Monday, June 29, 2015

"Of What Use Is A Gun With No Bullets?", BIS Says Central Banks Defenseless Against Coming Crisis

Most people in the know, know that the BIS is the central bank of central banks, including the Fed, Bank of England, Bank of Japan, European Central Bank, etc.  So when they push the panic button, it's time to sit up and notice.

Greek Contagion

Speaking of contagion:

In Italy,

In Puerto Rico,

In Portugal,

Gold Tumbles Despite UK Mint Seeing Europeans Rush To Buy Bullion

You want to know why gold bug conspiracy theorists are accurate in alleging the precious metals complex are manipulated (like most markets today)?  Because the basic economic law of supply and demand is violated repeatedly.  When a shortage in a commodity occurs, prices should rise, not plummet.

But another law mandates that price manipulations are never sustainable, and eventually, the rubber band effect will cause prices of gold and silver to skyrocket some time in the future.

Thursday, June 25, 2015

Selling a 10 oz Silver Bar for $10 (When It's Worth $160) - EXPERIMENT -

This never gets old, as it depicts how dumbed-down most Americans are regarding monetary history and currency.  But put it into context.  Encinitas is a beach town north of San Diego.  According to Zillow, average home prices are $848,300.  So the knee-jerk assumption is that residents are fairly affluent and intelligent.

Apparently not.

For The First Time Ever, QE Has Officially Failed

This is the other side of unintended consequences.  The QE mechanism is rather esoteric, so to put it in layman's terms:  what goes up, must come down.  With rising yields, bond prices drop, which will tank the equities and real estate markets.

Another way to put it is:  there is no free lunch.  Running the money printing press doesn't build long-term wealth.  It enables capital misallocation and increases the debt burden.

Crying Wolf?

Dear CIGAs,

We have all from time to time tried to help others, friends and family, by pointing them toward reality. For our troubles and efforts we have been viewed as the "squirrely" guy/gal with a tinfoil hat who see’s everything as a conspiracy. We have lost friends and even had family cringe when holiday get togethers were planned because no one wants to be exposed to our "craziness". Worse than any disease or even leprosy, anyone spouting Austrian economics or even "common sense" (almost extinct today) has been shoved into the outcast corner by the mass delusional majority. Over the last few years, "theory after theory" has become fact after FACT after FACT! There can no longer be any question, conspiracy to delude and defraud has run rampant and is a day to day operation in the Western world.

Originally my thought was to write this piece about and around the perfect response, "but you do agree the government is bankrupt, right?". I say this because almost anyone (in the U.S.), no matter what age, sex, religion, race or financial status will generally agree with this. For those who don’t agree, it is better to leave well enough alone, this is a subset living in their own delusional world.
For those who do agree "the government is broke", they are broken down into basic subsets. There are those who "get it" fully. There are those who know the government is broke but don’t really understand what it means or the ramifications (they can’t connect the dots). Another group are those who agree and know in the back of their mind this is true …but they don’t REALLY believe it because they simply cannot …"it’s too awful to comprehend". Then, we have another group, probably the largest of all, those who agree but think it really doesn’t matter. They may also believe no financial crisis will ever occur because "the government will never let it happen". Let’s talk about this group next.

The "can’t happen here" crowd only need the dots connected for them. I believe it is best to ask them questions in an effort to lead them to their own answer and understanding. This is much better than lecturing or "telling" them because they will actually have to think to answer your questions. 

Questions such as:

1.  if the government is broke, how will they make good on their obligations such as payrolls, Social Security, food stamps, paying the military and most importantly paying on their debt?  Forget the first four, "do you realize Treasury securities are what funds Social Security, your pension, the bank’s balance sheet which holds your money …AND what underlies the dollar itself?"! 
2.  If the above doesn’t work, you might ask if the economy currently "feels good"?  Then ask, do you realize the federal government spends almost 20% of GDP (and their spending is "counted" as part of GDP).  If they are broke and have to drastically cut back on spending, will the economy not shrink by the amount the government can no longer spend?  Do you see without government spending, under any definition we would be in a depression greater than the 1930′s?
I don’t want to go through the entire exercise but please understand, "guiding" someone to their own conclusion which happens to be correct is best done with questions, MANY OF THEM.  If you can, take two, three or even more philosophical roads to help them reach the same conclusion each time …the understanding will be that much more cemented in their mind when they finally do(hopefully) arrive!

