plus need to. keep the slime due course knew the focus on domestic abuse that he. wanted. to see in the prison for the most good moment you know. you have to change. no one to. join me every thursday on the alex simon show and i'll be speaking to the world of politics sport i'm sure i'll see that.

max kaiser here with cassar part hey you know before george zorro's became vilified as a globalist and market manipulator and election writer he wrote a lot of interesting books and of course. jim rogers of the quantum fund which was one of the best performing hedge funds ever kind of invented the modern hedge fund and he's got a lot of things to say if you look at his old work and we're going to get into a stacy herbert we're going to talk about reflexivity because i think it's quite important in this day and age and in fact just so you know george soros versus warren buffett 2 different source of investors one speculator one is value investor and they've both and this is a downtown josh brown compare them in 2013 there annualized returns are 20 percent

per year for the past few decades and both born in 1930 said they have similar returns in 2 different ways them investing but george soros did write long ago about reflexivity and it's quite important to looking at the markets today because i want to point out that according to wikipedia reflexivity refers to a circular relationship between cause and effect especially as embedded in human belief structures as an anthropologist for example goes into a remote tribe in the amazon the observer affects the observed so the fact that this anthropologist this guy or this gal from new york city goes into the amazon to a tribe who's never seen somebody from new york they act differently than they would have perhaps if it were somebody else from another tribe in the amazon so what you observe might not know you've influenced their behavior so you can actually observe their behavior with economics how george soros explained reflexivity reflexivity refers to the self reinforcing in effect of market

sentiment whereby. rising prices attract buyers whose actions drive prices higher until the process becomes unsustainable george soros saw all this fact as incompatible with equilibrium theory and we'll get into that in a bit but i know you study because when i 1st met you 17 years ago you were talking about this you were talking about george soros and reflexivity can describe it as smoking your own belly button lint you describe that you are being reinforced in your beliefs by the manifestation of your actions to take further actions which then gave you more to believe in hyman minsky call this a minsky moment where you know stocks are high because stocks are high people are buying stocks because they're high and they're high when they're buying stocks that are high basically on their own delusion about their importance in that moment of getting stocks the place when he talks about is a repudiation of the equilibrium theory this is an important idea because there's

this idea of the efficient market that markets are efficient all information known about stocks and bonds are in the current price that's the efficient market theory if there was such thing as an efficient market then either george soros or warren buffett could compound money at 20 percent for 20 or 30 years because i would be impossible if markets were efficient and all information was known in the price reflected all that information so clearly markets are not if not efficient and this idea of reflexivity it's a bit of a quantum mechanics entering into the finance space you know this like schrodinger's cat as a quantum fund operator and that's very. scientific in that way but it nevertheless it does have a huge impact and i do think that we are seeing that in markets today people are looking at stock markets and assuming you know they hated the dow jones when it was at 9500 you know 1011 years ago after the 2008 financial crisis remember it was too high of 9500 it's going to go to 3000 and well here we are near 29000. and people

are saying well it's got to go to 50000 they love it at this price because somebody famously wrote in a book people are predictably unpredictable i believe is the title right and you know in terms of equilibrium theory in equilibrium theory prices in the long run equilibrium reflect the underlying economic fundamentals which are unaffected by prices remember in the last episode where i showed you that the s. and p. 500 is way outpacing the actual growth of the economy that shouldn't happen in equilibrium theory and yet this is what the economists working at the fed will keep on telling you that this is all equilibrium the prices are you know as they should be and reflect the underlying fundamentals but what soros pointed out and reflexivity asserts that prices do in fact influence the fundamentals and that these newly influenced set of fundamentals then proceed to change expectation thus influence in prices the process continues in a self reinforcing pattern because the pattern is self reinforcing markets tend

towards a disequilibrium and that's why we have boom and bust boom bust and they get bigger and bigger over the last 20 years since 1992000 says he wrote that there's been the emergence of ai artificial intelligence and there the emergence of ai journalism so a lot of the financial press and forbes already has this digitally assisted editorial content that they produce where machines are reading prices and then they generate stories those stories are then picked up by trading algorithms on wall street and 90 percent of the volume on wall street is by robot so the robots are reading the output of the robots and they're changing prices on the exchanges which are then we'll go back to the editorial robots who write about those new prices so robots are trading based on the editorial robots who are then impacted by the price changes generated by robots so that's a new chapter in this reflexivity story the observer changes the observed so warren buffett issues and annual newsletter for shareholders and berkshire hathaway

