Posts Categorized: Bill Holter

Posted by & filed under Bill Holter, General Editorial.

My Dear Extended Family,

After today’s news on Greece getting financial aid, the imminent demise of the Euro in terms of market expectations is behind us. That being true, the dollar rally is now challenged. With the dollar rally challenged the general commodity market decline should decelerate and end.

As a result of all the above, the downside in the price of gold is very modest here while the upside of the first rally back into the bull market takes gold above $2000. Timing from here may be quite compressed.

Standing watch,
Holter-Sinclair collaboration

Posted by & filed under Bill Holter.

Dear CIGAs,

I would like to add a little clarity. There have been questions such as “if the Chinese sell Treasuries and interest rates go up, isn’t that bad for gold?”. Simply put, the market place WILL generate interest rate levels, NOT the Fed. The Fed can and has pegged interest rates but they only follow the trend in the market and can only set rates over short periods of time. Yes, rates have been pegged too low for too long …and the result? Central banks all over the world are being forced to buy sovereign treasury debt issuance because the private sector is turning their noses up to zero percent bonds. In other words, global monetization. (The inverse of this situation is the suppression of gold and silver prices. This will end the moment real metal is no longer available to deliver. Investors are gobbling up underpriced supply just as fast as they are shunning overpriced debt).

As for the meme that higher rates are bad for gold, I would urge you to look toward history. Interest rates went higher and higher throughout the late seventies’, so did gold. Higher interest rates from here will mean only one thing, the central bank is losing control of the corralled credit markets. Higher rates will destroy the synthetic markets of derivatives and result in cascading failures, insolvencies and bankruptcies. Ask yourself a question, if the Fed (and other central banks) were to lose control and the credit markets were to enter into a panic, what exactly would you want to have? The answer of course is “money,” that is not nor has any liability to anyone or anything. China and Russia now have the ability to “force” this loss of control of credit markets onto the Western central banks. Do you think they are aware of this situation? Do you believe they are accumulating gold because it is “pretty” too look at? Are you afraid of higher interest rates?

Bill Holter
Holter -Sinclair collaboration
Comments welcome!  bholter@Hotmail.com

Posted by & filed under Bill Holter.

The Rumblings of War

Dear CIGAs,

Shock of all shocks, the IMF announced the Chinese yuan will not be admitted into the SDR until at least Sept. 2016.  http://www.bloomberg.com/news/articles/2015-08-04/imf-says-more-work-needed-before-yuan-reserve-currency-decision  What exactly does this mean?  I can tell you the gold community is so shell shocked and fearful at this point, it “must be bad for gold”, right?  Going back a couple of weeks, China announced they had accumulated another 600 tons or so of gold to the near panic of precious metals investors.  This announcement would be used as another shot at taking price down because the Chinese “don’t like gold as much as we thought”.  This was the prevailing sentiment.

What I think happened was China played “good boy” with the West and lied about their gold holdings.  They announced enough gold to allow them into “the club” but not so much as to “offend” or intimidate anyone in the West.  Their announcement was clearly bogus as they are importing 600 tons every three months …and we are to believe it took them six years?  China had requested both “publicly and officially” to be included in the SDR.  They were publicly humiliated with this move by the IMF.  The Chinese are a very proud people, public humiliation would be last on my list of aggressions toward them!

Make no mistake, they will retaliate.  I believe just as the IMF did this while China is having market problems and during a period of weakness, China will return the favor to the U.S.  …at a very inopportune time for us.  When our markets are convulsing, probably this fall, you can expect one of two responses from the Chinese.  They will either come public with a true and VERY LARGE number for their gold holdings, or they will threaten to and actually dump some Treasury securities/dollar holdings…or both!  I believe their response will be timed to hit us just as in a boxing match, when we are tired, down or vulnerable …for maximum effect.

Whether you want to believe it or not, the U.S. is in a financial war with nearly the rest of the entire world.  To not include a rising China into the SDR makes no sense and is an impossible feat in the long term unless China decides it is not their desire.  I see no upside whatsoever to this action.  Does it “buy time” and postpone the inevitable?  Maybe not.  The action of poking the hornets nest may actually accelerate the collapse!

  There are other possibilities but looking at the two retaliatory options mentioned above, what could result?  First, were China to come clean and “admit” they have 10,000 tons of gold (or MUCH MORE), the yuan would immediately strengthen and move into the dollar’s territory as a settlement currency.  Markets would quickly do the math and understand if China has this much gold …where oh where did it come from?  China could even do an audit publicly and count the bars out in the open surroundings of their Olympic stadium in a “we’ve shown you ours, now you show us yours” fashion!

