The Central banks bought a staggering $1.5 trillion in assets in the first five months of the year to keep the economy from imploding while at the same time, capping the gold price. Yes, it’s true…. $300 billion a month of Central bank asset purchases pushes up STOCK, BOND and REAL ESTATE values while it depresses or caps the gold (or silver) price.
The amount of Central bank asset purchases are now reaching insane levels. And they have to. It is the same thing as being a drug addict. Once, someone starts down the road of drug addiction, it takes more and more of the drug to reach the same effect. Thus, when Central banks started purchasing assets to prop up the market, they have to continue, and they have to continue buying even more.
In a previous article, I published this chart showing Central bank asset purchases up until the first four months of 2017:
This chart came from a Zerohedge article that showed the Central banks purchased $1 trillion in assets in just the first four months of 2017, and the total of their balance sheets reached $14.6 trillion. In just five years, Central banks purchased $7 trillion in assets. However, in the first four months of 2017, they ramped it up to $1 trillion. Which means, the Central Bank asset purchases could reach $3.6 trillion annualized in 2017, surpassing half of all official purchases in the past five years.
That’s a lot of PROPPING UP folks…. and it also has totally depressed and capped the gold price. But, not for long.
However, before I get into some really interesting charts on just how crazy things are getting in Central bank land, I would like to share some of my sentiments about what is taking place in the Good ‘ole U.S. of A.
BRAIN DAMAGE & INSANITY Have Taken Root In America
Unfortunately, many Americans are now suffering from increased levels of insanity and brain damage… and it’s only getting worse. That being said, I really can’t blame them. Everyday most Americans, from sunup to sundown, receive a constant flow of Mainstream media advertising and propaganda. And it’s even more damaging for the little tots and kids.
From infancy to adolescence, kids receive a tremendous amount of brainwashing via the TV, I-phone and internet. When a tiny tot is sitting in front of a TV all day watching someone named Sparky the clown telling the child to eat sugar loaded with a smattering of cereal, this is the first step in turning that infant into an attention-deficit hyper-active kid that will not only drive his-her mother and father completely insane, but also all the teachers and public that has to deal with this wonderful child in the future.
As the child grows up, it now needs a lot of sugar or the screaming starts. I know of this first hand when I travel on the road and stop at one of the newer Mega-Travel-Stops on the interstate. Maybe some of you have been into one of these new Mega-Travel-Stops that have RV & Big Truck fuel pumps along with 100 gas pumps for regular cars and trucks.
On a busy travel weekend, I would recommend anyone who hasn’t visited one of these fine establishments, to take a bit of time out of your day… to do so. When you get in there, it can be complete CHAOS. Of course, there are many fully wired adults and lots of screaming kids looking for their junk food fix. I have seen some kids grab bags of chips, take them to their parents standing in line at the checkout counter… and when the parent said no, the kid took the bag and threw it back on the wrong place on the shelf. Many times the bag fell on the floor, and the parent did the RIGHT THING… and ignored it… LOL.
I gather if you apart of the mass exodus of families out of the suburbs on the weekend get-a-way, this may seem normal… the CHAOS, ya know. Basically, these Mega-Travel-Stops are frogs boiling in the water and no one seems to notice, and no one seems to care.
Anyhow… after Americans spend top dollar just to live in a McMansion or some other shoddy built suburban home, with all the bells and whistles, they have to spend even more money to GET AWAY FROM IT ALL during the weekend. Of course, this makes perfect sense when we have gone completely insane.
Think about this for a minute. Many Americans spend 40-60 hours during the week to afford the dream home with white picket fence in the suburbs, located six feet from their neighbor, but as soon as Friday rolls around, they grab the kids, the RV and get out of there AS FAST AS POSSIBLE.
So, this is our new economy. Americans working jobs they hate, to buy a house they can’t wait to leave just as soon as the weekend arrives. And all of this is being propped up by massive amount of debt and Central bank asset purchases.
That’s the insanity. Now, let’s discuss the brain damage.
Brain damage impacts Americans in different ways. However, the majority who have the illness, don’t realize they are inflected. So, they continue on their marry life, not realizing the brain damage is getting even worse.
So, what do I mean by brain damage? It’s quite simple. A person who suffers from brain damage, actually believes a new Credit Card in the mail is a like winning a small lottery. Thus, they are able to go out and buy more garbage and crap to fill up an already stuffed house or rental storage facility. Brain damaged Americans no longer understand THRIFT, FRUGALITY or PRUDENCE.
Rather, Americans are racing 70 mph down the interstate, spending money they don’t have on lots of screaming kids, just to get away from it all. And it gets even worse. No, I am not kidding.
In the past, I have tried to share some of what I know about the economic and financial insanity to family and friends, but the response was normally the same, THAT I WAS LOSING MY MIND, and… “Don’t worry… Everything is Fine.” You see, when someone has severe brain damage, they believe BAD is GOOD, WRONG is RIGHT, DEBTS are ASSETS and so on and so forth.
