Spot on! “Mayans Forecast 2012” as “End of Era”, Says Prominent Swiss Money Manager

By Dominique de Kevelioc de Bailleul

It’s all too clear to long-time gold and silver investors, the finally days have come for a collapse of the global financial system.  No doubt about it, this time.  Gold and silver will take its rightful place as money whether the global monetary magicians like it, or not.

In a striking interview on King World News, Egon von Greyerz of Switzerland-based Matterhorn Asset Management told Eric King the financial world is in collapse—right now—in 2012—just in time to vindicate the Mayan prophecy buffs who have been repeatedly ridiculed as ‘unsteady’ throughout the year of financial turmoil.

With Cyprus, Greece, Spain and Italy (now Slovenia) collapsing at once, “it’s incredible that the Mayans forecast 2012 would be the end of a major era,” said von Greyerz.  “It looks, today, like we are standing on the eve of massive changes in the world that will have consequences for a long, long time to come.”

Time is on the side of every gold and silver stacker.  The trend is up, and any steep drop in the paper price (albeit from a JP Morgan takedown or industrial buyers slacking of purchases from bad economic news) has triggered the Pavlovian response from accumulators of physical to ‘back up the truck’ and drain inventory from the Comex.  That knee-jerk reaction, buying on paper market dips as well as buying truck loads on crashes is a relatively new phenomenon in the precious metals markets.

That patience and forthrightness throughout the 11-year precious metals bull market may be well rewarded soon, according to von Greyerz.

FOCUSING UPON THE PHYSCIAL SILVER MARKET AND GLOBAL QE PACKAGE

Not only are fiscal budget deficits and sovereign debt levels unsustainable, so is the rate of physical silver leaving inventories.  To put the silver market into a proper prospective, especially to newcomers, here’s a recap of Eric Sprott’s interview with FinancialSense Newshour of October 19, 2011.  It’s worth repeating a spot-on interview with a dealer who has his ear to the ground on a daily basis.

It’s all about the physical market.

“There’s a paper market; there’s a physical market.  The physical market is what I analyze more than anything else.  And all I see is buyers.”

The markets recognize gold as a reserve currency, and silver cannot be far behind.

Sprott: “One of things I believe, sort of, on a longer-term prospective, is that, the markets have made gold the reserve currency . . . it’s gone up hundreds of percent against every currency in the world, so it is the world’s reserve currency as far as the markets go.  And, as an offset to that, gold is not going to be a reserve currency without silver playing a hand, here.”

Historically, silver trades at an ‘equilibrium’ price of 1/15th the cost of gold.  Today, gold trades at more than 50 times the price of silver’s price.

Sprott: “Give it three to five years, we’re going to get back to ratios which are way more appropriate to the underlying fundamentals of gold and silver.”

The global banking crisis will drain cash from the monetary system into gold and silver.

Sprott: “If you think it’s bad for banks, today, wait until you deal with a couple of years of negative GDP growth and what happens to the value of those [tier-3] paper assets that they own, because it will get worse.  One thing I’ve always imagined . . . the ultimate destiny for gold and silver is that, people will prefer to own those investments rather than have their money in the bank.”

See BER article regarding future GDP, Jim Rogers’ Most Dire Warning, Please Get Worried

Conventional commentary on the state of the banking system is completely wrong.  Ignore it.

Sprott: “Three months ago (July 2011), when they did the European stress test, Dexia bank was considered to be the most well-capitalized bank.  And three months later, they were . . . I don’t the word, broke, or taken over by respective governments.”

Fund managers haven’t discovered the silver market yet.

“You go to some of the biggest names that even own gold and you ask them: Have you looked at silver?  They haven’t even looked at it.  So, I think we’re in the early days to people moving into silver, both in the sense of owning physical silver and of course in the sense of owning silver stocks. . .”

Fast forward back to von Greyerz’s latest KWN interview. Everything Sprott spoke of in the October 2011 interview may be coming to a head right now, according to von Greyerz.

“What we know is that the euro will collapse, and it doesn’t matter whether it collapses by being printed into oblivion or because many countries desert it such as Greece, Spain etc.,” von Greyerz said.  “We also know that other major currencies will collapse.  The consequences of these (eventual) collapses will be horrible because we will have a hyper-inflationary depression.

