Tag Archives: Understanding cycles

Apr 1 2021

Collectibles Going Crazy?


Armstrong Economics Blog/Collectibles Re-Posted Apr 1, 2021 by Martin Armstrong

This June, Sotheby’s will be auctioning off three of the greatest rarities in the stamp and coin field. The 1933 Double Eagle $20 gold coin, the unique British Guiana One-Cent Black on Magenta, and the unique Inverted Jenny 1918 Plate Block. This is truly an incredible offering from a single collector to have captured three of the rarest and most unique collectibles in history.

It is a bit unusual that a unique stamp from a less than the mainstream region has emerged as the rarest and sole-surviving example of the British Guiana One-Cent Magenta from 1856. It was last sold in 2014 at Sotheby’s for $9.48 million. While it was rediscovered by a 12-year-old schoolboy living in South America in 1873, perhaps due to fantastic marketing, it has emerged as one of the most important stamps in famous collections that have ever assembled. In 1873 L. Vernon Vaughan, a 12-year-old schoolboy living with his family in British Guiana found the stamp among a group of family papers bearing many British Guiana issues. The young philatelist would later sell the stamp for several shillings to another local collector. The British Guiana then entered the UK in 1878, and shortly after, it was purchased in Paris by Count Philippe la Renotière von Ferrary who many considered to be perhaps the greatest stamp collector in history. Then following the war, France seized Ferrary’s collection, which had been donated to the Postmuseum in Berlin, as part of war reparations due from Germany following World War I. The stamp was then sold in 1922 at auction when it was purchased by Arthur Hind, a textile magnate from New York, for its first auction-record price of $35,000. The stamp changed hands moving from the collections of the Australian engineer Frederick T. Small; then a consortium headed by Irwin Weinberg; then by John du Pont of the famous chemical company. Du Pont paid $935,000 for the stamp in a 1980 auction, before it was last sold at auction to Weitzman for the record-setting price of $9.48 million.

Interestingly, a tradition emerged where previous owners of the British Guiana signed the back of the stamp. Weitzman added his own personal mark to the reverse of the stamp inscribing his initials “SW” along with a line drawing of a stiletto shoe as a nod to his legacy in fashion.

This 1933 Double Eagle ($20 gold coin) is the only example that may be legally owned by an individual. It was the coin acquired by King Farouk of Egypt. Stuart Weitzman purchased the coin at a Sotheby’s/Stack’s auction in 2002 for a world record price of US$7.59 million, nearly doubling the previous record. The Director of the United States Mint signed a Certificate of Monetization that, in return for twenty dollars, authorized the issuance of this single example.

In August 2005, the US Mint announced the recovery of ten additional stolen 1933 double eagle gold coins from the family of Philadelphia jeweler/coin dealer Israel Switt, who was the illicit coin dealer identified by the Secret Service as a party to the theft who admitted selling the first nine double eagles that were recovered. Israel Switt had many contacts and friends within the Philadelphia Mint. As the story goes, the Secret Service found that only one man, George McCann, had access to the coins at the time and served prison time for similar embezzlement in 1940. Israel Switt somehow obtained the stolen 1933 double eagles. One theory is that McCann swapped the previous year’s Double Eagles for the 1933 specimens prior to melting, thereby making sure the count was correct. The US mint began striking Double Eagles on March 15, 1933. Roosevelt’s executive order to ban gold was not finalized until April 5. Therefore, on March 6, 1933, the Secretary of the Treasury ordered the Director of the Mint to pay gold only under a license issued by the Secretary, and the United States Mint cashier’s daily statements do not reflect that any 1933 Double Eagles were paid out.

