Posts Categorized: Bill Holter

Posted by & filed under Bill Holter.

Dear CIGAs,

Rather than write about the economy, the markets or geopolitics, today let’s look at something a little different.  It’s important every once in a while to step back and take in the big picture because we are all guilty of getting too close or “finite” if you will.  We fight the daily battles while losing sight of what the war is really about.  Gold advocates otherwise known as “gold bugs” have been worn down by the daily battles, some have even forgotten what the real war is.  Gold bugs, these are the “crazies” out there who are described as nuts or “conspiracy theorists”.  We know now they were not “theorists” at all. JP Morgan’s $32 billion paid in fines along with many other fined and censured firms is proof of conspiracy FACT!

The term itself “gold bugs” is disparaging as if gold advocates are like some sort of cockroaches running around and dirtying up the place.  It is true that some “advocates” go off half-cocked and see everything as a conspiracy, I have even come across some who are so fervent they believe in gold as some sort of “religion”.  It is not.  “Gold” as JP Morgan once said “is money, nothing else”.  Gold is in fact money, it is real money that has value on its own and not “legislated” or as it is in today’s world, “mandated upon” the public.  Most Americans who are reading this may have a difficult time understanding it even though true, many foreigners are nodding their heads with a slight smile!  It should be pointed out, everything these crazy gold bugs have been saying about the world from a “fiscal” standpoint has and is in fact coming to fruition.  It has not happened “when” nor as soon as they believed it would (me included), because the current insanity of balance sheets could never have been imagined even 10 years ago …however, “timing” does not change “the ending”!

Stepping back and looking at the forest rather than the trees, collectively a very large part of the world is in a state of bankruptcy even though not declared, recognized or admitted.  No matter how you look at it or on what level (state, corporate or individual), the standard of living is broadly in decline globally.  (Yes I know, that top 1% or even .1% is living well and improving with each drop of sucked blood they receive from the system.)  While choosing this topic to write about, I had no idea how fortuitous the timing was.  Within 15 minutes of beginning this piece, a link to an interview of none other than Alan Greenspan, Richard Fisher, and Lawrence Lindsey hit my inbox! 

I could only chuckle after watching the interview because my entire writing can now consist of “yeah, what they said!”.  Rather than write an entire article on this, I believe it might be better to let you watch what I was going to write, and we can move on to the “motives” of these three telling “mostly” the truth.  If you watch this interview, please keep in mind this one question “…and the alternative is”?

Why exactly would these former Federal Reservists hint that, mathematically, logically, intuitively and in real life, IT’S OVER!  They did back pedal a little bit as the interview went on but “why” or better yet why now?  I believe they know what the crazy gold bugs have been saying all along is true and the day of reckoning is very close at hand.  They must be trying to get “out in front” of what is coming so they’re on the record for historical and “legacy” purposes.  Nothing else makes any sense.  Are they “trying” to torpedo the system or to break confidence?  I highly doubt it but after watching the interview, would any kid with a paper route invest their money into the current system?  Are they trying to bad mouth the Fed now they are no longer employed there?  No, in fact, they each one pointed the blame at Congress.  It’s Congress’ fault we are in this mess!  “They” (Congress) spent the money and made the promises which cannot be honored and will ultimately be broken.

There is a punch line of course, one these three men don’t want you to hear!  Actually, the joke AND the punch line are both one in the same, “the money itself is bad and is the core to ALL economic and financial problems!”.  You see, Congress could never had authorized all of the spending if the Treasury did not have the “money” in its coffers.  Yes Treasury could have borrowed money but would have been restrained if “money” was gold or something “real”.  The only way that Congress has been able to get away with bankrupting the country was with the aid of … yes, the FEDERAL RESERVE these guys used to work for!  The Fed has in fact underwritten the scheme, if there was no Fed …the leverage could never have been built into the system.  Greenspan, Fisher and Lindsey of course know this but they can never admit it.  Were they to admit it, it would be an admission that they knew all along they were driving the bus over a cliff …with a roadmap wide open!

All three spoke about the current state of interest rates and the unsustainability of the situation.  They ask “why”, for what good reason are interest rates at levels only justified by a crisis?  The answer of course is; we are still in a crisis, we never exited and if rates HAD been increased …their greatest fears would have already been realized!  Mathematically, rates cannot go higher because of the inability to service interest payments (not to mention blowing up the leveraged interest rate derivatives) would come front and center.  They are trying to say the inability to pay is guaranteed to come …but is a future event.  If rates were to rise now, it becomes a current event.  It’s really this simple!

Lawrence Lindsey even said at the 45 minute mark, “this is how they all end …including Zimbabwe”!  All “what” Larry?  Fiat currencies?  Or central banks who issue them?  This brings me to another article which has come out and ties in perfectly.  Actually, it ties in so well we can bring this entire article full circle and back to one of the gold bugs most central theses.  Zerohedge posted an article regarding a systemic bet being made by billionaire hedge fund manager Paul Singer.  Mr. Singer’s strategy is simple, he calls it the “bigger short”.  He believes interest rates have only one way to go, up.  He also believes we will see far more staggering defaults than we did in 2008-09.  He believes shorting the debt of the world is a no brainer trade and one where you can win ALL the marbles.

