Bonds have risen in a 35 year bull market. That bull market looks tired and probably peaked in July of 2016.

The U.S. Dollar Index recently hit 14 year highs. Has the dollar finally peaked? Has it turned downward since January 3, 2017?

Stocks have been rising since the 2009 crash lows. Rounded to the nearest point, the Dow hit 20,000. Was that enough to make a final top before a major turn downward?

Gold made an important low over a year ago but we continually hear chatter about gold falling below $1,000, perhaps to $700 or even $350. I believe it has turned upward and the chatter will dissipate.

Let’s speculate about turning points in these important markets.

T-Bonds:

The global bond market is perhaps $100 trillion. Derivatives tied to interest rates are perhaps another $500 trillion. Yes, these are big numbers and interest rates affect practically everything – student loan debt, consumer spending, sovereign nation borrowing, housing sales, mortgage rates, credit card rates, bank profitability, availability of credit and more.

The global bond market is the largest financial bubble in history. A crash would be important …

Examine this chart of the U.S. T-bond.

….for larger charts and analysis of all Major Markets go HERE

…related:

Marc Faber: Take a Gamble on Trump

Well-known market forecaster Martin Armstrong at ArmstrongEconomics.com joins us today to discuss his thoughts on a wide range of topics, including his current forecasts on stocks, bonds, why he doesn’t think the market is in a bubble yet, the attempt by governments to ban cash around the globe, and much, much more.

…also from Martin:

What About Collectibles?

Gold and Gold stocks have rallied as expected and the consolidation in the miners in recent days looks bullish. GDX and GDXJ have digested the recent recovery quite well as Gold is testing resistance around $1200/oz. While the price action portends to more gains so does the breadth in the miners as well as short-term structure in the US$ index and bond yields.

In the first chart we plot GDX along with its advance decline (AD) line at the top. The AD line is the holy grail of breadth indicators as it is a trusty leading indicator. At the January 2016 bottom, the AD line was showing a strong positive divergence. Presently, the AD line is trading at a 3.5 month high and above its October 2016 high. If GDX were trading at the same relative level then it would be about 17% higher. Moreover, the AD line only retraced 38% of its 2016 advance while GDX retraced 62% of its advance. This suggests continued strength in the gold stocks.

GDX Advance/Decline Line

The current short-term trends in the US$ and bond yields also support more gains in the precious metals complex. The US$ index tried but failed to break 103.50 and should test at least 100. It could potentially decline to as low as 97 and test the 200 and 400-day moving averages. Meanwhile, it is no secret that bonds (like Gold) became extremely oversold (and yields extremely overbought). The 10-year yield, which closed at 2.38% should test at least 2.20% and could fall to 2.10%. Declining yields are immediately bullish for precious metals.  

US$ Index & 10-Year Yield

Strong breadth coupled with continued weakness in the US$ index and bond yields supports more gains in both Gold and the gold stocks. Our targets for the miners remain $25 for GDX and $40 for GDXJ. Those are the strongest and most reasonable targets but $26-$27 for GDX and $41-$42 for GDXJ are possible. Look for Gold to test $1220/oz while maximum upside on this rally is $1250/oz. We have turned more constructive on the miners but definitely expect another buying opportunity after the US$ and bond yields resume their uptrends. Consider our premium service including our favorite junior miners for 2017.

Jordan Roy-Byrne, CMT, MFTA

Jordan@TheDailyGold.com

…related: 

Gold Stocks: A Fabulous Rally Accelerates

If you think Mr. Trump is just blowing smoke when he rails against Washington’s bloated bureaucracy, you’d better sit down and brace yourself for a series of shocks …

Shock #1. The federal government’s complete failure to pass its audit: Just four days ago, the Government Accountability Office (GAO) released its full audit report covering fiscal year 2016 … and it’s a disaster:

The U.S. government failed the audit on about 34% of its assets. 

This is crazy. When you run a public company, if your books are so botched up that your auditors refuse to give you a clean bill of health, it’s the kiss of death. But for the federal government, it’s routine; Uncle Sam has failed his audit in every single one of the past 20 years.

Here’s what’s new: Mr. Trump is the first president since Ronald Reagan with an explicit agenda to disrupt the status quo. Will that include a reorg that cleans up the mess? That remains to be seen. But if ever there was a president who has explicitly expressed the intent to tolerate some disruption for the sake of long-overdue fixes, Trump is it.

Shock #2. The messiest department of all: According to the GAO, the U.S. government department with THE sloppiest accounting and THE most waste of all is none other than … the Department of Defense.

