We just finished a wildly volatile week in most all markets across the entire world. Stocks were dumped early and then pumped at the end of the week, interest rates were dumped until the end of the week and oil simply crashed and actually “sniffed” at a “7” handle. Greece came completely apart at the seams with their stock market and bond markets collapsing.
An obvious question would be “why.” Why did all of this happen this week? An obvious answer which surely would be a contributor is the spread (or fear) of the Ebola virus. But this is truly a strange duck and one I’m not really sure what to make of. By now I am sure you saw the picture of the Ebola patient wrapped up in a Hazmat suit surrounded by three others in Hazmat suits and … a guy with a clipboard? The “clipboard guy” apparently even flew with the patient as there were pictures of him again after the flight …what’s up with this? Even more strange is President Obama kissed the nurses who were caring for an Ebola patient? Is there an antidote? Is it a manmade virus? Is it real? Is it a “bio weapon” gone bad or “escaped” by “accident on purpose?”
There are all sorts of questions to this which we really don’t have the answers to but suffice it to say, an Ebola pandemic (real or just perceived) would be enough to shut this country (and the financial world) down. It could be used as a scapegoat for crashing markets, financial closures, martial law and mass quarantining of population segments. If it is real, what a tragedy. If it is not, yet is used for “cover” and a “reason” for societal and financial collapse, what a travesty. As for Ebola arising just now, I say the “timing is curious” to say the least… especially since there are reports this is a manmade virus.
Another area of “timing” was the emergence of Fed Governor Bullard on Friday morning. If you recall, he was boisterous on October 9th when he said, “We should be willing to remove some accommodation.” Friday morning he flip flopped and said, “A logical response at this point is to delay the end of QE.” It is important to understand why he has said what he said and in particular “when.” The markets and the dollar were rising and crushing emerging currencies and markets by Oct. 9th, Mr. Bullard stepped in and tried to jawbone some of the building froth from our markets. It only took a week later and some 1,500 Dow points for him to step out and reverse his words.
There are several problems here as I see it. First, the Fed is darned if they do and darned if they don’t. The stock markets threw a taper tantrum and dropped nearly 10% in six or seven trading days. In order to placate the equity markets, QE cannot be shut down. On the other hand, the Fed cannot continue QE or begin another round because there simply are not enough Treasuries outstanding for them to purchase. Let me rephrase this, there are enough but whatever the Fed buys …they are taking out of the collateral pool which then can no longer be lent against. This in effect actually lowers the amount of credit outstanding which “de”flates rather than “re”flates.
Another problem is the leverage that the Fed itself is taking on. Their capital is now levered at nearly 80 to 1. The big banks were levered nearly 30-35 to one back in 2008 and we all know how well that worked out. What will the Fed do? Lever themselves over 100 to 1 and blow their balance sheet up another trillion dollar? I suppose they could try this but the markets at some point are going to call their bluff. The Fed has no margin for error now, a bigger balance sheet and higher leverage will only make the collapse when it comes that much more horrific. Do you believe there are any odds whatsoever that the Fed can ever even hint at the reality of higher rates? No matter who would like to deny this truth, “tapering is in fact tightening” and no amount of words can change this. Make no mistake, this is ultimately, and will also be seen as a “solvency” problem for the Fed itself. Going one step further, the Fed acted as a white knight back in 2008 and ’09, they have now put themselves in a very poor position because they are now the ones in need of a white knight. Not only will they NOT be seen as the white knight, they very well could become the problem itself?
We also got news at the end of the week, India imported 100 tons of gold for the month of September …this was about half of all gold mined for the month. There was also a report from Shanghai, they imported over 68 tons for the WEEK! If China were to import at this run rate, they would import 3,500 tons over the course of a year. This is an impossibility over the long run as the rest of the world only produces 2,200 tons. I bring this up because again, we have more evidence of demand completely dwarfing supply while price remains weak. “Apologize” however much or in whatever manner you’d like, physical demand is blowing out the actual supply while the price is being suppressed. I believe there is also a “timing issue” here, something behind the scenes is in a precarious state, the “alarm bell” must be silenced.
Last weekend in Washington, the G-20 held a finance minister and central banker meeting. Do you find it at all odd that immediately following this meeting the markets have become unstuck? What was discussed or decided behind these closed doors? The annual G-20 meeting will be held next month in Brisbane Australia, has or is something being decided? Is something “being” decided “for” the U.S. and her dollar? Curious timing?
