The Bureaucracy is Out of Control
Obama should just resign. He is outrageous. He supported the NSA and has claimed the CIA does not spy on Congress. Well, the Inspector General has released his report and oops – yes the CIA spies on Congress.
Let’s get real here I have reported that for 2 years speaking and communicating with people on the House Financial Services Committee (banking), they were telling me that the NSA was sweeping up even their emails and phone calls way before Snowden. I was told that point-blank and no in confidence. Therefore, EVERYjournalist had that SAME info and refused to report it. Snowden had to go to the Guardian in Britain to get the story out because WE HAVE NO PRESS WITH INTEGRITY that is still standing in the United States.
Now they are all reporting the CIA spies on Congress (see New York Times). The executive branch led by the President controls the Judiciary as well and it is normally at war with Congress. Obama has used the NSA, IRS, and the CIA to attack everyone. At some point these people behind the curtain are the unelected. They threaten and blackmail people as part of their routine. I have seen this first hand and you do not grasp pure evil until you see it in their eyes. These types of people see themselves so above everyone else and bask in their power to destroy anyone or anything they deem inappropriate. Where this will all end is written in history and it is never pretty. Obama is either a stooge or part of the real danger to the survivability of our nation long-term intact.
July Recap of Few Markets
The closings for July were quite important in the long-run.Gold on a nearest futures basis closed July at 1281.30. Support during August will lie at the 124000 and resistance will form at 1285.00 on a closing basis with 1318.00 followed by 1350.00. We do not see a possible final low before Jan/Feb 2015. The uptrend line is about where the last lows were. This is typical and most standard chartists will see that break as bearish long-term. We need to break that support to see the towel thrown in by most. So we are still looking for a low under $1,000 and that could form as early as Jan/Feb. We will lay out the details going into September 2015 in the coming report.
The Euro pulled off an outside reversal to the downside (exceeded the June high and closing below the low). The cash closing was 13388 and we elected the first minor Monthly Bearish Reversal leaving us 132-1333 to watch very carefully. We are still looking now for the September turning point. Here the chart pattern is awesome. The Break-Line Channel has performed perfectly capturing the rally and we can see the Euro has been unable to breach that resistance. On the downside, we should be expecting a drop to par in the months ahead.
Looking at the S&P 500 Cash, we have broken out about the Breakout Channel. The key now is for that channel to provide support for any retest. By September, that will reside at 184263. A correction can be 2 to 3 time intervals and that would bring us to where the computer is targeting – October. We will also see volatility tick up Oct/Nov. There is a potential to extend the decline into December. If that were to be the case still holding the top of this channel, then this would warn of a possible extension in the cycle pushing the high off to 2017 based upon Sovereign Debt Crisis and perhaps war that pushes capital into stocks running away from debt.
The pattern is different and more bearish in the Dow compared to the S&P 500. Here July was an outside reversal to the downside (new July high closing below June low). The first Minor Monthly Bearish lies at 1528400. We need to watch this number for if elected, then this could signal not just an October low, but an extension into December.
Now compare the S&P500 to the Dow Jones Industrials. The former is the broader market and the latter is the big money institutions. The Dow lead the way up and then we warned there shift to the S&P 500 was taking place. You can see the stark difference. Constructing the same channel from the same points in time, the Dow has not yet broken out of the top. Any retest here should hold the bottom of this channel. How these two indices react in the next 3 months will be critical to the future. In the Dow, we may see a turning point in August. We still show October and December, But here we are showing August as important. So pay attention to the Weekly Reversals and arrays in the computer reports.
The Euro – A Dying Currency
COMMENT:
Your daily effusions are a tonic — for which much thanks.
Reading your earlier writings, and specifically your Oct 1997 memo on the Euro,I am stunned how little has changed in the last 17 years.Somehow that flawed currency has been induced to retain a pulse but it is not hard to anticipate its sudden death.
It is remarkable that what you saw 17 years ago remains today beyond the ken of
the multitudinous talking heads.Such foresight ( and there are plenty other examples) deserves to be reckoned a prodigy.
Sincerely
B
REPLY: The old saying, the more things change, the more they remain the same. The Euro is headed lower. A closing for July BELOW 13478 should shift the Euro into a negative trend near-term. The real critical support lies at the 13298 level both on a weekly and monthly closing basis. I must say, the way this is setting up it indeed smells like war is on the horizon. Additional support was at 13400. At the time of this posting the Euro is trading at 13387.
Dow Jones Outlook for July 2014 Closing
The July high seems to be unfolding nicely in the US share market as we warned at the World Economic Conference. The computer seems to have done an excellent job targeting the week of 14th as the Directional Change.
A closing for July BELOW 16695 will warn that we are starting to lose the upward momentum. At the time of this post we are trading at 16661. Additional support lies at 16590 so a closing beneath that will be more negative near-term. The main support lies at the 15280 level followed by 14300-14800.
