Tuesday, August 27, 2013

Get Ready For War The Dow Jones – Turning Down ?

DJIND-W 8-27-2013
The US share market should have bottomed Friday/Monday. Instead, we inverted and made a meager high. This is not good at all. This warns we may see a test of the bottom of that channel next week or as late as the week of October 7th.
Everything is indicating Obama may start a war attacking Syria BEFORE Congress returns. September has been a major target this year all along. The fundamentals keep increasing for this target. We began with the German elections. Then we added the Debt Ceiling issue. But there is something even more serious why Obama needs a war and the mainstream press is lined up goose-stepping to whatever the Obama Administration dictates.
The Treasury has extraordinary powers and even Congress member and staff have a Thrift Plan that is like a 401K but government is the trustee. They have been taking funds from that to stay under the debt ceiling. This is the second time they have done that. But come October, they run out of everything.
With the fear that the conservative will not raise the debt ceiling, Obama needs a war to prevent a default. The easy way to do this is act when they are out of session so when they come back they are boxed in by the mainstream press to fund whatever.
Parliament in UK is generally also not around during August. The gulf war began August 2nd, 1990. World War I began 28th July 1914. World War II began September 1st, 1939. The Korean War began early on June 25th, 1950. The Gulf of Tonkin incident (or the USS Maddox incident) took place also on August 2nd, 1964. While December may be the season to be jolly, August is notorious for starting wars.
DJFOR-W 8-27-2013
We have a Directional Change this week with a key Weekly Bearish Reversal at 14805 and 14450. A closing below the latter will warn we may see that postponement. Keep in mind, that Europe needs a war as well not just for the German elections, but to employ the youth and divert them from the economic collapse. It appears that any escalation of the war would come in November 2014.
The evidence has shown that government often sacrifices troops to enrage the people to increase their power. During World War II, they let troops die knowing the Japanese would attack since they broke their code. But to save the troops would gave revealed the had the code. We are normally collateral damage. It is their edge that counts -always.

Capital Flows – The 4.3 Year Directional Change & Sovereign Debt Crisis


QUESTION: I have been following your articles but I am confused by your latest few articles. Previously you were mentioning that there will be a flight to quality as US has the largest debt market in the world. You also mentioned that this flight of quality will worsen the debt crisis in US into 2015.75. However, your recent articles seem to suggest that there is now no flight to quality but shift to private debt instead. If so, does that mean the sovereign debt crisis will not worsen yet but delay into 2025 instead? If capital is going into private debt, does that mean that economy will recover and grow then?
ANSWER: There are two flight-to-quality.

(1) First you have the natural domestic cyclical flow back and forth between the PUBLIC and the PRIVATE sectors. After the 1929 Crash of the Private Wave, capital turned to government and stocks do poorly and sovereign bonds do well. When the wave turned in 1985, the Dow exploded and the market rallied from 1,000 to so far almost 16,000.

(2) There are also international capital flows. Capital flees economic and geopolitical turmoil. When the G5 was formed in 1985, they chased the capital concentration out of the USA culminating in the 1987 Crash and it turned into Japan causing the bubble there for 1989. Then capital flows poured into South East Asia and that bubble burst 1994 as capital then turned back to the USA (moderately) and into Russia. When Russia broke in 1998 with Long-Term Capital Management, it the flowed into Europe for the Euro. Capital then flowed into the USA for the DOT.COM bubble 2000, which crashed into 2002. Then it poured into Mortgages for the next 4.3 years and that bubble burst in 2007. It then flew into gold and that peaked in 2011. Then it moved back to the Dow and is shifting away from government bonds. That should peak in 4.3 years or 2015.75. The capital flows change direction every 4.3 years.

