We are entering a period of an increased risk in earthquakes appearing in California. This begins here in March 2016.

According to statistics released by the State Forestry Administration, China has 2.6 million square km of desert that accounts for 27 percent of the country’s total land area. The desert areas are scattered among 12 provincial-level regions in north China. There is a serious problem on the horizon for China. Following the creation of the People’s Republic of China (PRC) in 1949, the Communist State attempted to alter nature. China’s forests were cut down and used for fuel, lumber, and paper production for the billions of little red books that became rather notorious. This process increased during the 1960s and had the tendency to eliminate both forests and grasslands. This led to a sharp rise in the rate of desertification.

Realizing its mistake, the government saw the desert areas expanding and embarked on an effort to reverse the damage by trying to the create a reforestation effort in 1978. They actually planted 66 billion trees. This became known as the “Green Wall of China,” which was to be completed by 2050.

However, while the intentions were good, the bottom-line result has been devastating. The government introduced fast-growing pine and poplar trees that were not native to the region. These trees needed more water and sucked the region dry. The water table in the soil dropped nearly 10 fold and most of the trees died. Only about 15% of the trees planted since 1949 have survived. Their attempt to reverse the trend had the exact opposite impact. Instead of creating a forest, it expanded the desert. China now has the second largest desert in the world – the Taklimakan desert.

This presents a political risk for the future as China is squeezed by the expanding desert. They will need new technology to grow food as we pointed out.

Of course, the gold promoters are declaring this is a new bull market. Should we expect anything else? They do not address why silver is not responding and the ratio continues to rise. But what the heck. No sense in looking at anything else that might contradict the dream.

Gold has to close above the Feb high today to retain a bullish posture near-term. A closing below the $1263.90 level will shift into neutral for now. Our Directional Change is not due for a couple of weeks. We need a closing today ABOVE 1286.50 to suggest further upside next week short-term. Silver is not even close to any Weekly Bullish Reversals.

We are working to finish the 2016 Precious Metals Report which will include an exclusive video I just shot yesterday. We will advise next week when it is ready.

In Asian equity trading today, only the Hang Seng that disappointed investors after closing negative -0.3% whilst the others recorded gains. Shanghai posted a small gain of 0.3% as the PBOC set the Yuan mid-rate at 6.5412. Earlier we saw the (Caixin) PMI was marginally weaker than previous at 51.2 versus a previous 52.4. Meanwhile, a slightly weaker JPY helped Japanese exporters and hence a stronger closing for the Nikkei at +1.3%.

In Europe, after we saw the PMIs (parts and whole) the markets settled down for the remainder of the day. The earlier numbers in Germany’s were small better but roughly in line registering 55.3 against a forecasted 55.1 whilst the Eurozone came in at 53.3 against an estimated 53. All core markets were very well behaved today, but it really should be no surprise given we have the US Employment data tomorrow followed by the eagerly awaited ECB Meeting next week.

As expected the US session was pretty calm ahead of tomorrow’s employment numbers but we did see a rally in the final hour that managed to lift all indices out of the red and into the black for the close with energy stocks lifting us into the close. The oil price did improve a couple of dollars, during the afternoon and that was one reason provided for the support seen in stocks.

The gold price rallied by more than $25 (2%) today taking the YTD rally to a little over 17%. The word on the street was that this was just short-covering but our Weekly Reversal level lies for tomorrow evening at $1277. Silver also rallied closing +1.8% at $15.30.

The USD Index (DXY) took a bit of a beating today as we saw strong rallies in the Euro, GBP and JPY. We heard short-covering was the name of the game, ahead of the big data release tomorrow (NFP) and we saw GBP rally 0.8% and the Euro rally 0.95%; DXY closed -0.7% at 97.55. A$ +0.8% whilst the Brazilian Real lost 2.4%.

Treasuries rallied during the majority of the session with US 10’s closing 1.82%. 2’s were little changed by the close to set the 2/10 curve at 97BP. 30yr bonds were down 3BP at 2.66%. German Bund closed 0.17% and that puts US/Germany spread at +165BP. UK 10yr Gilt closed -1BP at 1.42%.

QUESTION: Hello Martin,

Can you verify the following statement:

“No bear has ever resumed following a 20% rally.”

As today marks a 21% move of the lows your expertise would be appreciated.

Thanks!

BGG

ANSWER: No. Sorry. That is total nonsense. The rally from 1982 into 1983 moved from $297 to $520 — and guess what— new lows unfolded. Look at this from the reversal perspective. We elected three monthly bullish reversals on that rally and stopped with the fourth. I really do not understand why these people just bullshit everyone. They clearly have no regard for those they tell this garbage to.

Here we have the silver manipulation of 1997-1998. Here too, we have a 77% rally. Whoever is claiming that a bear market rally exceeding 20% confirms a change in trend is either trying to sell something or is so biased that they cannot possibly be an analyst. If you want to be an analyst, you have to remain dispassionate. Simple as that. No conflict of interest and no predetermined expectation.

Above is the Japanese Nikkei. Between 2003 and 2007, the rally was 140% yet still new lows were made. There we elected, again, only three of the four monthly bullish reversals.

So, sorry. There is no hard and fast rule that states if a market rallies x% then the trend has reversed. That is a very primitive way of trying to look at markets. You cannot even assign a specific stop-loss based upon a percentage. This is what the reversals are for and this is the risk model analysis provided in the reports. The risk is in both directions.

