hey everyone this is elijah johnson with silver doctors calm and with us today to continue answering viewers questions is dr. Jim Willie editor of the hattrick letter found on golden jackass calm now Richard from Georgia is wanting to know just about us treasuries we talked about at the beginning how US Treasuries are being sold off and interest rates are rising just a slight bit but you're saying a lot less than they should be given how much other countries are selling Treasury bonds now this viewer wants to know the largest derivative holdings by the biggest banks are in interest rate swaps so what does all this pretend for those big banks holding those swaps they're going to all fail it's so simple it's so simple let's just look at Deutsche Bank that wasn't mentioning the question but it's certainly relevant to this picture Deutsche Bank is the big European bank in deep deep trouble in multiple fronts and they've let it be known they hold 75 trillion euros in derivatives I love telling this one story there was an analyst and I think it was called investment dynamics a website he did an analysis of Lehman Brothers he did it right around the time they failed he did it again after the dust cleared and we were very clear on what their toxic non not their toxic all their liquidated assets were worth okay he found out that his conservative method of valuing the books for Lehman Brothers was off by a ratio of two and a half to one because he was conservative he didn't want to be wrong hide rather be wrong low so we have something that's at least this bad he did the same analysis several months ago of deutsche bank and arrived at deutsche bank's value at minus four hundred billion euros apply the two and a half to one and you arrive at 1,000 negative euro value for deutsche bank's books so they're worth somewhere between 500 and a thousand negative euros in the billions ok what's going to happen to them well they get marked to the market reality strikes they get plowed under this is not complicated this is not complicated any big bank that holds significant derivatives on the interest rate swaps might be forced to endure the reality of seeing the US interest rate moving up toward five and six percent which is historically the norm what happens to the derivatives if we move from sub 2 2 / 5 percent they all become worthless we have these numbers thrown around that it's like 14 hundred trillion in derivatives dollars 14 hundred trillion dollars 1.4 quadrillion dollars of derivatives float around though in the Western banking system what happens when they go worthless what happened if they just lose say half their value okay well they just lost three hundred and fifty trillion dollars or more of their value what happens to the banks they all get ruined what's going to happen next and in the next couple of years is we're going to see on US soil a lot of foreign banks and I think more than a few of them will be Chinese because the u.s. banks are all broken you know here's a very a very ugly spotlight on QE the US Fed has been printing money in covering Treasury bonds whether it's new debt or existing Treasury bonds held by Wall Street I tend to think that one of the biggest motives there are two big motors rather 4qe one was to cover the US government debt because we couldn't find investors anymore the second one is to bail out the wall street banks that hold too many US Treasuries they're all going to go pretty much worthless what was the result of QE and printing all this money to cover the Treasury bonds it provided the insolvent banks liquidity it prevented their bankruptcy QE prevented a string of Lehman Brothers vents layman brother failures why because they had liquidity there they could sell their impaired Treasury bonds and and the Fed could promote a rally rising value and send some of the money to stock so Americans remain asleep like my sister my sister won't wake up until their stock account is down not until then maybe not even then I don't know hmm so Huey had a hidden agenda of preventing the failure of all the wall street banks which I include wells fargo the California bank but maybe another 60 American banks now this next question is about about Deutsche Bank this viewer is wanting to know they're saying that you said there was a rumor floating around that China was bidding on Deutsche Bank's gold derivative book can you give us an update on this well this happened about three weeks ago maybe four weeks ago and well I mean if that happened that I'm about to describe I learned about this about a month ago I reported on that that that is to be sure I'm a little disappointed I thought that when the Chinese came back from their vacation uh what was it three or four weeks ago they had their national holiday week to commemorate the establishment of communist China I thought that they would react with hostility to what was done during their vacation week okay here is what I am told was the setup Deutsche Bank is desperate for cash they're insolvent and when you're insolvent and desperate for cash you tend to be at the door of bank failure so they sent out appeals looking for cash the Chinese heard the appeals and offered them a bunch of cash in return for owning their gold derivative book then they went on vacation okay these negotiations weren't just a single day they were for over several weeks but they were not signed the derivative book for gold was not sold from