In September 2004, the claimed owner, Joan Switt Langbord, heir to Israel Swift, tried to sell the 10 coins and they had to be surrendered to the Secret Service. In July 2005, the coins were authenticated by the United States Mint after working with the Smithsonian Institution, as being genuine 1933 double eagles. Joan Switt Langbord claimed to have found them in a box and she went to court to have them returned. On October 28, 2010, US court ruled and the issue went to trial in July 2011. On July 20, 2011, after a ten-day trial, a jury ruled unanimously in favor of the United States government and Lanford appealed. At first, the Court of Appeals overruled the jury, but then it went En Banc and the Court of Appeals ruled in favor of the government. The Langbords appealed to the U.S. Supreme Court, which on April 17th, 2017 denied certiorari.

Hetty Green’s son, Edward Howland Robinson Green (1868-1936), was not so frugal and spent $3  million on coins and stamps. He was an avid collector and bought the famous sheet of 100 inverted airmail stamps in 1918, paying $20,000. The last time this Plate Block appeared on the market was 16 years ago when it sold at auction for $2.97 million.

Meanwhile, the classic Ferraris from the 1980s have nearly doubled in price over the past year.

Mar 31 2021

Revealing History


Armstrong Economics Blog/Ancient History Re-Posted Mar 31, 2021 by Martin Armstrong

COMMENT: I find it interesting how two people the general consensus has said were scoundrels, John Law and Julius Caesar, you have shown were actually people against the establishment. I read your Anatomy of a Debt Crisis and you have put together the contemporary historians where everyone else just seems to rely on the fake news of the day.

Thank you for digging up the facts.

HY

REPLY: When I was in high school, I had to read Galbraith’s “Great Crash.” Nowhere in his book did he ever mention defaults on national debts by any country. When I came across Herbert Hoover’s memoirs in an old book store in London, this was probably the second thing that changed my life, with the first being the movie  “The Toast of New York” about the Panic of 1869 when gold hit $162.50, which I had to watch in history class. I learned not to trust the history books, and the best way to find out the truth was always to return to the contemporary reports of history and/or the newspapers of the time.

The coinage has been a major factor in identifying the history and accurately dating events. Here is an extremely rare coin of Julius Caesar. Note that there is no portrait of him. He is announcing his victory in Gaul. His Gallic campaign was initially a piecemeal affair, but within six years, he had expanded Roman rule over the whole of Gaul. Following years of relative success, mainly thanks to the disconnected nature of the tribes allowing him to take them on separately (divide and conquer), Caesar was faced with the chief of the Arverni tribe, Vercingetorix, who too late had built a confederation to stand against Caesar. In 52 BC, despite formidable resistance, Caesar finally defeated Vercingetorix at the Battle (or Siege) of Alesia. This illegal war which by Caesar’s own account had left a million dead, was instrumental in elevating him to a position of supreme power among the statesmen of the late Republic, making him incredibly wealthy through war booty and also making him dangerously popular with the plebs — the common people.

This coin was struck in the course of Caesar’s war against the Senatorial faction led by Pompey and later Metellus Scipio. Caesar’s triumphant coinage trumpets his military achievements and conquest in Gaul while reminding the bearer also of his claimed descent from Venus through Aeneas. Interestingly, behind the bust is how old he is IIL or 48 years old. The reverse figure tied below the trophy of arms is popularly believed to depict the defeated Vercingetorix. The figure is carefully rendered in detail of how the Gauls appeared unshaven often with tattoos in blue to frighten their opponents.

In order to consolidate his power when he returned, Caesar produced triumphant coinage to spread the news of his military capability. The reverse of this coin is popularly believed to depict Vercingetorix himself. In 48-47 BC, the defeated Gallic chieftain still languished in the Tullianum, the underground prison beneath the Comitium. He would be hauled out for Caesar’s triumph in 46 BC, then returned to his cell and strangled.

This example of Julius Caesar AR Denarius was struck by a military mint moving with Caesar to pay the troops on a regular basis between 48-47 BC.

This is a Roman silver denarius struck by Brutus announcing he killed Caesar on the Ides of March 15, 44 BC (EID MAR). As you can see, the coinage can actually be used to confirm history to the year and sometimes to even the very day.

Mar 30 2021

What is 2032?


Armstrong Economics Blog/ECM Re-Posted Mar 30, 2021 by Martin Armstrong

Many people have asked, “Why is 2032 going to be such a major change in the world’s political economy and society as a whole?”

