Very soon we will be entering the month of June. Normally June is the time of year in the northern hemisphere when people think of picnics, parks, water sports and the outdoors. It is a time where plans are made for vacation, rest and relaxation. This year may be a little bit different. I say “different” because there is a plethora of converging events, any single one of them with the ability to take the financial markets down to their knees!
Let’s first list the events (which may not even be all inclusive because I either forgot something or am unaware of). What I see converging in June is as follows; the Austrian mortgage banks and banking sector, Greece, Ukraine, India, Russian sanctions, a Russian/Chinese announcement, the “very secret” TPP, and let’s not forget the second largest gold expiration on COMEX.
Since we know so little about the TPP (Trans Pacific Partnership), let’s start with this one. We know so little about it because it is being negotiated in secrecy. So “secret” in fact, anyone who gets to see what is written so far is threatened with jail time if they divulge anything about it. This harks back to Obamacare when Nancy Pelosi once giggled like a little school girl and said “we have to pass it to see what’s in it!”. Fast forward and yes, we now know what was in it, a healthcare industry in turmoil, higher premiums and a “tax” if you don’t participate… Going all the way back to NAFTA, none of these deals has been “good” for the American worker, one can only imagine how deafening that “giant sucking sound” will be that Ross Perot first heard in 1991? Not even sure how this is possible, our legislative process has been kidnapped with no ransom even requested. If this masterpiece gets unveiled in June, a wonder as to market reaction?
Next there is the Austrian mortgage bank Hypo Alpe Adria, will they make their smallish payment of 500 million euros or will they start a chain reaction? If you recall, this pinch came about when the Swiss de pegged the franc and revalued some 20-30% higher within 10 minutes, in many cases it made the loans in Swiss francs worth more than the underlying properties themselves. The southern province of Carinthia has already backed away from pledges previously made by simply saying “we can’t pay”. An important understanding is how all of these banks …own each other’s debt. In other words, the “cross ownership” of debt means that when one goes down it will act as a hit to many of the other’s portfolios. While this is not a huge trigger, all of Eastern Europe can and will be affected by what originated from the Swiss de pegging the franc from the Euro. With the system as illiquid as it is, there is no telling how far this one could reverberate?
On to Greece, they have already raided pension funds and sequestered local monies, June 5th is the deadline according to their finance minister. They owe 320 billion euros, they do not have the money to pay nor do they have a printing press to create it. The only way out is to borrow more …or default and fall into the open arms of Russia and China. The latter seems most likely to me. Greece is a natural trading partner with Russia and does sit along the “old silk road”, moving away from the U.S. and even the Eurozone seems a natural. Please remember the big “nut” here is not the 320 billion euros, it is the CDS written in multiples on their debt AND the interest rate swaps in existence, these are in the TRILLIONS, not chickenfeed in an already illiquid world!
Logically, the next one to segue into is Russia and the NATO sanctions due to expire …in June. If a vote were to be taken today, would the sanctions be re imposed? Would Germany vote for them? Will Greece vote for them if they are still a member of NATO by June? Please understand the relationship between Mrs. Merkel and Mr. Putin, they “used to” talk on the phone daily …until the NSA spying revelations of last year. Will Mrs. Merkel go for more sanctions? What will she do about further aid to Greece. Greece has the ability to ignite many things, financially and politically all bad for the West.
Moving along, let’s look at Ukraine. The IMF is seeking a restructuring (read haircut) on $10 billion worth of Ukrainian debt with private holders. This, the IMF says is necessary before another aid package of $40 billion is approved. The “haircuts” requested are in the neighborhood of 40-50%, will this one fly? Let’s not forget, Russia lent $3 billion to Ukraine in late 2013, I wouldn’t bet they will be accepting haircuts any time soon. In fact, wouldn’t it behoove Russia to watch Ukraine default …and further pressure the financial system of the West? Interestingly, John Kerry just met over the weekend with Russian minister Lavrov, what exactly did they talk about? If I had to speculate, my guess would be the U.S. has just walked away from this pink elephant. But why? Why would the U.S. walk away now?