This also happens to be one area where Mr. Trump, General Mattis and the Republican Congress are unanimously gung-ho — to invest the most money. But that also raises some urgent questions:

As they move to boost defense spending, will they also tackle the waste at the same time?

If so, what kind of disruptions will be needed to really make a dent?

What will be the impact on major defense contractors?

Will they actually do it?

Trump’s pre-election Tweet against Boeing denotes a keen awareness of the problem. But the nightmarish logistics of cost-cutting indicate that he may first have to focus on the defense build-up, and only secondarily on the complex, time-consuming fixes that are sorely needed.

Shock #3. The government is the biggest enterprise on Earth: Well, maybe this is not such a shock to you. But even though you may be aware of the problem in general terms, it’s still shocking when you consider the numbers:

• The U.S. federal government employs a whopping 3.2 million people.
• India’s population is now over 1.335 trillion. Take away the entire trillion, and it’s still larger than America’s. But India’s biggest single enterprise, the Indian Armed Forces, employs “only” 1.4 million; and its second largest, the Indian Railways has “only” 1.3 million. Even combined, they have fewer employees than the U.S. government.
• In China, the largest single enterprise is the People’s Liberation Army. With China’s massive defense build-up in recent years, you’d think it would be larger than the U.S. government. But with 2.3 million, it’s far from it.
• Walmart, with more than 5,000 stores in the United States and Puerto Rico, is America’s largest private employer. Finding someone in the store to help you may often be a challenge, but there are actually quite a few employees around — over 2 million! Nevertheless, Walmart is also much smaller than the U.S. government.

Needless to say, all this is quite a change from the days of George Washington, when the federal government employed just a handful of people in three small departments — State, Treasury and War.

Can Mr. Trump turn around, stop, or at least slow this massive, centuries-long trend of government expansion? I think it’s possible. But to the degree he can truly shake things up, the side effects are bound to be painful.

Shock #4. Unintended consequences: Everyone on Wall Street knows WHAT Trump and Congress have promised to do: They want to get tougher on trade deals, lift regulations, cut taxes, repeal Obamacare, restore the nation’s infrastructure and more.

Everyone also knows WHEN these changes will begin: Soon after Inauguration, just four days from today.

What virtually NO ONE on Wall Street can tell you is what the unintended consequences will be. They don’t know if trade wars will be triggered. They don’t know what the impact will be on the federal budget. They don’t know how America’s adversaries will react or how the U.S. government will react to those reactions. They certainly don’t know exactly how investors will respond or when.

We don’t either. Nor do we need to. Indeed, it’s precisely at times like these that our investment strategies, perfected over decades of political and market turmoil, become such valuable assets.

Larry Edelson, for example, didn’t need a PhD in political science to predict that Donald Trump would win the election. Instead, he used his deep knowledge of historical cycles, based on thousands of years of data, to correctly predict the outcome. Nor did he need a crystal ball to predict the housing bust of 2007, the Great Debt Crisis of 2008, the Fed’s wild money printing of 2008-2016 and every major move in gold since the 1980s. Cycles showed him the way.

This also helps explain why Larry’s subscribers are looking at open gains of 207% in gold bullion, as much as 167% in SPDR Gold Shares, and from 10% to 38% in four related investments recommended just last year, just to mention a few.

Similarly, our editor Jon Markman didn’t need to be an Einstein Fellow to predict when the tech sector would rise or fall. Instead he relied on his robust forecasting model that has proven itself through some of the most disruptive market gyrations of all time. End result: Overall portfolio growth of more than 25% in 2016, including all losing trades.

Better yet, right now, after years of testing and validation, Jon has just launched a new investment approach based on a trading technology developed in the 1930s by one of my father’s contemporaries — Jesse Livermore. Until now, no one, not even my father who tracked his trades in real time, was able to decode Livermore’s timing indicator. But Jon has.

Meanwhile, our editors Boris Schlossberg and Kathy Lien use a simple device that was created 354 years before boomers like Mr. Trump (and me) were born: The Gregorian Calendar.

I could fill volumes with these success stories. And I could also tell you a story or two about editors who sometimes go through slumps. But suffice it to say that all of us at Weiss Research are completely ready for the indisputable outcome of the Trump presidency:

The incoming administration will shake Washington and Wall Street to its core. It will precipitate a sea change unlike anything in living memory, sometimes for the better, sometimes not, driving some markets sharply higher, others sharply lower. 

I repeat: Many people can tell us WHAT the Trump presidency will change and even when those changes will begin. But we are among the very few who can tell you with disciplined objectivity and relative confidence, how to deal with the impact — on stocks and stock sectors, interest rates, gold and silver, foreign currencies, options, plus much, much more.

Good luck and God bless!

Martin