Holy Hell About to Break Loose

 

Larry Edelson

I’ve long maintained that the final quarter of this year, starting with the historically volatile month of October, would be the start of a roller coaster ride through hell.

And if you haven’t already noticed, it’s shaping up to be precisely that.

 Global equity markets are teetering on the edge of a cliff. For some, like Europe’s markets, it will be the beginning of a long, drawn out bear market.

For others, like our markets, it will be a severe sharp pullback that gets the majority bearish, but then sets the stage for yet another bull leg higher.

You can see the blood starting to spill almost everywhere. Europe’s markets are cratering, with Germany’s DAX, the bulwark of the European Union, starting to rollover to the downside.

If you look closely, you can see the blood starting to spill.

You can see it — if you look closely — with our equity markets:

 Where more than half of all publicly traded U.S. stocks are now down more than 20% from their record highs.

 Where the Dow Transports are now down 15.43% from the record high Nov. 14.

 Where the Dow Utilities have slid as much as 18.8% since their January record high.

 And where many U.S. stocks are down even more, many losing more than half their value since their record highs over the past year.

Thing is, it’s going to get much worse this month for stocks, all over the world. Germany’s DAX is set to crash. The Dow Jones Industrials will plummet to 15,000 then possibly to 13,900 before recovering.

And stocks aren’t the only asset class where holy hell is breaking loose.

 Bubbles are bursting in the biggest markets of all, sovereign debt. That’s true no matter what Janet Yellen and the Federal Reserve do with their official interest rates.

In Europe, German bunds are starting to look like they will implode any day now. Same for Japan, where the Japanese government continues to print money with reckless abandon and Japanese government bonds have nowhere to go but down.

Here in the U.S., hardly anyone realized it, but interest rates started moving up way back in July 2012, when the 10-year U.S. Treasury note yield bottomed at 1.394%.

Slowly, but surely, investors worldwide are starting to shun sovereign debt, realizing that there are no returns to be had there and that the safety of government debt today is nothing but a mirage.

Short-term interest rates, on the other hand, are indeed falling, with
three-month Treasury bill yields now negative at -0.02%. They could get even more negative as investors flee the stock markets and park capital in money markets, pushing short-term yields even further into negative territory.

But don’t be deceived: Even in the short end of the yield curve, a government debt bubble bursting looms high.

 Then there is the commodity sector, in one of its worse deflations ever. So bad that the world’s largest and most sophisticated commodity company, Glencore, has seen its share price plummet more than 70% this year, with half that loss occurring on Sept. 28.

Gold, which has fallen more than 40% since its high in September 2011. Silver getting clobbered. Copper annihilated. Other base metals prices shedding 70% or more.

Grain markets reeling. Soft commodity prices such as coffee, cocoa and sugar cut in half or more.

Right now, a bounce is overdue, especially in gold and silver. But here too, don’t be deceived. We have not yet seen the final lows in gold or silver and any bounce is nothing but a fake out. So don’t — I repeat, DO NOT — get caught now in any commodity bounce. It will merely rob you blind.

 And what about the geo-political scene, where I warned way back in 2012 that the war cycles were ramping up, and where Martin Armstrong, one of the foremost economists alive today, also agrees? Consider the refugee crisis in Europe — while I am for humanitarian efforts, the strain of the crisis will be the final nail in the coffin for indebted European governments. And where cultural conflict is sure to rise.

Or here, in the rise of Donald Trump, who is anti-establishment. No, I don’t like the economic policies he has revealed.

But that’s not the point. His popularity is threatening the status-quo in Washington, showing you that the people are finally rising up against harebrained politicians who want nothing more than to save their butts at your expense.

Or how about ISIS and Syria — where for the second time since the Cold War, Russia and the U.S. are polar opposites, just like they are regarding Ukraine?

Potential for a future international war? Very possible. Leaders in Washington, Brussels and Moscow need to divert their peoples’ attention away from the lousy state of domestic economic affairs.

And more, now all coming together on the world stage, starting to turn nearly all markets upside down and inside out.

No problem — if you are prepared. In fact, it’s exactly the opposite of a problem — if you know what to do. It’s an opportunity to better protect your wealth and build enormous profits to boot.

Already, as I pen this column, my Real Wealth Report is up 18.8% year-to-date. And members of my Supercycle Trader are enjoying gains of as much as 121% in less than a week, with several open trading positions on now and more coming  that could offer even better profit potential.

