If Greece Blows Up And Financial Armegeddon Hits, Gold Will Go “Bid Without”

Although the Fat Lady isn’t on stage singing yet, it looks like my view that the Troika/Greece situation would resolve with a “NO-GREXIT” was wrong.  I’m actually relieved because perhaps this will be the catalyst that will trigger a forced re-setting of all markets globally which have been rendered catastrophically disconnected from any remote semblance of their representative underlying fundamentals.

At least at this moment in time, the Eurozone has rejected any bailout extension beyond June 30th, regardless of the outcome of the Referendum on the matter declared by Tsipras.   Perhaps this is the Troika’s most extreme effort to get Greece to “blink” in what has been, up to this point, a childish game of chicken.

However, that not being the case, it will be interesting to see how the markets will react on Monday, assuming the Central Planning Network of western Central Banks exercise ultimate control by cutting the “electricity in the casino” by making  sure all the markets “break” ahead of Monday’s open.

Per a report posted by Zerohedge, one Cyprus-based FX brokerage firm, Mayzus, has declared at FX instruments to be “Close Only” mode until Monday morning:  LINK.  It will be interesting to see, assuming no changes to the latest status of the GREXIT drama, if most, if not all markets, decide to declare a trading holiday on Monday.

Please understand that if the credit, derivatives and equity markets had not been inflated with printed liquidity to such an extreme degree, there would never be a need to “break” the markets to stop trading or declare an outright “holiday” as Mayzus has.

Why? Because the relative price level of the markets would have already incorporated a significant amount of the expected risk attached the probability of a GREXIT. Unfortunately the Central Banks have, up to now, successfully prevented healthy volatility and have completely insulated the markets from all measures of risk.

Thus, the only way to prevent financial Armageddon is to declare all markets on holiday. However, the most interest market to watch will be the re-pricing of the market for physical precious metals.  Even if they suspend the trading of fraudulent paper futures trading, an over-the-counter – or even “black” market – for physical bullion will develop.  This is because, unlike futures contracts, buyers and sellers can effectuate an exchange of physical for fiat paper.  Of course, I believe that this market would open up “bid without,” meaning buyers will stick bids out looking for offers.

There’s nothing more terrifying in the markets than trading a market that goes “bid without” when you are short.  Theoretically markets have a bottom – zero – but the upside is infinite.  Speaking from the experience of being a market maker in a relatively illiquid market – junk bonds – it is more than just an “uncomfortable” feeling when you are short and the market goes “bid without.”  It seems like an eternity until the first offer might appear and the pit in your stomach goes bottomless when an offer finally appears at a level much higher than the level for which you were praying.  The short position will cause heart attacks and Bill Murphy’s prediction that they will eventually carry gold shorts out of the Comex on stretchers will come to fruition.

The only advice I would give to someone who decides to throw an offering out in physical gold is this:  make sure you offer your gold at a price at which you are willing to own fiat paper currency instead of hard currency devoid of counterparty risk. Regard the value all fiat currencies like you might regard the value of new drachma relative to the value of physical gold bullion.

If You Don’t Like The Outcome Of The Game, Just Change The Rules

Perhaps this could be the “Force Majeure” event the Comex bullion banks are looking for in order to get out of their massive naked paper short position in silver by declaring that all contracts are to be settled “cash only.”  At that point, may as well just shutter the Comex because no one will want fiat cash.

Speaking of changing the rules, BlackRock is seeking Government clearance to “change the rules” governing their mutual funds in order to set up an internal program in which mutual funds that get hit with big redemptions can borrow cash from internal funds that have a lot of cash:   BlackRock Seeks To Change The Rules Of The Game

Not only does this tell us that the elitists running BlackRock expect a big run on mutual funds at some point soon, but it’s a signal to everyone to get their cash not only out of the rigged markets, but out of the financial system entirely.  

More on this later, but anyone reading this who owns BlackRock mutual funds of any variety is a complete idiot if they don’t call up their brokerage or financial advisor and demand immediate redemption.  That is, of course, if the markets open Monday….

 

26 thoughts on “If Greece Blows Up And Financial Armegeddon Hits, Gold Will Go “Bid Without”

  1. There will still be unlimited amounts of Paper Silver and Paper Gold for sale next week – you can take that to the bank.

    1. That is pure hyperbole, unless the NEARLY “unlimited” paper – physical proxies- have or have nearly saturated the fragile, overstressed system’s tolerance. So I could see only ONE more, naked contract breaching the boat’s tipping point.