We are confronted by the end of the Sixth Wave come 2032, which will be a profound economic and political change. It appears these world leaders are pushing us toward fulfilling the vision of Kalus Schwab and his distorted view of how society functions. While the first wave marked the collapse of Rome, 794 marked the collapse of the Nara period in Japan as the capital then moved to Kyoto. That would last until 1185 AD when government was overthrown, marking the birth of the Shogun Period (military general authority). The Great Seljuk Turkish Empire had its origins, with its first capital in 1037. By 1092, the Seljuk Empire was at its greatest upon Malik Shah I’s death and had captured most of the Byzantine Empire, creating the Great Monetary Crisis of 1092 in Constantinople. Alexius I (1081-1118AD) of Byzantium saw his empire carved up.

It was 1075 when the Investiture Dispute began, where the Pope opposed kings appointing bishops to control. He had to threaten the ex-communication of kings, which only concluded in 1103. This was the start of the separation of church and state. In 1084, Emperor Henry IV deposed Pope Gregory VII and installed the first Anti-Pope Clement III who then crowned Henry Holy Roman Emperor. A revolution in 1094 resulted in Pope Urban II overthrowing the Anti-Pope and Henry lost power over Italy. But by 1111, Henry V captured the Pope, forced his settlement, and then crowned Henry V as Holy Roman Emperor. By 1112, the Church splits between Papal and Imperial supporters.

The Balkans had been overrun by the Patzinaks who were a nomadic people of the Turkic family. Their original home is unknown, but during the 8th and 9th centuries, they inhabited the region between the lower Volga and the Urals. They then laid siege to Constantinople itself in 1090 AD. They led Alexius to ask for help from Venice, which began the First Crusade (1096–1099) where they took Jerusalem. But the Venetians were more interested in plundering Constantinople. Thus, 1104 marked the peak in the Byzantine Empire and by the Latin rulers who seized Byzantium taking control 1204-1261 AD. It wasn’t until 1298 when the reign of Osman I, founder of the Ottoman Empire, began.

The financial crisis in France led to the default on loans to Italian bankers and the seizure of the Papacy itself moving it to Avignon in France known as the Avignon Papacy, also known as the Babylonian Captivity, which was period from 1309 to 1376. The French Anti-Pope seized the Knights Templars on Friday, October 13, 1307, to confiscate all their wealth and that of their clients. The Knights Templars had become the first real international banking system as they evolved following their founding around 1117/1118 AD, lasting for 22 waves of 8.6 years. This next wave also saw the Black Plague (1347-1351) wipe out 50% of the population, which then changed the economy by shifting it from serfdom in Europe to capitalism as wages began to take place because of the shortage of labor.

The next peak in the cycle 1413.75 marked the start of the religious revolution. In England, the Oldcastle Revolt was a Lollard uprising against both the Catholic Church and the English King Henry V. Oldcastle was influenced by Lollard cleric William Swynderby, who preached in Almeley during his youth. Lollardy was a politico-religious movement initiated by prominent theologian John Wycliffe during the 1370s. The Lollard beliefs dealt with their opposition to capital punishment, rejection of religious celibacy, and belief that members of the Clergy should be held accountable to civil laws. In addition, it was the rise of the iconoclasty, which took place in the Byzantine Empire, where they rejected ornamentation of churches, religious images, and pilgrimages. They objected to war, violence, and abortion. John Oldcastle led the revolt, and it took place on the night of 9/10 January 1414. The rebellion was absolutely crushed at the battle on St. Giles’s Fields. There was rising discontent in religion that manifested on October 31, 1517, when Martin Luther nailed his 95 Theses to the door of the Wittenberg Castle church in Germany.

This next wave peaked in 1723.35, not merely saw the Protestant Reformation impact region, but with the fall of Constantinople in 1453, scholars fled to Europe and Russia, taking the wealth of knowledge with them. By 1492, Christopher Columbus convinced others that the world was round and not flat based upon maps that came from Constantinople. While it would slowly expand the knowledge in Europe, the Age of Enlightenment is formally classified as being between 1715-1789, which really became the foundation for the next wave into 2032.

