Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Friday Stock Market CRASH Following Israel Attack on Iranian Nuclear Facilities - 19th Apr 24
All Measures to Combat Global Warming Are Smoke and Mirrors! - 18th Apr 24
Cisco Then vs. Nvidia Now - 18th Apr 24
Is the Biden Administration Trying To Destroy the Dollar? - 18th Apr 24
S&P Stock Market Trend Forecast to Dec 2024 - 16th Apr 24
No Deposit Bonuses: Boost Your Finances - 16th Apr 24
Global Warming ClImate Change Mega Death Trend - 8th Apr 24
Gold Is Rallying Again, But Silver Could Get REALLY Interesting - 8th Apr 24
Media Elite Belittle Inflation Struggles of Ordinary Americans - 8th Apr 24
Profit from the Roaring AI 2020's Tech Stocks Economic Boom - 8th Apr 24
Stock Market Election Year Five Nights at Freddy's - 7th Apr 24
It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- 7th Apr 24
AI Revolution and NVDA: Why Tough Going May Be Ahead - 7th Apr 24
Hidden cost of US homeownership just saw its biggest spike in 5 years - 7th Apr 24
What Happens To Gold Price If The Fed Doesn’t Cut Rates? - 7th Apr 24
The Fed is becoming increasingly divided on interest rates - 7th Apr 24
The Evils of Paper Money Have no End - 7th Apr 24
Stock Market Presidential Election Cycle Seasonal Trend Analysis - 3rd Apr 24
Stock Market Presidential Election Cycle Seasonal Trend - 2nd Apr 24
Dow Stock Market Annual Percent Change Analysis 2024 - 2nd Apr 24
Bitcoin S&P Pattern - 31st Mar 24
S&P Stock Market Correlating Seasonal Swings - 31st Mar 24
Here's a Dirty Little Secret: Federal Reserve Monetary Policy Is Still Loose - 31st Mar 24
Tandem Chairman Paul Pester on Fintech, AI, and the Future of Banking in the UK - 31st Mar 24
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and the Long-Term Inflation Cycle

Commodities / Gold & Silver 2024 Mar 11, 2024 - 09:35 AM GMT

By: Clif_Droke


Of the many factors that determine gold price trends, the long-term cycle of inflation and deflation is of singular importance. The cycle in question corresponds closely to the 50-to-60-year economic periodicity known as the Kondratieff Wave (or K-Wave), but is in fact a separate cycle. As we’ll discuss here, the cycle tells us to expect a gradual acceleration of inflationary pressures between now and the year 2029, with particular significance for gold investors.

The K-Wave was brought to renown in the 1920s by the Russian economist Nikolai Kondratieff and is widely regarded as the predominant economic super cycle. This cycle arguably represents the most casual approach to identifying the real supply/demand conditions of any free market economy and is especially applicable to the United States. (Cycle analysts have even identified this cycle as existing as far back as thousands of years ago in Assyria and the Roman Empire.)

Commenting on the K-Wave, the late cycle analyst Samuel J. Kress—whose eponymously named Kress Cycle of 60 years duration closely corresponds to Kondratieff’s long-wave cycle—made the following observation back in 2002:

“The K-Wave is the manifesto of economic determination. It is the ultimate boom/bust condition. The cycle is caused by the beginning of acquisition and the ending liquidation of debt. Debt creates a false or created incremental demand in addition to intrinsic, real demand. When debt assumption becomes excessive, the system becomes illiquid. At that time, debt must be reduced to alleviate the pressures of illiquidity. This waning demand is reflected in reduced overall economic activity and [corporate] earnings. In turn, this begins the momentum likened to a snowball rolling downhill. Once debt is liquidated, the system re-liquifies, debt is reacquired and the economic super cycle begins anew.” [Kress, The Reign of the Bear, 2000-2014]

Kress maintained that the last K-Wave that bottomed in the previous decade was the fourth one since the U.S. gained its independence in 1776. He depicted the K-Wave as it pertains to consumer price inflation, dividing it into five phases:

  1. Inflation: 1949-1965
  2. Hyper-Inflation: 1965-1980
  3. Disinflation: 1980-2000
  4. Deflation: 2000-2010
  5. Final Bottom: 2010-2015

Similar to the K-Wave, the 60-year long-term cycle of inflation/deflation identified by Kress contains several smaller component cycles, each having its own significance to financial markets, consumer prices and even to extended periods of war and peace.

Indeed, Kress noted that two wars typically occur in every K-Wave: the first at the end of deflation and beginning of inflation (Parts V and I, shown above), and also at the end of hyper-inflation and the beginning of disinflation (Parts II and III). In the fourth (most recent) K-Wave, World War II ended in the mid-1940s and the Vietnam War ended in the mid-1970s.

Kress’s supposition was that the first 60-year cycle of any significance for the United States can be identified as beginning in the year 1774, which closely coincided with America’s Revolutionary period between 1775 and 1783. The 60-year cycle is comprised of two 30-year cycles, each of which has a peak at the midway point of 15 years (an important point to remember when analyzing inflationary and deflationary periods).

The composite 60-year cycle carries not only the seeds of economic expansion and contraction (inflation and deflation), but the bottoming of its 30-year component cycle is sometimes accompanied, or followed, by war. This was true in the immediate wake of the years 1774 (Revolutionary War), 1864 (Civil War), 1894 (Spanish-American War) and 1954 (Vietnam).

Even when the 30-year cycle’s bottoming doesn’t produce “hot” wars, a “cold” war often accompanies it which is characterized by heavy war-time spending levels. This point is worth emphasizing, for it serves as a key impetus for strengthening gold prices.

The most recent 60-year cycle of deflation—as well as its 30-year component—bottomed around 2014-15, and with it a new long-term cycle of inflation was born. As the 60-year cycle can be divided into two 30-year cycles, so the 30-year cycle can be divided into two 15-year half-cycles. This is an important variable for gold investors to keep in mind, for its upcoming peak of the latest 30-year cycle that should produce some intensive upside pressure for the yellow metal’s price.

Unlike bonds and real estate, which each benefit and fail from the former and latter stages of the long-term cycle, gold benefits from both stages of it. Kress explained gold’s ability to benefit from both runaway inflation and deflation as follows:

“When the latter stages of inflation begin, gold is perceived as the ultimate hedge. During the hyper-inflation of the 1970s, gold increased in value approximately 20-fold, and then began its bear market in the early 1980s with disinflation. When deflation/depression begins, the price of gold is perceived as the ultimate storehouse of value.” [Kress, Taming of the Bear, 1999]

With deflation long since in the rearview mirror, a new inflationary super cycle has been underway for the last several years and is approaching the first of at least two acceleration phases: the first one is scheduled for around the years 2029-2030 when the 30-year component of the super cycle is due to peak. In other words, we should begin to see consumer price inflation accelerate higher as we draw closer to the end of the current decade.

With inflation’s intensification should come growing demand for gold as a hedge against higher living costs, just as it did in the prior inflationary period of the 1970s. Accordingly, gold or a derivative thereof, should constitute at least a conservative weighting in one’s portfolio with a dollar averaging approach during the coming two years.  

About the author: Clif Droke is a veteran gold market analyst and published author. He can be contacted at

By Clif Droke

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit

Clif Droke Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in