Issue #109
Editor’s Note: Below is a sneak preview of my March Real Wealth Report publishing this Friday. While it does contain some minor edits, it’s of MAJOR importance to you as a Gold and Silver Trader member.
Be sure to read the entire article. In it, you’ll learn of the important changes I am making to Gold and Silver Trader. At the end of the article, you’ll also find an update on current positions and new trading opportunities coming up. — Larry
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Major Market Turns Now Imminent As War Cycles Accelerate Higher.
Inside this issue:
* A peak back at the history of how empires die …
* Why major markets are now on the cusp of crucial trend changes as the war cycles ramp higher.
* The steps I am taking to make SURE you grab your share of the profits coming up INCLUDING …
Three key changes I am making to Improve the Gold and Silver Trader’s performance.
Dear Member,
When I said this year is going to be one for the history books, it’s because I knew that the war cycles were rapidly ramping higher, setting the stage for major changes in nearly all markets.
Those changes are now unfolding right before our very eyes.
And they’re not just typical market driven changes; minor changes that mean nothing in the overall scheme of things.
Nor are they limited to the markets.
The events we are about to see unfold affect not only every major market on the planet, but also every economy and every society.
They will change the way we view the world. The way we look at other countries.
The way we look at governments. The way we look at money. The way we invest and trade the markets. The way we live our lives.
If you’re thinking that I’m talking about Ukraine, you’re right. But it goes well beyond that.
As I’ve told you previously, the ramping up of the war cycles this year is the single most important development that you need to know about, and that acceleration is now here, in droves.
Ukraine is merely one more stepping stone higher as the war cycles ramp up. The very serious situation in Ukraine is merely the beginning.
The cycles ramp higher all the way into 2020. Civil wars, domestic violence, geo-political stress and even major international conflict are all now on the table.
You need to know exactly how to protect yourself and your family’s wealth, and even grow it during what will prove to be the most turbulent times since at least World War II.
War Is Coming. It Is Going To Envelope Europe,
The United States, China And Japan.
I don’t say that to scare you. I am not an alarmist, a shrill, a fear mongerer,
a doomsayer, or anything like that.
I am a student of history, of society, of mass human behavior, of markets — and the cycles that drive them all.
I rely on fact, not fiction. I rely on observation, with a keen eye toward history and how certain behaviors and patterns in markets, economies and governments tend to repeat themselves, over and over again and again.
And the fact of the matter is this:
The Death Of All Major Civilizations
Is Etched In History.
Great nations always follow the same progression of events; from a period of great prosperity, to one of delusion, and ultimately suicide.
In every case, the pattern is clear:
* The government spends too much on military, and on promises it makes to its citizens …
* It wakes up and it’s broke; so it borrows all it can from its people, and still more from foreign countries and banks …
* The debts become so horrendous and unwieldy investors finally scream “enough!” and slam their wallets shut. Bond markets start to tumble and rates head higher, no matter what the monetary authorities and central bankers do …
And that’s when panicky political leaders begin to turn on their citizens: They confiscate their wealth … destroy their freedoms … tax them into oblivion in a final effort to avert financial Armageddon …
And At The Same Time, Engage In Diversionary Tactics To
Divert Their Citizens’ Attention Away From Problems At Home.
There’s no better example than the Roman Empire, arguably the most important and influential civilization the world has ever known.
Hollywood loves to wax poetic with epoch stories of the great and mighty Rome disappearing in the blink of an eye.
But reality is a far different bedfellow.
When the Ostrogoth Chieftain Odoacer and his barbarians deposed the last Western Roman Emperor, Romulus Augustulus in AD 476, the Roman Empire had already been in decline.
Odoacer considered Romulus — and his “great” Roman Empire — so paltry a threat, he didn’t even bother to assassinate him.
He merely sent him into exile … and crowned himself King of Italy, and absolute ruler. And few throughout the Empire were the wiser.
It’s a simple fact NONE of the doom-and-gloom hyperinflationist’s understand …
Great Global Civilizations All Destroy Themselves By Suicide.
At its height, the Roman Empire was a beacon of prosperity.
