Bill’s interview with Dr. Dave Janda from this past weekend.
Posts Categorized: Bill Holter
I intended to write this yesterday but was still buried from response to last Thursday’s article. My wife teased me, she told me she had not seen me work like that since I retired from brokerage back in 2006. From Friday morning through yesterday I burned my cell battery down 5 times and was stuck several times plugged in and talking with a 3 ft. chord attached! I thank everyone for the huge response and reiterate this is a window that when closes will probably never open again.
This is a very important week. We had an IMF meeting over the weekend and an extremely bland “communique”. I am sure much more went on behind the scenes than this “don’t worry be happy” statement.
China has their 29th Communist Congress the 18th and 19th this week. For sure it will contain pomp and circumstance as they install new and old leaders but the highlight will be their “5 year plan” discussions. We may (most probably) not be privy to the true core to the plan and only offered public tidbits for view but we will see.
We can look back at the last five years and see China has readied herself to assume leadership for the world in many if not most areas previously lead by the US. They have set up credit facilities, a clearing system alternative to SWIFT, trade deals all over the world especially including the Middle East and other commodity rich areas. (And amassed a huge hoard of gold). They have also cozied up to Russia in many ways including militarily. We have also seen several instances where US Naval vessels may have been compromised technologically. In fact, I understand the Fitzgerald will have new electronics installed by Lockheed Martin. The main supporter of the U.S. dollar (the military) may have been tested publicly and only understood by those watching closely?
The point is this, China is “ready”. They can now at this point begin to “pull the trigger”. Whether it is one big trigger or many smaller triggers I do not know. (A betting man would wager many small triggers as the Chinese are a very polite society). I also do not know if one of the smaller triggers creates a domino effect but I suspect so. Do not mistake this, China does have huge leverage and imbedded fraud as does the West. The biggest difference as I have stressed for over two years is China actually created “stuff” whereas the West took their plundered spoils and “ate” them. In other words, China has built out their infrastructure and actually has premade “ghost cities” ready to roll. The U.S. is left with 50-100 year old infrastructure, little manufacturing left and highly unfunded liabilities in pensions. The American party is over…
As I have maintained, the Chinese have an “out” in the case of imminent financial global collapse. They can simply mark up their gold holdings and fill the balance sheet black holes with appreciated gold. The U.S. cannot do this as gold has been leaked out for years and may not even be an asset at this point. We have received many questions regarding the supposed “Chinese oil contract, settled in yuan and backed by gold”. We also received an extreme amount of questions regarding Koos Jansen’s article calling this a “myth” First, if you recall when I first wrote about this, I suggested China would NEVER convert yuan into THEIR gold. Rather, they would take presented yuan and buy on the open markets including COMEX and LBMA (and expose their lack of inventory?). In this manner, they would simply be taking cash flows from the oil trade and using it as a way to break the “paper pricing” forced on physical markets by dollar hegemony.
Yes I know, “people can currently take dollars and buy gold, they can even take yuan and buy gold” already, so what the heck am I talking about? To this point it has not been a very good “life decision” to either accept non dollars for oil, OR to take your dollars and purchase gold…(ask Saddam and Mohamar about this)! Looking at this just under the surface, ANYONE who used a couple hundred million dollars (or God forbid MORE) to purchase gold would be “seen”. Do you see where I am going? They have, are and ALWAYS WILL be seen and known if they use dollars because of something called the SWIFT system. Conversely, should oil producers use their “yuan” to buy gold, the U.S. cannot track these trades because China’s clearing system will clear the trade!
Do you see the beauty of this? Oil producers using yuan instead of dollars will no longer fear buying gold because it can be done under cover of China’s clearing system. (I guess it should be asked, would a logical trade move toward some’s liability or toward something with no one’s liability? Said another way, ending up with gold is true “settlement” as opposed to owning a liability yet to be settled). In addition, a freely trading and much “higher” gold in fiat terms is something the Chinese would desire as they have amassed maybe 20,000 tons or more. This, opposed to something the U.S. would not want, no longer being a major holder of gold. One might argue the previous sentences but good luck with that because common sense, a pencil and napkin will suffice!
