The euro crisis appears to be unfolding right on target rather amazingly. Our target was published in “The Rise and Fall of the Euro” back in 2011. The target for the collapse in confidence was 2016.202. This comes into play March 13/14, 2016. It is rather amazing that we can target a specific event within time, years in advance, and watch these things unfold. This illustrates that TIME remains everything and humanity repeats a process that results in the same response over and over again throughout history. This also demonstrates that our forecasting is not based upon OPINION. With the euro unable to reach 116 of a rebound, this does not look very good in the next few weeks.

Here is what we published in that report:

 

From a timing perspective, the Bretton Woods System actually began with the operational start of the IMF on March 1, 1947 (1947.164). The euro began officially on January 1, 1999 (1999.002). The birth of the euro essentially completed the 51.6-year cycle between 1947 and 1999. The collapse of the euro appears to be due no later than 17.2 years from its birth, making the ideal target 2016.202, just 23.5 weeks ideally AFTER the peak on this current Economic Confidence Model wave 2015.75.

 

Larry Summers, the father of NEGATIVE INTEREST RATES, is so against a free society and looks upon us as dumb cattle to be herded and corralled for his pleasure. His ideas are just beyond belief. Now Mr. Pro-Government-Anti-Democracy is advocating killing the $100 bill. He is moving to electronic money so that government can get all the taxes it ever dreamed of. We are rapidly being converted from milk cows to just beef cows. This is creating a completely totalitarian future. With people like this who never had a real job but knows how to dictate to the world, our future looks very bleak.

Summers actually reveals this is really about taxes by arguing that the U.S. government should stop issuing new $100 bills and recall the old ones out of circulation. Keep in mind the government will comply because this is the balloon he is floating at their direction and the press cheers our demise. There is nobody in the press willing to call him out. They prefer to lick the ground he walks on. They give him air-time because that is their role.

Summers went further and suggested that even the $50 bill should be examined. In support of the ECB ending the €500 note, he slandered Luxembourg who objects to ending the €500 note by saying that this minuscule country has a “long and unsavory tradition of giving comfort to tax evaders, money launderers, and other proponents of bank secrecy.”

This proves that withdrawing the €500 note in Europe and the $100 and $50 bills in the U.S. is all about taxes — not crime or terrorism. They are moving to end money as we know it. The problem is that the $100 bill circulates predominantly OUTSIDE the USA. They will take a step closer to eliminating the dollar as the reserve currency, and eventually we will end up with a new one-world currency as early as 2018 but probably by 2020. This is really part of the 2017 G20 accord to tax everyone everywhere.

Thank you Mr. Summers for your persistent dedication to eliminating our freedom and converting the world into a giant totalitarian state, despite admitting the government is incapable of forecasting the business cycle. That means that they are too blind to even comprehend the consequences of their actions today.

TIP: Swap your $100 notes in the sock-drawer for $20s. We went from $10,000 to $100 without terrorists or money laundering laws (which now means hiding money from government). Summers will take us down to $1 at best and he wants that gone as well. This guy should be in prison for what he has done to society. He was the cheerleader to get rid of Glass Steagall under the Clintons.

Summers is in the top 10 people who have created the destruction of all our rights and the world economy. The press treat him as royalty. In my book, he is in the class of Adolf Hitler within the Financial arena. Hitler actually began terminating the handicapped because they were a burden to the state. They happened to be veterans from WWI. This is the same attitude of Summers. Eliminate all our rights for his efficient mind to be at peace. What happens when he controls everything, and government is still unable to survive? He will be first among the elite to advocate sending in troops to hunt anyone who dissents from his will. Yes I am being harsh. But this guy has ZERO respect for that cattle he sees out his window any more than Germany terminating veterans because it was a burden to take care of them. Our society which he cannot figure out how it works because he admits it is too “complex” for his mind, never prevents him from trying to manipulate us to his desire. He seems more like a two-year old who gets mad they cannot play with a toy and do not like to share. If the economy is too complex to forecast, it is too complex for his manipulation games.

Well, Monopoly is going cashless. It looks like the game company sees the writing on the wall and are preparing the kids for the new world order — a cashless society.

QUESTION: Mr. Armstrong : Since you have deep knowledge about coins and currencies going back to ancient times, it would be really helpful to get your view of what Bitcoin is or could be as a sort of “World Currency”. Is it a fad or something that should be taken seriously?
Thank you – BH

ANSWER: No, Bitcoin can never become a “world currency” for it is highly questionable whether or not any electronic form of money can become a true “world currency” when more than half the world does not even have a bank account. This is why Europe declared it a right to have a bank account when in fact they are really saying it is mandatory. Call it a “right” and everyone wants a “right”; call it “mandatory” and they see it as authoritarian. This is the oldest game in town. Do you buy LIFE INSURANCE to cover you if you live forever? Or is it DEATH INSURANCE in case you die early? Try selling DEATH INSURANCE and they will hang the phone up.

