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Tunisia/Swiss banks/Gold – What’s Next?
The blow up in Egypt is going to create ripples all over the globe. It
will certainly be disruptive for equities and the dollar. It will
influence global bond yields and PM prices. The oil market could be
in for a short-term shock. It could have a significant affect on
European GDP prospects. So there is a lot of uncertainty. I will make only one forecast of the lasting impacts of what is unfolding. Swiss banks and the Swiss government are in for another pounding over the issue of banking secrecy.
I’m sure that you have heard about the Tunisian leader who looted the
vault for $60mm worth of gold as he headed (quickly) out the door. (ZH report) That story made a big stink. This story today from NZZ is going to smell worse:
From the article (my translation):
Last
Wednesday the Federal Council announced: Within seven days were reports
of "tens of millions of francs," received in Switzerland from the family
of the deposed ruler of Tunisia Ben Ali . All assets of the family must
be blocked and reported to the Department of Foreign Affairs (DFA). This action was taken by the Federal Council on Regulation by emergency law issued since last Wednesday.
So not only did Ben Ali (and his wife) attempt to steal a ton and a half
of gold, they were also attempting to pirate away tens of millions in
cash. As with the gold story the authorities in Switzerland moved
quickly to seize the ill gotten gains and make things right. Right?
Baloney! Ali had money in Swiss private accounts way before last Wednesday:
The banks and other financial institutions reported suspect funds from the Ben-Ali clan only after the overthrow of the ruler - but not in the long years before, when he was in power and committed the alleged crimes.
Daniel
Thelesklaf (first head of the unit for combating money laundering in
2000 and now director of the Basel Institute on Governance) said: “The reporting requirement in the Money Laundering Act has remained largely a dead letter. The case of Ben Ali is the best example of it”.
"There is a gap in the legislation on money laundering and potentates like Ali. Therefore, it is naive to believe that there is no other money in Switzerland of potentates or their accomplices."
Bingo! Ali had money in Switzerland for a long time and other Potentates (Kings) have money there too. This stinks. Once again Switzerland is where the bad guys go with hot money.
In the scheme of things the Tunisia story is not a big deal. The amounts
involved were small. Tunisia is yesterday’s news at this point. No one
really cares if the former leader tried to stash some cash in Swiss
vaults.
But the number of Swiss black accounts and the aggregate amounts in them from the “Potentates” of Egypt, Saudi Arabia, Jordan will prove to be staggeringly large.
There are some folks in Switzerland who are crapping in their pants over this. The question is, “What to do?”
Should they attempt to "get ahead" of the coming problem by disclosing
that some “Potentates” from other areas also have accounts as did Ali?
Or do they wait to see if the Potentate falls and then follow the
example set with Tunisia where they act after the fact?
If they get in front of the curve they will have violated banking
secrecy rules. To act first and make a public announcement regarding
other hot money would cause those poor leaders to fall. For these
reasons Swiss Inc. will not take any action until after the next
Potentate tumbles.
The Swiss are going to look just horrible as a result. Should we lose another government (we will) and in the carnage it is disclosed that other Potentates have used Swiss banks to stash cash (we will) there is going to be some broader backlash.
Switzerland has addressed the black account problem for Americans. They are doing the same thing for a few other EU countries. That leaves the rest of the world.
There is at least a trillion of foreign cash in Switzerland that is
watching this aspect of the Tunisia/Egypt story. Should we see the next
chapter, where the Swiss “out” some other Potentate based on “new”
information, the rest of those account holders are going to get very
nervous.
Should we get the headline that the Swiss have acted against another
leader I would recommend getting long physical gold, fast. If hot money
is not safe in a Swiss account it will go into physical gold.
»
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Trusting the Swiss and trusting the Chinese....not even remotely comparable.
Would you trust China? Seriously?!
They flagrantly steal intellectual goods of every sort, from patented and copyrighted technologies to CD's and dvd's. They would hesitate to steal your money? Hahahahahaha!
The U.S. at least had some history of respecting property rights before descending to the way things are now. The Chicomms have less than 30 years of grudgingly sort of unofficially, on the sly allowing any.
One thing I fail to understand is that why most analysts are recommending the purchase of Gold as a safe investment? The problem today is that the price of Gold is not derived by it's physical demand or supply but more by the speculative positions standing long or short on the commodity exchange like any other traded commodity, stock or currency.
