Thursday, October 6, 2022


by Harvey Organ, Harvey Organ Blog:



 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.038 BILLION TO BE EXACT or 148{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).


In gold, the open interest ROSE by A MONSTROUS 11,747 with the RISE in price of gold ($4.95 yesterday.)  The new OI for the gold complex rests at 448,709. Yesterday we had the bankers supplying a major amount of short paper to newbie longs who entered the arena like gangbusters.  The specs shorts covered but at a higher price.No wonder a raid was orchestrated overnight with the intention of cooling gold’s jets. It seems that the raid failed again.  The bankers are losing control over the precious metal markets

we had: 193 notice(s) filed upon for 19,300 oz of gold.

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Remember This Milestone: The Dow Jones Industrial Average Hits 22,000 For The First Time In U.S. History

by Michael Snyder, The Economic Collapse Blog:

The Dow hit the 22,000 mark for the first time ever on Wednesday, and investors all over the world greatly celebrated.  And without a doubt this is an exceedingly important moment, because I think that this is a milestone that we will be remembering for a very long time.  So far this year the Dow is up over 11 percent, and it has now tripled in value since hitting a low in March 2009.  It has been quite a ride, and if you would have told me a couple of years ago that the Dow would be hitting 22,000 in August 2017 I probably would have laughed at you.  The central bankers have been able to keep this ridiculous stock market bubble going for longer than most experts dreamed possible, and for that they should be congratulated.  But of course the long-term outlook for our financial markets has not changed one bit.

Every other stock market bubble of this magnitude in our history has ended with a crash, and this current bubble is going to suffer the same fate.

But many in the mainstream media are still encouraging people to jump into the market at this late hour.  For example, the following comes from a USA Today articlethat was published on Wednesday…

“It’s still not too late to get in,” says Jeff Kleintop, chief global investment strategist at Charles Schwab, based in San Francisco. “The gains are firmly rooted in business fundamentals, not false hopes.”

I honestly don’t know how anyone could say such a thing with a straight face.  We have essentially been in a “no growth economy” for the past decade, and signs of a new economic slowdown are all around us.

But even though price/earnings ratios and price/sales ratios are at some of the highest levels in history, some analysts insist that the stock market still has more room to go up

On the flip side, investors with time to ride out any short-term market storm should not rule out getting in the market now. Economies around the globe are improving and are boosting the profitability of corporations in the U.S. and abroad, says Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners in Charlotte, N.C.

Zaccarelli won’t even rule out Dow 25,000 by the end of 2018.

Personally, I believe that it is far more likely that we would see Dow 15,000 by the end of 2018, but over the past couple of years the bulls have been right over and over again.

But the only reason why the bulls have been right is because of unprecedented intervention by global central banks.

Today, the Swiss National Bank owns more than a billion dollars worth of stock in each of the following companies: Apple, Alphabet, Microsoft, Amazon, Exxon Mobil, Johnson & Johnson and Facebook.

So where does a central bank like the Swiss National Bank get the money to purchase all of these equities?

It’s easy – they just print the money out of thin air.  As Robert Wenzel has noted, they simply “print the francs, exchange them for dollars and make the purchases”.

If I could create as much money as I wanted out of thin air and use it to buy stocks I could relentlessly drive up stock prices too.

Our financial markets have become a giant charade, and central bank intervention is the biggest reason why FAANG stocks have vastly outperformed the rest of the market.  The following comes from David Stockman

Needless to say, the drastic market narrowing of the last 30 months has been accompanied by soaring price/earnings (PE) multiples among the handful of big winners. In the case of the so-called FAANGs + M (Facebook, Apple, Amazon, Netflix, Google and Microsoft), the group’s weighted average PE multiple has increased by some 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

The degree to which the casino’s speculative mania has been concentrated in the FAANGs + M can also be seen by contrasting them with the other 494 stocks in the S&P 500. The market cap of the index as a whole rose from $17.7 trillion in January 2015 to some $21.2 trillion at present, meaning that the FAANGs + M account for about 40{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the entire gain.

Stated differently, the market cap of the other 494 stocks rose from $16.0 trillion to $18.1 trillion during that 30-month period. That is, 13{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} versus the 82{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gain of the six super-momentum stocks.

If global central banks continue to buy millions of shares with money created out of thin air, they may be able to keep this absurd bubble going for a while longer.

But if the Fed and other central banks start pulling back, we could see a market tantrum of epic proportions.  In fact, almost every single time throughout history when the Federal Reserve has attempted a balance sheet reduction it has resulted in a recession

The Fed has embarked on six such reduction efforts in the past — in 1921-1922, 1928-1930, 1937, 1941, 1948-1950 and 2000.

