Ian's Investment Insights. The Implications of the Pending Collapse of Fiat Paper Money

Ian Gordon

"It’s very difficult to make predictions, especially about the future." Former New York Yankee catcher Yogi Berra. When it comes to the financial markets, predicting their futures is compounded by the fact that they are all rigged. (See Ian's Investment Insights, November 28, 2014). Following that publication, I intended to write a continuation of the price manipulation in the gold markets. Maybe I have already made my point on that account. Since this publication is slated for issue in January, I think I should discuss how I see the year unfolding particularly as it relates to the investment markets with an emphasis on stock markets and the price of gold bullion and gold equities.

The Deciding Battle in the War between Paper and Gold

This year, perhaps, the most crucial issue that we have to determine is how Vladimir Putin will respond to the economic and monetary war being waged on Russia by the Western nations led by the United States. I think it is wise to assume that Mr. Putin is not going to let this belligerence go unanswered. You can bet that his determined course of action will attempt to cause as much damage as he can to these western economies and to the U.S. dollar. Mr. Putin has many options and most importantly Russia is being funded by super rich China. "If the Russian side needs it, we will provide necessary assistance within our capacity." Wang Wi, Chinese foreign minister.

If Mr. Putin could somehow engineer a dollar collapse much like these western nations have done to the Ruble, that would likely lead to America's bankruptcy. I can think of only one way that might be achieved; that is if Russia and China jointly tied their respective currencies to gold.

The United States professes to own approximately 8,100 tonnes of gold, which is highly unlikely. She has been conducting a war on gold in defence of the dollar for the best part of 50 years. U.S. gold holdings have not been audited since the Eisenhower Presidency.

In 2011, Congressman Ron Paul wanted an independent audit of US gold holdings. He said "If there was no question, you'd think they would be very anxious to prove to us that the gold is there." Congress deemed that such an audit was not necessary and anyway, it would be too expensive. Asked if there was any truth to the claims that Fort Knox has no gold, Ron Paul answered, “I think it is a possibility." Kitco News, August 25, 2010.

A story published by the European Union Times in 2011, noted that Russian Prime Minister Putin had been issued a report by the Russian Federal Security Service (FSB) which stated that the former International Monetary Fund (IMF) managing director, Dominique Strauss-Kahn was charged and jailed in the U.S. for sex crimes after his discovery that all the gold held in the United States Bullion Depository at Fort Knox was 'missing or unaccounted for.'

According to the FSB, Strauss-Kahn became concerned that the U.S. was stalling on its pledged delivery of 191.3 tons of gold to the IMF. Mr. Strauss-Kahn flew to the U.S. and raised the issue with senior U.S. government officials. Apparently, the IMF chief was contacted by rogue elements within the CIA who told him that all the gold reported to be held by the U.S.. Using this trumped up charge as an excuse for Strauss-Kahn's removal as IMF managing director, true U.S. gold holdings remain unknown. Obviously, that is how the U.S. Government would like it to be.

As many of you know, I have long been a reader of Dr. Robert McHugh’s Elliott Wave technical analysis of the investment markets (www.technicalindicatorindex.com). As I wrote in the opening paragraph of this letter, "When it comes to financial markets predicting their futures is compounded by the fact that they are all rigged." In spite of this, for the most part, Dr. McHugh has been accurate in his market calls and his trading strategies. His track record for those who subscribe to this service has been outstanding. The following chart from Dr. McHugh's latest newsletter projects a price of 40.00 for the U.S. dollar, which is 55% from its current level. Such a collapse would be in keeping with some sort of concerted effort to destroy the U.S. dollar's 'exorbitant privilege.'

Source: McHugh's Market Forecasting and Trading report, December 31, 2014.

We must now wait and see what might be the response from Russia and China to the Western attack on the Russian economy. They have been working together these past few years to reduce the dollar's role in international trading amongst not only themselves, but many countries that are sick of the dollar's inordinate privilege. Nevertheless, most countries still use the dollar as the commodity currency. Bringing these countries out of the dollar camp is likely to be a very difficult and long term process.

The Chinese leader, Zi Jinping and Vladimir Putin may see this as the opportune time to put the coup de grâs to the petro- dollar's reserve status.