The other possibility comes with an “option A or B” for the Fed.  If the Chinese decided to sell some of their Treasury holdings, could the Fed sit idly by?  Option A, the Fed could let the market absorb the dumped Treasuries and allow interest rates to rise and watch as bond prices crater.  This is not much of an option, especially in a world where all prices are generated and created “officially”.  On the other hand, option B would be FORCED MONETIZATION!  The Fed could decide they had to buy any and all Treasuries offered by China.  I believe this is exactly what the Fed will decide they MUST do. 

Not coincidentally, the Chinese know this.  They also understand by using this tactic, they will be forcing the Federal Reserve to create an “exit door” especially for …and because of them.  This is the reverse of the old story, if you owe the bank $1 million they own you, if you owe $1 billion then you own the bank.  You see, in this instance the Chinese have a direct lever on our credit markets.  It would be bad enough if they could control our interest rates which they certainly can now influence.  What makes this really bad is they can FORCE the Fed to either monetize or face the immediate collapse of credit markets and thus all markets.  As I mentioned above, the Chinese will not do this until the time is right.  The time will “be right” when our markets display weakness.  They will smile while doing this and politely (publicly) restore honor and dignity.

Before finishing and as long as we are talking about financial “war”, let’s briefly look at Russia.  The U.S. and NATO are now crossing some very red lines in the sand when it comes to both Ukraine and Syria.  Trainings and war games are taking place in western Ukraine while the U.S. is and has authorized airstrikes (with Israeli assistance) against Syria.  Mr. Putin has said in no uncertain terms he will not allow the slaughter of Russians in Ukraine.  He has also stated numerous times he will not stand by idly should allies Syria or Iran be attacked http://www.zerohedge.com/news/2015-08-04/russia-ready-send-paratroopers-syria  .  These are all very real sparks in the dry tinder of current geopolitics. 

The question you need to ask yourself is this,  do you really believe the current fairy tale pricing of assets, ALL ASSETS will hold during a financial war with China?  Or during a real war with Russia?  This is not fear mongering, it is what’s on our dinner table!

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com

Posted by & filed under Bill Holter.

Dear CIGAs,

It is not often I write something as important as what follows.  It was said after the last crash that “no one could’ve seen it coming”.  This was not so back then and is not so today.  If you were looking for the truth in 2007, the average investor had ample warning from many sources warning of what was to come.  The warnings are now much louder, far easier to hear and coming from some mainstream and even “official sources”.  Are you listening?
After the biggest financial and social crash in history occurs, “they” will say you were warned!  Who are “they” and how exactly were we warned?  For several years and in particular the last 12 months, the IMF (International Monetary Fund) and the BIS (Bank for International Settlements) have been issuing warning after warning.  They have truly warned us as I will show you.  Do I believe they did this out of the goodness of their hearts?  No, I believe it has been in “c.y.a” fashion followed by their laughter because the sheep have and will sleep through it all until it’s too late.

Thanks to Larry White from www.Lonestarwhitehouse.blogspot.com a full listing of the recent warnings has been compiled and logged.  I had seen each one of these over the last year and have even commented on a couple of them but it never really registered with me there were so many.  Normally I try not to “link” articles to death, this one is different because it is important you see how many and just how in depth the warnings have been!  I will asterisk the three most important articles in my opinion, there have been 16 such warnings over the last 12 months! 

July 2014 – BIS  –BIS Issues Strong Warning on “Asset Bubbles”

July 2014 – IMF –Bloomberg: IMF Warns of Potential Risks to Global Growth

October 2014 – BIS –“No One Could Foresee this Coming”

October 2014 IMF Direct Blog — What Could Make $3.8 Trillion in global bonds go up in smoke?

October 2014 IMF Report –“Heat Wave”-Rising financial risk in the U.S.

********December 2014 – BIS –BIS Issues a new warning on markets

December 2014 – BIS —BIS Warnings on the U.S. Dollar

February 2015 – IMF – Shadow Banking — Another Warning from the IMF – This Time on “Shadow Banking”

March 2015 – Former IMF Peter Doyle – Don’t expect any warning on new crisis -Former IMF Peter Doyle: Don’t Expect any Early Warning from the IMF –

*******April 2015 IMF – Liquidity Shock –IMF Tells Regulators to Brace for Liquidity Shock

May 2015 BIS – Need New “Rules of the Game” –BIS: Time to Think about New Global Rules of the Game?

June 2015 BIS Credit Risk Report –BIS: New Credit Risk Management Report

June 2015 IMF (Jose Vinals) –IMF’s Vinals Says Central Banks May Have to be Market Makers

*******BIS June 2015 (UK Telegrahph, no blog article) –The world is defenceless against the next financial crisis, warns BIS

July 2015 – IMF – Warns US the System is Still Vulnerable (no blog article) –IMF warns U.S.: Your financial system is (still) vulnerable

July 2015 – IMF – Warns Pension Funds Could Pose Systemic Risk (no blog article) –IMF warns pension funds could pose systemic risks to the US

And there you have it in black and white!  You have been warned!  MANY TIMES in fact…and from the most inside and official of sources!  Yet on a daily basis we hear from our own mainstream press, Washington and Wall St. …don’t worry be happy!  These are very real articles with well thought out and cogent logic.  They are not to be ignored!

