The Next Financial Crisis Will Come from Europe!

A financial system stability assessment report, from the International Monetary Fund (IMF), on one bank in Europe identified Deutsche Bank AG (NYSE: DB), as the TOP bank that poses the greatest systemic risk to the global financial system. Systemic risk was identified as a major contributing factor in the ‘financial crisis’ of 2008. This is essentially the risk of contagion by the failure of one firm leading to failures throughout its’ industry.

On February 24th I talked about DB (Deutsche Bank) as the next major bank to fail. Since then price has plunged 31% and its likely headed much lower yet.

IMF: The Top Bank That Poses Global Financial Risk Is DEUTSCHE BANK!

Deutsche Bank’s $75 Trillion In Derivatives Is 20 Times Greater Than German GDP!

e1

Deutsche Bank was historically one of the most respected banks in the world.   Today, it is increasingly the subject of reports that it was on the verge of collapse which was primarily due to a massive exposure to derivatives estimated at $50 to $70 trillion. The bank has struggled continuously since the 2008 financial crisis, and its’ stock price, as of late July 2016, stood at a new seven-year low of just $14.57 per share which is less than 10% of its’ peak price, in 2007, before the ‘financial crisis’.

e2

The bank’s CDS spread shot up to recent highs (a CDS is a measure of risk – higher is bad) and its’ share price hit 33 year lows. DB has been struggling in Europe’s negative interest rate environment.  Negative interest rates have been crushing European and Japanese banks. Deutsche Bank’s CEO John Cryan told analysts that banks will increase fees and take other measures which will be passed on to customers.

 e3

 

The bank was hit with a $2.5 billion fine in October 2015 for its’ involvement in the LIBOR scandal regarding interest rate rigging. In January 2016, it announced a record loss of more than $6 billion for 2015 which is a stunning reversal from a 2014 profit of $1.6 billion. In my past articles, I issued a warning that Deutsche Bank was massively leveraged and that its’ problems were most probably insurmountable. In June 2016, the Fed announced that Deutsche Bank had failed its’ stress test for the second year in a row. The bank was also hit by the BREXIT decision seeing as it derived nearly 20% of its’ revenues from the United Kingdom.

 

 

Does Deutsche Bank Have Similarities to Lehman?

The biggest problem that Deutsche Bank faces is excessive leverage on its’ balance sheet. It faces insurmountable challenges from poor-performing core businesses and a lack of capital.  I believe that the company ultimately must raise more equity capital to solve its’ leverage problems. Deutsche Bank’s valuation highlights the market’s pessimism. As of June 15th, 2016, the bank traded at 27% of tangible book value, which means that the company is worth less than its’ liquidation value.

In 2008, failures at Lehman Brothers and American International Group Inc. (NYSE: AIG) led to a run on banks and imperiled the financial system. Similarly, a failure at Deutsche Bank will have catastrophic consequences for the banking system during 2016.

The U.S. Department of Justice (DOJ) has ordered Deutsche Bank AG (DB) to pay $14 billion in order to settle claims of miss-selling mortgage-backed securities.  Deutsche Bank said it would fight a $14 billion demand by the U.S. Department of Justice to settle claims that it miss-sold mortgage-backed securities which raises questions about the future of Germany’s largest lender.

The bank’s market value is about $18 billion.  A pending fine of $14 billion is not a good sign. The bank, which is already battling multiple legal cases, has only around $6 billion in its’ litigation reserves. Therefore, paying a $14 billion fine would seriously impact the capital structure of the bank. It is important to note that Deutsche Bank has already been struggling in terms of profitability.

 

The Destruction Of An Illusion:

Last Monday, September 26th, 2016, their stock crashed yet again; down another 6%.  Its’ bonds have slumped, while the cost of credit default ‘swaps’ are essentially a way of hedging against a collapse. It all has a very 2008 deja vu feeling to it.

e4

Markets should be bracing themselves for the worst outcome. The European ‘debt crisis’ will create long-term systemic risks for ALL banks. Shares in all European banks continue to lag while at the same time U.S. indexes are making all-time highs!

