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  • Saturation Economics: At the Brink of Historical Equity-Commodity Nonlinear Second Fractal Collapse: The Fractal Quantitative Analytical Case for A Greater Than Expected Nonlinear Collapse of Gold Valuation 0 comments
    Jun 13, 2010 10:55 AM

    Saturation Economics: At the Brink of Historical Equity-Commodity Nonlinear Second Fractal Collapse: The Fractal Quantitative Analytical Case for A Greater Than Expected Nonlinear Collapse of Gold Valuation

    The qualitative argument for gold's coming 3-4 week valuation collapse is that the operative money supply is undergoing nonlinear collapse. While fiat money has been promised to support highly indebted  bankrupted countries using the Euro and there is some support for highly indebted relative to revenue American states by the US federal government, the money in private and corporate hands which is a growth/decay function of ongoing  private and corporate borrowing and reciprocal bank lending is decreasing.  There is an excessive and increasing supply of, excessively  overvalued assets with associated excessive debt - much of which will defaulted on as private owners of household and commercial real estate decide to return the asset to the mortgage paper owner.

    Real estate and automated manufacturing plants of real value have been produced through the leverage of debt. Surviving fiat currency units, equities, and commodities can now be viewed to be reciprocally denominated in those valued assets. As the hard assets remain a constant, the decreasing surviving currency units become relatively more valuable. Interest rates will plummet in this environment.

    Gold and silver are following 18/45 month (x/2.5x) and an exactly concurrent  caricaturized  13/29/21 month fractal; the 21 month third fractal is composed of two three phase series: 8/20/13 weeks and 9/23/19 of likely 22-23 weeks with 3-4 weeks before the expected low.. The second fractal growth series  of 9/23/19 is in a terminal  2x third fractal saturation area and conform in the end to a 9/23/22-23 decay fractal of historical nonlinearity. It is the degree of that nonlinearity and gold's devalued low that is the object of this writing.

    Looking at gold's monthly valuation chart from its low in 2001 a 50 month low to low base fractal is observed which is 2.5x of the initiating 21 month fractal occurring from
    1999 to 2001.  A perfect completion of a 125 month 2.5x second fractal to the 50 month first fractal base would exactly match a x/2.5x/2x/1.6x second fractal series with an 1b month base: or 18/45/36/29 months.  Gold is currently completing the first and second fractal series of this sequence of 18 and 45 months with an expected low in the US dollar denominated range of 625-675 within the next 3-4 weeks using the 50 month first fractal underlying slope as a limit and the upper 1/3 valuation of the first 18 month fractal of the second fractal's (18/45 sequence).

    There is another scenario, however, which is consistent with this end stage very leveraged, very asset saturated, very debt saturated, and pending private and commercial real estate debt defaulting world macroeconomy. Whereas years with positive US GDP growth were balanced with years of negative GDP growth before 1914, for the last 96 years  there have been only 6 years with negative GDP growth, the last two occurring in 1946 and 2009.  A  2-3 percent GDP increase or a 8 percent Federal budget deficit at this debt saturated, asset over produced, asset overvalued  point in history represents fractions of an unstable very over leveraged  base GDP that might be reasonably over a 50 year period 30-40 percent lower without the leverage that private, corporate, state, and federal debt has exponentialized.

    It is this very debt facilitated, very  overleveraged, falsely elevated GDP and global environment that has accompanied and determined  equity, commodity, and in the context of this writing, gold's valuation over the last ten years and that has produced gold's  50//18/45 month first and second first and second subfractals series.

    It is a re-visitation analysis of gold's larger time-ordered fractal valuations that suggests the metal may be at the very terminal portion of a very large second fractal that could result in a massive collapse of its pricing relative to fiat currencies, leading to a collapse in the next 3-4 weeks below 400 and possibly as low as 125-150 US dollars.

    Fractals subsets are determined by low points in the valuation curves. If there are two relatively adjacent low points there may be twin operating interpolated growth and decay fractals.

    Gold's yearly low valuation in US dollars in 1968 and again in 1970 represent starting point for two interpolated fractal growth series. Likewise in 1993 there are two monthly low points in gold's valuation curves.

    Gold's fractal progression from 1970 has been 7+/18/18 years with completion of a x/2.5x/2.5x maximum growth fractal.

    The second fractal's 18 year 1993 two interpolated monthly low points has the second monthly low point as the absolute valuation low but the first low month occurring  early in  1993 represents the summated or integral or average low for all prices during a month. The first and second low month valuation are separated by one month for a total of a 3 month 'initiating' fractal.

    This initiating fractal is followed by a 2-2.5x  7 month base fractal with thereafter a classical Lammert fractal growth progression of x/2.5x/2x for 7/17/14 months.

    The four phase fractal growth and decay series would be x/2.5x/2x/1.5-1.6x or 7/17/14/11 months.  Gold valuations broke down at the 11th month of the 4th fractal following a 3/7/7 month decay fractal ending in early 1998.

    What is interesting is the interpolated fractal of 9 months starting in early 1993 with a 9/23/18/13 month fractal:: x/2.5x/2x/1.5x  ends a large first fractal at the same low point in early 1998 as the conjoined 7/17/14/11 and 3/7/7 month  fractals

    This is an interpolated fractal of 61 months.

    If the 3/7/7 or 15 month decay fractal of the 7/17/14/11 or  45 month series and 3/7/7 or 15 month series is combined with the next 20 month fractal, a 34 month interpolated base fractal is created by the conjoined fractals.

    This 34 month base fractal x is followed by a 21/50 or 70 month second fractal of 2-2.5x.
    The third fractal is composed of a 14/29/21 month or a 62 month fractal.

    The curvilinear fractal series is 34/70/62 months with a averaged . 31/73/62 or x/2.5x/2x growth fractal.

    From the original 9/23/18/14 or 61 month first fractal beginning in early 1993, the second fractal is composed of the terminal 20 month fractal portion of the 34 month base (15 +20) fractal of the 34/70/62 x/2.5x/2x or averaged 31/73/62 month series. The above cited 20 month  fractal is followed by the remaining 70/62 months for a total of 150 months. If the interpolated lows in 1993 are averaged: a 60 month base is determined with 150 of an expected 150 months to complete a very long time ordered second fractal of 12 and 1/2 years.

    A 12.5 year second fractal nonlinear ending for gold which has completed a maximum 7+/18/18 year x/2.5x/2.5x saturation fractal starting in 1970, with the third 18 year fractal composed of 60 (x) and 150 (2.5x) months could devalue this traded commodity to an area of 325-400 US dollars and as low as 125 US dollars, the later value to capture all low points between 1993 and 2010.

    Expect unexpected nonlinearity for gold devaluation within the next 3-4 weeks.

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