Bold prediction on how metals holders will win

The repo markets are experiencing high volatility again, just like they did just before the Q1 2020 market crash.  I think you should watch a few minutes of this video from the time offset provided.

https://youtu.be/lZ3dBXyzBY8?t=1479

To summarize:

·        The repo market is the liquidity mechanism of the federal reserve system.  The liquidity mechanism is there in order to stop runs on the system.  In other words, if some institution is in trouble because too much greedy leverage has been employed and something happens that puts their solvency in question, that federal reserve bank can go get short term loans in order to plug the gaps.  But in order to get the loan from the federal reserve, they must leave collateral.

o   Treasuries are used as collateral for repo loans.  It was liquidity crisis in the repo market which caused the Q1 2020 market madness.

·         The information in the video implies that 2/3 of this “collateral” is fake.  It’s “rehypothicated” which is another way of saying fractionally reserved which is just another way of saying naked shorted.  In a crisis one out of 3 holders will end up with the collateral, 2/3 will get left holding an empty bag of paper promises.  Remember, this is coming from Forbes, not just some YouTube guy.  He's reading from a Forbes article written by Caitlin Long.  She says all the big banks know about this fraud.

·         At some point there will be an event.  These events have been coming faster and faster so we should not have long to wait.  That event will trigger the admission that 2/3 of the collateral is determined to have evaporated.   More to the point, it will no longer be possible to cover the fact that it never really existed except within a shell game of debt and lies.  At some point, the loans that were collateralized by the fake collateral will be called in at which time they will be defaulted on.

·         When the lending system collapses, the banks will collapse, the markets will collapse and the economy will collapse.

I say again:

·         Don’t trust the banks with your cash.  When they go under they are taking your cash to bankruptcy court with them and the FDIC cannot bail the entire system out.  Cash is trash right now but the collapse of fake debt notes is beneficial to the dollar and so it could be a strong deflationary event. Jim Rickards' ice9 is a real threat.

·        Have gold and silver.  Gold was recently declared to be money again in the banking system.  The mechanism of this declaration was to declare it a “tier 1 collateral asset” under the Basil III rules. I predict that there will come a time when there are not enough treasuries in order to serve as overnight loan collateral.  When that happens, the system will begin paying fat interest to hold your gold.  Why?  Because that’s how badly it will need tier 1 collateral.  For a LONG time people have said “you can’t eat gold” and “gold pays no interest”.  But when the system collapses you will be able to put your gold on deposit and it will pay you stupid interest to leave it there.   

      Why is this such a great deal for gold holders?  Simply because you will still own your gold, at least unless whoever you loaned it to goes BK.  When you are tired of loaning your gold, you will receive your metal back.  But in the mean time you will have received a lot of payments for the loan.   Does this sound like anything we have heard before?  Why, yes it does! It sounds just like the US Bretton Woods promise to back the dollar with gold and to make the dollar (which is simply a debt note) convertible into gold on demand.  Of course we defaulted on that promise in the end but at first, and for several years, it was a good deal for gold depositors.  They got to keep their gold but they also received interest on it.

      Think about it.  In today’s fake money system, if you loan paper currency to someone they give you nothing for interest yet you take a ton of risk.  You will have default risk (they might not pay you back) and also inflation risk (your paper currency will probably get debased while out on loan).  But in order to create confidence, they will have to come begging for our gold and people will require them to provide some guarantee about the gold you loan them.  And since you will get repaid in gold, you stand no risk of losing any purchasing power to inflation.

All of your long term excess cash and retirement money should be in physical metals IMO.  As little as possible of your cash should be in an account of some kind. Even paper bills on hand are much better than paper bills on account someplace.