Special Report: Italy to crack hard in 2017. Banks to fail. Country to leave EU and euro currency.

Dear Investor,

I don’t like being the bearer of bad news, especially on New Year’s Eve. But I have an obligation to you that surpasses everything. An obligation to alert you when I think a financial event is so powerful and black swan like — that it could wipe out a good deal of your net worth.

I am not talking about the stock market right now, the U.S. or any other countries’. Other than a short-term pullback, it’s on very firm footing, heading toward my targets of at least 32,000 and probably higher to 45,000.

The chief reason: Capital flows and safety.

But if you have any money in Italy —  or the European Union and the euro — and you have not heeded my past warnings and have gotten killed on the euro — it’s time to fasten your seatbelts.

Italy Will Go Down the Tubes in The First Half Of 2017.

Here’s the problem:

FIRST, Italy’s banking crisis centers mostly on the fate of Banca Monte dei Paschi di Siena (MPS). The bank shed 28 billion euros ($29.6 billion) in non-performing loans (NPLs) in 2016 which accounted for 36% of the bank’s loan portfolio.

That is the highest proportion of NPLs of any bank in Italy. As a result, investors and depositors began withdrawing their money, compounding the bank’s financial crisis by creating a confidence and liquidity problem. Last week, MPS announced that its remaining 11 billion euros in capital liquidity would only last until April.

But already, MPS failed to meet its Dec. 22 deadline to raise another 5 billion euros of capital.

The bank’s efforts to privately solve its financial problems by raising additional rescue funds have also failed, leaving the Italian government as the bank’s only remaining savior.

With the private sector and outside financial institutions reluctant to help, MPS formally requested aid from the Italian government. On Dec. 23, the Italian Cabinet announced that the bank would be rescued with a 20-billion-euro fund approved by Parliament earlier in the week.

Sounds good, right? But is the 20 billion euros really enough? No, it is not.

Goldman Sachs estimates MPS needs at least 38 billion euros while the London Capital Group estimates it needs as much as 52 billion euro.

SECOND, where will all that money come from to save the bank?

Not from Germany. As the previous bail-out force for many banks all over the EU, Germany now has its own problems.

Germany, Europe’s largest economy, grew by only 0.2% between July and September, half the 0.4% rate seen in the previous three months.

This was much slower than economists had expected and well below the 0.7% rate recorded in the first quarter.

A plunge from 0.7% in January of this year to 0.2% now is a huge drop.

Q4 looks a tad better, but there is no question Germany is sliding. Add in the bail-ins, the reluctance to bail-out Italian banks, the refugee crisis all over Europe, Italy’s high unemployment (adults, 11.4% as of latest data, April 2016; youth unemployment an amazing 38.3% as of August 2016,).

Germany’s exports are down over 2% for the year.

Bottom line: Germany cannot bail out Italy, nor can the International Monetary Fund (IMF). Italy will go down the tubes in the first half of 2017.

Consequences:

  • After a mild pullback in the dollar, another strong rally in the greenback against the euro with the euro likely falling below 1 to the dollar by the end of March.
  • An Italian stock market crash.
  • Worst of all an Italian sovereign bond market collapse.

ACTION TO TAKE:

  • Buy inverse ETFs on the euro, at the right time.
  • Buy inverse ETFs on Italian stocks or indices, at the right time.
  • Buy ETFs on long U.S. dollar positions, at the right time.

What is the right time? It’s dictated by my proprietary Artificial Intelligence models and Neural Net, the most accurate timing program I’ve ever developed.

Designed to implement razor-sharp buy and sell timing. Found exclusively in my Real Wealth Report and Supercycle Trader Service

Best wishes and Happy New Year …

Stay safe and I’ll talk to you soon …

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.

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Comments 43

Stephen A kapogiannis December 31, 2016

Thank you Larry you are the best great information

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william December 31, 2016

what about the stocks in the country of Norway that is listed on NYSE?

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gordon December 31, 2016

Love you Larry but there just seems to be soooo much funny money floating around. These banks all sell billions of government backed bonds and investors gobble them up and ask for more. There is no risk they are backed by their governments how can you lose?? The governments can paper over these problems at the press of a button. I rather liked your gold forecast but its hard to see an eventual moon shot in gold with the outright flagrant manipulation going on in the gold market. It is so blatant. Honesty has to return first and we are way to far down the rabbit hole of corruption for honesty to return.

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Anthony Fantasia December 31, 2016

Hi Larry; It is great that you keep us subscribers up to date with current events. Waiting patiently for buy and sell signals. Keep up good work. Happy New Year Tony

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Fabian December 31, 2016

I don't consider Italy and the rest of Europe going down as bad new. I just hope it happens this time. Happy new year.

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okeke December 31, 2016

Larry you forgot to add the forex market and how to trade the Euro vs dollar.

