Gold & A Global Financial System In Complete Turmoil

On the heels of continued chaos in global markets, today acclaimed money manager Stephen Leeb spoke with King World News about the gold and silver smash and what investors should expect going forward. Leeb also talked with KWN about one country in Europe that is getting very serious about its gold.

Leeb: “Germany, as we know, is repatriating their gold from the United States. Everybody has talked about that — ‘Why is it taking years to get a few hundred tons back to Germany (from the United States)?’ But guess who else they are repatriating their gold from? France.

Now, the German comment is, ‘Well, there’s no need to store it in France because we’re all one currency now.’ Really? And you expect to remain one currency for the next 10 or 20 years? And if you’re just one currency, why not leave it in France?

Germany is getting very serious about their gold….

“So they are the one Western exception. The rest of the gold is headed East big time … The reason Germany entered my head is because all of the sudden you see Germany, Toronto, London, all vying to be hubs for yuan trading. That’s trading in Chinese currency.

All of the sudden the yuan is on the verge of becoming a reserve currency. If you think that trend is going to stop any time soon, forget it. But Germany continues to go it alone. They continue to be the one European country after gold. They want to be the hub of yuan trading. So you can see how the world is developing, Eric.”

Leeb also added: “This was inevitable that you would have a big decline in gold. Ultimately the West, and in particular the United States, is desperate to keep the dollar at the forefront, to keep the dollar as the reserve currency.


$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.


The Paris Gold Ring Scam

I know I owe you a few stories out of Sydney, but I absolutely have to tell you about something that happened to me – TWICE – in Paris. We’ll get back to Sydney later this week. I promise.

Please, please say that you do, and that you weren’t, like, in the womb when the movie premiered, okay? Because I recently had an exchange with the lovely girlfriend of a friend (both of whom are slightly younger than us) and even though I consider us contemporaries, I realized that I saw Jurassic Park in the movie theater as a teenager when she was 2 years old.

I dealt with this revelation in the mature manner, adding a couple of tablespoons of metamucil to my vodka soda and whispering something about how the music was too loud.

Anywho, The Matrix: there’s this part where Trinity talks about the difference between how Neo sees himself (in the Matrix world) and what he really looks like. It touches on the nature of self-image, and how sometimes, there is a large delta between how we see ourselves, and how the rest of the world sees us.

I tend to think of myself as looking fairly cosmopolitan. That I blend into a city, especially when we’re in Central Europe. If I ever go anywhere without my massive camera, I get asked for directions, having been mistaken for a local. And even when I do have my camera, it’s not like I’m an easy mark, right? I mean, no one would look at me and think, “That girl looks easy to rob.”

Right, you guys? RIGHT?

But in Paris, I realized that’s a bunch of hooey. Someone might as well have put a sign on my back noting that I was a tourist with an expensive camera and no idea where her hotel was. Because no less than two people saw me and felt that it was appropriate to try to pull a scam on me. And it was the same scam – the gold ring scam.

Apparently it’s a popular one in France – there are posts about it on Trip Advisor, and on countless blogs. It’s fairly simple, and even now, I wonder if there isn’t more to it.

The first time it happened, I was by myself near the Palais Garnier Opera House in the 9th arrondissement. I was a few blocks from our hotel, but nevertheless hopelessly lost. I needed to pull out my map. Doing so always freaks me out, because it makes it painfully obvious to anyone within a block radius that you are not only a tourist, but a clueless one to boot. Plus, it involves opening up my purse.

I found a corner where the facade of a restaurant jutted out slightly from the storefront next to it, pressed my back against it, so I could stand comfortably, without worry that anyone would sneak up on me. I found the street I was on, and looked at the tiny little rues that burst out of it like rays of the sun on a child’s drawing. My hotel was on one of them but … good heavens, why was the print so small? Don’t mapmakers realize that those of us who get lost also tend to lose their glasses?

As I squinted at the map a pair of men walked by, and one of them stooped to pick something up in front of me.

Weird. I didn’t notice anything on the ground, and I tend to look (I’m constantly looking out for pooh).

He held it up to me. It was a men’s wedding band, simple and gold.

“Is this yours?” he asked in French.

Reflexively, my hands slapped down on my purse and camera. This happens every time a stranger tries to talk to me in a foreign city: my heartbeat quickens, and I’m convinced I’m about to be robbed. It isn’t because I’m savvy – it’s because I’m paranoid as hell. I shook my head, wide eyed, my back against the building behind me.

NO,” I said firmly, clutching my things and staring at the ring.

He shrugged, saying something like, “I guess I’ll keep it then” to his friend, and the two of them walked off.

In those brief moments, a million things went through my head. I wondered if it could have been Rand’s wedding ring. No, that was impossible. Rand’s ring isn’t gold.

I then thought of all the men I knew who had legitimately lost their wedding rings while playing with their kids or doing chores around the house, and how sad they’d been about it. I imagined a poor pair of elderly tourists walking through the city and one of them realizing that the gold band they’d worn for 40 years had somehow slipped off their finger. Maybe I should have told the man who’d found the ring to go to the authorities? Or taken it from him and offered to go myself.

But he’d never have believed me in the case of the latter.

“Give me the ring. I’ll get it to its owner.” Yeah, right.

Besides, I didn’t even know where was at that moment.

Looking at the map,  I wondered if it could have been a scam. Some sort of distraction or … ? I couldn’t figure it out, so I just focused on figuring out where I was.

I eventually made it back to the hotel, my possessions and a small portion of my sanity still intact.

I told Rand about my day, and I mentioned the ring.

“That was a scam,” he said, matter-of-factly.

“You think?”

“Definitely,” he replied. Rand guessed that it was some sort of pick-pocketing scheme. I wasn’t sure – the guys were well-dressed, and didn’t really seem shifty – but wouldn’t that have been the point? Plus, I realized that I couldn’t remember either of their faces. I’d only seen the ring, held just under my nose. That was odd,  because it meant that the gentleman had to be holding it quite low (I’m short).

The more I considered it, the odder the scenario seemed.

“Oh, man,” I whispered to myself.

The next day, Rand and I were walking not far from the Eiffel Tower, near the Quai Branley Museum. Though we’d encountered crowds of tourists everywhere, we found ourselves relatively alone as we walked down a narrow, tree-lined promenade. The only other people around were a heavily pregnant woman heading towards us, holding the hand of her small son, who looked to be four or five. She wore a long skirt that touched the ground, and her hair was up in a scarf. I wondered how she wasn’t dying of heat when I noticed her bend down to pick something up off the ground.

She struggled to get up – why the hell was a pregnant woman bending over like that? I’d have helped her had she been closer to us. She straightened up, and as we passed, I saw that she was holding a gold ring out to us.

“Is this …” she began.

“No,” I snapped, my hands squeezing tightly around my purse and camera. As we rushed away, I looked at Rand, my jaw hanging open.

“Told you,” he said.

My mouth hung open for a while. I’d been hit by the same scam two times in as many days. I realized that I looked like a tourist, but I hadn’t figured I’d been such an easy mark. Just a reminder that how we see ourselves isn’t necessarily how the rest of the world sees us.

Oh, and the next day? Two different people asked me for directions. Go figure.