So the flight-to-quality is away from long-term debt keeping it short-term and into the US private sector as capital concentrates. Just follow the money both domestically and internationally.
Regarding the Sovereign Debt Crisis, it can be postponed due to war that distracts people from what government has done. This is possible and it seems like the powers in Washington want to invade Syria. However, Russia will be an adversary and they will risk war with Russia telling themselves Putin is wrong. But it will be Washington who starts the war – not Russia. Putin is responding to the rising aggression of the USA and that seems to be geared at confusing the whole issue of the Sovereign Debt Crisis.
During World War II, the Fed was ordered to support the bonds at par. That was lifted in 1951 and that is when the bonds started their free-fall. These people KNOW they have a debt crisis, and that is why they are arming Homeland Security against a domestic uprising. Yet they continue to raise taxes killing the economy. They will destroy the world before giving up any power willingly. I have stated they will NEVER go quietly into the night or the light – they will kick and scream all the way.
The best way to buy time is to create a diversion. That they are experienced at. We must respect they can create a postponement for the war cycle turns up in 2014. So unfortunately the timing allows them to do that. This Private Wave does not end until 2032 so sadly they do have the time. But keep in mind that this wave began 1985.65 and the major focal point will be 31.4 years into it or 2017.05 (January). That should be the most they can postpone the start of this Sovereign Debt Crisis with the maximum culmination being 2025 and the optimal being 2020. They will lose. There is no question about that. They may trash the world in the process. You cannot imagine the hatred some of these people have gleaming in their eyes. They trust nobody. As a result – they will do outrageous things under the pretense their adversary intends the same if not much worse. They are fighting shadows in their own mind.

Sunday, August 25, 2013

US Real Estate

Real Estate

QUESTION: “Hi Mr. Armstrong, You mentioned before that real estate will decline from 2015.75 and will continue for over 10 years.  Do you still feel that way and why? Thanks,”
ANSWER: Real Estate is a strikingly different animal. The 30-year mortgage was created by FDR to try to restore the value of real estate. Our problem today is people will be less and less inclined to lend for 30 years due to uncertainty as this cycle moves forward. Fund managers who are still inside the box will but that stuff all day long until they lose your shirt.
The real estate that has been coming back are high-end in New York City and selected places in Florida for example. But this is being driven by foreign capital inflows. Lots of Europeans are buying in the USA right now to hedge against the banks and the euro. They are trying to keep assets out of the country and the banking system.
Places like Detroit and the lower income will not recover much and will turn down again. The lower the income area the hard it is to sell property. The high end is acting like a hedge at this time. That will survive and may rise sharply into 2015.75. The downside will be purely one of liquidity. Cash always rises in purchasing power during economic declines.However, we are not likely to see the traditional flight to quality. Expect cash to go to corporate bonds more so than real estate after 2015.75. There is likely to be a crisis in government debt at the state and local level that infects the national level as well. As shown here, there was a reduction in the flight to quality after the 1931 Sovereign Debt Crisis as corporate yields declined in a premium over federal issues. This is what we see coming ahead. The quality will more and more emerge on the private side.

Can the Dow Rally with Declining Bank Stocks – ABSOLUTELY!


QUESTION: “how can you possibly align staying away from bank stocks at the same time thinking there is a possibility the dow doubles in the next 2 years….NO CHANCE both of those happen (in my humble opinion)…ZERO….would love a scenario laid out, however, that big banks would flounder while the rest of the markets rip to the upside…..would be interesting reading …thx.”
HomeStake 1899-1985
ANSWER: Just because the Dow rises, it does not mean that every sector rises. In 2000 it was the Dot.COM rally that was the focus. During 1907 it was the Railroad stocks. During 1929 it was the industrials led by Autos. Every rally is different despite the fact that the market rises overall. The bank stocks will NOT be the high flyers.
Look closely at the events during the 1929 bull market as the Dow was making new highs, some stocks were collapsing including all the commodities. Look at Homestake. It began to break out only in 1931 when things were crashing. Homestake was not making new highs with the market in 1929 because commodities peaked in 1919 and began a 13 year bear market. The Dow can rally like it did into 1929, but the bank stocks will not any more than the commodities did. Homestake rallied only when the 1931 Sovereign Debt Crisis began.
The bank stocks will NOT be seen as a safe alternative. That has nothing to do with the market overall nor will it prevent capital from shifting. Facts are facts. Opinions everybody has one. Big deal. My opinion; we will not reach the Mad Max event. But that is a personal hope. We may blow everybody up before then anyway.

The Fire is Burning – We Need More Fuel


QUESTION: “Hi Mr. Armstrong,  
I am curious. I take it that you feel the DOW may double into 2015. Yet the SPX looks like it may roll over and crash. Does what you say about the DJIA equate equally with the S&P 500, or are they going to diverge and one goes up, while the other crashes?

