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I first read Larry Edelson’s treatise on the Cycles of War more than a quarter-century ago, when his daughter and my son were attending our K-8 Weiss School here in Palm Beach Gardens.
One day, Kari posed with Anthony for a school photo, and soon thereafter, she handed me her father’s Cycles of War report, while uttering these simple words: “Please read this. It’s from my Dad.”
I was so impressed, I decided Larry should join our research company.
He wrote that the next major war cycle would not begin until the 21st century. But when it did, he insisted, the consequences would turn the world of investments inside out and upside down.
The Prediction
Fast forward more than two decades to January 2013. That’s when Larry and I spoke together at our Weiss Wealth Summit at the PGA National Resort. And that’s also when he pinned down the timing more precisely — with this prediction:
A new war cycle has now begun. It will start to ramp up immediately and continue to do so until the year 2020. Wars, revolutions and chaos will spread and sink major economies. They will drive global commodities into a depression. But they will also create a tidal wave of flight capital from the Middle East, Europe and Asia to the only major nation and only major market in the world that’s still perceived as relatively safe and stable — the United States and its blue-chip stocks.
At the time, few believed him. Fewer still understood how a nonfinancial phenomenon could become a major factor for financial markets.
Yet, here we are, nearly three years later, and not only are wars spreading just as predicted, but global markets are also following Larry’s script practically to the letter.
To better understand how, let me ask you …
Four Intriguing Questions
With Four Surprising Answers
Q: How many major economies in the world are currently improving?
Answer: Virtually none. Almost every one — including the European Union, United States, China, Japan, Brazil, Russia and Canada — is sinking, slowing or just muddling along.
Q: How many major world commodities are in an uptrend?
Answer: Very, VERY few. Just in the last 12 months, energy prices have been sliced nearly in half, with crude oil down 44%, heating oil down 40% and gasoline down 36% … foods have been clobbered almost across the board with coffee off 38%; sugar off 19%; soybeans off 15% … and metals have also taken a shellacking — nickel down 39%; zinc down 28%; copper down 26%; aluminum down 25%, and silver down 11%.
All major commodity indexes — for energy, food, raw materials, and metals — are at or near the lows they made in the 2008-09 debt crisis.
Q: What about corporate profits?
Answer: We’re witnessing the first back-to-back quarters of earnings declines since 2009. It’s an earnings recession. And it’s here.
Q: The toughest question of all: With all four of these powerful forces so blatantly negative, why have the U.S. stock averages been marching higher since the end of September?
There are several good answers. But for us, the most blatant and obvious is the same theme we have been harping on for the past three years …
The Global Money Tsunami
This is the term we’ve coined for the massive influx of flight capital that Larry began forecasting nearly three years ago — mostly flowing from major trouble spots overseas and mostly going to large, high-quality, U.S.-based blue-chip stocks.
Tracking this giant money wave is no easy feat. But you can see it in the persistent strength of the U.S. dollar … the chronic weakness of major foreign currencies and … most of all, in the recent, die-hard strength of major U.S. stock averages.
Why are global investors so desperate to escape their local markets and rush to the United States?
One reason is the slump in their economies I just told you about. But in many countries, the most emotional and powerful reason is the war cycle.
Money is rushing out of the conflict zones for the same reason that millions of migrants and refugees are flooding to Western Europe: fear.
Whether they’re wealthy investors wiring millions or they’re destitute citizens clinging to their last belongings, the giant motivator that drives them is the wars, revolutions, and chaos.
The key facts:
Fact #1. The violence is spreading. Not long ago, the conflict was concentrated mostly in two countries — Iraq and Afghanistan. Now it has spread to at least seven more — Syria, Egypt, Libya, Turkey, Yemen, Nigeria, Bangladesh, and, to a lesser degree, even Israel.
Also not long ago, it was widely believed that the impact of the chaos could be strictly contained to Arab countries. Now, with the migration crisis, it’s overflowing massively into Greece, Macedonia, Serbia, Croatia, Slovenia, Hungary, Austria, Germany and beyond.
Until just a few days ago, it was widely assumed that the world’s air transport industry was safe. Now, with last week’s crash of a Russian tourist airline in the Sinai Peninsula, a new fear is spreading that it may no longer be safe to travel.