Of those episodes, five ended in recession, according to research from Michael Darda, chief economist and market strategist at MKM Partners. The balance sheet trend mirrors what has happened much of the time when the Fed has tried to raise rates over a prolonged period of time, with 10 of the last 13 tightening cycles ending in recession.

“Moreover, outside of the 1920s and 1930s, there is no precedent for double-digit annual declines in the balance sheet/base that will likely begin to occur late next year,” Darda said in a note.

President Trump is going to get a lot of credit if the stock market keeps going up and he is going to get a lot of blame if it starts going down.

But the truth is that he actually has very little to do with what is really going on.

This stock market bubble was created by the central banks, and they also have the power to kill it if they desire to do so.

And once this bubble bursts, we may be looking at a crisis that makes 2008 look like a Sunday picnic.

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Immutability And Timelessness, In The Dawning Of The Fintech Age

by Andy Hoffman, Miles Franklin:

2,500 years ago, the Greek philosopher Heraclitus wisely espoused, “the only thing that is constant is change.”  Which, in the world of investing, could not be truer – particularly today, as the pace of technological innovation accelerates at an unprecedented pace.  The problem is, that while technology is generally speaking a good thing, not all technology is utilized for favorable purposes; in many cases, in stark contrast to the best interest of the world’s “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.”  To that end, the foundation of today’s technologically exploding world – its monetary system – is still based on an archaic, fraudulent fiat Ponzi scheme that is rotting the world’s finances and economy from within, for the benefit of a handful of politicians, bankers, lobbyists and billionaires.

Frankly, industrial technology is starting to resemble the world of Star Trek, whilst monetary “technology” is closer to the Flintstones.  And now that “fintech,” or financial technology, has enabled bankers to maniacally control the prices of “currencies”; as well as the “markets” they trade in; and, of course, the “barometers” of progress mankind uses to “check” monetary abuse, like gold and silver – the wealth disparity between the “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}” and “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}” has exploded to politically, geopolitically, and socially untenable levels.  Not to mention, global economic activity has been decimated by oversupply; whilst dramatically increasing the cost of living, and creating the largest, parabolically-rising debt edifice in history.  This is why, for all the excitement about new technology, the world is not yet able to truly advance; and why, given the exploding pace of technological growth and information dissemination, the historic “reset” of the monetary system required to enable advancement must occur sooner rather than later – in the process, catalyzing one of the greatest wealth transformations in global history.

The way I see it, the biggest losers will be the equally archaic stock and bond markets; perhaps not in nominal terms, as Central banks desperately print money to maintain the rapidly dying illusion that “all’s well”; but certainly, in real terms.  More importantly, I believe the very concepts of stocks and bonds are slowly being phased out, given how detrimental they have become to the global economy; and particularly, the world’s “99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.”  I mean, when one considers just how much fraud goes into the process of issuing “securities” – from rigged accounting, regulatory agencies, and financial markets; to the insider trading benefiting the “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}”; to the debt piled on, at parabolically rising rates, to “buy back” said “equity” – again, benefiting the “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}”; to their monetization by Central banks – in some cases, like the Japanese and Swiss, blatantly so – again, benefiting the “1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}”; it’s difficult to believe that in the age of Artificial Intelligence, Driverless Cars, and Crypto-currency, a handful of unelected bureaucrats and their bankster cronies can remain in charge of printing “money” and administering “markets.”  Which I ASSURE you, won’t remain the norm much longer.

As for bonds, everything I just said about stocks goes double.  As despite relentless propaganda – now, more than ever, given the satanic “partnership” between the “evil Troika” of Washington, Wall Street, and the Mainstream Media – the world’s biggest scourge, in both Heraclitus’ time and today – is DEBT.  And now that Fintech has figured out methods – like off-balance sheet derivatives – to “leverage” debt at ratios putting Lehman Brothers to shame, the level of global debt has reached levels undreamt of as recently as the turn of this century – to the tune of roughly $320 trillion on balance sheet, and at least as much “off balance sheet.”  To wit, whilst NYSE margin debt of $539 billion is itself at an unfathomably large record-high, “shadow margin lending” – i.e., “off balance sheet” – may be at least as large.  Heck, the entire Chinese economy is based on shadow lending, “managed” by the equally anachronistic, and unwaveringly failing, Communist manifesto.  Which is why China, the anticipated “leader” of the 21st Century, must experience a dramatic, and globally destructive, economic and monetary crash before it can truly advance.  And why, wisely so, its government, and citizens, are stockpiling gold at a record rate – both “on” and “off” balance sheet.  Not to mention, China in many ways represents the center of the Bitcoin universe – with a government that understands crypto-currency more than perhaps any other.