Zerohedge of course picked up on the “minor flaw” in this strategy.  The very same flaw I might add that Harry Dent, Martin Armstrong and others are missing.  You see, when you “win”, you must be “paid”, but paid in “what” is the question.  Assuming Mr. Singer is correct and the system does collapse on itself and he “wins”.  His win of course will be HUGE …but, he will be paid in dollars or euros or whatever fiat currency his trade is done in.  What will his winnings be worth if the currency itself is worth nothing?  It reminds me of Mikhail Barishnikoff in the movie “White Nights”, he had a stack full of worthless rubles and threw them handful after handful up in the air while saying “rubles, rubles, lots and lots of rubles”.  He had money …but it wasn’t worth anything.

You see, the currencies themselves are supported by the very debt Mr. Singer is selling short and expects to collapse!  Which now brings us back full circle to the crazy gold bugs.  This is exactly what they have been saying all along, a debt default will also mean a collapse in confidence of the currencies themselves and direct “fear capital” back into real money.  This will create huge demand, force supply into hiding and additionally revalue gold higher because the currencies themselves are losing value and confidence.  Gold bugs are not so different from those who see the dangers in the system from overheated markets and overleveraged debtors.  The only difference is that these nut jobs want what hasn’t been for nearly 50 years, they want TRUE and REAL “SETTLEMENT”!  They actually want to get paid in something real!  How crazy is that?

Bill Holter for Holter-Sinclair collaboration

Posted by & filed under Bill Holter.

Dear CIGAs,

Jim has asked me to review “G.O.T.S.” (Get Out of The System) with you and comment on it. From a timing standpoint, I can tell you he is as adamant as I’ve ever seen, now, RIGHT NOW you must exit the system! You will not be afforded the opportunity if you are even one second too late!

For your convenience, here is the GOTS check list:

1. Your equities are held in certificate form or direct registration
2. You have no Federal sponsored retirement funds such as 401K etc. 
3. You have no CDs and investments in bonds. 
4. You have modest money deposited among selected BRICs countries or BRIC protectorates like Singapore 
5. You store your own precious metals. 
6. You have no mortgage obligations. 
7. You keep cash on hand for 6 months expenses. That is cash, not plastic with credit open
8. You have no consumer debt at all. Pay it down or off.

9. You have a small hobby farm for protein and veggies outside of where you are living with no mortgage debt, set up green. 
10. You have a gas, diesel or electric car with high fuel mileage for the farm. 
11. You have a generator with large fuel capacity for the farm.

12. 33 1/3% of your liquid net worth is in gold and silver or according to your preference.

The above is by no means a complete checklist. Please keep in mind, not everyone even has the ability to attain the position of this checklist because they simply cannot afford to.  In a perfect world, the above checklist would be a “start” only and situated on a private island, preferably with other likeminded people.

Let’s break this list down into groups.  Numbers 1-4 pertain to your “paper assets”.  When the system comes down and is reset, do not count or rely on your paper wealth as an “asset”.  There are two problems, first whether your institution will even survive and then of course whether the paper itself retains value.  The basic premise is to rely as little as possible on paper and the institutions holding that paper. #4 is notable because having some capital outside of the West and within the BRICS ahead of time will leapfrog any capital controls put in place.

#5 is very important because of the counter party risk issue.  Is it really and truly gold and silver that you own? Or is it a piece of paper or a receipt “promising” you gold or silver?  Promises are made to broken …and “promises” are the only thing holding the financial system up from total collapse.  Better said, it is the “belief” in these promises preventing an outright collapse.  I have maintained all along, all that has been done has been to hide the relationship of values between paper currency and gold.  Quite simply, more paper exists than is believed and less gold is held than claimed.  We will find out the true relationship as the promises are broken!

  Numbers 6-8 are all about debt, have as little as possible!  For some, this is impossible.  Some believe gold will explode in current dollar terms (it will) and their debt will be washed away via inflation (it will not).  Jim wrote to me:

“Anyone who knows the real history of Weimar collapse know that the banks were not hurt as mortgages & debts owed were readjusted to value to gold before the collapse to the value of gold after the collapse so you owed the bank the exactly the buying power in terms of the Rentenmark (new currency) after the currency collapsed. Those that owned gold, closed debt obligation ahead of time and GOTS to the greatest degree they could were the winners to the degree they GOTS. They and the banks were the only winners.”  I agree with this, there will be no “debt jubilee”.  I would also add this, with gold (and especially silver) priced as they are right now, selling metal to pay down debt is not smart because the relationship is skewed.  I believe you will have a better gold/dollar relationship at a later date and prior to the issue of a new currency.  That said, having zero debt means zero chance of becoming a slave.

Numbers 9-11 are the hardest of all because they require a lot of capital.  Being totally self sufficient may only be a dream to you, ignoring this and living in a city will be a nightmare!  If the best you can do is to live 30 miles away from a city and in a rural setting, this certainly will be a better choice than living in a metropolis.  Remember, food stocks will run out within 3 days and even if you have paper dollar bills, they cannot spend on what does not exist.

