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Bail-Ins Approved By EU Yesterday - Coming In UK, U.S. And Globally

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Today’s AM fix was USD 1,299, EUR 938.58 & GBP 773.03 per ounce.               

Yesterday’s AM fix was USD 1,311.50, EUR 950.43 & GBP 784.06 per ounce.

Gold dropped $23.80 or 1.79% yesterday, closing at $1,302.90/oz. Silver lost $0.37 or 1.85% yesterday to $19.62/oz.



Gold in U.S. Dollars - April 15 to April 16, 2014 - (Thomson Reuters)

Gold was pinned at $1,300 an ounce, well off Monday's high at $1,330.90. The sharp sudden price fall yesterday in early afternoon trade in London (see chart) was attributed to more peculiar computer-driven concentrated selling of huge tranches of gold futures contracts on the COMEX, which then saw heavy stop-loss orders placed by momentum traders.

Data from Nanex shows that gold futures contracts with a notional value of nearly $500 million dollars were sold in minutes. This, not surprisingly, hammered gold futures down over $12 and led to the futures exchange having to halt gold trading for 10 seconds. This sudden price fall resulted in gold falling  below its  200-day moving average (DMA) and to selling by momentum traders piling in and shorting gold.

Gold quickly recovered from the concentrated selling with buyers stepping up to take on the liquidators. Demand appears to be ticking up and holdings in the SPDR gold fund rose by 0.6 tons to reach 806.82 following a three-week downtrend in holdings. Assets rose by 1.8 tons on Monday to 806.22 tons, the first inflow the fund has seen since March 24th.

Gold’s losses were kept in check by fears of further escalation of tension in Ukraine. Our warning yesterday of conflict and a civil war in Ukraine was echoed by Putin and Medvedev overnight.

Gold in Euros - Jan, 2009 to April 16, 2014 - (Thomson Reuters)


Ukrainian forces began a military crackdown against what are being called pro-Russian separatists in the eastern regions of the country. The so-called ”anti-terrorist” operation is the new government’s response to people, some armed, taking control of administrative and police buildings in the East.

The local parliaments of the Donetsk and Lugansk regions elected the creation of independent, sovereign states, and called for referendums on ceding from Ukraine, much like the events in the Crimea.

Ukrainian troops retook state buildings from ethnic Russians in the eastern Donetsk region yesterday. White House spokesman Jay Carney said while the U.S. is considering military assistance to Ukraine, lethal aid isn’t an option at this time.


Thursday will see 4 way talks in Geneva, hosting senior representatives from Ukraine, Russia, the EU and U.S. It is hard to see how progress will be made given that economic sanctions remain and look set to intensify.

Yesterday, these not inconsequential geopolitical risks and robust physical demand internationally could not overcome the speculative selling and possible high frequency trading (HFT) manipulation on the COMEX.

Bail-Ins Approved By EU Parliament Yesterday - Deposits Over €100,000 Vulnerable
Yesterday the EU Parliament adopted three key texts outlining common rules on how to restructure and resolve failing banks.

The laws make up what has become more commonly known as Europe's banking union and include the creation of a Single Resolution Mechanism and a €55 billion Single Resolution Fund for banks in difficulty. The law was approved by the parliament with 570 votes in favour and 88 against.


Importantly and little commented on is the fact that they also include the Bank Restructuring and Resolution Directive, which seeks to shift the burden of bank failure from taxpayers to creditors - both bond holders and depositors.

Another key piece of legislation approved yesterday was the Directive on Deposit Guarantee Schemes, which says that bank deposits up to €100,000 will remain protected from any loss that a bank may incur. This means that deposits over €100,000 are now vulnerable to bail-ins and deposit confiscation.


Now shareholders and creditors including depositors over the €100,000 level will be the first to face losses from a bank failure and there remains a real risk of that in the EU.


goldcore_bloomberg_chart2_10-12-13.png (606×384)

European banks have been recapitalised but should the sovereign debt crisis return or a new global systemic crisis happen, à la Lehman Brothers, individual banks may again face capital shortages - see here.


“Bail in will be the main way to solve the problems," said Swedish MEP Gunnar Hökmark. “Bank resolution will be funded by creditors via bail ins and will also by resolution funds which will be funded by banks for banks."

“Bail-in” enshrined in the two laws, means that the bank’s owners - the shareholders, and creditors -  the bondholders and depositors, will be first in line to absorb losses banks will incur, before outside sources of finance may be called upon.

The two EU laws on bank resolution will also require banks to finance reserve funds to cover further losses, but only after bail-ins have been used.

Bail-In Regimes are coming in the EU, the UK, the U.S. and internationally  …
Bail-In Short Guide: Protecting your Savings In The Coming Bail-In Era
Bail-In Research: From Bail-Outs to Bail-Ins: Risks and Ramifications

 

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Thu, 04/17/2014 - 18:38 | 4671126 MeelionDollerBogus
MeelionDollerBogus's picture

oMERgawd

there's bailins and the gold slammed down 12 buckeroos!!

