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Uninsured Deposits Could Be Used In Future Bank Failures Says Influential CEO Of Italy's Largest Bank

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Gold is higher in most currencies today except the Japanese yen. Gold surged over 3% to 0.149 million yen per ounce yesterday as markets shuddered due to the scale of currency debasement soon to be seen in Japan.

While the Nikkei has surged as expected, Japanese 10 year bonds sold off sharply with yields spiking from the all time record lows of 0.334% to over 0.6%.

The risks of a bond market crisis or currency crisis in Japan is something we have long warned of. The risk is now very high and hence strong demand for gold bullion in Japan with Reuters quoting sources in Japan who said that "the general public is buying."

Billionaire investor George Soros and Bill Gross, who runs the world’s biggest bond fund, said the Bank of Japan’s currency debasement risks weakening the yen. Indeed, Soros has warned of a currency "avalance".

“If the yen starts to fall, which it has done, and people in Japan realize that it’s liable to continue and want to put their money abroad, then the fall may become like an avalanche,” Soros said today in an interview on CNBC.

An interesting development in the precious metals market is the largest Dutch bank, ABN Amro, has said that they will no longer be providing physical delivery of precious metals including gold, silver, platinum, and palladium bullion coins and bars. 

ABN AMRO, one of the largest banks in Europe announced in a letter to clients that it would no longer allow clients to take delivery of their metal and instead will pay account holders in a paper currency equivalent to the current spot value of the precious metal.

Thus, instead of legally owning a risk free, physical asset (a bullion bar or a bullion coin), the bank’s clients are now unsecured creditors and are now exposed to the bank and the financial system – somewhat defeating the purpose of owning precious metals.

The move highlights the importance of owning physical bullion either in your possession (be that be in a safe or vault in a house, in the attic, under the floorboards or elsewhere in your possession) or in a secure vault in a country that is stable and respects property rights.


Gold in USD (3 Year) – Bloomberg

Gold is again testing long term support at the $1,540/oz level and at the €1,200/oz and £1,000/oz levels (see charts).

While further weakness is possible and the short term trend remains down, current price levels will be seen as cheap in the coming years as fiat currencies continue to be devalued versus store of value gold.

Gold looks oversold and gold’s 14-day relative strength index has fallen to 28.4, below the level of 30 that indicates to some analysts who study technical charts that a rebound may be imminent.

Markets and many experts remain in complete denial about the ramifications of the EU, IMF, ECB deposit confiscation in Cyprus. The mantra is that Cyprus is different and unique. This is the same complacent and irresponsible mantra that was heard when the subprime crisis in the U.S. reared its ugly head and when Greece began to implode in 2009.

The CEO of Unicredit Federico Ghizzoni said yesterday that uninsured deposits could be used In future bank failures. He said that the savings which are not guaranteed by any protection or insurance could be used in the future to contribute to the rescue of banks who fail and that uninsured deposits could be used in future bank failures provided global policy makers agree on a common approach.


Gold in EUR (3 Year) – Bloomberg

He called for “a common solution in Europe” saying that the “EU should pass laws identical and shared in different member states”. Indeed he went a step further and called for a global coordination of deposit confiscations to rescue failing banks.

Including deposits “is acceptable if it becomes a European solution,” said Ghizzoni, 57.

“What we cannot accept is differentiation country by country inside the same area. I would strongly suggest to make this decision not only within Europe but within the Basel Committee, where all countries are represented.

Ghizzoni is also a Member of the Board of Directors of Institute of International Finance in Washington, Member of the International Monetary Conference in Washington and Member of the Institut International d'Etudes Bancaires in Brussels. He attended the powerful Bilderberg Group meeting in Spain in 2010 and he a frequent attendee at Davos.

It is important to realise that the Cypriot deposit confiscation was not a "haircut" rather this is a confiscation of people's deposits - 60% of individual and companies hard earned cash saved in a bank.

Cyprus is not a tax haven or offshore. It is in the EU and the majority of the deposits were held by EU citizens - Cypriots, Greeks, British, German, Italian and citizens and companies of other nations.

Russian deposits made up just 8% of the total and of that only a tiny fraction was 'Oligarch money'.

This is an attack on capitalism itself and something that one would expect in North Korea. It is a very dangerous precedent and what is more concerning is that there are policy papers calling for similar confiscation of deposits in the UK, Canada and New Zealand in future "banker bail outs" or “bail ins”.

We do not have a “crystal ball” however we are keen students of economic history and of the history of debt and financial crises. This clearly shows that sovereign nations, be they led by kings and queens or democratically elected governments usually resort to printing money and debasing the currency or expropriating assets.


Gold in GBP (3 Year) – Bloomberg

Today, we have powerful supranational institutions who have little loyalty or affinity with ordinary people or businesses and whose primary aims seem to be to protect failing banks and a failing currency union.

The confiscation of deposits, especially deposits over the €100,000 level seems likely in other European countries and could be seen in indebted nations globally.

Individuals, families and companies need to diversify their assets and not have all their life savings and capital in banks.
For breaking news and commentary on financial markets and gold, follow us onTwitter.