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Thomas Clawson December 31, 2016

Larry, I am a US citizen and have been heavily weighted in PM's for a long time. I also own several mining stocks and have been waiting for your signal to buy more. From your "Special Report" I just read, it sounds like PM's in USD's is definitely not the place to be. Am I correct in this assumption?? Tom

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Florence speid December 31, 2016

I found this very interesting and thought-provoking .But what if you don't have a lot of money to invest ?

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Dave December 31, 2016

I respect your thesis re the Eurozone, but like all market timers, you keep getting it wrong. You first predicted the fall of the European Union some years ago, and have repeated your prediction more or less yearly. It hasn't fallen yet, and, like all events beyond our control, will fall when we/you least expect it. For that reason, investments based on a thesis, no matter how sound in theory, are, except for the lucky few, doomed to failure. C'est la vie.

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Mary Kealoha December 31, 2016

I already have a lifetime subscription to Real Wealth Report. I would like to receive the free reports.

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saji December 31, 2016

W/Could China bail/buy out Italy?

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Bob Schubring December 31, 2016

Thanks for the update, Larry. It should be noted that under EU law, the act Italy's parliament took, is illegal. EU policy demands that banks be bailed-in, by gouging the money out of depostitors' accounts to cover loans made to borrowers who can't pay them. This leaves the EU leaders in Brussels with two bad choices. They can change the anti-bailout policy, to make Italy's illegal action, legal. This will anger Germany, which cannot afford to pay for any bailouts. The EU has looked powerful, for most of its' existence, because Germany could put money into it to fix problems, whenever there was a crisis. A bank-crisis bailout that Germany doesn't fund, means that pro-German policies adopted by the EU, now are viewed with some suspicion in the other EU countries. Or they can impose sanctions on Italy for taking an illegal action. This will anger Italy's voters and drive them to push for an exit vote. Meanwhile, the other shoe has yet to drop in London. Although Americans tend to use the name "England" when actually referring to the United Kingdom, it's important to understand, from a property-law standpoint, who owns whom. The United Kingdom arose after Henry the Eighth died without an heir to the throne to succeed him. His sister inherited the English crown...but she had already married the late King of Scotland and they had a son named James, who was now King James the Sixth of Scotland. Learning that he had inherited the title of King of England, James took a trip south, liked the warmer climate of London, and moved there, becoming King James I of England and VI of Scotland. His grandson got tired of being James III of England and VIII of Scotland, and pushed the lawyers to agree on forming a United Kingdom of Great Britain. Under UK law, a statute becomes law when it is passed by Parliament and given Royal Assent by Queen Elizabeth. The Brexit vote has yet to result in an Act of Parliament that's been submitted to the Queen for Royal Assent. At the moment, some in Scotland propose to separate from England and remain an EU member, while England exits. To do this by peaceful means, requires persuading the British royals to leave England and move back to Scotland, thereby giving Royal Assent to the act of exit. Since those same British Royals control the Bank of England, these legalities don't involve a trivial sum of money. Three options are possible. 1, By an act of violence, someone could overthrow the British Royals, seize the Bank of England, give it to the EU, and the EU could seize back control of the UK. That's the least-likely outcome, because nobody can afford the consequences of war in Europe. 2. Scotland could work out a deal in which UK pounds sterling circulate alongside EU euros, Scotland remains an EU member, and also remains the host country of the UK, given that they provided England with a king 400 years ago. That's going to give Europe's lawyers 20 years worth of work to complete. Unfortunately, they don't have 20 years to do it. My prediction: Someone will talk about the possibility of doing it, but the likelihood of making it work soon enough, is slim. 3. The most-likely resolution of the crisis, is that the EU has a Boris Yeltsin-Mikhail Gorbachev moment, when it suddenly becomes painfully obvious who actually has a functioning government, and who is a well-dressed refugee. Holland, Luxembourg, and possibly Belgium, might opt for a Rheinish Union with Germany, that replaces the current EU, and Poland might join it. Everybody else will exit abruptly and will apply to the IMF to have their old currency resume trading against the others...and during the lull between the currencies, there will likely be barter between the people. it will be this barter trade that creates the appetite for gold, because there's no way to run a black market in a cashless society. Politicians, as Larry keeps pointing out, love the cashless society because money transactions must be recorded in a central place, for cashless systems to work. The flip side of that coin, is that barter was already a cashless system that had no need for politicians nor accountants.

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Dan S December 31, 2016

Larry, yes "Europe is in the crapper" people retiring at age 50, debt up to your butt and no fiscal responsibility. I listen to all of this and look at the good old USA and our system. Government and public unions offered huge salaries and pensions (with no funding), a phony health care system (spewing it poisons for large pharmaceuticals), mandatory insurance except for people illegally in the country (it's free and called emergency care), more homeless people living on the streets (relocated as not to affect tourism in the beautiful cities) and shall I go on? When I compare the the two, it seems your are looking at the wrong group of countries or country to predict a major problem in the works. Why don't you look at the the bigger problem brewing here at home. The US Dollar is strong, my Azz! A quick look at the US Debt Clock prints the real story, not phony predictions. Take some time and visit http://www.usdebtclock.org/. Social Security failing as it wasn't meant to be a retirement system, all while the US Government sits on 2.7 trillion dollars of money pulled from the fund. Problems overseas Ha!!!!

