We Already Have HYPER-CREDIT.

The combination of currency debasement, falling production, and rising debt always ends in credit collapse. In all history, there are no exceptions. But ten years ago, few Americans had ever considered the possibility.

Image result for credit freeze

Suddenly, on Aug. 9, 2007, inter-bank lending locked up; the dollar was in free-fall; and credit completely FROZE here and around the world. The following year, Bear Stearns collapsed (March); Merrill Lynch and Lehman Brothers collapsed (Sept. 15); and the stock market crashed (Sept. 29, 2008). The Dow Jones Industrial Average had the biggest one-day drop in U.S. history; Lehman was the largest bankruptcy in U.S. history. 

Since the global credit-collapse in 2007, the economy has been rocked by a series of violent after-shocks: the banking system came close to locking up again in Nov. 2011, Oct. 2014, and Aug. 2015. The Federal Reserve has kept the dollar system afloat by ‘doubling down’ on the excesses that led to the debt crisis. For nine years, the world has been on the biggest debt-binge of all time (U.S. debt grew 114%). 

The Federal Reserve’s remedy for the on-going debt-crisis is the creation of HYPER-CREDIT. The entire financial system is sustained by exotic financial instruments called “derivatives.”

Image by Martin Kozlowski, Wall Street Journal.

The Federal Reserve monetizes debt (here and abroad). From nowhere, trillions of dollars spring into existence (new debt becomes brand-new credit). The Fed and other central banks have created, issued, financed, or enabled an estimated 1.4 QUADRILLION dollars of derivatives debt to ‘paper over’ the fragile banking system. The number attached to this debt has three more zeros than the combined value of all of the goods and services produced on earth (10 to the 15th power)!

By definition, one thousand trillion dollars of derivatives debt “derive value (cash flows) by reference to underlying assets.” What possible collateral could give value to more than one quadrillion dollars of derivatives debt? The following logical conclusions can be made about this historic debt bubble:

  • There is relatively little real collateral underlying the debt.
  • The debt can be repaid only by more HYPER-CREDIT.
  • The debt is merely delaying a monetary catastrophe.
  • The climactic end of the bubble is certain (Herbert Stein’s LAW): “If something cannot go on forever, it will stop.”

 $1 trillion = one million million dollars
$1 quadrillion = one thousand million million dollars

A few years back, Dr. Jürgen Stark, an economist with the European Central Bank, shook the financial world when he told the Ludwig von Mises Institute that the global financial system came “within hours” of collapse in Nov. 2011. He said:

“The whole system is based on pure fiction, groping since 2008 to avoid a second Lehman, which if it happens, the system will not survive.” [Professor Dr. Jürgen Stark, European Central Bank; mises.org.]

Dr. Stark told the audience that the only thing keeping the system going since 2008 is money-printing; central bankers are “flying blind;” no one knows how much money (credit) is being created or where it is going. He recommended allocating savings to traditional safe-havens such as silver and gold. 

The year before the global credit-collapse, gold was $525/oz [Jan.5, 2006]. The day credit FROZE worldwide [Aug. 9, 2007], the gold price was $662.60/oz [London p.m. fix]. On March 14, 2008, people were shocked and amazed when gold surged past $1,000/oz for the first time ever. However, soon after the stock market crashed [Sept. 2008], gold dropped 30% (from $1,000 to $700/oz) and silver fell 70% (from $21 to $9/oz).

Did the precipitous fall in silver and gold prices mean low demand and abundant supply? NO. The ‘hit’ on precious metals was accomplish by “naked” short-selling.* Every scared gold-bug wanted coins; and every U.S. dealer ran completely out of coins and bars – almost overnight

Within a few days, the supply of PHYSICAL gold and silver dried up all over the country. The major world refiners had nothing. NO gold or silver was available from the five major world mints: Canada, Austria, Perth, South Africa, and U.S. Mint. Dealers could not get delivery for well over a month. In 2011, the same thing happened; and silver deliveries were delayed even longer. When the next financial crisis rocks the dollar, will supplies of gold and silver completely disappear?

Today’s market indicators do not reflect what is happening beneath the surface. The monetary system ‘as we know it’ is coming to an end. The International Monetary Fund says a “Money Standard Shift” will be concluded during the next crisis. 

BEFORE THE NEXT PANIC, PRESERVE YOUR 
NEST-EGG BY SWITCHING TO REAL MONEY.

