"The collapse in real values for stocks as well as the credit implosion, economic contraction, terrorism and war of the past decade are consistent with our Elliott wave cycle case that in 1999-2000 the direction of fiscal mood changes from positive to negative at a Grand Supercycle degree," says technical cycle analyst Robert Prechter.

In his The Elliott Wave Theorist, he suggests, "But this is not the end of the story. The fact that investors are still giddy -- which is an apt word for the current sentiment indicators -- is consistent with our Elliott wave case that the bear market has barely begun."

"The stock market has now fulfilled our forecast made back in February for a rise to 9,000-10,000," says Robert Prechter. In The Elliott Wave Theorist, he now sees increasing risk.

"The rally in the S&P since March has been one of the faster ever, rising 50% in five months, and rapidly carrying the S&P to the lower end of our general target zone of 1000-1100.

"At the same time, optimism has finally reached 'Primary degree' levels. The daily sentiment index recently reported 88% bulls among S&P traders, a reading equal to that on October 9, 2007, the top day of the 'Cycle B wave' when the Dow made its all-time closing high of 14,164. Higher readings are possible, but we are no longer compelled to wait.

This article is part of a 20 article special report on "Metals, miners and money".

The case for gold and/or other commodities in large part rests on a forecast for higher inflation. With a contrary view, Bob Prechter -- well known as the leading practitioner of Elliott Wave theory -- offers his assessment for deflation. As such, his top investment idea within this scenario is not gold or oil -- but cash.

The editor of The Elliott Wave Theorist explains, "When the bull market in inflation is over, an unprecedented number of IOUs, stacked in an inverted pyramid, will collapse in value in a deflationary rush, and prices from stocks to commodities to goods and services will fall along with them.

"In 1998, we called for a huge bull market in oil that would carry to new all-time highs. That run is now in its final stages. Market psychology fits a major top, because short-term measures of optimism match all-time extremes.

"Investors everywhere have come to the conclusion that the world is running out of oil, despite the fact that the real price of oil (the oil to gold ratio) is lower than it was seven years ago.

"Today, oil is near the end of wave 5. But this is only part of the picture. The rise from 1998 is itself a fifth wave, so the entire advance from 1933 is also ending.