But this wave was the beginning of the crisis with a monarchy. Columbus was backed by Spain, which then became the new financial capital of Europe. But the mismanagement by the monarchy led to Spain becoming a serial defaulter beginning in 1557, followed by 1570, 1575, 1596, 1607, and 1647, ending in a third world status by the end of this wave. King Philip V of Spain abdicated the throne in 1724 to go to a monastery.

In England, on October 17, 1722, the Habeas Corpus Act was suspended because of a Jacobite plot to take the thrown by a Catholic James III they called the Old Pretender, and Parliament prohibited journalists from reporting on political debates. From here on out, the tone for the next wave was set in motion. The rise against the monarchy. This was the wave of human rights and it moves into its culmination come 2032 with the rise against human rights and the attempt once more to suppress the people with the rise of authoritarianism. This is once more a major turning point, and we will face a dramatic change both economically and politically on a global scale.

The forthcoming “The Discovery of the Business Cycle” goes into the details of these waves throughout history with not merely political facts but also the rise and fall of the world’s monetary system.

Mar 25 2021

The Greatest Female Trader of All Time?


Armstrong Economics Blog/Traders Re-Posted Mar 25, 2021 by Martin Armstrong

QUESTION: First I want to thank you for your guidance. You have helped me understand markets where I can see I was clueless before. You seem to be a contrarian. I take it that is why you say the majority must always be wrong. Have you learned this to be the best way to look at the world?

Thank you for shining a light in these dark times.

GR

ANSWER: The greatest traders of all time have always been contrarians. They can see the patterns within patterns and how history repeats right before their eyes. Jesse Livermore (1877 – 1940) turned bullish in 1923. He could see the bull market coming. The Wall Street Journal accused him of turning bullish to influence the presidential elections. When they were proven wrong, they simply refused ever to quote Jesse ever again. Many have pointed out that Barrons had reported that our model was calling for new highs back in 2010 more as a joke. They have never reported ever again how it was correct. It appears that the media does not like it when they are wrong and will retaliate.

Hetty Green (1834-1916) was a woman in a man’s world. She became not just one of the wealthiest and most astute investors in American history, but she became the richest woman perhaps in the world. Hetty’ was known for her extreme frugality, which was exploited by her adversaries and made for good copy in the press. They dubbed her the “Witch of Wall Street” because she was such a good trader her wealth could outdo even the top ten Wall Street bankers in her day. She was in reality a woman in a man’s world, during the era of robber barons when deals were done in dark oak wooden rooms filled with cigar smoke clouds that you would think it was going to rain.

Her reputation as the “Witch of Wall Street” was undeserved and today they would call it sexist. Hetty was the first female billionaire in modern terms who would be worth $10 billion+ in 2021. When she died in 1916, she was worth between $100-$125 million when a dollar was really worth something. She actually despised many of the titans of industry and finance of the day for their predatory ways and profligate spending. She actually sympathized more with the average hardworking citizen, yet she followed in her father’s Quaker footsteps.

Hetty Green was the woman of the Gilded Age. Few men could compete with her mentally. Hetty was abandoned at birth by her mother and she was viewed as a female by her father. Against this backdrop, Hetty set out as a child to prove she was of substance and had value. She followed the simple rules of her wealthy Quaker father, and always was extremely frugal. She would accompany him to the counting houses, storehouses, commodity, and stockbrokers. She observed trading from an early age and clearly saw the patterns within patterns.

While she inherited money, she understood trading. Perhaps her greatest trade was buying greenback bonds during the Civil War and into the panic of 1869. Some painted it as she never lost faith in America’s potential, but from a practical standpoint, she could see that the North was the industrial hub against the South which was agricultural. Others claim she just ignored the herd mentality and took advantage of financial panics and crises.

