muses of the moment

December 1, 2009

Martin Armstrong’s “last” letter

Filed under: Martin Armstrong — Tags: — totallygroovygirlfriday @ 4:40 pm

Click here  for Martin Armstrong’s “last letter”. No wait, we did it!!! They are not moving him, he will write more.

This was supposed to be Martin Armstrong’s last letter. Of course, we now have the wonderful news that it will not be! The letter entitled The Sum of All Fears: A Great Depression (11 pages), dated November 26, 2009, is a very good one to read.

Some notes:

Martin uses history to explain what a depression really looks like. I especially like his take on seeing the influence of cycles rather than a direct cause and effect. It is very enlightening.

Some main points, we have moved from a time of immovable assets as a hold of wealth to a time of movable assets as a store of wealth. In other words, look for gold, silver, rare stamps and coins, and fine art to go up in value as many more people start buying these items. They will replace real estate as a store of wealth. Martin’s letter goes into much more detail about why these things will occur and how that will completely restructure the economic and financial systems currently in place.

Martin has mentioned the real estate cycle in his last 3 papers….PAY ATTENTION TO THIS. For a refresher the chart is on page 7. No one, anywhere is mentioning this very important shift. If you have the majority of your net worth in your home, you must understand that this is not sustainable. Most Americans look at their home as always rising in value. Even now that it has lost value, they think it will recover again. It will not. There will be a little gain in 2015, but it will never get to the 2007 level of value again. By 2030, your house will be worth what it was in 1950. Keep in mind that because of hyperinflation, the dollar amount may go up, but that dollar will have lost purchasing power.

The most important line in this letter:

They (the banks) did not create the bull market. They only accelerated a pre-existing trend.

Not only is this true for the real estate boom, it will be true for future booms and busts. The pre-existing trend is there. Make sure you know what it is.

Trading the Gold Market

groovygirl is a long-term investor, but there are things that everyone needs to know about the gold day trading and short-term market moves, even if you are buying and holding long-term.

So, I will mention some of them now.

We are in a new segment of the gold bull market and the computer logarithms that control the day trading movements have changed their input. As a result, they are effecting the gold market in the short-term (both up and down).

This will not effect the long-term movement, but expect volatility up and down in the future. We are in wave 3 up, and it is traditionally the most volatile and the best time to make the largest profit on the way up. Traders know this.

Do not let volatility derail your long-term investment plans. Right now wave 3 will trade between $700 and $3500. So, don’t panic unless it goes lower than $700 and don’t call a high until it hits $3500. We will have a correction in wave 4, but in groovygirl’s opinion that is just a time to buy more, not sell. The length of this wave 3 is something I am not sure of. It could crest a year from now or 3 years from now. It depends on the loss of confidence in the USdollar. Martin Armstrong is the master timer, so I am looking to him for clues. The Fed could keep this charade going for another 2 years, we just don’t know when the average investors’ confidence will break and panic sets in en masse. Note: the gold prices I mentioned are based on Elliott Wave theory for the long term at this time and could change in the future, by that I mean go higher in wave 3. We will have to see how things play out. These are the prices I am using for my current investment plans.

Here is an article from zerohedge (.) com explaining the new day trading side of gold. Click here.

Other new issues effecting the gold market:

There is not enough physical gold to meet the paper gold markets outstanding amounts. At some point the physical gold price will break from the paper gold price. At that point you will not be able to buy physical gold, so do it now. I don’t know if this break will happen in wave 3 or wave 5, but it will happen.

Countries are buying new gold and bringing their gold bars into vaults in their home country. This is a signal to the market that gold is valued by governments and they expect a global currency crisis at some point in the future. Note: there are rumors, but no official announcement, that China plans to double its gold holdings within 3-5 years. Every emerging country will do the same. This is very bullish for physical gold. Even Iran doubled its gold holdings this year.

Silver will go through the same process as gold, but not necessarily in tandem.

Gold hit $1,200 on some charts over night. Some say Gold is over bought, it is. So is the DOW. There is a flood of liquidity circling the global looking for investments. What “should” happen is now subjective on the up side and the down side. Physical Gold is your protection in the coming currency collapse, not an investment for a return or trading.

Side musing: Click here for a very interesting article from zerohedge (.) com entitled, Is the FED Facing Margin Calls from European Banks? The attachment with the article contains evidence that the AIG bailout (with your future tax dollars) was to save European Banks and their credit derivative chain around the world and connection with Dubai default. We are all connected now. There is a case that AIG will have to be bailed out again…..or not. If not, quick implosion of global debt. If so, slow implosion of debt. There is NO fix to this global situation, the end result of debt implosion will be the same. It is extremely unstable because even the “powers that be” do not how these private derivative contracts are globally connected. Distance yourself and your money from the systems that are currently in place.

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