Did any fellow PM bulls ever think....

[jim4silver]

That one day you would read about a nation somewhere, actually confiscating $$$$ directly from customers' bank accounts because said bank was in financial disaster somehow and needed the money for some reason? What if in that scenario the amount "confiscated" was 40% of your total account holdings?

If you ever envisioned such a scenario, what did you think would happen to gold/silver when said event happened? I am sure even the most bearish PM folks would think such a move might make PMs go up a little, even for a week or so. What about it making PMs seem less advantageous to own? That is what is happening right now. If anyone thinks said move in PM prices is as it should be or rather normal, they are either delusional or just plain dumb.

This fact only makes me conclude that the PM markets are being manipulated. I am glad for this now, and hope they can push the prices lower. Anyone in Europe or America at this point that still refuses to own any PMs and instead keeps all their assets in paper forms accessible to banks and the gov deserves what they get in the end.

PS If this Cyprus deal gets finalized without the locals raising too much of a fuss, you can bet other Euro nations will do the same thing. Eventually it will come here, whether via 401Ks or bank accounts. And to think we were all (most of us that is) worried about gold/silver confiscation at some point.

Just my opinion.


Jim

 

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[TreasurePirate69]

I don't understand the problem. This has been going on for hundreds of years. Even here in the US your account is only insured for what the FDIC will cover it for. If you keep more than that in the bank then you know that you could lose it. If a bank declares bankruptcy then you can expect to lose anything above and beyond the insured amount. This has always been the case. Last week's plan was to create a tax that would impact those below the insured limit. This was met with strong opposition and rightfully so. This week's plan is essentially to let the bank declare bankruptcy and all depositors who have more than the insured limit are SOL. Why is this any different than what would happen here in the US if a bank declared bankruptcy? Why are so many people claiming that this event is some sort of wakeup call? It has always worked this way.

As for manipulation, why would the bankruptcy of a bank in Cyprus somehow imply that the prices of gold and silver should go up? Silver went up last week quite a bit when it was still expected that they were going to penalize regular depositors who were below the limit. But once that plan failed silver and gold both stabilized again which is what I would expect. I think this Cyprus deal is pretty much a non-event to the rest of the world now that they are letting it play out the same way thousands of banks have played out over the years. The media is trying to spin this as "confiscation" and such. But in reality this is just a standard case of a bank declaring bankruptcy. The same thing could easily happen to your local regional bank or small town bank. And it would work the exact same way.

 

[FreedomUIC]

I was thinking along the same lines as you Jim. The silver price spiked last week up .44 but only lasted for a couple of hours then lost that amount and .20 some more....

I just don't understand the reasoning but I am in this for at least 15 more years so stacking as much as I can.
I am starting Gold shortly, 1/4 oz a month each month for at least five years then back to silver. Of course this plan is fluid
as price will determine what path I choose.

 

[jim4silver]

I don't understand the problem. This has been going on for hundreds of years. Even here in the US your account is only insured for what the FDIC will cover it for. If you keep more than that in the bank then you know that you could lose it. If a bank declares bankruptcy then you can expect to lose anything above and beyond the insured amount. This has always been the case. Last week's plan was to create a tax that would impact those below the insured limit. This was met with strong opposition and rightfully so. This week's plan is essentially to let the bank declare bankruptcy and all depositors who have more than the insured limit are SOL. Why is this any different than what would happen here in the US if a bank declared bankruptcy? Why are so many people claiming that this event is some sort of wakeup call? It has always worked this way.

As for manipulation, why would the bankruptcy of a bank in Cyprus somehow imply that the prices of gold and silver should go up? Silver went up last week quite a bit when it was still expected that they were going to penalize regular depositors who were below the limit. But once that plan failed silver and gold both stabilized again which is what I would expect. I think this Cyprus deal is pretty much a non-event to the rest of the world now that they are letting it play out the same way thousands of banks have played out over the years. The media is trying to spin this as "confiscation" and such. But in reality this is just a standard case of a bank declaring bankruptcy. The same thing could easily happen to your local regional bank or small town bank. And it would work the exact same way.

