December 2003 – T Theory® Update

New Gold Mega-T

Gold031219

The Long Term Gold Bullion Chart illustrates some of the important cyclical junctures needed to confirm the basic T Theory forecast of a new Gold bull market projected to last until the year 2020. The chart is courtesy of BigCharts.com and the nine-digit number at the upper left is the chart symbol. It can be used to make updated or more detailed charts at their web site. Also note if you click on the chart a larger version will appear in a new pop up window. I am adding the BigCharts.com site to My Links in the left column.

Verification of the projected up trend in the right side of any T, including this relatively new Gold Bullion T, is usually done by reference to moving averages and support levels but I am leaving these refinements out for now. The bigger picture usually provides the better suggestions for generating wealth long term, so my first priority is to look at these very long-term monthly charts for clues that might be helpful.

Looking out into the new year, the most significant pattern, beyond the big Ts projection of a long term bull market, is the rather remarkable sequence of Gold peaks at the points labeled A, B and C. These represent the three key completed peaks in the Gold bear market starting from the very speculative peak over $800/oz in 1980. Because the next key peaks at B and C occurred as lower peaks, T Theory interprets the declining tops sequence as a Cash Build Up Phase as I have noted in the chart.

Within T Theory, this cash build up period defines the left side of all time symmetrical Ts that eventually projects the time matching up trend. For gold the T Theory projection is for a 20 year up trend into 2020 as the time symmetrical match to the 20 year bear market that was completed in 2001. In the months ahead, a significant aspect may be that these descending peaks A, B and C are separated by 8 years and a possible repetition of this spacing could see a Gold Bullion peak in the first quarter of the new year, that is anywhere in the January to March period.

According to basic T Theory concepts the left side of any T (that is 1980 to 2001) is defined time wise by the pattern of descending peaks either in prices, as for this gold plot, or as descending momentum peaks in other long-term equity examples. In either case, confirmation that any new T specifically requires this bear market pattern of descending peaks to be “broken” to the upside, usually by some dramatic upside breakout of the long decline. Technically the upside move must be surprisingly strong, and for this gold picture it must carry significantly above the last descending peak, which for gold, is the 1996 peak, just above $400.

Thus it can be assumed the recent rising trend will continue until Gold can convincingly break above the C peak at $420-ish. This might require a burst of strength to $450 or better to confirm the basic T criteria. Expecting Gold to climb above the 1996 peak, probably in the early part of 2004, is the single most important short-term conclusion to come out of this long-term analysis. In the meantime it is not unusual to see hesitation or dips as preparation to the upside breakout, but they can be bought ahead of the expected breakout.

Of course the main implication of this new T is the suggestion of a sustainable uptrend in gold for a much longer term that is probably suspected even by the most ardent ‘Gold Bug’. Nevertheless three major equity Ts completed their long-term projections very accurately over the last three decades and I am assuming this Gold T will be functioning in a similar manner for many years. Obviously this is bullish for investments that act as ‘stores of value’. Not so obvious is that during long term rises in gold (1966 to1980, for example) equity investments suffered while Gold was doing well.

This is confirmed in T Theory by the fact that the major equity Ts all died out at the recent equity bubble peak and there is no reason to believe any new long-range equity Ts are likely for some years. This therefore places the projected new Gold bull market as the top of the priority list as far as a T ranking is concerned. Unfortunately gold is a volatile and emotional investment that isn’t terribly diversified. Better than average money management skills are needed to keep ones capital growing all the while controlling financial risk and getting a good nights sleep.

Most of us who are gold enthusiasts have invested some modest portion of our assets in gold mining stocks rather than the actual metal plotted here. Judging by correspondence I would say those of us that have rejected US equities as being over-priced and over-owned are typically invested as 10% to 30 % in Gold Mining Stocks, and often using mutual funds to diversify their holdings. The remainder of their financial investments typically are stored in very low volatility income investments (like bonds) that temper the overall volatility of the mix and help make money management fairly straightforward and relatively painless.

My own preference is to shift assets between the gold and bonds by some modest percentage as one anticipates the shorter-term fluctuations. This isn’t always possible to do successfully so the major of the gold investment should stay with the long range T. But, for example, if a short dip occurs in the price of Gold, say to the $385 level in the weeks ahead, I would add say 5% of my total assets to the Gold funds on that reaction.