“Gold is on the verge of a major breakout here.  I agree with James Turk that this summer we could see a major move starting.  I could see a 12 month rise of major magnitude.  Gold will reflect the destruction of the world economy.”

And silver’s ratio should shrink dramatically during a summer rally, giving investors of the white metal more bang for the buck against gold on the way up during a catchup feeding frenzy from fund managers and retail public caught off guard.  Maybe the Mayans were right after all.

Jim Rogers’ Most Dire Warning, “Please Get Worried”

In his most serious demeanor of recent memory, Jim Rogers of Roger Holdings said the U.S. economy is in for a very rough sledding akin to other major crises since the beginning of the republic.  In fact, the 69-year-old veteran of the commodities markets said even he is “worried.”

When asked by Newsmax’s Kathleen Walter about the state of the U.S. economy, Rogers said he’s not particularly concerned about 2012; it’s an election year, after all.  But after the election, in 2013 and 2014, “it’s coming again” —that slowdown expected by many analysts to lead to a sovereign debt crisis in the U.S., much like what has afflicted Greece.

“. . . this year is going to look good and feel good, because Mr. Obama is going to give out a lot of good information,” Rogers said.  “It may be manipulated information, but he’s going to put out a lot of good information.  He’s going to spend a lot of money; he’s going to print a lot of money to get us through the election.”

But post-election, conditions will change, the data will change, and the financial turmoil that the markets have already enduring will accelerate appreciably, according to Rogers.

“Be very worried about 2013 and be very worried about 2014, because that’s when the next slowdown comes,” Rogers stated.  “In 2002 we had a recession and in 2008, it was worse because the debt was so much higher.”

He added, “The next time is going to be even worse because the debt is so staggeringly high now. So if you are not worried about 2013, please — get worried.”

“Staggeringly high” U.S. sovereign debt, to which Rogers alluded, is projected by most economists to top $16 trillion for fiscal 2012, and the rate of deterioration has soared dramatically since the global financial crisis began in 2008.  The U.S. budget deficit for fiscal 2012 is expected to reach $1.6 trillion, or more, up drastically from $438 billion at the end of fiscal year 2008, and up 10-fold, or $162 billion, from 2007.

Rogers’ dire warning comes off the heals of Marc Faber’s May 25th comments, of which, he said the probability of a U.S. downturn next year is “100 percent.”

Because both men have earned reputations for candid and measured language regarding forecasts, investors have weighted their assessments of the future for the economy and investments quite heavily.

During the U.S. collapse, stocks will drop and currency markets will be in turmoil, according to Rogers. However, like a tsunami, the tide back into the U.S. dollar could be strong during the worst of the collapse, as it had been during the kickoff to the crisis with the fall of Lehman Brothers (from USDX 72 to 88), but the epicenter of a global currency crisis will come back to the shores of the U.S.

That’s the time when interest rates on U.S. sovereign debt could skyrocket, leading to a flight of the U.S. dollar and financial Armageddon predicted by some notable and respected analysts and economists.

Taking into account that 61 percent of global central bank reserves are held in U.S. dollars (28 percent held in euros), the extent of the damage to living standards in the U.S. and across the globe could be dramatic and sudden, according to Euro Pacific Capital CEO Peter Schiff and ShadowStats economist John Williams.

Greece’s less-than-two-percent weighting of the eurozone is equivalent to the weighting of the impact of America’s state of Maryland upon the U.S. dollar, so the fallout of a Greenback in free-fall, globally, has no precedent, no yardstick and no shape, giving rise to the notion that the purpose of FEMA facilities built throughout the U.S. during the past decade has been the result of preparations for a Greek-like moment of global financial history, with riotous crowds and mayhem on American soil 100 times more problematic than that of Greece’s.

“It’s just going to be turmoil. Everybody’s going to be worried, including me,” Rogers said.