To that end, as highlighted in yesterday’s “Precious Metals and Bitcoin – Twin Destroyers of the Fiat Regime, Part III,” Fintech innovation in the monetary space is advancing at an unprecedented rate.  Heck, yesterday’s Bitcoin “hard fork” may well prove to be a powerful, and extremely unexpected, dagger in the powers that be’s’ diseased fiat Ponzi scheme; in that it may well have separated Bitcoin into two powerful entities; one, focused principally on storing value – and the other, facilitating unprecedented transactional speed.  A few months ago, at the height of the “scaling debate,” I suggested this very thing, but was scoffed at for believing such blasphemy had merit.  However, in a world where literally thousands of transaction types occur each day, it’s difficult to ascertain how one currency can handle them all.  And frankly, the most important transaction of all, wealth storage, works best when it has a medium of its own.

This is why GOLD’s principal “use case” (and with it, it’s “baby brother” silver) – wealth storage – has been bastardized throughout history, diluted by government-abused “gold standards” due to a lack of viable transactional alternatives.  And why, when crypto-currency overwhelms the fiat monetary regime, it (they) will not only be liberated from the maniacal suppression that has pushed prices to their lowest-ever inflation adjusted levels; whilst simultaneously, destroying the mining industry’s ability to produce them; but finally, after thousands of years, they will be relegated to said principal use case – wealth storage – which for centuries, has been diluted by futile, universally destructive government efforts to manage the monetary system.

And for those that say, “but crypto-currency will take over that use case, too” – I’ll simply say “plus ça change, plus c’est la même chose”; i.e., the more things change, the more they stay the same.  As, per last week’s “co-existence of scarcity assets,” the amount of fiat currency – and debt default – to be “insured” against is unfathomably large, compared to the minuscule size of the available-for-sale float of the handful of scarce, wealth-storing asset classes.  To that end, if you are fortunate enough to be able to hold an ounce of gold in your hand – realizing its weight, luster, brilliance, and the amount of blood, sweat, and tears that went into finding, producing, and circulating it – I ASSURE you, you’ll understand why Precious Metals’ financial system role isn’t going anywhere, no matter how rapidly “Fintech” advances.

I could easily end this article here.  However, I kid you not, my original working title was “gail force economic headwinds, Precious Metal tailwinds,” so I feel compelled to discuss the reasons why.  I had no idea I’d go off on the aforementioned, extremely important, big picture tangent.  However, the fact remains that the global economy – and monetary system – is rapidly collapsing; to the point that the final hyperinflationary push, that forever destroys fiat currency in lieu of said “new world” of Fintech, has never been closer.

On a day when the Australian Central bank followed those of the U.S., Europe, and Japan (last week) in warning of the “dangers” of a strengthening currency; just one day before “whisper” rumors suggest the Bank of England will do the same; oil prices plunged based on OPEC’s production again hitting a new all-time high in July (with U.S. shale perhaps a month or two behind), as “deflation” fears – rigged stock market notwithstanding – continued to take center stage.  To wit, Jim Rickards’ tweet yesterday, regarding why the Fed is “done raising rates this year.”  Which, I might add, the money markets decidedly agree with – and myself, per last week’s (maniacal Cartel suppression efforts notwithstanding) “most Precious Metals bullish I’ve ever been.”

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A 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} Gold Allocation May be Outdated

by James Anderson

Market Updates and Opinions are provided as a third party analysis and do not necessarily reflect the explicit views of Kitco nor Kitco Metals Inc. The following information below should not be construed as financial advice nor is the author an accredited financial advisor.

To understand why the somewhat cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold investment allocation mantra may be somewhat misleading today, some historical context is required.

In this 10 minute read, we will especially pay attention to the last half century or so in which fiat currencies (the numeraire or moving benchmarks for which gold and silver bullion are most often measured against) have been in full expansion and usage across the globe (since the early 1970s).  

Historical Gold Silver Investment Allocation Context

Nearly a half century ago, the London Gold Pool price rigging ended (1968). That was essentially the beginning of the end for the fixed $35 oz USD Bretton Woods’ gold price which was set globally following World War II and ultimately helped establish the US dollar then and still the main reserve currency it is today (while lessening its dominance in recent years, about 60{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of all currency worldwide is still USD denominated).

