The first opportunity for a major dollar high is 2018 and after that comes 2020/2021.

The Dollar Remains King

Posted May 8, 2017 by Martin Armstrong

QUESTION:  Hi, I’ve read your blog for a couple of months now and it clearly opened my eyes. But I’m wondering if I’m getting crazy now.. I can see a pattern between rising Chinese yields (despite weaker growth), parked Chinese money in the Canadian & Australian housing bubble, plunging commodities (very bad for Australian and Canadian people who have to pay of their massive mortgages) and why all this will lead to a rising dollar. Am I looking in the right direction? A.S.

ANSWER: Yes. The only way to reach the economic crisis that forces political change is to put on the maximum amount of pressure. It does not even require that what people BELIEVE will happen, happens. Human nature is such that we all act in anticipation of events. Sure the Euro has bounced on belief that BREXIT is a passing phase. But the election of Macron was the worst possible outcome as it should have been for it in the Euro that will crumble as Brussels now tried to federalize everything to secure it own survival against the people of Europe.

The dollar rose between 1980 and 1985 on the fears that the USA would default creating a two-tier monetary system with red dollars externally and green dollars internally. The US national debt hit $907.7 billion in 1980 and the Eurodollar market was about the same. The Europeans were convinced that the US would default by adopting a two-tier dollar. Consequently, between 1980 and 1985, Eurodollar deposits fell by about 50% and the Europeans moved their accounts to the USA where they thought they would get green dollars. That was the number one question I would get at seminars and conferences in Europe between 1980 and 1985. It never happened. Yet the “belief” it might moved capital to USA and that sent even the British pound to $1.03 in 1985.

Only the dollar moving to all time record highs in 1985 sparked the Plaza Accord. However, that is where the whole idea of the Euro was born. Jim Baker saw THE PROBLEM AS THERE WAS NO CURRENCY TO COMPLETE AGAINST THE DOLLAR. Baker urged Europe to create a single currency to prevent the dollar from rising, which then reduced US exports.

The national debt continued to rise reaching $2.125 trillion by 1986 and $3.2 trillion by 1990 and now we are at $20 trillion by 2017. The Dow Jones Industrial average was 1,000 in 1980. So exactly how is 21,000 on the Dow today out of like from just the expansion in debt?

You can see the correlation below. Our number remains 23,000 on the Dow where things begin to get interesting. So far, it is just keeping pace with international value. The first opportunity for a major dollar high is 2018 and after that comes 2020/2021.

A Cashless Europe – Stupidity Has No Limitations

Posted on February 3, 2016 by Martin Armstrong

QUESTION:

Martin,

An all electronic currency seems almost inevitable to some, however as you have stated in the past not everyone ha the ability/facility to transact solely electronically.

With cash being anything which is agreed the most marketable asset, wouldn’t the people of Europe just transact in another form of cash (USD, gold, silver etc.)

Is there a large enough cash alternative to the euro? (probably not)

I assume then the majority will perish while the thrifty will already be in USD.

Do you think they could actually coordinate a move to electronic currency on a world scale all at the same time?

so many questions

Regards

ANSWER: Assuming this is not globally coordinated, which would take brains and probably years to accomplish, the typical move by politicians has been to assume they are ALL POWERFUL demigods, and as such, they focus on their domestic fiefdom only. They are already hunting gold. The French had to leave town to buy or sell because the gold dealers were driven out of business with regulations that demanded they report everyone who bought or sold. They even chased out the rare coin and antique shows, as the dealers went to London and Zurich where they did not have to report on everything bought or sold. This is just an example of how they see the world through their own power. In the USA, both the city of Philadelphia and Atlantic City are destroying their own existence because they demand income taxes from anyone holding a convention or event there. We will never hold another conference in Philadelphia. They built a convention center with taxpayer money in the hundreds of millions of dollars that now remains in the dark most of the time.

Gold will be driven underground. If you have too much gold jewelry on, they will pull you over and weight it at the airport. 

In all cases where a currency has been cancelled or the confidence in government collapses to any extent, from Russia to a Zimbabwe event, the people use the currency of a neighbouring country. The best thing for Europeans to do right now is to hoard U.S. dollars in cash — not euros, and not even Swiss francs. The Swiss will surrender to the demands of the EU, so I would not count on those 1,000 Swiss franc notes remaining valid for long either. The USA would find it extremely difficult to move to electronic currency. The USD remains the legal tender since 1792. It has never been cancelled and it might even spark a breakup of the USA with the Bible Belt whom is moving to secede.

The Japanese kept demonetizing the currency with each emperor who came to power. They routinely devalued all outstanding currency to 1/10th of his new coinage. People could not hoard money so they turned to Chinese coinage. Japanese Emperors LOST the ability to issue money for nobody would accept it. Japan ceased issuing coins for 600 years and bags of rice and Chinese coins filled the vacancy.

