Gold: What Is The Economy Usually Doing When It Goes Up?Technorati Tags: gold, economy, elliott wave, robert prechter, indexed annuities, fixed annuity
Research proves wrong the idea that gold reliably rises during recessions, says EWI President Robert Prechter.
September 21, 2010
By Elliott Wave International
...If gold isn’t going up when the economy is contracting, when is it going up? Table 4 (see chart on p. 24 of this free Club EWI report -- Ed.) answers the question: All the huge gains in gold have come while the economy was expanding. This is true of the three most dramatic gold gains of the past century:
(1) Congress changed the official price of gold from $20.67 to $35 per ounce in 1934, during an economic expansion. The gain against the dollar was 69 percent.
(2) The entire bull market from 1970 to 1980 occurred during an economic expansion... [Of] the $815 per ounce that gold rose from 1970 to 1980, $725 worth of it came while the economy was expanding.
(3) The entire bull market from 2001 to the present occurred during an economic expansion... [Of] the $748 per ounce that gold has risen since February 2001, $726 worth of it has come while the economy was expanding.
Even lesser rises in gold, such as the two big rallies during the 1980s, came during economic expansions. So the biggest gains in gold, by far, have occurred while the economy was in expansion, not contraction.
Why is such the case? Simple: During expansions, liquidity is available, and it has to go somewhere. Sometimes it goes into stocks, sometimes it goes into gold, and sometimes it goes into both. During times of extreme credit inflation, such as we have experienced over the past three decades, the moves in these markets during economic expansions are likewise extreme. When recession hits, liquidity dries up, and investors stop buying. During depressions, they sell assets with a vengeance.
Of course, we socionomists do not believe in the external causality of investment price movements. Recessions and expansions do not make investment prices move up and down. Fluctuations in social mood propel the economy, liquidity and movements in investment prices. So the only reason we bother with studies like this is to de-bunk various commonly held views of financial causality. Now we know: The idea that gold reliably rises during recessions and depressions is wrong; in fact, like most such passionately accepted lore, it’s backwards.
Finish reading this 16-chapter paper online now, free! Download Robert Prechter's FREE 40-Page Gold and Silver eBook.
Here's what else you'll learn:
* Why Gold Is Still Money
* What Long Term Analysis of Gold Stocks Shows
* Study: Does Gold Always Go Up in Recessions and Depressions?
* True or False: Gold Is Better Than Stocks During Expansions
* What’s Next for Gold?
* Elliott Waves in the Silver Market
* MORE
Keep reading this free report now -- Download Robert Prechter's FREE 40-Page Gold and Silver eBook.
This article was syndicated by Elliott Wave International and was originally published under the headline Gold: What Is The Economy Usually Doing When It Goes Up?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Annuity Definition
What Are Indexed Annuities?
Your Free Chance to Learn How to Forecast Markets Using Technical Analysis
EWI's Senior Tutorial Instructor Jeffrey Kennedy gives you practical lessons -- free
September 17, 2010
By Elliott Wave International
There are two camps of market analysts out there: the fundamental camp and the technical one. Fundamental analysts look at things like the GDP, unemployment, interest rates, etc. to make logical assumptions about where the stock market is going.
Technical analysts use none of that. They look at the market's internals to gauge the trend: things like momentum, trend channels -- and yes, Elliott wave patterns.
And this is your free chance to learn how they do it.
We've put together a free 54-page Club EWI resource for you, "The Ultimate Technical Analysis Handbook." Below is a short excerpt from chapter 3. Enjoy! (For details on how to read this free report in full, look below.)
The Ultimate Technical Analysis Handbook
Chapter 3: How To Integrate Technical Indicators Into an Elliott Wave Forecast
By EWI's Senior Tutorial Instructor Jeffrey Kennedy
I love a good love-hate relationship, and that’s what I’ve got with technical indicators. Technical indicators are those fancy computerized studies that you frequently see at the bottom of price charts that are supposed to tell you what the market is going to do next (as if they really could). The most common studies include MACD, Stochastics, RSI and ADX, just to name a few.
I often hate technical studies because they divert my attention from what’s most important -- PRICE. ... Nevertheless, I have found a way to live with them, and I do use them. Here’s how: Rather than using technical indicators as a means to gauge momentum or pick tops and bottoms, I use them to identify potential trade setups.
Out of the hundreds of technical indicators I have worked with over the years, my favorite study is MACD (an acronym for Moving Average Convergence-Divergence). ... Even though the standard settings for MACD are 12/26/9, I like to use 12/25/9 (it’s just me being different). An example of MACD is shown in Figure 6 (Coffee).
Coffee - December Contract Daily Data
The simplest trading rule for MACD is to buy when the Signal line (the thin line) crosses above the MACD line (the thick line), and sell when the Signal line crosses below the MACD line. Although many people use MACD this way, I choose not to... I like to focus on different information that I’ve observed and named: Hooks, Slingshots and Zero-Line Reversals. Once I explain these, you’ll understand why I’ve learned to love technical indicators. ...
Read the rest of the 50-page "Ultimate Technical Analysis Handbook" online now, free! All you need is to create a free Club EWI profile. Here's what else you'll learn:
Chapter 1: How the Wave Principle Can Improve Your Trading
Chapter 2: How To Confirm You Have the Right Wave Count
Chapter 3: How To Integrate Technical Indicators Into an Elliott Wave Forecast
Chapter 4: Origins and Applications of the Fibonacci Sequence
Chapter 5: How To Apply Fibonacci Math to Real-World Trading
Chapter 6: How To Draw and Use Trendlines
Chapter 7: Time Divergence: An Old Method Revisited
Chapter 8: Head and Shoulders: An Old-School Approach
Chapter 9: Pick Your Poison... And Your Protective Stops: Four Kinds of Protective Stops
Get more lessons like the one above in the free 50-page Ultimate Technical Analysis Handbook. Learn more and download your free copy here
This article was syndicated by Elliott Wave International and was originally published under the headline Your Free Chance to Learn How to Forecast Markets Using Technical Analysis. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Annuity Definition
