Critical Week!

If Deutsche Bank goes under — and it may indeed totally collapse — it will be a weapon of mass destruction many times larger than the failure of Lehman Brothers in 2008.

  • It has $46 TRILLION in derivatives on its books with immeasurable counterparty risk.
  • It’s facing up to a $14 billion fine from the U.S. Department of Justice for its role in the 2008/09 crisis and refuses to pay it — because it can’t afford to.
  • What is vulnerable is Deutsche Bank’s business model, since it is obligated to invest its large German deposit surplus in German government bonds. With a sovereign debt crisis looming, that’s a recipe for disaster.
  • With an estimated 3.4% return on tangible equity for 2016, Deutsche Bank is worse than other banks in Europe, which is half the total of 6.8% for all institutions on the Continent, according to financial services firm Keefe, Bruyette & Woods. U.S.-based banks are projected to have a 10.6% return.

I find it fascinating that one of the largest banks in the world could go down precisely when my AI models forecast an important turning point.

You’ve seen the charts here before, charts like this one for gold.



Click image for larger view

These come from my Artificial Intelligence (AI) and Neural Net (NN) computer models.

 

I can run them on any freely traded market and they will give me a projected path forward …

Not only for price, but also for important turning points, in markets and economies.

And often, when many markets show the same turning point … something big is brewing somewhere in the world.

In previous columns, I showed you similar charts. The Dow Industrials, the euro, and all were pointing to early October as an important turning point.

So how does this tie into the possible failure of Deutsche Bank?

  • You can expect several more banks in Germany to go. Deutsche Bank isn’t the only German bank in bad shape.
  • You can expect Italy’s near bankrupt financial system to collapse.
  • You can expect the euro to tank.
  • You can expect the dollar to soar.
  • As for U.S. stocks, initially lower, but then a sharp recovery as European flight capital comes pouring into the U.S.

As for gold and silver, it remains to be seen. The forecast charts call for a low, and they have nailed the recent downtrend. But in times like these, gold and silver could continue lower beyond the October 5 date.

Why? Because if Deutsche Bank goes, there will be massive margin calls and forced liquidations of stocks and other assets, and gold and silver could get hit very hard.

So although a low is due about now in gold and silver, I’m not going to make that call until I see more action, and especially see how Germany handles what’s happening with Deutsche Bank.

Angela Merkel has sworn there will be no taxpayer bailouts. But already, she’s trying to skirt the law by effectively nationalizing 25% of Deutsche Bank by buying as much as 25% of its stock.

Fine I say. Go ahead, Angela. You’re going to incur massive losses for the German government, which is the taxpayer no matter how you look at it …

And you’re going to lose your chancellorship come elections next summer.

So what should you be doing now?

For one thing, you should mostly be in cash, as I have stated all along.

For another, if you acted on any suggestions I made to hedge gold and silver holdings with inverse ETFs, you should exit those now — with gains.

I know — above I just stated that gold and silver could move still lower. So why am I telling you to grab gains on any inverse metals ETFs you may have?

Simple. In this free column, I can’t give you specific timing and buy and sell signals. It wouldn’t be fair to paying members of my various services, who get my signals and everything my models tell us.

Stay safe, and best wishes, as always …

Larry

Larry Edelson, one of the world’s foremost experts on gold and precious metals, is the editor of Real Wealth Report and Supercycle Trader. Larry has called the ups and downs in the gold market time and again. As a result, he is often called upon by the media for his investing views. Larry has been featured on Bloomberg, Reuters and CNBC as well as The New York Times and New York Sun.

Comments 36

Roy Pirhala October 5, 2016

Larry, your calls are right on and serve as a flawless planning tool for me. I certainly recommend to others. My silver purchases (no gold) are now only thru Everbank where I can purchase silver bullion either scheduled or whenever in my account at a very, very low markup. They offer other metals as well, and CD's in foreign currencies too. Worth a look but you may know of them anyway. I find www.KITCOSILVER.com to be a fine and trustworthy silver source too.

Keith Dial October 5, 2016

I have been listening and paying attention to your views on gold and silver. In this column, that you called "free", you say you can not give any buy and sell signals. I just paid up for two years for your subscriptions, so nothing free here. What gives? I haven't gotten anything for that money yet..... so I guess I'm selling my inverse NOW!! I've enjoyed you, but hope you don't disappoint. By the time you read this it will be too late for me

Angela October 5, 2016

Dear Larry, I live in Germany and have to admit: You are right! But the Deutsche Bank is only the tip of the iceberg the Titanic (in this case Germany) will hit and sink. - Deutsche Bank (you mentioned this problem) - elections next summer will bring back the right wing extremist (not only in Germany) - BREXIT means other countries will have to pay the UK part for the EU (Germany as largest contributor) - due to the German retirement system ca. 50% of all retired persons will face poverty in 2030 - low wages create additional poverty for those retiring after 2030 - the refugee crisis costs a fortune (anyway, these people need help!) - there are further financial problems, like the infrastructure, demographic development, etc. Furthermore, there are several countries in the EU with terrifying financial and economic problems, e.g. Italy (already mentiond by you), Greece, Spain, France. Just to name the most prominent ones. Maybe it was the best time for the UK to leave the doomed EU? Greetings from Hamburg (Germany), Angela

Gary October 5, 2016

What will happen when SAUDI ARABIA stops investing in the USA.Where will they send there oil dollars?I don't believe all those monies are coming our direction.