from deutsche bank d bank they weren't sold from d bank to the Chinese there was an offer on the table and the offer on the table would have relieved d bank a tremendous amount of stress then the Chinese went on vacation three or four weeks ago and during that time pressure came from Wall Street mean the US government Hank handlers people who give orders to the president and the Congress who write the laws enforce the regulations word came from the wall street bankers that Deutsche Bank was to liquidate a portion of their book the derivative book the gold book and and we saw a hundred-dollar drop in matter of two or three days in the gold price the official comics corrupt price all right I thought that in the following week we might have a snapback route that we did not what it appears to be is the Chinese are using the opportunity the situation to acquire more even cheaper gold the Chinese are amazingly patient we would think the Westerners would think well this is going to happen in the next few months the Chinese think know it will happen in the next several months if not couple years if the Americans are dumb enough to discount their goal that they sell us we are smart enough to keep accepting it and not pressure them to put an end to this so i thought the Chinese were going to react a little more hostile and a little more of a hostile way but they didn't so not really sure what's going on with respect to the D bank gold book really no I'm not afraid to say I don't know there's a lot going on out there and if I don't know about this or that hey I'm not embarrassed to say so this is very confusing very elaborate very hidden but one thing's for sure Deutsche Bank is going down and the Chinese are going to try to exploit the situation let me point out a couple of details regarding the gold book okay it is widely regarded that Deutsche Bank has the counterparty long side to The Wall Street short side here's what that means okay we're at a few years ago we're at 1700 and we're moving down to 1600 it happens from these illicit corrupted paper shorts that wall street in london banks execute so let's just say JP Morgan does a huge block of short gold futures contracts and because of the nature of the futures there has to be a counterparty on it and deutsche bank took that counterparty long side mm-hmm so deutsche bank was long at 1700 then they were long again at 1600 then deutsche bank is long again at 1500 long again at 1400 and long again at 1300 so the gold derivative book accumulated over the years by deutsche bank is pretty much all in negative territory now there's another side to this they roll them over most derivative most of these gold derivatives these these futures contracts there they roll over you don't have a ten-year-old futures contract you have a one-year-old two-year-old six-month-old three-month-old they get rolled over okay but i believe deutsche bank has some over-the-counter gold derivatives that are much more elaborate and are like custom written and might have and endurance adoration for more years but the point is deutsche bank probably has a lot of underwater gold positions so if they sell to make sure the Chinese don't get them in their hands they're selling underwater gold position they're taking losses and they're aggravating there- liquidity position there aggravating their their problems with liquidity their problems with cash flow they're draining the Deutsche Bank swamp even faster hey you singing their death event or possibility or potential so the whole exercise of dumping the Deutsche Bank gold book I believe badly aggravated the situation for Deutsche Bank with respect to its failure so they might have kept the gold out of the Chinese hand the bullet the book the gold derivative book but they've hastened the risk of deutsche bank failure while they're coming up with these cocoa bonds which put the bond investors at risk of loss I think thing I know it has a labret definition I can't even remember what Coco bonds stands for collateral is one of the co I can't remember they're raising more money they're even offering a high bond yield and they're raising cash they're making investors some debt securities and in life is going on for Deutsche Bank so these are idiots who are buying three percent or four percent Deutsche Bank corporate by they're idiots they're going to lose they're going to lose their asses but you know let's just as I say let Darwin do his work Darwin and you know natural selection get rid of the dummies get rid of the ones who don't know how to survive get rid of them okay so there's some new investors of Deutsche Bank corporate bonds congratulations let me know how you're doing in another year the Qataris you know the nation of guitar Persian Gulf Arab the oil their nlng experts big investors Qatar just backed out of Deutsche Bank so those three percent bond investors are probably regretting it already in a matter of you know couple weeks guitar is backing out go they're not too sure they have a big two billion dollar investment from just 18 of 20 months ago they lost half thermal so guitar is angry this Deutsche Bank ship is going down anyone who thinks it's going to turn around and become viable again as nuts all right let's move on this next fewer is wanting to know what your view is about the future of the UK after breakfast ok there was a lot of scare tactics put on the table put in the news a few months ago that