CALAMITY

Wed, 04/16/2014 - 22:59 | 4668082 Comus
Comus's picture

Touch my account and there is going to be a problem!

Thu, 04/17/2014 - 18:39 | 4671129 MeelionDollerBogus
MeelionDollerBogus's picture

Ya, your problem.
My account has .9999 fine on every bar & coin.
Yours doesn't? Whoopsies.

Wed, 04/16/2014 - 23:24 | 4668135 UselessEater
UselessEater's picture

How? Its digital, little 1's and 0's eaten away by loss of dollar value and frozen in an instant for new taxation regimes.

Wed, 04/16/2014 - 22:13 | 4667949 AdvancingTime
AdvancingTime's picture

A bad haircut, in this case means you have been robbed. That may be the case if the government reaches in over a long weekend and steals money from your bank account. This is a horrible precedent to set.

The worst part may be how some people are letting it slip out that it would be fair, or in some way justifiable if it is only on the larger accounts. It is fine if it only impacts the savings of someone else, the savings of what they see as "the wealthy", the problem is someday they may come for you. I shudder to think what kind of world our children will live in. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/03/a-bad-haircut-seizing-bank-accoun...

Wed, 04/16/2014 - 22:11 | 4667941 TheReplacement
TheReplacement's picture

Wait, when did we debate the merits of bailing out these banks and when did we decide they actually need to be bailed out?  This is supposed to be for the greater good.  Well, my self interest says that neither myself nor anyone I know would be better off bailing out the banks.  Let them fall.  New and improved banks will open in their place.  Even if they don't we'll figure out some way to trade for what we need.  I'm curious to see if we'll discover how little we need banks.

Wed, 04/16/2014 - 22:11 | 4667938 AdvancingTime
AdvancingTime's picture

Another reason to move your money into tangable assets. Never before has mankind diverted such a large percentage of wealth into intangible products or goods I contend this is the primary reason that inflation has not raised its ugly head. Bottom-line much of what happens in our economic future depends on inflation or deflation. The modern economy that has evolved over the last several decades is loaded with interwoven contracts reeking of contagion. If  faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar.

Like many people I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply. The timetable on which events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment? Answer, it could be months before your car is repossessed so you buy gas. It is important to remember that debts can go unpaid and promises be left unfilled. The article below delves into how and why inflation may bring economic chaos.

http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....

Wed, 04/16/2014 - 22:07 | 4667920 Rising Sun
Rising Sun's picture

It's a beautiful day in the neighborhood, won't you be my neighbor?

 

Except you Yellen - you can fuck off and die bitch!!!!!!!!!!

Thu, 04/17/2014 - 18:41 | 4671138 MeelionDollerBogus
MeelionDollerBogus's picture

Hey kids, this is how we answer tha door in Mister Robinson's Neighborhood!

Wed, 04/16/2014 - 22:15 | 4667957 TheReplacement
TheReplacement's picture

She is not the one to blame.  Those elected to power have the duty to control or stop or end the Fed.  They do not.  But who elected them and gave them these powers?  Who has put up with it all these years?

Wed, 04/16/2014 - 22:49 | 4668060 UselessEater
UselessEater's picture

Pollyanna thinking? Its not that simple.

Rhodesia had to deal with sanctions and a 360 degree border to protect and the might of UK, USA, Russian, Chinese, Aust, etc backed armed & financed opposition so a useful figurehead could take up dictatorship and run the nation into the ground while providing vital resources and more sinister arms hot spots.

No one is elected into power they are backed into power and the wolves hope they get the meat not the left overs.

Wed, 04/16/2014 - 21:48 | 4667832 zerohedgejjxxzz12
zerohedgejjxxzz12's picture

Well if I had that kind of money, I would be pulling it out of the bank and buying gold right now, no waiting.

Wed, 04/16/2014 - 22:20 | 4667972 MontgomeryScott
MontgomeryScott's picture

Gold is good.

Silver is good, too.

Food, water, clothing, shelter, lead, antimony, brass, whiskey, beans, knives, deodorant, toothpaste, PPDs, heirloom seeds, canning supplies, matches, fuel, spare auto parts, arable land, livestock, honey, salt, whiskey, (oops, double post), gilley suits, .50 calibers, first aid supplies, solar generators, compasses, maps, whiskey, (shit, I already said that!),... and OTHER things might be a wee bit better than gold or silver.

Wed, 04/16/2014 - 21:42 | 4667810 MontgomeryScott
MontgomeryScott's picture

It's true, what the conspiracy theorists say.

When you give your money to a bank, it is no longer YOUR money.

HELL, it's not really money in the first place, simply a 'debt instrument', or a 'note'.

I would think that this new 'legislation' should be fair warning for those that can, to get their money back from the people who now have it (possession is 9/10ths of 'the law', and in the case of a 'bail-in', the other tenth just went in favor of the majority opinion, named 'law'). Enough left to transact daily business... and that is ALL...

