Gold & 2nd Term US Presidents

48
Sun, Aug 24, 2014 - 7:25pm

Did you know that there is an (alleged) cycle in the price of gold which approximates 8 years in length. Here it is:

Since gold is in a bear market, or recently was in a bear phase, it would appear to be prudent to look at the downwaves of this cycle in the past. Then those periods can be compared with the downwave of 2012-2014.

So for a start let's look at the 1970s 8 year cycle bottom:

Next came the 1980s bottom:

This major low came in a few months after the idealized time. It was preceded by a secondary size low which came 2 years earlier, and the rally between the lows was sharp and significant.

The next low came in the early 1990s:

Once again a low 1 and 2 years [prior to the main low. The main low came in "late".

The following low came here:

A pre-low is visible 18 months prior. Note that the absolute low this time came prior to the idealized low, and the later low was a higher retest. The higher retest set up serious bullishness following it's completion. After this low gold went into it's most recent substantial uptrend.

Whether this rise is secular or cyclic is open to conjecture, although many commentators insist the 2000s gold bull was/is a secular bull, which secular bull trend many assume may not be completed and resumption is assumed. I myself think that that particular view is bull because everything is cyclic in some way or other. To me, the gold bull of 2000-2011 was simply another 7-9 year bull cycle swing which lasts for half the cycle length and is inevitably followed by the return swing. The return swing downwards in 2008 was suppressed which raised the starting point of the following upswing out of the 2009 low. This downswing is making up for the relative shortness of the last one. The "secular bull"downswing retracement is now becoming quite mature and the rallies can be expected to show surprising liveliness, hurting late bears during the bottoming period, but failing to show prolonged follow through to further upside.

Let's get back to the bottoms of this cycle. Next wave ....

There was an 8 year cycle bottom along the way during the gold bull:

At the above bottom, the early low also appeared, but when the "main low" came later, it failed to break the "pre" low, and a series of higher bottoms formed. Following this gold began to rise in value at quite a fast rate.

However a top formed and the 8 year cycle turned down once again.

We are fishing about for an end to this major 8yr wave with it's 3-4 yr downswing at the moment. Though calls for super low swings and for super bull swings (at the same time!) are beginning to emerge as they always do from the must-make-big-name-to-achieve-breakthrough pundit business, not to mention the retail bullion sales business who are naturally hoping upon hope for an end to the bear before all their clients are gone while at the same time keeping a long term bullish face and improving terms (lower premia over spot) towards their remaining clientele. I have found that it is wise to look dispassionately at the data and close my ears to whatever conversational "rhubarb" is floating around.

Here is how it looks with this particular idealized cycle superimposed for reference:

So we can see that the habits of 2nd term Presidents are still intact so far. Being such clever people with clever advisors, they have conjured up via totally innovational concepts and practices exactly the same results as the previous clever presidents' advisors did before them ,and before them , and so on ad nauseum.

So this makes it appear that the gold low is not yet upon us, and another 12 months could be required to make ultimate low for this 8 year downswing.

But not every 8 year downswing is equal. Remember those 2nd year presidents were only "in" for some of the downwaves. Here are the late 20th century and early 21st century US Presidents:

Richard Nixon, Ronald Reagan, Bill Clinton, George W. Bush and Barack Obama have been elected president twice during the period shown in the gold price charts here. This is year 2 of the second 4 year term, or year 6 of tenure for these dual incumbents.

I leave it to readers to consider which downwaves are the important waves to focus upon based upon who was "in" and for how long. For example, in some years the pre-bottom was higher or lower than it was in other years. This also requires to be taken into account. You have the charts here so this can be readily evaluated.

If all of the 8 year cycle waves, similar and dissimilar were to be overplotted, what might it look like? Here is the chart which takes a bit of careful scrutiny to catch the times and places where they tend to do the same things, and the other times and places where they tend to "disagree" with each other:

Note that the variation between separate lows has been "normalized here by using logarithmic data for the gold price. it is essentially a percentage ratio chart of gold rather than the exact chart. Also note that, if this plays out the same again, (and for sure it won't do that so neatly) but if it ends up looking similar, there are two opportunities for the price of gold to make seriously determined attempts to test the decade trading range lower limits before setting off for the upper side of this long term trading range. "Moonshots" come after the retesting process is completed, and it is my opinion that until then, while big moves up and down will be seen, the thing that goldbugs hope for deep in their hearts will come after the bottoming process has had another low printed, whether this exceeds the low already made is of no importance, it is the need for another half yearly retest that must be satisfied.

And for the bearish of mind who latch onto the message "another low is coming!!" please look to the difference between the different historic downwaves for this cycle, and also the presence of something called "higher lows" which can satisfy a cyclic bearish period just as well when appropriate.

What I see mostly is the probability for two separate "weak periods" during which I might hedge holdings, and at the end of which I would probably buy, should they come to pass.

