Posts Categorized: Bill Holter

Posted by & filed under Bill Holter.

It is obviously time to go back to basics. I say this based on the emails we’ve received this week which ranged from tears to tirades regarding gold and silver price action. While speaking with a friend a few months back (during a period of price weakness), I said tongue in cheek that I should write an article titled “We are not your psychoanalysts”! The amount of fear was and is astonishing to me. We have tried to demonstrate with math, logic and history what the ending is. The problem for most is, even if the ending is understood they “want it and they want it now”!
So, in an effort to help the panicked or despondent, let’s go back to the very basics. Below is an image of John Exter’s pyramid;

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You will notice the pyramid is inverted. 100 years ago, this pyramid was inverted but obviously much smaller altogether. What has happened over the last 100+ years is that more and more “derivatives” of all sorts have been created. Also, “promises” of all sorts have been made. When I say promises, we are talking about pension plans, health aid, welfare etc. that promise current and future benefits. Basically, via the use of credit (and derivatives since the 1970’s), asset values have been continually inflated and re inflated. Without credit and without derivatives, valuations of most ALL assets would be only tiny fractions of what they are today.

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Posted by & filed under Bill Holter.

Rather than write on a planned topic, I received at least 20 e-mails yesterday on the same subject so had to switch gears. The e-mails were all panicky because an analyst who works in the precious metals industry suggested that silver will not perform as gold will in the coming reset. I feel the need to address this because I believe it is faulty analysis and may have motivation behind it. I will not name the analyst but can be easily discerned.

In an interview it was said that during the Weimar experience, gold performed extremely well but silver lagged. It is for this reason they suggested not to pay attention to the current out of whack silver to gold ratio north of 80-1 and it will not narrow. This is just wrong for so many reasons. First, the ratio of silver to gold worldwide at the time was roughly 15-1. Silver was priced at $1.385 per ounce while gold was at $20.67 per ounce in dollar terms. This 15-1 ratio was much closer to the ratio of silver versus gold in the Earth’s crust and extracted via mining. Silver actually exists at a ratio of slightly less than 10-1 versus gold, this is what I call “God’s ratio”.

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Posted by & filed under Bill Holter.

Because we have received a dozen or more questions on the same topic, I thought it might be a good idea to discuss. Michael Pento was recently interviewed by Greg Hunter They spoke about many topics including the silver/gold ratio. The questions we received were panicky in nature from holders of silver. Paraphrasing, “do you agree with Michael Pento that silver will not do anything on the upside if we enter a depression”?

I had not listened to the interview when the questions (mostly all the same) came rolling in. As a side note, rarely do I watch interviews or read opinion pieces from other authors. Not because I think I know it all, but because of the way I am wired. Explaining this, I am voracious for data and facts that I can use with past data and facts to form my own opinion(s). What good would it do if I simply parroted what others “believe”? While I am always open to other opinions or why my own may be wrong, it is important to me to be original and authentic in thought rather than repeat what others believe.

After watching Michael’s interview, I agree with most all of what was said. He did not pan or badmouth silver. All he said was he believes the 80-1 ratio between silver and gold will probably remain during an economic depression and that he prefers gold. He talked about precious metals going ballistic, that physical metal is the way to own it and paper holders (he was not talking about mining equities) will discover they own nothing. All good stuff and he very well may be correct but claiming the 80-1 ratio will hold is not telling you silver will underperform gold from current levels so please relax.

My personal opinion on silver (and Jim coined the phrase) is it will be “gold on steroids” for several reasons. First, silver is mined at a ratio of just under 10-1 versus gold and this is also about the same ratio as it is believed to exist in the Earth’s crust. I call it “God’s ratio”. Secondly, silver has traditionally been “used” for the last 100 years. Yes it is still stacked but much of the demand comes from industrial, military, technological, medical and solar uses. And yes there is scrap recovery but much silver is basically lost forever once used. There are no huge known stockpiles other than the 500 million+ ounce supposed hoard by JP Morgan and this is important.

{A couple other thoughts, under chaos conditions gold is portable and silver not so much whereas silver will be spendable and gold not so much. These differences are due to weight/value and transaction/the ability make change (as in change back for your gold coin). Also, when the masses do finally stampede into metals, silver is/will be more affordable to the average man on the street. This alone argues for higher demand for silver than gold under financially stressed conditions}.

If you understand that EVERYTHING is manipulated and rigged in price, and if you understand this has and is done using leverage (borrowed money and derivatives), then you should ask “why”. This is simple, it is ALL about the dollar and the ability of the US Treasury to borrow literally unlimited amounts of capital. It is all about control and the ability to pay for and continue control. Gold and silver are direct enemies of fiat dollars or fiat anything. They have been suppressed in price in an effort to support the value of paper currencies.

The important thing to understand is this, because the world has reached “debt saturation”…credit markets will seize up and the funding for manipulation will begin to wane and ultimately cease. Gold and silver will explode in price because they are not only the reverse of paper currencies but the “leverage” applied in these markets are positioned short in the effort to suppress pricing versus positioned long in paper assets in an effort to support prices.

What I am getting at is whether you call it a re set or any other name, markets will eventually “clear”. By clearing, I mean markets and asset’s pricing will find their own natural levels where buyers and sellers decide they should be rather than pricing manufactured at artificial levels decided by the operators. This is why I believe the silver/gold ratio will drop decidedly and approach the 10-1 level. 10-1 pricing is the “natural” level because it is the ratio silver and gold occur in nature versus each other. If this ratio does occur, silver will outperform gold by eight times.

To finish, as a precious metals broker, the vast majority of my business has been silver rather than gold (probably 80% or more). I have even actively swapped gold into silver and continue to recommend this. If Michael Pento is correct and the 80-1 ratio holds, owners of silver will have equal performance with owners of gold. If I am correct and the ratio does shrink, then silver will outperform. This is why I have personally stacked almost exclusively silver for the past several years. In fact, I use silver stored in a non bank vault as my personal bank account.  In my opinion it is usually wise to look at downside versus upside and in this case it strongly favors silver!

Standing watch,

Bill Holter

Holter-Sinclair collaboration