Dr. Charles Nenner is a physician who got involved in cycle theory in his spare time and became a very accurate predictor of future market prices. He is considered the godfather of cycle theory and I very much respect his opinion. He has a website at charlesnenner.com that you can check out. Better yet, click here to listen to the short video that is now posted at kitco.com, called "Cycles Say Gold Is Bottoming". In the video, David Gurwitz of Charles Nenner Research explains on 7/3/2013, what their trading algorithm is now predicting.
What Is Cycle Theory
The video explains that there are a series of repeating top to tops, in any market. Regarding gold, Charles Nenner Research found a top every 8 weeks, every 17 weeks, every 39 weeks and every 65 weeks. When all of these cycles top at the same time, you get a major top in gold. Bottoms occur at the midpoint of the tops and when all the cycles are bottoming concurrently, a major low tends to form. These cycles are sine waves or curves which also occur in nature, including ocean waves, sound waves and light waves. When the sine waves of each varying length topping cycle are added together, you get the amplification that creates major tops.
What Is The Theory Now Predicting For Gold?
Adding to the cycle theory, Charles Nenner Research also has a target algorithm which helped them predict the top in gold at $1900 in 2011. Sometime thereafter they predicted a low of $1285 which was recently met and exceeded to the downside. They are now looking for a bottom between now and September 2013 after we get through a minor top in mid July 2013. Gold will start up slowly but should return to the old high within the next 2-3 years. Actual time and projection targets can be determined once a bottom forms in the short-term. They see the gold metal as rallying much more than gold stocks, so they prefer one play the metal. Thus equity traders should do better in the ETF GLD (gold metal)over the ETF GDX (gold miners). Be aware that the initial rally phase will start out very slowly.
What Is Cycle Theory Predicting For Other Markets?
If you listen to the video mentioned above, David Gurwitz explains that copper topped out 9 months ago, as predicted. Short-term they see a bottom but long-term copper is going lower. They are planning to go long the grains. They are planning to get short bonds and see a major long-term selloff in bonds developing lasting several years. Bond interest rates have a 60 year cycle and have enjoyed 30 years of decreasing rates. We should now begin the 30 years of increasing rates in bonds. Natural gas is a short-term bottom but goes lower long-term. The U.S. dollar should top out in 2014 and then go lower. It will be interesting to see how this all pans out.