ALERT: Stock Market Divergence Widens – Gold Price For The Win

ALERT: Stock Market Divergence Widens – Gold Price For The Win


hi this is Mike Maloney and I’ve shown this graph before but I’ve added one more data set here what I’ve done here is we have base currency the amount of paper dollars that exists or deposits at the Federal Reserve redeemable in paper dollars and then the green line which is the value of the wilshire 5000 total market cap index and then I’ve added to that the current tax receipts of the US government now on the wilshire 5000 that’s denominated in points which is basically an abstract created from a mathematical formula and there isn’t as much tax receipts as there is base currency creation so I’ve taken the wilshire 5000 total market cap index x 47 to lift it up until it overlays the blue line it is the green line just to show you the difference in percentage the difference in percentage move from this point here where the the blue line and the green line are on top of each other to this point here where they’re still on top of each other the percentage move for each of them is exactly the same and what I’m interested in is the percentage move not the number of points or the number of dollars the tax receipts it’s the same thing I’ve lifted that by 1.5 because it was down here underneath it and you couldn’t see the correlation as well I’m not interested in the number of dollars I’m interested in the percent change and what we see here is an incredible correlation again in tax receipts from this point right here back to about there the tax receipts rise and fall with the value of the stock market until we started qe3 QE 1 and 2 lifted tax receipts with the stock market qe3 did not something change there’s a divergence there and I think what’s going on here is yes the there’s the stock market is rising except that’s mostly the bank’s trading among themselves so there’s a lot of high-frequency trading a lot of the public has actually been exiting stocks and it’s the public that really gets screwed when it comes to paying taxes we pay more than the big entities do on a percentage basis so the tax revenues that are coming in from this big stock market boom since the year 2012 roughly those tax revenues aren’t coming from the increase in the stock market anymore so what you see is a divergence of the stock market going up where the real economy and the tax revenues that are derived from that economy from more sales in stores and stuff like that those tax revenues aren’t increasing at the same rate that the stock market is going up one of the things that I’ve shown before though you know the the blue line again is base currency and this whole economic recovery has been bought and paid for by the Federal Reserve with the bailouts and QE 1 and then qe2 and then qe3 and then we tapered in 2014 and it’s been falling since then the base currency how many paper dollars exist but the stock market kept on going now is that because it took the training wheels off and it’s going along just fine on its own I don’t think so when you examine this a little bit more closely one of the things that you see is this tremendous correlation that I was talking about all the way back from late 2008 base currency in the stock market traveled almost exactly together and then there was this divergence that started to happen where the stock market kept on going after they stopped all of the currency creation but what you see are these sudden crashes that take it right back down to the level of the base currency creation and it’s done that three times and now the divergence is greater than ever the divergence was was pretty big the last time we talked about this but now it’s really big and like I said tax revenues haven’t kept up so the tax revenues really do represent the real economy because this is how much blood the government is able to suck out of the real economy and they’re always able to suck a certain amount of economic energy out of the real economy about twenty to twenty-five percent roughly is what they’re able to take before they start collapsing the real economy so that hasn’t changed the percentage that they take out in other words this growth and if you look how this growth has gone flat now for the past several years it’s just been absolutely flat the tax revenues and then you know getting back to the first graph this current economic expansion the white area here is now about to overtake the white area here there was one back in the 60s that was a little bit longer than this one so right now when we overtake this one this becomes the third longest economic expansion in history and then it has to overtake the one that’s back here it’ll become the second but this goes back to the beginning of the United States we’re in the third longest economic expansion and the last you know 200 and some years that means that the chances of this going on much longer are extremely low and now they’re talking about a Fed rate hike and so it’ll be at exactly the wrong time if they do a rate hike that will probably be the trigger that causes the next recession the next one of these gray bars I think we’re probably already in a recession as you already know a whole bunch of factors indicate that and when they declare a recession they’re declaring that it started more than six months ago because it’s a lagging indicator so that’s my take on that but what I find scary and I wrote about this in the update to my book guide to investing in gold and silver than 2015 update that tax revenues now rise and fall with the stock market and before that the tax revenues weren’t really dependent on the stock market they there was no huge correlation but since the year 2000 there’s a very high degree of correlation so as we go into the next crash tax revenues will fall deficit spending will explode the government will answer with more and more spending programs and so on to try and stimulate the economy and it’s a recipe for disaster but it’s an opportunity for some folks you just have to find that opportunity so I hope you got something from this video if you did please like it and share it and subscribe to our channel thank you very much

51 Comments

  1. Great video! I didn't know you could multiply time series variables like that on the St. Louis Fed site. Thanks for sharing. Looks like folks better sell sell sell if they haven't already.

  2. So what you are really trying to say Mike is that the entire United States government and the FED is a the biggest fraud in world history.  Prepare accordingly for the collapse of the Great Lie.

  3. Only 54 percent retail investment in the stock market compared to 65 percent in 2008. The crash won't be major but significant since inflows from other countries are still high.

  4. Good video!  Maybe the stock market is assuming that the fed will end up buying stocks as it is hinting it would like to do.  Of course, stocks will have to fall quite a bit before congress will give the fed the authority to do so, but in the end stocks could go up (perhaps less than inflation when that genie gets out of the bottle).