One piece by the BIS last October talked about the “no one could have seen it coming” meme we heard so often back in 2008-09.  THEY see it coming and have been telling you for over a year!  Please understand this, the BIS is the central bank for central banks.  No one knows the inside situation (particularly in derivatives) better than they do.  If you don’t believe me or others who have worked so hard to get the warnings out, listen to what both the BIS and IMF are telling you.  They have gotten out in front of this and will only say “we tried to warn you” after the fact.

As a chuckle to finish, below is a photo of me and CIGA Dave in front of the BIS headquarters after deciding to heed their warnings personally!
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Standing Watch,

Bill Holter
Holter-Sinclair collaboration
Comments Welcome!  bholter@hotmail.com

Posted by & filed under Bill Holter.

Dear CIGAs,

The world is awash with "promises".  Nearly everything we think of as having "value" is because of a promise behind it.  A few examples;  your bank accounts, retirement funds, bonds and even the dollar bills in your pocket.  Your bank account for example, once you deposit the money it is no longer yours.  You can argue this if you wish but we now know this is true for sure after recent "bail in" legislations passed throughout the west.  When you deposit funds into a bank, it then becomes "their money" held for you …they "owe" it to you.  Do not take this lightly, lawmakers around the world have made this the new reality.  A little known fact, in 1845 Britain passed banking law that made depositors (unsecured creditors), this is still precedent to this day.  When you deposit money you "accept a liability" from your bank and are classified as an unsecured creditor.  In other words, "get in line with everyone else"!

Same thing with many retirement accounts.  Think about Social Security.  When you get your annual statement form, it comes with an asterisk.  This is to inform you they "might need to reduce benefits".  With any retirement account you are relying on the custodian to make payments to you upon retirement.  Think about state and municipal retirement accounts promising the good life, they are nearly ALL underfunded.  Meaning there is not enough money in there to make (promised) future payments unless some sort of magically higher returns are realized.  These are underfunded by the TRILLIONS of dollars!

Bonds are an obvious asset class where a "promise" is relied on.  Dollars on the other hand seem the most misunderstood by the public while being the biggest leap of faith in all asset classes.  Dollars rely on the "full faith and credit" of the U.S. government (a bankrupt entity) yet the populace sleeps through the night secure knowing they own dollars.  ALL non backed, fiat currencies in the past have failed.  The dollar is the widest spread and widely owned fiat the world has ever known, its failure will be spectacular upon arrival!

I wanted to point out the above "promises" as a basis to speak about trust or confidence.  The financial world turns on the axis of "trust".  This trust was nearly broken in 2008 and is the reason the Federal Reserve needed to secretly lend $16 trillion all over the world.  If the Fed had not come up with these funds, failures would have spread and trust would have been broken amongst the banks/other financial institutions and even between the central banks themselves!  The Fed’s largesse worked and trust was maintained.

Now, I believe we are set for another "test" of trust.  We have gone five+ years with QE this and QE that, the reality being outright monetization.  In fact, central banks today are buying more sovereign bonds than are even being issued.  The public and even the professional funds have backed away from the debt markets, you can’t blame them because the interest received does not even cover inflation not to mention a risk premium.  Globally the pace of trade and business activity is slowing or even declining which will bring to a head the difficulties in meeting debt service and other "promises".

I ask, what will happen when inevitably "trust" begins to wane?  Or even fully break?  It is at this point the system goes into "The Great Call".  Margin call?  Of course, because nearly everything financial has leverage behind it but there is more to it than this.  The "call" I am speaking of is for contracts of all sorts to "perform".  In particular I am thinking "derivatives" contracts will be called on to perform their contractual duties.

All in all, there are over $1 quadrillion worth of derivatives outstanding.  The problem with this is the "tail" is bigger than the dog. In other words, the amount of derivatives outstanding dwarfs the total amount of money outstanding and thus the ability to "pay" and make good on the contracts.  The other side of this coin are contracts promising to deliver something.  Here I am thinking both gold and silver.  There are far more (100-1 or more) obligations outstanding than there are ounces or kilos available to deliver.  This is a default just waiting to happen.                                                              

If you listen to the Harry Dents of the world, the dollar will be the safe haven and where all fear capital will go.  In a world based on nothing but trust and promises, will fear capital really pile INTO a currency based ONLY on trust and promises …when "trust" is exactly what is come into question.  Actually, it can be said the dollar was originally set up in 1971 on a "never pay" model.  The dollar (and bonds) only promise to pay "more dollars" and nothing else.  This game worked for many years, now it looks like the Saudis after doing many deals with both Russia and China may be set to transact in currency other than dollars.  Are they displaying confidence? 

