Free Metals Report: Read Bob Prechter’s Big 5 Gold Warnings for Bulls and Bears

Very good report if you’re interesting in the Gold/Silver market:


Dear Trader,

Volatile price action is a surprise to most investors most of the time.

That’s definitely true of precious metals in the past 30 days. But, the real story is far bigger than just one month. In fact, gold and silver have seen declines of more than 30% and 50%, respectively, since 2011. Now that’s news!

If you invest in precious metals, you owe it to yourself to read this brand-new report, Bob Prechter’s Big 5 Gold Warnings for Bulls and Bears, from Elliott Wave International.

Inside the new report, you’ll learn the truth about:

1) Central Bank Buying
2) Fed Inflating
3) The “Crisis Hedge” Argument
4) The “Gold is Cheap” Argument
5) The Conviction that Post-Peak Lows were Support

Follow this link to learn more about Bob Prechter’s Big 5 Gold Warnings for Bulls and Bears and get your very own copy now — it’s free >>

Thank you for reading,

P.S. If you follow the link above, you’ll see a stunning chart of some of EWI’s gold and silver forecasts over the past three years. When a market’s wave patterns are clear, as they are now in gold and silver, it is a remarkable sight. See the chart now.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

Click here if the links above fail


Updated Time Cycle Analysis


I thought I’d include the blog readers into this, I’ve added a new chart detailing possible Time Cycles for market turns over the next year or so.

I don’t reveal the Time Cycles but they are the some of the ones described in my recommended Gann Course provider.

The only problem we might have is if I’ve not got the starting points correct – I’ve obtained this starting point 1 from the 6th March 2009 LOW  – the November 2012 starting point 1 is simply a repeated cycle from that date – the next year or so is the next axis of that particular Time Cycle.

S&P500 TC 2013

We can see that the RED cycle from Starting point 2 had a minor effect on the market by putting in a minor top, let’s see what happens when the next point of that cycle hits on 31st May 2013.

The caveat here is that before I commit money to a trade I need to see the market confirming my thinking – I don’t just buy/sell because a time cycle level arrives!  Even if the Time Cycle date is accurate and correct the effect it has on the market might only be small – regardless to what other people tell you, at present I do not know of a way to accurately predict price levels.

Think big then go small – Large cycles due this year are a potentially market topping cycle due in May, August or October – this cycle is derived from past highs/lows back to the 1960’s, the current particular cycle playing out typically ends down for 3 years.

The smaller cycles in the chart are obtained from the current state of the market from 2009 low – If the market has shifted phase then these cycles won’t work.

Let’s see if/how it unfolds over time.

A permanent copy of this chart is on the W.D. Gann page – Medium term Predictions page

The Hovis Trader.

An alternative to Fibonacci levels


I love the concept of having a set of lines on my charts that display potential support/resistance levels – BUT do they really work?

Well, lets have a quick test:

1st I’m going to take a look at the famous 61.8% level – price HAS to find support or resistance on this level and it HAS to hit it, I am not accepting turns where price nearly hits – price has to hit the level and reverse.

2nd I’ll test this over 2 years worth of data by hand – I could do more years but I don’t want to.

3rd I’ll create a new support level of 42% – This level has nothing to do with natural growth, Fibonacci etc It is an independent number plucked out of the air to see what we can deem from this test.

4th I will also test the 50% level too just for comparison.

Here’s the results:

61.8% & 50% Test

50% & 62,8% levels

42% Test

42% levels

Well as we can see from the results it is plain to see that Fibonacci levels aren’t all they’re cracked up to be!

For a start it is impossible to know exactly the level to start from – often these levels did not get a direct hit by starting a retracement from a high or low, often the swings after a high/low matched!

We can see that we could pick virtually any number between 10-90 and it’s likely to have a fairly decent success rate.

Saying all this though and if you check out my Fib/Gann levels page you’ll see that I do like to have lines on my charts to aid potential turning points – this I have decided is a partial flaw and it’s something that I’ll be looking to sort out and tweak in the years ahead.

I urge you to pick a random number and test it for yourself.

Now it’s no secret that I’m a great fan of W.D. Gann.  I’ve studied Gann a lot and it is my conclusion that there is no way on earth that Gann would NOT have known about the Fibonacci number sequence – Gann talks extensively about NATURAL LAW, for centuries Fibonacci and it’s application has been known, Gann would of studied that, yet he makes very little reference to it in his works and prefers to use his own support/resistance levels namely dividing swings into 8ths – he then applied this basis for his gann angles to.