The reason the paper U.S. dollar is a “world currency” is because it is recognizable. You will accept it in exchange ONLY because you know someone else will take it from you. One of the reasons Bitcoin has become popular is that people have wrongly assumed the Fed creates money at free will and that the money supply should not be in the hands of the banks. This reasoning shows naivety for the Fed can create elastic money and buy assets, but those assets ultimately mature and expire. They attribute all our problems to central banks and totally ignore the fact that Congress creates the money with new debt that reverts to money, which simply pays interest as it did in the 1860s to convince people to accept it. When government bonds could not be used as collateral to borrow against, then it was less inflationary to borrow than to print. That changed in the 1970s, so note there is no difference between borrowing or printing except borrowing creates more money because we have to pay the interest.

The story about the Dutch buying Manhattan from the Indians for some strings of beads and trinkets worth $24 has been a popular piece of trivia. Actually, in the Dutch National Archives, the only known primary reference to the purchase of Manhattan island is a letter written by Dutch merchant Pieter Schage, dated November 5, 1626, written to directors of the West India Company. This was in reference to the settlement of “New Netherland” and New York was first named New Amsterdam. In this letter, Schage writes, “They have purchased the Island of Manhattes from the savages for the value of 60 guilders.”

The guilder was essentially a one-ounce silver coin of .885 fineness. Beads to us seem like a scam, but to the American natives this was money. To the ancient Chinese, cowrie shells were money. Both cases, beads or shells actually come from the same branch as gold and silver – the desirable luxury line of value.

The second branch of money is the more practical avenue where the object must have some utilitarian value. For example, this was what we call the “Bronze Age” precisely because the Minoans traveled the seas and money became bronze ingots. Bronze was the next step up in that utilitarian branch that evolved from food and then clothing. Note the shape of these bronze ingots. They are imitating the previous universal form of money in the practical utilitarian branch, like sheep skin for clothing. The four points symbolize the four legs.

Gold and silver have no practical value. They, like shells and beads, come from the “luxury” branch where the object is simply desirable. Gold became prized because it was seen as the tears of the sun. Until it was widely discovered, only royalty could possess gold. We see it in the form of royal use in Egyptian coffins to royal cups in Greece. As gold became more common, then it moved down through the classes to become accepted as a commodity in trade.

 

The earliest form of money in Rome was simply lumps of bronze. Eventually, this became standardized by weight to save time in calculating how much metal one had for each transaction. This gave rise to coins, which began in Turkey during 7th century BC.

So within this context we must ask the question: can Bitcoin become a world currency? The answer to that is more likely than not a resounding NO. Any form of electronic money could function within the developed world, but to trade with the rest of the world we will be like the Dutch searching for beads to conclude a transaction outside the electric zone.

So we live within our developed world, but if we travel, we may find it not so easy to conduct business with electronic money just as not all places will accept a given type of credit card. Some people from Europe discover their cards do not work in the United States. This is just one example of a closed system.

Then there is the question of government. There is a profit to manufacturing money even when it is a precious metal. This profit is called Seigniorage (also spelled seignorage) which comes from the old French seigneuriage meaning the “right of the lord (seigneur) to mint money.” It was a death sentence to counterfeit for you were depriving the king of his right to make a profit. Pictured here are Indian imitations of Roman gold coins spanning from 14 AD to 240 AD. Why not mint your own gold coins? Because there was no “trust” in government so the value of a Roman coin had a premium to just the bullion value. They did keep pace with the changing emperors.

Bitcoin will eventually clash with government for they are hunting money. They will want their piece of the action. That is just how things evolve. After the crash and burn, the system will be completely new. That is when we will have a chance to reshape the world.

 

 

QUESTION: 

Hello Martin

Today it seemed as if you posted a basically bearish Euro call and a temporary bullish Gold call. I understand that a crisis in the Euro could get people to buy gold but in the long term if the Euro falls to 80 Cents, Gold in Dollar terms would drop to the $ 1,000 per ounce you have been predicting. Don’t the two calls conflict ?

Thanks
Confused.

ANSWER: This is how it is set up on our model. But keep in mind, these are short-term swings, they are not long-term changes in trend yet. Our opening pivot point is 1211.77 for tomorrow. It is still pointing upward. When that turns down, typically so will the trend. Keep in mind that a panic in Europe will still have a positive impact on gold. You may actually see the dollar, Dow, and gold rise. Eventually, this will be the trend to emerge when capital realizes that it is not looking very good outside the USA with war brewing in the Middle East and Europe under the control of madmen/madwomen. We will see these link together briefly.