The Chinese are now net sellers of U.S. Treasuries.  Ask yourself this question, if China could sell all of their Treasuries and turn it all into gold, silver, oil, copper and other real tangible assets (without destroying the Treasury market or making gold and silver go no offer), would they?  I say yes, they absolutely would love to be out from under their Treasury position.  Apologetic others might say China is comfortable, we will soon see. 

Because confidence is the only thing at this point holding the game together …and its fickle nature, it is important for you to think this through.  What will be standing when confidence breaks?  Can banks globally survive "runs" when depositors come calling?  Can commodity exchanges deliver all they promise?  Can borrowers "borrow more" if they cannot redeem past issues with new debt?  This is where we are headed both systemically and globally!

Before finishing I want to tie two connected thoughts together.  First, the great Paul Craig Roberts said last week he feared precious metals could be suppressed forever.  I received MANY fearful e-mails regarding this thought process.  Mr. Roberts would be entirely correct if it were not for one small detail, REAL gold and REAL silver must be available to deliver.  Otherwise the game comes to an end and the fraud is exposed.  He is entirely correct, "price" can be jammed or rammed with enough "margin" posted.  Dan Norcini once upon a time had it correct when he said, nothing will unnerve the shorts more than the longs standing for delivery …and making a call for the product.  I would like to remind you, COMEX currently has only 11.7 tons of gold for delivery.  This is roughly $400 million.  If I were short, this paltry sum would not add to my confidence.

Another thought going hand in hand with this is where we are now versus 2008.  Back then we were within overnight hours of the entire system coming down, this is fact.  What has changed since then?  "Nothing", but in reality quite a bit.  Nothing has changed from the standpoint of "tools used".  We have not altered or changed anything that "got us to the brink"… only done more of it!  We have far more debt and more derivatives outstanding now.  In fact, central banks and sovereign nations have even sacrificed their balance sheets to prolong the game.  It has worked …so far.  The only problem is the entire arsenal of the central banks have already been tried and failed to provide the real economy with any stimulus.  The result has been capital pushed into financial markets and blowing the bubble(s) far larger than they were.  Now, we have far larger markets with far more leverage than 2008.  These will need to be met with central banks and sovereign treasuries with weaker balance sheets and almost no ability to borrow in an effort to reflate.  It is a recipe for disaster. 

We already know the sovereign debt markets are very thin on the bid side as liquidity has dried up.  We also know equity markets are displaying horrible internal breadth.  China is actually nearing a 1929 scenario and will be there shortly if they cannot steady.  Confidence is a fickle girl, if it breaks, then we go back to the 2008 scenario and we’ll find out just how powerful the central banks really are.  I believe the coming "Great Call" cannot nor will be met and only then will we see what is left standing.  It is imperative here and now to position yourself in assets that do stand on their own, everything else will be a broken promise!

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome! bholter@hotmail.com

Posted by & filed under Bill Holter.

Dear CIGAs,

Let’s look at two different topics where we are seeing contradictory "evidence".  First up is what’s happening in the gold and silver markets.  Never before have I seen sentiment as poor as it is today.  Nor have I seen so many negative articles about gold in the various mainstream publications.  It has gotten so bad, gold has even been compared to "pet rocks"!  While we have seen food fights before, the name calling as of late has become deafening led recently by Martin Armstrong and Cliff Droke.  I wonder how or what their response is to the physical side of the argument?

As you know, there have been "air pockets" in the price of gold over the last three years.  Nearly always, these takedowns occur at night and in particular Sunday nights.  The last one a couple of weeks back, saw $2.7 billion worth of gold sold over a two minute span.  I have asked the question many times, "who" controls this much gold and if we could identify someone or some entity, "who" would ever sell in a manner to destroy pricing if a profit motive truly exists?  Can anyone conjure up an answer to this while including the phrase "profit motive"?  I dare any of the gold bashers to answer these two very simple questions!  Front running just a bit, any real answer I would imagine must have "desired lower gold price" as part of the explanation.

A very real problem or flaw in logic exists in the current gold and silver markets.  If there is in fact so much selling (panic selling), how is it possible the U.S. Mint had to stop selling Silver Eagles nearly a month ago?  It can only be for one of two reasons.  Either they had enough silver but could not produce coins fast enough to satisfy demand, or, they could not source enough silver to make the coins.  But this does not make any sense.  How could there be "too much demand" if everyone is selling?  Also, how could there not be enough silver available if everyone is selling and has sold?  Where did all of this "sold" silver go to?  Again, I dare anyone to come up with a logical answer to this.

