I received an e-mail yesterday from a friend who from time to time sends me articles, op ed pieces etc. He and I think in quite similar terms. He is very knowledgeable in economics and finance and is in his 80’s now so if he hasn’t seen it all, he’s seen a very good part of it. I read his short e-mail and then went on to what I was doing at the time but it struck me that what he said is absolutely true in my opinion. The e-mail follows, there is nothing new or truly remarkable about it except for the fact that “I hadn’t really thought about it” …or all the way through anyway.
“We are on the same page. My contribution, this is not going to take months or years but only weeks. When started, this is not going to take weeks or months but days, probably 24-48 hours. Your gap up and gap down theory is half right. The gap up will be in gold but the gap down will not take place as markets will close within 24 hours of commencement. We live in fascinating times and the crap is extremely close to the fan!”
OK, so as you know, I believe there will be a “gap” up in gold and more than likely down in most everything paper including the stock markets. His suggestion of only being half right and that the equity event may only last 24-48 hours made me look at this from an entirely different perspective. I don’t think it will really matter if there is a false flag event or not, let me explain.
I can foresee a Monday morning coming where we have a huge $50-$100 gap up in gold that does not get filled and then moves higher for the remainder of the day. I also believe that this will be followed by another $200-$400 day which also does not fill the gap and powers higher as the day goes on. In contrast, I could see a 500 or 1,000 point Dow drop followed by a weak close and the next day another 2,000+ point drop. If this action were to happen, I don’t think there is anyone out there who would deny that the financial system as a whole would be on the verge of a credit unwinding. Margin calls and forced sales into illiquid markets with few or no bids would be our greatest nightmare.
This is where the e-mail that was sent to me got me to thinking. He is correct in my opinion and as you know, I have believed that we are headed into a “bank holiday.” But, I had not really thought it all the way through until yesterday. The bank holiday in my opinion will not come after some long protracted downtrend like the 1930’s; I think it will come quickly to “stop” (in reality, HIDE the reality) the carnage. I think that my prior error in thought process was that as an American, I looked at it from an American centric standpoint; I know this needs some explanation.
Assuming that this scenario comes into play (and yes you can argue that it will not but it would be wishful thinking in my opinion) and we in fact do get into “bank holiday limbo,” what will really happen. U.S. banks and markets will close and probably most western markets will also decide (be forced) to close. My guess is that some though not all eastern markets will close also but guesses what …even though the financial markets close it doesn’t mean that “stuff” doesn’t get “revalued.” Just because stocks, bonds and currencies etc. are not trading, it doesn’t mean that their “values” are not changing. Just because some exchanges are not open does not mean that “deals” or trades of wheat, copper, oil…and yes, gold and silver are not privately being done. Actually, there will be some markets open where prices of non U.S. assets are being priced and re priced.
I knew all of this but I had never thought of “how” it would get done, the logistics in other words. By looking at this through “American” eyes, I somehow forgot that while “we” are closed, others may be open…open to trade and to revalue markets. While “markets are being revalued,” we will for the most part have to sit idly by and watch it happen. “Watch it happen” as in powerless to get at or move funds or positions to “save” or protect what we have (left) …or to purchase what is being revalued higher.
In past devaluations, stock markets usually reacted by moving lower initially until it was understood that this is an avenue to get funds out of the currency. Stock markets usually then moved higher from there and became thought of as an inflation hedge. The math normally works like this, let’s say that a currency devalues by 75% and the stock market doubles, this will leave “50%” of the initial buying power intact. If my friend who sent me the e-mail is correct which he very well may be, stocks will close and not be allowed to go down, they may even open up higher but by a lesser amount than the dollar loses value.
To close, it is important to understand that EVERYTHING will be reset. Dollars versus all other currencies, all currencies versus real goods, stocks, bonds, real estate…everything. I believe that the biggest loser in all of this will be the dollar. This only makes sense because the dollar has been in the biggest financial/currency bubble that has ever existed. It only stands to reason that when this thing blows, the biggest loser will be the dollar. We as Americans will see this (actually the word is “feel”) as inflation. A reset of 25% would mean that goods and services would immediately cost 33% more, a 50% reset would make things cost double etc.