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Safi December 31, 2016

What about gold and miners ?

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adrian December 31, 2016

Dear Larry, I know the European collapse is something you have been warning about for some time. My prediction, for 2017, is that we will see a massive unwinding of global bubbles including the U.S, stock market. The era of cheap money will end. As you alluded to, the other day, bond holders will have to take a massive haircut. With Donald Trump, as president, I would not like to be one of them. I do not think he will hesitate to get from A to B as quickly as possible. After all we know what he thinks about the major creditors to the U.S. This may lead to a quicker unwinding, of the bond bubble, as they scramble to avoid his gun. We live in interesting times, Adrian.

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Ralph Goetz December 31, 2016

Hi Larry: I am a current subscriber. I enjoyed the K-Wave video very much. It was well done with a lot of thought put into it. You paint a clear picture of what is to come, and it all makes sense. Keep up the great work. Ralph.

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Terril December 31, 2016

Thanks Larry Good info.

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janet December 31, 2016

Thanks Larry - you are the best - so appreciate your input!!

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George Dominick December 31, 2016

Will you be recommending any LEAPS? Short or long. Why or why not?

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BRian Riordan December 31, 2016

I have lots of EUO and I have lots of UUP. I'll watch my RWR and I will probably find the Inverse ETF for the Italian Market. Can't wait. Even though I have Italian Ancestry, I do not feel guilty shorting their banksters. It is so very nice to get all of this HEAVY DUTY successful information without having to enroll in another publication I have no room in my incoming mail for. I thank you Larry, for helping me acquire my 'wealth' over the years when I'm on a budget. I picked up on you when you first started with Martin Weiss. Remember Glamis Gold? Brian R.

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Robert Greenwood January 1, 2017

Hi Larry Happy New Year Thanks for all the great work you do. Could you recommended options position also when you recommend the stock. Thanks , Bob

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M January 1, 2017

Central banks around the world have continued to print more money with general stock market price impugnity up to now. They have, in effect, delayed the outcome you write about. Therefore, a possibility still exists that the ECB could print more Euros to aid the Italian banks. This could continue to delay the European crisis beyond 2017. If this possibility is no longer realistic, I'd like to understand why it wouldn't be. And who knows when the market will truly begin to "care" about additional ECB intervention? I personally don't have a good idea when the decline may start. But then again, such uncertainty among a majority is characteristic of financial bubbles. Hopefully, your AI model can suggest a probable time frame. As a subscriber, I'm looking forward to receiving this information.

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Eric Albin January 1, 2017

Germany is a capital importing country and Italy is a capital exporting country. With German exports down, all the more reason for Germany to export capital to nations that buy German products. Simple analogy, when all the chips are on one side of the table and credit not available- Game Over. With common currency Italy cannot devalue and FOREX markets non-operable. Only solutions are financing Italian debt or Italy must leave EU and re-establish it's own currency. Also there are other players such as the IMF. Remember that the EU has stated that no economically important institution will be allowed to fail in a disorderly way. I suspect there will be a multifactorial lend and pretend policy of loans, bail-ins, bail-outs, draconian cutbacks in social services, etc. and the can will be kicked further down the road. As per Gold as the best hedge against sovereign default, The place of gold has been supplanted by Forex currency hedge, easy capital flight and Bitcoins. While gold is down in 2016 Bitcoins appreciated by 127%. To project gold trends without considering all of the stated factors will lead to dubious projections.

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Penny Peden January 1, 2017

When? what should we do?????

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VPC January 1, 2017

Uhm... What about oil? Will it still reach ~ $ 25,- around the beginning of February?

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Harry Lucas January 2, 2017

Larry, you actually went many extra milee in providing warnings - - - even on Dec 31st. Thanks. Yes, your life is focused on creating wealth - - - however your above warning to me shows a personal caring (as in look-out) In Return: Here is my gift to you for your enjoyment along with your, wife and children. It is short and takes place in Italy in front of a bank. It begins with a small girl and a coin. https://www.youtube.com/watch?v=fj6r3-sQr58

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David Latham January 3, 2017

Larry: if you have to store your gold in a depository which one is the best deal? What is your recommendation? R, David

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FRANK ELLISOR January 6, 2017

NEED TO KEEP MY MONEY(MY CASH IN BANKS) AND THE RIGHT STOCKS SAFE WHEN THE WORLD CRASHES. THANK YOU LARRY, AND MY THANKS TO MARTIN WEISS AND HIS COMPANY. FRANK ELLISOR CARY, NC I ALSO SUB. TO HEAT MAPS.

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