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Gold and Hyperinflation
| 2 April 1792 28 June 1834 10 May 1837 10 May 1838 |
Gold was fixed
at $19.39 an ounce under Gold Standard. Gold price was raised to $20.67 an ounce. Suspension of free conversion of money into Gold. Free conversion was re-instated. |
After 55.80 years, because of financial panic and huge demand for Gold, the U.S. government suspended free Gold conversion. The 2nd Gold egg was laid in May 1837.
Gold egg No. 3 [1893 Q1]
55.80 years later, in 1893, another financial panic occurred. Gold was hoarded. In October, the discount rate soared to 36%.
John Dennis Brown's 101 Years on Wall Street made the following comments:
The last great mercantile and credit crisis of the nineteenth century smashed the market in
1893. During the summer, the casualty list included a fast-swelling list of banks, insurance companies, and brokers. Cash currency commanded a premium of 5% over certified checks.The nation, at the same time, suffered from a growing currency crisis originating in the
Sherman Silver Purchase Act of 1890 and driven by a growing foreign distrust of dollar holdings. Heavy selling of securities encouraged the efflux of Gold and the Treasury's bullion holdings fell dramatically.
Gold egg No. 4 [1948 Q4]
This egg was laid immediately after World War II. The following events make interesting reading:
Hungary 1946
The inflation rate was 19,800% per month.
In August 1946, 828 octillion (1 followed by 27 zeroes) depreciated
pengos equaled the value of 1 pre-war pengo.
Japan 1947
Fishermen & farmers in 1947 used scales to weigh currency
and change.
China 1946-1948
The Chinese National currency became valueless (when the National
Party was expelled to Taiwan).
Gold egg No. 5
The reference point of the coming crisis is the 3rd quarter in 2004! The crisis peak may deviate from the reference point by several months. In a separate analysis (as I will explain later), I have arrived at the conclusion that the most turbulent months will be in year 2005. During this period, Gold and Silver prices will soar. So will commodities.
Before moving to the next section, let me recapitulate:
THE UNDERLYING CAUSE
I read a novel City Boundary by Qian Zhong-shu. In the preface, Mr. Qian told a story. An English woman read the English version and was keenly interested. She telephoned Qian and asked whether the chief character in the novel was Qian himself. Qian replied bluntly, "If you like the egg, eat it. Why are you bothering me with the hen?"
Dear readers, if you like the gold egg, pick it up and keep it in a safe place. As to the goose... er... Since you want to know why she lays a Gold egg every 55.80 years, I am telling you the underlying cause now.
People in weather forecasting business know well that there is a lunar cycle of 18.60 years. The knowledge is an indispensable tool for predicting water tides. Three times 18.60 years = 55.80 years. It so happened that in every 3rd occurrence of this 18.60-year lunar cycle, momentous events had occurred to bring into prominence Gold's role in the financial markets.
The following is an explanation for the formation of the 18.60-year lunar cycle:
The Earth revolves around the Sun. The plane of the Earth's orbit is called the Ecliptic. The Moon's orbit (around the Earth) is inclined 5 degrees 8 minutes to the Ecliptic. The point where the Moon crosses the Ecliptic from south to north is called the North Node, and where the Moon crosses the Ecliptic from north to south is called the South Node. The two nodes (180 degrees apart) move in clockwise direction and complete one circle of 360 degrees in 18.60 years.
For nodal and planetary positions, please refer to The American Ephemeris by Neil F. Michelsen. (Amazon)
THE 18.60-YEAR CYCLE AND EFFECTS ON GOLD AND CURRENCY
What had happened on the shorter cycle of 18.60 years?
The effects, though regional only, were the same. Currency collapsed, and Gold was in great demand, as evidenced below:
FINANCIAL PANIC
Knowing that hyperinflation is approaching, we have no difficulty to get into a long Gold &/or Silver position. The important decision is when to sell so to maximize profits at or close to the peak. In a spiraling inflationary period, fortunes can be made or lost within a short time. It is crucial to know beforehand when to liquidate the long positions.
