AG Thorson | May 21, 2016 01:22PM ET
This time, I'm going to change up the weekend newsletter and focus on the 8-year cycle. I compiled a brief list of arguments supporting its early arrival and separate evidence opposing it.
I originally expected a fake-out rally that would fool many into believing the bear market was over before a final plunge lower. An incident like that would get the remaining gold bugs to throw up their hands in despair, and a new bull run could begin. However, if this was a false rally, then it was the most convincing representation I've ever witnessed.
Evidence supporting:
Evidence against:
There is conflicting evidence supporting both camps. I believe a move to new lows within the regular timing window (August 2016 to February 2017) for an 8-year cycle would be good; it would decisively clear sentiment.
The overall picture will clear up by the end of next month after we see what happens with Britain exiting the EU and a potential Fed rate hike.
US dollar weekly - The dollar climbed higher for the third consecutive week, but prices are quickly approaching the 20/50 week MA crossover and could stall next week.
Gold OBV - On balance volume (OBV) fell to a new low this week; this often precedes prices dropping to a new low. Note: A similar situation developed in 1985 and prices DID NOT drop to a new low, so this is not a guarantee.
2015 yearly highs - For me to be convinced the 8-year low arrived, I'd like to see the 1-year cycle highs exceeded in gold, silver, and miners. So far only the miners have exceeded those highs.
Negative divergences - Negative divergences in the slow stochastics and the MFI suggest a correction in gold prices has begun, and possibly more.
Silver's 21-month pattern - Since the bear market began in 2011, silver prices have been forming an extended base and breaking through it to new lows. The green arrows represent the final peaks before prices steadily dropped. Oddly, these peaks are evenly spaced at 21 months apart. Will the pattern repeat?
The June targets are still active; nothing has changed from the Thursday Report concerning the daily charts.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.