Wednesday, August 30, 2017

It is the fool who rushes in assuming he will miss the move before key points are exceeded. Gold at 1362. Dow -23,000

Gold & the Dow




QUESTION:  Dear Martin,
I have been following your blog for years now. I am not a trader or financial person in any sense of the word but I take a keen interest in the economy and try to keep myself educated re current science theories for my own interest. I love your blog and your fundamental theory re cycles and how the West thinks differently to the East. I feel you have given me an an insight into how the world functions in a way i couldn’t hope to find else where and you generously put your blog out for free which is a public service that I am deeply grateful for so thank you very much for that. I am English and live in England and I have a very modest amount to invest and i wondered if you would recommend either (a)waiting for gold to change trend and investing in that and or (b)waiting for the Dow to possibly go through 23000 and invest in that.

ANSWER: There is little doubt that we stand at the threshold to some chaotic period ahead. I have warned governments behind the curtain of what is to come. It seems as if at times I am the only person who has ever read a history book. I point out that 99% of all revolutions begin with the abuse of taxes. No matter how many times I show this is the trend and all the countless rebellions in ancient, medieval, and modern times (within the last 309 years) such as the American Revolution (no taxation without representation) or France (let them eat cake), I am just one person and I cannot move a mountain. So I do this blog as a public service realizing that we must crash and burn and thus it is up to us at that brief opening in the clouds to push for the freedom we deserve for our posterity.

We know where the trend changes from gold at 1362 to the Dow at 23,000. We have not yet missed anything. The boat has not left the dock. Patience is required along with a clear head. Never act emotionally. Be clam and poised. Remember there must always be the false move before the slingshot move.

It is the fool who rushes in assuming he will miss the move before key points are exceeded. That is when losses are always the greatest. Rallies in gold are up to the next bank of Reversals as is support in the Dow. Keep in mind that September is a turning point in gold and August was key for the Dow. The two are not yet aligned. That may not unfold until next year.

Monday, August 28, 2017

Is the Stock Market Really Overvalued?



All we have been hearing since 2011 is how the stock market is going to crash and then there will be hyperinflation and all sorts of strange relationships that never materialize. They simply focus on the level of the stock market in nominal terms without adjusting it for inflation or showing how it has performed relative to the rest of the economy. Here is a chart of the stock market expressed as the total value of shares traded annually as a percent of GDP. Sorry, this illustrates that the retail market is not in crash mode just yet and it is still nowhere near the overbought levels of 2007.
This chart also reflects the crisis we have in liquidity. The more government tries to also regulate banks, they have been withdrawing from proprietary trading and we find the trading volume has been shrinking.
Government manipulates the statistics to always try to reflect that everything is OK and they are doing a fantastic job. Here is the ECB’s assessment of liquidity trying to pretend it’s back to normal. Real liquidity is HALF that of 2008 yet the ECB’s the Financial Market Liquidity Index is a complete fraud for it simply measures the spread between bid and ask and not the volume traded. The Index combines eight individual “liquidity” measures based upon their definition. Three of them cover bid-ask spreads: (1) on the EUR/USD, EUR/JPY and EUR/GBP exchange rates; (2) on the 50 individual stocks which form the Dow Jones EURO STOXX 50 index and; (3) on EONIA one month and 3 month swap rates. Three others are return-to-turnover ratios calculated for: (4) the 50 individual stocks which make up the Dow Jones EURO STOXX 50 index; (5)
Honestly, the bid ask spread can narrow and let a panic start and that will quickly vanish as market-makers withdraw. There is far less depth to the markets today than before back in 2007. A return on investment also means nothing with respect to liquidity.
So as long as we have analysts relying upon government statistics without thinking about their construction, this is really the blind trying to lead the blind. What a joke!

