Posted at 7:34 PM (CST) by & filed under Bill Holter.

In a recent article, Peter Degraaf posted a series of charts including the one below. I must confess I had never seen this particular chart before but extremely glad it was posted. I knew the monetary base had grown wildly but did not realize the extent until seeing it in graph form. While Peter spent just one paragraph on this, let’s look at it in depth to get a better understanding of why it is so important and what it really means.


Let’s start by deconstructing this down to what it really means. First, I must confess I do not know whether this chart is comparing the “priced” amount of U.S. gold to the monetary base or rather the price of gold to the monetary base. Either way, this chart tells us something VERY important! The price of gold relative to the monetary base has never been lower than it is right now other than at the end of last year.

Looking at the chart, you can clearly see the “markup” of gold in 1933 from $20.67 to $35. You can also see the run from $35 to $850 during the 1970′s and peaking in 1980. You can also see the turn in 2000-2001 when gold traded down to $256 per ounce. These were very important generational turns but we can glean something even more important from this chart. In relation to the monetary base, you can now purchase gold below $20.67, below $35 and below $256 when adjusted for the monetary base outstanding! The monetary base has grown and grown for 100 years, it has exploded in the last 8 years.

Making this simple to understand, as the monetary base grows (money is printed), it is like slicing a pie. With each “cut” (addition of dollars), each slice gets smaller and smaller. As with anything, the smaller something becomes, the less valuable it will be. In banking or finance, this concept is called “inflation” when a currency becomes more plentiful in relation to goods …prices rise because it takes more of the more plentiful currency to purchase the same amount of goods as compared to previously.

Shifting gears, there is another side to this equation and one the powers that be are desperately trying to keep hidden from you. They have been suppressing the price of gold to hide the fact they have sliced and diced the “dollar pie” until now the slices are miniscule (the dollar has very little value left). They have done this at the same time “risk” has exploded. When I say “risk”, I am talking about systemic risk. Never before has the world taken on as much leverage in relation to GDP nor versus collateral. Banks, brokers, insurance companies and even sovereign governments are now more leveraged and financially in higher risk situations than ever before in history!

I would be remiss in writing this if I did so without talking about “U.S. gold”. There is so much anecdotal evidence the U.S. has been divesting gold (even custodial held gold) for years, in no way can anyone credibly believe the 8,300 tons claimed is still there. If this is the case which I absolutely believe it is, then the above chart would be revised to even lower levels. I guess the best way to illustrate would be to go back to our pie analogy, how big would the many more slices be if the total pie was the size of a thimble?

Going one step further, “gold” has been rehypothecated many times over. We have seen instances on COMEX where there were more than 500 ounces represented by paper contracts for every one real ounce they claimed to have. We have no way to know what the real global number of hypothecated gold is to actual gold …but we will find out sooner or later and the mass of paper owners will be left holding just that …paper. The cover up has gone on for years and was done to support confidence in the dollar, U.S. Treasuries and the fiat currency system in general.

The currency/debt system we live in will mathematically implode as sure as the Sun will rise tomorrow. This is simple logic, the system as a whole cannot grow enough to pay back nor service the debt already in use, “debt saturation” if you will. Richard Russell called it “inflate or die” which means either “inflate” the currency or outright default, there is no in between in the end. Someone, somewhere “loses”, there is no way around this, the odds greatly favor the holders of currencies as being the losers rather than outright default.

To finish, it is my hope you are putting 1+1 together while reading this. There has never been a more dangerous time financially than today in all of history. This, at the same time gold has never been cheaper in relation to the amount of dollars outstanding. This 1+1 is a no brainer, never before a greater need for the safety of gold and never has the insurance policy been this cheap! Of course we could talk about silver which is extremely cheap versus gold but that would be overkill for another writing. This will end with a massive call on gold by EVERYTHING credit …which is everything, everywhere financial! The “call” for real gold will come on like a light switch flipped overnight. You either have it, or you don’t …and never will!

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Standing watch,

Bill Holter
Holter-Sinclair collaboration

Comments welcome

Posted at 1:35 PM (CST) by & filed under Jim's Mailbox.

“Aeroplane money” versus “Helicopter money” used by the combined central banks of Europe and the USA would give you $40,000 Dow easily, with the gold to Dow ratio (with gold more than 50% higher than the Dow). Aeroplane money is different than Helicopter money and cannot be camouflaged as to being sterilized.

Best Regards,

Hi Jim,

I read this several times and I still don’t grasp why Armstrong thinks the next target for the Dow is 23,000 and then on to 40,000!!

Maybe you and Bill can figure it out.

I’m at a loss for words!


Financial Sense Interview with Armstrong
July 25, 2016

Posted at 1:25 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Playing chicken with taxi cabs for nukes is total madness. How is Japan to know what is or is not aboard the missile?

