– GoldCore interview with Kerry Lutz on the Financial Survival Network
– Gradual realisation that central bank “masters of the universe”
-“We all know that bad stuff is going to happen, we just don’t know when it is going to happen”
-“The penny is beginning to drop that … we are coming very close to the end of the road”
– Prevailing wisdom that can print currencies with reckless abandon not being questioned
– We need a free market in currencies, not bail-ins and a war on cash and gold
– People blindly trust “experts” so welcome that some of them giving prudent advice re diversification
– Currencies of creditor nations – Norway, Switzerland, Singapore, Hong Kong will outperform in long term
– Mr Spreadbury of Fidelity “helped a lot of people in the mainstream who would never consider gold and silver”
– Avoid speculation, focus on diversification and owning quality assets for long term

Interview Transcript

Kerry Lutz: Mark O’Byrne, you know him well, executive director of Goldcore – a well known precious metals seller, bullion dealer, storage company across the channel is on the case. Mark hasn’t been on the show before but he is a very sage, savvy advisor on the topic of precious metals and how to protect your wealth. We’re really pleased to have him on – Mark, Welcome….

Mark O’Byrne: Hi Kerry. Thanks for having me on and for your kind words. I have enjoyed your show as well over the years. You are doing some good stuff out there so keep up the good work.

KL: Likewise, I follow your writing religiously. We all know what’s going to happen, we just don’t know when it’s going to happen but that’s going on now – when people in the mainstream finance – and Fidelity is the bedrock in the U.S. – they manage I think well in excess of a trillion dollars. When a guy like that tells you to put money in your mattress what are you supposed to think?

MOB: Yeah. It’s interesting and I think it shows that the concerns that many of us have had for a long time is percolating into the mainstream and the “smart money” who…they’ve almost been indoctrinated as well and they believed in the powers of the central banks as the masters of the universe. But some of the smart money… and as you said ….Fidelity, it doesn’t get any bigger that that, I mean they are one of the biggest mutual fund managers in the world, one of the biggest financial services companies in the worlds, they are absolutely massive.

This guy is very well respected, one of their bigger bond fund managers in the UK – about £4 billion worth of money that he manages. So for him to say that – and he wasn’t talking off the record, he actually told the Daily Telegraph.

The Telegraph, for your American listeners is , there are two papers of financial record in the UK, one is the Financial Times and the second one is the Telegraph so they are the newspapers, that people buy for markets, finance and business news. So for him to tell the Telegraph that is incredible.

He actually said specifically people need to own “physical cash” or “physical currencies” so he wasn’t even saying specifically – own physical pounds to a UK audience, he was saying physical currencies and that suggests maybe  two or three currencies, not just one currency so he appears to be speaking to global diversification there.

He also mentioned, even more unusually for a bond fund manager – he told people to own precious metals, gold and silver specifically. So its very interesting and it got picked up very widely. It went viral on the Telegraph website and saw huge traction – people sharing it on Twitter, Facebook and all the rest of it. Zero Hedge picked up on it and they got huge traction with it as well. I think it was read by 180,000 people which is massive so I think it shows the that regarding risks that are out there … the penny is beginning to drop.

These risks have been building up for years and years and we got a temporary stay and a temporary reprieve in recent months and years as they kicked the can down the road as we all know but I think people are beginning to realise we are coming very close to the end of the road.

KL: What amazes me Mark is why now, I mean for people like you and I – we have not believed in the efficacy of central banking for decades now. We’ve questioned everything these people do – the Bernanke’s, the Greenspans, the Christine Lagarde’s of the world. We’ve questioned them and their infallibility, it’s just like the infallibility of the Pope right. I mean how could you think other wise if you are a thinking person who thinks critically and questions the world around you its just like Newton lying back there, and i know this is apocryphal event, of the apple hitting him in the head and it’s like “oh gravity” like thats to me”…..?” Why are they so late to the party here?

MOB: It’s hard to know. These eureka moments…. some of them seem to be having that. Maybe deep down they didn’t really believe in the modern Keynesian Doctrine that we have today in terms of the all powerful central banks and the notion that they could just print money with reckless abandon and there would be no ramifications – because that has been very much the prevailing wisdom of recent years.

Some of them maybe were a little bit skeptical of it but they went along with it. I suppose by the very nature of it – if you are fund manager and you work in a bank you have to go along to get along. You are not going to have a job for very long if you start asking the questions that this guy has bravely gone on the record and said.

Also, markets were working in their favour and have been booming for a number of years, stock markets and bond markets as we know are at all time record highs. This sentiment allied with momentum is a powerful thing.

