Alasdair Macleod: We Are Likely to have a Failure on COMEX in the Silver Market !

• “We are quite likely to have a failure on COMEX in the silver market”! 
  by http://goldswitzerland.com/ 
  Matterhorn Asset Management is very pleased that the Christmas 2012 Matterhorn Interview is with Alasdair Macleod. We know Alasdair as a man with a lot of common sense based on a long time hands on experience in the largest financial center of the world. So here it is; straight from the horse’s mouth. Enjoy the interview.
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  The renowned economist and financial analyst Alasdair Macleod looks back through the rear window of twenty-twelve and comments important events and developments such as “QE to infinity.” Moreover, he gives his expectations for 2013 in general and the gold and silver markets in particular.
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  Alasdair Macleod started his career as a stockbroker in 1970 on the London Stock Exchange, and learned through experience about things as diverse as mining shares and general economics. Within nine years Macleod had risen to become a senior partner at his firm. He subsequently held positions at director level in investment management, fund management and banking. For most of his 40 years in the finance industry, Macleod has been de-mystifying macro-economic events for his investing clients. The accumulation of this experience has convinced him that unsound monetary policies are the most destructive weapons that governments can use against the people. Accordingly, his mission is to educate and inform the public, in layman’s terms, what governments do with money and how to protect themselves from the consequences.
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  By Lars Schall
  Lars Schall:  Shall we do a review of 2012 by season?
  Alasdair Macleod: Yes.
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  L.S.:  Let’s look for the big stories last winter, spring, summer and fall. So, what in your experience was the big story last winter at the start of 2012?
  A.M.: The short answer is the Federal Reserve Board extending zero interest rates until 2014, which was unheard of before. We have now got used to zero rates. And also the ECB started to abandon all sound money in order to support the Eurozone banking system and the weaker members. And that to me sets the tone for an eventual complete paper money collapse.
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  L.S.: Maybe you tell us a little bit about zero interest rates and what usually happens?
  A.M.: Well, usually what happens is that the Central Bank manages interest rates at a level which it thinks is appropriate for the economy. In the case of the Federal Reserve Board, it is meant to balance the level of unemployment and the prospects for inflation by managing the interest rates. Now, in practice, that probably means that it sets it below what the market would normally be comfortable with or what the market would decide on its own.
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  But here we have a situation where the Federal Reserve Board has turned around and said, “We are going to keep interest rates frozen at zero until late 2014 at least. So, that basically means that the cost of borrowing is tied to that zero bound and there is no way that interest rates can go any lower. It is the end point of lowering interest points. Obviously, if you’re going to keep interest rates at that very low level, you’ve got to do two things: Firstly you’ve got to pump money into the system to keep rates at zero and secondly the Central Bank must satisfy any demand for money at that zero bound. And of course, the FED has been doing this, by buying government treasuries and injecting the money in payment for them into the banking system. The banks, where they have drawn down on their lending capacity, have not lent it into the economy but they have used it for financial speculation. So that’s why huge amounts of derivatives have been piling up. And the US banking system, believe it or not, is also exposed quite significantly to the Eurozone area.
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