Perhaps you should ask some of the "wealthy" folks who are losing 40% of their bank account balance if they would not have been smarter to keep that money in gold and silver in their possession. If they had, they would not be losing 40% of their wealth today.

If you really think the Cyprus deal is a non-event to the rest of the world, then I don't want to try and change your mind.

Jim

 

[TreasurePirate69]

Well, I agree that they would have been better off having their money in other places. They also could have chosen another bank. They didn't have to put their money into gold/silver in order for it to be protected. My belief is that gold and silver are going to drop by as much as 40% in the next 5 years. So if that holds true then there are going to be a lot of rich (and poor) folks who are potentially going to be looking at similar losses on their PM investments. But as always, diversification is key regardless of whether it is PM's or banking.

My main point is that this is nothing new. We had hundreds of banks in the US that went belly up over the last 5 years. Many people who had more than $250K (single account holder) lost money because it wasn't protected. It's unfortunate but they really should have known better. This is not some new "evil banking/government plan" to steal all of our money. If anything this shows that the system is still working (for now). If they actually had gone through with the "deposit tax" that was proposed last week then it would have been a different story (although technically other banks have done this recently on a much smaller scale). But depositors in Cyprus who heeded the 100k Euro limit on insurance are going to be protected. That is good news and I would think that this would mean that PM's would not shoot to the moon on such news. So I don't see how this makes someone "delusional or just plain dumb" for not believing that the current PM prices are due to manipulation.

 

[jim4silver]

Well, I agree that they would have been better off having their money in other places. They also could have chosen another bank. They didn't have to put their money into gold/silver in order for it to be protected. My belief is that gold and silver are going to drop by as much as 40% in the next 5 years. So if that holds true then there are going to be a lot of rich (and poor) folks who are potentially going to be looking at similar losses on their PM investments. But as always, diversification is key regardless of whether it is PM's or banking.

My main point is that this is nothing new. We had hundreds of banks in the US that went belly up over the last 5 years. Many people who had more than $250K (single account holder) lost money because it wasn't protected. It's unfortunate but they really should have known better. This is not some new "evil banking/government plan" to steal all of our money. If anything this shows that the system is still working (for now). If they actually had gone through with the "deposit tax" that was proposed last week then it would have been a different story (although technically other banks have done this recently on a much smaller scale). But depositors in Cyprus who heeded the 100k Euro limit on insurance are going to be protected. That is good news and I would think that this would mean that PM's would not shoot to the moon on such news. So I don't see how this makes someone "delusional or just plain dumb" for not believing that the current PM prices are due to manipulation.

I disagree with your view on banking in general. You seem to infer that putting one's money into a bank account (savings, checking, etc) is akin to investing in a stock, wherein one can lose their entire investment and that is OK (over and above insured deposit limits). I believe that it is more of a "safe keeping" and fiduciary duty between a bank and a customer. A customer should not be forced to bear the loss of the bank and let the bank remain standing. In the end if a bank fails, a depositor does not have much recourse in most instances, but in the Cyprus case depositors' money is being used to keep the banks going from my understanding of what is happening.

I would like to see some (one or two) references where something like Cyprus has happened over the past 5 years or so and as you say the depositors lost their money over the insured limits. This is not like a local savings and loan having to close its doors and another bank taking over.

Just my opinion.

Jim

 

[TreasurePirate69]

I personally do not have all of the inside information about what is going on in Cyprus. So it is very possible that the Cyprus situation is indeed different in many respects to what typically goes on here in the states. In the US it is very common for accounts to be switched to another bank while the original bank declares bankruptcy and goes out of business. In the US, the depositors are typically first on the list to be repaid above other creditors. So even a depositor that has over the insured limit may not lose all of their money. If the bank doesn't have enough to cover all of the depositors then those that are above the limit will lose funds. This appears to be different from what is going on in Cyprus. In Cyprus, they do not appear to be putting depositors first in the list and those above the insurance limit may lose funds in order for creditors to be paid. So I think there are some fundamental differences.