One other area which received little to no press were events in France and also Italy. French bond yields diverged higher from the rest of the core Euro states and they basically have thumbed their noses at the deficit spending targets they were given. Italy did a currency swap earlier this year and an 8 billion euro trade deal with China this past week. Again, the timing is curious because Italy is one of the European weak sisters in need of assistance. Germany has her hands tied trying to support Greece from collapse …so in comes China to help a struggling Italy. The fracturing of the Eurozone may be a result of the coming reset? Again, timing?
I bring this last paragraph forth because China has to this point only “courted” western business as opposed to going head to head with the U.S. I received a note the other day which stated “China could make gasoline $100 per gallon any time of their choosing.” I initially scratched my head on this one but after 10 seconds I “got it.” China can pull the plug on the dollar any time they choose. Once this is done, hyperinflation will be set our nation and $100 per gallon may become a conservative number. The upcoming G-20 meeting will be of particular interest to me because I believe there will be (maybe already are?) decisions made “for” the U.S. as opposed to the traditional “by” the U.S. I believe the problem is now seen globally to be the Federal Reserve, I also believe the world is working to “fix” the problem. More on this tomorrow.
Bill,
You have got it figured out for sure!
Timing is every thing and I believe the collapse will be blamed on the Ebola scare that is gaining fast. Mexico would not even let a cruise ship from Texas come into their ports! And I can’t blame Mexico as they don’t want Ebola. Staying at home and not spending will take hold fast.
Today 3 schools in central Oklahoma closed because of Ebola and I have not even heard of Ebola in Oklahoma yet.
The scare is on and halloween is several weeks away.
The Fed speaks with forked tongue and changes their story daily/weekly as needed. Only brainless sheeple would even bother to listen to the Fed.
Our wake up call is just around the corner and will be scary and ugly!
make sure you are prepared to hibernate.
Jim Rickards has supposedly said that all G-20 gold will be taken to a Swiss mountain… see link below
http://www.arabianmoney.net/gold-silver/2014/10/19/all-the-worlds-gold-to-be-confiscated-and-buried-in-switzerland-by-2020-argues-jim-rickards/
What do you smell here ???
thanks
I saw this earlier today, he is a CIA spook that doesn’t even make sense. To answer your question, I smell horseshit.
Bill,
I completely agree with you re. Jim Rickards comments. I read this article this morning myself and completely lost respect for Rickards who generally appears logical.
Do you think the BRIC countries (in particular – China) would be so stupid as to give up control over their massive holdings of gold to have it placed in a Swiss Mountain?? For what benefit?
Maybe the CIA spook was in turn spooked by the CIA to write this horseshit.
the Chinese I am sure will have something to say.
Another great read, thanks Bill.
I do not think gasoline will hit $100/gal in the near (or foreseable future) as the US produces a lot of oil to offset any hyperinflation of the USD.
I could see $10/gal but I believe that is not too likely.
I see foodstuffs skyrocketing in price whenever/as soon as/ China dumps their US dollar holdings.
THe US’s number one export is food, followed by scrap recycling. USD gets weak, China has a billion people to feed, the rest will be history.
any “dollar prices” can happen depending on what happens to the dollar. In a derivatives meltdown, all bets and price forecasts are off.
I believe that any of us who try to pay attention to our financial problem are being killed by one drop of water hitting our foreheads at a the rate of one drop every 30 seconds. The others who just live day by day are not being tortured like we but will have one hell of a time trying to adjust when TSHF.
Chinese water torture.
Bill,
I determined over a year ago that Jim Rickards is a “pimple on the ass of society” !
Yes, his breath smells of horseshit.
he still to this day says all the gold is still in Ft. Knox yet did not know there has been no audit since 1956.
Bill,
I totally agree, in a derivative meltdown all bets on prices are best just a wet dream. And as far as US producing mountains of oil, that is just another BS story that will fade within 10 years.
As the chinese say, “may you live in interesting times”. I’m afraid the up-coming interesting times are going to be more than more Americans can handle.
Thanks
I believe far less than 10 years.
Bill, can you comment on the following: the Silver Trading market opens at 6:00 PM EST on Sunday night. The previous close is say $17.38. For the opening 5-6 minutes the opening price is $17.05 then it gets right back to $17.38 and begins moving. Who is shorting and who is winning? Why doesn’t this manipulation draw attention? Thanks
this has gone on for over 10 years and has been meant to depress the sentiment. The CFTC found “nothing actionable” …probably because “who” they found doing it. Many see it, yet mainstream ignores it because it will bring everything, and I do mean everything including our way of life into question.
