More words from Martin Armstrong. Gold the Real Breakout "QUESTION: Martin Did you imply that a gold bull market really only begins when gold exceeds its 1980 high adjusted for inflation? That would imply that eventually gold outperforms inflation which I do not think it does. Adjusting for currencies and inflation gold would need to about double from here to reach that level. If it ever reached that level wouldn't that be a sell zone rather than expecting a breakout? ANSWER: Gold indeed is not linear so it will not track inflation because it is a commodity. This results in bursts of price movement that amounts to catch-ups that get everyone excited assuming it will last forever and it never does as is the case with any commodity. We ran these charts to demonstrate that gold was in a bear market and that it was really declining in a basket of currencies in the 1980s and early 1990s. Source: What we do see is that gold will eventually exceed the 1980 high in real terms but probably on the third try and not the second. This is just a trading pattern as was the case with the Dow Jones trying to get through the 1,000 level where it was the 4th time that became the charm (1966, 1968, 1973, 1983) . So yes, gold will be a selling opportunity on the next rally that will exceed the 2011 high nominally and test the 1980 high in real terms. Then there will be another correction, and most likely the third rally will be the breakout. Gold is important to watch because it will signal the real break in public confidence since the Goldbugs will be discredited and the majority will see them as always wrong and will fight the gold rally. That is the REAL fuel necessary to see it rise dramatically. It has absolutely nothing to do with fiat, hyperinflation, Fed balance sheet, or missing gold from Fort Knox."
http://armstrongeconomics.com/2013/11/06/gold-the-real-breakout/ The only person we need to listen to.
I've read this bit three times now and still don't understand exactly what he means. Can anyone clarify?
He's referring to another pullback before another rally in relation to ECM. You have to read his previous article on the blog which the above relates to. http://armstrongeconomics.com/2013/11/06/coming-ecm-book-64-year-gold-cycle/
Thanks, but I still don't understand what he's saying in the quote I highlighted. He seems to completely divorce cause and effect, and is suggesting that gold will go up because gold will go up...for no other reason. That doesn't seem reasonable to me.
From what I gathered he's suggesting in relation to ECM that there is a 64 year cycle which started when gold rallied in about 2000 with a rally and correction every 4 years or so. There'll be a rally from about 2016 to 2020 then a correction until about 2024 then rally at 2028 to 2032 (the halfway point in the 64 year cycle, third rally from now and breakout). What I think he's referring to in the above quote is the time when he expects gold to correct from 2020 to 2024 and the gold bugs will be ducking for cover when there's no hyperinflation or anything else which would suggest a huge breakout gold rally. Then again I could be way off the mark
That's pretty much what I gathered too. Which makes no sense to me at all. He appears to be saying that what actually happens in the world makes no difference and has no bearing on anything. the only thing that matters is the chart. I know he's a respected economist but I don't buy this at all. I'd probably be less sceptical if he showed a 300 year chart that backed up his claims, but this just looks like fitting a limited data sample to match theory. Maybe someone else can expand on this.
Yeah. I suspect Dr Armstrong has read the first few chapters of "Technical Analysis for Dummies" and then run off and written his latest blog post which was probably overdue. In this, he has essentially said 'Gold follows a repetitive cycle that ignores political, social, monetary & financial trends. Why? Because it just does. and that graph was spurious at best... Try harder Dr Armstrong
I have tried to get into Dr Armstrong's blog, because he seems so widely followed. And try as I might, I just can't see how it isn't all just TA bullshit.
