European Sovereign Debt Crisis Deepening - Risk of Contagion And Bond Market Crash, And Why Rising Rates Mean Gold Strength

Tyler Durden's picture

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Turd Ferguson's picture

Buyer beware. Blythe is in the house but she presents us with a great opportunity.

EscapeKey's picture

Jeez, Gold is all over the place this morning.

Hephasteus's picture

There must be derivatives tied to price of silver and gold. They are not tolerating over 30 price on silver and they have to work really hard to keep gold from getting to credible striking distance of a breakage in case of bad news.

Misstrial's picture

Yes indeedy.

Gold & silver inverse ETFs = derivatives.


william the bastard's picture

Gold pimp

ColonelCooper's picture

If you'd quit gargling goat balls, you'd be able to speak more clearly.

tmosley's picture

Says the incarnation of the arrogance of ignorance.

geminiRX's picture

Hey Turd, what is your opinion on Kinross? Seems rather beaten down and not such a bad bargain in the low 16's?

slewie the pi-rat's picture

1) the pretty girl, dressed in red, does NOT have her curl in the middle of her head.

2) kinross?  i bought it long ago, in a space-time "far away" as PART of a "balanced portfolio" of 4-5 stox: kinross,  shorty-torty, the Gfldz, Welkom, yes, the big, bad krugerRugerZ. it was de-fense, but inflation wuz the raging 'stag' @ the time, PLUS, i don't recall the exact #'s, but the dividendz were about 15% which i moved into Fidelty MoMkt Fundz.  X99 stuff, discount trading, $6/option contact, those were the daZe!  i did NOT try to get rich, then, and/or call the turns.  when the "spike" was in it's early stages, i had met my investment objectives, and got out, going all-in in the mo-mkt fund.  When Volker "took away the punchbowl"/or what-EVer, we were getting 18%/year, which DID get "reinfestered"/stayin in the Mo-MkFun. this was back when the FED, as well as everything else was not controlld, totally, by the polz and the bankz, and the lobbyist.  at least WE felt we still had some viable choices;  to bad we got that wrong. when that party died out, i went all-in in Cali RE, etc, and eventually cashed out, and then just screwed the pooch, got V careless in the first daze of the OEX, and augered in.  genRX:  what is Kinross, paying, now?  Ms. Red EscKey is absolutely pounding the true nail of upcoming volitilty, IMO;  paper?  Now?  if you have children and hair and want to protect both, be careful, ok?  Turd is brilliant, but unless and until he knowZ yer situ and objectivez, i doubt he can tell you much more than i, but, mebbe he can, and will.

3)  japan?  mr. bonner's "new trade of the decade" = sell T'z, buy japanese commonZ, i believe.  when i introduce peeps to his site, i always tell them: "IMO, he is the BEST there is."  clear, concise, real.  He and AW publish several agora skools, and they are xlnt places to Study & Learn.  i have raised holy hell all over his places, as you might, perhaps, imagine, but i hope we recognize each other as persons of good will.  we tend to "disagree" about only one thing really, and since his family and wealth situ is quite diff from mine, why not?  Mr. B has eyes all around his head and is very perceptive.  stocks?  well, yes, as above.  US stocks?  when the DJI gets to 5000, he'll buy!  until then, look out below!  i do NOT speak for him, AND i hardly ever get anything correct, so figure this out 4 yerself, ok?  but i think he has cattle that eat sand, somewhere or other.

4) Japan, deux:  as we see, from above the above article, the japanese are savers.  when gold and platinum reached parity,a few years back, they gobbled up ALL the platZ they could get on their plateZ.  if you believe THEIR guy, maybe BB is right, again! he is advising a spread, again, for this DECADE, but not to PM's, right now, unless BTFD'z (?) & no PM paper, IMO, and i do mean 0.  PM's?  i lmao'd when he advised his, again, DEFENSIVE strat: if you got it, which you should by NOW, bury it and try not to forget where!  I can't advise on his "acquisition strategies", b/c, after i decided i liked being "poor" much more than being "rich", i was/am pretty much outa the "game" except for some little fun, now and then.  i have tried to present my strategieZ on this site, as well as my reasoning, and my viewZ, as well as my values, and all i can say, is thank you for the oppotunity to do so, and play yer own hand, ok? oh...and, hopefully your heart, also.

