Why This Week’s Low Is So Important

 

 

The Dow fell as far as it could possibly do without reversing the trend on a long-term basis even technically. The low this week has been 15370.33. This has flirted with our Third Monthly Bearish Reversal at 15550, but we have also a simple technical point of great importance – 15284. That happens to be last year’s low. Penetrating that number would open the door to a slide into March of 2016.

Consequently, penetrating this week’s low will be INCREDIBLY significant for it would set the stage for 2016 being an OUTSIDE REVERSAL TO THE UPSIDE and that would be just about the worse type of PANIC you could possibly create. WHY? Because this would imply a total meltdown in government and the rush of assets from government paper to private assets would be like a building on fire with all the doors locked except one.

 Oh there will be the bulk of people claiming the market will implode and the Dow will fall to a 100 so the sky is falling will be coming out saying I told you so. But we have to stand back and ask? If everything collapses, does the world really just meltdown so easily? Even in an extreme hyperinflation, ALL assets rise in value. So there is just no possible way for the world to meltdown and ONLY gold will rise. That is just insane and the people who argue money is not tangible and is really a theft because it is fiat, are clueless because ALL money is fiat even gold if its value is fixed and declared to have some specific value. Money is purely an agreement for there is NOTHING that exists which is money in the context that they preach. Money is merely a medium of exchange that you are willing to accept simply because others will accept it from you. So it does not matter if it is gold, paper, or bricks of tea.

 

Here is a brick of pressed tea of China that was used for money in 1949. This illustrates that any commodity can be used for a medium of exchange simply because it has a recognized use. In Japan, bags of rice were the medium of exchange for 600 years. Cattle has long been a monetary base in Africa and was the foundation of the Roman monetary system from the outset so much so that their bricks of bronze pictured cattle to illustrate its value in exchange – bronze backed by cattle. Roughly, 5 pounds of bronze (Aes Signatum) was equal to one head of cattle. Bronze had tremendous utility value for it could be shaped into a tool for agriculture or into a sword for weapons.

Therefore, the prospect of gold rising and nothing else is simply gibberish. If we penetrate this week’s low, then the type of Phase Transition that follows is the worst possible we could ever imagine. This would set the stage for the complete meltdown in government. This will become our greatest concern for the pendulum will swing to the extreme left which will propel the swing to the extreme right. This becomes totally insane.