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Sprott:  “The most imminent threat (to the financial system) is where another banking system goes down.  Maybe it will be Slovenia, Spain, Portugal, or something like that.  But you know there have been a lot of deposits taken out of these banks....

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“Of course that’s been offset by the Fed lending to the US subsidiaries of the European banks and anyone who is in trouble, so they can pay off the depositors.  But the time is coming when we all realize that the banking system, because the assets are weak, some day there is going to be another bail-in. 

And the minute that bail-in gets reported, unlike the Cypriot bail-in, people will realize that it’s very, very risky having your money in banks.  The minute that happens it will trigger gold and silver, and I think that’s the next event to watch for -- some weakness, or some outright bail-in of another banking system.”

Eric King:  “Eric, I know it’s impossible for you to know, but how close are we to that (moment) would you say?”

Sprott:  “It depends on who the next country is and how big it is.  If it was Spain I think it would be too big for the ECB or governments to deal with.  Maybe they can get away with Slovenia, who came out said their banks had a $5 billion shortfall.

But it looks today like nobody wants to write the check any more.  The governments don’t want to write these checks to support their banking system.  So it could be any time.  We keep progressing with what they call in Europe ‘The Banking Resolution,’ which is really the ‘Bail-In Resolution.’

I think the BIS has set the tone.  They’ve said, ‘Well, it’s so simple to deal with a bail-in bank.  We just close it on Friday, we make the depositors and creditors take the hit, and we open it on Monday.’  It’s fine for them (the BIS), but not so fine for the depositors.  And when it starts to reverberate that you don’t want to have deposits in a bank, that’s when all hell is going to break loose.”

Eric King:  “Eric, when you say, ‘All hell is going to break loose,’ how bad will this be?”

Sprott:  “Well, you know, Eric, I’ve read all of the interviews that you’ve ever had on your website, and some people go to the reality of what happens when the banking system fails?  I mean I don’t even think people, and even I don’t want to contemplate it.  It’s an utter disaster if people don’t trust governments, currencies, and banking systems, because everything stops.

I don’t even want to go there in a way because that outcome is something that none of us would really want to view in the clarity of the situation that we all find ourselves in, but it would not be pretty to say the least.”

IMPORTANT - The is the first in a series of powerful interviews with billionaire Eric Sprott.  Sprott discusses what is happening behind the scenes in the ongoing war on gold and silver, the greatest threat to the financial system, as well as the coming  financial collapse.  Eric Sprott’s powerful KWN audio interview is available now and you can listen to it by CLICKING HERE.

IMPORTANT - Due to recent events, KWN will be releasing interviews all day today.

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The audio interviews with Bill Fleckenstein, Eric Sprott, Grant Williams, Egon von Greyerz, Dr. Paul Craig Roberts, William Kaye, Michael Pento, Andrew Maguire, David Stockman, Art Cashin, John Hathaway and Jim Grant are available now. Other recent KWN interviews include Marc Faber and Felix Zulauf -- to listen CLICK HERE.

Eric King

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