Its a bit like, was it Chuck Prince at Citigroup who had the expression “as long as the music keeps playing we all have to keep dancing” and i think that is the prevailing philosophy with a lot of these guys.

Some of them are beginning to ask questions and I think a lot of them see the writings on the wall and they can  almost cover their asses and say well I did warn about this. it will be interesting to see, the guy will probably never mention this again. He’s probably surprised how much traction it’s got internationally, you know.

But it also goes back to economics and the prevailing Keynesian wisdom.  Its the Keynesian-Austrian thing. There isn’t any awareness of Austrian Economics among the vast majority of the public and also these fund managers, these gods who work in various banks and central banks … the majority don’t appreciate that.

There are a few guys who do and those are the guys who have done well for their clients, particularly over the long term and they did well at the height of and during the crisis. They have done slightly less well over recent years where the stock markets have boomed and gold and silver bullion haven’t done as well.

So its interesting …they see the writing on the wall and I suppose for the rest of us, it is better late than never because hopefully he (Mr Spreadbury of Fidelity) has helped a lot of people in the mainstream who would never consider gold and silver and never have realised there were these levels of risks pertaining to bonds and cash.

I think people are led by the nose by these experts so if you get a few of these experts coming out and giving good advice, it’s actually quite a good thing …”

This transcript is the first half of the interview. Listen to the AudioHere

MARKET UPDATE

Today’s AM LBMA Gold Price was USD 1,175.75, EUR 1,048.93 and GBP 744.71 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,183.35, EUR 1,052.24  and GBP 749.17 per ounce.

Gold fell $7.50 or 0.63 percent yesterday to $1,177.60 an ounce. Silver slid $0.37 or 2.28% percent to $15.83 an ounce.

Gold in Singapore for immediate delivery slipped 0.2 percent to $1,176 an ounce near the end of the day,  while gold in Switzerland was again flat.

Gold inched down to a one week low as investors hope a Greek debt deal is on the horizon.  The yellow metal is seeing speculative liquidations as stock markets surge again and on renewed speculation that Fed interest rate rise could come this year.

Greece’s creditors have refused Tsipras’ proposal. In addition to that the Greek Prime Minister must sell the new austerity package to his own party, coalition partners and the people of Greece. As they say at the opera, “It isn’t over until the fat lady sings”. The Greek tragedy is set to continue …

Fed Governor Jerome Powell said yesterday that he was prepared to raise interest rates twice this year, once in September and once in December, as long as the economy performs as expected. Fed governors voice their opinion in the press but the decision to raise rates still comes to a vote and members are still divided.

China is awaiting approval from its central bank for a yuan-denominated gold fix “anytime now”, with more details about the scheme that may be revealed at an industry conference this week, noted Reuters.  The world’s top gold buyer and top gold producer is seeking to become the leading price-setter for bullion and is asserting itself at a time when the global dollar denominated benchmark, the century old London fix, is being investigated for price manipulation.

In late European trading gold is down 0.02 percent at $1,178.56an ounce. Silver is up 0.43 percent at $15.90 an ounce, and platinum is up 0.37 percent at $1,072.64 an ounce.

Breaking News and Research Here

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Dave Kranzler on the corrupt silver market.
(courtesy Dave Kranzler/IRD)

Comex Silver Is The Most Corrupted Market In History

The silver paper futures open interest is now officially over a 1 billion ozs., most of which represents a naked short position in silver.   Never in the history of the markets has any futures market been this extraordinarily disconnected from the amount of underlying physical commodity that is available to deliver against those contract open interest.

The only conclusion that can be drawn is that the Fed, Treasury and big banks are implementing the most extreme market manipulation exercise ever witnessed.  I shudder to think about what catastrophe is coming at us that they know about but we don’t – yet.

“James Mc,” a valuable daily contributor to Lemetroplecafe.com’s nightly “Midas” report commented last night on the Comex silver market in comparison to the CME lumber futures market:

Total North American lumber production for 2015 (est.) is 60 billion board feet. At an average of $400 mbf that translates into $24 billion dollars. Keep in mind this excludes the rest of the world’s lumber production, which could easily be double that amount. On the other hand total world silver mine production for 2014 was estimated by GFMS to be 877 million ounces. At $16 oz. that is a total of $14 billion. Silver OI is 45.45 times greater than lumber OI. with physical silver production being only a fraction of lumber production in dollars. Lumber futures O.I would have to be 100 times greater or more to compare to the outlandish oversized silver futures. Or, put another way lumber futures would have to reflect hedging 68 billion board feet, more than the entire year’s production for North America to be scaled to silver Any arguments for a higher silver O.I due to hedging for recycled and above ground silver supply are dwarfed by the stark reality of the above figures. To say the silver market is normal is like having referred to hurricane Katrina as a passing thunderstorm.

