2017 should be a pivotal year for our financial system and the human experience as a whole. We are going to see epic changes that will affect our lives in ways that most people can’t even imagine. In fact most will not even be able to intellectually grasp the changes about to take place in our world.
There will be massive spikes in wealth for those that have prepared for the coming events and massive losses for those that are not. Gold and silver will spike and there will be multiple flash crashes in currencies, stocks, and bonds. Real Estate prices could possibly crash by 50% or more by the end of the year.
Everything within our global financial system relies completely on credit. When credit dries up, our financial world will come to a complete standstill. The global debt has reached such extreme proportions that the global economy just can’t take it anymore.
Just in the U.S., debt has become so extreme that there is no way it can ever be paid back. Look at student loans of nearly $2 trillion, our US deficit of over $20 trillion, and our unfunded liabilities of over $200 trillion. The total global debt to annual GDP ratio is over 300%. There’s no way it will ever be paid back. The world is living on borrowed money. So what happens next?
What happens when debt can’t be paid back? Defaults.
What happens when there are defaults? Lenders stop lending. Credit dries up and we have credit freezes.
Once defaults begin, credit freezes will ensue and the world economies will come to a grinding halt.
The end will come with a natural market correction in the bond and stock markets and that will cause the rest of the financial cards to finally fall. Interest rates will start to rise as the bond market collapses.
For the short term, I expect bonds to surge higher in the first quarter of the year due to a massive short squeeze, then around the second quarter, bonds will start their implosion and rates will skyrocket higher. Higher rates will make debt unaffordable and the system will begin to seize up.
The time for the market bubbles to burst is upon us. An economic recovery cannot be sustained until the out of control debt is balanced and that will take a complete reset of the system.
Stocks may crash before bonds or simultaneously, as this over indebted system can’t tolerate higher interest rates. Higher rates will have a negative impact on housing and eventually lenders will freeze credit and the system will just stop working.
Trump’s efforts to improve our economy will be welcome, but I’m afraid the system is too far gone for him to do anything about it. Once the defaults begin and credit grinds to a standstill, it doesn’t matter what he does to try to stimulate things.
The only way to protect yourself is by owning precious metals. There is no counter party risk with gold and silver and as the economic system fails, precious metals will be the only thing left that survives. It’s the only insurance for a collapse of the system.
Taking a look at the long term chart of gold we see that the trading range of gold is in an ascending triangle pattern or reverse megaphone since before 2005 to present. Gold price should trade within these trend lines over the next few weeks. Price is expected to rise to the upper trend line before we should see any major retracement. There is always a possibility that we could see a break of the upper trend line. If that happens, that will signal a major move up into the bull market.
We have a psychological resistance level at 1200. The banking cartel has been defending this zone for several months and every time gold surpasses it, they attack gold with billions of naked shorts in the futures market to bring it back down.
That’s exactly what they have done this morning. If we zoom into the 15 minute chart of gold this morning, the cartel attacked gold starting between 8:30 and 9:30 this morning. We will have to see how this plays out throughout the day, but I think we will see a bounce back before the end of the day.
The daily chart below shows gold’s recent surge higher and the bullish trend line that has formed. Our profit target at this point in time is the green rectangular box with a price target between 1280 and 1290. That could change depending on how long it takes to reach the upper trend line.
If gold spikes next week with some major 20 or 30 point moves, we should make the 1290 range before it hits the trend line. If it continues to move in gradual increments like it has over the past couple of weeks, then our profit target will be reduced closer to the 1280 range.
It’s always possible that we have some major black swan event that causes gold to blast right through resistance at the trend line. If that happens, all bets are off, and we could see a major push higher in the coming weeks to the 1400 level or higher.
Stock Market: (SPY) (QQQ)
Stocks have been stuck in a consolidation channel pattern for the past month. It appears the Trump exuberant blow-off top has finally stalled. The question now is which way it will go from here?
Earnings are miserable and stock valuations are at extreme and historical highs. We know that the smart money is selling into this run up, so my money is on a break to the downside and possibly a flash crash down from here.
Stay tuned to see what happens by inauguration day next Friday. This should be an exciting and eventful week ahead of us.
Energy Stocks: (XLE) (UNG) (USO) (LNG)
No matter what OPEC does to try to maintain a strong oil price, it seems somebody doesn’t want to cooperate. Crude broke through support at the beginning of the week, but surged back up on Thursday only to be dropping back down below support again today.
I would wait until we see a sustained drop and hold below the trend line before placing any short positions.
Housing Market Stocks: (DHI) (TOL) (PHM)
Housing stocks have had a slight rebound due to the rebound in the bond market. The rebound in the bond market has caused interest rates to stabilize, at least in the short term and that has been positive for housing. I expect this rebound to continue at least into the 2nd quarter before we see rates begin spiking higher again.
Higher rates will have a negative impact on housing and I expect the real estate market will begin to implode in the 2nd half of this year.
The 10 year treasury has rebounded slightly over the past couple of weeks but appears to be consolidating now. We even had a slight break of the uptrend line today, but it seems to be recovering.
I expected a short squeeze to ensue after the crash in the bond market from the second half of 2016. That being said, I’m not sure this rebound is over quite yet. We’ll have to watch the bond market next week and see if it maintains its upward direction.
I do think it will eventually head back down probably in the 2nd quarter of this year causing interest rates to spike higher again and putting additional pressure on stocks and real estate.
(SLW) January 2018 CALLS
(GDX) January 2018 CALLS
(RGLD) January 2018 CALLS
(SPY) December 2017 PUTS
(DHI) August 2017 PUTS
(TOL) August 2017 PUTS
(PHM) August 2017 PUTS
A Terrifying Warning That The West Is Now Approaching The ‘Brick Wall’
The world is now entering a very uncertain period with a high risk of political, economic and financial upheaval. Taking measures against these risks is critical, including not being heavily exposed to the banking system and owning some physical gold and silver for wealth protection and insurance purposes.”
2017 Predictions on Trump, Gold, Silver, Housing, Stocks, Bonds & Antarctica-Clif High
High, who calls what he does “Predictive Linguistics,” mines the internet and collects billions of data points to produce forecasts of the future. On the financial markets, High simply says, “We’re screwed. . . .
Why Are Wal-Mart, Boeing, & Lowe's Laying Off Workers If The U.S. Economy Is In Such Great Shape?
The stock market has been on quite a roll in recent weeks, but signs of trouble continue to plague the real economy. Even though economic conditions appeared fairly stable throughout 2016, our long-term problems just continued to get even worse. So the truth is that we are more primed for a major crisis today than we have been at any point since the last recession.