Robert Prechter’s Dire Prediction for 2012

Speaking with Financial Sense Newshour’s Jim Puplava on Thursday, Robert Prechter of Elliot Wave Theory fame said he doesn’t think central banks can continue re-inflating the popped credit market bubble past Election Day.  He believes that market forces will conspire against the politicians and collapse the system before November. Sign-up for my 100% FREE Alerts

“I think the third big mania of the last dozen years is pretty much topping in 2011, 2012,” said Prechter.  “And last year, the big metals run I think ended, and this year is just kind of a double top type of echo, very similar to the 1999, 2000 highs in stocks and ’06, ’07, ’08 highs in real estate, the Dow and commodities.  So it’s another sort of two-year topping process and I think it’s very long in the tooth, and it’s probably your third and last chance to get out of traditional investments.”

The retreat of the small investor from the stock market, he said, will not turn around, suggesting that, this time is really different from previous cycle rebounds.  According to Prechter, don’t expect the sidelined cash from mom-and-pop investors to take equities higher.

“People think that the public has to see it coming before this thing ends, but I don’t think that’s going to happen.”

He points out that the market’s rebound from the low of 666 in the S&P in March 2009 was orchestrated by the Fed through unprecedented low interest rates and trillions of dollars of credit to financial institutions and hedge funds.  But, as the counter rally to the Kondratiev super cycle fades this year, the resumption of the Winter Season of the K-wave will overwhelm central banks.

“Central banks and governments have managed to try to shore up all of the bad debt, or at least a lot of the bad debt, in the world,” Prechcter said.  “Now that’s working because the cycle turned up in 2009, so you’ve got enough optimism so that investment bankers and hedge funds and speculators are availing themselves this free credit and leveraging it up 30 times <chuckles> and buying the stock market.

“So while there’s plenty of liquidity becoming a narrower and narrower expression in terms of where investment people have decided to put that liquidity to work, the seven-and-a-quarter year cycle, which bottomed in 2009, tops in 2012, it bottoms in 2016.  It may take its sweet time topping out as it did in ’06, ’07 and ’08, and again, in 2000, which held up virtually all year before it turned down.  But the ultimate conclusion for all this, I think, lies ahead, and we’ve not solved any of the debt problems.”

Prechter also cited that optimism is too high when matched up with the underlying fundamentals and an unresolved financial crisis.  With trillions pumped into the financial system from all of the G-8 nation central banks, GDP, trade and employment show no signs of a robust economic recovery.  That, he said, shows the powerful effects of debt destruction and deflationary pressures that come with a Kondratiev Winter.

“The first problem is that things are looking good,” Prechter explained.  “How did they look in the first quarter of 2009?  They were scaring economists to death, and now you’re seeing articles that everything is okay, we’re out of the woods, everything is great.  When’s the best time to buy, and the best time to not get involved?

“One would think, after a three year recovery that the economy would be just roaring along, interest rates would be back to normal, trade would be ballooning, everyone would be employed.  We have the opposite situation despite all of the inflationary credit that’s been created by the central banks, despite all the spending by government, we still have an extremely sluggish economy.”

With the counter-trend rebound within a grander trend of deflationary collapse nearing its end, the next downturn of the economy will make bailing out sovereign nations nearly impossible, both in terms of the mathematics and politics, according to Prechter.

“As far as Greece is concerned, I think that’s a central bank failure,” he continued.  “Somehow the media, or investors, decided that was just fine and the problem was resolved.  But what happened was, Greece defaulted on $100 billion worth of debt.

“Despite three years of recovery, where they couldn’t defend $100 billion worth of Greece’s IOUs.  And Greece still owes 260 billion euros worth.  How many people think they’re going to pay that off?  So there are plenty more defaults to come.   And one can only imagine how they will be flooding out once the trend turns down, social mood and the financial markets and the collateral starts to shrink even more.  That’s going to be the time when the defaults really flooding in.”

Prechter believes that conventional economic thought doesn’t take into account the behavioral characteristics of market participants during the Winter period of the Super Cycle.  After confidence in the economy wanes for as long as it has since 2008, investors may stay on the sidelines a lot longer than most people now believe.

“Well, this is what the economic theorists such as the Keynesians and monetarists never planned for, that is, changes in human behavior, changes in mass psychology,” said Prechter.

