For several years there has been talk of a financial and economic “re set” coming, this is no longer speculation as the reset has already begun! The Swiss have suppressed the price of their currency, the franc, since late 2011. They pegged the franc versus the euro with a “floor” versus the euro at 1.20. After confirming this floor publicly on Monday, they abandoned it Thursday only to see the euro depreciate through the par level. What you saw on Thursday and Friday was the work of Mother Nature as the Swiss decided they would be better served by no longer battling her.
The ramifications of this move by the Swiss are almost infinite when you consider the chain reactions they have now started. Several large FOREX firms including the largest retail firm in the U.S., FXCM, were rendered bankrupt overnight. Even Goldman Sachs and Citi admitted to being offside and sustained large losses. As of right now, we have no idea who “won” and who “lost”, nor do we know “how much?”. We heard almost nothing from Swiss or European banks on Friday, “who what and how much?” will begin to surface this coming week. As I have written for years now, if the loser goes bankrupt, the winner does not get paid…thus turning the winner into a loser. This is a very big problem the markets ignored on Friday but will not be able to ignore as the dead bodies begin to surface.
Think about this point very seriously, many investors (and firms) went to bed Wednesday evening with no stress at all on their portfolios (or their business), in just five minutes Thursday morning they were insolvent. Just FIVE MINUTES! We are only talking about “investments” here, how many other real businesses in the import and export area are now broke? Broke because they hold euros but need francs or they export from Switzerland or import to Europe and now their business model makes no sense? How is this even possible in just five minutes time?
Another aspect to what and how the Swiss moved on Thursday is that of “central banks” themselves. Did the Swiss not know they were going to float the franc on Monday when they confirmed the peg publicly? Did they or did they not inform the IMF prior their actions? What about the BIS which is headquartered within their borders in Basel, surely they tipped them off? Christine LaGarde claimed in an interview with CNBC that she had no prior notice, really? If this is true then it shows the Swiss central bank has moved in an “every man for himself” type of action. It also shows the “united front” of central banks is not so “united” anymore! If Ms. LaGarde is not telling the truth and in fact the IMF did have prior knowledge, what would this mean? It would mean the central banks are finally losing control of the rig. It would also mean the central banks have distorted currencies, interest rates etc. so badly that once Mother Nature takes over, we can expect repeat performances all over the world and amongst all assets and currencies. How can I say this? I would simply ask if it is “normal” for two trading currencies to revalue 30% in five minutes or if it is not normal, what was the cause? We of course know, the cause was the actions of the ECB and SNB over these last three+ years.
We have already speculated the Swiss made this move for one of two reasons. First, they may have decided the amount of euros necessary to purchase (and thus the amount of francs created) will go exponential this coming week when the ECB goes full on QE (printing). We also know that euros already make up more than half of their balance sheet. The other possibility is they know the Greek election is coming up, (the Greek banks are already experiencing bank runs) and they see the very real possibility of the Eurozone fracturing or even dissolving. Another possibility is maybe they just decided “their first loss is their best loss”? Maybe they have watched as the core of Europe has asked for their gold back and understand that “trust” amongst central bankers is waning? Maybe they simply decided to front run the obvious and necessary re set and do it on their own terms? It is very hard to say what exactly the motivation was, the important thing to understand is their action has started a re set in motion which will not be stopped! In plain English, the Swiss just yelled FIRE …while standing in the exit!
I have several other questions but first I want to point out the obvious. Oil was cut in more than half in dollars over 6 months, could you say the price of oil was “re set”? How about copper? How about other foreign currencies? Could the huge moves in so many assets qualify as being “re set”? The collapse in oil and copper prices are black swans pointing to a rapidly slowing global economy. The Swiss removing their currency peg is another black swan event and in reaction to the ECB moving toward hyperinflating their currency.
My biggest question now is this, what will happen when China allows their currency to float? The Swiss are one thing, China is whole different story! Think of the ramifications when it comes to trade? Another, maybe even more important question is what will happen when the Chinese “force” the price of gold and silver to trade freely? Let me explain this further. The Chinese know full well that gold IS money, otherwise they would not have spent the last several years buying almost every single ounce that came from the ground. They know it is artificially priced by New York and London. They can “float” gold in several manners. First, they can simply bust the COMEX and LBMA by bidding for and purchasing both their entire inventories within a 24 hour window. Another possibility would be to simply put out a “global bid” and state some price (much higher than current) they are willing to buy any and all gold, presto, COMEX and LBMA would be busted without them doing it directly!
