"These Sectors Will RISE..." - Martin Armstrong

Added: 2026-05-25

[00:00:00]Since the US is more of a pretty much self-reliant on energy, our economy will go into a stagflation but not a [music] depression. So from an international capital perspective, the capital is still targeting towards the United States. And I would suggest if you look at the stock markets, you'll see when the Dow is leading, that's the big foreign capital that comes in. They park in Dow stocks. They don't buy the IPOs on NASDAQ. NASDAQ is more retail. All right. So, and as you go into a sovereign debt crisis, I know a lot of people, oh, US got the biggest debt.

[00:00:40]Yeah, but we got the biggest economy as well. When you have the Middle East, excessive debt, but you cut off their production capability, then they don't have the money to even service the debt.

[00:00:53]All right. Europe is in the same position. I am very concerned that they are kicking up for war with Russia largely because they have no choice. The EU is in desperate condition economically. Their GDP growth is about half of the United States. [music] But if you analyze the cost of government, what percentage of GDP is consumed by the bureaucrats? In the EU, it's almost 50%. It's not very, I would say, hopeful. I think he will try to lower the interest rates. However, when you also go into times of war, interest rates rise. What people have to understand is that the Federal Reserve can control the short-term interest rate only. The long-term interest rate is set by the markets. That's why the Fed got into quantitative easing. And that creates a problem in the sense it makes it more volatile. It puts more risk on this. And I don't see him as being able to get out of any of this. Well, I think the hard assets tend to rise because maybe the greatest shock will be the Middle East because people don't even see that there is a debt problem there.

[00:02:07]So, I mean, back in when Greece got in trouble in 2010, the traders immediately go, "Oh, who's next? Oh, Spain." Right?

[00:02:16]So, once you get that first shock, that's how a trading room works. So my view is that if you see a sovereign crisis develop in the Middle East, the traders are going to go, "Oh who's next?" All right. They'll probably look at Europe. I know you have a lot of these people left. Oh, the US has got the biggest debt, but we've got the biggest economy, too. Our problem is that with all of this, it's largely socialism that politicians, I think, have no longer know how to run governments. it's vote for me and I'll give you a free car and a lollipop and that's how they win elections. It's always bribing the people and as a result you need deficit spending. So I mean here's you know people say oh go to a gold standard. You can't go to a gold standard. You have to change the political system first. [music] I mean if you went to a gold standard the gold will be wiped out I mean very quickly.

[00:03:13]So you have to change the political system. Our computer was correct. It forecast that gold would go down for a couple months. People thought, "How can it do that in the middle of war?" Well, as I said, the banking system went down in UAE. People needed to sell gold because you couldn't get anything out of a bank. Russia started selling gold to circumvent the sanctions. [music] So, I only see this as a temporary liquidity problem, not a long-term shift. In order to be long-term, then you got to open your arms and embrace government. And I just don't see that. And I've said for a long time, look, the stock market will go up with gold mainly because you have sovereign wealth funds. We've got just two clients with well over a trillion dollars in the portfolio. You can't put that kind of money just in gold. They need to earn interest, etc. So, they tend to buy more on the equity side.

[00:04:09]I've managed to get them out of, you know, real estate, things of that nature that are not liquid. Also, one had an audit by, you know, S&P and they said, "Oh, you're selling more government debt. You're taking on more risk." Cuz they were moving towards more on the corporate side. And they said, "No, look, we used Armstrong economics." And we verified what he said. It's government's at default. All right. We get something back if General Motors went down. You know, he goes to bankruptcy and you get something back.

[00:04:38]Government, you get zero. And S&P left them alone. They walked out the door.

[00:04:43]didn't downgrade them but they were moving to corporate debt. The risk of capital controls from Europe is extensive and if we look at what Europe has done historically they've even confiscated silver not just gold and during World War II Europeans couldn't buy gold so what they were doing was buying the miners so a shift in that direction is coming. Okay. The biggest problem with gold for institutions, not individuals, but institutions, is that it doesn't pay a return. So that's why a lot lease it out and things of that nature to earn some money on it. It costs money to store it, but it provides no yield. Whereas the miners at least provide some sort of a yield. So when you look at Europe and you pull back the curtain, you see what Ursula did. She interfered in the Hungarian election as they have done in every election period from Italy to Romania etc. They're really like you'd be better off shaking hands with the Italian mafia. They have more ethics and as soon as she got rid of Orban and Hungary look at what she's proposing. We have to end any single country blocking us now to sell the euro. Initially the criticism was that they could be dominated by Germany or whatever again. So the structure was that any vote would require unanimous among all members to prevent one from dictating to another. That's the very thing she wants to eliminate. Now every step she takes is towards tyranny. And this is indicative of the problem our computer shows with Europe. The EU is not going to survive. The more they do this, the more the tensions of the separation are going to appear. And they have interfered in the Scottish elections, the Italian, Romania, now Hungary. They even threatened to go into the German elections to stop the AFD from winning. They are a ruthless criminal organization. We've been warning our clients about that. That's why you saw a lot of gold move from London and Switzerland to the United States and Singapore as I warned them and they can see this coming that when they get into trouble they're going to put capital controls on. They've always have and as a result you got gold over there in London you can't get it out.

[00:07:15]Part of the reason the dollar is also the reserve currency is Americans don't we've never encountered it but Europe routinely cancels its currency. Even Switzerland, you have an old note, British note from 30 years ago. It's not valid. You got to take it to the central bank and swap it for a new one. This is what they do because they are very Marxist. You got a €100,000 stashed in a safety deposit box. They cancel the currency, forces you to bring it out.

[00:07:45]You say, "Okay, fine. Give me the new one." Oh, where'd you get this? Did you pay your taxes? This is what they do.

[00:07:52]They even cancel the coins. France had 10 Frank coins, they cancelled them. I mean, America has never done that. So, Americans don't realize, but that's why about 70% of our paper dollars circulate outside the United States. I think you'll see more towards, you know, the tangible side from June on. The biggest risk you have there is an escalation of war both in Europe against Russia and in the [music] Middle East. And look, the United States was largely agrarian. JP Morgan had to lend 100 million in gold to top up the Treasury back in 1896 cuz we were bankrupt from the Silver Democrats. [music] So by the end of World War I, the US became the financial capital of the world. You know, it wasn't any policy that we adopted. It was simply the fact that Europe decided to blow its brains out twice. So that's what sent all the capital to the United States. All right. By the end of World War II, we had 76% of the world gold reserves. We produce the arms. We produce the food. You got tanks running around blowing things up. You're not going to be a farmer, you know, tilling the soil. So war impacts the international capital flows. And that's why I say all these people, oh, the dollar is going to crash. Take a look outside the United States. I'd rather have a dollar than a euro any day of the week. Look, I've traveled around the world. Well, I still have, you know, some thousand rupee notes from when I was in Mumbai. They cancelled them. They look pretty, very nice. I got to go back to exchange room to get real money. I mean, this is routine. This is why the capital's going to come here. I mean, I was in Athens and I went to go buy something in a store and the guy said, "If you give me US dollars, I'll give you 10% off." He wanted the dollars. He didn't want euro.