You also cannot get away from the fact that many of today’s Fibonacci experts also use the 50% level – Gann used this extensively too! – the 50% level is not a Fib level!

Like anything you have to make up your mind on what suits you.

Hope it helps


Expectations 2013-2017

Hi All,

I thought I’d provide a blog post on my expectations over the next few years – this is not my own research, however, I have spent many hours reading and researching the facts.

As usual I personally find that Elliott Wave International provides me with the most unbiased research on the economy out there, so it’ll be no surprise to you that my expectations run along side those they mention in their reports and published works.

It is vital to understand that I do not use or subscribe to Elliot Wave COUNTS – there is a massive difference between their [EWI] wave counts and the economic research they publish – I solely focus on the economic research they provide.

It’s been fairly clear that ever since 2000 we’ve been in the grips of a major deflationary depression, this has been highlighted with force since 2008, for example:

  1. In an INFLATIONARY environment mortgage lending goes UP – it hasn’t!
  2. You don’t issue QE in an INFLATIONARY environment – we’ve had QE 0,1,2 and unlimited!!!! = Not normal
  3. Stock markets are virtually range bound, that does not happen if all is well

The use of Time Cycles show very clearly when to expect major turns in the markets, these turns in the markets govern the mood out there in normal land.  There is expected to be a major turning point this year 2013 and 2016.

If this turn in 2013 occurs as expected then it should force the markets down for 3 years or so.  So we really need to know what to expect if that outcome occurs:

  • Falling/stagnant markets force the media to try to explain the reasons, some of these won’t make sense as the media just explains any old crap in the hope of sounding and looking half knowledgeable
  • This heightened media coverage actually makes the public start to think about the people running their money – “How did they not see this coming….” etc
  • This makes the public anxious and angry = increased social anger
  • If the markets fall then Gold and Silver are fully likely to follow suit – they [gold/silver] are not and never have been safe havens!  If you believe that you’ve been misled by which “experts” you’ve listened to.
  • I’ve covered in other blog posts more aspects that should be affected such as property prices, jobs etc

I need to focus on one key area as it’s crucial – the BOND market.

At present people (as expected) have been flocking to Bonds – for the past few years they’ve accepted and continue to accept negative interest rates – real returns.

Okay so apart from all the usual nasties associated with a bear market, the world has one major problem – DEBT, the world has become addicted to debt, it simply cannot continue, something has to give.

The main options are governments significantly reduce spending, increase taxation, instigate other radical ideas/policies or default – none of these options helps Joe Public.

At present people are flocking to the US Bond market and the US$ – This [at present] IS the safe haven asset of choice (NOT gold/silver) and once again this was predictable a couple of decades ago, so it’s nothing new based on “recent” events.

IF the US$ becomes for whatever reason unwanted and as the worlds reserve currency it is called into question – there’s stacks of evidence for this happen! – then this will be dreadful for the entire world economically.  This is mainly likely to occur due to debt levels of the USA and the ability to repay.

So If we get into the situation of the US$ failing and failing to be the world’s reserve currency then the entire worlds paper currency becomes questionable.  In my opinion this is the situation that will propel Gold/Silver to mega new price levels – but only if this happens.  the failing of the worlds reserve currency will not happen lightly.

It is then likely that Gold/Silver will become currency and the acceptance of paper bills/notes rejected by retailers – the big problem is there’s probably not enough gold/silver in the world for everybody!

This is likely to occur sometime in the next 3-4 years if the worst is to happen, as usual nobody has the ultimate crystal ball so we will just have to wait, watch and see what actually does happen.

In conclusion:

The stock markets to be down to flat for 3 years, during this 3 year end of cycle run all focus will be on the US$ and bond market, it will take a massive blow to bring the US$ down and if it happens [of which I do have doubts] then I’d expect Gold and Silver to massively explode in price towards $5,000 troy oz or more as the world clambers to own those assets to pay for goods/survive.

Interest rates are likely to remain very low during this time too.

China and Russia have been dumping the US$ for a number of years and buying up gold so they are obviously blatantly aware of the potential problem the US$ could cause if it failed.