everybody. the world reason i think is every february right and he observed a few years ago if you recall that most investors would be better off in a passive index fund just stop treating in and out stop trying to be like soros just that that's how you lose money just do a passive index fund and everybody listen to him thus changing the dynamics of the market i that's why he has 120000000000 in cash but now this is what has emerged a new risk to the market caused by these sort of observations that everybody would just be better off and a passive index fund perhaps that would be ok if it was just a few people following his advice but when the entire market follow a set of his advice we're nearing a future where 3 index fund companies control corporate america the largest asset manager in the world black rock with ice shares has 7 trillion dollars under management then guard has $5.00 trillion and state street with s p d

r manages $2.00 trillion these companies hold 80 percent of all indexed funds as we've covered just recently more more of our of the markets are just passive investors so back in 1907 before the crash you had the emergence of what's called portfolio insurance yes now when i was a stockbroker at the time so i know this quite well so the amount of this portfolio insurance product was sold in many multiples of what was actually supposed to be insured the underlying stocks and when that became clear you had the crash of $87.00 now it currently with these passive investor funds and also e.t.f. exchange traded funds if you have an exchange traded fund that supposed to cover the mining sector and an exchange traded fund the supposed to cover let's say north american stocks they would both own the the same stock but they don't actually own the shares of the same stock they just own the they just referenced the number of where that stock is trading without owning the stock so you've got now many many multiples of these e.t.f.

than index funds that are. from sing stocks but don't own the stocks so if there is a down stick in the actual stock price it's magnified $102030.00 times because you've got it impacts in a highly leveraged manner this whole facade this whole ponzi scheme of index an e.t.f. better owning 2030 times more of equity than actually exists in the actual stock exchange so remember back in the to 6007 to 2009 period when the whole global financial system fell apart and we had something like 7000 banks in america and now we have like 4000 but 3 or 4 huge ones right j.p. morgan citibank goldman sachs bank of america they own like the vast majority of the funds there are too big to fail so again here you have even more concentration 3 own all these funds for the majority of the ordinary american obviously george soros and warren buffet's or it's. operate differently in the market but in terms

of what they own here you see a good summary of the various risks resulting from passive funds increasing ownership of the largest firms blackrock vanguard and state street combined own 18 percent of apple's shares up from 7 percent at the end of 2009 so they're owning more and more of the largest companies and the largest companies like apple or microsoft become bigger and bigger percentage of the s. and p. 500 and they become too big to fail these 3 funds are too big to fail member one the money markets were too big to fail back in 2008 so what are the extraordinary measures that like for example that are happening in the repo market we don't know what the causes could it be connected to this it could be just as valid as any hedge fund or or any bank going under as well we don't know. because we're supposed to read the market but because of all this reflexivity we don't know who drive what came 1st the chicken or the fed in the case of apple because you have so much

concentration in these funds. as you point out the market does reflects the concentration of apple in the index so these passive index funds are required to have the allocation that represents the market so they buy more apple shares but they do so concurrently across multiple e.t.s. and they do so without actually having the shares on their books they don't take delivery of those shares they don't have those shares they just reference that number as something that they would own so it's exactly the problem of issuing claims against an asset too many claims against that asset it's like the broadway show the producers right the idea was the oversold the play he sold tickets to the play and then he purposefully did a horrible play because he figured everyone would not go and cancel the tickets and they would just take all that money upfront well it was a smash hit then people came to the theater with their tickets but they had no seats for the 6 e.t.f. market currently is the exact same they have many many of these funds they claim

they own apple shares but they own but they don't so if in fact they want to all simultaneously collect their shares they couldn't blackrock really close examination on this of course black rock is much bigger than most european economies if you look over in europe there is a lot of controversy about black rock having so much of a dominant position in places like ireland spain france i think france just they had some protesters stormed the offices of black rock only in the past week or 2 so this is the reality of the amount of power they're getting as this article here and that in bloomberg points out and then finally in terms of this reflexivity of course it's warren buffett value investor who came up with that that number of 100 percent assume a stock market equals 100 percent of g.d.p. that's perhaps bubble territory that's why he has 120000000000 in cash just sitting there well we've never had it so good global equities now worth $88.00 trillion

dollars the highest value in. terry and it equals 100 percent of world g.d.p. so again that reflexivity of the prices we're going to start you're going to see i don't know how fast it's going to go but you're going to see more and more people chasing this price higher because they the observer and the observed right and a lot of people do cash in some of those gains and increases g.d.p. and then it'll look like the stocks are not quite sure to get out a percent of g.d.p. they go up again that's another reflexivity it's all real reflects somebody is at the heart of everything because we live in a simulation. even real and not of it's real this shows i'm not even here i'm a hologram. i think we have to go to the break and when we come back we won't be here just pure holograms. the world is driven by shaped by.