I recently wrote of a “Global Margin Call” where because oil and other assets, currencies, etc. have moved so rapidly, many derivatives traders have surely been thrown “offside”. This move by the Swiss is nothing different except it was done “officially”. Actually, the funny thing is they moved to suspend what they were “officially” (and artificially!) doing. The move by the Swiss has only made the global margin call that much bigger! The global re set which was already in the works is now publicly and officially happening before your very eyes. You can close your eyes or not believe this fact, it will not make it go away, nor will it insulate you financially from what is coming.
To finish, and I plan to follow up maybe even tomorrow, the most important re set will be that of gold and silver prices. I say “most important” because these are the only “tools” available to you as an individual to protect your wealth. If the Swiss franc and the euro can change in value by 30% within five minutes, what do you think the revaluation of gold and silver will be when the 100 ounces of “paper metal” come looking for the real thing? At what price will the market clear? Add a zero? Two zero’s? Please understand this, when the margin call is issued worldwide, there is only one money where the call will work in reverse, precious metals. The “call” will be for real, yet non existent metal. Gold had already sniffed this margin call and re set out a couple of months ago. No matter how much paper was thrown at it, it simply stopped going down. Even while the dollar strengthened synthetically, gold went higher versus the dollar. Gold has clearly been THE best money, what do you think will happen to real metal when it turns out that 99% of the supposed global supply is proven as counterfeit?
We will soon witness the greatest margin call in all of history. We will also witness the greatest transfer of wealth and re set in all of history! My only question is whether what so far has been “rolling re sets” becomes an official market/bank/finance closure and announced …or, do the markets continue to trade and force re sets in market after market.
As an additional note, we have one last question to ponder which may or may not be connected. Koos Jansen put forth a “mystery guest’s” theory that the Swiss went short gold in Sept. 2011 which marked the top in gold. He asks in the following link, “did Switzerland just cover their short“?
I believe there may be some credence to this theory but would go one step further. Zerohedge asks the question and speculates Japan may be the next “Switzerland” and pull the plug on Abenomics. Personally I see it a little differently, more importantly, what if the Chinese were to react to the coming QE4 by doing two things? What if China just walked away and sold their dollar holdings …and at the same time revoked their current peg of the yuan to the dollar? Will China some day ratio back their yuan with gold? I think this is likely. Would the dollar collapse 30% like the euro just did versus the franc or will the re set be much larger? Of course the next question would be “how high would gold be marked up”? An unpegging of the yuan by China would be more important and (current) system ending than nearly anything else I can imagine. For China to break their peg, the paper short positions in gold and silver would finally be exposed for what they are, counterfeits!
Regards, Bill Holter
Now tumble into this mix, the most recent events coming out of Russia. Especially considering that the German’s have now announced repatriation of 80+ tonnes of gold bullion. On the heals of the Dutch doing the same!
I think you are correct Bill, in your assumption that these events must be considered ‘every man (nation) for himself’ to the lifeboat. Considered singly, these events portend a weakness in the global financial/economic arena. However, when taken as a part of the ‘big picture’ a scene comes to mind of people (nations) abandoning the sinking ship.
As ‘icing’ on top of this already financially toxic mix, stir in some military ‘hot spots’ such as; Ukraine, Syria (ISIS) Iraq, Afghanistan, etc. etc. And you have all the ingredients for another war. When all else fails? The PTB take the nation to war.
unfortunately yes.
Bill, I agree with your take on this. I’d like to add my thoughts on BRICS nations that are positioning themselves for a currency reset based on the gold standard. We’ve all read about how the US has become so aggressive over the last 10 years. Wars in Iraq, Afghanistan, Libya and Ukraine are examples. Sure the US confiscated (stole) the sovereign gold from these countries. Of course they needed this gold but NOT for the gold value. They want it to make sure these countries can’t join the BRICS banking system. All the countries that have gold reserves will need to pledge their gold as shares for fractional membership in the new banking system. If a country has no gold for admission they will then be easy for the US to ‘persuade’ to stay with the US system. I don’t think it will be ‘all or nothing’ when the banking structure changes. The US is certain to put forth their new system so as not to lose all power and influence.
they stole the gold to deliver to the market (and the Germans?).
bill, thanks for enlightening all of us with your writings that help focus on what things really mean and the results. it looks positive we will have a reset, maybe massive, in PM’s within a year of so. that being the case, I think the next issue is keeping the Feds from stealing our physical gold or taxing the living hell out of it. if MF holds our PM’s in Canada/Brinks do you think that is in jeopardy of being confiscated by either US or Canada Feds? any other advice about keeping PM’s that are being stored outside of banking system away from Feds? thanks, dave
Dave, Dave, Dave…let me help.
