Saturday, December 19, 2015

All the world's money

Courtesy of: The Money Project

Sunday, November 29, 2015

Guest essay: Comex Gold

It has been said “truth” is a funny concept. What is truth to one may not be to another because opinions vary from one person to another. “Truth” in this context consists of one’s opinion or point of view. By this definition truth can be altered, changed or even “made”. For example, the truth believed and espoused by MSNBC is far different than that of FOX News, both by the reporters themselves and by viewers. Real truth however cannot be “made”, massaged or opined as it is mathematical in origin and more an issue of black and white.

The global financial system has gone awry where economic truth must be masked and hidden to cover the reality. Somehow our central planners think if the people “believe” something …then it “is”. I am here to tell you, no it is not. A perfect example of something completely out of whack but melded into the new “normal” are negative interest rates throughout much of Europe. These negative interest rates are no longer for only short dated maturities. Rates are negative in some cases out past 7-10 years!

How can this be? Investors are willing to lock in a guaranteed loss for 10 years or more? Rates have been pushed negative of course because the central planners want people to spend their money rather than save it. You see, “velocity” has crashed because people have tightened their belts in a move toward austerity …something the sovereign treasuries and central banks cannot even spell. Please keep in mind whether it be euros, yen or dollars, the central banks have the ability to print as many of these currency units as they choose to. Negative interest rates guarantee less “units” returned upon maturity and give less than zero risk compensation to offset the “printing” that has already been promised. In essence, savers are PAYING for the privilege to lose “units” even when central banks are promising to do their best to reduce the value of these units. The madness of crowds I guess?

Another example “truth” just does not add up is in the area of “swaps”. Just as GOFO rates in gold should never ever be negative, this also holds true for the swaps market. Currently, rates have gone negative which means the bankers and brokers perceived credit quality is actually rated higher than the issuing Treasury. Common sense would tell you if the U.S. Treasury were to default then no bank or broker with Treasuries in their portfolio would be left standing. I do not believe swaps have gone negative out of value “judgment”, I believe unencumbered collateral has become so scarce that mathematical insanity has become reality. Six months ago we were given a tip off this was coming. I wrote about it here titled “The Mother of all Margin Calls” …and now the ugly truth has arrived!

I would of course be remiss commenting without including the farce in the gold and silver markets. Yesterday’s post-Thanksgiving and illiquid trading day saw some 18,000 contracts sold at the COMEX within a 30 minute timeframe.

In fact, there were 4 single minutes which saw a total 7,000 contracts dumped on the market. For perspective, 18,000 contracts represents 1.8 million ounces of gold …while COMEX claims to have a grand total of 150,000 ounces available for delivery! 1.8 million ounces of gold is equal to well over one week’s production of every gold mine on the planet, 150,000 on the other hand is just over 16 hours! For further perspective, China has been importing over 1.3 million ounces of real physical gold each and every week and amounts to nearly 80% of all gold produced. Why is this important? China is importing each week nearly 10 times the total amount of gold COMEX has for delivery in total. Put another way, COMEX gold “pricing” rests on a foundation 10 times smaller than what China imports each and every week! How is it credible that COMEX can sell 12 times as much “gold” …in just 30 minutes as they claim to have available for delivery?

COMEX currently has a problem in my opinion. Their registered (dealer deliverable) category has not received any gold over the last two plus months and has done nothing but shrink to a level equal to just 16 hours of global production. First notice day for December gold is this coming Monday. With just one day left there are still 24,000 contracts open. If history is any guide, Monday will see a drop of 12,000 contracts and a 40% bleed down during the month. If this were to occur, we will see over 600,000 ounces standing with only 150,000 ounces available for delivery. We have seen this potential situation several times over the last couple of years but never with an available inventory as feeble as it is now.

My point to writing about the current COMEX conditions is simple. Though COMEX currently “prices” gold, they have little to no inventory to back them up. China imports more in a single day than what COMEX claims they have to deliver. Nearly any Black Swan, be it a financial, geopolitical or military event will strip the COMEX of any ability or credibility to continue as “manipulator in charge”. I have asked in several writings why the CFTC has allowed the pricing mechanism to be so corrupt after each blatant raid such as this past Friday’s. They found “nothing actionable” in the silver market which in my opinion is code speak for “we can’t arrest the government” …therefore “not actionable” in the interest of national security.

