Gold, Currencies and the 4-8 year cycle Harmonics
With Gold making all time highs the policies of the Federal Reserve and US Treasuries are coming under closer scrutiny and now is a good time to look at the cycles governing the moves in all Currencies including the oldest and most reliable Currencies which are Gold and Silver. The 4, 8 and 16 year cycle Harmonics rule Gold and other Currencies with a tendency to stretch into the larger 50, 100, 200 and 400 month versions but also the PI series of 4.3, 8.6, 17,2 and 34.4 years. For example the Bull Market from August 1896 to September 1929 was 397 months long and rose 1,000%, while the next one from July 1932 to February 1965 was 403 months and went up 2,000%, and the latest one from December 1974 to October 2007 was 394 months and also rose 2,000%, and 400 months is 33.3 years and one third a Century. Gold has been making regular highs near January every 8 years with the next one due near January 2012, but we are likely to make a Wave 3 high between 1200-1300 near January 2010 first and then have a Wave 4 correction before the next Wave 5 high that should take us to 3,200 into January 2012. Recently Gold has been following an 11 and 22 month cycle that is just short of the 12 and 24 month Harmonics of the 1-2-4-8-16 year series. The speeded up tempo is probably due to the increased optimism and momentum shortening the cycles as we get close to the first of three probable Gold highs in January 2012, 2016 and 2020. With the last 11 month highs being in May 06, April 07, March 08 and February 09, the odds of the next one occurring in January 2010 is high since it is also a 22 month cycle high.
US Dollar Summary; The US Dollar is a much more liquid market than Gold and is less regular in its behavior but the 4.3, 8.6 and 17.2 year PI cycle series is easy to confirm with the Yen and US Dollar showing major turns 17.2 years apart. The European and Canadian currencies have also seen highs and lows just about every 16 years for the last 50 to 100 years with the latest lows in 1985-86, 2001-02 and highs in 1979-80 and 1995-96. The US Dollar is actually behaving a lot like it did in the last declining phase of the 17.2 year PI cycle except that it is falling a bit slower from 2002 to 2010 (-40%) than it did from 1985 to 1993 when it dropped 50% of its value. The USD should continue to behave like in the early 1990’s and make a low in December or January before moving back once more to the 90 area in 2010. We are already 17.5 years from the July 1992 low in the US Dollar and a turn higher is expected any time, but we made marginal new lows in July 1992 and there is a small risk we could breach the 70 level briefly despite the weaker bearish momentum of 2002-2010 vs. 1985-1993 which suggests we won’t see new lows and the 74 area should hold.
