Why Silver Cycles and War Cycles?

Because silver prices and wars are connected, and because cycles have predictive value when viewed over the long term. Look at silver prices since the year 1900. Yes, silver has not freely traded for a long time, but there is value in the study.

Six important silver lows have been identified with green ovals. Two other lows in 1931 and 1971 are ignored. The six lows identified approximately match these wars:

Low Date War

1 1914 World War I

2 1939 World War II

3 1963 Vietnam War

4 1990 Gulf War

5 2001 War on Terror

6 2017 Beginning of the XXX war

Wars are usually financed with debt – borrowed currency. The extra currency in circulation creates price inflation. Silver prices, along with most other commodities, rise due to currency devaluation. Silver is used in war materials and war production, so demand rises, which also causes prices to rise.

Conclusion: We expect silver prices to rise at the beginning of new wars or the escalation of major and costly wars. There is little doubt that both World Wars and the Vietnam War were costly and important to the U.S. economy.

The Gulf War and the War on Terror were expensive. National debt at the end of 1990 was $3.3 trillion. Today it is $20 trillion. Much of that debt resulted from the Gulf War, Iraq War 2.0, the war in Afghanistan, War on Terror, and other military actions. The War on Terror caused a spike in silver prices and national debt.

Date Silver Appx. Price National Debt

Sept. 2001 $4.20 $5.8 trillion

April 2011 $48.00 $14.3 trillion

August 2017 $17.00 $20 trillion

Observe that following each green oval – the beginning or escalation of a war – the price of silver increased considerably.

Date SI Appx. Low SI Appx. High Date of High

1914 $0.50 $1.33 1919

1939 $0.35 $0.86 1946

1963 $1.29 $50.00 1980

1990 $4.12 $7.40 1998

2001 $4.67 $20.94 2008

2017 $16.70 ? ?

These approximate dates, skipping the War on Terror, are 25, 24, 27, and 27 years apart. A major war occurred about every 26 years. Based on this approximate cycle a costly war is due … about now.

North Korea, Syria, Iran, China, or Russia? Many possibilities exist for expanded wars. Although we do not want war, the supposed benefits of war are:

• A major war distracts the populace from government and central banker mismanagement of the nation and economy.
• A major war pumps huge profits into the military-industrial-media-security-banking complex and benefits many other corporations including Big Pharma, Big Ag, weapons manufacturers, and more.
• Big Oil benefits when crude oil prices rise, as they will.
• Congress and lobbyists get their cut of the swag. There is something for everyone in the political and financial elite.
• A major war justifies a massive increase in debt and a “clean” debt ceiling law. Why bother with a ceiling if we know it isn’t real?
• Central banks want inflation and a big war assures it.
• The nation might unite against a common enemy instead of wasting resources on current nonsense.
• The military tests their new weapons and expands their importance.
• The NSA eavesdrops on everyone claiming national security priorities and the need to ferret out North Korean, Russian, and Chinese spies.
• And the list goes on.

Many vested interests support escalation of existing wars and beginning new wars. It is all about money and power. The Deep State favors more war.

SILVER:

High tech weaponry, missiles, military hardware, fighter jets, helicopters, and computers need silver, lots of silver. A new war will increase demand. Silver prices will rise, as they have following WWI & WWII, the Vietnam War, the Gulf War, and the War on Terror.

The inevitable massive increase in debt – say another $20 trillion in eight years – will devalue the dollar and create silver price rises. Some individuals will protect their savings, investments, and pensions from devastating consumer price inflation with silver purchases, increasing demand. We see the precursor of those silver purchases with the fantastic increases during 2017 in Bitcoin and other cryptocurrencies.

The Stock Market:

Dollar devaluations diminish the buying power of the dollar so the DOW rises. War will increase corporate profitability so the DOW will also be pushed up by earnings, probably after a major correction.

Date Dow Appx Low Dow Appx High Date of High

1914 59 390 1929

1939 140 680 1959

1963 700 1000 1966

1990 2,500 11,750 2000

2001 8,100 14,000 2007

The DOW and S&P 500 are trading at all-time highs in August 2017. A new war might temporarily crash the stock markets, but they are likely to rise after a nasty correction. Massive debt increases, dollar devaluations, and central bank levitation support stock prices.

