GOLD AND SILVER BREAKING DOWN.......
Gold and Silver are breaking down
Gold and Silver are breaking down
As this last week
Gold has fallen to a low of $1206.80, still above its $1179.40 and 1181.40 lows of June and December
2013. Silver, however, has plunged to $17.32, well below its former long-term cycle low of $18.17 in June
2013. Thus, we may be setting up for a case of intermarket bullish divergence, where Gold does not break
to a new yearly low, and Silver has. This creates the need to review our long-term cycle studies on each.
Let’s start with Gold. The test of the $1179-1181 double bottom area means that the greater 8.33-year
cycle is probably exhibiting a “combination” chart pattern (two half-cycles of 4.17 years and three 34-
month phases). So we need to discuss the 34-month phase
Measured from the start of the current 8.33-year cycle, the first 34-month cycle phase occurred on
December 29, 2013. It is next due October 2014 +/- 6 months. That’s now. Furthermore, the
34-month cycle sub-divides into two 17-month half cycles, and/or three 11.33-month phases. In this case,
it is a two-phase pattern. There are no 11.33-month phases showing up in this 34-month cycle.
The first 17-month half cycle occurred with the 4.17-year cycle low on June 28, 2013. The next 17-
month cycle is therefore due November 2014 +/- 3 months. The overlap of these two time bands is now in
force (August 2014-February 2015). The only problem (for bulls) is that the 34- month cycle is bearish,
which means the lowest price will not happen until the cycle ends. Therefore, Gold would – could – break
the $1179-1181 double bottom lows of 2013. It is not inevitable (I’ve seen cases where it hasn’t), but it is
probable. So let’s discuss where that bottom could be prior to February 2014.
“If the $1180 support level breaks, then we shift fully to the idea that a
34-month cycle phase is occurring, and its due date is October 2014 +/- 6 months. The price target would
be $975.70 +/- 111.80.” However, the downside price target for the 17-month cycle is even lower, $815.50
+/- 115.80. That is in the range of the prior all-time high of $855 in January 1980. We could also construct
a measuring target based on breaking the lower end of this descending triangle (1180 area), which yields a
downside price target of $927.50 +/- 59.60. All of these price targets overlap at $868 – 931.30. I know it
sounds drastic, especially for someone who is a gold bug like me, but that is the call if prices close below
$1179, and stay below $1179 for a couple of weeks. When metals fall, they fall hard. And with Uranus
square Pluto, everything becomes exaggerated, whether up or down. There is a slim hope, however, that
prices will only test, or trade slightly below the $ 1180 mark, and then bounce back. After all, the time
bands for the 17- and 34-month cycles are now in force, and time is more important than price to a market
timer. Yet, price is important.
Since Gold is in the time band for these two longer-term cycles, traders need to be prepared to buy
any primary cycle trough that forms. One is due now. September 22 starts the 16th week of the 15-21
week primary cycle. It also starts the 8th week of the second 8-11 week half-primary cycle. Both cycles
are due within the next three weeks.
September 23 is also a two or three-star critical reversal date (it’s a judgment call). Gold is making
new cycle lows today (September 22), which is in this geocosmic time frame for a market reversal. The
new moon in Libra on September 24 can also correspond to a low within a day.
The price target for the primary cycle trough is $1194.40 +/- 23.40. The price target for the halfprimary
cycle trough is $1217.80 +/- 15.20. The overlap is $1202.60-1217.80. The low today has been
$1208.80. Since Gold has not broken below $1180, and Silver has fallen below $1817, there is a case of
intermarket bullish divergence developing within a time band for a cycle low and a geocosmic critical
reversal. Additionally, stochastics are not making new lows as prices do, which is a case of bullish
oscillator divergence. These are conditions under which lows form, and traders are advised to start
probing the long side.
If a primary cycle trough does happen now, and the price remains above $1180, then we look for a 2-5
week corrective rally to the crest of the next primary cycle. As of now, that would be back to $1277.80 +/-
16.30. If prices get above $1325, it starts to look bullish, while a close above $1347 is bullish and strongly
suggests the 34-month cycle low has been completed. But I don’t expect that to happen yet. This is a
normal primary cycle, and I prefer to see longer-term cycles end with distorted primary cycles, like
contractions of 11-14 weeks. Therefore, after this primary cycle low is complete, we will look for a final
washout to be completed 11-14 weeks later, probably December-January, and quite possibly below $1000.
Those of you who are gold bugs (like me) might want to protect your core long positions by hedging until
then. Once the 17- and 34-month cycle lows are in, I would expect a minimum 20% rally to follow,
maybe much, much more.
