The Greatest Wealth Transfer In History

Written By: The WealthCycles Staff

When I began studying monetary history and wealth cycles, I was electrified by the realization that the same patterns have repeated over and over again, from ancient Greece and Rome to our own modern global society.

What really thrilled me was the realization that understanding those cycles gave me a roadmap for where today’s markets and the economy were headed. For example, I could see that every time in history that a government intervened in free markets, the markets would eventually undergo a correction. I could see that every time a government began devaluing its currency by creating more and more of it, certain events, like inflation or hyperinflation, would follow, every time.

My understanding of cycles has allowed to me to build a successful business and secure my family’s wealth. My strategy is to invest in accordance with the natural economic cycles that have occurred repeatedly throughout history.  Time and again, I have made successful investments not because I’m some financial wizard, but because my understanding of those cycles gave me just a little bit of an informational edge over the next guy.

The purpose of this introduction to the Wealth Cycle Principle is to give you the opportunity to gain that edge as well.

What is a Cycle?

The word “cycle” comes from the Greek word kyklos, meaning cycle or circle. One common definition of cycle is “a periodically repeated sequence of events.”

The idea of a cycle is symbolized by a circle, which, because there is no beginning or end, represents recurrence. The symbolic circle is often divided into segments—often two, such as the Chinese yin and yang or day/night, but more often four segments, like the seasons.

 “The reward of the historian is to locate patterns that recur over time and to discover the natural rhythm of social experience.”

-William Strauss and Neil Howe, The Fourth Turning

A recognition and understanding of cycles is one way human beings are able to recognize patterns in data. As early humans learned that events in nature recur over and over again with regularity, they developed the ability to plan for the future, which ultimately led to advanced civilizations.

Human understanding of cycles goes back thousands of years, beginning with the recognition of the human life cycle. Every human who has ever lived was subject to the human life cycle of birth, childhood, adulthood, aging and death.

Early humans also recognized the life cycles of animals and plants and the regular changing of the seasons. They learned to use their understanding of cycles to plan their hunts, to know when native plants would be ripe for harvest and eventually to develop agriculture. By developing an understanding of the past, humans learned to manage the future better.  

Cycles, as our ancestors recognized, are relevant in all aspects of life, be it the lifecycle of a cicada or the birth and death of a planet. In fact, even our human behavior and personalities are subject to cycles. Changes in the seasons raise or dampen our spirits; many people respond with depression to dark, dreary winter and grow cheery with the advent of warm spring sunshine and bright summer days. Many cycles trigger polarities of moods—from peace to war, or, with market cycles, from “exuberance” to “depression.”

Markets, which are driven by human emotions such as greed and fear and behaviors also fluctuate in natural cycles. Economic cycles, like other natural cycles, exhibit the polarity of booms and busts.

Types of Economic Cycles

The first economist to identify economic cycles was 19th century French economist Clement Juglar, best known for identifying the 7-11 year fixed investment cycle which bears his name. Juglar’s template for economic cycles became a model for other economists to base their theories.

The basic format of an economic cycle is expansion, leading to crisis, followed by recession, and finally recovery, which leads back to expansion. The timing of basic economic cycles can be predicted with some regularity.

Early 20th century Russian statistician Nikolai Kondratieff theorized that Western capitalist economies are subject to long-term cycles of booms and busts that recur regularly in 50- to 60-year cycles, known today as Kontratieff waves. He claimed that these supercyles had been running since the beginning of time.

Another natural cycle is the currency cycle. The currency cycle occurs less regularly and less frequently, but always follows the same pattern. Societies start with quality money that holds its value (i.e. gold and silver), and then move to quantity but lower-value currency and then back again. These cycles ebb and flow throughout history, as naturally as the tides.

The currency cycle has been recurring for the past 2,400 years. Every time, governments in order to give themselves the power of deficit spending, begin to create more and more currency. As they create more currency, each unit of currency has less value. Eventually the people realize their currency doesn’t buy as much as it used to and is losing value. Every time for the past 2,400 years, the free market prevails. Gold and silver automatically revalue themselves. It’s a natural cycle, and it always ends the same way, with the value of gold and silver rising to account for the excess currency the government has created.

The stock cycle is a shorter cycle. For a time, stocks and real estate outperform gold, silver, and commodities. Then the cycle reverses, and gold, silver and commodities outperform stocks and real estate.

The Current Wealth Cycle

The Wealth Cycle Principle is a way for an observant investor to use market cycles to forecast market direction and choose investments based on those forecasts.

