Get Ready for the ‘Granddaddy of all Cycles’

Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

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As Martin showed you in his Monday column, the world is a mess, a sorry state of affairs that is getting worse by the day.

This was all foretold by the cycles of war that I have been writing about for over two years now … cycles that show the world splintering apart, cycles that will not even come close to ebbing for another five years.

It’s the result of several different cycles coming together in time and space, and in a way that hasn’t been seen in at least 150 years. Since the 1860s, according to my research.

You have first, the Kondratieff Wave, a super economic cycle that peaked on cue in 2007/2008, a cycle that has been sped up by the impact of technology on the world — and a cycle which will not reach a bottom until 2025.

Symptoms: Slower business formation, debts going bad, plunging velocity or turnover of money and credit, and deflation, with a capital D.

You can see my graph of the K-wave here.

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You have the Juglar Cycle, a cycle that tracks fixed investment by business, a cycle that also peaked with the real estate crisis and now points down into roughly 2025.

Symptoms: Slower business investment, a “risk-off” mentality by businesses, leading to slower job formation, slower spending and more.

You can see my chart of the Juglar Cycle here:

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You have the Kitchen Cycle, discovered in the 1920s by Joseph Kitchen, a shorter cycle of 40-months, but also related

to the inventory cycle of commercial businesses. It also peaked during the real estate crisis, then plunged, then rallied into last year … and is now pointing down into 2016, followed by a bounce, then another decline into 2025. 

You can see the chart here:

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Symptoms: Like the Juglar Cycle, slower business formation, slower inventory turnover, lackluster employment growth, and more.

You have the Armstrong Economic Confidence Cycle, pointing to a major turning point this October. Marty Armstrong, a close friend of mine and to a very major degree, my mentor in cycles, says it will be a doozy, the beginning of a “Sovereign Debt Big Bang” — where the patently unplayable debts and IOUs of Europe, Japan and the United States all begin to crumble, right before our eyes.

Symptoms: Collapsing bond markets in Europe, the United States and Japan; soaring interest rates, and more.

You have the Kuznets Cycle, discovered by Simon Kuznets, an approximate 18-year cycle that vacillates between periods of low and high income inequality.

It bottomed in 2013, showing that despite government efforts to redistribute wealth, income inequality, not just in the United States but almost everywhere, will get much worse in the years ahead and not reach a climax until 2025.

Symptoms: Rising social discontent, class warfare, rising attacks on the rich, rise of third-party neo-Nazi groups, and more.

You can see my chart of the Kuznets Cycle here:

Click image for larger view

The thing is, income inequality normally declines during recessions and rises during booms.

Yet during this turn of the cycle, we’re seeing the opposite: Income inequality is rising during a period of slow global economic growth. So if you think income inequality is bad now, fasten your seatbelts. According to the Kuznets Cycle, it’s going to get worse: The rich are going to get richer in the years ahead, and the poor, poorer.

So the question then becomes “Why?” Why is income inequality worsening, despite slow global economic growth and despite government efforts to redistribute wealth?

It has to do with what I call the “granddaddy of all cycles,” the major war cycle of 53.5 years in duration, a cycle that has pinpointed every major war since the beginning of time.

You can see my chart of this major war cycle here. It’s pointing up into 2020, the earliest date it can peak.

Click image for larger view

Make no mistake: It is this war cycle that is now driving — consciously or unconsciously — nearly every government decision that is being made.

  • It is why we are seeing attacks on the rich in Europe and the United States, not to mention China.
  • It is why we are seeing governments in Europe and the United States tax the rich, to allegedly redistribute wealth, but in reality, is backfiring, sending the rich fleeing, causing income inequality to worsen, and killing business formation.
  • It is why we are seeing battles between religions, between civilizations, between groups within nations and between nations.
  • It is why we are seeing rampant cyber espionage, between nations as well as governments spying on their own people.
  • It is why we are now seeing the world in such a mess that even Pope Francis has recognized that the world is already in World War III, an acknowledgement he made last September at a speech in Italy.

Make no mistake: The world is indeed a mess, but it’s also about to get a whole lot worse.

Markets will continue to gyrate wildly. Europe will go down the tubes. Japan will default as well in the years ahead, and the biggest of them all, our own government, will also succumb to the forces I describe above.

You will see gold plunge on further deflation, then suddenly turn around and soar to over $5,000 an ounce.

You will see the U.S. stock markets similarly plunge, but then soar like an eagle as they become the last bastion of capitalism, as frightened money from all over the place, including sovereign bond markets, pours into equities like never before.

You will see bond markets lose 30 percent, 40 percent, even 60 percent on the dollar, wiping out pensions and untold millions of unsuspecting investors.

You will see the value of the dollar soar, as investors from other areas of the world, run for cover … and then, when the process is complete and everyone realizes the Emperors of Washington also have no clothes …

You will see the dollar crash and burn, forcing the world’s leaders to convene a new Bretton Woods, a new monetary system, a new reserve currency.

Mark my words: All of the above, and more, is coming. You must do everything you can to protect and grow your wealth.

Stay safe, stay protected, and be open to mega profits …

Best wishes,


P.S. For more than 35 years, I’ve made studying the Great Depression of the 1930s and economic cycles — and trading the financial markets based on my knowledge of both — my passions in life.