In August 1971, President Richard Nixon closed the official central bank gold window which meant nations could no longer exchange US dollars for gold bullion. Remarkably US citizens were still not even allowed to own more than some 5 ounces of gold bullion until full gold ownership freedom was reestablished at the start of 1975.

One ounce of gold ultimately performed a more than 20 multiple in US dollar values from a beginning price of about $38 oz USD in 1970 up to January of 1980 when it peaked at just over $850 oz USD.

Similar price performances for gold bullion also occurred for platinum bullion, palladium bullion, and especially silver bullion throughout this 1970 – 1980 timeframe. Notice all four precious metal peaks occurred within months of one another in early 1980 (COMEX forced liquidations of silver long contracts likely played a significant role in ending the price run ups for all four precious metals).

Following the 1980 mania in precious metals, it became fairly commonplace for financial experts and advisors to suggest investment allocations of some 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of investment portfolios allocated to gold and perhaps silver for diversification and as a hedge against bond, currency, and equity volatility.

This cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation advice still prevails today but only amongst a small minority of financial advisors and commentators. Likely in part due to the brutal silver and gold bear markets experienced throughout the 1980s and 1990s whilst simultaneously occurring alongside many strong bond and stock bull markets the world over, this 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation mantra all but disappeared only to have arisen thanks in large most part to the 2008 financial crisis and the prevalence of financial internet research now available.

Today high profile and alternative financial experts, like Jim Cramer or Jim Rickards, often say a 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation makes sense, yet they may be a little understated in percentage terms. Let’s take a closer look as to why this may be the case.

Jeffrey Christian & CPM Group on Gold Silver Allocations

For over a decade I have worked and invested in the physical precious metals industry. Throughout this timeframe Jeffrey Christian and the CPM Group have consistently produced sound and accurate research and market projections.

When one studies precious metal price discovery mechanisms and the fractionally reserved leverage which commodity exchanges (e.g. COMEX ) use to highly influence precious metal spot prices and therefore ultimately physical bullion prices, the truth is futures derivatives have mainly run the show on bullion price discovery for decade after decade (perhaps the fall of 2008 a one glaring exception to this rule as bullion prices went up whilst their spot prices went down).

Jeffrey Christian is a somewhat controversial figure amongst many long term bullion buyers (mainly due to his explicit citing of the commonality in 100 oz paper derivative to 1 oz bullion leverage used in bullion price discovery mechanisms at a 2010 CFTC hearing, note moment 5:30 here). This fact angers many a bullion buyer as being unjust (including myself at times) but that doesn’t mean Mr. Christian was wrong in citing the virtually unbacked leverage in use in the year 2010, nor for that matter to date.

My experience studying Jeff and CPM Group’s work suggests not to bet against his nor his research firm’s analysis.

Jeff was somewhat bearish as we reached interim price highs for silver in the spring of 2011 and gold in the fall of 2011 whilst myself and most precious metal bullion buyers and sellers had little clue we would endure a cyclical bear market for as long and as pronounced as we have had to date.

Good news for bullion longs like myself is that Mr. Christian has recently been on record stating good years are ahead for both silver and gold prices. Given where we stand today perhaps he is not sticking his neck out all too far.

Backtesting Cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} Gold Allocation Suggestions

According to Jeff in the early part of the 1980s, there were many seminal gold price studies that showed 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} or 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of an investment portfolio could have been optimally allocated to gold from 1968 to 1980 to maximize a risk return allocation based on performance.

In late 2016, Jeff and his firm re-ran those numbers in a backtest from about 1968 to late 2016. What they found was if you took a portfolio of 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} S&P and 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} T-bills and you added gold to it in 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} increments, the optimal gold allocation was actually about 27{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 30{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold depending on whether you used T-bills or T-bonds respectively.

Do take note, this 27{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to 30{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation does not take real estate investing into account (a study like that would be prohibitively more complex). The study strictly referred to bonds (now in total an over $100 trillion USD market worldwide e.g. government, corporate, etc.) and equity or stock markets (an over $50 trillion USD market worldwide) which are and have been easily estimated at more than ten times the size of all the physical silver and gold above ground and much less paltry investment allocations to each respective precious metal currently.

For example see the explosive growth in paper asset values to gold investment holdings since 1980 in the following chart.

It is also important to note that this recent CPM Group study on gold allocation spans almost the entire full fiat currency era in which all nations states have and continue to only issue paper and digital currencies backed by the full faith, credit, and taxation powers of their respective nation states.

