Has Gold Made a Long-Term Cyclical Top?

By Jake Bernstein

Has Gold Made a Long-Term Cyclical Top?

Has Gold Made a Long-Term Cyclical Top? Seasonal Cycles say WAIT before buying again!

By Jake Bernstein, FSC Board Member

rulesbasedtrader@gmail.com

Several years before the recent peak in gold prices, my cycles were clearly forecasting a penetration of the long-term highs. While I can claim credit for having correctly predicted the big bull market, my most optimistic targets were surpassed. Fortunately, the cycles said that tops had not been made yet. So, I waited.

And I was rewarded!

The influence of bullish cycles on all precious metals including copper made me even more positive about my forecast. Accordingly, I recommend buying coins, bullion, shares, futures, ETFs, etc.

I cannot claim to be a psychic or prescient to any extent. I was simply following my work. Furthermore, I cannot rightfully claim credit for the magnitude of the move, which clearly eclipsed my targets. Indeed, the fundamentals for such a record-breaking price increase were hiding in plain sight when viewed after the fact. And 20/20 hindsight is among the tools we all possess.

My primary interest is in harnessing the power of cycles as an investment tool to add to your trading strategy as opposed to providing explanations as to the “why” of things.

Understandably, those of us who exited positions and took profits would like to revisit the positive experience by establishing long positions ahead of what could be another surge. Can we get new clues from seasonal cycles as to the possibility of having another across-the-board bull market in metals?

To provide reasonable answers to any questions, I turn to seasonality. Specifically, I look at the seasonal trend, highs, and lows as guidelines for forecasting the next significant price movements. More specifically I look at the seasonal composite futures charts for precious metals and copper. And what I do here is what I see.

But the seasonal futures charts shown below provide a summary and what to expect over the next few months.

Note that these are composite charts, by which I mean they have been normalized for price. They do not show any one particular year but rather a composite of all years. They are in effect market DNA since they show the pure seasonal trend without regard for its current fundamentals.

Figure 1: Gold futures normalized seasonal tendency

Figure 2: Silver futures normalized seasonal tendency

Figure 3: Platinum futures normalized seasonal tendency

Figure 4: Copper futures normalized seasonal tendency

Jake Bernstein, FSC Board Member

Jake Bernstein has been publishing Jake Bernstein's Weekly Futures Trading Letter since 1972 and trading futures and stocks since 1968. His forecasts and opinions are quoted regularly in the financial press and on financial websites, and he is frequently interviewed on radio and television throughout the U.S. and Canada, including Wall Street Week, CNBC, JagFN.TV, and WebTV.com. In addition to speaking extensively in the U.S., Canada, Europe, and Asia, Bernstein is a consultant for investors, traders, industry, financial institutions, short-term traders, brokerage firms, and commercial firms. Floor traders, professional traders, money managers, hedgers, and traders, both new and experienced, subscribe to his market advisory services. Bernstein is based in California, U.S.