CONCLUSIONS:

• Since 1900 silver prices, national debt, and the Dow have increased exponentially – straight line increases on a log scale graph.
• Since 1900 the U.S. has entered a major and costly war about every 26 years, with an extra “War on Terror” in 2001. Given the approximate 26 year cycle, we are due for a major and costly war NOW!
• The U.S. stock market is selling at all-time highs. A new war might crash market prices but we know government and central banks will devalue the dollar, massively increase debt, and push new digital currency units into the stock market, eventually forcing it to new dollar devalued highs.
• Silver prices are still two-thirds below their all-time highs reached in 2011. War materials needed in a new war will increase demand for silver. The massive debt needed to finance the war will devalue the dollar and push silver prices higher. The coming consumer price inflation will encourage individuals to purchase silver (and gold and cryptocurrencies) to protect their savings from central bank and government created consumer price inflation, which means more demand for silver.
• Silver prices will rise in the next several years with no escalation in wars because of supply, demand and devaluation.
• Silver prices will rise spectacularly if the U.S. indulges in another major war.
• We do not look forward to another war or an escalation of existing wars, but history suggests another war is likely. Plan accordingly.

https://deviantinvestor.com/

The futures were higher overnight, although I couldn’t tell you why, but it didn’t take long for those gains to be erased and the market was slightly weaker in the early going. This morning I took the opportunity afforded by the bounce over the last couple of days to reload some of the puts that I sold Friday morning. I only bring that up to emphasize the point that, for the first time in ages, I have begun trading around on the short side, however minutely.

…continue reading HERE

….also from King World News:

Greyerz – The Greatest Crisis In World History Is About To Be Unleashed

Ok, maybe it is not fair to call years ending in seven a curse. But years ending in seven have had a checkered record. Since 1830, the Dow Jones Industrials (DJI) has recorded nine up years and nine down years ending in seven. Years ending in seven have the second worst year record for the DJI. The leader or, in this case, the biggest loser is years ending in three. Its record is nine up years and ten down years. As to the biggest winner, well, that honour goes to years ending in five with a record of sixteen up years vs. three down years. 

Years ending in seven are the leader in one category. They have the most losses totalling 20% or more. The total is four. 1857 saw the DJI lose 31%, in 1907 the DJI was down 37.7%, in 1917 the DJI dropped 21.7%, and finally in 1937 the DJI fell 32.8%. Years ending in seven have also been, overwhelmingly, associated with stock market panics and crashes. Note the following:

An interesting side note to the above panics dating from the 19^th through to the 21^st century was the famous tulip mania panic which ended in 1637 after four years of sharply rising tulip prices. There was also a panic in 1797 after the collapse of a land speculation bubble in 1796. Numerous merchant firms collapsed in both the US and Britain. Panics and crashes are words that could easily be associated with years ending in seven. 

Gold too seems to respond to years ending in seven. While gold’s free trading history commenced only in the 1970s, it is interesting to note that of thirteen times gold saw gains of 20% or more in a year, three of them occurred in years ending in seven—1977, 1987, and 2007. And while gold has had only four years where it lost more than 20%, one of them naturally occurred in a year ending in seven—1997. Gold thus far in 2017 is up around 12%. Could gold see another 20% plus gain in 2017? Time will tell. So far, every year ending in seven since the 1970s has seen gold make a 20% or more move up or down. 

Given the years ending in seven and their propensity for panics and crises, it might not be a surprise that seasonality also plays a role. According to research carried out by Don Vialoux and Jon Vialoux of Equity Clock and Timing the Market www.equityclock.com, www.timingthemarkets.com the markets’ ten-year cycle seasonality for years ending in seven is quite negative. The two charts below draw this phenomenon quite nicely. 

Source: www.equityclock.com

Source: www.equityclock.com

The pink line on both the DJI and S&P 500 chart is normal seasonality for an average year. Markets tend to rise in the early part of the year until May and then over the next four months the markets tend to be choppy (sell in May and go away?) August tends to see tops and the market sells off and is weak into October/November before regrouping and starting another rise into the first few months of the New Year. Remember, seasonality is an observation over a long period and there are years where it might not work. 