In all honesty the world is run on and by credit, those supplying the credit won’t lie down without a fight – how ugly it could get I can’t imagine at present, I personally don’t expect paper based currency to die, for me it’s one step too far.

I think that the focus will solely be upon debt reduction by the main global economies and getting there house is complete and utter order – this scenario fits well with the time-scale and time cycles going forward.

I’ve NOT detailed every little thing that’s likely to happen such as further bank failures and the like, just a generic broad synopsis of possible events should the crap hit the fan.


Bear Market stress catching up with you?

Bear-Market Stress is Weakening Society

We published our disease/epidemic study in the May
and June 2009 inaugural issues
of The Socionomist. We
concluded that for as far back as history provides data, social mood
appears to have dramatically influenced the health of societies.

As it happened, our study was published near the bottom of a Primary-degree
bear market and the onset of the Swine Flu pandemic. From an Elliott
wave perspective, an even larger-degree trend toward negative social
mood began a decade earlier, in March 2000, when the S&P 500 Index
was some 19% higher than it is today. Elliotticians label this trend
“Supercycle” degree, which is two degrees larger than the
Primary-degree bear market mentioned above.

Society has been expressing this larger trend toward increasingly
negative social mood through a variety of health-related symptoms.
For example, our 2009 study said,

Stress–born of the same fear that drives stock prices lower,
tanks economies and escalates foreclosures–also increases the risk
of disease. … Foreclosure–being forced out of your home–is one
of the most disruptive and stressful financial calamities that a family can suffer.1

Two years later in its October 2011 article, “Foreclosures Are
Killing Us,” The New York Times echoed The Socionomist:

Foreclosure is not just a metaphorical epidemic, but a bona fide
public health crisis … . A growing body of research shows that foreclosure
itself harms the health of families and communities … . A paper
released last month by the National Bureau of Economic Research found
that people living in high-foreclosure areas in New Jersey, Arizona,
California and Florida were significantly more likely than those in
less hard-hit neighborhoods to be hospitalized for conditions like
diabetes, high blood pressure and heart failure. …

More than one-third of homeowners in our study had symptoms of major
depression. The N.B.E.R. study found significantly more suicide attempts
in high-foreclosure neighborhoods. For every 100 foreclosures, it
found a 12% increase in anxiety-related emergency-room visits and
hospitalizations by adults under 50. Losing a home disrupts social
ties to neighbors, schools, jobs and health care providers–ties that
under better circumstances promote good health.2

Indeed, our 2009 study showed foreclosure and flu maps of the continental
United States, graphically illustrating the relationship between stress
and susceptibility to disease.

Foreclosures Are Still Killing Us: The foreclosure epidemic
and consequent stress have visibly worsened since March 2009.

Our study also said, “An extended bear market causes neurological
change across a broad spectrum of society … . The effects of social
stress will increase with the bear market.” We quoted the American
Psychological Association:

The most chronic stressors–which change people’s identities or social
roles, are more beyond their control and seem endless–were associated
with the most global suppression of immunity; almost all measures
of immune function dropped across the board. The longer the stress,
the more the immune system shifted from potentially adaptive changes
(such as those in the acute ‘fight or flight’ response) to potentially
detrimental changes, at first in cellular immunity and then in broader
immune function. Thus, stressors that turn a person’s world upside
down and appear to offer no ‘light at the end of the tunnel’ could
have the greatest psychological and physiological impact.3

In other words, the longer and more extreme a period of stress, the
more debilitating its impact on health.

How are we faring? In the 30 months since our initial study, society
has indeed continued to flag. Let’s look first at various stressors
from around the world and their link to social health.

The Mood Decline Has Undercut Society’s Well-Being

In various places around the world, it increasingly sucks to be human.
The Christian Science Monitor recently wrote, “The standard of
living for Americans has fallen longer and more steeply over the past
three years than at any time since the U.S. government began recording
it five decades ago.”4 Also in the U.S., the unofficial
misery index–the sum of unemployment and inflation rates–is now
at its highest point since 1983, which was just after the grueling
16-year Cycle-degree bear market. “The pace of change has been
incredibly rapid and incredibly tough on the less educated,”
says Mark Zandi, chief economist for Moody’s Analytics. Another economist
says, “it appears large segments of the workforce have moved
permanently into lower-paying positions.”4 The Gallup-Healthways
Well-Being Index hit a 32-month low in October,5 and Federal
Reserve data showed in December that “Americans got much poorer
last quarter, as their collective household net worth suffered the
biggest decline in three years.”6 A Marist Institute
for Public Opinion survey finds that one third of Americans say their
financial problems are chronic, and “64% of Americans worry that
they won’t be able to pay their families’ expenses… .”4 For
many, the light at the end of the tunnel is steadily dimming.