Lastly, when someone responds by saying, “Gold is just a Barbarous Relic”, well then… you know the BRAIN DAMAGE is now irreversible. The poor slob is past the point of no return… and is not curable. All we can do is keep our mouths shut during holiday get-to-togethers, eat the junk food and hope and pray there aren’t too many screaming kids.
Okay… enough of my rant. Let’s get back to the good stuff.
Central Bank Asset Purchases & Their Impact On Gold
As I mentioned in the beginning of the article, Central Banks purchased $1 trillion of assets in just the first four months of the year. However, they did one better as they added another half trillion in May… LOL:
So, the total for the first five months of the year, is a staggering $1.5 trillion. Also, we can see that the Central bank balance sheet is now $15.1 trillion, up from $3.5 trillion before the 2008 U.S. Housing Market and Banking collapse.
If we compare the Central bank balance sheet as a percentage of GDP, we have the following wonderful chart:
If we are not suffering from brain damage, we can clearly see here that Central banks balance sheets now account for nearly 40% of GDP. The reason the total Central bank balance sheet in the chart above is higher than the previous chart, is that this one includes China’s official bank balances (PBOC). If the Central banks balance sheets now account for 40% of GDP, well then, we are in serious trouble when the punch bowl is taken away.
Also, according to a recent zerohedge article, “Nothing Else Matters”: Central Banks Have Bought A Record $1.5 trillion In Assets In 2017, they republished the chart below and stating the following:
The latest data means that contrary to previous calculations, central banks are now injecting a record $300 billion in liquidity per month, above the $200 billion which Deutsche Bank recently warned is a “red-line” indicator for risk assets.
If Deutsche Bank warned of a “RED-LINE” for risk assets at the $200 billion a month for Central bank asset purchases, than what in the hell is going on when they are now buying $300 billion a month?? And how much is $300 billion a month?? It’s quite a lot when we look at the following chart below:
As the Central banks purchased an average of $300 billion a month in assets to prop up the markets, it totally overshadows the $10.7 billion a month of global gold mine supply (based on spot price of $1,250). Thus, Central bank monthly asset purchases are 28 times more than the value of the global gold mine supply. This is totally insane when we realize gold is still a monetary asset on Central banks balance sheets.
However, it is even more incredible when we compare Central bank asset purchases for the first five months of 2017 versus gold:
According to the data I published in my article, How High Will Silver’s Value Increase Compared To Gold During The Next Crisis?, total global gold investment is approximately $3 trillion. That’s everything which includes Central Bank gold inventories, and all large and small public-private gold holdings.
So, we can plainly see in the chart above, that $1.5 trillion in Central banks asset purchases in just the first five months of the year, would have bought HALF of all Global Gold Investment. I repeat… HALF OF ALL GLOBAL GOLD INVESTMENT.
Which brings me to the subject of “Frustrated Precious Metals Investors.” I continue to see precious metals investors who are extremely frustrated by the so-called “WRONG CALLS” by the analysts on the gold and silver price movements. Yes, it is true that many of us didn’t realize the degree in which the Central banks would go to prop up the markets… but this is getting completely insane now.
If the Central banks were to stop purchasing assets… then the markets would collapse. Heck, they are trying to collapse even with the massive Central bank intervention. The signs are everywhere.
Folks, without the over $12 trillion in Central bank asset purchases since the 2008 U.S. Housing Market and Banking collapse, the gold price would have been stunningly higher… so would the silver price.
This brings me to an excellent comment that gold analyst Jim Rickards made in a recent interview. He said that the 1998 Long Term Capital Management Hedge Fund collapse, that nearly took down the entire system, was bailed out by the Financial Banks (16 financial institutions bailed out LTCM). When the financial banks were in BIG TROUBLE in 2008, the Central banks bailed them out.
However… who is going to bail out the Central banks when they get into trouble??? And they are getting into serious trouble. Unfortunately, there is no one left to bail out the system when the Central banks finally lose control.
If the Central banks try to pull back on asset purchases, then the market will start to do a NOSE-DIVE. This would likely motivate them to come back in with ALL GUNS BLASTING. So, pay attention to the increase in Central bank asset purchases as a clue to know when they are becoming desperate.
This massive increase in Central bank asset purchases is a last ditch effort to prop up the market and cap the gold price. While they may have more propping up to do, they will likely have to increase their level of buying even more. As it goes exponential… then we know the END IS NEAR.
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Great read, as usual Steve. Thank you.
Don’t eat any junk food, DEFINITELY NOTHING with GMOs, they’re slow killing poisons. I hope you would surely know that, as I thought you said @ some point you grew some of your own food.