Friday, August 25, 2017

The Overlooked Cost of Electric Cars by EU Gov’t

Governments first imposed taxes on alcohol and cigarettes under the claim that they were trying to make people stop for their own good. But as always, as the governments became addicted themselves to the tax revenue. Now they have taken the same theory and applied it to tax soft drinks in Philadelphia naturally because they care and are trying to prevent people from drinking too much sugar. New York State has tried to them impose a tax on  electronic cigarettes,  where the Democratic Governor Andrew Cuomo lived up to the Democratic motto – if it moves or does not moves tax it, and if it died, tax everything it possessed. Only the fact that the Republican-controlled Senate in New York, rejected Cuomo’s plan to tax the liquid used in  electronic cigarettes. Government always pretends to be raising taxes to help people, but it is always a huge lie for its boils down to just grabbing money.
Now all the fuss over the environment and the push to electric cars has a tremendous problem in cities such as how does someone pug in their car when they live in a tall apartment building? But the other side of this coin has another problem. Governments have been faced with declining revenues from cigarettes so then they want to tax the alternative to make up for the shortfall in taxes. The same is happening with gasoline and diesel tax revenue. They will start to raise taxes on electricity using the cars as the excuse.
It seems that nobody publishes a simple statistic to reflect how much taxes on fuel is represented in the total budget of the European Union. There is plenty of information on how much tax on fuel countries charge. But when it come to how addicted government is on those fuel taxes seems to be something nobody wants to reveal.
Average price of oil for the last 20 years is 0.98 Euro per litre. In the EU average consumption of petroleum is 12,530,000 barrels a day in 2016. Therefore, taking this very low average price we arrive at the following:
1 BBL = 158.99L
Therefore multiplying this together we get the amount of litres of consumption of petroleum products per day.
1,992,144,700
Multiply this by 365 to give the yearly total
727,132,815,500
Multiplying this by 0.98 (conservative figure of the average price of oil for the last 20 yrs)
712,590,159,190 Euros of sales of Petroleum.
Multiplying this by the average tax rate of approximately 60% of the pump price is taxation, we then arrive at EU countries recoup approximately €427,554,095,514 per year in TAX revenues from fuel. Now let us take that as a percentage of total tax revenue in the EU and we arrive at €427,554,095,514 TAX on petroleum products within €5,877,506,000,000 in total 2015 Tax revenues of all 28 member states, and we finally arrive at 7.27% of total TAX revenues comes from the tax on gasoline and diesel.
The cost of going Green to the state budgets is going to be huge. This will lead to tax hikes in other areas to make up the shortfall most likely on electricity. We can expect electricity to rise in taxation dramatically and this will impact people in their apartments in cities who do not even own a car.
Then add the rise in interest rates and we are looking at the next 4 to 5 years of a true crisis in funding government

Wednesday, August 23, 2017

The Constitution is Negative Not Positive So You Cannot Waive Any Rights



The greatest constitutional scam that the Judiciary and the Department of Justice have been doing for decades,  is they constantly rule against people claiming that they waived their rights under the Constitution. What judges have done is turned the Constitution on its head changing it from a restraint upon government to a positive right you can waive and thus the government has no restraint whatsoever. You might as well waive your right to life under the way courts accept waiving rights. This is completely ILLEGAL and you cannot possibly waive any right whatsoever for that is handing you the power to change the Constitution amounting to a constructive amendment for each and every case. That means the Constitution really no longer exists in the hands of judges for a defendant has the same power as James Madison and can change the constritution granting powers to the government that were expressly denied.
One of the most respected legal minds in the nation, Judge Posner, explained clearly that the Constitution “is a charter of negative rather than positive liberties. . . . The men who wrote the Bill of Rights were not concerned that Government might do too little for the people but that it might do too much to them. The Fourteenth Amendment, adopted in 1868 at the height of laissez-faire thinking, sought to protect Americans from oppression by state government, not to secure them basic governmental services.”Jackson v. City of Joliet, 715 F.2d 1200, 1203 (7th Cir.), cert. denied, 465 U.S. 1049 (1983).  Thus the city had no constitutional duty to help the accident victims, and thus its failure to act deprived them of neither liberty nor life. /Id. at 12061
The Supreme Court has continually rejected that the Constitution is Positive and thus creates rights that the government must provide; see i.e. Harris v. McRae, 448 US 297 (1980); United States v. Butler, 297 U.S. 1, 62-70 (1936) et al. Since the Constitution is NEGATIVE and not POSITIVE, then it is impossible to waive any right whatsoever for that amounts to constructively amending the Constitution.
If the Constitution can be amended differently by waivers for every individual case, then there can be no rule of law whatsoever and all negative restraints upon the government are lifted if they can threaten citizens to surrender all rights. If the Constitution is positive, then they must pay for any right you came from medical care to abortions.
You cannot have it both ways. If the Constitution is NEGATIVE, then you cannot waive any right whatsoever and the police, prosecutors, and judges, are in fact restrained to the law and cannot escape it by claiming you waived it so now they have dictatorial or authoritarian powers.