Another alternative that will not set off the metal detectors will be diamonds, but this is a tough market with high margins. If you can get purely investment certified stones, perhaps. But this is an opinion-oriented closed market.

Understand how stupid government rulers really are. The difference between STUPIDITY and GENIUS is very clear: GENIUS has its limits. Why do the worst possible people want to rule? It is a question for a psychological study that is desperately needed.

Euro Crisis & the Dollar- The euro held the Yearly Bearish at the 103 area. Might break after May.

Posted on February 3, 2016 by Martin Armstrong

We are finishing up the world currency reports. The reports are not ready at this time, but we will make an announcement once they are available.

As we stated at the conferences, nothing appears ready to break before May. Nevertheless, the crazy period ahead appears to be the 2017-2020 time frame. The euro held the Yearly Bearish at the 103 area and elected the 116 number. Normally we would see a rally first to retest that area before turning down.

Technically, this view from the reversal model is also supported. When we broke that up-trend line, there was no retest. The euro just collapsed. We should mount some sort of a retest. As far as breaking the 80 cent level, as we have stated before, that is not short-term, but long-term. This type of move will send the U.S. dollar higher after 2017.

Every time the dollar moves to record highs, we get major monetary reform. Roosevelt devalued the dollar in 1934, and in 1985 when the dollar was pushed to all-time record highs they formed G5, which is now G20. When it broke in 1971, we ended up with the Floating Exchange Rate System. Extreme moves in the dollar spark political economic reform. Governments see this coming and are preparing to move electronic.

This is the type of move we need to see to create the change in the monetary system once again. It will probably take the form of the U.S. dollar no longer being the reserve currency. We will probably be looking at some electronic currency based on a basket.

So nothing has changed yet. We have a long, hard, road ahead into 2020. The Fed knows there is a problem and raising rates may attract too much capital inflow. They are entertaining negative interest rates to ward-off the inflow of capital. Of course, such a move will create a massive collapse of pension funds nationwide. Most state pension schemes will go belly-up.

I may not be a Christie fan for I do not see him overhauling the tax system in New Jersey. Yet, he at least admits that there is a problem. Social Security will be broke in 2017. Negative interest rates will really destroy it.

Christie commented on the crisis:

Let me be honest with the people who are watching at home. The government has lied to you, and they have stolen from you. They told you that your Social Security money is in a trust fund. All that’s in that trust fund is a pile of IOUs from money they spent on something else a long time ago. And they stole it from you because now they know they cannot pay these benefits, and Social Security is going to be insolvent in seven to eight years.

Posted in Uncategorized | Tagged Christie, Dollar, Euro, Federal Reserve

USD / Yuan - we have elected ALL FOUR of the Monthly Bullish Reversals, confirming the change in trend

China Shuts Down FOREX at Foreign Banks to Try to Stop Dollar Rise

Posted on December 30, 2015 by Martin Armstrong

China has suspended FOREX business at three main foreign banks for the first quarter of 2016 in an effort to curb the outflow of capital into the rising dollar. This is an interesting attempt to curb the rise in the dollar and it is clearly showing the overall trend in motion.



It is interesting that China has taken this approach for we have elected ALL FOUR of the Monthly Bullish Reversals from the January 1, 2014, low in the dollar, confirming the change in trend. We still recommend that China just float its currency, for the West will blame it for manipulation when, in fact, the global trend is toward a strong dollar into 2017.

Origin of Dollar Sign

Posted on November 19, 2015 by Martin Armstrong

Apparently, there is some new conspiracy theory running around that claims that the dollar sign ($) is some sort of symbol for a secret banking cartel because “S” is not found in the word “dollar”. Sorry, it seems that these people are desperate to create some support for whatever it is they are trying to say. First of all, the word “dollar” comes from the German “thaler” because there was such resentment toward England that the colonists refused to use the word “pound” for money.

The British needed money badly, so they demanded any payment from the colonists was to be in silver and gold, but any payment to America was to be in copper. This resulted in AMERICA being starved of money to the point that they issued paper money. The standard coin used in America was the Spanish 8 reals, which became the dollar. A piece of eight was cutting this up like a pie. One eighth of a dollar or one silver real was one “bit”, so 2 bits was 25 cents, 4 bits was half a dollar, and 8 bits equaled a dollar.

Therefore, the dollar sign “$” came from the Spanish 8 reals, not from some secret banking cartel destined to rule the world. There is no secret hidden image of meaning behind the symbol. It was merely taken from the Spanish coins that were in circulation throughout the American colonies since the British needed money and extracted everything from America, just as governments are doing again today.

The Dollar Rally is the Key

Posted on August 13, 2015 by Martin Armstrong

QUESTION: It seems as though the rally in gold is short covering? If it is, and all bottoms start that way, why is this not the bottom?

Always read your work with great interest.