In each of the previous three Long Wave winters there has been a monetary crisis or at least a major monetary reset. At the onset of the first winter the currency reset occurred in the United States after President Andrew Jackson in 1836 vetoed the bill that would have renewed the charter of the Second Bank of the United States. From that year the U.S. would be without an official central bank until 1913 when the Federal Reserve Board was introduced. At the start of the second Long Wave winter in 1873, the United States joined all major countries in adopting the gold standard international monetary system. Between 1931 and 1933, at the beginning of the third winter, the international gold exchange standard system collapsed and was replaced by a hodgepodge of fiat currencies.

As this current winter moves into its frigid state, the evolving monetary crisis is focussed on fiat currencies which have been the means by which the world is drowning in an ocean of debt. This crisis is coming to a head, as desperate central banks resort to the printing press in an effort to reduce the overwhelming debt loads of their respective governments. This is always the sign that fiat money is reaching its final death throes. (John Law's Mississippi scheme in France in 1720 and the French revolutionary paper Assignat debacle of the 1790s).

Meanwhile, Russia and China have been aggressively building their gold reserves. They can only be doing this because they are anticipating the coming collapse of fiat currencies under the leadership of the U.S. dollar. With that collapse, the gold which they have accumulated will assume its traditional role, which is money that can be trusted.

In the event that gold is reintroduced as money, the world would likely be divided into two currency blocs. One of these blocs would be comprised of those countries with gold to back their currencies and the other would comprise those countries with little or no gold.

Countries unable to join the new gold standard system would be shut out from trading in the world markets. Interest rates on their debt would rise to astronomical levels because no one would lend them any money. Prices would rise and they would encounter shortages of all staples, indeed they might not be able to obtain staples like food and energy to provide for their consumers. Credit would cease to operate, bringing about a complete collapse of their banks. The end result would be a devastating economic depression leading to excruciating unemployment and likely widespread civil unrest.

Which way will the European countries go? Will they keep their currencies closely aligned with the failing dollar or will they bravely cut their financial, monetary and political ties with the United States and realign themselves with developing wealth and monetary power of the BRICS and the countries closely allied with them?

A Stock Bear Market for the Ages

An accumulation of evidence strongly suggests that U.S. stock markets are on their last legs. Obviously, a fiat paper money collapse would be devastating for traditional stock markets, nevertheless, U.S. stock prices are in a massive bubble courtesy of the Federal Reserve. For the gamblers it is playing in a can't lose casino, where the Fed, the dealer, shows its hand before the start of the game.

"Tulips, the South Sea Bubble, the new economy, the housing bubble-at some point the greatest fool -has bought into an absurdity and a market that can only go one way goes the other way, precipitously. If the tech wreck was a jump off a thirty-meter platform and the 2008 financial crisis a plunge off the cliffs of Acapulco, the end of this multiple-absurdity mania of manias will be a swan dive from the top of the Empire State Building into a two foot wading pool." Robert Gore, A Mania of Manias, Straight Line Logic.

"The pattern below would never occur in an honest free market. Nearly six straight years of continuous vertical lift just wouldn't happen in a setting where the GDP of the underlying economy-US and Europe-has grown virtually not at all since 2007 pre-crisis level, and where earnings are facing massive headwinds from global cooling, deflation and the heavy anchor of 'peak debt.' David Stockman, Contra Corner.

I have written previously about the technical evidence that is supportive of the notion that U.S. stock prices are constantly being manipulated to the upside, but let me refresh your memory on this account.

I have been drawing your attention over the past few publications of these ‘Insights’ to the reliability of key point reversals in projecting a reverse in the direction of a price trend. "A key point reversal top/high is made when a price makes a new high but closes below the closing price of the previous bar. A key point reversal bottom/low is signalled when the price makes a new low and closes above the closing price of the previous bar."

"The most important key point reversals occur in monthly or long term price charts, because they generally indicate a reversal in the long term trend." Ian's Investment Insights, “The Natural Behavioural Patterns of Economic Cycles within the Investment Markets”, November 22, 2013.