Friday, August 18, 2017

European Refugee Crisis will Engulf Europe by 2032



Migrants sit in a boat during a rescue operation by the Italian navy off the coast of Sicily on Nov. 28. Italy is looking to revamp the way it handles the hundreds of thousands of migrants who arrive annually.

The European Refugee Crisis is really completely out of control. The bulk of these people are by no means refugees. You see no women and children here in the boat – only young men. Now Spain is the new target and will overtake Greece as the second-biggest gateway for economic invader entering Europe by sea. The sudden surge in migration to Spain comes following a crackdown on human smuggling along the Libya-Italy sea route, which has been the main entry route to Europe. Africans are migrating to Europe because there is little to do at home.  Egypt will grow to 100 million people while Nigeria to soon reach 400 million. Europe will be swallowed up whole as it was when the Roman Empire was subjugated by the Barbarians who crossed the Rhine River.
When the Barbarians took over Europe, they at first issued coinage in the Roman tradition. But this began to rapidly diminish. Nevertheless, history is repeating. Europe is being swallowed up once again. By the time we see the other side of 2032, Europe will be a shadow of its former glory just as the main language of California will be Spanish not English. Things are definitely changing.

Tuesday, August 15, 2017

Moving Averages and Stochastic – Not Trading Tools but Good Confirming Tools



QUESTION: Mr. Armstrong; What is your view of moving averages? Can they really be used for trading?
Thank you
KL
ANSWER: No. Moving averages and stochastics are nice confirming tools. They are incapable of forecasting a high or low. They also do not reflect magnitude of a move. They can be a useful confirming tool, but nothing to actually enter a trade on that is consistent.

Monday, August 14, 2017

The Revolution Cycle can be just 13 to 26 Weeks

QUESTION: Mr. Armstrong; What you are saying is there is no diplomacy that would work and that the only real player here is regime change and that is in the hands of the North Korean people. So what is your advice to Trump?
KE
ANSWER: Forget the trying to talk reason or my arsenal is bigger than yours. Yes. Diplomacy is dead in the water. The only way is for Trump to get on his knee and beg forgiveness. This seems to be what the Democrats want and then they will bash the Republicans in 2018 with it in the elections. So lets get realistic here.
Trump’s last statement was : “We will see what happens. We think that lots of good things can happen and we can also have a bad solution. ” There is nothing else he really can do. So why all this blaming Trump? We are dealing with a dictator who is playing straight out of the old Marxist Play Book of the Cold War.
Stasi East GermanyKim Jung-un’s power lies in his secret police force exactly as the Stasi in East Germany. There is one way you dominate a state. That is you follow the Julius Caesar strategy but instead of using it against state enemies, you turn it against your own people. You divide and conquer making people spies on their own neighbors so everyone is watching everyone else and reporting
venetian-mouthoftruth-copyThe Venetian Empire eventually crumbled by the same strategy of divide and conquer turning neighbors against neighbors. It was called the Mouth of Truth. Anyone could drop a slip upon anyone else and accuse them of whatever. They were immediately seized and assumed to be guilty.
Kim Jung-un maintains power in this classic manner. He has turned North Koreans against each other. Everyone is afraid to speak freely for being turned in.
I have written before that I went behind the Berlin Wall before it fell with a friend to visit his family trapped there. We took a walk and his cousin would always be looking around. She would speak truthfully only when nobody was in listening distance. As soon as anyone came near, she would immediate go into a skit of how great it was to live there and how wonderful the state was to take care of them.
smelling-jars