This leaves the issue of total aggregate global leverage, or to put it another way, maximum expected volatility for swings both upwards and downwards. Gold has certainly seen a significant downswing already, prior to the trading range of the past year or so, and if the swing gets pushed a great distance one way, the return stroke may reasonably be expected to exhibit some similar characteristics. However excluding all the other factors,of which there are undeniably a great number, the habitual behaviour of these powerful administrations is what it is, and they can be assumed to continue to indulge in modern day versions of exactly what their predecessors did before them.

Have a nice weekend everybody!

Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

About the Author

  48 Comments

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Safety Dan
Aug 25, 2014 - 8:22am

President Woodrow Wilson & Fed Reserve Act

1913 proved to be a transformative year for the nation's economy, first with the passage of the 16th "income tax" Amendment and the false claim that it had been ratified.

"I think if you were to go back and and try to find and review the ratification of the 16th amendment, which was the internal revenue, the income tax, I think if you went back and examined that carefully, you would find that a sufficient number of states never ratified that amendment." - U.S. District Court Judge James C. Fox, Sullivan Vs. United States, 2003.

Later that same year, and apparently unwilling to risk another questionable amendment, Congress passed the Federal Reserve Act over Christmas holiday 1913, while members of Congress opposed to the measure were at home. This was a very underhanded deal, as the Constitution explicitly vests Congress with the authority to issue the public currency, does not authorize its delegation, and thus should have required a new Amendment to transfer that authority to a private bank. But pass it Congress did, and President Woodrow Wilson signed it as he promised the bankers he would in exchange for generous campaign contributions. Wilson later regretted that decision.


News report of Wilson's signing the Federal Reserve Act. Under the Constitution, only a new Amendment could transfer the government's authority to create the currency to a private party.


President Woodrow Wilson

Woodrow Wilson later regretted that decision.

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men." -- Woodrow Wilson 1919
Safety Dan
Aug 25, 2014 - 8:15am

President William McKinley Government Gold Backed Currency

In 1896, William McKinley was elected President in the middle of a depression-driven debate over gold-backed government currency versus bank notes borrowed at interest from private banks. McKinley favored gold-backed currencies and a balanced government budget which would free the public from accumulating debt.

"Our financial system needs some revision; our money is all good now, but its value must not further be threatened. It should all be put upon an enduring basis, not subject to easy attack, nor its stability to doubt or dispute. Our currency should continue under the supervision of the Government. The several forms of our paper money offer, in my judgment, a constant embarrassment to the Government and a safe balance in the Treasury." -- William McKinley


President William McKinley

McKinley was shot by an out-of-work anarchist on September 14, 1901, in Buffalo, NY, succumbing to his wounds a few days later. He was suceeded in office by Theodore Roosevelt.

Wealth Watchman
Aug 25, 2014 - 8:14am

Interesting thoughts

Thanks AM, for your unique analysis.

Also, Turdville, I've begun a new series of articles speaking to the new war that we know we're already in, but state it in a way to explain it to newbies. It is my aim to bring in fresh blood into this PM community, by expressing these thoughts in a manner that those hearing it for the first time, can hopefully understand.

https://thewealthwatchman.com/what-is-supreme-excellence-pt-1/

https://thewealthwatchman.com/what-is-supreme-excellence-pt-2/

Have a great day, folks!

-Wealth Watchman

Safety Dan
Aug 25, 2014 - 8:10am

President James Garfield - Gold, Silver & Money

James A. Garfield was elected President in 1880 on a platform of government control of the money supply.

"The chief duty of the National Government in connection with the currency of the country is to coin money and declare its value. Grave doubts have been entertained whether Congress is authorized by the Constitution to make any form of paper money legal tender. The present issue of United States notes has been sustained by the necessities of war; but such paper should depend for its value and currency upon its convenience in use and its prompt redemption in coin at the will of the holder, and not upon its compulsory circulation. These notes are not money, but promises to pay money. If the holders demand it, the promise should be kept. -- James Garfield
"By the experience of commercial nations in all ages it has been found that gold and silver afford the only safe foundation for a monetary system. Confusion has recently been created by variations in the relative value of the two metals, but I confidently believe that arrangements can be made between the leading commercial nations which will secure the general use of both metals. Congress should provide that the compulsory coinage of silver now required by law may not disturb our monetary system by driving either metal out of circulation. If possible, such an adjustment should be made that the purchasing power of every coined dollar will be exactly equal to its debt-paying power in all the markets of the world. --James Garfield
"He who controls the money supply of a nation controls the nation. -- James Garfield


President James Garfield

Garfield was shot on July 2, 1881 and died of his wounds several weeks later. Chester A. Arthur succeeded Garfield as President.