As for COMEX, I would ask this. Why is it allowed for any institution or group of institutions to sell in 30 minutes, twelve times the amount of paper contract gold than is claimed to exist for delivery? The December month alone looks to be quite problematic, why is this practice allowed as a failure to deliver could be created by a mere 1,500 contracts? Is the final solution a force majeure and just go on down the road?

As for you as an individual investor, can you see the danger here? A failure to deliver or a “caused” failure ending in a force majeure will be catastrophic. The candy store will be closed …and then what? Do you really believe metal will be available for you to purchase at any price even resembling the current? I have said all along, the entire game will change when the last ounce available for delivery is gone. When I say the “entire game” I am speaking to ALL of it. When the fraud in gold is exposed and understood, do you understand that the confidence in the entire financial system of dollars, Treasuries and all the rest will be broken for our lifetimes?

To finish, much of what we see in our daily lives is nothing more than a fraudulent mirage. Our way of life and standard of living depends entirely on this mirage and collective madness to continue. However, some very ugly truths that come naturally as a gift from Mother Nature herself have been appearing. These “ugly truths”, each and every one of them should be an impossibility in logical nature but they exist and are appearing with more frequency. Can you handle the ugly truth?

Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome,

Thursday, September 17, 2015

A post-Fed SPY strategy

A butterfly adjustment on top of a failed long put debit spread at 195/190.  Will it work?  If the market marches higher, it dampens losses.  If market declines, same --- to a point.  If market stays put, generates profit.  SPY at 201 at this writing......these are October options.

Sunday, May 3, 2015

New World Banking System Being Formed

Russia has abandoned the idea that US debt is to be held and has already sold over half of its $360 billion since the US placed sanctions on Russia!  China has lot of reasons to sell.  It has announced it will be selling its own debt to keep its economy growing at 6-7% a year.  We Americans have been fed a propaganda diet that China will never sell US debt because we are told it wants its own currency to remain cheap in the world market.  But China is forming it own version of a world central banking system called  Asian Infrastructure Investment Bank (10) (AIIB) [China bond data (11)].  It openly says it will compete with Wall Street and move away from the Dollar standard.  China and Russia are now forced allies,  both are among the BRICS agreement nations that last year agreed to set up a common bank.  The US has jawboned against all these efforts, but to little avail, and over 57 countries, including Great Britain, have agreed to join the new AIIB bank.  Of the majors, only the US and Japan have refused to join.  China and the members of the new AIIB hold well over $4 trillion of US debt–what if one or all start to sell in order to fund the new AIIB?  This author thinks China alone holds enough dollar bonds ($1.2 trillion) to burst the Godfather of Bubbles.

Monday, March 16, 2015

China, Gold, SDRs And The Future Of The International Monetary System

China, Gold, SDRs And The Future Of The International Monetary System

The question is posed:  "Could it be there is a team of academics and policy makers around the world working behind the scenes to reform the international monetary system by adding, among other currencies, the renminbi and gold to the SDR?"

Thursday, February 5, 2015

Upcoming feature

Look for our upcoming feature:  WEEKLY OPTIONS:  A BUSINESS APPROACH in the March issue, Futures magazine.

Thursday, January 15, 2015

Overnight Swiss move Shocks Currency, Metals Markets

SNB Unexpectedly Gives Up Cap on Franc, Lowers Deposit Rate - Bloomberg

The Swiss National Bank (SNBN)
scrapped its minimum exchange rate today, abandoning a key tool in its
policy kit designed to shield the economy from the euro area’s sovereign
debt crisis.

In a surprise move, the central bank ended its
three-year-old cap of 1.20 franc per euro and cut the interest rate on
sight deposits over a certain limit. Just a month ago, when the SNB
introduced negative rates, the bank indicated the cap was here to stay,
saying it would defend it with “utmost determination."

The franc
jumped to a record against the euro and rose to its highest in more
than three years against the dollar following today’s announcement. Swiss stocks plunged.

Wednesday, January 14, 2015

From their own numbers: Verify Fidelity mutual fund return? I couldn’t and neither could Fidelity phone staff

No one does options exclusively.  You and I both have other investments, e.g. stocks, ETFs, mutual funds.

Regarding the latter, we set out to do something we thought would be very, very simple:  verify the 6.64% annual return for FWWFX in the current (January, 2015) Fidelity shareholders update, just received in the mail.

The impetus?

The numbers in my personal spreadsheet didn’t add up, so I thought I’d “dig a little deeper.”  To put it mildly, I was surprised that Fidelity customer assistance couldn’t do it either.