Regardless however, the bank that is declaring bankruptcy will go out of business in Cyprus so I don't think this is a case of depositor money being used to keep the bank afloat. But then again, that's just my understanding of what I have read. And the media isn't helping matters because they are trying to paint this as a story of bankers bailing themselves out which is not exactly the case from what I can tell.

But I'm happy to admit that I don't fully understand what is going on. I'm just glad that they upheld the insurance limits so that those who were under the limit will not lose funds.

 

[Marchas45]

O! Boy! we always have one. I agree 100% with you Jim on Cyprus and how it will effect European Countries. Their (meaning depositors) already taking fiat out of the UK banks along with a few other countries and yes it's going to affect the US as well eventually and I'm one glad son of a gun that has already removed most of mine and have it in Physical PM's. The banks are failing because the Elite want to create Debt and it's the Banks that are causing the problems for all of Cyprus and most of Europe and not the people. The poor buggers are going to suffer.
And it's not the banks that are declaring bankruptcy but the Government.
By the way, didn't I read somewhere that the banks here in the States are doing away with some of the Insurance via the Dodd-Frank Deposit Insurance Provision. If anyone is keeping their fiat in the banking system then their nuts.

P.S. The Cyprus Government are now stopping people from taking Fiat out of the country and are confiscating it at the airports and borders if it's over 10,000 Euros. What do you call that? I call it THEFT. Video - Cypriot Border Officials Stop Removal of Currency - WSJ.com

 

[Marchas45]

Here is a great article:

Submitted by Deviant Investor

The following article was written by our friend, “Taki” of GoldSilverWorlds. I have reposted it, with his permission, and added my opinions in red.

GoldSilverWorlds | March 20, 2013

The tragedy in Cyprus continues. Reuters reports today that the island is in an impasse as the initial proposal of past weekend was killed by the Parliament with 100% of the votes. Several alternative plans are being discussed behind the scenes. One of the potential scenarios is the Russians buying up one of the ailing Cypriot banks. Meantime it appears “EU officials voiced frustration but little sympathy for an ambitious but now bust banking system.” (via Reuters).

We wrote over the weekend our conclusion about the Cypriot case: Wakeup Call From Cyprus To The Rest Of The World. It was meant to help people SEE with their own eyes the truths and fundamentals behind the facts. Our article reached tens of thousands of readers.

Jim Sinclair considers this IMF-ECB-Cyprus fiasco tremendously important. We ignore his wisdom and experience at our peril.

The Cypriot case is all over the place, in all types of media. However, it is amazing how the following simple facts remain underexposed. It is one thing to look at the news; it is another thing to look at the learning that comes out of the news. For those who are willing to see, here is what Cyprus is teaching the whole world about money, the debt crisis and gold:

1. The counter-party risk has never been that high in history. Keeping your money in your savings account not only has no yield, but also has a risk of losing (part of) it to the bank itself.



One important message from this banking and public relations disaster is that, per the ECB, the money you put into the bank (for your checking or savings account) becomes a liability of the bank, and not a deposit placed there for safe keeping. In other words, a bank failure means some of the bank’s liabilities will not be repaid – such as some or all of your bank account.


2. Money in your bank is NOT safe. It appears incredibly difficult for people to understand this truth. In people’s mind, safety and banks go hand in hand, just like yin and yang or day and night.



Fractional reserve banking allows deposits to be loaned out many times. This increases bank profits. When an extraordinary number of individuals attempt to withdraw their deposits, a bank run occurs. The IMF-ECB demand that depositor money be partially confiscated suggests that many more people may want to withdraw funds from banks across Europe. This will discourage confidence in banking systems.

3. How is it possible that banks need their depositors’ money to survive when they borrow at 0% and lend at rates between 4% and 8%? It shows the whole banking system is truly ailing.



Since banks buy the bonds of insolvent countries, some defaults are to be expected. Adding leverage and derivatives increases the risk of default and bank failure. It appears that the world’s largest banks are heavily leveraged and holding a large quantity of “dodgy” assets that might better be described as toxic waste. The system survives on “extend and pretend” confidence and bailouts. Yes, the banking system is dangerously overextended and dependent upon central banks “printing money” to keep them alive.

