Gold & Silver Smash & Fires Burning Everywhere In The World

Today Egon von Greyerz spoke with King World News about the gold and silver smash, and the disturbing reality of what is happening in various troubled countries around the world.  Investors have also seen some shocking moves in global markets recently and below is what Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say in this powerful interview.

Greyerz:  “On a day like today investors have to put aside the short-term action in gold and silver and look at the fundamentals.  It’s hard to know where to start, Eric.  There are fires burning everywhere in the world, and these fires can’t be extinguished.

Therefore, all governments and central banks will do is put more fuel on the fires because they don’t have any other tools to rectify these massive problems that we have in the world….

“Any of these fires could be the catalyst for the next major crisis, and the next crisis in the world will be much more severe than in 2008.  I’ve previously stated that Japan is a basket case that can never be saved.  And of course Japan is the world’s 3rd biggest economy.

When you look at China, its financial system and economy is a bubble.  The bursting of this bubble will likely have a massive effect on the world economy and global trade.  Therefore, both Japan and China will continue to expand credit and print money.  That’s the only thing they can do to save their economies.  Of course the consequences will be inflationary, and most likely hyperinflationary.

If you look at Europe, we just had two central banks confirming that their economies are in real trouble.  The ECB just had a press conference where Draghi stated that rates will stay low for an extended period.  The ECB is under tremendous pressure.  It’s balance sheet is full of toxic debt from its member countries.

These debts are guaranteed by the member countries, and some also by member country banks, and these debts are held on the ECB balance sheet at par.  These assets are not worth par.  Some of it is worth less than 50% of par.  So you have a potential write off for the ECB of hundreds of billions of dollars, or maybe even one trillion dollars.  And even though the member countries and some banks are guaranteeing the money, they don’t have the money to pay the ECB.  So the ECB will be forced to print a lot more money.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/5_Gold_%26_Silver_Smash_%26_Fires_Burning_Everywhere_In_The_World.html

$300 Trillion In Derivatives Losses To Lead Gold’s Rebound

Today Egon von Greyerz warned King World News that the global derivatives market has already suffered a staggering $300 trillion of losses.  These massive derivatives losses, which are being hidden from the public, will help lead the rebound in gold as it begins the next leg of its bull market.  Below is what Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say in this powerful interview.

Greyerz:  “A few years ago when the problems in Greece started, it was found that the Goldman Sachs had helped them to hide the real truth of their economy by a major derivatives positions.

 

Now we’ve found out that Italy has done exactly the same thing.  They took out derivatives in order to meet euro criteria back in the late 1990s.  They had a total of $31 billion of derivatives and now they are finding that at least $8 billion of that is worthless.  That’s about 30% of the entire position….

 

“This just illustrates what I’ve been saying time and time again, that a major part of the over one quadrillion dollars of derivatives currently held in the financial world is worthless.  Here you have a typical position that a government is taking, $31 billion of derivatives, and 30% is worthless.

 

If you then overlay that loss into the total amount of global derivatives, the loss would be a staggering $300 trillion.  It would not surprise me if $300 trillion is in fact very close to the total losses on global derivatives.  If that is the case it means that no counterparty can cover those type of losses, so in reality the entire financial system is bankrupt.

 

This is why the world will witness money printing on an unprecedented scale going forward, despite misinformation and propaganda about “tapering of QE.”  So central planners are just hiding the truth and lying to the public.

 

If we continue to look at Italy, 160 corporations are in “special crisis administration.”  That’s 160 major companies in Italy alone are in serious financial trouble.  But Italy has a stunning debt to GDP ratio of 238%.  In reality it’s probably a lot higher than 238% because of the derivatives losses which have been used to conceal the truth about what is really taking place.

 

But what this means is we can’t trust any government figures.  This is why Draghi recently said, “There is still downside risk.”  Of course there is downside risk, and that risk is massive.  If we look at the European banking system, it’s terminal.  People can never repay their debts to those banks, and of course the banks have continued to borrow money from the ECB since 2008.  Of all of the bad debts these banks have, remember that nothing has been written off or even written down so far.

 

And of course the central banks have bought worthless debts directly from the banks in Europe.  The ECB over the last 11 years has grown its balance sheet over 200%.  The Fed’s balance sheet has grown 400%.  The Chinese central bank has grown its balance sheet 660%, and the Bank of England 800%.  England’s balance sheet has gone from $2 trillion to $9 trillion, and of course that debt can never be repaid.

 

Not only are the central banks highly leveraged, but so are the commercial banks.  France is also in a mess.  French bank Credit Agricole has a remarkable 46 times leverage!  So if there is 2% bad debt, the capital of that bank is wiped out.  Another French bank is using 40 times leverage.  Credit Suisse, if you use Basel III rules, also has 40 times leverage.  Deutsche Bank has 30 times leverage.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/28_$300_Trillion_In_Derivatives_Losses_To_Lead_Golds_Rebound.html

“The Price Damage Is Almost Beyond Belief At This Point”

Today one of the savviest and well connected hedge fund managers in the world told King World News the price damage in gold and silver “is almost beyond belief at this point.” Outspoken Hong Kong hedge fund manager William Kaye also warned KWN that a “criminal” syndicate of banks has now positioned themselves for a massive and spectacular rise in the price of gold and silver, and his firm’s money is long metals for the ride. Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in this remarkable interview.

Eric King: “Bill, your thoughts on this continued smash in gold and silver that we are seeing?”

Kaye: “It’s more of the same, Eric, that we talked about last time. They choose the thinnest sections of trading in gold, Asia time, for most of the smash. Most of the price damage was done overnight in the United States during Asian trading.

They took the price of gold down to levels that we haven’t seen for years….

“As I talk to you now we are now trading in the $1,220s, which is a new multi-year low. So the bulk of the damage was done in two time periods: In Asian trading and in equally thin Chicago (COMEX) trading, when most of the real players have already gone home.

The price damage is almost beyond belief at this point. Two years ago we were above $1,900 on gold and rightfully so given all of the events that were occurring and are still occurring. Now we are in the mid-$1,220s, which given the policy response to what is an ongoing crisis, is incomprehensible.

No one can make any logical sense of what has taken place because the currency wars that are fully underway everywhere in the world justify gold prices that are not only higher than they were two years ago (above $1,900), but they justify prices in our view that would clearly be above $2,000 and maybe even above $3,000.

Those prices I am giving you are the prices gold should be trading at today. Meaning they are not looking out on to the horizon because the money printing that is going on is not going to stop tomorrow. In fact it’s going to continue and if anything, in our view it will accelerate.

So the only thing that can explain the price behavior in gold has to be a concerted raid. What is of particular interest is that this manipulation really has to be the Fed, or coordinated intervention with the other central banks, including the ECB. The reason for this is because it’s very clear, if you pay attention to Andrew Maguire on KWN, that the bullion banks who were very short when this raid commenced in mid-April, are now long, and some are very long.

So the setup here is pretty fantastic. For people that are looking to add to their positions, we are certainly at levels now that look absolutely compelling, and levels that we may not revisit again in my lifetime.”

Kaye also added: “I strongly believe this is being done to create even more outsized profits for the bullion banks. We had a very controversial recapitalization of the banks, similar to what occurred in the 1930s in the United States, and most of the world at that time was on a gold standard.

Source: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/26_The_Price_Damage_Is_Almost_Beyond_Belief_At_This_Point.html