Again, further speculation but it seems to me quite odd that Russia would announce “Chinese gold holdings” of 30,000 tons via Pravda. To rehash this, would Pravda have released this article without Moscow’s permission? Would Moscow have given permission without the approval from Beijing? Was Mr. Kerry/Obama informed that China will announce this 30,000 ton hoard of gold shortly? Is it a true story or not? As I wrote a few days ago, “gold” is a financial thermonuclear weapon, able to destroy the fiat of the West. It would not surprise me in the least if Washington was given the “courtesy” of a heads up to some sort of coming announcement even if a smaller sum than 30,000 tons. The point here is this, any announcement by China raises the question of Western holdings which of course brings Western currencies into question. It will be very interesting to see how forceful the U.S. is regarding Ukraine, this gold issue may just be the “softener”? I believe we will see very soon whether or not the U.S. changes tack regarding Ukraine (amongst others) as I suspect the Pravda announcement was no error at all.
Another June deadline is India trying to remonetize gold .They propose to allow the deposit of gold on account and interest paid on it. This would immediately boost the economy with a shot of adrenaline as collateral would be massively boosted and lending could blossom. The only problem is that this is about the 5th or 6th time such a plan has been trial ballooned and even if passed, the citizens of India will probably not go for it in masse anyway. They have a long history of holding their gold in hand with no counterparty risk between them and their gold. It might work to some extent but the number of 25,000 tons being deposited is a pipe dream. It should be said however, when China does finally announce their holdings and increase their ability to “price” global assets, the Indians will sit at the table as there is no doubt they hold massive quantities in total!
Lastly but not least important is the June gold expiration on the planet’s favorite gold “pricing” mechanism, COMEX. As of today, there are 187,500 contracts open for June; this represents 18.75 million ounces of gold or 581 tons. The “registered” for delivery category has been bled down to about 11 tons or about 378,000 ounces of gold. The first notice day is June 1st, only seven trading days away. Does anyone see a potential problem here? A “problem” as in there are 50 ounces of gold contracted for every one ounce COMEX claims to have?
Yes, yes, I know I have gone through this exercise before and each time the open interest just dried up and blew away. In fact, many expiration months have seen accounts FULLY FUNDED with cash to purchase the gold on first notice day, only to “go away” later in the month. This makes no sense whatsoever. Why would anyone fund their account fully in order to pay for purchase and then just walk away? On the other side, why would any short not deliver on the 1st or 2nd day of the month as they must pay storage costs for each day they don’t deliver? The answer of course is very simple, the gold does not exist to make delivery and the shorts do not want to let go of what very little they have …and instead cash settle with a little cherry on top? Before finishing this section, it should be pointed out that the ETF GLD has bled 17 tons over the last few weeks where gold rose $50. How does this make any sense at all? It only makes sense to me if someone needed the metal to deliver elsewhere and immediately. A strange occurrence but a topic for another day.
So there you have it, June could be quite the month as many events all converge over the 30 day timeframe, and none of them good! I have warned and warned, you must have exactly the positions you want should the markets close and not offer you the chance to alter. Please, imagine a world where things actually make sense and logic counts for something when it comes to valuing assets. Let’s call it “Mother Nature world” where values make some sense and are actually related to each other and to reality. How would your portfolio or financial position look like if we woke up one fine Monday morning in June to a brand new world?
Hi Bill,
Thanks for this interesting article (as usual), yes indeed, lots happening in June. With the extremely high leverage, it only takes a “sparkle” to ignite a financial chain reaction, that “sparkle” can be any scenario describe in your article. In 2008 central banks where able to save the system from a credit crunch at the very last minute, I really can see how much they will be able to do this next time around (they are in bad shape themselves), lower rates? hard to be lower (even negative) than what they are now, print more money? that’s what they have been doing since 2008…….the only thing they have left at the moment is “trust” from the public….because trust among central bankers seems to be running thin….just read on Zero Hedge that Austria is repatriating 110 tons of gold from BOE (you already had Germany, Netherland, France with Le Pen is considering it etc…).
Can see comments on the trading room tv from Mrs. Yellen that she expects economic data to strengthen and Fund rate to return to normal in several year. Correct me if I’m wrong but let’s say “normal” is in the range of “4% to 5%” just the service of the debt will be the bulk of the budget.
Kind regards,
Daniel
correct Daniel, there will be no white knights this time around.
So many questions Bill, and so few answers at the present time. An article just brought out by Koos Jansen at ‘BullionStar.com’ attempts to estimate how much physical gold China owns.
I tend to believe his speculative estimations, since he prefers to err on the conservative side, using a myriad of credible information sources.
As of the end of March 2015 (according to his research) China has between 13,177 and 15,623 tonnes of physical gold. In his words; “It’s the most conservative estimate I can make using all data I could find.”
thanks OLI, then my back of the napkin conservative estimate of 10,000 tons is in his ballpark.
