Gold & Silver Cycles Portend New Rallies; Middle East Cycles (Oct ’23) Concur.
09-29-23 – “The next 7-Year Cycle (2024) coincides with the culmination of a related 7th 7-Year Cycle for US Dollar hegemony in the world. ‘7’s often time or signify completion. This time is no different.
Looking back, the events of 2001/2002 set the stage as American vulnerabilities were exposed – leading to a decade of focus on the ‘war on terror’. While America’s attention was diverted, China was laying the groundwork for much of what would transpire in the decades to follow.
7 years later, the financial and economic debacles of 2008/2009 produced a perfect example of opportunistic events, prompting many nations to rethink their alliances and view Western monetary & financial policies with a more skeptical or cynical eye.
Much of what has occurred since then, including a myriad of new global alliances, were a reaction to another of America’s vulnerabilities (this one financial) being exposed in 2008.
7 years later, a series of events unfolded that took this competition to a new level. The first was China’s stock market meltdown in 2015. (A year prior, in 2014, Russia returned to her old ways and ‘annexed’ Crimea – a foreshadowing of things to come.) The second was the election of a very China-antagonistic US President in 2016.
Before that President could even begin to challenge China on trade disparity, etc., a new era was born… one which could soon have a much larger global impact – particularly on the U.S. Dollar’s role. (The mid-2010’s also began a period of Eastern gold buying as the West was selling.)
The Petroyuan…
2017 saw the introduction of a new vehicle – the petroyuan. It was created as a result of a common adversarial mindset: The enemy of my enemy is my friend. That is when the People’s Bank of China cut a deal with Russia to trade oil in yuan… a first.
Before underestimating this significance, remember what the creation of the ‘petrodollar’ in 1975 did for the US. That was when, after nearly bringing America to her knees with the first wielding of the ‘oil weapon’ in 1973, Saudi Arabia and OPEC agreed to price (and trade) their oil in US Dollars.
In essence, customers would need to ’purchase’ US Dollars – thereby supporting it and ultimately the debt that backed it – in order to purchase oil. And with that sudden surplus of US Dollars, Saudi Arabia would purchase American weapons and debt.
As that artificial support of the US Dollar continued, America went on a ’buying frenzy’, accumulating debt at an unprecedented rate. However, as is usually the case…
All good things must come to an end!
The 7-Year Cycle…
In 2022, 7 years from the 2015/2016 shifts, Saudi Arabia entered talks with China to price oil in yuan. Immediately, the media was flooded with explanations of why this would not hurt the Dollar and why the yuan was not a viable alternative for oil trade.
That may all be true… in theory.
Unfortunately, the markets move on perception… even when it doesn’t align 100% with reality.
And since the Dollar’s over-mature bull market has already fulfilled most upside objectives, AND revealed its first signs of vulnerability, it might not take a major shift (in oil pricing) in order to trigger a major shift (in Dollar faith & longevity).
The Middle East
America knows what is at stake. That is why in August 2023 – while negotiating with Saudi Arabia over Middle East policy and the push to have the Saudis recognize Israel – the US had a tiny, little caveat: ‘Oh yeah, we’re gonna also need you to distance yourself from China – economically & militarily – and keep pricing oil in US Dollars.’
That leaves Saudi Arabia to decide between a nation with ~1.5 billion people and growing oil demand as well as global influence (who also happens to be their largest trading partner) OR sticking with the frequently-antagonistic ‘old guard’ and hoping they are the lesser of two evils.
Actions Speak Louder Than Words?
Of course, these negotiations were another example of US reactionary policy, coming on the heels of China’s March 2023 mediation between Iran and Saudi Arabia. And then, also in August ‘23, China invites both Iran and Saudi Arabia to join BRICS.
Is it just me or does it appear as though America is becoming the proverbial ‘third wheel’ in the ongoing (and intensifying) courtship between China and Saudi Arabia (and OPEC and the Middle East)?
And this is occurring in the same year that began (Jan 16/17, ‘23) with Saudi’s finance minister announcing they are ‘open to discussing oil trade settlements in currencies other than the US Dollar’.
Mene, Mene, Tekel, Parsin
Not surprisingly, that Saudi announcement came just weeks after China’s Xi Jinping had visited in Dec 2022 and committed to purchasing massive quantities of Middle East oil while simultaneously ‘”pledging to ramp up efforts to promote the use of the yuan in energy deals.”
As for the US Dollar, it appears the handwriting is on the wall. The massive debt backing the US Dollar has been ‘numbered, numbered, weighed & divided’ in the inscribed words from the Old Testament book of Daniel (see page 1).
2022 began a new 40-Year Cycle of Currency War (after the previous 40-Year Cycle culminated in 2016 – 2021). Apparently, China got the memo!
All of this leads to 2024 – one complete 7-Year Cycle from the debut of the petroyuan.
2024 is also 49 years (‘Sabbath of Sabbaths’ or 7 intervals of the 7-Year Cycle; completion of completion) from 1975 – the debut of the petrodollar.
It is just a matter of time (and maybe not much time) before another similar (but not same; cycles rhyme but do not repeat) event occurs and provides another opportunity for what are often viewed as ‘anti-capitalist’ nations to do the ultimate capitalizing on Western folly. So who has been the real ‘capitalist’ over the last decade?? Stay tuned…
An Eerie Omen
The other leader – that has remained constant since it accurately pinpointed the time and price for the Nov ’21 peak – is the Russell 2000 index. It remains an intriguing index that has powerfully reinforced (and often guided) this multi-year topping process. As it was rallying from its March ‘23 low, the Russell was forecast to reach ~2000/RT before a multi-month top was likely.
