Friday, 17 November 2017

Everyone Understands That The Day Of Reckoning Is Coming

The only other times in our history when stock prices have been this high relative to earnings, a horrifying stock market crash has always followed. Will things be different for us this time? We shall see, but without a doubt this is what a pre-crash market looks like. This current bubble has been based on irrational euphoria that has been fueled by relentless central bank intervention, but now global central banks are removing the artificial life support in unison. Meanwhile, the real economy continues to stumble along very unevenly. This is the longest that the U.S. has ever gone without a year in which the economy grew by at least 3 percent, and many believe that the next recession is very close. Stock prices cannot stay completely disconnected from economic reality forever, and once the bubble bursts the pain is going to be unlike anything that we have ever seen before.

If you think that these ridiculously absurd stock prices are sustainable, there is something that I would like for you to consider. The only times in our history when the cyclically-adjusted return on stocks has been lower, a nightmarish stock market crash happened soon thereafter…

The Nobel-Laureate, Robert Shiller, developed the cyclically-adjusted price/earnings ratio, the so-called CAPE, to assess whether stocks are likely to be over- or under-valued. It is possible to invert this measure to obtain a cyclically-adjusted earnings yield which allows one to measure prospective real returns. If one does this, the answer for the US is that the cyclically-adjusted return is now down to 3.4 percent. The only times it has been still lower were in 1929 and between 1997 and 2001, the two biggest stock market bubbles since 1880. We know now what happened then. Is it going to be different this time?

Since the market bottomed out in early 2009, the S&P 500 has been on a historic run. If this rally had been based on a booming economy that would be one thing, but the truth is that the U.S. economy has not seen 3 percent yearly growth since the middle of the Bush administration. Instead, this insane bubble has been almost entirely fueled by central bank manipulation, and now that manipulation is being dramatically scaled back.


And the guys on Wall Street know what is coming. For example, Joe Zidle says that this bull market is now in “the ninth inning”

Joe Zidle, of Richard Bernstein Advisors, is arguing that the bull market has entered the bottom of the ninth inning.

“This is a late-cycle environment,” Zidle said on CNBC’s “Futures Now” recently.

“In innings terms, they’re not time dependent. An inning could be shorter or they could be longer. It just really depends,” the strategist said.

This bubble has lasted for much longer than it ever should have, and everyone understands that a day of reckoning is coming.

In fact, earlier today I came across an article on Zero Hedge that contained an absolutely remarkable quote from Eric Peters…

“We are investing as if 1987 will happen tomorrow, because it will,” said the CIO. “But we need to be long, or we’ll be out of business,” he explained, under pressure to perform. “So we construct option trades that are binary bets.” Which pay X profit if stocks rally, and cost Y if markets fall. No more and no less.

“What you do not want is a portfolio whose losses multiply depending on the severity of a decline.” That’s what most people have today. “At the last stage of the cycle, you want lots of binary bets. Many small wins. Before the big loss.”

“Are we at the start or the end of the ‘Don’t know what I’m buying’ cycle?” asked the same CIO. “No one knows.” But we’re definitely within it.

“When their complex swaps drop 40%, and prime brokers demand more margin, investors will cry ‘It’s not possible!’ But anything is possible.” The prime brokers will hang up and stop them out.

In case you don’t remember, in 1987 we witnessed the largest one day percentage decline in U.S. stock market history.

When it finally happens, millions upon millions of ordinary Americans will be completely shocked, but most insiders know that the other shoe is going to drop at some point.

In particular, watch financial stock prices very closely. Last month, Richard Bove issued a chilling warning about bank stocks…


One of Wall Street’s most vocal bank analysts is troubled by the rally in financials.

The Vertical Group’s Richard Bove warns that the overall market is just as dangerous as the late 1990s, and he cites momentum — not fundamentals — as what’s driving bank stocks to all-time highs.

“If we don’t get some event in the economy or in politics or in somewhere that is going to create more loan volume and better margins for the banks, then yes, they would come crashing down,” Bove said Monday on CNBC’s “Trading Nation.” “I think that the risk in these stocks is very high at the present time.”