If you take delivery of silver and gold, you will have protection from illiquid markets, third-party risk, and overnight currency devaluations. Today, the price of the 1-oz gold coin above is $1,360. Since the day credit collapsed, the PAPER dollar has lost more than half of its value against PHYSICAL gold.

Submitted by Denise Rhyne.

END NOTES

* Gold and the dollar are competing currencies. A rising gold price indicates a failing dollar. For this reason, the trading desk of the Federal Reserve “manages” the spot price with a trading technique called “naked” short-selling. When gold and silver break to the upside, spot prices are brought down by massive, concentrated sales of derivatives (PAPER gold and silver). Contracts representing millions of ounces are dumped simultaneously on London and New York exchanges. 

Things You Probably Didn’t Learn in School About Gold & Silver-pdf : Includes articles on NAKED SHORTING.

 

“Indeed, one can be deceived in many ways; one can be deceived in believing what is untrue, but on the other hand, one is also deceived in not believing what is true.” [Danish philosopher Søren Kierkegaard, 1847 Works of Love, Haper Perennial, p. 23, 1962; Kjerlighedens Gjerninger, SKS, vol. 9, Gad & Søren Kierkegaard Forskningscentret, p. 13, 2004.]

Dollar Will Lose Value Over Time: Guaranteed.

The British Pound Sterling lost its status as the primary basis of global trade in 1944. Why? Because the Treasury of the United States held title to about 4/5ths of the world’s officially-held gold reserves [more than 20,000 tons after WWII]. The dollar became the world’s “reserve currency” because U.S. government creditors could convert their dollars to U.S. gold [from 1792 until Aug. 15, 1971].

Since gold convertibility was suspended in 1971, the U.S. dollar has retained its “reserve-currency” status because of the dollar’s forty-year monopoly in settling OPEC oil trades [the “Petro-Dollarsystem]. 

After the 2007 credit-collapse, China began to implement a strategy to slowly ‘de-peg’ from the petro-dollar and aggressively** add gold to its foreign exchange reserves.

Image result for forest for the trees luke gromen

China is now ‘de-dollarizing’ [unloading U.S. Treasuries]; and U.S. debt is rising. Since the world debt-crisis began, U.S. debt has more than doubled [up 114% in only nine years]. This chart shows how rapidly the monetary base has been expanding:

PRINTING DOLLARS

Image result for st louis fed adjusted monetary base

The official money supply quadrupled from 2009 to 2014. But the Federal Reserve no longer reveals how much or how fast the total monetary base is expanding. To avoid the spotlight on the ballooning total, the Fed quit publishing the “M3” monetary aggregate in 2006. [Image of the Adjusted Monetary Base courtesy of Zerohedge.]

Money-printing is showing up in the inflated stock market, select real estate markets, and the rising costs for insurance, rent, utilities, tuition, medical care, bitcoin, groceries, gold. 

The day credit FROZE worldwide [Aug. 9, 2007], the gold price was $662.60/oz [London p.m. fix]. On March 14, 2008, people were shocked when gold surged past $1,000/oz for the first time ever

THE EAST IS DRAINING BULLION FROM THE WEST.

Who is buying all the gold? Since the 2007 crash, Chinese, Russian, Indian, and Middle Eastern purchases of gold bullion have been unprecedented. Buyers from the Near and Far East [VietNam, Turkey, Singapore, Hong Kong, Shanghai, Dubai, Bangkok, etc.] are vacuuming available bullion supplies on every price-dip. (Recently, Russian buying has dwarfed purchases by China!) Of the 3,000 tons of gold mined each year, every ounce is PRE-SOLD.

Image result for uk lbma silver bullion

In the last nine years, there has been a massive draw-down of deliverable gold at the LBMA [London Bullion Market Association] and the NY COMEX [New York Commodities Exchange]. As a result of “scrap” shortages, the world’s five major refineries have waiting lists for deliveries of pure bullion. Today, warehouse inventories of available “Good Delivery Bars” [400 oz gold bars, 1,000 oz silver bars] are extremely low at major bullion banks. 

Image result for naked silver shorting

Two of the bullion banks under pressure are JPMorganChase Bank: JPMorganChase Bank is custodian of “SLV” the silverExchange Traded Fund [ETF]; and the Hong Kong & Shanghai Banking Corp: HSBC Bank is custodian of “GLD” the goldExchange Traded Fund [ETF].