So no, any new Chinese oil contract will not be backed directly by gold. This would be complete insanity for the Chinese and a recipe to undo the hoard of gold they have so meticulously and methodically accumulated over time. Rather, they are creating an avenue where Mother Nature can direct capital flows freely (by choice of the owner) and without fear of U.S. retribution. I guess you can call this “de facto” backing the oil trade for yuan…with gold – by repealing the fear of doing so by holders of said yuan! This is cunning action by the Chinese and aligned in harmony with Mother Nature in my opinion. We will soon see…
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As many of you know, I worked in the brokerage industry as a stockbroker/branch manager for 23 years. During that time and the 10+ years since, I have seen the “herd” move(d) violently in tandem many times. For years, smart investors would discern what retail investors were doing as a group and do the opposite quite profitably. It has been said and I have to agree, “the little guy is almost always wrong, and wrong at the wrong time”. Fade the little guy, it is usually quite profitable!
We are again seeing this phenomenon as evidenced by the VIX trading at all time lows and huge capital betting on continued non volatility. This thought process has obviously been aided and abetted by central bank’s massive liquidity flows and “official” purchases of anything and everything to support amarkets. Just to point out, it is not so much the fault today of market participants as it is central banks for “fooling” them into their complacency.
Another area where we can see public action is with official mint sales of coins. Zerohedge recently wrote about this here;
The public has largely shunned purchasing metals since Feb/March of this year after 18 months of very strong appetite
The above chart is only half of the story because it relates only to retail demand as opposed to “supply” (selling) in the retail space. (Before going any further, please do not panic as what I am talking about is “retail” as opposed to institutional or even sovereign demand, which has remained strong. And rest assured, the little guy buying retail lots will never determine the market but more on this in a moment).
What has actually happened this year is something we have NEVER seen before, the little guy has not only backed away from purchasing coin, they have actually been sellers unlike never before. It is hard to say “why” but I have a couple of suspicions. First, “burnout”. People have watched as stocks/ bonds/real estate have continually inflated since 2013 while gold and silver prices have been suppressed. (This is a topic already covered extensively by GATA and others, if you don’t believe metals prices have been suppressed, I have some ocean front property in Arizona for you.)
Basically, the little guy has gotten “tired” of waiting, in this sense the central banks have won by holding an exploding system together longer than the average investor can wait. Obviously another factor is “the other pasture”, it is hard for people to watch markets go higher and not be on board. Never mind interest rates at 5,000 year lows or stocks and real estate priced at all time high multiples of cash flow, earnings etc. We even see “air” trading at $4,900!
The mass retail selling has done what one would suppose, coin premiums have sunk to all time lows. This has however created an incredible opportunity! You can now purchase AU Liberties (almost uncirculated 1933 and earlier gold coins) for LESS than current 2017 Eagles. Not only that, the premiums for higher grade “uncirculated” coins in the MS 61-MS 63 grade range are such that pricing is roughly equal to or only slightly higher than one ounce Gold Eagle prices. The anomaly is so severe, even when sourcing 1/4 and 1/2 ounce Liberties, there is little to NO PREMIUM over the one ounce coins! At this point, 1/4 and 1/2 ounce Liberties can be purchased at 5% and larger discounts to their same weight American Eagle counterparts. This makes no sense and has never happened before but it is in fact the case currently.
To put this in perspective, Liberties were being “bid” (what dealers were paying customers) 60%-70% OVER spot back in 2009. Higher graded uncirculated coins were being bid even higher. The fear back then was president Obama would lead a charge of gold confiscation. Capital moved away from bullion and into these numismatics as an effort to cover from confiscation. The thought process was, and I believe rightly so, pre 1933 coins would be considered your “coin collection” rather than current bullion subject to confiscation. The best thing to have done then was turn numismatics into 60% more bullion, the situation is reversed today.
The bottom line is this, given the choice of purchasing bullion or numismatics today, the choice is a no brainer. You can purchase coins with numismatic value for equal or less than a current sovereign coin. You will own a rare coin with numismatic value where premium in the future is highly likely (if not guaranteed?) to increase and maybe increase drastically …while paying a discount today to do so. Alternatively, if you own Gold Bullion the opportunity exists to swap into rare coins for very close to even up. If you wanted to swap in higher grade uncirculated coins, you might be giving up only 5%-10% weight but owning coins where the premiums will likely come back and probably substantially. Remember, these Libs and Saints have not been minted since 1933 while sovereign mints create several million of their coins each and every year …and only change the dates on them!
The opportunity currently exists and has never existed before. Should retail investors (or even institutions if they figure this out) begin to move back in to the tiny numismatic space, the window will close rapidly. If you would like to learn more about the existing opportunity available, please contact me at firstname.lastname@example.org or contact Miles Franklin at 800-255-1129. We currently have substantial inventory available and the ability to source more if needed. Obviously, once the market recognizes the mispricing, older and rare coins will be bought up to correct the current mispricing!