We are also seeing the same thing in gold.  It is trading in backwardation ($7 plus) in London and with substantial premiums in India and throughout Asia.  If the masses are dumping gold then supply should be plentiful, how can physical tightness exist or premiums over the paper price exist if recently sold gold is falling out of dump trucks on their way to refineries?  Any logical answers for this?  The gold bashers say "see, the price is down, there is your proof".  Do Armstrong and crew deny that the only thing necessary to sell a COMEX gold or silver contract short is the ability to post margin?  Do they deny that "money" (margin) can be and is created for free ?  And then used to "water down" the futures in the same manner as a company over issues stock or a country over issues money supply?

There is a very real distinction between paper gold and physical gold, this will soon become apparent.  The difference is physical in your own control is no one else’s liability.  Paper gold on the other hand is the liability of the issuer of the contract.  Currently, COMEX has a whopping 11.7 tons left of deliverable gold left.  JP Morgan claims to have less than four tons, these are the lowest numbers I can ever remember.  To put it in perspective, 11.7 tons of gold is worth less than $400 million dollars.  The COMEX can now be broken and exposed with petty cash!  As sure as the Sun will rise tomorrow, there will eventually be a "call" on real gold.  Not only on COMEX gold but ALL paper gold …any call will not be met because the gold does not exist to meet the call.  There are now more than 100 paper ounces of gold sold for every one ounce of real gold that exists to deliver.  If there were 100 fake shares of IBM trading and watering down every one real share in existence, the price of IBM stock would be trading in the low single digits!  The fake shares would alter perception but not the reality of what the company is worth as an ongoing concern.

Another area to touch on is the "threat" of the Fed raising interest rates.  I view a rate hike as ONLY a threat at this point and will get into that shortly.  Looking back, the Fed has floated the idea of rate normalization ever since early 2010.  It was always six months out …and continually extended.  But this time they really mean it?  The consensus is now for a rate hike in September.  I can only say one thing to Janet Yellen and the gang, I DARE YOU!  In my opinion, if the Fed were to raise rates we might only have a functioning financial system for about 48 hours, I cannot see more than a week or two at the most.

Why is this you ask?  Let’s count the ways … First, global trade is already imploding.  China is entering a margin call scenario on many fronts.  An already strong dollar is pressuring an over indebted world that owes in dollars.  Internally, the U.S. is missing on many cylinders, retail sales and housing turnover already weak will become disastrous.  Reported economic numbers are barely treading water even with bogus assumptions and accounting.  Tightening credit will also have a negative effect on the banking system with razor thin margins and even more so in the derivatives complex.  Higher rates on their own will create margin calls, not to mention investors scrambling for the door in fear of even more rate hikes.  Panic begets panic in other words.

The way I see it, there is a very real probability the Fed not only does not raise rates in September, a very real chance exists for QE4 to be announced and implemented in a panic.  It should be added that the possibility of forced U.S. Treasury sales by China is a distinct possibility.  They may be forced to do this to shore up their panicky markets.  Who will be the buyer?  Yes of course, the Fed and ONLY the Fed!  It is my belief the Fed is about to be tested beyond breaking not only as lender of last resort but also "buyer of only resort" when it comes to the Treasury market.  Liquidity is already quite tight world wide, can the Fed really exacerbate the situation by raising rates?  Is any economy anywhere in the world strong enough to bare higher rates?  Any financial system solid enough?  I DARE THEM to raise rates …I bet they will instead be forced to do the opposite and pump unprecedented new liquidity!

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com

Posted by & filed under Bill Holter.

Dear CIGAs,

While taking a short vacation last week, this article was intended to be my first one upon returning.  That plan was squashed a week ago with the brutal "interventions" upon gold and silver during the illiquid overnight hours early Sunday morning.  Let me add to what I wrote last Friday by saying the phrase "TIME AND SALES"!  For anyone who does not know what this means, any trade on any market anywhere in the world has a "paper trail".  It is called a "time and sales report".  Very simply, it reports who traded what, in what amounts and to whom.  Once the broker is identified, then regulators can query as to who the customer was for whatever trade in question.  If they want to know "whodunit", it’s quite simple.

This is not rocket science.  It is not hocus pocus or even anything "special".  Time and sales have been around since the dawn of trading.  Even prior to computers, handwritten records were taken to record who traded what, when and in what quantities.  Should the SEC, NYSE, CFTC or anyone else want to know who is doing what, it takes five seconds or less to find out.. (This includes the Chinese who have outlawed selling under the penalty of firing squad!!!  So who is doing all the selling?) In my opinion, the regulators should be strung up on lampposts for their lack of doing the jobs they are being paid public tax money to do.  They have turned a blind eye, presumably because they are told or believe it is for "the greater good"?  …the greater good… sounds like something out of Russia or China back in the day when I was a youngster in the 1960’s – or even something in the history books we read as kids in school regarding Nazi Germany.