Sometimes you really have to ask: Is French President Francois Hollande simply clueless? At a European Union summit, Hollande said he opposes Britain’s demands for special treatment for its financial markets as a way to keep Britain in the bloc. Hollande has bluntly said that Britain cannot veto what happens in the Eurozone. Hollande’s socialist agenda will never yield. He is so out of touch with reality. If Britain remains in the EU, it will be the end of the financial markets in Britain. You definitely want to get your money out before you cannot. There is little doubt that Hollande will outlaw shorts, and that will destroy liquidity. This may be the final straw that diverts the financial capital of the world to Asia.

The president of the German secret service, Hans-Georg Maassen, has come out and warned that the uncontrolled immigration has created a serious safety risk to Germany because the authorities no longer know who is in the country. If people think U.S. politics are going in the gutter, look at Germany where politicians have created a clash between polarized left and right-wing extremism. Maassen warned that an Islamist or right-wing attack in Germany could lead to an explosion of social unrest. Maassen has virtually shown that Merkel’s decisions have placed Germany at serious risk, but has also fueled the movement to end the Eurozone.

Merkel’s decision happened at the worst possible timing. As the European economy turns down further, the cost of the refugees will send taxes even higher. The civil unrest our model has been predicting is on schedule. It is linked to the economy and when that turns down, this cycle will turn up.

Since Jews founded Goldman Sachs, some people assume that qualifies it as a Jewish bank, which makes it evil. I think it should be pointed out that Hank Paulson, former CEO of Goldman Sachs who became Secretary of the Treasury under Bush, I believe deliberately allowed Lehman and Bear Stearns (two of the five main investment banks) to collapse to increase Goldman Sachs’ market share. Paulson was raised as a Christian Scientist. Jews did not found UBS, Deutsche Bank, Barclays, HSBC, or J.P. Morgan (who attended Episcopal school). There has been no difference Christian and Jewish banks as they have all engaged in proprietary trading. So sorry, Jewish bankers are not the problem as it is the culture of banking at the top. Religion has nothing to do with this one.

Before the Protestant Reformation, banking was exclusively a Jewish industry for Catholics had the sin of usury. Catholics who wanted to get into the banking industry funded the Protestant Reformation as their cover to take over banking. At last count, they did a pretty good job as they now represent the majority of bankers today.

Medieval bankers were merchants prior to St. Thomas Aquinas who declared money lending to be a sin in Summa Theologica, which cleared the field of Christians. The first bankers coming out of the Dark Ages were northern Italians, not Jews. There are numerous paintings of medieval bankers of the period. They were merchants. In Germany, they called bankers “Peppermen” because pepper was worth more than gold by weight.

In the Tuscan city of Lucca, the cathedral square was the center of business. In the 14th century, the moneychangers and spice dealers were required to take an oath that was inscribed upon the facade of the cathedral of San Martino. The mere fact that an oath was even imposed implies there were ethical problems previously. The oath sworn by the dealers promised they would commit “no theft, nor trick, nor falsification.”

So the point is obvious. This issue has not been confined to the “Jewish bankers” as some like to shout. This has been the inherent corruption within humanity, which knows no boundary of race, religion, or gender.

The Republicans have declared war on Trump simply because they fear that any outsider will cut them off from rolling in the perks. They have attacked Trump personally and have demonstrated that they are brain dead. This is no longer about Trump as an individual. They are simply ignoring why the people have voted for him — they have had enough of career politicians. Today was crossing the Rubicon. There is no returning. What if Trump wins? The confrontation with Congress would be unbelievable. They should have listened to the people instead of rejecting their message, regardless of who Trump is or is not.

The establishment has many ways to ensure they maintain control of government. They can suppress Trump, but in the process they will expose how corrupt they truly are. The bankers own both the Democrats and Republicans. They will steal the election one way or another by rigging the counts, brokering the convention, or playing games with the electoral college. The likelihood of this ending nicely does not exist. Our models not only warned of this for 2016, but they were pointing to the same impact coming in Congress. By the time we get to 2018, this is not going to resemble anything we thought once existed. So today, the Republican Party signed their own death warrant. They are no more “conservative” than Trump or Hillary, and they prefer Hillary to Trump any day. Trump is Ross Perot 2.0. Come 2018, that will be more of the same.

The sharp rise in third party activity suggests we are heading for a split in the Republican Party. This previously took place when Abraham Lincoln became the first Republican president, and then Teddy Roosevelt split and formed the Progress Party in 1912. The spike you see there in 1855 was due to the fact that Republican Party split into a third party. During the first “anti-Nebraska” local meeting, “Republican” first appeared as the name for the new anti-slavery party. The meeting was held in a Ripon, Wisconsin, schoolhouse on March 20, 1854. The first statewide convention where a platform was presented and candidates were nominated under the Republican Party name was held thereafter near Jackson, Michigan, on July 6, 1854. This was the beginning of the Republican Party and the opposition to the expansion of slavery into new territories.

It was in 1912 when Theodore Roosevelt led progressive elements to separate out of the Republican Party. The Progressive Party lasted until 1952. The presidential election of 1860 brought Lincoln to power. It was about 51.6 years later when Teddy Roosevelt split the party. If we then add 51.6 years, we end up with 1963 followed by right now. The 1958 election was a landslide for the Democrats against Republican President Ike. The 1958 results saw a gain of 16 seats for the Democrats for a party balance of 65-35. The assassination of Kennedy led to a landslide in 1964 where LBJ gained the highest portion of the popular vote in history. So 2016 is a major turning point and it appears the Republicans have committed suicide once again, which is in tune with the cycles perfectly.

They need to listen — IT IS NOT ABOUT TRUMP — IT IS ABOUT YOU!

As for Trump, tone down the wild talk off the top of your head. The press will now support the establishment and will turn against you in FULL FORCE as they take their marching orders from the Good Old Boys (GOP).