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Austrian economist Joseph Schumpeter later identified many cyclical behaviors including a four-year business cycle and a longer ten-year wave. He summarized these findings saying that During the period of a rising wave in the long cycles, the intermediate capitalist cycles are characterized by the brevity of depressions and the intensity of the upswings.

The inflation rate cycle coincides almost perfectly within the Kondratieff long wave cycle.

• Kondratieff identified these in-between periods as the downward wave in the long cycle.
• This means that at such a time, gold attains its highest purchasing power and the production of gold becomes the most profitable.
• His advice during the downward wave is to invest in the production of gold, in other words gold mining stocks.

If we are at the beginning of a downward wave, are gold mining stocks still a valid investment strategy given the structure of todays markets?

To answer the second question, we should be able to identify the current stage of the cycle by measuring the time elapsed since the last downward wave and by comparing the conditions prevailing at each time. Kondratieffs research showed that a full long wave cycle takes an average of about 56 years.

But it is possible that the world has been experiencing a downward wave for some time. Falling inflation and interest rates since that time are consistent with the typical conditions in a downward wave.

Kondratieff identified long-term declines in real agricultural prices as a marker for the downward wave.