the day or thinks. we. will be a reflection of reality. in a world transformed. what will make you feel safe. isolation community. are you going the right way or are you being.

what is true. is. in the world corrupted you need to descend. to join us in the death. or remake of the shallows. welcome back to the casa report imax kaiser it's time now to continue our conversation on the gun. culture insulin dot com egon welcome back thank you you know you've got i got to ask you a quick question here i used to hear all the time particularly when i was working on wall street this phrase the no of switzerland or the gnomes of switzerland are you know most what's really. no one knows and no tool

someone was trying to tell you if you will do very well because you know right now. i think go is the best insurance against physical gold is the best insurance against the risks i see in the world about what i decided already back in 2002 mainly for our own money we started with and a few people we had by then and eventually we opened it up to people. so as you know only 2 percent of world financial losses are in gold and so there's just a minuscule amount and very very few people who are actually even good looking at gold or considering using gold as insurance. or you know i wouldn't call my self no one told all i'm saying is that the few people who are interested in preserving well some of those we are trying to help you know it's

a real pleasure to meet people who are actually free thinkers because most of the investors in the world just think about the stock market's going up and of course ever the toxic barrier for a long long time i mean i wrote an article somebody called alfred and he invested through his family when he was born in the stock market or even 945 and today by just staying in the market the whole time never selling no going through big corrections 30405060 percent he's still just using his savings and that was sending his call today $16000000.00 because he hasn't ever worried about an ad to read any company report it just invested in the index and no skills so it's you know it's been an easy game i think that game is over now and that war you know we are trying to help a few people to actually protect against what i see coming so now last discussion

we were talking about something he gave us a data point that i wanted to cover because a lot of times markets are on data that people like their stock. spot who are in these markets are studying them very closely you're talking about the m. a c. the the moving average convergence and divergence i think it's down versus the golf this could be a fascinating data point and i think it could be revealing some interesting transair could you get a lot of more into as far as they got so this is a trending indicator it is not you know it's obviously that there is a delay in this because the turn only happens are something as he doesn't focus the but it is a very long term trending indicator and as i said that on a quarterly chart of the of the dow against go that's been going up since 2010 so he's got been going up for 9 years and it just turned the end of

2019 and that is a very very strong indication it doesn't tell you that the market's going to crash tomorrow because that is we talk about a quarter inch 0 but the trend is not the trend has not changed from up to down. and those are these are long term trends are a lot are likely to play out with now. markets in dow and the dow or in old stocks let's say will stock markets in the world will be the same again as real money guns go and that's not surprising because you know all those stocks as we've talked about in previously all stocks have just gone up because of brendan money and massive injection by central banks massive massive credit expansion so the fact that we're now going to see a turn. against real money i'm not surprised now because as you rightly said gold is up and form every single asset market in the 2000 buses 2009 stocks

have been formed gold and because so we saw we had a. very. big fall of the dow by about while it fell about the dow gold ratio fell from a fool to. sell one percent between 200-2011 then we see in a correction now to just over 20 of the ratio and i know that correction is finished and that correction still only took the market up i took the down to 50 percent of the form so it is still it only recovered 50 percent of the falls in 2000 so the goal still dow is still down 50 percent right now against goals as 2000 and now comes the next leg and this next leg down of the dow against go well be bishes and as i said our being there we are going to go down at least 2 to $1.00 to $1.00 we are around 18 now and that ratio $18.00 to $1.00 down divided by

by go and i think we are going to go to a nice one and that would be a 95 percent from now and i see that coming i think is inevitable. due to what has happened in markets and always in the quilty will fade into the created and in the last 10 years or so right while another negative indicator might be taking a look at warren buffet's he's now 128000000000 in cash which i think is the highest cash level he's ever had he. not jumping in at these high prices at the moment which you would you say that supports the theory that maybe stocks are better high warren buffett i don't know i'm sure you know some gold today i don't know if you know and still rebut you know you remember last time in the ninety's he went into silver and when the market went up dramatically he still managed through hedging and trading in and he's he still managed to lose on silver since part of

