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Precious metals expert and financial writer Bill Holter says the recent underreported announcement by the UBS CEO Sergio Ermotti in Switzerland that his bank might need a “rescue” is yet another sign on the short road to the end of the global Ponzi scheme backed by the US dollar reserve currency. Holter points out, “You’ve got a sick bank (Credit Suisse) that is being bailed out by another bank (UBS) that may turn out to be sick. My question is who is going to bail out these central banks? You have got the Fed with a $9 trillion balance sheet. The last time, the Fed went from $900 billion to $9 trillion. Can the Fed now go from $9 trillion to $90 trillion? Who is going to bail out the Fed? Who is going to bail out the US Treasury? Who is going to bail out the Bank of England, the ECB or the Bank of Japan? These central banks have completely blown up their balance sheet and have no ability to save anything. My question is who is going to save them?”

Can’t they cut interest rates again like they did in 2009? Holter says, “If they cut interest rates from here, you would see the dollar absolutely crash. The only reason the dollar has not crashed is interest rates have basically gone from 0% to 5%. They have done that in a year and a half which is the fastest increase in interest rates in all of history.”

So, rate cuts will devalue the dollar. Can you pay trillions of dollars borrowed in Treasury Bond back in confetti dollars? Holter says, “Yes, you absolutely can pay back your debt in confetti. It’s been done many, many times before as currencies get lost…

…click on the above link to read the rest…

The Financial System Has Reached the End

November 28, 2023

THE FINANCIAL SYSTEM HAS REACHED THE END

The world is now witnessing the end of a currency and financial system which the Chinese already forecast in 1971 after Nixon closed the gold window.

Again, remember von Mises words: “There is no means of avoiding the final collapse of a boom brought about by credit expansion.”

History tells us that we have now reached the point of no return.

So denying history at this point will not just be very costly but will lead to a total destruction of investors’ wealth.

POLITICIANS LIE WITHOUT FAIL

History never lies but politicians do without fail. In a fake system based on false values, lying is considered to be an essential part of political survival.

Let’s just look at Nixon’s ignorant and irresponsible statements of August 15, 1971 when he took away the gold backing of the dollar and thus all currencies.

Later on we will show how clearsighted the Chinese leaders were about the destiny of the US and its economy.

So there we have tricky Dick’s lies.

The suspension of the convertibility of the dollar in 1971 is still in effect 52 years later.

As the dollar has declined by almost 99% since 1971, the “strength of the economy” is also declining fast although using fiat money as the measure hides the truth.

And now to the last lie: “Your dollar will be worth as much tomorrow”. Yes, you are almost right Dick! It is still worth today a whole 1% of the value when you closed the gold window.

The political system is clearly a farce. You have to lie to be elected and you have to lie to stay in power. That is what the gullible voters expect. The sad result is that they will always be cheated.

CHINA FORECAST THE CONSEQUENCES ALREADY IN 1971

So in 1971 after Nixon closed the gold window, China in its official news media the People’s Daily made the statements below:

…click on the above link to read the rest…

Dutch Central Bank Admits It Has Prepared for a New Gold Standard

November 20, 2023

Dutch Central Bank Admits It Has Prepared for a New Gold Standard

In a recent interview the Dutch central bank (DNB) shares it has equalized its gold reserves, relative to GDP, to other countries in the eurozone and outside of Europe. This has been a political decision. If there is a financial crisis the gold price will skyrocket, and official gold reserves can be used to underpin a new gold standard, according to DNB. These statements confirm what I have been writing for the past years about central banks having prepared for a new international gold standard.

Wouldn’t a central bank that has one primary objective—maintaining price stability—serve its mandate best by communicating the currency it issues can be relied upon in all circumstances? By saying gold will be the safe haven of choice during a financial collapse, DNB confesses its own currency (the euro) does not weather all storms. Indirectly, DNB encourages people to own gold to be protected from financial shocks, making the transition towards a gold based monetary system more likely.

photograph of gold bars on pallets at gold vault of Dutch National Bank

Old gold vault of DNB in Amsterdam.

