Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Nearly 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 16 2018
By: Ira Epstein

Silver Slumps, US Military Weak, and PTJ Says We Are headed For Scary Moments
By: David Morgan

Slowly We Turn... Gold vs.
By: Gary Tanashian

COT Gold, Silver and US Dollar Index Report - November 16, 2018

GE, Nvidia, Nordstrom, Bitcoin All Tank, And The Fed Notices
By: John Rubino

Years of Recklessly Low Interest Rates Causes Inflation to Soar
By: Nathan McDonald

Gold Miners’ Q3’18 Fundamentals
By: Adam Hamilton, CPA

GoldSeek Radio Nugget: Bill Murphy and Chris Waltzek

Is Gold Under or Overpriced?
By: Arkadiusz Sieron


GoldSeek Web

Contraction Of Credit… Central Bankers Greatest Fear!

 -- Published: Sunday, 28 February 2016 | Print  | Disqus 

By Bill Holter

   Just a short comment on a VERY BIG problem!  The below chart shows "margin" balance on the NYSE with an inverted chart of the S+P 500 laid over it.

  Please notice the amount of credit being used to carry stocks now is significantly larger than it was at previous market tops in 2000 and 2007.  Also, the amount of credit has begun to contract, this is a classic margin call being met far.  The danger of course is as it always has been when margin builds like this.  As the equity market pulls back, margin calls are issued and in some cases "forced sales" are done.  This can, has in the past and most likely will occur and morph into a virtual loop where forced sales weaken prices, creating new margin calls and more forced sales in a negative feedback loop...otherwise known as a market panic.

  It does need to be pointed out, there will be no "white knight" this time around as there are none left.  The Fed rode in and save the markets in late 2008.  It was discovered after the fact they lent $16 trillion all over the world.  They have blown their balance sheet from some $600 billion in 2007 to a current $4.5 trillion.  The Treasury had about $9 trillion of on books debt with a $14 trillion economy.  Now the Treasury owes $19 trillion (the real number is multiples of this) supported by a $17 trillion economy (this amount is questionable). 

  My point is this, in the past when margin debt got to outsized levels it created "bubbles" as it has now.  Once the margin debt begins to contract, this is when the waterfall action begins and this is exactly where we are today!  Margin debt is contracting with the background of a financial system that is having liquidity problems.  Top this off with central banks already all in, and sovereign treasury balance sheets bloated with more debt than the size of their underlying economic output. 

  Please spend a couple minutes and study the above chart.  Governments can and do lie.  Brokers can and do lie.  Hard and fast statistics and the following results do not.  The contraction of margin debt has commenced and markets are following like clock work.  What follows this will be the greatest fear central bankers have always had, a general credit contraction.  The problem of course is this credit contraction is coming during a time of unprecedented leverage in both gross and relative terms!  The 1930's saw much pain but neighbors helped neighbors in that episode.  The morality and sense of union in the 1930's is nearly gone, unfortunately almost extinct!

Standing watch,

Bill Holter for;

Holter/Sinclair collaboration.

Bill Holter writes and is partnered with Jim Sinclair at the newly formed Holter/Sinclair collaboration.

Prior, he wrote for Miles Franklin from 2012-15. Bill worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards. He left Wall Street in late 2006 to avoid potential liabilities related to management of paper assets. In retirement he and his family moved to Costa Rica where he lived until 2011 when he moved back to the United States. Bill was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-present.


| Digg This Article
 -- Published: Sunday, 28 February 2016 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2018 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of, its affiliates or advertisers. makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, is strictly prohibited. In no event shall or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.