Its complex developments of senatorial government … historical writings … stunning art and architecture … flourishing trade and commerce … and more were a testament to its power and wealth.
Yet by the end of the 3rd century AD, the Roman Empire had been transformed into a military police state that sought to control almost every aspect of its citizens’ lives.
It died largely because of abuse of power by politicians; and rapidly rising taxation that drove many of its citizens into destitution — and onto the public dole — and drove other citizens away from the Empire …
And by a corrupt Treasury and justice system that tracked down and confiscated citizens’ wealth — largely to fund the government’s debts.
As American historian Will Durant — author of the classic, 11-volume Pulitzer prize-winning series, “The Story of Civilization” — put it …
“A great civilization is not conquered from without until it has destroyed itself within.
“The essential causes of Rome’s decline lay in her people, her morals, her class struggle, her failing trade, her bureaucratic despotism, her stifling taxes, her consuming wars.”
Archeological evidence shows a startling decline in Western standards of living during the 5th century. It was a change that affected everyone, from peasants to kings.
And it was no mere transformation — it was a decline on a scale that can reasonably be described as the end of a civilization.
The costs of military and the pomp of Emperors increased, even as the means of meeting them steadily eroded.
In the end, there was simply no money left.
So Rome Turned To Raising Taxes, Confiscating Property And
Moving Its Armies To Confiscate Other Foreign Lands — All In A Search For More Revenue And Natural Resources.
But internally, Rome was so weak the barbarian invasions were easy to pull off and strike the final blow to the Roman state. The culmination of three centuries of fiscal deterioration.
The Byzantine Empire — which was the sequel to Rome — also faced a number of external enemies. Yet, as with the Roman Empire, it was largely internal decay that destroyed it.
Stretched thin from multiple wars, the imperial army struggled in vain to maintain its territories. While the debts incurred through war left the Empire in dire financial straits, forcing a heavy tax burden upon the Byzantine citizens to keep the Empire afloat.
As taxes became ever more of a burden on the peasantry, the lower classes of the Empire began to resent the state.
By the time Constantinople fell to the forces of Sultan Mehmed II under the Turkish Ottoman Empire in 1453, a civil war and ongoing internal battles had already ripped the mighty Byzantine Empire apart from within.
And before you think this is confined to ancient history …
The British Empire, under the rule of Queen Victoria, controlled nearly one-quarter of the world at the turn of the 20th century. And ruled just over one-fifth of the population.
It was the largest Empire in the history of the world, with over 400 million people under its rule.
But its power quickly eroded, beginning with the Boer War in South Africa in 1899, which proved longer and more costly than expected.
A series of wars, on multiple fronts, left it financially exhausted and heavily in debt. It was almost impossible to defend its far-flung colonies, placing an enormous burden on its citizens.
Sound familiar? It should …
This Has Been The Inescapable Fate Of Virtually
Every Major Economy Throughout History …
The Roman Empire, the Byzantine Empire,
the British Empire, and yes …
It’s The Same Path Europe, America, And Russia Are On Now.
I know, you think I’m overreacting. After all, many think Ukraine has almost nothing to do with us.
But it does. In more ways than most consider.
First, Russia is a dying empire. It is bankrupt, rife with corruption, alcoholism, Aids, and no rule of law. And it is led by an authoritarian oligarch who wants nothing more than to divert the population’s attention away from problems at home.
At the same time, Putin is dead set on rebuilding the territories of the former Soviet Union. Not its communism, but its territorial reach.
On several occasions, Putin has stated that he believes the greatest single event of the 20th century was not the collapse of communism, but the loss of the Soviet Union’s territories.
He will not back down on Ukraine. As I pen this issue, Putin has already occupied a natural gas distribution center near the village of Strilkove in the Crimean Peninsula.
Coming next in this new emerging conflict will be Latvia and Estonia. Lithuania and Belarus. Moldavia and Georgia. Perhaps even Poland, East Germany, Czechoslovakia, Romania, Bulgaria, Hungary, Albania and Yugoslavia.