One of the most important points which can be made about these key point reversals is that they are seldom counter reversed by the following price bar. Now, look at this monthly chart of the S & P 500 from January 2014 to December 2014. Each bar represents the complete price from low to high during each month. The horizontal line on the left of the price bar is the opening price at the start of the month and the horizontal bar to the right of the vertical price bar is the closing price of the month.

S & P 500 Monthly Price Chart Jan 2014- Jan 2015

The key point reversal low in February was a reversal of a two-month downtrend in the ongoing uptrend. Shift you eyes to the right and notice the key point reversal high that occurred in July. The June numbers are shown in the bar immediately to the left, because the June S & P high price of 1,968 points and the June closing price, the horizontal bar on the right of the price bar, of 1,931 points are relevant to the S& P 500 July price action. In July, we note that the S & P 500 made a new record price high of 1,991 points, which was well above the record high price recorded in June. The last trade for the S & P 500 in July closed at 1,905 points, which was also the monthly low price; which in itself is bearish. That closing price level was well below the closing price of the S & P in June. These two July prices, the record high and the closing price well below the June closing price were a confirmation of a monthly long-term key point trend reversal and the likelihood that the S & P 500 stock bull market had ended. As I wrote in an Ian's Investment Insights 'Alert' published on August 1, 2014, ...”The key point reversal monthly high reached in July is almost conclusive evidence that the stock bull market of March 2009 to July 2014 is now finished." Not so, I was wrong.

The S & P 500 record price peak in June 2014 was followed by a key point reversal in July, which was countered by a key point reversal low in August, which was then countered by a key point reversal high in September; that signal of a trend reversal to the downside was itself countered by the October key point reversal low. Four key point reversals in a row is not a coincidence, I don't believe in coincidences. Anyway, I went back ten years studying the monthly chart of the S & P 500 and could only find two occasions during that time that the there had been a key point reversal signal that was reversed in the following month.

From my perspective, the most blatant manipulation of stock market prices occurred with the October key point reversal low. The following daily chart of the S & P 500 from July 2014 to the present is, I think, convincing proof of this. On September 9, 2014 the S & P reached a record high level of 2,019 points. Within 18 trading days prices fell by 10%; 7.5% of that decline occurred in the final 5 days. Clearly, this suggests that selling was reaching panic proportions. The 'Powers that Be' could not afford to allow the selling to continue for fear that once set in motion there would be no stopping the decline. Their hand is evident in the final price bar. The S & P opened at 1,874 points on that 18th day of the decline on October 15, 2014 and dropped to a low level of 1,821, which was almost 3% below the opening price. It closed the day at 1,862.50 points, only 0.6% below the price at which it had opened. Within 12 trading days the S & P price had surpassed the point from which the earlier decline had started.

Like many independent analysts (Stock Investment Money Managers are not independent analysts), I am very bearish on the stock market outlook for 2015. I know that many of you will say that I have been a stock market bear for many years. That is true. However, I am a student of the Long Wave or Kondratieff Cycle. With my knowledge of this cycle, I know that every autumn stock bull market, which is the biggest of the cycles, is followed by a devastating winter stock bear market. We just haven't experienced the typical winter bear market, because the 'Powers that Be’ haven’t allowed it to occur as it did after 1837, 1873 and 1929. For example, following the autumn stock bull market peak in September 1929, the ensuing winter bear market lasted until July 1932. While that's only 34 months, in that short time the Dow Jones Industrial Average shed 90% of its value. The Transportation Index was down by a whopping 93%.

This constant interference in the natural process of the markets will culminate in massive retribution, which is likely to lead to a bear market more horrendous than the 90% bear market experienced between 1929 and 1932. Indeed, the two Elliott Wave theorists, Robert Prechter ( Elliott Wave Theorist, www. elliottwave.com) and Dr. Robert McHugh (Main Line Investors, Inc. www.technicalindicatorindex.com) both write that from an Elliott Wave perspective that this winter stock bear market will be one degree greater than the 1929 winter bear market. The Elliott Wave Theorist's target for the DJIA is 400, yes that is 400 points with, as the publication puts it, 'significant to U.S. survival'.