“You not only have misery in Greece, you have near rebellion.  People are angry, they’re taking to the streets, and as you pointed out, there are largest percentage who are unemployed,” he added.  “They have nothing better to do.  The higher that unemployment figure goes in Greece, the more people that will be available to be out in the streets rioting, and throwing politicians out of office and changing how they they’re doing things.”

He added, that in Germany, the will of the German people for additional bailouts won’t be there, leave future expiring debt with no political solution similar to the one executed with Greece.  The public has grown tired of bailouts.

“Eight percent of the populous was against this last bailout.  I think it would be nearly impossible for Germany to pull off yet another bailout of Greece,” Prechter explained.  “I think at this point they’re past the point of no return politically.  I don’t think they can do another one.

“They’re doing everything they can as technocrats to stop it, yet the best they can do is tread water.  The S&P is no better than it was 13 years ago. I think once this last cycle rolls over, I think the whole system is gonna implode, and that’s why you want to make sure that you’re not laden in your portfolio with risky debt instruments or the traditional investments such as stocks, commodities and real estate.”

Unlike many analysts who believe the Fed must continue to “print or die,” Prechter remains as one of the few analysts who claims that the Fed and other central bankers will have to cut short the printing presses for political reasons.

“It’s a weird limbo situation . . .,” said Prechter.  “The ultimate resolution I don’t think is going to be runaway inflation on the upside . . . I think it’s going to be a deflationary implosion.”

He added, “What I think is going to happen is it’s going to come soon that most people are thinking.  They say. ‘Okay, the Fed will keep everything up until Election Day.  We don’t have to worry until the end of the year.  Everything’s fine.  At least we have another year.  I don’t really believe that.”  “I don’t think it can hold up much longer at all.” Sign-up for my 100% FREE Alerts

German Bundesbank’s “Incredible Gold Scandal”

“The incredible gold scandal,” the German newspaper BILD began its article about the disposition of Germany’s mysterious gold holdings following the collapse of Lehman Brothers in 2009.

Growing pressure from the German people and politicians exerted upon its central bank, the Bundesbank, to audit the nation’s gold reserves intensifies, running parallel with escalating anxieties felt by German taxpayers for more than two years leading up to Greece’s to-big-to-pay $18 billion interest payment deadline of March 20, 2012.  Sign-up for my 100% FREE Alerts

Everyone knows that Greece doesn’t have the money, and the big money has bet that Greece will have to officially default on the 20th, as evidenced by the one-year Greek bill, which topped 1,100 percent this week.  Hedge fund managers have spoken: Greece is done with the euro.

Now it becomes a scramble for the gold.

Considering the ominous Greek sovereign debt backdrop, a suspicious Germany now wants to know where its gold is stored, as the last audit made in 2007 clearly indicates that the Bundesbank skipped its 2010 audit.

Just as pressure has been applied on the Fed by U.S .Rep. Ron Paul to agree to an audit of U.S. Treasury gold held at Ft. Knox and West Point, Germany may have to break the rules, too, by stonewalling the country’s elected representatives on the matter of its gold reserves.

“A clear breach of the law,” top Bilanzrechtler Prof. Jörg Baetge told BILD. “At least every three years to control counts the bars are made. [Google translation]”

When Germany’s controversial member of the Bundestag, Phillip Missfelder, inquired into the reason for the missed audit by the Bundesbank, the 32-year-old  chairman of the Junge Union received a series of Fed-like responses from Germany’s central bank.

“I was shocked,” Missfelder told BILD.  “First they said that there was no list.  Then there were lists that are secret.  Then I was told, demands endanger the trust between alliance bank and the Fed. [Google translation]”

A skipped audit, and now, peculiar responses from one of the most respected central banks, regarding the world’s second-largest sovereign gold stockpile (after the United States) has gold bugs wondering if German gold has been essentially held hostage at the NY Fed to prevent another explosive run in the gold price.

Coincidentally, or not, some traders suspect that Venezuela’s Hugo Chavez’s repatriation of 99 tons of gold from London vaults created a nearly 25 percent jump in price during the un-seasonal summer rally in gold of last year.