5) Europe? ireland? greece?:  are the latter 2 gonna take-down the former 1?  i don't know, but here's a link to the blarney on the near horizon:  Irish general election, 2011 - Wikipedia, the free encyclopedia.

i think andy capp may awaken to his own national archetype (the GOLDEN Harp) and rid him/herself of the poison of the the IMF, they may choose to default now and avoid the rush.  their call. nations?  yep. and cleaning house w/ rakes, too?  you decide what the HELL is going on, here, 4 yourself. 

6) china?  here's what the (imo) smartest 'austrian' on the planet, had to say, 2day:  Silver and Opium - 

so, i feel kinda bad about calling the Chinese counterfeiters and implyng them to be aggressors, but i've been programmed by my culture, also, and the
nutty professor has helped me Be, Serve, and Grow, here, and i thank him for his wisdom.  Conan Doyle started one of Sherlock's "adventures" in a London Opium Den!  jeeez!  how styooopid of me!  when will i ever learn?

you decide what you think is best for you, and for us, and for them and for everybody's kids, if you would.  i'll be on my donkey, which for some reason, just refuses to die.


geminiRX's picture

Did you forget to refill your Lithium?

slewie the pi-rat's picture

lol gemini.  thx 4 yer concern.  i hope things turn out well for everyone.  don't you?  yeah, i know it's too long & crappy, but it seems you might have at least glanced thru it and gleaned the parts which were meant for you = all of it.  yeh, i'm changing tactics after 3-4 weeks of fighting like a banshee.  i'm done w/ that.  trust me?  Hahaha!

but I'm NOT changing my strategy, just my tactics.  i'll probably spend the next 10 years of my life just backing down, eh?  also, see below, if you will, ok?

slewie the pi-rat's picture

i'm pretty happy i didn't claim to speak 4 Bill Bonner, Agora, or the Daily Reckoning b/c i got his trade of the decade wrong.  i got the one he announced @ the beginning of the decade correct, but i did not realize he had changed it:  this is from 1/19 (without permission): "But what about Japanese stocks now? We thought you would ask. Since we announced our new ‘Trade of the Decade’ – sell US Treasury bonds/buy Japanese stocks – we have gotten nothing but grief on the subject. Everyone thinks he knows what will happen to Japanese equities over the next 10 years; and everyone thinks they will go down."  Read more: Will Japanese Stocks Survive a Meltdown?

This is from 5/3/11, (w/o permission): "I had great luck with my last trade of the decade. Ten years ago I suggested selling US stocks and buying gold. It worked out very well on both sides. So people wanted to know what my trade would be for the next decade. I gave it some thought and came up with something. I think this one will work out too… but I’ll give you an even better Trade of the Decade."  and, later:  "So, that’s the new Trade of the Decade. Sell US Treasuries. Buy Japanese small caps." 

Then, he changed, again, in the same essay:  "So, how about this? Instead of selling US Treasury bonds, sell Japanese government bonds. Japanese bonds are probably even more over-valued than US bonds. And with the Japanese borrowing more than ever…while the Japanese savings rate declines…it seems a fair bet that Japanese government debt will go down at least as much as US debt. Maybe more.

By buying Japanese small caps while selling Japanese bonds you take out the currency risk. You have an even better Trade of the Decade. The Japanese small caps stocks are extraordinarily under-appreciated. The Japanese government debt, on the other hand, is extraordinarily over-appreciated.