If you don’t hold it, in your physical possession…YOU DON’T OWN IT! I can’t believe that anyone still stores their stash in someone elses freaking vault…in another country!
If shtf, how in the hell are you going to get to the MF/Brinks vault in Canada???
Your metal will be gone, if you think that for one second that they will insure that it get to you…God help you.
I believe you should have and store in multiple locations, non banks.
So the Chinese know full well that Gold is money and I bet the PTB in the USA know that full well also.
I speculate they are sitting on a great deal of of Gold and likely 3 times more than those pesky Chinese.
as usual, you are wrong regarding U.S. gold holdings.
Correct..when one speculates which is what I said.
And you have been speculating for years
Only the PTB know how much Gold the USA is holding, after all there has been no audit.
Why no audit,no idea and I don’t care .
“Why no audit, no idea and I don’t care”. I would expect this from you Silversmurf, very naïve in my opinion.
Sure, pal, that is why the US and Fed have refused a full audit of USA physical gold holdings since Ike did one… they refused others countries requests to simply verify their gold held by the US too… due to “security concerns”, LOL!!! Wake up!!
am writing about this for Wed.
Well it does seem reasonable to state that IT HAS BEGUN.
WE are in my view in the early stages of the Great Escape.
Yes that is what I said. The Great Escape.
That is what the situation will be once people begin to believe that the Reset has begun.
I am begin to smell a slight smoke odour.
Is there a fire about to break out Bill…..
Are you smelling smoke down there in Texas.
Good piece Bill..sure does make one wonder what goes on behind the scenes…
the last time I smelled smoke, my house burned down!
Too bad the Central Bankers cant call the fire dept to help them out this time.
This time all we can do is rebuild what they destroyed.
The re set has already begun.
Bill, I just read where Germany repatriated nearly 100 tons of gold from the fed in 2014, once again mysteriously melting it into another form of bar. How could we only get them about 5 tons in 2013 yet nearly 100 in 2014? Clearly, Germany doesn’t trust the fed but I thought that gold (100 tons) wasn’t even there.
central banks don’t trust central banks. The Germans assayed and inspected …and were sure to state the serial numbers matched. ..And then went ahead and re melted them down, sure, I believe the story?
Yeah, that makes no sense. And yes, maybe that gold repatriated to Germany was the stolen Ukranian gold. Like a ponzi scheme, paying early investors with new investor proceeds. Only it’s worse than a ponzi, because the Ukranian gold was not voluntary, but stolen.
possession is 9/10th’s of the law.
Wonder if Dave (comment 3 from above)noticed this comment.
don’t know, what do you do with a gun to your wife’s or child’s head? This is why some needs to be stored in a non bank vault.
Bill, if that happens even one time and the word gets out, all bets on what will happen are off.
You and I both know what will happen then.
yes.
There was a piece on ZH by Bruce Krasting in which he berates the SNB for not playing by the rules.
They were supposed to, he says, have made their move on a Sunday, when positions were not large or overly leveraged as on weekdays, and the move should have been well-telegraphed so that “players” would not sustain large losses!
What constitutes “rigging” here if not this unspoken cartel agreement among CBs and speculators?
It’s almost as if the entire system is designed to ensure that a small but secure profit “flow” continues safely to the exclusion of anyone not in the game and that such continues even in what is literally a “no-real-growth” new normal…
correct Kredit.
Bill,
Thanks for your valuable and timely article.
I think behind the scenes some folks are wondering what the heck they are going to do now that they are dead broke. And I would bet some winners are wondering if they will ever see a dime of their so called winnings.
In all of history if you don’t have it (gold/silver) in your hot little hands, then you don’t own it. Taking a chance in any other arena (aka paper games) can doom you to permanent poverty.
Most people don’t understand the repeating of history and will be victims of it.
History rhymes.
Bill this is a very sobering article today. The remark about “How investors went to bed Wed night with no stress on their portfolio and awoke Thursday morn and saw that within 5 minutes of trading – became insolvent.” That is a very profound statement. Like many others I have been following the Global Financial Collapse for many years – Now it is literally at the door step. Most people are Totally unprepared for the Destruction that is headed our way THIS YEAR. Keep sounding the alarm Bill – People desperately need to PREPARE.
all it took was overnight.