Fact #2. More and more countries are joining the war. Not long ago, most regional and world powers were involved very tangentially, supplying little more than some money and assorted equipment. Now, they’re being dragged in far more directly:
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| This is just a small sampling of the massive weaponry unleashed on the Islamic State by America’s allies. And yet, despite all this firepower, and despite 7,300 air strikes so far, the enemy has held nearly all its conquests and is continuing to score new victories. |
- The United States has been leading a 62-nation coalition in nonstop bombing of the Islamic State. The coalition partners include …
- Britain, which deployed its first RAF airstrikes in September of 2014, using its Tornado GR4s to drop Paveway IV laser-guided bombs.
- Australia, which authorized missions by RAAF Boeing Super Hornet fighter bombers in October 2014.
- Canada, which began its first air strikes in November, when the Royal Canadian Air Force CF-18s began dropping GBU-12 bombs on Islamic State positions near the Euphrates River in Iraq.
- Jordan has deployed a series of its own F-16 Fighting Falcons.
- Plus Belgium, Denmark, Netherlands, France, and Turkey plus Arab states like Bahrain, Saudi Arabia, and the United Arab Emirates which have also joined directly in the battle.
Total number of U.S. coalition air strikes in Iraq and Syria so far: 7,300.
United States authorities have also just announced a new U.S.-sponsored alliance between Arab and Kurdish forces to mount a ground offensive against the Islamic State in Syria, while a U.S. State Department official told Congress last week that America’s Arab allies are also considering sending their own troops into the fray.
- Iran has been an active participant in the war against the Islamic State practically from the outset, with a major escalation of its military involvement beginning in June 2014. Until then, most military observers thought Iran would provide strictly logistic support, but there’s now abundant evidence that it has also sent in troops, heavy weapons, and even fighter jets.
- Lebanon’s Hezbollah, largely sponsored by Iran, has provided more foreign troops in the Syrian war than any other country or group.
- Russia launched its direct intervention in the Syrian war this past Sept. 30 with over 1,630 air strikes just in the first five weeks of operations so far. This ushers in a new and more dangerous phase of the war because, according to State Department testimony before the House Foreign Affairs Committee last week, 85-90% of those air strikes are aimed at U.S.-backed rebels.
Thus, according to BMI Research, Russia’s targeting of Western-backed Syrian rebels will seriously raise tensions with the West, while the West will be largely powerless to halt Moscow’s strikes.
Moreover, Russia itself risks getting caught up in an unintended clash with the West or being dragged into an open-ended conflict.
The most immediate risk, BMI writes, is “some sort of incident between Russian and NATO/Gulf aircraft in and around Syria, such as a collision or provocation, especially if it results in fatalities.” Another risk, they say, stems from ground forces that Moscow has sent into Syria to assist its air campaign.
Plus, adding momentum to the escalation, last week Russia sent anti-aircraft missiles to Syria to safeguard its jets.
Fact #3. Most of this chaos is deeply rooted in the past and will endure for many years into the future. This is not a single episode that comes and goes quickly. It’s the culmination of centuries of escalating tensions that trace their roots to …
The death and succession of Muhammad, splitting Shias from Sunnis in the 7th century …
The Crusades that pit Christians against Muslims in the Middle Ages …
The fall of the Ottoman Empire, as Britain encouraged an “Arab Revolt” against the Ottomans in the early 1920s…
Cold War proxy battles between the United States and the Soviet Union — a time when the CIA provided arms to Osama bin Laden in Afghanistan, and now …
A free-for-all series of military actions by two opposing military forces:
- Western nations and their Sunni allies — most notably Turkey, Saudi Arabia, Qatar and other Gulf nations versus …
- Russia and its Shiite allies — especially Iran, the Syrian regime, Hezbollah and, surprisingly, even Iraq.
The key point: These two global alliances are split along the same fault line between Sunni and Shiite Islam that first appeared after the death of Muhammad 1,383 years ago.
It’s obviously not a new conflict.
It’s not going away any time soon.