Here are the numbers:

Close 10/31/2013
Close 10/31/2014

Capital gaine


Total return
%age return, i.e. 2014 close + dist/2013 close, or (24.93+2.066)/25.41

Reported return in Fidelity lit.


Obviously, there was something wrong in my math, and surely Fidelity could easily straighten me out, and “reconcile” the account.

Turns out not.  I was gobsmacked.  While we are sorting this out, (and the possibility exists that I am still just “missing something” that I should be able to spot but can’t -- post the error if you see it, ok?) here is the full transcript of our “talk”:


System: Thank you for contacting Fidelity Investments. All interactions are subject to recordkeeping and monitoring. Chat representatives of Fidelity Brokerage Services LLC, Member NYSE, SIPC are unable to accept any trading requests to buy, sell or exchange securities, nor do they provide legal, tax or investment advice.

ME: Initial Question/Comment: Question: reading your current shareholder update. For FWWFX, stating a gain of 6.64% from Oct 31 2103 to same date 2014. I reviewed, got decline in those dates from 25.41 to 24.93. Loss of 1.9% or so. Please advise.

System: FIDELITY REPRESENTATIVE has joined this session!

System: Connected  Your Reference Number for this chat is 5750466.

FIDELITY REPRESENTATIVE: Hello, thank you for contacting us, John. How are you today?

ME: Good, thanks.

FIDELITY REPRESENTATIVE: I'm glad to hear you're well. I've not reviewed that fund, but are your calculations taking into account capital gains distributions and dividends paid out during that time?

ME: Prices taken straight off yahoo. Are distributions :"separate"?

ME: I guess they might be.

ME: How much were dist. in that period, then, we'll re do the math.

FIDELITY REPRESENTATIVE: Yes. The historical prices reported do not include any distributions, which are subtracted from the value of the fund upon distribution, so it's possible that the value of the fund may be lower while still technically calculated with a gain.

FIDELITY REPRESENTATIVE: You can review the distribution history here:

FIDELITY REPRESENTATIVE: The performance figures reported on account for all distributions in addition to market movement during the periods listed.


ME: I now get 6.2%

ME: Still off by .44%. Can you resolve?

ME: I added 24.93 + .087+ 1.979 to get 26.996

ME: Div by 24.93 Oct 31 2014 price

FIDELITY REPRESENTATIVE: I'm afraid I cannot. I'm not an analyst and I'm not familiar with the exactly calculations are figured. It's possible that the fund's expenses are being figured as well.

ME: k tx

FIDELITY REPRESENTATIVE: I can assure you that the data presented on is provided by properly licensed analysts and is correct.

ME: Can you have someone email me the manner in which the 6.64% FWWFX return was calc, e.g. an analyst?

FIDELITY REPRESENTATIVE: Our analysts are not able to communicate directly with clients.

ME: A shareholder should be able to see how the return was calculated.

ME: You are asking me to take this on faith.

ME: We are .44% off.

ME: No one there can tell me?

ME: How you figured the return on one of your major funds?

FIDELITY REPRESENTATIVE: You are welcome to review the fund's prospectus online if you like.

ME: I have your report in my hand.

FIDELITY REPRESENTATIVE: The figures presented on are regularly reviewed and re-calculated with new data and are correct.

ME: Lots of words, not much clear explanation on the return.

ME: If they are correct, should be easy to verify.

ME: You have heard the phrase, "trust, but verify?"

ME: Can I talk to a super?

FIDELITY REPRESENTATIVE: Certainly. Just a moment.

 System: NAME WITHHELD has joined this session!

 System: FIDELITY REPRESENTATIVE has left this session!

ME: Hi: Seeking explanation of FWWFX return ---- price, div and cap gains on how FIDELITY figured 6.64% return FWWFX. Price Oct 31 2013 was 25.41, Oct 31 2014 was 24.93, plus div .087 plus cap gain 1.979 gives me 6.2% , not 6.64% as published. Put me straight....

FIDELITY SUPERVISOR: Hello, my is (withheld) and I am a supervisor in the Electronic Response department. Would you mind if I take a moment to review your chat so far?

ME: No problem, take your time...

FIDELITY SUPERVISOR: Thank you for your patience. I am happy to help to the best of my ability. We do not have all of the details of everything that is factored into that calculation, but I can see if I am able to duplicate that figure.

