QUESTION: Hello Mr. Armstrong,
I am a big fan of your work. I read ALL of your blogs and have purchased some of your materials. You truly opened my eyes to how the world really works. I am unfortunately one of those public workers you talk about. I first hand see how my employers are having trouble finding the funds to pay us. I also realize that i won’t touch my pensions when my retirement will come around like the baby boomers have been doing. So i am investing in the market to create my own pension mostly thanx to your guidance.
My questions for you is concerning the dow jones. Do you still see it go up till 2016 or might it go up till a later date. Last question is do you still believe the price range of mid 25000 still feasible by 2016…
Thank you very much for your time and god bless you.
ANSWER: I fully appreciate the idea of working for the government. I have friends that do. The problem is whatever government does really should be privatized for then you would get the pensions you were promised. Government can violate everything and never get prosecuted. Doing what they have done to their workers is deplorable. What they are doing to the Vets is typical. They are just not trustworthy period.
That said, your question probably cannot be answered until after this next turning point on the ECM. We are coming up to September 3/4th, 2014. There is the traditional business cycle that would imply a high in 2016. However, that would also imply the traditional flight to quality (government bonds) when the economy turns down.
The question requires capital flow analysis because we have two major turning points 2016 and 2020. If we get a Phase Transition into a major high for 2016, then we may see the traditional crash into 2020. However, if we make a new high into 2015 that is marginal and not a doubling effect of a Phase Transition and a decline into 2016, then the cycle inversion will move forward and the high will come 2020.
That can be created by two converging trends. First there is the cycle of war with its first big target 6 years after 2014 and that is 2020. This would send capital fleeing into the USA. Second, we have the economic side of the Sovereign Debt Crisis. This also will unfold in Europe and send capital into the dollar. The flight to quality then shifts from bonds to tangible assets and that will be primarily MOVABLE assets of which equity is in that category. We should also see gold rally WITH stocks.
Here you can see that the Dow rallied during the 1970s basically following the same cycle as gold reaching a high in 1980, although this was not a Phase Transition as was gold doubling in value the last 6 weeks. Hence, a rally in stocks and gold is not unusual.
We will be addressing this issue shortly. We are finishing the computer systems to get everything up and running in time to resolve these questions – not by opinion, but by analysis.