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silver (1)With The Global Market In A Panic Over China, The Doc & Eric Dubin Break Down All The Action & Discuss The Impact On Gold & Silver:

RMRShield

How many times have we seen this EXACT chart pattern over the past decade after a gold or silver breakout rally?

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On the show, we dubbed the overall pattern The Golden Sombrero- but Eric points out that in this case, the cartel painted a witch’s hat pattern in gold:

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2016 Silver Eagle SDBullion

    • Thanks for posting that URL.  IMO, Kyle Bass is one of the sharpest guys in finance today.  Anytime he chooses to speak, we should all choose to listen.  I was watching the Halftime Report segment when he came on the phone.  The few minutes that he was on were definitely the highlight of the program that day.

    • One of 2 i always make a point to catch Ed, the other being my man crush Jim Grant, haha. Two of the smarter,  sincere voices out there with an attitude of humility to boot.

  1. @jerseyjoe   Kyle Bass, if he could, would move to Mars given the Chinese banking problem.  The shadow banking system  has $35 trillion in loans.  The bad loans are only a few hundred billion.   What is kind of funny is that Chinese GDP is half of ours but this banking overhang is 75% larger than our national debt and 7.7 times the asset base of the Fed, which just lost 33% of its capital due to a provision in the FAST bill that had the treasury take $20 billion of their $60 billion equity.  W
    hy?   Beats me but heck, with the US Treasury its just money on the table

    I dont know what sort of leverage the Chinese banking system is subject to but the Fed is leveraged over 99 to 1.   Central banks always fail eventually.  I wonder who will STB the bed first.  Not that it’s important who tanks first because if China tanks, the world tanks.

     

    • China’s GDP is roughly 11 Trillion AG. The financial pundits are blaming China which is beyond ridiculous. The Federal Reserve is the problem not China! Not even sure that the U S GDP is even close to 16 Trillion as the fuzzy math used as a tool.

    • I have done business in China and came close to opening a factory there – it is the wild west.   The fact that we import any consumable product from there (or Asia in general) is a testament to the criminals running this country.   The Chinese people are afraid to eat their own food.   And they took over our largest pork producer and I have read chickens are being sent there for processing – so why not pork and while they are at it slip us of their chickens and pigs fed on ???.

      The fact that China has fallen for this western banking cabal is insane.  But the Chinese are gamblers and believe in luck, throw the party cronyism and a lack of regulation that is applied uniformly on the pile and anything goes.   ( I have toured China widely – some of it hosted by Chinese companies I have done business with.  One of my senior engineers was from the top military university where all Mao’s generals sent their kids.   These kids essentially run China now.  Through that employee I met some of China’s top decision makers and toured some very interesting facilities – including their super computing campus.  I met so many senior officials including ex-military, I was debriefed by some of the alphabet agencies back in the states.  And yes they were trying to recruit me.)

      I had previously read all of the ZH articles that were referenced in the Bass article and understood the dimensions of the Chinese mess but Bass has a way of framing the issue.  (and he has called way more than the mortgage melt down.)  I think he is understating his concerns for fear of drawing fire.

      As has been noted by several pundits – especially Rickards, is if the world banks reprice gold, a reset can be achieved with less pain since few other sectors of the economy would be hammered as they would be in out right wholesale defaults of sovereign debt or banking grid lock on a credit meltdown as Holter, Sinclair and Hoffman are rightly concerned about.  As noted, such a reprice would have to be a huge upward repricing to infuse liquidity and spurn inflation as the debtor nations all want – on our backs (never cutting da gubamint and their huge welfare/warfare state dependencies).  The other obvious problem is that Rickards believe we still have gold to benefit from a repricing.

      The fact that all these Central Banks are just financial garbage dumps speaks to a global day/year/era (when you throw on demographics) of reckoning.   (Oh and thanks all for your “its the Fed” – yeah I get it perhaps more than you know.)

  2. Don’t fall into the trap they want you to believe, that China is responsible for the financial problems in the US. They always need something external to blame so as to divert attention way from the real problem, in this case The Fed.

    China’s economy remains stilted towards manufacturing, whilst a transition towards domestic consumption is taking place. As of now, China remains the manufacturer to the world so if the world isn’t consuming, China isn’t manufacturing and it’s economy and “markets” will have problems.

    So, which came first, the chicken or the egg?

    Incidentally, China has zero external debt

    • Yes Ranger, we usually are!

      Incidentally, Russia’s TOTAL debt amounts to 17% of GDP even as it builds its Gold reserves every month along with China. Not coincidental.

      The new attempts by “Someone” to crush the oil price and the RUB will not work either. Russia is largely self-sufficient and its people are used to enduring hardship. And indeed do so gladly if the National good is at stake. Imagine that? Putin’s popularity ratings remain at around 90% as he is seen as a strong leader. Imagine that?

      US sanctions on Russia are only hurting Europe, Germany in particular. Russia has now decided that ALL its Oil and Gas exports to Europe will be denominated in RUB (And to China in RUB/CNY) so what do you suppose that might do to the fundamental value of RUB as Europe has to sell EUR/USD to buy RUB to pay for Energy?

