Tag Archives: Orwell’s “1984”

May 24 2016

Gold Perspectives


Armstrong Economics Blog

Re-Posted May 24, 2016 by Martin Armstrong

2 perspectives

QUESTION: Did gold bottom on your first benchmark? When you say adjusted for inflation, gold should make a new high by 2023, do you mean we have to wait that long?

Gold Basket 5-22-2016

ANSWER: We cannot ignore the fact that gold bottomed in dollars on the precise day of the target on the benchmark. However, you cannot look at the world only from the dollar perspective. If we are going to break the bank of the world economy, that comes ONLY with a rise in the dollar — not a decline. Raising interest rates domestically will help. We already have foreign banks opening branches in the USA so they can park money in the excess reserves at the Fed and collect 0.25%. So even a break for gold in dollars under $1,000 does not mean new lows in other currencies. For a real bull market to form, we need gold to rise in all currencies — not just dollars.

Gold 1980 High

Now look at gold for the high of 1980. You see a unified major high. While the gold promoters kept yelling it would rally and make new highs, it fell for 19 years into the final low for 1999. Look closely at these charts. You can see gold declining sharply in yen for example. It was holding in pounds, reflecting the weakness in the pound rather than the strength of gold.

Gold 1999 Low

IBEUUS-Y TEK TO 2020 1-22-2016Ok, let us now turn to the 1999 low. We do not see a unified low. There is a very curious development. Gold in euros bottomed ahead of everything else the week of January 5, 1998, which was the beginning of the euro. When we ran our global correlated models, what popped up was a very bearish expectation for the euro despite the media being paid to cheer it up. You even had the dollar haters cheering that the euro would kill the dollar and they would become millionaires overnight.

Now look at the euro chart. We have recreated the euro using the formula for entry and not the ECU which included the pound previously. The major low was in 2000, and the previous high was in 1995. The euro began in a free fall, crashing to test the 80 cent level in 2000. This contributed to the U.S. DOT.COM bubble for all the money was pouring into the USA in fear of Europe, despite the media talking the currency up.

The fact that gold bottomed on our model in the euro the first week of 1998 demonstrated that the euro would fall out of bed. This illustrates how we simply MUST look at everything in the world. Trying to forecast anything in isolation is foolhardy.

Swiss Peg 2011

Now look at the above chart again and you will see why the Swiss attempted a peg and why it broke. You do not see gold bottom in Swiss francs until the week of October 23, 2000 — about a full year past the U.S. dollar low and almost two years after the gold low in the euro. On September 6, 2011, the Swiss franc effectively adopted a euro peg with the Franc and ended its floating independence. Our model clearly warned that the Swiss peg would collapse. They sought to freeze the Swiss exchange rate at 1.20 francs to the euro with no upper boundary in place. The Swiss National Bank committed to maintaining this exchange rate to ensure stability. However, they were forced to abandon the peg on January 15, 2015, costing every Swiss citizen a fortune in the process of 6250 francs per person because capital fled to the Swiss and the dollar trying to escape the euro.

There has been nothing to negate the fact that gold in dollars can still make a new low under US$1,000. Keep in mind, that we must approach this from an international perspective. We will be addressing gold in the various currencies in this year’s edition of the Gold Report.

May 24 2016

Confused? When Will This End?


Armstrong Economics Blog

Re-Posted May 24, 2016 by Martin Armstrong

Confused Man

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.

 

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Here you have Larry Summers, the father of NEGATIVE INTEREST RATES, admitting he cannot forecast the business cycle. Thanks for the many offers to buy him a seat at the WEC. But he looks at the world through the eyes of power to change what the free market does. He has no interest in understanding how the free markets function. So this is what we are faced with. People who think they can force the economy into doing whatever they would like to see happen. It will NEVER work. If they cannot forecast, how is it possible to create a trend they do not understand?

Carrying the World-rBecause they lack any real world experience, it NEVER dawned on these people that there are two sides to every coin. They are trying to manipulate the world economy yet they do not understand how it even functions. Mr Negative Interest rates has set in motion the collapse of socialism for keeping interest rates low, he has wiped out the pension funds. So now that they created that next crisis problem, the next solution they are proposing is to seize everyone’s retirement fund so they can bailout their own.

