The Seven Year Shemitah or Shmita Cycle

86
Sun, Oct 12, 2014 - 3:48pm

I have noticed much discussion about this cycle in recent weeks. The narrative is that it is a religious reflection of the Sabbath principle, whereby six days are for work and the seventh is for rest. Apply this idea to a timescale of years and it becomes 6 years tilling the fields and the seventh year for allowing the land to go fallow and regenerate fertility.

A little searching will reveal that certain parts of the world take the Shmita "cycle" pretty seriously. Some connotations are that the seventh year should be interpreted as a year during which financial debts are cleared completely - a Debt Jubilee. The indebted part of the world could do with that I guess, but the part of the world that owns said debts would be more likely to respond with high velocity projectiles, explosives and assassinations of those adventurous persons who propose such ... revolutionary ... notions, and look like they are becoming increasingly heard by the masses.

So is there really a seven year cycle? What would it look like if there was? It's easy to take eg 2008, the stock market high and go back 7 years to 2001 and say "Look! The 911 attack happened then!". My simple response would be that 911 is possibly a connected event, but only possibly. Let's look back some more before jumping to possibly false conclusions.

Another 7 years prior was 1994 a time during which the bond market took a dive. But I have this nagging doubt still. Look at it this way, every year bad things happen and it's so easy to cherry pick newsy events to curve fit a theory. I need to see either more precision, or more duration of an increased number os repetitious sequences to become convinced.

So with that in mind I went back to 1915 and walked forward 100 years to see how a 7 year alleged cycle corresponds with the price of the Dow Jones Industrial Average in stocks.

Readers are free to make up their own minds about what they see, or don't see. I provide the visual track record for your perusal. Oh also, this cycle has a test using the Bartels test of approximately 90% probability of being non random in timing and fit of it's wave structure.

I tracked it back to 1865 but decided to show the last 100 years for this contribution.

Above: The 1910s and roaring 20s and seven year cycle in the Dow.

Above: The 1929 crash, 1930s and 40s depression years and the seven year cycle in the Dow.

Above: The post WWII depression period from 1945 to 1965 and the seven year cycle

Above: The 1970s stagflationary depression and the early 1980 inflationary breakout for the Dow with the 7 Year cycle

Above: The 1980s, 1987 crash, and 1990s and the seven year cycle in Dow stocks

Above: The "naughties" and "teens and seven year cycle in the DJIA

The above chart shows what might happen in this alleged cycle actually exists, and continues it's merry way for the coming six years.

Of course those of us who are politically aligned might point to a 7.5 to 8.5 year cycle which could occur when two presidency terms within the US, Japan or elsewhere are filled consecutively by the same individual, a like-thinking sequence of individuals (such as in communist countries, a "chosen" replacement candidate) or when two business cycles are joined together in a pairing. Many countries choose political leaders such as they are able to, at 3 1/2 to 4 year intervals, and therefore two terms together makes up the required time. So the Sabbath is a nice idea, and it goes back a long time for sure, but I merely point out to readers that the self organized structure of mankind in many places on the planet allows for semi repetitious performance, whether to good or bad effect, for other reasons too. Choose your cause if you need to.

Before signing off, take another look at those charts above. Did you notice a tendency to go down for only 1/4 of the 7 years and to go sideways and up for the other 3/4s? That is it may go up for 5 1/4 or 5 1/2 years and fall quite quickly for the remainder of the 7 year period. If this cycle is real, that tendency might be real too.

So ... if it doesn't bottom at the half way point, could this exercise just be looking at pairs of three and a half year cycles? It might well be so. If it were so, then the lows in the seven year idealized sine wave might look like highs instead of lows, and the actual lows would appear at the times when the sine wave crosses it's midpoint, or centre of trading range. Possibly this happens sometimes but not all the time and both cycles can be seen doing their thing.

There is another angle to the narrative of the Schemitah. That is that seventh Schemitah (every 7 x 7 = 49 years) can be "a big one"! Pay attention to this period for anniversaries of turbulent events past. Also, 49 years is not that far from the 53-54 year Kondratieff economic cycle, and given that these types of things have a certain built in variance there could be a link.

You've got to decide some things for yourself, especially when the information available is partial and subjective, rather than enough to constitute proof. I think there is enough information here to work with, or make a good start into a more detailed investigation, should that be deemed necessary.

Well that's all for now.

