COMMERCE DEPARTMENT 1st QUARTER NUMBERS
LOTS OF ARMSTRONG TODAY
JUST KEEP SCROLLING OR GO TO
THE ARCHIVE LIST IN THE RIGHT COLUMN
JUST KEEP SCROLLING OR GO TO
THE ARCHIVE LIST IN THE RIGHT COLUMN
The Commerce Departed originally put out 0.1% but it was revised to -1%. The economic growth has been marginal for the last year because we are seeing (1) rising taxes, and (2) rising unemployment from public sector. There has been no real expansion of the economy thanks also to FACTA that has had the impact of contracting the world economy. When we turn bow next year, this is going top be harder than the last.
Gold For the Close of May
Gold is moving into the June seasonal low on schedule. A closing for the month on a Nearest Futures basis tomorrow below 1251 should result in the sharp decline. A monthly closing BELOW 1192 will warn serious of a sharp decline that will more than likely break the $1000 level. C A U T I O N is highly advised.
Precious Metals
QUESTION: Hi Martin,
As someone who was taken in by the gold and silver bugs and went all in 3 years ago I am now left out of pocket and can’t sell my investments as I’d lose nearly half. As I am only a small time investor how much longer do I now have to wait before the cycle turns again so I can recoup my money back?
Thanks for all your assistance, your views from behind the curtain are truly enlightening.
Kind regards
L
ANSWER: We are preparing the gold forecast report. It is likely to press lower and you have to consider it may bottom in the $900 area. That is the risk. Will it rise thereafter? Yes, of course. I have disagreed with the gold promoters because they recklessly sell ideas without experience as a trader or respect for the people they mislead. This is not a soap box to push your beliefs upon someone else.
It is always about timing. Yes, there will be a default on the national debts and there will be a currency reset. Those things are as inevitable as death itself for all things die, including governments. Anyone can say that. It is common sense that the current monetary system will not survive unless you work in government for then they claim they are the exception to economics because they are government. There are no exceptions.
What our models are about is simply trying to ascertain the timing by looking at HOW LONG it takes these to develop. You cannot determine that by personal opinion. My personal guess would not be any better than someone else. Who knows. The point is to try to quantify this with unbiased modeling – not personal opinion. What someone “thinks” will happen may be good for conversation at a bar. It does not form a foundation upon which to invest.
Here is the model just using the Monthly Reversals on one level. This is not some contest for personal opinion. It is simply what is the market doing yes or no. Opinion as to manipulations, governments, whatever, is nice for talk. However, you cannot trade on opinion unless you wish to lose everything because it is human emotion that creates the boom and bust cycle. This is my point. EVERYTHING rises and falls. Only a trader survives. There is a time to BUY and there is a time to SELL. There are no exceptions. Claiming there is some dark force at work is absurd. Who cares what the reason is for a rally or decline. The market is always right and it does not matter anyway for the markets move in ANTICIPATION of what they expect might happen regardless if it does or not.
Currency Inflation & What Does That Mean.
A number of questions have come in about the precious metals and real estate along side the stock market. Precious metals have their place. As long as you trade them and not turn them into some conspiracy, they are a tradable market and you can buy or sell. It is just when people preach nonsense that cause others to lose their shirt with no regard for what they are saying. That is wrong. The metals will rally when it is time.
Keep in mind that there are different types of inflation. What we are seeing in the high-end real estate and stocks is the demand-inflation driven by several forces:
(1) People trying to get off the grid fearing banks
(2) Pension funds underwater having no choice but to run into equities especially when interest rates are poised to go negative. These morons in government cannot even think about what negative rates will do to pensions.
We should see the precious metals rally as well. But that comes when the ECM turns down and people once again begin to question government. Will gold go to $50,000? That depends upon the currency for that is NOT real nominal value – just fictional. Saying this implies gold will rise to that value and you become rich. That is not true. Gold will rise as a hedge against government and that requires the decline in confidence. That is why gold rallied with the decline in the ECM after 2007.
