A Review of Martin Armstrong’s 2011 Predictions

So, it is the end of the year, let’s see how Martin Armstrong did on the predictions he made based on his Economic Confidence Model for 2011.

Click here for the mid-year review of Martin Armstrong’s 2011 predictions.

Here is a reprint of the December 31, 2010 post which summarizes his conclusions.

Actually, Martin Armstrong hasn’t made any predictions for 2011. But he has mentioned some market perimeters in his letters of 2010. Statements in quotes are directly from Martin Armstrong’s letters.

Update January 5, 2011: Martin Armstrong’s latest letter, just received, dated December 22, 2010, has some updates to the info below. Click here for the full letter, market info is on page 7.

Updates below are in blue.

Here we go.

DOW-neutral-higher

“When we look ahead to 2011, the resistance will stand at $12,500-$12,900 level followed by $13,340. The primary support begins as high as $10,608 level assuming we close above that level. (Which we have at $11,577.) This should be a very important pivot area even into 2012. Above the market, we will have this $11,800-$11,935 as critical pivotal resistance also for the next two years into 2012. Well below the market, we have the $7,400-$7,290 that will also be the major pivot support for the next two years.”

“The big turning point will be the June of 2011. If the DOW retests support precisely to the day, then we should see a very strong bull market thereafter going into the high for the top of the next 8.6 year wave in 2015.75.”

groovygirl’s comments: A high into 2015 could be inflation or dollar debasement, not actual real return on investment.

2011 year end DOW was 12,217, we are still hitting Martin’s resistance level.

PANIC CYCLE-2015

“Looking into the future, it does appear that 2015 is going to be a YEARLY PANIC CYCLE with massive huge volatility into 2016.”

groovygirl’s comments: A panic cycle doesn’t necessary mean a crash. It means extreme volatility, uncertainty, and panic. It is groovygirl’s opinion that 2015 is the year that the dollar dies.

Martin has commented that Panic Cycle still set for 2015.

GOLD-up

“The monthly chart shows a primary channel that stands at $1,400-$1,480 for 2010 and $1,480-$1,660 for 2011. It is this later channel on the monthly level that is likely to present the overhead resistance.”

“Looking ahead the main support lies at $1,030-$1,047 level. This will be the pivot support throughout 2011. This suggests that the broader long-term trend on a near-term basis will remain bullish as long as gold stays above this level for 2011.”

Click here for the Gold $5,000+ letter from 2009. The last 3 pages are very informative! Click here for the most recent letter about gold from 2010 (lots of good charts in this letter).

Gold is what investors buy when they are not confident in the economic climate/government policies. We have seen that type of buying in 2010, it will continue in 2011.

Martin sees the possibility for $5,000 gold by 2015. If that is the case, gold could rise in 2011 on its way to that number. But remember, expect volatility in the gold market, do not day-trade gold.

groovygirl’s comments: we are ending the year sort of in-between Martin’s channels ($1,421.60). Groovygirl is going to go with higher gold in 2011 trading within Martin’s upper channel prediction or between $1480-$1660. Silver has done wonderfully in 2010, ending the year at $30.91.

Update: Silver is bullish. Gold could retest support at some point this year, but will be at $5,000 by 2015.

Gold ended the year within Martin’s suggested trading channels at 1566. But jumped up over $1660 to a new high of $1900. With silver at 27.87, they are both up from the beginning of the 2011.

REAL ESTATE-falling

Same prediction as 2010. Martin is calling for a temporary bottom in 2012 and a rise in 2015. (This time line falls right in line with the remaining mortgages from the big bubble that must “reset” between now and 2013.) Then, a slow, very bad decline into 2030. (This time line represents reality hitting the bank balance sheets that finally start effecting housing prices in a very real way.)

This is a 26-year decline in real estate. So this means that the housing market is not recovering and residential and commercial real estate will be under pressure in 2011 as credit is still frozen within the banks balance sheets.

Click here for Martin’s letter on the Real Estate cycle. (Real estate information starts on page 8 with a chart.)

Real estate still not recovering. In fact revised housing data in December makes things worse. Martin’s prediction is confirmed.