It isn’t going to take much to set off an unstoppable chain of events. Our financial markets are even more vulnerable than they were in 2008, and the right trigger could unleash a crisis unlike anything we have ever seen in modern American history.

Unfortunately, most Americans keep getting fooled by the artificial boom and bust cycles that the central banks create. Right now most people seem to have been lulled into a false sense of security, and they truly believe that everything is going to be okay.

But every time before when the market has looked like this a crash has always followed, and this time will be no exception.


Wednesday, 15 November 2017

Alan Greenspan compares Bitcoin to Civil War Greenbacks and Continentals


Former Federal Reserve Chairman Alan Greenspan is the latest high profile financer to give his take on the controversial currency. In an exclusive interview on FOX Business Network’s “Mornings With Maria,” Greenspan said “Bitcoin is what used to be called fiat money.” He then compared Bitcoin to the currency issued by the Continental Congress after the American Revolution began.

“I would use the analogy of Continental currency. Continental currency in 1775 was issued with no backing and it sold at par in the marketplace for quite a while until they started to build up more and more printing of continentals.”

According to Greenspan, the perception of the cryptocurrency is not necessarily matching the reality, saying, “Human nature is such that if you get something such as Bitcoin, you think there is some value there whether there is or there isn’t. But that’s the same thing as a Continental, greenbacks in the Civil War, all of these currencies which didn’t have any backing.”

- Source, Fox Business

Monday, 13 November 2017

Ron Paul: The Government Burden Goes Way Beyond the Income Tax


Washington DC is not buzzing with activity so that taxpayers can be permitted to keep more of their earnings. Washington and the surrounding areas are some of the richest places in the entire country. 

While it may appear that government cuts taxes in one area, they always make sure to raise them in another. A new philosophy on the role of government is desperately needed. Ron Paul discusses on today’s Liberty Report.

- Source, Ron Paul

Friday, 10 November 2017

Fed Hikes Next Year Shouldn't Derail Gold Prices


George Milling-Stanley of State Street says in a run-up to a rate hike, investors tend to short gold, but any Fed hikes next year shouldn't derail prices.

- Source, CNBC

Wednesday, 8 November 2017

Keith Weiner: It’s Now Time For Gold To Enter Into The Mainstream Discussion

Physicists say that the universe is expanding. However, they hotly debate (OK, pun intended as a foreshadowing device) if the rate of expansion is sufficient to overcome gravity—called escape velocity. It may seem like an arcane topic, but the consequences are dire either way. If the rate of expansion is too low, then it will get slower and slower until expansion stops entirely, then finally, begin collapsing again in a Big Crunch. That’s bad enough. But the other possible fate of the universe is even worse. If the expansion is fast enough, then the universe will keep expanding forever. Things will get colder and colder, until the state called the heat death occurs.

If only economics had similarly vigorous controversies. It faces its own existential problems. For example, there is an analogous concept to heat death in the economics universe. Will credit continue to grow, and with it the economy? Or will some force—or law of economics—prevent slow and stop it?

There is a force that can cause the heat death of the economic universe. It is not the moralizing argument that faults man for the sin of wanting more material comfort, and condemns his desire for growth as hubris.

Everyone needs growth. Even the environmentalists couch their anti-growth policies. They want us to stop using energy, but cannot openly promote energy poverty as an ideal. So they talk in terms of sustainability.

Sustainability is an interest concept. For a process or system to be sustainable, it means that there is no reason why it cannot continue indefinitely (well at least until the sun goes red giant and engulfs the Earth, which may not happen because before that our galaxy is on a collision course with the Andromeda galaxy…)

Well, is our economy and its monetary system sustainable? How do you even approach this question in a rigorous way?

We submit one fact for your consideration. To service debt, you must generate income. If you fail to pay at least the interest when due, then the creditors suffer big losses. This impairs their capacity and appetite to lend to others, which suffocates businesses who need capital to expand. So the key is generating enough income to pay interest. We would add on top of that the need to amortize the principal too.

The analogy to heat death of the universe is a pretty good fit. Physicists are not looking at one probe that is moving out of the solar system and will chill down to near absolute zero when its power supply runs out of juice. Nor one object, such as Pluto. They are looking at the universe and all entities in it including all stars and all life on all planets.