  5. so not only do we have Hillary and Trump that are likely to start ww3 but we also have a falling economy which is a perfect reason for war?
    great…

  6. Stimulate the economy! Whenever I hear this one, I get the image of a doctor trying to revive a dead man by jumpstarting his heart. EVERYBODY: CLEAR! BOOOOM!

  7. I am a econ student at your typical Marxist/Keynesian college. I am in the middle of a project where we are supposed to demonstrate the effects of policies utilizing the Fair Model and other mediums. I am going out on a limb and asking for your help so that I can effectively demonstrate the truth because I am not being taught it.

  8. Stock market also going up due to record stock buybacks since companies don't think there is anywhere else to invest. Sure helps out CEO bonuses.

  9. Tell me if I've got this right? What happened to value of gold in Sterling after Brexit (up) what will happen if Trump wins= the same thing?( in relation to US dollars)dollar goes down= gold up

  10. Hi Mike. Since the U.S. Dollar is not the only currency in the world, would it not be better for price discovery if one were to calculate the total world debt ( $152 Trillion ) by the total amount of physical gold and silver (10,660,609,208.57 ounces)? If so, gold would be $14,264 per ounce and silver would be $1,682 per ounce base on above ground physical supplies.

  11. OUT OF 49 TRILLION POUNDS IN GLOBAL CIRCULATION………………32 TRILLION HAS BEEN SMUGGLED INTO OFFSHORE TAX HAVENS……………..AND THEY TELL THE POOR HARD WORKERS…THERES NO CASH!?!!?!?!?!

  12. Last month I gave up on gold/silver, even though price was down for some time. I invested in guns and bullets instead, some canned meat too lol

  13. I think that the Federal Reserve will not raise or lower rates, but will move to a bracketed floating interest rate, for example, a target of 0.5% +/- 1% with a sticky high-end, such that when the high end is reached, the target is raised 0.25%. In the short term, rates will sink into the negative. It will cause people to refinance their mortgages into a hybrid variable/fixed interest rate, such that their interest rate will be fixed unless rates double, in which case it will reset to a higher level. In the short term, people will feel like they have more money because their interest rates will have dropped, and people will go out and spend. In the medium to long term, interest rates will ramp up much faster than anticipated and shock all of the people who refinanced with these new hybrid mortgages because their rates will be higher than when they refinanced, which will contribute to global debt expansion.

  14. Gov't tax revenue is skewed because federal taxes have gone up. In 2009 the gov't lowered the payroll tax to help job creation, but removed the tax break in 2010 or 2011. Income tax rates increased substantially in 2011. I doubt take home pay for the majority of Americans has increased since 2008.

  15. What the fakery is, is that Trump was not a real choice either. This reminds me of the Federal Reserve arguments before Congress with two competing bills, where both bills – ie whichever passed – would provide the same result to Elites.

    Trump has chosen Reagan contra criminal Edwin Meese; former President of Mellon- Scaife's Heritage Foundation Edwin Feulner; former W Bush administration official and COO for Jeb Bush, Christine Ciccone; former Dick Cheney adviser Ado Machida; aid to corrupt Bill Frist staffer and associate Eric Ueland; and former Sen. Jeff Sessions' chief of staff Rick Dearborn, to lead his "transition team"! Truimp also calls Chris Christie, Newt Gingrich and Rudy Giuliani "close advisors"! Mellon Scaife's Heritage Foundation – the people who brought you the debacle in Iraq after Saddam – is reported to have strong representation on Trump's transition team…. and Trump is also considering John Bolton for Secretary of State and Guiliani for Homeland Security.

    "Defense" shares (meaning war) have spiked upward dramatically on Wall Street, since the Trump win. So have private prison shares like CXW which spiked up 25% on the 9th. All of this is much different than guerilla economists projected, where they predicted that a Trump win would put share markets into a tailspin. All Realists must jettison the fallacy of the Left VS Right paradigm, which is simply a means by which the Illuminati have divided and conquered folks for millennia. Until that happens (at a minimum) we will be divided and conquered.

    Folks wanted "change" just like they did in 2008… and they will get more of the same…. just like they did from 2009 going forward. And would have with either Trump or Clinton.

    When will the people ever wake up and realize this system is terminally broken and that there is no hope? Given a long enough timeline the survival rate for everyone drops to zero. Sorry for that negative message, but we are here.

  16. If you knew the next Monetary System would not be backed by Gold (or Silver) you would be busy thinking of how it should work.

    "They" don't want your input but rather you look at the Gold Mirage. Every Gold/Silver System has failed but the Shills don't tell you that.

  17. Mike, make a video about what the market did after Trump won the presidency. I suspect heavy market manipulation from the government. The first few hours on Wednesday, markets were crashing and gold was on the verge to skyrocket, but something happened that caused the reactions to reverse before it got bad.

  18. Alright boys, yet again silvers approaching 17, currently at 17.20 hitting strong support, same with gold its at 1216 or so at the moment

    Is this back up the truck time? I'm getting so close to just going all in and getting the F out of paper and into real money. Metals were just manipulated and it's what I've been begging for a while now I'm so close to going (almost) all in.

  19. with India removing the 500 and 1000 rupee notes and making a new 2000 note. Did they just debase the currency by half, instantly.

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