And now, two major world powers — the U.S. and Russia — have not only taken opposing sides, but they’ve also joined the battle.
“Peace” Talks?
Yes, there were Vienna talks on Oct. 30. But they were everything but peaceful.
Instead, it was mostly a forum for Saudi Arabia (Sunni) to directly attack Iran (Shiite). And the two sides vowed never to agree about the critical issue in the war — the fate of Syria’s dictator, Bashar al-Assad.
The Saudi foreign minister restated the Saudi position that peace could not be achieved as long as Mr. Assad stayed in power: “He should leave this afternoon. The sooner the better.” The Saudi official also insisted that Iranian forces would have to be withdrawn as part of any agreement … threatened to step up support for moderate Syrian rebels … and vowed to send them more lethal weapons. Meanwhile,
The Islamic State continues to score victories.
Despite peace talks … despite thousands of air strikes by both the U.S. and Russian sides … despite the direct intervention by so many nations in the region and beyond … the Islamic State continues to hold most of its gains and even advance in some areas.
Just recently, Islamic State fighters captured the Syrian town of Maheen and mounted a major offensive against Sadad, a mostly Christian town. This brings the Islamic State to within 13 miles of the main road linking the Syrian capital Damascus to their main base in Homs.
And this expands their hold on the North and East of Syria after the group overran the town of Tadmur, home of the ancient ruins of Palmyra in May and took the town of Al-Qaryatayn in August.
Moreover, despite U.S.- and Russian-lead campaigns against rebels in Syria, neither side has done hardly anything to stop the spread of terrorist organizations beyond that war zone.
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| Despite massive Russian and allied bombing raids, the Islamic State has just taken the town of Maheen in Syria’s Homs province. |
Islamic State, their affiliates and other terrorist organizations have claimed credit for the downing of the Russian passenger plane in Egypt last week … for violent bombings at peaceful demonstrations in Turkey’s capital … for new suicide attacks in Nigeria … for still more bombings in East Africa … for a series of assassinations in Bangladesh … and much more.
What would you do?
If you’re an investor in any of these countries, in any of the regions near these countries, or any of the economies impacted by their chaos, what would you do?
Would you stand idly by and let your money lay fallow in their banks, stock markets or real estate? Or would you make every effort you possibly can to get it the heck out of there?
That’s what a growing number is now doing — not only with their money, but with their families, their life and their entire future.
And that’s the key factor that’s driving U.S. markets higher despite negative economic cross-currents.
We have no doubt the Global Money Tsunami will continue to be an important factor for months to come.
Whether or not it will continue to be the prevailing factor, however, remains to be seen.
Good luck and God bless!
Martin
Dr. Weiss founded Weiss Research in 1971 and has dedicated his entire career to helping millions of average investors find truly safe havens and investments. He is Chairman of the Weiss Group, which includes Weiss Research and Weiss Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. His last three books have all been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.
{ 26 comments }
TO LARRY IS IT TIME TO LOAD UP ON GOLD & SILVER PHIL ROMANO OF BOCA RATON FL.
IT IS TIME TO LOAD UP ON “LEAD”……TO PROTECT UR FAMILIES FROM THE COMING CHAOS…….TAKE UR PICK……9MM OR .357!!!!
WHEN THE BANKS SHUT DOWN GOLD WILL BE USELESS…..AS THE FEDS WILL BAN IT JUST LIKE THEY DID BACK IN 1933!!!!
LARRY AND MARTIN ARE BLIND SHEPHERDS LEADING U DUMB SHEEP TO DISASTER!!!!!
when the ponzi shuts down gold and silver will be the *only* items of value. gold and silver have always had value and always will. While tw’s militia prepper nonsense and bullets will mean little in the coming collapse
so far, obama is winning world war III without firing a shot. leaders in china, russia, iran, etc., are learning the hard way that their citizens will be eating bark off trees to survive if spending shifts to weapons of war. no way can putin and his allies win a war, let alone afford one. this could be the first time in history we get through a major war cycle without a world war – a war that is being fought without firing a shot.
No way can the pathological states of america afford to keep printing and keep the ponzi afloat in a major new war. But agree with Weiss, there is little doubt that the garbage who rule are banking literally on that very thing. Yes the Great Unwashed have much to worry about, little to be thankful for, and much to regret.
