Gold News Daily
5.31.18 – Deutsche Bank Shares Crashing
Gold last traded at $1,304 an ounce. Silver at $16.45 an ounce.
NEWS SUMMARY: Precious metal prices steadied Thursday on month-end trade settling and a flat dollar. U.S. stocks fell after the U.S. announced tariffs on Mexico and Europe, increasing trading tensions.
Spinning Italy’s Distressed Debt Into Gold –Holmes/Forbes
“In the past, the fifth month has provided an attractive buying opportunity….This particular May, the price of gold also had to contend with a stronger U.S. dollar, which appreciated against the euro as political strife in Italy spread throughout the entire continent. Priced in euros, then, gold is performing well, having closed at a nearly one-year high of 1,125 euros on May 29….Italy’s appetite for change fits into what I see as a global trend right now. Based on what I’ve heard during my travels, middle class taxpayers, in the U.S. and elsewhere, are increasingly fed up with special interests and entrenched bureaucrats….Similarly, it’s possible that Italy could end up being next to say addio to further European Union (EU) control and take back its own economic and political destiny….The country’s public debt currently stands at 132 percent of GDP, and ratings agencies are reviewing a possible downgrade of its credit rating. Should it default on its billions of dollars in loans, a chain reaction could quickly spread to financial markets all over the world…for these reasons I think itâ€™s prudent to have a 10 percent weighting in gold.”
URGENT: Remember Lehman Brothers? –Carrillo/SATC
“Deutsche Bank is the world’s 4th largest bank which just laid off 10,000 employees this past week. Their stock is now plummeting sharply this week, down 12% just in the past two days alone, along with its revenues. News sources report, ‘Deutsche Bank Has Credit Default Swap Exposure of 2x Global GDP.’ If marketeers run on the derivatives book, nothing will be able to save it. This would be a high impact event. Before the 2008 crisis, Deutsche Bank’s price was a $120.00 a share. You may remember that the 2008 panic began when Lehman Brothers’ stock price broke below $10.00 a share. Today at $11.27 per share, Deutsche Bank stock is $6.00 lower than it was after the 2008 credit crisis. We could see a full blown stockholder panic if and when the stock breaks below $10.00, which was the Lehman Brothers’ stockholder panic trigger.
Deutsche Bank carries enough derivatives to collapse the entire financial system. How big would the impact be to the U.S. and global financial system? Twice as big as Lehman Brothers….Do you own wealth insurance? Buy gold and buy silver, before it’s too late! Gold prices increased by 110% after Lehman Brothers collapsed – and gold was the only asset class that did increase!”
Craig R. Smith Comment: Arthur Levitt, former chairman of the SEC, said Deutsche Bank should now be treated like a “penny stock” on Bloomberg today. Remember, Deutsche Bank passed the “stress tests” with flying colors because of the capital they hold. Yet that capital could disappear overnight if other banks call in their loans. Still think the banking system is “sound as a dollar”? Read Mr. Smith’s Special Report, Don’t Bank On It!
Deutsche Bank Crashes After Fed “Secretly” Put US Operations On “Troubled” Watchlist –Zero Hedge
“It was already a terrible week for Germany’s largest bank, when the Italian turmoil sent its stock price below 10 euro for the first time since the bank’s existential crisis in the fall of 2016, and it just got worse this morning, following reports that the Federal Reserve has designated Deutsche Bank U.S. operations to be ‘troubled condition’ which the WSJ said was a rare censure for a major financial institution and is being reflected in its price this morning, which is now down over 5%, at 9.35 euro, and rapidly approaching the all time low of 8.834 euro hit in September 2016 when speculation was rife that Germany would bail out Europe’s largest lender. As the WSJ reports, the Fed’s downgrade took place ‘secretly’ about a year ago, and hasn’t been previously made public until today. ‘The troubled condition status – one of the lowest designations employed by the Fed – has influenced moves by the bank to reduce risk-taking in areas like trading and lending to customers’….The Fed downgrade also landed the bank’s FDIC-insured subsidiary, Deutsche Bank Trust Company Americas, on the FDIC’s ‘Problem Banks’ list of at-risk institutions….Judging by the market’s reaction, which following the news has sent the stock crashing to new multi-year lows…”
Here Comes Another Global Financial Crisis –The Week
“Is another global financial crisis on the horizon? Investors are increasingly worried that an escalating political crisis in Italy could lead to a populist, euroskeptic government taking power. As a result, there’s rising uncertainty about whether the country might eventually abandon the euro currency zone or default on its giant debt pile. To make things worse, the Trump administration continues to toy with the idea of a trade war with Europe and China. That would be the last thing the global economy would need if the Italian situation deteriorates further. Debt crises and trade wars are a toxic combination….Italy is the eurozone’s third-largest economy, 10 times the size of Greece’s. It also has the world’s third-largest sovereign debt market, some $2.7 trillion. Only Greece has a higher public debt-to-GDP ratio in the eurozone.
My AEI colleague Desmond Lachman, a former International Monetary Fund official and Wall Street emerging market strategist, argues that Italy’s troubles have the potential to roil the global economy much like the 2008 Lehman bankruptcy. (The 10th anniversary is coming!) America wouldn’t be spared. Italy is a mess. It’s too big to fail, but also too big to bail out. To a large extent, it will need to save itself though economic reforms that boost its lagging productivity and reduce its debt load as a share of the economy.”
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