Answering Questions on Gold

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QUESTION: Marty, it appears you are correct once again in gold that this rally would not reverse the trend. The gold promoters have been all over the place claiming gold has bottomed and the stock market and the world will go to zero because of fiat. Is there a number we should be watching below since we cannot reach the 1187 number on the upside?

ANSWER: Yes. A daily closing back below 1108 will warn that high is in place. A closing tomorrow below 1180 will be bearish. We need a monthly closing ABOVE 1287 to suggest that this is actually breaking out and changing the trend. That does NOT appear to be likely until the general public loses confidence in government. It is coming. This is what Trump is all about. ONLY when that unfolds will gold reverse for it is the hedge against government, not inflation, fiat, or any other nonsense. These people ruin the lives of investors; they talk a lot, yet do not offer a single example from history to support anything that they pretend will happen. I heard on the radio people trying to sell “black gold” (oil) as something that you will make 30% a year on. Just amazing.

Dow for the Close

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The Rule of Reactions is always one to three. For a trend to develop, it must exceed the three unit of time limitation. So we need the market to move higher beyond today. At the time of this posting, the Dow is trading at 16628. We need a closing above 16460 to help stabilize the market. A closing on Monday ABOVE 17069 will suggest that we may have a low in place. A closing BELOW 16899 will warn that we should retest the lows before proceeding any higher. A closing BELOW the Monthly Bearish at 15550 would warn of a potential March 2016 low with still the swing to new highs as early as 2017/2018.

So far so good. As long as this week’s low holds, then this market will stabilize. But breaching that level means we will swing down and the swing back up violently. Thus, nothing has changed as of yet and we are still waiting for confirmation on when the collapse in government will start to send U.S. equities nuts.

 

False Move on the Yearly Level

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QUESTION: Marty; This is what you explained at the last WEC. The risk of a false move on the yearly level. Correct?

ANSWER: Yes, it is always fractal. A Yearly False Move is rare, and it becomes the biggest possible slingshot to the upside. The Dow made a Yearly FALSE MOVE on a number of occasions. For example, the high of 1916 dropped from 8500 to 6590 and established the low in 1917. It then swung to the upside, reached new highs at 11960 in 1919, and then on the panic back down.

The Dow made its intraday high in 1889, which was followed by a one year panic into 1890. It then swung back to the highest yearly closing in 1892 with the famous Panic of 1893 immediately thereafter.

A similar pattern unfolded with a high in 1872, a panic penetrating the previous year’s low in 1873, and then a dramatic swing to new high the next year in 1874.

These are just a few examples.

Our Forecast Array on the Yearly Level warns of 2017 as a turning point. The year 2018 will be a Panic Cycle Year, and then there will be a reversal of fortune into the bottom of the ECM for 2020, followed thereafter by a turn in 2022. So, there is no TREND here as we look ahead. It looks much more like wild swings back and forth.

 

Why This Week’s Low is So Important

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The Dow fell as far as it could possibly go without reversing the trend on a long-term basis, even technically. The low this week has been 15370.33. This has flirted with our Third Monthly Bearish Reversal at 15550, but we also have a simple technical point of great importance — 15284 — which happens to be last year’s low. Penetrating that number would open the door to a slide into March of 2016.

Consequently, penetrating this week’s low will be INCREDIBLY significant for it would set the stage for an OUTSIDE REVERSAL TO THE UPSIDE in 2016 that would be just about the worst type of PANIC you could possibly create. WHY? Because this would imply a total meltdown in government and the rush of assets from government paper to private assets would be like a building on fire with all the doors locked, except one.

Sky-is-falling

Oh, the bulk of people predicting a market implosion will yell, “The sky is falling!” while waiting for the Dow to fall to 100 for their chance to say, “I told you so!” But we have to stand back and ask: if everything collapses, will the world really just meltdown so easily? Even during periods of extreme hyperinflation, ALL assets rise in value. So there is no possible way for the world to meltdown while ONLY gold rises. That is just insane and the people who argue that money is not tangible are really thieves because it is fiat. They are clueless because ALL money is fiat if it has a fixed value — even gold. Money is purely an agreement for there is NOTHING that exists that is “money” in the context that they preach. Money is merely a medium of exchange that you are willing to accept simply because others will accept it from you. It does not matter if it is gold, paper, or bricks of tea.

tEA bRICK

AesSig-7

Illustrated above is a brick of pressed tea from China that was used as money in 1949. This illustrates that any commodity can be used for a medium of exchange simply because it has a recognized use. In Japan, bags of rice were the medium of exchange for 600 years. Cattle has long been a monetary base in Africa, and it acted as the foundation of the Roman monetary system from the outset, so much so that their bricks of bronze pictured cattle to illustrate its value in exchange — bronze backed by cattle. Roughly, 5 pounds of bronze (Aes Signatum) was equal to one head of cattle. Bronze had tremendous utility value for it could be shaped into a tool for agriculture or into a sword for weapons.

Hide-Under-CoversTherefore, the prospect of only gold rising is simply gibberish. If we penetrate this week’s low, then the type of Phase Transition that follows will be the worst type that we could ever imagine. This would set the stage for the complete meltdown in government. This will become our greatest concern for the pendulum will swing to the extreme left which will propel the swing to the extreme right. This becomes totally insane.

The Coming Phase Transition & the Dow

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QUESTION:

Mr. Armstrong,

Thanks for all you do.  I do have one question in regards to the Phase Transition above 23000 into the 35000-40000 number you have spoke of.  If we experience a close below 15500 for the month of August and see a continued correction into October to  around the 12000-13000 number would the top end thereafter be 23000 or would there still be a possibility of a phase transition regardless of when the low takes place, be it August or October?  Thanks for the clarification.

 

Tim

 

ANSWER: No. The three targets are price: 18500, 23000, and 30000-40000. That is independent of TIME. The doubling is the minimum. Our original forecast that the Dow would at least double by 2015 from the 2009 low of 6440 gave us a MINIMUM target of 12000-13000. We exceeded that and went to the next target of 18500. The next level being 23000 is at the MINIMUM requirement for a Phase Transition — double, if we fell back to retest the old doubling target, but we need not pull back that far. The criteria is to turn the majority bearish to run into bonds.

 

A lot of e-mails have been coming in saying they can now tell who follows us and who does not. The followers are selling bonds into the high and others who do not follow are buying. That is probably a fair statement.

 

INTR-CCON

 

Our target for the high was 2015, and so far it formed in May in equities leaving the ECM for the interest low, which was also on target. Those who continue to predict a collapse in the stock market as some catastrophic event where only gold will rise, have no clue that gold is by no means a viable safe-haven for the big money — that is for the individual.

Big money must choose between equities and bonds. We are at effectively reaching a 5,000-year low in interest rates. It cannot get more bearish than this for government. What we face is monumental. Trump is tapping into this anti-establishment momentum and the press is showing how corrupt they are constantly attacking Trump to maintain the establishment who they surrendered their ethics to a long time ago.