Gold, Bitcoin & XAU Poised for Sell-offs into late-Feb/early-March; Stocks Project Plunge.
02-19-25 – The Roaring ‘20s, the dot.com ‘90’s and… – “While it might only be only one sector of the overall financial markets, there is an unfolding parallel – part 1920’s & part 1990’s – that warrants closer scrutiny in the weeks and months to come.
In both previous cases, it was an example of trends getting way overdone. Another trend is showing signs of stretching to an extreme… and preparing for a sharp ‘snap back’ (some of which has already taken place).
In the 1920’s, stocks were heading progressively higher when someone developed the ingenious idea of creating a shell company whose only value would be the stocks that shell company purchased.
That shell company would issue shares – like any other company – and allow the ‘average investor’ to afford stocks in a market that was quickly becoming overpriced & inaccessible to many investors.
On the surface, it sounded like a reasonable idea.
As that roaring bull market became over-extended, the shares of those shell companies became too expensive… so someone had another bright idea. Let’s create a shell company whose only value would be the stocks of the other shell companies it purchased (whose only value is the shares of the stocks they purchased & owned).
That shell company would issue shares – like any other company – and it would allow the ‘average investor’ to again afford stocks in a market that was rapidly becoming overpriced.
Great idea… except for one thing!
Any setbacks in the overall stock market – something considered next to impossible at that time – would exponentially magnify losses in the corresponding shell companies …and exponentially magnify losses in the related shell companies of shell companies.
As a result, a 10% loss in general equities might create a 20% (or greater) loss in the first level shell shares… that might create a 40% (or greater) loss in the second level shell shares. Hmmm.
Lucky for them – or so they thought – the roaring ‘20’s bull market would never stop… and serious corrections were impossible. Maybe.
The 1990’s were a bit different but were still a prime example of a market that gets WAAAAYYYY ahead of itself with shares of dot.com companies – that were years away from possibly showing any profitability (or even any income) – bid up to levels akin to the Tulip Bulb Mania.
Luckily, the roaring ‘90’s bull market could never experience a serious correction. Maybe.
The 2020’s is seeing an amalgamation of both – though it is probably not yet to the same degree (and could stay contained to one sector of the market).
This is occurring in the digital currency arena.
When digital (crypto) currencies – particularly Bitcoin – became overly expensive, a plethora of less-‘qualified’ cryptos were created to fill in the void.
Then came NFTs and meme coins – examples of ‘the greater fool’ type of ‘investment’ (speculation).
And now there is a race to see which tech companies can become the largest holders of Bitcoin (and others) the fastest. Even if they have a viable core company, the value of their Bitcoin holdings is rapidly overtaking the value of the core company.
What happens if Bitcoin drops 20 or 30%… and just languishes there for a few months?
What happens if Bitcoin returns to where it was when the post-Election parabola took hold… built entirely on ‘future expectations’?
If Bitcoin merely erased those 6 weeks of gains – from early-November – mid-December – it would be a normal, healthy correction in a multi-year bull market.
However, that would equate to a ~35% drop (a relatively normal correction in a bull market that has extended this far) that would be exponentially magnified in companies, funds & individual accounts that bought it since mid-December… some of which is probably on margin or debt of some form.
What then? Before 2025 is complete, investors might find out the answer to that question.
Stock Indices remain in the midst of multi-month trading ranges while showing progressive signs of topping (in leading/weaker indexes) and rolling over to the downside. On balance, the ensuing declines could last into late-March/early-April ’25…
The Dollar Index likely set a secondary top after surging to its weekly LHR (weekly extreme upside target at 109.78/DXH) and monthly SPR (109.83/ DXH) to begin the month and reversing lower.
After a quick plunge, it bounced into Feb 12th and right to its declining daily 21 High MAC before resuming its decline. It has now bounced to its declining daily 21 Low MAC – placing it at a pivotal juncture. It needs a daily close below 106.44/DXH to confirm a new wave down and a weekly close below 106.44/DXH to turn its weekly trend down and confirm that a multi-month top is in place.
The Euro is the inverse and needs a weekly close above 1.0557/ECH to turn the weekly trend up and project an overall advance into April ’25 – the next phase of a ~34-week high-high-high-(high) Cycle Progression and a .618 rally in time.
In the short term, a daily close above 1.0529/ECH is needed to show new strength.
The Yen remains in positive territory with an increasing probability for a larger surge – likely reaching .6950 – .6980/JYH – in the month of February. A weekly close above .6652/JYH is needed to turn the weekly trend up and confirm.
Bitcoin & Ether are reinforcing signs of topping after Bitcoin set its highest daily close on January 21st – 6 months/180 degrees from a previous high daily close (July 22nd) – ushering in the potential for a larger-magnitude wave ‘5’ peak as it fulfilled a ~43 – 46-week low-high-high-(high; Jan 3 – 24, ’25) Cycle Progression. Ether preceded that top and many cryptos have lost 40 – 55% from their recent peaks.
A drop into early-March remains the primary objective for this decline. Ether & Solana have already plunged to their early-November ’25 lows. Could others follow suit?
Gold & Silver remain near multi-month highs with Gold remaining in a multi-year & multi-month bull market as Silver is neutral on both counts (it would need a weekly close above its late-Oct ’24 peak to re-enter a multi-year uptrend).
Gold broke out to new highs in late-January/early-February, fulfilling its bullish weekly trend pattern and surging to its next upside range target at ~2950/GCJ (2440 – 2610 – 2780 – 2950/GCJ). It is hesitating near there but has not shown any signs of reversing lower.
Silver has entered a more vulnerable period, basis its weekly 21 MARC, but would not show any signs of topping until – at the very least – a daily close below 32.40/SIH. Until that occurs, the multi-week uptrend remains intact.
The XAU & HUI remain in multi-week uptrends after turning their weekly trends back up in mid-January. They have entered the time when the inversely-correlated weekly 21 MARCs could shift from being supportive to applying downward pressure if they overtake the levels of current prices.
In the current week, the 21 High MARC is at 168.71/ XAU with the 21 Low MARC at 160.43/XAU. It just spiked below that level but needs a daily close below 160.25/XAU to turn the daily trend down and confirm a multi-week top.”
Gold & XAU remain in weekly uptrends but are poised for corrections into late-Feb/early-March ‘25 before resuming their uptrends. Silver is rallying in a likely ‘B’ wave advance (that should ultimately give way to a ‘C’ wave decline below its Dec ’24 low and back to its early-Aug ’24 low) and continues to lag Gold. A multi-month Silver low could/should stretch into April ’25 and reinforce future cycles in April ’26. Early-April ‘25 is also the time when a sharp stock market plunge could accelerate into a multi-month bottom.
The 40-Year Cycle of Currency War continues to impact Gold and its relationship to the US Dollar. Gold fulfilled major cycles in Sept/Oct 2022 when it perpetuated a 7-Year Cycle of consistent lows (2001 – 2008 – 2015 – 2022) that coincided with the onset of a new 40-Year Cycle of Currency War AND 80-Year Cycle of War and projected a multi-year bull market to follow…
Outlook 2022/23: A New Currency War Begins
Outlook 2023: A New Currency War & Inflation
40-Year Cycle – Dollar Dominion, Dilemma & Demise
Gold’s mid-November ’24 low created a third successive (higher) low and signaled the onset of a new 3 – 6 month advance. The Dollar rallied into January ’25 – fulfilling its 3 – 4 month outlook and ushering in the time for a projected major decline in 2025. See current publications for the most updated analysis.
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