We have already gotten many pieces to the ending of the petrodollar puzzle. We know about Russia and China (and the remaining BRICS) making deals in all directions that will not use the dollar. We have seen the U.S. allies Britain, France and South Korea all doing trade deals with the East that will not use dollars. We know that Saudi Arabia, (the lynchpin of the “petrodollar”) has had high level talks with both Russia and China over the last 180 days. Unless you are an ostrich and just want to “hope” that these talks were merely about the weather and how Aunt Millie and Uncle Joe are doing then you know that “energy” and trade in general was discussed. Obviously, Saudi Arabia accepting rubles, yuan, euros (and God forbid gold of all things) was a part of the discussions.
Of course there probably were a few “what if’s?” discussed. The Saudis would have wanted to know “what if” the U.S. were to freeze their assets? What if the U.S. shut them out of the SWIFT system? What if the U.S. decided some sort of military retaliation? In order for Saudi Arabia to cross the U.S. they would need some, if not many “assurances” to these and probably other questions. My question is “did they get all of the answers that they needed?” …or are there more?
I don’t know the answer to this but I do know that if both Britain and France (with South Korea as a cherry on top) have decided to do business with our “enemies” and do this business without using dollars for settlement …then something really big is afoot. It also tells me that now the Saudis can do business deals WITHOUT using dollars and all they’ll need to do is point a finger. You see, prior to any of these 3 other deals being done, Saudi Arabia could not “defect” and go it alone. Now, all they need to do is say that “they are modeling their deal” after the Brits, French or South Koreans.
I must confess that after hearing about France and the South Korean deals on Friday, I thought that gold (and silver) would be up sharply and the dollar down sharply this Monday morning, they were not. I usually try to look 2, 3, or more steps into the future as the markets used to do but that thinking is so passé. Gold is and has been “locked down” for 2 years now. We can argue that it is or is not manipulated but in my opinion that would be a waste of precious time. We can argue the supply and demand points or the fact that the metals now trade at or below the cost of production. We can argue about the dangers of systemic leverage, a bloated money supply, monetization, the fractional reserve nature of nearly everything or the mathematical bankrupt nature of the U.S. Treasury or …we could talk about the “fraud” that is pervasive everywhere. Again, in my opinion it is a waste of time.
You see, even if just one of these points is true (they all are, each and every one of them) then you should prepare for the worst because something is really wrong. Actually, all you need to do is look at the “market reactions” to any of these topics to know that something is wrong. Should interest rates on U.S. Treasuries be close to all time lows when we already know that the money supply has been pumped up and the fiscal sustainability of the nation is in ruin? Dilution on the one hand and nothing but risk on the other. It doesn’t make sense does it?
No, it does not make sense and will not until it does. The derivatives that have been used to paint the pretty pictures will snap like rubber bands, prices will “adjust” without ever trading between “here and there.” What I am telling you is that we are very close to waking up one day to a world that is unrecognizable. Stocks might look like they split, bonds, currencies, gold and commodities will all look like the decimal points or comma’s are in the wrong places.
Why am I sounding so urgent with this piece? Because as I see it there is just the one last piece of news from Saudi Arabia to come out. No amount of dollar printing or derivatives creation will be able to hold back the financial tsunami once the Saudis defect officially and publicly. As I wrote in my last piece, no matter what spin you hear after a Saudi announcement, do not believe it! If you hear anything out of Saudi Arabia that does not sound “kissy smoochy” to the U.S., you absolutely MUST prepare for what will come.
You should have already been making preparations and only need to “top off” or finish final preparations. If you have not done anything yet then PLEASE, get off of your duff and move as fast as you can NOW! I believe that from the day that Saudi Arabia announces that they will accept currencies other than dollars for oil, it will only be 2 weeks or less that some other country comes out and says they will NO LONGER accept dollars for oil. This will create a “run” on dollars. A “run” as in trying to spend as many as possible as fast as possible before they lose much or all value. This will also be seen at your local Wal Mart with maybe a few days delay. Make no mistake whatsoever, we have sat back and watched as the Chinese and other foreigners have “run” the gold market. The next market to be “run” will be dollars (and thus Treasuries). This will work it’s way all the way down to daily items and will be seen as a “crack up boom”. The first 24-48 hours will probably be explained as consumers finally starting to spend, after that everyone will know exactly what is happening.
