It’s easy to understand how people have fallen victim to “Trumphoria” when they look at their recent 401k statements, or they look at the U.S. equity markets at their all-time highs, but looks can be very deceiving. In the following interview with Bill Holter, one of the world’s leading forensic economists, Bill explains exactly why people need to begin preparing for the inevitable.
Notice how his comments are eerily similar to those made by Peter Schiff when he said, the collapse of the U.S. Dollar will be the single biggest event in all of human history! The following is just a brief quote from my interview with Bill that follows:
“We are at all time highs in markets, but confidence is beginning to crack. Some very ugly truths are beginning to come out… “
“All credit booms have ended badly, and this is the biggest credit boom in the history of history…”
Bill Holter writes:
So far this year it has been U.S. and geo politics at the forefront. Most all of my writings have had the “truth bomb” theme and rightly so as the unveiling of truth will greatly alter markets and thus market pricing and “reality”. To switch gears, let’s look at a few charts and articles to see where we really are.
First, John Rubino put the chart below out showing where the median S+P company is priced versus their revenue. Without a doubt, we are at nosebleed levels. Just a cursory look reveals a reversion to the mean going back to 1986 would see the S+P dropping more than 50%. If you turn on CNBC you will hear current levels are “normal”, I think not.
As you know, the equity markets have blown out to the upside since the election. It has been my contention that “new money” has been missing. As it turns out, we had a major short squeeze leaving short interest at three year lows. Squeeze Over? Short-Interest Plunges To 3-Year Lows This is very dangerous as we have seen this type of set up many times before …followed by very weak or crashing markets. Sentiment has become extremely one sided and the bears have been runin, who will be there to buy? Certainly not the shorts because their buying has already been largely concluded.
Another warning sign is mutual fund “cash”, this is now at ALL TIME low levels at just 3% http://kingworldnews.com/major-alert-critical-indicator-just-plunged-to-the-lowest-level-in-history/! Lastly, as depicted by the chart below, insiders were very big sellers into the Trump rally. Who would know if their company was overvalued better than an insider?
Let’s take a look at the set up for gold. While I do not like short term charts because they are painted daily, longer term charts are more difficult to paint. Below is a weekly chart of gold going back 5 years. There are several things to look at here. First, notice the “golden cross” (buy signal) that took place in late December. This is the red and blue line in the main chart crossing over to the upside (the 50 week moving average rising above the 200 week moving average). These averages move very slowly and normally only cross once in five years. This is very good and signals a trend change.
Next, please look at the red and blue lines at the bottom of the chart. This is the MACD (moving average convergence/divergence). This is much more sensitive to shorter term movements. Please notice the “hook” at the bottom right of the chart, this is signaling strength coming as it looks to be crossing over to the upside (and from the most oversold level over the last 5 years other than 2013).
While charts are made to be “painted”, the current set up couldn’t be more bullish. We had a couple of true anomalies over the past week in COMEX gold. First, going into first notice day, open interest dropped 90,000 contracts in just three trading days.
I cannot ever remember this happening to such an extent. Also, the amount of open interest for February rose on the second day of delivery period. Plus, the amount “served” on day one was about 10 tons or half of open interest. In the past, we would see very little served early and open interest decline during the month as cash settlements were made rather than deliveries.
These changes are significant in my opinion. I have written many times before that it made no sense for contracts not to be served early because of cost to carry (vault fees). What we are seeing makes much more common sense. We also have seen for the last seven months a propensity for open interest to increase during delivery period, this is indicative of demand and desire for delivered metal immediately. The drop of 90,000 contracts may very well signal the banks flattening out positions as a new sheriff comes to town? We do know JP Morgan took delivery of physical silver each and every day of January.
If Ted Butler’s claim JP Morgan held 550 million physical silver ounces prior to January is correct, we can add over 100 million ounces to that figure! As for silver, please read Steve St. Angelo’s latest https://srsroccoreport.com/critically-high-u-s-silver-supply-reliance-in-jeopardy-when-paper-markets-crack/ Ask yourself what will happen to price should a true trade war break out and we must import so much silver supply to meet demand? How will this work if tariffs are imposed or …shipments not made?
To summarize, financial markets are extremely stretched while gold, silver and mining shares are coiled for explosive movements upward. The catalysts (risks) to begin the process are too many to list but I do believe it will involve some sort of “truth” being made known, and accepted. We stand right in front of the greatest transfer of wealth in all of history, do not be caught trying to “trade” this as you may be caught wrong footed, out, or most likely not even able to react. Be long “money” as everything else is only credit and someone else must perform in order for you to collect. Trust in yourself and your own common sense as “trust” worldwide will be broken by some very ugly truths!
Standing watch with great anticipation,
The following prior article by Bill Holter shows that for the first time since becoming the global reserve currency, the U.S. Dollar is demonstratively being phased out!
