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Chart of the Century!

by Bill Holter, JS Mineset, SGT report.com:

In a recent article, Peter Degraaf posted a series of charts including the one below. I must confess I had never seen this particular chart before but extremely glad it was posted. I knew the monetary base had grown wildly but did not realize the extent until seeing it in graph form. While Peter spent just one paragraph on this, let’s look at it in depth to get a better understanding of why it is so important and what it really means.

Let’s start by deconstructing this down to what it really means. First, I must confess I do not know whether this chart is comparing the “priced” amount of U.S. gold to the monetary base or rather the price of gold to the monetary base (because the axis is not labeled). Either way, this chart tells us something VERY important! The price of gold relative to the monetary base has never been lower than it is right now other than the at the end of last year.

Looking at the chart, you can clearly see the “markup” of gold in 1933 from $20.67 to $35. You can also see the run from $35 to $850 during the 1970’s and peaking in 1980. You can also see the turn in 2000-2001 when gold traded down to $256 per ounce. These were very important generational turns but we can glean something even more important from this chart. In relation to the monetary base, you can now purchase gold below $20.67, below $35 and below $256 when adjusted for the monetary base outstanding! The monetary base has grown and grown for 100 years, it has exploded in the last 8 years.

Making this simple to understand, as the monetary base grows (money is printed), it is like slicing a pie. With each “cut” (addition of dollars), each slice gets smaller and smaller. As with anything, the smaller something becomes, the less valuable it will be. In banking or finance, this concept is called “inflation” when a currency becomes more plentiful in relation to goods …prices rise because it takes more of the more plentiful currency to purchase the same amount of goods as compared to previously.

Shifting gears, there is another side to this equation and one the powers that be are desperately trying to keep hidden from you. They have been suppressing the price of gold to hide the fact they have sliced and diced the “dollar pie” until now the slices are miniscule (the dollar has very little value left). They have done this at the same time “risk” has exploded. When I say “risk”, I am talking about systemic risk. Never before has the world taken on as much leverage in relation to GDP nor versus collateral. Banks, brokers, insurance companies and even sovereign governments are now more leveraged and financially in higher risk situations than ever before in history!

I would be remiss in writing this if I did so without talking about “U.S. gold”. There is so much anecdotal evidence the U.S. has been divesting gold (even custodial held gold) for years, in no way can anyone credibly believe the 8,300 tons claimed is still there. If this is the case which I absolutely believe it is, then the above chart would be revised to even lower levels. I guess the best way to illustrate would be to go back to our pie analogy, how big would the many more slices be if the total pie was the size of a thimble?

Going one step further, “gold” has been rehypothecated many times over. We have seen instances on COMEX where there were more than 500 ounces represented by paper contracts for every one real ounce they claimed to have. We have no way to know what the real global number of hypothecated gold is to actual gold …but we will find out sooner or later and the mass of paper owners will be left holding just that …paper. The cover up has gone on for years and was done to support confidence in the dollar, U.S. Treasuries and the fiat currency system in general.

The currency/debt system we live in will mathematically implode as sure as the Sun will rise tomorrow. This is simple logic, the system as a whole cannot grow enough to pay back nor service the debt already in use, “debt saturation” if you will. Richard Russell called it “inflate or die” which means either “inflate” the currency or outright default, there is no in between in the end. Someone, somewhere “loses”, there is no way around this, the odds greatly favor the holders of currencies as being the losers rather than outright default.

To finish, it is my hope you are putting 1+1 together while reading this. There has never been a more dangerous time financially than today in all of history. This, at the same time gold has never been cheaper in relation to the amount of dollars outstanding. This 1+1 is a no brainer, never before a greater need for the safety of gold and never has the insurance policy been this cheap! Of course we could talk about silver which is extremely cheap versus gold but that would be overkill for another writing. This will end with a massive call on gold by EVERYTHING credit …which is everything, everywhere financial! The “call” for real gold will come on like a light switch flipped overnight. You either have it, or you don’t …and never will!

This was a public article, if you would like to read all of our work please follow this link to subscribe.

Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome [email protected]

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21 comments to Chart of the Century!

