Gold & Timing
Bull markets I have stated many times are 7, 11, 13 or 21.
Gold has three very interesting bottoms. The 1999 is the intraday low. 2000 is the lowest yearly closing. Then 2001 produces the lowest quarter closing. This is an interesting set up that is rare to say the least. So effectively, both the 11 and 13 cycles come into play since the low was not a single event. So we got the 13 year since 2012 was the highest closing but we got the intraday in 2011 as 11 up from the lowest closing. Had both the intraday and the close been unified in 1999, then the ideal would have been 2010 with a max of 2012.
Likewise, on the way down we should have had a 19 month correction but the move up to create the highest annual closing in 2012 extended the cycle. Everything happens for a reason and this may prove to be the currency crisis.
This decline will be no different than anything before. The bulk of the drop always takes place within the first 2-3 years. So just as gold crashed from $875 in 1980 to $293 by 1982, the 5 year bear market prevailed but low was $280 compared to $293. The 19 year low was only $254.
Even if gold declines into 2015, the bulk of the drop will most likely take place during this year as was the case 1980-1982. A lower low in 2015 may be marginal. That depends upon the low we see this time. If it is in the 1150 area, then the worse case should be 875-907.
We still see the phase transition for 2017 time frame and that is normally up to a 2 year event so 2015-2017 does not change anything long-term. The rest will be in the report.
China Bubble or Breakout?
QUESTION: I’m a reader from China and one of the big fans of you in our country. I want to ask you a question and would be very happy to get your reply. If my memories are correct, you have been a bull of China and praised Chinese leaders for their competence. But in reality, Chinese people are very disapproval of the government, to be more exactly, hate and curse! As you know, aside from problems of severe pollution and food safety,China has a very big housing bubble and the price is well beyond people’s purchasing power. Many young people had to use their parent’s retirement savings or even borrow the rest from relatives as down payment to buy an apartment so they can get married. On the other hand, most Chinese public servants have many many suites of apartment——to hide their bribery money in many cases. Corruption is widespread in China, everywhere. People are yearning for democracy and election, and not trust one-party politics anymore. Also, many people are expecting a crash of china’s housing market. Sadly enough, they have been expecting for many years but the price just won’t stop rising.
So, what’s your opinion, about china’s politics and housing market? I will be very eager to wait for your answer. Thank you very much.
Yours,
——-
Beijing,China
ANSWER: Politicians in the USA like to point their collective finger at China for corruption problems while they sanction a legalized system of corruption that ensured the NY bankers will NEVER be prosecuted. Furthermore, in the USA, politicians receive untold millions legally funneled to them by political action committees. The PACs assure that Congress votes the way that those who provide the money want it to. Why is Goldman Sachs above the law? They bought both parties equally. Rubin took charge of the Treasury under Clinton and did away with Glass-Steagall. Paulson took over the Treasury from him and eliminated Lehman and Bear Stearns, but as soon as Goldman’s was getting shorted he outlawed short selling. Nobody in Congress will even investigate Goldman Sachs because they have their hand out under the pretense it is LEGAL.
China should just LEGALIZE the corruption like it is done in all GOOD upstanding Democracies and it will not be an issue regardless what goes on.
All government is what it is. The ONLY form of government that seems to work is the benevolent dictator. But that is rare. Give people power and they all go nuts no matter what form of government. So the people can yearn for democracy, but it will be no better. Where the government of China deserves credit is they saw Communism failed, they changed course without a revolution after Tenamin Square, whereas we have Homeland Security buying tanks for domestic use and 1.6 billion bullets enough to shoot every American 5 times. I wonder if when their tanks roll down our streets, will they stop as they did in Beijing?
So when it comes to government, on this score, I and with Thrasymachus. I see no difference between left or right, the names employed, or the pretended form. It is always just their issue of self-survival. So be very careful what you wish for. Without eliminating a system run by CAREER politicians, there will never be any REALchange in corruption.
As far as the economy some housing prices may have bottomed in 2012. Keep in mind hat it is volatile and that prices were rising from an extremely low level. The government has taken steps to try to suppress the cycle unlike in the United States. The 2010 reforms were.