Deutsche Bank has struggled in Europe’s negative interest rate environment and very recently the German Chancellor Angela Merkel has ruled out a government rescue of the bank. Deutsche Bank has the second largest ‘derivative’ book in the world while behind JP Morgan and that is indeed a serious concern. If the viability of Deutsche Bank is put in jeopardy, many other Euro banks will go under, as well, which would induce “global turmoil” reminiscent of 2008. The IMF has highlighted Deutsche Bank as the most important net contributor to ‘systemic risk’.  Once confidence is lost, a bank is in big trouble. If Deutsche Bank does go under, it will most likely take Merkel with it and quite possibly the euro as well!

 

This is Your Biggest Buying Opportunity Of Your Life!

The difficulty in identifying asset bubbles is directly related to credit expansion. The problem is not the asset bubbles, whether they be in stocks, housing, or student loans. This is merely a symptom of a deeper condition. The real threat is the underlying credit expansion by easy monetary policies that has created these asset bubble problems in the first place.

Every crisis also brings an opportunity with it, hence, lets’ make the best use of the opportunity before the price of gold and silver blows through the roof. It is better to invest now and see our investments multiply, instead of waiting for the crisis to start, as, by then, more than half of the rally would be behind us.

Follow my trades and long-term investment position at www.TheGoldAndOilGuy.com

Chris Vermeulen

Massive Chinese debt and why they are on a gold buying binge!

China’s debt is a staggering $24 trillion with 247% of annual GDP as of last year, which is, in fact, an increase of an astounding 465%, within a decade. The total borrowing, by both the financial and non-financial sectors, was only 78% of the GDP in 2007 and has since increased to 309% of GDP, according to economists at Nomura Holdings Inc., led by Yang Zhao and Wendy Chen.

Although some naysayers believe that the leverage in China is still far below that of what the U.S. was in 2007 previous to the financial crisis. However, they neglected to note that the property sector has increased by 4.5 times, between 2000 and 2015, within the top-tier cities. Experience suggests that such a rise is both ‘unsustainable’ and ‘bubbly’. A sharp drop in the property prices will increase the leverage to astounding levels thereby threatening their economy.

 china1

Huge fiscal deficit challenge:

The IMF has forecasted that China will have a moderate budget deficit of 3%, which sounds very comfortable. The IMF has merely considered the governments’ debt so as to arrive at said figure, which accounts for less than 20% of public spending. The local governments and municipalities in China account for over 80% of public spending.

When the total figures are considered, the balloons to 10%, according to the IMF, whereas, Goldman Sachs believes that number is much higher being that of 15%. These numbers are far worse than the U.S.’s were directly before the financial crisis of 2008. Learn more here: fiscal deficit

Most state-owned companies are taking on more debt in order to pay off their earlier debt. Bad loans soar as shown in the chart below. The government has not allowed any major firms to become bankrupt in order to keep their job numbers propped up. If the start to let companies fail unemployment numbers could skyrocket!

 china2

 

Growth is struggling:

With growth struggling, and in order to merely reach those of the beaten down estimates of the Chinese government, it appears highly unlikely that China will be able to manage their debt ‘overhang’.

In light of the forthcoming five-year congress of the communist party, the government will not want to push through unpopular reforms, although, they are indeed necessary. The Chinese debt binge has reached such a vast amount that the experts now believe that in order to raise the GDP by $1.00, China must take a credit of $4.00 which is most certainly a sign of an impending crash that will have both global repercussions and further consequences!

 

Major investors who have raised concerns about China:

Legendary investor, George Soros finds an “eerie resemblance” between the U.S., prior to the financial crisis, and the current Chinese situation. “It’s similarly fueled by credit growth and an eventually unsustainable extension of credit,” Soros told  the Asia Society in New York in April, reports Bloomberg.

Similarly, BlackRock Chief Executive Officer Laurence Fink has also raised concerns about the Chinese debt.

