MMA Weekly Comments

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Gold and Silver continued their blow-offs to new 20+-year highs late last week, as June Gold tested $600.00/ounce and July Silver tested $12.00 – levels not seen since the early 1980’s. Crude Oil continued to rally too, reaching 67.30/barrel in the nearby futures contract, its highest level since early February, and not far from its all-time high of last September 30, which was just above $70.00/barrel. Foreign currencies also rose against the U.S. Dollar, with the Euro now pressing against an important trend line. If it can close up next week, we may see the next leg of the long-term bull market resuming.

In world equity markets, many indices soared to new all-time and/or multi-year highs around last week’s solar eclipse. This was the case in the Australian All Ordinaries, which posted a new all-time high of 5095.50 on Friday. In Japan, the Nikkei rose to 17,126 on Thursday, one day after the solar eclipse, its highest level since August 2000. But these highs were not matched in the Hang Seng index of Hong Kong. It tried to make a new yearly high above the 15,999 posted on February 27. But it fell short, thus creating a case of intermarket bearish divergence for the Pacific Rim countries.

A similar phenomenon was noted in Europe. The London FTSE and German DAX rose to their highest levels since March and July of 2001. So did the Netherlands AEX, which rose to 473.10 last Monday, but then failed on the next attempt rally on Thursday. But the Swiss stock index fell well short of its multi-year high of 8108 attained on March 20.

And in the Americas, the NASDAQ Composite soared to 2353 on March 30, one day after the eclipse, its highest level since February 2001. Yet the Dow Jones Industrial Average plummeted last week, closing only 4 points above the low of the week. It was 200+ points off its multi-year high of 11,335, realized on March 21. Both the Bovespa of Brazil and Merval index of Argentina had rallies last week, but both failed to take out their multi-year highs realized on March 6. Thus in all regions of the world, cases of intermarket bearish divergence are in effect, suggesting that a crest of significance is now forming, or has just formed. Whether this is the 4-year cycle crest or not remains to be seen.

Short-Term Geocosmics:

There are three geocosmic signatures of note happening this week. The first is that heliocentric Mercury and Venus are entering Sagittarius on April 1 and 2 respectively. The second is that Saturn will return to direct motion on Wednesday, April 5. And finally, Venus will ingress into Pisces on April 6.

The heliocentric planets entering Sagittarius is consistent with the theme of “blow-offs,” as we are witnessing in precious metals. It would not be surprising to see a pause in this vertical movement come to an end while these planets are in Sagittarius.

Saturn turning retrograde is a strong level 1 signature – our strongest correlations to primary cycles in U.S. stocks within 9 trading days (70% rate of frequency in this instance). Typically, however, any markets that decline into this aspect are prone to a sharp rally immediately afterwards. Psychologically, Saturn stationary represents a time when the collective mood may be more depressed or worried than usual. Things may seem bleaker than usual. But it is also a time when news is usually at its most depressing, and can thus represent a favorable time to buy commodities or equities that are low in price.

Venus ingressing into Pisces (April 6-May 3) favors romantic thoughts and experiences. This is fine for an individual, but collectively it may indicate another period of irrational euphoria, or hysteria if things start to go bad. These ingress periods tend to correlate with reversals in Copper and Japanese Yen-Dollar rates.

Long-Term Thoughts:

Once again the news is punctuated with themes of the forthcoming Saturn-Neptune opposition. This aspect is officially in effect August 2006-June 2007, but its influence may be noted in current affairs up to nine months before and nine months afterwards. As discussed in previous columns, this signature historically coincides with disappointment in one’s leaders – a time when the world is looking for confident and inspiring leaders, but instead becomes bogged down in scandals involving its leaders, or scapegoats sent in to take the fall for its leaders.

Friday’s “Wall Street Journal” was filled with articles displaying great lapse of character and ethical behavior on the part of various government and business leaders. One front page article went into great detail explaining how House majority leader Tom Delay’s powerful empire came crashing down amidst a slew of potential scandals involving Lobbyist Jack Abramoff. Another article relates how computer maker “Gateway” destroyed evidence in “bad faith” in a patent-infringement case. There were other news articles outlining how the Justice Department went after one of its former star prosecutors, who was critical of the department’s unethical handling of various terrorist-suspect cases. It is part of this trend to not go after the source of the problem of unethical violation, but rather go after the person who points out fault with the leadership.

To say this is a dangerous time to be a “good person,” or to do “the right and honorable thing,” is an understatement – especially if that action is perceived to be critical of the leadership in any way. It is the same psychology that says you are not patriotic if you voice concerns that may be interpreted as ‘critical” of one’s government (either you are “with us or against us” attitude). This is so common, and hence so dangerous, during Saturn-Neptune hard aspect periods. It the reason why this year’s mid-term elections in the U.S.A. are once again likely to be drowned in sensational accusations - and even blatant lies - against one’s opponents. And yet during these aspects, the investment community erroneously assumes these matters will just work themselves out, and equity markets tend to rally. Only a year or two later does the full effect of the truth come out, and then the markets fall hard. The last time we had this same aspect was 1971-72. The U.S. stock markets rallied as Richard Nixon easily won his second term as President. But the initial rumblings of the illegal break-in of Democratic offices in the Watergate Apartment complex began to grow and grow, and within two years later, he was forced to resign amidst a scandal that could no longer be contained. Stock markets fell hard, but 1-2 years after the aspect and the event that led to his resignation.

And so here we are again, seeing the same Saturn-Neptune themes play out. There are a host of scandals on the horizon involving government leaders everywhere. There are countless examples of ethical violations from leaders who claim to be morally and ethically right, whether liberal or conservative types (conservatives are taking it hardest now, because they are holding the highest offices). And yet it is only through this “moral cleansing” period that we will be able to identify those who truly are honest and ethical. It is a time when heroes can arise, and false idols usually do fall. But will be able to know the truth before it is too late? It is unfortunately a time when the ‘good guys” may be falsely accused and even destroyed by those who truly believe and act as if they are “above the law.” It all comes out in the next 1-3 years. So watch for the signs, and watch to see how these signs begin to take on a life of their own. As the truth comes out, and the disappointment grows and grows, the stock markets of the world will eventually respond, and then go through their own “moral cleansing.” The ethical and moral issues are starting to arise now, but it may take until 2008, when Saturn starts its opposition to Uranus, before the stock markets seriously react.

In the meantime, the precious metals markets are already reacting to this geocosmic set up, just like they did in 1979 when Saturn and Neptune were also in a hard aspect. It happens about every 9-10 years, the last being 1998 when President Clinton was nearly removed from office.