It is all preordained. Gold goes back to retest somewhere around $420ish. Then we resume upleg. If gold goes to $350 or whatever this CT toadie claims (based on a prophecy from Mahendra), the bull market in gold is over--there is no rapid rise from $350 to $1000.
Relativity, Quantum Mechanics, and the Stock Market
You're probably wondering what those three things could ever have in common, right? Well, if you know a little something about modern physics, you already understand how general relativity and quantum mechanics are related, but what about the stock market? Einstein and Buffett, together? Come on! What could these two possibly have to talk about? Well... everything, it turns out.
Modern Physics 101
First, a brief, hopefully enlightening discussion of general relativity and quantum mechanics, for those of you who were not fortunate enough to have endured these subjects already as an engineering or physics undergraduate. Fear not, those of you whose eyes are already glazing over: this will not involve any fancy equations or pop quizzes after the discussion! This is simply a primer for the uninitiated, a "Physics For Dummies." Hey, if we can understand this stuff, anyone can!
Basically, general relativity and quantum mechanics are used to describe and analyze the very large and very small, respectively. If you want to explore the behavior of planets orbitting stars, general relativity provides you with the mathematical tools to do so. However, if you're interested in tiny paticles such as electrons and protons, quantum mechanics is the way to go. It's pretty much that simple, at least for the purposes of this discussion. Of course, the more inquisitive readers out there are already wondering why we need two different sets of rules to analyze things in the first place. You're not alone: physicists everywhere are trying to find a way to unify these two disciplines. If you'd like to delve into the matter further, pick-up a good book on superstring theory. Okay, that's quite enough digression!
So, general relativity is good at describing the behavior of very big things, and quantum mechanics is good at the very small. But how do very big and very small things behave, anyway? Well--again, for the purposes of this discussion--big things exhibit very orderly, well-defined behavior, while small things tend to be chaotic and unpredictable. For example, a planet's orbit around a star has a nice, basic geometry to it, while an electron's path around an atomic nucleus is as far-removed from "orderly" as possible. In fact, at any given moment, it's literally impossible to determine precisely where the electron is! The best that we can do is make educated guesses based upon probabilities. The point of all this being that "big" things tend to exhibit orderly, predictable patterns, while "small" things are chaotic and unpredictable. Okay, physics lesson over. That wasn't so bad, now was it?
Physics and Stocks
Some of you no doubt already suspect where this discussion is heading next: the idea that the price movements of securities are governed by similar laws of behavior! Take a look at the following long-term chart of the NASDAQ Composite index:
This chart displays the final phase of the most recent, secular bull market in stocks. As you can see, there is a well-defined, orderly uptrend that ends in 2000, followed by a well-defined, orderly downtrend. And the further you "move away" from the price data--from a time perspective--the more well-defined the trends and patterns become. Now, examine the following intraday chart, also of the NASDAQ:
Notice the chaotic, jerky nature of the price movements, up and down, back and forth. And the "closer in" you move--again, from a time perspective--the more apparently "random" the price movements become.