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Everything in life moves in cycles. Seconds, minutes,
hours, days, all add up to become part of a cycle.Some cycles, such as the
beating of the heart move fast, while a millennium moves very slow.This
article will draw your attention to a very important 7 year cycle.(Charts
courtesy Stockcharts.com unless indicated).
The number 7 is much more prevalent in nature than most
of us realize:There are 7 oceans, 7 continents, 7 vertebrae in the neck,
7 layers of skin (2 outer and 5 inner), ocean waves roll
in sevens, the rainbow has 7 colors, sound has 7 notes, there are 7
directions, The Jewish Menorah has 7 candles, there are 7 holes in your head
(go ahead and count them), the earth was created in 7 days (including a day
of rest), a cube has 7 dimensions (including the inside),the male body has 7
parts, the number 7 is used 735 times in the Bible.
Seven is the number of completeness and perfection (both
physical and spiritual). It derives much of its meaning from being tied
directly to God's creation of all things.According to Jewish tradition, the
creation of Adam occurred on October 7th, 3761 B.C. (or the first day of
Tishri, which is the seventh month on the Hebrew calendar). The word
'created' is used 7 times describing God's creative work (Genesis 1:1, 21, 27
three times; 2:3; 2:4). There are 7 days in a week and the Sabbath is on the
7th day.There are 7 deadly sins, 7 virtues, 7 gifts of the Holy Spirit, 7
classical planets, 7 numbers in a N/A phone number (after the area code), 7
hills in Istanbul, Rome and Jerusalem, 7 liberal arts, 7 wonders of the
ancient world, 7 is the number of games in the playoffs for NHL, MLB and
NBA.The number 7 is also important in Hinduism, Islam and Judaism.
There is an obvious 7 year cycle in economics:
Reaching back to forty nine years ago (7 x 7), in 1966
the USA experienced a 'credit crunch'. In August of that year the US bond
market suffered a serious 'liquidity crisis'.
Seven years later in 1973, the world experienced an 'oil
embargo' followed by a dramatic rise in the price of oil. There were long
lines of cars at gas stations.
Move forward by 7 years and in 1980 Wall Street avoided
the collapse of some of its banks and brokerage houses by forcing the Hunt
Brothers to stop accumulating silver.The brokerages were shorting silver in
the futures markets, where the Hunt Brothers were buying contracts and taking
delivery. FED Chairman Paul Volcker allowed the COMEX to adopt a change in
trading rules over a weekend. This change in rules forced the Hunts to come
up with hundreds of millions of dollars in margin money with no advance
warning.Silver peaked at 49.00 and gold topped out at $875.00, while interest
rates peaked at 22%.
Another seven years passed and in the fall of 1987 stock
markets crashed around the world.'Black Monday' of October 1987 saw the Dow
lose 22% in one day. (Chart courtesy 'Marketvolume')
Then seven years later, in 1994, the bond markets
crashed.
Seven years passed and in 2001 Wall Street was closed for
5 days due to the militant Islamists attack on the World Trade Center in New
York.The DOW lost 684 points on Sept 17th 2001.Banks received
billions of dollars of newly created money from the Federal Reserve, to keep
the system afloat.
Image of Wall
Street Bull
The seven year cycle moved on and in 2008 we saw the
Subprime Housing Market Collapse, along with the overnight bankruptcy of
Lehman Brothers.The Lehman investment bank fell so fast, none of the
employees had any idea their jobs were disappearing.The DOW lost 777 points
on Sept 29th 2008.The banking system almost collapsed, (banks
refused to cash checks except after a three day 'hold', for fear that the
issuing bank might fail), but the US FED saved the day, by massive injections
of newly created cash, not only into US banks, but also some Canadian and
foreign banks.The debt problem was 'solved' with more debt!
It seems incredible that all of these crashes occurred
seven years apart!
2015 is the next domino in the sequence.The financial
problems of 2008 have not been addressed - only covered up with more
money printing.
"I told
them the real 2014 deficit was $5 trillion, not the $500 billion or $300
billion or whatever it was announced
to be this year. Almost all the liabilities of the government are being kept
off the books by bogus accounting. The government is 58% underfinanced.
