War Cycles to Drive Cotton?
Burton, David, Futures (Cedar Falls, IA)
Over me next five years, we should nave some wild swings in the commodity markets due to wars, droughts and movements in the stock markets. The war cycles are likely to blow up from the end of 1999 to 2005 as a number of cycles coincide. The most important number that W.D. Gann wrote about was 90. The number is one-quarter of a 360 degree circle, and markets often make trend reversals or trend accelerations on 90-day, 90-week, 90-month and 90-year time cycles. The other important Gann cycles are the 60, 50, 49, 45, 30, 20, 15, 13, 10, 9, 7, 5, 3 and 1-year cycles.
With cotton data dating back as far as 1731, there appears a strong correlation between the outbreak of wars and rallies in cotton prices. Cotton prices, historically, have collapsed after war begins but then rally for the next three to four years. Some of these rallies in cotton prices tied to the outbreak in wars have been dramatic.
During the American War of Independence from 1775 to 1786, cotton prices moved to a low of 20[cent] in 1774 to a high of 61[cent] in 1779. During the Anglo-American War of 1812-14, cotton moved up from 10[cent] in 1812 to a high of 39[cent] in 1814.
Cotton prices moved from a low of 12[cent] in 1860 to a high of 89[cent] in 1864 during American Civil War of 1861-65. In World War I, cotton prices moved from 9[cent] in 1914 to a high of 50[cent] in 1920 and the highest prices in more than 35 years. During World War II, cotton moved from 9[cent] in 1938 to 42[cent] in 1946, the highest prices in 30 years. …