But the first point I want to make is that this is just an idea. It’s not a substitute for a serious investment strategy."  Read more: An Even Better Trade of the Decade

And, even though he came down the stretch of the last decade saying how well "we" had done with trade:  sell US stocks, buy gold, i missed a day 'cause my dog ate my homework, and just missed what he was up to.  MY BAD. 

one of the bloggers who was paying attention (5/3/11) wrote:  "Let’s have a link to that original trade of the decade, I did not remember it as Japanese small caps, I thought it was Japanese Stocks, not specifically small.  And was there not a comment at that time that asked why not short the Japanese government bond…"  Read more: An Even Better Trade of the Decade

Here's what he said, today, 2/16/11 (w/o permission): 

"Stick with the program, dear reader…sell stocks on rallies (like this one)…but gold on dips.

That was our advice for the last decade. It’s still good advice.

Or, if you want to move into this decade’s advice, here’s the formula:

Sell Japanese government bonds on rallies, buy Japanese small cap stocks on dips. The bubble in Japanese government bonds will blow up too. When it does, Japanese investors will rush to low-priced equities. Count on it.

Okay, so it’s a little harder to do. But who said investing was going to be easy?"

And here's what one guy (not me. none of these blogs are mine) said: 

Mr. Bonner,

Regarding, “But who said investing was going to be easy?”

The Mogambu Guru says! In every column he writes for The Daily Reckoning!!!!

Minus 10 Junior Mogambu Ranger Points (JMRU) for you, sir!"

And he added, right below:  "Sorry, I meant “(JMRP)”

My acronym skills are lacking…"

Read more: Deferring Recession: A Short History of the "Age of Bubbles"

I repeat:  slewie has the highest respect for Mr. B, b/c i have learned tons  of incredible stuff from him.  And, after 7 hourZ of going thru Fourteen months of Archives: 1) I have no freaking idea what i am talking about.  Trust me. 2) I learned a heluva lot. 3) Do you have an extra lithium carbonate?
whatz that smell's picture

during the days of yore, they called it "climbing the wall of worry".

today, the subroutines call it "Buying the Flipping Dip".

Quintus's picture

Jesus.  If the FinMin of any country is on the airwaves explaining how there is zero chance of default, you can bet that default is imminent.  Same pattern in Greece, Ireland, etc.

jus_lite_reading's picture

Of course, this is only damage control after the fact. Which begs the question: Would an FinMin of ANY country today, admit to their country's possible default if they knew it was imminent?

Did Borders tell their investors that a BK was imminent months ago, or did they hold out for the last few cents of profit for their execs?


Oh regional Indian's picture

Nice analogy Just lite.

Watching a co-ordinated take down with the appearence of a game of musical chairs being played by a bunch of schemeing old men in suits is an awesome con.

Like the rest of the game, rigged. Every bit of it.


jus_lite_reading's picture

Question: Are Indians as dumbed down and naive as Americans? Because I don't think any nation is a brainwashed as Americans...

SheepDog-One's picture

Geithner a couple weeks ago said default is 'unthinkable'...certain sign we're defaulting.

jus_lite_reading's picture

I thought he said, "the USA Titanic is unsinkable..."

Sudden Debt's picture

Yes, a default is indeed unthinkable!




Jim in MN's picture

Won't it be funny when a couple of million enraged 'lower class' people walk up the hill from France and ask for it all back?

Blank Reg's picture

"You can never be certain that something will happen until the government denies it."  ~  Sir Humphrey Appleby.

slewie the pi-rat's picture


if you think japan is ireland, greece, or borders, b/c they have a finance minister who must listen to reason, at this point, please put down the cruel-aid 4 a sec. 

rank japan against ireland, greece, and borders re:

  • 1) industrial and technological base.
  • 2) savings of the people in PM's
  • 3) will and homogeneity of the "nation-tribe".
  • 4) honor and dignity v. 'finacial hooliganism'.
  • 5) "GDP" trend per capita.

OK, continue draining those cups, now.  But thanks for at least considering these ideas, even if you don't agree w/them.

And remember:  people make fortunes fading my callZ!