But in the case of Germany’s 3,401 tons, of which approximately 60 percent (2,000 tons) is rumored to be stored outside of Frankfurt, a potential move in the gold price from an unwind of 20 times more potentially re-hypothicated gold (levered as much as 100:1) could take out gold $5,000, $10,000, $20,000 or more, easily, if Germany insisted that its gold (possibly rehypothicated) be returned to its own vaults.

A leveraged gold market of approximately 100:1 would, in effect, translate to 200,000 tons (2,000 x 100) removed from the gold market (or any fraction of that amount).  That cannot happen without a total and immediate implosion of the world’s Western fiat currencies (in terms of gold).  It’s too much gold to unwind and continue on the facade of viable Western fiat currencies.

Therefore, German gold moving back to Germany won’t happen.  London’s scramble to find 99 tons for Chavez is one thing; finding as much as 2,000 tons to ship to Frankfurt is quite another.

Missfelder told BILD, “It may be that is the gold assets of the German apparently violate any applicable accounting law.  This is a case for Parliament.  I call for a clear view. [Google translation]”

Aside from the heat that Germany has taken for more than two years in its fight against pledging its country’s people as collateral for Greek fiscal profligacy, Germany has another, even bigger problem.  That is: how to repatriate German gold without destroying all hope of keeping the post-Bretton Woods fantasy alive.

Will Germany ultimately take the big hit at the endgame of dollar hegemony?

Author of Currency Wars, Jim Rickards, believes that German gold has, de facto, been confiscated, already.  If any mention from the officialdom in Berlin that it seeks to repatriate its gold reserves could force Washington’s hand to refuse the request and confiscate the up-to 2,000 tons of gold held at the NY Fed.

“ . . . as I’ve described in the book Currency Wars, if the U.S. gets into extreme distress, and there’s a collapse in the dollar, I have no doubt that in an emergency basis the U.S. will basically confiscate all the gold in their possession,” Rickards told King World News in mid-November.  “Then they will convert it to back up a new gold based U.S. dollar as plan B or some way to stop the crisis.”

Rickards continued, “So it’s a political question for Germany as to whether they want their gold back, but sometimes you don’t ask questions if you don’t think you are going to like the answer.  It would be interesting if Germany demanded that gold be shipped to Frankfurt or Berlin what the U.S. would say.”  Sign-up for my 100% FREE Alerts

Greece “Officially Defaults” March 23, Banks Close

Wonder why European leaders appear more like a rotating cast of bumbling 3 Stooges than a team of coordinated fraternal bureaucrats throughout the debt crisis in Greece?  British investigative reporter John Ward of The Slog may have shed some light on to the matter of Greece and the strategically planned hard default of the beleaguered nation’s financial obligations at the close of business March 23. Sign-up for my 100% FREE Alerts

According to Ward, that following Monday, the 25th, Greek banks will close, then presumably usher in the drachma in addition to the shock, confusion and panic expected in markets to the surprise outcome of the two-year long display of alleged unity between France, Germany and other monied parties to solving Greece is revealed to be just a ruse, a delay tactic for a preparation of the event.

“A written document giving firm dates and detailed actions for a planned Greek default has been in the possession of two top Wall Street bank currency trading bosses since the second week in January,” Ward begins his blog post of the morning of Feb. 16.  “The Slog has separate but corroborative sources affirming the existence of the document, and a conviction among senior bank staff that – at least at the time – the plan represented ‘a timetable, not a contingency’. The plan gives a firm date of March 23rd for default to be announced after the close of business.”

Ward makes a compelling case for a backdoor arrangement made between Germany, IMF and the U.S. to take matters into their own hands for saving the global banking system has been the plan all along.

One of Ward’s ‘protected’ sources was quoted as saying, “I have strongly suggested to Greek business friends and clients that they sell up fast, do a sale and leaseback on property, empty bank accounts, and change to a hard currency.”

If Ward’s information is indeed accurate, others closer to the decision makers than Ward surely must have known far earlier.

One premier currency heavyweight, John Taylor of FX Concepts, smelled blood (or had knowledge) back in July of last year of the eventual amputation of Greece from the euro.  His seemingly radical call for gold to reach $1,900 during that unusual summer rally of 2011 in the precious metals, coupled with his brazen prediction of gold $1,000 in April-May of 2012 as well as the euro trading below parity against the dollar, turned many heads.