If you ask me, that insane level of CB asset purchases already reeks of desperation. But from my POV actually, it is not desperation, rather it is the centerpiece of “the plan”. What plan? Answer: To kick the can down the road a little further. I think “they” have a plan and they’re just buying time, continuing preparations behind the scenes, fully cognizant of the fact that they are destroying (what’s left of) the economy, but knowing it is in terminal phase anyway due primarily to energy depravation. I think “they” will pull the plug one day in the not too distant future. Suddenly stop the asset purchases one day, for example. If they do that, like Steve said, the economic crash will be rapid and devastating. Epic! Then we’ll find out what “the plan” is — if there truly is one. I’m betting there is.
Northwest Resident: I believe you are absolutely right in this matter. I am surprised that Steve quoted Jim Rickards once but not the second occasion – when JR supposed that who will bail out the central banks? JR feels that it will be the IMF using SDR’s. And perhaps it all keeps condensing down until there is a one global system. I don’t know, I am not an expert but I do believe there is a method in their madness. Stay safe.
That is what Revelation says in the Bible, what’s happening now was written 2000 years ago!
SDR’s backed by what? Gold? or just fiat…
Yeah I was also thinking about Rickards statement about the IMF bailing out the central banks. Someone I respect(maybe Andy Hoffman) thought it was ludicrous for the IMF to bailout central bank currencies with a basket of equally worthless fiat currencies.
Also on the topic of collective brain damage:
I challenge you to find that following 3 different recent stories within very short amount of time somehow have no common theme among them. (This comment not necessarily addressed to you personally, Steve….Rather to your readers/commenters on this blog as a whole.)
All 3 of these stories contain the worst kind of self-entitled, narcissistic behavior by 3 women of somewhat similar neo-liberal urban background. Last 2 of them are from the same age group in their 20s. When the just-in-time food delivery system breaks down in an economic collapse, this kind of brain damaged urban rubbish is going turn into zombie horror really fast. Like, they really will have no idea what hit them & what the hell just happened. It’s truly sad to say, but Darwin’s Law of Natural Selection will really be @ work & it won’t be pretty.
“He Broke Me” – Tearful Kathy Griffin Says Trump is Trying to Ruin Her Life in New Video
http://tribunist.com/news/he-broke-me-tearful-kathy-griffin-says-trump-is-trying-to-ruin-her-life-in-new-video/
Really Patient Cop Endures Ugly Tirade From ‘Ruined’ PHL-17 TV Reporter Colleen Campbell in Philadelphia – “I feel ruined and embarrassed for me and my family.”
http://www.huffingtonpost.com/entry/tv-reporter-colleen-campbell-rants-ugly-at-a-really-patient-cop_us_5937c5fbe4b01fc18d3eea40
Joe Biden’s niece dodges jail after $100K credit card scam
https://nypost.com/2017/06/09/joe-bidens-niece-dodges-jail-after-100k-credit-card-scam/
The Fed hasn’t done any QE & assets purchases since 2014 and the US markets haven’t collapsed. I expect when the BOJ & ECB stop purchases they will get the same result as the US ….. nothing untoward.
Stuart,
LOL… you didn’t see that chart of the Central Bank balance sheet increase versus the top Tech stocks?? A very similar upward trend. Stuart, please tell me that you are not one of those suffering from brain damage.
I know you are smarter than that.
steve
No I don’t believe I am suffering from brain damage.
However after years and years of warning “the end is near” by the Gold & Silver fraternity nothing has happened.
Steve, I believe you mean well, but the collapse of the financial system is as far away as it ever was.
When the FED stops, other central banks take over. Its a ‘circle jerk’
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/04/19/SNB%2013F%20Q1%202017.jpg
FED, then BOJ, then ECB.
But the total amount increases more and more.
When it goes above some threshold or it stops, everything will fall apart
I have noticed lately that he yield curve is levelling out. For any traders here a massive opportunity on the short side may be presenting itself in the next few months.
Gold and silver will be a shorting opportunity as well until it isn’t.
The central banks imo are doing a great job keeping this from falling apart. If one thinks about it what are they supposed to do what would you do in this dire situation? I’m glad they are buying paper assets and keeping the system grinding sideways it gives more time. Maybe they can do this for another 5 more years who knows but the longer the better for ones who understand what’s really happening. To me it’s the greatest cover up of all time and 99% of public is completely unaware and too stupid to realize this is going on. I really don’t care about “price” only wealth preservation I want store my time and energy in something that is a store of time and energy.
Steve, it maybe in article and I missed it, sorry, but when you say “Global Gold Investments” does that include all ETFs or just physical?
olegig,
Thanks for that comment. I made the change in the article to show PUBLIC-PRIVATE large and small gold holdings. Yes, the $3 trillion includes all ETFs and similar products. That $3 trillion accounts for all INVESTMENT GOLD in the world.
steve
– All central banks of the world, de facto, are the property of the Fed.
– All central banks of the world, de facto (through the purchase of shares and liabilities) own all the world’s major assets.