Social Security is 33% underfinanced. So, the entire government enterprise is
in worse fiscal shape than Social Security is, but they are both in terrible
shape. [On future prospects] If you take all the expenditures that the
government is expected to make, as projected by the Congressional Budget
Office (CBO), all the spending on defense, repairing the roads, paying for
the Supreme Court Justice salaries, Social Security, Medicare, Medicaid,
welfare, everything, and take all
those expenditures into the future, and compare that to all the taxes that
are projected to come in, then the difference is $210 trillion. That is the
fiscal gap. That is our true debt."
Lawrence Kotlikoff a professor of
Economics at Boston University, in
testimony before the US Senate
This chart shows the US Federal debt rose from zero to
nine trillion dollars between 1776 and 2008.Since Mr. Obama has been in the
White House, this debt has doubled to over 18 trillion dollars, while the US
debt ceiling has been abandoned! He has added as much debt in 7 years as all
former presidents together, in the preceding 242 years!Anyone with any
understanding of keeping a budget knows that this is a recipe for disaster.In
2008, 25 percent of all Americans in the 18 to 29-year-old age bracket considered
themselves to be "lower class". But in 2014, an astounding 49 percent of all Americans in that age range considered themselves to be
"lower class".The percentage of Americans who are fully employed is
back at 1982 levels.For the first time in US history businesses are closing
faster than new ones starting up.
Stock markets are overdue for a major correction.The
energy for the current stock market rise has come primarily from the printing
presses.Central bankers are now running out of options to save the financial
system, after years of adding money to the money supply.
Canadian and European banks are just as vulnerable to a
crash as US banks.In 2013 the Canadian government added 'bail-in' to banking
law.Just as was the case in Cyprus, banks can change deposits into bank
shares, should a liquidity crisis occur.The shares would likely be subject to
a time limit during which they will not be tradable. European banks are also
able to confiscate depositor's money via bail in.Meanwhile cash is on track
to becoming obsolete (please read my article:'The Battle against Cash', at www.pdegraaf.com)
The seven year cycle has been dealt with in great detail
by Jonathan Cahn, author of 'The Harbinger,'in his latest best
seller:"The Mystery of the Shemitah."
Interestingly, the Jewish Shemitah has often ended at
about the same time as the market crashes listed in this article. The last
Shemitah ended on Sept 29 2008, the day the DOW shed 7%.The 2001 Shemitah
ended on Sept 17th 2001, the day the DOW dropped 684points.The
current Shemitah is due to end on Sunday September 13th 2015.
 
Featured is the gold chart from 2007 - 2009.Gold was
finishing a pullback in 2008, very similar to the correction that started in
2011 - a pullback that appears to be ending. (See next chart).This 2008 gold
bottom occurred right around the 2008 stock market crash.
Featured is the current gold chart.Price found support at
the $1075 level and is heading for the first target at the green arrow. A
pullback is expected to find support at the blue arrow. The supporting
indicators are positive (green lines).China is buying gold at a rate of 2,000
tonnes per year, while India and Russia along with several smaller Asian
nations are absorbing 1,000 tonnes per year.This is more gold than the mines
of the world are producing.The deficit has been made up by dishoarding on the
part of Western Central Banks.These banks are running out of
gold!Fundamentals are 'gold-bullish'.
During periods of financial turmoil people have always
turned to gold for safety.
Featured is the silver chart from 2007 - 2009.Shortly
after the stock market was crashing, silver ended a pullback that began in
early 2008.
Featured is the current silver chart.Price found support
at the 14.50 level and the supporting indicators are positive.There is
resistance at the two arrows.As soon as price rises above the two arrows, the
next silver rally will be underway.
"The Prudent see Danger and take
Refuge."Proverbs 22:3 NIV.
Protect yourself - prepare for the worst and hope for the
best.
Disclaimer:Please do your own due diligence.Peter Degraaf
is NOT responsible for your investment decisions.Investing involves risk.
Peter Degraaf is an independent investor with over 50
years of experience.He publishes a daily report for his many subscribers.For
details please visit www.pdegraaf.com
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