A recent survey by the UK’s Chartered Institute of Personnel and Development
indicates that stress has now surpassed heart attack, stroke, cancer
and back problems to become the most common cause of long-term sick
leave. The survey describes strong links between job security, stress
levels and mental health problems.7 One U.K. professor
goes so far as to say, “Stress is the 21st century equivalent
of the Black Death.”8 (That may be an exaggeration, but chronic
stress certainly does increase susceptibility to disease, as multiple
studies show.)

Greece is a case study in the psychological impact of a negative mood
trend. In June 2011, Time headlined, “The Greek Mental-Health
Crisis: As Economy Implodes, Depression and Suicide Rates Soar.”
Time said Greek psychiatrists recently reported a 25% to 30% increase
in the number of patients. The Greek suicide rate increased by 18%
from 2007-2009, with higher estimates for 2010. “The Greek identity
has suffered a tremendous blow,” said one psychiatrist. “[People]
are ashamed. The entire world today thinks that the Greeks are cheaters
and the black sheep of Europe. This is very hard to accept.”9

In the United States, people also are increasingly sad. The CDC reported
in October that Americans’ “use of antidepressant drugs has soared
nearly 400% in the past 20 years,” making them the most frequently
used medications by people ages 18-44.10 Mental health professionals
cited several possible reasons for the spike, including the “struggling
economy and the record number of layoffs and home foreclosures.”
Medco Health Solutions recently reported,

More than one in four American women took at least one drug for conditions
like anxiety and depression last year, according to an analysis of
prescription data. [The] use of drugs for psychiatric and behavioral
disorders in all adults rose 22% from 2001.11

And for the second year in a row, in 2010 the number of U.S. soldiers
who killed themselves exceeded those who died in combat.12 July 2011
brought “the highest monthly toll ever recorded,” according to the
National Journal.13 A CDC study recently found that the U.S. suicide
rate for adults of working age rises during economic hardship and
declines during prosperity. With laudable insight, the authors cautioned
that the correlation could be non-causal: “… a third factor may increase
the risk of both suicide and unemployment.”14

Socionomics holds that there is indeed a significant third factor,
society’s mood, which influences both societal health and the economy.

A Perfect Storm of Mood, Malaise and Pathogens

Some of the health problems we face during a negative mood trend result
from our behavior during the preceding positive trend. For example,
our 2009 report said,

The breadth of the recent peak in social confidence is evident in
decades of widespread complacent overuse of antibiotics and the consequent
emergence of antimicrobial drug-resistant organisms. … Complacency
about disease may be the ultimate expression of overconfidence.1

The four ascending lines in Figure 1 plot the percentage increase
in rates of antibiotic resistance of three bacterial threats to public
health and the rising rate of MRSA hospitalizations.15
The descending line shows the number of new antibiotics approved by
the FDA. The dangerous divergence is largely due to two reasons, one
biological and one profit-related: 1) antibiotics inevitably lose
effectiveness over time–especially if overused–as bacteria evolve
and adapt, and 2) short-course antibiotics are far less profitable
for pharmaceutical companies than are long-term drugs that do not
lose effectiveness, such as cholesterol-lowering statins. Regarding
profitability, a June 2011 article in Drug Discovery & Development
said, “In 1990, nearly 20 large pharmaceutical companies were conducting
antibiotic R&D. Today, fewer than five Big Pharmas retain active
research programs.”16 Earlier this year, Pfizer announced
deep research cuts, while Johnson & Johnson, the world’s largest
pharmaceutical firm, dropped antibiotics research entirely.

Figure 1

Meanwhile, since our 2009 study, there has been a steady stream of
new reports of rising antibiotic resistance in old enemies.