ANSWER: Do not confuse long-term and short-term. The market was due for a correction and that may continue into September. The depth of the decline is important. That will determine what we get into 2015.75.
The Dow has the possibility to double into that target. However, to see that, we have to see capital concentrate in the US both from Europe and Asia. Capital is pouring out of the emerging markets. Brazil, India, and China that looked so good are now moving opposite. The Bail-In policy in Europe could send a massive tidal Wave of capital into US equities because you cannot trust the banks. If that happens, the Fed will raise interest rates attracting more capital to the dollar and the bonds crash with the budget deficit rising. That will set the tone for a dramatic expansion in debt and that is the catalyst for the Sovereign Debt Crisis. This is a game of dominoes. One is necessary to push the over the next one.
Those talking about hyperinflation are missing the point that with taxes rising, low interest rates and the deficit declining, where is this wave of massive spending coming from? We need to send the system into its debt spiral for as that happens then the unfunded liability will get bigger. This is a fire burning. It needs some more fuel. Then you will see the commodity rally. But right now, the decline in commodity prices shuts down supply. That is necessary to create the next rally – it is called shortage.

Friday, August 23, 2013

Gold – The Coming Slingshot Move

 Posted on by

QUESTION: You were correct and gold collapsed into June when the gold promoters kept saying buy. Was the low in June sufficient for the major low? Do we still need to see $950?
ANSWER: Markets must move to extremes on both sides to provide the ENERGY for the move in the opposite direction. The further gold would decline, the further it will rally. This is what creates the energy. The MINIMUM targets I provided were 1) mid $1100 range and 2) June 2013. We have met that criteria.

So does this mean gold will rally from here? No, The biggest target in time is January 2014. If January were a high at the $1421 level, then we are probably looking for that final low in the months beyond. A January 2014 high would warn that we could see the worse case scenario being the $950 with the furthest time target December 2015/January 2016. A January 2014 new low  would have the potential for the final low. However, you must understand that capital is nearsighted. It focuses largely on one thing at a time. You cannot look at just gold for the answer. This is a dynamic collective economy and everything must be lined up.
Please understand. This is not my OPINION nor is it based upon what I “think” will happen. That is really irrelevant. We all have “opinions”. The important aspect is that you understand HOW markets move so you participate in everything instead of waiting for just a single event. There are no singeltons in life. It is what it is – never what it might have been, could have been, or should have been.
NIK87-W Projected Target
The bubble top in the Nikkei for 1989 began from this same turning point 1987.8 and culminated in 1989.95. You see the sharp crash there in late 1987.The Nikkei about doubles in this short period of time. So what we are looking at here with a possible capital concentration in the US share market that could double by 2015.75 is not unusual. This can push the dollar higher and that will be negative for gold. Private assets rise and gold will follow the Dow Jones when capital is fleeing domestically from the Public to the Private sector, That is the pattern in the Germany hyperinflation period as well – all tangible assets rise. Those preaching the Dow will collapse by 90% and gold will rise do not even understand history. That is possible when gold is the official money but money rises when their is a lack of confidence in the Private sector – not the Public as we have with the Sovereign Debt Crisis. If stocks collapsed, then the bonds will rally. That is the Great Depression and the fundamentals were different. That is was gave birth to socialism. Today it is the socialism that is collapsing. Those who claim there will be hyperinflation and the Dow will crash are insane. If that were the case with hyperinflation, everything rises stocks, real estate, and commodities.
These analysts are fixed on one relationship and the markets are dynamic. They do not follow one relationship perpetually. Domestically capital flows between Public and Private and within the Private from sector to sector. Internationally, Capital flows can be measured by taking the Capital Account and subtracting the Current Account. If the capital is pouring into the USA from 1) emerging markets, 2) Japan, and 3) Europe, then we end up with the same conditions for a bubble top in the USA going into 2015.75.
Swinging a market to the extreme in one direction will then swing it further in the opposite direction. That creates the energy and it is why the majority must always be WRONG! Then if we have the failure for the FLIGHT TO QUALITY with capital rushing into government paper, that is the condition necessary to send gold up and through the $2300 level that is the 1980 high adjusted for inflation.
Those preaching the collapse in the Dow now to 10 cents on the dollar are insane. To do that now send bonds up when there is no widespread sovereign debt crisis that the public sees. Such a pattern simply cannot happen without everything lined up.