How to Prepare for a Gold Standard

In my latest article on this subject—“Europe Has Been Preparing a Global Gold Standard Since the 1970s. Part 2”—I have demonstrated that central banks of medium and large economies in the eurozone have balanced their official gold reserves, proportionally to GDP, to prepare for a gold standard (/gold price targeting system). My analysis was pieced together by scarce quotes from central banks and data of European gold and foreign exchange holdings. My conclusion was that several medium-size economies in Europe (the Netherlands, Belgium, Austria, and Portugal) sold large amounts of gold from the early 1990s to 2008 to come on par with France, Germany, and Italy. I wrote:

…click on the above link to read the rest…

The Cycle of Evil

November 3, 2023

THE CYCLE OF EVIL

We are on the inevitable road to perdition for the world economy & financial system, ending in a potential global conflict of uncontrollable proportions.

Evil begets evil as The Cycle of Evil hits countries at the end of an uncontrollable debt expansion.

The pattern throughout history has always been the same – countries and empires, without fail, become victims of their own success -failure, whether it was the Mongols, Ottomans or the British.

As real growth ceases, a country starts to finance expansion with debt until it cannot even afford the interest on the debt, never mind the capital which it has no intention to repay.

At some point, the people, fearing a war or terrorist attack will approve of the leader’s fear mongering by supporting unlimited debt issuance. This is now happening in the US with regard to Ukraine and Israel.

Neither the US nor Europe is taking a single step to remedy the situation. Both are now in the Cycle of Evil of more deficits, more debt, higher interest costs, leading to more deficits, more debt higher interest costs, leading to ……………..

The Cycle of Evil is also accompanied by decadence and moral decline where leaders invent problems that are not real such as climate change, ESG (environmental, social and governance), forced vaccines and incarcerations, 25 new genders and other woke issues etc.

Few Americans understand that the next stage of the Cycle of Evil is about to hit them.

And even fewer Europeans have a clue that they will be dragged down into the same debt collapse quagmire.

The next stage will involve many banks failing, more than the FDIC or government can afford to save without destroying both the Currency and the Bond Market,

A collapsing currency and sovereign debt paper that no investor wants to touch with a bargepole is hardly the right climate for massive debt issuance.

…click on the above link to read the rest…

The Myth of the Invincible Dollar

October 15, 2023

The Myth of the Invincible Dollar

I write a lot about the national debt.

And most people don’t care.

That’s because there’s a widespread belief that the dollar is invincible.

It isn’t.

The prevailing attitude is that the US government can borrow and spend indefinitely. After all, it hasn’t caused a problem so far. But a long fuse can burn for a long time before it finally reaches the powder keg.

I don’t know how long we have before the debt bomb explodes, but I do know we get closer and closer every day. And sadly, very few people care enough to address the problem.

The recent government shutdown drama is a case in point.

A stopgap spending deal swept the shutdown threat out of the headlines, but it’s still there lurking in the shadows of the halls of Congress. If lawmakers don’t figure something out by Nov. 17, the government will be forced to shut down.

There isn’t much talk about a shutdown right now, but when people do discuss the possibility, they almost always focus on the mythical crisis that shuttering the federal government might cause. That sidesteps the real problem — out of control government spending.

Conventional wisdom is that Congress needs to do whatever it takes to avoid a shutdown. If that means maintaining spending at current levels or even increasing spending, so be it. The handful of intransigent members of Congress who want to hold out for spending cuts are always cast as the bad guys in this kabuki theater. As economist Daniel Lacalle put it in a recent article published by Mises Wire, “The narrative seems to be that governments and the public sector should never have to implement responsible budget decisions, and spending must continue indefinitely.”

…click on the above link to read the rest…

Unwinding the Financial System

October 6, 2023

Unwinding the Financial System

This article looks at the collateral side of financial transactions and some significant problems that are already emerging.

At a time when there is a veritable tsunami of dollar credit in foreign hands overhanging markets, it is obvious that continually falling bond prices will ensure bear markets in all financial asset values leading to dollar liquidation. This unwinding corrects an accumulation of foreign-owned dollars and dollar-denominated assets since the Second World War both in and outside the US financial system.

Furthermore, collapsing collateral values, which are increasingly required backing for changing values in over $400 trillion nominal in interest rate swaps are a new driver for the crisis, forcing bond liquidation, driving prices down and yields higher: we are in a doom-loop.

What action can the authorities take to ensure that counterparty risk from widespread failures won’t take out inadequately capitalised regulated exchanges?

It seems that they acted some time ago by giving central security depositories (The Depository Trust and Clearing Corporation, Euroclear, and Clearstream) the right to pool securities on their registers and lend them out as collateral. Your investments, which you think you may own can be absorbed into the failing financial system without your knowledge.

