The Globe Cinema (617 8 Ave. SW) in Calgary, Canada, is holding a private screening of “The Forecaster” this Saturday at 1 PM. Following the film, Martin Armstrong will conduct a live Q&A via Skype.

If you are interested in attending, you will need to preregister: http://integratedwealthmanagement.ca/events/

Cost is a $10 (or greater) cash donation to the Calgary Food Bank, which will be collected at the door.

QUESTION: Do you think value investing is viable in today’s chaotic markets?

Much appreciated

KB

ANSWER: No. Value investing has been a recipe for wild swings. If you do not have the stomach for long-term then it is not something to get involved in. It should also be noted that it resulted in bankruptcy pre-World War II for it could not cope with the Great Depression. The town I grew up in had a Main Street. My father’s friend mostly owned it. Why? He had cash at the bottom of the Great Depression and bought it all up at distressed prices. With time, it was a great trade. However, he bought the low and most people buy the high and cannot survive the swings. We are entering the most chaotic period in our lifetime. Surviving this is more than just putting gold coins in your sock drawer. The strategy has to be comprehensive and you MUST understand what is going on globally to come out the other end.

Here is the opening paragraph from a 1997 transcript of a conference we held in London:

“For most people the real issue at the moment is are the stock markets too high? How do we determine value? Back in 1994, I met a lot of value investors in Europe and said that our models were showing the market was bottoming and we were looking for the Dow to go to 6,000 by 1996 with an outside chance that it would go to 10,000 by 1998. They thought we were crazy and said the US markets were overvalued at their 1994 level. Some of them went into cheap assets in Russia and South East Asia and subsequently lost up to 70% of their portfolio. So the question of value appears very subjective but it is critical to understand. Really the question of value is defined by the monetary system within which we operate. Throughout history we have had broadly two types of system – a fixed exchange rate system and a floating rate system. The current floating rate system was born in 1971 but it is by no means the first time we have had such a system.  Gold bugs argue that the only way we will survive is to return to the gold standard but this has not prevented panics in the past. Money is really the language that allows the transfer of wealth back and forward through commerce. Value is more to do with the tangible assets.”

I seriously doubt that value investing will work for the average person in the period ahead. It has been part of the theory that gold rises with inflation when it does not (see Forbes study). Do not get me wrong. Since the S&P 500 penetrated last year’s low, we are setting up for the Slingshot to the upside. Such moves unfold as confidence in government and central banks collapse. The computer will pick the timing and the Global Market Watch may pick the pattern. Then it will be time to jump in for the ride.

We still see the Dow at the 23,000 and exceeding that area with the potential to reach 40,000 remains viable for 2020-2021. You must understand, however, for that to unfold confidence must collapse in government. We are witnessing this trend unfolding. I posted an interesting article in Forbes that shows that people are starting to trust the private sector more than government. This is why Donald Trump is soaring in the polls. This is all about government losing credibility, which will cause private assets to soar and public to decline.

QUESTION: Mr. Armstrong; Why do you not advise Trump as Rubio and the Media demand details from him but not from anyone else as to their economic plan?

CB

ANSWER: I do not advise Trump. If he really wants to make an impact, he should watch the “Solution” DVD. If he demonstrated that we need major reform because we are going broke under the management of career politicians, then he might attract more people who are on the fence. Let’s be realistic. Those supporting Trump distrust government politicians. They really do not care about his message. I would prefer Trump, not for any policy, opposed to any career politician who would bring the same line of thinking to the table. A career politician will not think out of the box and will blast us with more regulation and taxes that will kill the economy. They will continue to hunt money until nothing is left for us but total enslavement, and that does not matter if we are talking about Rubio or Hillary.

Obama stuffed Christine Lagarde in the IMF and that has been far more devastating than any appointment to the Supreme Court. She has destroyed the global economy by threatening countries to hand over their info on everyone (except exempt politicians like her, of course) so they can hunt money absolutely everywhere. They do not look at the net result and only look at the world through their own greedy eyes. I would hope Trump would look at this as a businessman and say, “You people are nuts.”

The standard of living for families is declining — not because the “rich” are making more from investment — because the government continues to raise taxes and rob our savings that they pretend are there for retirement. In reality, they keep lowering benefits because they stole all the money. Anyone in the private sector who did this would be in jail. We are prosecuted for fraud in the private sector, but fraud in public sector is rewarded and called “politics.”