      All of these efforts are increasingly obvious and show the signs of policy desperation as more and more people come to understand the pathetic and hypocritical purposes of US foreign policy and, ironically, as Russia increasingly assumes the moral high ground.

      Both China and Russia have much longer time horizons as they implement their startegic vision(s), even if it requires all of the neocons to be dead first. Cheney and Wolfowicz both look on death’s door, so that might not be too much longer.

    • “So, which came first, the chicken or the egg?”

      Clearly, the egg came first otherwise there would be no chickens.  It is possible to have eggs without birds but it is not possible to have birds without eggs.   😉

       

  3. Hey Doc, I just want to thank you again for the  2016 silver eagle sale. It does matter to “we the stackers” to be able to accumulate at “any quantity” sales. This is important and the other coin dealers don’t seem to get that! People who are stacking want to get the best price and many of us are cost averaging our all in prices downward. It also helps psychologically to bring your total all in cost down. You have to go back many years to find prices on silver eagles like what you are bringing to us through your sale. Thank you again and God bless!

    • Agreed.  Also note Sunshine 10 oz bars are only around $0.88 over spot. Consider that more oz (cheaper) silver in bar form compliments a collection of ASE.

  4. It is far insolent to believe that China is the problem. The problem resides in Washington D. C. it is called The Federal Reserve! The un Federal Reserve is the worst enemy of the United States!, not ISIS, RUSSIA or CHINA!

     

  5. “China’s largest bank is buying the lease on Deutsche Bank’s huge London gold and silver vault, enlarging its footprint in the city’s bullion market, according to reports.

    ICBC Standard Bank, which took a controlling stake in London-based Global Markets business last year, has also applied to become a clearing member of the London gold and silver over-the-counter business.

    The Chinese and South African lender is aiming to fill the gap left by Western banks, which are retreating from commodities to cut costs and reduce regulatory burden.”
    http://www.telegraph.co.uk/finance/commodities/12090283/Chinas-largest-bank-buys-huge-1500-tonne-gold-vault-in-London.html

  6. How pleasant to read a nice string of lucid and well presented opines.   I don’t know if your counterparties just have their tails between their legs this week or they have been banished.    I like both options.  I don’t mind the countering ideas just lets hear some other than the usual tripe that totally ignores S/D, the Monetary Madness, and the Manipulations.

  7. @jskauai.  Good show on your ASE purchase.  I did something a tad different but will acquire generics early next week.  After our conversation last week very illuminating BTW, when you are buying and TOH is buying, that is ditto for me

    I sold 30 oz of AGE and will use the proceeds to buy silver from SDB.  The gold came from my SDIRA and that extraction creates virtually no tax consequences given that my CPA can shelter IRA withdrawals here and there

    The gold to silver ratio is nearly 79. Even with trading costs this ratio not only is way to sweet to miss but it portends some ‘ugly’ coming down the road.  The last time GTSR approached 80 to 1, the 2008 Lehman FUBAR overtook us.  Silver dropped like a rock but rebounded nicely.

    thanks for all the first rate insight you provided.  Cheers

    • @AGXIIK, take a look at this 30 year chart of the gold/silver ratio…http://www.macrotrends.net/1441/gold-to-silver-ratio-historical-chart… what strikes me is that it peaked at about 100 in 1990 and is in a bear trend making lower highs and lower lows. I’m no expert at this but I believe the next low in the gold/silver ratio will be lower than the 2011 low of about 31/1. However I will start trading silver for gold at about 50/1 and cost average into the decline. I am watching this carefully and the current up trend in the ratio should not take out the 2008 of about 83/1. If it does take out that high then we may be in for a longer time frame for gold out performing silver. Time will tell…

    • Edited post

      @AGXIIK, take a look at this 30 year chart of the gold/silver ratio…http://www.macrotrends.net/1441/gold-to-silver-ratio-historical-chart… what strikes me is that it peaked at about 100 in 1990 and is in a bear trend making lower highs and lower lows. I’m no expert at this but I believe the next low in the gold/silver ratio will be lower than the 2011 low of about 31/1. I am thinking that it will occur in 2018. The global silver production by then will be in a clear down trend and supply will not meet demand. However, I will start trading some silver for gold at about 50/1 and cost average into the decline. I am watching this carefully and the current up trend in the ratio should not take out the 2008 high of about 83/1. If it does take out that high then we may be in for a longer time frame for gold out performing silver. Time will tell…

    • @jskauai

       

      An astute observation on the historical relevance of the G / S price ratio.  I just used the SD Bullion gold and silver prices to calculate this and it is right at 79:1 as I type this.  I have long thought that one could add considerably to their stack by trading silver for gold when this ratio exceeds about 80:1 and then reversing it as the ratio declines to about 40:1.  One could double their gold ounces in this way and at no monetary cost to themselves, such as would be required if they merely bought twice as many ozs. of gold with additional fiat.

