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Greyerz – One Of The Most Important Charts Ever

http://kingworldnews.com/kingworldnews/ … _Ever.html

Today Egon von Greyerz sent King World News one of the most important charts you will ever see. Greyerz, who is founder and managing partner at Matterhorn Asset Management, demonstrated, in this one chart, the incredible danger facing the global financial system and why gold will explode higher in price.
This is the first of two interviews KWN will be releasing with Greyerz today. Here is what Greyerz had this to say in Part I, along with his chart: “If I look around the world, the problems continue. China has yet another round of QE totaling $60 billion. China is under real pressure. And if you look at ArcelorMittal, which is the biggest steel producer in the world, and for them China is a massive market, they had a 20% decline in sales in Q3.”
“That’s a massive plunge in sales, and a major part of that is due to China. Steel production is a very good indication of what’s happening in the world, and a 20% fall is massive. But, importantly, that is a sign of a worldwide fall in demand for raw materials, especially in China.
Looking at Japan, one company after another is having problems. The electronic company Sharp is fighting for survival. Panasonic has massive losses, and even Sony is suffering. Japan is in trouble and their debt-to-GDP is a staggering 200%….
“So the reality is Japan will need to continue to print money. Argentina is another country which will default very soon. It’s an absolute mess in Argentina, but that is not unusual because they have one default after another.
Moving to Europe, eight months ago Greece had a financing package, agreed to by the EU, of 175 billion euros. Of course now we are being told that will not be enough. They expected the debt to peak at 167% of GDP in 2014. Now Greek debt will be 200% of GDP, and I doubt that will be enough.
The target for the Greeks was to get down to 120% by 2020, but there is no chance whatsoever of accomplishing that. So the question is, who is going to finance even more debt for Greece? Well, obviously the ECB will have to print more money.
Spain is also suffering. Retail sales last month had the biggest plunge in history. We also see Europe’s unemployment is at a record high of 11.6%. So everywhere we turn the problems continue. In spite of that, the European Union is now having budget discussions for financing Brussels activities and the EU.
Well, of course the unaccountable bureaucrats want an increase in the EU budget. Virtually every country is hemorrhaging in the EU, but the well-paid bureaucrats are asking for more money. The UK Prime Minister Cameron is trying to fight against that, but he is unsuccessful.
Over in the US, hurricane Sandy is going to negatively impact the already struggling US economy. The negative effect may be relatively small, but it will still be damaging. With 50 million people on food stamps and unemployment at levels which can only be compared to the Great Depression, the US can ill afford additional unforeseen problems such as hurricane hitting the east coast.”
Greyerz also warned about insolvency: “I’ve spoken in the past about bankrupt governments, and the bankrupt banking system. If you value debt in the banking system at market value, then no major bank would be standing today. But in addition to that, if you then look at the derivative positions of the banks, this is a disaster waiting to happen (see chart).
The real over-the-counter derivatives outstanding, worldwide, is at least $1.1 quadrillion, and a major part of that is worthless. People have no idea what kind of turmoil and destruction this can cause to the global financial system. KWN readers need to understand that as the global economy edges closer and closer to collapse, the earthquakes in the financial system will become so enormous that it will eventually overwhelm politicians and central planners.
This is why it is so important that investors protect themselves by holding physical gold and silver outside of the banking system because the coming derivatives disaster will create an explosion in the price of gold. And when the chaos is finally over and a new financial system emerges, gold and silver will be one of the few assets left standing.”
I would just add to what Greyerz has said here that when you look at the ‘cubes’ within the cubes, which represent gold and alleged gold holdings, the smaller of the two cubes shows gold held by the central banks totals $1.6 trillion. Greyerz, like Turk, believes the central banks do not physically possess all of the gold they claim to have.
This could mean that the central bank gold cube may in fact only be half the size of the one Greyerz shows in his chart. If that is true, then the case for an eventual explosion in gold is that much more compelling.

Greyerz – Gold & The Incredible Financial Destruction We Face

http://kingworldnews.com/kingworldnews/ … _Face.html

Earlier today King World News published the extraordinary chart sent exclusively to KWN by Egon von Greyerz. In part II of his interview, Greyerz, who is founder and managing partner at Matterhorn Asset Management, discusses the incredible chart, and gives readers a shocking price for gold which is based on that ‘cubed’ chart.
Here is what Greyerz had this to say in Part II, along with his comments about the fascinating chart: “I discussed the real over-the-counter derivatives earlier, which stand at $1.1 quadrillion, and this is worldwide. Every time there is a problem in a bank it seems to be derivatives related, such as what happened with JP Morgan which recently lost $5.6 billion, and UBS which lost $2.3 billion.”
“They have young people, many times in their 20s, coming in and having derivatives positions of tens of billions or even one hundred+ billion dollars, and these young people have no idea what they are doing. The individual from UBS, who is now defending himself, said, ‘I just came in to run these positions. I had no idea about this market.’ He is only 27 years old.
So you have inexperienced people taking massive risks, and running positions which amount to an unthinkable total of $1.1 quadrillion….
“Every time we look at these positions closely and value them, which is when there is a problem, the banks realize the positions are not worth anywhere close to what they believed they were. The real, underlying problem is that even management at the banks don’t understand these derivatives. They don’t know how to value them, so they have no understanding of the true value of the positions.
Many times they are virtually impossible to understand, therefore the traders can value them at whatever they want. Of course they are unregulated and they are not traded on any exchange, and most all of this is held off-balance-sheet. Meaning they are not included on the banks balance sheet.
What the banks do is net down the positions to a very small total because they assume that counterparties will pay. Well, we know when something happens in the banking world, take Lehman as an example, and we will have many more Lehmans in the future, the counterparty doesn’t pay or isn’t able to pay.
What that means is the gross remains the gross, and again, we have an outstanding exposure, worldwide, of an unfathomable $1.1 quadrillion. You also have to realize that there are virtually no reserves against these enormous positions.
This is why investors that hold major assets in banks are taking risks they shouldn’t take. The reality is the banking system is incredibly fragile because of the ongoing risk of the derivatives bubble blowing up at some point. I would add that the risk of this happening is very high in my view.
This is the reason, as I’ve said, that investors have to hold assets outside of the banking system. Let’s take a look once again at the cube chart, just to look at the proportion of outstanding derivatives to gold:
You have $1.1 quadrillion of derivatives, and all of the gold ever produced, which is in one corner of the chart, is $9 trillion. If you take the gold said to be held by central banks, which assumes the central banks physically possess the 30,000 tons and I don’t believe they have anywhere near that, but hypothetically speaking, if they did, it is only $1.6 trillion worth of gold.
You can see in the above chart that the central bank gold only fits into a tiny corner of the cube. So what I am saying with this chart is if there is a derivatives blow up, you can only imagine the amount of money that would need to be printed. And, again, I think there is a very high probability of a derivatives blow up taking place.
If you then related the enormous derivative position to the percentage of gold allegedly held by central banks, if gold were to reflect that, you are not talking about gold at $10,000 or $20,000, you are talking about gold well above $100,000 an ounce. This is what investors must focus on in terms of the bigger picture for gold.”

Statistics: Posted by DIGGER DAN — Fri Nov 02, 2012 12:53 am