The Times They Are A-Changing

June 10, 2018

Life has kept changing at an ever faster pace since the early folks changed from hunting and digging for their food to growing it and thus able to establish settled communities. What has helped speeding up the rate of change was the invention of such things as the use of fire and metals, the wheel, gunpowder, ships capable of sailing the oceans, internal combustion engine, electricity, the computer and the cell phone. All of these things radically changed the way people live. The changes keep happening, not only because of what we discover and do, but also because the world itself is changing. And not all changes are beneficial.

Some of the changes going on, of longer and shorter term trends, are going to have significant impact on many people, including many of us. Some are good for us, as for example the continuous improvements in medical science that helps us to live longer and, perhaps more important, to enjoy good health and an active life longer than what was possible for the vast majority of our parents and forefathers. That is, if we can afford to make use of the new knowledge and skills.

A brief look at three important trends that will affect the lives of many of us in most disturbing ways are the growth in the population, with specific reference to trends in demographics, and secondly, trends and events in the physical world around us that would have severe impact on a majority of the global population should there happen or develop a crisis that disrupts the world as we know it today.

At http://worldpopulationreview.com/continents/ is a table that provides some facts that indicate what lies ahead for selected regions during the next few decades. I calculated the values in the table below from the information at the website:

Region

Total pop (m)

Growth%

2050 pop (m)

% now

% 2050

Global

7 632

1.09

9 688

100

100

N America

364

0.73

437

4.77

4.50

Europe

743

0.08%

756

9.74

7.80

Asia

4 545

2.52

7 926

59.6

81.8

Africa

1 288

0.90

1 569

16.9

16.20

The growth rates apply to the native population of these regions. It requires a Total Fertility Rate (TFR) of 2.1 per woman (i.e. couple) to sustain a culture over at least 25 years. No country has sustained its culture with a TFR of less than 1.9. At a TFR of 1.3 it would take about 100 years for enough births to equal the starting population. The TFR for the following countries in parentheses as it applies to the citizens of that country (data 2007):

France (1.8), England (1.6), Germany (1.3), Italy (1.2), Spain (1.1), the European Union (1.38), USA (1.6).

200 years ago, children that grew up in practically all of the western world could expect to spend their lives much as their parents did. there were changes. These changes as a rule developed rather slowly, such as when the railroads pushed west in the US and it became possible to travel and ship goods further and faster with greater ease. But initially, at least, the general lifestyle of most people did not change radically within one generation.

Today it is different. The mix of global populations, who they are, where they live and dominant cultures in many countries are in a state of flux and they will display dramatic changes during the lives of even the current generation. And this will be more drastic in the West where the low birth rate will have a dramatic effect on the demographics of these countries. It will happen soon enough that many of the readers of this report will experience and have to adapt to those changes.

But Mother Nature may also be hiding a few surprises for us and these might be even more upsetting for our current lifestyles than anything the changes in global demographics might bring. There is little doubt that weather patterns are changing, irrespective of whatever the cause or causes might be. Since about 1860 when the British navy covered enough of the world’s oceans to enable a global weather map, global temperatures have reached new highs.

If memory serves, since about 2000 the then most recent 10 years have been the hottest on record, with an exception when a major volcano turned active, to blast dust high into the atmosphere and thus reduce the amount of sunlight reaching the earth. Earlier data from 2015, which had 2014 as the warmest year on record, also had 13 of the 15 hottest years ever starting in 2000 – a full streak of 24 years.

Higher temperatures mean there is more energy in the atmosphere and that results in greater turbulence in weather patterns. Call it global warming, but the effects are expected to vary from region to region and season to season. Worse storms during winter and summer, greater temperature variations, longer wet en dry seasons. Not only will this affect our quality of life, but there will be increasing and lasting impact on global economies and on the ability to keep growing the crops that feed us.

The Earth itself is making itself felt. Over millennia, the incidence and intensity of volcanoes have decreased. That, however, does not mean that there is not going to be a repeat of some of the major eruptions of relatively recent history, such as Pinatuba and Mount St Helens and now Kilauea, as well as others. These issue a warning that there could be another major eruption in the not too distant future. Were one to happen, say larger than what we have experienced since Krakatau in 1883, apart from all local effects, the ash in the sky could reduce the amount of sunlight to reach the earth significantly enough to have an effect on all kinds of crops. And our current population currently is in a fine balance with the production of food on a global scale. Until it happens, of course, we disregard the possibility.

The most immediate and for many people what will be a very disruptive change is now waiting for a trigger to set it off. This is the mountain of debt that has been accumulated in many countries, in particular those in the west, that stand ready to collapse, with horrendous effect on the economies of these countries. This subject has been discussed here not too long ago, but the risk of a repeat of 2007/8 and at a higher order of magnitude in terms of the effects does not prevent Wall Street from rallying again and again whenever the Bears try to stamp their authority on it.

