The MONTHLY S&P 500 Index
The green arrows are 10 years long. Peaks indicated are in 1987, 2007, and potentially 2017.
The pause in 1997 was not a top because the market rally extended
into early 2000. The current peak in 2017 could also extend, but
valuation and timing indicators show high risk.
When the monthly RSI (timing indicator at bottom of graph) exceeds
70, turns down, and prices fall below the red support line, a
significant correction or crash is possible. Those crashes occurred in
1987, 2000, and 2008. The S&P is ready to make a similar correction
or crash in 2017 or 2018. The RSI has reached its highest level in two
decades.
The S&P 500 Index, DOW, NASDAQ, DAX and many other indices are
excessively high, thanks to central bank “stimulus” and QE policies. The
monthly chart of the S&P shows S&P prices are in a high risk
danger zone.
Possible tops have occurred before, but instead of crashing, the market sometimes zoomed higher. Do you own due diligence.
Also, read “Hindenburg Omen Meets Titanic Syndrome.” However, if you want to believe the S&P is going higher, read “Stock Market Crash … Another Lie.”
The Gold Market and its 10 year pattern
The gold market has an approximate 10 year low to high pattern.
Gold: 2001 – 2011
The dashed green arrow shows that gold bottomed in April 2001 and
peaked in August 2011, ten years later. Gold prices bottomed in late
2015 and could rally for many years.
Gold: 1970 – 1980 & 1982 – 1993
Gold sold for about $35 per ounce in 1970, although the market was
controlled. In January 1980, ten years later, it sold for over $850.
Gold prices crashed to a low in June 1982 and eleven years later they
peaked in August 1993.
A ten year low to high pattern, beginning with the late 2015
low in gold prices, suggests a gold price high during the middle of the
next decade.
The Crude Oil Market 1998 – 2008
Crude oil prices bottomed in 1998 at under $11.00 and rose to nearly $150 per barrel in 2008, ten years later.
The Silver Market – Same 10 year pattern as gold
Silver prices have a 10 year low to high pattern similar to gold.
Silver prices bottomed in November 2001 and rallied from $4.01 to
over $48 in April 2011, about 9.5 years. Silver prices bottomed again in
December 2015.
A nine to ten year low to high pattern suggests a high well into the next decade.
Given the exponential increases in global debt and increasing
consumer prices, the coming silver and gold highs could be many times
larger than today’s relatively inexpensive prices of about $1,250 for
gold and $16.00 for silver.
The Nikkei 225 Index
The Japanese Nikkei 225 Index shows a pattern similar to the S&P
500 and DOW Index. The Nikkei peaked in mid-2007 and has rallied, in
part due to purchases by the Japanese Central Bank, into late 2017. We
shall see if 2017 is a lasting high.
The weekly chart (shown below) indicates a possible rollover in prices and RSI.
Total Debt Securities
The St. Louis Federal Reserve publishes data for total debt
securities in the United States. In 1971 President Nixon severed the
last connection between gold and the U.S. dollar, which encouraged
expansion of currency in circulation, debt, and continual devaluation of
the dollar.
Date Total Debt Securities in $millions
1971 772,728
1981 2,224583
1991 7,902,302
2001 16,767,365
2011 33,868,046
2017 41,800,000
2021 52,771,000 (assuming continued exponential growth
2031 94,505,000 of 6.0% per year, the compounded rate
2041 $169,245,000 for the last 20 years)
The pattern for total debt is simple: Up, Up, and Up. This
makes the pattern for the dollar’s purchasing power equally obvious:
Down, Down, and Down.
SO WHAT?
- Dollar devaluation is central bank and governmental policy. Expect it to continue.
- To preserve purchasing power, your income, savings and retirement must grow more rapidly than the dollar is devalued.
- The stock markets (DOW, S&P 500, NASDAQ, DAX etc.) have increased in price since 1982, 2002 and early 2009.
- Gold and silver have increased in price since 1971, 1991, 2001 and late 2015.
- Buy low, sell high! Buying gold and silver in January 1980 and April 2011 was unfortunate timing.
- Buying the U.S. stock market in early 2000 and mid-2007 was
unfortunate timing. We may look back from future years and compare 2017
to 2007.
- The stock market indices, as of late December 2017, are expensive
and ripe for a correction. Today is a high risk time to purchase most
stocks.
- Central banks have levitated stock markets since 2009 via the
injection of trillions of digital currency units in addition to outright
purchases of stocks and ETFs.
But central banks are not
all-powerful. If they were, the market disasters in 2000 and 2008 would
have been prevented. More crashes will occur.
CONCLUSIONS:
- Dollar devaluation is central bank and government policy. It will continue.
- Stock markets have been levitated by central bank “stimulus” and
“printing.” Most stocks are now dangerously high, whether measured by
fundamentals or technical timing indicators.
- Stock markets MAY have already turned lower as indicated by the
daily and weekly charts. The monthly charts say, “Look out below!”
- Gold and silver prices are currently inexpensive and will
rise substantially as dollar devaluation continues. Fear and panic from
stock and bond sell-offs will also push gold and silver prices much
higher.
- Take advantage of current low metals prices by purchasing silver, platinum, and gold.