bread would go to hell in a handbasket I put out in the thing was the August July and August newsletter that Britain is going to go through a stormy period and come out on the other side with some advantages let's just look at one of the advantages just one the lower British Pound it's seen as a horrible development really would Italy like a cheaper lira to stimulate their economy that's my comparison Italy cannot use the discounted currency to stimulate their economy like Britain can Britain's in a very nice position they can go out and say we've got British cars we've got British consultancies it's all now ten to twenty percent cheaper line up we got contracts ready to sign this is how stimulus comes there's another very odd when they they called it the stave the staycation the staycation it's stay home for your vacation the staycation they didn't go to the Italian the French the Portuguese and the Spanish resort facilities why because it would have caused ten and twenty percent more they stayed home okay so they notice that there was a benefit from the absent flow of money out for their own British tourists going to Europe in late summer it was realized in August August is a very big vacation month in Europe it's like an official vacation month I remember I was on my honeymoon coming down from Switzerland we went into Turin Italy and could not find an open restaurant everything was shut down it was August so there's a lot more to the brexit let's touch on one of the most difficult points it has to do what they call the passport issue London bankers operating say for French and German banks and a lot more bank but just think of the many French and German banks that are represented in London and no longer could they operate without that extra cost of crossing an international boundary that boundary now has gone back into effect with its inherent costs okay it's called the bank or passport I not really sure how that is all going to play out I think London is going to lose a rather sizable portion of its financial center activity but something is likely to take its place because of brexit and that is specifically the Chinese what I call RMB trading center it's also called the the Chinese hub the RMB hub think of it as two things China wants to sell a an RM be denominated bond in London to cover say the Italian government debt I'm not talking about the whole debt I'm just talking about a new block of debt a new trench of Italian government debt it might be say ten billion dollars every month for the Italian government debt for a period of time they might actually try to roll over some old debt and make it new rmb debt and chen is going to want to do it in london they're also going to want to do it in frankfurt germany that's the other big financial hub they've got an RMB hub already in Frankfurt Germany Germans are just into everything that's positive ok the other function of an rmb trading hub beyond bonds is simple currency exchange ok there there's a lot of a lot of trade between China and Britain and then they need to trade between British pounds and rmb currency the chinese yuan ok fine they want to do that in London they don't want to do that in Shanghai they'd like to do it in London so they're going to try to the Chinese are going to try to rope in the British with these RMB hub centres at the same time during all of this Russia is not obligated any longer this is I think a very big piece that's not discussed regarding brexit they're not obligated in any way in the future of being bound by the EU Commission regarding the Russian sanctions so on a case-by-case basis evaluate the merits and they might do say an energy deal with the Russians a pipeline supply deal because the North Sea is another part of the British economy UK economy does not discuss much but they've got something like an eighty or ninety percent decline in the North Sea oil and gas output compared to say 1980 when it was really going great guns so Britain is going to lose a portion of its financial sector because of brexit while it lost a significant portion the majority portion of its energy income and they need to import energy so I think reason they got out of the EU was so they could import Russian oil and gas look for a nice big project soon in Britain of an lng facility to take Russian gas it's a little more expensive but it's it's a lot more volume so the bricks it is going to be I think pretty much what I said back in July and August it's going to be a shock wave and adjustment and then they're going to be moving forward but in a more international role not obstructed by sanctions not obstructed by say the growing us Chinese trade war which is one of the most unique phenomena in human history because the US has tremendous trade dependence supply dependence for finished products on China while we're having the trade war while china owns say three trillion dollars or two trillion dollars worth of Treasury bonds they own a lot more than they admit I mean don't don't write to me in the contact us and say oh no Chinese are down to one one point 0 trillion dollars same as Japan in Treasury bond ownership well yeah that's their official but it does not include sa fe sa Fe is their sovereign the sovereign wealth fund does not include a lot of things doesn't include private holdings SI if he is state administration foreign exchange sa fe doesn't include the cic the chinese investment corporate food