Switching gears just a bit, we have seen the "mentality" change somewhat over the last year or so.  Even the mainstream is showing some signs of a shift.  This "shift" has even become evident amongst and within the "old boys club".  For example, who would have imagined Germany, Netherlands, Belgium and Austria would ever ask for their gold back?  Or Texas building its own depository and using the words "not" and "confiscate" in the legislation for proposed repatriation? 
Several very well known and at one time mainstream money managers have publicly told of the dangerous situation.  The latest is a bond manager who has gone entirely to cash, how’s this for putting a crash helmet on? Just a few weeks ago, Bloomberg put out an article asking if China could gold back the yuan.  This was significant because no news source (other than maybe Kitco) has been as bearish and slandering regarding gold than Bloomberg.

Going to the beginning and back to the top, who exactly was correct in 1999-2000? Who was correct from 2005-2008 about an impending crisis? The answer of course is the very same people screaming bloody murder today "the financial system will come apart from the seams". Are those who were correct before, now "crying wolf"? Or are they saying the same things for the same reason and forecasting the same results as before? "They" (we) were not crazy then and are not crazy now. In fact, it is even much easier to see now than previous. As a side note if you recall, we heard in late 2008 and 2009, "who could have seen it coming"? Or, "no one could have seen it coming". This is dead wrong! In fact, even within the mainstream press there was a concerted effort to silence the truth. For example, Greg Hunter while at CNN tried to warn of the banking collapse. He was told "don’t go there" and was rewarded by having his contract not renewed!

"Some" saw the dotcom bubble coming, more saw and warned of the 2008 crisis coming …and even more see this one coming. Not only are there more and louder voices today, the numbers are growing slowly but surely and even engulfing some mainstreamers who used to laugh at "us tinfoilers"!
I know how difficult it is and has been. The financial landscape is perverted beyond recognition and any time you open your mouth, you are proven wrong. Gold goes down the following day along with a new high in stocks so you look "stupid". You are not. "We" cannot make price, we can only tell the truth as we see it and suggest via common sense and logic the need to prepare for the worst. As I see it, the outcome is not in any doubt and becomes clearer each day. My fear is we are not in 2008 anymore, the coming collapse will change the world order to one unrecognizable to today. The U.S. is in fact "broke" as we spoke of at the beginning. The "realization" of this not only can happen but WILL happen. Sadly, because of how badly the U.S. has treated the world over these last years, we will be given no mercy when negotiating our bankruptcy. It will be a real live wolf at our door!

Regards, Bill Holter
Holter-Sinclair collaboration
Comments welcome!

Wednesday, June 24, 2015

Will Seizure of Russian Assets Hasten Dollar Decline?

The answer is "yes."


The Mystery Of The "Missing" Inflation Solved: Record Number Of US Renters Can't Afford Housing

Richard Russell – The Greatest And Most Destructive Of All Bear Markets Is Coming, Gold, The Great Unwind And A Critical Lesson
"Twelve-term congressman Ron Paul tells this story: "I once rode alongside President Reagan on his helicopter, and the subject of what was happening to our money came up. 'Ron,' the president told me, 'No great nation that abandoned the gold standard has remained a great nation.'" 

Ron Paul also talked about a conversation with Alan Greenspan. "He told me he still stands by his original thesis, which was published decades ago. He wrote, 'In the absence of the gold standard, there is no way to protect savings, and confiscation through inflation. There is no safe store of value.'"

Sunday, June 21, 2015

'It's time to hold physical cash,' says one of Britain's most senior fund managers
The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress.

Ian Spreadbury, who invests more than £4bn of investors’ money across a handful of bond funds for Fidelity, including the flagship Moneybuilder Income fund, is concerned that a “systemic event” could rock markets, possibly similar in magnitude to the financial crisis of 2008, which began in Britain with a run on Northern Rock.

“Systemic risk is in the system and as an investor you have to be aware of that,” he told Telegraph Money.

The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts. But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager.

His concern is that global debt – particularly mortgage debt – has been pumped up to record levels, made possible by exceptionally low interest rates that could soon end, and he is unsure how well banks could cope with the shocks that may await.

Paul Craig Roberts’ Address to the International Conference on the European/Russian Crisis Created by Washington

The Truth About The Ban On Cash, Big Brother And What Has Western Central Planners So Terrified

Wednesday, June 17, 2015

Texas Gold Repatriation Bill Has One Message To Feds: "Come And Take It"

Today Financial Journalism Suffered An Epic Failure

PetroYuan Proliferation: Russia, China To Settle "Holy Grail" Pipeline Sales In Renminbi

Did Yellen Just Throw Greenspan/Bernanke Under The Bubble-Blowing Bus?

A central banker's hypocrisy knows no bounds.

War on Retirees

Let's say a retiree has been blessed, disciplined, and prudent enough to save $1 million for their retirement.  In a savings account earning 0.1%, the retiree's annual income is $1,000.  So the solution is to put it in the safety of bonds, right?  Wrong.  If yields rise, bond prices drop.  So the bond holder not only doesn't make much, he/she will actually lose some of the principal.  Besides, at nearly zero percent, rates can only go up.

How about stocks?  It's been soaring to record highs, right?  Well, what if they flatten, or God forbid, equities drop?  10%?  60% (like the S&P500 did from 2007-2009), or 80% (like the NASDAQ did from 2000-2003)?  What then?  And oh, by the way, if interest rates rise materially, bond prices will drop, but equities will plummet.  The Fed knows this.  That's why they pin down yields on the short end of the curve.   But the bond vigilantes will eventually demand higher yields at the long end, because frankly, the US Treasury is insolvent and will NEVER be able to pay off its obligations.

Banks Fund Wars

All wars are funded by banks. The playbook is to induce deflation, so the government can grab bag assets at discounted prices. Then induce inflation by ginning up the printing press and create paper currencies to fund the war. Wash, rinse, repeat.

The Hidden Messaging Behind FOMC Announcements

The FOMC announcements from Fed Chair Janet Yellen are like Jerry Seinfeld episodes. It's a show about nothing. Her long-winded transparencies could be summed up by, "we're not raising interest rates until further notice."

The underlying message should be "We want to hike rates, but we can't because the debt servicing costs would be out of control. But we can't tell you that because markets would collapse. So, QE to infinity, bitchez!"

The “Dry Bubble” We’re In. What That Means.

Another Fed "Insider" Quits, Tells The Truth

Monday, June 15, 2015

Real Investor Psychology

The Greater Fool Theory in progress.

Click on Image to Enlarge

Rich-man’s club risks Cold War obsolescence

Russia isn't America's only anti-dollar enemy.  It's really China who has Washington most worried.

Yes, Global Times is China's propagandist mouthpiece.  But western media outlets shill for Washington's agenda also.


Prophecy?  Or scare-mongering?

The War On Cash: Officially Sanctioned Theft
The benefits to banks and governments by eliminating cash are self-evident:
  1. Every financial transaction can be taxed
  2. Every financial transaction can be charged a fee
  3. Bank runs are eliminated

Snowden, Putin, Greece: It’s All The Same Story

The Doomsday Bunker For Billionaires

Saturday, June 13, 2015

Is Deutsche Bank the next Lehman?
The nature of all fractional-reserve banks — who are by definition bankrupt at all times – is to project an aura of stability until that illusion has already begun to implode.

How One Accounting Rule Wrecked The Middle Class

The fallacies of GDP

I'll give you the Cliff notes version.  Gross Domestic Product calculations do not accurately measure a nation's economic growth.  It's, at best, a measure of monetary inflation.

Writing's On The Wall: Texas Pulls $1 Billion In Gold From NY Fed, Makes It "Non-Confiscatable"

I've blogged about this numerous times before <click here>, so there is no need for further comment, other than...
Don't Mess With Texas!  The confiscatory implications regarding sovereignty and currency options are huge.

Did COMEX Just Receive A Physical Gold Bailout From The Feds?