Thus, acting with the hands of central banks, the Fed becomes the owner of all major assets of the world.
When the Fed finishes buying up the world’s major assets, the next phase of this scam of the century will come.
Which will be called: “Gold or Death.”
After that, all the major world assets and all the gold of the world, will be in private ownership of the Fed.
(Through this “natural market path”, of course).
Have you seen this https://youtu.be/5pXKrWj9ZuE
Wow so when that 1.5 trillion 5 month spending starts chasing physical and no longer paper……Shizam as us gommers say.
“we can clearly see here that Central banks balance sheets now account for nearly 40% of GDP.” Do you mean US GDP Steve? Wouldn’t it make more sense to look at the combined GDP of the US, Europe, Japan, Switzerland and China, since this is Central Bank asset purchases of the CB’s of those five economic entities?
I think that Steve did just that. According to the World Bank, the combined GDP of the US, EU, China, Japan, and Switzerland was $50 trillion in 2016. So $15.1 trillion of central bank balance sheets works out to 30.2% of that GDP. Still way too much in my opinion.
Eric Bauer,
I am sure that chart represents the GDP of the Central Banks included in that chart. However, I did not make the chart. But, Peter explained it quite well.
steve
Often not mentioned is the Central banks are buying up real estate, bonds[debt] and corporations with currency they create out of thin air. I assume the ECB, BOE, and BOJ are also not part of their government, they are banking cartels, just like The Federal Reserve. So the bankers are buying up everything with fake money and little to no auditing or oversight.
DisappearingCulture,
Agreed. I wish there was some way to put a figure on how much Central Banks are buying ABOVE & BEYOND what is stated publicly. I would imagine it has to be quite significant.
steve
If you can find a better nutshell explanation anywhere, please let me know.
https://www.youtube.com/watch?v=ibNJYfCuLxs#t=5m54s
And he didn’t even mention the central bank buying that you and Disappearing Culture spoke of, Steve.
We cannot hold 17$.What a joke.Bitcoin make in one day more than silver in years.
So buy some bitcoin, etherium, and any other hot crypto and participate in the hot money flow. PMs and cryptos are not mutually exclusive. I dabble in cryptos myself. I continue to buy silver because it has other properties that make it valuable not to mention it’s cheap. It’s probably cheaper then at any other time in history, especially if you use manhours or labor as a constant measurement. My time line for wealth preservation and accumulation extends for another 15 years of accumulation and an additional 10-15 of retirement / dishoarding. God willing of course.
Agreed Pete.
I’ve diversified as well but I understand Gresham’s law: Bad money drives out good money.
If I were in Venezuela right now, and had the choice between paying for something in Litecoin or silver, I would get rid of the litecoin first. An ounce of silver can buy you 6 months of food in starving Venezuela right now.
Excellent article..scary charts. Once upon a time I would have interpreted those charts as energy being borrowed from the future. Now I see them as empty promises. Unfortunately, the reserve banks have little to show for their efforts. I see poor infrastructure, a spoiled and ignorant population, a torn government, and hot money flowing into cryptos, housing, and the markets. Nothing that will stand the test of time. It’s no wonder the Chinese, Indian, and other nations are sharply increasing their gold imports. I suspect they can smell the end game. Those societies that have lived through recent monetary mayhem are accumulating fungible, portable, everlasting wealth. Wisdom undoubtedly learned the hard way.
I think we did borrow from the future. We borrowed all of our grandkids’ futures, then all of our kids’ futures, and now we are borrowing from our own futures. The question is at what point does the present meet the future? In other words, when do we run out of future to borrow from…
When do the present and the future meet? I suspect it’s happening right now. Steve produces amazing information for those with the courage and eyes to see. Based on Steve’s research we can get a good sense of the action and drama developing behind the veil. The government and super wealthy are well aware of the EROI cycle and have chosen or have been cajoled to follow this path. I think economics, geopolitics, social psychology, and EROI are all one big inter-related dance. Steve gives us a great play by play of the EROI and how TPTB are reacting. Very hard to see without his insight. It’s like being in the passenger seat while flying off a cliff 🙂 I think the SHTF moment that we will point at is manifesting now and will be apparent either this fall or next year. That’s my guess. I was hoping for farther down the road, but forces with more information and resources at their disposal are positioning themselves and are forcing the cycle to accelerate. Back to the car analogy: When the cliff approaches the occupants of the car panic and brace for impact.
It certainly feels quite imminent. However, it’s an extremely complex world with many interrelated systems out there. And if we are to go off the cliff for good, I’d imagine that literally EVERYONE is fighting for their existence right now. I am not in the camp of people who believe that this or that group of elites are in control or that there is a plan for all this. I personally believe that the so called elites are scared shitless, while the average Joe and Jane have no clue what’s happening. Nevertheless, the elites have no clue what to do about all of this either. They may have more money and more assets, but those are just additional reasons to fear what’s coming. Anyway, what I wanted to say is that given that really nobody wants this system derailed, the central banks and governments of the world will do everything in their powers to keep the party going as long as possible. My best guess is that the lights go out by 2040 latest.