The Italian Association of Microbiologists says 15,000 Italians per
year get dangerous, drug-resistant infections in hospitals. According
to the Independent, infection outbreaks can be so virulent that “Sometimes
the only solution is to close the hospital.”17 In April,
researchers warned, “gonorrhea is increasingly developing resistance
to all of the antibiotics we have to treat it in the United States.”18
In July, scientists found “superbug” gonorrhea in Japan that is resistant
to all recommended antibiotics and could become a global public health
threat.19 In May, bedbugs carrying antibiotic-resistant
MRSA appeared in Vancouver.20 In June, Europe was hit with
an “entirely new super-toxic”21 strain of E. coli bacteria,
a food poisoning outbreak that spread to at least 10 countries and
in Germany alone sickened 3,816 and killed 54.22 In August,
on the same day that scientists identified S. Kentucky, a new salmonella
superbug they fear may spread globally, U.S. officials reported a
multi-state outbreak of S. Heidelberg, a different strain of antibiotic-resistant

In October, Scientific American reported that MRSA ST398, a strain
of drug-resistant Staphylococcus aureus first identified in pigs in
the Netherlands in 1994, was “recently found in about half of the
pigs and farmers tested in Iowa.” The article says, “The rate of human
[ST398] infections is going up in Denmark and the Netherlands …
We are just looking at the beginning of an epidemic.” Some of the
cases cannot be linked to livestock, suggesting that the bacterium
has evolved human-to-human or other transmission capability. Scientific
American wrote that the 29 million pounds-per-year of active antibiotics
used in U.S. food animals have resulted in “a profitable meat industry
… but also one of the most effective systems for the evolution and
transmission of antibiotic-resistant strains of bacteria that an engineer
could devise.”24

On November 17, 2011, The European Centre for Disease Control and
Prevention said, “the percentage of carbapenem-resistant K. pneumoniae
has doubled from 7 per cent to 15 per cent. … [It] is ‘particularly
worrying’ because carbapenems are the last-line antibiotics for treatment
of multi-drug-resistant infections.”25

New multi-drug-resistant microorganisms, such as gram-negative bacteria,
are evolving at a stunning pace as well. One pathogen that originated
in India, New Delhi Metallo-Beta-Lactamose (NDM-1), is not a bacterium
at all, but a bacteria-produced enzyme. Some strains of bacteria can
transfer the gene for NDM-1 production to other strains via horizontal
gene transfer, which is essentially a non-reproductive, natural form
of genetic engineering. Transmitted via food, water and human contact,
NDM-1 makes bacteria resistant to a broad range of antibiotics, including
powerful last-resort antibiotics. NDM-1 is increasingly common in
the U.K., and the CDC identified it in three U.S. states in June 2010.26

The Rising Potential for a Syndemic

The diverging trends depicted in Figure 1–the increases in drug-resistant
bugs versus the decline in the number of new antibiotics–have roots
in decades of complacency about the threat of infectious diseases.
But the critical, take-home point is the timing. This chink in society’s
immunological armor has begun to widen just as social mood is set
to plunge further and create a legion of fears, problems and stressors.
In fact, our 2009 study warned of a coming “syndemic,” a combination
of ills–such as poverty, hunger, stress, violence, diseases and lack
of medical care–that amplify declines in social welfare and create
what epidemiologists call an “excess disease burden” on the population:

A spiraling decline in social mood stacks [relatively] minor stressors–such
as subprime defaults and falling stock prices–atop bigger stressors,
such as job losses and falling house prices. This enables future stressors–crowding,
homelessness, family violence and depression–all of which increase
the risk of epidemic disease.

This is the same conclusion reached by two researchers, Johannes Krause
and Hendrik Poinar, who recently led a team that unearthed and fully
sequenced the ancient DNA of Yersinia pestis, the suspected cause
of 14th century Europe’s Black Death. The researchers found the ancient
DNA to be genetically identical to that of modern Yersinia, which
still infects thousands of people each year and produces similar symptoms
but spreads slowly and is far less virulent. Krause speculated, “[Perhaps
the] Black Death behaved differently from modern Yersinia infection
due to Europeans’ total lack of previous exposure. Another possibility
is co-infection with other pathogens, a so-called syndemic.”27
Poinar made it even clearer:

For a long time we thought the bug was the culprit … but now we
suspect that the interplay between the disease and humans was what
made the medieval plagues so devastating. Fourteenth century London
was crowded, cold and damp. Large parts of the population were malnourished
and many were carrying other diseases, such as the flu. Then suddenly
the plague arrives with the merchant ships from Southern Europe. It
was a perfect storm.28