    1. For the same reason the stock market “breaks” only when it’s about to really tank and never when it goes straight up on b.s. economic number

  2. Here is a quote from Bill Holter from yesterday:

    “If we look at the July silver contract, there are 55,000 contracts still open with only 4 days remaining before first notice day. This is 275 million ounces still open with only 57 million ounces available to deliver. This is truly fraudulent sales of metal because the metal does not exist to deliver. Yes I know, the apologists will say “this always happens and the shorts will decline into first notice day and evaporate throughout the delivery month”. I agree, this “has” always happened in the past but something is changing now. In the past, total open interest always dropped going into FND, now it is not. Not only are all July contracts closed out being rolled into September, the total is rising rather than declining sharply.”

    http://www.jsmineset.com/2015/06/26/dont-push-a-bad-position/

  3. Seems some VERY interconnected marked to supermodel derivatives are going to lose runway appeal.
    In Bix Weir’s latest email (anyone can sign up @ link), Monday sees bankruns and Wednesday, a Greece default.:

    “The Planned End Game and a Quick Note on the Grexit
    Bix Weir
    http://www.RoadtoRoota.com

  4. Be serious. F*#kin clown. Will be a nonevent at this point. No one cares about Greece. Get real with this “bid without” sh*t

  5. Hi Dave,

    I think that while the Greek banks may not be open on Monday that this crisis may take a while to get going. There are three more days to see if Greece blinks. I would think that it would require a few days of major market sell offs before the regulators would move to shut them down. It will be interesting to see what impact this will have on the July COMEX silver longs. Maybe this is the event that will make a lot of them decide to stand for delivery. Next week promises to be interesting for sure.

    Best Regards,
    Bill Osborne

      1. They won’t blink. The Greeks think it’s their natural birth right as the “inventors of democracy” to get easy money from the ECB. In reality they are just a bunch of asswipes.

  6. Hi Dave

    I’ve been reading your work for quite a while, and I see it as very sound in its logic.
    Although I’m not sure if the markets will have the plug pulled on Monday, but that remains to be seen. An interesting thing to add to the mix at this point is the Chinese Stock market is already in freefall which hasn’t been mentioned in this article.
    This on its own could spark contagion without Greece. Then I also think we have a hidden problem in the OCD markets which might break surface as well this week if things get bad enough. Then add to the mix a possible COMEX default as well and we are in to perfect storm terattory. This leaves one tool in the bag for Mario Draghi and that’s going to the printing press and fast.
    As a final note: I’ve just read Austria has joined the fré and is going for a vote on a referendum to leave the EU!

      1. Dave, it’s not a big story. As a reference use
        http://www.eu-austritt-oesterreich.at/
        and Google translate.

        First they have to collect sufficient number of supporters (100,000). If it passes there has to be a debate in the parliament and in best case there will be a referendum but most probably it will go to the dust bin. Don’t read too much into it.

  7. I expect gold to be back in the 1200’s pretty quick come market open on Monday. There will a lot of buying early doors.

  8. In the immortal words of Richard Milhouse Nixon, (who, it turns out, really was not a crook compared to the gypsy in the White Palace today) “we will know in the fullness of time.”

  9. Sunday morning, word around the campfire has it that there will be
    a bank holiday on Monday in Greece. Spread betting has stocks getting
    hammered in Europe but, no clear indication of the carnage here in the U.S.
    Stay frosty !

  10. Silver is the metal to watch. With it’s huge short interest and all time high open interest, the naked shorts could make things very interested very quickly and all this is happening right into first notice day. BTW, how many trillion in derivatives are tied to Greece’s 330 billion in debt? How would you like to be a bank teller or ATM loader in Greece on Monday? I guess the tellers will be verbally and physically assaulted and the loaders get the next few weeks off until the ink on the newly printed Greek Drachmas dry!

  11. While I am deeply cynical about the markets, I don’t think the option is really there to put them “on holiday” for more than an hour or two for cases of turmoil and decline. You close the markets for a few days, or a week, and you can never really reopen them without magnification of the turmoil you sought to stem. And note, the week of September 11, other markets were still open when New York was closed down- so that example can’t be used for optimism on a closure.

    What is more likely to happen in a waterfall decline is that the central banks step in and put a floor under the bid.

  12. Greece just closed all banks and the Greek stock market until July 5th. Poof mutherfuckers. Physical in your hand or you don’t own it!!!

  13. http://www.foxnews.com/world/2015/06/28/greek-banks-will-not-open-monday/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+foxnews%2Fworld+%28Internal+-+World+Latest+-+Text%29
    Greek banks will not open Monday
    Published June 28, 2015The Wall Street Journal
    EXCERPTS:

    “Greece said it would temporarily close banks on Monday in a bid to prevent its banking system from collapsing after the European Central Bank moved to cap the amount of emergency loans it provides for the country’s cash-strapped lenders.
    The ECB said earlier on Sunday that it wouldn’t increase the lifeline of emergency liquidity that has been sustaining Greece’s banks, even as nervous Greek depositors appeared to withdraw their money at a greater pace over the weekend…

    Tsipras’s gambit means Athens will almost certainly default on a $1.72 billion payment it owes the International Monetary Fund on Tuesday. Greece’s international bailout expires the same day, meaning the country would no longer be under the umbrella of an international rescue package. Finance ministers of other eurozone countries rejected Greece’s request for a one-month bailout extension to give it time to hold the referendum…”

    There could be light at the end of default,
    Markets could breathe after a halt.
    Chickens always come home to roost,
    Will they lay golden eggs as a boost?
    Contracts should settle one by one,
    Their counterparties out in the sun.

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