Annual closing below 121.50 to signal the Euro will move into meltdown sending capital into the dollar that could make the blast upward in the Dow

12298 is Closing Support for the Euro

Posted on December 5, 2014 by Martin Armstrong

The Weekly Bearish Reversal lies at 12298. A closing below that today should signal a new low next week. Keep in mind 12150 is the key Yearly Support. We need a closing below that to signal the Euro will move into meltdown sending capital into the dollar that could make the blast upward in the Dow to the first barrier of resistance.

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The dollar up will turn the US economy down hard and unemployment may indeed truly reach 25%

Deflation v Inflation – Comprehending What Will Come

Posted on December 5, 2014 by Martin Armstrong

QUESTION: Martin,

While I clearly understand your reasoning for deflation in the US allied to a very strong dollar; does the opposite apply to those countries, like the UK and European economies where their currencies are likely going into freefall?

Keep up the brilliant work. Is the movie coming to the UK?

AB

ANSWER: Yes. Britain abandoned the Gold Standard first during the Great Depression and its economy end the deflation and was the first to recover. This was one of the very arguing point of George Warren to devalue the dollar to Roosevelt to re-inflate the economy. Germany has imposed deflation on everyone really tearing the European economy apart because they do not understand why they even went into hyperinflation.

The rise in the dollar in the US as other other economies were defaulting pushed the USA into a deflationary depression. This then set in motion protectionism as they failed to understand the mechanism unfolding.

It is important to understand the mechanism. The collapse in currencies that will force the dollar up will then turn the US economy down hard and unemployment may indeed truly reach 25% since it is now 12% on a good day.

This was our old forecast for unemployment from 2010. Nothing has changed. Once you realize that this is not some PERSONAL OPINION of what I would like to see happen or what I “think” will happen, then there is hope that you will grasp the way to zig and zag if you at least comprehend your opponent.

The decline in other currencies is NECESSARY to relieve the economic pressure. The negative side today that did not exist during the Great Depression is the crisis in pensions. This is why I warn we are in the collapsing trend of socialism. All the unfunded promises will evaporate. Government will not print money to cover them, they will prefer war to eliminate obligations. Just look at Ukraine. The people rose up and now the new western installed government tells the people that reform will come AFTER they win the war. Government NEVER go into hyperinflation when they have an established economy. That unfolds in revolutionary governments as was the case in Germany, Russia, France, and even the USA. In with the new government that defaults on the obligations of the previous. There is absolutely no case of an established government with a police force and a bond market deliberately moving into hyperinflation. That would be intentional suicide. Just open you eyes to the policies of Germany and the IMF.

Euro - The critical number at year end will be 121.50

The Euro – Clinging to Life?

Posted on December 5, 2014 by Martin Armstrong

Reply

The Euro bounce into mid December has resistance at 123-124 followed by 128-129. The critical number at year end will be 12150. A year-end closing beneath this level will be long-term bearish. However, support will lie at the 118-120 level next year. A closing above 121.50 will suggest that the euro is not ready to collapse at this time and we may need to wait until 2016. The key resistance will stand at the 135-137 level for 2015. The critical support lies at 116. Once this area is broken, then the Euro will collapse to retest the par level against the dollar. We can see that we have a convergence of support this year at the 122.70 area from a technical perspective. This lends more significance to the 121.50 level for the year-end closing.


 

Russian devaluation

Can Money Just be Devalued Creating Deflation as a Solution?

Posted on December 2, 2014 by Martin Armstrong

QUESTION: Mr. Armstrong; Is it possible that governments devalue currencies to confiscate capital like taxes? It really does not seem likely that these people have any intention of moving into hyperinflation. They are increasing money supply but at a slower rate than the destructive deflation. It clearly appears governments are in a confiscation mode and it looks like they can just half the value of your money rather than inflate to cover costs. Has anyone taken that approach in history before?

Thank you ever so much. I really enjoyed the movie. It was a mind shocking experience. It is one of those films you have to see twice. The question and answer session was tremendous. The whole audience seemed to want to know where to put their money now.

GK

ANSWER: Yes, Amsterdam was awesome. Putting me on the nightly news I was told was very impressive. It just illustrated how on point this topic truly is. The more people who see this film the harder it will be for them to pull the wool-over everyone’s eyes.

The answer to your question concerning devaluation is ABSOLUTELY. There is more than just one way to skin a cat as they say. Roosevelt confiscated gold and then devalued the dollar to prevent people from profiting from the rise in gold from $20 to $35. In fact, the last time the confiscation approach took place aside from Roosevelt was immediately following World War II.

The Soviet government first issued a ruble after the revolution in 1917 (see above). They too went through hyperinflation and in 1922 they issued the second ruble that replaced the 1917 ruble at 10,000 to one. Why would people buy bonds of a nation that was anti-capitalist? At the same time as the German hyperinflation also caused by a communist revolution, we see the mirror hyperinflation within Russia. The next year they issued the third ruble valued at 100 to one of the 1922 ruble. The fourth ruble was issued in 1924 and this was a gold ruble valued now at 50,000 old rubles.

In 1947, Russia changed course from hyperinflation to confiscation. This new approach was implemented with a confiscatory re-denomination of the currency, which was decreed on December 14, 1947. The purpose was to reduce the amount of money in circulation. The main purpose of this change was to prevent peasants who had accumulated cash by selling food at wartime prices from using this to buy consumer goods as the postwar recovery took hold. Even under communism, raw commodities could not be fully controlled especially during periods of war.

