Sunday, 3 May 2015

Martin Armstrong on the end of cash - negative interest rates - bond bubbles and Gold

Armstrong's recent focus on controls of cash holdings, negative interest rates and debt/bond bubbles coming into the September 2015 period. Some would see a role for gold, Armstrong suggests not yet.....more.....

We appear to be entering into territory, unseen for hundreds of years. This is not a Great Depression scenario; this is a lot more difficult to deal with. Equities have remained steady due to capital inflows. Domestic retail investment remains at record lows. The future will be the decoupling of stock prices from earnings because we are dealing with capital preservation. Those who constantly harp on the overpriced stock market would imply, “Buy bonds!” That is the opposite side, but rates are nothing to negativity. Of course, you will have those who will yell, “Buy gold!”, but that is still a tiny fraction of the world economy. Even equities are grossly underweight within the world economy compared to debt. That is where the BUBBLE really lies, and that is where we focus our attention. The traditional calls to sell stock are the same old reasoning that has existed in a Public Wave. This is what happens when confidence collapses in government. It is a complete new game.

What may set the stage for the bond bubble requires a flight to quality. In other words, we may see a scare in the share market that sends cash running into the bond market to create the top. We do not see a break in the market that is long-term in nature, just a break that gets the majority anticipating a change in trend.
On gold : To make it clear, nothing has changed. A bull market is something that rises in terms of all currencies. The paper dollar and gold are ending up on the same side of the fence with this war on cash that is brewing. J.P. Morgan is looking to charge money to people who have cash on deposit beyond what they deem to be necessary as of May 1st. Oddly enough, hoarding paper money is a hedge against the banks. This is why many are now advocating abolishing paper currency and moving towards electronic. The key to a future bull market in gold is not “fiat” nor is it “inflation”. Those theories are really meaningless. The key to a reversal of fortune occurs when the M A J O R I T Y lose confidence in government. The end game is that gold is likely to break the $1,000 level on the benchmarks. This is more likely to be the final phase transition of capital rushing into the bond markets and out of the commodity/stocks. When capital moves to the extreme, then we can see the reversal....................The traditional mumbo jumbo is dollar up, gold down. However, we may be entering a completely new phase. Gold and the dollar may no longer be archenemies. They are actually now moving to the same side of the fence, for the common enemy is the rapidly approaching electronic money, with so many analysts at banks now calling to abolishing paper money. What is interesting is that paper money places a check and balance against central banks from moving deep into negative interest rates. At some point, more and more people will just withdraw their cash and hoard it, which has already begun. Right now, gold enthusiasts are closely watching the statement expected for this week from the Federal Reserve policy makers on Wednesday. They are clinging to anything, looking for any clues that the Fed is becoming less likely to raise interest rates. They fear that raising interest rates will support the dollar, but there is really a lot more going on behind the curtain.

No comments:

Post a Comment