For the past three years I’ve been talking about the dangers of Central Bank policy and the bubbles created from zero interest rate policies (ZIRP) and Quantitative Easing (QE=Money Printing). The U.S. government has created so much debt that it’s become unserviceable, so they continue to borrow more money to maintain the status quo.
This is like you continuing to borrower money to pay your debts when you know your income is not enough to cover the expense. You just borrow more and more money until you reach a point of no return. You go bankrupt because you don’t have enough income to service the debt.
Well this is exactly the position every sovereign country in the World is in. Governments are consumers, not producers. They always spend more than they earn from tax revenue. That’s why they always want to raise taxes, so they can spend some more.
What’s the result? Virtually every country in this global economy is bankrupt and virtually all are crashing. It has created a domino effect of global proportions. Look at Greece, then Brazil, Argentina, Puerto Rico, Japan, Spain, France, Italy, the UK, Russia, China and now the U.S. All of these economies are intertwined and the banking systems are connected. One depends on the other. When one falters, it has a negative effect on the others because they all depend on trade with each other.
The only reason the U.S. economy hasn’t crashed sooner is due to our central banks’ ability to create money out of thin air.
Everything Is Collapsing Because The World Economy Is Imploding.
So now it looks like time has finally caught up with the perpetrators and guess who’s going to pay? Mom and Pop investor, that’s who. IRA’s, 401k’s, pension funds are all going to crash in value along with the U.S. markets.
People who thought their money was safe in the stock market are going to wake up with the realization that they’ve lost all the gains made over the past 7 years or worse; they could be wiped out.
How would you like to be approaching retirement age only to find out that your pension fund is now bankrupt or your 401k only has enough value to support you for a year or two?
You are watching this happen right now! It might take several months to complete, but it will happen. You should know how the government will respond. They will take control of all retirement funds, IRA’s, 401k’s, pension funds and create another government run retirement program, similar to our bankrupt social security fund, so they can pilfer your money at will.
Government is the antithesis of financial prosperity. More government is the problem, less government is the solution.
The 7 Year Cycle
For a different take….
I’m not a religious person. I was raised in a religious household, but as I grew older I began to question what I had learned. I consider myself agonistic, which I guess basically means I’m not sure. I see a lot of conflicting facts from religion vs. reality and science.
So I guess I’m open to the idea that there is a higher power or force that might affect certain aspects of life, but I need to see proof or evidence, not someone’s interpretation of a story that was written when people thought the world was flat.
It’s made me cynical, but there are things that are happening around this world that make me think there might be something worth investigating further. Whether the causes are religious based or mathematical based is yet to be determined, but I know religious people will consider it an act of God, even if it can be proven by science as something completely explainable.
One such thing is the 7 year cycle.
There have been some interesting events that seem to happen every 7 years. They’re being written, published and preached to many in the financial world. I’ve included excerpts from an article by Peter Degraaf below which portrays the many ‘coincidences’ of the 7 year cycle. See below and decide for yourself if this has merit.
2015 is the Next Domino in the Crash Cycle!
The number 7 is much more prevalent in nature than most of us realize: There are 7 oceans, 7 continents, 7 vertebrae in the neck, 7 colors, sound has 7 notes, there are 7 directions, The Jewish Menorah has 7 candles, there are 7 holes in your head (go ahead and count them), the earth was created in 7 days (including a day of rest), a cube has 7 dimensions (including the inside), the male body has 7 parts, the number 7 is used 735 times in the Bible.
Seven is the number of completeness and perfection (both physical and spiritual). It derives much of its meaning from being tied directly to God’s creation of all things.
According to Jewish tradition, the creation of Adam occurred on October 7th, 3761 B.C. (or the first day of Tishri, which is the seventh month on the Hebrew calendar). The word ‘created’ is used 7 times describing God’s creative work (Genesis 1:1, 21, 27 three times; 2:3; 2:4). There are 7 days in a week and the Sabbath is on the 7th day. There are 7 deadly sins, 7 virtues, 7 gifts of the Holy Spirit, 7 classical planets, 7 numbers in a N/A phone number (after the area code), 7 hills in Istanbul, Rome and Jerusalem, 7 liberal arts, 7 wonders of the ancient world, 7 is the number of games in the playoffs for NHL, MLB and NBA. The number 7 is also important in Hinduism, Islam and Judaism.