Trading Strategies for Gold: Investors may maintain long positions with a close below $1175 . Position traders are flat but may look to buy Gold now with a stop-loss on a close below
$1175. However, look to exit and sell short on the next 2-5 week rally, to $1275, +/- 15, with a stop-loss on
a close above $1325. Aggressive short-term traders may also probe the long side this week if prices remain
above $1180, looking for a sharp 2-5 week rally. Also, on a 2-5 week rally back to $1260-1290, look to sell
short again with a stop-loss also above $1325. In the event that prices break below $1175, all traders may
go short with a stop-loss back on a close above $1220. But even so, all traders would be advised to look to
cover those shorts rather quickly (within the next three weeks), and get long again, for a primary cycle
low is due. The issue is how far can prices fall within the next three weeks? Given that there is a Jupiter-
Uranus trine this week (September 25), they could fall hard and fast and then also reverse quickly.
Silver is also breaking down. In fact, it has fallen to a low of $17.32 (September 22), a new 4-
year low. Now we must consider low price targets as discussed in our special Silver report issued in May
2014. In that report, we stated, “The downside price target could be as low as $13.12 +/- 2.87 (due 2014-
2016), and even a re-test of the $8.40 low of October 2008.” Let’s briefly review that now.
Silver exhibits a consistent 18.53-year long-term cycle going back to the 1860s. The last confirmed
lows were in November 1971 and then the double bottom of February 1991 and February 1993, when
Silver tumbled to $3.50, lower than its high during the U.S. Civil War in the 1860s. Measured from the
1993 low, the next 18-year cycle is due 2008-2014. There was a low in 2008, when Silver fell from a high
of $21.44 in March 2008 to a low of $8.40 in October. That was a decline of nearly 61% (Mr. Fibonacci
would have loved that), but it only lasted seven months. Declines to 18-year cycle troughs usually last 2-5
years, even more in bear markets. The current decline has witnessed prices falling from a high of 49.82 in
April 2011 to today’s low of $17.32, a decline of 65.2% and a duration exceeding more than 3-1/2 years.
It seems like this is more consistent with the 18.53-year cycle than the decline in 2008.
Within this 18.53-year cycle, there appears to be three 7-year phases (range 6-8 years), as noted on
the monthly chart above. The last 7-year phase began with that low in October 2008, so it is ideally due ,2014-2016. We can also see this 7-year cycle breaking down into two 3.5-year half-cycles. The first half
cycle unfolded with the triple bottoms of September 2011, December 2011, and June 2012 at a final low
of $26.07 in June 2012. This would imply the final bottom is not until December 2015 +/- 7 months.
However, last phases of longer-term cycles in commodities are notorious for contracting.
Price targets for the 18.53-year cycle trough in this situation are not that reliable. The break of the
lower part of the former descending triangle projects down to 1122 +/- 164. However, as , $13.12 +/- 2.87 seems more likely. And we cannot rule out the possibility that
it is happening right now, as Silver breaks to a new 4-year low and Gold holds above its lows of June-
December 2013. As deflating as this might seem to long-term Silver bulls, just remember this: If this is
indeed the ending to the 18.53-year cycle, we will soon begin a new 18.53-year cycle. You saw how
Silver exploded from a low of $3.50 to a high of $49.82 in the first half of this current cycle. It should do that
and more in the next one. And Gold would participate as well. It looks bleak now, and there very well
may be a horrific washout. But it is the preparation for a new and more exciting bull market to follow.
September 22 begins the 17th week of Silver’s 17-week primary cycle (range is 13-21 weeks). It is in
the middle of the time band for its primary cycle low now, and this is a critical reversal zone. There is an
intermarket bullish divergence set up with Gold, as long as Gold holds above 1179.40. Additionally, the
18-day CCI index dropped to -207 (Sept 22). When this index falls to -200, in a time band for a
primary cycle low, we look for the bottom to be completed within the next 7 trading days. In other words,
all of our leading indicators are setting up for a primary low now.
Once this low is completed, we anticipate a sharp 2-5 week rally will follow. At this point, our price
target for that rally would be $19.30 +/- 55. After that, we anticipate another decline to lower levels, unless
Silver can close above $21.63.
Trading Strategies for Silver: Long-term investors need to consider hedging their long positions on any 2-5 week rallies now, for there is danger of a decline back to $15.00 and even lower by year-end, unless
Silver can rally back above $21.63. Position and aggressive short-term traders may probe the long side this
week, with a stop-loss based on Gold closing below $1179. On the next 2-5 week rally, both types of
traders are advised to look for signs to get short, especially if Silver stalls at $19.30 +/-.55. Your stop-loss
can be on a close above $20.50.
