In his latest report,
Samuel Kress of SineScope reviewed the 120-year
cycle and broke it down into its constituent cycles. For the sake of our long time readers,
I’m providing my own breakdown of the 120-year cycle and its effects on
the past, present and future of the financial market and economy.
The 120-year Mega Cycle
first began in the mid 1770s after a prolonged depression
and the Revolutionary War, from which our nation was born. Mr. Kress has historically referred to
the 120-year cycle as the Revolutionary Cycle since it always portends a
revolution of either government or the nation’s way of life. The current 120-year cycle is
scheduled to bottom in late 2014, yet already we’re witnessing
preliminary signs of this revolutionary unrest in the form of protests and
occupation movements across the U.S. and around the world.
The 120-year Mega Cycle
is also known as the Grand Super Cycle and is composed of two 60-year super
cycles. Sixty years approximates
to an average economic long wave (or K-wave). This also encompasses the biblical
Jubilee Cycle of 50 years, which is the cycle of release from debt
obligations. In modern times a
generation is defined as being roughly 20 years. This means that in any given 60-year
cycle three generations pass and fulfills the old saying, “From
shirtsleeves to shirtsleeves in three generations.” Thus we can see that a complete cycle
of 60 years normally sees a complete revolution of the economy, from poverty
to riches and back to poverty again.
The 60-year cycle is
composed of two 30-year mini super cycles. There are four 30-year cycles in a
complete 120-year cycle. The
latest 30-year cycle – the final one of the current 120-year cycle
– peaked in late 1999 and is scheduled to bottom in late 2014 along
with the 120-year cycle. The 1999
peak of the latest 30-year cycle coincided with the stock market’s
orthodox top of 1,555 in the S&P 500 index. This peak also kicked off a historic
15-year secular bear market which should carry into late 2014.
Mr. Kress has emphasized
that the 1/8 (12.5%) of a cycle’s duration is its “hard
down” phase. He writes,
“Applied to the 120-year [cycle] is 15 years which began the
‘hard down’ phase of the historic high. This could be considered the peak of
our economy. Applied to the
60-year (economics) super cycle is 7 ¾ years. Added to later 1999 is
earlier 2007 when an effective double top occurred. This began economic decline. Applied to the 30-year is 3 ¾
years, and added to earlier 2007 is the end of 2010/beginning of 2011 for the
final ‘hard down’ phase of the economy to form the 120-year
bottom in later 2014.”
The next cycle of
significance below the 30-year cycle is the 12-year cycle, which Kress
identifies as the primary directional cycle. Its half cycle is the 6-year secondary
directional cycle. The tenth and
final 12-year cycle of the current 120-year cycle peaked in September 2008
during the worst part of the credit crisis. According to Kress it can be
considered the beginning of economic instability.
The 6-year cycle is the
smallest yearly cycle which Kress recognizes. Its peak was scheduled for late
September but was foreshortened by the other yearly cycles as well as weekly
cycle influences, producing the high for the year in the S&P 500 in April. Kress writes, “From the present
until the 2014 bottom, any market advances will depend on the
quarterly/weekly cycles, and each subsequent year’s high and low should
be below the previous year’s high and low.” He further believes that by the end of
2012/early 2013, a cascade-type decline similar to the 1973-74 and 2001-02
declines will punctuate the 2014 bottom of the 120-year Mega Cycle.
There is a final cycle
component of the 120-year Mega Cycle which Mr. Kress has been wont to dismiss
in recent years. I’m
referring to the 4-year cycle, which answers to the Business Cycle (also
known as the Presidential Cycle).
It is the smallest complete cycle of the 120-year cycle series (the
2-year cycle is smaller but is technically a half cycle). The 4-year cycle is currently in the
ascent and is scheduled to peak in late September 2012.
As we’ve discussed
in recent reports, the 4-year cycle could hold the key to the upcoming year
to a large extent. In my
commentaries of the last few weeks I’ve emphasized that if the
world’s central banks combined to produce a coordinate economic
stimulus – a global QE3 if you will – then economic Armageddon
could possibly be stalled until the 4-year cycle peaks next year. On Wednesday, Nov. 30, the S&P 500
(SPX) recorded its biggest gain since August after the Federal Reserve, the
European Central Bank and other major central banks stepped in to head off
escalating funding pressures that threaten the key arteries of the world's
financial system. In addition to
this, China acted to lower reserve requirements for its banking system.
Thus we have the
beginning of what could be considered a coordinated monetary policy for re-liquifying the global economy. If the central banks rigorously stick
to their promise, then the 4-year cycle should afford the financial system
with perhaps one more year of survival until the final descent of the
120-year cycle series begins in late 2012/early 2013.
We got an immediate-term
sell signal for gold earlier this month when the SPDR Gold Trust (GLD), our
gold proxy, violated its 15-day moving average. GLD is trying to establish support
back above the 15-day MA and is within reach of closing above its nearest pivotal
high of 170.13 (the Nov. 30 close).
Getting above this level should pave the way for the buyers to take
the advantage in the immediate term.
[Disclaimer: This commentary should not be construed as investment
advice. Investors should follow
their own opinion when participating in the market.]
Gold & Gold Stock
With the long-term bull
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Editor, The Daily Durban Deep/XAU Report
In my latest book, "Gold & Gold Stock Trading Simplified,"
I remove the mystique behind gold and gold stock trading and reveal a
completely simple and reliable system that allows the small-to-mid-size
trader to profit from both up and down moves in the mining stock market. It's
the same system that I use each day in the Gold & Silver Stock Report -
the same system which has consistently generated profits for my subscribers
and has kept them on the correct side of the gold and mining stock market for
years. You won't find a more straight forward and
easy-to-follow system that actually works than the one explained in
"Gold & Gold Stock Trading Simplified."
trading system revealed in "Gold & Gold Stock Trading
Simplified" by itself is worth its weight in gold. Additionally, the
book reveals several useful indicators that will increase your chances of
scoring big profits in the mining stock sector. You'll learn when to use reliable
leading indicators for predicting when the mining stocks are about o break out. After all, nothing beats being on the right
side of a market move before the move gets underway.
revealed in "Gold & Gold Stock Trading Simplified" are the
product of several year's worth
of writing, research and real time market trading/testing. It also contains
the benefit of my 14 years worth of experience as a
professional in the precious metals and PM mining share sector. The trading
techniques discussed in the book have been carefully calibrated to match
today's fast moving and volatile market environment. You won't find a more
timely and useful book than this for capturing profits in today's gold and
gold stock market.
The book is now
available for sale at:
Order today to
receive your autographed copy and a FREE 1-month trial subscription to the
Gold & Silver Stock Report newsletter. Published twice each week, the
newsletter uses the method described in this book for making profitable
trades among the actively traded gold mining shares.