During the second phase when people turn on the USA, gold would rise against the dollar. That trend is not yet here. For now, we are in the staging process. The relationships will be tested to their limits. So a gold rally is still possible in a crisis emerging in Europe. It may not last long-term.

We need a monthly closing in gold ABOVE 1363 and a quarterly closing above 1309 before you can negate a potential collapse below $1,000. We have central banks dumping gold to raise cash. So this is not over until the central bankers scream. Holding 1170 on a closing basis leaves gold still positive for now. We had directional changes for the 15th and 16th and gold turned down. So if the low of the 16th holds, then the volatility also starts to rise and this coincides with what we see in the euro. Plus, our target for the euro given back in 2011 was for its collapse 2016.202 (see posting tomorrow).

Despite weaker than expected Chinese Trade Balance stocks actually performed well on the back of PBOC rhetoric concerning the currency, taking it to its strongest level against the USD in almost a year (6.4935). It has however, weakened since China close and the off-shore was last seen in NY at 6.5200. Shanghai closed +3.3%, Hang Seng also closed better at +1.1% and after a volatile day in Japan the Nikkei closed small better +0.2%.

Late in Asian trading and just ahead of the European open, we heard rumours that Saudi and Russia had agreed to level current exports resulting in a huge 5% bounce in the oil price. These gains were short-lived and by the end of US trading all gains had been returned and were closing down on the day (below $30 at $29.12 -1.1%). This was the excuse provided by dealers as to why we saw a strong open for European stocks only to finish their day on the lows. German ZEW failed to live up to expectations, UK Inflation (0.3% for Jan) is still way off the annual 2% BOE target, EDF Energy saw a 68% decline in net profits (took a 3.6bn one-off impairment charge) and a vocal ECB still had the markets in a bit of a spin concerning direction and confidence. Amidst all of this Standard Charter’s stock (normally seen as stable) was down 5% as strategists cut forecasts. DAX, CAC and IBEX all closed around -0.5% lower. FTSE was the exception to core closing up +0.6% but they did see a 1.1% depreciation in the GBP.

The US indices performed well closing up +1.4% and on the days highs, this despite the Empire Manufacturing Index came in -16.6 but better than the January -19 number. One of the reasons talked this evening is the steady drift into the USD. DXY closed this evening at 96.93 a gain of 1% on the day.Gold and Treasuries were the losers today with gold trading under $1200 at one stage. We closed this evening at $1202 a fall on the day of 3.2% or $38 lower. 10yr US Treasuries gained 3.5bp today to close 1.78%. The curve steepened 2/10 to close 106bp. In Europe the German 10yr Bund closed 0.26% which closes the spread at +152bp. Italy 10yr closed 1.62% (+2.5bp), Greece 10’s closed 10.68% (-16bp), Turkey 10’s 10.49% (-3bp) and finally UK 10yr Gilts closed 1.44% (+1bp).

Gold and Treasuries were the losers today with gold trading under $1200 at one stage. We closed this evening at $1202 a fall on the day of 3.2% or $38 lower. 10yr US Treasuries gained 3.5bp today to close 1.78%. The curve steepened 2/10 to close 106bp. In Europe the German 10yr Bund closed 0.26% which closes the spread at +152bp. Italy 10yr closed 1.62% (+2.5bp), Greece 10’s closed 10.68% (-16bp), Turkey 10’s 10.49% (-3bp) and finally UK 10yr Gilts closed 1.44% (+1bp).

The euro continues its fall and the likelihood of reaching 116 is starting to dwindle. Even the British Telegraph has come out and stated that the bail-in plan for government bonds in Europe risks destroying the entire euro system. We have to understand that those in power are clueless. All they do is try to defend their prior decisions by insisting they are correct and the world is wrong. When we look at the volatility and panic cycles starting next week, it appears the crisis may emerge in Europe.

We can see how this crisis could help an extended gold rally. We are also seeing the Dow holding, which is the international money for they like to buy the trophies whereas the S&P 500 is domestic. So we have not penetrated last year’s low in the Dow and there is NOTHING that takes place without a reason. The Daily Bearish to watch in the cash euro is 11070. A daily closing beneath that warns this may be down and dirty.

When we look at the technicals, the Stochastic is turning down as well. We did not exceed the recent Breakout Channel and the former Downtrend Line lies at the 109 level. Penetrate that area and we are off to new lows.