A few months back I penned a fictional article referring to how it might begin to go down and can be found here:

By no means was this all inclusive, the exercise was undertaken to make people think.  It was meant only as a start for some or a reminder for others of what you may have forgotten. When Jim requested a review, he finished with the following “GOTS = Get out of the system. It is as or more important than owning gold and being in the system.” Please understand what he is saying, “gold will help but it is not a magic bullet.” Gold is meant to get your wealth “from here to there.” In other words, gold will transport wealth from today into tomorrow. It is up to you to live long enough to get there. Sufficient quantities of water, rice, beans and lead will be more helpful than gold or silver in this department!  Do the best you can with what you have, do not beat yourself up because you forgot something …you will.  Plan with like-minded people or neighbors and don’t mistake what is most important, your family and your spirituality.  Do what you can even while being laughed at by your friends and family, in the end, they will “get why you GOTS”!  And no matter what your faith or who your God is, make your relationship right because when push comes to shove, there are no atheists in a foxhole!  For those who have a belief, this is the Absolute GOTS of them all!

Regards, Bill Holter
Holter-Sinclair Collaboration
Comments welcome!

Posted by & filed under Bill Holter,

Greg Hunter’s

Dear CIGAs,

Recent Bloomberg analysis says if China backed its currency with gold, the price would need to be 50 times higher than it is today.  According to Bloomberg, that would be a gold price of around $64,000 per ounce, which is much more than gold expert Jim Sinclair predicted a few years ago.  Financial writer Bill Holter weighs in, “That was a few years ago, before some of the QE, and Jim has said that $50,000 gold may turn out to be laughably low. . . . I think it is very curious that Bloomberg would run this because Bloomberg is as mainstream Wall Street as you are going to get. . . . It would be my guess that Bloomberg has some type of information that China is going to announce their holdings.  I can show you that China has 10,000 tons of gold.  That’s pretty easy to do.  I use the figure of 10,000 tons, and oddly enough, that is the figure that Bloomberg used.”

So, what does the mean to the U.S.?  Holter says, “After they make an announcement that they have all this gold, people are going to say, wait a minute, where did they get all that gold? . . . It’s come from Western vaults, the biggest Western vault is the U.S.  So, the market place will make a judgment between the yuan and the dollar. . . . This is definitely a scheduled event in the fall, and the speculation has been that the Chinese may announce prior to that in order to give the IMF time to evaluate the data.  From my point of view, the Chinese may make that announcement to give it a push.  The dollar versus the yuan is going to depreciate greatly.  You could see a 20% to 30% move in the dollar (downward.)  The yuan is going to strengthen.”

Would the U.S. be forced to do an audit to verify its 8,000 tons of gold if China reveals theirs?  Holter says, “The market place will say do an audit or we will keep selling the dollar.  You very well could see an implosion.  I have said for many years now that there is going to be an implosion.  You are going to go to bed Friday night in a world that resembles the current reality, and you wake up Monday morning and everything has changed.  You will be locked into your position.  Markets are closed. . . .  Think about the brokers or banks that have a huge amount of derivatives. . . . The top two banks in the world alone have $150 trillion in derivatives.  The amount of collateral they need to post to keep the game going overnight could be in the hundreds of billions of dollars.  Where are they going to get that from? The Fed will not be able to put out this fire.”


Posted by & filed under Bill Holter.


The title is of course a little misleading because China has many options, none of which except one in my opinion will actually work.  Options to what exactly you ask?  Options to a collapsing global economy and an imploding financial system which will surely affect China as much as anywhere else, but with one caveat.  I take these events as a given, others do not but betting against an outright panic and global bankruptcy is betting against pure mathematics itself.

Let’s back up a little bit and look at where China is currently.  They are the second largest economy in the world (maybe the largest, we can’t really know because the numbers here, there, and everywhere are made up).  China is by far THE largest manufacturer in the world and also an enormous exporter.  China is also in a three horse race as to who owns the most U.S. Treasuries with Japan and unbelievably the Federal Reserve itself.  They have an oversized shadow banking system which has already been shown as fraudulent in several cases regarding copper, zinc and lead as "collateral" (or not).

The Chinese also have a stock market bubble boiling that makes the tulip craze  look tame.  Because of sheer size of the country, they are opening something like four million brokerage accounts per month.  In recent days they have had several stocks hit new highs only to drop 50-60% or more in just one day.  In fact, they had one company stock hit a new high and then go to ZERO the following day because it was discovered their books were cooked to a crisp.

We also know China is a huge importer of gold AND the largest producer of gold in the world.  NONE of their production ever leaves their borders.  There have been estimates of gold tonnage held by many.  Alisdair Mcleod believes they may have 25,000 tons or more, I personally believe it is possible if you include legacy or "elders" gold.  Others believe the number is closer to the 5,000 ton range.  My belief is that 10,000 tons is a justifiable number and very easily proven, if this is true, much of it had come from the U.S. and other Western sources and thus depleting the reserves.  

I assume the number is 10,000 tons or more, this is a safe number in my mind.  I think it is also a safe bet to say the U.S. has sold a minimum of one half of "our" gold which would leave about 4,000 tons.  If this is the case, there is already a  new world order where China has as much gold as numbers 2, 3 and 4.  Looking backwards in time, after the Bretton Woods agreement, the U.S. had every incentive to keep the "price" of gold down at $35.  This is so and evidenced by the old saying "it’s as good as gold".  The saying originally came about as a description of the dollar.  As it turns out, the dollar was NOT as good as gold, in fact it was not as good as anything, even a cup of coffee.  The dollar was overprinted and abused (inflated) by politicians (the Fed) in order to hide anything and everything "bad".  This worked until we hit the wall, let’s call this wall "debt saturation".  Now, the process is reversing and will end in a massive deflation versus real money while fiat currencies follow their issuers into insolvency.