The famous short seller Jim Chanos is short on China while stating that it “is the gift that keeps on giving on the short side,” reported CNBC, in May of 2016.

 china3

China shifting from dollars to gold!

China is gradually reducing its’ holding in the U.S. treasuries. In July, it held $1.22 trillion of US bonds, notes and bills,  which represents a drop of $22 billion since June of 2016. This is the largest drop, in three years, according to U.S. Treasury Department data which was released on Friday, September 16th, 2016.

There are many who believe that China’s mammoth holdings of US treasuries will restrict it from ‘dumping’ them. However, Bocom strategist Hao Hong  said, “The gold reserve on the China balance sheet has almost doubled since 2009. By holding gold, and moving away from a US-dollar centric system, we actually require less U.S. dollars,” reports Zero Hedge.

China’s gold holdings, which was a paltry 395.01 tons, in the second quarter of 2000, has now risen sharply to 1,828 tons, according to the World Gold Council.

With the Chinese Yuan set to enter as the fifth currency in the International Monetary Fund’s SDR (Special Drawing Right) on October 1st, 2016, the Chinese are propping up the gold backed Yuan as a fierce competitor to the U.S. dollar!

“The recently-opened Shanghai Gold Exchange differs greatly from the London Gold Exchange in one fundamental area: In Shanghai, buyers take physical delivery of gold whereas London deals in paper-based gold futures contracts. In Shanghai, ‘what you buy is what you get’ whereas in the West, gold is a virtualized commodity,” Tom McGregor, Commentator and Editor at CNTV (China Network Television), told Sputnik.

Conclusion:

Similar to that of other developed nations, the Chinese debt has also reached ‘bubbly’ proportions. However, the Chinese are leaning towards gold, in a big way, as witnessed in their latest holdings. They know that, during the next crisis, those nations with a large gold backing will not only survive, but will become prosperous, as well!

China is most certainly going to increase their gold reserves even further, in the future. Imagine if only a portion of their U.S. treasury holdings are shifted to gold, the yellow metal will go parabolic.  Therefore, keep an eye on gold and be well prepared to buy it when we reach that last dip, before the ‘bull run’.

Want to know where gold, silver and mining stocks are within their bull/bear market cycles? Or do you want to know when and how to take full advantage of these next major moves?

Follow me at www.TheGoldAndOilGuy.com

Chris Vermeulen

FED Goes from ZIRP to NIRP!

The FED has not followed through on their numerous promises of a rate increase that Yellen and other FED officials have made over the past several years. She spoke about purchasing assets of private companies and also mentioned that the FED could modify its inflation target.

Investors will most likely purchase shares in companies whose assets have been purchased by the FED since it is likely that Congress and federal regulators would treat these companies as “too big to fail.” Federal ownership of private companies would also strengthen the movement to force businesses to base their decisions on political rather than economic considerations.

Politicians will never restore sound money policies unless forced to do so by either an economic crisis or a shift in public sentiment, not because a crisis leaving Congress with no other choice!

The failure of the FEDs’ eight-year spree of money creation through quantitative easing and historically low interest rates have failed to “restart” the failing economy. They continue to add new tools to “artificiality inflate” the stock bubble. They will stop at nothing as they discuss implementing NIRP.

The collapse of the “fiat system” will not only cause a major economic crisis, but also the collapse of Capitalism as we knew it.  Congress has also failed the American people and its’ economy by refusing to consider meaningful spending cuts, it will not even pass legislation to audit the FED.

 

The FED has lost even more of its ‘Credibility’!

Governor Fischer has lost all his credibility. He predicted four rate hikes at the beginning of the year for 2016.  His speech on August 21th, 2016 on the slowdown in productivity: “We just don’t know.” Last week, he was down to two rate hikes for the year.

