The markets of late have been like watching paint dry.
I’ll address them in a few minutes.
But first, let me tell you about some reflective thoughts I had while watching the markets this past week.
Thoughts about what a mess the world is in. There’s a whole lot going on that I don’t like one bit at all.
I don’t like the fact that China is being very aggressive in the South China Sea, and that it is all but certain a war will break out there some day soon.
I don’t like the fact that Germany is now becoming the last shoe to drop in the European Union, with its GDP for the most recent quarter slumping badly.
I don’t like the rise of neo-Nazi and fascist groups all over Europe.
Nor the very real chance Putin will invade Ukraine and other Eastern European countries and former Soviet Union satellites.
I am very worried too about the Middle East. I have absolutely no doubt that a wider war looms dead ahead, between several Middle Eastern countries.
Or that the Ebola virus could become the 21st century’s Black Death.
But these are just a few of the things I don’t like about the current state of the world.
I am extremely worried about what’s happening in my own country.
I am worried that our insane and arcane tax code is driving the rich to invest overseas and to even give up their citizenship.
And that there is now a rash of “corporate inversions” going on where some of our biggest and brightest companies are leaving our shores for lower-taxed homes in other countries.
Our tax code is precisely what our forefathers didn’t want. A direct tax on our labor that effectively turned our country into a socialist state by making us all slaves of a leviathan.
And by giving the government the right to intrude on your privacy by monitoring everything you make and do.
That’s what our income tax is. Our forefathers were against all forms of direct taxation, and were for indirect taxation instead, such as a national sales tax.
But now, we have the opposite — an income tax that has become so repressive that the IRS is now chasing down every penny it can find, even money you have or earn outside of the U.S. — making our country the only developed country in the world to have such a draconian tax system.
Yes, you are an economic slave to Washington.
I don’t like how our federal government wastes more money than one could do if they were stinking drunk, and though they could issue blank checks and promises to everyone.
And that behind closed doors in Washington, our leaders are actively considering the International Monetary Fund’s socialist answer to simply grab 10 percent of everyone’s wealth to help solve our debt problems …
And to further confiscate our wealth by requiring all retirement accounts to buy U.S. Treasuries.
I totally despise the fact that 200 million Americans now live completely without any constitutional rights, in a so-called “Constitution-free zone” where you can be stopped, searched and thrown in jail without a warrant or due cause.
The NSA spying, which continues unabated, has trampled on our right to privacy — another completely distasteful act our leaders are engaging in.
I also despise the fact that our country’s legal system has become such a farce that each and every one of us is guilty of committing as many as three felonies a day, according to research by Harvey Silverglate and Alan M. Dershowitz.
And the Department of Homeland Security (DHS)? Along with the IRS, it’s become the modern-day Gestapo — an internal standing Army intruding and trampling on your privacy and liberty.
Arming and militarizing local police with military-grade armored vehicles and weapons, 1.8 billion hollow-point bullets and more.
Can you blame the people of Ferguson, Missouri? How would you react if militarized police paraded down your street loaded to the gills with all sorts of hardware you’d normally see only in a war-like situation?
And lest you think Ferguson is an extreme example of the American police state, think again. There are countless examples of heavily armed SWAT teams being used in America even for routine investigations and petty crimes.
Thing is, the war cycles ramp up all the way into late 2020. That means we have almost six years to go before there is any relief in sight.
Sure, there will be brief interludes between now and then. But in the months and years ahead you can expect …
More civil wars across the globe
Massive social and political unrest in the developed economies of Europe and the U.S.
Rising taxation and confiscatory wealth measures
International wars
More international terrorism
More invasions on your privacy
More Fergusons
And more, lots more geo-political unrest, the worst we have seen, according to my war cycle models, since the mid-1800s.
And on top of all that, you will see the baton of the largest economy in the world get passed from the U.S. to China.
As to the markets, there have been no changes since my column last week.
First, the U.S. broad equity markets, as expected, have bounced. But that’s all it is, a bounce. A 20 percent swoon in the Dow lies dead ahead.
Second, continue to avoid U.S. and European sovereign bonds. Though rallying a bit in price, the risk to owning them vastly outweighs the potential reward.
Third, gold and silver remain a bit lackluster, due to summer seasonal weakness.
But be sure to use that weakness to accumulate precious metals. The next phases of their long-term bull market are right around the corner.
Fourth, continue to steer clear of the euro currency. Instead, keep most of your money in dollar-based investments. As much as there is not to like about what’s happening to the U.S. — Europe and the Middle East are in worse shape, which is driving frightened capital directly into the dollar.
Fifth, consider investing in Asia, which is a bright spot in the world. I repeat my warning in my last column: According to all of my models, most Asian equity markets are now embarking upon new long-term bull markets, with China leading the way higher.
What is your view on all this? How do you see things developing in the near term? Feel free to add your comments to the discussion — click here to participate.
Stay tuned, stay safe and best wishes,
Larry