Take care

Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

About the Author

  86 Comments

Silvergunn
Oct 12, 2014 - 4:10pm

Thanks Argentus

Yealp, very interesting. I was thinking more about this, and as you have mentioned it has been talked about much lately.

One thing that I have also wondered regarding the 7 year elimination of debt and maybe why the 7 year Mortgage came about???

Regarding the "let the fields lay fallow on the 7th year", I guess that's a good time to use the emergency food supplies to keep them fresh? As long as there is not a drought the 8th year...

First!

I was going to post this when I noticed the new thread, anyone see this?

https://www.examiner.com/article/dhs-to-intensify-attacks-on-freedom-oriented-citizens

sierra skier
Oct 12, 2014 - 4:22pm

Just in time

I ran out of other posts. Thanks AM.

Edit in: You always provide good food for thought. Thanks for your analysis on the 7 yer pattern.

Bollocks
Oct 12, 2014 - 4:35pm

Thurd

Latest from Chris Martenson

The Crash Course - Chapter 17 - Understanding Asset Bubbles

Through the long sweep of history, the bursting of asset bubbles has nearly always been traumatic. Social, political and economic upheavals have a bad habit of following asset bubbles, while wealth destruction is a guaranteed feature.

Bubbles only used to happen once every generation or longer, because it took substantial time for the victims to forget the pain of the damage.

But that’s changed in the new millennium. Less than ten years after the bursting of the dot-com bubble we saw the rise & bursting of the housing bubble. This is simply astounding and thoroughly unprecedented.

More astonishingly, there are now concurrent equity and bond bubbles raging across the entire financial market structure of the world.

We are in our third bubble period in less than 15 years. This new era of serial bubble-blowing signifies that we are now in new turbulent territory with which we have little historical guidance to draw on.

The recent years of money printing by the world's central banks has NOT ushered in a “permanent plateau of prosperity”. And, as with all bubbles, symmetry indicates the downslope after the bursting will be steep, swift, and likely quite scary.

Jeremiah Jr
Oct 12, 2014 - 4:43pm

Great Post

Don't often post on MS and not quite sure about the direct 1-1 correlation between the financial markets and the Shemitah, but imo that cycle is still active, or will be shortly in the future, Always enjoy your perspective.

Silvergunn
Oct 12, 2014 - 4:50pm

Martin Armstrongs cycle's

They are real close to this, 8.6 years I think?

https://armstrongeconomics.com/models/

https://armstrongeconomics.com/the-business-cycle/

He writes on PDF pg35 below (in pg58 of the paper's pages) about this 8.6 year cycle of his model's. It was correlating with the 1980 gold high, so based on that 2014 is 4 cycles away from that?

https://armstrongeconomics.com/wp-content/uploads/2012/05/manual-models.pdf

Bollocks
Oct 12, 2014 - 5:11pm

It's that number 7 again

Interesting stuff Argentus. Thank you .

DeaconBenjamin
Oct 12, 2014 - 6:03pm

Sweden close to being cashless society

Four out of five purchases in Sweden are paid electronically or by debit card and with the development of cheaper technology the trend is moving towards a fully cash free society, according to a new report.

"Sweden and the rest of Scandinavia leads the world in terms of cashless trading," said Bengt Nilervall at the Swedish Federation of Trade (Svensk Handel).

Swedes use their debit and credit cards almost every day - an average of 260 transactions per person per year.

The picture is very different in southern Europe. In Italy, for example, three-quarters of all consumer purchases are still paid for in cash.

"That is due to the low confidence in the authorities and the banking system," said Niklas Arvidsson, an associate professor of industrial dynamics.

Arvidsson argued that Sweden could become completely cash free but predicts that this development is unlikely until at least 2030.

"The familiarity of cash in the hand could prevent this. A recent Sifo survey showed that 2/3 people consider (the availability of) cash to be a human right," he said.

Retailers, banks and card companies welcomed the trend with the proviso that customers are able to keep up with developments.

A cash free society would lead to increased security for both staff and customers and would cut cash-handling costs - estimated to be around 8.7 billion kronor ($1.2 billion), some 0.3% of GDP.

Armed robberies are furthermore in decline in line with the reduction of cash use. In 2012, a mere five bank robberies were committed, according to the Swedish Bankers' Association - the lowest figure in 30 years.

The spread of cards and electronic payments has had a profound effect even on the street level with fruit and veg traders and even retailers of the homeless magazine Situation Stockholm accepting card payments.

