Reset Watch Note: Jim Sinclair and Bill Holter Believe a "Reset" Has Now Begun

Anyone who has followed the issues that we do here on this blog for a long time knows the name Jim Sinclair. Jim is well known for his ability to do amazingly accurate long term price forecasting in the gold market. He famously called the top of the first huge bull market in gold back in the early 1980's. More recently (in this century) he incredibly made a long term gold price forecast of $1,650/oz way back when the price of gold was trading well below $500/oz. in the early 2000's. Gold hit that and more within his time frame.

In collaboration with Bill Holter (also hailing from Texas), they have been very consistent in the view that the present monetary system is unsustainable long term due to the combination of too much overall debt along side too many high risk derivatives that interconnect all through the banking and financial system 

In this very recent interview with Greg Hunter, they repeat the warning they have been issuing now for many years and are going on the record to say they believe that this recent sharp move up in the price of gold is a signal that the first "reset" of the present system they have long predicted is now starting up. Jim Sinclair says the events that he and Bill expect to unfold during this reset process will be completed by 2025. 

Below I have pasted in the video of the interview. 

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Bullet points from the interview:

- the present system is unsustainable due to too much debt and risky derivatives
- Democratic candidates for President are basically calling for a debt "jubilee" reset
- central banks are cornered and running out of ammunition to stave off a reset
- the recent sharp move up in gold is an early warning signal
- there will be two resets higher in the price of gold over the next few years
- the events that are part of the reset process will unfold by 2025


Added note 7-17-2019: Ray Dalio describes his own version of a coming reset which he labels a "paradigm shift"
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My added comments: The conditions we all live in these days are not easy to get a handle on. Trying to make a prediction about anything happening within a certain time frame is extremely difficult to do. I will say that having followed Jim Sinclair for a long time that he has done a pretty good job of long term forecasting, especially in terms of predicting price levels for gold many years in advance.

Some people who were alert and alarmed when the 2008 financial crisis arose have since gone off alert because the enormous coordinated effort by central banks around the world to stave off a failure of the present system seems to have accomplished at least that much up to now and the system seems stable to them now. A decade has passed since that last major crisis.

In this new interview, Bill and Jim offer a reminder that by no means have the problems and issues that triggered the big 2008 crisis been permanently solved. Instead, they feel that the unusual and unprecedented monetary stimulus actions that were taken have at best simply managed to push a day of reckoning off into some unknown future date. Jim Sinclair thinks that date will come before the year 2025. Readers should watch the video to see why he believes this.

If you want more evidence that even those who were directly in the heat of battle in the 2008 crisis don't feel like all the problems are solved and have some similar concerns, please go back and read our articles (first one here, followup here) from earlier this year that feature Mike Silva. Mr. Silva was the Chief of Staff to Tim Geithner at the NY Fed. Near the end of his article describing how it was to deal directly with the 2008 crisis, Mr. Silva offered this comment:

"Once a financial mob panics, the only thing that will end that panic is for a central bank with a large billy club to show up and announce: "Break it up everyone. Go home. This crisis is over." Unfortunately, the Dodd Frank Act (DFA) has crippled the Fed's ability to play this role. I guarantee that curbing the Fed's emergency authority will come back to haunt us."

Mr. Silva offered this answer to his own question about whether we will see another major financial crisis:

"Absolutely. As long as we have a financial system, we will have financial crises. The only question is how often and how severe. Personally, I think a crisis is likely to happen sooner rather than later because of the large number of possible crisis triggers that are currently being squeezed." (see page 15)


Mr. Silva also stated in his article (see page 14) that the system did come very close to failure during that 2008 crisis and he was right in the middle of it at the NY Fed at that time:

"This was a terrifying moment. Central banks know how to support individual institutions, but no central bank had ever tried to support entire markets. And that was what we had to find a way to do."

My point here is, that while none of us can know if or when the next big crisis may strike, it is beyond foolish to assume it can never happen. It is also foolish to make no effort of any kind to understand these important issues and try to make some basic simple preparations in case another huge crisis does one day emerge. That's just common sense like buying auto insurance. You hope you never need it, but you would not think of not having it. In fact, it is deemed by society as so important for people to have it that it is illegal to drive without having it. Surely, the same prudence should be used in relation to the issues we cover here that might some day actually lead to some kind of major "reset" to a new financial and/or monetary system. 