In short, Putin is on a warpath for revenue, from the additional taxes it could reap by winning back former Iron Block territories, and from securing natural resources and supply routes.
Second, Ukraine is a perfect starting point. It’s a former territory with Russian as its most common first language.
It’s also a country weakened by the massive corruption of its President Yanukovych, who is said to have pilfered the country for as much as $38 billion that he has hidden away in foreign bank accounts, and who is now under Russian protection.
Ukraine is also the breadbasket of Eastern Europe, and a major transit route for natural gas flowing from Russia to Europe.
It is also home to vast untapped sources of natural gas in its adjoining Black Sea — estimated at nearly 3 trillion cubic meters — which Russia would annex by taking the Ukraine.
Chevron, Shell and ExxonMobil have already signed deals with Ukraine to explore, develop and produce the natural gas. So don’t kid yourself that Putin isn’t targeting the U.S. by taking Crimea or the entire Ukraine. He is.
And let’s not forget that from 1921 to 1991, Kiev, Ukraine’s largest city and its capital, was the former capital of the Ukraine Soviet Republic, the founding member of the Soviet Union.
Third, Europe is in shambles and in need of new tax revenues, secure natural gas supplies, and a diversionary tactic.
As I’ve said all along, Europe is a dying empire. Jobs are being hemorrhaged. Personal income is falling. Social services are deteriorating. Crime is soaring.
A record high 28% of people in Greece are jobless, and Citigroup is projecting it will hit 32% by 2015. For those under 25, a catastrophic 61.4% are out of work.
In Spain, the jobless rate sits at 26%. For its youth, a staggering 54.3%. It’s so bad, the youth in Europe are being called “the lost generation.”
Many households have no income, as all family members are out of work.
According to the international charity Oxfam, nearly 1-in-10 working households in Europe now live in poverty. And it warns up to 25 million more Europeans are at risk of poverty by 2025.
All this as the European aristocracy preserves their own wealth by looting the economy by raising taxes and slashing wages and social services for the working class.
Ukraine is going to become a tipping point for Europe. Just prior to this crisis, European leaders were considering including Ukraine in the European Union.
The motives were simple: More tax revenues would be had, and just as importantly, Europe would gain a more secure supply of natural gas.
The reason: 30% of Europe’s natural gas comes from Russia, but is transited through Ukraine.
By losing Ukraine to Russia, 30% of Europe’s gas needs become 100% at the mercy of Putin.
Fourth, from Washington’s perspective, America is in desperate need of a diversion. The frightening reality…
* 102 million working age Americans are now unemployed, a 36% increase since the year 2000 …
* The average duration of unemployment has nearly doubled since January 2009, from 19.8 weeks to 37.1 weeks …
* 40% of those lucky enough to have a job earn less than $20,000 a year …
* 46.5 million Americans, 15% of the U.S. population, are now living in poverty, according to the U.S. Census Bureau …
* 48 million Americans are now on food stamps, the highest number since the program began in 1969 …
* Median household income has declined five years in a row …
This is the new reality. And on top of it all is the most indebted government in the history of civilization, a government that is at least $145 trillion in debt.
Would Obama Provoke A War As A Means To Divert America’s Attention
Away From Problems At Home?
Many think not. But I disagree. Look at how quickly Obama was ready to pull the trigger on Syria. Look at how he was internationally embarrassed when Putin outsmarted him in Syria.
Consider how desperate he must be to turn American’s attention away from the economy at home, away from Obamacare issues, away from class warfare (that he started), away from rising taxes and the desperate straits that Washington’s balance sheet is in.
But whether he does or doesn’t defend Ukraine militarily, and come to Europe’s aid in this crisis as well, or go head to head with Putin …
The repercussions are already set in stone. Because …
Fifth, and most importantly, all of the above and the ramping up of the war cycles into 2020 …
Are Going To Change The Markets
Beyond What Any Government Or Central Banks
Alone Or Together Could Do …
Turning Everything You Thought You Knew
About Economics and Markets, Inside Out.
