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Sinclair, The Man, now recommends Silver.
MilesWaits
Posts: 5,311 ✭✭✭✭✭
Jim originally saw silver only as an industrial metal and therefore not as price related to the destructive qualities of QE and Derivatives; yet, times change:
QE3 To Infinity–The Final End Game
September 21, 2012, at 2:30 pm
by Jim Sinclair in the category General Editorial | Print This Post Print This Post | Email This Post Email This Post
My Dear Extended Family,
The final end game of QE3 to infinity, with a month or two off from time to time, will be a product of the long term viability of the Federal Reserve Balance sheet and the impact on the dollar there from.
Let’s review what has transpired and begin to look at what will happen:
1. OTC derivative manufacturers and distributors sold fraudulent paper to almost every entity as clients of the Western world financial system. Inherently the OTC derivatives manufacturers and distributors had part of the transaction on their books. No problem as long as the entire scam was a "Daisy Chain," a connected set of transactions that has the appearance of risk but when all netted out equals almost zero.
2. Until Lehman was flushed, and flushed it was, most all OTC derivatives could have been netted to zero in a derivative resurrection bank. Losers would have rejoiced and winners would have declared war. However when Lehman was forced into bankruptcy it broke the "Daisy Chain" (a chain of near risk-less transactions when netted) of the OTC derivatives scam. At this point winners had won huge and loser had lost huge and there was no longer a means of repair to the quadrillion dollar scam. The problem has no practical solution other than transferring all losing paper to the balance sheet of the Federal Reserve where then it was anticipated no non-government "mark to market" audit would ever occur. It was the perfect hole to stick the junk into.
3. The size of the OTC derivative market stood at one quadrillion one hundred and forty four trillion as reported by the Bank of International Settlement, the counter internationally.
4. The Bank of international Settlements, seeing this outrageous number, changed their computer method of valuation to maturity assuming no failures and reduced the size of OTC derivatives of all kinds to a more acceptable but still huge number of $700 trillion notional value.
5. In the first and second round of QE the Federal reserve purchased OTC derivatives including the variety called securitized mortgage debt to remove them from the balance sheets of the Western world financial system, thereby improving the Western world’s financial institutions balance sheet and preventing an international industry wide bankruptcy. That means the Federal Reserve has impaired its balance sheet in order to repair some of the balance sheet integrity of the Western world financial system. The amount they have purchased is significant, but not compared to total outstanding above more than one quadrillion dollars.
6. The reason for QE to infinity, QE3, is the failure of business activity in the Western world to pick up with early huge monetary stimulation so as to repair the balance sheet of the Western financial world financial system. The unseen crisis is the hidden weakness of the Western world financial system thanks to FASB (The gatekeepers of world accounting) which allows financial institutions internationally to hide their losses by valuing their paper at whatever the bank wants it to be with no reference to seek a market value, primarily because there is none to seek.
7. The crisis not seen by Fed observers is the true balance sheet condition of the loses on the trillions of dollar of worth-less paper fraudulent paper because numbers are given but no independent mark to market audit has been or is likely performed.
8. As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar, continues to expand exponentially.
9. The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve’s Balance sheet, as it impacts confidence the US dollar and US interest rates.
Now you know what brings about the end game.
In the future I will do small simple articles dealing with the impact on markets of a to be Bankrupt Central Bank, the US Federal Reserve. The end game could come sooner, but only if there was an independent "mark to market" audit of the Federal Reserve inventory of worthless paper which remains unlikely no matter who wins the election in November.
Those of you invested in gold and silver vehicles of all kinds (with the exception of ETFs and futures) rest well this weekend. $3500 will easily be a place gold trades. The Canadian dollar and blasphemy to the euro snobs, the Swiss franc, remain go to vehicles for cash positions. Yes cash because you to not have to pay to own them as you do with a sovereign paper with negative interest.
Your watchman,
Jim
QE3 To Infinity–The Final End Game
September 21, 2012, at 2:30 pm
by Jim Sinclair in the category General Editorial | Print This Post Print This Post | Email This Post Email This Post
My Dear Extended Family,
The final end game of QE3 to infinity, with a month or two off from time to time, will be a product of the long term viability of the Federal Reserve Balance sheet and the impact on the dollar there from.