Stay safe and best wishes,

Larry

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 46

Kalstad October 7, 2015

Hello. Exciting reading Larry. What do you think about future oil prices?

Curious October 7, 2015

What happened to Europe? Didn't see any...

$1,000 gold October 7, 2015

we're about halfway throught the 4th wave (a corrective wave) of the elliott wave pattern.

$1000 gold October 7, 2015

i'm back again and i'm going to shut down this chat again this week

$1,000 gold October 7, 2015

do what you want. i don't care.

$1,000 gold © October 7, 2015

corrections last about 3-4 months. the right shoulder is forming now. i'll be a buyer at the "bear trap."

Bob October 7, 2015

$1,000 gold The expected move on the small H&S Bottom is to about $115 once it breaks north... Is that what you're seeing as well?...What concerns me is that I also see a high wave candle (doji) which formed today at a resistance point...with an 80% chance of a sideways or bearish move for a few weeks or month, as well as the not completed H&S Top which has a measurement down to $95 on GLD. It would seem logical to buy the $110 calls and $110 puts simultaneously.

$1,000 gold October 7, 2015

options are for the pros, i'm just an amateur. larry says the dow will go to $31,000, but this week says all hell will break loose. as for me, i bought what looked like an inverted head last monday, a mid-point in this correction. the head appears to have completed and now the right shoulder will hopefully form. i'll look for a bear trap after that as another buying point. larry likes to participate in this forum now, so you can ask him and were (another resident exert) the hard questions. i like to keep it simple.

gobsmack October 8, 2015

ya, options are like a slot machine.

were October 8, 2015

sounds like a butterfly spread, which are know to work well in times of volatility.

winky October 9, 2015

only leveraged so you lose more faster!

Robert P October 7, 2015

"For others, like our markets, it will be a severe sharp pullback that gets the majority bearish, but then sets the stage for yet another bull leg higher." Could it be that everyone is already bearish, expecting another leg down in October ....meanwhile, we are seeing the beginnings of the next wave UP?? While the major indices have not shown a real re-test of the August low, the charts of numerous individual stocks DO show the re-test, and are on their way back up now..... Food for thought........

Robert P October 7, 2015

I've heard it said that the markets move in such a way so as to cause the most pain possible to those involved in them............. As for "geopolitical events," I've seen many seemingly major "crises" over the last few years....and the markets just yawned and continued to go higher!

Bob October 7, 2015

$1,000 gold...I see both a large H&S Top (which hasn't made its measured move to the downside yet) and a small H&S Bottom (now forming and which hasn't broke to the upside yet) in gold...Which one takes precedence? Thank you.

Bob October 7, 2015

Larry, Are you recommending that we short bonds, e.g., go short TLT or long TBT??? Thank you,

Dd October 7, 2015

Over longer periods of time the leveraged etfs are designed to lose value, so it might be safer to short the bullish etfs. Maybe this is already priced into the options, but not sure since i'm not a valuation expert.

joe October 8, 2015

Larry, those suits look great on you.

Titus L October 9, 2015

I just received an e-mail from you Larry and you said that euro sinks. In fact in the last six month euro goes up against dollar from 1.05 to 1.13 today. The euro goes up right now as I write. How come?

Ray October 10, 2015

Patience, little grasshopper.

BDF October 9, 2015

lose money on one bad options trade and that's money gone forever that could have been invested in good stocks.

were October 9, 2015

the bottom is in for the year.

Titus L October 9, 2015

Oh, a new e-mail alert, and you said again "the euro continues to plunge". But the euro continues to... surge! From the beginning of Volkswagen Gate euro rose against the dollar from 1.10 to 1.14. Only today the euro rose from 1.13 to 1.14! And in the last six month euro goes up from 1.05 to 1.14 today. Keeping that way and I'm afraid that the German banking crisis will sky-rocket the euro.

Ray October 10, 2015

Not too long ago it was at 1.40. Stop badgering.

winky October 9, 2015

where did all the "larry bashers" go? many bashers, one guy?

Phyllis Root October 10, 2015

I bot an ETF stock to short the Euro. It has put me at a loss since May and June when I bot. (symbol: EUO) Yet Larry keeps saying that the Euro is plunging. If that were true, why do I have a plunging short sale on it ??????????????

stuarts2 October 10, 2015

If Martin Anderson, with his long history of fraudulent activity, is your idea of "one of the most foremost economists alive today," it calls into question all of your sources of information and prediction.