      Like you, I am watching the G / S ratio carefully.  It is almost time to swap gold for silver, IMO.  My only real problem in this is that I have a small safe and a LOT of silver won’t fit inside it.  Time to open an account at The Bank of Mother Earth.  😉

      I especially like your idea of averaging into a declining G / S price ratio.  This seems much better than guessing a specific number beforehand and then hoping that it happens.  If it does, all is well, but if it doesn’t quite get there, a significant opportunity could be lost.

       

    • IMO, there is very little “fiction” on Dave Stockman’s web site.  This article exposes the fictitious numbers so routinely shoveled out to the public by the BLS.  Most of us think that they should “get the L out of there” and name their department appropriately.

      The article is dead-on as far as I can see… especially the part where the BLS uses these idiotic and archaic surveys to determine economic activity in the US.  The really dumb part of this is that the US Dept. of the Treasury has hard data that is updated on a DAILY basis about the number of people employed in this country, the hours they work, and the pay they receive.  This is WAY more accurate than these dumb surveys that are sent out to a tiny fraction of the employers out there and are MUCH faster / easier to get.

      The only problem with the Treasury data is that it is not so good for lying to the public about how well the economy is doing at any given time.  Our so-called leaders want to paint a rosy picture of the economy because their policies directly affect the economy.  If the economy is doing poorly, they could be blamed for it.  To prevent this, they conjure up numbers out of thin air that make them look good and their pet group for doing this is the BLS.

      They would rather look good than be good… because, as we all know, politics is a game in which perception trumps reality… for a while.  But then, that is all these idiots are concerned about.  If they can get away with performing like crap but managing to make themselves look good, then they are satisfied with that.  We citizens, however, are not satisfied with that unless we are of the low information variety.

  8. Here is something interesting about that Golden Sombrero

    Nicknamed, El Turdo, this yellow hat symbolizes the famous Mexican trader  El Grande Crapo Chapo,  recently captured by the Mexican Army.

  9. @ranger  Good intel with Schtupnik and Stockman.  This reminds me of the saying commonplace in the Soviet Union.  ‘We pretend to work; the government pretends to pay us’

    What we now hear is something along the same lines.  “The government gives us pretend statistics and we pretend to believe them”

    Putin engages in real politik.

    O’Douchenozzle engages in real bollshitvik

     

  10. @ranger  IN a history class decades ago, I remember reading that a Spanish governor of Ecuador was executed by the natives in 1599.  The method of execution was having molten gold poured down his throat until he exploded.

    What a novel way to get rid of a former Sec of State and harridan in chief.

    Heat up a gallon or two a Libyan crude and use the same technique.

    That would be better than Dorothy and the Wicked Witch.

    I’d pay a dollar to see that execution.

    Scratch that.

    I’d pay one American Gold Eagle to see it.

    First row seating. I’d pay for my own popcorn too.

    After living for 35 years with the unrelenting scandals, morbid screeching from Dame Kill,  capped by the infamous line  ‘What Difference Does it Make’, a fitting end to this excrescence would be a party enjoyed by all

    Pontificationed enough for ya? 😉

    Whatta world!

    • @AGXIIK

       

      In thinking of Hellery, I always wonder how Vlad the Impaler would have handled her duplicity.  Old Vlad, of course, only knew one way and that was a sharp stake up the old keister with gravity providing the coup de grace.  Mounting her in the village square would provide several hours of entertainment.  The betting on when she would finally expire should be enough to put a major dent in the national debt.

      Failing this, I just want ONE member of the dePRESSed to ask her this on national TV: “Madam Secretary, if you could not even keep one of your ambassadors and his 3 body guards alive and well, what makes you think that you as president can keep 320 million Americans alive and well?”.  The look on this bitch’s face at that point would be… priceless.  😀

       

  11. @jskauai   That is a remarkable chart and shows the GTSR peaks at the times of worsening and hard economic times.  The banking crisis of 1990 is the tops and surprisingly that was not as bad a time as Lehman 2008.   I wonder if we will see a spike well over 100 to 1 in 2016  That would not surprise me.   Gold 1050 and silver 10

  12. Re: swapping silver for gold.
    I’ve never had a gold position worth mentioning. Totally expect silver>gold to be my first swap, but perhaps I could have done with holding some gold now in stead of the most base silver I own, as  the ratio has been creeping up since I got into bullion around 2011.
    If/when we see the ratio dropping, how would you decide to start swapping? 50 might be early for me, but do you buy when your higher target is hit, or when there seems a reversal after and below that level? If thereis still no blow-off top in gold+silver, the ratio could fall more?
    Had silver not been margin-killed in 2011, it could have climbed along with gold from April through August. A ratio between 15 and 20 could well have been achieved. If the evil overloarrd are with us next time, gold coudl get margin hikes while silver is left alone. That 15 ratio is totally on the table then, and if the situation gets a bit hectic, 10. That’s be soooo awesome. And I’d be kicking myseld having swapped most at 40 then.

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