I need to state a theory discovered by me. It has not been disclosed to anybody until now.
Theory
"When lunar node is posited alongside Jupiter for a long time, there is hyperinflation."
Notes:
Lunar node = North Node or South Node
Alongside Jupiter = Close to Jupiter, not more than 14 degrees apart.
Long time = More than 6 months.
To illustrate the application of this theory, let us study the last soaring Gold market in 1979-1980.
The positions of North Node and Jupiter are taken from The American Ephemeris.
When North Node was on the positive side of Jupiter, it lasted only 2 months, so the formation had no application. When North Node was on the negative side of Jupiter, they stayed within orb for more than 7 months. Accordingly the period from early November 1979 through end June 1980 was extremely bullish for Gold.
Spot Gold was quoted at US$370 an ounce in early November 1979. It soared to US$875 on 21 January 1980. There was a sharp downward reaction in February and March 1980, touching a low of US$475. Gold then climbed all the way up during the rest of the bullish phase. Its price overshot past the end of June 1980, reaching US$690 in early July.
The period from early November 1979 through end June 1980 was only a part (the most bullish part) of the financial panic. The bullish Gold trend started much earlier.
There is an equally bullish phase for Gold in the near future.
South Node is on the opposite side of North Node (the lunar nodes are always 180 degrees apart). Interactions between South Node and Jupiter are the same as interactions between North Node and Jupiter. Bear in mind that Libra is opposite to Aries.
When South Node is in the positive side of Jupiter, they stay within orb for about 8 months. Therefore the period from end December 2004 through early August 2005 is extremely bullish for Gold. South Node then swings to the negative side of Jupiter, and this lasts only 2 months. The latter formation has no application. I expect termination of the bullish trend from the last week of August 2005.
The bullish period from end December 2004 through early August 2005 is only a part (the most bullish part) of the financial panic. The bullish trend for Gold will start much earlier.
A FORECAST FOR GOLD AND SILVER
It is not the purpose of this article to make any guesses. However, from the facts presented, I believe that during the impending hyperinflation, Gold prices will explode, exceeding significantly the peak achieved in January 1980 (US$875 an ounce) because:
(a) The astronomical phenomena for 2004-2005 are at least as bullish as those for 1979-1980.
(b) In
the past occasion, Gold started with a low of US$100 per ounce
in August 1976. The current
occasion had a low of US$252 in August 1999. It is not unreasonable
to expect a much higher peak for the present bullish market.
The next problem is to consider whether or not to buy Silver as well.
The Gold/Silver ratio was 16 for many years before 1870. The ratio rose to 90 in 1930s (Great Depression). From 1960 to 1980 (inflationary periods), it fluctuated between 20 and 40. The latest low was 20 in end 1979-early 1980. The ratio rose to 100 in 1991 Q1. It now stands at 70.
It is clear that during inflationary periods, Gold/Silver ratios fall. Since the coming great event is hyperinflation, I expect the ratio to fall to 20-40 (like years 1960 to 1980) which is about half of the current ratio of 70. This means that for 100% rise in Gold (Gold price is doubled), Silver will rise 300% (Silver price is quadrupled). On this reasoning, I would advise buying Silver also.
CONCLUSION
Here are the main points:
1. Hyperinflation is imminent.
2. Past analyses indicate the following will happen:
Gold will soar.
U.S. dollars will collapse.
Interest rates will climb sharply.3. The reference point for the hyperinflation is the 3rd quarter of 2004. By planetary correlations, the most bullish phase has been located. It is from end December 2004 through early August 2005. However, Gold will rise significantly before this period.
4. Gold price will greatly surpass the high reached in year 1980.
5. It is advisable to invest in Silver also because Silver rises more rapidly than Gold.
6. Hyperinflationary forces will disintegrate by the end of August 2005.
Good luck!
Y. T. Wong
Contact
Hong Kong, 1 January 2004
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321gold Inc