On the Weiss Wealth Cruise last November and in published articles since then, I warned everyone that …
A. Central bank monetary policy would mean little going forward — whether they printed even more money or began to taper, as the U.S. Federal Reserve has started to do,
The reason for that conclusion was simple: It was none other than gold’s failure in September 2011 to respond to QEII and III, and instead was the beginning of a bear market that I said would last three years in duration.
Gold’s failure to respond to further money printing was seminal, and it told me — in no uncertain terms — that something else was going on.
In the months that followed, and as I’ve reported, instead …
B. Disinflation, and outright deflation in Europe, gained the upper hand.
The reasons were simple to identify: Leaders in both Europe and the United States were turning against their citizens, embarking upon austerity measures, raising taxes …
And now, they are going even further, considering wealth taxes and confiscatory measures, such as Europe’s confiscation of depositor funds in Cyprus last March.
I also stated that instead of focusing on what central banks were or weren’t doing, the single most important thing you could stay on top of was none other than geo-politics.
Keeping abreast of geo-politics, I said time and time again, was the new key in helping protect and grow your wealth.
The reason for that conclusion was simple as well: It was none other than the ramping up of the war cycles, which I have been harping on ever since.
Make No Mistake:
The War Cycles And Geo-Politics Are
The Two Most Important Forces You
Need To Monitor Going Forward.
They are going to change everything you thought you knew about the markets.
Namely, war and geopolitics — not inflation — are going to become the driving forces behind several new bull markets in stocks and commodities.
For commodities, that’s almost a no-brainer. Most commodity markets respond bullishly to rising geo-political tensions and war.
They also become subject to hoarding, both by nations and individuals who are looking to get money off the grid.
That’s why, as I have previously reported, the collectibles, art, jewelry and other such markets are now on fire, hitting one record price after another, record sales volumes after another.
And it’s why, as one of my colleagues over here in Asia that works for a collectibles logistics firm recently told me, 80% of Swiss gold exports are now flowing out of the West to the East to geo-politically safer, off-the-grid depositories in Singapore and Hong Kong.
Geo-politics and the desperate dying acts of the European Union are also the reasons why the stock market will go much, much higher in the years ahead …
Just like it did between 1932 and 1937, when Europe last went bankrupt, driving tidal waves of European money into U.S. equities.
And keep in mind my other warnings: That U.S. equities, long-term, will become a safe haven for capital that’s not just coming out of Europe, but coming out of other corners of the world as well.
Not to mention also a safe haven for capital rushing out of the arms of a bankrupt U.S. government and its sovereign bonds.
But here’s the key:
Because The War Cycles Are Ramping
Up Faster Than Even I Expected …
The Markets Are Also Changing More
Rapidly Than I Had Anticipated.
Two simple but major examples will suffice.
First, the U.S. stock market is even stronger than I had expected. That does not mean the market is going to continue to go virtually straight up. To the contrary, a sharp pullback is still needed before the market can go much higher.
Nevertheless, I have underestimated the rapidity at which the war cycles are overpowering nearly all other cycles, and that has caused me to miss out on recommending several very profitable opportunities for you.
And that, I am not happy about.
Second, gold is even stronger than I had expected. No, I am not declaring a bottom in the gold market and a new bull market. I will discuss that in a few minutes.
But with hindsight, I must admit, I am disappointed that I underestimated the potential for gold to rally.
I am further disappointed that I failed to help you catch a part of the move in gold and mining shares — even if the rallies turn out to be bear market bounces.
And that, I am not happy about either.
In a moment, I will tell you about the steps that I have recently taken to help ensure that you are able to take better advantage of the more frequent opportunities that are now becoming available in all major markets …
But first, let’s review the long-term picture for the major markets. For stocks, gold, and commodities in general.
The U.S. Stock Market Is Still On
The Precipice Of A Major Correction
There is no question in my mind or on my long-term models that the Dow Industrials are headed to 31,000+ in the years ahead, not in spite of the weak U.S. economy or rising geo-political conflict …
But because of them! But there is also no question that the Dow’s next phase up will not start without a pullback occurring first.
From every measure I look at, stocks are overbought and ripe for a major selloff (Europe’s equity markets are headed for a far deeper and longer selloff).