Good Morning Bill, Koos Jansen put up another gold article yesterday on BullionStar.com about the lack of reporting quality on the Chinese gold market, specifically on gold leasing.
The reporting entities he takes issue with are; World Gold Council, GFMS, CPM Group, and Precious Metals Insights.
The degree of half truths, misrepresentations, shoddy accounting, eroneous facts and blatant prevarications, coming from these so-called “respected” firms, boggles the mind!
Of course the other ‘BIG’ MSM actors eg: Reuters, pick up these stories and spread the lies further afield.
they have an agenda.
Great article Bill. Thanks for pointing out all the red flags in play.
I agree with you and Daniel in that there is no white knight this time but there are black knights (ready to raid) and there will be a black swan(to give them the excuse to raid). So, they bailed out last time, all they have left is the “trust” of the sheeple, and Ms. Yellen is claiming we have a bright out-look coming up. So it sounds to me like she is trying to keep this sentiment positive when she knows darn well she cannot raise interest rates, the out-look is not good, and we are not in a recovery. This hype, or lack of hype is concerning to me at this particular time as there is so much she should be saying but only seems to want to keep the sheeple compliant…. I’m not surprised by this considering who she works for.
It makes sense to me, they will likely do a bank bail-in when they still have 90% of the people not having a clue because they are so easily convinced when the FED says bright out-look and in recovery, it must be true. I mean the MSM has been convincing all my smart friends we are in a recovery so Yellen saying these things makes it more true to them. So I think its a set up…. leading up to that, the bansters will have leveraged perfectly for a stock market crash. This to them is kicking the can down the road to maintain their own solvency at the expense of everyone. So like stated in the Art of War, keeping the people compliant and working from within is key but for those of us who know they are lying, that’s a major red flag.
Sorry if it sounds like I am just stating the obvious.
Not that the bail outs were a white knight.
it was, at the time.
……your “smart” friends.
Hi, Bill.
…”The only way out is to borrow more …or default”…
This is for Greece. As for their residents, they are notorious for not paying taxes. The people of Greece are also very fond of the Euro as to having their own currency. Given this, and the penchant for not paying taxes, it would seem that they do not care too much for their country. If they all pay back their back taxes and confront their problems financially themselves, they should be able to take care of themselves. Pay up, I say, save your country yourselves. You do not need to borrow.
Cheers
really? 320 billion euros? That’s a lot of euros!
Bill another very helpful article
I want to add two other June possibilities:
Tom Coughlan’s international gold /silver trading system is likely to go online which will draw and is drawing lots of players from the LBMA and can be used to arbitrage the lower prices that the comex will try to play against it and Rob Kirby’s assertion that the Vatican is likely switching sides and will not be supplying gold to the west anymore to suppress the gold price
Yes, the ABX is a biggie, the Vatican should never have supplied gold in the first place if they really did.
Bill thanks for the June prologue. … June Is Bustin’ Out All Over … https://www.youtube.com/watch?v=b-REcatoCgU
thanks silvor.
Darn-it, June is when I harvest and plant, I may just set this one out.
But it’s got to dry out first.
Been here 65 yrs, most rain I’ve ever seen. 12 ins. In last 4wks when 2 is normal.
The world already looks different from my porch.
take to the high ground!
From what I saw on TV this morning, you too my friend. Looks like we need tornado shelter on top of the hill!
pretty ugly out there right now.
China has 100,000 tons of gold.
Maybe, but very hard to prove this one.
Something tells me gold and silver are headed to the rocket pad, about mid-June.
there are several potential triggers for this.
What we see outwardly is indicative of what is going on inside.
The level of desperation in this game to manipulate is off the charts.
Just hold firm, believe in your research and believe that truth always floats back to the surface.
Watch carefully and you may soon see a major tremor in the Ponzi just before a total meltdown.
we are seeing tremors daily.
Thanks for the article Bill! One question I have regards to the amount of derivatives exposure that is out there which is tied to Greek debt. When you say the exposure is in the trillions, can you point me to where I can get some online info on this claim? It´s easy to see just how high total bank derivatives exposure is among the big banks (ex. Deutsche Bank $72+ tril.), but much harder to sift through those numbers when your looking for specific info regarding Greece. Thanks.
think of it this way Mike, what is EVERTYHING worth? Versus how many derivatives total? BIS estimated 5+ years ago $1.4 quadrillion, 7-10 times what everything was “worth”. Multiply 320 billion euros times 7-10 and you have at least 2-3 trillion. Much of this is simply a function of “bets” on CDS that Greece will default. Everything is rehypothecated over and over and over, it will all come down because the underlying collateral cannot support it, a Ponzi scheme from the start of fiat.