In his December 31, 2014 report, Robert McHugh wrote, "The multi-decade Jaws of Death stock market pattern is calling for an economic collapse and a market collapse. This is a Bear market for the ages coming, which we believe is already starting in stealth, masked by the artificial stock market rally whose main purpose has been to hide the truth about the underlying economy's collapse, including the unannounced disintegration of the middle class in America. Part and parcel with Bear markets are social strife issues – a negative psychological state of mankind."

Below, I show Dr. McHugh’s Elliott Wave analysis of the DJIA from 1900.

There comes a time when poor economic conditions forces stock prices to reflect this reality. Fudging numbers to project the economy to be better than it really is stops working once it is apparent to the general populace that these numbers are not a reflection of the true facts. Once that is the case, driving stock prices higher just doesn't work anymore. In 2015, stock prices are likely to face the harsh reality of a Long Wave winter. They have been propped up for 14 years by massive infusions of fiat paper money, which is itself on its last legs. As a consequence of this ongoing manipulation, this bear market is going to be, as Dr. McHugh writes, "One for the Ages."

The Next Stage Bull Market in Gold and Gold Equities

Over the longer term, the price of gold and gold equities and stock market prices always move in opposite directions. This is most apparent in their price movements within the Long Wave seasons. I’ll explain it for you one more time. I think that it is so important that this phenomenon is understood, because it allows us to make rational investment decisions based upon these Long Wave seasonal secular bull or bear markets.

Each Long Wave cycle lasts between 50 - 60 years, although this, the fourth cycle, has been extended beyond 60 years as a result of the exorbitant reliance on paper money. The cycle is divided into the four seasons. Each Long Wave season closely follows the characteristics of the four annual seasons. The Long Wave spring heralds the rebirth of the economy; summer is the time when the economy blooms and reaches its fruition. Summer is always the season of inflation which peaks at the end of the season. I call autumn the 'feel good period', because it has always been the season of the most intense and successful speculation in stocks, bonds and real estate. The end of the Long Wave autumn is signalled by the end of the great stock bull market. Winter is the time that the economy dies or at least falls into a prolonged sickness brought about by the collapse in debt that has been building in each of the past seasons, but particularly in autumn. (All of this is explained in some detail in these two charts).

The Longwave Principle

Lifetime Economic, Financial and Investment Map

The Long Wave spring is the season during which the economy resumes its growth following the winter depression. As a result, spring is very bullish for investing in stocks and bearish for investing in gold. In the fourth Long Wave spring (1949-1966) the value of the DJIA increased from 161 points to 995 points. In the summer (1966-1980/82), the inflationary season, investing in gold and gold equities is bullish and investing in the general stock market bearish. Accordingly, the price of gold rose from $35.00 (U.S.) per troy ounce in 1966 to $850.00 (U.S.) per troy ounce in 1980, whereas the value of the DJIA fell from its record high of 995 points in 1966 to 777 points in August 1982. The Long Wave autumn is always the most bullish season for investing in stocks and the most bearish for gold and gold stocks. In the current fourth Long Wave cycle autumn the DJIA increased from its summer ending bear market low of 777 points in August 1982 to 11,750 points in January 2000, whereas the price of gold fell from $850.00 (U.S.) per troy ounce to $252.00 (U.S.) per troy ounce in 1999 and 2001.

The Long Wave winter is very bullish for gold and gold equities and is very bearish for the general stock market.

I consider the 2000 price peak to be the end of autumn, following the typical mass speculation phase, which was concentrated in high technology stocks, especially dotcom new issues. (Previous autumn speculations - 1816-1837 - canal building, expansion into the US mid-west; 1866-1873 - railways; 1921-1929, industrials led by autos.) We have seen how the stock prices during this Long Wave winter, following every major downward price movement, as between 2000 and 2002 and 2007 and 2009, have been forced higher through central bank extreme fiscal and monetary stimulus made possible by a fiat paper money system. As we have noted, that overt manipulation of stock prices is likely to be concluded in 2015 with devastating consequences. (The inverse Long Wave seasonal price relationship between stocks and gold can be seen on Dow/Gold price ratio chart, here).