But when the seasonality is applied to years ending in seven, things have a tendency to get “nasty” following the July/August top. It ends up being a free fall into the October/November period. Again, this is not an “every year ending in seven” occurrence. But there is strong tendency for the markets to react negatively in years ending in seven. Given our history of panics, crashes, and financial crisis in years ending in seven the seasonality of years ending in seven does not seem to be much of a surprise. 

So here we are in a year ending in seven in August and we have two world leaders threatening to blow each other and the world to smithereens. Madmen we say? Time will tell. But if the tale of the tape is correct, expect a market sell-off that could take us into October/November before we find a low. The sell-off may already be underway. 

If our wave count is correct, this should only be a minor wave 4 up from the February 2016 low. The February 2016 low was, we believe, an intermediate wave (4) up from the major low of March 2009. Intermediate wave (2) was the 2011 EU crisis. If this is correct, then we know we are now in intermediate wave (5). Following a correction now for wave 4 we should then have one more run-up to new highs. That could be a blow-off top that carries us into the first quarter of 2018. But it could also be a feeble rise to a small new top or a double top scenario as we saw in 2007 following the initial breakdown in July of that year.  We presume it would get underway with an easing of world tensions and the madmen not blowing each other (and us) to smithereens. Saner heads prevail (we hope). Once the fifth wave is complete, however, a major bear market could well get underway. But that is not expected until sometime in 2018. 

Source: www.stockcharts.com

A normal correction now could take us down to at least 21,165 or the uptrend line from the February 2016 low currently near 20,750. A worst-case scenario could drop us to 19,525, the Fibonacci 61.8% retracement level of the move from the November 2016 low to the recent top. Something bigger would be in play if we took out the top of wave 1 at 18,167. But we doubt that at this time. It is, however, a consideration.  

We also note that this is the first year of the Presidential cycle and the first year tends to be the weakest in the four-year Presidential cycle. Not helpful is the failure to see any major legislation since Trump took office in January, the looming US debt limit, budget and tax reform that also could prove difficult to pass given the record to date. Add in the ongoing conflict with North Korea that is grabbing the headlines and the markets could see a rough ride into the fall. 

So, are years ending in seven a curse for the stock markets? Well, the record is not good. Panics, crashes, and financial crises have been frequent. The seasonality is negative, more negative than average seasonality. One might even say the market reaction is “the same as it ever was.”

Disclaimer

David Chapman is not a registered financial advisor, nor an exempt market dealer (EMD). We do not and cannot give individualized market advice. The information in the newsletter is only intended for informational and educational purposes. It should not be considered a solicitation of an offer or sale of any security. The reader assumes all risk when trading in securities and David Chapman advises consulting a licensed professional financial advisor before proceeding with any trade or idea presented in this newsletter. David Chapman may take a position and sell a position in any security mentioned in this newsletter. We share our ideas and opinions for informational and educational purposes only and expect the reader to perform due diligence before considering taking a position in any security. That includes consulting with your own licensed professional financial advisor.

In a better world we might expect:

• Individuals, corporations, and governments spend no more than their income.
• “Honest” money is used by all, has intrinsic value, retains its purchasing power and is not counterfeited by individuals or bankers.
• Governments and bankers support and encourage “honest” money.

Alas, we live in this world and must realize that:

• Debt has increased rapidly for the past century. Example: U.S. national debt has expanded from roughly $3 billion to $20 trillion.
• Currencies are IOU’s issued by central banks who promote ever-increasing currency in circulation, expanding debt, and continual devaluations in purchasing power.
• The “fiat-currency-game” will continue until it implodes.

THE PROBLEM SHOWN IN ONE GRAPH:

Another Perspective on Official National Debt Increases Since 1913:

The economic world runs on debt and credit. Dollars are created as debt, so expect more debt, lots more debt. From the St. Louis Federal Reserve:

However, gold and silver protect purchasing power.

The stock market is another way to protect purchasing power.

Central banks and commercial banks create more dollars, yen, euros, and pounds, thereby diluting the value of all existing fiat currencies. Consequently consumers must protect their purchasing power.

The government and central banking “borrow and spend” business supports and benefits the financial and political elite, so it will continue. For perspective on central bank “printing,” of their currencies from “thin air” consider this graph:

How do you protect your purchasing power? Stocks, bonds, real estate, silver, gold, and many others.

The problem with stocks – they are dangerously high.