It is also important to understand that “stuff” and assets will be reset or revalued at different rates depending upon supply and demand. Candy bars may not have the demand that baked beans or toilet paper has. Or whiskey and cigarettes may have more demand than say something like home furnishings. The world is about to change drastically, our media, Washington and Wall St. may not be telling you this but the rest of the world is. The biggest problem is that we do not manufacture like we once did and thus we are forced to import many goods. If foreigners turn their noses up to the dollar which they are already doing, how will we pay for these imports? The answer is that we will pay dearly or do without. Sad to say, this is how a “forced” reset generally works. In this case however it is not going to be “forced” simply because of finances, our policies and actions will come into play…because we haven’t “played well with others” for a long time now.
I think this is half right. TPTB will never give up control of these markets. I think the COMEX and LBMA will be bombing the spot price even after they have run out of gold. People will simply stop using it as a proxy and the actual physical price will be determined by the Asian markets. As the Dollar collapses once the reserve status is removed and the petro-dollar arrangement is no longer exclusive, no one will want dollars and we will not be able to import goods. Food, gas and necessities will sky rocket in price as well as everything else and the DOW will take off like a rocket as folks with dollars will have no place else to park them. Think of Germany in the early 1920’s. Stocks went up but not as much as gold and stocks did not maintain purchasing power. I don’t see either market closing but they will become irrelevant on the world stage and the US Empire will simply drift into the ether like the British Empire did. That’s just my opinion based on what TPTB have been and are doing.
everyone has one and they are certainly entitled to it.
No matter what form the collapse takes the main point is that the American people will be screwed and their wealth plundered unless they have gold and silver.
It will be crying time for every one including those that have protected themselves as it will hurt to see you friends and relatives in dire straights.
a big yes on all points.
Your friend’s perspective makes great sense to me.
I read this yesterday, and it made sense to me. To me, it points to ‘the event’ happening a bit later, rather than sooner. What do you think?
“…Instead of launching prematurely their gold-backed currency (which could kill exports), they build a Trade Zone and form a growing alliance of participating nations, in order to assure a critical mass that includes on the order of at least 60% of global trade. Then later, when the moment is right, when the supporting system is truly ready, when the crisis in the West reaches a critical matter point, the two lead nations A & B launch the new gold-backed currency, announce the new trade settlement system, make known the new banking procedures, and do so with an ARMADA of nations in support of the new structures that had been under development. The strong critical mass of over 60% would assure that lost trade with the minority of nations would not be crippling…”
http://www.silverdoctors.com/jim-willie-bombshell-over-40000-tons-of-gold-stolen-by-the-west-shipped-east/#more-42324
this is all happening now.
Very interesting. Bill, what do you think would happen to outstanding debt such as a mortgage. Say you owe $200k on your house, if the dollar is devalued 50%, would the banks simply double the amount that is owed on your mortgage? I can’t see how they could get away with that without everybody revolting since incomes certainly won’t increase. I been contemplating for a while to down-size to get rid of my last remaining debt which is my mortgage.
I believe that debt will be adjusted in some fashion, best not to have any.
Why would debt be adjusted if it is inside the US with US citizens?
The Dollar’s value inside the US will not change for domestic goods or debt, just foreign ones.
Of course, prices for precious metals and any other items traded around the World would be affected.
if everything is reset at same rate, what does it accomplish? There have to be winners and losers and of course the govt and banks will be winners.
who said that everything is reset equally?
Bill, If you go back and think about the First Rocky Movie, Apollo could be thought of as the U S A and Rocky as Russia. Which in my mind makes Russia less likely to take a real beating like Rocky did before it strikes the deadly blow to win the match. Putin is Rocky on high steroids with ballistic ambitions. When all of the mess Mr. 80 predicts happens, I think you will find Putin behind it all in some form or another. I also thin it will take only a couple of days to all happen.
I don’t know about the Apollo/Rocky part but I do agree, once started this will unravel at the “speed of light” …literally.