MONCRS-1Many of our old clients will remember this chart we published back in 1991 showing the 18 Year Monetary Crisis Cycle which picked the 1985 high in the dollar. The next target was 2003 and that was the breakout against the dollar following 2002, which was the low in the DOT-COM Bubble. The British pound took off from 1.40 reaching about 1.80 in 2003 and kept going into a high in 2007 at 2.1151. The next target will be 2021. Keep in mind that these previous targets like 1949 and 1967 were breaks in the fixed exchange rate system. Since then, we are in a floating exchange rate system so these now tend to pinpoint the start of problems rather than the end.

As far as gold, 2016 would complete 5 years down from the intraday high in 2011. Unfortunately, there is a split with the highest closing being 2012. That means the 5 year bear market correction may not end until next year. There can still be a dramatic swing that wipes out every one dropping to new lows and then wildly breaking out to new highs leaving the bulk of the people confused and constantly trying to sell the rally, which provides the fuel to rise further. That is exactly what is unfolding in the US share market. You have countless people calling for a 80-90% drop arguing the market is too “rich” at this level, but they are not looking at the alternative. Bonds?

We will look at this question in detail at the Conference. We have to correlate the entire world to see the truth. Then we can lay down the markers. Clicking them off  one by one allows us to see the trend confirming its direction for the whole. There is no doubt about it that the door opens for a Monetary Reform in 2018. We are still in the staging period so we have to look at the whole to comprehend the trend.

May 23 2016

THE BATHROOM WARS


Published on May 22, 2016

In his latest Firewall, Bill looks into the fallacies involved in the latest product of the Progressive Synthetic Injustice machine.

May 23 2016

President Obama Visits Vietnam – Poses For Picture With Ho Chi Minh Statue…


Obama apologizes to everyone for all the bad things that we have done. One wonders if he can ever admit that we did anything good or right; I don’t think he can.

May 23 2016

BREXIT: What Would Happen to Brits Living in EU?


Armstrong Economics Blog

Re-Posted May 22, 2016 by Martin Armstrong

BREXIT On Schedule

QUESTION: Mr. Armstrong; The scaremongering going on here is claiming that if BREXIT becomes reality, we will be thrown out of Europe and have to pay massively for healthcare outside of Britain. Do you have any information on this?

Thank you

A former neighbor

DS

ANSWER: There is something most Europeans are clueless about. The EU is by no means a free deal for all. The EU will be in dire straights if BREXIT goes through. Britain will be in far better shape than Europe. The EU will most likely offer the UK a European Economic Area (EEA) deal, which would have no impact on Brits at all. What is that? An EEA option will have virtually no effect on expats living in the EU. There is no doubt that single market participation will not change for the EU would be shooting itself in the head.

As for the question of healthcare, I do not doubt that they are lying about that as well. Currently, anyone from Britain living in Europe on a pension receives free healthcare. It is true that this is not the case outside the EU. However, unknown to most, the UK currently pays a large sum to countries in the EEA to cover British healthcare. For example, the British Department of Health already reimburses other EEA countries as well as Switzerland for the cost of providing treatment to people for under EU law, irrespective of nationality. The likelihood of that ending is probably nil for it would mean any EU citizen would be denied healthcare in Britain.

I seriously doubt that leaving the EU would disturb trade or healthcare. The net effect of BREXIT would retain independence of London as a financial center, eliminate the necessity to open its borders, and exit the likelihood of the Bank of England being subordinated to the ECB, which will come, not to mention freedom for its own taxes and regulation. Despite the “scaremongering”, Britain would get the benefits of trading with the EU without surrendering its sovereignty to an unelected bureaucracy that the people would have no possible way to disagree with, outside of war.

May 23 2016

Paradox of the Bell Curve


Armstrong Economics Blog

Re-Posted May 22, 2016 by Martin Armstrong

Paradox of Bell Curve

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

Gresham Sir ThomasANSWER: 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.

Roman-Hoard-Britain

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.

