QUESTION: Mr. Armstrong; I am impressed with your computer system for without historical data depth, it still manage to correctly forecast the high in Bitcoin. The BIS had come out against cryptocurrencies as has our central bank here in Switzerland calling them crude and unlikely to become a world currency without impressive advancement in the technology. With Bitcoin off more than 70% from the high, I am amassed that people keep calling for new highs. They did the same on gold. It appears to be some sort of emotional drug that these people get addicted to or are they just frauds?

Thank you

PVC

ANSWER: The Global Market Watch is best on the higher levels. There are over 100,000 different patterns and it is still learning. It is matching patterns it discovers and when it discovers a new one, it records it and tests against it in the future. So it was able to forecast Bitcoin correctly from a pattern recognition perspective alone. That does not require heaps of historical data. It is a very interesting tool which completely evolves with time. I find it funny when people try to argue against it pointing their finger at me personally when it is the computer that is doing that job – not my personal opinion. The daily level is the most volatile for the complexity is off the charts. The reliability increases as we rise through the timing levels.

Nevertheless, there are some people who miss the high and refuse to admit that they are wrong. You had people constantly calling for gold to take off for a 19 year decline. Even after the 2011 high, I got intense hate mail blaming me for the decline from these same type of people. They prefer to blame me rather than admit that they were investing emotionally, which is the worst strategy of all. I have stated before that when I was doing an institutional conference in Tokyo at the Imperial Hotel, a guy bribed his way in just to ask me what to do. He bought the Nikkei the very day of the high with $50 million and it was his very FIRST attempt at investing in stocks. He still had the position despite being down some 40% at the time.

There is a basic rule that I have come to determine. A market can survive as long as the correction on a monthly level does not closed beyond 43% down from the high (8.6 /2). The next stage is 51.6%. Move beyond that and you cross into Meltdown Mode. Bitcoin crossed the 43% decline mark so that was a warning this was not a short-term correction from which new highs were possible. Moving beyond 51.6% meant that new highs are not likely for quite some time.

The Swiss National Bank has come out and stated it is not looking at cryptocurrencies and the blockchain technology for they consider them “far too crude” to support a digital franc. The Bank for International Settlements (BIS), the central bank to the central banks, has also come out with devastating prespective of the cryptocurrencies. They have highlighted the hacking and a number of perceived technical flaws as a major deterent to them advancing to a digital currency among nations. The BIS flat outright made it clear that they are too unsuitable to serve as a new global currency.

Of course, those who are the new crypto-believers will never yield. They believe what they WANT TO believe and close their minds to anything else. They analyze, forecast, and invest purely on emotion. Whenever emotions are involved, decision will NEVER be prudent, wise, or successful. This seems to be some strange human flaw for it is by no means confined to cryptocurrencies. As I have stated before, this same type of pattern appears throughout history in everything from tulips, stocks, gold, silver, and DOT.COMs just to mention a few. However, like the DOT.COM Bubble, there is valid shifts in technology that will advance in the years ahead.  The NASDAQ decline was 78.4% in two years 2000 to 2002 bottoming with the ECM turning point back then. BitCoin dropped 69.06% in the first two months. June made a new low bringing the correction to 69.83%. It took the DOT.COM Bubble 18 months to reach that same percentage decline. It took the Japanese Nikkei 106 months to reach that percentage decline. For the 1929 Crash, it took 24 months to reach that same percentage decline. Therefore, it is abundantly clear that the losses in cryptocurrencies have dwarfed most other bubble declines and it reflects the skepticism inherent within as smart money realizes this is not going to circumvent central banks and bring governments to their knees

QUESTION: What is your “opinion” on the Trump tariffs dispute with China?

ANSWER: Years ago, an old friend from high school was in the Philadelphia Steam Fitters Union. They went on strike for a very long time. He finally came to me and asked for a job. I gave him one and all I ever heard was how if he stayed 15 minutes longer, he would be paid double time. I sent him to New York and everyone always came back by the end of the day besides him. When I asked what happened, he said it was 3 o’clock and there was no point to come back to the office for just a couple of hours. This was the 70s. He drove a Toyota. When I asked why he was driving a foreign car he said it was cheap and reliable. I asked what about the union jobs he was bypassing. He did not answer. Needless to say, I had to fire him.

It’s always comical to me how people always want the cheapest price they can buy, and then they want the highest possible wages to work. I believe in free trade. Tariffs are only forcing consumer subsidized high wages. If someone can produce the same product at a better price, that is the benefit of the consumer. Those people should move on and retrain to an industry that is higher paid rather than demanding excessive wages for jobs other can do for a lot less.

The United States really has a trade surplus of about $1.4 trillion when trade is allocated to the flag a company flies. The USA is moving more into the high-tech areas. Lawyers are a dying profession and medical is slowing by overpricing itself and there too we will see real price shocks. Let the free markets decide the future. That is what they are good at

QUESTION: Sir; I have noticed that the Roman and Greek hoards of coins you have offered are silver. You do not offer hoards of bronze coins. I have two questions. First, are broze hoards less common? Second, why have you been a buyer of large hoards to begin with?