The perceived first takeaway on the meeting at Jackson Hole was the one that made all the headlines. She is joining the “chorus” of FED officials who have been saying it is time for another rate hike: “Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”   This appears to be the FEDs’ new “mantra”.  She added, “And, as ever, the economic outlook is uncertain, and so monetary policy is not on a preset course.  When shocks occur and the economic outlook changes, monetary policy needs to adjust. What we do know, however, is that we want a policy toolkit that will allow us to respond to a wide range of possible conditions.” The FED now calls that “forward guidance.” In other words, they just do not know!

She did mention that QE purchases could be broadened to other assets. The real FED FUND rate has been trading deeply “negative” since 2008.

ge1

Negative Interest Rate Policy (NIIRP) Is Dangerous!

Yellen has now established the fact that it is legal for the FED to authority the use of NIRP. She has now put it into her tool box and is developing specific plans for implementing it.

The consensus is dangerously wrong by relying on flawed theory and flawed policy assessment. NIRP draws on fallacious pre-Keynesian economic logic that asserts interest rate adjustments can ensure full employment. The consensus is dangerously wrong, resting on flawed theory and flawed policy assessment. A negative nominal rate on money being held by your bank, can be thought of as a form of a tax on deposits that lowers “real wealth” and negative wealth effort on consumer spending and “aggregate demand”.

 

 

Conclusion:

Gold in your portfolio:

Investors should consider doubling their gold allocations amid negative interest rates. The long term effects of these policies are unknown, but I see discouraging side effects: unstable asset price inflation, swelling balance sheets and currency wars to name a few. Looking forward, government bonds are likely to have limited upside, due to their low-to negative yields

Amid higher market uncertainty:

We have entered a new and unprecedented phase in monetary policy. Central Banks in Europe, Japan and soon in the United States have implemented Negative Interest Rate Policies (NIRP). Investors, including long term investors, should assess the implications of holding bonds with negative return expectations on portfolio composition and risk management.

My analysis shows that Investors will benefit from increasing their gold holdings up to 2.5 times, depending on the asset mix, even under conservative assumptions for gold. In addition, we expect that demand for gold as a portfolio asset may structurally increase due to NIRP.

The only “recovery” that we have experienced has been an artificially inflated recovery on Wall Street. For the rest of the country, our long-term economic decline continues.

Secular investors should start turning their attention to commodities and precious metals. Golds’ bull market is far from over. The volatility in gold in recent days is principally due to sharp fluctuations in the expected path of US rates amid surprises in the macro data and diverge ring comments from FED officials. The recent consolidations were fueled by profit taking will end shortly.  The next FED meeting will result in more dovish FED speech resulting in new and more purchases.

When investors realize that they are holding potentially worthless currencies, the big money will rush into the precious metals sector. Consider this, the total world’s investment holdings in silver are a paltry $50.8 billion, compared to $3.04 trillion in gold, as shown in the below.

ge2

Did you know that the hedge funds alone manage around $2.7 trillion, according to Barclay Hedge data? Even if a small portion of the trillions sloshing around out there, decides to enter into silver, the “white metal” will shoot through the roof.

The difficulty in identifying “asset bubbles” is directly related to credit expansion. The problem is not the asset bubbles, whether they be in stocks, housing or student loans. This is merely a symptom of a deeper condition. The real threat is the underlying credit expansion by easy monetary policies that has created these “asset bubble” problems in the first place.

Follow along with me as I navigate the financial markets for both short term swing trades and my long term investing positions: www.TheGoldAndOilGuy.com

Chris Vermeulen

Clear and Present Danger!

The cycle since 2009 has been different from other market cycles, throughout history, in only one significant manner. That having been said, it is the Global Central Banks that have intentionally pushed interest rates to zero and below. This encouraged investors to speculate in the equity markets which have now become ‘dangerously overvalued, overbought, as well as ‘over bullish’ extremes according to all measures. In my opinion, this has “deferred” and not eliminated the disruptive unwinding of this “speculative” episode.

They have encouraged a “historic expansion” of public and private debt burdens with equity market overvaluations that rivals only those of the 1929 and 2000 extremes on reliable valuation measures. These brazen experimental policies, of Central Banks, have amplified the sensitivity of the global financial markets to “economic disruptions” and “distortions of value” in relation to investor risk aversion.