 

Gold fell back to 1191 and then rallied back to the 1216 area. Gold appears to be setting up to extend the counter-trend reaction into the first week of March. With back-to-back Directional Changes for the weeks of 02/08 and 02/15, the typical outcome is one of a choppy trend. Last week we got the high and this week may produce the reaction low. If this proves to be the case, then we should extend the rally into the week of the 29th. Overall, volatility should begin to rise over the next three weeks. So stay nimble and objective. If we rally into the end of the month, then we can still see a test of the 1309 area.

Using our What-If models, we suspect that a new high during the week of 02/29 should bring in a Weekly Bearish up to the 1170 area. If that is elected, then gold has most likely prolonged the agony and we will then look to the next Benchmark. None of the price action so far has negated the potential to penetrate the $1,000 level for a final low.

Trading  is something you have to develop a “feel” for. The only way to do that is with experience. The object of our modeling is to place the entire world before you. Once you become familiar with how to use the model, you will be able to look at any market and ascertain its direction based upon experience with the model in other markets.

 

Using the reversals with timing in “reverse” is one of the best trading strategies. Doing this is what awarded me Hedge Fund Manager of the Year in 1998. In 1998, I sold $1 billion worth of yen against the Yearly Bullish Reversal at 147 on an MIT (Market If Touched) just before the Long-Term Capital Management collapse. It was 16 days after the Economic Confidence Model turning point that year on July 20, 1998.

 

 

We had also only reached three Downtrend Lines. The timing was correct for the yen. We were at a major turn in the Economic Confidence Model. Our models had forecast that Russia was about to collapse, which manifested in the Long-Term Capital Management collapse.

Everything was in line. This is what we are porting over and the computer will articulate this as everything lines up.

QUESTION: Mr. Armstrong; I assume you have studied this hunt for money government goes through. Has it always ended in the collapse of government?

Thank you

PD

ANSWER: No. It really depends upon the economic system in place. There are two comparable plagues that devastated the world population. One ended in oppression and the other gave birth to capitalism. It is like the battle between public and private. It depends on what side you reside when it hits. In a public wave, taxes rise to compensate for the decline in population, whereas in the latter we find the birth of taxation applied to individuals who suddenly are free to earn money.

One of the worst such events coincided with the Justinian Plague (541-542AD) and was a pandemic involving Yersinia pestis, the organism responsible for bubonic plague. This hit the population on a monumental scale, creating a wave of devastation comparable to the Black Death that came about 600+ years later (2 x 309.6), which created capitalism by killing about 50% of the people and ended serfdom by reintroducing wages during the 14th century. It is estimated that about 25 million were impacted on its first wave but recurrences struck, bringing the total death toll to perhaps 50 million. The primary source describing this as a worldwide event in history has come to us from the noted contemporary historian during the 6th century, Procopius of Caesarea (Procopius Caesarensis; c. 500-560 AD).

The Justinian Plague (541–542 AD) resulted in 5,000 deaths per day in Constantinople, but the Emperor responded with massive taxation as the pestilence swept through the known world; notably the Roman Empire. Justinian is remembered for his legal code reforms, but also for massive taxation for trying to restore the fallen glory of ancient Rome by waging a series of military campaigns to retake lands that had been overrun by barbarian tribes. The plague wiped out most of the farming community and impacted the tax revenue of the government. It was taxation that was different from the Black Death. Here taxation was applied to individuals, whereas latter taxes were minimal and applied only to landlords. Justinian showed no mercy whatsoever when it came to the collapse in his tax revenue. Despite the human desolation, Justinian hunted the ruined freeholders. He not only demanded they pay his annual tax even if they had no income, but he increased the tax on those living to compensate for the amount of taxation their deceased neighbors were liable to pay.

Justinian I was rather ruthless when it came to taxation. There was a tax revolt that boiled over on January 13, 532 AD, known as the Nika Revolt, which emerged when an angry populace arrived at the Hippodrome in Constantinople to watch the chariot races. The Hippodrome was next to the palace complex where Justinian could watch from the safety of the palace. The spectators were hurling insults at Justinian for his taxes. Initially, it was a contest between two opposing teams known as the “Blue” and “Green.” After race 22, the chants began to change to Nίκα (“Nika”, meaning “Win!” or “Conquer!”). The crowds became violent, and for the next five days the palace was under siege. They set fires that destroyed most of the city including the church, the Hagia Sophia, which Justinian would impose harsh taxes to later rebuild.

Therefore, in this instance, Justinian I raised taxes on the 50% who survived so his revenue would not decline. Since this was a period of capitalism where individuals earned money for their labor (in socialism/communism the state earns the profit from the labor of the population), taxes were raised on the people. The Black Death ended serfdom as labor became scarce and landlords had to offer more than 20% of the food and a free housing to work their land.