Howard October 5, 2016

Hi Larry Good timing on this Gold call! One of the reasons that forces change in governments is when citizens lose confidence in their existing administrations. If Angela Merkel really is proposing to use public funds to buy 25% of the stock in Deutsche Bank then she truly has lost the plot. This would rank as a worse economic catastrophe than her invitation for millions of refugees to flood into Europe. She would be the cause of the downfall of the European union. Brexit is just the beginning of the seismic shifts and changes to come.

craig October 6, 2016

The the new world order has Merkel firmly in their pocket. They won't let DB go completely down because they can still use its vast business network to defraud depositors and investors in the longest running financial scheme in history and to continue their deep state control of Germany (not a conspiracy theory becasue everyone knows about it); however, they will clean clean the shareholders' clocks and run over any wide eyed deer in the headlights. Funniest part I've read about Brexit is the arbitration over claims to the EU's stock of expensive wines and fine art, all procured byy unelected representatives at taxpayers' expense, of course.

Shiva October 5, 2016

Thank you Larry for these warnings. If the euro tanks in this way, what will happen to the EU?

Ken October 5, 2016

Larry you called it and nailed a home run on gold and silver, got hammered right on que per your model, outstanding, just look at JNUG got taken out and crushed yesterday.

Doug October 5, 2016

Larry, My retirement is locked up in a 403B and is invested with a big brokerage firm. How should I diversify to survive the coming onslaught? When I speak to my broker, he assures me to just hold tight. I feel like I am going to get crushed with his advise. Any insight would be very mush appreciated. God Bless You, Doug

Patrick October 5, 2016

OK, I signed up for a subscrition to your Real Wealth Report. If it is everything you say it is, I will continue the subscription. I am curious though, as gold continues to retrace before it continues it's climb to 5000/oz, where do you expect the inverse gold ETF's to settle out at. Harry Dent expects gold to retrace to 750/oz, maybe lower.

Clyde Merritt October 5, 2016

Short term accuracy can make or break you. I find your short term forecasts somewhat lacking. For example you failed to call the December, 2015 bottom until much after the fact. Charts are great for hind-sighting, not so great for forecasting!

Mark Rosenbloom October 5, 2016

Please send me subscription information.

$1,000 gold October 5, 2016

did $50 oil wake up the frackers and put a lid on prices? looks like america is in control of the price of oil now, not opec. all that oil money that use to go to the saudis is staying here in america, and let's face it the saudis are hurting. low oil prices, rock bottom interest rates, nearly full employment - the rest of the world may suck, but it looks to me like the tables are turned in favor of america.

Shar October 5, 2016

Thanks for being punctual with this info Larry - much anticipated and appreciated. After reading through your K-Wave explanation again it seems to me your proposal of making 'tons of money' while others fail during the expected financial destruction of the world economy corresponds exactly to what Donald Trump was quoted as saying "he was smart" to use every single legal tool at his disposal to save himself and his company. Exactly the same. Regardless of who you are really in favor of leading the US through this time period I believe your choices mirror my choice for president, whom I've already voted for....D. Trump. Thank you and good luck to us all!

hugh October 5, 2016

the 3rd friday in october seems to be a popular date for markets collapsing.

Adrian Flyte October 5, 2016

Dear Larry, The thing I find the most scary, at the moment, is the bottoming in government debt yields at the beginning of July. I believe the 36 year bull market in bonds is finally over. For every percentage point rise global investors, in this crap, lose 1 trillion dollars. Rates have already risen nearly 50 basis points from the low and much more could lead to a total panic. As regards gold mining stocks I believe they are going through a natural correction after the recent rally. But a great buying opportunity hopefully lies ahead. Keep up the great work. I feel sure you are right. Best wishes Adrian.

Michael October 5, 2016

The German gov't will bail out DB. That's the way the game is played. Since there is a problem with DB, why should the US market go down? The flight is already occurring. That's why the US equity markets will not drop. Gold is barely down. It's been in a tight range. Tell me when gold drops $200-300. Not $100 from the highs this year and down $75 from September highs. Small stuff that you are making into big stuff. Equity markets continue to hang in. Explain that......Maybe you should focus on the interest rate sector. Banks are stronger because of the rising rates. I don't think US equity markets drop with better bank prices.

Eagle495 October 5, 2016

Looks like the Germans need a Glass-Steagall Act which kept Americans Banks solvent from 1933-1999 when the Republican Majority Congress removed it through Gramm/Leach/Blyle ( all powerful Republicans).... Then Treasury Director Rubin (Republican from Goldman) encouraged Clinton to not veto as it was "Obsolete". Soon after Rubin left to take a job at Citibank (which profited greatly by the removal) at a Million a year despite NEVER attending a single board meeting..... Eight years later in November 2007, the American Banks collapsed becasue of the very trading that Glass-Steagall made illegal..... Currently, our banks are at great rick of another collapse as they are again doing what got them in trouble in 2007 without G.S..... Currently the Democrates are trying to get G.S. returned to law and the Republicans are resisting...... So, who do you believe deserves your vote come November? Want another 1929 or 2007?