Those in the West have no concept of how evil a state can become. I have warned that revolutions come from the left because that is where dictators are born with the desire to rule people. The right fosters the drive to freedom and the desire to be left alone. The notorious Stasi secret police of East Germany is notorious for surveillance and dividing the people turning man against his brother until there is no single opposition against the state. When the wall came down, the extent of the secret police operations targeted against their own people was mind-blowing. What surfaced was their “smelling jars” collection. Yes, the Stasi used odor recognition to keep tabs on anyone they suspected. The Stasi often collected the samples covertly by breaking into homes to stealing a suspects’ used underwear. They then kept them in jars in case they turned up missing to hunt them down.
It is quite possible that Kim Jung-un has employed the same tactics that have existed throughout his dynasty. Quite frankly, diplomacy NEVER worked with the Soviet Union until the state could not economically function. Sanction can perhaps help that process is 100% enforced, but it is something that is inevitable and therein lies the danger.
The people of North Korea have to rise up against the Secret Police. The frustration of the people will explode at that moment and we will see a period of wholesale lawlessness. As familiar social and political institutions fell along with the Berlin Wall in East Germany, crime erupted almost overnight and the policing system in East Germany could not cope with the dramatic change causing the police to collapse.
A close look at the fall of East Germany is a guide to how North Korea will fall. History repeats BECAUSE human nature is the same throughout centuries regardless of culture or language. People will respond the same way no matter what.
There were local East German elections on May 7th, 1989 which were rigged but perhaps more obvious this time. Small demonstrations followed were quickly dispersed with Brut force by police and the Stasi, but this time the dissatisfaction did not simply subside as usual. It continued to foster for 186 days (26.5 weeks) until the Berlin Wall fell on November 9th, 1989.
During 1988, reformers inside the Hungarian government opened their border to the west and allowed Hungarians to leave for Austria. Then in 1989, Hungary began allowing East Germans on Hungarian soil to leave for Austria as well. Czechoslovakia blocked East Germans from fleeing to Hungary. The government in Prague was holding firm to communism. During August of 1989, East Germans began seeking refuge in the West German embassy in Prague. In August, there were thousands of them, camped out in the cramped confines of the embassy grounds. Czechoslovakian authorities tried to stop any more from coming into the city, but that effort failed.
Therefore, during August of 1989, as East Germans began storming West German embassies in Prague and Budapest in hopes of receiving asylum in West Germany, this made the West German television, which was watched by almost all East Germans. When the people saw the stampede, only then did the atmosphere within East Germany start to explode. Now large demonstrations began to take place in Leipzig during an international trade fair in September 1989. Again they were broken up with sheer force by the police and Stasi.
It was then in September 1989, that the Hungarian government simply opened its borders and East Germans began to pour out of the country by the tens of thousands. It was against this backdrop that the East German government prepared to celebrate the country’s fortieth anniversary on October 7th – a day that would truly be remembered in the Communist world.
It was  October 7th and 8th that became East Germany’s “revolution.” On these two days, the East German state collapsed. The Soviet Premier Mikhail Gorbachev, became a symbol of hope to many East Germans, and the events in Hungary with the storming of the West German Embassies in Prague and Budapest were now the catalyst for large-scale protests throughout the country. On the 7th, a huge spontaneous demonstration erupted with several thousand East Germans pouring into the center of Berlin that nobody had seen since the 1950’s.
The East German police had been prepared for weeks to expect “counter-revolutionary” actions by “enemies of the state” to protest on October 7th.  However, the police officers never saw such a crowd. They had no idea how to deal with any sort of mass protest where they were confronted with the hostility of thousands of very angry citizens. Both police and Stasi were involved in the operation where they did beat and arrested more than 1,000 people. The police stations and prisons were overwhelmed. The protesters were denied everything including foo and the use of toilets.
It was October 9th, 1989 that became the crucial turning point in this fostering revolution. In Leipzig, a traditional prayer service turned into a demonstration by 70,000 as reported in Spiegel on October 16th, 1989. The East German army and all security forces had been mobilized, but the crowd was massive. For the first time in East German history, the Stasi backed down and did not break up the protest probably due to its size. This marked the beginning of change in East Germany and the victory over the state succeeded in 155 days (22.1 weeks) 0.424 (about 43% of a year 1/2 of 8,6 cycle). Meanwhile, on November 4th, 1989, the Czechoslovakia border was opened for East Germans, even while it still stood as a barrier to the citizens of Czechoslovakia themselves. Just five days later, on November 9th, 1989, the Berlin Wall fell.
The lesson that we have to draw here is not diplomacy, but the North Korean people need to know they can rise up and win. Such revolutions take place very rapidly. Here we saw East Germany fall in just 26 weeks. The strongest weapon is information. The news has to focus on the people and what they stand to gain. Show how China is now the second largest economy and Chinese tourists have replaced Russians and Japanese everywhere around the world. Give the people hope, Kim gives them oppression. His Marxist handbook is outdated. The tilling the soil and slave of the state has come to an end globally.