“If the Central banks were to stop purchasing assets… then the markets would collapse.” True. Likewise, if the big holders/owners of Bitcoin, XRP, etc. were to stop purchasing Bitcoins, XRP, etc. to drive up their prices in the current short-lived frenzy bubble that they created and rigged, then Bitcoin would collapse to $200 again and XRP to .01 cent again, etc., given there is a set circulation, so their prices can be easily manipulated up to dump it on the losing bag-holders, just like those that bought dot.com stocks before they went bust. Sadly, many will be waking up one morning and see Bitcoin crashing down to below $2000 or lower and ripple XRP to .10 cents or lower, etc. and they won’t be able to sell to cut their loses as all the exchanges will be overloaded. So, they are forced to watch Bitcoin drop $100’s more and XRP to .05 cent or less before they are able to execute their sell order on the exchanges, given they are all overloaded. Bitcoin already crashed down $800 in the last crash, but you don’t wake up seeing gold crashing down $800 per ounce. Yes, gold/silver has not taken off over the last few years, but they trade in a stable trading range and you don’t wake up seeing that you lost 50% or more of your money like you can with owning Bitcoin, XRP or any Crypto – and many of them will go bust and people will lose 100% of their money, just like many Internet Companies went bust when the dot.com bubble burst. It’s always fun riding any frenzy bubble up, but it can crash and turn on a dime and one is stuck being one of the many losing bag-holders. Be careful with your hard-earned money.
We lament central bankers for their folly and corruption, and rightly so. Do you know who holds more gold than anyone? Central bankers (probably). We talk about the corrupt bankers and how we can’t change this system, but they own the gold too. The problems started when they issued gold certificates (receipts) that they didn’t have the real stuff for. So if we go back to gold, how do we stop the bankers AGAIN?
Perhaps we think about money in a new way, a decentralized way that isn’t controlled or manipulated by State actors and bankers. You ridicule bitcoin, but the bankers don’t control it. They may be able to manipulate the price for a time, but the people own it and control it dictate its value. Cryptos are the answer to overcoming corrupt bankers. And forget about Ripple – nobody in the crypto world takes that coin seriously. It is a well known banker coin that isn’t decentralized – it just uses blockchain tech to improve business efficiency. Trade it to make a profit if you must, but don’t hold it long term. You know who doesn’t care if the bitcoin price drops to $1,000 or less again? The people who got into it in the first place for the right reasons (decentralized money, trustless value exchange, etc) – not the speculators. We don’t care if the speculators are weak hands and lose their money. Don’t care. It won’t change the fundamentals of why bitcoin and similar cryptos exist. Gold is a good store of value, but a crappy medium of exchange in a digital (global) market. Dollars are a good medium of exchange and unit of account, but a terrible store of value. Bitcoin (and other cryptos) solve both of these weaknesses of gold and dollars.
Steve talks about $1.5 trillion in CB purchases. The entire crypto market cap is $110 billion. That would amount to 11 days of CB purchases during the span that Steve talked about in the above article. The crypto market is tiny, with a huge ceiling that hasn’t even been explored yet. Cisco stock (just one stock) is worth more than every crypto in existence. The upside is much bigger than the downside risk. But keep telling yourself it is just like the dot com bubble. Just be prudent with crypto. Don’t go all in; just dip a toe in the water. Make your first Bitcoin purchase, try out Ethereum, hedge with some QRL and try to understand what problems different cryptos are trying to solve. It is an exciting time to be alive.
So we know that the current systems are about to die. How do we go from there? We need a new system or start moving toward such so the blow won’t be so bad. I believe I have solutions for most problem we have today in the world. I like to invite you to review Hanomy Manifesto which can be download at Hanomy.com (a non-commercial site). I am working on this alone and have been trying to spread the word. Hanomy is a new social, financial, and political system for the world. Numbers work now I need the message of it to spread out throughout the world. Then they will demand it .. hint no country can say no. Hanomy can be implemented in just few short years. It has solutions for now and the future once AI takes jobs away. I hope Hanomy to get to the right ears and eyes before the current system collapses. I am working on the second revision and FAQs section right now. Here are the highlights of Hanomy. • Fundamental human needs met throughout life’s existence
• Basic human rights observed everywhere
• Sovereign debts worldwide are settled and eliminated
• Upheld liberty and freedom
• Financial contributions drawn from a portion of idle/unutilized money
• No taxes on income, profit or spending
• Interest charges and usury practices abolished
• Power of money creation where it belongs – the people
• An end to the fractional reserve system
• Upheld free market principles (true capitalism but with social responsibility)
• Decreased or dissolved inflation and hyperinflation
• Reduced income inequality
• An end to corporate welfare
• Advanced technology benefiting humanity
• Freedom of time for quality of life and caregiving
• Prohibited conditions for authoritarianism
• Preserved sovereignty and respected borders
• An end to “modern day slavery” (this includes you)
• Improved care of the environment and world resources
• A world we’re proud to claim and pass along
Wisate Klinkusoom,
Unfortunately, future prospects for mankind don’t look that promising. And, its all due to the Falling EROI – Energy Returned On Investment of Oil and Natgas… and to some degree, coal.
