In life, there is balance; I try to maintain this balance with both the bright and dark side of whatever it is I am writing.
But as we draw closer to the seven-year cycle of market and economic crashes, I can’t help but find myself in a position of doubt.
For those unaware of the seven-year cycle, just look back at the dates of some of America’s greatest crashes: 1973 (recession, oil shock), 1980 (oil and silver crash, deep recession), 1987 (black Monday), 1994 (bond crash), 2001 (dotcom bubble), and 2008 (financial crisis).
They were all seven years apart.
Since 2008, I have called for the market to climb. Despite all of the experts that told us otherwise, the market has continued to reach new record highs, year after year.
A few weeks ago, I made a call that we may see 2015 end in the green. But perhaps I may have been a little too early in making that call – despite the market holding up.
I can’t pinpoint it, but I have this feeling that sometime in September, something is going to come crashing down – or the beginning of a crash may set it. This is just a hunch – a feeling – so it may not be wise to take it too seriously.
The market could still hold up after September, and still end up in the green this year. But I certainly won’t say that about 2016.
So why my sudden change of views?
No, it’s not just that we’re leading up to the end of another seven-year cycle.
I look back to many instances of history and compare the connection of events from those times to today. While from a technological standpoint, things are drastically different, human nature has changed very little.
We are now witnessing a culmination of events that can only end up in disaster: the war in the Middle East is intensifying; the media is fuelling hatred (i.e. Ferguson); we’re witnessing a major oil shock; the market is frothy; there is mistrust amongst every country (i.e. NSA); and there is a major attack on the dollar – with China and Russia leading the way.
Let’s not forget the tremendous amount of debt that has been accumulated by the world’s top economic powers in the last seven years. Example: China total debt has nearly quadrupled, rising from $7 trillion in 2007, to $28 trillion by mid-2014.
There are even religious and prophetic connections – should you be interested in that sort of thing – that call for a market crash by the will of God.
A Prophetic Take on the Market
Some may think I am crazy for even mentioning prophecies or religion when speaking of the market, but with all of the pundits talking about meaningless manipulated data and fundamentals, it can’t possibly hurt to view things from a different perspective.
I stress that I am only providing you with a different view, so don’t take it personal.
You can tell me what you think after by:
In Defiance of God?
When God destroyed Sodom and Gomorrah for their sins, Abraham recognized that God is the judge of men’s actions (Genesis: 18:20-25). In this case God passed judgment, issued a verdict, and carried out the sentence.
In other words, God passes judgment should he feel a direct defiance of His ways.
In 1973, the United States Supreme Court made a landmark decision (Roe v. Wade) on the issue of abortion. Some believe abortion is in direct defiance of God’s way; others believe it is not. For those that believed it was, also believed judgement would be passed.
In that same year, the United States began a very deep recession, and experienced one of the greatest bear markets in history.
There are numerous examples of prophetic and religious comparisons to stock market and economic crashes. And because faithful coincidences can exist, we should at the very least be aware.
It is now 2015 and the U.S. is about to make another landmark decision.
Could this Landmark Decision Destroy the Market?
What I am about to say will spark indefinite controversy.
But before I do that, I want to make clear that I am not here to talk morals, values, or beliefs – everyone is free to choose his or her way. I am simply presenting an example for discussion, in relation to religious and prophetic views of the market.
In a few months, at the end of June, the United States Supreme Court will pass judgment on the issue of gay marriage.
Many of the Christian or Catholic faiths believe this is in direct defiance of God’s way; others believe it is not.
I believe everyone has a right to make their own decisions. I also believe that in order to prevent a very dramatic protest of civil rights, the United States Supreme Court will have no choice but to rule in favour of gay marriage.
As this may be considered by some to be in direct defiance of God’s way, could we then witness a crash – or the start of a crash – just as we did in the year of Roe vs. Wade?
If you are religious or believe in religious prophecies, then you should get your money out of stocks immediately.
I am interested to know what you think of this subject.
