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EU Agreed Banking Union Yesterday - Global Bail-Ins Cometh ...

GoldCore's picture




 

 

Friday’s AM fix was USD 1,338.50, EUR 970.21 and GBP 810.57 per ounce.

Thurday’s AM fix was USD 1,327.00, EUR 962.64 and GBP 802.78 per ounce.     


Yesterday, gold climbed $15.27 to $1342.27 at about 7AM EST before it fell back off in New York, but it still ended with a gain of 0.44%. Silver rose to as high as $20.579 at one point, but it then fell back off and ended unchanged on the day.

Euro gold rose to about €966, platinum gained $2.30 to $1432.00, and copper climbed slightly to about $2.95. Palladium prices, meanwhile, closed at a level not seen in more than 2 years with the rally linked to worries about risks to Russian supplies of the metal.

Palladium surged 3.1% to the highest since 2011 on concern supply from Russia may be restricted.

Gold finished higher on Friday, partially recovering from a four-session losing streak on the back of a weaker U.S. dollar, but the metal’s prices still suffered from their worst weekly loss since November - down over 3.5%.



Gold in U.S. Dollars, 5 Days - (Bloomberg)

Gold had become overbought after its surge to 6 month highs and was due profit taking and a correction. A perception of an abatement of tensions between Russia and the West has contributed to the pullback this week. Momentum could lead to further falls next week but we expect weakness will be short lived.

 

Gold’s Technicals
There is a risk that gold could fall below immediate support at $1,320/oz and the next levels of support are at $1,300, $1,240 and then back where we started the year at $1,200. A 50% retracement would not be unusual after the speed of recent gains and that would take us to the psychological level of $1,300/oz again.  

Gold in U.S. Dollars, 1 Year - (Bloomberg)

A political solution needs to be found as governments continue to opt for economic sanctions of various degrees, it could degenerate into a full blown trade and economic war. Were this to occur the benefits of free trade and globalization that we have seen in recent history would be at risk - creating real challenges for the global economy.

The premiums that risk assets such as stock markets command could quickly be lost as market participants reevaluate asset allocations in the light of the more risky economic and geopolitical situation.



Gold in U.S. Dollars, 43 Years - (Bloomberg)

Hopefully, calm and wise counsel will prevail and a diplomatic political solution will be found. However, in the meantime, gold continues to be an important asset to own in order to hedge these and other geopolitical and economic risks.

 

Yellen At Fed - Print Baby Print
It was very welcome to see a woman taking over the helm of the Federal Reserve. However, we cannot allow our goodwill in this regard to cloud judgement and impact our analysis of her and the Fed’s performance and policies.

Yellen gave mixed messages, both on the economy and on monetary policy, but market participants have chosen to focus on some of the more hawkish comments that she made. She acknowledged that the Fed may have been too optimistic about the economic outlook recently. Yet, she and the Fed largely stuck to their projections for how growth and inflation will unfold in the coming years.

 

It is important to remember that the Fed did not predict or foresee at all the sub prime crisis, the housing bubble, Bear Stearns, Lehman, the global financial crisis and subsequent recession.

The dollar is set to be structurally weak in the coming years given the still significant imbalances in the U.S. economy and still very poor fiscal state of the economy. No amount of jaw boning or Fed tinkering with interest rates will change that.

While interest rates may rise from nearly 0%, they are set to remain low for the foreseeable future. At least until the bond markets decide to enforce fiscal discipline on the U.S. Then interest rates will likely rise substantially leading to a severe U.S. recession.


US Govt 10 Year Yield, 1971 to March 2014 - (Bloomberg)

On a long term basis, it is likely that the dollar will remain weak and gold's bull market will continue until the end of the interest rate tightening cycle which will likely be between 2020 and 2025.

This was seen in the 1970s when interest rates surged higher that decade from a low in March 1971, to a high in September 1981. The U.S. 10 Year went from 5.38% to 15.84% during that period and gold rose from near $35/oz to over $850/oz in January 1980 (see charts).

 

Thus, contrary to the popular perception, rising interest rates are not bearish for gold. High interest rates and real positive interest rates in a sound economy are very bearish for gold prices and will burst the coming gold bubble. However, that is a long way off - likely between 2018 and 2025 and likely when gold prices are well above their inflation adjusted high (CPI) of $2,500/oz. Indeed, longer term prices over $4,000/oz or $5,000/oz are quite feasible.


EU Agrees Banking Union - Bail-Ins Cometh ...
 

In the early hours of yesterday morning European Union politicians struck a deal on legislation to create a single agency to handle failing banks and bail-ins in the Eurozone after another all night negotiating marathon ahead of a summit of EU leaders starting in Brussels today.