Actually, I don’t believe there is a way out of the mess. Rather, we collapse back to something more sustainable. But, that could be a pipe dream as well. While I understand the lousy dynamics of collapse looking us right in the EYE, I don’t believe we have any good solutions.
steve
You are correct Steve, there is no way out of this mess because the banking model is faulty!!!! If we don’t understand this from the beginning then we can’t have a sensible discussion. Private banks are in business for their shareholders NOT the people.
Even under the gold standard the North American economy was in trouble between 1959 and 1984; 25 years! it went sideways between 650Pts and 1300Pts. It never broke that pattern until the Qtr. ended June 1985.
The dropping of the Gold Standard and the introduction of the Petro Dollar in the seventies gave TPTB the means (without question) to create Fiat at will.
What they failed to realise was the EROI!!!! You are spot on with this Steve. The chickens are slowly coming home to roost. Where we go from here is anyone’s guess BUT one can be assured the banks will not go quietly.
The system has to collapse; we can only hope out of the chaos, sanity will prevail. One could say it’s the White Hats vs. the Black Hats.
The us lost its gold standard in 1934 when roosevelt stole the peoples money repayed them with depreciated ious it might have had an international gold settlement standard up 71 but a true gold standard ended in in 1916, when reserves were lowered. Americans have been debt slaves from 1914 with the introduction of illegal, unconstitutional, income tax, paid for the pleasure of the jewish bankers who own the fed. The fed was and is used to fight wars, for israel, debt monetisation started in 1916 with liberty bonds (sic).
its always the opposite liberty = enslavement- the people having to pay for the bankers profits and currency debasement. Israel rules ok.
But to think the US was on a gold standard prior to 1971 is false propaganda used to distract people from demanding a gold standard.
Its total bs the people used token money from 34 to today. Thats why the world is in a shit state because this token money is the measure of the worlds currencies. worldwide robbery
Gold in the hands of people is liberty as per the constitution..
Another very well thought through and written post.
I well understand “The markets can remain irrational longer than we can remain solvent” I remember buying my first silver one ounce bar in 1974. I still have it. I read Howard Ruff, “The Ruff Times” and his early books.
What’s the point? This war has been going on a long time. I liken this to the “Bataan Death March”. Many are lost along the way.
I’m not quiting. I’m more hardened now than in 1974.
Bob F.
Don’t worry Central banks have this covered!
https://www.youtube.com/watch?v=9D-QD_HIfjA
I often think that the illuminati (behind the stage curtain) know the economy is going to crash. And they are keeping it going in order to crash it when they want. Most crashes happen in October, it will probably happen then.
Steve,
There is no such thing as an orderly collapse. Collapse is panic, bad choices and diminished resources and sinks. It is like an angry mob running in all directions. There will be little order in such chaos. Eventually, there will be, but not for a long time. Given the heights we have attained, the collapse will last for several decades and come in stages. The first stage will be a financial collapse including a dollar collapse. The second stage will be diminished flow of imports and world trade. Next will be social upheavals and crime. Maybe a breakup of major countries. Finally, war will occur.
Steve,
Something is not gelling. Answer these simple questions, then I will buy your story about a desperate Fed.
1) Is the Fed, along with most other CB’s not privately owned?
2) Do they not report to the BIS and not to any government that they purport to do.
3) When last was the Fed audited? If ever. Therefore how can one take their balance sheet as being gospel?
The notion that the Fed has the economy or for that matter the people’s interests at heart is nothing short of ludicrous.
Think of it this way. What could be a better way of owning all the most important assets of the world, than printing money out of thin air and purchasing them.(QE program)
The only way the world would have allowed this, is if there was some form of crisis(enter 2007/2008).
Why would they now offload these assets which are real and physical(real estate,corporations,commodities to name a few) for bits of paper that they created in the first place.
Is it not obvious for anyone to see,that this is the biggest heist in the history of the world?
Or am I just a lunatic?
I think we all have to ask ourselves who have been the beneficiaries of the heist.
The US public has.
Don’t ever believe that our standard of living was a result of ourselves.
Jeckel Island pulled a fast one on the world. If your in an air conditioned office typing your view I’ll show you 1-2billion who have worked 10 times harder than you who have nothing. Explain that.
