Can we observe a 30-year cycle in Homestake Mining prices and/or its ratio to the general stock market?
The bottoms in the ratio (second chart) are the moments when we can speak of “artificial tops” in gold. The 2011 top and the 1980 top were seen in gold directly and the only (!) addition that the above chart provides us with is the mid-1930s extreme.
We can see exactly the same thing on the chart featuring Homestake Mining directly. There was a major, long-term top in mid-1930s and then nothing extreme happened until 1980 with the exception of interim tops in the late 1960s and mid-1970s.
About 30 years passed from the 1980 top to 2011, but that’s it as far as the confirmations of the 30-year old cycle go and a cycle with only one occurrence is no cycle. The timespan between the 1980 top and the previous one is about 45 years, which is exactly between two supposed topping dates (that should be 30 and 60 years away). In other words, the mid-1930s observation couldn’t invalidate the 30-year cycle theory more than it already does.
On a side note, since gold topped in early 1980, taking the 30-year cycle and applying it to the letter would make one sell gold in early 2010 – more or less when gold was trading around $1,100, right before the biggest rally of the bull market.
Summing up, it doesn’t seem that gold is just a premier commodity as its price doesn’t seem to follow the 30-year cycle. Consequently, it doesn’t seem to be justified to expect gold to form the next big top between 2038 and 2040 – it could and is likely to rally much sooner. The above doesn’t mean that gold will not decline in the following months, but it does imply that one shouldn’t bet on a multi-year long decline in the prices of yellow metal. Therefore, when gold slides sharply, it is likely to serve as an epic buying opportunity – not the start of a boring, multi-year consolidation.