2001 --
A Cycle Odyssey
by Eric S. Hadik, editor
INSIIDE Track
2001
is the convergence of many long-term cycles. As a result, some
volatile action is likely in equity & precious metals markets
beginning later this year. Corroborating special reports focus
on diverse aspects of this but for now, the focus is on Gold
& Silver.
Before I elaborate
on some strong technical & cyclic reasons why Gold &
Silver should begin a bull market in August 2001, let me address
the oft-asked question of what fundamental event could possibly
trigger this.
I believe there are
many fundamentals at work and that each will play a role. But,
the lightning rod for a big move in precious metals as well as
other markets could be the January 1, 2002 conversion to the
Euro. It is well documented that most Europeans are skeptical
of this move and the period encompassing the 4th quarter of 2001
& 1st quarter of 2002 is likely to see several surprises.
For the sake of brevity, I will not address these here (they
are discussed separately).
As news continues to
pour in, the likelihood of some form of Euro-chaos appears to
be growing. It is times like this that often lead to drastic
measures in order to insure some facade of stability. One of
these possibilities (and I emphasize `possibility') is some form
of linking gold to the coming Euro currency unit. A less drastic
possibility might also develop. Europeans, uncertain as to the
stability and trustworthiness of their new currency (but knowing
they need to abandon their old, national currencies) might park
their money in precious metals as a haven. This could create
a temporary surge in Gold & Silver in the months leading
into and out of January 1, 2002.
A weaker Dollar could
also play a role. There are powerful Dollar cycles converging
now and again in late-March 2002. The market action between these
two cycles is expected to be dramatic. It is conceivable that
a new surge in commodities - and precious metals - will be at
least partially linked to a Dollar decline/Euro rally in the
coming 12-18 months.
I do not want to devote
any additional time to speculating on potential fundamental factors.
Instead, I would rather focus on what is already apparent: Cycles.
In the last 100 years,
Silver set 10 important (what would be termed `major') lows.
4 of these lows (40%) occurred in the `01' year of the respective
decade. Another 3 of these lows (30%) occurred in the `02' year
of the respective decade. In other words, 70% of the major lows
in Silver of the last century occurred in the `01' or `02' year
of the decade (1902, 1921, 1932, 1941, 1971, 1982, & 1991).
2001 - 2002 fits within
this ongoing sequence. 2001 is also both 30 & 60 Gann/geometric
years from the 1941 & 1971 lows. It is a Cycle of Time 19
years from the 1982 low.
So, between mid-July & early-August, 2001, Silver will have entered the 540th week from its Feb. 1991 low and the 180th week from its Feb. 1998 peak. Silver also just completed the 90th week from its September 1999 secondary (`B' wave) peak, 135 weeks (3 x 45) from its December 1998 `A' wave low and is at 210 weeks from its July 1997 low. Anyone familiar with Gann & the concept of time being geometric (divided in the same way the important segments of a circle are delineated) should recognize the importance of this time frame.
So, there are strong decennial, yearly (30/60/19/7/3.5-years), monthly (84 & 42 month movements) & weekly arguments for Silver bottoming in late-July or early-August. It is also interesting that the month of August is the perfect contrast (180 degrees on a calendar from the Feb. 1998 peak & Feb. 1991 low) for a low.
Shorter-term cycles are also beginning to coincide in late-July/early-August. So are price projections. Since the beginning of 2001, the intra-year support in Silver and therefore its downside objective has been 413.5. There is other support building between 411 - 415.0 (basis the September Silver futures contract), so this is the first important level to watch for a low.
Two other areas are at 399 - 402.0 and at 380.0. Though the 411 - 415.0 level is the strongest synergy of support, a brief spike below this to discourage premature bulls would not be uncommon. Suffice it to say that major time & price projections are colliding in the next 2-4 weeks and the next 20-40 cents and could/should usher in a major low in Silver.
The biggest moves higher in precious metals, however, might wait until after stock index cycles converge in late-October/early-November. This is a topic for a future discussion.
Editor's Note: Eric S. Hadik is President of INSIIDE Track Trading and editor of INSIIDE Track & The Weekly Re-Lay. Comments can be directed to him at INSIIDE@aol.com, by calling 630-637-0967 or by faxing 630-585-5701. More information and copies of previous reports are available at www.insiidetrack.com.