Short-Term Reversal Dates in Silver: Look for isolated highs or lows in Silver (and probably Gold) in
these solar-lunar time frames, and from which prices reverse at least 2.5% (and better if 4%):
Sep 22-23**
Sep 24-25*
Oct 1-2**
Oct 7-8*
Oct 9-10**
Oct 20**
Oct 21-22 (maybe 23 too)**
Oct 30-31*
Gold has fallen to a low of $1206.80, still above its $1179.40 and 1181.40 lows of June and December
2013. Silver, however, has plunged to $17.32, well below its former long-term cycle low of $18.17 in June
2013. Thus, we may be setting up for a case of intermarket bullish divergence, where Gold does not break
to a new yearly low, and Silver has. This creates the need to review our long-term cycle studies on each.
Let’s start with Gold. The test of the $1179-1181 double bottom area means that the greater 8.33-year
cycle is probably exhibiting a “combination” chart pattern (two half-cycles of 4.17 years and three 34-
month phases). So we need to discuss the 34-month phase
Measured from the start of the current 8.33-year cycle, the first 34-month cycle phase occurred on
December 29, 2013. It is next due October 2014 +/- 6 months. That’s now. Furthermore, the
34-month cycle sub-divides into two 17-month half cycles, and/or three 11.33-month phases. In this case,
it is a two-phase pattern. There are no 11.33-month phases showing up in this 34-month cycle.
The first 17-month half cycle occurred with the 4.17-year cycle low on June 28, 2013. The next 17-
month cycle is therefore due November 2014 +/- 3 months. The overlap of these two time bands is now in
force (August 2014-February 2015). The only problem (for bulls) is that the 34- month cycle is bearish,
which means the lowest price will not happen until the cycle ends. Therefore, Gold would – could – break
the $1179-1181 double bottom lows of 2013. It is not inevitable (I’ve seen cases where it hasn’t), but it is
probable. So let’s discuss where that bottom could be prior to February 2014.
“If the $1180 support level breaks, then we shift fully to the idea that a
34-month cycle phase is occurring, and its due date is October 2014 +/- 6 months. The price target would
be $975.70 +/- 111.80.” However, the downside price target for the 17-month cycle is even lower, $815.50
+/- 115.80. That is in the range of the prior all-time high of $855 in January 1980. We could also construct
a measuring target based on breaking the lower end of this descending triangle (1180 area), which yields a
downside price target of $927.50 +/- 59.60. All of these price targets overlap at $868 – 931.30. I know it
sounds drastic, especially for someone who is a gold bug like me, but that is the call if prices close below
$1179, and stay below $1179 for a couple of weeks. When metals fall, they fall hard. And with Uranus
square Pluto, everything becomes exaggerated, whether up or down. There is a slim hope, however, that
prices will only test, or trade slightly below the $ 1180 mark, and then bounce back. After all, the time
bands for the 17- and 34-month cycles are now in force, and time is more important than price to a market
timer. Yet, price is important.
Since Gold is in the time band for these two longer-term cycles, traders need to be prepared to buy
any primary cycle trough that forms. One is due now. September 22 starts the 16th week of the 15-21
week primary cycle. It also starts the 8th week of the second 8-11 week half-primary cycle. Both cycles
are due within the next three weeks.
September 23 is also a two or three-star critical reversal date (it’s a judgment call). Gold is making
new cycle lows today (September 22), which is in this geocosmic time frame for a market reversal. The
new moon in Libra on September 24 can also correspond to a low within a day.
The price target for the primary cycle trough is $1194.40 +/- 23.40. The price target for the halfprimary
cycle trough is $1217.80 +/- 15.20. The overlap is $1202.60-1217.80. The low today has been
$1208.80. Since Gold has not broken below $1180, and Silver has fallen below $1817, there is a case of
intermarket bullish divergence developing within a time band for a cycle low and a geocosmic critical
reversal. Additionally, stochastics are not making new lows as prices do, which is a case of bullish
oscillator divergence. These are conditions under which lows form, and traders are advised to start
probing the long side.
If a primary cycle trough does happen now, and the price remains above $1180, then we look for a 2-5
week corrective rally to the crest of the next primary cycle. As of now, that would be back to $1277.80 +/-
16.30. If prices get above $1325, it starts to look bullish, while a close above $1347 is bullish and strongly
suggests the 34-month cycle low has been completed. But I don’t expect that to happen yet. This is a
normal primary cycle, and I prefer to see longer-term cycles end with distorted primary cycles, like
contractions of 11-14 weeks. Therefore, after this primary cycle low is complete, we will look for a final
washout to be completed 11-14 weeks later, probably December-January, and quite possibly below $1000.
Those of you who are gold bugs (like me) might want to protect your core long positions by hedging until
then. Once the 17- and 34-month cycle lows are in, I would expect a minimum 20% rally to follow,
maybe much, much more.
