COMMENT: Marty, I used your model as you have taught us. I sold the euro at 116 with a stop loss at 11705. I sold gold at 1305 with a stop above last year’s high. I can afford to buy seats at the WEC for my wife and son. Will you scream loud when it is time to buy gold? That should mess all the goldbugs up. They really hate you because they are the ignorant fools.

REPLY: Numerous emails are coming in from those who sold the Euro at 116. It is what it is. This is a shame politicians will never admit a mistake. They just go pedal to the metal and assume more of the same will reverse the trend. A close in the Euro below 11140 should signal that the trend will continue to press lower and the May high was possibly the high for the year. But that is our initial support for now. As for gold, yes, we take out 1206 on a weekly closing basis and new lows become possible. A close on Friday below 1225 and we should press lower. We do see capital inflows to the USA right now and this is probably because of the upcoming BREXIT vote on June 23rd. It is hard to see how the metals can rally against a rising dollar.

We will scream loudly when it is time to buy at the low. That will be for those who subscribed to the metals report exclusively. Everything has its time and place. Unfortunately, the gold promoters have one agenda so that is all they can preach. That is the entire problem in the United States. We have too many agencies competing for authority regulating everything they do not understand. The CDO bombs sold by the banks were approved by SEVEN agencies. Big deal. Not a single one figured out this was a bad idea. They are paid not to do a job. The credit rating agencies showed in 2007 they too are the disposal of the highest bidder.

This is why we have countless funds each with some special expert market. The muni-bond guy will always tell you they are the best. The emerging market guy will tell you its a buy. Every single specialty will preach its own book. The average person needs to become a hedge fund manager to sort out the nonsense from reality since they all preach with such passion and sophistry. So of course, any group I warn that instrument will decline will hate my guts. That is their bread and butter.

I was a global hedge fund manager. That meant people came to me to make those decisions. The world was available for my shopping cart. That is what I am trying to provide here. The unbiased global view. This is about survival. Sorry, I am not selling gold, swamp land in Florida, or condos in Bora Bora. This is about surviving what is coming and hopefully we can spread the word so when it cracks, we have enough influence to push toward freedom. Otherwise, say goodbye to the world we grew up in and your children will never know what freedom use to be.

QUESTION: Dear Martin, First of all, thank you for your daily blogs. First thing I read every morning. I can’t wait to attend Novembers Orlando conference. My question is about the inverse relationship of Gold(precious metals) and the Dollar. Looking at historical charts it would suggest that we may continue to see a price decrease in Precious Metals as the value of the dollar rises, deflation. This will continue until the Government panic sets in around 2021-2023 as your ECM tells us. Then serious lift off of Gold may occur as a new monetary system sets in and people want to get rid of dollars because of the complete loss of confidence in government and the future of the US monetary system.

Would love your input and thoughts.

D

ANSWER: There is no question that we should see deflation overall moving into 2020. But this is a different kind of deflation. This is capital contracting and hoarding so you will probably see asset prices rise, but GDP actually continue to contract. The classic “inflation” people talk about is rather narrow-minded. They tend to see waves of only demand inflation when people are rushing to buy things. This is associated with hyperinflation, but that is really when the collapse in confidence unfolds in a government. That can take place in the peripheral small economies like Zimbabwe or the collapse of a government post-war as in Germany and other Eastern European nations post WWI. It does not unfold in the core economy arbitrarily while others survive. It always comes from the outside in.

Now, let us look at cost-push inflation such as we saw with the OPEC crisis. They just raised the price of oil so the dramatic rise in the cost of production created the recession, but demand contracted. So prices can rise from a ratcheting up of cost which can be both private like OPEC or government with taxes.

QUESTION: Mr. Armstrong; On the one hand you show the debasement of the Roman currency, but then you say there was also massive hoarding and deflation. Can you explain how do you get deflation with debasement?

Thank you for the the mind food

PH

ANSWER: It may seem to be a paradox, but everything unfolds like a bell curve. This is why you do not get the same result by simply moving in a straight line. This is the same thing we are experiencing currently under Quantitative Easing by central banks. We have increased the money supply, but we are also moving toward negative interest rates and this promotes hoarding. People have not been investing. They have been sitting on the sidelines trying to figure out what to do.

Sir Thomas Gresham made the observation that debasing the currency results in bad money drives out good. But what does that really mean? What he is saying is that people then start hoarding the old money. It may be a paradox, but debasement does not cause hyperinflation, it causes deflation because the vast money supply that was circulating is hoarded. Therefore, the government needs to further debase desperately trying to keep a sufficient degree of money in circulation. The more it debases, the more people hoard. As people hoard, they contract from commerce and GDP contracts. This results is a reduction in tax revenue, which then causes government to further debase to make up shortfalls in revenue.

When you then introduce a collapse in confidence within government, then if people no longer “feel” secure, they then hoard even the based currency. This is why we find so many hoards of debased Roman currency during the chaotic 3rd century.

It is a curious paradox. Right now, people are hoarding as are the banks and corporations. It is hard to hoard paper currency for you will not be able to distinguish between old and new. This means that the hoarding will migrate ti tangible assets, shares, gold, silver, and antiquities.