German Finance Minister Wolfgang Schaeuble was drawn into the talks around 0530 GMT as the negotiations dragged on into the night. The politicians emerged around 0715 GMT with the deal, which now will need formal approval by the European Parliament and by national governments.


Negotiators persuaded nations that had been opposed to the proposed Single Resolution Mechanism and the legislation for bail-ins to agree.


Insolvent banks will be treated equally regardless of the country they are based in. Failed banks creditors, both bond holders and depositors, will be subject to bail-ins in the same way in all countries.

“It’s a very good agreement,” European Central Bank President Mario Draghi said before the meeting of EU leaders in the Belgian capital. The banking union was shaped in part by Draghi and he hailed the compromise plan as “great progress for a better banking union. Two pillars are now in place.”


Plans for a single banking union were put together two years ago due to fears for the euro and the EU’s 6,000 banks. Countries wanted to break the link between sovereigns and insolvent banks to ensure taxpayers were not forced to bail out insolvent banks and to prevent contagion and a systemic crisis.

It had already been agreed that shareholders and importantly now depositors will be bailed in before the single resolution fund can be tapped. About 100 banks plus transnationals and those already bailed out will come under the direct supervision of the ECB from January.


While most of the coverage is on the European Union member states and the European Parliament agreeing the final details of a single resolution mechanism (SRM) to wind up failing banks, there is little coverage of the developing bail-in regimes and the heightened risk that depositors in the Eurozone now face.  


Banks in the Eurozone remain extremely vulnerable. Our research on
bail-ins and the developing bail-in regimes clearly shows how banks remain very vulnerable and it is now the case that in the event of bank failure, your deposits could be confiscated as happened in Cyprus.

It is important to realise that not just the EU but also the UK, the U.S., Canada, Australia, New Zealand and most G20 nations all have plans for bail-ins in the event that banks and other large financial institutions get into difficulty.

The coming bail-ins will pose real challenges and risks to investors and of course depositors – both household and corporate. Return of capital, rather than return on capital will assume greater importance.

Evaluating counterparty risk and only using the safest banks, investment providers and financial institutions will become essential in order to protect and grow wealth.

It is important that one owns physical coins and bars, legally in your name, outside the banking system. Paper or electronic forms of gold investment should be avoided as they along with cash deposits could be subject to bail-ins.

Educate yourself about this emerging threat to your livelihood by reading:
Bail-In Guide: Protecting your Savings In The Coming Bail-In Era (10 pages)

Bail-In Research: From Bail-Outs to Bail-Ins: Risks and Ramifications (50 pages)  


 

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Sun, 03/23/2014 - 07:52 | 4582017 Peter Pan
Peter Pan's picture

Unless bail ins provide relief to borrowers to ensure their survival and their ability to service the balance, then bail ins will achieve nothing.

Sun, 03/23/2014 - 09:42 | 4582100 Spumoni
Spumoni's picture

I don't know what universe Draghi et al. live in, but the only way they are going to get my deposits involves bloodshed. I agree to pay taxes. That's it. My money is MINE, unless I choose to give it to someone else. I suppose it would be one thing if the regulators were jailing the cons who have created this scenario out of their unbridled, unfettered greed, but they aren't. 

Perhaps they ought to use a carrot. Pay me exorbitant interest in gold or the metal of my choice, and they can borrow all the paper they want. try to steal it to pay off bankers? You have to be kidding. Fuck these guys. They are idiots.

Sun, 03/23/2014 - 06:08 | 4581947 theprofromdover
theprofromdover's picture

The Taxpayer won't be asked to fund this?

Oh really?

 

When the bank shareholders sell up, when the depositors pull their savings, when the bank executives take their fraudulent bonuses, who is left. They'll nationalise all these insolvent banks, print more money, fire up inflation, sales taxes, property taxes and income taxes, and pay for it that way.

Draghi's great solution? Taxpayer pays for everything.

Sun, 03/23/2014 - 01:47 | 4581810 PhysicalRealm
Sat, 03/22/2014 - 22:25 | 4581503 TheRideNeverEnds
TheRideNeverEnds's picture

Good thing I keep all my money in my IRA and Margin account, those are insured and will be safe right?

 

Right guys?

 

Guys?

Sun, 03/23/2014 - 01:40 | 4581800 TheReplacement
TheReplacement's picture

Yeah well no. 

This isn't really about your wealth, per se.  Of course they want to scoop up as much as they can in the process the main goal seems to be consolidation of the banking system itself.

Will we see a desperate Europe in five years sending tanks east?  Will we be forced to take sides between a beligerent Europe and a defensive Russia?  Are we just setting them up?  Who is this we exactly?