Let’s review what has transpired and begin to look at what will happen:
1. OTC derivative manufacturers and distributors sold fraudulent paper to almost every entity as clients of the Western world financial system. Inherently the OTC derivatives manufacturers and distributors had part of the transaction on their books. No problem as long as the entire scam was a "Daisy Chain," a connected set of transactions that has the appearance of risk but when all netted out equals almost zero.
2. Until Lehman was flushed, and flushed it was, most all OTC derivatives could have been netted to zero in a derivative resurrection bank. Losers would have rejoiced and winners would have declared war. However when Lehman was forced into bankruptcy it broke the "Daisy Chain" (a chain of near risk-less transactions when netted) of the OTC derivatives scam. At this point winners had won huge and loser had lost huge and there was no longer a means of repair to the quadrillion dollar scam. The problem has no practical solution other than transferring all losing paper to the balance sheet of the Federal Reserve where then it was anticipated no non-government "mark to market" audit would ever occur. It was the perfect hole to stick the junk into.
3. The size of the OTC derivative market stood at one quadrillion one hundred and forty four trillion as reported by the Bank of International Settlement, the counter internationally.
4. The Bank of international Settlements, seeing this outrageous number, changed their computer method of valuation to maturity assuming no failures and reduced the size of OTC derivatives of all kinds to a more acceptable but still huge number of $700 trillion notional value.
5. In the first and second round of QE the Federal reserve purchased OTC derivatives including the variety called securitized mortgage debt to remove them from the balance sheets of the Western world financial system, thereby improving the Western world’s financial institutions balance sheet and preventing an international industry wide bankruptcy. That means the Federal Reserve has impaired its balance sheet in order to repair some of the balance sheet integrity of the Western world financial system. The amount they have purchased is significant, but not compared to total outstanding above more than one quadrillion dollars.
6. The reason for QE to infinity, QE3, is the failure of business activity in the Western world to pick up with early huge monetary stimulation so as to repair the balance sheet of the Western financial world financial system. The unseen crisis is the hidden weakness of the Western world financial system thanks to FASB (The gatekeepers of world accounting) which allows financial institutions internationally to hide their losses by valuing their paper at whatever the bank wants it to be with no reference to seek a market value, primarily because there is none to seek.
7. The crisis not seen by Fed observers is the true balance sheet condition of the loses on the trillions of dollar of worth-less paper fraudulent paper because numbers are given but no independent mark to market audit has been or is likely performed.
8. As QE3 to infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of the USA, the US dollar, continues to expand exponentially.
9. The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve’s Balance sheet, as it impacts confidence the US dollar and US interest rates.
Now you know what brings about the end game.
In the future I will do small simple articles dealing with the impact on markets of a to be Bankrupt Central Bank, the US Federal Reserve. The end game could come sooner, but only if there was an independent "mark to market" audit of the Federal Reserve inventory of worthless paper which remains unlikely no matter who wins the election in November.
Those of you invested in gold and silver vehicles of all kinds (with the exception of ETFs and futures) rest well this weekend. $3500 will easily be a place gold trades. The Canadian dollar and blasphemy to the euro snobs, the Swiss franc, remain go to vehicles for cash positions. Yes cash because you to not have to pay to own them as you do with a sovereign paper with negative interest.
Your watchman,
Jim
Now riding the swell in PM's and surf.
0
Comments
Miles, please organize a fishing trip with me, you and Jim and I'm in.
FYI- Peter Schiff is getting married on Sunday in an outdoor event. It's supposed to rain so I don't know what that will mean it terms of luck for metals next week
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Jim is a good man.
Miles, please organize a fishing trip with me, you and Jim and I'm in.
FYI- Peter Schiff is getting married on Sunday in an outdoor event. It's supposed to rain so I don't know what that will mean it terms of luck for metals next week
MJ >>
You are already invited, MJ, whether it is deep sea or shallow shoreline! Jim might want the dogs along, though.
You can supply the wit and intelligence and I have fine shark bait experience with my seal-like surf wetsuit.
That is a rare and valued experience you are about to embark on, even in the rain! Yes, mucho fotos, por favor....
Miles
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Alabama says she is in as well. MJ
I had to come all the way from the highway and byways of Tallahassee, Florida to MotorCity, Detroit to find my true love.
If you gave me a million years to ponder, I would never have guessed that true romance and Detroit would ever go together.