Yours truly,

JB

ANSWER: 

Major lows are always short-cover rallies, but they are much more dramatic. Here we had gold struggling to rally as it made a dead cat bounce when oil was making new lows. That showed the cycle was indeed higher, but gold was flat while oil was crashing. What moves sideways during an up cycle and what will not rally moves lower with more gusto when the cycle turns back down. In this case, gold held and finally began to exceed the reversals only when the other commodities in the sector completed their cycles. Gold had to wait.

PRICE is entirely separate from TIME. We have been warning for years that we should see a dollar rally that may even exceed the 1985 high. The yuan made the 19 year low in 2013 and last year we had an outside reversal to the upside, showing that the dollar was indeed in an uptrend. The crack in the euro, the pound, and the C$ have combined to confirm that forecast of the trend.

So what we need to complete here is the dollar rally. There is about $9 trillion in dollar short positions from emerging markets. Clients around the world have been calling us in for consultations, as usual, since the number one creator of havoc is currency. More than 75% of corporate losses have to do with currency.

We have not yet felt the pain needed to create the major global shifts for the future. The TIME is not right. It appears to be the second benchmark. If you look at these markets from a connected basis, it becomes easier to see the trend. Our forecast for a dollar rally is critical to the outcome as a whole and we are seeing the subtle pressure building, as with China’s devaluation. A dollar rally will create global chaos and that is the key to political change. If you are familiar with charts, our Dollar Index back to 1900 shows that the dollar is still alive and well with a new spike high being within the realm of possibility.

China & the Dollar

Posted on August 11, 2015 by Martin Armstrong

The dollar rally and the devaluation of the yuan is not a fluke and it most certainly is not a one-time event. The dollar declined against the yuan for 19 years during the same timing that saw gold decline from 1980 to 1999. The major low on an annual closing basis at 2013 and 2014 was an outside reversal to the upside for the dollar. The Yearly Bullish Reversal stands at 683 and technical resistance stands at 658. The dollar filled the gap that existed prior to 1994 and is yet another confirmation that the dollar rally is underway.

Yes, the world trade is contracting and will get much worse after October. Governments are destroying the world economy on their hunt for taxation. Politicians are hunting money as if it were some sport and are undoing everything that was built postwar. Numerous reports are coming in to us about people traveling on trains and having their bags searched for money in Europe. The hunt for cash is wiping out the world economy. Americans are being thrown out of banks and mutual funds everywhere. FATCA has forced Americans to repatriate dollars. The only real Americans who can operate overseas are now established multinational companies. Small companies cannot expand from the United States nor can individuals send money anywhere.

Add to FATCA the problem in Europe and we see capital still pouring into the USA from both China and Europe. The real estate cycle has/or will peak with this turning point around the world from Switzerland, Britain, Canada, to Asia right down into India and Australia. We are plagued by politicians who have absolutely no clue how to run an economy and it is now all about them retaining power virtually everywhere we look.

The dollar rally is unfolding despite the fact people do not understand why. They look only at the USA debt and assume the dollar must crash, when in fact, the problem we face is on a global scale and $18 trillion in U.S. debt is simply not the large enough for international capital to hide. The future is going to be anything but a textbook move. This is why this year’s World Economic Conference is going to be a real eye opener.

USD turnaround in Sept/ Oct 2015

Per Martin's cycle, he believes that dollar will peak in Sept / Oct 2015.

US may decline at first with the DAX and then base turning up for the last 2 year phase transition into 2017

Posted on February 28, 2015 by Martin Armstrong  

Reply

The US share market compared to the DAX is lagging. We can see our Energy models have been declining as we have pressed begrudgingly higher. The Oscillators, more commonly used, are crawling at the highs. While we still see the potential for new highs here in March, the lack of a spike high on our Energy Models compared to the DAX is telling for the long-term. This strongly suggests that the US share market will make new highs after 2015.75 on a capital inflow.
 



We appear to be in that 1927 moment where the Central Banks secretly got together and tried to deflect the capital inflows to the USA to help Europe. The USA lowered its interest rates in 1927 and then was forced to raise rates virtually doubling them trying to stop the rally into 1929.



What we are currently looking at is perhaps the False Move. The US may decline at first with the DAX and then base turning up for the last 2 year phase transition into 2017. This too may line up with 86 years from the Sovereign Debt Crisis of 1931. So here too we could be facing the dreaded TENTH WAVE. A False move will shake the tree and get the fundamentalists on the bearish side yelling “see – I told you so.” Obviously, this will be one of those times we need an unbiased global capital flow model to track where the money will be shifting to.