Paula October 10, 2015

Hi Larry, I agree, the economy and stock market are a mess and the worst is yet to come. I believe because most people do not understand their investments and don't know what to make of the economic news coming from Washington and Wallstreet they are not preparing or don't know how and we are all in for a terrible shock. Also, I was thinking of the phrase I have heard several times; "Too big to fail", Looking back in history some of the greatest empires are no more; Persia, Rome, Egypt. Do people honestly think the United States could not suffer the same fate?

Ron October 10, 2015

Larry, If the European Financial System is a mess & you have projected the EURO to fall to .80 against the US $, currently $1.14 & rising, shouldn't we see a recommendation from you in Real Wealth to short the EURO by buying EUO or are we too early yet?

Mitch October 10, 2015

OCT 7, 2015 "all hell will break loose". GUARANTEED 100 percent Bwwwwaaaaaaaaaaaaaaaaaaaaaaaaaaa

Mitch October 10, 2015

URGENT MESSAGE: from Donald Trumph. YOUR FIRED

Edouard D'Orange October 10, 2015

It's "You're", which is the contraction for "You are", not "Your", the possessive. On grammar alone, YOU ARE FIRED!

Phanu-el Asva October 10, 2015

Other than going to Mars,which is preposterous if it can not make it on Earth,Sapiens is on a bridge to nowhere.

melg October 11, 2015

'Keep your powder drive, play only with what you can afford to lose". What to do with the rest? Oh, It's all at risk! Do people understand this?

melg October 11, 2015

Play only with what you can afford to lose. Oh it is all subject to loss? Good luck!

Torquil October 12, 2015

Larry, Thank you for the in depth information. However, you might want to provide an older issue of your Real Wealth Report so people have an idea of what it is about.

Joy October 12, 2015

Larry, May I ask you when would you say gold /silver will come down again? it seems they're headed up strong. Thank you very much.

Joy October 12, 2015

Hi Larry, when would you expect gold/silver start back down? upward trend seems to continue so far. appreciate your comment. thanks

Joy October 12, 2015

Larry, when would you expect gold/silver back down? they keep going up now. Thank you very much !

Michael October 12, 2015

It is becoming more clear that the Fed will not be raising interest rates soon. In fact, it seems that a lower dollar value may now be preferred by various interested parties, including the US. That said, the is dollar going lower and gold is going higher. Do you see anything changing that dynamic in the short to intermediate term?

$1,000 gold October 12, 2015

yes. we're in a correction. focus on the technicals for now. we're slightly past the midpoint and forming a right shoulder. look for a bear trap at the end of the right shoulder, which is a scary dip to the downside that reaches the neckline of the inverted h&s. called a bear trap because the bears will come out in full force declaring their usual doomsday scenario, but it's usually the last good buying op before the bull resumes. this correction should complete by years end. nothing has changed in gold. still in a bear. dollar will get stronger as fed will need to tighten in the years ahead as the economy begins to overheat. ignore the short-term machinations of the market. volatility is just a rest of panic from the correction. it's just a blip on the big chart of the over all bull we're in, which will continue for at least the next couple year, probably more.

$1,000 gold October 12, 2015

when you use the words "that said," i know who you are. hope the below information helps.

$1,000 gold October 12, 2015

expect a recession in a couple years or more. but this secular bull will last another 10-15 years.

$1,000 gold October 12, 2015

i can show you when and how to expect any recession with a fair degree of accuracy if you want to learn.

$1,000 gold October 12, 2015

remember commodities have reset and can't get expensive until demand returns. china is in a recession that will take a couple years pressure off commodities. oil will stay cheap because every time it gets expensive the frackers will get greedy and pump too much oil, keeping a lid on prices - and the rest of the world hasn't even begun to frack yet, so the opec cartel is dead for good. all this means the secular bull is on. don't miss it.

$1,000 gold October 12, 2015

gold had been doing the opposite of the s&p - a mirror image. nothing has changed. stocks go up, which they will, gold will go down. more of the same, until we reach the point of recession and the fed returns to stimulus again. that will be the bottom in gold.

Don October 29, 2015

Would it be wise for my Irish friend, in Ireland, to convert some Euro's into Dollars as a hedge against the Euro dropping lower? Thanks, Don