This seems particularly relevant, given the appointment of JPMorgan Chase as custodian of the large gold ETF, SPDR Trust (ticker GLD). In a test case in the New York courts concerning Lehman’s failure, JPMC was given legal protection should it seize its customer’s assets.

This important erosion of property rights is poorly understood. But as the financial distortions are unwound, leading to unintended consequences such as bank failures and ultimately the collapse of the dollar-based fiat currency regime, the implication is that holders of physical gold ETFs will be left owning an empty shell at a time when they might have expected some protection from the collapse of the value of credit.

…click on the above link to read the rest…

Don’t Dismiss the Possibility of Gold Confiscation

September 5, 2023

Don’t Dismiss the Possibility of Gold Confiscation

If you hold precious metals in your portfolio, there is a good chance you fear hyperinflation and the crash of fiat currencies.

You probably distrust governments in general and believe they are self-serving and have no interest in your economic well-being. It is likely that your holdings in gold are your lifeline – your hope to get you through these times while holding on to your wealth.

But have you ever given any thought to the possibility of having this lifeline confiscated by the authorities?

In my conversations with friends and associates, I have often raised this question. The typical responses:

“They’d never do that.”

“I’ll deal with that if and when it happens.”

“I just wouldn’t give it to them.”

I consider these “wishful thinking” responses.

It’s an interesting thought that the greatest threat to gold and silver investment might not be the possibility of losing on the speculation, but the government taking it away from you. It’s a thought that I’ve found few want to even think about, let alone discuss.

If you fall into this camp, you’re in good company. Some of the forecasters whom I respect most highly also treat it either as unlikely or at best, “something we may need to look at in the future.” To date, in conversing with top advisors worldwide, the two primary reasons they believe gold will not be confiscated are:

“Confiscation would mean the government acknowledges the reality of the value of gold.”

Yes, this is quite so. They would be changing their official view… which, of course, they do all the time. But I submit that all that they need to do is put the proper spin on it.

“They would meet greater resistance than they did back in ’33.”

…click on the above link to read the rest…

Rising GDP + Rising Yields = A MAJOR Sign of “Uh-Oh”

September 5, 2023

Rising GDP + Rising Yields = A MAJOR Sign of “Uh-Oh”

Have you heard the good news?

The Atlanta Fed GDPNow estimates a 5.9% growth in real GDP for Q3 2023. In nominal terms, we can even boast of an 8.9% surge.

What fantastic news! Growth! Productivity!

This must mean we can all breath a collective sigh of relief as Powell continues his valiant war against inflation as GDP rises, right?

I can almost hear the champagne bottles popping from the Eccles Building to the Bezos-owned Washington Post.

The financial wizards have saved us once again, right?

Wrong.

Oh, so, so, so, so WRONG.

Why?

Debt-Driven Growth is Not Growth, but a Slow Death Trap

As usual, the answer lies in math, history and, of course, THE BOND MARKET.

For years and years, I have tried to make one point (and indicator) almost reflexively clear, namely: The Bond Market Is the Thing.

This is because the bond market reflects debt forces, the most cancerous of all market killers once they metastasize from the acceptable to the fantastical, and the cheap to the unaffordable.

Today, we stare upon the greatest national and global debt bubble in history.

And the cost of that debt is getting higher, not lower.

This should be the key theme of every conversation, but instead, our citizens are arguing over gender neutral bathrooms and exciting politicos (opportunists) scurrying for power like donkeys fighting for hay.

Far better, in my opinion, if the people understood boring things like sovereign bonds…

In particular, they just need to consider and understand yields on Uncle Sam’s IOU (with particular emphasis on his 10-Year UST), which tells us the market’s measurement of the cost of debt.

…click on the above link to read the rest…

The West Is Losing Control Over the Gold Price

August 29, 2023

The West Is Losing Control Over the Gold Price

TABLE OF CONTENTS:

Introduction The West is Losing its Gold Pricing Power The East on a Gold Buying Spree Conclusion

An important change has unfolded in the global gold market. The East has been driving up the gold price, predominantly in late 2022 and the first months of 2023, breaking the West’s long standing pricing power.

Gold bazaar in Turkey. Pricing power in the gold market has recently shifted to the East.