We will be putting on line our famous Capital Flow tracking system that only the biggest institution ever got to see. This will be available to those brave souls ready to cross that line from the old world of personal opinion into the new realm of a computer that really is tracking the world. It would take thousands of analysts to do this and then you need a team they report to and finally someone at the top of that to coordinate the disparities. This is the only way ahead to the future. There really is none other. Personal interpretation and soap-boxes are just still preaching the world is flat. Fortunately, there will always be skeptics who will prefer fundamental analysis so no worries – the majority will always be in the dark. It is like politics 45% will vote Democrats no matter the evidence and 45% will vote Republic refusing to ever switch. Ah! But that 10% are the real movers-and-shakers in society. This is for that most distinguished 10%.

Dollar displacement by the peak of the next 8.6 year wave 2024.35 ?? - see graph

The Petro Dollar is Dead – Long Live the Dollar

Posted on January 19, 2015 by Martin Armstrong

QUESTION: Martin,

I have a friend who is concerned about the impact of Russia’s breaking with the petro dollar.  I explained to him your point that trade is a small piece of the world economy and that the dollar (which is really the U.S. debt market) is still the only market large enough to absorb world reserves, and that is why the dollar is king.

However, I would also like to hear if you have any other thoughts & forecasts on the petro dollar.

-DB

ANSWER: This will have no impact on the dollar short-term. The real importance here is the setting of the stage for the one-world reserve currency. To reach that point, what we need is a strong dollar rally that will hurt the world economy significantly forcing political change. This is ripe for Obama has done far more to destroy the integrity of the United States than anyone could have possibly imagined. In just 3.14 years, he wiped out decades of peace and reignited the cold war. He loves to play golf costing the taxpayer tens of millions of dollars for each game and has missed more morning briefings than the last 10 presidents combined. Nobody could have possibly set the stage for the collapse of US power more so than he has done. Then and only then will we move to solve that problem with a replacement for the dollar. Obama and the NSA have set the stage for changing the monetary system.

So the resistance toward the dollar is there waiting in the wings. However, this will not prevent the rally near-term in the dollar. It is illustrating that eventually we will abandon the dollar as the reserve currency and the botched job creating the Euro has also contributed to setting this trend in motion. Displacing the dollar takes decades to accomplish for it is one domino at a time. Such profound changes to the world monetary system are not accomplished overnight. It took 26 years to wipe out Bretton Woods. From 1971, it was 26 years to the start of the Euro and the Asian Currency Crisis. We should see the dollar displacement by the peak of the next 8,6 year wave.

You can see the one-world currency coming – it’s just not ready this instant. It will be the solution they choose. Even the IMF is planning meetings on the SDR guess when? Around 2015.75.

Understanding the Bond Bubble

Posted on January 18, 2015 by Martin Armstrong

The Swiss Peg cracked because of the flight of capital from Euroland. There is still a risk that the money flows more into treasuries going into the end of the summer. The more unstable Euroland APPEARS, the more capital will flee to the dollar. The higher the dollar, the more PROFIT on US debt for foreign investors.

This is similar to the 1987 Crash that took place in equities. The 1987 Crash was currency driven set in motion by another BRAIN-DEAD idea of forming the G5 in 1985 to manipulate the dollar lower. It was the Plaza Accord that forced structural changes in Japan known as “reforms” all designed to lower the US Trade Deficit that was not even real. The lawyers in charge looked at the current account and did not understand the more Japanese invested in US government bonds, the inflow appeared in the capital account while the interest payments flowed out of the current account these fools assumed was trade.

 The stock market crashed because foreigners perceived the dollar would decline by 40% and sold dollar assets. We are looking at this phenomenon in Euroland. The spread between German 10 year and US 10 Year Treasuries may prove to be the trade of the century later in the year (short Germany Long US). German rates .45% v 1.84%.

Dollar v Swiss – 2011 Low Still Holds. 26 year peak in Swiss real estate.

Posted on January 18, 2015 by Martin Armstrong  

Reply

The dramatic move in the Swiss franc may have confirmed two other interrelationships. Against the dollar, we wrote at year-end “The Swiss is currently trading at 9934 and a mere year-end closing above 9785 will signal that indeed the 2011 low for the dollar will hold and that a test of the 11800 followed by 12300 level then becomes possible.”

Despite the wild move, the 2011 low was 7185 and the low on this dramatic move was 7406. The 2011 low did hold. This only warns that we will see the dollar rally as the next nail in the Euro is driven. The losses are mounting around the world showing all the so called professional who seem to have believed mainstream media’s propaganda campaign to support the Euro. Everest Capital was forced to close its largest hedge fund. The managers were betting on a decline in Swiss francs. After the surprising decision of the Swiss central bank of the hedge fund lost more than 800 million dollars.

However, the other aspect we were watching in Switzerland was what appeared to be a peak in real estate for 2015 on a 26 year cycle. There has been a major influx of European capital fleeing into Switzerland to escape Euroland. With the surge in the Swiss against the Euro, that has created a virtual Phase Transition top in real estate. Look to take your profits before it is too late.