Since the onset of the current Long Wave winter, the prices of gold and gold equities have been in their expected seasonal/secular bull markets. Let's examine the facts. The price of gold made a double bottom in 1999 and 2001 just above $250.00 (U.S.) per troy ounce. This completed its secular bear market that had originated from its secular bull market price peak of $850.00 (U.S.) per troy ounce in January 1980. It is currently priced above $1,300.00 (U.S.) per troy ounce, which is 520% higher. The HUI Gold Bugs index reached its secular bear market price low of $35.00 in July 1999. It is currently trading above $190.00, which is 540% higher than it was priced in 1999. The HUI reached a record price high $638.00 in September 2011. Since these 2011 price peaks, the HUI, like the gold price has been in a long term correction. These long term corrections have been extended by blatant manipulation of the gold price.

I have explained this inter relationship between these secular seasonal bullish and bearish cycles and long term cycles in an Ian's Investment Insights that was published on November 22, 2013 and I urge you to read it. In case that you don't, I am going to draw some details from that report.

"Within these 16 to 20 year secular bull and bear markets there are usually four and a half long term cycles. These long term bull/bear cycles generally last 4 to 5 years. In bullish secular markets, the bullish phase of the long term cycle can be as much as 70% and the bearish phase 30% of the total time of one complete long term cycle. In bearish secular markets, the opposite is likely, with the bear portion of the cycle taking longer to complete than the bullish phase."

"In bullish secular markets each successive long term cycle generally makes higher high prices and higher low prices. In bearish secular markets the opposite is true, each successive long term cycle usually makes lower price highs and lower price lows than the previous long term cycle. The half cycle always occurs at the end of the bull or bear long term cycle. A bullish secular cycle starts from a price low and ends on a price high, which is the bullish phase of the fifth long term cycle. Since secular bull markets start from a price low, each long term cycle is measured from price low to price low. A bearish secular cycle starts from a price high and ends on a price low, which is the bearish phase of the fifth long term cycle. Thus, in bearish secular markets each long term cycle is measured from price high to price high."

This is the schematic which outlines the relationship between these seasonal secular bull and bear cycles and the long cycles that operate within them.

In that November 2013 publication of Ian's investment insights I have shown several different price charts which demonstrate this relationship between secular cycles and long term cycles. In addition, I have demonstrated how short term and intermediate term cycles relate to long term cycles.

Because gold and the HUI have been in the Long Wave winter secular bull market since their 1999 and 2000 price lows (Gold $250.00 (U.S.) and the HUI $35.00). Let us examine the secular bull market chart of the HUI that I presented in that November 2013 publication.

HUI Gold Bugs Index Monthly Chart.

Chart: Thomson Reuters

The HUI secular bear market commenced in 1980 at the end of the Longwave Summer, when the prices of gold shares reached their peak, and ended in November 2000 at the onset of the Longwave Winter, when it reached a price low of 35.31. A new secular bull market and with that the first long term cycle originated from this secular bear market price low. The bullish phase of this first long term cycle ended in 2003 when the HUI reached a price high of $258.60. The first long term bear phase started from that high and ended in May 2005 when the HUI reached the bearish phase price low of $165.71. From that price low the second long term cycle commenced its bullish phase. This ended in March 2008 when the HUI price peaked at $519 .68. The following bear market phase ended at the price low of $150.27 in October 2008. From that low the 3rd long term cycle started its bullish phase, which ended in September 2011 at a record price high of $638.59. The bearish phase of cycle started from that record high price level.

As I saw it at the time of my writing in November 2013, the bearish phase ended in June 2013 when the HUI reached a low of $206.66, on the same day that the gold price was hammered down more than $50.00 (U.S.) in an obvious official intervention.

Since then there has been an ongoing official crusade to hold back the price of gold in order to promote the dollar's legitimacy as the world’s reserve currency. As a result, the long term bear market phase has been extended significantly beyond its normal time frame. However, that extension now appears to be over and the fourth long term bullish phase should now proceed but with increased vigour. This on two accounts; first, manipulation of the prices to the downside will be countered by the cycle reverting to normal, forcing prices higher to adjust for the overprice reaction on the downside; second as the secular bull market progresses each successive long term bullish phase attracts more consensus to the bullish camp. Anyway, it is normal for each successive bullish phase to make a higher price than the preceding bullish price peak. Thus, this fourth bullish phase price peak should see the HUI reach a price peak significantly higher than the price peak reached at the end of the third bullish phase, which was $638.59.