Such conditions were not present in 2009 during the swine flu pandemic,
which nevertheless killed thousands of people and “fulfilled every
scientific condition for a pandemic.”29 Should they be
present next time, the casualties should grow by multiples. And conditions
are changing in ways that could favor the development of such a syndemic.
As we noted in 2009, “The bear market will bring some degree of breakdown
in the health care system.” Deflationary conservatism will squeeze
hospitals, physicians, pharmaceutical companies and Medicare even
as health and social crises arrive from multiple directions. Already
we see warning signs. According to a report on NPR, drug companies
and doctors have rationed critical drugs whose demand has outstripped
supply for short periods, including “a wide range of medications:
cancer chemotherapy agents, anesthetics, antibiotics, electrolytes
needed for nutrient solutions, and dozens more.”30 In fact,
The New York Times wrote, “at least 180 drugs that are crucial …
have been declared in short supply–a record number. Prices for some
[of them] have risen as much as twentyfold.”31

Our study said, “The ebbing tide of social mood will reveal even more
[food-safety] laxity and cause even more hardship.” The same is true
of drug safety, as the bear market has already forced hospitals to
use substandard suppliers. NPR reported, “[Nine] Alabama patients
died and 10 others got seriously ill after getting bacteria-contaminated
intravenous feeding solutions made by local pharmacies.”30
The elderly–a large segment of the rapidly aging demographic–are major
consumers of health care resources. Old people are more likely to
suffer from chronic and disabling disease, and many depend on multiple
prescription drugs for quality of life, and even life itself. Even
without an epidemic, these people and the health-care system are highly
vulnerable to supply-chain disruption.

According to a September Time article, Dr. Irwin Redlener, the director
of the National Center for Disaster Preparedness said, “when it comes
to public health, we may actually be worse off than we were a decade
ago. … There have been tremendous cuts in virtually every program
that has to do with preparedness.” Time also summarized a new report
by the Trust for America’s Health and the Robert Wood Johnson Foundation:

■ Thirty-three states have cut funding for public health, with 18 of
those states cutting funding for two years in a row.

■ Local public health departments have cut about 29,000 jobs, representing
19% of the public health workforce.

■ Federal support for public health preparedness has been slashed by

■ The United States has 50,000 fewer public health workers than it
did 20 years ago, and one-third of public health workers may retire
within five years.

■ The medical system’s ability to care for a “massive influx of patients
remains one of the most serious challenges for emergency preparedness.”32

Recognition is Dawning

The influence of the post-2000 negative trend in social mood on the
U.S. healthcare system is becoming clearer. As the trend continues,
researchers will increasingly recognize the strong connection between
social mood and societal health. Researchers will likely begin with
the erroneous idea that the flagging economy, not negative mood, is
the underlying cause of the decline in collective health.

“Prolonged Illness Found Among Idle [Unemployed],” headlined The New
York Times in April 1933, in the pit of the Great Depression. The
article described a New York State Health Department study of “1,600
families chosen at random from the files of public welfare agencies.”
The researchers found higher morbidity rates than had two previous
studies, one of which was conducted ten years earlier:

Sickness is unusually prevalent among the more than 300,000 families
on the public relief rolls in the State. … Individual illnesses
among the unemployed families, although only slightly more numerous
than normal, were unusually prolonged, more than 40% of those disabled
by illness on the day of the survey having been ill for more than
a year.33

Jumping ahead to 2011, research by evolutionary scientist Randy Thornhill
has developed a fascinating “‘parasite stress’ model of human society,
which considers all disease to be a parasite on human society”:

He has already used it to predict that people in disease-ridden regions
will be more xenophobic, and prefer to associate with relatives and
close neighbors. These “collectivist” societies opt for strongly conservative
values and autocratic governments, which Thornhill says minimizes
the risk of contracting diseases. By contrast, people in countries
with low disease rates tend to be more individualistic and democratic…
. Thornhill [with a colleague] has now found a link between disease
and violence. The pair compared murder and disease rates from 48 US
states and found that high disease rates correlated with high murder

Social Fear Threatens Medical Science

Scientists are striving to understand a long list of primary pathogens
with pandemic potential. For example, H5N1 bird flu, a lethal virus
that is scarily similar to the 1918 flu that caused the deadliest
global pandemic ever recorded, currently cannot spread easily among
mammals. But researchers recently demonstrated that “five mutations
in just two genes have allowed the virus to spread between mammals
in the lab. Scientists note that “the virus is just as lethal despite
the mutations.”35 Controversy is brewing over whether these
scientists should be allowed to publish their complete methodology
via the Internet.36 The common practice of widely sharing
research to better human health may become a casualty of the negative
social mood trend. People increasingly fear such “dual use” research
could also enable terrorists to make powerful biological weapons.