Similarly, we as economists must look at the economic universe and all business enterprises and people in it. If one business is stranded with, e.g. an obsolete product such as mobile phone that can only do voice calls, it will fail and default on its debts. That is not under question. The question is: can it happen to the entire economy? If it does, then the monetary system will fall and everyone will lose their savings.

If it can happen what are the circumstances?

So far, we said income (that is net income, after cost of goods sold and all other expenses) must exceed debt service. And, perhaps including debt amortization.

Measuring these two quantities, much less estimating them years or decades in the future, would be quite a challenge. Just like measuring the velocities and distances of all objects in the universe.

Fortunately, we can look at something much easier. We know the economy is in motion today. So we just need to know the trend. If income is rising at least as fast as debt service, then we can say that the economy is sustainable.

We have been writing about this trend for the last month, though we did not describe it in this context. The variable we need to measure is none other than marginal productivity of debt! MPoD, as we will call it here for brevity, is a measure of how much new GDP is added for each freshly borrowed dollar.

The graph we published on Oct 15 is included again here.


Aside from the anomaly when MPoD moved up sharply in the wake of the great financial crisis (which we discussed here), it is an unmistakable falling trend. Post 2010, it is falling again from that higher level. This trend spans many decades, and it is no fluke.

A falling MPoD means we get less and less GDP for each borrowed dollar. Or conversely, we have to borrow more and more dollars to get a dollar of GDP. This is significant as growth in net income can be no greater than growth in GDP (but it is likely a lot slower, a whole ‘nother topic). This graph is saying that the income to debt ratio is falling.

We are getting close to our statement above, income must exceed debt service or else there will be a heat death of the economic universe. We have now proven income is growing slower than debt total. We have one more step, to prove income is growing slower than debt service.

Normally, debt service would grow proportionally with debt. It may seem fortunate that we don’t live in a normal universe, as we shall see in a moment. We live in an abnormal place, which is subject to one of the planks proposed by Karl Marx in his infamous Communist Manifesto.

“5. Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.”

The central bank conducts what it calls monetary policy. The net result of monetary policy for 36 years so far is falling interest rates. Keith has written about the various ways that falling interest causes destruction in his series of articles on yield purchasing power.

However, in light of the heat death question, falling interest would seem to have the potential to save us. It is obvious that servicing the same debt at 1% interest has a lower monthly payment than at 10%. This is why many economists say there is no problem. We are told that, “debt service today is not a greater percentage of GDP than it was when the debt was much lower decades ago.” That may be true, and we won’t even get into if net income is the same percentage of GDP as it was (we would bet an ounce of fine gold against a soggy dollar bill it isn’t).

We want to make a different argument. If debt service depends on falling interest, what happens when interest hits zero? Here is another good analogy to physics, which also asks what happens at zero. In physics, nothing. Literally. Motion stops on even a molecular level at absolute zero.

What happens to an economy when interest—we mean the long-term bond rate—falls to zero? What happens when businesses can borrow at 0%? Well, obviously, debt service goes to zero (not including amortization of the principal). With no cost to borrow, businesses can borrow for activities that produce no economic value(!)

In a normal economic universe, interest is greater than zero. As we said last week:


“A dollar to be paid next year is worth less than a dollar in the hand today. One reason is that we are mortal beings. In order to be alive next year, we must remain alive every single day between now and then. There are natural reasons for time preference—the desire to have a good today, and not postpone it. We are also not omniscient. Something may come up, such as an illness, which forces us to consume what we did not plan to consume.


Another reason is, of course, risk. Unlike the magic machine in our example, a business enterprise may cease to make money for any number reasons including a new competitor or changing customer preferences.

For many reasons, a dollar to be paid next year is not worth a dollar today. A dollar to be paid in ten years is worth even less. Future payments must be discounted. The discount is related to the interest rate, and it shares many of the same causes.”

At zero, this economic law is violated. No one can act as if he had no time preference, which is exactly what zero interest requires him to do.