FIDELITY SUPERVISOR: Give me a few minutes to run through the historical data for FWWFX.

ME: thanks

ME: Appreciated

ME: brb in 5 min ok?

ME: Don't hang up on me ok?

FIDELITY SUPERVISOR: That's fine. I will post my findings and wait until you return.

ME: Thank you, brb.

ME: Back.

FIDELITY SUPERVISOR: I am still reviewing the performance figures. It may be just a few minutes longer.

ME: Take your time, I appreciate your assistance.

ME: Would like to get this right.

ME: Prob. I am just missing something.

FIDELITY SUPERVISOR: I have been running a few different figures to try to replicate that return %. I was looking at the change between 10/31/13 and 10/31/14 and also 11/1/13 to 10/31/14. The numbers are close, but I am not able to get that exact number.

FIDELITY SUPERVISOR: The report mentions that those figures are based on the fiscal year ending on 10/14/14, but it never mentions the specific dates that are used in the calculation.

ME: In your booklet, it says "periods ended Oct 31, 2014. I don't see Oct. 14

ME: In your booklet, it says "periods ended Oct 31, 2014." I don't see Oct. 14

FIDELITY SUPERVISOR: I'm sorry, that was a typo.

FIDELITY SUPERVISOR: I meant to write 10/31/14.

ME: No problem.

FIDELITY SUPERVISOR: I am assuming this would be 11/1/13 through 10/31/14, but that part is not made clear in the Investor's report. Going on that assumption, I took the difference between the prices on those dates, which would be -$0.46, and factored in the total distributions for the year ($2.066), to get a total difference of $1.606.

ME: OK. Did you figure a return? Or should I?

ME: We are getting the same dist., i.e. 2.066.

ME: Are we agree that we go from Oct 31 to Oct 31, 2013, to 2014/

FIDELITY SUPERVISOR: Based on the basic calculation for return, we should just divide $1.606 by the starting price, $25.39 on 11/1/13, which gives us 6.325%.

ME: Are we agree that we go from Oct 31 to Oct 31, 2013, to 2014?

ME: OK, at 6.325% still falls short of the reported 6.64%, it would appear.

FIDELITY SUPERVISOR: I would imagine it would be 11/1/13 to 10/31/14. I did also run the numbers from 10/31/13 to 10/31/14 and did not find a match with the 6.64%.

FIDELITY SUPERVISOR: My conclusion is that there is some other factor that is slightly altering the figure, and that is likely just a difference in the pricing dates that were used for the fiscal year.

FIDELITY SUPERVISOR: I apologize that I am unable to provide more information. Our analysts do not provide us with anything outside of the same documents that are presented to our clients.

ME: So, for a "civilian" like myself, there is no relatively easy way to verify Fidelity returns?

FIDELITY SUPERVISOR: Unfortunately we do not have any further access to all of the variables that were used in the calculation. The numbers go through a long process of cross-checking by different internal groups for accuracy.

ME: And no one at Fidelity who can provide same?

FIDELITY SUPERVISOR: There are individuals in the fund management group who have access to all of the details, but they have not made them publicly available and the group is not accessible to front line representatives.

ME: Thanks for trying, I do appreciate the effort, but must admit I am somewhat disappointed and disconcerted that such a seemingly simple thing as "fact checking" is not able to be done here.

ME: Bye.

FIDELITY SUPERVISOR: I am sorry I wasn't able to provide you with the solution you were looking for. I will submit feedback to our Fund Management group to suggest adding specific dates for the fiscal year calculations.

FIDELITY SUPERVISOR: Please let us know if you need any assistance in the future. Have a good rest of the day.

ME: Yes, if I may say, I think there are many pages of fine print in the shareholder update, but perhaps, from my vantage, ask mgt. to add a simple, short explanation, plain to see, on how the annual return was calculated.

FIDELITY SUPERVISOR: That is a great suggestion. I will add that to the feedback that I am entering now.

ME: e.g. X + Y + Z DIVIDED BY A = RETURN. Just real simple.

ME: Then footnote as necessary until the cows come home.

ME: There is presently no easy, online way to verify your returns.

ME: Have a nice week.

FIDELITY SUPERVISOR: Thank you. You too!

System: NAME WITHHELD has left this session!

System: The session has ended!

Sunday, January 4, 2015

Tis the season for prediction

Here's one from 2004 -- cogent, logical and wrong....good to keep in mind.  Predictions are useful to stimulate your own thinking, not to fixate least not usually.....