We have been telling you it is all about credit for years … you will soon see the real world reasons why. It is clear the real global economy was already seriously slowing down in Q4 prior to the coronavirus outbreak. Now, China who has been the supplier to the world and the great hope to be the engine of growth to pull the world forward, is all but frozen up.
Within a very short period of time, we will begin to see more and more real world examples of products not being produced which affects downstream ability to get final products to market. The latest example of this is the Audi electric vehicle plant “pausing” https://www.businessinsider.com/audi-pauses-e-tron-suv-production-due-to-battery-shortage-2020-2 production because they cannot procure batteries. Just watch how many other various products cannot and will not be produced in the coming weeks … and remember, businesses have both accounts receivable and accounts payable, not to mention boatloads of DEBT!
As for the coronavirus, all one must do is take a look at the travel and leisure industry. Airlines, resorts, etc., not to mention restaurants and other ancillary businesses have already reported severe drops in traffic, some as much as 30-40%. All of these have both accounts receivable, accounts payable, and debt. Can the industry survive with lower traffic flow? Can the industry survive if even one part of the chain breaks?
Please understand the entire global financial AND real economic systems only function as long as cash flows function. Lack of parts or product means no final sale which means the entire supply chain chokes because the final product is not monetized. This is where accounts payable and receivable come in. How does a business pay another business if they are not being paid? Or how do they pay their bank debt with less or no cash flow? This episode already looks like a chain breaker in not one but several links!
As a reminder, since 2008 (which occurred in the first place because of debt saturation), more and more debt has been piled on the system in an effort to move it forward, the term is “reflate”. The giant Ponzi only worked because interest rates were zeroed out to alleviate debt service. ($17 trillion actually traded at negative rates). Interest rates are now at the lowest level in man’s 5,000 year history. Interest rates are supposed to compensate for risk, how do negative rates compensate for the weakest debt to anything ratios in human history? Complete lunacy is an understatement.
What I am telling you is this, we have a massive credit event directly in front of us because cash flows in and from the real economy are rapidly becoming impaired. Virtually everyone on the planet either owes money or is owed money. Virtually all products delivered as final goods use credit from inception to final delivery. Credit is in the process of breaking down like a domino chain with multiple blocks being tipped in different directions. The result will be, none left standing…
Have you wondered why gold has been very firm since last September? We have tried for years to explain to the public that gold will perform just as well, if not better in deflation as in inflation. Gold (and in particular miners) were the best performers from 1929-1939. The lead up to that period, the greatest buildup of debt ever seen fueled the bubble. The bubble burst and the credit event ensued. Gold (and the miners) performed better than anything else because the world was liquidating credit in an effort to distance from liability. Gold (and silver) were the only currencies WITHOUT LIABILITY! Fear capital fleeing liability, naturally flowed to the only monies without liability, pure asset monies gold and silver. We are about to see a replay, only many magnitudes greater because the debt is magnitudes greater!
Gold sniffed out the cash flow slowdown in September and understood what the repo market was saying, https://www.zerohedge.com/markets/after-breaking-repo-market-jpmorgan-wants-start-using-feds-discount-window-again now it smells further cash flow difficulties. Interesting JP Morgan wants to access the discount window at this moment in time. They say they are acting as benefactor to the banking industry by erasing the “stigma” of direct Fed borrowings. I would ask, benefactor or beggar? Do you really believe they do not need these borrowings?
When you add the fact that gold is massively levered with paper derivatives to the short side, “rocket fuel” is an understatement! In chicken or the egg fashion, I wonder whether a credit implosion leads to failure to deliver or whether an exploded gold price and failure to deliver leads to the credit implosion? It matters not because the result will be the same as the event now looks to be carved in stone. When the smoke clears, the public will understand they were hoodwinked into using and saving in a fraud as everything financial will be worth nothing. The books must be balanced, and THE only thing on the asset side of the ledger with the ability to do so is gold … “Purity” will replace bond ratings in what comes!
To finish, the big miss is that ALL fiat currencies are debt or credit based. When the credit markets become impaired, so will the currency markets. Anyone sitting in cash for “safety” reasons will be sorely disappointed because they reside in the very same frying pan of credit of wild speculators. The coming deflationary credit event will end in a hyperinflationary debacle of busted fiats. Broken credit markets will engulf everyone and everything in the arena. Exiting the credit arena is your only option!
Standing watch,
Bill Holter
Holter-Sinclair collaboration
www.jsmineset.com
Bill- Excellent reporting! Perhaps the “can” stops here, but better not to wait any longer to find out.
Thank you for being persistent with real information.
thanks Bing, we try!
So are you saying the reset will happen much sooner than the 5 year plan the elites want because of the black swan corona virus.
The mistake I think we all make is we underestimate the governments ability to keep things going by bailing out banks behind the scenes, pretending repo operation isn’t QE, etc.
Even if they get things back under control I do find it hard to imagine it taking 5 years for the coming money printing to totally destroy our currency sending precious metals through the roof forcing the reset by the market
we actually believe there will be two resets. The first one manmade which will fail, the second by Mother Nature herself…
So the first reset may happen sooner than expected because of the corona virus?
Exiting the credit arena is not an option for everyone.