We have watched for years as China grew in strength economically, financially and militarily. They have pre positioned themselves by making trade deals, setting up credit facilities and even an alternative clearing system to the West’s “SWIFT”. We also know China has been gobbling up global mine supply of gold for going on 10 years now. As I’ve written in the past, just using the back of a napkin, it can be surmised they now have hoarded 20,000 tons or more compared to the “supposed” 8,133 tons held by the U.S..
It is clear China has meticulously readied themselves to take the role of world leadership from the U.S. but do they really want the responsibility AND burden of issuing the reserve currency? This has always been the question and the answer from logical thinkers is “no”. No, because we (and of course China) have seen the result of the “burdens” that comes along with the privilege of issuing the reserve currency. I must confess, I too did not believe China would desire or even accept the responsibility of reserve currency status. I now believe this thought is mistaken! I will explain shortly.
Bill’s recent interview with David Moadel.
I have been asked my opinion regarding cryptocurrencies. Let’s start by saying I have no doubt within only a short time, “crypto currencies” will be issued and embraced by central banks. This is not to say I am endorsing Bitcoin, Ethereum or any other digital currency. It is even possible that not a single existing crypto will exist when central banks finally make their leap.
issuing and embracing cryptos make total sense from the standpoint of central banks for several reasons. First, what crypto bulls consider as “privacy” today, central banks will see as “total knowledge” if they are the issuer. This will mean total knowledge of all transactions which also means a near impossibility of any tax evasion even down to the lemonade stand (assuming you have your lemonade permit!). Also, if central banks issue the crypto currency…you can pretty well bet they will also have a back door …that allows them to either freeze or even empty “your vault” of digital coins…whenever or for whatever they choose.
Whether we are headed toward a one world currency or several currency blocks (this is more likely), digital money is coming if the central banks have anything to say about it. As I mentioned above, I highly doubt central banks will want “competition” to their currencies so some sort of legislation (either by individual sovereigns or collectively on a global basis) can be expected as an attack on existing “private” cryptos. In my mind, there does exist the possibility that an existing currency (or a very small handful of current cryptos) is used as the “platform” for central banks but I would not place my hope on this. I also would not want to bet “which one” or ones will be chosen if this is the case?
In my opinion, the volatility of digital currencies while wicked and speculative (upward so far?) is not the real danger, and the ride is not for the faint of heart. The real dangers are several and basically involve a “poof” moment that does not exist with gold or silver. When I say “poof”, I am talking about “poof, it’s gone!”. Do not say this is impossible because it is not.
I would ask, what if we experience an EMP and the grid goes down? No electricity, no computer. Yes you can go to another area or country but good luck getting there. Another argument you hear for digital currencies is “they are not hackable”…to which I must call utter bullshit because EVERYTHING including the NSA is hackable! Even the modern car you drive is hackable and can be overridden with a joystick today. We see it all the time, this entity or that entity gets hacked. We have even heard of people’s cell phones being hacked and digital currencies stolen that way. One must also worry about the exchange(s) being hacked, we have already seen this where coins just disappeared. I just recently read this article for more potential pitfalls or arguments. Suffice it to say, in the case of Bitcoin, no one even knows who its creator Satoshi is, how does anyone know he did not install a backdoor when he launched it? It does make sense that the programmer has a back door doesn’t it? Maybe he was an “honorable” programmer? Are all the others the same? We do not exactly live in an “honorable world” no matter how badly you’d like to believe it…
To finish, maybe I am old school but I see a vast difference between digital currencies and precious metals. Most important of all, precious metals cannot “disappear” overnight if you have them stored properly. Can they be made “illegal”. Yes governments can try this but how do you make silver illegal with all of its medicinal, solar, industrial and technological uses? Can jewelry be made illegal? An EMP will not destroy the value of metal. Neither will a fire or flood. They can be taken from you at gunpoint which is why you should have metal stored in several places. Metal will work for barter in the situation of a full out meltdown of financial markets. Will your local farmer trade his eggs, beef, extra tools or diesel fuel for Bitcoin? Probably not. Will he trade for metal? I think so. Then I would ask, if you want to “trade” your digital currency when financial institutions are closed …”how do you get paid” if financial transaction are frozen? The same can be said of metals but I am pretty sure a guy with two motorcycles might trade one for 100 ounces of silver …(or less?) …I’m not so sure he’d accept a digital currency?
I could go on and on with examples but I am of the school that “possession is 9/10ths of the law”. In the case of outright anarchy, (which we very well may be facing) “possession” itself may become the law? If you take nothing away from this article other than just one concept, please understand that metals cannot experience a “poof” moment where you go from wealth to nothing in an instant. We face a credit meltdown dead ahead where return “OF YOUR CAPITAL” will trump return ON your capital. Gold and silver are money, not credit, they may very well be your ONLY capital before this “credit episode” is all over?
