Posts Categorized: General Editorial

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With the coming financial crisis and subsequent economy, lots of things which have been a part of the American way of life will change out of economic necessity. Lots of “middlemen” will be removed from the stream of commerce.  This is already seen and fostered by online purveyors, but certain businesses could be eliminated entirely.

Auto dealerships are middlemen who may be eliminated. This will not really help the consumer through a better vehicle price because manufacturers will merely raise prices if permitted to sell directly to the public. The auto dealership has been a business which has been a historically significant part of our business culture, but may not be around for long after the coming financial crisis.

Dealerships are middlemen between the consuming public and the auto manufacturer. These dealerships exist due to franchise laws which prevent auto manufacturers from selling vehicles directly to the public. Dealerships are already struggling to keep their lights on in the present economy. Most people today don’t buy vehicles ~ they lease them. A restructuring or repeal of franchise laws could eliminate dealerships. A repeal of franchise laws may be viewed as necessary to keep the auto manufacturers financially solvent and able to continue production. Auto dealers don’t have a powerful lobby, but auto manufacturers do. The repeal of franchise laws could render franchise contracts avoidable and would have the effect of shuttering auto dealerships.

If dealership franchises were eliminated, the subsequent economic impact would be the loss of those retail jobs, services, utilities, insurance, taxes and attendant carrying costs which support such businesses. It would be possible then for vehicle manufacturers to merely have it’s agents place orders for vehicles and outsource warranty work. Then, manufacturers could raise prices to keep up with whatever demand remains for vehicles and be able to remain in production. The ripple effect of a repeal of the franchise laws would support the manufacturers and keep manufacturing jobs, but spell economic disaster everywhere a dealership presently exists. If this seems unlikely, it may not be when triage in supply and demand occurs. Dealerships can’t sell something which does not exist because manufacturers are out of business and government can’t bail them out. If the middlemen or the manufacturer is to be sacrificed, I submit to you that it will be the dealerships.

The auto industry is among the largest manufacturing industries which remain in the USA and keeping them going will have priority over middlemen who would go under anyway absent their vehicle supply from manufacturers. The government makes the laws and can change the laws. Although there is a mandate in the USA against government impairing contracts, this has not been the case, and we need to look no further than the healthcare sector to see what is required of the consumer and the provider whether, either agrees or not.

Another sector of middlemen which could be eliminated due to financial necessity is in Real Estate. It is already occuring and already being seen. This elimination is a slower consumer driven demise which doesn’t require a change in the laws, it only requires a change in public perception and public education. Real estate is not a sector which has or needs a lobby but it does need a constituency. The constituency is home buyers and sellers.

Many sellers are already moving to the personal sale of real property. Personal sales of property are legal and a seller doesn’t need a real estate broker/agent to sell their own property, privately.  Some people are not capable of negotiating the purchase and sale of real estate, but many are, and only need information and opportunity to sell real estate privately.

Real estate commissions are ultimately a choke point for sellers who can’t afford the loss of those proceeds of a sale. This is especially true in an ever tightening market. More and more, sellers are disillusioned with listings not selling, and many are reverting to their lawful right of “For Sale By Owner” (FSBO). Real estate agents and brokers are middlemen just like auto dealerships. The issue sellers have with sales isn’t that they can’t achieve a bargain and sale with a prospective purchaser, it is the sellers inability to attract a buyer to make their property known to the buying public, and the information needed to sell. Anyone can go to a stationery store, or online to acquire a Real Estate Purchase and Sales Contract. Those contracts should ultimately be reviewed by an attorney, but the era of “caveat emptor” could be the framework of the future real estate market.

With online real estate advertising service providers like Zillow and Trulia, or FSBO sites, or even Craig’s list, real estate agents and brokers can be eliminated from real estate sales at a significant savings. Real estate agents and brokers could be the dinosaurs of real estate sales and it is happening already, especially in areas of already depressed housing market, and areas with older housing stock. The real estate agents and brokers are already a dying breed in some areas and for this reason, they may not survive a financial crisis.

Cutting out the middleman is going to be the new business model following a financial crisis. Any intermediary which can be by-passed in any supply chain will be eliminated due to economic necessity. The Internet which provides direct access to producers will continue to eliminate the middleman. Online purveyors like Amazon are already cutting out the middleman and it is the wave of the future. It really isn’t a wave…it’s a tsunami!

CIGA Kat

Posted by & filed under General Editorial.

We ran this article last week for subscribers and are releasing it for the public this week. (We will then also re-run an article done last summer regarding junk silver.) Currently an anomaly exists that only a couple years ago could not have been imagined. 10 years ago it would have been considered an impossibility!