(*Please note that hateful remarks regarding this topic will be removed. Discussion is one thing, but hate towards another will not be tolerated.)
Not What it Seems: Germany Gold Update
Countries all around the world are playing defense, with trust amongst central banks diminishing.
Two years ago, I talked about the mass repatriation of gold from countries all around the world, specifically Germany:
“(Germany) will retrieve all 374 tons of the bullion it currently keeps in Paris and 300 tons currently stored at the New York Federal Reserve Bank. The process will take 8 years and bring about 19 percent of Germany’s gold reserves back to the Fatherland. Germany holds 3,400 tons of gold reserves – the most of any country, second only to the United States.
The Bundesbank’s announcement indicates that German leaders believe the global economic crisis may soon intensify. In other words, the currency war I talked about in my past letters is heating up.”
A year later, it seems Germany’s gold repatriation wasn’t going so well:
“In one year, the US has managed to ship back only 5 out of the 300 tonnes Germany wants back. The rest came from Paris. That means only 1.6% of what Germany wants back has been delivered by the US; even more shocking, that’s only 0.147% of all the gold Germany stores in US vaults.”
Clearly, something was wrong. A few months after, Germany was forced to tell the public what happened:
“After all of this talk, it seems that Germany has decided not to repatriate its gold back from the U.S.
As Bloomberg kindly put it:
“Germany has decided its gold is safe in American hands.
Surging mistrust of the euro during Europe’s debt crisis fed a campaign to bring Germany’s entire $141 billion gold reserve home from New York and London. Now, after politics shifted in Chancellor Angela Merkel’s coalition, the government has concluded that stashing half its bullion abroad is prudent after all.
“The Americans are taking good care of our gold,” Norbert Barthle, the budget spokesman for Merkel’s Christian Democratic bloc in parliament, said in an interview. “Objectively, there’s absolutely no reason for mistrust.”
Well it turns out that Norbert Barthle was wrong: The Germans DO have a reason for mistrust.
Why do I say this?
According to the Bundesbank, Germany’s central bank actually has continued to repatriate its gold:
“The Bundesbank successfully continued and further stepped up its transfers of gold last year. In 2014, 120 tonnes of gold were transferred to Frankfurt am Main from storage locations abroad: 35 tonnes from Paris and 85 tonnes from New York.”
If there was no reason for mistrust, as Barthle told us, then why continue with the repatriation? More importantly, what is the reason for this mistrust?
Let’s take a look.
“The Bundesbank took advantage of the transfer from New York to have roughly 50 tonnes of gold melted down and recast according to the London Good Delivery standard.
… The Bundesbank assures the identity and authenticity of German gold reserves throughout the transfer process – from when they are removed from warehouses abroad until they are stored in Frankfurt am Main.
As soon as the gold was removed from the warehouse locations abroad, Bundesbank employees cross-checked the lists of bars belonging to the Bundesbank against the information on the bars removed.
Finally, once they arrived in Frankfurt am Main, all the transferred gold bars were thoroughly and exhaustively inspected and verified by the Bundesbank.
When all the inspections had been concluded, no irregularities came to light with regard to the authenticity, fineness and weight of the bars.”
Except for one thing…50 of the 85 tonnes repatriated from the U.S. were melted down and recast. So why not melt all of the gold? What about the gold from Paris? Why was that not melted down and recast?
The answer, according to officials, was that some of the gold bars met delivery standards while others did not. Hmm…wait just a second…why would some of it meet today’s London Good Delivery Standard, while others didn’t? These gold bars were all from the same time period.
Germany hasn’t sold a single ounce of gold since the 1970’s, so why would it need to melt and recast its gold to meet the London Delivery Standard?
The answer, I’ll leave for you to decipher.
But pay attention to what I am about to say.
The Swiss Know Something
We have never – ever – witnessed more currency swaps than we have in the past few years. We have never witnessed this much activity amongst nations to bypass the dollar in international trade.
