Posted 21 December 2009 - 10:44 AM
The HUI is 15 months along from the August 2007 low (last 55 - 56 week cycle low). By 16 months we should see a bear rally begin which should last until March 2009. Then the HUI heads for its 4.5 year and 9 year nest of lows in the fall of next year. This should coincide with stock market lows as liquidity will be needed for any good bear rallies.
The last 14 month cycle low was a good call. But I dd not expect that to be the 9 year low, and all indications right now suggest that it was. I recognized the transition quite late (see some of my August postings on PMs). Now I wait to see how things unfold into the next 14 month cycle low. That may come early next year for gold. Beyond that it is very difficult to read this market right now. I would be more comfortable adding positions next summer when I see how the $SPX corrects into its next 18 month cycle low. For now energy is an easier play as the cycles have been very well defined and I think oil has put in a 45 week cycle low.
The thing you have to realize is that cycles are not perfect. But they can give you a great insight into various markets. Read my $SPX postings over the last year for example. But there are times when you get pseudotrends that exceed your expectations. Examples are the huge declines of 2008/2009, the fantastic bear rally (I expected 1050 - 1060 max for this rally). So the HUI's 70% decline was worth avoiding in 2008, was it not? I just did not see the HUI retesting its high so quickly in 2009. If the long term lows are in for the miners, then we need to pay attention for entry points in the coming year.
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain