Tuesday, March 25, 2008

Money week mentions Martin Armstrong’s PI cycle

Why the US rate cut is good news for gold

Moneyweek still bullish on gold (although it has corrected more since the article was written)

Posted by sold 2 rent 1 @ 12:24 PM (1675 views)
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6 thoughts on “Money week mentions Martin Armstrong’s PI cycle

  • Did I miss something over the weekend? I was under the impression that the 22nd March 2008 was an important day in the Armstrong PI cycle.

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  • sold 2 rent 1 says:

    rickyb,

    Whilst it is too early to say exactly what the turning point was, it is odds on to be either the USD index and/or the banking index.
    As Ambrose from The Telegraph pointed out, we were on the verge of a financial collapse last week. “Fed’s rescue halted a derivatives Chernobyl”.

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  • From the graph of the model, I understood that the turning point was in “Economic confidence”, which will now rise unabated until 2009.3. How do you suggest that this will manifest itself? Could you remind me again (in your own words preferably) why exactly PI x 1000 days is such a significant period of time? I presume there have been some rigorous scientific studies into why PI x 1000 should be involved in economic cycles.

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  • All is far from dire in the US. Don’t be surprised if the dollar comes back up for a while…

    From Alan Steel:

    As I write this on Tuesday morning, online News leads with a shock horror headline telling us ‘x’ billions wiped off the Stockmarket – worse yet to come. History tells us it’s this kind of headline that should encourage us to buy shares, not sell. Over the years the ‘x’ has just got bigger.

    Exactly 33 years ago, less than 2 years into my career as an Independent Financial Adviser, Bill called on me for the last time a few days before he retired. He represented a well known investment house. Having spent a lifetime in investment, starting off as a 15 year old, running errands on the floor of the City, he’d amassed 50 years of valuable insight and experience.

    How many of you remember what happened in world stockmarkets between October 1973 and January 1975? The FT Index fell 62%! Believe me it was scary. Experts saw no hope for the future, inflation was really rampant, and making matters worse, climatologists confidently predicted an oncoming Ice Age.

    But Bill held sway with his soothing words of wisdom. He explained although shares in a Blue Chip business halved it didn’t mean the business lost half its value. When the FT Index jumped 25% in January 1975 surprising pessimists, Bill simply said commonsense was returning.

    What bothers me at times like this, is the inappropriate and loose usage of adjectives and verbs from commentators, coupled with their misuse of statistics and data. How can something soar to 5.29%? How can an index plummet 1.5%? What’s a troubled economy? Why are we told we’re in Recession when facts don’t support it? Why should a Recession bother us anyway? Studying history tells you it’s no big deal.

    These days it’s fashionable to knock the US economy. Loose adjectives, and iffy data are wheeled out to support this thesis. But a thesis isn’t a fact. Check the facts, challenge the numbers, and a different picture emerges.

    We’re told Recession is a year over year decline in a country’s gross domestic product – or GDP if you prefer – for 2 or more consecutive quarters. It’s not Recession if an industry or sector isn’t doing too well, or if one area of a country is suffering redundancies. Study the last 2 years of US GDP growth and you will find no 2 consecutive quarters where numbers decline. And those who predicted declines have been wrong on every occasion. One day they might get it right. But so what?

    We’re told the US consumer is spent, evidenced by poor retailing spending numbers. But the numbers are rubbish. The products that make up the numbers were put together many years ago. Not one cent from internet sales in the US, including Amazon and Apple sales for example, nor any returns from direct consumer sales, catalogues to you and me, are included either.

    Over the last 3 years in the US, consumer spending has exceeded $28 trillion, of which only 3% represents withdrawals on home equity lines of credit. And US and Global wealth are all time highs, as is Global liquidity – that’s cash to old timers like me.

    But what about US sub-prime? According to the US Mortgage Bankers Association, the percentage of mortgages to borrowers with risky credit, entering the foreclosure process, has risen to 0.6% of the US mortgage market. Unemployment in the US is still below 5% of the working population. As to the credit crisis, that’s not confirmed by data openly available on the Internet.

    It’s been said the US Dollar is a Mickey Mouse currency compared to the Euro. 5½ years ago it was the Euro that was collapsing against the Dollar. Cycles happen. And evidence is mounting suggesting US Dollar strength to be the next surprise.

    Some experts constantly predict Recessions. More agreed over recessionary fears in 1990, 1994, and 2001/02. However a consistently successful US Hedge Fund Manager whose preferred system is to buy shares down on their luck, with high dividend yields, has seen his investors receive returns double those of market averages. Interestingly the best 3 years were 1991, 1995, and 2003. (Catch the connection?)

    Yesterday a leading Value UK Fund Manager presented to us his thoughts for the year ahead. Personally he was looking forward to receiving his bonuses. Why? Because he wants to invest in a solid UK companies where their share prices have been hammered in the last year. He hadn’t seen such value since 1987. Being somewhat older I was able to contradict him. There’s hasn’t been this value since January 1975.

    Finally, let’s see what history tells us about crises. Taking the 42 financial and political crises since 1914, the average fall on crisis day in the Dow Jones Index is 3%. 8 months later the average rise is 17%. Crisis, what crisis?

    Courtesy of the Daily Telegraph, 22 March 2008.

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  • “Check the facts, challenge the numbers, and a different picture emerges.”
    “consumer spending has exceeded $28 trillion, of which only 3% represents withdrawals on home equity lines of credit”
    “Not one cent from internet sales in the US, including Amazon and Apple sales for example” – are included in the spending numbers

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  • sold 2 rent 1 says:

    rickyb,

    I think we will see capital flowing into a mini-bubble for the April 2009 high. Where? Difficult to say. China? India? Maybe commodities after a correction? We should have more of an idea where by November/December.

    As for “rigorous scientific studies”, I know you are taking the p*ss here. Only Mr Armstrong knows the secret behind his model and he has been in prison without a trial for 8 years. He is a brave man who knows this model has to be kept out of the hands of the NWO.

    IMHO I am with Robert Prechter on this one – God – if he exists – was a mathematician.

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