Posts Categorized: Bill Holter

Posted by & filed under Bill Holter.

Originally posted for subscribers on January 4, 2017

By now you should already know the story behind the gold/silver ratio and why silver is the compelling buy of the two. The ratio is currently about 82-1 (it takes 82 ounces of silver to purchase one ounce of gold). Silver is found in the Earth’s crust at roughly 10-1 versus gold, let’s call this “God’s ratio”. Were the ratio to reach 10-1, silver would thus outperform gold roughly 8 fold. 10-1 may or may not be a stretch but suffice it to say that silver should certainly outperform gold in the coming bull market. Let’s call this anomaly #1,

If you understand the above then you understand you should be more heavily weighted in silver versus gold. But what “form” of silver should you own? Your choices are ETF’s or pooled accounts (a very poor choice as the metal may not even exist and all you own is a worthless piece of paper), bars, generic rounds, foreign sovereign mint coins, or US mint lineage coins.

Bars in my opinion are the worst possible form of physical ownership. I say this because they are the easiest to counterfeit and larger bars such as 10, 100, and 1,000 ounce bars are just too large for any utility. You may have originally purchased these because they were the “cheapest” but they are the cheapest for a reason which we will get to shortly. The potential counterfeit issue also exists for one ounce rounds. We have not seen this yet but rest assured that once the price of silver rises significantly, counterfeit silver will become a very real issue.

About a year ago, Jim spoke to the issue of potential gold (and silver?) confiscation. He believes this will eventually occur and gold/silver not issued by the US Mint will be “illegal” to hold or trade. The way to protect yourselves is by holding US Mint lineage coins rather than bars, rounds, or foreign sovereign coins like Maples, Kangaroos, Philharmonics etc. This basically leaves you with two choices, either American Eagles or “junk”. Junk, meaning 1964 and earlier dimes, quarters, halves and dollars.

Junk is by far the best form of ownership for several reasons. First, they are “fractional” silver meaning they are broken down to less than one ounce. Each $1 face amount of 1964 and earlier coin contains .715 of one ounce. In other words, for every $1.40 in face amount, you have one ounce. So 14 dimes holds the same amount of silver as does an eagle, do you see the advantage here? In a system down scenario which is looking increasingly likely, dimes give you the potential of 14 transactions rather than just one with an eagle. In other words, if one ounce of silver is valued higher than something you are trying to trade for, how do you get change back?

Another reason why junk is superior is the counterfeit issue. Bars, especially the larger ones are easily counterfeited with obviously more incentive than once ouncers. The incentive to counterfeit dimes or quarters is obviously less than one ounce AND, these old coins must show wear and tear because they circulated and were used for years. Unless it is a slabbed and graded coin, it better be worn somewhat, otherwise you are probably looking at a fake.

The last reason and we will call this anomaly #2 is “price”. Over many years, junk normally carried the highest premium of all forms of silver and generally equal to or higher than eagles. If you look back 4+ years ago, dealers were bidding $4-5 over spot for junk! Typically, and due to surcharge by the mint, eagles carry about $2.50-3.00 premium over spot. This premium does move up and down but not normally by much. The reason junk normally carries the highest premium is twofold, it is “fractional” and has not been supplied (nor will it) since 1964.

With the above in mind as to why junk is the best form of ownership, current premium is roughly $1.25-1.50 over spot (and currently rising) which allows an opportunity. Currently you can trade silver eagles for junk and end up with more silver ounces. If you trade Canadian maples or some other sovereign mint coins, you can do the trade even up and lose no ounces but end up with a better form of ownership. Swapping bars or generic rounds can be done at a small deficit but is very wise in my opinion as junk premiums will eventually normalize with junk being the highest valued form of ownership.

If the above makes sense to you and you want to consider a swap, or if you just want more information, please contact me. I believe the current anomalies will not exist for very much longer and the time to reposition is here and now. I am posting this for subscribers only at this point and will make this article pubic in a week or two. Once the pubic gets wind of this opportunity, I can envision junk supply being cleaned up and premiums moving higher and above all other forms of silver ownership. The time to reposition is now!

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Posted by & filed under Bill Holter.

This article was written for subscribers last week. Because of the importance of the topic it was decided to post for the public.

Bill

Apr 24, 2019

If one offered investors a fat tail put option that never decays or expires, costs about -1% pa to carry, has no counter party risk & no chance of ever becoming worthless, there would be a line out the door. But when one explains that this option is physical gold… no interest.

–          S. Mikhailovich

The above quote has been atop www.jsmineset.com   for over 6 months now.  Recently, several readers have asked “what does it mean and why has the quote remained for so long”?  With financial markets bloated and ready to implode without notice, let’s look at this very important concept and then expand on it as you will see.

First, what is a “fat tailed put”?  A put option is something speculators use to bet on downward movement, or hedgers use to protect long positions.  In this instance, the “put” happens to be against the financial system as a whole.  In other words, a put, or a bet/hedge against a systemic implosion.  A “fat tail” refers to something that begins to move exponentially the higher the sigma event becomes.  The worse the event, the greater the move higher of a fat tailed put in far greater magnitude.  Ultimately in a credit meltdown, owning gold will be the equivalent of owning “all the marbles”!

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Posted by & filed under Bill Holter.

A couple of topics for you today that are connected, obvious, yet not understood or even contemplated at this point. First, have you ever wondered why the names of many fiat currencies refer to “weight”? Such as the Peso, Peseta, Lira, or Pound amongst many others? This is similar to the names of various roads, like “Saw Mill Rd.”. It was named that because years ago there was actually a sawmill down the lane. These fiat currencies with “weighty” names started out as receipts for either gold or silver. They were convertible into a specific amount of metal when presented at a bank.

In essence these currencies were representations of physical metal since they were redeemable but far easier to carry around due to the lack of weight. In today’s jargon, paper currencies that were redeemable in specie were “derivatives” of the metals themselves. Then as time went on, the redeemability was cancelled and the currencies became true fiat, unbacked by anything except the credit worthiness of the issuer.

Over time, ALL currencies have become fiat and these currencies steadily devalued. I would ask, how can anyone have the thought these currencies can gain value versus gold or silver over a long period of time if they were originally spawned as derivatives? Can a derivative ever become more valuable than that it originated from? The answer of course is no and should be followed by another question; can a monetary guarantee from any government ever be more ironclad than that of physical metal itself?

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