Important article from the Irish times
Submitted by Jim Sinclair–
It will be the catalyst to the “Emancipation of Gold” which is from gold paper fraud. Fear of account risk to “Bail In” is going to go viral where big money is concerned. This is one of the factors in the large bull market for physical gold that the paper gold manipulators cannot extinguish with price pressure.
The more these geneses pressure gold the greater the demand for physical gold will become. Please review video #3 from yesterday on Boss Hogg and gold. (Again per Jim Sinclair)
Bank deposits of over €100,000 may be at risk
Proposals under Irish presidency to deal with European bank collapses likely to ‘bail-in’ large depositors
Deposits of over €100,000 are likely to be hit in the event of future European bank collapses, according to a proposal put forward by the Irish presidency of the European Council ahead of a key meeting of finance ministers next week.
* Discussions on the controversial bank resolution regime, which is likely to see savers with deposits over €100,000 “bailed in” as part of future bank wind-downs, are due to intensify this week in Brussels, ahead of Tuesday’s meeting, which will be chaired by Minister for Finance, Michael Noonan.
“We will try to get some guidance from Ministers about the possible design of the bailout tool,” one EU official said yesterday.
The Irish Times takes no responsibility for the content or availability of other websites.
Under a compromise text proposed by the Irish presidency, uninsured deposits of over €100,000 would be bailed in in the event that a bank is resolved, but depositors would rank higher than other creditors in the event of a wind-down.
In this scenario – known as “deposit preference” – depositors would rank at the very end of the process, with other creditors first absorbing losses.
However, some member states have not ruled out the possibility that insured deposits, i.e. deposits under €100,000, would be forced to bear losses in the event of a bank collapse even though these deposits would be likely to be protected by the deposit guarantee scheme.
However, the explicit exclusion of insured deposits from future “bail-ins” could in fact be included in the final text, according to some sources, with some MEPs in particular keen to include such a provision.
Significant differences still remain between states on the issue, with some countries calling for greater flexibility as regards the application of the new rules on a national basis, including the possibility that individual countries could be permitted to exempt large depositors from losses if a bank fails.
The introduction of an EU-wide bank resolution process, which would govern how banks are wound down, is a key strand of the EU’s plan for a pan-European banking union, which was endorsed by EU leaders at last June’s summit.
However, the chaotic Cyprus bailout instilled the issue with greater urgency, with EU lawmakers now keen to provide clarity around bank collapses.
Moving the burden
This year Jeroen Dijsselbloem, head of the group of 17 euro zone finance ministers, said that losses on bondholders and depositors could form part of future bank bailouts as euro zone officials seek to move the burden of bailouts away from taxpayers – as was the case in the Irish bailout – and on to private investors.
The European Commission argues that this switch from so-called “bailouts” to “bail-ins” would result in an allocation of losses that would not be worse than the losses that shareholders and creditors would have suffered in regular insolvency proceedings that apply to other private companies.
While the inclusion of large savers in future bank bailouts is now widely accepted, significant differences still remain between member states.
While the new rules governing bank resolution were first intended to come into place in 2018, since the Cypriot bailout there have been calls from senior EU figures such as European Central Bank president Mario Draghi and EU economics affairs commissioner Olli Rehn to introduce the new regime as early as 2015.
The Irish presidency of the European Council is hoping to reach a common position by the end of next month.
In this interview with Ellis Martin, The Silver Guru-David Morgan discusses the issue of counterfeit Silver Eagles making their way into the hands of unsuspecting small bullion dealers and investors in the US. It’s a treasonous endeavor evidently. Where are they coming from? Who’s not paying attention or looking the other way? Listen and learn. Also: Ineffective QE pumping with monies not finding their way past the banks and how big can big can the economic bubble get ahead of a world cutting back on manufacturing. Major mining companies consolidate and trim down while junior and mid-tier producers ramp up. What’s going on?
Is Krauth a silver expert? Read what the real historian Charles Savoie has proven…
“Interestingly, silver was not targeted by Executive Order 6102. Now, we can’t know if there will ever again be anything akin to this Oval Office edict – much less what it might cover and might say.
But going on the past, and considering the size of the silver market relative to gold, silver could be a way to own a precious metal that just might sidestep any risk of future confiscation.”
Silver did not sidestep FDR’s metals thefts!! August 10, 1934, front page New York Times—
If only people touted as experts had adequate historical background! EO 6814 issued on August 9, 1934, caused the public to be dispossessed of 113,031,000 oz silver as of February 1937 as documented with court acceptable data in my 312 page week by week documentary of the FDR gold/silver seizure at the site linked. For the sake of the FACTS alone, I HOPE this post won’t get deleted due to some absurd personality popularity profile parade.