And zero, itself, is not sustainable anyway. Assuming that some amount of amortization is required, then the debt service becomes unbearable and the interest rate must keep falling.

When interest is positive, or even zero, business borrowing must fund activities that generate a positive return (even if only share buybacks). However, when interest goes negative, they can borrow to engage in capital-destroying activities. So long as the rate of destruction is below the rate of interest.

For example, suppose an enterprise destroys its investors’ capital at 1% per year. That’s bad. But what if it can borrow this capital at -2%? The investors lose 2% per year. But the business nets +1%. Positive one percent. What is profitable to do, will be done at large scale across the entire economic universe.

At negative rates, investors lose a bit of their capital every year. They are subsidizing businesses who are destroying it bit by bit every year.

Negative interest rates are not sustainable. A falling interest rate can make debt service cheaper. However, it does not solve the problem of falling marginal productivity of debt. The heat death of the economic universe looms closer every day (we make no prediction of the timing of this here, that will be the subject of a future series).

So now we can write an economic law:

If MPoD < 1, the economy is unsustainable

That is, the heat death of the economic universe is inevitable.

Note that MPoD was under 1 even as long ago as the 1950’s (we suspect this pathology began either around the time of President Roosevelt’s gold confiscation in 1933, or the creation of the Federal Reserve in 1913, but we don’t have the data going back that far).

Prior to the crisis of 2008, MPoD fell below 0.1. Even now with its post-crisis boost, it is well under 0.4, and falling.

It is time for gold to enter the mainstream monetary discussion. Interest rates and MPoD do not fall when there is a free market in money and credit. And the market will choose gold, if it is free to do so.

The prices of the metals ended all but unchanged this week, though they hit spike highs on Thursday. Particularly silver his $17.24 before falling back 43 cents, to close at $16.82.

It was not a gentle fall back. In about an hour and fifteen minutes on Friday morning (as we Arizonans reckon the time), the price of silver dropped from $17.16 to $16.76. Was this a case of the infamous manipulation we’ve all read about? We can’t tell you who did it, but we can show you a clear picture of what happened.

In any case, it seems that either Fed Chairman Appointee Powell is not good for silver, or else that the price of silver has little to do with continuation of current Fed (central) planning.

We will look at intraday gold and silver supply and demand fundamentals. But first, here are the charts of the prices of gold and silver, and the gold-silver ratio.


Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio fell a hair.


In this graph, we show both bid and offer prices for the gold-silver ratio. If you were to sell gold on the bid and buy silver at the ask, that is the lower bid price. Conversely, if you sold silver on the bid and bought gold at the offer, that is the higher offer price.

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph showing gold basis and cobasis with the price of the dollar in gold terms.


We see a rising cobasis (our measure of scarcity) along with a rising price of the dollar (i.e. falling price of gold, in dollar terms). This is not surprising; it is the typical pattern nowadays.

Our calculated Monetary Metals gold fundamental price moved down by $12.

Now let’s look at silver.


We also see the cobasis tracking the price of the dollar. Look at how they go down together on Wednesday and Thursday, and up together on Friday. Keep in mind that the contract roll is well underway, that it impacts the silver basis more than the gold basis. Mechanically, the roll involves selling the expiring contract.

- Source, Monetary Metals

Monday, 6 November 2017

Are We About to Get 1970's Inflation or Worse?


Jay Taylor and John Rubino discuss thoughts on the increase in the money supply, velocity of money and what it means for the Fed’s monetary policy in light of debt levels.

- Source, Jay Taylor

Friday, 3 November 2017

The Ultimate Panic Is About To Be Unleashed In Financial Markets

Egon von Greyerz: “We are currently standing before one of the most unique and frightening periods in history. Never have there been so many extremes in so many different areas. In the last 100 years everything seems to have grown and intensified much faster, including population, technology, inflation, debt, money printing, budget deficits, stocks, bonds, property prices. crypto currencies etc

“All of these areas are now in an exponential growth phase. The final stage of exponential growth is explosive and looks like a spike that goes straight up. A spike for a major sample like global population or the Dow never finishes with just a sideways move. Once a spike move has finished, it always results in a spike move down.