A weekly closing BELOW 16675 will also warn that we should move lower. If we close above 16695 for July and the week closes above 16675, then we are still treading water. The volatility should rise a bit in early August going into the 2nd week.
We are preparing the next release of monthly and quarterly levels on reports and the written analysis by the computer shortly. This has been a major undertaking to ensure security for the systems and access for the clients. Just for the record to all hackers – the models are NOT connected to the internet – only the output is uploaded. So you can hack all day long – you will not get close to the system.
State of the World Trends
QUESTION: Dear Mr. Armstrong,
Firstly, I would like to thank you for discussing economic and political matters in an honest and frank manner. It is difficult in the present world to find individuals with integrity, and I am aware that you have sacrificed a great deal in order to maintain yours. As a student of economics, with a particular interest in macroeconomics, I am of the same opinion that you cannot isolate national trends in a complex international system. Capital flows are often understated, or even overlooked in the grand scheme and many analysts have a rather myopic world view.
I was curious regarding your recent post on the war between public and private interests. I assume that this refers to the capital flow tug of war between private stocks and public bonds? Furthermore, where does physical gold and silver fit into this picture?
My understanding of your historical data is as follows, capital can (and will) shift from public assets (bonds) into private assets (stock) as a way to avoid currency debasement. It is likely that in the event of sovereign default all assets will rise, though the stock market will likely see the most significant rise as capital flows seek a place to park. Likely this will move first. However, gold, silver and other precious metals will also rise with a time-lag as “main street” seeks physical assets to protect their wealth.
Most notably I saw the “Executive Order 6102″ in 1933 on the historical Dow Jones Industrial Index chart. I suppose that flight of household savings into precious metals can actually become a serious threat to future economic growth and development, at which point laws will be enacted and enforced as best as possible.
Would this be a fair assessment?
PS: Regarding your recent posts on cryptocurrencies, central bank created bubbles and so on, you have been absolutely objective and spot on in my opinion. Cryptocurrencies are a short-term convenience to accustom people to an entirely electronic currency system and also to take the wind out of the sails of precious metals. Also regarding central bank bubbles, it should be obvious to critical thinker that central banks can augment or set circumstances in motion which might assist in bubble creation, but bubbles have existed before and will exist long after central banking.
Thank you for your time, I understand this is a long email, and once again thank you for your blog. It is a source of daily interest.
Regards,
CS
CS
ANSWER: Precious metals are not a threat to the monetary system directly. Gold was confiscated to prevent hoarding. Like in Japan, if people see no opportunity to invest they hoard. FDR’s confiscation was in that direction not that the metals presented a threat. Today, gold will never replace the currency as the medium of exchange. We are headed into electronic currency and gold would just be impractical in this new age of the internet. We will see the same trend as the railroads and how they wiped out local business monopolies and they gave birth to mail order. The Dust Bowl destroy agricultural jobs and only those who were capable of learning skills made the transformation. The internet is doing the same thing reducing jobs locally and shifting the skill set to computers that is leaving the jobs behind for those too old to make the transition. This is how the economy evolves.
The threat of precious metals is not some powerful force to replace money any more than Bitcoin. It is a threat to the collection of taxes as is Bitcoin. Moving to electronic currency will wipe out Bitcoin and they will leave it bee to get people accustomed to electronic money and then prosecute everyone on there who did not report income. The flight of household savings into precious metals will never be huge. The precious metals advocates are a tiny fraction of society. The bulk will just follow electronic money and never think twice. Go to Starbucks and watch how many your people pay with their cell phone. They do not use plastic or cash. The older generations cling to gold, but the younger generation think differently already.
Central banks do not create bubbles. The same as banks cannot manipulate markets regarding trend. What they both can do is increase the volatility. Neither is capable of creating a trend for to do so means the entire array of global markets must also be manipulated. Nobody can do that and nobody can figure this out on a individual level. It takes our supercomputer just to track everything in the world simultaneously. I do not think any person has such brain power.
Just look at today’s action. Stocks down and gold down. This is the classic Public v Private force. The gold promoters hate stocks and the dollar yet cannot see gold’s role within the entire gambit of the global economy. Like the silver lawsuits. Come on. The theory is that banks have manipulated and prevented their rise. That would only be possible if the precious metals were the only thing down – but that is not the case. The gold promoters have so discredited themselves that they have done far more damage that most recognize. Talk to a non-goldbug and they look upon the gold scenarios are snake-oil salesmen who cannot be trusted. Everything is a manipulation and that is why they have been wrong. So what are they going to say now when the banks are bailing out of commodity trading & warehouses. Liquidity will decline further and the metals will not rally until they are ready for prime time. We are now starting to lose their traditional scape-goats. Who will them blame next?