Global physical gold and silver inventories and supplies expand slowly a sound money systems tend to be deflationary by their very nature. The same cannot be said for many fiat currency numeraires in which silver and gold are mostly measured (see the M2 chart below for many of their growth trends).

IMF SDRs are not excluded either, since 1973 SDRs have simply been indexed or backed by a fiat currency mix of unstable benchmarks like US dollars, yen, pounds, and more recently euros and yuan.

All SDRs have done since 1973, is lose some 95{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of their purchasing to gold bullion and about 92{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of its value to silver bullion. This trend will most likely not change unless the underlying structure of IMF Special Drawing Rights themselves are changed to include some form of bona fide physical bullion backing aside from its current 5 fiat currency indexing.

So long as we remain under a full fiat currency monetary system, I find it hard believing no physical silver bullion or gold bullion ownership makes prudent sense on a go forward basis.

Maybe we should reexamine from which era this cliche 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} gold allocation suggestion was born and put it to the test in terms of today’s bond and equity market valuations? Which asset classes seem most overpriced?

Perhaps it is prudent to buy and own more of what is most undervalued at the moment.

Contrary to naysayers, most bullion buyers are college educated, yet they are self-taught as little to no universities teach anything about bullion nor why 21st Century central banks increasingly own and buy more gold bullion reserves year in, year out.

The vast majority of gold and silver bullion buyers don’t buy bullion because they think the world’s going to end. Most simply buy bullion because they want to maintain their purchasing power over the long term. Having a portion of one’s wealth denominated in physical silver and or gold bullion is likely more stable than having an undiversified investment portfolio which often can be subject to severe currency valuation volatility, potential bond bear markets, and eventual stock bear markets which can wreak havoc on one’s investment portfolio if not properly diversified ahead of time.

I personally expect another mania in precious metal prices to ensue as the years progress, somewhat similar but far larger in scope than the last late 1970s version.

Perhaps now is the time to begin reallocating some capital from equities and other paper assets back into physical precious metals.

Low premium silver bars or silver coins are often a great choice for those just getting started with bullion buying. The downside on their current prices long term appear to be somewhat limited, and the upside potential for gold bullion and especially silver bullion looks to be attractive at these current price and bullion product premium levels.


by Egon von Greyerz, Gold Switzerland:

Stock investors are rejoicing about stock markets making new highs in many countries, totally oblivious of the risks or the reasons. It seems that this is an unstoppable rally in a “new normal” market paradigm. No major increase is expected in the inflation rate or the historically low interest rates. The present rally has lasted 8 years since the 2009 low. There is virtually no fear in markets so investors see no reason why this favourable climate would not continue for another 8 years at least.

Yes, of course it could. All that is needed is that governments worldwide print another $20-50 trillion at least and that global debt goes up by another $200-500 trillion.


The gullibility of people today is exacerbated by the power of the internet and social media. Anything we read is accepted as fact or truth whilst a major part of it is just fake news. This is of course nothing new as it has been used by governments for centuries. Goebbels, the Nazi Propaganda Minister, who was an expert at manipulating the German people, said: “If you tell a big lie often enough and keep repeating it, people will eventually believe it.” The power of the internet and other media has facilitated spreading news and propaganda to billions of people and very few can distinguish if they hear or read “real” news or “fake” news.

Anyone in government is in capable of telling the truth. Automatically when someone assumes an elected position his Pinocchio nose grows extremely long since his entire purpose is then to be all things to all men in order to be re-elected. This is why virtually no elected official has a backbone nor any morals or principles. Because if they had, telling the truth would make them unelectable.


During my early professional years as a banker at the end of the 1960s and early 1970s, I spent some time with a prominent UK Merchant Bank. This is what the old-style Investment Banks used to be called before the Americans came to dominate the sector. The senior bankers used to arrive at work around 10am and then go to lunch at 1pm. The lunch would consist of at least one gin and tonic to start with and then a good three course meal with a bottle of wine or two. Afterwards some Port with cheese and maybe a beer or two at the pub to finish off. Then back to the office at around 3pm for 4-5 hours of work. And this is how the City of London would operate when it was the financial centre of the world.

Any transaction was based on a handshake and a brief contract. Lawyers played a very small role in this process. Banking was based on trust, personal relationships and high moral standards.Banks displayed total loyalty to their staff and employees did not fear for their jobs. Major deals were concluded with a minimum of legal interference and compliance hardly existed. And still there was very little deception or fraud.