I worked in Iran for an Iranian firm from 1975 to 1979, and the two Iranian owners were the first in the office to exit when the time came; one to Switzerland and the other to Jacksonhole Wyoming, each with a briefcase of gold in hand as they left. My feeling was that they both already had the bulk of their wealth out of the country long before they exited. My wife carried a $10,000 bank cashiers check (the legal limit) which she had inserted with a tampon to carry most of our remaining funds onto the airplane. Hard times make for difficult transfers if not already made before hand. From what you are saying, money transfers better get going post haste if not already made by now. Most of the average persons property will get left behind, like the case was with Vietnamese Boat People. Good luck and God Bless is very correct.
That is why foreigners buy property. .to get their wealth out of their country
i’ve still got my eyes wide open for that “bear trap” on the s&p chart. any pullback to the neckline and i’ll double down.
All agreed. But the ground realities r changing fast. With a new government and a new primeminister being installed in Canada, the stance is changing. Britain has its own doubts to participate deeply in this muddle. I believe Australians hav withdrawn some of its fighter planes. And even the Southis the thickest ally of US is changing their attitude towards this fight followed by UAE. Can u pl
explain ur stance in this context.
The choice for the Pathological States in ’16 will be between Caligula and Jack the Ripper …that much is certain
“The Global Money Tsunami…This is the term we’ve coined for the massive influx of flight capital…”
While I agree that this will indeed happen, I think it’s too early in the cycle for the real “tsunami” to hit yet. The little sputter of a correction we saw in August was just the beginning. Instead of basing our thinking on a re-enactment of 2011, the REAL model, chart-wise, is late 2007 and beyond.
I believe we have much more downside to go before the markets turn around for the super blast up to the predicted djia 31,000…..but I could be wrong….
Moreover, I’ve seen you guys use the term “the Great Recession” for the events and aftermath of 2008 and 2009. After the crash of 1929, the market rebounded quite a bit …THEN it really went sizzling down, much more than it did at the initial “crash!”
I think we are really re-playing that time in history more than we could believe! We are, right now, in that initial rebound after the crash…a rebound that is based on absolutely NOTHING but fake money and figures on paper, conjured up by the central bankers of the world, to try to sure up the economies of the nations and avoid the inevitable!!
I believe we still have the super down-draft yet to go! THEN, when everything’s in great despair, will come the tsunami of money pouring into our market!
think about it. all money if fake. always has been. nothing has ever changed. good times or bad, boom or bust, a dollar bill is just a worthless piece of paper with green ink on it. it’s always a house of cards ready to collapse on any given day. that’s way own stocks in real companies with real assets is the best place to be for the long haul.
Cash is just a means of exchange until it means nothing.
Money is gold.
Hi Martin
Most thinking people see this scenario playing out. Nobody with a lot to loose wants war. Mr Putin is now feeling the pain and cost of this intervention. This probability of conflict has impacted on tourism and kept money tighter. All we need now is some timing strategies that work. That’s the hard one. On this I’m in the dark as much as anyone else.
Some of the hype could be toned down.
There’s no evidence that Russia, Iran, et al., respond to democratic pressures as Western governments do. They will keep at whatever their objectives are until they lose the means; their “publics” don’t mean what they would mean in a Western country.
Russia is in Syria (entering the Middle East for the first time in more than 40 years) to prop up Assad. Russia is not opposing ISIS, at least not in Syria, where ISIS and the Assad regime have what amounts to a truce. Iran is fighting ISIS in Iraq, but not in Syria; it is supporting al Qaeda in Afghanistan, to make trouble for the US and Afghan government. Russian attacks are overwhelmingly against the native Syrian rebels (US-backed), the rest being against what’s left of al Qaeda and al Nusra in Syria. Both organizations have been completely eclipsed by ISIS, in a typical Middle Eastern pattern of increasingly radical actors stealing the limelight.