Let’s take a closer look now.
Here is a monthly timing chart for the S&P 500.
It actually gave me a sell signal at the end of last October.
Being a monthly timing chart, it can be off target by as much as a few months, as it has been.
Yet, the S&P 500 is only up about 5% since that sell signal was issued. Not all that much. Especially when you consider that there are very few stocks that have pushed the index higher since then, with the majority of stocks either down or sideways since.
Far more important is the slope of the impending decline. As you can see, it is nearly straight down heading into the end of May. In other words, we are on the cusp of a MAJOR pullback, one that may have already started.
Yes, the S&P 500 has wandered to new highs since October, but the Dow Jones Industrials has not, and it actually peaked on the last day of December. This non-confirmation between the two indices is very bearish.
Moreover, as I have said all along, the Dow Industrials will not break out and start its new leg to 31,000+ until it closes decisively above 16,650. The high thus far, intraday, was 16,588.25.
Importantly, the same applies to the Nasdaq and other major U.S. equity indices, here and in Europe.
My recommendation: With the exception of my recommended stocks, on both the short- and intermediate-term time frames, this is not a stock market you should be heavily invested in.
If you are long stocks, tighten up your stops or hedge.
Now, to none other than …
Gold:
It’s Simply Too Soon To Determine
Whether Or Not It’s Bottomed.
There are, no doubt, a lot of reasons to be bullish gold now, including Ukraine and the fact that gold has rallied a smart $200 since its $1,180 low on the last day of December, taking out my system resistance levels at $1,320 and chart resistance at the $1,360 level.
And gold may move even higher, to test major overhead resistance at the $1,449 level.
But as to whether or not gold bottomed back in December, or new lows will be seen in May, as originally expected, it’s simply too soon to say.
I will, however, say this: It is entirely possible that the war cycles are overpowering the short-term cycles and that gold may have already bottomed. If so, then one of two scenarios must soon pan out. Either …
1. Gold continues higher and closes above $1,449 on a weekly basis. Or …
2. Gold soon pulls back but holds new key support levels at $1,300 to $1,320, and then begins to rally anew.
Short of either one of the above developments, it is simply too soon to declare the bottom is in … and it remains entirely possible that gold will fall to new lows before it bottoms.
So how do we trade gold now? How do you avoid missing out on short-term opportunities? Again, I’ll discuss the steps I am taking to address that in a moment.
But right now, let me say that I do not believe — even if gold has indeed already bottomed — that this is the time to load up on any precious metal.
For one thing, the recent rallies are long in the tooth.
For another, volume during the rallies has not been that strong.
For yet another, silver has lagged gold’s rally, creating a non-confirmation.
And still another, if you are banking on Ukraine to send gold higher here and now, you might be right. But bear in mind that gold could just as easily crash if there’s any peace progress made, or get dumped once shooting breaks out.
I know, that sounds strange. But if you look back at gold’s response to the war in Afghanistan, to Persian Gulf Wars I and II — in all three instances, gold plunged once shots were fired.
Yes, the war cycles will drive gold higher over the long-term. But one incident alone, Ukraine, is not enough reason to load up on gold, and probably not enough of a force to drive gold to close above $1,449 on a weekly basis.
Moreover …
Disinflation Still Has The Upper Hand
In the Commodity Sector.
This past month we saw both the price of copper and oil plunge, quite dramatically. Copper plunged from a high of $3.23 on March 6, to as low as $2.90 as I pen this issue, a whopping 10.2% decline in 10 days.
Oil, despite the crisis in Ukraine, plunged from a high of $105.22 on March 3 to as low as 97.55, a 7.2 slide in 13 days.
Other commodities have experienced rallies, such as the grain markets. But overall, disinflation still has the upper hand in the commodity sector.
You can see it in this chart of the DJ UBS Commodity Index.
The recent rally in commodities has been weak at best and is already starting to rollback to the downside.
Moreover, there are no signs of a sharp bottom in place yet, and the commodity sector, in general, is now as overbought as it was back in April/May 2011, which preceded a whopping 27% decline in the index.