4. Governments are truly desperate. Still they keep on pretending nothing major is going on. They have a plan for everything. But time and time again, they surprise us with unexpected major problems. The bankruptcies of major Spanish and Italians banks earlier this year are recent examples; the Cypriot thing is unimaginable.



Governments are heavily in debt and don’t control spending. They must maintain the cozy relationship with banks and central banks so they can borrow ever larger amounts from the banking system. The banking system is teetering near insolvency and must receive bailouts and the support of governments (example: allowing confiscation) to “extend and pretend” bad assets are actually good assets. Currently, governments are effectively taking assets from citizens via price inflation while paying low interest rates on deposits. It could escalate to Cyprus-style confiscation and pension plan nationalization.

5. Didn’t we learn only half a year ago from our European leaders that the debt crisis was solved? Didn’t we hear that they would do whatever it takes to get the economy rolling again? Either they truly don’t know what they are doing and talking about, either they are liars of the highest degree … or both.



“Extend and pretend” in both Europe and the United States will work until some “black-swan event” causes a loss of confidence in the banking system and creates a chain of bank failures and derivative destruction across Europe, Japan, and the United States. Think the assassination of Archduke Ferdinand in 1914 or the failure of Credit Anstalt Bank in Austria in 1931.

6. Cyprus is telling that the debt crisis is not over; it is only worsening.

Yes, indeed! If the 2008 financial crisis was the first wave of the debt and derivative crisis, perhaps the IMF-ECB-Cyprus fiasco marks the emergence of the world financial system from the “eye” of the debt hurricane and the reemergence of the destructive winds of insolvency and financial chaos.

7. The whole scenario was organized. The central bank blocked the electronic payment traffic in and out of Cyprus during the weekend. Cypriots feel betrayed. But who knows what other surprises our leaders are cooking for not-Cypriots?



If something like this happens in banking and politics, it was probably planned. What may not have been planned were the collateral damages and the unintended consequences. What the middle-class should expect is that their interests will be considered too little and too late to save most of them.

8. What did the financial and monetary system solve since the big crash in 2008? Indeed, nothing. The symptoms of the crisis are becoming worse. It means the true crash is yet to come.



National debt in the countries of the EU, Japan, and the United States is rising far more rapidly than economic activity can support. This can continue for a long time (it already has) but not forever. It seems likely that it will end with bang, not a whimper. Possibilities include a new monetary system, a devastating crash, another world war, confiscation of private assets, destruction of unbacked paper money, or various other unpleasant changes.

9. The key take-away in our humble opinion is that Cypriots holding physical gold and silver (or other tangible assets that preserve purchasing power) are not being touched by any means. Although we are 100% convinced of our point, we do not see this message appearing, nor do we hear people talking about it. Consider it a privilege if you have this insight or if you understood this learning.

The priority of the financial and political elite, banks, governments, and the media is to maintain the status quo – unbacked paper money. Don’t expect major media attention upon gold until it is too late for most people to preserve their assets and purchasing power with gold and silver.

10. Trust is what is touched much more than the bank accounts. The next crisis will be driven by trust. As our money system is only backed by trust (hence “fiat money”), you can be sure that our current money system can potentially be destroyed.



No unbacked paper money system has survived more than a few decades in the history of the world. Currently, not one currency is backed by anything more substantial than faith, credit, and trust in sovereign governments. Trust is weakening and that bodes poorly for a banking system based merely on trust, but not supported by real assets such as gold, silver, oil, or something substantial and real.

These lessons are there for anyone who is willing and open to see, whether they remain underexposed is not important. Ignoring them is at one’s own peril.

As Ayn Rand said, “You can ignore reality, but you cannot ignore the consequences of ignoring reality.” Haven’t the banking and political powers-that-be ignored for far too long the reality that money must be backed by something substantial, such as gold? The consequences of ignoring that simple reality are: massive and un-payable debts, increasing instability in banking and political institutions, monetary failures, insolvent governments, evaporation of individual savings and retirement assets, and bankrupt citizens and businesses. The IMF-ECB-Cyprus fiasco just accelerated the pace at which those destructive consequences will impact our lives.