It seems that everything in the world is developing much faster today, such as computers and mobile phones or robots. The world assumes that this exponential growth in so many areas will continue or even accelerate further. But sadly, that is unlikely to be the case.

There is a more scientific illustration of how these exponential moves occur and also how they end.



Imagine a football stadium which is filled with water. Every minute one drop is added. The number of drops doubles every minute. Thus it goes from 1 to 2, 4, 8, 16 etc. So how long would it take to fill the entire stadium? One day, one month, or one year? No, it would be a lot quicker and only take 50 minutes! That in itself is hard to understand, but even more interestingly, how full is the stadium after 45 minutes? Most people would guess 75-90%. Totally wrong. After 45 minutes the stadium is only 7% full! In the final 5 minutes the stadium goes from 7% full to 100% full.

That is the simple explanation why we are seeing this very fast exponential move in so many areas. It is of course impossible to say exactly when the global stadium or individual stadiums will be filled especially since we don’t know the size of these stadiums. What we do know is that when it is full, the water level will not only stop rising but the stadium will collapse.

We are probably now in the final minute, or probably seconds, of the move since we are in the exponential phase that has lasted around 100 years.



If we look at a few examples of exponential growth, we can start with world population. For thousands of years global population grew very slowly but finally reached 1 billion in the 1850s. Since then it has gone up over 7x to 7.5 billion. Many “experts” now forecast that we will soon reach 15 or 20 billion.

Yes, global population could grow slightly from here but more likely is that we will see a major reduction in the coming decades. It could even happen a lot faster depending on the type of event that the world is facing. Looking at the size of the exponential move, 6.5 billion people have been added to world population since the mid 1850s. A normal correction to such an exponential growth would be 38% to 50%. This would mean that world population could go down between 2.5 and 3.7 billion to 3.8 to 5 billion people. This clearly sounds horrendous and improbable but looking at the chart, it is likely to happen. It is of course possible that we could see some further growth before global population goes down. But the risk of the downturn starting soon is much greater than a significant further increase.

The triggers for such a major reduction could be manifold like war, epidemic disease, economic collapse leading to poverty and famine or a combination of these events. For example, around 1340-50 there was the Black Plague that reduced the European population by up to 60% and world population by an estimated 30 to 50%. A nuclear war between North Korea and the US would eventually involve China, Russia, Iran, Pakistan, India and many other countries and would be just as devastating, probably leading to world population going down by much more than 60%. Likewise, a collapse of the financial system, which is not improbable, would be cataclysmic for the world.

It is absolutely clear that one or several of these events will take place in coming years but when exactly is of course impossible to say. Depending on the magnitude of the problem, including the geographical spread, it is very difficult to prepare for it for normal people. Very few have their private jet and residences in many parts of the world. However, for people who have savings, now is the time to take defensive measures if you haven’t already. I know of very old family wealth who for hundreds of years have kept their wealth in property, art and gold with 1/3 in each. With productive land, this has of course been a superb portfolio and will continue to do very well during the coming downturn. Gold and agricultural land are real wealth preservations assets, while some art today is a bubble asset and therefore will suffer. But 2/3 of the assets are likely to perform extremely well in coming years.



A contrarian or a risk averse investor can today look at any chart of stocks, bonds or property, which will all tell him that we are now at extremes. On a risk/reward basis, very few investors make money by buying at the very final stages of a move. Yes, it is true that anyone who bought into the Nasdaq in early 1999 had more than doubled his money by March 2000. The problem is that more than 95% of investors stayed in at that point and most did not get out until they had lost 50-80%.



As the superb Chairman of Sprott USA, Rick Rule, stated at the New Orleans Investment Conference last week: “Either you are a contrarian or you will be a victim.” The reality is that most people will be victims in coming years. Very few will realize that what we will see next is the end of a major era or cycle of a major degree. Whether it is a 300 year cycle or a 2,000 year cycle doesn’t really matter. Historians will know afterwards. What we need to focus on today is to protect ourselves against these risks rather than to become victims.