Yeah that “nothing actionable” caught my eye when I first saw it. Ever hear of the Exchange stabilization fund?
http://en.wikipedia.org/wiki/Exchange_Stabilization_Fund
Wiki quote from above link “A change in the law, in 1970, allows the Secretary of the Treasury, with the approval of the President, to use money in the ESF to “deal in gold, foreign exchange, and other instruments of credit and securities”
So of friggin course there’s nothing actionable found,,, duh, what you think I’ve got Stupid written on my forehead? – Not directed toward anyone here, just a statement in general,,,
yes Marty, you get it!
Please fix your RSS feed as its broken. Tell your webmaster about it as he will know. Also fix andy’s and Hoffman’s feeds too.
I’m sort of new at this, having only been following for a few years. But what years they’ve been for a dedicated stacker. I guess I was naive enough to believe there was still some oversight and something this obvious would draw attention. It’s drawn mine….. so now I’ll watch the opening and stack more on those 3-4% drops.
stack until you can’t.
Great article Bill. I think that “strange duck” ebola was rolled out this month in order to time what may happen in December possibly – global currency reset. The GCR was supposed to have happened last February. It didn’t because TPTB in the U.S. raised a stink for postponement and began the Ukrainian coup in order to steal their gold and buy Them some time to continue Their wars and very profitable games of theft. By the time December gets here the American people should be in full blown panic mode out of this ebola fear tactic card They have played. F D Roosevelt said, “Nothing in Government happens by accident” and you can believe that’s why this ebola baby has been rolled out at this precise time. That snake Rahm Immanuel said, “Never let a good crisis go to waste”. So, I believe this will provide the cover for the first GCR coming in December, which was postponed from last February. Of course, the value of money (gold/silver) will be reset also at a much higher price. We shall see.
it’s “cover”?
Yes. There could likely be a high level of panic over this “ebola” fear spread across the whole nation two months from now. So, in a sense we’re talking about a lessor of two evil scenarios between, 1.) Fear for the health of your family contracting a potentially deadly disease and 2.) the value of your dollar collapsing 35% over night. Both are bad, but which is going to get the greatest immediate concern from the populace? Had they have done the GCR in February as originally planned, it would have gotten all the attention and the screams and the howls from the people with nothing else to offset or counter the people’s anger. That is what I mean by cover. Maybe it was not the best choice of words.
…now, if a threat of Ebola no one will be on the streets rioting will they?
No. Nobody will be rioting at all. To the contrary, people will be cooperating with the Government’s draconian measures to control the spread of this disease. What do you think?
that was my point exactly Richard.
What is this supposed “reset” of last Feb? Never heard that one before anywhere…
I have written many times that the financial system must reset to come back into balance. Don’t know about “last Feb.”
Bill – I first heard about the GCR from Lindsey Williams and his Elitist friend in November of 2013. He stated that it would take place in 90 days or about mid February 2014. It never happened of course, and we all wondered why, because the Elitist friend of Chaplain Williams had always given him good info before. Lindsey did not know why either as he only reports what he is allowed to say. Anyway, I heard Jim Willie say the same thing on an interview a week or ten days ago. Willie said the GCR was supposed to have happened back in Feb according to his sources. But the Ukraine thing got in the way and maybe They were not ready then and needed a countervailing crisis (not cover) like ebola which we have now.
Bill: I really enjoy your articles. As far as Ebola used as an excuse for a GCR, this might be a valid concern. Do you think that Ebola might also be an excuse to do away with paper currency? It would be convenient for the banksters to site safety reasons for doing away with currency that has the capacity to transfer germs, etc. to holders and users of cash. As a final thought, isn’t it ironic that silver is antibacterial and would be a great replacement for paper.
it’s possible.
Why do your articles always get 10 times the comments on them than the other guys? LOL
not sure
You hit it when you said an excuse will be needed other than tapering that caused the market crash for the Fed to maintain legitamacy.
Interest rates will never be normal again and like you said even a hint of it will completely blow up the economy. We are too far down the road now and debt and unfunded liabilities are going to implode sooner rather than later.
Gutted manufacturing base means no growing out of the mess so default/reset is imminent.
My instincts say Ebola has been “invented” and planned for some time just for an instance like this. We can only speculate day to day but the PTB are 50 moves ahead.
Get right with God through Jesus and work out your salvation. God is taking us down this road to draw distinct lines.
yes Miggy, there is evidence Ebola is manmade… and yes, time to get it right with your maker if you believe in such. I do.
If you are wondering why there is volatility in the markets, read the book, The Mystery of The Shemitah, Jonathan Cahn. Pretty clear why historically September and October are volatile.
I understand seasonality and man “preparing for winter” , then why no volatility the last two years?