My guess is that it doesn’t really matter what happens to the financial state of the US as far as most American citizens are concerned. The War/Financial Criminals are in charge now and there’s about a 99% chance they’ll still be in charge when the last dollar bites the dirt. The surveillance state will continue, the lies will continue and the warmongering will continue. The only chance of changing anything will be if the American people suffer so much that they finally pour out into the streets by the millions and all the criminals in government flee the country out of fear.
I believe your latter scenario has a very high probability of happenng.
You need to wrap your head around what you just said.
Over 240 years ago, brave, courageous men put their asses on the line for something that they believed in…my family and friends blood has been spilled the whole way. For a handfuls wealth.
Time for these sob’s to be sent back to hell where they belong. I am still long on the United States of America.
Hope you stand for liberty and freedom Roger…and are prepared to do something about it.
I spent 21 years in the military. Although I spent my time thinking that I was a protector of freedom, it was only after I had retired that I realized that, in truth, I was being paid to protect big banks, big business and the military industrial complex.
you are a patriot that was sadly used like a pawn.
God bless you Roger. Those of us that get it have unfortunately found out the hard way.
I was a bit fired up last night, because it WILL MATTER what happens. So called “Americans” that you referred to will be streaming into the street. They have been a tool, an even worse tool. A tool used by those in power to gain majority over the producers. A tool that offers less than nothing to humanity and the earth…only taking, not giving/helping/sharing.
Brother, your accomplishments still stand, you are a patriot. You did everything for the right reason.
Let’s all stand together and make the wrong right…for our kids and grandkids.
Thank you Bill for your tolerance.
they will be streaming into the streets because they are hungry.
Nice work again Bill, thank you.
Central Bankism IS world socialism. The very idea that the hard working people of little Switzerland were having to bail out the masses in the EU to the tune of hundreds of billions of euros was ridiculous if not downright nauseating. It’s lovely to see this ‘social experiment’ fail like all of them are bound to fail. Let’s hope the Germans give the ECB the heave ho and align themselves with weakth creating nations.
Thanks Nirvanix, I am writing about central bank distrust for Wed.
If they (CB’s)are “splitting the sheets” with one another, this will be as you say a “once Mother nature takes over” event.
I have a similar saying, “that’s how the planet works.”
Going to get real ugly brother…sorry to say but we Americans have it coming.
sadly yes.
Agreed. Central banking is nothing but central planning applied to banking. Since central planning has a dismal record of abject failure, what makes anyone think that “this time is different”? From what we have seen around the world, this is not a workable approach and never has been. How about we transfer ALL US Gov debt to the Fed balance sheet and then… END THE FED! >:-]
it’s never different.
Proverbs 10:20 The tongue of the just is as choice silver: the heart of the wicked is little worth.
Amen brother!
LaGarde says, “The word for today is MULTILATERALISM. Please use it in commentaries, editorials, and comments three times per day during the RESET”
She is a jackass.
I favour the gradual rolling re-sets in a somewhat orderly fashion. To have it otherwise as you supposed by way of a formally enacted measure would be like searching a bottomless pit….there is no definitive end.
In this fashion it will be one action followed by successive actions and the consequences will be strikingly similar to we have witnessed with SNB decision. No business is spared with perhaps the ones who take the biggest hit being the speculators….and the Central Banks themselves.
HOLD GOLD and SILVER.
We still do not know the exact motives for the SNB decision nor do we fully appreciate the hedge they would have had in place …knowing full well that the CHF was going to appreciate. To me there had to have been currency / interest rate/ Gold derivatives bets put in place prior to the releasing of the CHF from its peg.
rolling re sets will end with a closure when the derivatives chain snaps.
hi sig
ur here too. great!!!
Hi Allen,
YEP I have been here in one form or another for sometime.
Bill,
Thanks for another great article. If the Chinese should free the Yuan and it appreciate 30% against the Dollar what effect will it have on US inflation ? This could be the trigger for a new higher inflation cycle.
yes correct but the appreciation may be more than 30%.
If the Chinese revoked the peg of the yuan to the dollar, what will happen to price of Chinese stocks that trade on the US stock exchanges?
if traded in dollars they very well may go up?
Bill
al ols from USAWD W/Greg H. comments line. I see lastman is here also.
I guess egon von greyerz was probably all over this possibility w/his gold initiative, or maybe stunned as well.
Egon is a great thinker.
Bill please explain why or why not gold and silver mining shares now ahead of these unpegs and resets. what will happen if invested gold and silver shares vs. gold and silver phys. thank you bill.