 

Advice for Trump

Taxes:

1. Eliminate all taxes whatsoever if you are not present to use such services. Eliminating taxes would allow for greater savings, and citizens would be required to save a portion of their income. Instead of QE for bankers, eliminate taxes and try QE for the people.
2. We will not raise the minimum wage. Instead, we will eliminate payroll taxes and stop borrowing from the poor as it robs them of interest. Currently, they receive a refund check so they think politicians are fantastic.
3. No person should have to pay more than 15% of their salary to state and local government. If a government needs more, then something is wrong and they need to reform.
4. Eliminate property taxes. You should be able to retire without having to cope with rising property taxes.
5. Eliminate Social Security for those under 50 and pay out those over 50. Replace Social Security with mandatory 401K investment plans.
6. Eliminate domestic corporate taxation. This will provide the incentive to bring jobs home.

Government spending and policy:

1. Stop government borrowing. Limit the creation of new money to 5% of GDP (I do not want to hear that will be inflationary since QE failed to produce inflation, which is all about confidence and not the quantity of money). At times, up to 70% of the national debt has been accumulated interest.
2. All government pensions must be eliminated. Part of the QE process should be the bailout of pension systems for government workers and end the process.
3. Retire the national debt; stop borrowing federally and competing with the private sector for capital.
4. Return the central bank to the original design of 1913. Eliminating government debt will do the job. During economic declines, the Fed should buy corporate short-term paper with its “elastic money,” which will compensate for banks when they stop lending. Short-term corporate paper would actually be paid off and that would then contract the money supply back to its original state prior to the crisis.
5. Merge SEC & CFTC so advisers can provide advice on the best investments rather than just what they have a license for in equities vs. futures.

Judicial reform:

1. Judicial reform is mandatory. I would retire ALL federal judges and nominate replacements by their legal profession. Penalties for bribes and such would be life imprisonment or death — the person the judge illegally sentenced would choose.
2. Expand the Supreme Court and make it an ABSOLUTE right to be heard rather than winning a lottery. Moreover, a panel of judges nominated by the legal community shall determine the constitutionality of ALL legislation BEFORE it is enacted. It should never be the burden of the citizen to PROVE the government is acting unconstitutionally. The Constitution is NEGATIVE and was intended to be a “restraint” upon government. ALL LIVES matter — do this and they will.
3. Reform the Grand Jury process. Both sides should be allowed to present ALL evidence to the Grand Jury and they alone will decide to indict. State prosecutors who protect police should be in prison.
4. Restitute the Roman position of Tribune of the people. The Tribune would be citizens who prosecute government employees from police up to judges and politicians. Then, and only then, will the system clean out.

Education reform:

1. Forgive all student loans and end subsidization for college. Without competition, the education is worthless anyhow.
2. Restore the Roman system of apprenticeship. In Switzerland, less than 10% of students go to college. They enter an apprenticeship in the field they desire. Learning in the real world is far better than theory.

Healthcare reform:

1. Reform lawsuits that cap jury awards to reduce medical costs
2. Introduce artificial intelligence systems that can provide reliable diagnoses. Hospitals are turning into big corporate businesses that reduce family doctors.
3. Eliminate medical expenses as a liability so they cannot take someone’s home or put them into bankruptcy (opposite of what Clintons did to students). This will cause healthcare to have a normal business cycle. The current healthcare system is an extortion that is like government consuming a larger proportion of disposable income. Return hospitals to their Hippocratic Oath and FIRST take care of anyone irrespective of money (i.e. end Obamacare).

Miscellaneous:

1. Eliminate TSA at airports. You would be cleared as to whom you are, and there would be no need for x-rays or strip searches if you are known to be a normal citizen. Foreign visitors should go through TSA if they do not have prior clearance.

This is the start of my short list of policies that I would advise Trump to adopt. Then he just might beat everyone in history with the percentage of the popular vote exceeding 65%.

 

COMMENT: A Hollywood feature film – well done.

And you’re circumspect enough to realize it’s “the collective”, “the source”, whatever, that decides ALL; not you.

But you’ve been gifted a particular insight; or was it those years incarcerated, studying your navel?

Ahh- the irony!

Thank you so much.

NMM

REPLY: Yes, I signed the contracts for the Hollywood film. I have met with the screenwriter. He flew out here and I like his style and his direction. He is very famous and has some big-name films under his belt. I do not want to say too much publicly so nobody tries to stop this one.

