QUESTION: Marty; Your directional changes are amazing. They signal a change but it can be a turn as well as a sudden blast to the upside. You also mention that this is the worst you have ever seen personally in 40 years on the private blog. Could you elaborate?

Thank you for being here. There are a lot of us who are really grateful for what you are contributing. You show know that.

GR

ANSWER: Thank you. We are all in this together. This is not merely trying to pick the next trade. This is about surviving what is really unfolding.

To be a hedge fund manager, you have to look at the entire world compared to a domestic investment manager who operates exclusively in the domestic market and is oblivious to events externally. I get called in all the time into various crisis events around the world. They just need someone who can see the whole rather than has a myopic perspective. There seem to be few of us in such a position. Friends who have worked on desks at the banks internationally have just retired. It is not easy to do this sort of thing. I just have a 40-year track record and in the middle of a crisis, they really do not want someone who may have created the greatest quantitative model in history all in theory but has never actually been in the trenches. You are asking others to stake their entire career on your theory and you are wrong, they lose their job. So it gets hectic to say the least during times like this.

The Directional Change came today and yes it was a blast off. We opened in the Dow ABOVE the previous high which is an extremely bullish technical signal. A Directional Change can be a turn, but it can also be a launch pad. The Panic Cycle can also be a big move in one direction, but they are often outside reversals meaning that they can exceed the previous high and then penetrate the previous low.

Now, as to the comment I wrote today which has sparked a lot of emails. I wrote on the Private Blog ” Anyone who pretends they can forecast this based upon a personal ‘I think’ will be just luck or a fool. I have been an international hedge fund manager and analyst my whole life and this is the worst I have EVER seen in 40 years!!!!!!!!!!!!!!!!!!!!!!!!!!!!!”

There is complete political chaos everywhere you turn. This is not simply supporting or bashing Trump. We are fooling here with the very foundation of CONFIDENCE in the governmental system. Now throw into this cauldron the chaos politically in Europe. Stir in the insanity in Britain, the trade dispute with China, the Russian stupid sanctions, and what we get is complete chaos. Normally, capital flows have been logical. They fled to the USA for World War I and II. They fled the USA during the Civil War. Capital attempts to move away from uncertainty. What I mean as to this is the worst I have personally seen in 40 years is that we have uncertainty absolutely everywhere globally. There is no safe place for capital to hide. This is why we have seen a new record high in the Dow.

Add to this, the chaos our computer is showing in interest rates starting from October onward. On the 10-year yield, we have elected all four Monthly Bullish Reversals and that confirms a long-term change in trend which is really obvious at this point. A Quarterly closing above 3.16% and we are off to the races. We are looking at everything starting to get crazy in sovereign debt issues globally beginning in October. With the Dow Jones Industrials now making a new high for the year, the Fed will be looking more comfortable about raising rates to help the pension fund crisis that is brewing. So pay attention to interest rates in October!!!!!!!!

This is what the Reversal System was designed for. To be objective in the midst of total chaos and uncertainty. November is shaping up as a Panic Cycle in the Euro, not in the share market. In the Pound, we have a Directional Change and a Panic Cycle in October. The political risks around the world are just everywhere. This is also why we scheduled the WEC in November and just after the US elections. Personally, this is a real challenge. I cannot be everywhere around the world at the same time. The best we can do is watch the arrays and the Reversals. Just let the numbers speak for themselves. I warned that we had a Double Bullish Reversal in the Dow at 25800. Once that was elected, it has been off and running to new highs.

The Australian Gold Rush began in following gold discoveries at Coolgardie in 1892 and Kalgoorlie in 1893 located 370 miles (595 km) east-northeast of Perth. Once again, miners discovered two huge boulders with an extremely high gold content. Kalgoorlie is one of Australia’s most famous gold rush events because it was largely credited drawing people from around the world to search for the precious metals. Western Australia’s population grew from a meager 49,782 in 1891 to a booming 184,124 by 1901. In just those 10 years, the region became known as the Goldfields-Esperance region, often called the Golden Mile. It has typically been called in mining the most naturally rich square mile in all the earth.

Now we have boulders worth millions of dollars. The biggest one weighing 95kg and contains over 2,400 ounces of gold. The company has now begun to dig for gold they believe is worth at least $11 million. This is a rare find given this area was the center of attraction for gold miners.

The gold content of these rocks is very high. Some hope that they will lead to an even bigger discovery in the months ahead.

There is little doubt that Spain was once the Financial Capital of the West. Their discovery of America produced mountains of gold and silver to the point that they really impacted the European economy creating significant waves of inflation. However, there was the War of the Spanish Succession (1701–1714) which was why the famous Spanish Fleet that sank on July 31st, 1715 took place. This was a massive treasure fleet that remained in the New World until the war was over because the risk of being attacked by the British was too high. The British sought to prevent the Spanish from funding themselves for the war by preventing ships carrying gold to make it to Spain. The fleet was 11 ships and they are said to have been carrying not just gold and silver, but the dowry for the Queen called the Queen’s Jewels.

When the Spanish Colonial authorities heard of the great disaster, they responded from Havana and St. Augustine. Over 1,000 men died and the survivors were few on the beach. The authorities tried to direct their efforts at salvaging the galleons. By September 1715, some survivors were still at the camp on the beach. The Spanish authorities had turned the beach into a base of salvage operations. The Spaniards claimed that they were able to recover large portions of the treasure. This may have been a tactic of the Spanish exaggerating the amount of the recovery to deter others. Nevertheless, there were pirates were responding to the wreck perhaps even as fast as the Spanish. One English privateer named Jennings was a very successful pirate in early 1716. Given the vast number of coins that have still been recovered, obviously, the Spanish never recovered any significant portion.

