Archive

Archive for March, 2013

BERNANKE STATES CYPRUS STYLE DEPOSITOR HAIRCUTS POSSIBLE IN US IF EVENTS IN EUROPE BECOME CONTAGIOUS!

March 28th, 2013 No comments

ap110301127343_7070393

 

 

 

 

 

 

 

 

 

 

 

 

 

At the FOMC Press Conference in response to a question posed as to whether the Fed would ever impose depositor haircuts as was attempted this week in Cyprus, Fed Chairman Ben Bernanke confirmed that Cyprus style depositor haircut wealth confiscation is possible in the US if the Cyprus event or another event in Europe were to become contagious and the people lose confidence in the US dollar.

Below is a Transcript of Chairman Bernanke’s Press Conference , March 20, 2013

DONALD JUDD. Donald Judd, CBS News. I was wondering if you could tell me how if a run on the banks happens in Cyprus, how that might affect US markets. And also, is it possible for the US to levy a tax on regular deposits here or why not?

CHAIRMAN BERNANKE. Well, as someone mentioned, Cyprus is a tiny economy and I don’t think that these issues as worrisome as they are and as concerned as we would be for the Cypriote people, I don’t think that they have a direct implications for the US economy. The only way that they would create a problem would be if the runs became contagious in some sense, if depositors in other countries lost confidence. But at this point, I’m not aware of any evidence that that is in fact the case.

Read more Here Pages 22, 23  http://www.federalreserve.gov/mediacenter/files/FOMCpresconf20130320.pdf

Categories: Uncategorized Tags:

Dutch Finance Minister Tanks Markets; Is Cyprus a “Template” for Europe?

March 28th, 2013 No comments

Jeroen Dijsselbloem

 

 

 

 

 

 

 

 

 

 

Photo : AFP 

Head of the Eurogroup of eurozone finance ministers Jeroen Dijsselbloem has spooked global markets by saying the Cyprus bank restructuring deal should be considered a template for the rest of the single currency bloc.

What does that mean? It seems to mean that if a bank needs to recapitalize, it should go first to bondholders and shareholders, then to uninsured deposit holders…before they consider a bailout from the Troika (ECB/IMF/EU)?

In other words, he is implying that uninsured deposit holders may now routinely be hit before any bailout, or at least at the same time as a bailout.

Not surprisingly, all banks are to remain shut until Thursday, the central bank of Cyprus announced in a shock statement late on Monday, cancelling an earlier decision to open most banks on Tuesday.

Is this the end of the beginning or the beginning of the end?

The reality is that the weakness  of the system, both economic and political, has been exposed. It  will not be long before the next  crisis emerges – weeks, months or merely days.

Read more here If this is the last Euro Crisis, I’m a Dutchman

Categories: Uncategorized Tags:

Cyprus Banks and The End Game is a Huge Crisis-Peter Schiff

March 28th, 2013 No comments

This is a wake up call for everybody that has a bank deposit.

Why leave any money beyond what you immediately need to clear expenses in a bank when you are getting low to zero interest, have your deposit lose value through inflation when all the while the bank is probably insolvent and may very well fail. Why take the risk?

Categories: Uncategorized Tags:

Is Gold a Safe Investment?

March 27th, 2013 No comments

For the past ten years, gold has been an excellent investment, rising from about $300 an ounce in 2000 to over $1,600 an ounce today. That’s probably why a recent US poll showed most investors believe gold to be the best long term investment, ranking it better than real estate, stocks and savings accounts. Many Australians agree.

One of the reasons for gold’s strength as an investment is the present global debt crisis. As economies slow down, there’s been an increasing pressure to service debt. Governments all over the world have responded by increasing the money supply. The potential of future inflation has driven investors to buy gold to protect the value of their money. This trend doesn’t seem likely to change, making gold prices very stable.

Another factor making gold a safe investment is the rising price of oil and the resulting inflation caused by greater global demand for oil and dwindling global oil production. As more economies around the world become increasingly dependent on oil as a primary energy source, more investors will turn to buying gold and other precious metals as a hedge against rising inflation and the devaluing of paper currency.

Gold vs. Paper Money and Investments

Sure, there will always be a difference of opinion between economists, each offering the pros and cons of their particular point of view. But, in the long run, gold has always done very well, seldom losing its value and never given away for free.

You can’t say the same for paper money. Too many times in history, paper money had no purchasing power and was better used as fuel for the furnace or for wiping a baby’s bottom.

The same can be said about many paper stocks and investments. Companies and industries flourish and disappear, making their investments of little to no value.

In 1970,General Motors, Exxon Mobil, Ford Motors, General Electric and IBM were the five largest global companies. Not today. Only Exxon Mobil is still in the top five. The US retail phenomenon, Wal-Mart, is # 3. In 1970, it was only a small local chain store.  

