Precious Metals Market Timing
The 5-year syndrome

Ron Rosen
Jul 9, 2005

"Time is more important than price; when time is up price will reverse." -W.D. Gann

W.D.Gann left us some wonderful research and information. His cycle work, based on how Humans function in the various markets thru time, is truly a simple but magnificent gift. He called the 30- and 60-year cycles the Master cycles. They are the most important for our purposes.

He also gave us this information which is quite significant for this year, 2005.

"The years ending in the number 5 are the years of ascension."

I checked on this and every year ending in the number 5 has been an up year for the Dow Jones Industrial Average since 1895. Some were big up years and some barely made it. I can not adequately describe how much this information has been ridiculed. It seems the "intellectual elite" consider this asinine and stupid. I have read many essays and opinions as to why the stock market will collapse this year. For some strange reason it's not doing it. Maybe I should lay "5" to 1 odds that the market won't collapse. This sounds like a good bet but in spite of the overwhelming evidence I'd rather watch and concentrate on the precious metals complex. So be it. Even I wonder," Can it really be true?"

The 30-year T Bond Yield is clearly following Gann's 60-year Master cycle. I have not heard or read about any analyst, economic expert or Government official mentioning this fact. I have heard and read a great deal about the fundamental reasoning for interest rates doing what they are doing. The conclusion by Alan Greenspan is that we are experiencing a "conundrum". Well, conundrum and cycle both begin with a "c" so I guess for government work that's close enough.

I have mentioned many times that Gold, Silver and the precious metal shares appear to be following the W.D.Gann 30-year Master cycle. This fact has received as much acclaim as the Years ending in "5" in the stock market are the year of "ascension". As for Gold it consistently trades in a manner that I would describe as honest which is contrary to what folks complaining about "manipulation" are saying.

Delta turning points, Gann's work and long term wave counting are three mighty powerful tools. Oh yes one more ingredient, Patience. This is not a special report. It's just a few rambling thoughts. Next report will be sent this weekend.

Stay Well,
Ron Rosen

This 60-year interest rate cycle report was submitted and sent to subscribers on January 24, 2005.
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The 60-year Interest Rate Cycle

The chart above clearly demonstrates that there is a 60-year cycle influencing interest rates. Interest rates bottomed in 1946, and we may be headed for a bottom in 2006 to complete this cycle. It took approximately 12 years for interest rates to double from the 2 % level in 1946. It is difficult to guess how fast and how big a rise we might have this time around. During the early part of the last cycle that began in 1946, the Dollar was convertible into Gold for foreign nations. That no longer is true and we can't be certain that those nations whose currency is backed by the U.S. Dollar will remain willing to maintain those reserves in the Dollar. They may decide to diversify their holdings and sell some or all of their U.S. Dollar holdings. This would most likely precipitate the U. S. Dollar decline or collapse that is being discussed and written about by a number of folks in the financial community. Warren Buffett is a well known U.S. Dollar bear and has confirmed that he has diversified out of U.S. Dollars into various foreign currencies.

Back in the late 1970's, Paul Volcker, the then Federal Reserve Board Chairman, did the only thing he could to stop a Dollar collapse and skyrocketing Gold price. He forced long term interest rates on U.S. paper up to the 15-3/4 % level. Short term rates rose to a very high level as well. His approach worked and Gold collapsed and the Dollar recovered. Without Gold backing for the Dollar, at least for foreign central banks, the same tactic may be the only way to prevent or shorten a Dollar collapse and skyrocketing Gold price. So, once the cycle bottoms we cannot depend on interest rates rising slowly. This highlights the need to maintain a core position in Gold items. The bottom of this interest rate cycle may be a signal to make sure you are positioned in Gold items. It may be a good timing device. However, it appears that we may have another year, plus or minus a few months, to enjoy a rising stock market fueled by further interest rate declines. I strongly suspect that this will be the fuel to once again keep the much laughed at "5" year syndrome for the stock market alive and well. Ever since 1885 every year ending in 5 has been an up year. Some squeaked thru and some rose substantially. The year 1895 barely made it as President Cleveland seemed to threaten War against England. War against England is like threatening your Mother! Twice was enough. Three strikes and you're out. Fortunately it never happened.

There are further war threats being talked about today so this year may be one of those "squeakers". A market cycle is not magic. It is people and institutions run by people functioning with their money, thru time, in response to the economic environment in a manner that is called cyclical. It can be observed and it can be used as a valid indicator of the future cost of money. All one needs to see the progress of the interest rate cycle is a long term chart of the U.S. 30-year T-Bond yield. The chart I have provided gives a clear long term picture.

(January 24, 2005)
Ron Rosen
email: rrosen5@tampabay.rr.com

Tee charts reproduced courtesy of The Delta Society International.

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