Getting back to China, whenever they do make an announcement of how much gold they have, the yuan will appreciate greatly versus all fiat currencies.  Many will pooh pooh this thought because "China will never do that, they will kill their own manufacturing base".  Let me answer this before moving forward.  The Chinese are very smart people, they can see the West is hitting the debt wall.  They also know that as the wall is hit and markets begin to implode, their "customers" are going to have an even harder time buying Chinese produced goods.  In fact, they already know this.  They already know this is happening and can see it in their trade figures …which is why they recently formed the AIIB and are working feverishly to open the "old silk road" trade route!  They are simply lining up new customers from one end of the silk road to the other!

I have hypothesized many times in the past, China has built out their infrastructure and even "ghost cities" using credit.  Once the credit markets begin to default, they will be left with "stuff", in place and will last for the next 50 to 100 years.  Roads, bridges, buildings, airports, ports, etc., you name it they have already built it.  And yes, their stock market will crash, their real estate market is already softening, in reverse and declining.  I am not saying it will be all rosy, to the contrary, there will be bankruptcies galore in China… with a caveat.  The "government" of China will go through this liquidation phase with the most gold in the world.

Moving forward, since China will be hurt badly as investments default, I believe they will re price their gold higher initially.  I believe marking their gold higher in terms of yuan will be their only option.  They will be forced to in order to "recapitalize" themselves (and their banking system) and begin to fill in the black holes created by defaulted U.S. Treasuries and other "assets" held.  You see, not only is the old saying "he who owns the gold makes the rules" true, it is also true that he who owns the gold has the ability to PRICE IT. 

This has been true for so many years as the U.S. (the West) has wanted low gold prices as a show or display that their fiat currencies were "good".  Now, as the curtain goes down on the West, China will want a very high gold price in yuan for when the curtain rises again.  A gold price maybe even higher than it should be will give the PBOC more power initially AND will allow them some room to inflate and grow.  Please notice I am only talking about China in this paragraph.  As for the dollar and other Western currencies, they will be revalued downward versus the yuan which gives gold priced in dollars a double whammy of re pricing.

Let’s tie this all together and look at the old silk road and the trade route China is focusing on.  It goes from Asia, through the Middles East and into Europe.  Could this be why various European nations are repatriating their gold?  Not only because they have lost trust in their custodian but they also know China will put an emphasis on gold holdings in the future?  What do many Asians hold as money?  Yes, Gold.  Indians?  Gold.  Arabs?  Again gold.  The point I am trying to make is the "old silk road" might as well be called the "yellow brick road" and one paved with gold from beginning to end!  It seems to me, the only ones who don’t understand this or even disagree are Westerners and in particular, Americans.  Our standard of living is about to pulled right out from under us while violently proclaiming "it can never happen".  I would say, it should have already happened but has not because we still had a few kilos left to supply the paving crew of the "Wizard of OZ paving company".

The above was finished midday on Saturday, since then two new pieces of news have come out.  First, China announced it is setting up "the world’s largest gold fund"  .  They will earmark $16 billon to purchase physical gold.  If you do the math, this is around 500 tons or about 20% of global production.  By calling it "the world’s largest gold fund", maybe China is saying they do not believe "GLD" is real?  Just an observation. 

  In the latest piece of news, RT ran an editorial piece pointing out that China already lends more to Africa and Latin America than the World Bank and IMF combined.  Is this posturing "for" the Chinese before the IMF readjusts the SDR?  Seemingly disconnected pieces to the puzzle, don’t bet on it!

Regards, Bill Holter for;
Holter/Sinclair collaboration. 
Comments welcome!

Posted by & filed under Bill Holter.

Dear CIGAs,

Very soon we will be entering the month of June. Normally June is the time of year in the northern hemisphere when people think of picnics, parks, water sports and the outdoors. It is a time where plans are made for vacation, rest and relaxation. This year may be a little bit different. I say "different" because there is a plethora of converging events, any single one of them with the ability to take the financial markets down to their knees!

Let’s first list the events (which may not even be all inclusive because I either forgot something or am unaware of). What I see converging in June is as follows; the Austrian mortgage banks and banking sector, Greece, Ukraine, India, Russian sanctions, a Russian/Chinese announcement, the "very secret" TPP, and let’s not forget the second largest gold expiration on COMEX.

Since we know so little about the TPP (Trans Pacific Partnership), let’s start with this one. We know so little about it because it is being negotiated in secrecy. So "secret" in fact, anyone who gets to see what is written so far is threatened with jail time if they divulge anything about it . This harks back to Obamacare when Nancy Pelosi once giggled like a little school girl and said "we have to pass it to see what’s in it!". Fast forward and yes, we now know what was in it, a healthcare industry in turmoil, higher premiums and a "tax" if you don’t participate… Going all the way back to NAFTA, none of these deals has been "good" for the American worker, one can only imagine how deafening that "giant sucking sound" will be that Ross Perot first heard in 1991? Not even sure how this is possible, our legislative process has been kidnapped with no ransom even requested. If this masterpiece gets unveiled in June, a wonder as to market reaction?