General Motors is # 19 today, behind Toyota (# 10) and Volkswagen (# 12). Ford Motors, General Electric and IBM are not even in the top 20.

As you can see, investing in stocks can only be profitable if you can predict the future and know who the winners and losers are going to be.

That’s never been the case for gold. Buying and selling gold is easy. Gold is always in demand and even more so today as mining production is becoming scarcer and even more costly, keeping gold prices stable or on the rise.

Most market analysts believe gold and other precious metals will continue to do well in the future, as long the global economy remains unstable. Some are predicting gold prices will go as high $2,000 an ounce in the short term.

Five Common Precious Metal MYTHS

March 20th, 2013 No comments

Buying gold, silver bullion and other precious metals is one of the least understood investment options open to inexperienced investors.

When investors take the time to look at the facts about precious metals in the light of day, they soon discover that all of the old myths about buying and selling gold and other precious metals can’t stand up to the examination.

Let’s take a look at five of these common misconceptions about precious metals.

1. Gold and silver investing is only for wealthy high rollers.

You don’t need to be a millionaire to get started in buying gold or silver. Many average investors are putting up as little as one hundred to one thousand dollars to start their precious metals portfolio. So, with extra cash you may have on hand, you can begin to invest in rather inexpensive coins and silver bars. In fact, people from all levels of income are investing in gold and silver to protect themselves and their money in case of an emergency or disaster.

2. Precious metal investing is only for the experienced investor.

Many investors believe precious metal investing is too difficult to understand, but this is also far from true. Gold and silver are globally traded and information on the global demand and supply of these precious metals are not some closely held secret. Everything you need to know to be a smart investor is available anywhere in the world.

Actually, silver is one of the safest investments anyone can make. It’s virtually fool-proof. Whether you choose to invest in silver coins or silver bullion is up to you, but both hold their value extremely well, and both make an excellent investment.

3. Investing in gold is risky business.

Gold is actually one of the least risky investments you can make. Unlike paper investments, gold will never lose all its value. There will always be a demand for gold. Right now the demand for precious metals, such as gold, silver and platinum, is on the rise, while the supply from annual mine production is falling rapidly.

Another factor strengthening gold as an investment is the inflation caused by rising oil prices due to increased demand and declining production. Another trend in gold’s favour is the increase of money supply by the central banks, which causes a decline in the purchasing power of paper currency. All these factors make gold a safer investment.

4. Gold is not a very good investment.

When compared to recent major stock indices, gold’s performance may look weak, but that’s not necessarily true. Over the last ten years, gold has registered an average annual return of about 20 percent, which is certainly respectable. As far as the DOW is concerned, companies come and go. They perform poorly, go bankrupt and totally disappear and are then replaced on the DOW by newer, higher performing companies. Your money is safe in the stock market as long as you pick the winners and avoid the losers. Gold, on the other hand, may not make you get rich quick, but it’s value is not going to disappear overnight, as is the case in some publicly traded companies. Gold’s main purpose is as a wealth protector.

5. Precious metals are not a very good inflation hedge.

The truth is that since 1971, gold has steadily risen in price against fiat currencies when the global gold standard was abandoned. During that period of time, all of the world’s currencies have greatly depreciated in value when compared to gold. The purchasing power of the American dollar, for example, is only 20% of what it was in the early seventies. On the other hand, gold increased its purchasing power and will continue to do so as long as the central banks continue printing more money than the increase in the national GDP.

As far as precious metals are concerned, it pays to keep an open mind. Do your due diligence and explore the reality behind the myths and you will be surprised by how much value there is in precious metal investment, especially as a wealth preserver

Cyprus banks will stay closed until Thursday

March 19th, 2013 No comments

closed

Banks in Cyprus will remain closed until at least Thursday while talks continue over controversial plans to put a levy on savers’ deposits.

The news that bank accounts face a one-off tax to help fund the country’s bailout saw depositors rush to cash machines, which soon ran out of funds.

Politicians want to finalise the bailout terms before banks re-open, as fears mount of a bank run.

Plans for a levy unnerved investors, sending shares and the euro lower.

Cyprus’s banks were closed on Monday for a Bank Holiday, and the country’s central bank said they would now remain shut until Thursday at least.

Read more here : Cyprus banks will stay closed until Thursday

Categories: Uncategorized Tags:

Cyprus Bailout Risks Europe Bank Runs

March 18th, 2013 No comments

Cyprus Bank Run

Image : money.cnn.com

When Cyprus’s banks reopen on Tuesday morning, every depositor will have some of his or her money seized. Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized. And then the Eurozone’s emergency lending facility and the International Monetary Fund will inject 10 billion euros into the banks to allow them to keep operating.

