Throughout history there has been one asset that, regardless of the type of crisis, has always been turned to in times of confusion and panic. Whether the crisis was financial, energy related, or involved global confrontation, individuals and governments alike have always turned to gold as a last resort. When currencies collapse, when governments lose credibility, and when people panic, precious metals have always been the sought after wealth preservation mechanism.
Modern-day opponents of gold as a medium of exchange argue that it is a relic of the past, and monetary systems of the 20th and 21st centuries no longer require its backing. Many will also argue that it can’t be eaten, and that its industrial applications lack significance.
Nonetheless, when it hits the fan, capital flocks to it.
Inflation is often given as the reasons for investing in gold, but as we’ve previously pointed out, inflation is only a symptom of other problems, and more a periphery driving mechanism for money flows headed towards gold. The real reason is and always has been crisis. When the private sector realizes that governments are incapable of mitigating or resolving the onset of crisis, gold has historically risen, just as it has in recent years.
Only recently has gold received any attention in the mainstream, likely because of it doubling in value the last three years. The long-term trend, however, started over a decade ago, when gold was trading under $300. The smart money began flowing into the precious metal early on, before it was on anyone’s radar. As governments around the world began to attack personal liberty and introduced more restrictive policies in the personal financial sphere with things like excessive taxes and fees, in financial markets, and as a result of terrorism, money began to run away from traditional assets. This move to gold has been ongoing since around the year 2000, and it continues today.
Whether you choose to invest in gold or not is a non-issue in terms of what gold is actually telling us. Famed forecaster and creator of a cyclical model dubbed the Economic Confidence Model, that has accurately predicted a host of events from the 1970’s through today, Martin Armstrong, says that gold is telling us exactly how, why and even when, events will unfold going forward. In his latest essay How and When, Armstrong provides some key insights:
The Middle East is not the big issue. We are facing a global famine and food crisis that is behind the political unrest. This is coming at a time when governments are broke. We have state and local governments in a debt crisis and that meltdown is VERY REAL!!!! Government is collapsing. That is the issue!
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It is not even the geopolitical events that are really the meat and potatoes that drive gold. They are good for the short-lived rallies. What we are facing is a collapse of the global debt structure. That is very different from anything else.
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…what we are facing is a complete collapse in government debt, for the interest expenditures to keep rolling the debt are growing, displacing normal types of spending. The interest is consuming the total expenditure, and this is causing the total collapse in government debt.
THIS IS the big 800 pound gorilla in the room. Gaddaffi is noise. Inflation is noise. It is the DEBT DEFAULT that is the reason why gold will become exponential. These big types of exponential moves last normally about 11 months where markets may explode 3 to 5 times the starting value before the phase transition.
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So far, gold is in a sideways phase that can build a significant base from which an extended bull market remains a real potential. The WORST IS YET TO COME insofar as the sovereign debt crisis. Yes, this entire global economy could be fixed in 30 days or less. However, the governments of the world would never never take such action and would rather see society crash and burn before they would ever listen and relinquish any power. So yes, there could be that extraordinary spike up that would be devastating forcing reform sooner rather than later.
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The real key is the SOVEREIGN DEBT CRISIS. This is not about inflation in the traditional sense. This is about the collapse of the monetary system on a true wholesale basis.
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What has taken place now, gold has surged higher post 2007 thanks to the same banks [that required help in the 90’s] requiring another bailout – TARP. The is not just inflation. We are on the verge of a currency meltdown this time.
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The KEY is to see if GOLD begins to at last line up with the Economic Confidence Model. If that indeed takes place, this will signal, more than anything else, that we are in fact at the threshold of a serious economic event that will change the world over the next 8.6 years. The is not a question of if gold is trading up or down for speculative purposes. We are facing something FAR MORE significant than just a bull market in gold. This is the real leading indicator to watch at this time. It is a window to the future that we need to see what develops. Short-term, we have the low or spike high. Long-term, a low the week of 6/13/2011 is a warning for the next 8.6 years.
Martin Armstrong utilizes a specific cyclical model to determine dates and time lines. Before you dismiss him as just another forecaster trying to make date predictions, we encourage our readers to take some time to peruse his previous writings. We have no doubt that you will be amazed and potentially terrified by his accuracy over the course of the last four decades.
Of note is that Armstrong does not claim that he can predict stock market moves with this model. It is a general model that can be applied to finance, economics and geo-politics, and rather than identifying highs and lows in markets, it identifies turning points in economic confidence. Of importance is that there are literally tens of thousands of variables that affect this model – think a butterfly flapping its wings. In Armstrong’s own words:
The Economic Confidence Model is by no means a stock market model, gold, or anything else. It is the global unified frequency and we can correlate the world and begin to see that is the individual markets that align with that model BY THEIR OWN frequencies, that become the greatest receiver of capital concentration. This is why communism and socialism fail. They are working against the natural course of the economy. If everything were evenly distributed, there would be no book nor bust, but there would also be no liberty or progress.
Economic Confidence Model sampling:
Key Points from the economic confidence model in recent years:
- In The Business Cycle and the Future (1999) Armstrong predicted September 2000 as a major turning point. September of 2000 saw the high point of the tech bubble.
- In the aforementioned article (1999) Armstrong predicted a major bottom for November of 2002. Check the stock charts and you’ll see how accurate he was at the time.
- 2007.15 (365x.15 = 54 days) identifies February 27, 2007 as a major turning point. One week prior to this date Mr. Bernanke advised that real estate was under control. February 27 is arguably the top of the mortgage backed securities bubble.
- December 5, 2009 was a notable low in the US dollar. It subsequently rebounded from this point.
- Preceding the April 16, 2010 turning point, we wrote an article about Armstrong’s forecasts. On April 16, curiously, it just so happened that Goldman Sachs was charged with civil fraud, making it clear that they were directly involved in the financial collapse. One can only assume that this had/has a direct effect on the general sentiment with regards to confidence in our economic and financial systems.
The June 13, 2011 cyclical turning point approaches. Armstrong utilizes the overall frequency of the ECM, along with technical analysis and timing to determine what may or not happen with gold.
If we see a major low in gold around June of this year, and if Armstrong’s model is correct, we could be facing a cataclysmic economic event, or events, over coming months and years.
We also urge our readers to keep their eye on the long-term. As we mentioned in our commentary on Chris Martenson’s recent piece The Coming Rout (In Stocks, Bonds, Commodities and Precious Metals), volatility will run rampant, so being concerned specifically with price is not as important as the overall trend. The response from global stock markets, commodities and precious metals with regards to the Japanese nuclear crisis is a perfect example of panic buying/selling. The herd will always act in unison during panic, and most will simply “sell everything” at the onset.
We firmly believe there is strong support for precious metals in the $1000 area, and those who have nowhere else to put their wealth because of collapsing stock markets and depreciating fiat currencies will turn to gold as a last resort – just as they have done historically. This will include individuals, financial firms, and even governments.
If the world is truly in a financial, economic and geo-political crisis, then gold will continue to shine, and remain a leading indicator that something abnormal is occurring on a global scale.
Recommend Martin Armstrong Writings:
It’s Just Time (2008) [PDF]
A Forecast for Real Estate (2009)
A Three Year Old With a Pocket Calculator Can Figure Out We Are Screwed! (2009)
How ALL Systems Can Collapse Overnight (2009)
Will Gold Reach $5000+? (2009)
“We firmly believe there is strong resistance for precious metals in the $1000 area,”
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This should probably be corrected as “We firmly believe there is strong SUPPORT in GOLD in the $1000 area”.
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Everyone would do well to heed Martin Armstrong’s analysis. He is in every sense an economic savant, presently serving prison time @ Fort Dix, NJ, as vindictive punishment for refusing to assist the CIA with his proprietary systems to detrimentally manipulate global economies.
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On a related note…
Do not judge the quality of Martin Armstrong’s analysis based upon the quality of his publication. It is being done with material and technical restrictions, FROM HIS CELL!!!
Dboy – corrected! my bad.. i was working on resistance levels in that paragraph as well, but deleted that portion of it….
James – no doubt… he’s using a basic typewriter.
BTW – Armstrong has been released from prison.. .he’ll be serving the next 6 months in home confinement.. I am excited to see what he comes up with now that he has access to all of the data, his models and computers!
About his release from prison [PDF]Â : http://www.martinarmstrong.org/files/release%2003-08-2011.pdf
Armstrong thinks he has the plan taht ill save the world .Armstrong also thought he could rip off Japanese investers as well thus why he went to prision for 8-10 years as well .To this day millions of that money were never acccounted for .Armstrong very well could be a a multi millionair as we speak but he wont get to it too fast .Im sure they will watch what he does in the next 6 months so he must be patient a little while longer.He serves time inprision while a lot of investers got screwed for a lot of millions .Isint that the way white collar people pay society while the masses suffer the most ? Armstrong in my opinion is no better off than Bernie , they both take peoples money . Im sure he will want to try to open up a business and post his charts and do a newletter chargeing people and makeing serious cash , that is what these type of people do .You dont pet a snake once it bites you the first time .
Call me silly but I get more joy out of playing with fifty 1/10 coins out of the tube than a stack of one ounce coins. I wonder where they will be a hundred years from now.
@ Mac Slavo
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A blessed event! Truly! Brought a tear to my eye. Thank you for informing me, as well as for the link.
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This man suffered midieval torture and imprisonment for refusing to participate in massive, murderous evil for global domination
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Although the issue of his compliance refusal superficially appears to be one of mere economic manipulation. In the reality of implementation, many, many millions would starve, suffer and die from the consequences of such a program. Martin was succinctly aware of this and morally declined to de facto join the ranks of Stalin and Pol Pot in the name of ‘God & Country’.
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We all need to deeply thank the many financial supporters of Martin’s family during the lengthy period of his ‘gulag’ incarceration.
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as they say on ZH, BTFD. the PM’s are on sale now.
According to his web site he is now out of jail, and is in a house arrest.
Thanks Mac – an excellent read!
Everything is cyclical, Gold has had a great run and it’s time for a great pullback (like a sling-shot). The further the pullback the more altitude you get. The long term trend is the key.
We are just past the half way mark of a 20 year bull cycle in commodities (gold) and at the 40 year mark for fiat currency (or crisp $10 bills) which has been falling for decades.
I believe Armstrong is spot on. There will be a major pullback in gold between now and the end of June.
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Since it’s around the corner, how about a follow up in July?
Great website, great articles, thanks for your effort to spread the word!
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The most revealing “leading indicator” to watch…..
The science of human population dynamics and the tragically misleading flaws bound up in the Classical Demographic Transition Model.
We are routinely presented with plenty of factoids, figures and statistics. Where is the scientifically-driven evidence regarding the population dynamics and unbridled, skyrocketing growth of the human species on Earth?
As humanity’s most luminous beacon of truth, science provides us with a last best hope for the survival of life as we know it on Earth. We must make certain that scientific evidence is never downplayed, distorted and denied by religious dogma, politics or ideological idiocy.
Let us not fail for another year to acknowledge extant research of human population dynamics. The willful refusal of many too many experts to assume their responsibilities to science and perform their duties to humanity could be one of the most colossal mistakes in human history. Such woefully inadequate behavior, as is evident in an incredible conspiracy of silence among experts, will soon enough be replaced with truthful expressions by those in possession of clear vision, adequate foresight, intellectual honesty and moral courage.
Hopefully leading thinkers and researchers will not continue supressing scientific evidence of human population dynamics and instead heed the words of Nobel Laureate Sir John Sulston regarding the emerging and converging, human-driven global challenges that loom ominously before humankind in our time, “we’ve got to make sure that population is recognized…. as a multiplier of many others. We’ve got to make sure that population really does peak out when we hope it will.â€
Sir John goes on, “what we want to do is to see the issue of population in the open, dispassionately discussed…. and then we’ll see where it goes.â€
In what is admittedly a feeble effort to help John Sulston fulfill his charge to examine all available scientific evidence regarding human population dynamics, please give careful consideration to the following presentation and then take time to rigorously scrutinize the not yet overthrown science from Russell Hopfenberg and David Pimentel regarding human population dynamics and human overpopulation.
http://www.panearth.org/GPSO.htm
Please accept this invitation to discern the best available science of human population dynamics and human overpopulation; discover the facts; deliberate; draw logical conclusions; and disseminate the knowledge widely.
Thank you.
Steven Earl Salmony
AWAREness Campaign on The Human Population,
established 2001
Chapel Hill, NC
http://sustainabilityscience.org/content.html?contentid=1176
http://sustainabilitysoutheast.org/
Another stooge in the game of things .Armstrong has had some good economic models no doubt but his preditions are like one of thousands out thier .Trust in Armstrong and he will make thinsg right kind of sounds like Obamas change . Id be very carefull this guy .People say he was mistreated in Jail but they are only hearing the armstrong side of it as usual .
@ Steven Earl Salmony
In regards to human population, non-whites are using breeding as a weapon against the white race. Whites are therefore left with no choice but to raise huge families, lest they end up downtrodden and beaten down like they are in South Africa. Democracy is a severely flawed system of government in which the population with the highest birth rate can enslave, exploit, and abuse any minority population. Mexicans are here stating openly that they are breeding armies of children for the purpose of taking over the U.S. through our flawed notions of “Democracy.”
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Non-whites consider children a weapon to be used against Democracy in order to destroy the white race.
LISTEN UP “NWO DEBT SLAVES!—…
“â€USSA / ameriKa— NOW IT IS YOUR TURN to know , FEEL, REAP AND SUFFER WHAT YOU HAVE SOWN AROUND THE WORLD! UPON THE POOR AND DEFENSELESS WOMEN AND CHILDREN of the nations you would have become your OIL slaves OR DEAD CHATTLE IN THE WIND OF NWO GLOBAL ENSLAVEMENT WAR-WW4!
SO YOU AMERIKANS AND THE JEWS OF ISRAEL , MAY STEAL THEIR LANDS AND NATURAL RESOURCES…
SOON A CONTINUOUS MASSIVE RADIOACTIVE CLOUD WILL DESCEND UPON YOU AMERICANS FROM CALIFORNIA TO WASHINGTON DC , FROM CANADA TO MEXICO AND YOU AND YOUR CHILDREN WILL ALL SUFFER AS DO YOUR VICTIMS IN THE MIDDLE EAST WARS!
CANCERS FOR ONE AND ALL!
THIS IS FOR THE POOR WHO SUFFER IN DEPLETED URANIUM “FALLUJAH†IRAQ, THE PALESTINIANS WHITE PHOSPHEROUS IN THE WEST BANK AND THE VIETNAMESE NAPALM /AGENT ORANGE IN THE VIETNAM WAR!!! ALL ILLEGAL WARS!!! FOUGHT WITH ILLEGAL WEAPONS!!! SHAME ON YOU AMERICA AND ISRAEL!!! NOW YOU REAP WHAT YOU HAVE SOWN!!! YOU CAN’T ESCAPE IT!!!
IT’S NOW AMERICAN’S TIME TO KNOW THE PAIN AND HORROR FIRST HAND OF WHAT SHE AND ISRAEL PERSECUTE UPON THE POOR AND THE DEFENSELESS OF THE WORLD!
SUFFER FOR YOUR GREED AMERIkA AS THE DARK CLOUD FROM JAPAN OF RADIOACTIVE CANCER DESCENDS UPON YOUR VERY HOMES IN DOWNTOWN , USA… BREATHE IT IN AMERICA! ! THAT IS THE SMELL OF AMERICA/ ISRAELI JEW, NWO GLOBAL ENSLAVEMENT AND NOW IT IS YOUR SMELL!!!
MAY YOU ALL GET CANCERS ONE AND ALL!
THIS IS WHAT YOU WANT! THIS IS WHAT YOU GET!
HAVE A NICE DAY! ;0(
ARM UP STOCK UP PREPARE, PREDITOR OR PREY THE CHOICE IS YOURS!!!
GEAB N°53 is available! Global systemic crisis: Second half of 2011 – Get ready for the meltdown of the US Treasury Bond market
– Public announcement GEAB N°53 (March 17, 2011) –
GEAB N°53 is available! Global systemic crisis: Second half of 2011 – Get ready for the meltdown of the US Treasury Bond market
Beyond its tragic human consequences (1), the terrible disaster that has just hit Japan weakens the shaky US Treasury Bond market a little more. In the GEAB No. 52, our team had already explained how the sequence of Arab revolutions, this fall of the “petro-dollar†wall (2), would translate during 2011 into the cessation of the massive purchases of US Treasury Bonds by the Gulf States. In this issue, we anticipate that the sudden shock experienced by the Japanese economy will lead not only to the halt in US T-Bond purchases by Japan, but it will force the authorities in Tokyo to make substantial sales of a significant portion of their US Treasury Bond reserves to finance the enormous cost of stabilization, reconstruction and revival of the Japanese economy (3).
With Japan and the Gulf States alone accounting for 25% of the total 4.4 trillion USD of US federal debt (December 2010), LEAP/E2020 believes that this new situation which is asserting itself during the first quarter of 2011, against a background of China’s increasing reluctance (holding 20% of US Treasury Bonds) to continue to invest in US government debt (4), carries the seeds for the collapse of the US Treasury Bond market in the second half of 2011, a market that now has only a single buyer: the US Federal Reserve (5).
It is certain that the context of the crisis of US local authority securities (Munis) and European government debt (the entire periphery of the EU, including the United Kingdom) that our team anticipated for this timeframe (see GEAB N°50 ), will only exacerbate the event. Moreover, it is highly significant that PIMCO the world’s largest bond fund manager decided, at the end of February 2011, to liquidate its US Treasury Bond holdings. And that was before the disaster in Japan (6)!
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http://www.leap2020.eu/geab-n-53-is-available-global-systemic-crisis-second-half-of-2011-get-ready-for-the-meltdown-of-the-us-treasury-bond_a6091.html
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Steven Earl Salmony- Haven’t you guys been predicting a “population bomb” for several decades now? I remember back in the early 1970s the so-called scientists were all over this. Dire warnings of certain doom for homo sapiens when we reached ___ number in population. In fact this hysteria goes back a couple of centuries. Just fill in the blank with a number and try to convince people that we’re all doomed. “Oh no!” “There’s too many humans!” “Planet earth is gonna die!” This is all nonsense, and old nonsense at that.
And as for your comment “As humanities most luminous beacon of truth, science provides us with a last best hope for the survival of life as we know it on Earth.” I got a news flash for ya: “science” has been selling it’s last best hope for survival for a long, long time and it all turns out to be snake oil. By the way, “science,” even if it was legitimate science, which this isn’t, has never been humanities most luminous beacon of hope. Just look at the words used here. They’re quasi-religious and mythical sounding terms designed to instill FAITH in science while at the same time denouncing real religion. Go ahead and send more links and quote some “scientific” research and numbers. The predictions are false, the numbers are cooked. The whole theory is wrong because it’s satanic in origin and founded on a hatred of humanity. No amount of “scientific” tinkering will bring it in line with the truth. God has opened the eyes of many millions of people and He has revealed His truth to them. Only the blind and gullible would fall for this tripe. Jesus warned us of many of the ways that satan would try to fool people by constantly repackaging his lies.
Folks- Please don’t be misled by this stuff. And Salmony, if you’re gonna respond by calling me a religious kook or a bible thumper, don’t bother wasting your time. I intend NO personal attack on you in what I’ve said here but these theories need to be exposed for the nonsense and lies they are.
For those with Japanese manufactured automobiles, if you wish to drive in addition to eating and drinking, an equally important component of your SHTF strategy must be to stock up on service and maintenance parts — spark plugs, brake pads & shoes, rotors, oil filters, fuel filters, air filters, belts, etc.. An extra set of new tires would be a very good idea as well (*). Gasoline won’t be your only serious problem regarding your ability to be mobile.
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(*) Note that tires only last 5 years (some claim 6, others even as much as 10!!!, but I wouldn’t trust this), even if you never use them. They dry-rot, mostly from the inside out. Don’t go overboard on ‘prepping’ these. It’ll be pissin’ in the wind. The best strategy would be to replace your tires NOW if they are worn or marginal and also obtain an extra set. Inflation with nitrogen gas can mitigate the deterioration to some degree.
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Thanks for a thought provoking discussion.
My take is that inflation is more the issue now than a crisis of confidence in governments. As you point out, the Sovereign Debt Crisis underlies much of our economic angst, but the first recourse of most debtor governments has been to borrow or print the money they need to pay their debts. The US government has increased currency in circulation about 65% since 2000, while Gross Domestic Product grew only about 35% in the same period. (See http://safemoneyproducts.com/equity-trades/ ) That’s the definition of inflation.
When the government calculates Gross Domestic Product, it includes the money it borrows and prints! For fiscal 2010, GDP was up $635B after $1290B in Federal deficit spending (a negative 50% ROI). 16% of GDP was borrowed and printed money!
QE2 – Quantitative Easing, Phase 2 – ends officially on June 30. It will be interesting to see what happens to stock prices after that. A slump would make sense, if money printing has been propping up the markets.
I understand what you say about the long-term erosion of faith in our system. Shorter-term, I see increases in commodity prices almost across the board. Some prices have gone up much more than gold. In the last six months, gold is up about 5%, after cooling off some. But lumber and copper are up about 14% in the same period; crude oil about 19%, silver 52%, coffee 53%, and cotton about 81%. When I see such broad-based rises in commodities, it suggests inflation to me. If it were investors seeking safe haven, it would be confined to gold and other precious metals.
Thanks for going deeper than most in an important subject.