corporation these are their private not private these are their Kwazii official reserve holding sovereign wealth funds they also i think hold a lot of gold that's not counted in the official silly statement of gold ownership so I think brexit is going to be okay for Bretton ah I've heard some stories that they wanted out of out of the European Union so they could become a very important cog wheel center for the Eurasian trade zone that the u.s. so vigorously has been opposing and when I read that and I swallow it and digest it and think about it I come up with only one conclusion the big tie the big link has existed for well over a hundred years between the United States and Britain it might be going away the British might become very important agents for trade on the financial side for the Eurasian trade zone that the US has been blocking like with their efforts of scorched earth with respect to Ukraine if Britain becomes a big agent for the Eurasian trade zone it goes exactly against the entire Ukraine war on its hidden agenda so I think Washington's got some very severe isolation issues coming up Elijah and it's gonna get going to get weird gonna get nasty now moving forward here this viewer is wanting to know about Central America and they're saying that you know a lot of expatriates live in Central America and there's also a lot of construction going on the sewer thinks it's a bubble because you can see lots of less than half filled condo towers and they're wanting to know when the u.s. Falls what do you see happening to the expatriates in Central America okay I live in Central America I'm in Costa Rica I follow what's going on in Costa Rica I follow what's going on in Nicaragua and I follow as best I can and not perfectly the events in Panama what I have noticed is yes there's a construction boom you don't have to look very hard in San Jose Costa Rica where i live to see a construction boom just down the ode not even a mile from me is a 25-story tower that's going to be for condominiums in the town center is a twin tower of 40 stories and what I'm told is they're not even half full the one that's just under a mile away it's not completed yet they're they're still avidly working the construction you see a lot of cement facades okay here is what i have learned regarding costa rica and then i'll address the other country they are almost exclusively chinese projects so what are they doing i think they're converting their dollars into a hard asset of a commercial building will it go empty for a while well maybe would that mean they lose some money well maybe would they lose money in the Treasury bills if there are in a debt restructure definitely would they lose money in the Treasury bonds if there's a devaluation don't really know because I think when the two dollars come there'll be an international dollar and there'll be a domestic dollar and the Treasury scheisse dollar as i call it the rainbow dollar with the multicolored built new bills that is not going to be the international dollar the story i'm hearing is that the international dollar will continue and the US government will lose its oversight and control of the the international dollar so the chinese own international dollars they're trying to convert to hard assets not just in San Jose Costa Rica they're buying lots and lots of properties across Africa they're buying port facilities in Africa buying mines in Africa the doing projects for for oil delivery facilities in Africa like Nigeria they're doing a lot of big package deals in Africa where it's not just oil delivery and facilities for that but it's community centers schools and hospitals and railroads in other words developing the infrastructure for those African nations the u.s. goes in and sells weapons and assassinates leaders and enforces vaccinations that kill people and Chinese don't do that they go in and try to establish commercial ties and invest in the country and in their infrastructure that helps develop the economy alright so the Chinese okay when it comes to Costa Rica I don't know of any large-scale projects that are outside Chinese control I don't know one not one so if there's a construction bubble it's a Chinese issue okay what's going on in Nicaragua well they've got this supposed canal a wider canal I don't want to into a long discussion of the Nicaraguan canal to compete with the the u.s. controlled Panama Canal it's funny the Panama Canal is controlled by the US on its movement but it's pretty much operated by the Chinese I don't want to get into a long discussion I I I tend to think that the Panama Canal is really about narcotics from the US government Langley and the Chinese don't want that stranglehold so they're talking about a Nicaraguan canal and let me just point out a couple major things regarding the Nicaraguan canal a fellow on my step might on my step my group of colleagues I have a colleague in my group who's a rather good friend smart fellow and he did an analysis close to a year ago of the Nicaraguan canal project and he said Jim from the highest point to the lowest at the thousand feet that means it's going to need something like 200 locks that means it's going to need a lot of name native river water to manage the lock system that means it's going to be shut down every six months due to silt and sand build up so if they complete the canal they're going to need to build two hundred locks and it's gonna have to be