QUESTION: Marty, you said towards the end of the bear market in gold, it will start to align with the stock market. Are we approaching that period since this has been gold and stocks both rising opposite of what the goldbugs have been forecasting?

LWR

ANSWER:  Yes. We are running out of time for the downside in gold. This does not say we are breaking out right now. In fact, the next Benchmark was the February 27th, which we published in the 2016 Gold Report. We would need to close February above 1306 to imply that a breakout is unfolding and a closing below 1255 today will still be bearish. Gold is moving into a tight range where technical resistance stands at 1286 area and support at 1230.

The rise in gold is unfolding despite the rise and expected rise in interest rates. Likewise, gold has been rising with the US share market. This is part of the tangible asset rally as capital begins to drift away from public sector debt. A collapse in confidence means ALL tangible assets rise – not just gold.

However, we are still basing. The rally does not yet appear to be sustainable. A closing today below 1255 after trading above that right on the Benchmark day no less, warns that we are preparing to change trend, but it is just not right now. Let’s see the closing for February.

QUESTION: Marty; The GMW was saying it was a knee jerk low the day before the week closed. Do you have to wait for the week close?

KW

ANSWER: Technically yes. The comment is as of the close of that time level so in the case of Knee Jerk Events, it is forecasting in reality that the event (high or low) will hold. It also depends upon how the event unfolds on the Weekly to Yearly level. You can get that Knee Jerk low show up early in the week and then rally into the close of that week with all the time it saying it is a Knee Jerk event. The important aspect is that the event is being identified as a Knee Jerk rather than a capitulation and change in trend. That is very important.

What we have been building is a database of the GMW whereby each pattern number is recorded with the event that follows. We are then running systems on that to see if it is possible to produce a highly accurate forecast of say when event #10550 takes place #11870 follows.

We are always looking at more in-depth means of analysis that is testing the boundaries of forecasting.

QUESTION: Hello, could you explain the differences between “Knee Jerk v Spike v Temp v Reaction Events” ? They are all Timing indications I guess? regards.

ANSWER: When the computer is classifying something as a Knee Jerk high or low, it means it is a one-time-unit event. A Reaction High or Low has not penetrated the previous event and is at least a three-time-unit event. A Temp High or Low is normally a brief trend greater than three-time-units.

Here is the Global Market Watch on gold. You can see it correctly forecast two Knee Jerk lows, which proved to be correct. It is the GMW which eliminates personal opinion and is based solely upon pattern recognition. This is neither technical nor cyclical based. This is something altogether unique and represents true Machine Learning Intelligence.

QUESTION:  Martin,
Love your blog, especially your historical perspective.
You recently responded to a viewer that we should take precious metals out of safety deposit boxes. Is there a reason for this? To my understanding the bail-in rules for banks in N.america put deposits and bonds at risk only?
Thanks.

ANSWER:  The contents of a safe deposit boxes are not covered by FDIC insurance. Never store a passport or any document you might need to get a hold of in emergency in a safe deposit box. The government can simply close all banks as they did in 1933 in a “Banking Holiday”. At 1:00 a.m. on Monday, March 6, President Roosevelt issued Proclamation 2039 ordering the suspension of all banking transactions, effective immediately. He had taken the oath of office only thirty-six hours earlier.

From March 6 to March 10, banking transactions were suspended across the nation except for making change. Roosevelt presented the new Congress with the EMERGENCY BANKING ACT at this time. The law empowered the President through the TREASURY DEPARTMENT to reopen banks that were solvent and assist those that were not. The House allowed only forty minutes of debate before passing the law unanimously, and the Senate soon followed with overwhelming support.

Banks were divided into four categories. Surprisingly, slightly over half the nation’s banks were deemed first category and fit to reopen. On the Sunday evening before the banks reopened, Roosevelt addressed the nation through one of his signature “FIRESIDE CHATS.” Roosevelt assured sixty million radio listeners that the crisis was over and the nation’s banks were secure. The bank run was over. On June 16, 1933, Roosevelt signed the GLASS-STEAGALL BANKING REFORM ACT, and also created the FEDERAL DEPOSIT INSURANCE CORPORATION.  Keep in mind the the government can close all banks for there is precedent. Whatever you have in a safe deposit box can also be seized and inspected.

There is no precise law against storing metal or cash in a safe deposit box. But law is malleable in the hands of any judge. He can seize the money or gold under the pretense of money laundering hiding it from the government. Under Civil Asset Forfeiture, they can assume the money is guilty of a crime being even tax evasion. It then is your burden to fight in court to get it back if you can hire a lawyer.

On April 1st, 2015, Chase bank in the US advised clients who rent safe deposit boxes from them that there would be some changes in their policies. Of particular interest is the following condition:

“Contents of box: You agree not to store any cash or coins other than those found to have a collectible value.”

This is why I recommend buying $20 common date gold coins and not modern bullion. You need to be in a position to say these are collector coins – not bullion. Gold is a HEDGE AGAINST government in the midst of a crisis. Gold does NOT rise with inflation. The 1980 high adjusted for inflation is about $2300. So if gold is a HEDGE, it is during a crisis. The risk of being able to get to a safe deposit box in a crisis diminishes greatly.

This year, 2017, is the beginning of the Sovereign Debt Crisis. While Greece is popping up on the financial radar, the Euro rescue in Portugal has also completely failed to reverse the trend of the country. There has been no effective relief from the debt crisis in Southern Europe. The debt in Portugal is also once again as high as before the crisis of 2010. The 78 billion euros of the European taxpayers money did nothing to reverse the economic trend, but in fact the funds simply went to save the banks.

Politicians really should be criminally prosecuted for trying to manage an economy. They have no experience and their own political careers always come first. As I have stated before, when the Euro was being planned, the commission in charge attended our World Economic Conference in London. I warned them that the Euro would fail unless the plan consolidated all the debts of member states. They said they understood the problem, but that the European people would never vote for that plan and so they wanted to get the currency through first and deal with the debt later.

That Phase II never came and as a result, as the euro then rallied from 80 cents to the dollar to about $1.60, all PREVIOUS debt of  member states DOUBLED in real cost. Joining the euro effectively destroyed Southern Europe and the politicians still cannot figure this out. It is as simple as you borrowed a foreign currency to buy your house and then that currency double in price. You now owed twice the amount in your home currency.

Meanwhile, the new US government wants to put US first returning to the age of mercantilism. Donald Trump also fails to grasp that forcing Americans to buy manufactured products in the USA, is forcing the consumer to subsidize inefficient American labor. You cannot tinker with the free markets. Trump’s concept of world trade and jobs falls short of reality of what free markets are all about exactly why the Eurozone is collapsing.

Welcome to the world financial crisis. We can make it better – but we have to PREVENT politicians from playing with the economy.