Cleanclog's picture

PIIGs have another influence happening.  Mass movement of some North Africans to PIIGs across the Mediterranean.  Could help with aging population, but most arriving illegally without many skills. Wonder if G-20 will mention later this week?  Probably not.  Just more currency posturing and "all is well" pronouncements by fin mins.

plongka10's picture

Was on BBC radio yesterday, focusing on Tunisians turning up in Italy. As you say,, little in the way of skills, just lookiing for any work they can find. The current (sic) bad weather in the Med is slowing the arrival rate, but I expect this phenomenom to continue. 

HedgeFundLIVE's picture

are your blogs ever NOT bearish?!  the market doesn't give a damn, and going long overnight has been working nicely for me:

jus_lite_reading's picture

There is no "market." The DOW can go to 30,000 and it won't matter. In fact, I hope it goes that high- then it's confirmed...

Rogerwilco's picture


Depends on where you like to gamble. I prefer Reno, the odds are better and there's good skiing nearby.

ivana's picture

think Yosano-san better shut-up ... when he needs to talk about this i public - means he's balls are really squezed.

Everybody knows that Japan is dead society for years now. Their corporations may be alive but they are abroad long time now and abroad is getting tougher day by day.

CB's only hope is that they all go down TOGETHER.

youngman's picture

But But But..Portugal just sold 1.6 billion in how did they do that?????

Who bought them....?  What a ponzi scheme this is...I am trying to figure out what the event will be that crashes everything....Egypt atacking Israel...China selling treasuries.....a Flash Crash.....Comex default....make a guess.....

Quintus's picture

When the conditions are right, the trigger could be anything.  A disaffected nutter with a pistol started WWI.  More recently a dispute last month over a license to sell fruit from a roadside stall in Tunisia has spiraled into a regional revolt that has so far seen the overthrow of two governments.

The trigger will most likely be small and unexpected.  The grain of sand that topples the pile.

ivana's picture

know one country where major rumble started in the bar when one pissed guy asked the other: WTF are you looking at?

MolotovCockhead's picture

Yeah, right! A single straw can break a camel's back...the last straw!

Jim in MN's picture

Soccer War, El Salvador v. Honduras 1969 featuring propeller dogfights (Mustangs v. Corsairs) and a little bit of napalm.  A classic.

jus_lite_reading's picture

You forgot Japan's crisis. Any of the events you mention will send the markets higher no doubt.

The ECB is buying every bond in sight, that's why.

ivana's picture

1.6 bil? peanuts...
"anybody" can do this, trillions are flying everywhere, just press enter ... betting on chinese in this case. they will ,bite by bite, on EU distressed debt force ECB powerz to finally step in.
After all, its fight for final deflation game and control.
Funniest time in financial history is with us now with chinese stepping in EU debt markets.

Powerz are spinning spreads, news, rates etc in order to speed up sovereign debt slavery and than chinese step in and destroy their game in second ha ha ha

h3m1ngw4y's picture

why not start QE3 while QE2 is up and running. and while at the job why not start QE4 with QE3 should be less bureaucracy?

4realmoney's picture

What is the market actually saying? Look at the run up in bullion prices. Enough said. Cool site that cost compares bullion dealers' pricing in real time. According to this, no shortages at the moment despite everyone complaining about silver shortages. Silver is going triple digits guaranteed.

A quick search of all the dealers shows plenty of inventory

Stuck on Zero's picture

With a huge debt overhang raising interest rates will force governments to print more money to pay the interest.  This will go into the pockets of the debt holders and thence into the economy driving up inflation.  Only higher taxes would solve this problem ... but, that would drop the economy and cause revenues to fall thereby causing more money to be printed.  Eeeech.  No way out.

spinone's picture

Once a debt based currency is debt saturated, game over.  Collapse and reset.

Snidley Whipsnae's picture

'[extra printing] will go into the pockets of the debt holders and thence the economy driving up inflation'

To a lesser degree than you might think. The debt holders are a small per cent of the population and most already have as many homes, autos, and yachts as they need.