“I would be surprised to see the euro hold above $1 through this crisis,” Taylor reiterated his summer call to Bloomberg Television’s Michael McKee on Oct. 11  “It’s not over. The banks are going to be in trouble when Europe goes into a recession next year.”

Moreover, Taylor has once again reminded investors of his sentiments regarding the Eurozone and the implications of an imminent Lehman 2.0—but this time, a Lehman-like meltdown of industrial strength.

Thursday, zerohedge.com posted Taylor’s latest missive, which reads, in part:

The market has not opened its eyes to the impact this Greek unraveling will have. The Eurozone will be mortally wounded and the world will suffer a significant recession – maybe as deep as 2008. European banks will lose much of their capital base and many should be bankrupt, but just as in the Lehman aftermath, the governments will try to save the banks and the banks’ bondholders, solvent or not. As the bank appetite for Eurozone sovereign paper will be decimated, austerity will probably follow shortly, followed by deflation and uncontrollable money creation. The European recession should be one for the record books.

Supposedly, evidences by market action to every news flash of a Greek ‘deal’ has calmed markets, putting the risk-on trade into full swing.  But, according to Taylor—who makes no mention of the specifics to the politics—a disaster is in the offing, not a smooth juiced up trade in equities, bond spreads and gold as a result of a job-well-done in ameliorating bank stresses.

In the meantime, evidence of ever-increasing violence in Greece has been the response.  The latest clash with police got noticeably worse this week.

“Before the vote took place there were 80,000 people on the streets, outside the Greek Parliament, basically attempting to storm the Parliament,” UK Independence Party Leader Nigel Farage told King World News.  “There were 5,000 Greek police there using tear gas and there were 10 major buildings that were set on fire.  It really was a very dramatic scene that took place in Athens on Sunday.

Further insistence by Brussels and Germany to subjugate Greeks appears more likely to threaten the lives of those hired to represent the nation of 11.5 million Greeks.  Letting the country exit the euro appears to be the most rational political move before a full-blown Arab Spring sparks in Europe.  Therefore, dropping Greece and ‘ring fencing’ European and American banks could be the most logical solution to Greece—but the plan for a trap must be sprung into action overnight to prevent a run on the banks of a more unpredictable nature.

Capital controls are easy to institute, but where to get the cash?

That solution can only come from the only central bank that can and has been largely getting away with money printing (also, for the most part, legally unencumbered) without much tears for more than 40 years—the Fed.

In late November, the Fed announced a rate deduction of 50 basis points to its currency swap lines with the BOJ, BOE, ECB, SNB and BOC, in a coordinated effort to grease the global banking system (or preparation for the big day on March 23).  The operation is headed by the NY Fed and its mostly unmentionable Exchange Stabilization Fund (ESF).

When asked in December by a House Oversight and Government Reform Subcommittee about the Fed’s move to open the money spigots to five of the world’s most influential central banks, NY Fed president William Dudley said, he “can’t imagine” the Fed ever undertaking unprecedented and politically charged action such as bailing out the Western world triggered by a European meltdown.

“The bar to doing that would be extraordinarily high,” Dudley, the successor to Timothy Geithner.  “We have never gone out and bought large portions of sovereign debt in the history of the Fed that I’m aware of.”

“This is about ensuring the flow of credit to U.S. households and businesses,” Dudley added. “It is in the U.S. national interest to make sure that non-U.S. banks that are judged to be sound by their central bank are able to access the U.S. dollar funding they need in order to be able to continue to finance their U.S. dollar assets.”

Of course, bailing out, or more euphemistically speaking—ring fencing, Europe is in the national interest of the U.S. because, if Europe melts down the U.S. melts down, and it truly will be financial Armageddon.  And that scenario will not be left in the hands of a bunch of bumbling European bureaucrats, who have for a millennium never gotten along when push comes to shove, and most likely never will.

Wasn’t it Gerald Celente of Trends Research Institute who predicted a financial meltdown and bank holidays by the end of the first quarter?  The world will soon find out. Sign-up for my 100% FREE Alerts