The basic mechanism of price discovery (based on demand and supply for actual use) of anything traded on an exchange has been terminally infected by speculators having access to unlimited funds and super fast computers for trading leading to volatile price swings. This has been made worse by the launch of ETFs for anything and everything under the sun by the financial community.
The price of everything including Gold is likely to suffer when the speculators unwind their positions due to some event that they have not anticipated or foreseen.
http://www.marketoracle.co.uk/Article24581.html
So what do you suggest? Some paper fiat currency? Yeah, those don't have a glut of supply on the other side. Where do you think those "unlimited funds" are coming from?
Oh dear lordylordy. Back to kindergartern with you for re-education. When you have graduated Kindy you may comment on such matters. I myself am only just out of nappies but at least I am not pissing on the classroom floor while the teacher hands out todays assignment.
Okay. My turn to answer this recurring question.
The PRICE of gold in paper currency will go up and down like hemlines. However, the VALUE of gold will remain more or less intact, as it always has.
An ounce of gold will buy a side of beef here in the US, plus they should also throw in enough bonus hamburger for a really big church picnic. Maybe even a second side of beef if you're close to the source, thanks to the falling relative value of the dollar in the last couple of years.
If you think of the real goods that an ounce of gold or silver will buy in barter, the rise and fall of the paper money price becomes less relevant.
The question is not whether your butcher will accept silver or gold for meat, and some will. The question is the relative value you get in exchange. Gold and silver don't rise or fall in value as quickly as paper money, generally.
Gold should not be traded and speculated, but held in its true metallic form as a solid store of wealth and insurance against the destruction of the value paper money. Save it for when your paper has no value, but you still need a side of beef to keep eating for the next few months.
But because both gold and silver have been actively disrespected by the Western financial community for almost half a century, they're still making up for lost time during their current increasing price trend, when either metal is purchased for Dollars, Euros, Yen and Yuan.
But if you're buying gold just to speculate on markets, then it's probably too much of an old lady's bet for you. Go with paper and watch your paper holdings double or triple. Along with the price of everything denominated in paper holdings.
I invest like an old lady for reasons I prefer not to admit. But I'm happy with the performance of both gold and silver since I started stuffing them under my mattress. There's a much better long term return than interest, but probably not as good as always choosing the right stocks at the right time.
And even though I can't eat gold or silver, I know a couple of places that will happily trade me a side of beef for some of my shiny.
Actually, the value will increase (back to where it once was) if the rest of the world begins to used gold for trade. the Population of the world is much higher than when Gold was last broadly used for trade. Gold is in fact deflationary since population increases faster than Gold. Due to supply and demand, it will take more "things" to purchase Gold.
Dear Dr Sandi
For me it is late and I must sleep so I cannot check your claim, but is a side of beef that expensive in the USA? i.e = price of an ounce of gold?
If yes perhaps I should go long longhorn?
It depends on the beef, and whether you're actually talking hanging or cut and wrapped. A half of beef can be cut and wrapped for anywhere between 3-600 dollars in my area depending on whether you're talking pastured or "finished".
I'll go with the Colonel on this one. I don't buy beef because one of the family HATES beef. And he's the one who pays the bulk of the bills.
But a good friend of mine just bought a finished side in rural Western Washington State for $800. This isn't exactly cattle country, so I suspect we pay a little more here than Texas or Wyoming.
But this butcher would take silver if it was offered. Or ammo.
Your point was well taken, and correct.
You know you are doing a good job getting under people's skin when you can get junked over such inane things as the price of beef. It's good to have fans even if they are chickenshit.
Nah. We love ya, Colonel. I'm a fan!
Thanks C.C. because I am planning my bug out hole and I had not figured on the price of beef being so high as was indicated. You give me some reassurance that I can at least afford a couple of half sides of beef in the deep freeze. Thanks.
Look in classifieds in small papers, 3x5's at rural grocery stores. Usually cheapest way to find it if you don't know a farmer. You can just take a drive in the country and find signs at the ends of driveways.
How much shiny to lift that hemline justa little higher?? ( sorry, minds in the gutter)
Hmmm, whatta ya got?
Thats the fraudulent paper market, which massive physical demand WILL collapse...
All of them?
Good point. My narrow POV is Au and Ag only...