Whether it is Saudi Arabia or not, you can mark my words. A currency crisis and run on the dollar of epic proportions is only “one event” or one announcement away from happening at which point “you” will be out of time! Regards, Bill Holter
OMG Bill, this is one if not “the” most important article you have written due to the substance and the timeliness of it. Pile on top the news just released about the US investigating 2 German banks, Commerzbank and Deutsche bank for money laundering. How much longer until Germany follows England and France with the “anti-dollar” policy? If South Korea is the cherry on top, then what would Germany be? A second helping?
Thanks Mark, I wrote about the two German banks today. Should already be posted.
Bill,
Everything you say makes absolute perfect sense to me. But given how the US (and Europe) has been able to delay and pray and escape catastrophe time and again the past 5 years, seems to me they would do something, anything, to keep a public announcement from Saudi Arabia happening, even if it sells oil in other currencies COVERTLY or gives Saudi military weapons or technology in exchange for continuing to sell oil in dollars. I do not bet on this, as my money is in your camp with PMs, but I have been amazed at how many lives our fed and gubment have and almost nothing surprises me much anymore. I do have cash in case of cascading defaults, bank closures, bail-ins, and the fact that electronic dollars outnumber physical 10 to 1.
10-1?
Total M3 to actual physical cash dollars that Comprise a PORTION of M1.
Hey Bill, I think he missed a zero there.
yes I think at least one zero multiplied by a digit.
Whether electronic to physical dollars are 10 to 1 or 500 to one, it indicates you should have a good bit (months of expenses worth) of physical cash dollars on hand in case of short-term chaos with cascading defaults via derivatives blowing up, banks and ATMs closing, electronic payment systems seizing, etc. I fully believe in PMs, but also cash for short-term chaos.
I agree but I don’t think dollars will spend for much more than a couple of weeks after the banks close. Even if you have cash, will you pay your mortgage with cash dollars? How about the lawn guy or garbage company, will they have gasoline to do their business? What about distribution? Will WalMart even be open. Yes having some cash is a good idea but what’s the point of having more than $5,000 or even $10,000? How will you spend it and who will accept it?
Hi Bill,
I apologize for the self serving question, but I can’t figure out the best course on real estate right now. You mentioned “topping off” and I’ve done pretty much everything I can think of preparation wise with one exception. I assumed that there would be a real estate meltdown as part of all of this coming financial deleveraging. So 5 years ago I switched out and have been renting my primary residence. Now I’m doubting that tactic. As part of topping off, is it better to “own” your primary residence albeit with a mortgage (thus not really owning it) or is it better to keep renting. Or would it be best to take a big chunk of one’s existing hard assets and just buy a primary residence outright? I understand real estate is not necessarily your area of expertise, but I feel like you at least could give some sense as to whether it’s better to hold on to all the hard PM assets you have and deploy them after a reset or whether its better to include primary home ownership as part of that final topping off.
no apology necessary. If you are renting now I would not try to make a move as any day we could reset and you might be between places. Your metals will allow you to purchase later and use less metal than required now. Just hunker down, be able to protect yourself and don’t live in an urban area because the tsunami of hunger and violence will wash over you and yours. You can only do what you can do, do not beat yourself up when you find out that you “forgot something” because I assure you that you will. Just do your best!
Would you count “suburban” as “urban”? How far out us far enough?
if gasoline becomes scarce, ask yourself how far people will walk or ride bikes? This distance in my mind separates urban from suburban.
I bought an rv and paid it off as my emergency crash pad, plastered the roof with solar, just need to buy the solar freezer. I would not go near buying real estate right now!
good idea, maybe some “off road” tires too?
The US must have some plan for the Saudi’s, some bribe. Attack Iran for them? I’m not smart enough to know what, just believe our government has a plan B.
I think we are already way past plan “B”.
And then there is always war. A global conflict would do nicely, thank you, to keep status quo… Just consider all the conflicts stirred up in the world lately. What say you Bill?
yes, this is the thought process but a war today threatens to go global and …the only winning move is not to play the game.