NEWS

Gold Traders Split With Bullion Nearing Bear Market - Bloomberg

Gold stays near 10-mth low, U.S. payroll data in focus - Reuters

UniCredit Says Global Rule Needed to Bail In Big Deposits - Bloomberg

Largest Dutch bank defaults on physical gold deliveries to customers - Examiner

COMMENTARY

Keep Your Nerve ... Gold Fundamentals Haven't Changed - MoneyWeek

Cyprus Financial Crisis: Deposit Confiscation - Demonocracy.info

CEO Of Italy's Largest Bank Says Haircuts Of Uninsured Depositors "Acceptable", Should Become A Template - Zero Hedge

Ton Of Gold Bricks: What Capital Flight Looks Like In Italy - Zero Hedge

All Banks Are Bankrupt - Casey Research

 

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Fri, 04/05/2013 - 13:50 | 3413503 TrustbutVerify
TrustbutVerify's picture

I don't doubt this whole cash-in-the-bank confiscation is appealing to the communists (more popularly known, of course, by other party labels) around the world.  I sense an immediate resonance.  

But..once again...long term confiscation simply won't work.  Spending has to be reduced one way or the other. Salaries and benefits for non-productive jobs (government - all levels) have to be curtailed (right sized).  Social Security elegibility ages must be raised.  Expectations for Medicare and Medicaid must be reduced.  Welfare and "disability" payments should be looked at closely.  

For the indidual, higher personal saving rates is a must.  Living within one's means is a requirement.  Real education must be achieved. And lastly, and perhaps the most difficult, buying goods made here in the US is essential - even yardwork level services when people coming looking for work.  Imagine the result if a major percentage of money going to imported good was diverted back into the US economy.  This will go a long way to rebuilding manufacturing sector and overall money flows.  

A tax overhaul might help in this regard.  

There is no other way.  

Fri, 04/05/2013 - 13:46 | 3413493 Walt D.
Walt D.'s picture

"Individuals, families and companies need to diversify their assets and not have all their life savings and capital in banks."

Individuals, families and companies need to diversify their assets and not have any of their life savings and capital in banks.

With zero interest rates, you are not being paid anything to assume this risk.

Most people believe that their money in the bank is being safely stored in the vault. If they knew the truth, they would be more careful.

Fri, 04/05/2013 - 13:33 | 3413449 Iconoclast
Iconoclast's picture

Cyprus confiscation is looking more like a beta test for the epsilon minus zombies as each day passes.

"If you tolerate this, then your children will be next"

Fri, 04/05/2013 - 13:40 | 3413471 screw face
screw face's picture

that's good  +1

Fri, 04/05/2013 - 13:17 | 3413390 newworldorder
newworldorder's picture

Ghizzoni, Draghi and their fellow Central Banker fraudsters lie and twist the use and understanding of languages at will, without being called on it. Most worldwide, MSM reporters and editors have adopted a "I know nothing mentality."  Do your jbos or get out of the reporting business. The time for games is long over.

Fri, 04/05/2013 - 12:56 | 3413327 Racer
Racer's picture

He said that the savings which are not guaranteed by any protection or insurance could be used in the future to contribute to the rescue of banks who fail

And what sort of interest are you going to pay for people to take on that risk of their money being stolen????

And by threatening that, you deter people and businesses from putting their money at risk, so thereby having to fall back on the insured deposits.

Therefore ALL money in a bank is at risk and needs to be rewarded for taking on that risk

Fri, 04/05/2013 - 12:56 | 3413326 A. Magnus
A. Magnus's picture

STOP THE FUCKING PRESSES!!! Gold is being allowed to have a $20 day, which means that there is a distinct possibility that HELL HAS FUCKING FROZEN OVER!!!

*Ahem*

You may now return to your regularly scheduled 'programming'...

 

Fri, 04/05/2013 - 12:53 | 3413318 Satan
Satan's picture

I owe my bank so much fucking money they are my bitchez.

Fri, 04/05/2013 - 13:06 | 3413367 johnQpublic
johnQpublic's picture

just tell them they need to take an 80% haircut or they burn in hell. you are satan after all. you need to start swing that stick around

Fri, 04/05/2013 - 12:35 | 3413251 Vooter
Vooter's picture

"Including deposits “is acceptable if it becomes a European solution,” said Ghizzoni, 57."

Oh, don't worry, Mr. Ghizzoni--there's definitely a solution for people like you...

Fri, 04/05/2013 - 12:34 | 3413249 Mad Mohel
Mad Mohel's picture

What's called for, is that these motherfucking bankers be marched to the gallows one by one. Then maybe the banks will be saved.

Fri, 04/05/2013 - 12:18 | 3413156 ebworthen
ebworthen's picture

The whole point of a bank is to protect your money from thieves and bandits.

When the banks and bankers become the robbers, why put your money there?

When banks and central banks in collusion with politicians STEAL YOUR MONEY there is every reason in the World to hide your assets outside the system.