How does The Wealth Cycle Principle work? By recognizing what market cycle is currently in progress, identifying investments that are “in the cycle,” and investing heavily in them before they reach peak price. When those investments become overvalued, it’s time to sell. Adherents of the Wealth Cycle Principle spend lots of time learning and interpreting what their next “in the cycle” investment will be. They keep a sharp eye on market fundamentals and price fluctuations. Even though they are sticking to their strategy of investing in the identified cycle, they must be constantly alert to what’s happening in other sectors, antennae tuned to changing conditions and eyes peeled for the next big thing.

Today, we’re in a precious metals cycle. But thanks to a confluence of events and the cumulative results of decades-old fiscal policies and market manipulations, our current economic condition is exponentially more fraught with peril and opportunity than the mere progression of economic cycles would ordinarily entail.

Today, a fiat-currency cycle of unprecedented size and duration is coming to a close. That’s because for the first time in history, every single currency in existence in the world is a fiat currency, and because globalization has linked the economies of the world in interdependent relationships to an extent never before possible.

Every fiat currency ever invented has failed—a 100% failure rate. When the word’s fiat currencies begin falling like dominos, each taking the next one down with it, the world’s people will have nowhere to turn but to history’s recurring choice for real money, gold.

As the fiat currency bubble bursts, a commodity cycle is just beginning. The recent pain and losses associated with stocks, bonds and real estate have created a generation once burned and fearing the fire. Tangible commodities will become the investment of choice, and for many solid and historically supported reasons, gold and silver will be among the most sought-after commodities.

One reason gold prices must rise is that peak gold—the point at which the maximum amount of gold is available worldwide—has been reached, probably some 10 or so years ago, according to a 2009 statement by Aaron Regent, president and CEO of the world’s largest gold mining and production company, Barrick Gold. Peak gold means the lowest-hanging fruit of easily extracted, high-grade ore already has been harvested, and the amount of gold mined each year will continue decreasing into the future.  Gold prices will necessarily have to go up in order to make mining operations pencil out.

Like gold, silver also has been used as money throughout human history. But silver also is an important component in many industrial applications, putting even more demand pressures on its price. And as with gold, we have reached peak silver. Today, very little silver is being mined.

Today there is probably six to seven times more gold available for investors to buy than silver. Today there is approximately 450 million ounces of silver available in stockpiles worldwide—about one ounce for every 14 people on earth. Silver prices are very low right now relative to gold, but those bargain-basement prices can’t hold much longer—despite government policies and financial sector machinations to manipulate the markets.

In fact, no one knows the true free market prices of gold and silver, because they have been artificially manipulated for so long. When the free markets do finally determine gold and silver’s true value (which they always have throughout time and inevitably will again), the wealth transfer will be mind-boggling.

The Next Great Wealth Cycle

I want to make it clear that I don’t advocate investing in gold and silver exclusively until the end of time. Ten or 20 years down the road, I might advise you to invest in something entirely different, because by then we may be in a different wealth cycle. But I will tell you that there may never be another opportunity like this one in my lifetime or yours to profit from the greatest transfer of wealth the world has ever known.

Here’s why:

●  Today’s currency bubble is inflated to unprecedented heights, and because every currency in the world is fiat currency, the only safe haven money investors can turn to is gold and silver.

●  The end of the currency cycle corresponds to the winding down of a stock cycle, magnified as millions of retiring baby boomers are mandated to withdraw 401k funds from the market.

●  As the currency and stock bubbles implode, a commodity cycle—favoring the two commodities that can be used as money when currency has become valueless—is just beginning.

●  We’re living in a world that is interconnected and interdependent in ways unimagined a couple of decades ago. With communications occurring at the speed of light, with former developing nations now populated with eager investors, with global trade imbalances and unstable currencies balancing governments and markets on knife’s edge… when this correction starts, baby, it will be the mother of them all.

It all sounds pretty scary, I know. But that’s why you’re reading this primer, and that’s why you’re taking time to learn the lessons of the past. Knowing what has happened in the past is essential to becoming financially educated today. Knowing what missteps have led others to failure or ruin allows us to avoid those same missteps today. Recognizing patterns that have repeated over and over again in the past allows us to predict what will happen when we see those same patterns repeating today. A solid understanding of history and its relevance to the present allows us to face the future with confidence.

Now you have the tools and the knowledge; use them wisely, and you can ensure future security and prosperity for you and yours. 

-Michael Maloney

The word “cycle” comes from the Greek word kyklos, meaning cycle or circle. One common definition of cycle is “a periodically repeated sequence of events.”

