The Banks Are At It Again
I know you might be tired of hearing what bastards the banksters are, but if you read the book The Big Short by Michael Lewis or saw the movie by the same name, you know exactly how far these thieving organizations and the psychopaths in charge of them will go to make money at your expense.
They caused the Great Recession by devising insane financial instruments and trading them at 100 to 1 leverage, and now they're playing Russian roulette with the world economy again.
There are headlines today that Deutsche Bank could cause the next Leman Brothers market implosion. It seems that bank has 36 trillion British pounds in shadowy derivatives. That is 10 times more than the GDP of Germany.
On top of that, Deutsche Bank was counting these risky “assets” as two-thirds of its Tier 1 assets — supposedly the safest assets you could have!
Deutsche Bank is the most at-risk bank in the world, and its balance sheet is deteriorating. The company faces $14 billion in fines from U.S. regulators for ignoring banking regulations.
Deutsche Bank has a long history of fraud. Back in April of this year, the company settled lawsuits over its fixing gold and silver prices.
According to Bloomberg:
Silver and gold futures traders sued groups of banks in 2014 alleging they rigged prices for the precious metals and their derivatives. Silver traders brought claims against Deutsche Bank, HSBC Holdings Plc, Bank of Nova Scotia and UBS AG. Gold traders additionally sued Barclays Plc and Societe Generale SA.
You see, the big banks and the Fed are colluding to keep the gold price suppressed.
None of the financial players want gold to go up in value. If gold actually reflected the value of the dollar, the world would suddenly realize the dollar is just a worthless piece of paper.
The Fed wants to hide the inflation of the money supply, the government wants the public to think we have a recovery, and the banks want to keep your money in “the system.”
But like all price fixing, price discovery happens whether the elites want it to or not.
Like a slingshot pulled back, this suppression has created a situation that is so delicate and tenuous that the slightest disruption could bring the world economy to its knees.
All it would take to destroy the world's financial system is for 0.18% of the holders of outstanding gold contracts on the Chicago Commodities Exchange (Comex) to ask for delivery of their gold.
Most contracts on the commodities exchange are settled in dollars. As a result, the banks have devised schemes to leverage their actual gold holdings to more and more profits.
They deal in “paper gold,” which is just a promise to deliver the gold if someone asks for it. Since people rarely do, the banks can sell gold they don't have and pay off the contracts in dollars.
But what if people started asking for their gold?
If you own a contract for gold, you have the right to ask for the gold.
But the banks aren't obligated to deliver any gold. That’s right, they can just tell you, “No!”
What would happen if more and more people started asking for the gold they contracted for?
If one person asks, no problem.
But in a world where the economy is a mess and confidence is slipping, it makes sense that more and more people would want to take delivery of their gold.
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What will happen to the system when people start realizing they didn’t actually contract for gold like they thought?
People will start asking for their gold and the banks won't have it to deliver.
The banks will refuse to deliver the gold and start canceling contracts and paying them off in dollars.
So investors will get dollars, and they won't be able to buy physical gold at any price! This exact situation is playing out in India right now.
If the banks deliver any gold at all, it will be only to the most well-connected gold contract holders.
It will become clear that there is as much as 100X more paper gold than real gold.
As the price of real gold adjusts to account for a supply that is a small fraction of existing obligations, the price of gold will shoot through the roof...
In May of 2015, Bloomberg pointed out that a gold standard in China would require an exchange rate at about $65,000/t oz! That's insane...
This is a mathematical certainty, as there isn't enough gold in existence to cover the contracts these thieving banks have written.
Just as Lehman sent panic though the financial markets and sent select gold companies up more than 3,000%, so too will the next market meltdown. Make sure you position yourself correctly before all hell breaks loose.
All the best,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.