How Companies Mask Runaway Inflation

Wednesday, June 10, 2015

China's Global Ambitions Take Shape As AIIB Structure Revealed, Germany Pledges Full Support

China is the real threat to USDollar hegemony--the political theater is only playing out in Russia, with Ukraine as the proxy stooge.

When Saddam Hussein and Muammar Gaddafi sought alternatives to the petrodollar, they were off'ed.  It's not so easy to nuke Russia or China.

Guess How Many Nations In The World Do Not Have A Central Bank?

"Obama Is Destroying Europe", "Dragging It Into A Crusade Against Russia" Says Former French PM

The Punch Bowl Stays

Peter Schiff may be a cantankerous blowhard, but his track record of predicting the booms and busts of the economy are way better than his mainstream economist peers.

What Would Happen If Mainstream Investors Discovered Gold?

Is This Gold’s Long-Awaited Killer App?

I'm not sold on BitGold for various reasons, but I do hope they succeed, as the concept is great.  I'm skeptical due to regulation from monetary authorities who understandably view currency alternatives as threats to their power.

US to Lose Its Ground Under BRICS Pressure

Ukrainians Dispossessed, Americans are next — Paul Craig Roberts

Tuesday, June 9, 2015

Ex-US Intelligence Officials Confirm: Secret Pentagon Report Proves US Complicity In Creation Of ISIS

"That’s An Interesting Conspiracy Theory"

The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi

The end of the petrodollar is arriving fast.  What that means to US consumers is to start stacking precious metals and Chinese yuan--or store barrels of crude oil in your garage.  I'm pretty sure the latter option is illegal and unsafe.

If Your BS Detector Isn't Shrieking, It's Broken

Obama Goes Full Stalin: Tells Secret Court To Ignore Law He Signed 4 Hours Earlier, Extend Illegal NSA Surveillance

The Coming Financial Shockwave And One Of The Most Ominous Graphs I’ve Seen In My 50-Year Career

Stacking physical bullion is antithetical to trading ups and downs, but sometimes trends do tell a picture, even if they aren't 100% reliable--no trading strategy is.

In other words, generally speaking, if you think you can beat markets, re-think that notion--especially when they resemble rigged casinos.

Having said that, I'm revisiting the cup and handle formation.

And here is James Turk's take on the silver chart.

Monday, June 8, 2015

Greenspan: US 'Way Underestimating' the National Debt

Don't listen to me, but absolutely hear out Alan Greenspan.  Not because he was the former Fed Chairman, but precisely because he is no longer the Fed Chairman and can now speak the truth.

Tomgram: Michael Klare, Superpower in Distress

I actually agree with this author, Rand Paul, and Ron Paul on America's imperial overstretch.

Saturday, June 6, 2015

Oct 2015 Crisis, China Preparing for Something Big

I am not endorsing this company, but I agree with its message.  I would also caution investors on investing in mining shares, as they are some of the most volatile.  The upside is huge, but so is the downside risk.

A Hopeful Edward Snowden Says "The Balance Of Power Is Beginning To Shift"

Or, perhaps far worse, this is the power of the government to obfuscate, and to pretend it is reforming when in reality it is hunkering down even further.

Capital controls explained: Argentina edition

Jack be nimble, Jack be quick, Jack jump over the fiat stick.

Tomgram: Engelhardt, Going for Broke in Ponzi Scheme America
As that system, awash in plutocratic contributions to politics and taxpayer contributions to the military-industrial-homeland-security complex, morphs into something else, so will you, whether you realize it or not.  Though never thought of as such, your debt is part of the same system.  A society that programmatically trains its young into debt and calls that “higher education” is as corrupt as a wealthy country that won’t rebuild its own infrastructure.  Talk about the hollowing out of America: you are it.  No matter how substantial you may be in private, you are being impersonally emptied in what passes for the real world.

The "Illegal Immigrant" Recovery? The Real Stunner In The Jobs Report
The foreign born are persons who reside in the United States but who were born outside the country or one of its outlying areas to parents who were not U.S. citizens. The foreign born include legally-admitted immigrants, refugees, temporary residents such as students and temporary workers, and undocumented immigrants. The survey data, however, do not separately identify the numbers of persons in these categories.
In other words, the "foreign-born" catogory includes both legal and illegal immigrants unfortunately, the BLS is unable, or unwilling, to distinguish between the two.

