I'm using a Hurst Trading software to generate the plot below. The software is bound by nominal Hurst cycle periods (ie. 10, 20, 40 week, 18 month and 4.5 year cycle periods). I actually follow different cycle periods for gold and the HUI (starting with 15 weeks, 56 weeks or 13/14 months, 26/27 months and 4.5 years). Hurst did state that gold seemed to move with slightly different cycles to stocks etc. So while Oct. 2008 was clearly the nominal low for gold, it made a higher cycle low at the 4.5 and 9 year cycle nest of lows. I do not agree with the placement of some of the diamonds shown below (eg. 18 month low in July 2007 - ie. it should have been earlier in Oct. 2006), but I cannot dictate where the software locates the lows, I can only guide it using an expert model (which I input) as reference. I should also point out that the software has only tentatively confirmed the 9 year low by placing a red hollow diamond.
When gold and golds stocks starting to break higher in July/August last year, I knew that something was up regarding the longer term cycles. I expected everything to head into lows late 2009 based on the 13/14 and 26/27 month cycles I follow. This also meant that the nominal cycle low came very early which was quite bullish. The same occurred for the last 4.5 year low in July 2005.
So what does this say for gold? While I expect a near term peak, I don't expect gold to restest the $1000 level, and it likely will not even see its Feb. 2010 low (~1050) if the 9 year low is in. The cycles have been nothing but extremely right translated and if you look back to July 2005, as the last 4.5 year Hurst cycle low, you can see that gold will simply grind higher from here, despite the inevitable corrections.
So strategically, you'd want to buy pullbacks if you do not have your intended investment position. I did buy into the March pullback to add to holdings, and now I will look at the next opportunity. It may come after corrections from higher levels, I don't really know right now. A near term correction is due and from there gold should grind higher into an autumn peak (Oct.?).
cheers,
john
P.S. The other "tell" is my HUI Gann level of 467.
http://www.traders-t...howtopic=118905
Edited by SilentOne, 16 May 2010 - 09:57 PM.