Do you remember this time period?  I still remember this time frame very well and pine for it every day.  Back in those days we couldn’t wait to get home from school so we could get to play baseball, football, basketball or even hike it to the nearest pond in winter time to play some pickup hockey.  Back in those days our parents knew where we were by where our bicycle was.

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There were no cell phones and if we needed to make a call from a public place, we would pull the dime out of our pocket our parents always insisted we have.

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We could sell (or even buy) lemonade without a health department license and had no fear of arrest – we even gave the police free samples.  We walked a half mile or even a full mile to get to school (but not uphill both ways nor always in the snow).  We did this with friends or if we were late we did it alone.  Back then this was the norm.  Today, parents are regularly being arrested for allowing a child to go two blocks away on their own… not to mention the nine-year-olds for selling lemonade!!!
  After playing, we’d all head home for dinner and get to watch some TV.  Remember?  " TV" where no cussing was allowed.  Most shows had a "theme" or an underlying lesson that taught kids "good always triumphed over evil".  We watched Batman, Superman and others.  Western’s were in vogue and there was always a lesson to be learned from watching The Rifleman or Gunsmoke.  I have said several times over the years when writing on this subject, "Leave it to Beaver cannot even be found on syndicated reruns anymore".  My point is, the "wholesome" world we grew up in is so far gone, current history books don’t even mention it as a footnote!

Think about where we are today.  Where handshakes used to suffice, contracts are now drawn up to be purposely broken.  More than half of our population "takes" while less than half the population supports this spending habit.  Worse, it is the "supporters" who are vilified today because they don’t "give enough."  We used to have free speech as outlined in The Constitution, now there is only free speech for the "special" groups.  Anyone who speaks against any of these very special groups is branded a racist, sexist, homophobe, or religious persecutor (except of course, unless you’re speaking against Christians – that’s OK… even seemingly encouraged).  Or worst of all, you could be labeled a "CONSERVATIVE!"

Today it is OK to burn the American flag, outlaw the quaint historical  Confederate flag …while flying the flag of any other nation (here in Texas the favorite to fly is that of Mexico) on our own sovereign soil.  I noticed yesterday while in a very long  U.S. Customs line upon returning home, how much longer, formal and probably difficult it was rather than just swimming across the river!  Many states no longer require a voter registration card to vote or even a driver’s license, so the motto "vote early and often" applies.  Citizens who pay for "old" health insurance now get "charged" extra on their taxes, while those who can’t afford insurance get it for free… along with cellphones, housing, food, stipends for each child etc. …and anyone who speaks out about it is branded a "crazy."  Please let me remind you, this country was originally formed because of oppression and the practice of "taxation without representation."  Have we pretty much gone full circle?

You could not have told me even 20 years ago we would be where we are today.  We have a system where the president makes up laws as he goes along, the Supreme Court rubber stamps his illusions and Congress has been relegated to irrelevance.  Speaking of Congress, didn’t "We the People" just throw the bums out?  Didn’t the Republicans run on a ticket that said they would overturn all sorts of ridiculous (and if you ask me) tyrannical laws?  Have they overturned anything?  No, they just passed the fast track trade bill which will gut our economy even further …while the Democrats voted against it …?  Forget about the giant sucking sound Ross Perot spoke of, we will soon hear the wheezing and gurgling last breaths of a nation, in my sad opinion.  In the interest of not losing you as a reader, I could go on and on about subjects like guns, GMO’s, baby parts for sale or whatever but I think you get the point and I’ll stop here.

From an economic and financial standpoint, it is funny that while away I read "The Scarlet Woman of Wall Street."  This was the story of Daniel Drew, Vanderbilt, Fisk, Gould and Erie railroad during the mid to late 1800’s.  There were no financial laws back then that prevented anything with the exception of bribery which was impossible to prove unless the giver and receivers were both stupid beyond their years.  Then all sorts of laws were written and the playing field was somewhat leveled (as much as it could have been).  Now, there are so many laws on the books, it is impossible not to break one of them.  The thing is, financial institutions do not care.  Since no one goes to jail (except for a couple of hedge fund managers), it is more profitable to illegally and blatantly swipe $10 billion because you know your fine will only be $100 million.  If you think about it, management in today’s world could probably be held accountable in today’s civil legal system for NOT BREAKING THE LAW and leaving money on the table.  Why play fair when everything is rigged, while you can steal and pay only 1% or less of what you made?  It is almost management’s "fiduciary duty" to lie, cheat and steal in order to not fall behind!