If i am not mistaken. Did Jim Rickards not say in previous interviews that the IMF will bail out the cb
Steve,
I am on page 331 of G. Edward Griffin’s “The Creature from Jeckyl Island 5th edition ,” chapter entitled “The Creature Comes to America.” While I am already aware of many of the issues resulting from a private cartel that conjures up currency from nothingness, loans it out and initiates a chain reaction of fractional reserve lending of more currency, the most striking feature of Central Banks to me their degree of DECEPTION. You have alluded to that point in this post indirectly in that one can’t get any reliable/accurate information. Without it, one is hard pressed to make any predictions or decisions about what to do with their savings/investments/income. The elites/bankers/CB etc want it this way. They have planned it this way with a serpentine route of currency flow designed to confuse all but the most determined /astute money manager.
In fact, my friend recently said he made a “bone head” decision and now owes a bunch of taxes. I explained that in this era of wild speculation (he recently banked $60,000 on short term gain on sale of bitcoin (so he was not a bonehead, but lucky yes.) I told him that in my opinion, he defeated the whole purpose of bitcoin. I think he may now have to declare it as short term gain/income since the bank now reports this “deposit.” He should have spent it on house repairs, car repairs- clothes, Berkey Water Filter, PM’s, Ham radio, vacation etc.–anything that he doesn’t have to report. If he buys a new car, I I think he gets hit with increased property taxes on it, and thus initiates a reportable event. The government or bank goes on a money hunt to find the “source.”
Even though you have put a lot of work in trying to dig out the real information, it still is a very difficult task. I have ceased trying to make any predictions.
ahaha till February 2016 I also claimed gold as a barbarous relic and I was invested all in stocks…then I started to understand how money works and I changed my mind about gold… so your claim of brain damage is not that…irreversible 🙂 cheers
Steve I love this blog. Great charts.
What I don’t think is clear here is GOLD DOESN’T MATTER. the CBs haven’t conspired against gold. They’re desperately trying to keep the energy flows working. Life is energy flows. You can’t eat gold. You can warm your house with gold.
Once the energy system breaks who cares about gold? Really who cares?
You think your sentimental wife will care about her engagement ring and wedding ring after a week without food?
Precious metals are nothing. Worthless shiny curiosity at best.
Well i can heat my house with bank notes. I remenber one movie with Silver-ster Stalone burning bank notes in snowy mountains not to die frozen. I do not remember the name of the movie though. It is true that i can not eat bank notes. But i can promise you that there are plenty of places on earth where with gold, you will be able to buy food, buy wood (and probably give a job to your wife to prepare food or do some cleaning in my house). Right now i have decided to increase my portfolio. No crypto currencies. Just daily bear products (turbo’s) from Soc Gen at the Paris and Frankfurt stock exchange. Funny is that absolutely no-one is selling the turbo’s. Something is cooking
“Gold is not a value because it can not be eaten” – this is a very primitive point of view.
We are not animals. Therefore, we are surrounded by many different values that can not be eaten.
The Internet can not be eaten. Clothes can not be eaten. You can not eat a roof over your head.
In our life there is much less food than values that can not be eaten.
If you deprive a person of all values that he can not eat, then a person dies even in conditions of abundance of water and food.
I do not think that a person needs a head, basically in order to eat.
LOL…a perfect example of Murican brain damage.
Parents did nothing because if they yell or punish the child they might be arrested.Kids and pet’s you can’t say anything.
Steve,
Thank you for yet another great article. The numbers are mind boggling.
While all central banks are evil, they are apparently not all equal. I am having a hard time understanding the direct effects of QE on the world’s economies and, more particularly, on gold and silver. The BOJ has been easing since 2001 and they are still buying everything that is not nailed down, the FED was actively easing from 2008 to 2014 (except for a couple of years in the 1960s) and the ECB is barely slowing down yet I cannot find any direct correlation or causation of easing with the prices of gold or silver. The manipulations appear to be solely at the hands of the big brokerage houses.
As for insanity and brain damage, I don’t think we have seen the worst of it yet. In 2007 leading up to the crash, when I lived a very different life, I remember everybody, and I mean everybody, was talking about all the money they were making in the stock market. Even the shoeshine guy in the courthouse was taking about his stocks (turns out he was making nearly six figures), as was my barber, the mailman, my poker buddies and the taxi drivers. You would overhear stock conversations standing in at the grocery store. Now, it is true I don’t get around like I used to before I sold my business, but I don’t hear or see the interest of the average person. This tells me that we have a way to go before it all goes to shit – the suckers aren’t playing yet and, unless this time it is going to be very different, we have a ways to go.
I still firmly believe that the coming collapse will be caused by a major liquidity crises. This could caused by the FED dumping their paper assets too quickly or by raising interest rates too quickly but I don’t see how continued insanity buying by central banks can precipitate the collapse if the markets continue to blindly trust all of the fiats.
I am content to continue to buy silver at a bargain and do everything else that needs to be done to be ready for when it ultimately happens. I feel sorry for those PM buyers that ache to see the prices skyrocket – they know not what that truly means.