Until recently, Western institutional money was driving the price of gold in wholesale markets such as London, mainly based on real interest rates. Gold was bought when real rates fell and vice versa. However, from late 2022 until June 2023 gold was up 17% while real rates were more or less flat, and Western institutions were net sellers. Most likely, Eastern central banks, and Turkish and Chinese private demand, lifted the price of gold.

Introduction

For about ninety years, up until 2022, there was a pattern of above-ground gold moving from West to East and back, in sync with the gold price falling and rising. Western institutions set the price of gold and bought from the East in bull markets. In bear markets the West sold to the East. For more information read my article: The West–East Ebb and Flood of Gold Revisited.

If we zoom in on the period from 2006 through 2021 the main reason for Western institutions to buy or sell gold was the 10-year TIPS rate, which reflects the 10-year expected real interest rate (“real rate,” in short) of US government bonds.

The physical gold price was predominantly set in the London Bullion Market and to a lesser extent Switzerland. Gold trade in London can be divided in three categories:

…click on the above link to read the rest…

Hedging the End of Fiat

August 28, 2023

Hedging the End of Fiat

It is slowly coming clear that the fiat dollar’s hegemony is drawing to a close. That’s what the BRICS summit in Johannesburg is all about — rats, if you like, deserting the dollar’s ship. With the dollar’s backing being no more than a precarious faith in it, it is bound to be sold down by foreign holders. Being only fiat, it could even become valueless, threatening to take down the other western alliance fiat currencies as well.

How do you protect your paper wealth from this outcome? Some swear by bitcoin and others by gold.

This article looks at what is likely to emerge as a replacement currency system, and concludes that from practical and legal aspects, bitcoin and the entire cryptocurrency industry will fail with fiat, while mankind will return to gold, as it has always done in the past when state control over currency fails

Introduction

It is gradually dawning on market participants that the era of fiat currencies is drawing to a close. Monetarists, who first warned us of the inflationary consequences of the expansion of money and credit were also the first to warn us that the slowdown in monetary expansion would lead to recession, and since then we have seen broad money statistics flatline, with bank lending beginning to contract. This is interpreted by macroeconomists as the end of inflation, and the return to lower interest rates to stave off recession.

Unfortunately, this black-and-white interpretation of either inflation or recession but never both has been challenged by bond yields around the world which are rising to new highs. And the charts tell us that they are likely to go considerably higher. Consequently, conviction that inflation of producer and consumer prices will prove to be a temporary phenomenon is infected with doubt.

…click on the above link to read the rest…

Why the dollar is finished

July 23, 2023

Why the dollar is finished

Last week in my Goldmoney Insight, I analysed the rationale for a new gold backed trade settlement currency on the agenda of the BRICS summit in Johannesburg on 22—24 August. This article is about the consequences for the dollar-based fiat currency regime.

There is strong evidence that planning for this new trade settlement currency has been in the works for some time and has been properly considered. That being so, we are witnessing the initial step away from fiat to gold backed currencies. Without the burden of expensive welfare commitments, all the attendees in Johannesburg can back or tie their currency values to gold with less difficulty than our welfare-dependent nations. And it is now in their commercial interests to do so.

We have been brainwashed with Keynesian misconceptions and the state theory of money for so long that our statist establishments and market participants fail to see the logic of sound money, and the threat it presents to our own currencies and economies. But there is a precedent for this foolishness from John Law, the proto-Keynesian who bankrupted France in 1720. I explain the similarities. That experience, and why it led to the destruction of Law’s livre currency illustrates our own dilemma and its likely outcome.

It’s not just a comparison between fiat currency and gold. America’s financial position is dire, more so than is generally realised. The euro is additionally threatened with extinction because of flaws in the euro system, and the UK is already in a deeper credit crisis than most commentators understand.

Introduction

On 7 July, news leaked out and was then confirmed by Russian state media that the BRICS meeting in Johannesburg would have a proposal on the agenda for a new gold-backed currency to be used exclusively for trade settlement and commodity pricing…

…click on the above link to read the rest…

Modern Currency Policy: Nations Compete, Citizens Suffer

June 28, 2023

Modern Currency Policy: Nations Compete, Citizens Suffer

Below we consider how modern currency policy may not be so good for, well, the people…

This is why gold inevitably enters the conversation, for unlike policy makers, this old pet rock garners more trust.