Old rubles were revalued at one tenth of their face value. This mainly affected paper money in the hands of private individuals. Amounts of 3,000 rubles or less in individual bank accounts were not revalued, while salaries remained the same. This is very similar to IMF proposals that accounts under €100,000 would not be confiscated in their original proposed bail-in. Now, they seem to have moved toward an across the board confiscation.

The proposal at the G20 is to take cash from accounts to cover losses in banks. This is the very same proposal imposed by the Communists in Russia – just have to get those capitalists. This is why I have been warning we are in the last death throes of Socialism. Those at the helm will make the very same decisions as those in Communism. Nothing ever changes. The same solution is always reached independently by those in power. Nobody ever asks – has anyone tried this before? Did it work?

Gold- This now cleans out the shorts. Resistance stands at 1217.

Gold

Posted on December 1, 2014 by Martin Armstrong

ANSWER: Yes this is the pop. We got the Panic Down on Friday, the Monday low, we need a closing above 1208 to suggest pressing higher. Welcome to the new age of rising volatility. This now cleans out the shorts. Resistance stands at 1217. A close above that should signal some further upside.

FATCA- reversing the US economy into isolationism and is paving the road for China

USA – Is It time to turn off the lights?

Posted on December 1, 2014 by Martin Armstrong

Reply

We have a very serious problem with taxation. Only the United States and Japan regards its citizens as state property. Taxes are normally owed based upon the concept that you are paying your “fair share” predicated on use. But the United States views it simply owns anyone born in the United States or overseas if they had even one American parent. This is in reality slavery that no state should own its citizens as property.
The Washington Post has reported the plight of the Mayor of London Boris Johnson’s remains in a major dispute with the U.S. Internal Revenue Service. It would be very nice to see everyone come together and challenge this to the Supreme Court for those are the pro-government judges that ruled all Americans belong to the state and that paying your “fair share” has nothing to do with taxes – just hand over whatever you have.
The mayor’s dispute with the US tax-collectors was brought to light when he traveled to the United States and did a blitz of interviews with the American news media. He explained that the U.S. government was forcing him to pay the capital gains tax on the sale of his Islington home. “Can you believe it?” When asked by Rehm if he intended to pay the bill, he said that he would not. “I think it’s absolutely outrageous.”
Boris Johnson was born in the USA but returned to England with his parents at the age of 5. He has never lived in America, but that means nothing to the IRS. They are hunting everyone everywhere. They have been sending letters to people in Canada who they figured out had one American parent but have never lived in the USA. I previous wrote about a couple in Switzerland where the wife was American living there with her Swiss husband for 20 years. When their 14 year-old son was ready to open his first bank account, he was told no way because he was America. Even foreigners married to Americans are being compelled under FATCA to disclose they are married to an American and the risk of being denied the right to have a bank account. I use to have American Express cards in USA, Britain, and Japan. That way, I paid my local bills in the local currency. Today, no credit card can be issued to an American outside the USA.
Americans are being prejudiced everywhere. What is most revealing, Obamacare notes the distinction between living in America and overseas. Ex-pats are exempt from Obamacare for they are assumed to have healthcare where they are. Otherwise, they would have to buy health insurance in America that would never cover them outside the country.
Congress NEVER directed that Americans pay taxes worldwide simply because they were born in the USA or had one American parent. This whole scheme was crafted by the Supreme Court who merely ruled that Congress did not exclude foreign income, so it must be included. The way this is being applied is outrageous. Americans are unable to do business outside the USA with local accounts because no bank will deal with Americans thanks to FATCA. These idiots cannot grasp that this is reversing the US economy into isolationism and is paving the road for China to take the lead. It is time to turn off the lights.

Gold closing BELOW 1042.50 at year-end will open the door to that extreme decline

Gold – One More Pop or Collapse?

Friday came in with the Panic Cycle on target. The polls in Switzerland were showing little support for the Save Our Gold issue. Nevertheless, as we approach year-end the major trading range will be 1310 to 1042.50. These are the outer end range boundaries and closing between these two numbers will leave gold in a bearish mode for 2015 as we head into the targets for the benchmarks.



Gold still has the potential for a manipulation pop into the seasonal turning point. However, the primary resistance remains in the 1250-1275 area. Only a closing above 1310 would save gold at year-end and that does not seem to be likely.
A break to new lows now will warn of a seasonal low on the next target with a two month bounce followed by a drop into the benchmarks. Friday’s Panic Cycle warns of perhaps an initial low on Monday until the Swiss vote really sinks in as to what it now means. This can be a real game changer for 2015.
Keep in mind that a closing BELOW 1042.50 at year-end will open the door to that extreme decline beyond the initial target support. In other words, break that key level too early and that means we will see a real dump that could extend back to the $630 target area.
For now, brace yourself. It looks like a lot of fun and games for 2015 on the horizon. Now that the Swiss central bank CAN sell its gold reserves, look out. When you ask a question, you better know what the answer will be or you end up with the consequences. Swiss sales of gold are now quite possible. As governments need money desperately and it is resolved that we are headed into electronic money, gold will become a barbaric relic of the past to financially strapped central banks in Europe.
If the Swiss sell due to massive losses in the Euro, they may set off a competition in official sales. France will join – just watch. Socialists always sell tangible assets. If we see a pop in gold, it will be a manipulation to get the bulls revved up to sell to them one more time – thank you very much.