Next there is the Austrian mortgage bank Hypo Alpe Adria, will they make their smallish payment of 500 million euros or will they start a chain reaction? If you recall, this pinch came about when the Swiss de pegged the franc and revalued some 20-30% higher within 10 minutes, in many cases it made the loans in Swiss francs worth more than the underlying properties themselves. The southern province of Carinthia has already backed away from pledges previously made by simply saying "we can’t pay". An important understanding is how all of these banks …own each others debt. In other words, the "cross ownership" of debt means that when one goes down it will act as a hit to many of the other’s portfolios. While this is not a huge trigger, all of Eastern Europe can and will be affected by what originated from the Swiss de pegging the franc from the Euro. With the system as illiquid as it is, there is no telling how far this one could reverberate?

On to Greece, they have already raided pension funds and sequestered local monies, June 5th is the deadline according to their finance minister. They owe 320 billion euros, they do not have the money to pay nor do they have a printing press to create it. The only way out is to borrow more …or default and fall into the open arms of Russia and China. The latter seems most likely to me. Greece is a natural trading partner with Russia and does sit along the "old silk road", moving away from the U.S. and even the Eurozone seems a natural. Please remember the big "nut" here is not the 320 billion euros, it is the CDS written in multiples on their debt AND the interest rate swaps in existence, these are in the TRILLIONS, not chickenfeed in an already illiquid world!

Logically, the next one to segue into is Russia and the NATO sanctions due to expire …in June. If a vote were to be taken today, would the sanctions be re imposed? Would Germany vote for them? Will Greece vote for them if they are still a member of NATO by June? Please understand the relationship between Mrs. Merkel and Mr. Putin, they "used to" talk on the phone daily …until the NSA spying revelations of last year. Will Mrs. Merkel go for more sanctions? What will she do about further aid to Greece. Greece has the ability to ignite many things, financially and politically all bad for the West.

Moving along, let’s look at Ukraine. The IMF is seeking a restructuring (read haircut) on $10 billion worth of Ukrainian debt with private holders. This the IMF says is necessary before another aid package of $40 billion is approved . The "haircuts" requested are in the neighborhood of 40-50%, will this one fly? Let’s not forget, Russia lent $3 billion to Ukraine in late 2013, I wouldn’t bet they will be accepting haircuts any time soon. In fact, wouldn’t it behoove Russia to watch Ukraine default …and further pressure the financial system of the West? Interestingly, John Kerry just met over the weekend with Russian minister Lavrov, what exactly did they talk about? If I had to speculate, my guess would be the U.S. has just walked away from this pink elephant. But why? Why would the U.S. walk away now?

Again, further speculation but it seems to me quite odd that Russia would announce "Chinese gold holdings" of 30,000 tons via Pravda. To rehash this, would Pravda have released this article without Moscow’s permission? Would Moscow have given permission without the approval from Beijing? Was Mr. Kerry/Obama informed that China will announce this 30,000 ton hoard of gold shortly? Is it a true story or not? As I wrote a few days ago, "gold" is a financial thermonuclear weapon, able to destroy the fiat of the West. It would not surprise me in the least if Washington was given the "courtesy" of a heads up to some sort of coming announcement even if a smaller sum than 30,000 tons. The point here is this, any announcement by China raises the question of Western holdings which of course brings Western currencies into question. It will be very interesting to see how forceful the U.S. is regarding Ukraine, this gold issue may just be the "softener"? I believe we will see very soon whether or not the U.S. changes tack regarding Ukraine (amongst others) as I suspect the Pravda announcement was no error at all.

Another June deadline is India trying to remonetize gold They propose to allow the deposit of gold on account and interest paid on it. This would immediately boost the economy with a shot of adrenaline as collateral would be massively boosted and lending could blossom. The only problem is that this is about the 5th or 6th time such a plan has been trial ballooned and even if passed, the citizens of India will probably not go for it en masse anyway. They have a long history of holding their gold in hand with no counterparty risk between them and their gold. It might work to some extent but the number of 25,000 tons being deposited is a pipe dream. It should be said however, when China does finally announce their holdings and increase their ability to "price" global assets, the Indians will sit at the table as there is no doubt they hold massive quantities in total!

Lastly but not least important is the June gold expiration on the planet’s favorite gold "pricing" mechanism, COMEX. As of today, there are 187,500 contracts open for June, this represents 18.75 million ounces of gold or 581 tons. The "registered" for delivery category has been bled down to about 11 tons or about 378,000 ounces of gold. The first notice day is June 1st, only seven trading days away. Does anyone see a potential problem here? A "problem" as in there are 50 ounces of gold contracted for every one ounce COMEX claims to have?

Yes, yes, I know I have gone through this exercise before and each time the open interest just dried up and blew away. In fact, many expiration months have seen accounts FULLY FUNDED with cash to purchase the gold on first notice day, only to "go away" later in the month. This makes no sense whatsoever. Why would anyone fund their account fully in order to pay for purchase and then just walk away? On the other side, why would any short not deliver on the 1st or 2nd day of the month as they must pay storage costs for each day they don’t deliver? The answer of course is very simple, the gold does not exist to make delivery and the shorts do not want to let go of what very little they have …and instead cash settle with a little cherry on top? Before finishing this section, it should be pointed out that the ETF GLD has bled 17 tons over the last few weeks where gold rose $50. How does this make any sense at all? It only makes sense to me if someone needed the metal to deliver elsewhere and immediately. A strange occurrence but a topic for another day.

So there you have it, June could be quite the month as many events all converge over the 30 day timeframe, and none of them good! I have warned and warned, you must have exactly the positions you want should the markets close and not offer you the chance to alter. Please, imagine a world where things actually make sense and logic counts for something when it comes to valuing assets. Let’s call it "Mother Nature world" where values make some sense and are actually related to each other and to reality. How would your portfolio or financial position look like if we woke up one fine Monday morning in June to a brand new world?