Fri, 04/05/2013 - 12:12 | 3413135 LawsofPhysics
LawsofPhysics's picture

Bankers push a button to add zeros to your account.  You spend the rest of your life supporting their lavish lifestyle through the interest while they also steal your savings and continue to change the laws by buying your representation through their lobby.  The last bit is very important so they can not be prosecuted (where is John Corzine?).

I am in favor of confiscating a few fucking heads, what say you?  Nothing changes until then.

Fri, 04/05/2013 - 12:11 | 3413131 Son of Loki
Son of Loki's picture

Everyone should open their wallets...be generous to their bankers....

 

Sounds reasonable.

Fri, 04/05/2013 - 12:06 | 3413105 Winston Smith 2009
Winston Smith 2009's picture

The Invasion of the Bank Balance Snatchers:

http://www.youtube.com/watch?v=JRVfGMjdGh8

Fri, 04/05/2013 - 11:54 | 3413065 IamtheREALmario
IamtheREALmario's picture

Ok, so how will gold hold its "price" if there is a lot of talk about confiscating it? The bank gets to name its price. The first sign of any action and everyone that does not plan to hide and hold their gold will sell.

Fri, 04/05/2013 - 11:41 | 3412978 thewayitis
thewayitis's picture

 

  xpecting bank runs from here on now .......Writing is on the wall.

Fri, 04/05/2013 - 11:38 | 3412966 Bansters-in-my-...
Bansters-in-my- feces's picture

***
Silver 6 month lease rate at Negative -0.580%

Sounds criminal to me.
Watch your asses in silver.

1,2,and 3 month rates all negative big time too.
Only the one year rate is poitive rate but sstill a give away.

Fuck yous Central Bankers.

Fri, 04/05/2013 - 11:37 | 3412959 Ckierst1
Ckierst1's picture

It is also acceptable to hang fascists from lampposts in Italy.

Fri, 04/05/2013 - 11:59 | 3413082 Winston Smith 2009
Winston Smith 2009's picture

Which is exactly why they limited the theft in Cyprus to accounts with 100,000 euros or more.  People with that much in the bank are in the minority and much less likely to riot in the streets.  That limit wasn't chosen for some altruistic reason.  Thieves aren't altruistic.

Fri, 04/05/2013 - 11:58 | 3413074 IamtheREALmario
IamtheREALmario's picture

Those Italians have such a sense of style. What wine to serve with a hanging? .... decisions, decisions.

Fri, 04/05/2013 - 11:30 | 3412930 Mototard at Large
Mototard at Large's picture

Boating Accident Alert!!  Francisco Schettino, the Captian of the Costa Concordia that sank off the Italian coast last year,  must have known this was going to happen.  Now he can claim that his gold holdings were lost in an unfortunate boating accident.

Fri, 04/05/2013 - 11:11 | 3412837 imaginalis
imaginalis's picture

Federico Ghizzoni is either off his rocker or very evil and corrupt. Or quite possibly both. He should be locked up for our safety and his.

Fri, 04/05/2013 - 12:02 | 3413100 Nehweh Gahnin
Nehweh Gahnin's picture

Clearly, he's not off his rocker, nor is he alone, obviously.  He is the CEO of a bank.  They need capital.  Repudiating their liabilities (to the depositors) gives them what they need.  Evil I will buy.  Corrupt, yes, but no more so than the rest of the banksters.  Maybe less, because at least he is speaking forthrightly.

The question I cannot answer is this:  Why in the hell does anyone have any money in these damn banks right now?

Fool me once...

Fri, 04/05/2013 - 11:13 | 3412836 Ghordius
Ghordius's picture

about Ghizzoni and the "template": one thing that I noted in Draghi's last press conference was that several reporters did not understand his remark on the "template" - and this is perhaps again a misunderstanding on the modus operandi of two quite different legal systems

in Common Law countries, precedent reigns supreme - until reversed, of course - and the judiciary has a much larger role

in Civil Law countries, a precedent - particularly if controversial - is a reason to pause, reflect, debate in parliaments and codify new laws and procedures about how this should have been handled differently in the past and how this has to be handled in the future - note how this gives a larger role to the legislating bodies (and a slightly different role to the executive, but this is another story)

Draghi urged a clear "resolution scheme", and he is not alone in it - meanwhile most parliaments have clearly stated that the 100k limit is sacrosanct

a friend noted that this could mean that this eurozone "precedent" could be copied in Common Law countries while being forbidden in the eurozone - a perverse effect indeed. anyway, this Gift from the Cyprus Affair seems imho part of a larger hunt for untaxed funds, and I'm still very, very suspicious of the role the 35-days (British-)Cypriot financial minister had in this

Fri, 04/05/2013 - 11:18 | 3412868 TerminalDebt
TerminalDebt's picture

Next they'll call for a global limit of 1 account per person

Fri, 04/05/2013 - 11:33 | 3412943 Ghordius
Ghordius's picture

natural person or legal person? lots of trusts use several companies with one account each, and some funds are tailored in a way to park cash deposits under several "under-100k" accounts

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