Posted Mar 8, 2013 by Martin Armstrong
Question: Can you clarify your statement: “German short-term rates went negative showing people were willing to pay Germany to hold their money. This is part of the whole shift in capital from PUBLIC to PRIVATE”
The movement internally within Europe is is showing that capital starts to move from one currency to another as CONFIDENCE declines. Although there is a single euro currency, people have been selling bonds and short-term paper of Southern European states and moving to the “quality” that is Germany and Switzerland betting on a breakup will end up with marks and francs. This causes their interest rates to go negative as we saw back in the crisis 2008-2009 in the states. This shows STAGE 1 where capital starts to shift. This is the precise observation Hoover made regarding capital movement back in 1931.
Some people are Goldbugs and will only buy gold. Others do not trust the Goldbugs for their analysis of fiat and inflation does not stand up to scrutiny. Hence, some people will shift among government bonds, especially big money because they need size to park. Then there are individuals who the majority will go to stocks, cash, and real estate. The point is, ALL of these areas will start to rise signalling a shift in trend within capital flows will emerge. Therefore, monitoring all allows you to CONFIRM the shift is underway. Keep in mind this is like an aircraft carrier not a speed boat. It is slow to make the turn so you can see it coming years in advance. Government bureaucrats hate our guts because we illustrate the emperor has no clothes and they cannot control the flows with regulation, jawboning, and prosecutions.
We monitor world commodities in a basket of currencies to provide the true world perspective. When the 51.6 year wave shifted from PUBLIC to PRIVATE in 1985, the Dow was breaking through the 1,000 barrier at last and commodities bottomed matching nearly the 1932 low. This confirmed the start of a PRIVATE wave dominated by the fall in currency purchasing power (i.e. asset inflation).
If you look at this chart on copper, what you see are major thrusts upward in spikes. This is how commodities trade compared to stocks or real estate. They surge to new highs in short bursts. Thus, timing is critical to catch the wave for they do not last long, then get everyone all bullish who then fight the decline expecting new highs any day – i.e. decline in gold for 19 years but the rally from $100 to $875 was 1976 to January 21st, 1980.
There are too many opinions. In analysis, we are still in the witch-doctor stage. The majority of people BELIEVE government is a god, all powerful here on earth. That is just not true but it will lead the majority to catastrophic losses. It is always the bond holder who loses everything in the end.
When I was first expanding overseas, I went to lunch in Geneva with one of the heads of the big banks. I asked his opinion on what we should use in Europe. He asked me to name one European analyst. I could not and was very embarrassed. He said there were none. The French was always bullish the franc and hater America. The German and the Brits were the same. He explained the reason everyone used our services was because we did not care if the dollar rose or fell – it was just a market. That holds true even more today. NEVER get attached to a market so you cannot see anything but that. You will be wiped out. The key is to keep an open mind, look at the world around you, forget the talking head that are just actors, government is not all powerful and is ONLY concerned about its self-interest, and pay attention to the markets and how they move for they are the TRUE mover and shaker int the world. It is time we start to STUDY medicine instead of praying to false gods to save the day.