From SovereignMan: “It’s Better to Turn Cautious Too Soon”

The problem with bonds: Bonds yield next to nothing and pay in currencies guaranteed to depreciate in value. Waiting for a friendly central banker to bail out your investment works for the elite, but not for most individuals.

The problems with gold and silver: They are mostly anonymous, safe, retain their value over centuries, are not simultaneously another party’s liability, and cannot be counterfeited by central banks or governments.

Some might see these characteristics as benefits, not problems!

Western central bankers believe gold and silver are threats to their fiat currencies. They want everyone locked into their unbacked debt based fiat currency schemes that benefit the financial and political elite. Tough luck for the rest of us.

The rise of cryptocurrencies indicates, among other things, dissatisfaction with fiat currencies.

In summary, the global financial system, based on “dishonest” fiat currencies is dangerous and unstable. Potential wars with North Korea, Russia and China will aggravate an already dangerous economic structure. Existing wars in Syria, Iraq, Afghanistan and elsewhere have been costly in terms of soldier deaths, excessive expenses, and unpayable debt. Central banks and governments want more debt, more currency in circulation, and higher prices, so … expect more wars.

The consequence of massive and unpayable debt, out of control spending, and central bank “printing” of currencies is inevitable destruction of the currencies.

The western central bank answer: Levitate stocks, boost bonds, near zero interest rates, “war on cash,” and more debt. Note the current parallels with crashes in 2000 and 2007.

The Asian answer involves acquisition of gold, lots of gold. Why have western vaults shipped another 1,000 metric tons of gold bullion to Asia in 2015?

We have been warned!

Gary Christenson

The Deviant Investor

Here at the Edelson Institute, we follow the war cycles very closely: Larry’s research shows that the cycles of war and conflict continue to ramp up. And that this escalation will not peak until the year 2020.

A huge part of the war cycles is cyber-warfare. And we are witnessing just the beginning.

Case-in-point: The lingering ransomware attack that began in Europe last Friday and continues hitting new targets in Japan and China this week.

The WannaCry software has locked thousands of computers in more than 150 countries. This ransomware attack, which hit 370,000 computers, stands far and away as the most severe malware attack so far in 2017.

The spread of this troubling ransomware is far from over. There are reports that link this attack to North Korea. If confirmed, it will add to the growing tensions between the U.S. and North Korea.

This is on top of other massive cyber-wars between countries, of which the Russian hacking of the U.S. elections is just the most recent in a firestorm of examples. We also see cyber-espionage by governments against each other and against their own people.

A disruptive cyber-attack on critical infrastructure in the United States (e.g., telecommunications, electrical power grids, gas and oil reserves, water supplies, financial institutions, and transportation and emergency services) would be extremely harmful … and costly.

In fact, Cybersecurity Ventures – which tracks and analyzes trends in cyber-misconduct – predicts the annual global costs of cyber-crime will balloon from $3 trillion in 2015 to $6 trillion by 2021.

You read that right: $6 trillion by 2021!

The $6 trillion includes the damage and destruction of data, plus stolen money and lost productivity. And don’t forget about the theft of intellectual property, personal and financial data, embezzlement, fraud, and post-attack disruption to the normal course of business … all of which adds up to huge sums of money to restore and replace.

That’s a staggering list of damages and a heck of an outlay of cash.

Bur, frankly, I’m not one bit surprised.

As the war cycles ramp up, cash-strapped, over-indebted nations are going to be forced to spend more money than ever on national security. And cyber-protection is just part of that equation.

We will continue to see the spread of cyber-espionage and the outright loss of liberty and privacy. Cyber-crimes and cyber-warfare might become the greatest threat to every person, place, and thing in the world.

But, it’s not all doom-and-gloom. For a savvy investor, there are plenty of ways to protect and grow your investments. Here’s how to play it …

As cyber-attacks become more common, the need for protection against them will skyrocket, driving up demand for cyber-security software.

That’s why, right now, I have my eyes on a number of companies in the cyber-security space, including: FireEye Inc. (FEYE), Fortinet Inc. (FTNT), and Symantec Corp. (SYMC). And if you don’t want to bet on an individual company, you can always go with an ETF, like PureFunds ISE Cyber Security (HACK) or First Trust NASDAQ Cybersecurity (CIBR).

Best wishes,

David Dutkewych