U.N. Chief ‘Deeply Troubled’ By North Korea Missile Launches
August 3rd, 2016


UNITED NATIONS (Reuters) – United Nations Secretary-General Ban Ki-moon is “deeply troubled” by North Korea’s recent missile launches, his spokesman said on Wednesday after one of the rockets landed in or near Japanese-controlled waters for the first time.

“Such actions seriously undermine regional peace and stability. We reiterate the call on the DPRK (North Korea) to heed the united call of the international community to reverse its course and return to the process of sincere dialogue,” said U.N. spokesman Stephane Dujarric.

(Reporting by Michelle Nichols; Editing by James Dalgleish)


Latest North Korea missile launch lands near Japan waters, alarms Tokyo

North Korea launched a ballistic missile on Wednesday that landed in or near Japanese-controlled waters for the first time, the latest in a series of launches by the isolated country in defiance of United Nations Security Council resolutions.

The main body of the missile landed in Japan’s economic exclusion zone, a Japanese defence official said, escalating regional tensions that were already high after a series of missile launches this year and the decision by the United States to place a sophisticated anti-missile system in South Korea.

Japanese Prime Minister Shinzo Abe described the launch as a “grave threat” to Japan and said Tokyo “strongly protested”. Japan also said its self-defence force would remain on alert in case of further launches.

A U.S. State Department spokesman condemned the launch, and said it would “only increase the international community’s resolve to counter” North Korea’s actions.


Posted at 10:18 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

This is Deutsch Bank’s worst nightmare.

Italian Bank’s Rescue Plan Faces Hurdles
July 31, 2016

With the ink barely dry on its bailout plan, Italian bank Monte dei Paschi di Siena faces a Herculean task convincing investors to back a third recapitalisation in as many years and avert a banking crisis that would send shockwaves across Europe.

To stave off the risk of being wound down, the world’s oldest bank has hastily unveiled the private sector-backed rescue blueprint late on Friday. It came just hours before the lender emerged as the worst performer in European stress tests that showed its capital would be entirely wiped out in a severe economic downturn.

The plan aims to clean up and bolster the bank’s balance sheet once and for all, restoring to health a lender whose frailty threatens the wider Italian banking system, the savings of thousands of retail investors and the increasingly weak political standing of Prime Minister Matteo Renzi.

A financial crisis in the eurozone’s third-biggest economy would also risk creating contagion across Europe, a region already reeling from Britain’s decision to leave the EU.

The two-pronged rescue scheme hinges on Monte dei Paschi raising five billion euros ($A7.36 billion) in a cash call to be completed by the end of 2016 – a tall order for a lender that is worth less than one billion on the market and that has burned through eight billion euros from share issues since 2014.

Global investment banks have made a preliminary agreement to underwrite the rights issue by Italy’s third biggest bank.

But this is subject to conditions, including that the second prong of the bank’s plan is successful: the sale of 9.2 billion euros of bad loans via a mammoth securitisation, whose sheer size is unprecedented in Italy.

As the bank’s shares – which have lost nearly 80 per cent of their value this year – brace for Monday’s market reaction to the bailout scheme, senior bankers and fund managers are already questioning the chances of the plan’s success.

“Both legs of the plan are potentially fragile,” said Filippo Alloatti, credit analyst at asset manager Hermes Investments.

“It will be difficult to complete such a big capital increase given their track record with past cash calls, and the securitisation is a monster operation, a puzzle full of moving pieces that need to fall into place. The execution risk is significant.”


Jim Sinclair’s Commentary

The latest from John Williams’

- Broad, Deepening Economic Downtrend Continued
- Revised Annual Change in GDP Slowed Sharply, Consistent with Entering a Recession
- Headline Real Quarterly GDP Revisions Took Fourth-Quarter 2015 and First-Quarter 2016 Growth Rates Lower, Below 1.0%, but Not Negative, with First-Quarter 2016 GNP Minimally Below Zero, Again
- Well Below Consensus, the Advance Second-Quarter 2016 Real GDP Annualized Growth of 1.22% Faces Likely Downside Revisions
- Nonetheless, Aggregate GDP Revisions Were Minimal and Heavily Gimmicked, Including Cycle-Dampening Three-Year Moving Averages
- Carefully Structured Statistical Shenanigans Were Designed to Smooth the Business Cycle, Not to Reveal It

- Velocity of Money Slowed Sharply in Second-Quarter 2016

“No. 823: Second-Quarter 2016 GDP and Annual Revisions “

Posted at 10:03 PM (CST) by & filed under

America is Doomed Without Restoring the Rule of Law-Karl Denninger
July 31, 2016

Trader and entrepreneur Karl Denninger has a dire warning. He basically says if there is lawlessness at the top of society, there will be lawlessness at the bottom. Denninger, who is so distraught he has suspended writing on his popular website, explains, “It is illegal for any entity with market power or anybody else to price fix. It is illegal to price commodities of like, mind and quantity in the market place. That is a federal law, and violations of these laws are not civil affairs, they’re felonies. . . . The only deterrents for corporations against bad behavior is people go to jail or the firm has its charter revoked because it runs out of money. The reason that is the case is as long as I can pay a fine and shift the cost onto the customers or shareholders or both, there is not deterrent—at all. . . . When does a CEO ever get indicted? When do members of the board ever get indicted? The answer is never.”