Today the financial world in London and major parts of the world is dominated by the US investment banks, the US legal system and the US government. Trust and loyalty are gone. Handshakes are worth nothing. Lawyers and compliance officers dominate everything and contracts are now running to hundreds of pages. Staff fear for their jobs since the banks have no loyalty to them. The only thing that counts is short term performance. This makes staff totally disloyal too as they know they can be fired on a whim.

Investment bankers are now Masters of the Universe and as the former Goldman Sachs CEO said, “Doing god’s work”. Well, one thing is certain there is certainly no humility in the financial world today or as Michael Lewis said in his book “Liar’s Poker”, major parts of US investment banks are dominated by “Big swinging di–s”. (Bankers with very big egos.)

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Ron Rosen: The Dollar And Equities Will Plunge Together – While Gold Spikes

by John Rubino, Dollar Collapse:

The dollar has been falling lately, which isn’t what a lot of people expected with the Fed being the only major central bank that’s raising interest rates. Higher yields on dollar balances should, according to basic economics, have attracted foreign capital to Treasury paper, thus putting upward pressure on the dollar. Didn’t happen though. The dollar is down about 10{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} since the Fed started tightening.

Stocks, meanwhile, might reasonably have been expected to fall, as their dividend yields become less attractive relative to rising risk-free fixed income returns. Also didn’t happen. US equities are now at record levels.

As for what happens next, Ron Rosen of the Rosen Market Timing newsletter has just published some dramatic predictions. Here’s an excerpt:

This REPORT attempts to demonstrate that the day the Dollar Index crosses beneath the 91.88 level will probably be the beginning of a collapse in the stock averages and a massive rise in the precious metals complex.

The completion of the 9 year Zig-Zag correction in the Dollar Index is telling us that D-Day will take place the day that the Dollar Index crosses beneath the 91.88 low. The following is an explanation of a Zig-Zag correction.

Excerpts from the NASDQ description of a Zig–Zag correction: “Zig zags look like a lightning bolt on the chart. There are 2 rules for zig zags: 1. The sub waves of an A-B-C zig zag appear as 5-3-5 2. Wave B of the zig zag cannot retrace 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Wave A – most of the time wave B retraces 38-78{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of wave A The 3 waves of the zig zag (A-B-C) subdivide as a 5-3-5 meaning the ‘A’ leg has 5 sub waves in it, the ‘B’ leg has 3 sub waves in it, and the ‘C’ leg has 5 sub waves in it. As a result of the ‘A’ and ‘C’ legs both containing 5 sub waves each, the impact of the whole zig zag structure is to be a deep retracement and recover a lot of price from the previous trend. Also, the zig zag was designed to make progress against the trend. Therefore, wave B of a zig zag can be any 3 wave pattern (including another zig zag), but wave B cannot retrace 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of wave A. A retracement of 99{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} is acceptable, though unlikely and progress needs to be made.”

It is as obvious as anything can be that the Dollar Index underwent a 9 year zig-zag correction that began in the June quarter of 2008. The zig-zag correction was complete at the high of 103.815.

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The First Pillar to Fall in the Coming Debt Crisis

by Justin Splitter, Casey Research

Americans are falling behind on their car loans at the fastest pace since the global financial crisis.

You can see what I mean below. This chart shows the percentage of auto loans that are “seriously delinquent.” These are loans that haven’t been paid in 90 days or longer.

This key ratio has been surging since late 2014. It’s now at the highest level since the 2008–2009 financial crisis.

• This is a big problem…

You see, more than one out of every three Americans has a car loan right now. Not only that, the average U.S. household owes nearly $29,000 in auto debt.

Americans have borrowed so much money that the auto loan industry is now a $1.2 trillion market. That’s 58{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} bigger than it was in 2009.

For years, investors ignored this explosion in auto loan debt. But they won’t be able to for much longer.

That’s because the auto industry is cracking before our eyes. If this continues, carmakers and auto lenders will be in serious trouble.

But you can’t ignore this just because you don’t own any car stocks. That’s because Americans don’t just have too much auto debt…

• They have too much debt, period…

And the Federal Reserve is a big reason for that.

Since 2009, the Fed has held its key interest rate near zero.

This has made it cheaper than ever to borrow money. So, naturally, Americans loaded up on debt.

During the first quarter, U.S. household borrowings hit $12.73 trillion. That’s a record high, and 5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more debt than Americans had at the peak of the last housing bubble.

This wouldn’t be such a problem if the U.S. economy were doing well. But it’s not.

The U.S. economy is recovering at the slowest pace since World War II. Not only that, the average U.S. worker is making just 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} more than they were in 2009.

• The average American now has more debt than they’ll ever be able to pay off…

You can see what I mean below.