Trading Strategies for Gold: Investors may maintain long positions with a close below $1175 . Position traders are flat but may look to buy Gold now with a stop-loss on a close below
$1175. However, look to exit and sell short on the next 2-5 week rally, to $1275, +/- 15, with a stop-loss on
a close above $1325. Aggressive short-term traders may also probe the long side this week if prices remain
above $1180, looking for a sharp 2-5 week rally. Also, on a 2-5 week rally back to $1260-1290, look to sell
short again with a stop-loss also above $1325. In the event that prices break below $1175, all traders may
go short with a stop-loss back on a close above $1220. But even so, all traders would be advised to look to
cover those shorts rather quickly (within the next three weeks), and get long again, for a primary cycle
low is due. The issue is how far can prices fall within the next three weeks? Given that there is a Jupiter-
Uranus trine this week (September 25), they could fall hard and fast and then also reverse quickly.
Silver is also breaking down. In fact, it has fallen to a low of $17.32 (September 22), a new 4-
year low. Now we must consider low price targets as discussed in our special Silver report issued in May
2014. In that report, we stated, “The downside price target could be as low as $13.12 +/- 2.87 (due 2014-
2016), and even a re-test of the $8.40 low of October 2008.” Let’s briefly review that now.
Silver exhibits a consistent 18.53-year long-term cycle going back to the 1860s. The last confirmed
lows were in November 1971 and then the double bottom of February 1991 and February 1993, when
Silver tumbled to $3.50, lower than its high during the U.S. Civil War in the 1860s. Measured from the
1993 low, the next 18-year cycle is due 2008-2014. There was a low in 2008, when Silver fell from a high
of $21.44 in March 2008 to a low of $8.40 in October. That was a decline of nearly 61% (Mr. Fibonacci
would have loved that), but it only lasted seven months. Declines to 18-year cycle troughs usually last 2-5
years, even more in bear markets. The current decline has witnessed prices falling from a high of 49.82 in
April 2011 to today’s low of $17.32, a decline of 65.2% and a duration exceeding more than 3-1/2 years.
It seems like this is more consistent with the 18.53-year cycle than the decline in 2008.
Within this 18.53-year cycle, there appears to be three 7-year phases (range 6-8 years), as noted on
the monthly chart above. The last 7-year phase began with that low in October 2008, so it is ideally due ,2014-2016. We can also see this 7-year cycle breaking down into two 3.5-year half-cycles. The first half
cycle unfolded with the triple bottoms of September 2011, December 2011, and June 2012 at a final low
of $26.07 in June 2012. This would imply the final bottom is not until December 2015 +/- 7 months.
However, last phases of longer-term cycles in commodities are notorious for contracting.
Price targets for the 18.53-year cycle trough in this situation are not that reliable. The break of the
lower part of the former descending triangle projects down to 1122 +/- 164. However, as , $13.12 +/- 2.87 seems more likely. And we cannot rule out the possibility that
it is happening right now, as Silver breaks to a new 4-year low and Gold holds above its lows of June-
December 2013. As deflating as this might seem to long-term Silver bulls, just remember this: If this is
indeed the ending to the 18.53-year cycle, we will soon begin a new 18.53-year cycle. You saw how
Silver exploded from a low of $3.50 to a high of $49.82 in the first half of this current cycle. It should do that
and more in the next one. And Gold would participate as well. It looks bleak now, and there very well
may be a horrific washout. But it is the preparation for a new and more exciting bull market to follow.
September 22 begins the 17th week of Silver’s 17-week primary cycle (range is 13-21 weeks). It is in
the middle of the time band for its primary cycle low now, and this is a critical reversal zone. There is an
intermarket bullish divergence set up with Gold, as long as Gold holds above 1179.40. Additionally, the
18-day CCI index dropped to -207 (Sept 22). When this index falls to -200, in a time band for a
primary cycle low, we look for the bottom to be completed within the next 7 trading days. In other words,
all of our leading indicators are setting up for a primary low now.
Once this low is completed, we anticipate a sharp 2-5 week rally will follow. At this point, our price
target for that rally would be $19.30 +/- 55. After that, we anticipate another decline to lower levels, unless
Silver can close above $21.63.
Trading Strategies for Silver: Long-term investors need to consider hedging their long positions on any 2-5 week rallies now, for there is danger of a decline back to $15.00 and even lower by year-end, unless
Silver can rally back above $21.63. Position and aggressive short-term traders may probe the long side this
week, with a stop-loss based on Gold closing below $1179. On the next 2-5 week rally, both types of
traders are advised to look for signs to get short, especially if Silver stalls at $19.30 +/-.55. Your stop-loss
can be on a close above $20.50.
Short-Term Reversal Dates in Silver: Look for isolated highs or lows in Silver (and probably Gold) in
these solar-lunar time frames, and from which prices reverse at least 2.5% (and better if 4%):
Sep 22-23**
Sep 24-25*
Oct 1-2**
Oct 7-8*
Oct 9-10**
Oct 20**
Oct 21-22 (maybe 23 too)**
Oct 30-31*
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