The entire world faces a “poof moment” because nearly everything either is itself credit or relies on freely flowing credit for its value. Gold and silver rely on nothing because they “are” money. They do not rely on credit nor are they the liability of anyone or any nation. They do not rely on an internet (which governments do have the ability to shut down) or computers. They do not rely on a user name or password either. Nor do they rely on the simple and basic technology of electricity. They can’t even be hacked (unless you use a hatchet to make change?). Call me old fashioned but subjecting yourself to a poof moment makes no sense at all when it is the coming poof moment you see coming …and are trying to protect yourself from!
I had not planned on penning a public article today but my plans were changed by Martin Armstrong as he again is busy attempting to rewrite history. He is again trying to scare people away from their only financial hurricane insurance, gold …why? Any thinking person knows a credit disaster is coming. Heck, even he has called for a pending financial disaster himself…but gold is not a safe harbor “this time”?
As a reminder of past fallacy, Mr. Armstrong wrote back in September 2015 “…”You are doomed if you cling to the idea that gold will rise simply because stocks decline. Gold was DEVALUED in 1934 since gold was MONEY. What it could purchase for $20.67 then cost $35. (this line has since been deleted from his original article) The government confiscated gold and moved to a TWO-TIER monetary system with gold used exclusively for international settlements, not domestic.” …Martin Armstrong
The fact is, gold was REVALUED 70% higher versus the dollar (and much more versus other assets) as what previously required $20.67 to purchase one ounce of gold moved to $35. I said at the time, what he wrote could not have been a typo or a mistake, his logic was in reverse and he was trying to rewrite history.
Fast forward to present, he is at it again. He recently posted “Am I certain about the strong dollar?” Let’s take a look at a few glaring “alterations” of history and poor logic according to Martin Armstrong.
His article starts out with “You can denominate oil to peanuts in some other currency but that still will never put a dent in the dollar. Why? It is capital flows than count and trade is minimal”.
Um not quite right Martin, and we will save this for the end as it’s the main broken bone to the writing.
He then attacks the Euro. While I do not disagree with his premise that the Euro is flawed because it is a common currency but consists of members with different credit ratings and different interest rates. I do disagree with his historical recollection. Martin tells us “In general, Europeans are still trapped in World War II thinking that a stronger currency means economic boom.” This is absolutely not so (please read “The rotten heart of Europe” by Bernard Connolly). For years prior to the Euro commencing, nation after nation DEVALUED their currency in order to receive cost benefit for their produced and traded goods. And besides, hasn’t Mario Draghi continually tried to talk the Euro down and devalue versus other world currencies? World currencies have been in a race to the bottom, I am not sure what Armstrong is looking at here.
Then he goes on to say “the Chinese yuan will not replace the dollar until AFTER 2032”. Has he not seen China for at least the last five years or more readying itself to do its business without using dollars? Trade deals, credit facilities, bourses and clearing facilities all being erected to the EXCLUSION of dollars? Does he not see the rest of the world distancing themselves from the U.S. and following very closely along with China? Plus, with history as a guide, the $20 trillion current US debt will double twice to $80 trillion by 2032, will the U.S. even be financially viable by then (is it even viable now)?
He went full circle to what he started with and the most flawed of all; “Denominating oil in yuan or euro means nothing. Where will you park your cash?”.
And then claims; “The ONLY time we get monetary reform is when the dollar RISES, not declines. Hey, if the dollar declines, then interest rates will continue to travel negative, gold will collapse, the stock market will implode, and Trump will emerge as the best president in history creating massive new American jobs exporting everything not just blue jeans, rock & roll, and US corrupt law. Emerging markets can keep borrowing dollars with no end, dumping commodities that are at excess supply, and everyone will be perpetually happy – the euro will be strong at last and magically the ECB can just keep European governments on life support without end.”
First, he is basically saying we will have economic nirvana with a weaker dollar and only at the expense of the stock market (and gold bulls of course). A weak dollar sounds wonderful according to him, maybe even “the answer” to a failed system? Unfortunately there is a thing called “history” which shows when a currency weakens or even collapses, stock markets, (gold), and assets in general skyrocket in that currency …just look at the results of Weimar, Zimbabwe or even Venezuela, their stock markets WENT UP in their own local currencies… not down. If weak currencies (inflation) were such a good thing, why haven’t we already figured this one out and EVERYONE just print and devalue? This has been tried over and over again throughout time and always ended up with the fiat currency being busted through over issuance. “Printing” currency to devalue does not produce prosperity… if it did there would be no poverty anywhere on the planet. This is historical fact, not opinion.