  • Millicent

    Ho-Hum… Holter

  • Sam

    V E R Y compelling graph taking into account the historical monetary base…and forget about silver…

  • Eric

    The fair value of Silver is between $500 and $1,000 per ounce.

    http://www.guidetosilver.com/value-of-silver.html

  • Tony

    ITS CAPTAIN OBVIOUS
    THEY PRICE GOLD JUST OUT OF REACH OF MAJORITY OF PEOPLE LIVING WEEK TO WEEK
    THEN THEY MOVE IN , MOP UP AND TAKE UP ALL REMAINING GOLD IN THE SYSTEM ONCE SOVEREIGNS ARE “SET” UP.

    NEXT STOP THEY CAN STILL SUPRESS SILVER TO FUEL THE TECHNOLOGICAL AND MEDICAL AND INDUSTRIAL SYSTEMS AS IT IS NOT PLENTIFUL.

    MAKES SENSE DOESNT IT?
    GOLD IS THE ONLY TRUE OPTION.
    OTHERWISE THEY WOULDNT LET YOU BUY SILVER, AFTER ALL SILVER IS POOR MANS GOLD!!

    • Hal

      Point taken, but you are still pointing out blatant suppression and limited supply of silver so unless you were looking to sell/spend it in the near-term, how could you possibly not want to hold at least some and maybe a sizeable amount. If they didnt let you buy silver, then it wouldnt really be supressed. If the numbers we see are accurate (everythiing from mining figures. Pm supplies/sales, debt levels, QE etc to jobs, spending, even population) then there must be quite the juggling act going on to keep things going for too long (thinking im decades) not to mention the campaign to keep people from realizing that money needs to come from real production if it is to remian just.

  • rich

    Look who’s coming to eat our dinner…………China’s Marshall Plan

    It will also boost trading links and help internationalize the yuan as banks open branches along the route, according to Jen.

    “This is a quintessential example of a geopolitical event that will likely be consequential for the global economy and the balance of political power in the long run,” said Jen, a former International Monetary Fund economist.

    Reaching from east to west, the Silk Road Economic Belt will extend to Europe through Central Asia and the Maritime Silk Road will link sea lanes to Southeast Asia, the Middle East and Africa.

    While China’s authorities aren’t calling their Silk Road a new Marshall Plan, that’s not stopping comparisons with the U.S. effort to rebuild Western Europe after World War II.

    With the potential to touch on 64 countries, 4.4 billion people and around 40 percent of the global economy, Jen estimates that the One Belt One Road project will be 12 times bigger in absolute dollar terms than the Marshall Plan. China may spend as much as 9 percent of gross domestic product — about double the U.S.’s boost to post-war Europe in those terms.
    “The fact that this is a 30-40 year plan is remarkable as China is the only country with any long-term development plan, and this underscores the policy long-termism in China, in contrast to the dominance of policy short-termism in much of the West,” said Jen.

    And that’s a win-win for soft power.

    “The One Belt One Road Project could be a huge PR exercise that could win over government and public support in these countries,” he said.
    http://www.bloomberg.com//news/articles/2016-08-07/china-s-marshall-plan

  • AgShaman

    It’s so similar to shorting stocks…it should beg the question:

    Does any broker or custodian profit from loaning out OPG…hence the impetus for exchange trading vehicles?

    There is still an army of traders that will not walk away from the casino. My guess is a considerable number of them have backstopped their plan to ride the titanic with a physical position of their own and beyond the paper ponzi of the casino in/out flowchart of fraud. Perhaps alot of them do not know where else to go, or what else to do…since manipulation has been discovered in all markets and syndicate bookmaking operations.

  • CalSailX

    This is damned near as bad as the woman calling me up the other day about my insurance, now I don’t place bets against myself. So I guess I guess my telling her to lick my hairy B*LLS shouldn’t have surprised her.

    It’s not as if I took her name and contact information, and filed a fraud suit.Gee at that point she might just know what it is to be well, and truly screwed. Hell get them to mail some retarded promise to you, and turn that crap into the Post Master General… and just giggle like hell as they try to dodge that bullet!

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