May 22 2016

A Snapshot of what Obama has accomplished in 7 years and 3 months and there are still 9 months to go.


A friend sent me an email with this series of charts in it today and after looking at it I thought I would pass it on.  There is no explanation needed the charts all speak for themselves.

ECONOMY

May 22 2016

Austrian Elections Today Too Close to Call!


Armstrong Economics Blog

Re-Posted May 22, 2016 by Martin Armstrong

Election-5-22-2016

The people who count the votes claim the election is a dead-heat in Austria today. Norbert Hofer of the Freedom Party and Alexander Van der Bellen are each on 50%, according to the estimate, which includes postal votes not yet counted. The pools really put Hofer ahead, so there may be some voting counting issued, Stalin fashion. Nevertheless,  what this is demonstrating is that 50% of the people are fed up with the EU. Instead to addressing the crisis, those in Brussels refuse to ever change course.

May 22 2016

Diet Leninism – Coca Cola Halts Production in Venezuela Due To Sugar Shortage…


This is what communism or socialism gets you when you run out of the ability to pay for the free stuff. Anyone that votes for Hillary is voting to bring what you see in Venezuela here — so if you don’t want to have any beer, toilet paper or soda vote for Hillary.

May 22 2016

ECM 2015.75: The Rock vs. Hard Place


Armstrong Economics Blog

Re-Posted May 21, 2016 by Martin Armstrong

Rock Hard Place

QUESTION: Mr. Armstrong, with your 2015.75 turning point on the ECM, you said that was the peak in government and the following 4.3 years would turn down rather hard. You also said 2016 would be a strong rise in 3rd party activity and people are now talking even about Bernie running 3rd party. You said 2017 would be the year from political hell and it looks really crazy here in Europe and with Merkel gone, everything will change. Then you said the monetary system would change by 2020 but could come as early as 2018. You said interest rates would start to rise in 2016 as early as March and that would be the fuel behind the dollar and help create the Sovereign Debt Crisis. I understand this is not your opinion and I can now see how each is linked to create the trend. The Berlin conference was fantastic and really helped me understand how this all fits together. My question is simply this. Do you have any idea what the type of monetary system we are headed into? What survives? You said the IMF is trying to position itself for that role which you opposed. Any clue yet?

ANSWER: The Fed is between a rock and a hard place and is trying to be that little flower that sees the light. It has two choices: (1) deal with the pension crisis at home by raising rates to prevent defaults, or (2) keep rates low to save other governments in emerging markets who continue to borrow and are doomed anyhow. Then there is the question of whether the budget deficit in the USA will explode with rising rates.

The Fed has really lost control of the economy, but the mainstream still needs to figure this out. Our model goes nuts from 2018 into 2020. This is part of the peak in 2015.75. Of course, the general public does not see this yet. They should by next year and then the game will change.

Quiet-into-LightGovernments will not go quietly into the light. They will rage at every possible moment. They are moving toward electronic money since their solution is to force everyone to pay whatever tax they demand. On January 1, 2017, G20 will begin sharing info on everyone. Compliance in business will cost tens of billions of dollars alone. Even companies who do not have foreign clients will have to confirm they do not.

Naturally, governments will act in the most stupid manner for they will not reform. Even if they grab everything, it would not be enough to save them. So be prepared. They will get very punitive. Expect crazy laws to benefit them like constitutional amendments. They will find whatever excuse to confiscate assets; mere suspicion will become proof and it will be your burden to prove innocence.

The old guard is near death. People like John McCain and Barbara Boxer, who was shouted down in California by Bernie supporters, are out the door. We are looking at new people coming to power — the changing of the guard. In this respect, Trump is part of the new and Hillary is the old world of corrupt politics. We are turning the corner. Those in government remain clueless.

What survives is always tangible assets be it land, industry, shares, or something of value like gold, silver, antiques, etc. Whatever currency we use is only a medium of exchange between tangible assets. Currency is not “money,” it never holds its value, and by no means is it a store of wealth. It is just a medium of exchange like a language. So whatever we end up with, which I believe will be some basket of currencies, will become the new medium of exchange through which everything else is measured.