Cycles Analysis Points To Interesting Gold Price Action

Research Highlights

In the early 1900s, multiple events prompted a rising commodity price level and a decline in the stocks-to-commodities ratio. We expect commodities may begin to appreciate and stock price levels may stall or decline.
We also believe we are currently nearing the end of a rising cycle in both stocks to commodities and S&P 500 to earnings ratios, suggesting a downward/sideways trend in the U.S. stock market will continue while commodities attempt to form a longer-term momentum base.
The current 100-year gold cycle suggests a recovery phase is nearly complete and we should expect an appreciation phase to begin within two years (or less). Historically, the appreciation phase prompts a 200% to 300%+ rally in gold prices.

My research team and I have been pouring over the long-term data related to the current global markets and central bank efforts to support the global economy in the midst of the COVID-19 pandemic. And we have some keen insights I would like to share with you. This research article highlights historical chart phases and trends and shows you how important it is to pay attention to cycles and super-cycle events as they continue to trend.

U.S. STOCKS-TO-COMMODITIES RATION CHART PHASES
In the early 1900s, multiple events prompted a rising commodity price level and a decline in the stocks-to-commodities ratio. The continued industrialization of the U.S. as well as the demand for commodities as “maker industries” flourished in the early 1900s prompted a decline in the stocks-to-commodities ratio. The start of WWI (1914-1918) prompted a strong downtrend in the stocks-to-commodities ratio, eventually settling near a bottom in June 1920. Even the Spanish Flu added to the demand for commodities as consumers still needed basic commodities to survive.

At that time in economic cycles, stock price levels began to collapse in comparison to commodity prices. We can clearly see the downtrend in the long-term stocks-to-commodities ratio chart below. Pay very close attention to how the downtrend lasted from early 1907 to 1921. When the stocks-to-commodities ratio declines in value, we typically see a rising commodities price level compared with a declining or stalling stock price level. When the stocks-to-commodities ratio rises, this represents a declining commodities price level to a rising or stable stock price level.

Stocks-To-Commodities Ratio Chart.

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