(By Jeff Berwick, The Dollar Vigilante) – The mainstream media and analysts, completely oblivious to the big picture and just seeing the world as a random series of unexplainable events, have been touting the line that the reason for market chaos to start this year was because of “China”.
That narrow-sighted theory has now fallen to the wayside as the Chinese markets have been up this week while the Middle East, Europe, the US, Japan, Canada and more have been decimated.
The French CAC 40 Index was down 3.45% today just days after Communist President Francois Hollande publicly stated that the French economy is now in a state of “economic emergency.” His solution? Stealing $2 billion of money from people (tax) and destroying the capital in “job creation” programs. Job creation programs may “create jobs”, but they are for things that no one wants (otherwise the market would do it), thereby destroying more capital.
The British, German and Swiss markets also lost approximately 3% today as well.
In the US, the Dow Jones Industrial Average opened down and by midday was down, yet again, more than 500 points. A surge of buying did come in near the end of the day to see the Dow close down 249 points, though.
Even though it closed off its bottom, US stocks continue to be off to their worst start of the year in history. The S&P 500, alone, has lost more than $2 trillion in value in the first three weeks of the year.
Worldwide stock markets (as shown by the MSCI All-World Index) are now down over 20% since their highs pre-summer.
Many global markets have also now broken below their August lows. The Dow Jones broke through its August low today but closed just 100 points above that level.
The blame for the recent drop has shifted from “China” to “oil”. The price of crude oil was down nearly 6% today to $26.76.
Again, though, like with China, mainstream analysis is missing the big picture. The price of oil dropping is not causing worldwide stock markets to collapse. Oil is used in almost everything in modern day life and manufacturing. How could the price of energy being much cheaper cause the economy and financial system to crash?
Oil, though, can be an INDICATOR of where the economy is headed. And it has fallen from over $100 in mid-2014 to under $30 in early 2016.
The last time it fell like this, as we’ve pointed out numerous times in the past, was during the financial crisis in 2008.
Looking at long term charts based in US dollar terms is almost useless due to the never-ending devaluing of the dollar but when price in gold, charts can show a better indication of things.
The last time the price of oil, in gold terms, fell this low was in 2008. Prior to that was just before the tech bubble burst in 2000. The time before that was in 1994 during the bond market massacre. And before that was in 1987, when Black Monday occurred. Those years all happen to be Shemitah years as well, as was 2015.
We now have entered into the Jubilee year, the once-every-49 year event that follows every seventh Shemitah. And, as William White, former Chief Economist of the Bank for International Settlements (BIS) said at Davos this week, it is now the “debt jubilee”. And he also points out that this is worse than the situation we were in in 2007. Which we also agree with.
Gold started the year at $1060 and closed today over $1100 and, despite rumors of bitcoins death last week (which we emphatically said it wasn’t), bitcoin rose $40 today, from $380 to $420. With our trades for subscribers focused on shorting the markets and buying precious metals and bitcoin, it was another great day for us.
If it wasn’t a great day (or great start to the year) for you, turn off CNBC and the television programming and your financial advisor who most likely just pushes what the firm wants you to buy and join TDV. Our newsletter is the hottest financial newsletter in the world right now.
While mainstream media will never have us on to combat their narrative, I was recently on one of the top radio programs in Spain (you can see/hear that here). And tomorrow I am live on the Real Money Show in Canada and the Richie Allen show in Europe.