Regards, Bill Holter
Holter/Sinclair collaboration

Posted by & filed under Bill Holter.

Dear CIGAs,

A few months back I theorized the rest of the world led by a Chinese/Russian alliance might let loose with a "truth bomb" or a series of them. It is clear the U.S. has been on a pathway in the desire to start a war. We have pressed in Syria and the Ukraine but so far to no avail. From the standpoint of the U.S., it is my opinion that a war is "necessary" to point at and blame for the financial collapse surely coming because in no way can "policy" be blamed.

The upcoming month of June will be a telling one as the situation in Greece comes to possibly a final head. Tiny Greece is important for several reasons. The first and most obvious, they are certainly a firing pin for the derivatives market. Should they default, what will it be called? Somehow, some way, a Greek default cannot be classified as one because a cascade of failures will immediately follow. Financially, Greece can take the Western financial system down all on its own.

Next, Greece is also a member of NATO, what will they do when the current economic and financial sanctions on Russia run out? Will they vote to extend the sanctions or vote in their own interest against them? Or, will they accept financial help and the cash flow from the proposed natural gas pipeline? A lesser question is what will happen to their EU status? Will they quit, get kicked out or remain as a black sheep in a dirty family?

I ask these questions again because Greece now says they will run out of money on June 5th. They have already pilfered pension funds and sequestered local agency monies, while pleading for the previously pledged but so far withheld aid. Atop this and more important are the sanctions on Russia due to end also in June. June is a very pivotal month!

To this point, the Chinese and Russians have been patient but firm dealing with the U.S.. Russia has warned about arming western Ukraine and placing firepower on Russia’s borders. China has sternly warned the U.S. regarding the disputed islands in the South Sea, a near spark incident was avoided last week. My point is this, the U.S. has been pushing while Russia and China have stood their ground. How long this can go on without some sort of "accident" morphing into conflict is questionable. As an example are the recent events surrounding the Spratly islands in the South China Sea, can the U.S. really push China in their own back yard? China and Russia are fully aware of the U.S. falling further and further into a weakened position in many ways, time is running out before a financial collapse and they know a wounded animal often strikes in desperation. They must in my opinion do something very soon to neutralize the U.S. or face the reality of fighting.

As I began with, I believe the only form of neutralization is some sort of "truth bomb" or a series of them. How best can this be done? I believe it must and will be done "financially", let me explain. If the ROW can neuter the U.S. financially, they will seriously hamper U.S. efforts to make war. As a side note, "the truth" will also take most all public support away for making war. I believe the process may have begun this past week.

While you may react with "oh it’s just propaganda" because of the source, Pravda posted an article over the weekend speculating China will very soon announce their gold reserves. The article speculates China has amassed 30,000 tons of gold. This may or may not be true, but I can easily prove 10,000 tons just on the back of a napkin. Whether the number is 10,000, 30,000, more or somewhere in between is moot in my opinion because it is MORE than the U.S. "claims" to have. It would also call into question "where" exactly all of this gold came from. As I have written before, China need not ask for an "audit" of Western gold, should they provide audited numbers, market participants will make the connection themselves.

I believe there are several questions needing to be asked. Is this a "30,000 ton bluff" by Russia? I don’t think so but if it is, what is the upside? Would Russia really throw this figure out publicly without clearing it with Beijing? Would China really bluff about how much gold they have? My opinion is no, they would not. I have said all along I believed China would announce their holdings probably this year. If this is the "pre pre announcement", it is a very big number and one I believe only as an opening salvo. Should China themselves make this announcement, please understand the "golden nuclear bomb" this would actually be. The financial system of the West will be destroyed overnight!

Before going any further, let me put a few of the various dots on the table. First and maybe what they were waiting for, the Western credit markets have had two very big convulsions in the last 10 days, these flash crashes have occurred as nearly all liquidity was briefly lost. While speaking of liquidity, this seems to be drying up across the board including the equity markets as volume has gone comatose. U.S. economic numbers are unmistakably weak and recession will be known by the end of June or early July. Another classic sign of illiquidity is the shortage of collateral available to the shadow banking systems in both the U.S. and in Europe,. A "margin call" to a system undercapitalized and under collateralized is a deadly recipe.

We also saw a story last week where several of the larger ETF’s have contracted for rather large credit lines to use in a "market event" causing mass liquidations. This is an entire story in itself and a humorous one at that! What makes the ETF’s believe their financial institution will be left standing and able to lend during a panic? And even if standing, during bad times the old saying goes …"credit lines are made to be pulled"! Worst of all, if they actually do use the credit lines because their various investments cannot be sold, won’t this ultimately injure remaining shareholders and make those who panicked first …the best? And especially if their investments do not immediately snap back, they will be required to sell more and at lower prices just to pay the loans (if they get them) down! Very poor "preparations" if you ask me.

Other dots include, the AIIB, an alternative clearing system to SWIFT, currency hubs all over the world, physical metals exchanges and even the ABX which plans to arbitrage between Eastern and Western markets. China has very rapidly recreated the "old silk road" trading route which includes both Iran and Greece, both sticking points in the side of the West.

