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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (316)	6/22/2001 2:24:43 AM
From: craig crawford	Respond to of 1643

Mania Musings and Bubble Bits beartopia.net The K-Wave, it will be remembered, is a 60 year long-wave cycle which exerts its force principally on the commodities market, but by extension, on the equities and bond markets as well. The present K-Wave—with its 60 year rhythm—began in 1949 with the bottom in corporate bond yields and consumer prices. Typically, the commodities sector—led by gold—will experience a crash and will deflate the better part of two decades from the peak in prices until the bottom. The two legs of the K-Wave are divided equally between K-Wave inflation and K-Wave deflation. Both legs are equidistant, so that once the first (i.e., inflationary) leg is complete, one can know in advance the exact leg of the corresponding deflationary leg since the deflationary leg is always equal in time to the deflationary leg…with a twist. The K-Wave inflationary leg for commodities tends to last 40 years followed by 20 years of deflation. For equities, K-Wave inflation gives stocks a mostly upward bias for about 50 years, followed by 10 years of deflation. This pattern held true in the first half of the century, with the K-Wave deflationary leg commencing in 1920, at which time commodity prices began a long and precipitous slide. Stock prices continued higher, buoyed by the forces of efficiency that early inflation tends to produce for corporations (excluding commodity-based businesses). Then, late runaway deflation takes hold, forcing stock prices lower, as it did in 1929 and throughout the 1930s. The K-Wave deflation in commodities ended in 1940, at which time grains prices and other basic commodities began reflating (really, this 10 year period in the K-Wave should be called “reflation” even though it’s technically classified as part of the deflationary leg). Ten years later, in 1949, a new bull market was born. So where are we in today’s K-Wave? The K-wave inflationary leg which began in 1949 topped out in 1980-81, harbingered by the crash in gold and commodities prices. We are now 20 years into K-Wave deflation—with 10 more years to go—and already commodity prices show important signs of having bottomed. This means the next 10 years will likely be reflationary for most commodities. However, stocks have still not deflated and we have just entered the final third of the K-Wave downward leg—known as “late runaway deflation.” Since any asset that inflated during the earlier part of the K-Wave must be deflated at some point, it follows that equities should begin deflating early in 2001. This assertion is based on the fact that the final Kitchin Cycle (a.k.a., “Business Cycle”) is due to come down around that time. The Kitchin Cycle is a constituent of the K-Wave structure. All things told, based on our position the K-Wave, year 2001 should be a time of collapsing equities prices and imploding debt the world over. Clif Droke, posted on Bear Chat, 09/21/2000