Podcast
by
charleshughsmith
Executive Summary
- Why the next stock market decline could be in excess of 50%
- What historic indicators of coming decline are telling us
- The case for holding cash now
- If the market does roll over substantially in early 2014, how long may the decline last?
If you have not yet read The Case for a Crash, available free to all readers, please click here to read it first.
In Part I, we attempted to answer the question, Which forecast is more likely to be accurate: that the Bull market in stocks will continue for years to come, or the market will swan-dive in yet another multi-year crash?
We concluded that there was little historical evidence to support the claim that the S&P 500 will extend higher for an additional three to five years.
Here in Part II, we’ll look for clues about the possible amplitude and timing of the decline that the five-year cycle of the “new normal” suggests is likely.
(A reminder on gold: I detailed a forecast on gold earlier this year based on price action around key support/resistance levels, and nothing in recent price action has caused me to amend that forecast. I have also noted that gold does not correlate well with either stocks or the U.S. dollar; i.e., its dynamics are largely independent of stocks and the USD. To the degree that gold is viewed as a “risk-off” safe-haven asset, it should do well if “risk-on” assets such as stocks crater.)
Forecasting the Amplitude of the Next Decline
A number of technical analysts have noted this megaphone pattern in the stock market, a pattern formed by alternating higher highs and lower lows. This is one basis of forecasts for the SPX to drop to the 500-600 level in the next downdraft, potentially retracing the entire Bull advance from 1995.
While this megaphone may not play out, it establishes a potential target for a crushing drop from current highs…
The Case for Cash
PREVIEW by charleshughsmithExecutive Summary
- Why the next stock market decline could be in excess of 50%
- What historic indicators of coming decline are telling us
- The case for holding cash now
- If the market does roll over substantially in early 2014, how long may the decline last?
If you have not yet read The Case for a Crash, available free to all readers, please click here to read it first.
In Part I, we attempted to answer the question, Which forecast is more likely to be accurate: that the Bull market in stocks will continue for years to come, or the market will swan-dive in yet another multi-year crash?
We concluded that there was little historical evidence to support the claim that the S&P 500 will extend higher for an additional three to five years.
Here in Part II, we’ll look for clues about the possible amplitude and timing of the decline that the five-year cycle of the “new normal” suggests is likely.
(A reminder on gold: I detailed a forecast on gold earlier this year based on price action around key support/resistance levels, and nothing in recent price action has caused me to amend that forecast. I have also noted that gold does not correlate well with either stocks or the U.S. dollar; i.e., its dynamics are largely independent of stocks and the USD. To the degree that gold is viewed as a “risk-off” safe-haven asset, it should do well if “risk-on” assets such as stocks crater.)
Forecasting the Amplitude of the Next Decline
A number of technical analysts have noted this megaphone pattern in the stock market, a pattern formed by alternating higher highs and lower lows. This is one basis of forecasts for the SPX to drop to the 500-600 level in the next downdraft, potentially retracing the entire Bull advance from 1995.
While this megaphone may not play out, it establishes a potential target for a crushing drop from current highs…
by
Alasdair Macleod
Executive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
The Very Real Danger of a Failure in the Gold Market
PREVIEW by Alasdair MacleodExecutive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
by
JW
Total 6361 items