“The Forecaster” was blocked in the USA, Switzerland, and the UK to some extent. It was a clever trick when the distributor bought the rights for a country that then refused to show the film. The three places where this took place are strangely where the banks dominate. The bankers and government really hated this film. The producer, Marcus Vetter, even had his studio broken into. Marcus’ cameras were stolen and they searched his hard drives for the footage. Fortunately, he had backup elsewhere. Every dirty trick in the book has been played. In the film, one government employee came forward named Oliver Brown. He states in the film that the FBI showed up to his home two days before the film crew flew in from Germany. The FBI tried to intimidate him not to appear in the movie.

I have also agreed to do an in-depth interview for a sequel documentary on the market manipulations, as press coverage on the matter to the general public is increasing. Even the success of the recent movie “The Big Short” has helped to increase awareness. This, to a large extent, is why Trump is doing well. Rubio cannot insult his way to the White House. The people are just angry at career politicians. It need not even be Trump. Generally, the producers feel my experience in trading mixed with my legal education puts me in a very unique position to explain reality in detail using common sense. Being in the eye of the storm of, perhaps, the greatest attempt to manipulate markets in history, gave me a front-row seat. I also believe there will be a DVD with outtakes that are very interesting since they followed me around the world for three years to make that film.

Documentary films are respected far more outside the USA, which is why I think doing a major Hollywood production will get the message out that we are screwed. You cannot fix something unless you understand it is broken. So we have to explain the solution to the general public in order for political change to move in the right direction. Otherwise, we are heading into fewer and fewer rights and the rise of authoritarian governments globally. Hopefully, the more we keep pushing this issue, the more we stand a chance of mitigating how hard we fall.

There was one scene in the movie where I am at dinner with my old partners. They were amazed that I was not bitter. One of them really understood me. He responded before I even got a word out by saying, “He’s glad it happened.” I would not say “glad” because the receiver stole even the pension (401K) accounts belonging to the staff. What it did do for me was provide another chapter in my education. Before, I “assumed” the government put people on trial and they were treated fairly. I was too busy to pay attention and the mistake of most people — we trust government way too much. Once I was in the system, I saw how corrupt it was and became thankful I did not become a lawyer for I would prefer losing my freedom to losing my soul. I have come to the conclusion that the vast majority of those in the “justice” (just us) system are surrendering their souls for power.

The government came to me with a reverse proffer in April 2000. I went to the meeting to listen. Chief Prosecutor Richard D. Owens would not leave the government until my case was concluded, for it would not look good if someone else came in and asked, “What the f***?” At that reverse proffer a few months into the case, he had the audacity to say to me “we know you did not steal any money, but we will not drop the charges.” He wanted me to plead to some concocted conspiracy with Safra, and said he would release me if I agreed — but I refused. That is when I had the detailed discussion about the Bank of New York case and the $7 billion in alleged money laundering that Safra set in motion. I told Owens to his face that the $7 billion was stolen from the IMF. I told him the money was a wire transfer directed and pocketed by Yeltsin for the so-called “refurbishment” of the Kremlin. I then told Owens I knew who was blocking their investigation in Russia: the minister of interior who was protecting Yeltsin. I told him if he thought I was going to plead to some bullshit conspiracy of being involved with Safra, then he was out of his mind.

I believe government prosecutors could care less about truth and have sold their souls for the opportunity to further their personal careers of abusing others. It’s all about their personal careers. When two low-level bankers were charged in the Bank of New York case, they remained on bail and, at their sentencing, they were given home confinement. To be considered a money laundering crime, the money had to be somehow involved in a crime. They would never dare say the truth. The bankers plead guilty and the judge then had to pretend to verify that it involved a crime rather than someone just wiring money from Russia to Switzerland. The judge asked what the $7 billion was for and they replied it was a “ransom” for a Russian businessman. You would think if some Russian oligarch who could pay $7 billion in cash was kidnapped that it would have been all over the news. No such person existed. It was Yeltsin pocketing money from the IMF. The judge said thanks and never asked even for the name of the person kidnapped or who they wired the money to. It was a political whitewash deal under the table.