SteveW
I have an old banking mate (In his mid nineties now) who was the CEO of one of our (Australia) largest finance institutions 40 odd years ago. He would always say to me; “The downfall of the banks will be liquidity problems”.
This can happen in two ways:
People will stop borrowing money and banks will stop lending it. Make what you will of it.
Man! I read most of these comments before bed!!! Well, hope for the best, prepare for the worst! Thanks for another awesome article..! I just love your stuff.. I really do!
Really a good one Steve, thanks.
Everybody should watch this important video that explains the current system
https://youtu.be/3C-KHt9vi5k
I’m one of those “Frustrated PM Investors” you mentioned, and I have a question–not a criticism, but a genuine question because I’m trying to figure out how this works:
Everyone, including you, is saying that MAN, this is going to be a biblical crash WHEN THEY STOP. As you put it, “we are in serious trouble when the punch bowl is taken away,” and “If the Central banks were to stop purchasing assets… then the markets would collapse.”
My question is, WHY does anybody EVER have to take the punchbowl away, and stop purchasing assets? Why can’t they just perpetuate this indefinitely if they want to? Is there a saturation point, and if so, what/where is it? I mean, these two statements of yours that I just quoted have been valid every day for the past 5+ years, wouldn’t you say? and yet they’re still scamming us. Thank you for any insight.
Frustrated,
Good question. Actually, they could continue propping up the markets indefinitely. I have made the argument before. However, where I differ from most other precious metals analysts is that the DISINTEGRATING OIL INDUSTRY will be the factor that destroys the Central banks ability to prop up the system with liquidity and asset purchases.
Of course, we could continue to see more propping up for a while.. I never said it would end tomorrow. However, the oil industry is now saddled with a lot of debt and the quality of oil remaining is not that good.
For example, shale oil has an EROI- Energy Returned On Investment of 5/1. That means 5 profitable barrels for the energy cost of one. However, back in the 1970’s, the U.S. oil industry enjoyed a 30/1 EROI. Our modern society needs something closer to 15-20/1 EROI of its oil to be sustainable.
This is the problem that the Central banks cannot manipulate.
steve
Frustrated, count in the exponential factor, good read on gdp and debt:
https://surplusenergyeconomics.wordpress.com/2017/05/10/95-exponentials-unravelled/
Belated thanks to you both for your replies–I’ve been chewing on the info in this link, and you’re definitely right that it’s a good read.
Remember when you used to be able to take the figures, calculate trends, and estimate more-or-less WHEN X would happen? You know, back when it wasn’t so freaking obvious that the markets are being totally manipulated, so the figures actually meant something? Oh, the good ol’ days! Sigh.
Peter Schiff publicly predicted that everything would crash at the end of May 2016, and Rob Kirby similarly made a spectacular prediction that it would be “two weeks from now,” which at the time meant mid-May 2016. They get points (at least in my book) for putting their reps on the line like that. So okay, their calculations were wrong, but only because of the “dark pools” and all the manipulation…
I just wish that we could mathematically factor in all the manipulating and come up with the RIGHT time-frame for the apocalypse. Until then I’ll hold my metals close and keep being frustrated, I guess.
“MASSIVE CENTRAL BANK ASSET PURCHASES: Last Ditch Effort To Save Economy & Cap Gold Price”
Comment:
For new readers, and readers not familiar with HOW the price of gold is capped, this article doesn’t explain…other than propping up everything OTHER than valuable metals.
Nutrient depleted, toxic food only good for alleviating hunger pangs as it poisons the system. Junk science, junk medicine, junk economics, junk education, junk values, junk money. Escape however you can from the system. Put in a sack of non GMO popcorn for a front row seat at the most spectacular crash in history.
Last Friday the S&P made a KEY REVERSAL, meaning it ‘s bar for the day was higher and lower than the day before and it was a down day. Did you see Apple, Google, Netflix, Amazon, Priceline? They are down big time. A KEY REVERSAL is a technical indicator that the top is in. See this video https://www.youtube.com/watch?v=ntxbAFnWC7g
http://www.zerohedge.com/news/2017-06-13/oil-prices-suffer-first-death-cross-2014-collapse
There’s a death cross event in the oil price. Looks like thermodynamic oil collapse is accelerating. Potentially could see oil crashing further as the utility of a barrel of oil is declining. The last three years have seen the smallest amount of oil found in decades and decades, we barely replace 10% of what is used in a year. Big trouble lies ahead as CAPEX is getting slashed, and debt loads taken on by oil companies and oil producing nations is huge. Can’t ever be repaid as the price crashes, banks blow up then and eventually system falls under unless CBS directly inject Trillions into millions of individual accounts.
I read your article, and though I feel a little more sane, I feel more hysterical. It is very difficult to comprehend the severity of such placation implicit in the buyout you have described.