Back in 2010, when gold traded around $1,000 per ounce, “numismatic” pre-1933 gold coins traded for huge premiums. This happened because there was fear the Obama administration might go the route of FDR and confiscate bullion. That did not happen, but we did get to see a precursor to what might be should (when?) confiscation become a reality.

As a background, (and we will focus on pre-1933 $20 MS63 Liberties and MS64 Saint Gaudens), these were the “cutoff” grades in the past. It was at these grades where the premiums over spot gold took a huge leap from just one grading below. Just a couple of years ago, MS63 $20 Libs were $75-$150 higher than the MS62’s. Back in 2010, MS63 $20 Libs were “bid”, meaning dealers were willing to pay $1,800 while spot gold was only $1,000. Currently you could say the jumping off point to the highest grade numismatics is at the MS63 grade for Liberties and MS64 for Saints. The next grades higher carry much higher premiums. Please keep in mind, these grades of MS63 and MS64 are way up the totem pole and represent extremely high grading and thus rarity.

As we told you last summer, premiums really compressed for the numismatics, particularly the MS60-62 range. These could be purchased for roughly the cost of a current year American gold eagle or Canadian maple leaf. Now, MS63 Libs and 64 Saints have seen premiums shrink to roughly that of eagles. This offers an incredible opportunity whether you are an outright buyer or want to swap current bullion into rare and uncirculated coin. Current pricing is stupid cheap!

Why have premiums collapsed? Because since 2011, the bear market in precious metals has destroyed sentiment and created sellers who became worn out, just as a severe bear market in real estate might reduce or even wipe out premiums for waterfront vs. inland property. The premiums will once again expand but confidence and desire to own must occur for the premiums to begin to come back. Should a whiff of confiscation come about, good luck finding ANY product resembling the spot price of gold…

What I am talking about here is positioning yourself in gold which we believe to be the ultimate financial lifeboat …but in a first-class seat without paying any additional fare to do so. Your downside is the price of spot gold, your upside is not quantifiable but very substantial based on history. In the event of confiscation fears or outright confiscation of bullion, your “coin collection” could become priceless. These are 100+year old, uncirculated and individually graded, documented and individually packaged coins considered as “collectibles”.

If you do not own gold and are looking to enter, these higher-grade collectibles are the preferred seat without the higher fare. If you already own bars or current sovereign bullion, you can swap at very little cost into a first-class seat. When retail demand does re-emerge, the spread between a MS62 $20 Lib versus a MS63 $20 Lib may move from the current ridiculous $20-$30 to $100 or many, many multiples. The time to purchase anything of high quality is when the entire sector is on a fire sale. That time is now!

If this is something you’d like to explore, please contact me at bholter@hotmail.com. I will be happy to discuss this with you and explain all the logistics involved.

Standing watch,

Bill Holter

Holter-Sinclair collaboration

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We have spoken for the last couple of weeks to subscribers how important it is to not allow your broker to hold your stocks if you wish to prevent them from lending them to short sellers.  I am amazed at how many readers have not done this as Jim has spoken of it since at least 2005.  He has also advised investors either DRS their shares or have physical certificates sent to them…yet here we are in 2019 and I am getting bombarded with questions like “why” and “how”.

How?  Contact your broker and tell them you want your shares sent to the transfer agent and then tell the transfer agent to send the certificate sent to you.  Why?  Because your broker effectively neutralizes your original purchase share for share when they lend them to a short seller who will do what short sellers do…SELL the stock you paid for and were dumb enough to allow your broker to lend them!

With regards to the mining share near and dear to our hearts, I have now seen a letter from a broker to a shareholder with my own eyes.  The broker offered 55%/per annum to their customer if they would lend their shares out.  One should probably ask “why”?  Why would a broker offer 55% to borrow shares of any specific company if the current norm to borrow is something like 5% or 6%?  We have also checked with various brokers to see what the cost to borrow is.  It seems the number is now approaching and even over 100% per annum.  Does this make sense in any fashion?  One could conclude there might be a tad bit of a problem on the short side, specifically finding borrowable shares?

In a world where interest rates hover near all time humankind lows, does your eyebrow raise when you hear a broker offering clients 55% per annum to lend their shares?  Does it not tell you something is very, very wrong in this instance?  Does anyone remember the VW short squeeze?

To quote again, “he who sells what isn’t his’n, buys it back or goes to prison?”

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Posted by & filed under General Editorial.