Corroborating that target, a pair of convincing trend indicators were converging in July/Aug ’23… at the same resistance near 2000/RT. The monthly 21 High MAC and 40 High MAC (illustrated above) were expected to time a peak and spur a reversal lower in Aug ‘23. That is exactly what transpired.
Not only is the structure of those monthly MACs a cause for concern. So, too, is the wave structure – reinforced by its monthly trend structure – labeled in the 21 MAC chart. And so is the uncanny range trading that has governed the Russell 2000 for several years. And so is the fact it was barely able to complete a 50% rebound of its 2021/22 decline.
All of those factors reinforce what has been described for this (and similar) indexes and stocks throughout 2022 & 2023. They all conclude that another decline is in the offing (in 2024 – ?) – one that could match (or exceed) the magnitude of the 2021/22 decline.
And that aligns with the expectation for a divergent peak – ideally in Jan ‘24 – that should usher in a new period of coincident stock selling. The Russell 2000 fulfilled multiple weekly & monthly cycles in late-July/early-Aug ’23 and corroborated that outlook…
There is still a good chance for some remaining (stronger) stocks and indexes to set higher highs in Jan ‘24 before a more significant sell-off takes hold. Among other things, 2024 is the latest phase of the 17-Year Cycle from the 2007 peak and subsequent 2008 meltdown (watch 2025).
That would perpetuate an uncanny 17-Year Cycle that has also had a remarkably strong correlation with and adherence to Middle East War/Conflict Cycles** (which begin in Sept/Oct 2023).
[**2023/2024 is also a complete 70-Year Cycle from a joint UK/US coup and new (Western friendly) government in Iran in 1953/54. It remains the source of great animosity for many in Iran.]…
Gold & Silver continue to reinforce analysis that projected major, multi-year lows to take hold in late-2022 and multi-month highs to take hold in early-May ‘23… with a subsequent peak expected to occur in/around early-Nov ‘23. Those early-May & early-Nov ‘23 cycle highs were/are expected to contain any rallies in 2023.
In some respects, the beginning of this latest 7-Year Cycle (in late-2022) could be similar to the beginning of the previous one. Multi-year lows were set in late-2015 & late-2022 and quickly gave way to strong 7 – 8 month rallies. In 2016, that was followed by a 5-month pullback into late-2016.
In 2023, Gold & Silver have retraced almost 5 months.
7 years ago, it took a multi-year peak in the US Dollar – in Jan 2017 – to usher in a multi-year bull market in Gold & Silver. The Dollar has been forecast to top in Jan 2024 and could pave the way for more significant rallies in precious metals, soon after.
After bottoming in sync with weekly cycles in mid-Aug ‘23, Gold & Silver rallied and twice neutralized their weekly downtrends. They were unable to reverse those trends up – failing to elevate the Aug ’23 lows to more than 1 – 2 month lows.
That recently spurred a drop to new multi-month lows, violating the mid-Aug ’23 weekly cycles and signaling this is a higher magnitude correction than what had been anticipated. As a result, Gold could spike as low as its early-March ’23 low (see chart on page 9), the 4th wave of lesser degree support.
A new multi-week, and potentially multi-month, low could be seen in the first half of Oct ’23 and lead to the anticipated rally into early-Nov ’23.
The XAU & HUI also violated their mid-Aug ‘23 lows and broke below their 2 – 4 month downside targets – the 4th wave of lesser degree support – at ~110 – 112/XAU & ~210 – 214/HUI, after failing to turn their weekly trends up. That shows that the ’II’ (or ’B’) wave decline is not yet complete.
There is a larger-magnitude cycle that should be monitored. It was discussed throughout the 2016 – 2020 bull market in Gold and helped time several important peaks. Now it is poised to time successive lows. This is a 12.5 – 13.5-month/~54 – 59-week cycle that has recently created a high (Aug ‘19) – high (Aug ‘20) – low (Aug/Sept ‘21) – low (Sept ‘22) Cycle Progression that could soon time another low in the first half of Oct ‘23.”
Gold & Silver are approaching bullish cycles that begin in early-Oct ‘23… and are expected to spur a sharp multi-week rally into early-Nov ’23. Middle East Cycles collide in Oct ’23 and also in 2024. The US Dollar could ultimately suffer.
The action since late-2022 is powerfully validating the onset of a new 40-Year Cycle of Currency War in which Gold & Silver possess unique potential for late-2023 – late-2024! The 90/10 Rule of Cycles in Gold continues to project a sharp advance in October ’23 – in the final weeks leading into a (potential) early-Nov ’23 peak. The weekly 21 MARCs concur.
Where are Metals Likely to Rally in 4Q ’23? Will Middle East War Cycles Have an Impact??
How Does 90/10 Rule of Cycles Project Sharp Rally in October ’23?
Why are early-Nov ’23 Cycle Highs the Key to 2024 Outlook?
Refer to the April 11, 2023 special issue of The Bridge – Gold, Silver and Elliott Wave Structure – and subsequent reports – for expanded analysis and charts.
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.