I'm going to return to discussing monthly key point reversals, if only to show how significant they are in generally pinpointing a long term trend reversal. If you review the Monthly chart of the HUI shown above you should notice that every long term bullish phase ended with a monthly key point reversal price high, which should have acted as an alert that the bearish phase of each of these long term cycles was about to commence. I have already apologised to my readers in an earlier writing for not noticing these reversals particularly the reversal signalled at the end of the third HUI bullish phase reached in September 2011. That is why I am now so alert to these Key point reversal signals, in particular monthly key point reversal signals.

To that end, I want to draw your attention to the fact that the HUI made a key point reversal low in November 2014. Here's the monthly price chart.

HUI Gold Bugs Index Monthly Price Chart November 2009 - Present

Chart: Thomson Reuters

The HUI made a new low of $146.00 in November 2014 below the preceding October price low of $152.00, which itself was a new price low for the Index. The November closing price was $163.00, which was $7.00 higher than the October closing price.

This monthly key point reversal simply adds evidence to the fact that gold stocks made their price lows in November 2014 and have now started their fourth long term bullish phase. Since that November price low in a little over two months the HUI price has increased by 30%, that's bullish.

Because we are confidently predicting that the HUI started its fourth long term cycle from the November 2014 price low, we can anticipate that the bullish phase of this cycle will last approximately 70 % of the time it takes the cycle to run its bull/bear course. Looking at the past three long term HUI cycles (See Page 10), this long term bullish phase should run for approximately three and a quarter years, which in this case would extend into early 2018. By that time the HUI should have reached a price higher than it reached at the top of the bullish phase of the third long term cycle, $639.00. Based on the amounts that each long term cycle high exceeded the earlier cycle high, I have conservatively projected that at the HUI price peak of the bullish phase of this fourth long term cycle will attain $830.00. This is equal to a 30% increase over the third long term cycle price high of $639.00.

The price of gold, itself, is also beginning its fourth long term bullish phase from a price low of $1,132.40 (U.S.) which was reached on November 7, 2014. This bullish phase should, like the HUI, reach its price peak in early 2018. Using the percentage increases experienced in each successive bullish phase of the long term gold price cycle, I have conservatively calculated that gold should reach the top of the bullish phase of this fourth long term cycle priced at approximately $ 3,360.00 (U.S.) per troy ounce.

These predictions on both the likely termination of the bullish phase and price achieved at that time are based on past, long term cycles, which for the most part of been reasonably consistent with regard to both time and price. However, we are now predicting a monetary collapse, and that is likely to result in a dramatic increase in the gold price as the rush to own the monetary metal turns into a stampede. In that case the projected gold price of $3,360.00 (U.S.) might be considerably surpassed and much more quickly than by early 2018. That too, would lift the prices of gold shares much higher than has been projected.

Conclusion

A gold price of $3,360.00 (U.S.) should be clear warning. The world is heading into a monetary catastrophe the likes of which have never before been experienced on a global scale. This failure of the global fiat paper money system will throw the world into an economic depression that will make the 1930s appear like a mild recession. In the early 1930s world trade contracted by 70%; U.S. GDP fell by 45%; 10,000 U.S. banks failed and unemployment reached 25% and, as I have already recounted, the Dow Jones Industrial Average lost 90% of its value. This time it is likely to be much worse.

Western central bankers alongside the Japanese central bank are in a state of panic. They have ramped up their printing presses at a frenetic pace in their desperate efforts to keep their fiat paper currencies from dying. They have accumulated debt on top of an already monstrous debt mountain to keep the Ponzi scheme alive. The world is awash in debt. That debt is supposedly hedged by a mega pyramid of derivatives. The entire facade is a sovereign default away from a financial disaster much greater than 2008. That crisis almost destroyed the entire Western banking system; this one will.