A long-time friend of mine who works with hedge funds in NYC thinks a Comex default is coming.  If that’s the case, it would make sense that JP Morgan, HSBC and Scotia – the primary Comex market-makers and Comex gold/silver vault custodians – are amassing a record level of naked-short interest in paper silver.

Why?  Because this serves the two purposes:

1)  these banks make enormous trading profits through their illegal manipulation of the gold and silver markets.  In fact, I don’t know about HSBC and Scotia, but in some past quarters JP Morgan’s commodities trading unit has been its only cash-profitable business segment.  I suspect this was largely from illegal trading profits in gold and silver futures trading.

2)  keeping the price of silver down via illegal manipulation enables these banks to accumulate physical silver at artificially low prices.  Obviously they know the truth about the real condition of the physical market. If you put on your “think like a criminal” hat, you would use the paper to push the price of silver down using paper – taking out trading gains on the market’s volatility – and you would be accumulating a massive hoard of physical silver because, once the Comex eventually defaults, both gold and silver will soar in price but silver will soar many multiples more than gold.

The Comex is headed for a default.  This means that the long side of the open interest will be settled in cash.  Of course, it takes a force majeure to trigger the cash settlement provision in the gold and silver contracts.  I can’t wait to see the nature of that force majeure event…

We are dealing with as heinous a suppression scheme as we have had to deal with all these years. While we have to deal with the here and now, there is no doubt in my mind there will be reckoning for all of this, as James Mc posits … especially in silver. The odds grow that reckoning will occur when least expected and it will be spectacular.  – Bill “Midas” Murphy, http://www.lemetropolecafe.com

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You will love this piece:  EDITORIAL
(courtesy New York Sun/GATA)

New York Sun: The Bernanke ten-spot

end

Another flash crash in gold/silver this morning:

(courtesy GATA/zero hedge)

Zero Hedge: Gold and silver slammed in mini-flash crash

end

And now Bill Holter:
 

Crying Wolf?
 

and now overnight trading in stocks and bonds from Asia and Europe:

1 Chinese yuan vs USA dollar/yuan strengthens to 6.2071/Shanghai bourse green and Hang Sang: green

2 Nikkei closed up by 58.61  points or 0.13%

3. Europe stocks all in the red except London’s FTSE/USA dollar index down to 95.13/Euro rises to 1.1207

3b Japan 10 year bond yield:  rises to  .47% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 123.87/ominous to

3c Nikkei still just above 20,000

3d USA/Yen rate now well above the 123 barrier this morning

3e WTI 60.91 and Brent:  64.31

3f Gold down/Yen up

3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil down for WTI and down for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund falls to .86 per cent. German bunds in negative yields from 3 years out.

Except Greece which sees its 2 year rate rise  to 21.63%/Greek stocks this morning falls by 4.58%/ still expect continual bank runs on Greek banks /Greek default inevitable/

3j Greek 10 year bond yield fall to to: 10.69%

3k Gold at 1177.25 dollars/silver $15.89

3l USA vs Russian rouble; (Russian rouble up 1/4 in  roubles/dollar in value) 54.27,

3m oil into the 60 dollar handle for WTI and 64 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/China may be forced to do QE!!

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9316 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0442 just below the floor set by the Swiss Finance Minister.

3p Britain’s serious fraud squad investigating the Bank of England/

3r the 3 year German bund remains in negative territory with the 10 year moving closer to negativity at +.86

3s Last Friday, another 1.8 billion ELA was raised to a maximum of 85.9 billion euros. Monday morning then saw another 1.9 euros added to the ELA as massive bank runs were the object of the day and thus the ELA stood at a maximum 87.8 billion euros.Then yesterday and today, the ELA was raised twice but the figures were not released (Reuters).The ELA is used to replace depositors fleeing the Greek banking system. The bank runs are increasing exponentially.This week the ECB is contemplating cutting off the ELA which would be a death sentence to Greece and they are as well considering a 50% haircut to all Greek sovereign collateral which will totally wipe out the entire Gr. banking and financial sector.

3t Greece  paid the 700 million plus payment to the IMF last Wednesday but with IMF reserve funds.  The funds are deferred to June 30.

3 u. If the ECB cuts off Greece’s ELA they would have very little money left to function. So far, they have decided not to cut the ELA but this weekend is the likely time to do it.

4. USA 10 year treasury bond at 2.39% early this morning. Thirty year rate well above 3% at 3.17% / yield curve flatten/foreshadowing recession.

