http://www.jsmineset.com/2015/11/12/popular-delusions-even-if-popular-are-still-delusional/
My e-mail box has been filled up this week with panicked owners of
gold and “trolls”, it is sometimes hard to decipher which is which. I
say this because the logic being employed is in some cases panic driven
and in others just plain flawed, but similar nonetheless. Some who own
gold assets have come to the mindset that even though they know precious
metals are manipulated, they fear it will “go on forever”. The same
goes even for some of the leaders in the gold community, weak knees
abound. The bottom line is this, once the last once of deliverable gold
is received, the game will end.
Let’s ask a few questions to put this in perspective. If your local
forecaster showed you the radar of a cat5 hurricane out in the gulf
moving very slowly toward you, is there anyone or anything that could
get you to cancel your homeowners or flood insurance? This is the case
in today’s financial and geopolitical world. You see daily where
leverage has risen to previously unseen ratios. You have watched as
interest rates around the world have been zeroed out and in many cases
have gone negative. You see reported economic numbers that make no
sense and are regularly contradicted by real world experience.
Geopolitically you see the United States losing power at every turn
to the hands of China/Russia and the rest of the world. Power is being
supplanted in trade, finance, manufacturing and production, socially and
even militarily. This loss of power is unmistakable …but, none of this
matters because the stock market is up, credit markets are still stable
(on the outside), the dollar is firm versus other fiat currencies and
gold has been pressed down and down. THIS is now the “new normal” and
nearly everyone is extrapolating it forward “forever”.
Sorry to break the news to you but ALL of this is unsustainable. You
need not even take Bill Holter’s word for this, just listen to the
number crunchers and bean counters regarding Social Security, Medicaid,
pensions, healthcare, military spending, the real economy and on and
on. In many cases, the “bean counters” are previous federal employees
like David Stockman and David Walker, who better would know?
We mathematically have the largest financial hurricane of all time
coming and will be a direct hit worldwide. All of the “rigs” will be
taken down and lost. Have you ever asked yourself what the world would
look like should free markets price everything? Do you really believe
interest rates would be where they are? Or the stock markets? Would a
McDonalds hamburger only cost $3? Would you be able to get $2 gasoline
when the rest of the world in many case $5 per gallon or more? When the
financial storm hits, do you believe your bank or broker will survive
because they are “special”?
What comes will be ALL engulfing. We will see what should have
happened in 2008 but was postponed. It was “postponed”, NOT cancelled
because no policy changes were allowed to take place. What comes our
way is 2008 on steroids! No central bank, no sovereign treasury nor
collection of same will have the power to save, rescue or mitigate the
100 years of credit growth when the great unwinding comes.
As for gold (and silver), this will be your only insurance and the
only lifeboat on our global Titanic. I asked earlier, if you knew a
category 5 hurricane was about to hit, would you cancel your insurance?
If you were told over and over again your insurance company was broke
and could not pay, but then did your own due diligence and found it was
not true, would you listen to the naysayers and cancel? Currently we
are headed into December, historically always the largest delivery month
for COMEX. This at a time when nearly no gold has entered the
registered vaults for 50 days running. COMEX holds less than 5 tons of
gold while China’s Shanghai exchange is withdrawing 200 tons per month.
Do you see a problem with this? Is this any different from the FDIC
having less than a quarter penny per $100 to insure deposits? Just
because a bank run has to this point been avoided (by any and all
means), do you really believe it will “never” happen given the financial
leverage now embedded in the system? Is COMEX any different? Just
because a “run” hasn’t happened does this mean it will never? Of course
the next questions should be “what if I have money in the bank and
don’t own any gold when the storm hits”? Do you really expect your bank
account to survive or for you to have the ability to buy your way into a
lifeboat?
Maybe you feel you are smart enough to know ahead of time when
exactly the black swan will arrive. If you believe this you are fooling
yourself. Anything from a derivatives blowup, a single bankruptcy of
the wrong entity, a mistaken dogfight in the sky or at sea, a flash mob
riot or secession somewhere or even “nothing at all” will get a cascade
of defaults started that cannot be stopped. This is the nature of
credit booms …they ALL bust and this just happens to be the BIGGEST
credit orgy in ALL HISTORY! All that is “in control” now will suddenly
be out of control in an instant. All that you see as “normal” in
today’s world was 20 years ago considered insanity. Just because the
vast majority believe in a grand delusion, this does not make it any
less delusional. Once the cascade begins, your insurance company will
not be accepting applications or even phone calls at that point until
the dust clears!
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome bholter@hotmail.com
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