Back in 2002, we decided as a company that risk in the world would accelerate in coming years and it was the right time to protect ourselves and our clients. Gold at that time was unloved and undervalued. It had been going down for 20 years and nobody was interested. Gold bottomed in 1999 at $250, having gone down from the $850 peak in January of 1980.



The average investor obviously did not get very excited that gold had gone up $50 since 1999, and was $300 in February 2002. That was when we decided to put a significant percentage of our own funds into gold as well to recommend to our investors to do the same.

This is a typical contrarian investment. You buy an asset that is on nobody’s radar screen, and in the case of gold in 2002, 65% below its peak price 22 years earlier. But it is of course not enough just to buy something which is cheap. What you buy must also have an intrinsic value and the potential to grow substantially. Gold’s role as the only money that has existed and survived for almost 5,000 years makes it clear that function is likely to continue for many thousand of years to come.



Also, Greenspan’s easy money policy had started in 1987 when Fed Funds reached 10%. With a weak economy, and weak asset markets Greenspan started his stimulative policy and lowered rates down to 3% in 1992. They had gone under 2% in early 2002 when we bought gold. Eventually rates came down to 1% on Greenspan’s watch. When Bernanke then needed to sort out the mess during the great financial crisis, rates were lowered form 5% in 2007 to 0% in 2009 where they stayed until 2015.


- Source, King World News

Wednesday, 1 November 2017

Ron Paul: Don't Get Too Excited About Tax Cuts


The income tax should be 0%, just as it was for the first 137 years of American history. So tax cuts across the board are always a welcome development. However, tax cuts are just part of the big picture. What we need is a total cut in government's size and scope. Unfortunately, President Trump is not going in that direction.

- Source, Dr. Ron Paul

Monday, 30 October 2017

Michael Pento: The Central Banks Will Not Be Able To Control Inflation As The System Collapses



As Janet Yellen admits “the Fed does not understand inflation”, there will be absolutely no way to control it once hyperinflation sets in.

Michael Pento says the Fed won’t be able to contain inflation as Janet Yellen says “we really don’t understand inflation”.

- Source, X22 Report

Friday, 27 October 2017

Ted Butler: Fear of Silver Shorting Scotia to Sell Its Metals Division


News reports this week indicated that the Bank of Nova Scotia (ScotiaBank), Canada’s third largest bank, had put its precious metals operation, ScotiaMocatta, up for sale. Various sources said the unit had been for sale for a year or so and it was thought or hoped that Chinese interests might buy the business. It was also reported that the Bank of Nova Scotia would shrink the unit if no buyer could be found. The impetus for the sale was said to be a scandal involving smuggled gold from South America to the US. Somewhat ironic, and interesting, was that the sale “listing” agent was none other than JPMorgan.

http://www.reuters.com/article/us-scotiabank-gold/scotiabank-mulls-sale-of-gold-trading-unit-sources-idUSKBN1CN2CN

I believe there is more to this story than meets the eye and it involves the ongoing gold and silver price manipulation. About the only thing I find suspect in the news accounts is the motive for the sale. I was aware of the smuggling story, but ScotiaMocatta didn’t seem particularly exposed in this matter. I accept that the unit is up for sale, just not the motivation behind the sale. If my reasoning is correct, this could be a very significant development in the ongoing silver and gold price manipulation on the COMEX; on a par with JPMorgan taking over Bear Stearns in March 2008; which, in my opinion, was the most significant event in the silver market in decades.

Truth be told, I could never figure out why a leading Canadian bank would even want to buy and run a business not remotely in keeping with its core banking businesses – it was like trying to put a square peg in a round hole. The Bank of Nova Scotia has roughly 90,000 employees, whereas the ScotiaMocatta unit has less than 200 employees and accounts for a tiny fraction of the bank’s $2 billion quarterly profits.

I think the Bank of Nova Scotia’s real motivation for seeking to offload its ScotiaMocatta precious metals unit after 20 years of ownership is liability. It’s the fear of what is to become of a major short seller in silver (and gold) on the COMEX. By every count, ScotiaMocatta is one of the 7 potential dead men walking who hold large concentrated short positions. It’s not some alleged smuggling ring that is motivating the bank to dump the unit. The only wonder is what took the bank so long to come to this conclusion.