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)

Buy Programs Stumble After Greek Deal Proposal Goes Back To Drawing Board In Last Minute

And it started off all so well: the market, blissfully ignoring what we wrote just yesterday in Why The IMF Will Reject The Latest Greek Proposal In Just Two Numbers, was in full blown levitation mode overnight when it sent Japanese stocks to their highest close since 1996 (pre dot com) and with the Chinese central bank doing its best to keep levitating local stocks away from the abyss, pushing the SHCOMP up another 2.5%.

European shares opened small in the green, hopeful despite a Greece deal not yet being finalized. The market tried to hold its gains despite an appalling unemployment number in Finland and a blah Ifo report from Germany. These numbers began to weigh, even as the ECB’s QE program is not going to be tapered anytime soon. And then red headlines ran quoting Greece PM Tsipras saying “creditors didn’t accept Greek proposals.” Oops, market immediately got  hit, but didn’t panic.”

Euro Stoxx 50 went from flat to down 1% and is bouncing. As BBG’s Richard Breslow adds, predictably, the market is taking this as a ploy, not an end game. Of course, this is precisely the “Bear Stearns is fine” conventional wisdom that Cramer was spewing days before Bear failed because nobody could fathom how anyone can conceive of a worst case scenario. Only it isn’t nobody: we reported before of a Goldman’s “Conspiracy Theory” Stunner: A Greek Default Is Precisely What The ECB Wants.

Greece Rejects “Totally Unaccepetable” IMF Counterproposal Demanding Pension Cuts, VAT Hike

As reported earlier and as tipped here on Monday, markets will have to call off the party for now because the focus of the Greek debt deal negotiations has now shifted back to Brussels after all eyes had turned briefly to Athens on Tuesday following reports which indicated a deal in principle had been struck. Here’s what we said less than 24 hours ago:

The IMF demands no tax hikes and pension cuts. Instead it will get almost exclusively tax hikes, amounting to 92% of the proposed measures, and just a few cuts, few of which actually impact Greek pensions. In short: the proposal is not only unsustainable, it is also unenforceable, something which the Germans – already facing a third Greek bailout – will be quick to point out.

 

Which is why tomorrow, after Tsipras is finished with the meeting with the Troika, he will have a new homework assignment: revise the “final final” proposal and come up with much less in tax hikes, much more in spending cuts: something which the already furious hard-line elements within Syriza will have a field day with.

And that is precisely what happened. As WSJ reports, creditors have decided to stick to their “red lines” after all:

Significant divisions remain between Greece and its international creditors over measures Athens must implement before receiving desperately needed bailout aid, according to a document seen by The Wall Street Journal on Wednesday ahead of a crucial meeting of eurozone finance ministers.

 

Key points of disagreement are corporate taxation, the overhaul of Greece’s pension system and value-added taxes, according to the document. For instance, Greece had planned to increase corporate taxes to 29%, but in the document creditors limited increase to 28%. That may cause new budget shortfalls that need to be plugged with other measures.

 

The Greek government has proposed increasing pension system revenues largely by raising social-security contributions from employers and limiting early retirement.

 

In the document, the creditors insist on savings worth 1% of Greece’s gross domestic product by next year and also call for eliminating a supplementary payment to the poorest pensioners, known as EKAS, by the end of 2017. The

 

Greek proposal wanted EKAS to be phased out only between 2018 and 2020.

 

The creditors also continue to insist on raising funds worth 1% of GDP from VAT, up from the 0.74 proposed by Greece.

And more from MNI:

One official said that the IMF disagrees with heavy taxation in businesses and the special corporate tax and wants more spending cuts in pensions and other public sector areas. 

 

The International Monetary Fund sent its own version of a counter proposal to Greece’s debt talks late Tuesday, a government official has told MNI, illustrating the growing dissent among the country’s international

creditors.

The new proposal, sent to Greece late Tuesday, was deemed unacceptable by the Syrzia-led government, the official said, who used a Greek expression to suggest that receiving it was like “touching fire”.

As indicated above, Athens isn’t pleased with the IMF’s position:

• GREECE OFF’L: IMF PROPOSAL TOTALLY UNACCEPTABLE TO GOVERNMENT

AFP confirms:

Put simply, the IMF has decided  that allowing Greece to wriggle from under the troika’s thumb by substituting unenforceable tax hikes for actual, sustainable fiscal reform would send the wrong message to Spain and Portugal ahead of elections this fall where Podemos in Spain and the socialists in Portugal may well score decisive victories at the ballot box.

So it’s back to square one — or square four, or five, or whatever square the negotiations were on when talks were still mired in an intractable stalemate last week.