Thursday, June 4, 2015

The "Better Than Cash Alliance" Has An Orwellian Plan

The US government's war on cash

Fed Urged by IMF to Delay Rate Liftoff to First Half of 2016

This charade of the Fed "normalizing" rates (letting bond yields rise) has been a pipe dream all along, as I have predicted.  The US, along with all the developed economies--including China, are entering panic mode, as endless printing of their currencies is not stimulating their respective economies.  Even mainstream financial media outlets and pundits are now questioning "unconventional" monetary expansion, something us "fringe" bloggers were questioning seven years ago.  It's merely compounding debt on top of debt.

And if yields do normalize, the piles of debt will render economies insolvent as debt-servicing costs soar.

QE to infinity!

WARNING: Western Central Banks Are Now On The Verge Of Losing Control

This daily update by Art Cashin doesn't say much, except for the brief quote by Peter Boockvar.
I’ve said this before but I’m sorry, I need to say it again. What we are witnessing in global markets is the inherent contradiction writ large that is modern day monetary policy where dangerously ZIRP, NIRP and QE are considered conventional policies. The contradiction is simply this: the desire for higher inflation if fulfilled will result in higher interest rates that central banks are trying so hard and desperately to suppress.

Outside of the short end of the curve, markets will always win for better or worse and that is clearly evident now. The ECB is getting their first taste of the market talking back and in quite the violent way. In the US, the bond market is watching the Fed drag its feet (its never-ending) with wanting to raise interest rates and finally said enough is enough. The US Treasury market is tightening for them. Since mid April, the 5 yr note yield is higher by 40 bps, the 10 yr is up by 55 bps and the 30 yr yield is up by 65 bps. 

The Fed now has two choices, raise rates in June or July and get back some control or don’t and lose it further. Bigger picture, IF the rise in rates continues around the world in coming quarters and it starts to impact global growth, central banks will then reach its next decision, whether to fight the rise with more QE or to just let markets normalize on their own. For US equities, I don’t think they should be so nonchalant with what is going on in bonds as extremely low interest rates have been their best friend over the years.

Burr told constituents not to mob ATMs

This is another example of do as I do, not as I say...

Sen. Richard Burr (R-N.C.) told his wife to pull the family's cash out of an ATM at the height of last fall's financial crisis — but he advised North Carolinians not to panic when Charlotte-based Wachovia was taken over by Citigroup in an emergency transaction around the same time. 

"On Friday night, I called my wife and I said, 'Brooke, I am not coming home this weekend. I will call you on Monday. Tonight, I want you to go to the ATM machine, and I want you to draw out everything it will let you take. And I want you to go tomorrow, and I want you to go Sunday,'" Burr told the Henderson County Chamber of Commerce on Monday.

When Wall Street nearly collapsed

How soon we forget.
On the Wednesday and Thursday after Lehman filed for Chapter 11, I asked my wife to please go to the ATM and take as much cash as she could. When she asked why, I said it was because I didn't know whether there was a chance that banks might not open. I remember my wife sort of pausing and saying, "Are you serious?" And I said, "Yes, I am."

Wednesday, June 3, 2015

Wall Street Banker Deaths Continue; Where Are the Serious Investigations?

Presenting The Next Great Source Of Middle Class Prosperity

Prior to the subprime mortgage bubble, households were using their home equity as ATM machines.  Today, it is possible to use one's automobile as collateral for more cash out loans.

So we have the student loan bubble to deal with.  Margin credit in investment accounts are soaring to all-time highs.  A roaring bond market bubble created by suppressing yields to zero.  A re-inflating bubble in certain real estate markets.  And now an auto loan credit bubble.


It’s official: the USA FREEDOM Act is just a destructive as the USA PATRIOT Act

This Is How The IMF Just Lost Its Last Shred Of Credibility

Monday, June 1, 2015

Kyle Bass Was Right: Texas To Create Own Bullion Depository, Repatriate $1 Billion Of Gold

Just as I suggested in 2011, UTIMCO wants their gold repatriated back to Texas.