- The down payment for first-time buyers’ mortgages was increased to 30% from 20%, while for second homes down payment rose to 60% from 50%.
- Mortgages for third home purchases were prohibited.
- There were limitations on home purchases in more areas, credit-quota limits and higher benchmark lending rates.
- New property taxes were introduced in Shanghai and Chongqing – between 0.4% and 0.6% in Shanghai, and between 0.5% and 1.2% on luxury homes and newly purchased high-end homes in Chongqing, plus a special tax on second home purchases by people with no business or employment interest in the city.
- In early-2011, Beijing also banned property purchase to those who have not lived in the province for five years, limited the number of homes a native Beijing family could own to two, and allowed only one home for non-native Beijing families.
- Mortgage discount for first-time homebuyers was eliminated.
- The benchmark interest rate was raised to 6.56% in July 2011, the third interest rate hike last year.
Keep in mind that these measures would NEVER have been taken in the United States when politicians need to be elected. There is always two-sides to a coin. Some of the steps taken in Singapore trying to suppress the real estate boom there once again were sound measures that would never be imposed by elected politicians.
Prices on a percentage basis historically rise more rapidly and sales are at record highs when first beginning in a national cycle. During the land bubble in the United States that burst in 1836 and led to the Panic of 1837, saw 1.2 million acres sold in 1829 at $1.5 million amounting to 80 cents and acre. At the peak in 1836, the government sold 20 million acres at $25 million at still 80 cents. Land speculation was dominant. What caused the bubble to burst was the Specie Circular demanding payment in gold and silver. The Act of 1820 stopped the government financing the land decreeing that the land had to be paid in cash, which was simply banknotes. This only made the banks now the lender so the bubble continued. The politicians failed to create a market economy and wanted to be seen as generous selling land at 80 cents and acre. Speculative market were booming and in some cases land prices reached $2.50. This created a real estate bubble that became nationwide. Mobile saw the land value of the city jump from $1.3 million to $27.5 million between 1831 to 1837. New York City doubled in value from $300 million to $600 million. The government surplus jumped from $8.1 million to $19.9 million annually between 1829 to 1836. The government couldn’t possibly lower taxes fast enough or low enough to prevent budget surpluses even at 80 cents.
Keep in mind it is not a bubble merely because of price. Who wouldn’t pay $3 an acre today for what was a bubble in 1836. It is a bubble because of TIME, not price. We are gathering all the data possible of the real estate in China because it is important to see when the bubble will burst. Second hand house prices are rising. So this requires close attention. One concern is we reached 23 years from 1989. The 26 year target would be 2015. It will not continue beyond that target in TIME.
British Pound & Reversals
QUESTION: I watched the Yearly Bullish Reversal in the pound for years at 201.00 you gave back in 1985. It reached that level in 2007 but never closed above it. Does that remain the number all these years?
ANSWER: Yes. Once generated, it never changes. True, 2007 reached 210 level intraday but could not close above 201, which was only the first minor Yearly Bullish. The major Yearly Bullish remained at 261, which could not be exceeded even during the 1980 rally. The first Yearly Bearish from 2007 was 173. That was elected with the closing in 2008 with the closing back down at the 145 level. The typical rally back to retest the reversal when closing that far below it saw the best level reached for the counter-trend reaction at 170 in 2009. The pound is now situated where a closing below the 139 level will signal new lows ahead. An additional minor Yearly Bearish lies at 144. The problem for the pound is that since 1971, it has been unable to EVER elect a single Yearly Bullish Reversal against the dollar. From a timing perspective, 1985 was the intraday low at $1.03. But 1984 was the lowest yearly closing at 115.35. That means from a timing perspective, just as we saw a 23-year decline picked the turning point to the month in the Japanese yen, a 23-year decline for the dollar against the pound was also precisely 23 years from the lowest annual closing 1984 to the intraday high 2007.
