Gold – Hedge Against Making Money?

QUESTION: Mr. Armstrong,

I really appreciate your comment “– YOU ALWAYS ASSUME YOU ARE WRONG. Why? That forces you to constantly double-check everything four times.”

Thank you for causing me to question my assumptions regarding the markets and specifically PM’s.  I can see know that I was holding gold for all the wrong reasons while ignoring the true reason and time to buy gold.

Were it not for you I would have held on indefinitely waiting for gold to go parabolic for reasons that are not realistic, and I would have missed the coming move in shares.

My question is, since Canadian real estate only dropped about 10% in 2008, not 40% like the US did, are you expecting a severe crash in real estate in peripheral countries like Canada heading into 2015.75?  Or might prices just move sideways for a decade or so and not really crash per se?

Also do you have prediction on how much the Dow may drop after a dramatic loss in confidence in 2015.75?

Thanks for helping average guys like me make smarter decisions.

May this ex-gold bug never be “Bugged out” on any given idea ever again.

RS

ANSWER: Yes. To be a great trader, always assume you are wrong, NEVER always right. That forces you to constantly double-check yourself and your reasoning. Whenever a market performs in a manner OPPOSITE of what you expect, you are wrong not the market and making up demons who are forcing the market to go against your expectation is merely a state of denial. Nobody can force a market to move against the trend. All the central banks in the world could not ban together to prevent recessions. Read the comments of various Fed Chairmen in the piece on the Business Cycle I wrote who have admitted total failure in manipulating the economy. Even John Maynard Keynes admitted before he died that his theory was wrong and stated:

“I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.”

 

You cannot systemically manipulate anything against the trend be it a market or the entire economy. The forces of the free markets are comprehensive. The full version of the model I created tracks everything on a global correlation basis. Weather, earthquakes, war, and social unrest, are all influences behind the Business Cycle and combine to make the trends.

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The USA was bankrupt in 1896 when JP Morgan lent it gold. After World War I and II, the USA had 76% of the total world gold reserves and that is what the dollar became the reserve currency. It was WAR and capital flows that made the dollar what it is. Europe became too socialistic after the wars and thus remained second-rate. They created the euro thinking it was the single currency that made the US the largest economy. No, it was a single language and economic freedom. Europe tried to nationalize everything and it was not until Maggie Thatcher that she began the real trend toward de-nationalization. A Starbucks Vanilla Latte in Switzerland costs 8 SF ($8.82) and in the USA $4.76. The average net worth of a European is less than an American because they spend a greater proportion of their income on taxes the governments waste.

Canadian real estate did not drop as was the case in the USA because it was not leveraged by subprime schemes. We are preparing a VERY IMPORTANT report on the stock market and real estate. This is essential to really understand because we may see a complete Cycle Inversion that will market the real breakout as we head into the Sovereign Debt Crisis.

There is a process whereby the cycle actually INVERT. They still produce a turning point on time. What happens, the opposite unfolds. This is how markets make changes in long-term trends. I published this on the metals in an old hand-made chart from years ago, Understanding that Cycle Inversions take place is important. It also represents a reverse in the thinking process of society and they start to interpret things opposite of what they did previously.

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I am working diligently to get this report out ASAP. The conferences to be held in the first quarter are also geared to this type of event. The computer is already highlighting next September from many different markets. This is the next turning point on the ECM. Will the metals bottom in 2014? Will the stock market peak in 2014 and invert to become a bull market into 2020? There are serious questions that need to be answered. We are not dealing with plain vanilla analysis here. This is hard-core global net capital flow movement that is becoming very aggravated to say the least. The time NEVER changes – the events do following the flow of capital.