This is something I have strongly urged not to dismiss over the past years.
Just a few weeks ago, the Swiss – one of the top gold refiners in the world – screwed the ECB by removing itself from the euro currency peg, and then immediately followed it up with an announcement to create a Chinese currency trading hub in the heart of Switzerland, Zurich.
The Swiss are brilliant financial moderators, incredible innovators, and have one of the most sophisticated business sectors in the world. It’s no wonder why they’re the world’s most stable economy – for over six years running.
You can bet that their actions are extremely well planned. They were one of the first to escape the 2008 financial crisis, and they have often been known to act in advance of economic market downturns.
Which means that there is a long term vision for not only removing themselves from the euro peg, but also the creation of a Chinese currency trading hub in Zurich.
As I mentioned in my last letter, the Swiss is one of the world’s central gold hubs, and its gold exports (as a result of being one of the biggest gold refiners) account for nearly a third of its foreign trade. That means the Swiss have a big picture view of what’s happening with gold, and they clearly see it moving from the West to the East.
And since the Swiss also have knowledge of financial flows – being one of the world’s major banking hubs – you can bet they have a much clearer crystal ball than most. Which, of course, means their decision to stun Western banks with the euro peg removal was not only a foresight of what’s to come for the euro, but also a direct retaliation against the actions of the Anglo-America banking system.
Despite being a neutral country, the Swiss have always been heavily connected to the Western financial system, and as such, have supported Western nations. But over the past years, their neutrality and privacy banking laws have been attacked by the U.S., specifically FATCA. The Swiss aren’t happy about being forced into changing its banking laws – ones that have stood for over a hundred years.
The Swiss are likely feeling betrayed by the Western system after being attacked by FACTA. But that’s the least of where their anger stems.
Attacking Swiss Savings
The Swiss have always been known as “natural-born savers.”
In 2012, the Swiss put aside 17.5 percent of gross income into savings last year. And despite the savings rate having dropped slightly, the Swiss still have the highest household savings rate in the developed world.
Furthermore, consumer prices in Switzerland have risen at an annual pace well below 1 percent for over four years. The country even experienced deflation between 2012-2013. Despite the “we need inflation” theory instilled by the Fed, Switzerland’s economy has continued to grow at a steady pace.
And it has an unemployment rate of just 3.4 percent, which is a high number by Swiss standards.
So what’s my point?
Switzerland is a great example of a well-run economy. It’s decision to move away from the euro currency peg is a direct shot in defiance of the Fed and the EU’s loose monetary policies – policies that threaten the savings of every Swiss.
They aren’t about to let the loose monetary and fiscal policies of the Western banking system take them down.
If the world’s most efficient economic power is moving away from the euro and toward a Chinese currency partnership, while continuing to expand its gold activities, what does that tell us?
Switzerland is clearly positioning itself for something they expect to happen. And since they have always been ahead of the curve, take serious note of their actions.
An Early Prediction Coming True?
Remember what I wrote in my letter, The Fed’s True Plan:
“Eventually, the Fed will have to begin winding down its assets, which means there will be a lot of bonds to soak up.
Foreign liquidity won’t be able to soak up all that has been printed. That means money will have to come from somewhere else. And that somewhere – I believe – is from the stock market.
If the stock market continues to climb, it will create more liquidity for bonds. Why? Because the stock market will eventually correct at some point, and when it does, investors will seek the safety of bonds; thus, soaking up much of the bonds held by the Fed.
The higher the stock market climbs, the more money is available for bonds on the way down.
This is the Fed’s true plan.”
Is my analysis already playing out?
According to the Bank of America, via Zero Hedge, the second largest weekly inflow of $14bn happened during the week ending February 5 2014, which was followed by last week’s inflow to all fixed income funds of $16.04bn – the highest on record going back to at least 2008.
Stocks, on the other hand, went from $1.62bn inflow in the prior week, to an outflow of $5.52bn last week.
Is this a sign of things to come?