I’m sending out as many notices as I can to watch out for this piece of bad info from Krauth, neglected aspect fallacy! EO 6102 didn’t have to address silver, EO 6814 addressed it! I don’t think he’d intentionally put out faulty info, but when faulty info is placed before investors, from any source—it needs correcting. The Commercial & Financial Chronicle, New York, is the main source of data on this travesty; the Wall Street Journal was the main data source from the General Services Administration’s silver “auctions” to the SUA that ended in fall 1970.
Today we have a plethora of companies reporting earnings and are moving through the 1st Quarter earnings season at a rapid pace. Thus far, earnings have been far from exciting and have made the previous 2013 forward earnings estimates laughable.
The only way we get to the proposed valuations is through multiple expansion which is simply going to require the Federal Reserve to continue to pump $85 billion into Treasury’s and MBS securities each month. I am confident they will comply.
There are a few analysts out there who are discussing the potential bubble forming in equities and other risk assets as Bernanke’s plan is working to the extent that asset prices are rising. However, even fewer analysts are pointing out that both retail and institutional money is constantly chasing yield at this point.
Simply take a look at the 2013 price action in high yield dividend paying stocks, high yield bonds, preferred stocks, and master limited partnerships. It is safe to say that a bubble has formed not just in equities, but in various fixed investments as well. Consider the following chart of the S&P 500 Index (SPX) shown as the dotted trendline and Johnson & Johnson (JNJ) shown as the solid black line.
Obviously from looking at the chart above, JNJ has outperformed the S&P 500 Index year to date. Has JNJ suddenly become a growth giant? Is it all about earnings growth and/or forward earnings potential or anticipated growth?
Or is the rally in JNJ really about the fact that Johnson & Johnson has a long history of paying strong, rising dividends. I am sure there are plenty of sell side analysts who will tell you that JNJ is going to $100 / share in the future for a variety of macro or quantitative reasons.
The sell-side analysts will tell you the economy is strengthening or that large cap multinational companies are seeing strengthening fundamentals and earnings growth. They are called the sell-side for a reason; they want to sell you stock.
Furthermore, my favorite recent discussion is about future earnings projections and the new strength that we are going to see in earnings. The following chart was posted at www.zerohedge.com and originally came from Standard & Poors. The chart below illustrates the trailing 12 month operating earnings per share of S&P 500 companies.
Based on the above data, how is the stock market fundamentally sound when earnings are collapsing? I guess the Federal Reserve is going to print profits for the S&P 500 companies. Actually earnings are irrelevant when central banks all over the world including the Federal Reserve are juicing the markets with a sea of liquidity and where multiple expansion trumps real earnings or value.
Furthermore, these same central banks are openly purchasing equities and allocating sizable portions of their balance sheets to stocks. Several central banks around the world have more than 10% of their reserves allocated to stocks at this point in time. The world is long risk and money is still flowing into bonds at the same time. Simply look at the recent price action in Treasury’s for the past few weeks or note the strength in municipal bonds in aggregate since mid-March.
This brings me to my final point. For the past several years, bonds and stocks in the United States have rallied together. U.S. treasuries and domestic equities have been trending higher for more than three years as shown below. The S&P 500 is shown as the dotted line and the 30 Year Treasury Bond Price Index is the black solid line.
It is without question that both the S&P 500 Index and the 30 Year Treasury Bond have been trending higher for the past 3 years overall. Both underlying assets have produced strong gains during the same period of time. Now this brings me to my final question for readers to ponder. If both the S&P 500 Index and the 30 Year Treasury Bond can rally together, what happens if they selloff together?
The answer to that question is the real problem. Many sell-side analysts and economists ignore the bubble that the Federal Reserve has created in equity valuations. The bubble continues to be fueled by the monstrous liquidity injections that they have conducted beginning with the original quantitative easing. However, what is even less acknowledged by the sell-side is the massive artificial bullish valuations that have been created in the bond market.
Long dated treasuries are being purchased by the Federal Reserve to artificially hold down interest rates. This ongoing practice is causing a separate bubble to form in fixed income investments. So now we have a bubble in equities and long-dated treasuries forming and the sell-side continues to trumpet that higher prices are likely. Ultimately the sell-side may be right in short to intermediate time frame, but the end game has a finality that few want to consider.
When these bubbles finally pop as all excessively valued assets do, the result is going to devastate financial markets. It may be in 6 months or it may be in 10 years, but history will not be thwarted. The central banks can try to outsmart history, but they will ultimately fail.
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This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.
By Debbie Carlson and Allen Sykora of Kitco News
Tuesday April 16, 2013 3:37 PM
(Kitco News) – Traders and analysts are reporting some pick-up in buying of physical gold after the dramatic price plunge of the last two trading days, but they also describe many potential buyers as perhaps holding back to see if prices stabilize before jumping in with both feet.
On the coin front, they report that there seems to be more interest in silver than gold at the moment.
Meanwhile, they say physical demand from the key gold-buying region of Asia is likely to pick up further, particularly considering the price drop came ahead of a key holiday period in Asia.