Why this might happen and how one might work out the technical details will be the subject on my next discussion. Right now I am in the process of writing up reports and closing out computer files for ending 2003. If a correction appears very near term my downside target is $385-ish, but if is delayed the target will rise, perhaps above $400. The only important point to say right now is that a dip is likely before the upside break out occurs and a dip would be a good buying opportunity.

The basis for this expectation is the observation that price of gold rising out of the big T’s center post low in 2001 shows clear indications of sharp dips at roughly 8 month intervals. These cyclical lows are not reliable enough to project low dates. However using a concept which I call T Envelope Theory, I have been able to convert cyclical time to useful price objectives to serve the more practical purposes of money management.

Thanks for checking in. Expect a new update in very early 2004.

Contrary Opinion Warning

Over the weekend I noted a new Stock Market Warning on the front page of http://www.cbs.marketwatch.com by long term Contrary Opinion analyst Mr Michael Burke of the respected Investors Intelligence Service that I think is worth reading. A quick read now might save you the trouble of digging it out of their free Archives later.
I first ran across Investors Intelligence back in the mid 1970’s when I was invited to speak about my T Theory concept at a meeting of Technical Analysts in New York. Present in the audience was Mr Abe Cohen, the founder of Investors Intelligence, and one of the original market analysts who had developed a good record of uncovering the better times to buy or sell common stocks based on his reading of investment advisor sentiment from a “contrary opinion” view.

After my presentation, I had a chance to chat with Mr Cohen and compare notes. We agreed that my concept (which basically states uptrends last only for a long as the prior “cash build up period”) was consistent with his findings the better buying opportunities only came when the 100 plus profession advisors he tracked were at a pessimistic (bearish) extreme. The irony of contrary opinion is that the better times to buy equities is usually when these so-called professional advisors are approaching a strong negative consensus. Thus he had concluded one needs to manage ones financial affair contrary to any widely held professional view.

Regretfully I didn’t have the time to ask him how one was supposed to have the courage and fortitude to buy when everyone was selling and visa versa. Certainly this the most difficult obstacle to applying contrary opinion. But I did think my T Theory approach at least made the whole process a bit more palatable. In any case Mr Cohen went on to go good works and I moved on to new T Theory projects. When Mr Cohen died, Michael Burke continued the work and became head of Investors Intelligence.

My interpretation of this latest over valuation warning is that it represents the culmination of their combined “contrary opinion” research over the last 30 years. There is no guarantee, of course, that their combined work is correct in concluding they are seeing “readings that have been by far the worst ever”. Likewise Burkes comparison to the Titanic disaster doesn’t sound very optimistic.

My reason for commenting on his conclusions at this time is that his “contrary opinion” based warning of market dangers can be compared to certain of my T Theory interpretations and I want to pursue their relationship in future updates. As always its most interesting to see how these attempts to uncover important situations, eventually work out over the months that follow.

More in my next posting. Terry Laundry

Welcome to Old Friends

It was nice to see comments from old acquaintances and friends posted here.

The note that follows is my reply to recently retired Robert Braun, but it is generally directed to all those joining this site.

“Hi Bob;

Nice to hear from one of my old time acquaintances and “voices from the past”. Please make any new comments you feel would be helpful as I ramp up this new site.

I hope you find my current writings helpful in your own financial management for the new environment I foresee for the decades ahead, not that we are necessarily going to live that long. But for whatever time we have remaining, I am committed to doing the best with my T Theory tools.

For the most part, these writings reflect what I am doing with my retirement money and they reflect considerable thought over the last 30 years of T Theory conclusions. There are no guarantee’s that my new T Theory thinking will prove right, but I see it as the right way to go for the future subject to technical confirmation of the forecast.

I just signed up for Social Security, as I will be 65 come January 04. If I was smart, which I am not, I would retire like you have done and move to a warmer climate as most of my New England peers are doing. But my T Theory keeps dragging me away from my old growth equity roots towards Gold and other commodity related investments, so I find that rather than retiring, I am compelled to start all over again in a brand new field.

So it looks like my retirement will be delayed for 5 years or so while I work on the big new Gold T that projects a great future for “stores of value” that may rival the 1982 Dow Jones Mega-T that promised great gains for the Industrial Equities from the 1982 low.