PROOF THE U.S. DOLLAR IS BEING PHASED OUT RIGHT NOW AS THE WORLD RESERVE CURRENCY…
Be sure to read Hugo Salinas Price’s latest writing titled, The Further Decline in International Reserves. It’s a very short read and represents visually what Richard Russell said for years …”Inflate or Die”.
Please read it carefully because if you do not understand it, you will not understand “why” mathematically we are about to go through financial and economic disaster.
Looking at the graph below, you will notice the parabolic move began in 1971. This was possible because “debt” had previously been constrained by the amount of purported U.S. gold holdings. De linking from gold allowed literally parabolic growth in new debt issuance. The increase in reserves really started to accelerate around the year 2000 and went vertical beginning around 2008. These were both years when the economy (and markets) began to seriously falter. It has been my contention that these years also coincided with “debt saturation” milestones where Kirk called down to the engine room demanding “more power”.
Before moving on, let’s look at how Ponzi schemes work and how they die. At first, there are few investors so adding even one more sucker to the pile is meaningful as his capital can be parceled out into meaningful “dividends”. But as the scheme grows, say to 100 unsuspecting souls, one more new investor only equals 1% “payouts” to the group. Then as the pool gets even larger at 1,000 or more, one new mark is almost meaningless. As the returns shrink, people begin to look elsewhere and bail out spelling the beginning of the end. If you look at the above chart again, it pretty much mirrors the birth, growth, maturity and coming death of all Ponzi schemes…doesn’t it?
Looking at the chart from a real world vantage point, the last two plus years has been more than a minor hiccup …the parabolic “trend” has clearly changed and reversed. Mr. Salinas Price wrote that Mr. Trump has communicated desires to eliminate the trade deficit which will expedite the decline of paper reserves. I would remind you what Mr. Trump said yesterday, “the dollar is too high”! This is further evidence of a move away from globalism toward nationalism. A “lower” dollar will help our exports while curbing imports. This will truly not be good for an over levered world that relies on product sales to the U.S. to pay their debt service. Another way to look at it is through the eyes of “Smoot-Hawley” glasses, we already know what happens to trade when tariffs are erected, trade volumes implode.
For the last few years, even with the U.S. trying and struggling to “play the game”, the debt structure had already begun to slow and roll over. Now with Mr. Trump at the helm, it looks like the U.S. will no longer play the game. Simply put, “game over” will be rapidly seen and understood as inevitable where no amount of hope will trump “policy” nor Mother Nature! The credit contraction is here and now, if you know this and understand what it means, then you know where it will all end.
As mentioned at the beginning, Richard Russell’s most famous quote was “inflate or die”. With regard to the above chart, Sir Richard was saying “inflation” (growth of debt) must either continually go up AND at an increasing rate …or it rolls over and dies. This is exactly why for the last few months I have harped on “credit” and why it is so important. Credit conditions all over the world have been tightening.
The greatest fear of the Federal Reserve has always been a credit contraction that could not be reversed …their greatest fear has arrived and in spades! Please understand that “credit” affects EVERYTHING. Production, consumption and the “ability” to consume, and importantly “distribution”. Without credit, the economic, nor financial world will turn …which of course will affect the “social world” as stomachs begin to growl in hunger.
You see, unlike past “reflations”, there is now little to no unencumbered collateral left (even including sovereign balance sheets) anywhere in the world. The amount of existing debt (Ponzi clients) is so large, new additional debt (new Ponzi clients) has little to no effect on the entire pool. In other words, we have reached and past the point of “debt saturation” where the ability to add meaningful debt does not exist.
The availability to obtain new credit is winding down. Assets are now in the process of being sold to pay existing debt down, very similar to Ponzi clients asking for their money back. Mr. Trump’s proposed policies of weakening the dollar and balancing the trade deficit will only speed the process …into complete and utter chaos. The “utter chaos” part is easily forecast because of debt levels compared to current production, and financial derivatives are often 10 times or many more the underlying assets themselves. “Orderly” will not be used to describe the coming liquidation process!
THE VOICE OF REASON is the pen name of Michael DePinto, a graduate of Capital University Law School, and an attorney in Florida. Having worked in the World Trade Center, along with other family and friends, Michael was baptized by fire into the world of politics on September 11, 2001. Michael’s political journey began with tuning in religiously to whatever the talking heads on television had to say, then Michael became a “Tea-Bagging” activist as his liberal friends on the Left would say, volunteering within the Jacksonville local Tea Party, and most recently Michael was sworn in as an attorney. Today, Michael is a major contributor to www.BeforeItsNews.com, he owns and operates www.thelastgreatstand.com, where Michael provides what is often very ‘colorful’ political commentary, ripe with sarcasm, no doubt the result of Michael’s frustration as he feels we are witnessing the end of the American Empire. The topics Michael most often weighs in on are: Martial Law, FEMA Camps, Jade Helm, Economic Issues, Government Corruption, and Government Conspiracy.