Via Michael Oliver’s Momentum Structural Analysis michaeloliver@olivermsa.com

For MSA’s history and an introduction to its methodology visit: www.olivermsa.com

Central Banks, The Stock Market, And Gold
March 10, 2019

When the pillars of the asset category that “must” be defended—the stock market—begin to crumble, the central banks always come in with policy guns a blazin’. And again, continuing with policies never imagined before—QEs, ZIRPS, and NIRPS. Game’s on. If you, as an investor or manager, thought CBs had plateaued in their policies of the recent decade, think again. Despite their academic nose-in-the air press conferences, the reality is that their stock markets must always remain inflated. Although couched in such language as “data sensitive” or Draghi’s “the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets,” the CBs’ message is clear. Rattle their stock markets and they’ll intervene in asset pricing as best they can. And given the success of that artificial pricing over the past decade, they’re no doubt confident they’ll continue to succeed. And so do many investors.

On the financial channels, investors and talking heads consider a likely renewal of easy central bank policy “good for the stock market.” No doubt President Trump is also pleased by Powell’s sharp reversal.

The CBs know they must push the pedal to the metal again. But the problem is that investors aren’t likely to direct the flow into the inflated bubble that the CBs so desperately want to keep inflated—namely, the developed market stock indices. The Fed, ECB, and BOJ know what will happen if those plaster and plywood skyscrapers crumble and give back their false pricing gains (especially from late 2011 to 2018). Such a downturn in that category will generate on-the-ground desperation and fracturing beyond anything seen in 2008. And they know that, though don’t mention it in their press conferences. That’s why the Fed raised its white flag so rapidly and with such little encouragement in December, thus rejoining the “print into infinity” policy.

Nice. We know where they stand now.

Article PDF

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Think awhile about this great new technology.

Are you hearing those voices again?

What are they saying to you?

Are they telling you how to vote? Are they threatening bodily harm to your loved ones, if you do not perform as instructed?

This is better than Alexa screeching at you at 3 AM.

Just wait until this is weaponized, and then used domestically for purposes of controlling civilian populations.

Next, Nick Tesla’s “Death Ray” will be perfected, if it has not already taken place. Put them together and the voice from nowhere will say “Good bye” to you just before the “Ray” engulfs you.

Maybe I should take the “X Files” off of my Netflix preferred list.

Also, do you think 5G can be weaponized?

The biggest problem with laser weapon technology is that you cannot precisely aim, and a laser weapon firing continues far beyond your ill aimed at target.

They shoot LASER-like beams precisely where they need to go…

These boxes leverage high-gain, adaptive antenna technology and sophisticated best-path-selection algorithms.

They are powered by something called MU-MIMO 802.11ax – which stands for multiple user, multiple input, and multiple output antennas.

If you’re an MIT scientist or Harvard engineer – I’m sure you understand that perfectly.

Jim

New Technology Uses Lasers to Transmit Audible Messages to Specific People
January 23, 2019

WASHINGTON — Researchers have demonstrated that a laser can transmit an audible message to a person without any type of receiver equipment. The ability to send highly targeted audio signals over the air could be used to communicate across noisy rooms or warn individuals of a dangerous situation such as an active shooter.

In The Optical Society (OSA) journal Optics Letters, researchers from the Massachusetts Institute of Technology’s Lincoln Laboratory report using two different laser-based methods to transmit various tones, music and recorded speech at a conversational volume.

“Our system can be used from some distance away to beam information directly to someone’s ear,” said research team leader Charles M. Wynn. “It is the first system that uses lasers that are fully safe for the eyes and skin to localize an audible signal to a particular person in any setting.”

More…

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Dear Readers,

For my interests, this is exactly what I  anticipated gold majors would do as the most predictable result of the shocking depletion of new gold finds of significant magnitude any where in the world.

Majors do not explore. Those majors that do have always done a total lousy job of it. They make up rules of exploration that totally tie the hands of the”Out of the Box” mine finders, from which new supply has ALWAYS come.

See: http://www.cloud-capture.com//gc/Final.mp4

Jim Sinclair

Executive Chairman

j.sinclair@tanzanianroyalty.com

Mining.com

Megamerger Push Has Gold Miners Eyeing New Dance Partners
March 7, 2019

A push by the world’s biggest gold miners to get even bigger will likely have a knock-on effect among their competitors, adding new vigor to an industry that failed to inspire investor support in 2018.

The megamerger mania now under way for Newmont Mining Corp., Barrick Gold Corp. and Goldcorp Inc. is likely to result in some of their assets being sold, helping to diversify portfolios for other miners and boosting the interest of investors. More importantly, it could force mid-tier companies to team up in order to successfully compete.

“This is a competitive marketplace in terms of attracting capital, and you have to make a decision at some point,” Michael Siperco, an analyst at Macquarie Capital Markets, said in a telephone interview. “Yamana, Kinross, Iamgold — what’s the strategy here in terms of not getting absolutely left behind?”

More…