Gold, of course, loves chaos, tanking currencies and cornered, debt-soaked nations, the numbers of which rise with each passing day.

We see currency debasement as mathematically and historically inevitable, though we have no clue (no one really does) as to the precise date, trigger or time the already teetering fiat money systems fall over the global debt cliff.

We only know that the $300+T cliff is here, and that nations are racing toward it at historical speed, with equally historical consequences.

Physical gold holders, however, enjoy a certain and calm advantage: They don’t need to be precise timers; simply patient owners.

As for more signs of the move toward weakening currencies in general, and a weakening USD in particular, let’s look at some more history and current facts.

Hot vs. Financial Wars: Today’s Evidence, Tomorrow’s Polices

As headlines change with daily Western biases regarding the military war in Ukraine, America’s financial war with the East (i.e., China) will continue into the next generation.

It’s no secret to me, or many others, moreover, that the war in the Ukraine is a US proxy war against Russia, in which Ukraine (and its citizens) are merely a convenient battering ram against Putin.

That’s just my opinion, but we’ve seen this “freedom” movie before. Many times, and in many countries, none of which ended with much “freedom” …

But as to financial wars, they too are just an extension of politics by another means, and with the growing waves of de-dollarization rising in speed and height following the predictable ripple of effects of the 2022 sanctions against Russia…

…click on the above link to read the rest…

If You Can’t Hold It, It’s Not Really Yours

March 14, 2023

If You Can’t Hold It, It’s Not Really Yours

The failure of Silicon Valley Bank and Signature Bank reminds us of a very important truth — if you can’t hold it in your hand, you don’t really own it.

That’s why it’s wise to hold at least some of your wealth in hard assets like gold and silver that are in your direct possession or at least stored in a secure, allocated, segregated, and insured storage facility.

The FDIC insures bank deposits up to $250,000. If you have more than that in a financial institution, you could lose everything above that limit if a bank fails.

Depositors at SVB and Signature Bank lucked out. The government has made provisions to cover uninsured deposits. But there’s no guarantee that will happen when the next bank goes under.

And even if you don’t have more than $250,000 in the bank, you could easily find yourself locked out of your account. Just last week, a computer glitch caused money in some Wells Fargo accounts to disappear.

There are also more nefarious reasons you could lose access to funds. The Nigerian central bank recently limited bank withdrawals in order to incentivize people to use its new central bank digital currency. In 2017, India faced cash shortages when the government declared that 1,000 and 500 rupee notes would no longer be valid with just a four-hour notice. And during its crisis, the Greek government shuttered banks and seized some bank deposits.

Most people assume “that can’t happen here” in the US. But as we saw over last week, the US banking system is vulnerable to collapse.

…click on the above link to read the rest…

Gold Or Silver?

January 21, 2023

Gold Or Silver?

You want both, obviously, but how much of each and why?

At first glance, gold and silver seem pretty fungible. They’re both hypnotically pretty. Their prices tend to rise and fall according to the same financial/political forces. They’re both seen as real money by a tiny (very wise) fraction of the population and as atavistic relics by the vast, ignorant majority. And – most important – they will both preserve their owners’ purchasing power when today’s fiat currencies evaporate like the fever dreams they always were.

So you definitely want some (and maybe a lot) of each. But gold and silver are not identical. They have different strengths and weaknesses in various “monetary reset” scenarios. And their prices don’t move in lockstep. Sometimes one is cheap relative to the other.

So how much of each should we own now, and how quickly should we plan to load up the truck? The answer is different for each person, but a few things are generally true.

The gold/silver ratio
The relative prices of gold and silver tend to fluctuate within a broad but discernable range. This gold/silver ratio is expressed as the number of ounces of silver it takes to buy an ounce of gold and tends to rise and fall along with the emotional state of precious metals investors. When those investors don’t foresee imminent inflation or other monetary disruptions, they gravitate towards gold’s safety and stability, and shy away from silver’s volatility. Gold’s price rises relative to silver’s, producing a high gold/silver ratio.

When investors expect rising inflation or other kinds of currency instability, they buy precious metals generally, but gravitate towards silver’s greater upside potential. Gold and silver both rise but the gold/silver ratio falls as buyers push silver’s price up more quickly than gold’s.

…click on the above link to read the rest…

Lawrence Lepard: Fighting the Broken Monetary System

November 30, 2022

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