If a major "reset" to the present system does come, we would hope for a gradual change under controlled conditions. But we can not rule out a disorderly reset resulting from a sudden, unexpected failure of the present system. We have documented numerous system risk warnings from officials at the BIS, IMF, and central banks here over many years. Over time some risks decrease, others increase. But risks never completely go away. The goal here is to monitor events, report what actually happens over time, and document various ideas on how to "reset" the system should that be necessary at some point in the future.

Incrementum: Advisory Board Minutes Discussion on Potential Systemic Risks

In reviewing the recently released Incrementum Advisory Board Meeting Minutes (see preview page here), it hit me at just how much interesting and relevant information is contained in this report. I can most certainly recommend to readers that it is worth your time to read through the report. 

I plan to do this article and another one to feature a couple of aspects of the discussions contained in the report. This first one deals with some various systemic risks that were talked about. Right now, there is very little talk anywhere about triggers for another major crisis that could lead to the kind of changes we watch for here. However, this report does contain some very thoughtful exchanges of ideas on that. Below are a few excerpts that illustrate that.

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Heinz Blasnik:

'What we are seeing is similar to what we usually see in the final stages of a bubble. And we are currently hearing a lot of bubble talk in the media. But at the same time we also see that people who previously made bearish comments have capitulated, and have turned bullish. Retail inflows into equity mutual funds reached a new high in early 2017, margin debt is at a record high, speculators have large net long futures positions and the Shiller PE ratio is the second highest on record. So sentiment and valuation indicators are very stretched, If you look at the last 2-3 years the indicators have been stretched for a long time so, which is also typical for the late stages of asset bubbles, but makes precise timing tricky as well.

But this time the differentiating factor is that the money supply is declining at the same time as the indicators become ever more stretched. This situation is similar to what happened prior to previous market peaks; the market continues to do well, but the monetary backdrop is weakening. And while we can’t tell with precision when it will happen, the current situation suggests a high probabiility that we will have another crash. I don’t think it will be like 2008 when it took a while from the time the market started turning down until it actually crashed. I believe that this time we will experience a very sharp correction that will happen more quickly and come as a surprise. A dangerous development in this context is the large increase in quantitative/ systematic investing strategies and the proliferation of ETFs. Many ETFs are holding investments that are not particularly liquid - particularly corporate bond ETFs - which is likely to pose a big problem in the next downturn."

Luke Gromen:

"It’s interesting to hear Heinz’s thoughts because we have written about something similar to this, just from a slightly different angle, multiple times this year. The consensus has been that the dollar would continue strengthening, that inflation would finally take off and that growth would resume, but coming into 2017 we were saying that the US economy was in much worse shape than the consensus believed. And in the first half of the year we have seen the disinflationary impulse grow and the dollar weakening. We continue to be bearish on the fundamental side of the economy, but what we wrestle with is how that translates into both the political situation and US risk assets. Pension fund problems have started to come to the forefront with Illinois potentially being downgraded to junk, Connecticut has had funding problems, New Jersey and Maine have also begun seeing fiscal strains.

If we were to have a sell-off in risk assets, the funding situation for these states would get much worse. Furthermore, from a broader perspective, we have done research on what percentage of consumption is driven by capital gains (and therefore in large part by stock prices), and the number is high. In the US 60%-65% of GDP is driven by consumer spending, and a lot of that spending is driven by capital gains in the stock market. The US therefore finds itself in a precarious situation where economic fundamentals appear to be worsening, which is happening in conjunction with a worsening fiscal crisis (of which Illinois, Conneticut, New Jersey and Maine are important symptoms.) If we get any type of US recession or crash in the stock market there will be fiscal and political problems in the US very rapidly. And so we believe the Fed will very rapidly introduce monetary measures if we do have a crash because they understand how precarious the situation currently is, both from a fiscal and political side."

Please Click here to Read the Full Incementum Report

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My added comments: This gives you a feel for the discussions in this report. The report covers a broad range of issues and the quality of the information is very good. In our next article, we will look at some excerpts of the discussion in this report about whether there is political pressure in the US to get a weaker dollar.

BullionCoin Update: While we wait for additional news on BullionCoin, it appears that another competitor in this space plans to enter the market in Q4 2017. GlintPay appears to be based in London and has this website up . Some comments on it are found in this article on TechCrunch.  Here is a quote from the TechCrunch article:

"However, I understand that Glint will offer a frictionless way to both store and spend your money in gold, including at the point of sale, just like a regular local currency." 

8-11-17: Two new Twitter comments from Andrew Maguire here and here. They say BullionCoin will launch on 8-15-17 along with the white paper. Timed to coincide with the 46th anniversary of Nixon taking the US off the gold standard.