a bear that was going up so i think he you know he should put that 120 or 1000000000 into precious metals instead because if i'm right about the destruction of paper. one in coming years and amassing money printing we will see then of course that cash will be not be worth some something so why don't you give him a call and we will help him yeah i think that's a great idea and i'm sorry i was going to have lunch for them but i decided to cancel at the last minute like just a son now rhodium actually is up 56 times higher than gold at the moment this is a runaway commodity it's absolutely burning the barn down in terms of price appreciation i mean that should also be a harbinger in the precious about all. sector right i mean there's a precious metal it's absolutely skyrocketing and that could be a leading precious metal in the stacks belfast's egon what effect yes of course that is an industrial metal rather than money. that goal is so it

has a use to and of course that use with all the electronics know which is going still going to do well in the future and that probably will do well but it you know is a liquid it is very bad indeed smaller metals and the the you know you come with gold you can lift this on and have sold their own position or buy in the same way within seconds with a rope it's a lot more difficult so anyone who wants to preserve well i would stick to go primarily and then some silver i wouldn't go into these minor minor metals because and they're also you know there are very few people who control those metals so therefore it's not an absolutely clean market and you're not going to get you know the margins between buying and selling and spread is going to be very big and so there are only a few dealers who control that so i'd prefer to stick to the high end in the with

metals that you can trade any time of the day with just that if you need a telephone call were few seconds and you sold your position or move more so that the other one is more suspected to. suddenly people are specialists in that area there will be a lot of other methods i'm sure that it's not normal so they do well also and i'm very very oversold in relation to gold and silver and probably will form in the next few years and i mean anyone who want to pursue well more than that as i think it will and policy well go also by only present and i think gold and silver will serve your purpose you don't need to go into other metals i believe last year there were reports that the refiners us what's real and there's a huge backlog and refiners that's what's on it that's still the case is that the story in switzerland refining and what have you heard anything updates on that we are in daily touch with their all the responses because we buy all our medicines

from the refinancing the new fresh gold or silver gold so that was a full rumor. that was the shortest last year that was never a shortage that were never in the days so that was the month and i know one or 2 people who did it also but i'm not going to mention names but that was someone who just did his own. so that responses were never shown to metals and in the autumn. 2019 they had a more quiet market and then there are many years so is actually and that was in spite of the fact that e.t.f. had been buying gold etc because we know an e.t.f. buy though they don't actually take physical gold they get is just the bullion banks that move a bit of gold from the from the central banks over to the so so that gold is sold 2 times or 3 times over and that's you know no so that was no increase in cisco gold

among from the refund of that old one when these e.t.s were increasing their holdings so again to also question that where there was no were no. backed logs from that major refiners last year ok well thanks for clearing that up finally a question about satchel banks and central banks have been. very have acquired a. record 50 years time and yet this doesn't seem to get out my faithful are talking about it it seems like an important bit of news around the world and what are your thoughts on this yes but the interesting thing is you know the paper reports and bags of buying gold is like everybody and every cent of bank in the world is buy gold but you know that the fed is not buying call back or. go the bank in germany is not buying gold so the central banks that were buying gold are the ones who understand what's happening in the world so it's all so you're talking about china you're talking about russia you're talking about turkey. poland

bored to beatles and hungry but is that it was mainly east and central banks more gold rather than west and still that was enough for the gold to montauk bars and the banks going up substantially last year and of course then you had banks like bank and on the banks that actually created gold also last year because they are them clearly they're seeing what's happening but the one we're really seeing it is rigs almost russia they know that the dollar is going to collapse so there's china of course china doesn't reveal its true position of gold holding and they only revealing around 2000 tonnes but they probably have in mind $20000.00 tonnes that they have gathered over a very long period of time so they're not revealing it but you know these countries russia and china they see that the dollars days are counted and i agree with that

totally i think we are at some point and you know it should happen this year and i think it will that we're going to see in dollar collapse and that will be. very serious for the well then of cool got to see what united states. congress thanks for being on the kaiser report thank you max speed to you thanks very much and that's going to do it for this edition of the concert for with me max kaiser and stacy herbert i'd like to thank our guest egon yvonne grier's of gold switzerland if you'd like to get in touch tweet us at kaiser report until next time by. from the. people by as though you could see the slow you force new focus on the most abuse that he's. going. to see in the film was the

budget for. the book movie. where we. came out here and then. the one. that. god. might. not but.

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