-- Published: Thursday, 18 September 2014 | Print | Disqus
By Bill Holter
So many topics to choose from today, Russia is pushing back on sanctions and has already begun to cut gas supplies to Europe. The Scottish independence vote which if "yes" means the end to a 1,000 year empire and brings into question the Anglo American banking and financial systems themselves. The ISIS situation and whether (in reality "how") we go back there with boots on the ground or not. We also have the FOMC meeting and statement coming today where we will find out whether QE will be publicly discontinued or not ...I say "publicly" because the reality is such that QE will remain forever whether admittedly or in the shadows and hidden from view. We also have news of India tripling their gold demand as new physical gold exchanges open in China tomorrow. The "live" date has been pushed forward by a week or more, I can only wonder what this means because the Chinese NEVER do anything by chance or without reason.
I could have chosen any of these topics but I had a conversation with a very long time friend and client this morning and he brought up the question that seems to be burning in everyone's mind, "when?". When does everything come apart at the seams? Please don't get this wrong, he was not asking me "when?" I thought, rather, he was commenting on how many people are expecting some sort of "slow burn". He said "so many people think this will be 3 years, 5 years or even 12 years" to unravel.
Here is the point, the "fuse", or I should say "fuses" are lit from so many different directions I don't have enough fingers and toes to count them all. Only one fuse (cause) needs to reach the powder keg but the way it looks to me is we will more than likely see many reach the powder at the same time. When I say same time I believe all within the same week as many are interconnected and many will be advanced by the ignition of others.
When my buddy said "3 years" I immediately said to him "you mean 3 days right?". He said to me "that's exactly what I'm talking about, once this thing goes how can it last more than 3 days?". Let me explain this, once we "ignite" I don't see how the markets can function for any more than 3 days (two weeks at the absolute maximum) before being closed. Today, everything relies on everything else for "value" or "foundation". It's like a building block tower where pulling even one block will take the whole thing down...and this happens quickly, NOT in some slow motion, slow burn or controlled collapse. This would be nice but unfortunately not the case.
Let me backtrack just a little to make a clearer picture. Back in 1998 LTCM was feared to be one of these "building blocks" that if pulled would take the whole system down. They had capital of just under $5 billion and borrowed $125 billion with derivative notionals of $1.25 trillion. So this was leverage of 25 to 1 and then levered into derivatives another 10 to 1. This was considered "crazy" and enough to crash everything so they were rescued, sliced, diced, bailed out and wound down with a huge sigh of relief. (By the way, it was rumored they had a short position of some 300 tons of gold that needed to be absorbed and swept under the rug, this I believe was only a sign of things to come but a topic for another day).
Fast forward to 2008, leverage of 25-1 was considered "old school conservative" and falling behind the curve so to speak ...until the Lehman moment threatened to stop the music. Again, slice, dice, bailout, raid the Treasury, print and borrow $ trillions upon $ trillions and another, even more huge sigh of relief... sort of. I say "sort of" because we never really recovered. Nothing has been fixed, governments themselves are now insolvent and broke, leverage is now higher, derivatives more bloated and widespread, and now no "white knight" anywhere capable of riding in to save anything.
What I am trying to say is "what happens this time?". Notice I did not say "next time"? I said this time because "last time" really never ended and was certainly never fixed. This time there will be no bailouts, no sovereign borrowings to save the world or anything else. Just look at the Federal Reserve, they are levered 77 to 1. Were they a bank or a broker ...they would have already closed themselves down based on their own rules! They are THE most levered hedge fund in the world ...and they do what? They issue the reserve currency that the rest of the world uses as a foundation for their banking and financial systems! You do see the folly right?
OK, before going any further I want to mention another aspect to this thought of "just three days". I e-mail and converse with a very large precious metals money manager and one of the most well known "gold guys" several times a week. He is as smart and well spoken as they come and a really fun guy to throw "too many" back with. He has been in the business forever and was one of the original "voices from the woods" back at the end of the 1990's promoting gold. He e-mailed me today and asked "what do you think 'they' will do to gold and silver after the FOMC announcement this afternoon? Do you see where I'm going with this?
I mean no offense whatsoever because I really have the utmost respect for this guy but what has happened over the last two to three years has even screwed with his mind. Yes I know, it is a logical question and having the answer would be nice but... it doesn't matter! It does not matter because the system is now completely unstable and will come down and "through" the foundation itself because the "foundation" is a complete fraud. I wanted to point this out because if one of the smartest and most steadfast names in the entire business is shell shocked and jumpy by daily movements then we have to be very close to something breaking. I can say this because the "psyop" of smashing gold and silver to break sentiment has worked so well that that even the smartest of the smart are questioning themselves and having their concentration broken. Don't get me wrong, I don't believe he has sold even one ounce of anything over the last 15 years (though I have seen him drink a few) so his resolve is not broken but his concentration has been momentarily.
Let me explain the above a little further, at this point "nothing matters" except the end game. It doesn't matter "how" we get there. Fed this, QE that, manipulation, naked shorts, frauds galore ...none of it matters because it will not change anything and can only delay the end game ...but the end game does not change. The "end game" I am speaking of is the event, not the actual snapshot of a closed global financial system smoldering and worthless. The "end game" will be in my opinion a 3 day event (maybe 10, maybe just a weekend) which completely changes the psychology (and surely net worth counted in ounces) of every market participant in every market. The vast majority will be burned and the greatest transfer of wealth in ALL of history will take place ...in a very very compressed time frame.
There will be no time for professionals (forget individuals) to get repositioned correctly so forget about the "I'll do what I need to when I have to" mentality. Do NOT let your concentration be broken, do not question your logic and do not let your guard down. The rest of the world has "had it" with the fraudulent West. This is the answer to "why can't the Fed just kick the can for another 3 to 5 years?". The rest of the world will not stand for it, they have prepared to change the world and they will do this. They have every ability to do this and we have given them every reason to do so. "Wondering" when is pointless as long as you know that they will.
I will finish by saying we now have a very good "tell" that what comes is already under way. I had speculated for several years that Jim Rickards was a CIA spook, it turns out I was correct and even he admits his ties several times in this link Senator and CIA Insider Accuse Federal Reserve of Covering Up Secret Bankruptcy. He is telling you the same thing I have for several years. Only a year ago he was saying "5 years", now, well, he is saying "now!". Jim Rickards if you recall was the lead counsel for none other than LTCM in 1998 and oversaw their unwinding as they nearly took down the world. Please view the video, it is fairly long but for the most part I believe you are hearing the truth. He pulls very few punches by saying the dollar will die. Please understand how the elites work, it is considered very bad etiquette if you do not warn your "marks" ahead of time. If they do not listen or take heed ...oh well, that's why they are called "marks"!
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-- Published: Thursday, 18 September 2014 | E-Mail | Print | Source: GoldSeek.com