We have seen unprecedented volatility over the last 2 months, in particular the last 3 weeks. This is highly unusual as most year ends and beginnings are calm with very little news. The news on a global scale has had the volume turned up so that nearly no market has been left unaffected. The obvious markets are FOREX and oil, the not so obvious market is that of the hidden markets, OTC derivatives. We have just finished the worst three days to start the year in history, what has happened?
I wrote about this yesterday and don’t want to be redundant but it is my belief, someone is already “very dead” …we just don’t know “who”. Before going any further, in my opinion it really doesn’t matter “who” has been blown up because everyone is sleeping with everyone else so to speak. It doesn’t matter who has been bankrupted, it matters who the bankrupt “owes” …and then it matters who they owe …and who they owe etc. etc.. The fact is, we live in a credit based daisy chain where no one can be allowed to fail or they all fail. This truth was displayed in 2008 with Lehman, we were only hours away from a complete seizure while the Fed was working behind the scenes with a $16 trillion fire hose.
It is now different than 2008, FAR different and FAR more dangerous. How can I say this? First, the Fed has already quintupled their balance sheet. The ECB has filled their own balance sheet with steaming cow patties of bankrupt sovereign debt …while the Swiss have filled their central bank balance sheet with euros, go figure? Let’s not forget about the Japanese, they have printed enough yen to purchase all new Japanese and U.S. sovereign debt issued …absolutely BLATANT monetization!
But wait, until a week or two ago we were being told the global economy (except for Russia of course) was “recovering”. Talk of the Fed actually raising rates was the toast of the holidays and champagne glasses rose to cheer an economy growing at 5%. Fast forward not even 2 weeks and panic has already arrived. Instead of a weakening yen, it is now strengthening. This is one leg of the carry trade. The other leg is the dollar, this $9+++trillion beast has also strengthened as asset prices are dumped and “dollar loans” are paid back. This folks, was not “part of the script”!
Taking this just a bit further, oil was “supposed” to come down to injure Mr. Putin and Russia, it was NOT supposed to crash more than 50%. I say “supposed” because now the U.S., Canada, Australia and a long list of other names in the oil patch have impaired energy industries. Has Saudi Arabia just cleaned out their competition and put shale projects around the world on hold or out of business? Has China filled her strategic reserves and given herself an energy tax cut? Has the East just blown up the West’s petrodollar system …with alternatives and contingency plans waiting in the wings? It’s OK, you can say it …”yes”.
So now that markets are spinning out of control, what is the answer? “QE4 squared” of course! Just yesterday as an example, Charles Evans (voting Fed member) said raising rates now would be a “catastrophe” because housing is not as strong as they thought it should be by now. Really Mr. Evans? Just housing? Should the U.S. lead (follow) the world into negative interest rates for pieces of paper which have zero intrinsic value in the first place? Or another example across the pond, Der Spiegel says the ECB has lost control and questions whether “helicopter money” comes next?
The point is this, “control” is being lost. The system itself has gotten too large for the central banks to control EVEN with 100-1 leverage. On nearly a daily basis, the official comments coming out contradict what was said the day before. Simply put, the rhetoric, jawboning and outright lies need to be bigger and more rapidly dispersed to keep the sheep within the herd. The problem of course is they are actually “working against themselves” in so many various markets. They must print which waters down currency values and creates demand for real money gold. They must suppress gold prices but they actually need inflation. They need lower rates for the world to carry the debt but are zero bound … they also need rates higher to show “economic strength”. They need inflation to cheapen the debt but the inflation cannot be seen by the herd. They need cheap oil as tax cut to consumers but can’t have cheap oil because then the petrodollar loses support and derivatives go upside down. They need stocks higher but can’t have a bubble because they can no longer handle the “burst”.
Do you see? Nearly all markets need to move in both directions at the same time to support “the story” told to the sheep and at to maintain the perception of control. As I have written for the past few days, U.S. QE4 and ECB monetization etc. will by necessity be implemented because there are no other tools left. No collateral remains unencumbered to reflate so the final tool is outright, unabridged and publicly visible monetization. We are in the very endgame of the Ponzi where deflating assets (derivatives and thus broken balance sheets) will force more free money in the hopes of systemic survival. This, while markets have become too large to corral by central bank’s weakening powers. If you question my statement “weakening power”, just look at their balance sheets. Look at their pure size compared to 6 years ago and also look at what “assets” they now consist of.