It is very clear that a zero interest rate policy has encouraged yield-seeking speculation by investors. As I have previously discussed, in many of my past articles, I detailed that monetary easing “in and of itself” does not “support” the financial markets. ‘Easy money’ merely stimulates speculation while investors are already inclined to embrace even more risk. The actions of the FEDs’ aggressive and persistent ‘easing’ will fail to prevent this “market collapse”.

Any financial professional who has any understanding of how securities are priced, should know that elevating the price that investors pay for financial securities does not increase “aggregate wealth”. A financial security (stocks) are nothing but a claim to some future set of cash flows. The actual “wealth” is embroiled in those future cash flows and the value-added production that generates them. Every security that is issued MUST be held by someone until that security is retired. Therefore, elevating the current price which investors pay for a given set of future cash flows simply brings forward investment returns that would have otherwise been earned later on. The FED is leaving “poorly-compensated” risk, on the table, for the future!

The total debt of the United States has reached gigantic proportions well beyond 2008 – CLICK HERE

The crisis ended precisely when, in the second week of March of 2009, the Financial Accounting Standards Board (FASB) responded to Congressional pressure and changed rule FAS157 so as to remove the requirement for banks and other financial institutions to mark their assets to market value. The mere stroke of a pen has eliminated any chance of widespread defaults by making balance sheets look financially stronger. The new balance sheets may be great, in the short-term, but ultimately have become weapons of “mass destruction”.

The Race to Debase Continues…
As of September 2nd, 2016, the BLSBS “disappoints” with a print of just 151,000 “jobs”. This will eliminate the possibility of a FED FUNDS increase, however, do not be surprised if some FED officials emerge to tell you otherwise, as we are already experiencing some counter-intuitive moves within several of the “markets”.

The true unemployment rate is ACTUALLY U-6! Consequently, the U-6 rate more accurately reflects a natural, non-technical understanding of what it means to be unemployed. Including discouraged workers, underemployed workers and other people who exist on the margins of the labor market, the U-6 rate provides a broad spectrum of the “underutilization” of labor within the country. In this sense, the U-6 rate is the TRUE unemployment rate which is close to 10%.

U-6 Unemployment Rate
U6

Concluding Thoughts:

In short, this incredible bull market is stocks which we have embraced since 2009 is quickly nearing its end. The FED’s mass easy money policies, stock buyback programs, accounting rule changes have simply masked/covered up most of the financial mess people, business and global economies are in.

Eventually all these tactics to cover-up and kick the financial-can down the road will start to fail. One they start failing things will get really ugly fast for the entire economy for those not knowing how to avoid and profit from market weakness.

If you would like to learn more about how to take advantage and profit from tough times, follow me at www.TheGoldAndOilGuy.com

Chris Vermeulen

End of Week Market Report

Its been a volatile week with last Friday kickstarting things with both volatility and the correction in the stock market we have been expecting.

On August 31st my trading partner posted an update to TheMarketTrendForecast.com members with his 2100 downside target for SP500. This week the SPX hit 2100 perfectly and has since bounced back up. This move happened quicker than he anticipated but the level was reached none the less. This weekend he will work on the new forecast for those members and it will provide us with more insight on the market direction next week.

Also, in the Aug 31st update, he updated the gold price forecast with is starting wave 3 of 3. Gold bounced strongly off our technical and EW support level just as expected. Since then, gold has faded back down in a bullish fashion with broad market selling pressure this week. He does expect higher prices in the near term for gold which could provide traders with another NUGT trade.

At this point in time, stock picks are tough as the market has been trading in a VERY tight range for many weeks with low volatility with the exception of the last 5 trading sessions. This just may be the bottom and the starting point of another run higher with the SPX meaning some new explosive stock trades like VUZI.

Take a look at the last two trades he gave subscribers of ActiveTradingPartners.com service:

atp-closed

If the stock market starts to rally he will focus on new long positions, but if things roll over and breakdown more, then inverse ETF and short trades will be more the focus.