The spread of electronic payment systems such as Swish are a further addition to the plethora of alternatives for people to transfer small sums without having to resort to the ATM machine.

https://www.thelocal.se/20141012/sweden-close-to-being-cashless-society-...

In 2012, a mere five bank robberies were committed. Almost suggests the Swedes know what is in the banks isn't really money.

DeaconBenjamin
Oct 12, 2014 - 6:08pm

US trial set to start against ex-UBS banker

A former top-level UBS banker will stand trial in the United States this week accused of helping rich Americans evade millions of dollars in taxes.

Five years after being charged with conspiracy to commit tax fraud, Raoul Weil, 54, the former head of the Swiss banking giant's global wealth management business, plans to plead not guilty at the federal trial that opens on Tuesday in Florida.

If convicted, he faces up to five years in prison and a hefty fine.

"He is not guilty," his lawyer Aaron Marcu told AFP.

"The same people at UBS who were doing bad things and helping clients hiding assets are the same who are going to testify against him."

The Weil case is a high-profile part of the massive US crackdown on offshore tax dodging, particularly in Switzerland, renowned for its vault-like banking secrecy.

According to the indictment, between 2002 and 2007, as Zurich-based Weil supervised the bank's overseas activities that serviced some 20,000 customers, he and his co-conspirators helped US customers conceal around $20 billion in assets from tax authorities.

The Swiss national was declared a fugitive by the US.

Fired by UBS in April 2009, Weil joined the wealth management firm Reuss Private Group in 2010 as a consultant, then became head of the company in early 2013.

That career came to an end when he was arrested in October 2013 after using his real name to check into a luxury hotel in Bologna, Italy and he was extradited to the United States.

Weil has been living in New Jersey under the supervision of authorities after being freed on bail of $10.5 million last December. He was ordered to surrender his passport and wear a GPS tracking monitor.

His trial initially was set for February 18th but Weil obtained a delay to examine millions of documents provided by the plaintiff, the Department of Justice.

Star witness

Weil's line of defence for the trial in Fort Lauderdale is that he was victimized by his colleagues who had concealed their activities helping US clients dodge taxes.

The conspiracy was brought to light by a whistleblower, the former UBS banker Bradley Birkenfeld, who served time in prison for participating in the illegal scheme.

After his release, Birkenfeld was given a $104-million reward by the Internal Revenue Service for providing the insider information that exposed the vast tax evasion conspiracy.

UBS has been cooperating with US authorities in the crackdown on tax evasion under a landmark agreement reached in February 2009.

UBS paid $780 million to settle the tax fraud case.

The trial, which looks set to pit current and former UBS employees against each other, was expected to last up to a month.

For the prosecution, the star witness undoubtedly will be Martin Liechti, the former head of UBS's wealth management operations in the Americas.

Arrested in 2008 by US authorities, Liechti struck a deal with them to avoid criminal punishment in exchange for providing detailed information about Weil's alleged illegal activities, according to legal documents.

The defence team is expected to present fewer than ten witnesses, including two or three who will testify by video conference from London.

Marcu said a number of people who were asked to testify on behalf of Weil have declined because they fear arrest if they enter the US.

There appears little chance that the two sides will strike a settlement deal before the trial opens, say people close to the matter.

https://www.thelocal.ch/20141012/trial-set-to-start-against-ex-ubs-banker

Of course he's on trial -- he was never one of Eric Holder's clients at Covington and Burling.

a $104-million reward by the Internal Revenue Service for providing the insider information that exposed the vast tax evasion conspiracy. So is that tax free, or do they just take back half of what they give you?

Marchas45
Oct 12, 2014 - 6:29pm

Honest AM

I'm really Trying but man it just goes over my head. Guess I'll just keep to selling Real Estate. Keep Stacking

SilverRunNW
Oct 12, 2014 - 7:37pm

DEC14 Comex Options - WOW!!

Take a look at the Dec14 Comex options. Huge numbers above $1,700 and open interest is 337,620 calls, and 152,556 puts. Sorry for the long post, but I wanted to show the whole spread between calls & puts at all price points.

https://www.cmegroup.com/trading/metals/precious/gold_quotes_volume_voi.html?optid=437

Calls $1,700 - 23,018 $1,900 - 27,015 $2000 33,237 $2200 - 13,647 $2250 - 31,102

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

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Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

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