Apr 18, 2016
Before the next long term update in June some thoughts about secular markets and money flowing between stocks and commodities. This is longer than long term:) it concerns your whole "investment life" which last roughly 40 years. It is the most important chart you should know(the first one). This chart SP500 priced in gold is showing very clear - first when you have secular bull market in stocks and when you have secular bull market in gold and second that roughly every 20 years the money flow changes its direction from stock in gold and from gold in stocks. It is very very important especially for non-active traders to know where you should park your money so that it brings you more value. All you need is the chart below no need of complicated economical/fundamental/chart analysis or to listen some "investment guru". David Hickson has every two weeks webinars talking about Hurst cycles. In one of his webinars he was discussing SP500 priced in gold. I searched in Internet for a chart SP500 priced in gold and I have found this page where you can check almost everything priced in gold not only SP500. I would say the chart is eye-opening. It confirms my expectation for one more cyclical market for stocks/gold before a secular trend change and now I am even more confident in my forecast. The most important conclusions: - Expect one more cyclical bull market in gold and one more cyclical bear market for stocks. - If history repeats we will see higher low for SP500 in nominal values, but lower low priced in gold/inflationary adjusted. - Expect secular trend change around 2020-2022. I think the secular trend change will be a process lasting a few years with different assets bottoming/topping in a time-span of 2-3 years. I expect double top for gold (lower high 2022), important low for stocks around 2020 and lower low with divergences 2022 and end of the bond bull between 2020-2022. Long term chart SP500 priced in gold - the secular markets are very well visible. We have great looking cycles for the secular trends roughly 40 years - 1898-1942 / 1942-1982 / 1982-2022. The next important secular trend change is coming in 2020-2022, but now you should be prepared for the next 40 years, knowing where to put your money for the rest of your "investment life":) Stock bears usually bottom at 5-10 grams gold. Interesting is that the secular bull/bear markets are getting longer and the amplitude is bigger. I do not know why.... I suppose because of CB's interventions we have bigger moves higher and bigger crashes. - bear market in stocks 1929-1942 - 13 years. - bull market in stocks 1942-1966 - 14 years. - bear market in stocks 1966-1982 - 16 years. - bull market in stocks 1982-2000 - 18 years. - bear market in stocks 2000-2022(expected) - 22 years - continues the trend of secular trends lasting longer.