It's understandable that readers may believe my unshakeable belief that all fiat currencies (including the USDollar) will collapse as being hyperbolic.

Well, the University of Texas endowment fund did exactly what I and a few others predicted back in 2011.  Here is today's zero hedge article.

And here are previous blog posts forecasting said event, with my pertinent comments:
April 18, 2011
I blogged about this last week, but wanted to reiterate that the University of Texas Endowment fund took delivery on $1 billion of physical gold bullion--not an ETF, for reasons I've blogged about many times.  Use the Search function in this blog and enter "GLD" and "SLV" on why it makes sense to avoid those precious metals-based ETF's for gold and silver, respectively.
In a nutshell, those ETF's are good proxies for spot prices of gold and silver UNDER NORMAL MARKET CONDITIONS.  But under distressed conditions, or in the case of a default in the physical markets (i.e. the custodians don't have enough physical inventory to meet their obligations), the physical spot prices will decouple from the ETF prices.  In other words, owning GLD and SLV are merely paper claims to precious metals that may or may not exist in the custodian vaults.  In the case of a shortage, the spot price may soar, while holders of GLD and SLV will be left with owning empty claims.  There's nothing worse than betting in the right direction, and still losing everything.
This is the reason why Kyle Bass advised the University of Texas endowment fund to take physical delivery of their gold bullion, removing counterparty risk.  But there is one detail they did not account for.  Since HSBC is now the custodian for the endowment fund's gold (with serial numbers of gold bars on every certificate), HSBC becomes the counterparty risk, as bullion banks have been rumored and even prosecuted for charging storage fees to clients even though their clients' inventory is no longer in their vaults.  In other words, their clients' gold had been swapped, sold, or leased out--without knowledge and consent from the client!  I'm not suggesting HSBC has been guilty of this in the past, but it has happened.  <click here>

In June of 2007, Morgan Stanley agreed to pay $4.4 million to settle a class-action lawsuit with brokerage clients who bought precious metals and paid storage fees, when in fact it was alleged that Morgan Stanley wasn't physically storing their gold and silver at all. NIA believes we may now have an epidemic of banks selling gold/silver they don't have. If this isn't exposed immediately, it could bring down the world's financial system.

January 8, 2013

Bass also serves on the board of UTIMCO, the University of Texas and Texas A & M endowment fund, which happens to be the 2nd largest ($28 billion under management), next to Harvard .  In other words, they have a lot of capital to invest, both wisely and prudently.  He's not some lunatic fringe blogger bent on the decline of western civilization.  His opinion carries weight on Wall Street--and on Texas ranches.
A couple years ago, he initiated UTIMCO's push to convert their GLD shares into $1 billion worth of solid gold bars--precisely due to counterparty risk (as in they may have legal claim to gold via a certificate, but if they don't possess the gold bars, all they own is an empty paper claim).
While I agree with him in principle, I don't believe UTIMCO went far enough.  Their gold bars do exist, but they are stored in HSBC's vaults, the custodian for the GLD ETF.  There have been some grumblings of HSBC manipulating GLD shares and physical inventory, as well as accusations of JPMorgan manipulating the SLV ETF for silver.  It's the ol' fox guarding the hen house syndrome.  If I were UTIMCO, I would go even further, and send a team of Texas Rangers to HSBC's vaults in New York, repatriate and transport those gold bars back to Austin, Texas.  After all, if/when the $hit does hit the fan, possession is 100% ownership--irrespective of legal paper claims.

From The Keynesian Archives: Who Said In 2010 That "Europe Is An Economic Success"

Here's What Happens When Your City Is Cut To Junk

Vallejo, Stockton, San Bernardino, Detroit, now Chicago.  Who's next?

Hacked Emails Expose George Soros As Ukraine Puppet-Master

Protecting Perks, Power, & Profits Has Perverted The Entire System

Click on Image to Enlarge

Europe Shocked When Russia Does To It What Europe Did To Russia

A Cynical Look At Tim Cook's Commencement Speech

The CME Cracks Down On Another Gold Spoofing Mastermind

Building 7 – The Story the NY Times Missed