Here’s another example. The Washington Post reported on December 8:

Imagine computer-designed viruses that cure disease, new bacteria
capable of synthesizing an unlimited fuel supply, new organisms that
wipe out entire populations and bio-toxins that target world leaders.
They sound like devices restricted to feature-film scriptwriters,
but it is possible to create all of these today, using the latest
advances in synthetic biology.37

Scientists at Celera Corporation used the “equivalent of a laser printer
that can ‘print’ DNA” to assemble the first-ever synthetic life form
in May 2010. The Post wrote, “Prices are falling exponentially. …
Eventually, like laser printers, DNA printers will be inexpensive
home devices.”

Security futurist Marc Goodman wrote on his website, “In effect, the
human genome is merely another operating system waiting to be hacked.”38
He warned of new custom-designed bioterror pathogens that could target
the genome of an individual or a group. “Bio-crime today is akin to
computer crime in the early 1980s,” Goodman said. “Few initially recognized
the problem, but one need only observe how the threat grew exponentially
over time.” Increasingly negative social mood recasts technological
boons as threats, meaning that science may soon be constrained by
the same authoritarianism that is shutting down portions of the Internet.

The intersecting trends of rising fear and scientific denialism–socionomic
traits of bear-market thinking–are also evident in the anti-vaccine
crusade and in accusations that the 2009 swine flu pandemic was actually
a hoax, a conspiracy by vaccine profiteers. Try telling that to the
families of the flu victims. Should another pandemic erupt near the
next major low in social mood (EWI has forecast the end of Supercycle
wave (a) in 2016), a syndemic is likely and hoax charges
are unlikely, as there will be far too many victims to ignore.

The Mood Decline Is Endangering Kids and Society’s Future Well-Being

Doctors at the Boston Medical Center and in four other big cities
say they are “seeing more hungry and dangerously thin young children
in the emergency room than at any time in more than a decade of surveying
families. … chronic hunger threatens to leave scores of infants
and toddlers with lasting learning and developmental problems.”39
The child poverty rate has been trending higher since the 2000 social
mood peak. “The State of America’s Children 2011,” a Children’s Defense
Fund report released in July, revealed other stressors of the young
resulting from the negative mood trend:

■ The number of homeless children and
youth in U.S. public schools increased 41% from 2006 to 2009.

■ The number of children [in households that receive] food stamps rose
rapidly since 2000 to reach a record 15.6 million children in 2009.

■ The number of children who fell into poverty between 2008 and 2009
was the largest single-year increase ever recorded.40

Poverty is not the only bear-market monkey on children’s backs. Parents
tend to grow more neglectful and abusive in a negative mood trend.
Our June 2009 study noted,

Today’s bear market is already damaging the youngest generation. The
May 21 Miami Herald reports that the severity of child abuse, the
number of child deaths and the number of cases of shaken baby syndrome
have all increased while the markets have fallen. A May 20 CBS News
story reports that children’s hospitals in Phoenix, Pittsburgh, Boston,
and Seattle have seen 20 to 40% increases in child abuse cases in
the past year, and that in Beaufort, South Carolina, where unemployment
in a five-county area is up 700%, child abuse cases have increased
64% over the past year.