Austin Stern October 5, 2016

Larry...As a member of your Real Wealth report, Supercycle Trader and Gold Miner Millioneer, I am committed to riding the wave and await your good advice on moves to make.

Karin October 5, 2016

Hi there! Tried to make a purchase in your store today. Didn't work with my e-card, can't see that it will work with Master card secure code either. Thinking about sending you the money via snail mail :-), if nothing else works. By the by, in my opinion the new strategy should include at least one video/voiceover every now and again./kh

Shar October 5, 2016

By the way Larry, should we be buying more of the BTG as it dips lower?????

Justin October 5, 2016

Well, first off, the US Department of Justice needs to levy a fine on the US Government for its failure to regulate the banking industry. The US Government created the subprime mortgage market and required the banks to make loans under those laws. Before that, banks wouldn't have anything to do with such nonsense. It was the US Government that created the laws that allowed any fly-by-night mortgage company to underwrite dubious subprime mortgages, bundle them up, and sell them on the open market with 100% US Government backing - putting US taxpayers at risk. Sure, numerous large banks were guilty of predatory lending, but the US Government was the enabler. Of course, a government that was so stupid, could be so stupid as to be the catalyst that leads to the downfall of DB and all the contagion that comes with it. Will it come to that? We'll just have to wait to see what happens next.

Don October 5, 2016

You have been calling this for years, Larry. Everything seems reasonable and logical.

Thomas Buis October 5, 2016

Larry, I'm really happy that your gold forecast is on the mark. I thought I lost my ass with dust. Now it looks really good. I got to get to the $81 mark to break even. It looks really good. Thanks Tom

Bob Schubring October 5, 2016

Interestingly, if Chancellor Merkel nationalizes DB wholly or partly, she moves a civil dispute over the Subprime Crisis of 2008, that the US tried to turn into a criminal case by seeking a $14B penalty, into a sovereign action by the German government. Technically, that gives Germany the ability to refuse to pay the penalty, and gives the US the ability to call this an Act of War and impose sanctions for their refusal. Barack Hussein Obama set precedent for this, in buying out General Motors and then acting as The US A Party in Interest, to squeeze concessions out of bondholders.

RichardBbosshardt October 5, 2016

sent in already but not printed ! RB

Blake October 6, 2016

46 Trillion......?!?!..THAT FIGURE DOES NOT SOUND RIGHT??

John N. October 6, 2016

Thanks for mentioning Deutsche Bank at last! Interesting that A. Merkel will be basically buying 25% of it, I have not read that yet! I notice Marti A. talks about the sovereign debt crisis being in 2018, so maybe that bank might delay a complete collapse until then, by buying even more of it to gain control and so Germany will one day collapse, but surely Merkel will at least delay that happening? Doesn't the huge quantity of derivatives somehow balance out!? In other words I have read that other experts think it could keep trading for quite a remarkably long time and really that bank IS Germany!? The European markets know about the problem with this bank, but there is not panic selling? So the world markets aren't stupid and so maybe Merkel will keep the bank afloat?! I ask you YET again was there a huge gap down in the 1930's after Europe went broke and then panic buying of USA shares or doesn't the same lightning strike twice??!! I do notice that both you and Marti A. don't see USA tanking below the early 1700's (if Europe collapses) so you both seem to think your very bullish forecasts for the USA share markets are intact and I notice that the USA Fed may buy shares and less bonds?! The whole mess is so complex and messy I feel privileged and lucky that you and Marti A. are around because the world economic mess is a huge opportunity and a huge risk!!!

Jamie-Dimon October 6, 2016

Should gold really go up shortly, I'd tend to say that this was one of the best calls ever !

James October 7, 2016

Does the Securities Exchange Commission give tips about what ETFs and precious metals to buy?

James October 7, 2016

That's the main difference between America and Europe, Europe has a lot of small countries with open economies whereas America is a large closed Economy.

Marc October 8, 2016

Never known anyone to be as spot on with the financial calls that also include the correct dates!

vishal October 8, 2016

sirji no response from ur side i want to join ur sneak peak indicator for gold silver crude.please reply u have any forcasting service laary sir

Steve October 8, 2016

We are missing the boat on the pound. It has gone down 6 points since Monday. Why no action from you Larry. You called the drop when it dipped to 1.28 a month ago. What's up?

Bill October 10, 2016

Please clarify, should we sell all of JDST or only 50% Most likely too late now…….I thought you said 50%. Clear as mud. Bill

skendow October 12, 2016

Please tell us about new CUSP id requirements for coins/bars? I read effective 9/26/16 governments now tracking/logging in attempt to control/pre-confiscate metals etc.? Any truth? How do we keep any privacy and remain on the legal side of what seems like more tyranny. Thanks Larry.