shut down half the time and I said I don't think this canal is ever going to happen to you and he said I don't think so not really not unless they overcome some huge obstacles and then he hit me with the zinger if they build the canal they're going to have to clear a lot of jungle so he estimated that somewhere like two to three billion dollars of hardwood lumber would be the booty from the construction project and it would probably go to the Ortega sandanista government private hands the dummies who read such a thing would say well gosh that'll go right into the Nicaraguan government registry our treasury and help them out with their deficits and relieve their currency problems and maybe be distributed across the country yeah what's stupidity it'll go into six or eight private hands and the public will never see it freakin dime of that okay so it could be the Chinese told the Nicaraguans we really want the naval base on the Caribbean or Atlantic side it's really not Caribbean its way south of the Caribbean we want the atlantic naval base and we want the pacific naval base and we're going to cut down a lot of trees and and deliver your booty of a couple billion dollars worth of hardwood just to let us proceed and that's what I think's going on the canal will never be built okay as for Panama it is a completely different world absolutely different world whereas Nicaragua has great difficulties and obstacles for capital formation panama has imple easy opportunity for capital formation huge international investment they have the canal and they've got a tremendous amount of narco money of both the u.s. type and South American type flowing through into their banking system but they've got some over expansion in Panama City I don't know how it's going to turn out loop regarding that the broken bubbles for construction I'm not really concerned about the broken bubbles of construction I'm concerned about the overpopulation issues they brought in just in 2015 they brought in a hundred and eighty thousand Venezuelans escaping from their completely wrecked country 180,000 Venezuelans and many of them may be the majority went to Panama City they've got horrendous traffic problems they just completed an underground subway system urban subway think of it in the underground train they completed an overground monorail system they still have the traffic problems they offered fast-track permanent residents 30 days but very tough requirements and one of them is set up a corporation and you seed it with five thousand dollars so they're trying to attract money but they're also attracting not much but some riffraff okay I don't really have a whole lot more to say about the bubble and expats but people who are outside the United States right now if they are able to have continued access for their wealth their savings their accounts and and just deal properly with all the new financial regulations that are on the books they're going to be in much better condition because most of these Latin American countries are rather self-sufficient in Costa Rica here we're almost completely self-sufficient with food we're not self-sufficient at all with gasoline and diesel and car parts there's no car manufacturing in Costa Rica they do have certain parts like tires there's a big bridge tone bridgestone which is japanese company the big bridgestone tire plant okay well they make some tires big deal i doubt it's even fifteen to twenty percent of the imported tires for Costa Rica mmm the shock waves are going to be brutal inside the United States and I think the American press is going to probably emphasize the difficulties for expats outside in order to distract the attention for those inside all right well Jim Willie thank you so much for joining us today before we let you go where can our viewers find you online the website started 12 and a half years ago this this month was issue number 151 Wow I remember I came here in December of 2006 and it was about two and a half years into the newsletter a little over thirty issues so I've been here I've been here a long time almost ten years the website is www gold and jackass com this month was unusual and it was because I think of the frozen situation suspended animation the tremendous attention on the politics and war threat there really wasn't a lot of activity going on and I almost had just one report but instead I divided it up and made to weather man there about two-thirds the regular size so less the two reports are these it's the global money war report which is really the International battle worldwide globally to defend the dollar the Ukraine war and the Syrian war are to defend the dollar that's not how its described its stopped the Russian aggression at the absolute nonsense its interrupt the gap the gas pipeline from Russia to Europe and make it so Europe doesn't have an energy dependence on Russia then the Syrian pipeline also a Syrian war also has an energy component the u.s. does not want any completed pipeline for the Iran gas it's called the Iranian gas pipeline it's interrupted why cuz it was a war scorch earth wrecked the country create a lot of refugees and interrupt the dependence potentially for the European energy supply from Iran just like they interrupted from Russia so that's the global money war report it's a lot more than war it's about central bank policy QE you know the hyper monetary inflation the bank insolvencies a lot of different