I call a FULL ALERT because control has and is being lost. There are no more “bazookas” left as Hank Paulson called it. There are not even any bullets left! Can they sweep it under the rug again as they have done for so many years? I believe no, there are no more “can kicks”. I don’t believe the ability exists because there are so many markets and asset classes going “in the wrong direction” in violent moves. Even gold, THE most sacrosanct market to the total “rig” has been quietly going higher throughout all of this. In fact, looked at versus non dollar currencies, gold has been in a rip roaring bull market for several months …while demand for the metal has exploded.
Take for example in euro terms, gold has now blown higher and through 1,000 euros with a vengeance, European demand will be further bolstered in a physical safe haven manner. This is true almost everywhere and in every currency. Will foreigners flock to actual dollars for safety? Or will they chase an already under-supplied gold market? The dollar rally has been purely “synthetic” and has occurred because of carry trades being forced into closure. The underlying assets have dropped forcing liquidations and dollars “bought” to close the trades. It has become a self fulfilling circle. Why has gold not declined along with other “commodities” you ask? Because gold is not a commodity, it is money, real money and nothing else is. Hasn’t gold been purchased with leverage and “carried” as the commodities were? Yes, this trade was cleaned out over the last 2-3 years with the sale (help) of naked COMEX futures.
What I think we are seeing early yet clear glimpses of are the short positions being unwound. Remember, we showed you a few months back evidence of a “long Nikkei-short gold” trade. This looks to be unwinding along with several other “schemes”. When all is said and done, the unwind will take everything “defaultable” with it. Gold nor silver can default as an asset, nor as money. Gold will be THE go to safe haven as defaulting derivatives expose the many already insolvent sovereigns and their central banks.
The big question we have harped on for several years “who really has the gold” will be THE question rising from the ashes of a burnt paper system. Either central banks have it or not, having it will be THE ticket to sit at the table deciding on future policy. Having it or not personally will be the difference between having wealth to negotiate in whatever new system arises. Having gold or not will be the difference between having wealth or being at the mercy of charity. This is not a drill! Because everything is computerized, events can, do, and will happen at speeds faster than you can think. You MUST be positioned now for what comes, any single day you wake up from here can be THE DAY!
Regards, Bill Holter.
Bill: Looks like “reality” is starting to peek out from behind the pile of baloney we’ve been fed by the “biggie bigs”. Good thing you and the other Miles Franklin folks have kept turning our faces toward the truth! It only seemed like it took a long time to show itself, but now that it’s upon us, I have a feeling the “unwinding” will move about as fast as the 1% crowd can get out. Let’s watch and see how long it takes them! I bet it won’t be that long…..
once in motion, the unwinding will happen at lightning (overnight) speed.
Bill
Another master piece! Add to the mix India appears ready to compete again with China for the Physical Gold Demand title in 2015!
India not planning further curbs on gold imports, trade secretary says
http://www.gata.org/node/14939
When it rains, it pours!!!
Best
Bernie
An exponential progression … the faster it goes, the faster it goes … the worse things get, the worse they get. That’s the world under the banknote scheme paradigm in a nutshell and the end looms far sooner than prior experience leads folks to expect.
the real problem is there is no more unencumbered collateral left.
Bill,
Excellent article!
The viagra commerical on tv says if you have an erection lasting over 4 hours to call the doctor.
It’s time that the world economy call the doctor, but the doctor will have no cure for this mess!
thanks Farrell, I don’t need that stuff yet.
Interesting analogy RF. I think the US took advantage of their erection as they proceeded to screw the rest of the world.
they would need more than just “pills” to do this…
I was thinking 2008 derivative meltdown
Yes, the financial tide is receding at a quickening pace, soon to expose those who have been swimming naked! We can discern the shouts of ‘help’ from the waters edge now, with the occasional body being washed up on beach. Those who are treading water, frantically search for a gold or silver life boat, with none to be found.
The problem is, few Americans are “searching”.
Bill, I hope America can take her country back. It’s all pretty much out of control.. I’m on your side. The entire world has had enough of central planning. Here too. Thanks for the article. Weird times.
I do too, we have gone so far from Mulberry, Andy Griffith would not even recognize it anymore.
Bill,
I do appreciate your efforts in writing a story as above; but I must tell you after reading I have to go read 1 Cor 15 just to regain my joy.
I understand gig.
Aside from today’s reconstituted b.s., does your employer, Miles Franklin, buy back silver and gold bullion – does it have to have been originally purchased from them?
Also, as a gesture of goodwill, since they are celebrating their 25th year of good fortune in the pm pumping business, will they at least pay me a few fiat pennies over spot?