Spot gold dropped nearly $80 an ounce on Friday and then tumbled nearly another $130 on Monday. In particular, the market will keep tabs on any physical demand that emerges at lower prices in the world’s two largest gold-consuming nations, India and China.
Observers offered slightly mixed assessments so far, with some describing a pick-up but others feeling there is still a wait-and-see tendency in the market.
Afshin Nabavi, head of trading with MKS (Switzerland) SA, said his firm has seen some increase in physical demand at the lower prices.
“The market is a little bit cautious at the moment,” Nabavi said. “They don’t know whether it is going to make it or break it at the moment. But, we’ve seen very good demand starting Friday. Yesterday, it was OK and today it’s more aggressive.”
Rohit Savant, senior commodity analyst with CPM Group, said many potential buyers in India appear to be still holding off.
“What tends to happen is you see buyers waiting on the sidelines to see where prices stabilize,” he said. Then they step into the market once they sense prices will be holding up.
UBS on Monday offered the same perspective, although noting that there was a pick-up in offtake from India on Friday. “Given the pace and extent of the move down, physical buyers are likely to wait for prices to stabilize before jumping in,” the bank said.
Nevertheless, gold has become cheaper for Indians two ways over the last few days, Savant said. This should be a plus and is a turnabout from last year when demand in the country was hurt by a weaker Indian rupee that meant higher prices in the local currency.
Gold just suffered its biggest two-day fall ever in U.S. dollar terms. Additionally, the Indian rupee strengthened in recent sessions, Savant explained. The dollar hit a low of 54.008 rupees Tuesday that was its softest level since March 25. The bottom line, Savant said, is that the price of gold in India slipped from 27,611.71 rupees for 10 grams as of April 8 to 23,869.73 on Monday.
Meanwhile, May is a month when many weddings occur in India, where gold is often bought as a gift. Further, the Akshaya Tritiya festival on May 13 is a key holiday when many Indians buy gold, Savant explained. In fact, the holiday is so significant that when there was a strike by jewelry shops a year ago to protest higher taxes on gold, the strike was called off a day ahead of the holiday so consumers could buy, Savant said.
Jeff Nichols, managing director of American Precious Metals Advisors, said his contacts and clients in Asia are buying.
“Based on my conversations this morning with clients and friends, I can say most definitely physical demand is up in Hong Kong, Shanghai, Mumbai, with increasing bar premiums over loco London,” he said.
The interest is in investment bars, while retailers are seeing interest in small bars and jewelry, particularly in India. The jewelry interest is the high-carat low value-added jewelry, he said.
“It’s very much price-inspired,” Nichols said, noting that there has been some hesitancy to buy earlier this year because of higher taxes levied on gold.
Meanwhile, in the North American physical coin market, Peter Thomas vice president of INTL FCStone Precious Metals North America, a physical precious metals dealer, said he hasn’t seen much immediate reaction to the sell-off from his clients, except to confirm a position.
“I’m hoping to see (gold) prices fall a little more to get all the money that’s on the sidelines (to) come back in,” he said. “We do need prices to stabilize first.”
Sean Lusk, precious-metals analyst with Ironbeam, said that his contacts in the physical market also related only a modest pick-up so far. “They’re not seeing anything of size – (just) smaller gold and silver purchases,” he said.
Lusk and others reported that there appears to be more demand for silver, such as coins, than gold at the moment.
Silver demand continues to be very strong, as it has been all year, Thomas said. “I haven’t seen (silver) demand like this (in a long time).”
The U.S. Mint Web site shows that silver bullion coin sales are around 2.22 million ounces for the month to date. With roughly half of April still to go, this would seem to put them on a pace to exceed the 3.37 million from February and 3.36 million from March. Year-to-date sales of 16.44 million are well ahead of 11.66 million for the first four full months of 2012.
“There’s a lot of interest in silver Eagles, even as the price dropped,” Thomas said. And, he said, the premiums for Eagles are still strong, even as the price has fallen. As of late Monday, he said the premium for American silver Eagles was $4 over the spot price.
The demand for silver over gold speaks to the price difference, he said, noting that $1,400 buys a person one gold coin, but many more silver coins.
David Morgan, independent precious-metals analyst with Silver-Investor.com, also said he is aware of reports of strong demand for silver coins. “Physical demand for the smaller coins is strong. I’ve heard of two to three months to deliver product. The only product available is the 1,000-ounce bars,” Morgan said.
He said this reminds him of 2008 “all over again. You’re seeing it in the strong premiums for silver. Back then I bought three 1,000-ounce bars and eventually had them minted into coins.”
Morgan said the interest in silver over gold right now may come from those who see more utility for silver use in a worst-case scenario than gold. “Americans really don’t know this, but the word silver is money in many languages – argent. It’s much more easy to circulate,” he said.
Be right, sit tight in the metal markets.