Chris Vermeulen

IS THE SPX TOP FINALLY IN?

The market is EXTREMELY oversold and is not yet in the Trending Mode!  Therefore, with NO CONFIRMED Trend and oversold momentum oscillators, the market should bounce back, early this week.  The SPX was in a Bollinger Band Squeeze for 5-6 weeks, but finally broke down, last Friday, September 9th, 2016.  Every asset class was down.  This is NOT “buy the bounce” situation.

spx15

In the medium term, there should be a sizeable decline.

I would not use this bounce back, if one does occur, to establish new long positions.  I must view any bounce back, that may occur, as an opportunity to get out of stocks and prepare to go short.  The markets’ decline could be a long way to the downside.

However, the Expanding Top Pattern that the SPX has been forming for the past few months, suggests that it could easily test the 1810 area. That low is over 350 points from its’ current levels.

With a presidential election that is scheduled for November 8th, 2016, it is difficult for me to believe that the Presidents’ “Plunge Protection Team” or the FED will not step in so as to keep the markets from experiencing a dramatic plunge, before the said election. After the election, anything is indeed possible!

Friday, September 9th’s decline was mostly driven by fear of a potential interest rate increase occurring in September of 2016.  As GDP growth is at only 1.1%, I do not believe we will get a rate increase at the time of the next meeting. The FED realizes just how vulnerable the market is which is why there was talk of a rate increase, last Friday.  If they have learned anything, after Fridays’ decline, they will almost certainly keep silent, until after the election.

For the past few weeks, I have been speaking about how the upside potential for this market is limited and that the downside appears to be very profitable.  I still believe this to be true, regardless if the market does indeed bounce back, this week.

However, I would still be cautious about getting short, too soon, despite Fridays’ strong decline. Therefore, please be patient!

If the market does bounce back, this week, and the momentum oscillators become overbought, that is when I will start looking to put on a few shorts.

Over the next few days, I will carefully monitor the markets and keep a very close watch over them.  If I do start to establish short positions, I will do so at higher levels.

If you would like to know exactly what I am trading next follow me at www.TheGoldAndOilGuy.com

Chris Vermeulen

Will your investments hold up over for the next financial crisis, which will be far worse than 2008/09

We are living in “extraordinary” times, which will end with unpleasant consequences. The world is looking towards the Central Banks to sort out these problems, whereas, the Central Banks are clueless about how to handle this situation.

Never in history has the world seen 30% of global government debt at “negative yields”. This is an experiment, which is unlikely to end with a good result.

“Conventional monetary policy has less room to stimulate the economy during an economic downturn,” San Francisco Fed President John Williams wrote in an essay.“This will necessitate a greater reliance on unconventional tools like central bank balance sheets, forward guidance, and potentially even negative policy rates. In this new normal, recessions will tend to be longer and deeper, recoveries slower and the risks of unacceptably low inflation…will be higher,” reports Zero Hedge.

 

But isn’t the stock market at all-time highs?

Since the third quarter of 2015, the total earnings of the SPX companies have dropped during every subsequent quarter, yet the stock market has reached all-time highs.

Not only this, the current valuations of the SPX are second only to the “lofty” valuations of 1999, which ended with the bursting of the “dotcom bubble”. Nonetheless, the stock markets continue to trade higher in 2016, but for how long?

These days there is a big disconnect between the real economy and the stock markets. The best example of this is the Venezuelan stock markets. Though the people there do not have food, there is rampant hyperinflation and there is unrest among its’ citizens, yet, the stock market went up 10 times between 2012 and 2016:

venezuela

Hence, the investors should be wary of the stock markets rise. The markets will not allow an opportunity to exit in a proper manner, a sample was the fall during the first two months of this year.

Precious Metals’ Powerful Rally Begins!

Smart investors are recognizing this opportunity, which has led to a rise in both gold and silver prices and purchases, as shown in the chart below. Both are among the top four performers this year.

 performance

The debt has become unmanageable, it’s on the verge of explosion!

