Followers of our director, Ahmed Farghaly, must have known his historic forecast for the prices of Crude which he presented in July of 2017. The forecast ended up having an out of sample correlation of over 85%. It is important to point out however that CVC is now presenting a very strong alternative view in regards to the prices of Crude. When we say alternative we certainly are not talking about a bearish outlook. We strongly believe that the prices of CRUDE are likely to advance in a manner not seen since the 1860s. We also believe that Crude is on the verge of a third wave higher of an extended fifth wave after the fourth wave triangle that ended in 2002. Attached below is our wave count!
Crude Oil Elliott Wave Count
As visible on the chart above, the bear market seems to be complete with a corrective structure from 2008. There lies little reason to expect an extended decline from current levels rather the odds favor a continued advance as we see the upcoming 18 month cycle low which is due at the time of writing. With that being said, we would like to see Crude take out its 20 Week FLD on the upside in order to further confirm our current hypothesis of a fifth wave extension in progress. CVC has reason to believe that the upcoming drop we are expecting in terms of the US Dollar will certainly be reflected on the prices of Crude. Oil exporting nations are likely to be served well in what is yet to come — a MAJOR war of epic proportions. Why do we say that? CVC has studied the cyclical realities that we happen to be under all of which are very troubling. The 162 year cyclical position in terms of Crude takes us back a year or so prior to the advance that occurred as the result of the US Civil war. The US civil war resulted in massive inflation due to the greenbacks that were printed at the time in order to fund the war. The 54 year cyclical position in regards of commodities takes us back to the late 1960s early 70s. With that being said, it is important to note what occurred to the US Dollar during that time. I recall Jim Rickards editor of Strategic Intelligence state that they would not take his Dollars in Switzerland after the collapse of Bretton woods. We expect a similar environment to occur this time around considering the geopolitical stress and environment we happen to be under which we speculate will continue.
THE CRB INDEX! On the verge of a TREND CYCLE
The chart above presents our phasing (i.e. cycle isolation) on the prices of the CRB index. It seems evident that we are on the verge of a Kuznets swing low. Once this low is realized CVC has reason to believe that the move from the early 2000s is going to be repeated. We know that the events that occurred in late 2001/early 2002 yielded two major wars that lifted up the prices of commodities in general. We see the upcoming war/currency crisis to be a lot more intense than what was observed in the 1970s perhaps closer or even worse to what occurred from an economic perspective as a result of the US civil war. With that being said, it is important that investors are aware of the cyclical realities, which since the beginning of time have been the dominant force, that we happen to be under. The best investment that we have found during such times are monetary commodities since the wars/errors in monetary policy almost always leads people to resort to a commodity that is a store of value rather than those that are consumed. Consumable commodities certainly fair well too but not even close to the blow off moves we see in history when it comes to monetary metals. Hence with that being said we would recommend that ALL investors are at least 25% to 30% in PHYSICAL gold and gold related investments.