Gold: The 'First Wave' In A 40-Year Cycle

by: Financial Sense

By FS Staff

Stealth Bear Market

"I look at the overall market as being in a major transition. As we talked about in late 2014, there were a number of generational multi-decade and even multi-century cycles all coming to a head and I was looking at the timeframe of 2015-2017 as being really the first phase of that transition with a larger phase moving into 2021...

I have expected a very stealthy bear market where the majority of observers and participants would not be convinced that a bear market was actually unfolding until the second shoe, whatever that ends up being, drops. And that's kind of what we saw in 2000-2001. You had the bubble bursting in the beginning of 2000 and… that weighed on some of the other indices but wasn't enough to really drag them down until the events of 9/11 in 2001.

That was when the markets [finally gave in]… and that continued on until October of 2002. That's the type of thing that I have expected in the indices this time around and everything I've seen up to this point has confirmed that with some precision that I wasn't even expecting..."

Significant Low Still Ahead

"I think this is going to be an ongoing progression of lows, some of them being double-bottoms like we just saw in August and January... but for the overall bear market, it would not surprise me at all to see it continue into 2017, so I do think it is a progressive thing, not the type of bear market that we saw in 2008...

I'm looking for June to be the next important low. I think we could see an intervening top in this timeframe - late March, early April - and looking at a little bit of a danger period in mid-to-late April when you perhaps get that first convincing selloff and overall decline into June before the next 1-2 month bottom takes hold."

Gold's "First Wave"

"I definitely viewed 2016 as being the initial confirmation to me of a multi-year bull market in gold and silver. I described it as a golden year, which to me meant that… gold would see the first sustained and significant rally bigger than what we've seen in the last 3-4 years...

To me, all we've seen is just the first wave of a major gold advance. Now the second wave, after the correction off that initial impulse wave, is often a long drawn-out affair with a lot of volatility. A couple of times where the market starts to run up towards its highs and everyone gets really frothy with their expectations and then all of a sudden turns back down and you kind of drag out that second wave corrective period. I could see something a little like that with gold, although we might only be talking a couple months there, but I do expect a much bigger advance later in 2016 and then into 2017 and 2018..."

40-Year Cycle

"But also this 40-year cycle that we've talked about, it's just uncanny how consistently we've seen a major battle between gold and silver, fiat currency or paper currency, and the attempts at either centralized or decentralized control of money that has repeated in this country since its founding in the 1770s...

The last big battle was in the 1970s and involved everything from Nixon shutting the gold window in '71 to the collapse of Bretton Woods in '73. But it was really in the 1975-1976 period that I saw the most significant event and the first one was all of OPEC agreeing to price oil in dollars, which then gave the dollar a new kind of backing. And then in '76 with the Jamaica Accord, which was really all of the westernized, industrialized countries basically codifying into an agreement that gold no longer played any role in the calculation and the backing of currency and, to me, that ushered in a new 40-year cycle that comes to fruition in 2016…"

Listen to this full podcast interview with Eric Hadik of Inside Track Trading and by clicking here.