– Fall 2015 turning point – civil unrest and riots globally says forecaster Armstrong
– Fed have to raise rates – due to pressure from congress and media
– By 2020 the cost of servicing U.S. debt will outpace defence spending
– European banks will collapse and “blood in the streets”
– Higher rates will also devastate emerging markets who have issued dollar-based debt
– Gold to “max out at $5000 per ounce”
– Advocates diversification and holding bullion coins familiar to public such as $20 gold coins
– “Your portfolio has got to include everything … including bullion”
Renowned financial analysts and trends forecaster Martin Armstrong has said that gold will “probably max out at $5,000 per ounce” as “people lose confidence in government” and that we will see riots and unrest globally in the coming months – the fall of this year.
It a very interesting interview with Greg Hunter of the excellent USAWatchdog.com, Armstrong says :
“Gold rises when people lose confidence in government. It has nothing to do with inflation. So, when you start to worry about government is not going to survive or who’s going to win, that’s when gold rises. Short term, we still have the risk of it going under $1,000 per ounce. It’s going to flip when everything is right. It will probably max out at $5,000 per ounce. . . . You are really talking about a major reset coming. 300 years ago, that was the revolutions against monarchy. Today, it’s going to be revolution against . . . pretend democracy. We do not have a democracy.”
We would slightly disagree with this as research and the historical record shows that gold is a hedge against inflation – particularly virulent inflation as was seen globally in the stagflation of 1970s and the litany of hyperinflations seen in the last 100 hundred years.
Martin Armstrong was accused of running a $3 billion Ponzi scheme and served 11 years in jail under house arrest, including a possible record seven years for contempt of court in a dispute over gold and antiquities. He is a former financial adviser who was Chairman of an investment firm called Princeton Economics International and he is best known for his economic predictions based on the Economic Confidence Model, which he developed.
Armstrong says you can forget about the U.S. dollar crashing in value. Armstrong contends, “No, that’s absurd. The euro is in terrible shape. The yen is in terrible shape, and honestly, you can’t park money in yuan or Russian rubles yet. I mean, let’s be realistic here, but eventually– yes.”
He contends that the Fed will be forced to raise interest rates in the coming months which will have serious implications world wide.
Armstrong predictions are based on the theory that everything in the world happens in cycles. We are currently near the end of a major 300-year cycle. The end of the last cycle saw revolution against monarchies. This cycle will end in revolution against corrupt democracies. Indeed, he reckons that government corruption worldwide is now at an extreme.
He warns that “governments are run by lawyers” more concerned with reelection rather than “financial experts” … “thats our biggest problem …”
He suggests that capital inflows to the U.S., particularly from China, will continue to push up the stock markets and real estate in the U.S. This will cause congress and the media to blame the Fed for the bubbles with the consequence that the Fed will raise rates.
He warns of the bubbles in the bond markets:
“… this one looks like it’s going to be in the bond markets….it’s the peak, really, in government and you have interest rates going negative and you can’t have much lower than that. So this appears to be the peak in so far as government is concerned and bond markets are going to be turning down.
I mean, we’re in a lot of trouble with most of these governments. Our models are really showing that by 2020 the amount of interest we pay to roll the debt constantly will exceed the entire defense budget.
In the longer term this is clearly untenable and has obvious ramifications including much higher interest rates in the U.S. and a much weaker dollar.”
He refers to the culmination of previous cycles such as Russia in 1998, the dotcom bubble and the real estate bubble and postulates that this 8.6 year cycle will result in the collapse of the bond markets.
Raising rates will have a particularly devastating impact on emerging markets who have issued dollar based debt with the result that they will end up “like Greece” unable to pay the interest on their debt.
He sees little hope for European banks. The euro which assumes all participating countries are the same is untenable. He says that in Europe, people buying German assets and debt in the expectation of a collapse in the currency and in the hope of redeeming such assets in newly issued Deutsche Marks.
He says that gold may hit $5,000 in the U.S. but has the caveat that $5,000 would not have the spending power that it has today and says a week’s wages may be $5,000/oz.
We believe that this is unlikely. Workers being paid $5,000 a week would mean the U.S. is experiencing hyperinflation. This would likely result in gold rising parabolically to levels over $10,000 per ounce.
He advocates a well-diversified portfolio including precious metals. He adds that that people should include coins that are familiar to the wider public.
Greg Hunters asks Armstrong whether he would be a “holder or buyer of gold at some point?”
To which he replies that “your portfolio has got to include everything … including bullion” and says it should be bullion “familiar to the general public.”
“You have to realise that if you walked into a Starbucks, and you have a silver quarter you know what it is .. is the kid at the counter going to know what it is … he is going to say it is a quarter.”
Presumably alluding to fact that popular “recognisable” gold coins will remain in demand, may be used for payments, trade and barter and will remain liquid in an economic crash.
He warns against gold and silver bars due to the potential risk of counterfeiting and potential trust issues with some bars. He thinks “staying with recognisable gold coins is better” and gives the example of the “$20 gold pieces and things of that nature.”
Armstrong warns that gold could fall to $1,000 per ounce in the very short term, coming months, prior to surging to $5,000 per ounce.
Hunter is a good interviewer and asks the right questions and the interview is a worth a watch.
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Today’s AM LBMA Gold Price was USD 1,189.85, EUR 1,123.56 and GBP 808.58 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,191.45, EUR 1,127.95 and GBP 814.33 per ounce.
Gold fell 0.6 percent or $7.20 and closed at $1,192.50 an ounce on yesterday, while silver slipped 0.61 percent or $0.10 closing at $16.20 an ounce.
The March U.S. retail sales figure missed market estimates yesterday, but a strong U.S. dollar seems be keeping gold at bay for the moment.
Gold in Singapore remained steady at $1,193.42 an ounce near the end of day trading after hitting $1,183.68 an ounce on Tuesday, its lowest price in two weeks. Comex U.S. gold for June delivery was unchanged at $1,193.50
Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose by 1.8 tonnes yesterday, data from the fund showed, only its third daily inflow since mid-February.
China’s economy had its slowest growth in six years growing only 7 percent in the first quarter, which some analysts say may stifle their demand for bullion. However, it could lead to increased safe haven demand particularly if there are falls in Chinese stock and property market.
Premiums on the Shanghai Gold Exchange picked up to $3-$4 an ounce over spot price from a lower range earlier in the week.
As usual Fed committee members are making it difficult to get a clear reading on if and when the Fed may raise interest rates. Minneapolis Fed President, Narayana Kocherlakota, said raising rates this year, as most Federal Reserve officials expect, would be “inappropriate” because it would delay the return of too-low inflation and the Fed’s 2 percent goal.
The Greek debt sage continues as government representatives and the nation’s creditors continue talks in Athens. Gold should be supported by uncertainty regarding a potential Greek default.
In Europe in late morning trading, gold is trading in euros at €1,124.140 per ounce or up 0.24%. Silver is trading in euros at €15.25 or up 0.39% and platinum is at €1,075.88 or up 0.27%.
In U.S. dollars in Europe in late morning trading, gold is at $1,191.91 or off -0.17%. Silver in U.S. dollars is at $16.17 or off -0.02% and platinum is at $1,151.90 or down -0.06%.
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