I told you this was coming. The world’s leading central bankers and institutions are all dead set on …
A. Doing everything humanly possible to stimulate economic growth.
B. Doing everything humanly possible to eliminate cash from the monetary system and eventually push the system to a 100 percent cashless world.
C. Controlling you, taxing and tracking you and your money like never before.
That’s why yesterday, at an undisclosed meeting, the IMF officially endorsed the use of negative interest rate policies as a viable tool to manage economies.
I ask you, when will all these big ego Ph.D. economists get off their rockers, come down to the real world, and see what really drives the global economy?
When will they talk to your typical business person about inventory turnover … swings in sales figures … the cyclic nature of pricing and purchasing power?
When will they realize that the more they mess with the laws of economic nature – the more damage they cause?!
There is nothing in this world that does not have a plan to it. History itself has a destiny or fate to it. Everything that ever was had a fate to it and everything that exists today has its own destiny as well.
No, I am not saying you cannot massage the system a bit. You can. Fiscal and monetary policy can be useful to help smooth out some bumps in the road that an economy may experience.
But thinking that you can control an entire economy … eliminate the business cycle and other, longer-term macro-economic cycles … is utterly insane.
Moreover, experiments to do so have led to more loss of human life than all world wars combined.
Think Karl Marx and Frederick Engels, who advocated a 100 percent communist state where you owned nothing and the state provided everything for you in return for your labor.
What happened there? Communism became responsible for the deaths of over 122 million souls between 1900 and 2000, souls that perished in China, the Soviet Union, North Korea, Afghanistan, and Eastern Europe.
That’s 34 million more than people lost to homicide (58 million) and genocide (30 million) during the same century, combined.
And interestingly, it’s only a tad less (3 million to be precise) to those lives lost to natural disasters (24 million) and famine (101 million) – most of which occurred in guess where? The communist countries of China, the Soviet Union and North Korea.
Communism is a killer. And yet, here we go again. One of the most powerful financial institutions in the world – the IMF – just endorsed central planning of interest rates and officially blessed negative interest rates as a policy tool every central bank should use to get everyone in line.
I don’t know about you, but I don’t like the way the world is headed. I worry for my children and their children.
The founding fathers of our country must literally be rolling over in their graves.
In The End, Free Markets Always Win Out.
That’s why you have bubbles that blow ever higher, then burst. It’s why you have good times and bad times. It’s why you have a profit motive, can run your business and expect to put a roof over your head and food on the table.
There has never been a successful economy based on the notion that you can somehow control cycles, flatten the business cycle, eliminate booms and busts, stabilize full employment forever, stabilize prices and even the values of different currencies.
In the end, all such attempts fail. Free markets always win out.
Take the current time period, for instance. Most analysts, pundits, investors and traders think the bigwig central bankers, policymakers, and financial institutions like the IMF have everything under control.
After all, global stock markets are holding up nicely. Bond markets have not collapsed. Currency markets are relatively stable. And there are neither signs of inflation, nor worsening deflation.
Pretty much an ideal scenario, no? On the surface, yes. But hidden below the surface are powerful cyclical forces that are threatening to peel away the top layers to expose the rotting flesh below.
Take gold, for instance. Almost everyone is convinced gold is now in a new long-term bull market. And it indeed may be. But before that bull market takes off for good, you’re far more likely to see a sharp decline, back to below $1,200.
That way, another deflation scare will be pumped right back into the system, prompting central bankers to hold off, or even cut rates again. That, in turn, will set off a new round of currency market volatility, causing panic and stress amongst equity traders.
Here is my latest AI chart of gold. You can clearly see that prices are forecast to head lower into May 31 in quite a steep fall.
The trend remains negative, with the next move likely to bring gold down to support at $1,202, then bust through that to the most important support level at the $1,180 to $1,160 level.
Let’s also consider crude oil, where all the pundits, just week ago, were predicting $10 or even $5 a barrel oil. How wrong were they?
Instead, my AI model – which is based on free market principles that prices always follow their own destiny – showed the opposite. Over a year ago it forecast that oil would drop to $26 and bottom. That’s precisely what oil did. Then it forecast that oil would rally to the $40 to $42 level and then pullback to $36. And again, that’s exactly what oil did.
Oil’s outlook has not changed. Here is the latest AI model for crude oil. It’s in a choppy and sloppy trading range, but one that should eventually see oil test the $50 level by May – regardless of what any institution or authority says or does, including OPEC.
Now consider the U.S. dollar. Nothing has changed there. Over the past week, the dollar has traded in yet another tight trading range. Short-term support can still be found at 93.197 on the Dollar Index, followed by 91.257.
Resistance will be found at 96.955 and then the former highs just above the 101 level.
Do you think central bankers or the IMF or the World Bank or any other institution can change the dollar’s path that you see in the chart here?
No, they can’t. How can they possibly change the desires and will of hundreds of millions of people and investors looking to protect their wealth from inept leadership run amok all over the globe …
From the forces of deflation and those macro-economic cycles … from fears of weaker, anemic economies all over the globe … not to mention the accelerated rise in geo-political tensions and crises …
From broken political systems like our own to the outright evil of ISIS.
No one can change the dollar’s destiny. It is what it is based on, all those forces and more, and it is vividly laid out for you in the chart above!
And the euro, a rat’s nest of problems? Etched in stone. The opposite of the dollar.
As you can see from my latest AI neural net model of the euro’s trading cycles, the doomed currency is about to roll over and plunge into free fall mode.
The decline should begin any moment and I will seek to add positions to take advantage of it.
And finally, consider the major U.S. averages, the Dow Industrials, S&P 500, Nasdaq. Even here, no one individual, no assortment of central banks or institutions, can change the outcome. Everything in stocks is a foregone conclusion, dictated by not just the many trading and investment cycles of stocks themselves …
But also by the interplay between those cycles and the larger, macro-economic cycles such as the K-wave, the Juglar cycle, the Kitchin cycle and of course, the war cycles, a set of geo-political cycles that has an uncanny ability to pick major turning points in domestic and international unrest and even in uprisings or rebellions. (Sound familiar, as in Donald Trump?).
Here’s the latest AI neural net model using the S&P 500. As you can clearly see, it is now projecting a rather choppy but steady decline all the way into early October of this year.
Oh, you might say, that’s the result of the political mess this country is in.
And to that I would respond, you’re absolutely right.
But the program behind the model knows nothing of Donald Trump, Ted Cruz, Hillary Clinton, Bernie Sanders, or John Kasich.
It knows nothing about the convention in July or how the nominee process works.
So how then can it possibly end up painting such a forecast, one that seems to be tightly correlated to the fall elections?
The answer is simple: The model takes all cycles into account and cross-relates them before issuing a forecast. Proof positive that in the end, the free markets always win out.
Hold all positions and stay tuned. Do note, however, that you should have been stopped out of your DUST shares on Friday. That stinks, but have no fear: Mining shares are headed into a tailspin pullback and soon. I will look to have you repurchase DUST soon, but wait for my signals.
I also expect to issue new recommendations this week, some of them very aggressive.
So stay tuned, and best wishes, as always …
Larry