 

Thu, 04/17/2014 - 18:44 | 4671147 MeelionDollerBogus
MeelionDollerBogus's picture

Pretty soon that long-known saying will change to "posession is .9999 of the law"

Wed, 04/16/2014 - 21:42 | 4667809 q99x2
q99x2's picture

Thems sons a bitches better not try taking my FAFSA. I'm headed into the UC system for Fall 2014. No good M'Fers.

Wed, 04/16/2014 - 21:50 | 4667837 MontgomeryScott
MontgomeryScott's picture

3Federal (fucking) 4Student 5Aid (1Free 2Application). I had to look it up.

NO, the FSA won't be touched at all. Well, maybe... I mean, they're already 'touched', don't you think?

Jeebus Christ, you're one of those Californicators? Don't worry. Gov. Moonbeam will make sure you're taken care of! Here, sign on this line, give us a DNA sample, and a quick iris scan, and let us enter you in to the database of the FSA...

Wed, 04/16/2014 - 20:17 | 4667483 whidbey-2
whidbey-2's picture

Bail ins do not work, the problems keep coming back. Cash and metals will be come very interesting and the banks will become empty buildings.  This is not new, nor workable, it leads to revolt.

Wed, 04/16/2014 - 18:19 | 4667076 shankster
shankster's picture

This is going to happen in the USA and sooner than most think.

Wed, 04/16/2014 - 19:32 | 4667323 ILLILLILLI
ILLILLILLI's picture

And without warning, as that is the only way it can work.

Wed, 04/16/2014 - 18:01 | 4666988 RaiZH
RaiZH's picture

[sorry double post]

Wed, 04/16/2014 - 18:00 | 4666985 RaiZH
RaiZH's picture

And what kind of people have 100,000 euros in a single bank account?

Wed, 04/16/2014 - 18:17 | 4667062 safe as milk
safe as milk's picture

i don't know how they do it in europe but in the usa it's $250k per depositor not per account.

Wed, 04/16/2014 - 20:30 | 4667532 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

FDIC has $15 B in assets...$500B in credit lines from the Treasury...and $17 Trillion in contingent liabilities

Fri, 04/18/2014 - 02:08 | 4671153 MeelionDollerBogus
MeelionDollerBogus's picture

Yup http://youtu.be/4TlPo0yCSa4 sounds completely solved to me!

Wed, 04/16/2014 - 19:42 | 4667372 UselessEater
UselessEater's picture

At the moment, but wait for a global crisis and the amount will steeply fall under $250K (a figure designed to make most people consider bail ins to be of no risk or relevance to themselves, but they forget about SME bank accounts and future tinkering with the legislation).

This is global legislation being applied to many nations in preparation for a melt down. Cyprus, as many have figured, was a live test case to see how the people react.

Wed, 04/16/2014 - 18:16 | 4667059 Never_Put_Down
Never_Put_Down's picture

You are kidding right?

Wed, 04/16/2014 - 22:05 | 4667912 MontgomeryScott
MontgomeryScott's picture

UM...

What's a 'Euro'?

OH! That's the thingie that the European Common Market shit was all about...

I call Fedscrips 'toilet paper'. Can I call your money 'Eurotrash'? It's ALL worthless debt instrumentality anyway...

12 stars, seven crowns, the woman riding the beast in Brussels, it's all good!(?) At least you don't have the seperated top of the Pyramid with the all-seeing eye of Horus on your paper shit (yet)...

European Debt Crisis

http://www.youtube.com/watch?v=vnuAh3esdpE

Where's the money coming from for the BAILOUT?

Well, if YOU have more that 100k Euro in the bank, well, you might have your answer. Don't worry, they can change the amount at any time. that's what they do. THEY decide, and YOU comply. SHIT, the EU sounds like FAUX NEWS!

Wed, 04/16/2014 - 17:52 | 4666945 Iam_Silverman
Iam_Silverman's picture

If I had a hundred thousand Euro - I'd be worried.

Wed, 04/16/2014 - 17:37 | 4666903 Ifigenia
Ifigenia's picture

why the taxpayers had to pay those banksters in 2008?

Wed, 04/16/2014 - 17:23 | 4666846 Eric L. Prentis
Eric L. Prentis's picture

About time!

Wed, 04/16/2014 - 17:59 | 4666977 remain calm
remain calm's picture

Coming to a US bank near you.

Wed, 04/16/2014 - 21:23 | 4667745 zaphod
zaphod's picture

So basically they are telegraphing to the very people who have the majority of money stored at banks, that they are at risk of losing their money soon.

Won't this just cause a run in the first place, where everyone who has more than $100K in an account races to withdraw first and lot be left holding the bag?

Wed, 04/16/2014 - 22:45 | 4668048 optimator
optimator's picture

They will limit the amount you can withdraw of course, they've thought this all out carefully.

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