Thursday, August 22, 2013

No Single Investment will Ever be Perpetual

No Single Investment will Ever be Perpetual – It all changes

QUESTION: You compare gold and the Dow in 1980 and today. Are you saying stocks are better or are you referring to the difference in timing?
ANSWER: There are cyclical periods for each and every aspect of investment. I talk about the gold promoters because they mislead people and tell them only gold will survive. That is not true. Capital moves from sector to sector. The Panic of 1907 was focused on the Railroads. Then the Panic of 1919 was commodities, which was followed by the Industrials for the Panic of 1929.

Silver peaked in 1919 and then fell into 1932 – 13 year decline. The commodities ended up bottoming with the stock market in 1932 for the Great Depression. Then the rally move into the bond market as we entered a Public Wave.
The next Crash was that of 1937, which was only 12 months, but it was scary. Most people assumed it would be a repeat of the Great Depression.
The bonds peaked in 1950 and then began a 31.4 year decline into 1981. This led to the rise in the dollar as capital was buying US debt at insane levels of interest rates. The British pound fell to $1.03 in 1985.
1964 demonetization
The commodities began to rise from the 1932 low. Guess what? Adding the Pi Cycle of 31.4 years brings us to the last year silver appeared in coinage – 1964.
The 1966 Crash was focused in the mutual fund sector because funds at that time were listed and people bid them up far beyond their asset worth.
Nixon closed the Gold window giving birth to the floating exchange rate system on August 15th, 1971. That was. 37.104 years after the dollar devaluation and confiscation of gold in 1934 (8.615 * 4.307)..
1973-1974 Crash
Then we have the Crash of 1974. This unfolded when foreign capital began to sell the dollar fearing it would collapse. This came 37 years after the 1937 event (8.6 * 4.3).
1980 we have the peak in commodities. 1981 we have the low in bonds peak in rates. 1985 we have Plaza Accord. 1987 the Crash dollar driven event that sent the dollar down 40% and capital fleeing into Japan creating the 1989 Bubble Top. As Japan peaked, capital then fled to South East Asia where it peaked in 1994 with the simultaneous low in the US Dow Jones. That lead to a tempt high July 20th 1998 in US stocks and the 1998 the peak in Russia and the collapse of Long-term Capital Management creating the first Fed bailout of a hedge fund to save the banks. Capital then flees into the US .COM stocks creating the Bubble in 2000 with the low in 2003. Then we rally into 2007 with the Mortgage Bubble and the collapse into 2008-2009. Then we have the rally to new highs in the US share market that nobody believes. The list goes on and on.
The key here is that this is like lightening. It never strikes twice in the same place. Each bubble involves something different. Therefore, preaching any single investment is the alpha-omega is wrong, can cost a fortune, and in the end you may lose your shirt. One thing you can bank on – when any market reaches a bubble, move on for that is what capital will do. Never stay there expecting new highs. Sorry. It is over. You have to wait for the next cycle.
So my only problem with the gold promoters is that they are no different than a bond salesman. Each have their pitch but downgrade any alternative. There is no single investment that will ever perpetually rise. Gold will rise, but only when the timing is correct. Gold rallied for 13 years. It was time for a correction. Sorry – that is the way markets trade. Live and learn – or die waiting for the next cycle.

Sunday, August 18, 2013

Money versus Asset

Money had NEVER been Tangible! Period! If you do not understand what money is you will lose your shirt & more