The total debt of the United States has reached gigantic proportions. It has seen an increase by a factor of 14 since 1980 as shown in the chart below. On the other hand, the GDP of the US has only increased by a factor of 6.2.

debt

Such a mind-boggling debt cannot be repaid ever. “Nobody is prepared to accept that we might have to wipe out decades of growth just to eliminate leverage. Banks go, there are defaults, bankruptcies, layoffs,” said Viktor Shvets, the global strategist of the investment bank Macquarie Group, reports Zero Hedge.

 

Gold and Silver will be the only saviors:

This is what I have been warning our readers, that all this excess will lead to a “Great Reset”, which will be a period of great turmoil and the only ‘asset class’ that will help you survive the onslaught are the precious metals.

“If you think of gold, the only way gold loses is if normal business and private sector cycles come back. If that is the case, gold goes back $100 per ounce. The other outcomes: deflation, stagflation, hyperinflation are all good for gold,” said Shvets.

 

 

Attempts to move away from the dollar standard:

 

There are talks of moving away from the dollar as the global currency of the world. An option being explored is setting up a global currency, which will be a derivative of the five international currencies, the dollar, euro, pound, yen and the yuan.

Nevertheless, this experiment is likely to fail even before it starts, because, not only are these highly flawed currencies, the Central Banks of these countries also own the largest money printing machines in the world.

So what is left?

A return to the gold standard in some way may be possible solution, because it renders the Central Banks jobless. Nevertheless, Shivets points that the gold standard is likely to come after a war and not before that.

Conclusion:

It is possible to forecast the timing of the stock market crash and the next financial crisis, due to our “Cycle Analysis” and “Predictive Analytics ”. I have been warning that the stock market will top out and eventually the large cap stocks will roll over. There is a huge amount of manipulation by the FED. However, as investors, we can be ready for any eventuality by investing wisely in both gold and silver which has worked well for our long term portfolio the past year and soon enough having a net short position on the stock market will be an incredible opportunity for those who embrace the collapse.

Every crisis also brings an opportunity with it, hence, lets’ make the best use of the opportunity before the price of gold and silver blows through the roof. It is better to invest now and see our investments multiply, instead of waiting for the crisis to start, as, by then, more than half of the rally would be behind us.

Get my next article and analysis by visiting www.TheGoldAndOilGuy.com

Chris Vermeulen

Locking In Another $450 In Profit This Week

Awesome Week For Trading Price Spikes!

Subscribers just locked in another $450 on yesterday’s SpikeAlert for the SP500 Index!

So far traders are up $1,550 in Profits with two simple trades

 

Tuesdays Spike Alert & Targets:

spike-alert13

Wednesday’s Spike Target Hit:

spike-sept14
These spike alerts can be traded in many ways. You can take advantage of them with:
– 1x, 2x, 3x ETFs
– CFD’s
– Spread Betting
– Binary Options
– My favorite – ES Mini Futures Contracts

GET SPIKE ALERTS HERE!

Subscribe

Awesome Start To Week $1100 Profit In One Morning

Subscribers just locked in $1100+ on today’s SpikeAlert for the SP500 Index!
These spike alerts can be traded in many ways. You can take advantage of them with:
– 1x, 2x, 3x ETFs
– CFD’s
– Spread Betting
– Binary Options
– My favorite – ES Mini Futures Contracts

Monday 7:51am ET  – Spike Alert & Targets

spikeup1

 

First Target Hit at 10:20am: $1100+ Profit

spikeup1t1

Subscribe

The Crisis Is Escalating!

Deutsche Bank and Commerzbank are presently in the process of merger talks. The fact that these meetings are occurring is a signal that Germany’s banking troubles are indeed accelerating.

Deutsche Bank to Initiate the Next Financial Crisis – Click Here

They are desperately seeking ways to cut costs and improve profitability. These plans include restructuring and job cuts using highly unconventional measures. Last June (2016), Reuters cited anonymous sources as saying that Commerzbank was exploring the option of hoarding billions of euros in vaults as a way of avoiding paying a penalty to the European Central Bank, which is due because of negative interest rates.