Thanks Bill for the fast answer. Use that formula towards US debt, and your looking at $140+ trillion minimum in derivatives exposure. Man, it´s going to be a long journey getting through the Great Reset. The trauma is going to be legendary I´m afraid.
Mike C – Much, much more than the $140T You must remember that the concept of a financially engineered product, that “derived” it’s underlying value from existing financial products, was and is purely a Wall Street creation. That has spread far beyond the confines of the USA, into every part of the global financial system.
You may liken it to a type of fast spreading cancer, that feeds on it’s host and when that is gone, it starts to feed on itself! In the end there’s nothing remaining. It’s now commonly held that the global derivative monster is well north of one quadrillion.
There lies the problem. pardon the pun
Very few Westerners understand HOW governments have kept the system in operation.
To many (kicking the can) is meaning less.
They simply do not comprehend the size of the hidden PONZI.
Very few realize that at one point debt either gets paid or defaulted upon.
NEVER NEVER and NEVER can the world total debt be paid. It must be defaulted upon. They have offset it to tax payers as much as they can. Now the system robs us of our life savings.
Here is an interview where Jim Willie talks at length on the subject of derivatives.
https://www.youtube.com/watch?v=0M5IkppQN48
MftN –
First law of economics;
All debt will be paid.
Either by the debtor, or by the creditor.
Either with dollars worth pennies, or with pennies worth dollars.
It will be paid.
As gold gets attacked again today as was anticipated we have this………….
http://news.goldseek.com/GoldSeek/1432569294.php
The future of gold seems clear to me.
today is option expiration day, what did you expect?
It is so predictable that it is a joke.
I expect a major assault on both gold and silver before summer ends.
This is their last chance to attack before they loose control. imho
If we are smart are PMs are not for sale under any circumstance until the reset occurs and the dust settles.
We have no idea how things will turn out after the crisis hits.
I remember Richard Russell said about ten years ago:
“The people who got on the golden bull at the beginning are rarely the same people at the end. The golden bull tries to buck off as many people as possible along the way.”
He also said:
“In the end it the question will not be how many ounces of gold did you buy? The question will be did you buy any at all?”
TrexMDR
Correct Trex.
News just does not stop coming.
http://kingworldnews.com/u-s-scared-to-death-as-china-just-secured-larger-flow-of-gold-into-china-as-part-of-plan-to-back-the-yuan-with-gold/
they will announce their holdings before fall.
If you add up all of the developments on the subject of China and Gold it does appear that they are actively lining up their ducks.
They want to build up the credibility of their currency.
Eventually have other players oferring RMB denominated bonds and the like.
Now consider the exchange hubs they have been opening around the world.
Initiate a long term mining enhancement program like those just announced and where does this lead?
Fall disclosure of holdings???? very likely
prior to IMF admission.
IMF admission might only be their first goal.
Jim Willie thinks that this may only be a stepping stone to their eventual goal.
Returning the world to a value backed currency system is a good thing.
In my view this should and could bring back some amount of truth and accountability to our monetary system.
The problem is that history has shown that man always abuses POWER.
As power moves from the West to the East the cycle could just repeat itself again.
In any event….we must first pay the price of our past excesses.
Pain will come before the healing can begin.
Bill, you will not be posting any more new entries on these blogs? Where is your material being posted now? Harvey Organ posted something from you today, but I don’t see the original entry for it here…confused.
(It appears you’re still checking are responding to comments on this blog, looking at some recent comments above.)
sorry, a little confusing I know. Jim and I are still trying to figure out exactly what our format will be. I had intended to take some time off but I wrote 3 pieces last week and will have 3 for this week (some vacation huh?). My work as of now is being posted at many places all over the net as it was prior. For now, JSmineset.com will carry all of my posts and I am trying to respond as best I can to the various sites. You will be notified via Miles Franklin, Harvey’s site and many others as to where it will be posted. We may decide to go forward as a pay site with public articles occasionally, whatever our decision is, we will make very public and clear as to where to follow us. Thanks and bear with me for now, Jim is in the very last stages of getting his mine site in Tanzania up and running so our partnership does not have his full attention. Another week or two and we should have a better handle on it all. Thank you so much for following my work!