Disorder Will Come – As Confucius Warned

If we look at the Shiller Cape index, it is now at a historical high (excluding the Dot Com bubble) and 2X the historical average. Yes, overbought positions can extend but the subsequent crash will be long and vicious.


Finally, another picture that reminds us of Confucius’ warning that “danger, disorder, and ruin may come”.

The Dow peaked against gold in 1999. The ratio came down from 44 to 6 or by 87% in 2011. We have now seen a 10-year correction with the compliment of the Fed and massive money printing combined with credit expansion.

The rise in the Dow could end tomorrow or we could see a continued meltup for a limited period. Regardless, the time for Confucian preparedness is now and here.

We know that stocks are massively overbought on every measure. To catch the last few points of the rise is an extremely dangerous exercise that could lead to ruin.

Now is the time to take profits in stocks and protect your assets from total annihilation.

As I showed in last week’s article, gold is today as cheap in relation to money supply as it was in 1970 at $35 and as cheap as in 2000 when gold was $290. The short-term correction in gold is now finishing and the next move up will be the strongest for a few years.

The rise in gold and fall in stocks will mean that the Dow will fall another 99% (see chart above) from here to reach the long-term trend line (not shown).

So getting out of stocks and holding physical gold will not only be a seminal decision but it will also heed 2,500 years of wisdom that Confucius taught.


Since this article was written, a small hedge fund has lost $30 billion due to ludicrous risk-taking in the derivatives market. Banks like Credit Suisse will also lose billions. I have consistently warned readers about these dangers. The whole derivative $1.5 quadrillion timebomb is at risk. More about this in the next article. Remember Confucius’ warning!

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