Their main problems are derived mostly from both low and negative interest rates. These lenders are used to depending on interest rate margins for income, while offering some services to depositors at either low or no cost. Low interest rates have significantly eroded these banks’ abilities to make money. It has become difficult for German banks to give incentives to their customers to encourage customers to keep money in their financial institutions. These inefficiencies, and the intense competition within the German banking sector, have already led to serious financial difficulties. If one combines these factors with the new challenge of declining interest rates, what possible positive impact can they expect to incur?

Interestingly, rates are not just low within the context of American history, but they also happen to be at their lowest levels – ever – in over 5,000 years of civilization.

5,000 Years Of Interest Rates – Rates Lower Than 1930’s Depression Era

chart-1

Deutsche Bank is not merely Germany’s biggest bank, but the political role that it plays in Germany is unique when compared to other countries. Deutsche Bank’s importance to Germany is many times greater than that of an investment bank like Lehman Brothers was to the U.S. in 2008. Deutsche Bank is technically a private bank, however, it is informally tied to the government and formally tied to most major German corporations. The bank’s fate will have an impact on all of Germany.

The Italian banking crisis is not only Italy’s problem!

Italy’s non-performing loan issues have now become common knowledge. Who will be forced into dealing with the repercussions of settling Italy’s impaired debt? That is a political question, and the answer depends, in large measure, on who holds Italian bank debt.

The U.S banks are not shielded from these European Continental banking problems. There is a substantial amount of uncertainty and risk.

The consequences of these failures pyramid the crisis due to the European Unions’ regulations. The European Central Bank (ECB) and the Central Banks of member countries cannot bail out failing banks by recapitalizing them. The bail-in strategy is, in theory, a mechanism for ensuring fair competition and stability within the financial sector across the Eurozone.

The bail-in process can potentially apply to any liabilities of the institution that are not backed by assets or collateral. The first 100,000 euros ($111,000) in deposits are protected in the sense that they cannot be seized, whereas, any money above that amount can be.

Germany insisted that the bail-in process should prevail.

The Bank for International Settlements stated that German banks are the second most exposed to Italy, after France, with a total exposure of $92.7 billion. Demand for gold has increased!

Italy’s ongoing banking crisis is presenting yet another threat to the stability of the ECB.

Commerzbank’s financial statements revealed that their Italian sovereign debt exposure was 10.8 billion euros ($12.1 billion).

Deutsche Bank’s net credit risk exposure to Italy is 13.3 billion euros as of the end of December 2015. Its gross position in Italy is 35.4 billion euros. Deutsche Bank is sitting on $41.9 trillion worth of derivatives.

Consequences of large bank failures are going to be significant.

Gold Is The Only Safe Haven Left In The World

Gold has remained as a form of currency for many centuries. Whenever countries followed a strict gold standard and used it as their currency, those economies were very stable. But, governments have always surpassed their means with their costly spending and have to leave their gold standard so as to fund their inefficiencies. Currently, gold is now beginning its’ multi-year “BULL MARKET”. Gold is the only asset class which will maintain its store of value during the impending crisis which is on the near horizon. The gold mania is about to be unleashed. While global central banks are now implementing negative interest rates, this is the perfect scenario for gold to surge much higher.

Gold does have historical store of value characteristics. It is held by central banks and institutions as a reserve. They do not want to sell it; on the contrary, many of them want to buy still more and accumulate it. Therefore, gold’s characteristic role, with regard to sovereign reserves, is still intact, even amid the fascinating evolution of central banking and institutional finance that we are witness to today.

This week I shared a detailed video for my newsletter subscribers talking about the big picture trends and price targets for gold, silver, mining stocks, oil, natural gas, the S&P 500 index, coffee, and sugar. We have some huge opportunities unfolding on the monthly charts. If you are looking for some easy, big trading opportunities, then follow my analysis and trades at: www.TheGoldAndOilGuy.com