This chart compares the level of household debt with disposable income.

A high ratio means that Americans have a lot of debt relative to income. You can see that this key ratio has been soaring since 2009. It’s now at the highest level ever.

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Europe’s Banking Dysfunction Worsens


from Chris Whalen, Daily Reckoning

“While the US and the UK have been mired in political chaos this year, the EU has enjoyed improved economic conditions and some political windfalls. The question now is whether this good news will inspire long-needed EU and eurozone reforms, or merely fuel complacency – and thus set the stage for another crisis down the road.”

Philippe Legrain
Project Syndicate

This week The Institutional Risk Analyst takes a look at recent reports out of the EU regarding a proposal to “freeze” the retail accounts of failing European banks.  The original story in Reuters suggests that our friends in Europe actually think that telling the public that they will not have access to their funds, even funds covered by official deposit insurance schemes, is somehow helpful to addressing Europe’s troubled banking system.  Investors who think that Europe is close to adopting an effective approach to dealing with failing banks may want to think again.

Judging by the reaction to the story by investors and on social media, it appears that the EU has learned nothing about managing public confidence when it comes to the banking sector.  In particular, the idea that the banking public – who generally fall well-below the maximum deposit insurance limit – would ever be denied access to cash virtually ensures that deposit runs and wider contagion will occur in Europe next time a depository institution gets into trouble.

“The plan, if agreed, would contrast with legislative proposals made by the European Commission in November that aimed to strengthen supervisors’ powers to suspend withdrawals,” Reuters reports, “but excluded from the moratorium insured depositors, which under EU rules are those below 100,000 euros ($117,000).

While some Wall Street analysts are encouraging investors to jump into EU bank stocks, the fact is that there remains nearly €1 trillion in bad loans within the European banking system.  This represents 6.7{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the EU economy, according to a report and action plan considered by EU finance ministers earlier this month.  That compares with non-performing loans (NPL) ratios in the US and Japan of 1.7 per cent and 1.6 per cent of gross domestic product, respectively.

But the most basic point to make about the proposal for a “temporary” suspension of access to cash is that such moves never work.  Moratoria are part of the banking laws in Germany and many other European nations, but they are never used because once invoked the institution is dead for all practical purposes.  In Spain, for example, the government had the power to impose a temporary suspension of access to deposits in the case of Banco Popular, but did not do so because it would have killed the franchise.

Jochen Sanio, the former president of the German Federal Financial Supervisory Authority (BaFin), commented about banks subject to “temporary” deposit moratoria that “they never come back.”  Sanio, who guided Germany through the 2008 financial crisis and forced the clean-up of insolvent state-owned banks, was retired and gagged for the rest of his life for challenging Germany’s corrupt political status quo of covert bailouts.

So again, one has to wonder, why any responsible official in Europe would support the plan reported by Reuters.  As the US learned the hard way in the 1930s and with the S&L crisis in the 1980s, the lack of a robust national deposit insurance function to protect retail depositors leaves an entire society vulnerable to banks runs and debt deflation.  Until the EU is prepared to do “whatever is necessary,” to paraphrase ECB chief Mario Draghi, in order to protect retail bank depositors, the EU will remain far from being a united political economy.

Readers may recall the comments of German Chancellor Angela Merkel last Fall, when she suggested that the German government would not support Deutsche Bank AG (NYSE:DB) in the event that the institution got into financial trouble.  At the time, DB was trading at about $12 per share in New York.  We spoke about DB and the ill-considered comments made by US and German officials from Dublin on CNBC on September 30th.

At the time, we reminded investors that political officials should never talk about a depository institution while it is still open for business.  This is a basic, well-recognized rule that has been followed by prudential regulators around the world for many years.  Yet because of the popular political pressures on elected officials such as Merkel, the temptation to engage in absurd hyperbole with respect to big banks is irresistible.

We see this latest piece of news out of Europe as further evidence that there is still no political consensus about how to deal with troubled banks.  As we learned last year, Merkel could not even make positive public comments about DB for fear of committing political suicide.

The more recent bank resolutions in Spain and Italy were made to look like touch measures in public terms, even as the Rome government quietly subsidized the senior creditors of two failed banks in the Veneto.  We noted in an earlier comment, “Fade the Great Rotation into Europe,” that the EU pretends to play tough on bank rules while bailing out the senior creditors:

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Gold or Silver? A 2017 Perspective – Jeff Nielson

by Jeff Nielson, Sprott Money

For both novices and experienced precious metals investors, the question “gold or silver?” still has relevance today. Experienced precious metals investors have already heard that according to almost every fundamentals metric, silver is more undervalued than gold, and thus a better value for the dollar.

