The
most common question I hear is "when". When does the system collapse?
When will we experience a re-set? I think this is a very odd
question. Odd because if you stand back far enough you should be able
to see "you are watching it"! We are all so close and watching day by
day movements, we are missing the big picture. Don't get me wrong, many
know systemically we are a bust but the daily watch for the lights out
moment goes on. My point is this, the collapse is happening right
before your eyes, "when" is a process and you are watching history!
From
a financial standpoint, we are also watching the collapse unfold.
Earnings are collapsing across many diverse industries. Just as we saw
leading up to the 1987 crash, 2000 and again in 2008 ...we witness the
"slaughter of the day" after the release of poor earnings or future
guidance. Credit default swaps are blowing out across many industries,
the most obvious and probably most important is in the energy and
banking sectors. The global credit markets are seeing various corporate
bonds collapse 5 and 10% on a regular basis ...and not industry
specific! Here again, you are watching the collapse unfold right before
your eyes but question is still "when?"
We
of course arrived at this financial/economic point in history with the
central banks driving the bus so to speak. Looking back to 1987, 2000
and 2008 we can see each time the reaction was "easing". Each episode
was more serious than the last and took more and more liquidity to keep
the system together. The last episode in 2008 took well more than $20
trillion to keep the system from seizing up. Since then, central banks
across the world and sovereign treasuries have overextended themselves
to the point of insolvency yet many expect them to save the day again.
The only tool left is the only tool they have ever really had, "press
the accelerator" further.
The
problem is now the "further" part. "Further" can only mean negative
interest rates which will render the system bankrupt by individual
parts and then ultimately collectively. There is no logical way to
either understand negative interest rates or to expect them to work in
any fashion. Investors are screaming for negative rates and as
evidenced by Japan's announcement, negative rates are briefly cheered.
The reality however is quite different. Zero percent interest rates and
now negative interest rates have and are damaging the banking
sector. A Badly Wounded Deutsche Bank Lashes Out At Central Bankers: Stop Easing, You Are Crushing Us
Please understand, Deutsche Bank is sitting on $75 trillion worth of
derivatives (AND their CDS rates are beginning to elevate rapidly!),
they are telling the central banks to not use the only tool they have!
I
have said all along, derivatives would be a reason for the lights out
moment. We now have volatility and decline resembling the precursor to
the Lehman moment in 2008 ...only this time with more debt, more
derivatives and more interconnectedness within the system. Can any
different result than what happened in 2008 be expected? The only
difference I can see is the ability to reflate the system no longer
exists in any fashion anywhere in the world. The largest derivatives
player screaming they are being crushed with low to negative interest
rates is simply part of the default process ...and you are watching it
unfold!
Before
finishing I do want to point out the activity in gold and the mining
shares. Gold is up close to 10% this year and the shares are up a crazy
45% in just two weeks! Something very big has changed. Many are
saying it is because negative interest rates are coming, I am not so
sure this is why. I believe big money and those running the clown
markets understand where we are. I believe they understand no effort at
reflation can work this time as we've passed that point now. It is my
belief we are seeing gold move higher because it cannot "default" when
the entire system defaults. What I am saying is this, the deflationary
event of derivatives blowing up and taking the financial system with it
will also destroy the currencies.
The recent announcement http://www.reuters.com/article/us-oil-iran-exclusive-idUSKCN0VE21S
by Iran regarding their non acceptance of dollars for current and past
oil is also in the running as a "cause" for a "currency event". The
question must be asked, where does this leave Saudi Arabia? Can they
afford to be the last oil producer who accepts dollars and only dollars
for oil? Add to this, the military failure by the U.S. in Syria An Exasperated John Kerry Throws In Towel On Syria: "What Do You Want Me To Do, Go To War With The Russians?!" ,
how does this bode for the support of a global petro dollar? Call this
deflation or hyper inflation, it really doesn't matter what you call it
as long as you understand that all currencies including the dollar are
credit based. They will collectively collapse along with credit and
derivatives. Gold will be the last man standing as "money will trump
credit currency" and will be seen as the only lifeboat available.
As
for "when", this is really not important because once the derivatives
blow, there will not be a "dollar price" for gold as it will ultimately
go no offer. No one will be willing to sell their metal until the dust
clears. Once it does clear, new currencies will be issued. I do not
believe gold will appear for sale until some new currency is brought
forth that can be trusted.
SOL:
WHY WOULD ANYONE WANT TO SELL THEIR GOLD FOR WORTHLESS FIAT U.S.
DOLLARS OR ANY FIAT CURRENCIES? ONCE THE DUST SETTLES AND A "NEW"
CURRENCY OR BASKET OF CURRENCIES MOVES TO THE FOREFRONT BACKED BY
SOMETHING TANGIBLE LIKE GOLD OR SILVER SUCH AS "BRIC CURRENCIES", THEN
SELLING MIGHT BE CONSIDERED. IN THE MEAN TIME BARTERING WOULD BE THE
ONLY SURVIVAL TOOL.
You
are watching the collapse firsthand on a daily basis and in real
time. It doesn't make sense to ask "when?" if you understand you are
living through it each day. Your only job, if you understand what is
happening is to be prepared. Be prepared to the best of your ability,
being just one second too late might as well mean forever!
Standing watch,
Bill Holter
Holter-Sinclair collaboration
No comments:
Post a Comment