 

[TreasurePirate69]

Here is a great article:

Submitted by Deviant Investor

The following article was written by our friend, “Taki” of GoldSilverWorlds. I have reposted it, with his permission, and added my opinions in red.

GoldSilverWorlds | March 20, 2013
.
.
.
.

Oh my! Where to begin? Where to begin?

 

[jim4silver]

TreasurePirate needs some more time to prepare, so he can tell us how the Cyprus situation is a good thing long term.

Once the smoke clears on Cyprus (assuming that it in fact does clear), they will start talking about doing similar things in other Euro countries. Probably Italy and Spain, among others.

Still is amazing though that many here don't even know about Cyprus. I was talking today to someone and I asked them what they thought about what was happening there, and he replied "what's going on there?". He probably knows the latest college basketball scores though.

Just my opinion.


Jim

 

[TreasurePirate69]

TreasurePirate needs some more time to prepare, so he can tell us how the Cyprus situation is a good thing long term.

Once the smoke clears on Cyprus (assuming that it in fact does clear), they will start talking about doing similar things in other Euro countries. Probably Italy and Spain, among others.

Still is amazing though that many here don't even know about Cyprus. I was talking today to someone and I asked them what they thought about what was happening there, and he replied "what's going on there?". He probably knows the latest college basketball scores though.

Just my opinion.


Jim

It's never a good thing when a bank goes under. Nor is it usually the end of the world. My stance is that this has been going on for hundreds of years. You say that Europe will be next. Well, they've already been doing it. And we do it here in the US all the time. Banks fail and people potentially lose money. So why is this a sign of the end of the financial world? Because the media is hyping it up as such? Because some bloggers/pundits who serve to gain by making people worried are pushing this as something unique? I'm not sure that is a good enough reason.

Can this Cyprus thing end very badly? Sure. Could this be the bellwether you guys think it is? Sure. Then again, this has happened about 1000 times before. I prefer to wait and see. I am making no predictions. I'm simply pointing out that there is a good chance that this is a non-event and that in 6 months we will be none the worse for wear. And I could be very wrong.

When this Cyprus thing first happened, you posted something in another thread. Another forum member jumped all up and down my back for pointing out that it technically hadn't happened yet and we needed to wait and see how it was going to play out. He never apologized or admitted that I was right. No big deal as far as I'm concerned. But I think it points out what I have been saying.

 

[TreasurePirate69]

One more thing I'll point out... if you read my posts you will see that I am usually very vague about what I think could happen in the future. I really don't know what will happen. Could silver go to $100 an ounce? Sure. Could it also go to $18 an ounce? I think so. I personally believe that it will go to $18 an ounce in the next three years. But I would put the odds of that happening at 50% or less. If there is any major financial event then all bets are off. I fully acknowledge that.

Contrast my views with the views of some of the other members here and you'll see the difference. There are some people here who are 100% certain that they know which way this is all going to go. They would never admit that there is even a remote possibility that they could be wrong. In some respects it is like a religion to some folks. They quote the "relevant scriptures" and pay homage to the evangelists. And if you dare utter a blasphemous word against the great silver gods then you are a complete nonbeliever and a fool. Funny, I don't remember saying that I don't believe silver could go to $100 or that this Cyprus deal couldn't end badly. I'm simply pointing out that the opposite has a chance of being true. If you find yourself 100% convinced of anything then you are likely wrong. Could you actually be right? Yes. But the odds are not very good.

PM's should not be treated like a religion. That's something to consider the next time you tune in to your favorite "silver evangelist" or quote the "silver scriptures".

P.S. - This particular rant is not aimed at Jim or at any other specific forum member.

 

[Marchas45]

LMAO well here's more fuel for the fire concerning Canada. Also I have nothing against you TreasurePirate and you have a right to your views as we all are.