Currency-Inflation takes place when the currency value declines on a wholesale basis and that produces advances in prices in EVERYTHING across the board. That is distinct from cost-push inflation like beef caused by shortages, or demand-inflation that is a rush into particular sectors because people perceive (a) rising prices or (b) better alternative.
Some have asked are Europeans better just taking the 10% haircut rather than running into real estate? I seriously doubt that 10% is going to fix anything and this will be an on-going problem. It is probably less risky to just get-off-the-grid for ultimately we will see all currencies reset.
That reset will come only when there are ZERO options left and we have to default on national debts. We will see. The IRS is targeting frequent-flyer points, bonuses or any kind, and eventually the healthcare Obama tax. These people will tax everything possible. They follow the same pattern regardless of what century, culture, race, creed, or politician persuasion.
Diocletian restricted movement until you paid your taxes during the reorganization of Rome. The IRS has done the very same thing. You cannot leave the USA if you owe $50,000 in taxes. See – history repeats because the GREED of those in government never changes regardless of the century. What took place before, will take place again. I need not express my personal opinions nor get involved in conspiracy theories. I look only at the facts – have they done this one before? What happens? And what comes next?
Will the USA Break-Up? Will all assets rise? How does this really work?
QUESTION: Mr. Armstrong,
As I continue to read your blog, I have to wonder if America will survive the coming hardships. America is split about 50-50 politically with no real possibility of reconciliation. Victory for one side or the other (left or right) is the only real “solution”.
Given this perspective is it possible America will break up along geopolitical lines as we are seeing with Scotland, Catalonia, etc. Or is this simply the hopeful illusions of a proud Texan who longs for an independent Texas?
Thanks,
JH
ANSWER: Historically, all governments are simply evil. Even Jefferson said if he was compelled to choose between government or the free press, he would choose the latter. Within government, there are agencies competing against agencies. It is all about their own survival. Even when the economy turns down, the fiscal conservative lobbyists converge upon the Hill and expect government to cut spending, just not theirs.
Just look at the UN. Yes it is one place also full of corruption. Is it capable of a one-world government? Not likely. China supports Russia against the USA right now. There does not seem to be the potential for harmony.
The crisis we face is all the unfunded liabilities and the endless borrowing with no possibility of paying anything off – ever. Government must collapse of its own faulty design. It needs no help for this will not work nor end nicely.
Wealth moves in three phases depending upon the severity of the crisis.
If it is a currency inflation, then everything rises across the board from commodities, stock, and real estate.
If there is a threat of invasion, then the stocks and real estate decline and we then see capital move into the movable assets.
If there is a total collapse and we enter a Dark Age, then nothing exists as wealth and we return to GO when it is back to just food.
There is no single solution. It depends upon where you are located and how far we go down the chain.
As far as the USA breaking apart, that seems inevitable for there are tremendous differences in beliefs that are clashing – ie Tea Party v Republican establishment.
To cause that we need the economic decline. That is what causes the entire motivation.
A one-world reserve currency would most likely emerge from some sort of G20 type model. We are talking about only a reserve currency that will require international agreement like Bretton Woods. Each country’s currency would float against that based upon confidence. That will replace the dollar as the reserve. The people would not surrender their cultures to one government – just look at the results in Europe.
There is no question that the monetary system must fall as we know it. This is simply a matter of time. As far as government, when the economy falls, then we will see the pressure build. We either move toward totalitarianism or freedom. I personally see the best form of government is one without career politicians where the people actively retain the check and balance. This was the ideal design in Switzerland, but even their the bureaucrats have zero experience in the real world. You cannot write about stuff you have no practical experience in to begin with. That is why we are in such an economic mess.
We need the people who are out there and clueless. That is the engine that propels the economy between boom and bust. Your independent Texas will come. It just taxes time.