erewenguy
Aug 25, 2014 - 7:07am

platinum

This excerpt from one of DayStar's Harvey Report digests from a different thread caught my eye:

https://www.tfmetalsreport.com/comment/267666#comment-267666

"Five months after the U.S. Mint began producing coins made with platinum, sales have all but collapsed as investors continue to favor gold and silver. The Mint, which resumed production of platinum coins in March after a six-year halt, has sold 13,600 ounces this year, including zero in July. By comparison, the Mint sold 313,500 ounces of gold coins and 27.71 million ounces of silver, fueled by concern that the Federal Reserve is inflating the economy with paper money to stimulate growth. The Mint has no plans to discontinue the sale of platinum coins, "though we did not expect the response to be so weak," said Tom Jurkowsky, a spokesman for the Mint in Washington. "

From a collectibles standpoint, this looks like an interesting opportunity.

erewenguy
Aug 25, 2014 - 6:29am

Visualizing Copper Extraction

What All The Metal Extracted From A Single Mine Looks Like

By Kaushik Thursday, August 21, 2014 Photography 4 comments

All the metals in your life - from those in your gadgets, to the ring on your finger, to the massive steel bars encased in concrete in the pillars of the apartment you live in – have come from earth. Extracting this from rocks is a mind boggling process, a method that has been discovered thousands of years ago and refined and perfected throughout the history of mining. Typically, ores contain metals in tiny quantities, so to recover just an ounce of the metal a mountain has to be dug up. The visualization of just how much metal a mine can produce is the idea behind the project For What It's Worth.

The project was undertaken by Cape Town photographer Dillon Marsh, whose work we’ve featured once before on Amusing Planet. In For What It’s Worth, Marsh attempts to quantify mining, "an industry that has shaped the history and economy of the country so radically."

The photographer took pictures of five famous mines in South Africa, and then using data about extraction rates, calculated the size of a single, solid orb to represent the amount of metal that had been mined in total. Then using a rendering engine and some quick adjustments for scale, Marsh inserted each orb into the landscape.

"Mines speak of a combination of sacrifice and gain," he says. "Their features are crude, unsightly scars on the landscape—unlikely feats of hard labour and specialized engineering, constructed to extract value from the earth but also exacting a price."

In the first of this series, Marsh deals with copper, but he has plans to do the same for precious metal, stones, and even coal.

Nababeep South Mine, Nababeep (1882 to 2000). Over 500m deep, 302,791.65 tonnes of copper extracted

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Blue Mine, Springbok (1852 to 1912). 3,535 tonnes of copper extracted

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West O'okiep Mine, Okiep (1862 to the early 1970s). Over 500m deep, 284,000 tonnes of copper extracted

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Tweefontein Mine, Concordia (1887 to 1904). Over 100m deep, 38,747.7 tonnes of copper extracted

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Jubilee Mine, Concordia (1971 to 1973). Over 100m deep, 6,500 tonnes of copper extracted

https://www.amusingplanet.com/2014/08/what-all-metal-extracted-from-single.html

gold slut
Aug 25, 2014 - 5:52am

@ Argentus

Terrific article, many thanks. You touched on this subject a while ago and this really puts the meat on the bone. Something to really get the grey matter working on a wet Bank Holiday Monday.

@ Safety Dan. Kennedy and Gaddafi (to mention just two), although I was well aware of this phenomenon (fight the Fed and get dead), it is something we should all be reminded of from time to time. Thanks!

Now, when are the POTUS elections, hmmm...

Safety Dan
Aug 25, 2014 - 3:11am

Gaddafi Over in Libya,


Gaddafi

Over in Libya, Muammar Gaddafi had instituted a state-owned central bank and a value based trade currency, the Gold Dinar.


The Gold Dinar

Gaddafi announced that Libya's oil was for sale, but only for the Gold Dinar. Other African nations, seeing the rise of the Gold Dinar and the Euro, even as the US dollar continued its inflation-driven decline, flocked to the new Libyan currency for trade. This move had the potential to seriously undermine the global hegemony of the dollar. French President Nicolas Sarkozy reportedly went so far as to call Libya a “threat” to the financial security of the world. So, the United States invaded Libya, brutally murdered Qaddafi ( the object lesson of Saddam's lynching not being enough of a message, apparently), imposed a private central bank, and returned Libya's oil output to dollars only. The gold that was to have been made into the Gold Dinars is, as of last report, unaccounted for.

Safety Dan
Aug 25, 2014 - 2:44am

As President, John F. Kennedy

As President, John F. Kennedy understood the predatory nature of private central banking. He understood why Andrew fought so hard to end the Second Bank of the United States. So Kennedy wrote and signed Executive Order 11110 which ordered the US Treasury to issue a new public currency, the United States Note.

Kennedy's United States Note - Click for larger

Kennedy's United States Notes were not borrowed from the Federal Reserve but created by the US Government and backed by the silver stockpiles held by the US Government. It represented a return to the system of economics the United States had been founded on, and was perfectly legal for Kennedy to do. All told, some four and one half billion dollars went into public circulation, eroding interest payments to the Federal Reserve and loosening their control over the nation. Five months later John F. Kennedy was assassinated in Dallas Texas, and the United States Notes pulled from circulation and destroyed (except for samples held by collectors).

Safety Dan
Aug 25, 2014 - 2:32am

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