If anything, speculators unwinding their positions will be on the short side thus driving the price up rather than down. The COT shows that managed money longs are lowest since May of 2009:
http://jsmineset.com/wp-content/uploads/2011/01/Gold-COT-1-28-2011.pdf
What if the "unwind" involves the unwinding of massive short positions?
Just saying.........
Maybe he needed a few bank accounts purely for having some change in his pocket during his rather frequent visits to Geneva: "(...) the Ben Ali family had flown to Geneva on private jets no less than 28 times last year alone"
www.ft.com/cms/s/0/f63a695a-2897-11e0-bfcc-00144feab49a.html
Alas, maybe not.
""Switzerland is where the bad guys go with hot money.""
""There is at least a trillion of foreign cash in Switzerland that is watching this aspect of the Tunisia/Egypt story. Should we see the next chapter, where the Swiss “out” some other Potentate based on “new” information, the rest of those account holders are going to get very nervous. ""
For those who haven't read the post below...
...Check out why, Logically, Canada's Western Provinces, led by "Gateway City", Vancouver BC
is "Canada and the World's next, Geneva of Switzerland."
...No brainer friends, Four Western Provinces w/ a plethora of Natural Resources and just 12.5 million citizens!...
http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/01/why-vancouver-bc-is-worlds-safe-haven.html
2/
"If we are wise, we must leave this country to its people, whose dislike for us is increasing," said Prince Turki, advising Saudi officials to escape with their families.
"Do it today before tomorrow as long as the money we have is enough for us to live anywhere in the world; from Switzerland to Canada and Australia…we should not return as long as we are able to get out safely, we must take our families quickly and pull out," he urged.
thanks flaunt #917752It would be nice if wikileaks would release any info they have on accounts held by other thugs around the world. I'm sure the Saudis have lots of money there so it would be very interesting if their details became public. Something has changed in SA -- One of the princes is getting really nervous:
Prince warns S. Arabia of apocalypse
Saudi Prince Turki bin Abdul Aziz Al Saud has warned the country's royal family to step down and flee before a military coup or a popular uprising overthrows the kingdom.
http://edition.presstv.ir/detail/129692.html
'... thugs around the world.'
Including our business leaders, banksters and politicians in the good ol' USofA, yes?
The robber barons of old got nothin' on this current crop of corrupt dirtbags.
Yes, most people complaining don't seem to realize that the foundation of their life style is built on the global banking fraud and war. The US uses a quarter of the worlds energy supplies and a third of the natural resources. It's not because we're the super smartest freedom loving God's children like you were taught in school
US is wasteful that is true, however, the measurement that should be used is production/resources consumed, not just resources consumed.
True,
but since the US consumes more than it produces.....
What? Oh now, wait a minute. That's not what Rev. Smedley told us this morning during the service.
should i put my gold in a swiss account, in case Uncle Sam comes to confiscate it?
stick it in a block of swiss cheese - no one will bother with it
See this weekend's Barrons. Marc Faber, who is Swiss, said Hong Kong or Singapore. He said that is the Hussein Obama comes for the gold that HK will tell him to go f**k himself.
should i put my gold in a swiss account, in case before Uncle Sam comes to confiscate it?
Fixed!
I did - Zurich Gold
It wasn't until Napoleon invaded Switzerland that England was able to get all the European aristocracies to band together against him.
Speaking of...
Sell GPBUSD into oblivion!
Indeed. And not just that - as the Wikileaks whistleblower explained it, at Swiss banks there is a culture of aiding and abetting money launderers and drawing a hefty profit from money laundering services.
Expect a large proportion of Europe's elite to be affected: paying income taxes is only for those who cannot afford the Swiss money laundering services ...
Yep, and it's no different in comrade Brucie's 'MeRiKa today...
In the end, after the IRS/USDOJ announced they were going after the Secret Swiss bank accounts, all they got were some small fish (And yes, the pressure on the Swiss is now officially OFF)
http://www.irs.gov/newsroom/article/0,,id=110092,00.html
No where in that list will you find the Golden Hoard on Fraud St. or the District of Criminals.
And the Apparatchiks are shocked about a dictator screwing his puny camel dung stinkin' country?
Shit, we fly more money than that into hostile countries to make friends with murderers and drug trafficers each and every year!
Where's the outrage on the runaway corruption happening in your own back yard comrade Brucie?
Or is that all part of the plan for you? - You know, that permanent revolution thingy that your buddy Mao talked about.