Bill, world elite to include Central banks are not planning to lose and are always hedging their bets. I travel 46 mph in a 40 mph zone and I am pulled over interrogated, probed and given a citation by my local law enforcement professionals. Central bankers and world elite members pull off events that are criminal beyond belief and government officials stand by and drink coffee and eat sweet treats. Nothing changes it’s cold in the winter and hot in the summer, gold and silver are precious and evil men are laughing. Semper Fi my friend.
You can only do what you can do Paul. Setting back a little extra food each week and purchasing a little junk silver on a regular basis would be a good start.
Lost your email. This was the only way I had to send this. The BRICs at work
Alibaba Registers Blockchain-Based Insurance Patent in Brazil
Alibaba, an e-commerce company based in China just registered a patent for a blockchain-based network based on insurance, monetary business, and financial business in Brazil.
Please forgive my ignorance as my financial IQ just isn’t what I wish it was in these financial arenas. I guess I’m just a regular Joe who has enough sense to read here, jsmineset and elsewhere but who probably isnt connecting the dots for my fairly simplistic situation – and I’d really like to…
Would it be an appropriate takeaway from what Bill has written here, to now be heavily concerned that my measly $31k in the bank (earmarked for my April 15th tax bill) could be at grave risk? And if so, would I potentially be better served by swapping those funds for in-hand precious metals ?? Yes, I know nobody here has a crystal ball but that’s the concern I come away with from what I just read, unless of course I’m completely misunderstanding – which is entirely possible.
Would somebody clarify for Dumbo here…? Would be most appreciative
You say your money is for your tax bill in a month or so well if you convert to gold because you fear everything freezes up next week I don’t think the IRS will accept that as payment my suggestion is to go to http://www.turbotax.com this weekend and complete your return and electronically pay the 31k bill which should be pulled from your checking account Monday or Tuesday.
I heard from http://www.georgegammon.com one way to avoid the bank is to go to http://www.treasurydirect.gov and put your money into 1 month, 3 month treasury bills you can keep “rolling them over” as long as I think 2 years and setting up the account should be doable for you.
Thanks Roger. Correctamundo for sure in the IRS not accepting Au or Ag as payment. As I read Bill’s piece along w everything else it seems a fuse for an imminent black swan is a possibility. Seems like ignition for this potential bomb could go off anyday (or not at all.) I was thinking more the possibility of my dollar value dropping like a stone as opposed to PM going up but I guess that’s two sides of the same coin. Thanks much for the treasurydirect option
Dumbo,
I don’t think it’s possible to guarantee that PM prices will be higher or even equal by March, when you need your $31k for taxes.
Better option in my mind, would be to take it out of the bank in cash between now and then, under the $10k per transaction limit, and hold the cash at home.
Then pay your tax bill on time, all things being equal
That is precisely what I’ve been considering. Of course moving that much cash out and then back in, makes me look like a money launderer in the eyes of big daddy. What’s the lesser of two evils….? I guess is the question. Of course if things unravel pre 4/15, I guess I’ll be screwed royally like everyone else.
why not just send the $31k now and settle up to the penny on April 15?
Bill I appreciate your straight talking. With your background and experience, I would believe you long before any “parrots” in the Papers or on TV saying who say “don’t worry all is fine”. I have not had a Television in my home for nearly 30 years. I no longer purchase newspapers other than a cursory look when in a cafe, or the like, while having a cappuccino.
I regularly send your articles amounts my group of friends and acquaintances. Some even within the financial industry cannot understand why people like you are not being heard in main stream. One said to me “you are a breath of fresh air”. This same person (an auditor) said he knew there was something seriously wrong but could not find any source which discussed what he knew to be evident.
What worries me are all theses so called financial “wizards” sucking up the savings of hard working people and placing them into superannuation. Yes .. shares, bonds and other financial instruments which will evaporate at some point. I have tried alerting people that their superannuation is not safe. Now I just say silent.
…mainstream will never allow anyone on who gets too close to the target.
So a black swan appears and gold and silver do the opposite of what was predicted and expected. The control by the banks and government seems much stronger than most believed.
Terry Moore
A combination of selling precious metals to meet margin calls on stocks and the usual naked shorting to drive the price down at a time when they should be soaring to discourage precious metal investors
yes
Mr. Holter- Looks like you have hit the right nerve! So many seem to suddenly realize that there must be some kind of problem going on here…. but the “meritocracy” steadfastly ignores it.
Nice work- Please don’t stop! We won’t either!
I believe Trumps plan is to use (borrow)fiat dollars to rebuild our infrastructure after the election then let the Fed bankrupt itself and if Fort Knox and the federal reserve basement has the gold they claim Trump will back our new currency with the gold and silver and reset our economy with gold and silver backed currency God calls that the Jubilee which is supposed to happen every 50years.
Thank you for all of the information Bill.
I knew the talking heads and the govt were not telling us the truth.
I am not an economics major or a financial wizard, but i knew that too many RED FLAGS kept popping up. The economy cant be doing well if major defaults are occuring on auto financing loans.
I love your explanation of “accounts receivable and accounts payable”.
This article has been eye opening.
they will never tell you the truth …because it hurts too much!
Thanks for the article. what is your case for hyperinflation being the end game of a seemingly deflationary event. more fiat chasing less goods ?