Four months ago, amidst the U.S. stock markets’ worst – and Precious
Metals’ best – ever start to a year, I opined that a swirling
confluence of devastating political, economic, and monetary events made it
unlikely the world would escape 2016 without a catastrophic financial market
event. Fast forward to today, and I feel stronger than ever about this
outlook, now that “the powers that be’s” best efforts to manipulate worldwide
markets and economic data have fallen flat on their face. Not to
mention, the Cartel’s last ditch gambit to put Precious Metals “back in their
box”; as following the past week’s spirited, albeit blatantly capped,
rallies, gold and silver have recouped three-quarters of their post “FOMC
minutes attack” losses; just as I predicted in May 18th’s epic, 42-minute,
must listen Audioblog, titled “the
Fed’s desperately pathetic FOMC minutes attack will miserably fail.”
To that end, late yesterday afternoon’s COT report (I’m writing this Saturday
morning) revealed that the Cartel “went for broke” last week, in shorting
29,000 more gold contracts – worth $3.6 billion – through Tuesday afternoon;
putting its historic (naked) short position not far from last months’
all-time high level, just before prices surged $30/oz on Wednesday, Thursday,
and Friday. In other words, they yet again lost a major battle,
putting the date of their inevitable Waterloo that much closer. And
heck, it’s not even gold, but silver where the biggest potential
fireworks lie, in light of the fact that COMEX registered inventories last
week plunged to an all-time low. Which is probably why Indian
silver imports hit an all-time high last year; U.S. silver imports, an
all-time high last month; and silver bullion sales an all-time high in
the first quarter. And why, to that end, I penned, just
two days ago, the “upcoming,
historic silver shortage.”
As for said confluence of of devastating events, how about commodity
prices renewing their death spiral declines this month – like “Dr. Copper,”
for instance; and god forbid, “oil PPT”-supported crude oil? Or
the “commodity currencies” backed by them, which are also back in free-fall
mode – causing Precious Metal prices to surge in nearly all currencies?
Heck, even British Pound-priced gold, one of the world’s most historically
suppressed markets, is within 24% of its all-time high, following yesterday’s
news that “Brexit” surged ahead of “BrEmain” in the polls, by a whopping 55%
to 45% margin. To that end, I continue to believe June 23rd’s Brexit
referendum – one day before Miles Franklin’s FREE Chicago Q&A Rap Session
– will potentially be the “most
important, and Precious Metals bullish, vote in history” – as this may be
Britons’ last chance to maintain their long, storied national
identities. I mean, just how negative will the ECB take rates after
the UK votes to “leave?” And how many corporate
bonds will it buy – let alone, the junk bonds it is monetizing as
well?
Then there’s that “small matter” of the PBOC actively devaluing the Yuan,
with the official “onshore Yuan” falling below August’s lows this week,
whilst the unofficial “offshore Yuan” plunged even further? There’s a
reason why I last August deemed a significant Yuan devaluation the “upcoming,
cataclysmic, financial big bang to end all big bangs”; which we saw a
small dose of then, when a mere 6% devaluation precipitated a massive,
worldwide equity, high yield bond, commodity, and currency plunge. And
now that a far larger devaluation appears imminent my guess is it won’t be
long before the entire world realizes just how cataclysmic it will be.
And by the way, in September’s “only financial event as potentially cataclysmic as a
signficant Yuan devaluation,” I wrote of how suicidal it would be if the
Fed raised rates. Which is exactly what occurred in December, nearly
destroying the financial world in the process; and exactly what will NOT
occur this Wednesday, when the Fed not only doesn’t raise rates, but is
forced to publish its most dovish statement yet! Likely, on a day when
not only are U.S. Treasury yields challenging their all-time lows, but global
sovereign yields are at all-time lows, with the vast majority
trading in negative territory.
As for today’s principal topic, how apropos could it be that two
days ago, German Bundesbank President Jens Weidmann and Financial Minister
Wolfgang Schauble warned of a “sudden surge” in European risk premiums, care
of the ECB’s unfathomably dangerous forays into mega-negative interest rates
and limitless, broad-sweeping quantitative easing? I mean, not 24 hours
later, Germany’s – and Europe’s – largest bank, Deutsche Bank, which has been
the subject of liquidity fears for years now, saw its stock plunge 6% to
$15.74/share; 89% below 2007’s all-time high of $138/share; 17% below its
2008 low of $19/share; and mere pennies above its $15.51/share low this
February, one day before – LOL – it supposedly bought back $5 billion of
bonds, catalyzing a “dead cat” bounce to $20.50/share. To that end, the
reason I mock the supposed February 12th bond buyback, is that most likely,
DB either 1) didn’t buy back anything, but simply lied about it; 2) they
bought the bonds back, but compromised their teetering liquidity further by
doing so; or 3) bought the bonds back with newly – covertly – borrowed
funds, making its debt burden even worse. I mean, buying back $5
billion of bonds when you have $700 billion of on balance sheet debt
and the world’s largest derivatives book, has about the same practical
efficacy as the Titanic bailing out a few buckets of water. Not to
mention, demonstrating just how desperate your management is, to “kick
the can” a few more months, in the – subsequently failed – “hope” of a
government or Central bank bailout. Or, to put it squarely in Titanic
terms, an “absolution that would never come.”
Since February’s stock plunge, I have deemed Deuschebank the “Lehman of
Europe” – most recently, at last month’s Miles Franklin Q&A Rap
Session in Houston.
I mean, DB’s stock plunge – amidst an environment of cascading bank stock
prices across Europe – sticks out like a sore thumb; as clearly something is
very, very wrong there. In my view, the “powers that be” are for some
as yet unknown reason, distancing themselves from DB – just as was the case
with Lehman in the States, as its competitors were serially deemed “too big
to fail.”
I mean, the current, rapidly growing list of lawsuits and allegations
against Deutscheban is utterly staggering – including its admission of
manipulating Precious Metal markets for the past 15 years – to the point that
clearly, this massive European crime center is not far from total, and
irreversible, implosion. Only this time, the ramifications would be
dozens of times uglier than Lehman, given that its derivatives web is so
large, it would likely entangle every financial institution in Europe – as
well as countless non-European corporations, institutions, and sovereign
governments. Not to mention, seven years after the Lehman crisis, the
global banking sector is far less liquid then ever, amidst the worst
worldwide economic conditions since the Great Depression. Not to
mention, an unprecedented, worldwide debt edifice nearly twice that of 2008’s
level, with Central bank balance sheets so bloated – and credibility so thin
– there is no chance they could “bail out” the world again, unless they
resort to outright hyperinflation. Which unfortunately, the sad, sordid
history of all fiat Ponzi schemes guarantees.
On Tuesday night, Jim Rickards is giving a special presentation from
Switzerland, to discuss the upcoming “zero hour” when gold prices go
parabolic, and offers non-existent. Whether he’s right about the
– in his view, imminent – timing remains to be seen. However, I
couldn’t agree more that it’s coming soon. And frankly, if Deutsche
Bank does in fact prove to be the “Lehman of Europe” – which I strongly
suspect it will – we may well be looking at the zero hour’s catalyzing event,
right in front of our faces.