things but the second report is a little more detail at the ground level like four it's called the golden currency report and it's a lot more ground level like actual Mint coin demand actual Indian imported gold demand policy changes for India I include Russian developments and Chinese developments both the the war that's heating up with Russia and the trade war that's been in effect for 10 years with respect to China Russia and China issues and oil issues are all in the gold and silver sorry the gold and currency report oil issues related to the death of the petrodollar de facto standard that's in the gold and currency report so been a labor of love elijah 12 and a half years I i recharge my jets in the couple weeks and that i'm not writing actively for the the newsletter and reports they were just posted on the 21st which was last friday the october reports and i enjoy this work tremendously i kind of missed the marketing research and statistical analysis model build and hypothesis testing and you know deep deep stuff analysis i miss it but i'm doing something very important now and I don't regret it at all this is far more important than you know computer industry marketing research I'm learning a lot it seems like every two or three months I have to learn about something important a few months ago I had to learn what the reverse repo was because the the December interest rate hike was a pretty much a false story had to learn what that was really about it was to enable greater leverage from the wall street banks robbed Kirby has been very helpful whenever I have to learn something I say Rob I need to learn something can you help me out he said sure what so a few years ago is about what the derivatives were now it's about what reverse repo is and I built a good staff they're not subject to me they're more like my colleagues with a lot of respect mutually handed if it's tits ten nine or ten people they're all men half of them are Americans half of them or not and we get along very well you know every once while one goes out one comes in had two new additions in the last three years and they're important addition they do significant contribution so sometimes don't have a when I have a forecast Elijah it's a little funny it's not mine it's from a colleague and he doesn't say to me hey Jim you can take it as your own no I'll say this is a hat-trick letter forecast and its compliments of Euro Raj or this is a forecast that the voice as explained to me on how it might unfold and I am the messenger on the analyst I'm the writer I deliver it so it's a very interesting dynamic for producing the reports it's a team effort sometimes I I'll ask someone can you just put together a bunch of notes on this and all I'll try to write it up but can you give me a synopsis on what you think is going on with respect to say to Iran in the Eurasian trade zone that was something you're you're I did a month ago I think it was this September report so the two reports and it's six months subscriptions and I hope people can go to the website and look at the free material eventually some for the hat trick newsletter it's uh it's I think very spellbinding now and I always mentioned the two compliments i receive when one type is I've been listening to your podcast and interviews and reading your public articles and I thought that was enough but I finally thought I'd sign up and some would say you know give you a reward for good hard work and I wish I had signed up two years ago and the other is I used to be a hat-trick letter subscriber and no eight nine ten eleven night I just went away and I wish I had never left I'm back now so it's nice compliments and what I'm starting to get now is people sign up and say I'm one of those guys who just listen to your podcast for free and man this is really interesting stuff I should have done this a year ago I should have signed up and I get other people say uh I left for three years and I I bounced around and I came back because your work is better than the ones that I was checking out so good comparisons good compliments and I don't say it's a lot of fun I'd say it's a lot of stimulus and I get into arguments with my father I said dad these forecasts are coming true and they're miserable hard hardship forecasts and I don't enjoy the outcome I enjoy the fact that I do good work and my father says yeah Jim I really think you you enjoy the u.s. is going down no I enjoyed that the u.s. cabal is going down but he doesn't distinguish between the Cabal and the government and he flies his flag I so I want to get rid of those who captured the flag and he said I don't think anyone captured the flag we're all Americans so therein lies the conflict and I don't think it's going to become clear until nine eleven is revealed I really don't think it's going to be I made clear until then and maybe wanted me to clear even after them so anyway well thanks for having me on its gosh it's been two hours I didn't expect to be two hours but if that's okay I know I'm a blabbermouth so thanks for having me on Elijah and congratulations for being part of silver doctors I think it's a feather in your cap thanks so much Jim and thank you so much for your time today okay alright thanks for having me by now [Music] you
![13325639_10153480935057121_7875465683000021020_n[2]](http://www.amarketplaceofideas.com/wp-content/uploads/2016/06/13325639_10153480935057121_7875465683000021020_n2.jpg)