COMMENT: “Money will no longer be tangible?  Declaring that the tangibility of money is dead will not make it so.  Goods will always be tangible and must be traded, bought, sold in with some kind of accepted tangible commodity — be it seashells, beads, or gold and silver.  As you mentioned, paper money, when accepted, was always backed by such tangibility.  Granted that governments have debased such currencies, but at least a feedback system was in place to counter that.  You frequently quote history — but never in history has anyone knowingly traded something real for something that is not.  It just hasn’t happened and will not happen.”
ANSWER: Money is simply the medium of exchange and a unit of account. It is not a tangible asset that always retains value and never has been. It fluctuates in value rising in depression and falling in purchasing power. When gold was “money” it rose with economic declines and declined in value with inflation. It acted no different! Anyone who keeps saying this nonsense that money must be “tangible” and never lose its value is trying to eliminate the business cycle as did Karl Marx and that is communism. Get over it. Understand you cannot have your house rise in value yet “money” still retain some mythical tangible wealth. Perhaps in the land of OZ, but there in no such historical period that anyone can point to.
While you have waited for this TANGIBLE rectification, in 1980 gold was $875 and the Dow was 1,000. The Dow rallied to almost 16,000 and gold could not exceed $2,000. It would seem to a reasonable person that 33 years is a long time to keep saying you will be right while refraining from investing. If you bought Detroit bonds in 1930 because “government debt” was safe compared to the risky stock market, when they suspended all payments, yes they eventually made good in current dollars only in 1963. If you were 60, that was 33 years to waiting and you still lost due to inflation.
China had intangible money for thousands of years. In Europe, they may have used tangible objects for money but that means nothing. WEALTH is measured in money. It is NOT money. Nobody in their right mind would hold cash as an investment earning no interest. It depreciates in purchasing power over time regardless what it is. Explain how China used paper money from the 13th century and even when the Mongols seized the Chinese Empire, they accepted the paper money that already was circulating without devaluation.
Explain how Egypt had warehouse deposit receipts for grain that circulated as money for thousands of years until Alexander the Great conquered Egypt and introduced coins?
REAL money defined as the productive capacity of a person is simply that. You work and your productive labor is the real VALUE you exchange for the medium of exchange and accept whatever it might be ONLY because someone else will accept that.
We have intangible money right now. The actual paper currency is less than 10% of the money supply. You have bank statements that are simply electronic entries. REAL wealth is purely assets that can be real estate, stocks, or gold (since it is not money). You say Donald Trump is rich because you see all the buildings with his name. You do not see MONEY for that is simply the unit of account by which we measure things like a yard-stick.
Do not confuse assets with money. MONEY has always been intangible. The wealth of a nation is not its gold reserves, but its people and their total combined capacity to produce something of value be it agricultural, manufacturing, or services. That is whatever someone else is willing to pay for.
The root monetary system is barter and that will always be the case. I will do this, if you do that. MONEY emerged like a language. If I wanted a cow you had and I had corn, we strike a deal as long as we both have what the other wants. When that does not happen, we now need a third party to enter the transaction and hopefully he has something you will take for the cow and he need my corn.
MONEY became simply a medium of exchange. Something one person would accept ONLY because he knew others would accept it from him. That facilitated trade. Whatever that object might be as long as the majority accept it. Regardless what you think that money has to be gold, tell that to a kid buying coffee at Starbucks with his cell phone they scan. The world has changed. What use to be is no more.
To say money has always been tangible is absurd – not true, and a great distortion of fact. What is the problem? If you keep this nonsense up spun by gold promoters, it is like saying this used car is better than that one because a little old lady drove it. Where’s the proof?
Gold will rise in value because it is an INVESTMENT – not because it is money. Keep believing this propaganda and you will lose everything. It is like the guy stand on the roof of his house in a flood. The water keeps rising and he is praying for God to save him. A large log comes floating buy and bumps into the house, but the man ignores it waiting for God to save him. Then two people come by in a row boat and say jump in. He says no, he is waiting for God to save him. Then a helicopter comes and throws a harness down but the man refuses and says he is waiting for God to save him. The water rises and man drowns. He then sees God and complains, I prayed and prayed for you to save me. Why did you ignore me.God says, I sent you a long, then a boat, then a helicopter. How stupid are you?

Economy Turning Down

Posted on by  

While Wal-Mart turned down, all retail sales are off significantly and we will see this on a wide scale basis and this will be the “fundamental” behind the decline and fall of the US share market into the weeks ahead. Ever since the ECM turned, the share market is slipping. With the crash in retail sales taking place, the domestic analysts will see only a bear market and economic recession. Indeed, it may “feel” like 2007 to many. This is similar to the “feel” that the British had in 1985 as foreign capital started pouring in when the pound fell to $1.03. The Brits thought the real estate market was over priced whereas the foreigners saw it like a sale at Harrods.
DJFOR-W 8-12-2013

We should see the Dow drop into next week. The ideal target will be Monday. Support is 148250 and 14805. The next area will be 14450. We should start to see volatility rise the last week of August into the first week of September.

Tuesday, August 13, 2013

Emerging Markets Decline as America Leads Growth

Posted on by   

The US Economy is emerging as the center of economic growth in the world. US growth in the latest readings shows an annual 1.7% growth rate while Japan’s economy advanced at 2.6% due to the decline in the yen as Investors in Emerging Markets have seen things get much worse right down to rising civil unrest in Brazil. Euro may show some moderate growth only due to the decline in the euro last quarter.
1994 SP500
The developed world accounts for more growth in the $74 trillion global economy than the developing world this is similar to the position in 1994.25 when the US began to rise drawing in capital that ultimately led to the Asian Currency Crisis in 1997. The stars are in the right position for a strong US equity rally into 2015.75.