You do not need to know very much about banking to know that the bullshit story Owens gave the press in my case was not even plausible. How does $1 billion vanish from a bank without the bank knowing where that money went? You either wire it out, write a check, or beam it out like Star Trek. Owens said he “knew” I stole nothing, which is why I had no restitution. He was admitting an obvious fact. That is why Republic National Bank/HSBC had to plead criminally guilty and agree to return all the money they stole to avoid jail time. Owens would never go to trial because there was no way to prove their allegations any more than there was in the Bank of New York deal set up by Safra.

Unfortunately, our “justice” system is really “just us.” As of 2012, the U.S. national average conviction rate in federal court was 93%. While the conviction rate in Virginia and New York have almost matched Japan’s conviction rate of 99%, the national average has exceeded even Adolf Hitler’s conviction rate of about 90% at his notorious People’s Court under Roland Freisler.

When my lawyer Richard Altman heard I was being charged in New York, he said New York practices law differently than any other court. Indeed, they even let judges change the transcripts of what takes place in court. I wrote the SEC and said what is the point of all this. Just make up a transcript that says I confessed to whatever you want me to say and get it over with. Who would ever believe me if I said I was not even there. The whole system is so totally corrupt you cannot imagine how bad it truly has become. But federal judges are appointed by politicians and it is a one-sided confrontation. I tried to address the facts, but no judge would ever consider anything against the government. It is no different than any kangaroo court. I complained that the theory of the case kept changing from hearing to hearing. I never understood what I was alleged to have done because you answer that and they just change the theory. It is as if they accused you of killing you roommate. They then appear in court to show they are alive. They change the theory and say oh, it was not that person, it someone you worked with. You ask for a name and they change it again.

So I know firsthand that the movement Black Lives Matter is coming out of the fact that the legal system is completely corrupt. The police can outright kill anyone and they will never be prosecuted. Government prosecutors KNOWINGLY prosecute innocent people and they are never charged. There is the case of Joseph Salvati where the jury awarded him $102 million because the prosecutors KNEW they were convicting the wrong person. Two of the men involved in the case died in prison. Their entire lives were destroyed because there is no check and balance against police or prosecutors. They protect each other and then judges bless the unholy corruption. Anyone working for the government who does this sort of thing should be imprisoned. After all, they violate the civil rights of an individual and remain immune from criminal prosecution.

Sixth Amendment to the Constitution

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence [sic].

Under the Constitution, you are supposed to have a fair and “public trial.” Judge Richard Owen closed the courtroom and threw the press out when he took all the lawyers away. Changing transcripts, holding secret court hearings, and denying me a public trial was all just par for the course in New York.

 

The Constitutional role of a judge taking a plea is one where he ensures that the defendant pleads voluntarily in his or her own words. I was handed a script to read; I was not allowed to say anything other than what was on that script, which is no different from terrorists holding hostages and demanding they denounce their country. I received the same treatment because they had no valid case. This is what the judge said:

 

So what did they have me say?

You just can’t make up this stuff. If it were not for Supreme Court Justice Sotomayor, who was one of the three judges on my final appeal, saying indefinite contempt without a right for a trial was not Due Process of Law, I would have probably died in prison. My case made it to the Supreme Court, to which she ironically was then appointed to, only because she disagreed. It was not until they dropped all the nonsense about conspiracies with Safra that I agreed to read a script that said I failed to tell my clients in a timely manner (over a weekend) that the bank took the money for “its own use” and not mine. After that, an inmate was, in my belief, paid to kill me, which is something that happens very often in prison. When he finished his attack, he came out and said, “I killed him!” Many who were there have reported this event by email (any other details for the movie are welcome). I spent three days in a coma, but survived to the astonishment of Receiver Alan Cohen (Goldman Sachs), Prosecutor Richard D. Owens, and the rest of the Southern District of New York. OOPS, sorry. Expectations of my death were a trifle premature.

So I survived the trial by fire for a reason. That much I believe. When my case began, Judge Owen kept making jokes about another SEC defendant, Stephen Schiffer. He was the first person to have his lawyers taken away by the SEC. The SEC and the court were ruthless to the point of engaging in mental torture that caused him to commit suicide. Judge Owen kept making jokes about Schiffer and how he was never overturned on appeal. When I asked who he kept making jokes about, my lawyer said you do not want to know. When I insisted, he then told me about the suicide. From that moment on, I looked into their eyes and no longer saw human individuals, but ruthless sadistic people who will win at any cost. They will wash their hands in your blood then go for dinner. That gave me the strength. It was a battle to the death — that much became clear. I could not count on the press who typically assumes the government is right or lawyers who fear judges and protect their own business before defending a client. I was on my own.