Thank you

LW

ANSWER: There are hoards of bronze coins from the 3rd century that are found. However, bronze corrodes easily. Therefore, the hoards that do exist are far too often not really salable because the condition is typically quit poor. I do have one small hoard from the early 3rd century that begins with Maximinus I (235-238AD) who really begins the major decline of the Roman Monetary System when he targeted the rich and simply declare that everything they owned belonged to the Empire, a very early version of Marxism. I will make this available, but there are only about 100 bronze sestertius that was the main unit of account. The condition is excellent for bronze since there are not corroded.

I also have a later 3rd century hoard of antoninianius which were once silver and had been debased to bronze silver plated. This was a hoard I purchased back in the late 1980s with over 10,000 coins. However, the salable coins were probably less than 3,000.

I have the other part of the Alexander the Great silver hoard. This was mostly drachms, but there are some tetradrachms as well perhaps about 100. Now, as to why I have purchased hoards over the decades is simply that they provide a snapshot of the economy at that point in time. This demonstrates what was in circulation and a hoard can be dated by the last coin included and this has correlated with periods of economic stress.

Now, in the case of this Alexander hoard, intermixed you find contemporary imitations that are struck on the outskirts of the empire. Here are contemporary imitations that were inside the hoard. They are generally of the proper weight, but you will notice that there is some small parts that are corroded. This reflects that the silver was not properly refined.

 Here is a jug I purchased also back in the early 1990s. It contained the small reduced bronze coins toward the collapse of the Roman Empire. Despite the fact that they were inside a jug, you will notice that they we covered in corrotion to varying degrees. Therefore, the find was more valuable as a snapshot of the economy rather than as a hoard of salable coins.

In 2007, there was a huge hoard disovered in England with over 50,000 coins. Again, they were bronze and it was a mixed find where some of the coins in the center were salable and others were interesting snapshots, but corroded.

These type of hoards from the 3rd century exist because of the stressful period both politically as well as economically. This is also when the barbarian invasions were beginning and as I have stated before, it was Aurelian who constructed the wall around Rome to protect it from the barbarians in 270AD, which was not needed previously.

Large hoards are typically found burried in pottery. In a southern Spanish park, construction workers dicovered a 1,300-pound hoard of Roman coins. A Viking hoard, the second such large hoard discovered in Sweden, has been unearthed revealing that the majority of the coins are from the Arab world. Hoard of this nature demonstrate how the trade routes fundctioned. Hoards are discovered in Asia and the Middle East. A hoard was disovered in Israel with Greek tetradrachms from the 2nd century BC. Roman coins have even been discovered in Japan. This has opened a lot of questions as to how did 4th century Roman coins end up in Japan.

Not all hoard have been because of economic stress. One of the most famous hoards was stashed away because of a volanic eruption. The Boscoreale Treasure/Hoard is the name for a large collection of Roman gold coins along with exquisite silver and gold Roman objects discovered in the ruins of an ancient villa at Boscoreale, near Pompeii, southern Italy. Consisting of about the 1,350 gold aurei, which included 637 gold coins of Nero alone. This one hoard was worth 135,000 sesterces, which was more than half the tolal value of coins discovered in Pompeii itself. There were also over 100 pieces of silverware, as well as gold jewellery. The disovery of objects is now mostly kept at the Louvre Museum in Paris, although parts of the treasure can also be found at the British Museum. The coins were sold over time to collectors.

The precious metal objects from the Boscoreale Treasure were illegally exported from Italy and were purchased on the black market by Baron Edmond de Rothschild (1845-1934), who donated it to the Louvre Museum in 1896. It appears that the objects were deliberally hidden in the storehouse prior to the eruption of Mt. Vesuvius. The name written on many of the containers was Maxima. A woman was found dead in the ruins, but we do not know if she was Maxima or a servant who stayed behind. The villa appears to have been owned by Maxima’s father L. Caecilius Jucundus, who was a banker from Pompeii. This one hoard was a substantial cash reserve of the banker. That makes sense given the vast wealth in coins discovered. He also seems to have inherited the wealth of the Julio-Claudian dynasty in Campania. Jucundus had a villa in Pompeii as well and his banking records have survived.

Boscoreale is well known to Roman numismatists as the find spot of a hoard of about 1,350 gold aurei, the latest of which dates to 78AD whereas the volcanic eruption from Mount Vesuvius on August 24, AD 79 burried the villa in ash. The villa remained undisturbed until 1876. The coin hoard lay undiscovered for almost another 30 years. Unfortunately, there was no formal study of the Boscoreale coins made before they were dispersed into the market. There was a list pubished 1909 which included material from other finds as well.