Sat, 03/22/2014 - 21:32 | 4581396 Duc888
Duc888's picture

 

 

My ass hurts.

 

It's a premonition now... but I can feel the tingle.  It's not good.

 

Who produces?  Who are the leachfucks.  Just keep that in mind.

Sat, 03/22/2014 - 21:30 | 4581383 cooperbry
cooperbry's picture

A couple more examples like Cypress and we may be back to an actual marketplace for banking as customers scrutinize any potential bank much more extensively.  People only need to lose money once and that will be the last time.  One can hope!

Sat, 03/22/2014 - 19:02 | 4581060 disabledvet
disabledvet's picture

THE NUKES ARE ON THE TABLE.

As stated by "Mr WOPR" in War Games "what you see General is a simulation since it makes no logical sense to launch all your weapons at once." (Professor Falken did turn out to be right...that was a movie however.)

But to follow the Professor's logic "where we have a problem is when there is a gradual ratcheting up of conflict."

I see no good options for President Putin beyond further escalation. And the only option available to the USA is an offensive military strike...or, "do nothing"...which certainly doesn't sound bad to me at all actually.

Needless to say "the Truxton is sufficient."
I should add "that does not represent a do nothing" option however. As far as that Commander is concerned "Pirates and terrorists are in charge of Crimea and have embargoed the Sovereign's Fleet. You have your orders."

Sat, 03/22/2014 - 18:26 | 4580986 nofluer
nofluer's picture

Sooo... any suggestions on how to ensure the soundness of a particular bank? I mean, I hate to burst your confidence bubble, but the banks got into the mess they are in for one simple reason - bankers LIE.

I asked a mid-sized bank a few years ago if they had any exposure, ANY exposure to RE derivatives or downstream products. They said "Oh, no. We don't do that."

A few months later the bank was taken over by another bank because of their UNSECURRED DERIVATIVE EXPOSURE!!! So they lied to me. Fortunately I didn't lose anything when they crashed into the swamp/morass of banker's Hell... but I'm willing to bet that most of the banks that have deep exposure to these "financial products" would lie to you about their exposure.

Sat, 03/22/2014 - 16:27 | 4580792 ebworthen
ebworthen's picture

"Your monies belong to us."

The global bankster motto. 

A nation (insert Western nation here) "of the banks, by the banks, for the banks".

Sat, 03/22/2014 - 15:54 | 4580739 dizzyfingers
dizzyfingers's picture

"...if they have ever profited due to abuse in the position of trust they have been given"

The ONLY REASON people want to be elected to public office.

Sat, 03/22/2014 - 15:50 | 4580731 dizzyfingers
dizzyfingers's picture

How about no more loans, no more credit, and no more freebies for anyone.

 

Sat, 03/22/2014 - 15:24 | 4580676 Soul Glow
Soul Glow's picture

They will need a crisis.  Say after Russia is off the SWIFT payment plan.

Sat, 03/22/2014 - 15:10 | 4580658 no more banksters
no more banksters's picture

"... no one can guarantee deposits, especially after the decisions of the recent EU Summit and ECOFIN for the bail-in, while in case of a new banking crisis, HFSF will suffer significant damage - in case that will still hold the largest part of the banks' shares - because according to the bail-in "rules", shareholders must also participate in the bank rescue. Therefore, according to the best scenario, the Greek Public, as guarantor of the HFSF, will be forced to sign a new loan agreement to cover additional damage thus loaded with additional debt."

http://failedevolution.blogspot.gr/2014/01/greece-only-public-in-banks-i...

Sat, 03/22/2014 - 14:55 | 4580612 kchrisc
kchrisc's picture

Another way to think of gold: Money, fiat, NOT in a bank.

Another way to think of currency, fiat: Money that rots.

Another way to think of 'printing': Rate of rot.

Sat, 03/22/2014 - 14:37 | 4580599 BurningFuld
BurningFuld's picture

Why do you think these fucks keep on printing money....caus' they know they can still steal your savings......................so really they don't have a care in the world. Yet.

Sat, 03/22/2014 - 13:54 | 4580537 Racer
Racer's picture

They want you to put your money in a bank, give you virtually next to no interest that does NOT keep up with inflation theft and risk it being stolen from you?

That will be 4000% interest to you banksters and even think I will have to think about it!

BTW what collateral do you have?

Sat, 03/22/2014 - 13:40 | 4580516 moneybots
moneybots's picture

Bail in the bankers.

Sat, 03/22/2014 - 13:31 | 4580499 rlouis
rlouis's picture

Damn, right on schedule. I have a hard time believeing they can drag this charade out until next year.