Canada Includes Depositor Haircut Bail-In Provision For Systemically Important Banks in 2013 Budget! | SilverDoctors.com

 

[TreasurePirate69]

LMAO well here's more fuel for the fire concerning Canada. Also I have nothing against you TreasurePirate and you have a right to your views as we all are.

Canada Includes Depositor Haircut Bail-In Provision For Systemically Important Banks in 2013 Budget! | SilverDoctors.com

Hmmm..... I really don't know what that means. Here is the relevant text from the article. The bold section below is what seems to be being construed as somehow taking depositor's funds. I'm not sure that's what it means. It could mean that but it could also mean something else. Time will tell I guess.

Establishing a Risk Management Framework for Domestic Systemically Important Banks

Economic Action Plan 2013 will implement a comprehensive risk management framework for Canada’s systemically important banks. Canada’s large banks are a source of strength for the Canadian economy. Our large banks have become increasingly successful in international markets, creating jobs at home. The Government also recognizes the need to manage the risks associated with systemically important banks—those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.

The Government intends to implement a comprehensive risk management framework for Canada’s systemically important banks. This framework will be consistent with reforms in other countries and key international standards, such as the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions, and will work alongside the existing Canadian regulatory capital regime. The risk management framework will include the following elements:

- Systemically important banks will face a higher capital requirement, as determined by the Superintendent of Financial Institutions.

- The Government proposes to implement a ―bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.

- Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans. This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are ―too big to fail.

 

[TreasurePirate69]

By the way, the Dodd Frank act also specifically talks about options for bail-in. Bonds are mentioned as a form of bank liabilities that could be used to create regulatory capital. I believe the Canadian legislation is really just a means of enacting their own Dodd Frank type of bill. With that said I hesitate to call it earth shattering or imply that it has some sort of hidden meaning beyond what it says. In the US, Dodd Frank does not mean that banks can just take deposits willy nilly. Our deposits are still supposed to be protected up to the insured limit. Beyond that there are no assurances which has always been the case.

 

[Peyton Manning]

am I wrong in this? Cyprus or any other EU country signed on to certain possibilities to be in. Basically giving up some soveriegnty ? No one can impose such on the US. And would it not require new laws here for it to happen? As slowly as congress works there should be plenty of time to get our cash.

 

[Marchas45]

Canada Banks are going the way Cyprus banks did by putting that into their Economics Plan and I just found out that the Swiss did it also back in 2012, give your customers shares in the bank in return for their deposits. Yea right but what happens when the bank closes. Hello! As for the the insurance protection I like how you used the word Supposed, that's the point. As for bonds and shares their not worth the paper their written on if the banks collapses.

P.S. I read another article that only the Cyprus banks where closed and that other branches around the world are open and the wealthier clients are removing their accounts with no penalties. So what does that say for the poor Cypriots?

 

[Peyton Manning]

it says read the fine print before you join anything

 

[jim4silver]

I read something today saying that some of the bank customers could lose 80% of their deposits if they are over 100K Euro and in one of those two banks being affected, and that the 40% figure is just an "average" based on all the different types of loses that will be happening at the bank as a result of all this. I don't know if that is true or not.

PS To my friend TreasurePirate, I do believe this Cyprus situation is vastly different than what has been going on in other cases where a bank fails and it is taken over by another bank. I do not believe it is true that here in the US in the many recent bank takeovers that account holders lost money on their uninsured deposits except in a small minority of situations. I would like to see proof of what you say about this happens all the time and has happened like this before in other places.

The Cyprus thing may not turn out bullish for PMs, but in my opinion it is HUGE in its ramifications. Further, one of the two banks this affects will stay open and remain in business after this is over. This is not simply to allow a company to go bankrupt as you had stated before. To me this is similar to when our banks failed in the depression era and the depositors got screwed. But at least then I assume the banks really did fail and were not bailed out from their failed investments (Greek debt, etc) by using the depositors money and then keep going on as business as usual, as is what is happening here according to what I have read, which may or may not be fully accurate.

All just my opinion.

Jim