PAPER SILVER • PAPER GOLD

Today, more than half of the world’s population believe that the only real money is gold and silver. On the other hand, less than ½ of 1% of Americans own physical precious metals. Most U.S. investors  buy PAPER gold and PAPER silver ‘derivatives’ [options, commodities futures contracts, Exchange Traded Funds “ETFs”].

The PAPER market is an entirely ‘different breed of cat’than the PHYSICALS market. Physical bullion cannot be printed; the supply is limited. The highly leveraged PAPER market has an unlimited, ‘virtual’ supply of silver and gold. In this securitized, fractional-reserve system, they sell gold and silver contracts without the bullion to back the contracts [the practice of selling 100s of ounces to every 1 oz of stored physical metal is called “naked shorting.”]*

NAKED SHORTING DISTORTS SUPPPLY AND DEMAND. 


Thanks to an unlimited supply of PAPER silver and gold, the digital market is in control of spot prices. Prices do not reflect actual supply and demand for physical bullion. During intervals in 2011, 2013, 2014, and July 2015, supplies of silver were so tight, U.S coin dealers were unable to satisfy over-the-counter demands. But each time, the market was flooded with massive tonnage of PAPER silver to suppress the price.

Shortages of actual silver and gold bullion can be hidden as long as naked shorting controls the pricing mechanism. The last time free-market forces prevailed against the trading desk of the New York Federal Reserve was in 2011.When silver and gold supplies completely dried up around the world, silver climbed 160% in only nine months. Coin dealers across the nation were “Bid only” – “No offer.” 

b4a664c3e192740990d561da10d3c4df.jpg

DON’T END UP HOLDING A PIECE OF PAPER.

A whole lot more money-printing is headed our way. And deliverable bullion in the West is in short supply. Extreme product shortages always end up triggering runs to higher highs. The next move up in precious metals will be propelled by even greater supply deficits. Take delivery while products are readily available in North America. Silver is the poor man’s gold. Old U.S. 90% silver dimes and quarters [pre-1965 coins] could be used in small transactions.


Coins made of silver and gold store value over time. The paper dollar loses value over time — it is guaranteed. In 1971, a $1 bill was equivalent to 1/35th of one ounce of gold. Today, a $1 bill is worth 1/1,360th of a one-ounce gold coin [below]. 


Submitted by Denise Rhyne

END NOTES

* NAKED SHORTING (three articles):
YouShouldBuyGold.com/2017/09/GOLD & SILVER-pdf

** The Eastern Hemisphere is buying physical bullion aggressively in anticipation of the coming dollar “re-set.” 2017 HEADLINES from :

“Shanghai Gold Exchange February Withdrawals Highest on Record, up 67% y/y.”

“Indian silver imports rose 96% in February 2017.”

“Indian Gold Imports Surge: Imports rose 65% in February from January imports. February 2017 Indian gold imports were up 148% from February 2016.”

“Russia adds another huge pile of gold to reserves in March.”

“China gold bar/coin sales up 30% year to year.”

“Indian physical gold buying may be behind Dubai tightness”
London (Platts) 25 Apr 2017

“India’s April gold imports more than double fr yr ago”

“UPDATE: China’s net-gold imports via Hong Kong more than doubles in March” Reuters http://www.reuters.com/article/china-gold-imports-idUSL4N1HX3GL

There is always a ‘lag time’ before massive expansion of the money supply causes a sudden, sharp rise in prices. Today, dollar debasement is being obscured by new ways to calculate the Consumer Price Index [CPI] and Gross Domestic Product [GDP]. The method uses hedonics, weighting and substitution. Most changes in costs for essentials are excluded from indices.

Weimar: first DEFLATION then INFLATION

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Platinum Markets-Brace for Uncertainty, Keep Door Open for Opportunity

by Aran Murphy

The market-makers wondered aloud at the end of 2016: Which way will our economy turn with new policy makers in Washington? Will our national debt become difficult to service with higher interest rates? Will our unfunded pension liabilities force broad-scale local bankruptcies? Or will we pull the government back, liberate our taxpayers and traders, and allow our entrepreneurial base to do what it does best?

A consensus emerged in December that our days of forestalling hard debt and demographic-driven choices are limited. Many worry that it is too late, or that the incoming President is too politically inexperienced to put our national finances back on track. Others think – with the recently elected – we may see tremendous opportunity to re-establish growth and loose our economic fetters. From bonds to stocks to more pure measures of market volatility, President-elect Trump continues to bring opposing views out after long years of – what many will consider stagnating – policy consensus.