Disinflation still has the upper hand in the commodity sector for several reasons. The most important of which is …
A) Global economic growth is meager, at best …
B) China is slowing further …
C) Leaders in Europe and the United States continue to engage in financial repression which includes raising taxes and preparing for confiscatory measures.
All of that means that big, savvy money is reducing risk, getting out of the markets, and largely going to cash and getting off the grid, rather than participating actively in the markets.
It’s also why, overall, volume and liquidity levels in nearly all markets continue to contract, globally.
My view: Commodities have not bottomed yet, and another leg down is coming. It should be the final leg down and commodities in general, will bottom later this year.
Nevertheless, I want you to be fully aware of …
The Three Very Important Steps I am
Taking To Improve The Gold and Silver Trader’s Performance.
I have not been happy about this service’s performance.
In addition, with the war cycles ramping up more quickly — and altering the markets — faster than even I had previously anticipated …
New opportunities should be coming fast and furious.
You, my subscriber, come first. So I am making the following changes:
FIRST, I have hired a programmer to help me refine and update my cyclical timing and trading models. That’s essential.
With so many major economic cycles coming together at the same time — not just the war cycles …
But also the Kondratiev Wave, the Juglar, Kitchin and Kuznet’s economic cycles …
It is critical that I update and refine my trading models. For every market, and for futures, stocks, ETFs and more.
SECOND, I will be adding a new level of analysis to the markets: Elliott Wave analysis. NOT orthodox Elliott Wave analysis, which has some flaws to it.
But instead, Elliott Wave analysis based on “hidden waves” — a concept that very few analysts and traders are aware of, and even less are competent at.
Analysis of hidden Elliott Waves is a very valuable methodology to help analyze markets and identify trading opportunities.
Be they intermediate- or long-term, bearish or bullish, trend-following or contrarian.
I am very excited about these changes, and in the future, you can also expect — not only more trading opportunities and better returns — but more educational material from me as well.
THIRD, I have hired an editorial assistant to help with research and editorial, to bring you more content. More in-depth reports. More special reports.
Bottom line: I am making these changes because you come first. Period.
There are many exciting opportunities coming up, and I am making the changes needed to ensure that I turn the service’s track record around, into positive territory, and make loads of money for you going forward.
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Now, to review the current portfolio, we have four open positions …
1. Long the PowerShares DB Gold Double Short ETN (DZZ). It makes no sense to get out of this position at this time, as there is a very real chance gold will soon pullback. Hold and maintain a protective sell stop at $5.52 good till cancelled.
2. Long the PowerShares DB US Dollar Index Bullish Fund (UUP). The dollar has been groping for a bottom for some time now, and according to my work, we should soon see the dollar start to rally. Tensions in Ukraine are a perfect fundamental backdrop for a stronger dollar. Any increased tensions there should drive European investors to cash, which should boost the dollar more so than the euro.
Hold and maintain a protective sell stop at $18.80, good till cancelled.
3. Long the ProShares UltraShort Crude Oil ETF (SCO). Oil took a nasty dive last week, even while the majority of analysts expected a rally due to the Ukraine crisis. Last week’s decline is a bearish sign for oil prices.
Hold and maintain a protective sell stop at $25.47, good till cancelled.
4. Long the SPDR Gold Shares April 2014 put option with a strike price of 127. This position has not fared well. But there is still the chance for a major pullback in gold, so let’s try to maximize the remaining value. Hold and wait for my next signals for this option before taking any action.
Now, to upcoming opportunities. As I noted above, I am making several changes to improve the service’s performance. They are already effective and underway.
And as noted previously, I am expanding the range of markets and instruments the service will be trading in.
Right now, on the radar screens are potential trades in the agricultural commodities, a new trade in natural gas, and possible major tops forming in the euro and the pound.
New trades can come at any time of the day. So stay tuned. It’s a new era for this service and I am dead set on improving the performance and making you a boatload of money. It will take time, but with the changes I am making, I am sure we will meet our goals and objectives.
Best wishes,
Larry
Position Tracker
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