And til this day, the events that followed all still seems like a distant dream. But the dream was real and was to change our lives forever.
I kept asking Clarence why our world seemed to be collapsing and things seemed to be getting so crappy. And he'd say, "that's the way it goes, but don't forget, it goes the other way too."
That's the way romance is... Usually, that's the way it goes, but every once in awhile, it goes the other way too.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
balance sheet in the process. I would have thought worthless MBS's for example would have been dumped into Fannie and Freddie since Tim Geithner went out of his way 2-3 years ago to lift the cap on what they can accept. That unlimited cap ends sometime this year.
Silver will go up if there are more buyers than sellers no matter what "fundamental" supports it may have.
Knowledge is the enemy of fear
Give Me Liberty or Give Me Debt
He says: The end game problem is an extended recessionary business conditions going into 2015 to 2017 wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow and the quality of the Federal Reserve balance sheet proceeds to deteriorate further.
Therefore the end game is the perception of the weakness of the lender of last resort, the Federal Reserve’s Balance sheet, as it impacts confidence the US dollar and US interest rates.
Now you know what brings about the end game.
So the end game is what? A dollar that doesn't buy much and high interest rates up the wazzoo. So why wouldn't you short Treasuries and keep on shorting?
I knew it would happen.
<< <i>So the end game is what? A dollar that doesn't buy much and high interest rates up the wazzoo. So why wouldn't you short Treasuries and keep on shorting? >>
I could be wrong but I think it was an indirect way of saying to start holding physical, not paper. Shorting treasuries is still paper holdings. Dno could be wrong though.
Interesting read Miles, thanks for that!
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>I'm glad I didn't name her Floyd
MJ >>
Alabama is glad you didn't name her Angelina.
"Those of you invested in gold and silver vehicles of all kinds (with the exception of ETFs and futures) rest well this weekend!"
Sane and sanguine advice, stackers........
Miles
the printing of paper in modern times. People will simply wake up one day and find that
bonds can go to zero in a few minutes.
End game is what happens after computer trading destroys everything.
I don't believe silver will be the asset of choice when a new system is instituted to keep the
machinery that feeds us running. It will be gold.
Once the economy begins to improve silver will be the asset of choice. Silver would already
be at the moon if we had half an economy.
On another note, will Peter Schiff lose his edge after he is married off?
I could be wrong but I think it was an indirect way of saying to start holding physical, not paper. Shorting treasuries is still paper holdings.
You are completely correct, and I've been very wary of paper since 2008. My question was intended to probe the trading strategies of some of our expert forum traders. Sinclair IS the man when it comes to knowing how the financial markets work, (or how they don't work).
I knew it would happen.
<< <i>So why wouldn't you short Treasuries and keep on shorting? >>
Not while the FED keeps propping them up. TBT will have its day, but not yet.
Why buy all the way down when you can be in leveraged silver on its way up. Wait for bond bubble to explode, sell paper metals and then buy TBT at the bottom:
Another good play when the captured market escapes the FED's control will be VXX when the equities come crashing down:
Give Me Liberty or Give Me Debt
<< <i>I don't believe silver will be the asset of choice when a new system is instituted to keep the
machinery that feeds us running. It will be gold.
Once the economy begins to improve silver will be the asset of choice. Silver would already
be at the moon if we had half an economy. >>
This has me a bit worried as I dont see our economy improving for quite some time.
As someone who really doesnt have much to "protect", I have been purchasing more silver oz than gold (more bang for the buck as well as believing that there is a higher % growth than gold). Maybe its time to save up for an oz or two of gold...
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>
<< <i>I don't believe silver will be the asset of choice when a new system is instituted to keep the
machinery that feeds us running. It will be gold.
Once the economy begins to improve silver will be the asset of choice. Silver would already
be at the moon if we had half an economy. >>
This has me a bit worried as I dont see our economy improving for quite some time.
As someone who really doesnt have much to "protect", I have been purchasing more silver oz than gold (more bang for the buck as well as believing that there is a higher % growth than gold). Maybe its time to save up for an oz or two of gold... >>
Everyone should have a little gold.
As the eternal optimist I'm still hoping an economic recovery can occur without the
current trends continuing. Silver will be the big winner but it's beginning to look like it
might be longer term.
These are very uncertain and increasingly perilous times.