If we look at Ukraine, we see that on January 4th, 2013,  the daily Komsomolskaya Pravda Ukraine, reported that Yanukovich mentioned three priorities in his country’s foreign relations: the country’s presidency of the Organisation for Security and Cooperation in Europe; the signing of an Association Agreement with the EU; and the development of “close partnership” with the Customs Union between Russia, Belarus and Kazakhstan, as well as with other organisations that he did not name. This raised the hopes of the people. I reported in December 2013 how corruption of the police in Ukraine was staring to come to a head. It was being exposed how they even killing people with no accountability.
The week of August 19th, 2013 in Ukraine, appears to be the turning point. Based upon sources, this was not merely when American National Security Agency whistleblower Edward Snowden was granted a one-year temporary political asylum in Russia and leaving Moscow’s Sheremetyevo Airport on August 1st, 2013, but this was the catalyst for a change in mind of Yanukovych to back away from the Association Agreement with the EU, which was being hotly negotiated in January 2012 and was initialed on March 30th, 2012 in Brussels.
Anti-government protest in Ukraine
Mass protests erupted in November 2013 when Yanukovych announced that he would not proceed with long-anticipated association and trade agreements with the European Union (EU) on November 21st.  On the 24th, a protest with about 100,000 people erupted on Sunday in Kiev in support of joining Europe rather than Russia. I reported back then:
“Ukraine has a lot of political pressure coming from Russia and Europe. Russia is said to have threatened to turn off the natural gas to the Ukraine if it joined the EU and Europe is promising to supply it gas even though it would be getting that energy from Russia. To say the least, the events in Ukraine are politically very important as we move beyond 2014.”
The day after I reported that our sources were reporting that Russia objected to the signing of the Association Agreement  was officially admitted on November 26th, 2013. The Ukrainian Government admitted that Russia had asked it to delay signing the EU association agreement and that it “wanted better terms for the EU deal.”
Now, by November 30th, general public support grew for pro-EU anti-government protesters as images of them bloodied by police crackdown spread online and in the media. Then on December 1st, about 300,000 people protested in Kiev’s Independence Square known as Maidan. One December 17th, Putin announced plans to buy $15bn in Ukrainian government bonds and a cut in cost of Russia’s natural gas for Ukraine to try to help the government.
Yanakovich outlawed the formation of any crowds. Again, on the 16th anti-protest laws are passed and quickly condemned as “draconian” and the on the 22nd, two protesters died after being hit with live ammunition. A third died following a fall during confrontation with police. Then as the pressure kept building from the people, on January 28th, Mykola Azarov resigned as Ukraine’s prime minister and the parliament repealed the anti-protest laws that caused the demonstrations to escalate in the first place.
On January 29th, a bill was passed, promising amnesty for arrested protesters if seized government buildings are relinquished. Then on January 21st the opposition activist Dmytro Bulatov was found outside Kiev after being imprisoned and tortured for eight days, apparently at the hands of a pro-Russian group. This merely intensified the protests and on February 16th, the opposition activists ended their occupation of Kiev City Hall in exchange of 234 jailed protesters.
Yet more street clashes continued leaving at least 18 dead and around a hundred injured and then on February 18th, major violence began when protesters attacking police lines after the parliament stalls in passing constitutional reform to limit presidential powers. Protesters took back the government buildings. Then on the 20th, Kiev saw its worst day of violence for almost 70 years. At least 88 people were killed within 48 hours. Footage showed government snipers shooting at protesters from rooftops, yet nobody would ever be prosecuted.
Ukraine-Livi
Protest leaders, the political opposition and Yanukovich agreed to form a new government and hold early elections by May 25th on February 21st. Yanukovich’s powers were reduced sharply and the parliament voted to free Yulia Tymoshenko, the former prime minister, from prison, which it had refused to do as a demad by the EU in signing the Agreement. Yanukovich flees Kiev after protesters take control of the capital. Finally, on February 22nd, the Ukraine politicians vote to remove Yanukovich and Tymoshenko was freed from prison speaking to those gathered in Kiev.
On February  23rd, pro-Russian protesters begin to rally in Crimea against the new Kiev administration. The next day, the Ukrainian interim government drew up a warrant for Yanukovich’s arrest.
While Ukraine left the Soviet Union on Sat., Aug. 24, 1991 (1991.6465753), here we find from start to finish was 26 months from the first step to open up with the EU. Here the pretend analysts all claimed that Ukraine was a CIA plot demeaning the people of Ukraine for their uprising. Yes, the US was in there as was the EU trying to hand pick their own leaders. But the uprising was that of the people. That is the only thing that changes the real balance of power.
In this case, from the first protest on November 24th to the removal of Yanukovich, it was 91 days or 13 weeks. Once again, the Revolution Cycle can take place in as little as 13 weeks or twice as long to 26 weeks. The point is – things can happen fast if the people become inspired.

My advice – talk to the people not Kim.