Anything more than spot would help ease my losses at this point. It’d partly make up for that time I bought silver in 2012 after listening to Andy H. say silver would never ever fall below $30. Maybe, he would even kindly chip in a little bit out of sympathy or guilt, do ya think?
Please, what ya say, can you put in a good word for me back at headquarters? I could really use the dollars right now to keep paying the banks, bills, debt collectors, taxes, car insurance, gas and groceries, etc.. None of them will take silver or gold …at any price!
your post speaks for itself …
Sorry for using you as a bit of a punching bag to vent out my frustrations. Maybe, its because you had a career for many years as banker/broker, according to your own words. Introspectively and truthfully speaking, I now realise I took a poke at you because you’ve been the closest to the truth of things out of anyone I’ve ever seen. And being a former banker and broker has only given you insightful tools to pry open and examine the financial inner workings of the beast that you otherwise couldn’t have done.
I’m actually rooting for you all the way to be eventually proved right. Unfortunately, the results of you being vindicated in your analysis and prognosis is utter financial destruction as the only way out at this point. Maybe, the increasing measure of my anxiety is directly proportional to the proximity of this collapse.
You certainly don’t require my endorsement or encouragement, but keep doing what is you are doing in warning the sheep of what is to come by illustrating the how and why. As for the when, it is now at hand.
ps. I’ve watched some of your interviews. I can tell that you are a good, honest and sincere man who says things from the heart. It comes across in your writings and replies as well.
May the LORD bless and protect you and your family, while endeavoring to protect and provide to others around you in the aftermath of financial and societal collapse. That is when the real work of restoration and test of our faith and fortitude will begin.
thank you for stepping up to the plate! I am a man who has always done business on a handshake and am skeptical when someone wants to do a contract. A man’s word should be his bond, we enter and exit this world with only one thing. OUR WORD! I am not always correct but I do always give my honest opinion. I try to be accurate and do the logic all the way to the finish. In the case of dollars versus gold, this is an easy one. No matter how much the “printers” mess with the price of gold and silver, we know exactly what the endgame is. Do not let them make you crazy and think incorrectly before the obvious endgame arrives! The are many “men” in the world, 1 of 100 can be called a “MAN” with capital letters. I believe you are one of them, do not forget this and stand tall against what mathematically comes our way. May God bless you and yours also!
I suggest you find someone in your neighborhood who reads the wall. I bet they would buy at very near spot from you.
Soon the middleman will be like an insurance agent in the millennium.
So does his name
I chose that name as a spiteful sarcasm. The irony of it is that I absolutely abhor fiat paper debt notes and clad coins. I’m a just an ordinary person who’s frustrated and irate over what’s taken place.
I’ve worked hard and since 2008 I’ve saved all I’ve earned into silver and a tiny bit of gold. This was, in the very least, supposed to keep my stored labor preserved and maintain my purchasing power in the years ahead. I’m now running out of time and am about to start bleeding very real losses as circumstances are forcing me to spend those savings just to live, while all the those who did the opposite and remain in the present, paper-Ponzi, financial paradigm/scheme have been enriched by the system/scam.
I sincerely believe that financial calamities are coming of such an enormous magnitude that it will cause death, untold despair and irreversible damage to the economy of Westerners, particularly for the US. I believe the manifestation of that begins this year, but I’m trying to hold on.
It is such a shame and a testament to the evil system we are under that I have to wish for an economic collapse – which will ruin most others – just so I can have back what I honestly saved and not be left as the bag holder (filled with silver) to the benefit of robbing Wall Street scumbags and thieving banksters.
I’ve tried to do the right thing, but I wished some of the pm pumpers could’ve seen what was forthcoming and applied the brakes a bit or made helpful financial advise and suggestions for weathering this storm, other than buy the dip (catch the falling knife) all the way down or buy now before silver goes to the moon and never comes back. All gold and silver have done is crash and burn after liftoff, especially the latter.
There gets to a point over the years where you’ve heard all the reasons, postulations, theories and forecasts from all the pm pundits, as to gold/silver’s rise or demise, that you can barely listen to their stories anymore, if at all. Six and a half years later on this roller coaster is enough. I need results to be soon in my favor rather than continue to watch the stock markets, bond markets, housing markets and everything else perpetually climb towards the stratosphere.