But these same investors have been hearing this message for many years. They look at prices today and see the silver/gold price ratio at a ludicrous level of nearly 80:1 – a ratio that has increased, not decreased in recent years. Some readers, even ardent precious metals bulls, may now have become Skeptics concerning silver.

Back in the real world, however, for more than 4,000 years the silver/gold price ratio has averaged 15:1. This reflects the supply ratio of silver to gold in the Earth’s crust: 17:1. With silver even more precious today because of its numerous, important industrial applications, and with most of the world’s silver having been literally consumed, this price ratio should be below 15:1, not at the current, insane level.

The argument in favor of silver is fundamentals based, and thus value based. For investors with limited funds or who simply seek maximum appreciation potential, silver is the clear winner. The retort from the Skeptics is obvious: if silver is such a great value, then why are prices not already reflecting this?

Regular readers know that this question has been answered before, from different perspectives, on multiple occasions.

1) We no longer have markets. Instead, a banking crime syndicate ( the One Bank ) has hijacked our markets, and replaced them with a computerized price-rigging operation .

2) Supply/demand data going back well over a decade indicates that the silver market would havealready imploded in an inventory default – unless some Secret Stockpile existed to bleed more supply into depleted warehouses.

Skeptics will consider this to represent additional ammunition.

If all markets are rigged, all of the time, the price of silver will never be allowed to rise toward its fair market value.

If some (massive) Secret Stockpile exists, the bankers and their allies will never run out of additional supply to feed onto this market.

The rebuttal to those arguments is elementary.

a) Computers can’t manufacture silver. Industrial end-users of silver can’t use the paper-called-silverwhich the bankers trade in their fraudulent ‘markets’ to manufacture their products. When the world runs out of silver, prices must rise – to whatever multiples of the current price are necessary to bring the market into surplus and stabilize the supply chain.

b) The silver market has had a continuous supply deficit for at least 30 years. All stockpiles are finite. A previous commentary has estimated that it has already taken at least one billion ounces of stockpiled silver to prevent inventory default. The possibility of stockpiles that are greatly in excess of that amount is dubious, at best.

What is a fair price for silver, today? An older piece estimated that number to be $1,000/oz (USD). But even that number is artificial, since it presumes that our paper currencies still possess value. They don’t .

So, everyone should buy (and hold) silver. Case closed? It’s not that simple. Investors in the yellow metal can supply arguments which favor gold over silver.

i) More widely recognized as “money” (especially in the Western world)

ii) More compact (more valuable), and thus

iii) More portable

iv) Stronger demand at present

Part of the reason why the One Bank has been able to pervert the price of silver to such a ridiculous extreme in its crooked ‘markets’ is through the success of its Western propaganda campaign. Silver is the Peoples’ Money . Yet most of the people in the Western world no longer even recognize silver as money.

For holders of precious metals who anticipate some crisis where we would want or need to use our bullion as money (currency), in the early days of such a crisis gold would clearly have superior liquidity. It would likely take weeks (months?) before the need for silver as money and currency would begin to filter through the psyche of Western populations.

Some especially rabid silver bulls will argue that the price of silver will (or at least should) exceed the price of gold at some point – due to the radical depletion of silver stockpiles and supply. However, even most silver bulls (this writer included) expect the price ratio to always remain in gold’s favor.

This means that for readers who have limited storage (hiding?) space, gold’s superior intrinsic value means it could be the more practical choice. Similarly, for any reader who can imagine being forced to flee their domicile, or even their jurisdiction, gold’s superior value makes it more portable.

At present prices, precious metals investors would require a suitcase full of silver to equate to a pocket full of gold. And that suitcase better be on (strong) wheels, since very few readers would be able to carry such a suitcase.

Then there is demand, which currently favors gold. What about all of silver’s “industrial demand”? The Silver Institute (a somewhat dubious source) estimates industrial demand to represent 55{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of total, annual demand (1.03 billion ounces), or roughly 570 million ounces.

However, the gold market now has an important source of demand which is lacking in the silver market:gold-hungry central banks . These are (generally) Eastern central banks who understand the paper currency Ponzi-scheme which has been created by the One Bank.

So far, 2017 is trending towards an off-year for central bank purchases, with current buying representing an annual rate of demand of only about 300 tonnes. Even then, if we factor in the supply ratio (17:1 in the Earth’s crust), this equates to just over 5,000 tonnes of annual silver demand.

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