Cycle Trading

Is the gold bull dead or alive?

Many are concerned that the gold bull is dead. The recent decline that resulted in a failed yearly cycle is cited as the reason why. This is because if a lesser cycle fails, that leads to the decline of the cycle of the higher order. The reasoning here is that with a failed yearly cycle, the 8 year cycle is in decline.

The reasoning is correct but the inherent assumption is wrong. That assumption is the next smallest cycle unit in an 8 year cycle is the yearly cycle. Actually gold has an 8 year, 4 year, yearly, weekly, and daily cycle. We have spent plenty of time discussing the daily, weekly and yearly cycle. So lets look at the 8 year and the 4 year cycle.

Here we see gold from 1984 to present. The arrows mark the 8 year lows.

Above I added a little more detail to the 8 year cycles.
Now let’s break down the 8 year cycles into their 4 year cycles.

The seven 4 year cycles annotated above ranged from 28 months to 55 months. That’s an average of 40.42 months per cycle.

So getting back to the point, the next lower cycle after the 8 year cycle is the 4 year cycle.

You will notice that in the first two 8 year cycles, the second 4 year cycles were failed 4 year cycles. They broke below the preceding 4 year cycle low. But those two 8 year cycles were prior to the start of the gold bull.

I believe that the 8 year gold cycle is still valid and in play. What we just witnessed in gold was a four year cycle low. I know that it looks bad because this 4 year low included a failed yearly cycle.

Please think of the 4 year cycle and the 8 year cycle in terms of the relationship, one being part of a larger.

Perhaps if you likened the 4 year cycle to the daily cycle and the 8 year cycle to the weekly cycle in the example below.

A failed daily cycle signals the intermediate cycle decline. Once the intermediate cycle low prints, the next daily cycle is expected to be a right translated cycle. The new intermediate cycle can go on to set a higher intermediate cycle high afterwards.

Now let’s look at the current 4 year cycle.

So gold had a failed yearly cycle the led into the 4 year cycle decline.

That set a 4 year low. Since it is not a failed 4 year low, but a right translated 4 year cycle, then my expectation is for the new 4 year cycle to set a higher 4 year cycle high.

And don’t even get me started about how the fundamentals keep improving with how the central banks just keeps on printing …