a u g u s t / s e p t e m b e r 2 0 1 5
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Record Production • Low Operating Costs • Cash Flow Positive
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Copper Mountain
MINING CORPORATION
positive for them. This was laboriously
done before computers. Calculations are
much easier nowadays.
Cycles are based on only one data point
– price – in each category. Therefore,
utilizing the unique spectrum of cycle
analysis in reviewing the past major moves
in gold and silver (as well as resources
such as crude and natural gas) has proven
to be better indicators of future direction
and level (and wealth preservation) than
the traditional mix (i.e. 60% stocks, 30%
bonds, 5% private equity, 5% currency
and real estate).
Cycles essentially predict the interpreta-
tion of events, not the events themselves.
Let's look at another commodity, crude
oil, as an example. Crude oil followed
cycles down from the high six months ago
around $100/barrel. Long term cycles sug-
gest a move back to that level. Reasons will
be supplied not by cycle analysis, but by
the media.
We now can conclude with the cyclical
view on gold. Fundamentals say the fol-
lowing: gold has traditionally been sought
after as an inflation hedge. China and India
have reduced purchases, and production
costs have risen. Since we are still in defla-
tion, prices should remain low.
The enclosed chart is an example of
how cycles are calculated for all types of
data series – i.e., stocks, bonds, commodi-
ties, and currencies. There are two lines.
The blue line is the price (here of the ETF
GLD), while the red line is the amalgam of
many cycles in GLD, combined into one
master cycle line to act as a guide where
cycles indicate prices will go. Cycles only
give direction. Therefore, our forecasts
utilize several other confirming technical
tools that we don't show here.
Cycle and target analysis for GLD indi-
cates that GLD prices will recover to their
highs, longer term. However, regarding
timing, as stated at the beginning, it is still
far too early for a long term low.
n
David Gurwitz is Managing Director of
Charles Nenner Research, providing indepen-
dent global macro research to a wide range of
clients based on cycle analysis