Rant over, thanks.
fiat, I understand exactly how you feel. “We” have less dollars today than 3 years ago, hopefully you have more “ounces” because that is what you will count your wealth or net worth in when this storm blows in and then passes. Gold and silver were exactly where capital should have been placed 3 years ago, no one except an insider with insider knowledge could have known the lengths they would go to depress metals prices. No one could have known they would sell 50-100 ounces of “counterfeit” paper metal for every 1 real ounce outstanding. An analogy, what price would IBM stock be trading at right now if someone sold 100 billion counterfeit shares? Then ask yourself this, at what price would IBM open up at once the “counterfeit” shares are recognized and abolished? This is gold and silver, hang on the best you can and as long as you can. You were correct in making your purchase, gold and silver are money made by God, not some edict declared by a government run by mortals.
Flat, Bill;
I am in very similar position as you describe Flat. I accumulate bullion and shares of precious miners from 2005. It is now in tenth year.
I am not complaining for bullion so much, as there is a paper profit, although not proportional to what may be when you look to monetary, debt, insecurity expansion.
But miners (although all in certificated form), one – full of gold reserves – was “restructured” in a way that shareholders were left with just 1% of the company and the other sold its best project with reserves to Chinese company for their shares.
For those I am somehow “desperate” as I am loosing my savings. I although still hope that this 1% remaining and shares for the other miner might still get valued so high to bring me profit if gold and silver will be revalued substantially. So I will patients wait!
Regards to both of you, Al
NFP Day and the metals are YET to be smashed? It appears the script has changed and has anyone seen the miners lately? Since Mid December it appears TPTB are covering some of their naked paper miner shorts. Things do seem to be happening much quicker now
revaluing gold higher will be THE only way for the central banks to reflate.
Bill:
It will be interesting to see if you’re right and if a major player has blown themselves up. The pressure in the system has been building for a long time, I’m surprised it hasn’t happened already.
I totally agree with your observation about the inherent contradictions that the central bankers have to maintain for asset prices and markets. After painting themselves in the corner, the central bankers have run for the door, but it’s closed. What a mess.
Randy
It would not surprise me if there were already some players that have blown over the past years, kept quiet and funded privately to keep the game going?
I place my educated bet on DeutschBank as one that has already defaulted but all the other major banks are in technical default if you use standard GAAP accounting.
yes andyb, exactly. They are ALL broke, how can they not be if the issuer of the reserve currency itself is insolvent?
I had posted this for Andy (Hoffman), but feel should post for you to get a look as well. Simply because it’s so freaking hilarious in a macabre sense.
================
For your infinite amusement, presenting following article…Had you seen it before?
https://fortune.com/2015/01/05/jpmorgan-chase-split/
Now, I want to see a recommendation from JPMorgan stating that Goldman Sachs should be broken up into pieces.
Followed by recommendation from HSBC that Deutsche Bank should be broken up into pieces.
Followed by recommendation from Deutsche Bank that Citigroup should be broken up into pieces.
And so on and on and on, with each set of criminal gangs publicly calling out for the other gangs to be broken up.
yes, I saw this. Personally, and pardon my French, they should all be broken up into pieces of shit!
I don’t know if you specifically have made these predictions before, but every year, at the beginning of each year, goldbugs predict this is the year the monetary system, or the economy, or derivatives, or the major banks, etc. are going to blow up and gold will be the last currency standing.
the conditions have existed for a derivatives meltdown every single day since 2008.
Bill:
Actually I think the derivatives problem existed since the 70s. Check this out: http://www.financial-edu.com/history-of-credit-derivatives.php
I think Thomas Palley has some good theories in his book about the situation you are discussing. http://www.amazon.com/Financial-Crisis-Stagnation-Destruction-Prosperity/dp/1107612462/ref=sr_1_1?ie=UTF8&qid=1421044930&sr=8-1&keywords=thomas+palley
He says since the early 80s, we’ve been surfing bigger and bigger bubbles. That fits with your Ponzi scheme comments. Started with a particularly vicious recession in 1981 or so. He built deregulation bubbles that got bigger and bigger. Today, we are running out of deregulation. If you look at real GDP since 2000, with the exception of 2004 + 2005, we’ve been in stagnation or recession the entire time.
All these will gather momentum, and if the government is unable to bail us out with extra fiat currency, then down we go.
The bad balance sheets referred to in the post, or the comments are why so many bankers are turning up dead, victims of suicide or murder.
Don
derivatives “started” in the mid 1970’s, the first real problem with them was 1987, the rest is history.
Agreed. Absolutely. The conditions for a derivatives meltdown exist and have existed for quite some time, but what will be different about 2015? The Fed has managed to stay off the inevitable for a long time, and each year people predict that the Fed’s interventions will no longer be effective, and each year they have been wrong. What will be different about 2015?
Because there is no more collateral (unencumbered) left and little ability for sovereign to issue debt other than to their own central banks.