To wrap this piece up I would like to say this, if you don’t believe or cannot see that all markets are rigged all of the time I’m sorry.  If I offended anyone for any reason, again I’m sorry.  If you believe today is "normal" in any way, I am sorry.  Actually, let me clarify this: I am not sorry, but I am sorry you don’t understand the point I am trying to get across and sorry you cannot see it.  Unfortunately, the American people have been slow boiled into believing our lives are normal and things are "just the way they are."  We have been lulled into believing we are an "exceptional" people and "deserve" the finer things in life.  What we have forgotten is that hard work, hard money, and innovation is what made this country great to begin with.  Many today don’t remember or never knew this very basic tenet…but ignorance does not change the fact.  Truth and justice (and for the most part "business") was what America was once all about.  Please do not tell me I am na├»ve.  I am not.  Please do not tell me this is not being done according to a plan.  It is.  There is zero percent probability the policies in place today are by mistake.  They are not by mistake and no one could be so stupid which leaves only one option …"purposeful" is the operative word.

The United States was the shining light of the world in so many ways.  We are no longer.  We were built as a Republic that followed The Constitution which was written mainly by God fearing Christians.  We have evolved into a perverted, apologetic, weak and slovenly society with little to no values regarding anything from our ethics, morals, constitutions, or anything else.  We believe we deserve the best and should work the least (if at all).  It’s the American WAY!!!  Unfortunately, what I write here is now considered by the majority as either anti-government or unpatriotic.  It is neither.  In fact, all I advocate is following The Constitution.  You know, that "thing" our politicians "swear to God to uphold" (did you catch that?  They swear to God!  Not to Walt Disney, Facebook or even the almighty Google!) while raising their right hand with their left hand on The Bible?  I am a true patriot in a world where burning the flag, shredding The Constitution and spitting on The Bible is considered sane and normal.  I am here to remind you it certainly is not!  I am not writing this to convert the perverts, only to let those who are still sane know that yes, you are still sane.  That said, in today’s ludicrous world, what I write here can be used as proof of my "insanity" and my lack of "patriotism."  You decide.

I guess I would sum it all up by twisting the words of Superman, "Truth, Justice and (is no longer) The American Way!

Standing watch (with tears in my eyes),

Bill Holter
Holter -Sinclair collaboration
Comments welcome!
bholter@Hotmail.com

Posted by & filed under Bill Holter.

Dear CIGAs,

After planning to take this week off for a little rest, market gyrations have changed the plan.  Initially next week I was going to pen a piece titled “Truth, Justice and no longer the American way”.  This will now wait a bit.

This past Sunday night and Monday’s action in gold needs to be discussed of what I believe is now a rapidly moving big picture.  $2.7 billion worth of gold futures were sold in just 2 minutes Sunday night.  As I have asked before, “who” could possibly “own” this much gold other than an official source?  The answer of course is nearly no one other than a very small handful of ETF’s.  In perspective, $2.7 billion worth of gold is roughly 3% of global production.  Said differently, it amounts to nearly 10 days worth of labor and production worldwide… sold in less than two minutes!

  Next, assuming there really is an entity that owns this much gold, “who” in their right mind would sell it in this fashion?  Who would sell so much and so rapidly concentrated in time as to knock the price down $50?  What trader would still have a job the following day if their own sale created a drop of four percent in the proceeds received?  Traders today fight over one thousandth of a percent, are we to believe a trader was willing to give up 4%?  Was this trader so “scared” that gold was going to drop Mondaythat he just “had to get out”?  No, it is obvious to even the most disingenuous, this was purely an “operation”, one meant to depress the price of gold at any cost.  In perspective, this trader by not spacing out the trade cost his “firm” $40 million if you only use the midpoint of the trade.  Will this be reflected in his year end bonus (sarcasm)?  As of today, finally, the hunt is on as to “whodunit” http://www.zerohedge.com/news/2015-07-23/hunt-mystery-gold-bear-raid-leader-begins ???

  In my opinion they may need to look to only two sources though only one is necessary.  In every trade there are two sides, the buyer and the seller.  Have you ever wondered “who” the buyer is in the middle of the night to such large sales?  What if it is principally only two houses who trade back and forth with each other and then flatten out over the course of the next few days?  In essence, if this is the case there is not really any risk because they would always be “flat” between each other.  I don’t know if we will ever find out “whodunit”.  This is certainly a possible scenario and one in a world where the rule of law has been revoked …certainly feasible.