The War of the Spanish Succession was a European conflict of the early 18th century that was triggered by the death of the childless Charles II of Spain in November 1700. His closest heirs were members of the Austrian Habsburg and French Bourbon families. With the riches of the New World at stake, who would rule Spain was a major economic prize. This also was a critical issue in changing the European balance of power. Charles II had actually left the undivided Spanish monarchy to Louis XIV’s grandson Philip of France who was proclaimed King of Spain on November 16th, 1700. Disputes erupted over the separation of the Spanish and French crowns. In reality, in an effort to regulate the impending succession there were three principal claimants, England, the Dutch Republic, and France. During October 1698, they signed the First Treaty of Partition. They all agreed that on the death of Charles II, Prince Joseph Ferdinand, son of the elector of Bavaria, should inherit Spain, the Spanish Netherlands, and the Spanish colonies. They also allocated Spain’s Italian dependencies would be partitioned between Austria which would get the Duchy of Milan and France Naples and Sicily.

Then in February 1699, Joseph Ferdinand died. Now a second treaty was drafted and signed on June 11th, 1699, by England and France and in March 1700 by the Dutch Republic and Spain. Leopold, however, refused to sign the treaty and demanded that Charles receive all the Spanish territories intact. Therefore, we see the contest between the Bourbons of France and Spain against the Grand Alliance. Bavaria joined France in September 1702 while Savoy and Portugal joined the Grand Alliance with Austria, whose candidate was Archduke Charles, the younger son of Habsburg Emperor Leopold. This led to war breaking out in 1701.

By 1710, fighting was really at a stalemate. France was unable to conquer Italy and the Low Countries. Philip V was the secure ruler in Spain. When Archduke Charles unexpectedly succeeded as Emperor Charles VI in 1711, Britain effectively withdrew. This then forced the Allies to make peace which produced the 1713 Treaty of Utrecht, followed in 1714 with Rastatt and Baden. With the British withdrawing and peace was restored, then Philip V could be confirmed as King of Spain and, in exchange, he renounced the French throne. The European territories were divided between Austria, Britain, and Savoy. Britain emerged as the key European maritime and commercial power overshadowing the Spanish and the Dutch.

Spain had borrowed heavily for this War of Succession because it could not risk bringing in its treasure fleets. Spain had become a serial defaulter beginning in 1557 followed by 1570, 1575, 1596, 1607, and 1647 ending in a 3rd world status. The loss of the treasure fleet of 11 ships in 1715 was a crushing blow to Spain. The lost of the 1715 Treasure fleet reduced Philip V to the status of a beleaguered monarch. Philip V had badly needed all the gold and silver to pay loans. The New World wealth that had made Spain a world power in the 16th and 17th Century had now become a fraction of what it once was. Spain’s role in world affairs declined in proportion with the loss of the 1715 Treasure Fleet.

Nobody has yet found the gold, silver, and jewels that were designated as part of the dowry for his new 22-year-old wife. He had married Elisabeth Farnese of Parma by proxy in 1714 and was still trying to make a good impression on the reluctant lady. Her dowry was to be the greatest of any queen in Europe. More than 1200 pieces of rare jewelry were said to have gone down with the fleet. She was demanding that her dowry be the greatest in Europe. She requested a heart made of 130 pearls, 14-carat pearl earrings, a pure coral rosary with large sized beads and an emerald ring weighing 74 carats. The Queen’s dowry was reported to have been stored in the personal cabin of the Fleet’s senior officer. She gives a new meaning to the term “gold digger” and no doubt was a woman worthy of the title – high maintenance. Of course, they were never marriages for love or even physical attraction.

The loss of the 1715 fleet immediately resulted in the debasement of silver coins which began in 1716. The Spanish mints flooded Spain with debased silver based on the real sencillo of 3·067 g, containing 2·556 g silver. These silver coins were called plata provincial. The silver minted in America was now officially called plata nacional, but was also called plata vieja (old silver) or plata gruesa (heavy silver), and occasionally plata doble (double silver).

COMMENT: Marty; You are not only the only person to forecast BREXIT, you also said the British Economy would do far better after BREXIT. There was absolutely nobody that agreed with you. I read every bank report in the city and every single one said the British economy would take a nose dive in the Thames. Well, all the official numbers are out and they have all proved Socrates to be an astonishing tool.  No wonder Maggie loved you.

HWM

REPLY: Yes, a good friend of mine who has a retail business there disagreed with me and said he would probably have to move to Frankfurt. He said that after the vote. I spoke to him last week and he said he reduced his staff in Zurich and hired more people in Britain. When I asked why? He responded it was half the price.

The numbers have shown that pay growth for British workers has “unexpectedly increased at the strongest rate for three years amid the lowest levels of unemployment since the mid-1970s” wrote the Guardian. It is because Britain is getting out of the EU which has been the most damaging to Britain’s economy because it gets the short stick on every negotiation. I cannot think of even one dispute that Britain has EVER won in the EU court. The typical idiom Fool me once, shame on you; fool me twice, shame on me, in the case of British politicians it should be Fool me once Ok you got me; Fool me twice alright shame of me; Fool me again, I must be just an idiot so no worries I will never figure it out anyway. I do not know how many times the numbers show joining the EU was a VERY, VERY, VERY, stupid idea. Europe has always hated the Brits. The French view if Napoleon won at Waterloo, then the world would be speaking French not English.

I have shown this chart to several UK politicians. They were surprised, but still never used it publicly.  If you just put aside all the opinions and what-ifs, just look at the numbers, you may begin to see the light.