Here are the bearish fundamentals. Higher interest rates and a higher $ are bearish for gold over the longer-term. In addition, the decline from the September 2011 high has retraced a large proportion of the price rise from the 1933 low. Tony Plummer of London (Helmsman Economics) points out that the 2011-2015 decline retraced more than 38% of the rally from 1933 to 2011. The violation of the 38% level suggests that there has been a shift in the underlying fundamentals. I think that this price move is telling us that the ability of governments to boost the economy by having central banks inflate the currency is failing. A unit of credit is not buying the economic growth that it formerly did. Or, I can say that the marginal efficiency of debt is declining. As I have written, the most over-inflated asset is government. The markets have been trying to deflate government, but bureaucrats have been fighting this natural market process.
Jupiter Cycle Versus Gold
Gold could fall to $800-$840 longer-term. The long-term cycle below bottoms in June. June and August are seasonally the 2 most likely months for a gold bottom. We are unlikely to see a sustained rally before then.
Monthly Expected Return- Gold
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