Posts Categorized: Bill Holter

Posted by & filed under Bill Holter.

I had to chuckle after getting caught up in the ZeroHedge click bait headline. First we should look at the article itself and then analyze the stupidity prevailing even among large and supposedly “wise” money managers.

As for the article, it was penned by Michael Snyder who has done some very good work in the past as he did with the legwork for this one. The problem(s) I see are that first, the mystery investor did not make a $262 million bet. This is the maximum amount he might be able to make between now and October. The original “investment” is far less than this and would normally be considered the amount of the “bet” if this was the amount they could possibly lose.

But herein lies the problem, the “bet” has literally an unlimited loss potential because in a complete blowout market, this trader is essentially short 262,000 VIX Oct. 25 call contracts. Never mind all the other bells and whistles in this trade, should the market crash and fear run unbridled, the net/net is this uncovered short call position of 262,000 contracts. So, the title is misleading in the first place because the original bet was only a small fraction of $262 million but the potential loss could certainly be in the multiple $billions … not like any lottery ticket I have ever seen or would even touch!

Taking this the extra yard, let’s talk about “what” this or any trader will “win” should they be that fortunate. First, you will notice I wrote “should they be that fortunate”…which means someone else (or collective someone else’s) will be unfortunate enough to be standing atop an equal sized loss. The obvious question is whether they will have the ability to payout on the “lotto ticket”? From a systemic standpoint, I absolutely 100% guarantee in a free market not backstopped by central banks, another 2008 experience cannot be settled. 2008 could not be settled upon and thus the reason the Fed secretly lent out $16 trillion across the globe, settlement HAD TO OCCUR or the jig was up. The number this time around will have to be far larger and probably many multiples.

Now, carrying the question all the way through, traders, investors, money managers etc. who believe they are “hedged” or have safe strategies in place are sadly mistaken. How can I say this broad brush and what makes me so smart? Don’t worry, I have not turned arrogant by any stretch, I can say this by looking at the problem with logic that long ago left our casino markets. You see, the problem is these players for the most part are playing for dollars, euros, yen etc. Even IF they believe they are playing for gold, I assure you they are not because out of the millions of ounces represented to create the current pricing, only a very small fraction and less than one percent of real metal exists and underlies the trades.

Getting to the heart of what I wanted to convey, the bottom line is even if the winners all do get paid (a mathematical certainty they cannot because of defaults), they will be collecting fiat paper chits that will not perform in a credit meltdown. This is not rocket science or voodoo economics, all fiat currencies are “credit based” in the first place so their “value” only functions while credit markets are standing with good faith and confidence. When confidence in central banks and sovereign treasuries does break, so will all fiat currencies. This will appear to be a hyperinflation when in reality it will be the MOTHER OF ALL DEFLATIONS in terms of gold!

To finish, we live in a world where the casinos themselves are broke but still functioning while they can still obtain credit. It will not matter whether you won or lost if you have not left the casino when the lights go out. The only way to truly win is to cash your chips in and fully exit the casino with real money in hand… BEFORE it is widely understood that no matter how many casino chips you have …you still have nothing! The mathematical explanation of this is “zero times anything is still zero”! Please think this article through thoroughly, the games are being played for the wrong winnings…

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Comments welcome bholter@hotmail.com

Posted by & filed under Bill Holter.

A very interesting week so far. The dollar is now down 150 basis points in 2 1/2 days, in the old days it used to take several months to move this much. The “96”level has only two ticks to go before we see a 95 handle. Gold was flash crashed in Sunday’s access market for about $20, this amount has not been fully recovered even with the flimsy dollar action. COMEX open interest actually rose on Monday’s drubbing which is proof positive the seller was not a “long”, conversely they were “shorts to open” …or should I say to affect a lower price. Open interest was very strong with yesterday’s tiny price rise, as I expect another very large increase from today’s session.

The point is this, it is taking more and more “shorted” contracts to contain the price. The mining shares have also been under lockdown, I am sure both legal and “naked” shorts have exploded in order to effect this feat. While the metals complex has been locked down, the dollar is taking a drubbing on world markets. The game of selling “paper metal” works as long as the dollar has respect, it is losing respect rapidly! Building the open interest will only make the delivery default that much uglier. This is not a matter of if, only when…

Posted by & filed under Bill Holter.

As an addendum to yesterday’s subscriber article, the topic of “time and sales” needs to be discussed. “Time and sales” is a very simple report that can be requested by literally anyone in any market. For example, when I was a young broker I had a large client who traded a minimum 10,000 shares at a clip. From time to time he would request a time and sales report to make sure his order was a good fill. Over a year’s time and asking for close to a dozen orders to be checked, he did have one trade where he was ripped off for an 1/8th ($1,250) of a point (we still traded in 1/16ths and 1/8ths so you can guess how long ago this was). The order was rectified and the client was reimbursed.

The reason I bring this up is because the CFTC, NYSE, NASDAQ, SEC or any other agencies have this tool of “time and sales” available to them. All exchanges are required to keep these reports. The CFTC can pull a time and sales report to investigate ANY time period they choose going back to the 1970’s …which of course includes many of the obvious and blatant precious metal waterfall events since 1996. The report will tell them EXACTLY how many contracts were bought or sold and which firm(s) performed the trade. Then, they can query the firm to find out who the buyer (or gross seller) was. They have the ability to track ANY trade back to the source, end of story!

But, they have not ever done this no matter how loudly the public cried out. Why not? This is fairly obvious, can you imagine if we truly knew “who”? I guess you could say because the public could NEVER handle the truth in their opinion?

So what is the point here? I wrote yesterday commenting on the settlement between the CFTC and David Liew and said I hoped they would “pull on that thread”. The more I thought about it, the CFTC never needed David Liew (though he would be helpful). All they need (needed) to do is pull a time and sales report before, during and after any of the plentiful waterfall events in precious metals. This would lead them to the clearing firm and thus the ultimate client. I might add, there was gross negligence after 911 for the airline put trades never to have been tracked back to the source. I would also add, if anyone in law enforcement is reading this, many people were MURDERED that day and there is no statute of limitations for murder. Please demand a time and sales for who bought all of those puts, follow the money (even though the winnings were never collected). The firms were required to “know their customer”, the identities can still be discovered if someone within law enforcement truly wanted to know. Perhaps, just as above …the public cannot handle the real truth?

The question still remains, is the CFTC now “changed” with a new administration and are they serious about following the rule of law?

If this is the case, all they need to do is follow the paper trail to discover who sold time and time again into the paper gold and silver markets to “e”ffect (no not a typo) and suppress price? Time and sales is in no way rocket science, any B grade broker has heard the term and knows what it is …does the CFTC? I am certain they do!

Standing watch,

Bill Holter

Holter-Sinclair collaboration