Sunday, August 11, 2013

The Great Rotation – Why Stocks Are Bullish

Posted on by   


Hand-drawn Chart Published in 1979
I have been explaining how capital shifts from public to private during a private wave investment cycle. Bond yields are way too low and risks way too high. It is now being recognized that capital is starting to shift from bonds to equities. They call this the Great Rotation. Based upon studying even the commentary in the newspapers during these periods demonstrates the thinking process fluctuates.

Interest rates decline during every recession and depression and rise during bull markets. During the 1920s, the press reported rate increases as bullish because it demonstrated people were still borrowing. When people stop borrowing, markets decline. In a Public Wave, rising interest rates are seen as bearish because the government does like what is happening not what is happening or why. Hence, this is the distinction between of Public and Private Wave. We are now seeing the effects of a Private Wave.

Saturday, August 10, 2013

Market Recap


The Euro on the cash reached 13359 yesterday and we our weekly resistance is 13357 for this week so a closing below that will warn that the euro may have reached a high 23 days up from the July 9th low (we are currently trading at 13341). Eventually, a weekly closing beneath 12800 will signal a drop back to 12100.
In gold we do not see anything major yet. The turning points appear to be Sept/Oct with choppiness ahead and the big turning point comes in January, A close above 2025 in silver will help for bounce into next week.
In the Dow, the critical support is at 14827-14805 and 14450. Break this area and a sharp drop to 13780 is likely. We still see September as turning point with volatility rising in October and November, subsiding for year-end, and then jumping again in March next year.

Friday, August 9, 2013

224 Year Cycle of Political Change

What Can We Do?

us-224 cYCLE 2013
A number of people have asked what can we do about losing our rights. I believe there is nothing we actually can do until the majority get upset. That may be what the 2016 Presidential elections are about. Political Change only comes when the economy turns down. The old adage – if it ain’t broke – don’t fix it.
What we are witnessing is the decline and fall. This is simply part of the cycle. This is how ALL great Empires, Nations, and City States collapse. We are putting together a serious international think tank. There are solutions to restore our liberty. All of this emerges because of the collapse in socialism. Government cannot be sustained under the current economic system. Consequently, we are dealing with bureaucrats who only see everything as grabbing more and more power. They cannot see that they are killing the economy globally and destroying the future of the next generation.
They are hunting down money and increasing taxes on a grand scale. Obama wants yet another $1.6 trillion tax increase. September will be the next debt ceiling fight. There is nobody looking at this from a practical long-term perspective. Just how do we survive long-term? Nobody has any plan whatsoever.
This is not about returning to a gold standard. We are so far beyond that. We have to completely restructure everything to realign the economic systems and balance them with our rights. We must confront What is money. As simple as that may seem, everything depends on it. If we take a step forward and look realistically at the monetary history and the evolution of money, we will see the light and comprehend that the next step in the evolutionary process awaits. Pretending money must be tangible like gold and calling for the Fed to be leveled and eliminating derivatives and reserve banking are ideas that would destroy society on a wholesale basis. They are impractical. How do you address credit cards, all outstanding mortgages, business loans, and job creation? All of these rantings are based upon a single notion – control of the money supply. Obama just spoke that the Fed Chairman is the most important decision for that person will control inflation. That is absolutely STUPID. It is after you go spend whatever you want and it is your wife’s job to balance the check book. Come on! That is brain-dead. The Fed has NO control of spending and the creation of debt. It cannot stimulate when the government is the largest borrower in the system. Raise interest rates to stop inflation and spending has NO impact upon Congress and will escalate the national debt faster. Keep interest rates near zero and pension funds go bust. We need REAL reform! That is not coming from people who have spent their entire lives working in the halls of government.
We are preparing the full SOLUTION well documented step by step. We are bringing together an INTERNATIONAL think tank to eliminate this party politics nonsense. The entire world is in serious economic trouble. This is merely phase II where communism collapsed in 1989 and 26 years later (2015.75) will start the collapse of Western Society. But before that collapse, we must move first to the extreme and this is what the NSA has been doing right on time. The 224 Year Cycle of Political Change turned in the USA April 22, 2013. By June the Guardian began publishing the leaks from Snowden that the world could no longer ignore.
The bottom line – there is nothing we can do except wait for the timing to unfold. When that happens 2015.75-2020.05, then and only then will we begin to see real political change. The entire point is to connect the dots. It is far better to realize what is unfolding so you are prepared rather than be caught in a state of panic asking when did this happen?