As for saying denominating oil in yuan, “means nothing”, can he really believe this? According to Armstrong, “flow” is what is all important (I must agree), … and “trade is minimal”. I beg to differ, TRADE is ALL IMPORTANT in today’s world and certainly affects capital flow very significantly “at the margin”. If trade and settlement did not matter to the dollar, then why has the U.S. used its military for so long to enforce the petrodollar? For that matter, why was the petrodollar scheme set up in the first place? (It’s OK Martin, you know what happened on Aug. 15, 1971). I bet Saddam and Mohamar might disagree with Armstrong’s take here if they were still living, what you actually settle oil (and other commodities) DOES MATTER because it affects “flow”, (and ultimately lives!).
I have a couple last questions. How is it Martin that a weaker dollar will not bring forth “monetary reform”? I understand your stronger dollar thesis where foreigners are financially blown up for borrowing in dollars that increase the difficulty in payoff and service of their debt. But why would there need to be monetary reform if the reserve currency was acting like the reserve currency and remained a strong standard to be compared to and saved in?
How is it, a weaker (or significantly weaker) dollar cannot bring forth monetary reform? What if the dollar is weaker because less people are using it …as they already are today? What if the dollar is weaker because the Treasury/Federal Reserve balance sheets look like they are approaching junk bond status …and foreigners bail out of dollars …as they already are? In reality, isn’t it the weak dollar itself (and poor financials of the issuer) that has prompted the rest of the world to seek a new reserve currency in the first place? They are tired of seeing their “savings” in dollars depreciate AND don’t fancy playing the game of “never getting paid” …!
You see Martin, dollars only promise to pay more dollars and “settlement” is never really made. With gold, because it is no one else’s liability, IS final settlement… (but you already know this of course). This is just one more difference between a “currency” and “money” that you seem not to want the public to understand? I am not sure why this is? You used to be such a beacon of logic, what happened to it? Where did it go?
One last question, what would John Edelson or Fred Manko say about your history?
CIGA Wolfgang’s response:
A few points:
-Quite simply, people FLEE a weakening currency (as you stated). Just look at Venezuela today.
What if the dollar is weaker because less people are using it …as they already are today? What if the dollar is weaker because the Treasury/Federal Reserve balance sheets look like they are approaching junk bond status …and foreigners bail out of dollars …as they already are?
-China does not want to be a reserve currency. They simply want a new basket to replace the current Dollar hegemony. Think Distributed Ledger.
‘Yes, a brave new world where the dollar is no longer the world reserve currency.
Barbara C. Matthews, a former US Treasury Department attaché to the European Union, has reached the same conclusion.
She said the link between the globalists’ currency and Distributed Ledgers “is impossible to avoid.”
And that “the IMF seems to be exploring the possibility of permitting a broader use of [their globalist currency] beyond internal transactions among member central banks.”
Make no mistake, if the IMF is planning to use Distributed Ledgers to replace the U.S. dollar with SDRs. And just to be clear, when SDRs take over, the American people will be left with devalued dollars.
On August 7, 2017, China announced they will begin using Distributed Ledger technology to collect taxes and issue “electronic invoices” to citizens there.’
-Reserve currency status is a license for monetary abuse.
“This creates a virtually unlimited demand for U.S. dollars, which allows us to print trillions of dollars each year to pay for wars, debt and anything we want. It keeps our country operating.”
-Tell the following to Germany and their “Economic Miracle” of the 1950″s (as it’s currency slowly climbed to new heights). Or to the Japanese in the 1970’s as they branded their product, raised prices, and assumed high quality production. It was literally quality product recognition that made them great.
“Hey, if the dollar declines, then interest rates will continue to travel negative, gold will collapse, the stock market will implode, and Trump will emerge as the best president in history creating massive new American jobs exporting everything not just blue jeans, rock & roll, and US corrupt law. Emerging markets can keep borrowing dollars with no end, dumping commodities that are at excess supply, and everyone will be perpetually happy – the euro will be strong at last and magically the ECB can just keep European governments on life support without end.” ….Martin
-Lastly, in regards to flow, see the chart and its importance!
As for saying denominating oil in yuan, “means nothing”, can he really believe this? According to Armstrong, “flow” is what is all important (I must agree), … and “trade is minimal”. I beg to differ….Bill.
Great article Bill.
CIGA Wolfgang Rech