The idea of a cycle is symbolized by a circle, which, because there is no beginning or end, represents recurrence. The symbolic circle is often divided into segments—often two, such as the Chinese yin and yang or day/night, but more often four segments, like the seasons.

A recognition and understanding of cycles is one way human beings are able to recognize patterns in data. As early humans learned that events in nature recur over and over again with regularity, they developed the ability to plan for the future, which ultimately led to advanced civilizations.

Inflation is simply an increase in the supply of currency and credit. The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling is defined by the term "price inflation." Central Banks attempt to stop deflation, a natural phenomenon which occurs in order to correct the prior inflation.

Hyperinflation is when extreme inflation spirals out of control and confidence in a fiat currency falls. Usually, hyperinflation is characterized by a negative feedback loop, in which people, fearing the falling value of their currency, buy hard goods in order to preserve their purchasing power. This drives the prices of goods up, which creates price inflation, and drives the purchasing power of currencies down—creating a feedback loop.    

The basic format of an economic cycle is expansion, leading to crisis, followed by recession, and finally recovery, which leads back to expansion. The timing of basic economic cycles can be predicted with some regularity.

The tangible things that we eat, use and/or buy. Commodities that are traded include Cattle, Cocoa, Coffee, Copper, Corn, Cotton, and Crude Oil, just to cover the Cs. Gold, silver and platinum also are traded on the commodities exchanges as futures contracts.

The word “cycle” comes from the Greek word kyklos, meaning cycle or circle. One common definition of cycle is “a periodically repeated sequence of events.”

The idea of a cycle is symbolized by a circle, which, because there is no beginning or end, represents recurrence. The symbolic circle is often divided into segments—often two, such as the Chinese yin and yang or day/night, but more often four segments, like the seasons.

A recognition and understanding of cycles is one way human beings are able to recognize patterns in data. As early humans learned that events in nature recur over and over again with regularity, they developed the ability to plan for the future, which ultimately led to advanced civilizations.

A fiat currency is created by a government decree. The Latin word fiat means “let it be done.” And with the stroke of a pen, or the crank of a printing press, “money” is created. Fiat currency has no inherent value—the paper that a $100 dollar bill is printed on is surely not worth $100. It might have been worth a few cents before the government ruined its utility as scrap paper by printing green words and numbers all over it! Compare this with gold, which is a precious, rare metal that is, in many cases, the only substance on earth that can be used for certain human purposes, including science, medicine, and of course—adornment.

Simply put, bonds are debt. Bonds basically say: "I owe you (IOU) X-amount of currency, plus X-amount of interest." —Michael Maloney, Guide to Investing In Gold & Silver. But, there is more to it than that. Bonds set the cost of borrowing, determine international currency flows, and play a huge role in determining the value of each nation’s currency. That means bonds have a direct effect on the dollars, euros, pesos or yuan in your wallet or bank account.

Very interesting Michael.

I have been following Mike for a while now. I have also read his book and am familiar with his macro views. However, I am based in India and am wondering if you are servicing this market. Do you have customers based in India at the moment? Are there any opinions on what is happening in the Indian market and how that ties into what is happening in US and Europe? Would be really interested to know.

INCREDIBLE,ENLIGHTENING,ENCOURAGING,PROFOUND.
HOWS THAT FOR A BLUE COLLAR TENTH GRADE DROP OUT
DESCRIBING WEALTH CYCLE PRINCIPLE,YOU SURE KNOW HOW TO HURT A GUY MIKE,I HAVE BEEN PLANKTON ALL MY LIFE
AND DID NOT KNOW IT
GEE, MABE I CAN EVOLVE INTO A SHARK SOME DAY,NOW
HA

As a wage earner, investor, and average citizen who is trying to protect my family, I have followed Mike's advice (and that of many others in the know)and have invested in PM. I have even moved my PM away from America's debt ridden shores and stored them in a country that handles money more responsibly. I constantly keep up on headlines and do my best to monitor the economic environment. I feel that I am definitely much more informed than other average persons on the street. However, there is one issue that I have no idea how to counteract, and that is the issue of a possible windfall tax on PM "speculators" when all of this mess finally catches up to us. Does anyone out there have any idea how we can protect ourselves against this. I choose not to shrug off this idea because I know that at the very least, our government will demonize PM investors, and I would not put it past the government to slap a huge tax on us in order to make us 'pay our fair share since we are the small group that "caused" this mess. The last thing that any governing body ever does is own up to its part when something goes wrong. Any idea at all would be greatly appreciated.