Health Day reported on a study in the October 2011 issue of Pediatrics:

A new study examined the rate of abusive head trauma [AHT] seen among
kids under age five in various U.S. locales from 2004 to 2009. Researchers
found that the rate of such trauma rose from about nine per 100,000
children to nearly 15 per 100,000 during that time period–coinciding
with the onset of the recession and massive job losses.41

Other research teams reported a doubling of abusive head trauma during
the recession. The authors of the Pediatrics study concluded:

The rate of AHT increased significantly in 3 distinct geographic regions
during the 19 months of an economic recession compared with the 47
months before the recession. This finding is consistent with our understanding
of the effect of stress on violence. Given the high morbidity and
mortality rates for children with AHT, these results are concerning
and suggest that prevention efforts might need to be increased significantly
during times of economic hardship.42

Teens and young adults express the rising stress in an “alarming new
trend,” according to a February 2011 Pediatrics study:

[Teens are] creating and sharing YouTube videos about cutting, burning
or otherwise harming themselves–and even demonstrating techniques.
… Young people say they do it to cope with stress or traumatic experiences
… . Most do it in secret, hiding scars under long-sleeved shirts
and confiding only in anonymous people online.43

The researchers say YouTube provides self-destructive teens a community
of support that normalizes the behavior. And it’s not just YouTube.
“Other websites promote anorexia, autoerotic asphyxiation, even how-to
guides for suicide,”43 said USA Today.

Earlier in 2011, the media blamed the languishing economy for rising
rates of reported child abuse. Now, armed with a new report from the
Department of Health and Human Services,44 they say there
is no such relationship. Yet, data in that report show that child abuse
fatality rates rose by 40% between 1999 and 2008. Socionomists posit
that the negative trend in social mood influences both the economy and
the severity of child abuse.

Children suffer increased physical and psychological stress in bear
markets, prolonging the legacy of a major mood decline.

Two Pedophile Scandals Display Socionomic Timing

It is no surprise to socionomists that a major child sexual abuse scandal,
such as the one that recently engulfed Penn State, went unreported during
the bull market but finally erupted during a negative social mood trend.
As the June 2002 issue of The Elliott Wave Theorist observed about the
Enron scandal, “During the bull market, few cared. There was
consistent misbehavior for a decade, but there was no scandal until
well after the trend changed.”

The same psychology has been operative at Penn State. Former coach
Jerry Sandusky’s alleged sexual predation of young boys spanned several
mostly positive-mood decades, and the current negative mood trend
has only now drawn back the curtain on his misdeeds. Megan McArdle,
senior editor for The Atlantic, struggled to understand the cover-up
that followed the Sandusky affair:

I cannot imagine how a bunch of people somehow tacitly agreed not
to do anything about it. … We’re all still left with a large, unanswered
“why?” I am fundamentally a cynic: I believe that people will do almost
any awful thing. But I need a reason. And I cannot find one in any
of this.45

Socionomics not only provides that reason but essentially predicted
the behavior.

The Associated Press got closer to the reason when it noted similarities
between the Penn State saga and the child sexual abuse scandal that
rocked the Catholic Church in the early 2000s. “The sort of instinct
to protect the institution is very similar,”46 said author
Philip Lawler. And it held intact all during the bull market. Then,
during a negative mood phase, heading toward the stock market low
of 2002, the Boston Globe widely exposed the Catholic scandal and
won a Pulitzer Prize. Fox News reported on December 5 of this year
that the Hollywood film industry might also have a history of child
abuse hidden away; if so, expect more of it to surface.47
Why? As increasingly negative social mood desanctifies one institution
after another–banks, Wall Street, democracy, capitalism, education,
the Federal Reserve–abused or aggrieved individuals finally find anger,
courage and supportive outrage from others, inducing them to speak
out, and the public is disposed to seek vengeance.

Figure 2

And finally, here is an international survey that shows child abuse
rates fluctuating with social mood. Figure 2 is one of UNICEF’s Innocenti
Report Cards.48 For each country listed on the right, two bars show
two different five-year averages of the annual number of deaths from
maltreatment per 100,000 children under the age of 15 years. The pale
bars show rates for a five-year period in the bear-market 1970s. The
dark bars show five years in the bull-market 1990s, which saw improvement
in the majority of the 23 industrialized nations. UNICEF summarized
the 1970s-1990s bear-to-bull improvement:

[In] 14 of those countries, the rate of child deaths from maltreatment
has fallen, in some cases steeply. In a further four countries the
rate has remained stable and in five countries there has been an increase
(though in all except Portugal the increase is so small as to be of
little statistical significance).

If EWI’s social mood outlook proves correct, this trend will reverse.
We believe an understanding of socionomic causality can help scientists
solve the mystery behind such changes. Complicating the outcome, however,
will be the concurrent tendency of negative social mood to increasingly
cast the scientific method itself as suspect.49

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