Russia, China and other nations have been accumulating gold at a furious pace in preparation for this looming disaster. Many European countries have been trying to repatriate their gold holdings for the most part out of the U.S. Germany is experiencing difficulty on this account. Central bank gold purchases are currently running at about 500 metric tonnes per annum or a little less than 20% of total annual production. That does not include the secretive amount being amassed by the Chinese central bank, which we must assume is considerably in excess of the 500 metric tonnes being accumulated by all other central banks. These central bank purchases began in 2010 reversing their ongoing gold sales, which they had been doing since at least the year 2000. Why? Obviously, they now trust gold more than their fiat paper.

The Second Coming by William Butler Yeats, published in 1921.

Turning and turning in the widening gyre

The falcon cannot hear the falconer;

Things fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world.

The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.

This poem written just after the carnage of the First World War describes a tumultuous and frightening period. "The Second Coming was intended by Yeats to describe the current historical moment (1921 in terms of these gyres. Yeats believed that the world was on the threshold of an apocalyptic revelation, as history reached the end of the outer gyre (to speak roughly) and began moving along the inner gyre. In his definitive edition of Yeats's poems, Richard J. Finnian quotes Yeats' own notes:"

"The end of an age which always receives the revelation of the character of the next age is represented by the coming of one gyre to its place of greatest expansion and the other to its place of greatest contraction... The revelation that approaches will...take its character from the contrary movement of the interior gyre."

In other words, I think that this poem is descriptive of the approaching storm as we move from the gyre of plenty and 'greatest expansion' to the gyre of 'greatest contraction'.

I am filled with a deep sense of foreboding. The monetary tsunami that is upon us will bring about a worldwide economic collapse far worse than any previous depression. Everything is pointing to the impending disaster. Commodity prices, not just oil, are beginning to hasten their downwards spiral. The price of copper is down almost 45% from its 2011 price peak. Copper has long been known as the metal with the PhD in economics since its price is directly associated with the health of the economy. Most currencies relative to the U.S. dollar and more especially gold are in a freefall. The Japanese Yen is down almost 40% against the dollar and since May 2014 the Euro has depreciated 20% against the U.S. dollar. U.S. stocks are beginning to look as if the projected vicious winter bear market has begun with the DJIA down about 1,000 points from its 2014 Boxing Day level peak. Gold on the other hand has been increasing in value versus the rising dollar. It looks very, very bad.

Are You Ready for This?

Written By: Ian Gordon

Note: In our February 20, 2015 publication of 'Economic Winter', which will bear the title "The Implications of the Impending Collapse of the Fiat Paper Money System" we will explore in some detail what might be the consequences of this paper money failure. For example will privately owned Central Banking continue to operate?

For my take on Silver read ‘Economic Winter’ Volume 60, Issue 1, June 17, 2014 “Gold vs Silver”

This information is not intended to be investment advice. Members of the Longwave Group may acquire, hold or sell securities referred to in this document. The companies referred to herein may pay a fee to be listed on the Longwave Group website or referred to in this publication. See the disclosure under the heading “Disclaimer” on this page for further important information.

Ian A. Gordon, The Long Wave Analyst, www.longwavegroup.com

Disclaimer : This information is made available by Long Wave Analytics Inc. for information purposes only. This information is not intended to be and should not to be construed as investment advice, and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific reader. All readers must obtain expert investment advice before making an investment. Readers must understand that statements regarding future prospects may not be achieved. This information should not be construed as an offer to sell, or solicitation for, or an offer to buy, any securities. The opinions and conclusions contained herein are those of Long Wave Analytics Inc. as of the date hereof and are subject to change without notice. Long Wave Analytics Inc. has made every effort to ensure that the contents have been compiled or derived from sources believed reliable and contain information and opinions, which are accurate and complete. However, Long Wave Analytics Inc. makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein, and accepts no liability whatsoever for any loss arising from any use of or reliance on this information. Long Wave Analytics Inc. is under no obligation to update or keep current the information contained herein. The information presented may not be discussed or reproduced without prior written consent. Long Wave Analytics Inc., its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein. In addition, the companies referred to herein may pay a fee to Long Wave Analytics Inc. to be listed on www.longwavegroup.com. Copyright © Long Wave Analytics Inc. 2015. All rights reserved.

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