So if the truth can reveal just how corrupt government is from top to bottom, then I have contributed to the whole. In that respect, I fulfilled my purpose in life and I can leave in peace and say good riddance to this corrupt system. Like Socrates, I believe death is either a migration of the soul to see all my old friends or it is a sleep so peaceful that you are not disturbed by a dream. Either way, there is nothing to be afraid of. Whatever I can do to expose how corrupt things are so they might be better for what we leave our posterity is why I was given the strength I found within.

We are putting the finishing touches on part I of the “2016 Gold Report.” This year, we will be adding a video. I will be shooting this coming Thursday. We will be addressing the ratios for silver, platinum, palladium, and copper. We will post the video when the report is available for purchase. I hope the video makes this even more dynamic for everyone.

 

Technically, the Dow Jones Industrials almost set up to make a “Channel Move” between two channels, but they interestingly overlapped instead with no gap between. This is one reason the S&P 500 could break last year’s low, but not the Dow. We made a new high for the month on Friday closing at 16639.97. We elected a minor Monthly Bullish Reversal in the Dow last month at 16175. Here the low remains the week of January 20. We really need a monthly closing above 17800 to signal that a breakout to the upside is likely. We have a Directional Change in March and the target for a turning point comes in April and then June.

Keep in mind that as the euro starts to give way, more and more capital will flee Europe into the USA. The smart money will buy the equity rather than government bonds.

A month-end closing ABOVE 16934 will be bullish. A closing beneath this level is will still bearish near-term.

 

We have interestingly reached an 86-year peak in oil reserves. This may actually be the end of that trend. Oil prices are causing companies to collapse, and in the Middle East various states have been forced to borrow money and raise taxes. We closed last month at $33.62 and held the Monthly Bearish at $33.55.  We are once again flirting with that number closing Friday at $32.78. The low for the month was the week of February 8. Our Weekly Bullish stands at $38.40. Our next key turning point will be April. A daily closing above $33.60 on Monday will be a warning that we may yet see a rally to everyone’s shock and dismay. This would be more geopolitical rather than supply/demand.

Our main number to watch remains at the 10460 level on a monthly closing basis. Our Major Monthly Bearish rests down at 9860. Our critical support begins at the 10335 level during 2016. Once that gives way intraday, we can see this fall to the 98 level. We still do not see a final low for the euro BEFORE 2018 with the potential to bottom as late as 2020-2021.

Our target for a turning point was February. That appears to have been accomplished during the week of the 8th. Now a weekly closing below 10927 will signal the start of the decline, but a daily closing beneath the 10715 level will be more definitive. We still need to look forward into March and May for turning points.

QUESTION: Marty

S

ANSWER: I have provided the Solution Conference and the DVD is available for purchase. I have signed a contract and they will be making a Hollywood feature film out of “The Forecaster” movie. The character will be based on me, but they will present the goal which was to provide the solution. Hopefully, this will help provide the idea to a broader audience. Understand that we cannot reverse the trend. The best we can do is mitigate the fall. We are destined to fail and the financial capital of the world will move to Asia following 2032. We cannot alter the cycle because those in power will never alter their thinking. They see only their self-interest and therein is why no empire, nation, or city-state has ever lasted indefinitely. No doubt some will argue that I am wrong. Given the odds that not a single society has EVER beaten the business cycle, I think you can bet on our outcome without any risk.

 

Perhaps one of the most enigmatic songs ever written was “American Pie” by Don McLean. For decades this song was debated as to what it meant. Most assumed it had to do with the collapse of society. That seemed to be the general consensus. After all, its famous lyrics seemed to imply the end of the world:

And the three men I admire most
The Father, Son, and the Holy Ghost
They caught the last train for the coast
The day the music died
And they were singing

Bye, bye Miss American Pie
Drove my Chevy to the levee but the levee was dry
And them good ole boys were drinking whiskey and rye
Singin’ this’ll be the day that I die
This’ll be the day that I die

The song became number one in 1972 and has been one of the most played oldies that is actually timeless. For all of us growing up who debated the meaning, McLean finally revealed last year that the song was inspired by the death of Buddy Holly – the day the music died. The original manuscript sold for $1.2 million last year. Guess it just goes to show opinion rarely gets it right.