There is an obvious 7 year cycle in economics:
Reaching back to forty nine years ago (7 x 7), in 1966 the USA experienced a ‘credit crunch’. In August of that year the US bond market suffered a serious ‘liquidity crisis’.
Seven years later in 1973, the world experienced an ‘oil embargo’ followed by a dramatic rise in the price of oil. There were long lines of cars at gas stations.
Move forward by 7 years and in 1980 Wall Street avoided the collapse of some of its banks and brokerage houses by forcing the Hunt Brothers to stop accumulating silver.
Another seven years passed and in the fall of 1987 stock markets crashed around the world. ‘Black Monday’ of October 1987 saw the Dow lose 22% in one day.
Then seven years later, in 1994, the bond markets crashed.
Seven years passed and in 2001 Wall Street was closed for 5 days due to the militant Islamists attack on the World Trade Center in New York. The DOW lost 684 points on Sept 17th 2001. Banks received billions of dollars of newly created money from the Federal Reserve, to keep the system afloat.
The seven year cycle moved on and in 2008 we saw the Subprime Housing Market Collapse, along with the overnight bankruptcy of Lehman Brothers.
It seems incredible that all of these crashes occurred seven years apart!
2015 is the next domino in the sequence. The financial problems of 2008 have not been addressed – only covered up with more money printing.
Do you see what I mean? Is this coincidence, a statistical cycle or fate? I don’t know, but technically, things happening in the financial markets indicate a crash is commencing now and I’m trying to prepare for it just in case. It’s obvious to me that financially, things are going to reset soon. The consensus from both sides of the debate is that 2015 is when the reset begins.
What do you think?
Live long and prosper.
(RGLD) (SLW) (GDX) (GDXJ) (PHYS) (PSLV)
The chart of gold this week shows a classic Bull Flag pattern. This breakdown in price was partially due to the options expiry on gold futures ending on August 31st. Don’t expect a big reversal until after Monday, the Cartel wants to keep price low until after options expiration. Once this breaks through the upper resistance of the bull flag, we should see a significant upside move.
Stock Market Indices
This week saw an epic drop in stock values which pushed technical indicators into extreme oversold territory. Take a look at the MACD oscillator below and you can see it shows extreme oversold conditions. This typically results in a bounce, however; this does not mean a recovery.
The Perma-Bulls would like you to think everything is fine and that this was just a kneejerk reaction to the China crash. The fundamentals that drive this bear market are still in play. Expect lower lows and lower highs as we move into the autumn months.
We could have a short term rally over the next couple of weeks, but the keyword here is ‘short term’. October is still my timeline for things to build up steam. The market is obviously in bear territory and just like in 2008; we will see short term attempts at recovery, only to be disappointed as the underlying weakness of this global economy takes control.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Looks like a short rally is also in play for crude oil, however, I’m not sure if it will break resistance at $44. Especially if the S&P loses steam and prints a reversal soon.
Financial Stocks: (XLF) (IYF)
Once this economy implodes, financial stocks are going to lead the way. Now would be a good time to short the financial stocks.
Biotech: (BIB) (KITE) (IBB)
Biotech’s have been in an uptrend along with the stock market, however, just as a rising tide raises all ships, a receding tide will lower them as well. I think we will see a correction in the biotech sector along with the impending stock market crash.
Commodities: (FCX) (JJG) (DBA)
Commodities will move higher once we have inflation, however, I think deflation is going to win in the beginning as the global economies crash. Inflation will begin once the central banks begin printing more money to hyper-inflate the economy. I will just watch these until I see a signal of a move up in price and a break of the downtrend line.
Plunge Protection Team Losing Control of Markets-Jim Sinclair