I believe the Sino/Ruso alliance now sees weaknesses in the West, it is exactly what Sun Tzu would look for. The economy is slowing, liquidity is drying up and leverage is maxed out. Volatility has now struck the all important credit markets of which are relied on to support the West’s way of life. What is next? I believe an announcement of China’s holdings will only be the beginning and put the U.S. on her heels as to our holdings. Next, and I mentioned this previously, I would not be shocked if Edward Snowden has done a data dump similar to what was feared with Mr. Assange of Wikileaks.

We already know of so many and various "dirty deals" which banks have pleaded guilty to, "proof" of Western deceit will be believed because of all the fines and "non" admissions of guilt already paid and entered. In essence, it very well may be the East pulls the curtain back on the Wizard of OZ! A data dump by the Russians and Chinese regarding the finances of the West (including a lack of gold), how markets are rigged and economic numbers "created", along with information regarding various false flags and the misdirection of the public would go a long way. The "questions" are numerous and may have a starting date of 9/10/01 when Donald Rumsfeld announced the Pentagon’s "missing" $2.3 trillion …which was never spoken of again after the following horrific day.

Much, if not everything has a paper trail to it. Enron’s misdeeds and hollow derivatives were conveniently washed away the following day as well as any paper trail to the "world bonds" issued during the Reagan years …and cashed in within the two weeks following 911. Nearly everything since then still has a paper trail attached to it, should Russia/China have the ability to expose and prove some of it, our financial system will be toast!

In the event of a little sunlight touching Western "dirties", currencies and bonds will be smoked along with of course the precious Dow Jones. An exposure would effectively cripple us financially, torpedo public support and effectively make it very difficult for the U.S. to run around the world further swinging a bat and stirring up war. In essence, an exposure would take the ability to point blame elsewhere off the table …and the past policy itself will finally eat the blame it deserves!

Bill Holter, for the Holter/Sinclair collaboration


Bill Holter writes and is partnered with Jim Sinclair at the newly formed Holter/Sinclair collaboration.

Prior, he wrote for Miles Franklin from 2012-15. Bill worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards. He left Wall Street in late 2006 to avoid potential liabilities related to management of paper assets. In retirement he and his family moved to Costa Rica where he lived until 2011 when he moved back to the United States. Bill was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-present.

Posted by & filed under Bill Holter.

Bill Holter for Miles Franklin

Dear CIGAs,

"Money as we know it…will simply disappear".  Could this really happen?  I think that it can and believe that it will in some fashion.  This is a huge statement and one that certainly needs some explaining.  Before getting to this, I want to relate to you a couple of questions I received this past week and pass along a quote that is very pertinent, and in my opinion almost an exact roadmap to what we will soon experience.

  First, I was asked by a new client, "I don’t understand, if the markets and banks close, how will I sell my gold and who will have money to buy it?".  This is a good question with no set in stone answer because once panic sets in there will be so many parts literally moving at the speed of light.  Let’s look at a couple of historic events to get a little bit of perspective.  After Archduke Ferdinand was shot in 1914, World War I commenced and our (U.S.) stock market was closed for nearly 6 months.  Money in the U.S. back then was either gold coin or "dollars" which were receipts for gold coin, "money" still circulated even though the stock market was closed.  Stocks circulated privately between individuals as certificates were signed over from one party to another in exchange for a real item or a service.

  Another historic event was back in May of 1931 when the Austrian bank Credit Anstalt failed.  This was a black swan event in a series that led to many banks around the world folding and what drove the U.S. and world economy deeper into depression.  A description of the affair after the fact by Lord Revelstoke (Barings Bank) was; "It was amazing, how, in a fortnight, the credit system we had spent decades building……collapsed".  Our banking system saw many failures and was closed for a time but again, money remained and still changed hands.  But remember, "money" was different back then, it was "real" whereas today it more resembles Monopoly money.

  Back to the original question, "how will I sell my gold and to whom"?  Gold (and silver) "ARE" money themselves.  They are a store of value, they have "worth" on their own as opposed to dollars, euros, yen or any other paper currencies.  The paper currencies have "value" because a government "says" it has value and enforces what they say with legal tender laws.  Gold and silver need not be "sold" for currency, they may instead be exchanged for goods or services during a time of stress.  Actually, the part of the question that asks "who will have the money to buy it?" can be answered in one word, "you".  YOU will have the "money" that may be retained or "spent" at your discretion, worrying about who will accept it during a crisis and after is not necessary.


Posted by & filed under Bill Holter.

By Bill Holter for Miles Franklin

Dear CIGAs,

Gold and the dollar are supposed to be mirror images of each other on the charts.  This only makes sense as gold is commonly referred to as the "anti-dollar."  Over the past 10 plus years Jim Sinclair has referred to this "mirror" relationship many, many times.  I can remember so many times in the past where on individual days this did not hold true and the "bashers" would come out of the woodwork to attack Jim.  They would say things like, "Look, if they are mirror images then how do explain this?" I had not seen a "monthly" chart on the dollar for quite a while but I had my suspicions so I again asked my buddy Trader Dan Norcini if he could send it.  Send it he did, look at this.


Just as I suspected, the dollar is again rolling over to the downside from the not so lofty level of the 80-82 range.  In fact, from a short term standpoint we have now had 4 closes under 80 …AND closed the week under the all-important "80" level.  A break under 79 should at least lead to a test of 76.  It is important to understand that the dollar is now under all of the important moving averages which are quite bearish.  While the dollar is still in a defined triangle, the MACD’s have crossed to the downside.  Whether we break the bottom of the triangle or not, it does look to me that at least a test of the support will occur.  Below is the chart of gold which I sent 2 weeks ago, the MACD’s have not crossed yet (the HUI has for sure), this looks like a double bottom to me and resumption to the upside.