  Switching over to silver, the low prices have again created havoc in the physical market.  Prior to Sunday, the U.S. mint had already suspended sales of Silver Eagles.  This was done for one of only two possible reasons.  1. demand was so great they could not keep up with it or 2. they could not source physical silver to mint the coins.  This is exactly akin to Venezuela’s toilet paper shortage.  They have mandated a retail price below what it can be produced for and thus …manufacturers have stopped making it because they cannot earn a profit.  Simple!Another analogy would be a butcher who advertised $1.99 filet mignon.  Even if he had any to begin with, it would not last more than a few moments and you would be stuck slapping some $3.99 a pound hamburgers on your grill.

  As of now, coin dealers across the U.S. are on back order for nearly all silver products.  The premiums as in other similar previous instances have risen and product has been swept off the shelves.  What is the “real price” of silver you ask?  It is whatever you must pay to receive real metal.  As it stands now, COMEX paper prices and real physical prices are about 15-20% apart from each other.  In my opinion, should COMEX press prices further down, they risk exposing themselves as a fraud.  Already in July, some 3 million ounces have jumped queue and been demanded for immediate delivery.  In other words, COMEX is risking creating a “run” on physical metal which is 100% contrary to what low prices have been used for.  Low prices are the main tool used of “sentiment discouragement”, it very well may turn out that these low prices create a stampede into their laughably small inventory!

  From a broader perspective, what I believe we are seeing is simply one “skirmish” (but at the very core) in a global financial war between the West and the East.  We now know several other pieces to the puzzle.  China, the leader of the East is clearly economically slowing down as evidenced by many recent statistics, the container trade numbers being most recent;

Their stock market is imploding and capital flight is in the hundreds of billions.  Couple this with China dumping U.S. Treasury securities via their “Belgium accounts” and we have a better picture of the “financial war” being waged.

  As a theory, most believe the 600 tons of gold announced by China last week was the reason for the Sunday/Monday drop.  This I believe is correct but for 180 degree wrong reasons.  Many were shocked and disappointed at the number of only 600 tons.  It truly is laughable as it represents about 3 months worth of gold China currently imports and has been for over 5 years.  I believe they made this announcement for two reasons.  First, they needed to show more gold in order to be considered by the IMF for inclusion into the SDR this fall.  I also believe they wanted to show a lower number so as not to spook gold higher as they are clearly a buyer each month.  If you are a buyer, why press the price higher as long as you are receiving delivery?

  Going a step further and tying this all together we can see several things happening.  China is now witnessing an unprecedented capital outflow while the U.S. dollar has gotten stronger.  A strong U.S. dollar is textbook warfare against Russia and aimed at tightening the screws further both financially and economically. We have heard from Sergei Glayzev on several occasions, Russia/Mr. Putin plan on dropping a financial and moral “truth bomb” on the United States.  They will only be pushed so far, I believe some sort of data dump can be expected at any moment.

  If you look at this from the standpoint of “war”, these are all chess moves between those issuing a fake currency and those wanting to do real trade with real settlement.  Did the U.S. just “punish” China for being a gold buyer and making an announcement (even though miniscule)?  I think this can be looked at as the Western banks are short paper gold derivatives and long dollars whereas the East is long real metal and desirous of leaving the Western banking system behind.  There is no other reason China and Russia would have set up trade banks, clearing systems, currency hubs etc. all over the world if they did not expect to use them.  This is a war between the West wanting to prolong their own current fiat system and the East wanting to move away to one that is equitable to all involved.

  We are already in WW III.  It is because of and being waged in financial assets.  It is clear to me the U.S. is in panic mode and trying to break the long term bull trend in gold.  If the trend cannot be broken, the dollar will be zeroed out.  Unfortunately, both sides know this full well.  The military warnings of late from both Russia and China have become much louder and the actions and movements by the U.S. (staging in Turkey for Syrian raids for example) much more dangerous.  As I see it, the U.S. “needs” war to cover many dirty financial tracks.  China/Russia on the other hand may try to prevent war by releasing “the truth” and thus crippling the U.S. financially and thus the ability to wage aggression.  The problem as I see it is the world is too far along technologically and the days of having to pay and fund an army long term is behind us.  Now, “kicking the table over” is a simple as pushing a button.  Unfortunately, this may be the only remaining choice for the U.S. in the financial collapse I see coming.

  Let me finish with a couple of questions.  Who do you believe is more levered, the East or the West?  Yes, China is levered and unquestionably going to suffer short term during the unwind.  Xi Jinping said this himself.  Who has a financial system layered with trillions of dollars in derivatives?  Which direction has physical gold been flowing for at least a decade?  Finally, what is the “real” price of gold or silver?  Is it what the paper exchanges say?  Or is it what it actually costs to purchase …in size?  I believe we will find out all of these answers and many more over the next few months.  The entire world will be shocked to its core when nearly everything we have come to believe in turns out to have been a Hollywood production of “Wag the Dog”!  I pray there will be “options” available to the West, though deep down I know this is not the case.

Regards,  Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com