Thanks again for the note and best wishes to you and your family for the new year,

Terry Laundry”

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All Rights Reserved By The T Theory® Foundation ©

Order the T Theory® Encyclopedia

For a complete understanding of the T Theory® and how to successfully use Terry’s unique methods, order the Encyclopedia from Paula at the above link.  There is additional material in the encyclopedia not covered here.  Paula will be more than happy to answer your questions too.

Many thanks to Paula Burke for her permission to re-post Terry’s old T Theory® explanations.  The period re-blogged on these pages are some of Terry Laundry’s best work and was published here from public domain.

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I claim no credit for the material found under T Theory® on this blog.  All of this material is the creation of Terry Laundry and was downloaded from Terry’s free blog site (TypePad).  I have created a mirror of Terry’s original material and now there is a second site containing Terry’s T Theory®.  One or both of these websites hopefully will survive through time as Terry’s material is too important to be lost to the ravages of time.  This site is simply a memorial to his lifetime work.

The page content re-blogged here is exactly as Terry created on his original webpages (saved on my computer with ScrapBook)).  Nothing has been left out from the period Dec 2003 to June 2011.  From Terry’s site, I made a lot of formatting changes, creating a more easily readable webpage appearance.  The PDF chart duplicates of the JPEGs have been omitted for ease and speed of recreating Terry’s pages.  References to PDF charts should be ignored (but no chart was left out).

After June 2011, Terry created a paid subscription website. None of that material is found here.

There were many many, many hours spent on this project; downloading Terry’s individual charts & audio files, followed by the uploading of Terry’s charts and audio to my WordPress blog library, after which I had to insert the uploaded material into my new T Theory® webpages (hopefully in the correct places).  This was a dull and arduous project and I hope you enjoy it.  I don’t believe there remains any more of Terry’s material in free domain, so my T Theory® project is probably finished.  If I’ve missed something, you can leave me a comment.

If you find an uploaded reference error (chart or audio in the wrong place), please note the month and year of the webpage, plus the exact name of the referenced error file.  Include any other info that will help me locate the problem file and where it occurs on the webpage.  Leave a comment for me with the info and I’ll fix it.

Terry’s material is very long and will take many weeks for you to finish.  Don’t hurry, it’s not a marathon and you will absorb more if you go through it at a reasonable rate.  This is especially true for those who don’t invest in the T Theory® reference encyclopedia.  The encyclopedia is a written reference for T Theory® and includes everything of importance for Terry’s T Theory®.  Without the reference encyclopedia you must depend on your memory and Terry’s method carries some rules that you could easily violate.  The encyclopedia also includes new information never seen on his website.

You are welcome to save any or all of my blog material to your computer.  You also have my permission to re-blog my information, but you must (1) credit me and my blog in an obvious manner and (2) don’t change my material.

FYI – I find the best way to save a webpage is using “ScrapBook” (it’s an add-on for the FireFox browser).  ScrapBook saves a webpage to your computer EXACTLY as it appears on the day you saved it.  You can’t tell the difference between the internet webpage and your ScrapBook saved webpage.  The saved pages are not pictures.  Instead the pages consist of HTML and page functionality remains identical on your computer.   There is also a second method for using ScrapBook, where you can save all of the webpages down to a defined link depth.  This optional method means all links will function on your computer to the link depth specified (meaning you can click on links on your saved webpages and tunnel down into pages within pages).  Saving the normal way will only save the top webpage but the links that exist could continue to  function by taking you to the website on the internet instead of on your computer.  But sometimes the linked website doesn’t exist anymore.  I’ve had this happen on some very good webpages with unique information (they just disappear into the internet void).  That’s a bummer when you lost some really good info and thus rose my need for ScrapBook.  You can also filter the pages saved using the optional ScrapBook method, which can exclude all pages not coming directly from the specified website (filtering is recommended using this method otherwise you wind up with a LOT of useless stuff).

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3 Comments on “December 2003 – T Theory® Update”

  1. bob collett Says:

    Dear Bob
    Great job. Too much interesting info.

    Dear Hayes Noel
    Idiot
    Regards
    Bob Collett
    Johannesburg

    Like

  2. Bob Says:

    I have no control over the blog’s emails.

    Just ignore and delete them.

    Bob

    Like

  3. Hayes Noel Says:

    could you plrease stop sending the Magic T postings. I know and admire Terry’s work but too much. Thx

    Like


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