Jerry, gold and silver “in the ground” and in a jurisdiction that follows the rule of law will be VERY valuable.
HI JERRY!!
from usawd i hope, this is super, last man sig is here, also,
bill, i learn alot from these 3 guys and some others form usawd.
I just found this comment line. yeaaahhh!!!!
turn it into a forum, that’s why it is here.
Just a bunch of us ole farts trying help one another survive what is coming.
stay in shape, survival of the fittest.
Jerry,
RU from USAWD ?
Re your Q:
Think of Gold/Silver in terms of money.
Then put that into the context of miners.
Miners will be the new CENTRAL BANKS.
What will they be worth?
Not all will be valued the same way.
Low cost, Low Debt, Unhedged, Long-life high grade reserves, proximity to existing infrastructure, stable sovereign jurisdiction with upside expansion (PPR) potential are key to determining the real winners.
The scene is set for a once in a multi-decade boom cycle for the miners. I expect to see the miners come into their own for the next two decades (esp. from 2021-22 through 2033).
This will make a few astute investors multi – multi millionaires.
I speak from having SKIN IN THE GAME and knowing the industry.
The SNB just telecast that the FIAT MONEY PRINTING GAME IS FINITE. Read into that….GOLD moving into the monetary system not away from it.
they will be utilities, their product is money. 100+ years ago, this was the case.
Exactly Bill.
Hope you are on the train too.
I am the grunt shoveling the coal!
…it is hard work…but the rewards will ultimately justify. Don’t be tempted to exit too early either.
The biggest gains will come long after the high is in for the precious metals. I have done some major research on this aspect from the prior golden period (70’s- 80’s- 90’s. We just have to survive the interim period to enjoy the fruits of our labor.
Make sure you are not exposed through any margin.
yes.
bill, lastman, sig;
http://sgtreport.com/2015/01/global-shockwaves-to-come-from-swiss-currency-bombshell-mike-maloney/
yes, dead bodies but we don’t know who yet.
…also…..
James turk, KWN says, a snipit,
So here’s the important conclusion that we should be taking from this, Eric. We all know that central planners are attempting to cap the price of gold. It won’t work any better for them trying to cap gold than it has for their attempt to cap the Swiss franc.
It is always good to remember, Eric, the weakest link of the chain always breaks first. Switzerland’s attempt to hold back a tide of fiat money was impossible. It had to happen sooner or later. It is just like what happened to the British pound in September 1992, or in March 1968, which marked the end of the central bank cartel called know as the ‘London Gold Pool.’ Market forces always prevail over time. The timing of events is difficult, but it appears that London Gold Pool II is now faltering.
exactly right.
Allen,
Read my take on this SNB action in my post over at USAWD.
James T’s work seems awfully congruent to mine.
Also while your at it …read the Pippa Malmgren recent post too…..she repeats the theme about CB’s losing the battle. I take it as a pat on the back.
I didn’t miss the hidden meaning of the SNB move …as obtuse as it was. They have effectively given the ECB, IMF and the FED (and all market participants) the middle finger salute.
EVG would be pleased because this has done what the GOLD initiative wanted to achieve. Don’t be surprised if the SNB hasn’t already added to its GOLD hoard in preparation.
central banks are my topic for tomorrow.
“Just FIVE MINUTES!”
For some, everything was lost in the same time it takes to hard-boil an egg.
and the stink was worse!
.
5Ws
&
“How can I say this?” D0N’T
ʬorry.
u …not-even-close…D0N’T
1Lie
Rothschild
®INC
.
is this an alien language? Way over my head.
Are we going to see Gold & Silver price double in 2015?
if the system breaks down, a double will be laughably cheap.
That would be great as long as a loaf of bread isn’t $57.00!
a silver dime might buy you 3 loaves?
God said only Gold and Silver is money. But who even listens to God these days ???
Now they will wish they did.
that is a big part of the problem.
Bill,
As I’m sure you know (but may have forgot), the Chinese, MUST float their currency by the end of 2015 (as per their WTO commitments) And Jeff Opdyke of Sovereign Investor, has been speculating that when the Chinese, reveal their TRUE Gold and Silver holdings, the earthquake will happen.
It’s been also speculated that it will either be May or October this year. – Me, I’d plump for October, and confidently expect it will be circa 10,000 tonnes (Metric) given the information from various sources I’ve read…
(http://moneymatterstoo.wordpress.com)
W.
10,000 tons is easily provable.