When it comes to the 8 largest concentrated shorts in COMEX silver and gold, JPMorgan, alone, is protected against financial ruin whenever silver prices explode due to its massive physical silver position. I see no evidence that any other entity has accumulated enough physical silver. Because JPM was so far ahead of the pack in recognizing that silver will soar in the future and began buying as much as it could starting six and a half years ago, it’s too late for the 7 others to jump onto the buy side now. That’s because such buying would set off a price spiral – about the very last thing a big short would want. JPMorgan has played this masterfully.

The best thing the Bank of Nova Scotia could hope to achieve now is to unload the problem on someone else, say an unsuspecting Chinese entity. The problem is that you can’t go from being, most likely, the 2nd largest silver short on the COMEX for years running, to suddenly closing out your shorts or getting long in a flash. You can’t just blink your eyes or click your ruby slippers and have the short position closed out – you must buy back the position or deliver physical metal, no easy task when you are talking perhaps upwards of 75 million ounces they hold short in COMEX silver futures (15,000 contracts). And just in case anyone is wondering – there is also no way that the Bank of Nova Scotia could ever admit to this and hope to unload the unit on anyone else. Hence, the BS smuggling cover story.

As to what has finally awoken ScotiaBank to the potential liability inherent in being a large short seller in silver and gold, there a number of explanations. Back in the summer of 2016, the open and unrealized losses to the 8 largest shorts in COMEX gold and silver combined amounted to $4 billion. By the end of last year, the 8 big shorts had succeeded in rigging gold and silver prices lower and with the price decline, the $4 billion open loss was extinguished. Still, at the gold and silver price highs of 2016, the $4 billion open loss had to be dealt with by the 8 big shorts. This meant that the unrealized loss had to be deposited with the clearing house by all shorts who were underwater, including the 8 big shorts (of which ScotiaMocatta was a card-carrying member).

This meant that ScotiaMocatta had to have deposited anywhere from $500 million to $750 million in unexpected margin calls in the summer of 2016, probably the most ever. Where did the margin money come from? In ScotiaMocatta’s case, from the parent bank. But since the demands for margin were so outside the bounds of what the parent bank was used to providing to its precious metals unit, it had to raise some eyebrows at the Bank of Nova Scotia. Large bank CFO’s and treasury officials tend to become concerned when they are pressed for sudden demands for many hundreds of millions of dollars. There is no way that the chief financial officer for ScotiaBank didn’t investigate why the ScotiaMocatta unit was hemorrhaging hundreds of millions of dollars. That person would have to ask what happens if prices continue to rise. Therefore, the bank came to realize what a potentially ruinous liability its precious metals unit was. Not only does the timeline fit regarding how long the unit has been up for sale, but I’m sure the parent bank came to appreciate the regulatory and general liability risk of being found to have manipulated the price of gold and silver for many years.

Only time will tell, but ScotiaBank trying to slip out the back wouldn’t seem to strengthen the dominant hand of the 8 big shorts in COMEX silver and gold. And it is upon the 8 big COMEX shorts that the price manipulation has always been based. I’ll make it simple – without the concentrated short position of the 4 and 8 largest traders in COMEX silver and gold, no manipulation would be possible. So any time a whiff of distress or disunity emerges from the big 8, it’s wise to sit up and take notice. Anything that might change how the real game has been played is, by definition, a potential game changer.

- Source, Ted Butler

Wednesday, 25 October 2017

Hugo Salinas Price to introduce the Libertad One Silver Ounce


*Please Click Image to View Video*

Hugo Salinas Price Interview, October 14, 2017, in Mexican TV Channel ADN40, speaking about his campaign to introduce the Libertad One Silver Ounce into circulation, as a vehicle for savings of the common folk.



Tuesday, 24 October 2017

The Bond Bubble and How Humanity Will Be Robbed By Banks Soon


In this video, Luke Rudkowski of "We Are Change" gives you the latest breaking news on the privatization of the U.S economic stock market, with the latest trends and analysis from Max Keiser. We also get into the wealth income gap, bitcoin, encryption and much more.

- Source, We Are Change