"He appears to be saying that what actually happens in the world makes no difference" You make up your own mind regarding the following: 1-Goldbugs and vested interest have been stating that Hyperinflation is around the corner and therefore the price would skyrocket. They have been saying this for how long now.....almost three years. No hyperinflation. 2-Fed balance sheet is increasing all the time and Janet Yellan has gone on the record to say this will not change any time soon and she will most likely increase bond purchases. This should increase the price although it has not. 3-Fiat money is being debased all the time due to mutlipy Fed bank printing programs around the world. Should increase the price although it has not. 4-Rumour of empty Fort Knox does nothing to increase price. To understand his work and it is based on cycles of business and is quite a read and therefore worth your time, see his website for his theories regardring the ECM. In his final analysis Armstrong is saying the Gold price will fall around January 2014 then rally to either hit the 2011 high and maybe approach the 1980 high then fall again massively 2015.75 or so. This will be the second rally and end with the price hitting or besting the June 2013 low($960-1060US). The third rally will commence after 2016 were we will experience the ultimate breakout to the upside were unheard of prices will be the norm. This will be due to total loss of confidence in Government worldwide. The reasons above do not matter in the end, he has charts on his site to prove this. Hope this helps somewhat although please see his site for his work on deflation and Governments destroying the world economy. You cannot live inside a vacuum of Fed balance sheets only. One final note regarding his writing style, he seems to be a bit cryptic at times.
The gold price goes where central banks want it to go. Central banks management knows that people try to use it in the monetary storage of value role, so they dumped away the inflation price adjustment for over two decades, inflicting them less dollars.. And then, when they saw more people willing to buy, they bought too, inflicting them less gold. Maybe in the fantasy future world they instead gonna reward those people that try to evade their inflation theft, by not selling low the gold they previously purchased high anymore. Maybe those people can buy the central banks managements some boxes chocolate cookies as a Beg to not do so.
Ok...what it means is that all the reasons that have been touted by the gold permabulls..ie.fed balance sheet, printing money,hyperinflation,no gold in fort knox, all fiat currencies with no backing....should have sent gold price soaring....but it hasn't. All this talk of hyperinflation.....and we have deflation........the reason being that asset deflation is occuring at a greater rate than the causes of inflation..ie money printing. The public confidence is the confidence in government.....that is the critical point....at the moment, people still believe that the government can save them...but it is when the common man in the street that has no knowledge or care about the fed balance sheet etc....when he starts to realise from what he knows and sees that the government are not telling the truth...that is the time that gold will start to shine. Contrary to what others have said on this post, Armstrong is also the penultimate economist..not just a cycles man...he is one of the few from the very outset that claimed that the euro is a doomed currency.....in a very short time we will find out about his claim, in opposition to most others, that the u.s. dollar is far from being toast and will see it drive to new highs before its final plummet..so much I have read of his has proven to be accurate... It is all about capital flows and confidence.....capital will flow to the least risky....not to be confused with "safe"... asset. Very few people understand capital flow like Armstrong. Too many people are convinced by the permabulls and in turn it will leave them clueless. If you do not allow yourself to consider properly a contrarian view then you will be the ultimate loser.
Just for the record Tolly....Armstrong has also stated that a new world currency will be digital not pm based......So why is he even bothering with all the metal predictions? And why the hell is everyone spending so much time and money and effort investing in worthless metals that are old school and not new age? I'm not even sure I will buy any more metals at all after all the Bitcoin and new Digital currency chat lately?
In the end capital has to go somewhere and Gold it will be. China will gain new reserve status because of it's Gold backing not inspite of it. China will gladly buy all your Gold and provide you the digital amount. No problem there for Gold holders.
O.k that's fair enough.....I'm just a little confused as to where I should be putting my money in the future that's all.
The fact is that gold is a market, like any other. It has always been seen as valuable to different degrees and it is this perception that drives the market. No different to art and collectibles.....reaching all time highs....they are a market. People will invest in what they deem to be good value. In coming years, the realisation that governments can not fix everything will mean people will invest in tangible things....gold, copper, wheat, real estate...whatever can be held. There is no 'true' value for any of these things...they are worth what someone else is willing to pay. As for Bitcoins....you invest into what you understand...not what others are doing. Armstrong considers most market cycles, including gold, but does not prescribe any of them. That is up to you to make your own decision. You sound like you got burnt buying p.m.'s....I would think that this will be a common thing before the end of the mid bull retracement in gold price...if you can hold on a bit longer you will get your money back plus more...a couple of years possibly
