- EU and Greece
running out of time as talks end “in disarray” – again
- Greece warns
Merkel of ‘impossible’ debt
- Concerns
Greece out of money by end of April
- Friday’s
“agreement” in Brussels falls apart hours later as protagonists fail to agree
on specifics
- Greece now
insolvent – will run out of liquidity by end of April
- Greek banks on
verge of collapse as runs continue – €1.5 billion emptied out of banks last
week alone
- ‘Grexit’ could
propel gold to over $2,000/oz
- Cyprus style
bail-ins look increasingly possible
Greece’s place in the Eurozone is as precarious as ever as
talks between Prime Minister Tsipras and European leaders in Brussels broke
down – hours after reaching general agreement – and Greece warned Germany
that it will be “impossible” for Greece to service debt payments due in the
coming weeks if the EU fails to provide short-term financial assistance.
Greece – faced with illiquidity, insolvency and a
potential banking collapse – is running out of time and appears to be on the
back foot as its international creditors refuse to countenance any debt
restructuring, rescheduling or forgiveness.
The warning from Greece came in a letter from Tsipras to
Angele Merkel provided to the Financial Times. It comes as concerns mount
that Athens will struggle to make pension and wage payments by as early as
next week, the end of March, and could run out of cash completely before the
end of April.
The letter, dated March 15, came just before Ms Merkel
agreed to meet Mr Tsipras on the sidelines of an EU summit last Thursday and
invited him for a one-on-one session in Berlin, scheduled for Monday evening.
In the letter, Tsipras warns that Greece will be forced
to choose between paying off loans, owed primarily to the IMF, or continue
social spending. He blames ECB limits on Greece’s ability to issue short-term
debt as well as eurozone bailout authorities’ refusal to disburse any aid
before Greece adopts a new round of economic reforms.
“Given that Greece has no access to money markets, and
also in view of the ‘spikes’ in our debt repayment obligations during the
spring and summer . . . it ought to be clear that the ECB’s special
restrictions when combined with disbursement delays would make it impossible
for any government to service its debt,” Mr Tsipras wrote.
He said servicing the debts would lead to a “sharp
deterioration in the already depressed Greek social economy — a prospect that
I will not countenance”.
At a press conference on Friday Angela Merkel said “the
Greek government has the opportunity to pick individual reforms that are
still outstanding as of 10 December and replace them with other reforms if
they . . . have the same effect,” according to the Financial Times.
That Merkel would consider holding Syriza to an
agreement made between Greece’s previous government and the Troika – which
Syriza have eschewed – shows how little progress has been made in the
intractable negotiations between the two sides since Syriza came to power.
All that has changed is that Greece is more insolvent
and Europe has bought time to deal, albeit reluctantly, with a “Grexit”.
Bloomberg confirms that the Greek government may run out
of cash to pay pensions and salaries in April.
“Locked out of capital markets and with its coffers
running dry, Greece is scraping the bottom of the barrel to pay pensions and
salaries amid signs that it could run out of money by early next month.”
At the same time, Bloomberg reports that €1.5 billion
was withdrawn from Greek banks last week alone.
January saw record drops in deposits in Greek banks. The
banks have been drawing from the Emergency Liquidity Assistance (ELA) program
to stay afloat. The ELA is operated by the Greek Central Bank but is reviewed
weekly by the ECB.
Greece’s central bank requested a raise to the ELA
ceiling to deal with the bank runs. The ECB approved a €400 million raise in
the ceiling – less than half of what was requested, according to Bloomberg.
Depositors in Greek banks, both individuals, small and
medium enterprises and corporates are becoming increasingly concerned about
the twin risks of default and return to the drachma or remaining in the
monetary union and potentially having Cyprus style bail-ins imposed on Greek savers.
Time certainly appears to be running out for Greece.
Either Syriza capitulates and returns to the Troika’s bail-out mechanism –
highlighting a complete loss of sovereignty, or Greece defaults and exits the
Eurozone.
‘Grexit’ should propel gold higher with respected analysts saying gold could quickly rise to
$2,000 per ounce should a ‘Grexit’ occur.
The Greek and EU debt ‘can’ has been continuously
kicked down the road. We are running out of road …
“A must read for depositors globally seeking to protect
their bank deposits from bail-ins”:
Protecting Your Savings in the Coming
Bail-In Era
MARKET UPDATE
Today’s AM fix was USD 1,181.40, EUR 1,086.15 and GBP 791.77
per ounce.
Friday’s AM fix was USD 1,171.75, EUR 1,096.17 and GBP 794.73 per ounce.
Gold and silver were both strong for the week – gold
rose 2.42 percent and silver surged 7.45 percent.
Gold climbed 1.1 percent or $12.90 and closed at
$1,183.20 an ounce Friday, while silver surged 3.72 percent or $0.60 at
$16.73 an ounce.
In Singapore, bullion for immediate delivery in afternoon trading was $1,181.71 an
ounce. Gold remained steady not moving much since the close on Friday.
In London spot gold in the late morning is trading at
$1,181.66 or down 0.03 percent. Silver is at $16.70 or off 0.20 percent and
platinum is at $1,138.09 or up 0.10 percent.
Premiums on the Shanghai Gold Exchange (SGE) have fallen
$2 to $4-$5 today compared with $6-$7 on Friday. This suggests that gold
demand in China eased after the gains last week. However, Chinese gold demand
remains very robust as seen in the 51.5 metric tonnes of gold withdrawals on
the SGE last week.
European markets today are cautious due to concerns
regarding Greece, ahead of a meeting between its prime minister and Germany’s
Angela Merkel.
In Europe, Greek Prime Minister Alexis Tsipras is
meeting with German Chancellor Angela Merkel today. Greece is running out of
cash quickly which is heightening the risk of a ‘Grexit’ and a return to the
drachma, or alternatively to Cyprus style bail-ins.
Open Europe a research group estimated a ‘Brexit’ or
Britain leaving the European Union could cost Britain 56 billion pounds ($84
billion) a year by 2030 unless the country keeps its borders open, based on a
departure by January 2018.
Bullion coin demand remains robust as seen in the latest
data from the U.S. Mint. Sales of gold American Eagle coins by the U.S. Mint have already out sold last March’s total by well over
50% this month, reaching 34,500 ounces with another week of the month left to
go according to Reuters. In March 2014 as a whole, they reached
21,000 ounces.