After the US elections, stock market indices took off. The bond markets tumbled. The Federal Reserve Bank raising rates didn’t help bonds, of course. Gold, silver and platinum prices eased as the world creeps out from under the Sword of Damocles that has long been the official policy of zero interest rates(One can’t have functioning capital markets when central banks are pricing capital at zero). The markets overall seem tentative about what direction, economically, the US should expect. Will the US experience crisis, or will it find the real growth in incomes and economic opportunity that has eluded us for the past 12 years? Continue Reading →

Beware Of The Dollar: The U.S. Ponzi Economy Is Malfunctioning.

Gold is the true “safe-haven” currency. The U.S. dollar is “strong” only when compared to more toxic currencies. Since the 2007 credit collapse, the dollar has fallen 100% against gold. 

Dramatic Spike In Fund Flows Into The Gold ETF GLD And A Major Warning On The U.S. Dollar

On the day markets FROZE worldwide [Aug. 9, 2007], the price of gold was $662.60/oz [London p.m. fix]. It now takes twice as many dollars to buy the same Troy ounce of PHYSICAL gold. The rising price of gold is signaling declining confidence in the dollar-reserve system.

THE DAY LIQUIDITY EVAPORATED

It is generally acknowledged the current crisis in financial markets began with a liquidity freeze on August 9, 2007. France’s largest bank, Banque BNP Paribas, cited that date as “the day liquidity completely evaporated from certain segments of the U.S. securitisation market.”* Continue Reading →

A Silver Short Squeeze Is On The Way

Everything has gotten bigger since the last major silver short squeeze (2011). Debt is bigger, leverage is bigger, and the number of major players taking delivery of physical silver is bigger.

The concentrated short positions in silver held by a small number of “bullion banks” DWARF the Hunt brothers’ 1980 long position of only 100 million oz.


Based on supplies of actual, available bullion and the last six months of demand, we expect to see a short squeeze (RUN) on silver [and gold] in 2017. Odds are: SILVER COINS will be the trade of the year. Continue Reading →

Gold Price Manipulation Will End.

We are living in an age of manipulated financial markets – interest rates are artificially low, and the stock market is artificially high. Demand for physical gold is at historic highs, supplies are strained, yet the price is relatively low. When will manipulation of the price of gold come to an end? 2017.

First, it is important to understand why the Federal Reserve is pulling out all the stops to repress the price of gold. A high gold price makes the dollar look bad. No one would want dollars if the price of gold were allowed to rise according to actual demand and actual supply of PHYSICAL bullion.

Over many decades until 2007, the Federal Reserve kept the price of gold artificially low by selling tons of bullion. However, coordinated gold sales by central banks stopped after the 2008 crash. Continue Reading →

The HYPER-CREDIT BOOM – BUST

Global financial markets are integrated and inter-dependent. The markets look ahead and trade on anticipation. It is now extremely bullish for gold!

Zero% Interest Rate Policy (ZIRP)

Since 2008 (for the first time in the history of the world), 90% of the developed countries have had 0% interest rates and a steady flow of “Quantitative Easing” (QE). A small number of “too-big-to-fail banks” [domestic and foreign] have been able to borrow from the Federal Reserve at or just above 0%. (For seven years, overnight/inter-bank lending was 0% to .25%. On Dec. 16, 2015, the nominal rate was raised to .25%; the maximum rate is now .50%).  Continue Reading →

Very Little Available Gold is Left in the West.

The last time gold and silver moved like a freight train was in the 2011. One country triggered the RUN on gold and silver. Overnight, supplies of gold and silver dried up; and mints worldwide ran out of deliverable bullion.


In less than nine months, gold and silver made new highs. Gold rose $600; silver climbed 160%. Silver was just as scarce as gold. (Silver was $9 Sept. 2005; $50 April 2011.) 

A LITTLE GOLD HISTORY FOR THE BIG PICTURE

When the leading currencies were backed by gold, the United States exported more than 40% of all manufactured products used by the world. While today the U.S. is the greatest debtor nation, fifty years ago, America was the greatest creditor nation. Back then, other countries needed sufficient gold to buy made-in-America products.
Continue Reading →

Is It The Right Time To Buy Gold?

Question: “Do you think that gold is currently a good investment?”

Alan Greenspan: “Yes. Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.” Alan Greenspan address to the Council on Foreign Relations, November 2014 CFR meeting; from Gillian Tett, The Financial Times.

Continue Reading →