Sorry. This is not personal opinion. It is just the facts. The nice thing about the numbers, it is the numbers – not me. Human opinion is still opinion. Some people are desperate to try to prove me personally wrong to try to negate the system. My opinion means nothing. What I may “think” will happen is not what always “will” happen. The numbers are the numbers. That has nothing to do with my beliefs, feelings, opinions, or desires. The object of creating a model is to eliminate HUMAN interpretation and opinion. So sorry. You may hate what I have to say. But it will never change the numbers or fate. It is always what it is. My personal goal has always been to eliminate myself. You cannot forecast the future from opinion with any consistency. So those who shoot their arrows at me are like primitive witch-doctors who are upset that I expose their mambo-jumbo for what it is – gibberish. The truth is simply that there is a hidden order to the chaos in which we think we exist.
It is time to abandon trying to manipulate society thanks to Marxist-Keynesianism, and just for once try to go with the flow. You cannot eliminate the business cycle for nature is incorporated within it. Perhaps if we go with the flow turning with the curves instead of trying to plow a new road that is straight, we may create a better world that is livable. The direction we are headed in right now, I can’t wait to get off this ride for life to me is not worth living when government cannot sleep at night worrying about what everyone is doing.
Government has always used religion as a weapon to divide and conquer. Kings were manipulating the Church. Religion has always been used by Kings and ministers for economic gain. They get the people fired up to further their own causes. Ever hear of the Investiture Controversy?
The French even seized the Catholic Church under Philip IV because he was broke. He they seized the Knights Templar and killed them all to seize their banking deposits similar to the ECB and Cyprus. Napoleon imprisoned Pope Pius VII to grab assets. When Napoleon invaded Italy and the Pope protested, he ordered the troops to invade Rome and the Pope excommunicated him but the Pope was seized. Not even Hitler did that.
The whole Catholic-Protestant nonsense was economics. Catholics were like the Arabs and had the sin of usury so the Jews became the bankers. The Christians wanted to get into the business and funded the whole Protestant Reformation for money. Henry VIII was broke, started the Church or England to fund government seizing the assets of the Catholics to fill his Treasury. Gresham’s Law emerged because he observed Henry VIII – bad money (debased) drives out good (hoarding).
Constantine claimed to have seen the vision of the Cross in the sky because Maxentius was Christian as was most of his Army for he built the first Church in Rome. If Constantine really had a vision, why did he wait until his deathbed to be baptized? Facing a Christian army it was a diversion to put crosses on your shields. How could Christians kills Christians? That is how he defeated an army twice his size – smart! It was profitable to then suddenly become Christian like his mother (who was real) because he got to confiscate all the wealth of the Pagan temples. That is how he funded the building of Constantinople. Just follow the money!
Catholics & Protestants still hate each other and have no idea why – other than they have been indoctrinated by government like those expecting a herd of virgins if they blow themselves up. What happened to Thou Shalt Not Kill or Thou Shalt not Covet thy Neighbor’s Goods? Marxism violates the Ten Commandments but it benefits government! If you are Mafia and you kill a “rat” who is one of your own and are ordered to do so by the boss, you get life. But if the President orders you to kill someone you get a medal. It is always Obedience to Authority – Stanley – You were right more than you realize! It goes far beyond “I was was just following orders.” It is in every aspect of government right down to the economics of manipulating theories.
Just perhaps it is time when we crash and burn to put government in its place and stop manipulating society for monetary gain. The numbers are always the numbers.
British Questions
Bank of England
QUESTIONS: What is behind the forecast concerning the pound?
ANSWER: We are still investigating. Much is not public information. Internal governmental sources put Bank of England monetization of new debt at or near 90-100% compared to US at about 62%. This is NOT yet confirmed. The source is high internal government level so it is credible not rumor. Then there is the movement to leave the EU, which the market could take negatively at first. Then you have the Scottish vote to leave the UK.
The underlying issues of Northern Ireland still remain below the surface. It is not a peace as much as it is calm. The technology today prevents what use to take place only because they can listen to everyone and hunt you down in minutes. At night, the gates are still locked separating the Catholics and Protestants there and the economic conditions have widened insofar as the Catholics have been supported from America when the Protestants have not. The Catholic side has modern buildings and the Protestant looks like Camden, New Jersey. The economic conditions leaves no jobs for the youth and the vast majority of educated kids now migrate out of Ireland. Socialism in the UK is collapsing simply because the youth are either unemployed or leaving. They will not be there to support the older generation besides being fewer in number.