Nonetheless, thre three coins illustrated above all have a very distinctive feature that identifies them from Boscoreale. This is their deep-red toning. The Boscoreale Hoard was discovered in the water cistern of a villa, where the owner had hidden it fearing an impending catastrophe. Perhaps, the hoard was stashed when the eruption began. However, what killed the people was the deadly pyroclastic cloud which engulfed the region. It was the resulting intense heat of which imbued all the gold coins with the beautiful red toning that we now see almost 2000 years later.

The coins were sold and there was often written tages noting their origin such as an aureus of Nero from the A. J. Fecht bequest to the American Numismatic Society from 1948 which had an original tag that noted: “ex Boscoreale find, Pompeii, 1898”. We should not underestimate the total currency stock or supply held by non-aristocrats living in the Pompei. The fugitives who died in room 10 of the Villa in Oplontis carried with them over 18,000 sesterces worth in cash. Life in Pompeii did not stop instantaneously when Vesuvius erupted. Fugitives took valuables and money with them. The coins found with skeletons are a mix of savings, daily earnings, and pocket money. The coins found in the shops and houses reflect what fugitives left behind. Looting and salvaging after the eruption further complicate the picture.

The average size of the hoards is six times the yearly subsistence for an adult at that point in time yet the number of persons depending on this money or the time span over which the hoards were formed is unknown. Therefore, the discovery of the hoards from pompei are more complicated than the hoards discovered elsewhere in times of economic and political uncertainty. These type of hoards reflect generally one person which is different from the hoards of Pompeii itself as distinguished from the banker’s hoard or cash reserves reflected in the Boscoreale discovery.

I will prepare some of the coins from hoards for clients to select. It just takes time to ensure which coins are of sufficient grade to offer in the first place.

COMMENT: Mr. Armstrong, it seems that whatever you say our government follows. You said China should buy directly from the Treasury and not the New York bank and they did that right away. Now they are considering stopping dollar borrowing here in China as well. You should be holding a WEC here in Shanghai next.

QLJ

ANSWER: Yes, Bloomberg has reported that here in the West as well. People do not understand that the more the dollar rises, the greater the risk of defaults around the world. US rates fell so low that it was cheap to borrow dollars. The borrowers are now starting to realize that they also had a foreign exchange risk. This is what I have been warning about. You even have the dollar bears here in the States who keep saying I am wrong and the dollar has to crash. Repeatedly, I have warned that a decline in the dollar will be celebrated by everyone including Trump because it would ease trade friction. A rise in the dollar means trade friction, protectionism, and emerging market crisis of debt defaults. As the defaults mount, the dollar will be sent even higher. Add a crisis in the Middle East and in the stability of the Eurozone, and you end up with dollar vertigo!!!!

QUESTION: Mr. Armstrong; You have obviously been correct on the Euro. You even called the bounce but it stopped at 1.2550 and did not reach your ideal target of 1.28. You are saying that interest rates in Europe are more likely to rise faster than the ECB predicts. The French central banker Francois Villeroy de Galhau has also come out and said that a hike in interest rates from mid-2019 onwards will be possible. That contradicts Draghi. Running a small business here in Europe is difficult as you know. So we should look to try to lock in rates now before it is too late. Correct?

FK

ANSWER: Absolutely. True, the technical resistance and the Monthly Bullish were in the 128 zone. However, the euro just did not have enough energy to reach that point which is in itself an indication of inherent weakness. If we look at the long-term 30-year rates on the euro, support lies at 0.93% and resistance at 1.7%. A monthly closing above 1.7% will signal a move up to 2.33% to 2.43%. After that, expect a rapid move to 5%. A closing at year-end above 1.42% will confirm a sharp rally is underway

QUESTION: It certainly seems that the cryptocurrency world has its flaws and may even be worse than traditional bank accounts and credit cards. They keep getting hacked. So they are trying to defeat central banks but may be running into the arms of scammers and thieves. I read one guy even claimed Bitcoin would be the new reserve currency. I really do not understand these fools. How can Bitcoin become the reserve currency? Where does this really end?

EP

ANSWER: I really do not know. The dollar is the reserve currency BECAUSE it has a $20 trillion debt that is used globally to park money. Europe never created a single debt market and that is why the euro never managed to compete with the dollar. There is just no way Bitcoin can become the reserve currency. That is really la-la-land. Where does this end? The technology may be absorbed by governments and perhaps you end up with a single electronic currency for each country. As far as circumventing central banks and governments, they can shut it down whenever they want by simply declaring cryptocurrency is for criminals as Australia is trying to do with cash.

With respect to the hacking, well easy come easy go. For the second time in just a few days, hackers launched a raid on a South Korean cryptocurrency exchange. The hackers had captured in one night about €27 million euros, the trading platform Bithumb had to admit. This is number six worldwide in terms of trading volume for cryptocurrencies. Bithumb announced that it would compensate its users.

The prices of most cryptocurrencies fell after the second South Korean incident within a few weeks. Bitcoin, the largest cryptocurrency, fell 2% that day. These attacks are starting to wear down the cryptocurrency market, and we may yet see a decline further into July.