empty vault

Today the 6th largest bank in Austria (Hypo Bank) halted payment of 8 billion euros of debt and they will enter shortly into a default position. In previous debt defaults, we had a bail out or a taxpayer funded rescue leaving senior bond holders and depositors completely whole.
We will now witness the new modus operandi of rescues:  bail ins where the bond holders and the depositors get hosed.
Due to the fact that the liability on the balance sheet of Hypo is some bank’s assets, I can assure you we will have massive contagion coupled with a sprinkling of credit default losses. 


This weekend we have three hot spots to cover.
The first is the crisis in Greece where it seems that the Greeks have a payment of 1.6 billion euros that it must pay by the middle of March.  However the Euro boys do not want to pony over more money.
The second hot spot is the Ukraine where they are experiencing hyperinflation to no endFood has disappeared from shelves.  The country has about 2.5 weeks of liquid reserves left before they run out.
The third hot stop is Turkey.  We witnessed today, the complete collapse of the Turkish lira:


In the Ukraine, hyperinflation is gaining a strong foothold The Hryvnia in the black market is fetching 39 UAH to the dollar.  The minimum wage today in the Ukraine is about 47.00 dollars per month.
In all probability  Russia will take the Eastern section of the country, with Poland taking Galicia.  It is anybody’s guess who will take Kiev and the agricultural belt of the northwest of Ukraine.  Regardless of this, the debt owed by the country will be shared by the Europeans who funded much of their loans.  The USA will probably cough up more money to replace losses by the IMF.  I wonder how many of the European countries will feel when they get a margin call. Late tonight, Goldman Sachs calls for the end game being played out in the Ukraine.

China dragon

I would like to point out that the Chinese traders have been absent from gold/silver trading as this is their New Year.  They will be back Wednesday.
No doubt that due to their absence our bankers are having an easy time of knocking our metals down….which I expect will end on Wednesday.


Today, the big story was the deal between Greece and the EU folks which may not be a deal as Greece must summit the reforms it wishes by Monday.  If the Troika creditors  (sorry Institutions) do not like the reforms Greece wishes, then the deal is off and we have a GREXIT.
We have the complete breakdown of events for you below:

Jim Sinclair

With respect to the Greek economy, the ECB decided to increase the ELA to 68 billion euros or an additional 3 billion will be granted to the banks due to the huge amount of bank runs in Greece this past week.
However  sovereign Greece announced that it has only one week’s worth of cash left which would put her out of money on Feb 24, 2015. Headaches mount for our big underwriting banks who bet huge amounts of money on Greece’s survival.
A Grexit will cause massive losses for the ECB bank and other official EU centres and the IMF.  A lot of these losses must be transferred to other members of the EMU.  Countries like Italy, Spain and France will not be available to absorb those losses.


Today good news came that there is a ceasefire in Eastern Ukraine and also it seems that Germany has blinked with respect to Greece. However late in the day, the Eurocrats threw cold water that they are close to a deal. This deal still has a long way to go and we will know for sure on Monday.
Meanwhile Ukraine has descended into currency collapse as the Ukrainian UAH fell to 26.5 UAH per dollar as Ukraine enters hyperinflation. 


Today starts the big meeting by the Euro clan to see whether Greece will leave the EMU.
We should know the true state of affairs by tomorrow night, although late in the day we have a series of announcements (without much substance).

Following is a brief outline on gold and silver comex figures for today:


Tomorrow we will finally see whether Europe shuns the Greeks.  Early in the morning, the Europeans tried a trial balloon which stated that they may be offering Greece a 6 month extension but that was later refuted by Schauble in the afternoon.
Let’s head immediately to see the major data points for today:

The End

Today gold and silver had a good day trading as both finished in positive territory.  The big news of the day is the Greek crisis and many are now believing that Greece will exit from the Euro as they will definitely run out of cash by the end of February. 
The Greeks are steadfast in not wanting to continue the bailouts as the nations gets deeper and deeper into hardship.  The GREXIT will no doubt cause severe harm to the Western bankers as not only will 320 billion euros worth of debt  evaporate but also the trillions of dollars worth of derivatives which may bring down many of the bankers.  Remember also that the bankers are suffering major losses from oil and from hugh short dollar losses combined with yen carry losses.
This Wednesday should be exciting to watch as the EU and Greece decide each other’s fate!!