Deal with the money, as money. Problem solved.

Convert it to your sub-dermal, digital-MintChip, one-world, one-government, one-money minus the "big tax" if you really want to down the road...

Many will be quite interested to exchange for your real money.

Dear Owen
I am a Swiss dealing in taxes and I do understand your worry about that and I am sure sooner or later they (the government) is going tax or even prohibit the possession of precious metals, as they have done before in the states. The government yet also depends on entrepreneurs and while I cannot advice you to hide them in your basement or other safe locations, you should also think in the pm investment in terms of a vehicle. You won't be holding them forever, yet just use them to enter into another field, that also provides revenue. Mike M. speaks often and so thus Robert Kiyosaki about asset classes. There will be tax cuts for people that actually do something and provide jobs or housing. By the time the broad mass demands pm's and the government steps in, you should already have entered a new asset class.

Mike, very much appreciate you educating us on the wealth cycles, and precious metals.
I have only one question, however, out of curiosity. Exit strategy.....Will you exit PMs market and then few days later advise your members to exit? Or will it happen on a timely manner for us who follow you?

Hello,

When it is time to exit the precious metals market, Mike will be sending to GoldSilver.com Insiders (i.e. Clients) his personal exit strategy. 

Us here at WealthCycles will be writing articles about whether or not we believe gold and silver are becoming overvalued. 

Earl

Mike,
Thanks for the eduacation.I read your book like the holy Bible.
Apart from the gold/silver ratio, is there any index to suggest when this bulls market will change?
Ola

Hello Ola,

Great question. 

I would refer you to chapter 7 of Mike's book. When you understand   "what's the value?" you will be able to determine for yourself what market index to move into next. 

To find out Mike's personal exit strategy from the gold and silver bull market, I would reference you to our sister company GoldSilver.com Insiders Program.

http://goldsilver.com/about-gold-and-silver-inc/

Earl 

Would it not be correct to say that if the silver ratio is below traditional norms that as long as that condition exists silver is a good buy? and that when the gold ratio falls below traditional norm then gold would become the better buy?

Hello,

Yes your correct that the gold/silver ratio which is currently below(above) traditional norms as we speak make the metals a good buy.

We believe that the metals will reach their historical ratio and surpass it as well.

Here is an article on the Gold Silver ratio that can help in answering your question as well. 

http://wealthcycles.com/features/the-gold-silver-ratio-and-how-it-works

Earl

Hi Mike and Team,

I had one question with silver as all the economic activities get hit will it not affect the industrial demand for silver and hence wont it shunt its price increase?

Hello Balachan,

Great Question.

The industrial demand for silver will be affected but I think the price will increase in the long run due to the demand. 

Great article about this topic is "Who's the Big Fish Now?"

Earl

Hello Mike,
Thank you. I will truly be in your debt when the wealth transfer happens. I read your book in January and it made so much sense that it boggled my mind...the histories, cycles, fiat currencies, consequences of debasement of a fiat currency, hyperinflation, insecurity of paper gold/silver,etc.
Wow, how come I was never taught that?? I went out and bought some silver before I was even half way through your book. I am slowly beginning to accumulate some now.
Most of all, I want to thank you for your generosity in sharing your vast amount of knowledge and experience with us. First of all, your book, then GoldSilver.com, and WealthCycles.com. I'm a paid member of which I feel that the annual membership is a small price to pay for the information and the perspectives that I will learn from your site.
I also bought your video but I was glad to see that you are making it possible for all to see it...for free. Educating the masses.
I get the impression that your PrimarY purpose is to educate us of what's coming down the pike and how to buffer ourselves from the rough ride...and not so much making money from us. Am I right?
Thank you for teaching and speaking to us in a language that we can understand and not one that the financial sages use.

Jim

Hello Jim,

Your right. 

Our primary goal is that you and others will have a secure financial future with the knowledge and understanding of economic wealth cycles.  

Earl

Mike-
Thank you for giving me the words to express to my friends and family what is happening to our currency and the transfer of wealth that will accompany it's downfall. They think that I am smart but I tell them that I am only smart enough to know what makes sense when I read it written by men much smarter than myself!

I suscribed to the Premium newsletter to learn more about the coming "great transfer of wealth" and to be better able to plan my next step onto what ever the next bubble will be. You say it will be real estate, I can understand why and the premise that as PMs peak, real estate will be hitting bottom, but you have been publishing very few articles and videos dedicated to that specific topic.

