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Saturday, February 4, 2017

Economic Crisis: Bill Holter: This Is the Biggest Bubble in the History of History

Bill Holter: This Is the Biggest Bubble in the History of History
 t’s easy to understand how people have fallen victim to “Trumphoria” when they look at their recent 401k statements, or they look at the U.S. equity markets at their all-time highs, but looks can be very deceiving. In the following interview with Bill Holter, one of the world’s leading forensic economists, Bill explains exactly why people need to begin preparing for the inevitable.

Notice how his comments are eerily similar to those made by Peter Schiff when he said, the collapse of the U.S. Dollar will be the single biggest event in all of human history! The following is just a brief quote from my interview with Bill that follows:
“We are at all time highs in markets, but confidence is beginning to crack. Some very ugly truths are beginning to come out… “
“All credit booms have ended badly, and this is the biggest credit boom in the history of history…”


Bill Holter writes:
So far this year it has been U.S. and geo politics at the forefront.  Most all of my writings have had the “truth bomb” theme and rightly so as the unveiling of truth will greatly alter markets and thus market pricing and “reality”.  To switch gears, let’s look at a few charts and articles to see where we really are.

First, John Rubino put the chart below out showing where the median S+P company is priced versus their revenue.  Without a doubt, we are at nosebleed levels.  Just a cursory look reveals a reversion to the mean going back to 1986 would see the S+P dropping more than 50%.  If you turn on CNBC you will hear current levels are “normal”, I think not.  
As you know, the equity markets have blown out to the upside since the election.  It has been my contention that “new money” has been missing.  As it turns out, we had a major short squeeze leaving short interest at three year lows.  Squeeze Over? Short-Interest Plunges To 3-Year Lows  This is very dangerous as we have seen this type of set up many times before …followed by very weak or crashing markets.  Sentiment has become extremely one sided and the bears have been runin, who will be there to buy?  Certainly not the shorts because their buying has already been largely concluded. 
Another warning sign is mutual fund “cash”, this is now at ALL TIME low levels at just 3%http://kingworldnews.com/major-alert-critical-indicator-just-plunged-to-the-lowest-level-in-history/ !  Lastly, as depicted by the chart below, insiders were very big sellers into the Trump rally.  Who would know if their company was overvalued better than an insider?
Let’s take a look at the set up for gold.  While I do not like short term charts because they are painted daily, longer term charts are more difficult to paint.  Below is a weekly chart of gold going back 5 years.  There are several things to look at here.  First, notice the “golden cross” (buy signal) that took place in late December.  This is the red and blue line in the main chart crossing over to the upside (the 50 week moving average rising above the 200 week moving average).  These averages move very slowly and normally only cross once in five years.  This is very good and signals a trend change.
Next, please look at the red and blue lines at the bottom of the chart.  This is the MACD (moving average convergence/divergence).  This is much more sensitive to shorter term movements.  Please notice the “hook” at the bottom right of the chart, this is signaling strength coming as it looks to be crossing over to the upside (and from the most oversold level over the last 5 years other than 2013).
While charts are made to be “painted”, the current set up couldn’t be more bullish.  We had a couple of true anomalies over the past week in COMEX gold.  First, going into first notice day, open interest dropped 90,000 contracts in just three trading days. 
I cannot ever remember this happening to such an extent.  Also, the amount of open interest for February rose on the second day of delivery period.  Plus, the amount “served” on day one was about 10 tons or half of open interest.  In the past, we would see very little served early and open interest decline during the month as cash settlements were made rather than deliveries. 
These changes are significant in my opinion.  I have written many times before that it made no sense for contracts not to be served early because of cost to carry (vault fees).  What we are seeing makes much more common sense.  We also have seen for the last seven months a propensity for open interest to increase during delivery period, this is indicative of demand and desire for delivered metal immediately.  The drop of 90,000 contracts may very well signal the banks flattening out positions as a new sheriff comes to town?  We do know JP Morgan took delivery of physical silver each and every day of January. 
If Ted Butler’s claim JP Morgan held 550 million physical silver ounces prior to January is correct, we can add over 100 million ounces to that figure!  As for silver, please read Steve St. Angelo’s latest https://srsroccoreport.com/critically-high-u-s-silver-supply-reliance-in-jeopardy-when-paper-markets-crack/   Ask yourself what will happen to price should a true trade war break out and we must import so much silver supply to meet demand?  How will this work if tariffs are imposed or …shipments not made?

To summarize, financial markets are extremely stretched while gold, silver and mining shares are coiled for explosive movements upward.  The catalysts (risks) to begin the process are too many to list but I do believe it will involve some sort of “truth” being made known, and accepted.  We stand right in front of the greatest transfer of wealth in all of history, do not be caught trying to “trade” this as you may be caught wrong footed, out, or most likely not even able to react.  Be long “money” as everything else is only credit and someone else must perform in order for you to collect.  Trust in yourself and your own common sense as “trust” worldwide will be broken by some very ugly truths!
Standing watch with great anticipation,
Bill Holter