Tuesday, August 6, 2013

CONFIDENCE = Everything

It maybe corny, but it is true. Confidence is not about merely being outwardly proud, it is all about believing in your own ability. The same is true with regard to the economy. Even Keynes realized it is WHAT you believe that counts, not even if it is actually true. Indeed, a false GOOD rumor will still move markets. Consequently, even Keynes knew you have to rekindle the “animal spirits” that led to confidence after a turning point.
In commodities, they have been moving them around for decades to try to create the impression there is a shortage and you better buy for it’s a bargain. That was the game when Buffett was buying silver in London so the supply declined in NYC as it was shipped to London. This old trick has suckering in even the well educated for decades. It sounds logical that a decline in supply means prices should rise. But prices will rise only withCONFIDENCE not supply. Something can be in short supply for decades and nothing will happen.
“Animal Spirits” is the term John Maynard Keynes used to describe the instincts, proclivities and emotions that ostensibly influence and guide human behavior, and which can be measured in terms of, for example, consumer confidence in his 1936 book: The General Theory of Employment, Interest and Money. It has since been argued that trust is also included in or produced by “animal spirits”. It is effectively the BELIEF in the market that counts – never reality.
This is why in a bear market GOOD news is never “good enough” and in a bull market “bearish news” is always ignored. It is what you believe that counts. So pay no attention to the promoters who say buy now because inventories are declining. Inventories in commodities decline in bear markets and always have. That is NEVER anything to pay attention to – only price movement. Look at all the yelling about the $3 trillion expansion by the Fed – it did not produce inflation. It is what the majority believes that rules the day.
So as everyone swear the stock market will crash and the dollar will crash, they have been saying the same nonsense for quite some time now. Silver fell 35% with declining inventories as did gold but it declined only 23%. So focusing on single isolated trends in the domestic economy is like assuming the world is still flat. Sorry – the world is round and it is a global economy – not just domestic.

Capital seeks preservation

War & Capital Flows

QUESTION: If 2014 is a war year how can confidence in economy continue till 2015?
ANSWER: This cycle is the beginning of unrest. We expect this to begin manifesting in terms of civil unrest – not a worldwide war. That could come later as things develop. However, the civil unrest is most likely to begin where the economy began to crack first and that we will see in Europe.
1900$X-M 1931 Sovereign Debt
How can confidence rise when war erupts? That is easy. Capital seeks preservation. It flees from wherever there is a conflict. The USA was dead broke and J.P. Morgan had to lend the US $100 billion in 1896 to prevent bankruptcy. By 1914 it was the financial capital of the world. Why? Because of war in Europe. That is why the 1920s Roared. Capital fled to the USA. By the end of WWII, the USA held 76% of the entire world’s gold reserves. It is not always a pure CONFIDENCE that the good times will roll. It is also the lack of confidence elsewhere that causes capital to flee. Capital smelled a rat and indeed it was the 1931 Sovereign Debt Crisis where most of Europe permanently defaulted on all its debt.
So it is the old choice – the prettiest of the three ugly sisters as they say. The dollar was driven to record high during that capital inflow from Europe and it is why the dollar became the reserve currency of the world 52 years after being bankrupt in 1896.

Sunday, August 4, 2013

The False Move


DJIND-D 8-1-2013
Just as they say there is the calm before the storm, there is always the false move before the breakout. As we approach the midpoint on the Economic Confidence Model August 7th, which is curiously 31.4 days from the low, we should keep in mind that this is the midpoint and not the climax peak. Resistance still stands at the 16000 level. The Dow has been crawling sideways buying time.
DJFOR-D 8-1-2013
The timing arrays are also now lining up with August 7th. This is independent of the ECM and is the collection of 72 models. Thus, as we move close to this target, we also see a Panic Cycle and volatility rising the week after.
DJ2731-W False Move
Capital will begin to shift and start to make its decision. If we see a high on the 7th in the Dow, we may see the classic False Move to the downside for the typical time period of 1 to three units. This is what we may see. A brief correction with all the bears yelling I told you so, then followed by a rally that wipes them out. This market has not peaked yet and it is destined for much higher prices ahead going into 2015.75.