Of course that means the terminal Greek bank run — which had already driven the Greek banking sector’s remaining deposits to a level below the Eurosystem’s total claims on Greece — will officially restart after taking a breather on Wednesday morning. Sure enough, despite reports earlier in the day that Greece had not requested an ELA increase, the ECB has now raised the limit again in anticipation of further withdrawals. ViaReuters:

The European Central Bank approved the amount of emergency funding (ELA) Athens requested for its banks on Wednesday, a banking source with direct knowledge of the decision said, without disclosing what amount Greece had asked for.

 

“The Bank of Greece got approval for the ELA it requested. If necessary the ECB governing council will convene again in the next 24 hours,” the source said.

So as we’ve said all along, the troika will get its pension cuts and VAT hike come hell, high water, or Grimbo, because that’s the only way to keep the Syriza germ from spreading and it’s also the only guaranteed way to ensure that any and all “radicalists” are purged from the Greek government. That is, if you thought The Left Platform was upset on Tuesday, you haven’t seen anything yet, because when Tsipras comes to parliament with a deal that looks identical to what the troika put forth months ago, political upheaval will follow in short order and either Syriza will be transformed into a party that will accept Greece’s fate as Germany’s debt serf, or Greeks will demand a new government and a Grexit — either outcome is ultimately preferable, from the troika’s perspective, to giving the rest of the EU periphery hope that austerity (or what passes for austerity in Europe) is negotiable. So, either the Greek negotiators will finally enact the “dreaded” pension cuts and VAT hike (in its originally proposed form), or else the Troika will be able to wash its hands of a Greek default and blame it all on Greek intransigence while sending a strong message to political sympathizers that they will get nothing from the institutions.

Reinforcing this point is the following from Bundesbank board member Joachim Nagel (via MNI):

Bundesbank Executive Board member Joachim Nagel said Wednesday that he opposes another debt relief for Greece at this point, arguing that such a move could encourage other EMU countries to follow the example.

 

A debt relief for Greece “sets the wrong incentive for other countries,”Nagel said at a conference in Frankfurt. “At this stage, a second debt relief would set the wrong incentives, especially for governments that are already weak” and struggling with growing opposition to austerity.

Then again, maybe all of this is just an elaborate attempt to hide the fact that Greece’s fate has already been decided by Mario Draghi, whose former employersuggested as much earlier this week.

end

And more on the rejection of the deal:

“No Deal”: Tsipras Says Creditors Did Not Accept Greek Proposal

Who could have possibly foreseen that the IMF would throw up all over the Greek “proposal”… aside from this post here “Why The IMF Will Reject The Latest Greek Proposal In Just Two Numbers” yesterday afternoon of course. In any event, moments ago Bloomberg reportedthat just as we wrote here yesterday afternoon, there is no deal and that Greek PM Alexis Tsipras told his associates that creditors not accepting equivalent fiscal measures has never happened before, according to a Greek govt official, who asked not to be named in line with policy.

Creditors “not accepting parametric measures has never happened before. Neither in Ireland, nor in Portugal, nor anywhere. This strange stance can hide two scenarios;they either don’t want an agreement or serve specific interests in Greece,” the official cited Tsipras as saying.”

As a reminder, Tsipras is meeting Wednesday with European Central Bank President Mario Draghi, International Monetary Fund Managing Director Christine Lagarde and European Commission President Jean-Claude Juncker in an effort to reach a deal before Greece’s bailout expires and about 1.5 billion euros ($1.7 billion) in payments come due to the IMF on June 30.

Here is the man himself tweeting as much and confirming that the blame game continues:

Some more comments:

The reaction across European asset classes was kneejerk lower…

… although it has since bounced back modestly as “hopes” that this final final deal, which was just scuttled, will be revised and lead to yet another favorable conclusion. They don’t call it climbing the wall of Greek rumors for nothing.

As for Tsipras suggesting that Troika does not want an agreement, he is absolutely correct. Recall “Goldman’s “Conspiracy Theory” Stunner: A Greek Default Is Precisely What The ECB Wants“… the same Goldman that blessed a Lehman bankruptcy and got precisely what it requested.

In any event, the ball is now in Greece’s court…

• CREDITORS SAID TO HAND GREEK GOVT REVISED PROPOSAL

… also as we predicted, where either the Greek negotiators will finally enact the “dreaded” pension cuts, or else the Troika will be able to wash its hands of a Greek default and blame it all on Greek intransigence. As a further reminder, at this point it is all about who gets the blame for a “Grexident.”

end

Germany weighs in on the matter:
(courtesy Bloomberg)

Germany Says Greece Breakthrough Far Off as Deal Terms Rejected