Bill, if 1% of population is in pm’s and most people live pay check to paycheck anyway then any collapse will cause the majority of mortgages to go into default as most people can’t afford to pay more for essential items they need to live and still cover their mortgage. The system will need to be put back together quickly else mass chaos . Maybe people will just stay in their homes even if foreclosed due to the mass numbers the banks will either be bankrupt or overwhelmed. Oh wait, is this possibly done on purpose? I’m sure it’s been planned for as a possible scenario in banking, fed, govt and this crisis won’t go to waste either I’m guessing. I mean they know , we know (1% of us ) but the masses don’t know and no one seems to care. Or there is no way to change it so just ride it out, seems do unbelievable to me
“else mass chaos” …I’m afraid so.
“What I am telling you is that we are very close to waking up one day to a world that is unrecognizable.”
Then I must have awakened about 6 years ago because this world is already unrecognizable and has been since about 2008. If you are saying that it is about to become even more bizarre, then heaven help us all.
Let me see, now… PMs, guns & ammo, food, water, water purification, meds, trade goods, seeds, comms, fuel, tools, ways to heat, cook, and make light… yep, looking good on the preps front.
10-4
I realize we have many non believers amongst us, but for those who are willing to reason just a little bit, they should consider the image mentioned in the book of Daniel.
At the end of this age, the final “Babylonian” Rulership over mankind will be that of 10 Kings. Represented by the ten toes. Consider that a King is not what we have here in America. Washington refused to be a King. We are supposed to be ruled by The Constitution. Big deal? People have sacrificed their lives for this country. It is and will be a big deal when it is destroyed. People will be fighting it to the death. But if you think it won’t be, you are not in line with scripture.
The only insight I am offering anyone, is that if you think America is not ready to fall, then you don’t understand what the Bible says is coming.
Take Heed to what is being said in this article.
We must overcome despite all this even to death, just as our Lord. But physically fighting is not the correct response. Our Lord simply spoke. We must speak the truth and let it lie where it falls. Testify. Trust that God will deliver us, and He will! Death does not persuade what we believe. But if you believe a lie, you will have Nothing.
Chad, I’m with you 100%. Things are lining up according to Scripture and we must take action to protect ourselves.
Proverbs 27:12King James Version (KJV)
A prudent man foreseeth the evil, and hideth himself; but the simple pass on, and are punished.
all you can do is your best and believe.
Bill, why is it that many people talk about paying off debts. I understand debts with veritable rates but why pay off ones with locked in rates. Regardless, if the crash is at its worst no one will pay anything and if it isn’t so bad the inflation will wash it away. The savers will loose out and the debtors will win. I focus on buying hard assets now instead of getting out of debt. Honestly, If the masses ( anything more tun the last crash ) refuse to pay their mortgages who and how will they get us all out of our homes? As corrupt as the Government is no one will allow the mass eviction of home owners and give it back to the banks. The entity that created this problem in the first place.
this is one way to look at it.
My guess is even if banks fail, the government is not going to allow trillions of dollars of interest income slip away. The government owns most of the mortgages anyway with Fannie and Freddie so any new currency will just have all mortgages revalued with this new currency. Does anyone know how they did it with the Euro? How were German, French and Greek preexisting mortgages handled when the Euro came into existence? Are all mortgages in countries using the Euro all in Euro denomination? Did people make out or was it worse? I would think a combination of both PM’s and debt reduction would be a conservative bet but only if you can totally pay off the mortgage.
The euro was in existence for several years and had a “conversion price” based on the previous 6? months average price versus the euro as the conversion. This was all done in tranquility and not during stress, strife or duress. Weimar Germany was different as will be the coming episode. I am a believer that if you currently have PM’s available to pay off your mortgage, they will pay your mortgage off in the future no matter what the conversion…just my opinion.
Payoff debt or buy PM’s, I guess that is a decision we all have to make. After being down 20K on the PM’s purchased before the April 2013 slaughter, I just wanted my debt gone vs. risking anymore losses with the PM’s, even though I know in the long run PM’s will/should rise in the future. I was worried about putting all my eggs in one basket. I also felt my current PM’s was enough to maintain my current wealth. I remember someone saying 10K worth of PM’s will insure 100K of dollars [james rickards, not sure to believe anything he says…. I would get the PM’s first before paying off any debt to ride the wave when things start breaking loose. Also remember, the government owns 30% of that 20 trillion of retirement funds (401K, IRA, pensions) from deferred taxes and I doubt they won’t snatch their portion if they need to or more than their share, that term is GOTS, and you gots to do it. Lots of worries out there.
plus worries that we aren’t even worried about yet.