Most of the bombing of ISIS targets is being done by the US. At this point, it’s been ineffectual at rolling ISIS back, although it probably has slowed ISIS down. The only effective ground force against ISIS has been the Kurds. Turkey is not opposing ISIS and was, in fact, a critical supporter of ISIS for a while, along with Qatar. The talk of Turkey now opposing ISIS is for show; Erdogan’s government is trying to stop the Kurds from making further progress toward statehood; that’s always been its main concern.
Thanks to Obama’s incompetence and narcissism, US influence and leverage in the Middle East have collapsed. No one trusts or believes him, and no one takes the US seriously any more. Iran’s power in the region continues to grow, and the nuclear agreement is already a disastrous failure, with even its weak conditions being mocked by the Iranian government. It has or has recently had five proxy wars going on (Iraq, Syria, Lebanon, Yemen, Gaza) and continues to acquire missiles and other advanced conventional weapons.
The general decline of violence globally that started with the end of the Cold War continues in most of the world, but not in the Middle East, where violence has been on a sharp increase starting in late 2010. The US installation of the highly sectarian Shi’ite Maliki government in Iraq, when the US left Iraq, played a major role in the rise of ISIS in Iraq, by completely alienating the Iraq Sunnis and sending them to ISIS as “their” crazy militia.
And the CIA didn’t send weapons to Osama bin Laden in the 1980s, a hoary chestnut that is still repeated now and then. Bin Laden, along with other youngsters in the 80s, played small bit parts in the Afghan war against the Soviets, raising money from private donors, with no fighting. The fighting was done by native Afghans, but the cause was hijacked by Pakistan’s military intelligence (the ISI), one of the main sources of Sunni radicalism in the last 40 years. Al Qaeda began its life around 1990 (without the name) and wasn’t formally organized until 1994, in direct response to the arrival of non-Muslim troops to protect Saudi Arabia in 1990.
Osama Obama… so much for “democracy” and “democratic pressures” in the west, eh? lol. The garbage you elect could not lick the Russian leadership’s boots.
Mr. Weiss, I have the utmost respect for you and your organization, but please stop echoing what Obama says; like a 62 nation coalition and thousands of air strikes. Name the 62 and then state what they are supposedly doing. Thousands of sorties maybe, but no where near thousands of strikes due to bureaucratic, ridiculous ROE’s (Rules of Engagement) that do not allow bombs to be actually dropped until targets are approved by politicians, lawyers, and arm chair generals Once approval, the targets are gone. 75% of the planes return with their loads intact! Russia has no joke ROE.
The American backed rebels are called ISIS.
Martin, I believe you guys are correct about the tsunami and I have my eyes on
the Dollar and Gold !!!
With the debt growing out of control the last ten years, the Fed Reserve will find they will have no money to give to the banks if the people refuse to pay taxes.
This will rely on a law change possibly.
When the gov’t decides to devalue the dollar at a rate of ten to one in an effort to control the debt, then the war with China will have begun, noting that China will not be paid back but ten cents on the dollar.
China is already sending troups into Mexico. Watch the youtube video of Chinese troups marching with both Chinese and Mexican flags down mainstreet Mexico City !
Russia already has forces in California on the coast, working in retired navy shipyards.
Russia is about to take over the UN based courts once Putin (translated Whore in French) settles that he is the controller of ISIS and not USA.
Within only a few years the “Vision of George Washington” will have come true: namely the 3rd World War in the streets of America, a black cloud having come from Europe over the sea to the Northern States of USA, and buildings burned down, people crying in the streets, until God intervenes and the evil is stopped at the Mississippi river.
Gold is only one concern. Self defense is a real concern. Possibly refusing to be apart of the dangerous areas in the larger cities is accurate?
Only God canl save this nation in the end.
A prayer come true for the Fed. We can exchange our phoney money for the wealth of foreigners.
I am thinking, how fortunate we are to have all these very informative insights from many FREE thinking , very inteligent reader.s The burning question is What can I as a very concerned ,reasonably intelligent individual do about it ?
I did my best to warn you about this but i am just a small voice to be heard of. God is my sheperd that is why i always take the way He had chosen for me
I would like this world to be saved from future crisis which primarily due to lack of transparency among banks and major financial institutions. Therefore,matkets are just speculations which does not have a basis to withstand even a minor setbacks.