If you compare the 2 charts of gold and the dollar, they really do look like mirror images.  As the dollar strengthens or weakens, generally gold is doing the opposite.  The opposite as in making either highs or lows in the inverse.  So while they are not mirror images on a daily chart and not exact mirrors on a percentage basis, these longer term charts really show the inverse longer term relationship that we would expect.

I wanted to show you these 2 charts together not so much to show the "inverse" nature but to show you that they are both telling a "story"…the SAME STORY!  The "MACD’s" are crossing up in gold and down in the dollar which auger well for a sustained move upward in gold while further weakness in the dollar. Some people will tell you that charts are worthless, especially because the markets (all markets) are manipulated.  They say that charts only show what has happened rather than offer you clues as to the much more important "what will happen."  I tend to agree with this view…in the short term daily charts and maybe even the weeklies.  But, when it comes to the very long term monthly charts, painting these is next to impossible just as holding back the tides are.  The long term charts are very difficult "make lie."

Chartists are a different breed.  Some read only charts while others read the charts but will only act if the chart is pointing them in the direction that they also believe the fundamentals are pointing.  An example of this would be Jim Sinclair.  He reads charts but will not take a position contrary to what he believes the fundamentals to be.  For example, I don’t believe Jim would ever "short" gold or silver in today’s environment even if the charts looked like they were topping out.  I say this because he knows that fundamentally the U.S. is broke and issuing valueless "chits" (dollars), he knows that it could be any given day that the dollar collapses for any number of reasons.  He will (already has) "load the boat" however when the charts are in agreement with the fundamentals which they are right now. 

Other chartists like Bo Polny who have had great track records don’t really care about the fundamentals.  In fact, they don’t even care "what" the chart is.  It makes no difference whether the chart is one of soybeans, stocks, interest rates, currencies, oil or what have you.  "The chart is the chart" and it makes no difference what the underlying asset is.  I personally don’t agree with this but I am not good enough or smart enough to read the short term charts…so I don’t try to.  Bo was at the Austin Q+A seminar with Jim Sinclair.  I heard Bo with my own ears "call bottom" on that Saturday afternoon.  He said, "We may have a down day Monday or Tuesday but we have bottomed and are turning up into a bull market that will last several years and be very powerful in the gold market."  So far he just about called it to the day (which he first did last June and was correct) as we have rallied over $125 since then.  He has also recently as of last week called for the dollar to break down and he sees the 79-80 level as very significant.  We will see if he is correct, the long term charts tell me that he is…again.

Many times over my career the charts of various assets would be saying that "something" was going to happen…and then all of a sudden out of the blue it would.  The news could be anything from a drought or flood, a buyout or an unknown and unexpected "loss," a lawsuit, a war, a death or a law change.  It didn’t matter "what" it was…but it was something that forced the market (particular stock or commodity) to move.  To a pure chartist it doesn’t matter "why," what matters is whether the chart was "speaking to them" and whether they were on the right side or not. 

Here is my perspective on the "charts" and the mirror images they have shown and what they mean now.  I preface this with "the markets are all rigged and charts are painted" …in the short term and with ALL "their" might …and that I am not a chartist but a fundamentalist by heart.  The long term charts as I’ve said are hard to "paint," particularly in the dollar market because of the sheer size of this market.  The dollar chart is telling me that something bad, and dollar negative is about to occur.  The "fundamentals" certainly support this whether you look strictly at the financial facts that the U.S. is bankrupt or you look at geopolitical events where the U.S.’s "power" is waning.  It makes no difference "what" it is that is out there, what does matter is that the dollar looks vulnerable and its "mirror" gold looks even more powerful.  It is also important that you understand that this is "happening" now, right now, the MACD’s are telling you this!  Do I know "THE" day that this will be recognized?  No, of course not but at this point it looks like the "bottom" for gold has already occurred and the "top" in the dollar as well is in the rear view mirror.

If I had to guess, I would say that some sort of geopolitical event will take place that "isolates" or shines the spotlight on the U.S. and our finances.  This could be anything from the Saudi’s accepting another currency other than the dollar for their oil, the Chinese announcing a 5,000+ metric ton hoard of gold or Russia invading the Ukraine unopposed.  It could be something as simple as us issuing sanctions that either backfire or are not adhered to by our allies.  It could be something as simple as the G-20 telling us that we are not invited to their next meeting.  It could be… literally anything. 

Not knowing "what" might be the "trigger" however it is not a problem.  As long as you understand what it means.  "Means" as in gold will move higher and the "standard of living" (the dollar) will move lower.  ALWAYS in the past, whenever something "bad" happened the dollar would always strengthen and rally.  It did this because the U.S. was seen as a safe haven with a strict rule of law and a military to back it all up.  The next time that you see that "something bad" has happened…watch what the dollar does and also watch what gold does.  The monthly charts are screaming up in gold and whispering down in the dollar, if these moves begin to accelerate on some sort of bad news then you will know that the game has changed!  The "fundamental meaning" is that the Sun is setting on the West.   Regards,
Bill Holter on behalf of Miles Franklin