There can be no doubt that the addition of new debt year after year, at Federal, state, corporate and household level cannot continue indefinitely. It has to end. Which will be a near cataclysmal event for markets and the economies. One can say with certainty the changes that event will bring about are coming to an economy close to you sooner than most people think. Hope you are prepared.

Euro-Dollar

Euro-Dollar, last = $1.1770 (www.investing.com)

After sitting sideways and tightly range bound just above line H ($1.2258) for a few weeks, the euro fell through the floor and broke below line K ($1.2000) as if on its way soon to test the bottom of bull channel KL ($1.1377). Last week the trend has changed, suddenly and quite substantially.

On the 29th of May, the euro reached $1.1540 and then reversed higher to end last week at $1.1770 for a gain of 2% in 10 days – a large move in such a short time for a major currency. Combined with the steep move lower on the break below line H on 20 April, for a drop of 5.1% and now the reversal to gain 2% reveals that it is not only Wall Street that is in a state of turmoil, with no clear trend but with violent swings in a relatively short time. This reflect sudden changes in perspective about the future of the markets and a sense of increasing concern that can lead to panic.

DJIA

Last week it was mentioned line K (25 114) was behaving like a watershed trend line within the top consolidation; a line that passes through the chart with only one or very few penetrations of the chart, but acting as strong resistance and support when approached from either direction. The resistance of like K failed last week when Wall Street enjoyed a steep rally that has now broken clear above line K.

This is a bullish event and it looks as if the stock market has shaken off all the concerns that had it swinging wildly up and down with little clear direction. Line Z (25 824) is now a possible target should the rising trend continue this week.

DJIA, last = 25316.53 (money.cnn.com)

Gold PM Fix - Dollars

The support along line T ($1291) is still holding following the recent break below bull channel KL ($1349) and despite the difficulty gold is having to break back above the $1300 level. The most recent rebound higher off line T has so far failed to ignite a new rally, but there is hope for that to happen while the support along that trend line holds.

The gold open interest on Comex has fallen steeply during recent weeks and is now in record low territory, far from the 600k OI of a year or so ago. The number is still very high though, but the sustained decline warns of something that is developing.

Gold Price – London PM fix, last = $1298.25 (www.kitco.com )

Euro-Gold PM Fix

Euro Gold Price – PM Fix In Euro, last = €1104.2 (www.kitco.com)

Just when it looked as if the euro price of gold was clinging to the rising trend along the support of line L (€1123) as the euro weakened, the euro reversed its trend at a time when the dollar price of gold was battling to remain above its support around $1290. The effect was for the euro price of gold to break down below line L and test support along line Z (€1096) – the top of bear channel YZ above which the euro price had just broken to give a bullish signal.

Any further weakness in the dollar price of gold or a stronger euro could see a test of the support along line T (€1086), which is currently the lowest support line of the broad bull channel going back to 2006. Even so, it is support that had to called into play after the final break lower below channel RS (€1.173). A break back into that channel is needed to fully resume the longer term bull trend.

Silver Daily London Fix

Silver daily London Fix, last = $16.72 (www.kitco.com)

Silver is back and well clear above the important $16.50 level across which it has been bouncing repeatedly for quite some time. However, this does not mean that a bull trend is beginning, as the price has moved much closer to $17.00 in the recent past, yet failed to advance further or even just to hold closer to $17.

A definite and lasting break above line L ($16.76) is needed to rekindle optimism of a new bull trend for silver. been getting close on occasion, but as yet no cigar.

U.S. 10-Year Treasury Note

The US 10-year Treasury market is said to be the largest single market in the world in terms of its total capitalisation. The recent drop in the yield from 3.318% on may 17th to 2.790% just 8 trading days later – a decline of just short of 16% - offered a large recovery to holders of the Treasuries, at the time when it looked as if the Bear had taken over.

The rally failed to hold or extend lower, however, and the reversal higher back to test line C (2.970%) only took 6 trading days. For a multi-trillion market to swing through a rally of 16% followed by a decline of 7% in about two weeks requires a lot of incentive and will shock investors and ruin many trading positions. It is also another sign that markets are moving into a time of greater instability. Times are both changing and becoming more interesting.

U.S. 10-year Treasury Note, last = 2.948% (www.investing.com )

West Texas Intermediate Crude. Daily Close

The break above the horizontal resistance at line X ($69.01) which then repeated at line F ($70.88), looked as if the crude oil bull was up, up and away. The price then reversed suddenly, to break back below lines F and X. Support at lines L ($65.86) and C (64.70) came into play and the price of crude remained there for all of last week – marginally below the very broad bull channel KL and just above line C.

While channel KL can manage to hold – with a recovery soon out of the minor break lower – an $80 price is not out of reach; with effects on global fragile economies.

WTI crude – Daily close, last = $65.74 (www.investing.com )

©2018 daan joubert, Rights Reserved chartsym (at) gmail(dot)com

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A one-ounce gold nugget is rarer than a five-carat diamond.