Sheesh. How many times have people fantasized about the world collapsing or dollar collapsing, or the crap hitting the fan? If I had a nickel for every time I saw someone say this crap was imminent, I’d be retired and living on an Island in the Caribbean.
Face it folks. I hold gold and silver, but there is just not going to be this fantasy, or gap up, or any of that nonsense.
If the market is being manipulated now, it will be so forever. or least past anyone’s current life span. With the internet and cyber technology that exists today, these sudden or volatile exogenistic events are just not going to impact markets the way people imagine.
Life just doesn’t work that way either.
The worse case you can imagine, 99.99999% just never comes to bear. the human brain imagination has this unique propensity to ruminate about mostly garbage.
It seeks certainty, so when it cannot find it, it rummages from one worse case scenario to another. We cannot predict the future, and that is troubling for today’s human. We all worry about way too much. The bad events that do happen, we actually think nothing of. We barely even give thought now to all of our soldiers that remain fighting in Afghanistan. I mean that is REAL war, and REAL death, yet its not on anyone’s radar and hasn’t been for years. North Korea is another so called bad one, and so is Iran, but has any of those bad things feared (nukes) actually occurred ???
Mosquitoe’s kill more people on this planet every single day, at the rate of 750,000 per year (spread of Malaria which takes out 600,000 of those 750k killed). yet we all feel they are nothing more than an annoyance.
A year from now, I’m coming back here, if this blog even exists, and I bet you your gold coin, won’t barely have budged in price, there wont have been any big ‘gaps’ up or down, and you’ll still be worrying about that imminent shan hits fit day.
You should change your name because if you truly understood energy then you’d realize that we have a very dark future awaiting us and this also ties in with the financial system. I disagree that manipulation can continue indefinitely; they can only manipulate markets because the average person has confidence in paper assets; when they no longer do, because the world runs out of hard assets like gold and silver, and our true energy predicament becomes apparent, then people will lose confidence and reality will be reflected in the market. You can’t print gold and when it runs out they can continue suppressing paper price but if you have to pay $5000 just to get any physical quantity, how long could that price divergence last?
Can you please explain how they can continue to suppress gold price when there simply isn’t any available to buy? The only way I can imagine is if the central banks that now have the gold (China and Russia) engage in a similar price suppression leasing scheme. But I don’t see this being possible because 1)their incentive is the opposite, to send gold price sky high in dollars, which will destroy the US and also increase their own power, and 2)again, because the world will have lost confidence in paper asset ponzi schemes and it simply won’t be possible to fool anyone again for a very long time.
correct Mark.
fantasized about what, a mathematical certainty? If you think that the gold and silver markets can be manipulated “forever” once the physical runs out…you need to go feed your harmonic unicorn some skittles. You have certainly imbibed in the Kool Aid, I think way too much of it. Common sense alone tells you that the U.S. and thus the currency is screwed because we are bankrupt, if you cannot see this then you cannot be helped and should take the name “guru” out of your moniker. There is a concept called “settlement” and this is what the entire ballgame is all about, we live in a “never pay” system which is why foreigners are preparing to shun the dollar.
My thought is how will they contain inflation? They could overnight reset everything twice fold or whatever but they will not be able to maintain the currency afterwards because everyone will lose confidence in the system and never trust the banking system again. That is the whole reason they have been able to pull this 40 year scam off, because the US owned the reserve currency status and controlled the media and managed to keep most people satisfied and confident. That is why Wall Street has managed to get away with what it has. And that’s why it’s hard to rip off the Indians because they don’t trust the system and don’t save in rupees, so the banks simply have no way of ripping people off there, they aren’t debt slaves.
The conditions are riper for a more massive hyperinflation in the US than ever before. When manufactured goods get expensive and everyone’s retirement savings go up in smoke why would anyone hold financial assets including dollars? People will want hard assets and the velocity of money will shoot up and that will bee the trigger. I don’t believe the US has any gold left with which to peg a new currency so it will inflate away.
Just clarification, I agree that the initial reset will happen instantly, but afterwards when the shock sets in and markets reopen, then the real inflation will begin as society reacts to reality, which will probably span months.
I will try to write about this, this coming week.