Please keep up the enlightening work and research and PLEASE give us a few focused tidbits on the indicators and timing of the jump to whatever bubble is next, be that real estate or some other undervalued commodity.

Thanks!
AGAUARAK

I do have some gold and more silver - in gold and silver maples. Would you even recommend people hanging onto things such as 10K/14K/18K gold rings/bracelets and necklaces as they do have a percentage of gold value in them? While they may not be 'legal tender' items, there is a gold value present in jewellery isn't there?

Anyways, i'm dumping cash and replacing with gold/silver. Thanks.

While government minted bullion is often the most fungible and recognizable, it is always prescient to have something you can travel with. 

thank you. every read is always exciting and educational! :)

whats Ben B have in mind for the end of june I can't buy enough gold and silver.he is in a box and only knows money printing.

Mike you are fantastic ! I am totally convinced.
I thank you for your kindness in sharing such serious and important information in very simple to understand manner. I am also very much enlightened by your videos. I am going to share them all to all my friends and relatives. Thank you very much. Continue your good work. May the Lord bless you and
your family.

The theme is obvious ride along with the wave, and transfer that wealth towards your own pockets. Thank you very much Mike Maloney, for making this article available to your readers for free.

As always, thanks for reading! 

Few things is more useful than The Wealth Cycle know-how Mike has shared with us (for free). Thank you very much. Wishing you all success.

Thanks for sharing this mike. Articles like this make my day, reinforce my understanding and keep my outlook positive. Thank you for all you do.

WOW! Great article MM.

Mike,

Once again you painted the economic future in full color. I will be hanging a copy of this article above my desk for days that need clarity. Great job and thanks.
Doug

Thank you, Mike and team for this info! I have shared the link to this article with many family members and friends.

I have placed big bets on silver, much of which I bought from Mike's company, however, I have also kept a smaller portion (25%) of my portfolio in cash (dollars.) Does Mike keep any of his portfolio hedged like this? There is a large, entrenched, rich, powerful incumbent force that is interested in keeping the fiat currency system in place and I feel a tad uneasy about betting so heavily against them.

The second question I'd like to hear Mike's opinion on (I hope you guys read old blog entries!) is regarding the silver/gold ratio.
If prices were historically set at about 16 due to the relative abundance of each in the earth, then why would these dynamics not currently control prices? In other words, if there is actually less above ground silver available like everyone says, then why isn't silver more expensive than gold? I've noticed that even the most learned experts do not seem able to imagine silver at a higher price than gold, but why not? Especially given the fascinating electrical and reflective properties of silver.

Rojelio, silver is more widely used in industrial applications because is 56 times ( by weight) more affordable than gold. Gold has higher thermal and electrical conductivity than silver. It also has lower corrosion than silver. It is just economy of scales. If the market was to suddenly embrace silver as a store of value, industry would move to the "next best" cheaper metals, and use alternate processes that reduce the amount of costly metals. This is a fact that I have not seen in Wealth Cycles discussions, but still a fact, as discussed in technology conferences and other arenas.
Cheers!
Luigi

Fundamental factors do control prices... But as we have observed, markets often get away from their true fundamentals. The gold/silver ratio has bounced off 16 several times in the past century and it should get back there again, but having hit 100 at its peak, the gold/silver ratio is likely to fall below, and maybe even way below, its historical lows... It should be a fun ride.  

you mentioned peak gold in your article, which is consistent with Richard Heinberg's idea that we're close to "peak everything" at this point in history. I wonder where you guys think we're at in terms of peak silver?

are you hiring? I want to work for you mike maloney. you are a super financial psychological
genius.

Every fiat currency in the world has eventually failed. Thats pretty scary. The one sentence that does not go out of my head since I see it so often on this website is that we are going to see the greatest wealth transfer in history. Every time I see that I have think as to what I can do to be part of it. I also agree that in 10 years or more we will most likely be in another cycle. We will probably find out on this website in which cycle we are going to be in. That's what I am hoping for.

We hope to be around in 10 years, but don't rely on us. Try to figure out for yourself what cycle we are in. From my own experience, I know just the process of researching will help you more than knowing.

 

nicholas - WealthCycles Administrator

Mike,
Thanks so much for sharing with us all this vast information. As you have said before, and feeling the same sentiment, I'm not afraid anymore-just looking forward to the changes (and challenges) that the coming years will bring us.

We are glad we are able to assist you Victoria.

 

nicholas - WealthCycles Administrator

testiomials I was electrified by the realization that the same patterns have repeated over and over again, from ancient Greece and Rome to our own modern global economy. ”

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