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….