I contend that most of the earnings the debt holders make will go into commodity speculation or rolled into more soverign debt that is paying higher interest rates.

Internet Tough Guy's picture

Euro debt crisis will trigger the arrival of freegold. UK and Japan have not much gold and no way out of their disaster.

X. Kurt OSis's picture

Off of Banca IMI's desk this morning:

"I said stay off the crack, and I still think that's pretty good advice, unless you can manage it socially. If you can manage it socially, then go for it, but not a lot of people can, you know?" --Charlie Sheen

Am I supposed to be excited that EU Finance Ministers have doubled the size of available aid to 500mm for the ESM facility in 2013? I'll pose it this way: If a bus mowed you down on your commute tomorrow, breaking your back and rupturing a few vital organs, would you be excited if I promised you a top surgeon in two years? Answers: (a) No. (b) I'd want to see photos of my caretaker nurse for 2011-12 before forming an opinion. (c) Please reconsider these Canadian-style health benefits. (d) I don't need a nurse, thanks, a helper monkey would be fine.

By the way, the answer is (a). It's (a), trust me. Because you've surfed too much of the web if you truly expect a nurse to sustain a multi-year fantasy, and I'm sure the Canadians have a fine medical arrangement, despite the occasional unfair jokes. By 2013, you wouldn't be angry, you'd be dead or catatonic. Talk about an egregious case of can kicking. It's a long unpaved highway to cover if the EMU loan sharks plan to continue their extortionist straightjacketing in the midst of a crisis while making all sorts of concessions toward the future. Remember when New York City deferred maintainance on their roads and bridges in the 1970's? As the apple rotted to the core, so did its infrastructure. Expanding the ESM is a deferred solution; the wagging finger in the eye of every non-core Eurozone investor.

Switching gears, today's Portuguese reverse auctions inspired confidence in exactly no one, as their debt agency scooped up around €200mm of the PGB 4/11 & 6/11 out of a projected 500mm; exerting the equivalent power of my mother struggling with arm curls each night. And given the 4mm+ still outstanding for each issue, this exercise hasn't alleviated the need for funding this Spring. The Portuguese are getting antsy. They've turned to syndicates for their coupon issues because their diapers aren't big enough to hold the mess. Their 10yr is resting comfortably above the all important 7% level. And their central bank can't fight the market trend, even with 750-1,000mm worth of artilery last week (or, according to a well known French bank, 15% of outstanding PGBs).

If the doctor's not on his way, let's cross our fingers and hope for the helper monkey. He rarely bites.

topcallingtroll's picture

A little cocaine is kinda good if you can manage it.  A few bumps at a party and then stop.  He is telling the truth.

BigInJapan's picture

Almost everything Yosano said above is bullshit.

He's basically kicking Japanese people in the teeth, daring them to find something with a better return than J-gov shitbonds. Well, they have - forex and mattresses.

The reckoning is fast approaching over here. I'll be taking pictures on my way out, yelling "I told you so" the whole time.


Instant Karma's picture

Maybe we should price the S&P 500 in cotton, or copper, or corn, as well as gold or silver.

Over time, the price of everything seems to go up, stocks, commodities, housing, it's just that the boom bust cycles are out of phase.

In the 1960s it was equities. In the 1970s it was real estate and commodities.

In the 1980s and 1990s there was a boom in equities and real estate. In the 2000s equities and real estate went bust, and commodities boomed.

In the 2010s I'd say real estate is due, but, the demographics have changed. We're at the wrong end of the baby boomers life cycle. Moving out of homes and into condos. Cashing out of stocks, and into bonds.

As a country, the last time the shit hit the fan economically was in the 1970s, and we were still the world's largest creditor. Now, we are drowning it debt.

All in all, I see no alternative to a mix of commodities and other hard assets. Stocks are fine, they may inflate with everthing else, especially if you pick a good stock.