Indeed, during the civil war, Hatty bought federal bonds when the greenback would collapse against gold. In 1862, the greenback declined against gold until the end of the year when gold was trading at a 29% premium to the paper greenbacks. The following year, by spring of 1863, the greenback collapsed to $152 against $100 in gold. After the Gettysburg victory, the greenback bounced back to $131 to $100 in gold. Then came 1864 when General Grant was making very little headway against General Lee. When it looked bleak in 1864, that is when the Greenback collapsed to its lowest point reaching during July 1864 briefly to $258 greenbacks to $100 in gold.

The Greenback began to recover, dropping back to the $1509 level. Congress limited the total issue of greenbacks to $450 million, which helped to support their value. Then the Panic of 1869 hit, and Greenbacks fell again to $162.50. Hetty made a fortune buying the Greenbacks at the lows. Then in December 1878, Congress made the Greenbacks on par with gold. What bonds in Greenbacks she was buying, she gained not just the interest but also about doubled her money on this trade alone.

Therefore, Hetty bought railroads, real estate, and bonds. She could smell blood in the streets, as they say in financial markets, and she was there to buy it up. Men mocked her, and women scoffed at her frugal ways. Nevertheless, she had thick skin, and because she would buy in the panics and win, they called her the “Witch of Wall Street.” Yet, she even supplied the loans that kept the city of New York itself from going bankrupt. Even when the markets panicked, Hetty looked at the trend and had a nose for seeing the market. She would be there lending money at 25%.

Hetty is said to have relished a challenge. When her aunt died and did not leave Hetty the fortune she expected, she filed a groundbreaking lawsuit that still resonates in law schools and courts. When her husband defied her and sank her money on his own risky interests, she threw him out and, marching down to Wall Street, quickly making up the loss. Her independence, outspokenness, and disdain for the upper crust earned her a reputation for harshness that endured for decades.  Yet, those who knew her admired her warmth, her wisdom, and her wit.

When Hetty died, she did leave a fortune.

Her son, Edward Howland Robinson Green (1868-1936), was not so frugal. He was an avid collector and bought the famous sheet of 100 inverted air mail stamps in 1918, paying $20,000. The last example sold after a few years and brought in $1.3 million. He also had bought all five of the known 1913 Liberty Head nickels and as many as seven of the rare 1838-O half dollars. He also held dozens of high-grade 1796 quarters.

Mar 15 2021

GameStop Update


Armstrong Economics Blog/Stock Indicies Re-Posted Mar 15, 2021 by Martin Armstrong

Gamestop has rallied back during the week of March 8th after all the hoopla. Cyclically, it was 13 years down and it was due for a bounce. Even our pattern recognition models picked up the rally starting in August 2020. Quite frankly, this has all the hallmarks of manipulation, but not what you may think. The classic manipulation is to pump up a market touting some player but the pros have already been in the market. This is how the Buffet manipulation of silver was done in 1998 and even the entire Hunt Brothers silver rally back in 1980.

I knew the Hunt Brothers were buying silver from the early 1970s. At the end, their name was attached to silver and the claim was they were taking it to $100. At that time, the exchange pulled the same maneuver and made it a fraction in margin to go short but 10x that to go long. The Hunts were trapped and could not sell anything without everyone jumping in front of them,

Melvin Capital, which was a small hedge fund lost 53% of its capital in January on GameStop. Not sure how that was possible unless the bet was purely a gut-trade rather than quantitative. The four largest asset managers in the world together own 39 percent of GameStop shares, according to regulatory filings. Those stakes, which are mostly held for years in passive index funds, have collectively gained roughly $1 billion in value since the beginning of this year. The hype of a huge short-squeeze seems to be exaggerated. One hedge fund, Senvest Management, recently boasted to clients that it made more than $700 million from a bet on GameStop in September, the Wall Street Journal reported. Certainly, our model was long, not short and I cannot see even a trend-following-model that would have been short. Melvin Capital to lose 53% does not seem to be very professional to lost that much on a single stock. The long-term is not over in this stock.