Sat, 03/22/2014 - 19:22 | 4581097 Buck Johnson
Buck Johnson's picture

Your right, they are on time.  They are putting the bail in into full effect and it will be nasty.  Don't be surprised if it doesn't happen here in the good old US of A.  They have finally figured out a way to protect a bank from failing and a run, force their depositors to bail them out.

Sat, 03/22/2014 - 22:24 | 4581500 jeff montanye
jeff montanye's picture

historically it is the depositors who get stiffed by a failing bank in a banking run.  although the arch criminals at the top of the eu tried to ignore deposit insurance in cyprus, the global uproar shamed them into reinstating that.  the u.s. has fairly heavily insured deposits by global standards (there's that word again) but beyond that, watch out.  and down the line tptb may breach the deposit insurance, no matter the shame (deep down inside they are shameless)

Sat, 03/22/2014 - 13:22 | 4580481 Navymugsy
Navymugsy's picture

You don't even need to go to court in Cyprus anymore. They're just going to take what they say you owe them and you can talk about it later:

 

http://cyprus-mail.com/2014/03/22/fury-over-taxmans-plans-to-dip-into-ba...

Sat, 03/22/2014 - 11:12 | 4580227 litemine
litemine's picture

The EU peoples that have "Cash" would be advised to remove it from their accounts before they lose a percentage to the Banks, who gambled and Lost for shareholders Profits.

The IMF tried to tax all transactions at 2%....that failed. The Bankers still received health Bonuses for their Non-Productive actions. They have somehow been allowed to be above the Law that we all live by....

Personally I am happy to see some of them dead, be it at their own hand (personal guilt) or assisted by someone else. Politicians should follow the same road if they have ever profited due to abuse in the position of trust they have been given.

Sat, 03/22/2014 - 11:20 | 4580240 layman_please
layman_please's picture

" ...if they have ever profited due to abuse in the position of trust they have been given."

you do understand that is the very definition of politician?

Sat, 03/22/2014 - 11:13 | 4580226 litemine
litemine's picture

double post

Sat, 03/22/2014 - 19:06 | 4581067 disabledvet
disabledvet's picture

that would be a lot of politicians.

Sat, 03/22/2014 - 09:12 | 4579972 Element
Element's picture

 

 

"EU Agreed Banking Union Yesterday - Global Bail-Ins Cometh ..."

Global Bail-Ins? So Russian savers and Australian Superannuation is going to pay to prop-up EU banksters? Title seems a little ambitious. How about national?

Sat, 03/22/2014 - 22:08 | 4581478 Bindar Dundat
Bindar Dundat's picture

And BITCOIN  will finally show its strength.

Not to say that there will not be problems but this will lead to global acceptance.  

The banks will still work hard  to kill Bitcoin but the Governments will accept bitcoin when they figure out how to stop tax evasion and the funding of terrorists.

Gold , Bitcoin and guns bitches...

 

 

Sat, 03/22/2014 - 20:28 | 4581228 Sirius Wonderblast
Sirius Wonderblast's picture

You say that, but the fact is these jackasses do actually actively seek to extend the reach of their rules and laws to overseas territories.

Sat, 03/22/2014 - 18:31 | 4580994 nofluer
nofluer's picture

Australia may be turning the corner - the new Liberal PM is having regular wienie roasts using stacks of regulations for fire fuel. He's "new" so maybe he didn't get the memo from the Oligarchs, but until he does maybe he'll do some good...

Sat, 03/22/2014 - 22:05 | 4581472 UselessEater
UselessEater's picture

Australia is getting the same bail-in legislation so its a global reach into our pockets made worse by the smae cross ownership/shareholders of global banks in local banks. Also Abbott and Hockey are floating balloons about the govt super Future Fund and others being used to finance social works called infrastructure but likely to be things like govt nursing homes with poor revenue streams - ie confiscation in my book!!

some useful links include GoldCores reports on bail-ins globally and CEC Australia who highlight the legislation being bandied about prior to Abbott and supported now by Abbott.

Abbott got the memo from some PTB hence the debt ceiling lift, TPP advocacy, OCED global tax regime support, G20 'collectivism' and the end of welfare debate for everyone but the banks who are still getting handouts from the RBA and soon from bail-in legislation.... Abbott will do as much "good" as any other PM at selling us down the river.

Sat, 03/22/2014 - 20:19 | 4581206 zebrasquid
zebrasquid's picture

Liberal bureaucrats getting rid of regs..doesn't compute.

Sat, 03/22/2014 - 22:08 | 4581476 UselessEater
UselessEater's picture

Down under 'Liberal' party means conservative so technically should be an anti-reg govt but while red-tape cuts for big business is considered not so much for the little local guy.

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