Cyprus’s government tried to explain this deal by observing that it was better than the alternative: Immediate bankruptcy and closure of the major banks. In that scenario, depositors would lose a lot more of their money. Businesses would go bankrupt. And tens of thousands of people would be instantly thrown out of work.

But, still, not surprisingly, news that deposits in Cyprus’s banks would be seized triggered an immediate run on the banks.

Depositors rushed to ATMs and tried to withdraw their money before it could be seized. But the ATMs weren’t working. And the government has now made it impossible to transfer money out of the country. So, assuming Cyprus’s government approves the deal (still pending), depositors will have some of their money seized on Tuesday morning.

Source : Cyprus Bailout Risks Europe Bank Runs

Categories: Uncategorized Tags:

Could gold be the next Libor scandal?

March 18th, 2013 No comments

Barclays

 

 

 

 

 

 

 

 

 

 

 

 

13 Mar 2013: US regulator considering an inquiry into London’s gold and silver markets to check if prices are open to manipulation

London’s financial sector was last night bracing itself for another official investigation into alleged price-fixing following reports that a US regulator is considering launching an inquiry into the City’s gold and silver markets.

The Commodity Futures Trading Commission is discussing whether the daily setting of gold and silver prices in London is open to manipulation, according to the Wall Street Journal, which stated that the CFTC is examining whether prices are derived sufficiently transparently.

The system of setting gold prices in London is unusual and involves a twice-daily teleconference involving five banks – Barclays, Deutsche Bank, HSBC, Bank of Nova Scotia and Société Générale – while silver is set by the latter three. The price fixings are then used to determine prices worldwide.

The news of the potential investigation comes after analysis of a similarly unusual system – the process used to determine the London interbank offered rate, known as Libor – uncovered manipulation and triggered multi-billion dollar fines against a group of banks.

Excerpt : Source  Could gold be the next Libor scandal?

Categories: Uncategorized Tags:

Gold vs. Silver – A Performance Review of the Last Decade

March 15th, 2013 No comments

Like all investments, gold and silver have their good days and bad days, their ups and their downs. But over the last ten years, these precious metals have had many more good days, especially when compared to the stock market.

Sure, the stock market gets plenty of publicity. But too few investors are paying close attention to the precious metal market, to the detriment of their investment portfolio.

What Are the Facts?

From the year 2000 through 2012, according to Kitco, the NYSE had a modest increase of 22.25%. The DJIA increased by 17.04%. NASDAQ had an increase of 117.73%.

Gold and silver, however, during that same period of time, went through the roof. The Gold USD/OZ increased in value by 532.15%. The Silver USD/OZ did even better, increasing in value by 573.26%.

Despite all of the negative myths about the wisdom of investing in precious metals, the facts speak for themselves. Gold and silver were definitely the best investment of the new century, far outpacing stocks, bonds and other paper.

Silver Beats Gold

In a precious metals bull market, silver consistently over the long-term outperforms gold. Since October 2001- January 2011 for example, silver increased in price from approximately $4 an oz to a high of $31 which is an approximate 775% gain. During that same approximate time period, Gold went from $265 to a high of $1430 for an approximate gain of 540%. So Silver outperformed Gold by 235% in the same time period. Despite general misconceptions that deter people to buy silver, the stats don’t lie – it has proven to be a lucrative investment option.

What Does the Future Hold for Gold and Silver?

The global economy is not doing very well and very few economists are willing to paint a rosy future. Economies all over the world are slowing down. Tax revenue income is dropping fast with each year. Unwilling to cut back on spending in any meaningful way, most countries have little choice other than increasing the debt level or printing more money, both of which will only increase the pressure of the national debt and decrease the value of the national currency.

Astute investors know that gold and silver are the best investments for bad times.

If inflation gets out of control, paper investments and cash won’t be worth the paper they’re printed on. That’s why so many investors want to buy gold and silver now and probably will continue to do so in the future. They see precious metals as the best way to protect and preserve their money. Most advisors recommend that about 15 to 20% of your investment portfolio should be in precious metals, such as gold and silver.

Categories: Uncategorized Tags:

How Much Gold Does China Really Have?…

March 7th, 2013 1 comment

China Infographic

Infograph Source : dailyreckoning.com

China is the world’s leading gold producer and also the world’s leading gold importer. Surprisingly their official gold holdings haven’t risen an ounce in over three years, but according to AgoraFinancial.com, last year set a record of imports via Hong Kong to mainland China.

According to Matt Insley from The Daily Reckoning, China could be sitting on more than 7000 tonnes of gold today.

China is hoarding gold at a rate never seen before – like modern day conquistadors.

Source : How much gold does China really have?

 

 

Categories: Uncategorized Tags: