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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Epic Paradigm Shift Looms Against the Acceptance of Fiat Money

Stock-Markets / Global Financial System Mar 03, 2008 - 10:01 AM GMT

By: Joseph_Russo

Stock-Markets Best Financial Markets Analysis ArticleAdaptive Trading and Investment Perspectives Since we first began offering our market forecasting and analysis services to the public some two years ago, Elliott Wave Technology has been strident in directing our clients focus and attention to the negative wealth effects that eroding fiat-currency's impose - along with the plausibility of epic consequence, if and when an inevitable paradigm shift against the acceptance of fiat-money were to ever reach critical mass. No matter where we are in a given investment cycle, we must first recognize the inherent nature of that environment, and then adapt our various investment postures with fitting perspective.


Say, you wanna revolution – well, ya know

In our view, as a result of their near-100-year monopoly, and flawed mandate to create public perception of never-ending (un)sustainable growth with price (in)stability, monetary authorities find themselves compelled in administering to an additional and rather absurd mandate - one which must avert an otherwise inevitable and catastrophic credit-deflation of their own making – and they must do so, at any and all cost. Our highly esteemed monetary authorities, boxed in a systemic paradox of their own design, appear to have no choice but to take their alchemy up a notch, and begin to fertilize seeds of hyperinflation in order to save face, and assure that their obligatory mandate will be fulfilled as agreed.

To their credit or shame - depending on one's perspective, they have successfully staved off this permanently imminent and exponentially growing deflation for more than 30-years running. The monster in which they've been so accustomed to taming – has apparently taken on such gargantuan proportion that it is now becoming acutely unmanageable. The seeds of hyperinflation are slowly taking root, and may soon begin to expose themselves to the populace, and spread unabated. Unless our monetary and political stewards begin taking immediate steps toward fostering the adoption of a sustainable, pro-active, fiscally sound and transparent set of practical transitional protocols to construct a NEW sustainable system of money and credit – the current generation will no doubt, be bearing witness in their lifetimes, to an epic paradigm shift reaching critical mass – resulting in a 21 st Century revolution to abolish and supplant the present fiat-currency system of money and credit.

Good, but not good enough

Although a new incoming administration with fresh momentum for promised-change may be considered a very good start, such positive intentions alone - unless radical and swiftly acted upon - will not be enough to get the job done in time. It also may be such that there is simply no practical timely solution other than making the necessary preparations to maintain civil order, the rule of law, and containing the masses as crisis after crises pounds the nation toward eventual revolt.

Ain't no stoppin'us now – we're on the move

It is our further opinion that this flawed system of fiat-money and credit-creation has long outlived its practical utility, and stands out quite clearly as the NUMBER ONE - singular systemic cause of all systems deemed to be broken, dysfunctional, grid-locked, intractable, or in some stage of pending breakdown or looming collapse. If left inadequately addressed, or simply left to 20 th century business-as-usual inflationary tactics - such denials, misguided actions, and lack of visionary leadership will ultimately threaten to impose an acute and prolonged disruption to the well-being of civilizations across the globe for decades to come.

Dual Voice / Singular Focus

Before we continue, we wish to point out that we communicate with two distinct voices on occasion. Our public voice, exemplified by expression of opinion and philosophical query, is often limited to articles such as this one. In stark contrast, our second voice is purely analytical, and all-business. Market based communications within our publications are strictly limited to adherence, and utmost respect for impartial technical assessments as to the state and progress of a wide array of broad market indices. We consider this to be our more disciplined, essential, and relevantly applicable voice. A voice that is steadfast, prepared, anticipatory, on-the-money, and always on-guard.

Takin' what they're givin' cause we're workin' for a livin'

Despite its current state of pending jeopardy, and though flawed as it may be, each of us by default - must participate and adapt to the current financial systems construct, limitations, and constraints. It is all that we have to work with. One of the cornerstones to our long-term investment guidance has emphasized the general rule of thumb in guiding each of our clients to take steps to assure that their accumulated wealth is protected against the ravages of inflation by means of acquiring a constant and adequate percentage of their total net worth in physical Gold and Silver bullion – under any all market conditions. The bulk of such acquisitions were made when gold was at or below $400 – it now appears destined to strike $1000 and beyond. Such guidance from two-years ago was definitely worth its Gold-weight, and most certainly worth the price of admission!

Pro-active long-term checks and balances

In framing our long-term market analysis, we have adopted a series of mechanically based checks and balances from which to monitor adequate levels of long or short side exposure to broad based financial indices. Our patience and discipline in observing these trigger-points has paid off handsomely per our recent bout of high-level profit taking - whereby we lifted 2/3rds of long side exposure to general equities just prior to the October top. Similar mechanics shall alert us as to when and if to take full cover, and when and if it may be prudent to begin re-introducing exposure back to the long side of equities. Naturally, more aggressive clients may use such barometers to build short positions in various indices.

Global Investors must Align Perception and Reality separately

The three charts above provide a small, relatively short-term glimpse into the early rumblings of a rather subtle paradigm-shift quietly building mass. The comparative studies illustrate the “official” and perceived levels of dollar denominated performance and value metrics. Below is a longer-term data series of the three titans. In the chart below, we have provided self-explanatory annotations as to our long-term forecast for the US dollar.

Aligning Short-Term Trading Expectations in Proper Context

Those committing themselves to short-term speculation should only do so only if they possess adequate amounts of discretionary trading capital, patience, tenacity, discipline, and resolve to succeed. Those seeking constant spoon-feedings of “tell-me-what-to-do-next” guidance - neither willing nor desirous to work for themselves, will generally end-up failing.

All too often, traders prematurely jump to and from the latest system or guru with the hottest advertised hand. Such folly equates to selecting a mutual fund or stock for long-term investment on the basis that it was last year's best performer.

Over time, and likely after parting with a good portion of their trading stake, participants eventually learn that one way or another; proper endeavor into the art of speculation is predicated on hard work-ethics, acceptable levels of routine losses, and discretionary adherence to adaptive-dynamic trading principles that have proven themselves both reliable and profitable over acceptable periods of time.

Strident Short-Term NTO Traders Resume capturing BIG PROFITS

The ongoing hi-jinks, mayhem, and housecleaning operations continue to rid the market of its most fearful traders. Though many may have cut & run scared - jumping ship at the first sign of rough waters, our swift response in quickly adapting proprietary short-term methodology to the current market environment has paid off smartly for NTO traders. Our adaptive-dynamic analysis provides short-term NTO traders with the audacity, resolve, discipline, and confidence - to stick it out, and come out on top when the going gets tough.

Short-Term Trading Environment: Week ending 29-Feb.

In a word … MANIC

Below is a graphic summary of recent short-term trade-triggers identified via Elliott Wave Technology's Near Term Outlook . Note how our trade performance has quickly rebounded after enduring a bout of sudden losses in weeks prior. In fact, the lion's share of February has been fraught with similar challenge. Such adversity along with the resumption of handsome profits is further illustrated by February's closing profits relative to last week's sizable $8,000 bounty.

Elliott Wave Technology's short-term market analysis provides an adaptive roadmap to the dynamic price action landscape five days per week. The Near Term Outlook provides an excellent platform from which speculative short-term traders may better execute their strategies, mitigate risk, and maximize profits.

The Broad Market Update

We are going to begin this broad market outlook with a long-run value perspective of Japanese equities. The chart below has been extracted from Elliott Wave Technology's Millennium Wave Quarterly archives. Our chart of the Nikkei is well annotated, self explanatory, and contains a shaded backdrop of the YEN vs. GOLD behind the nominal price series. 

Should one have interest in acquiring access to our long-term technical analysis and/or utilizing our proprietary short-term market landscapes, we invite you to visit our web-site for more information.

For immediate access to our broad market coverage in all time-horizons, one may subscribe directly to the Near Term Outlook which includes our Global Millennium Wave Quarterly reports, Interim Monthly Forecasts, and ongoing coverage of the short-term Dow, S&P, and NDX five-days-per-week, while issuing near-term updates for the US Dollar, Gold, Crude Oil, and the HUI two times per week.

Trade Better / Invest Smarter...

By Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Copyright © 2008 Elliott Wave Technology. All Rights Reserved.
Joseph Russo, presently the Publisher and Chief Market analyst for Elliott Wave Technology, has been studying Elliott Wave Theory, and the Technical Analysis of Financial Markets since 1991 and currently maintains active member status in the "Market Technicians Association." Joe continues to expand his body of knowledge through the MTA's accredited CMT program.

Joseph Russo Archive

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