Denninger says the lawlessness trickles down, and it’s bad for growth and innovation that creates jobs. Denninger contends, “The problem with this is economic progress. Without people having the ability and the promise to get ahead, what do you have left? . . . If this sinks into people’s consciousness, then the game is over. If you cannot entice people to get out there and create the next big thing, to be the next Intel, to be the next Amazon, then everybody swallows everybody until there is nothing left. If you are all sharks trying to eat each other, then there is no progress.”

Denninger also makes a dire prediction about a coming future crash. Denninger says, “All exponential growth forecasts that do not have an end date on them run up against mathematical facts. . . . You can’t have infinite expansion forever. Where it is coming to the forefront first is in the healthcare area. Obama Care was an attempt to extend the scam by a few more years because it was starting to collapse in 2007 and 2008. This is how they managed to buy themselves another six or seven years by forcing everybody into it. The problem is now you made it worse. . . . Here’s what everybody needs to take away from this and the most important aspect. In 2007 and 2008, the crash preceded the mathematical wall by a lot. . . . The market never allows you to get to the mathematical wall because somebody wakes up every night and gets really nervous. That’s just the way humans are. As long as the number of people who wake up really nervous is outpaced by the number of people that say ‘that’s an opportunity to make money,’ everything is fine. The day a critical mass of people say ‘oh my goodness,’ that’s when it comes apart. It always happens before you hit the mathematical limits. . . . The tipping point could come tomorrow for all I know.”


Posted at 1:11 PM (CST) by & filed under Jim's Mailbox.


Many people around the world are unfamiliar with derivatives against the oil companies and producers. With this bad of a mess imagine all of the high-yield debt that is tied to energy that could go wrong. In my opinion this is yet another linchpin that could be pulled to set off a market catastrophe. If the big producers are missing that badly imagine what the midsize oil companies have done. I have seen several mid and small producers out of Texas collapse in the last 18 months because of collapsing oil prices. Got gold?


A good point! (Although the article still expects higher prices).

A ripe banana is not the same as a fresh picked one. Yes, it may be sweeter, but its lifespan is severely limited.

If everyone is in high yielding stocks and bonds, which by all calculations makes them overpriced, then what?

I can only think of gold as the final and ultimate “safe haven”
CIGA Wolfgang Rech

Are Those Safe Haven Assets Safe Anymore?
July 29, 2016

Michael Sonnenfeldt doesn’t mince words: “There is no safety in safety,” the founder of Tiger 21, a network of “ultra-high-net-worth” investors, said. “All of the historical places you could get safe income from—dividend-paying stocks, bonds—they’ve all been bid up because of quantitative easing to the point where it’s just trash.”

Assets that include Treasury notes, high-quality dividend stocks, and low-volatility mutual funds have all seen spooked investors rush into their supposedly safe embrace. Sonnenfeldt and others argue that has transformed them.

“When you overpay for what used to be safe assets,” he said, “they now have a lot of risk in them.”

Whether they’re “trash” is debatable. But the concern that the prices of these assets may now be propped up more by fear than by economic fundamentals is legitimate.

Here’s a look at how some “safe” assets that investors have raced into over the past year or so are holding up. For a backdrop, take a look at how the S&P 500 has performed since last August’s deep dive.


Posted at 4:10 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

More bad news to Chair Yellen of the “we are going to raise rates” department. The action is not, but the words border on politically correct.

US Homeownership Rate Of 62.9 Percent Matches A 51-Year Low
July 28, 2016

WASHINGTON – The proportion of U.S. households that own homes has matched its lowest level in 51 years — evidence that rising property prices, high rents and stagnant pay have made it hard for many to buy.

Just 62.9 per cent of households owned a home in the April-June quarter this year, a decrease from 63.4 per cent 12 months ago, the Census Bureau said Thursday. The share of homeowners now equals the rate in 1965, when the census began tracking the data.

The trend appears most pronounced among millennial households, ages 18 to 34, many of whom are straining under the weight of rising apartment rents and heavy student debt. Their homeownership rate fell 0.7 percentage point over the past year to 34.1 per cent. That decline may reflect, in part, more young adults leaving their parents’ homes for rental apartments.

The overall decline appears to be due largely to the increased formation of rental households, said Ralph McLaughlin, chief economist at the real estate site Trulia. McLaughlin cautioned, though, that the decrease in homeownership from a year ago was not statistically significant.

America added nearly a million households over the past year and all of them were renters. Home ownership has declined even as the housing market has been recovering from the 2007 bust that triggered the Great Recession. Ownership peaked at 69.2 per cent at the end of 2004.