DOLLAR-neutral-falling

“There is potential for a final low in 2011. A closing below 74.71 will signal that such a potential exists for 2011. Major resistance will stand at 80.80 and a closing below that number will signal that the dollar is still weak for 2011.”

Therefore, since the dollar closed below 80.80, dollar could still be weak in 2011.

On January 21, 2010, Martin has released a letter on the floating currency system and USDollar predictions. Click here (last few pages have specifics). His conclusion, extreme volatility and then a currency crisis in the USDollar in 2015.

Click here for a recent letter in which Martin charts all major fiat currencies.

groovygirl’s comments: there is a currency war continuing into 2011, as all fiat currencies try to debase at once. Expect all currencies to race up and down making everyone ill. Many economists are predicting a much higher dollar next year because of the euro issues. However, groovygirl is a long-term investor and if the dollar isn’t going up to its 2001 levels (which it won’t), it is still in a major downward trend and is still losing purchasing power.

Update: Euro should remain neutral and dollar should fall some.

Dollar has fallen, then recovered some. Still hitting resistance at $.80. Closing the year at $.80. Martin is correct again, a weak dollar this last year.

groovygirl’s comments

Martin is correct in his predictions this year. Well done.

Groovygirl will comment on Martin’s 2012 predictions on Sunday’s post tomorrow.

Latest Release from Martin Armstrong dated December 29, 2011

Click here for Martin Armstrong’s year-end predictions for 2012. IMPORTANT REPORT.

Groovygirl will comment on this paper on the Sunday, January 1st post.

The Mogambo

totallygroovygirl loves the mogambo.

Groovgirl must apologize. She missed the most recent interview with her favorite recluse, The Mogambo. Click here for a 20-min interview on Nov. 10, 2011 with Richard Daughty, The Mogambo Gugu.

This unofficial website has past writings and a plea for Mr. Daughty to come out of his bunker, er…retirement.

In the interview, Mogambo mentions the numbers that don’t add up. Of the 310 million people in the US, only 65 million actually produce an income separate from recycled government money (that’s about 20%). How can 20% of the population support the other 80%? They can’t, we have been selling US debt to investors for cash to cover the short fall.

At a $5 trillion a year deficit (excluding long term liabilities), we are freaking doomed.

This further supports the last few days’ posts about how we can’t raise more tax revenue to sustain what we have going currently, let alone grow our way out of anything. Debt, government, the bond market, tax revenue, the economy, it must all contract. Government must get smaller. People must have jobs that produce something separate from the state.

At some point no one will buy US debt. It is not a question of “if”, it is “when”. The government will not be able to help you when this happens, you will have to fend for yourself.

The Endgame

Warren Pollock examines the current trajectory: Defend and Deny and the coming change in 2012 (and beyond): Realization.

Click here about 22 minutes, very good.

Let’s talk solutions. Let’s talk about the economic structure after the economic collapse of our current infrastructure that is unsustainable. Mr. Pollock gives a wonderful picture of the economic structure that we must look through in order to understand the breakdown and then the restructure that will be sustainable.

Mr. Hugh-Smith talks about taxing the rich

Click here for an excellent exercise in why taxing the rich will not get us where we want to go: “a balanced budget”. Mr. Hugh-Smith starts out with faulty information: a $1.5 trillion annual deficit. It is actually $5 Trillion, as John Williams with shadowstats.com points out after reading the fine print on the latest US 2011 financial statements. So, if taxing the rich won’t do anything for the $1.5 trillion short-fall, it certainly won’t do anything for $5 trillion.

But the gov will tax the rich anyway.

Groovygirl would like to add a few points to Mr. Hugh-Smith’s discussion.

First, there will be no rich in the US. They already have or are in the process of moving as much money as possible outside of the US and away from the IRS. They understand what is coming.

Second, there will be no middle class. Their assets will shrink in value and/or produce no return for the IRS to tax. We are already seeing this.

Third, unemployment (and underemployment) will continue to rise whether the government formally admits it or not. Unemployed people do not pay taxes and they don’t buy stuff.

Fourth, at some point, the IRS will turn its focus to corporate taxes and payroll taxes. This will produce two things, more jobs move overseas and fewer jobs for US citizens. Even if the US announces some incentive for companies to keep jobs in the US, it will be net effect at best. Government incentives go to pay higher payroll taxes for existing (not new) employees. That process is a circular flow of government money, not new taxes.

Fifth, any new taxes on middle class or lower classes will only lower national GDP as it currently consists of 70% consumer spending. People who pay more taxes, spend less on consumables.

Sixth, government as a whole must contract, it is unsustainable. Government employees will be laid off. Unemployed people do not pay taxes and they don’t buy stuff.

Seventh, an aging population doesn’t work. Unemployed people do not pay taxes and they don’t buy stuff.

This is why gg pays little attention to the media and political distraction that raising taxes or cutting government spending without addressing long-term liabilities such as social security, Medicare, and never ending “war”. It just that, a distraction.

It is groovygirl’s opinion that the US is in too deep to even cover the long-term liabilities.

Rearranging the furniture on the Titanic. Don’t waste your time, get in a lifeboat.

Gold and silver update

This is what groovygirl is doing; this is NOT investing advice. You are responsible for your own financial decisions and the future consequences of them. GG already has her core physical gold and silver positions. Those holdings were established long ago.

As groovygirl mentioned a few weeks ago when gold broke $1620, she bought some physical gold to add to her long-term holdings. She suggested at that time, that she would buy more if the price went down again.

Today, we are around $1530.

She is now buying some physical silver for long-term holding, but she is looking for a gold price closer to $1510-$1520 to buy more physical gold. If the gold prices should go lower, like to $1450 or $1420, she will buy more.

This is a physical long-term hold for metals, not a trade. Groovygirl doesn’t trade gold or silver anymore.

John Williams on the US Financials

John Williams from shadowstats.com has released a short post (subscription-required) regarding the recent Friday before Christmas release of the US 2011 financial statement.

It’s ugly.

We now know why this was released on the internet with no comment on the Friday before Christmas.

Here are the highlights, you pay for the detail. Well worth the money.

– Actual 2011 Federal Deficit Topped $5.0 Trillion
– U.S. Government Debt and Obligations Top $80 Trillion
– Long-Term U.S. Insolvency/Hyperinflation Remain Virtual Certainty

In each of the last two years, the US has had an annual deficit of $5 trillion, not the $1 trillion plus as reported in the media. These are the losses on the US income statement. If you include long-term obligations of Medicare and Social Security, the real deficit jumps to over $80 trillion. These are the losses on the balance sheet. We can not grow out of a continued $5 trillion plus a year deficit, let alone $80 trillion. We can not raise taxes enough to cover the $80 trillion obligations. Social Security and Medicare programs will be cut.

Completely unsustainable. There is no reason to assume that 2012 will not have at least a $5 trillion short fall, if not more.

Right now, the US is selling bonds (more debt) to cover this continued short fall. At some point in the future, the US will have a no-bid bond auction. Then we will have not just a balance sheet and income statement problem, but a cash flow statement problem. These three reports: the income statement, the balance  sheet, and the cash flow statement (and the footnotes of each!) tell you all you need to know about a company or country.

Bloggers warn about GS

More bloggers are warning of a collapse of Goldman Sachs. For Reggie Middleton’s take, click here.

Remember MF Global is the new blueprint. Bruce Kasting states that GS will go private in 2012.

The “perfect” scenario will be an MF Global style bankruptcy, expunging bad debts and taking customer funds in the process, to come out the other end a fully-paid-for, solvent, and private bank. Be careful of any investment running thru parts of the squid.

The things that put stress on the global banking system in 2008 are not fixed, they are still there (and more dangerous).

Latest Releases from Martin Armstrong dated December 28, 2011

Click here for Martin Armstrong’s latest release entitled Gold and Reversals dated December 27, 2011 (2 pages). Martin is bullish on gold long-term and bearish short-term. He lists the key support levels to watch for in the link. We broke through a key support, but we have not yet continued to trend. When will gold rally? When we see new bond offerings go unsold in the US.

Click here for Martin Armstrong’s latest release entitled The Coming Financial Border Controls and The Quest for Revenue dated December 27, 2011 (23 pages). GG will comment more later.

Art Cashin

Click here for Art Cashin’s take (via zerohedge) on the next bank run.