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Why ZIRP/NIRP Is Killing Fractional Reserve Banking & Forcing Deposits Into Gold
Submitted by Gijsbert Groenewgen via Silver Arrow Partners,
Could zero/negative interest rates be the end of the fractional banking system and force deposit holders into gold and silver?
Would you give your money to a hedge fund that is 9x leveraged?
With the negative interest rates deposit holders might be opt for paper money (notes) instead of digital money (digital wallet, bank account)! Which could bring down the fractional banking system because as we know of every $100 you deposit in the bank $90 is subsequently loaned on. US Federal Reserve sets a Required Reserve Ratio of 10%, but applies this only to deposits by individuals! Banks have no reserve requirement at all for deposits by companies! Go figure.
Anyway the Required Reserve Ratio of 10% means that only a fraction or $10 of the $100 you have deposited at the bank is available for cash withdrawal. Your $90 that is loaned on is leveraged within the banking system to increase profits for the bank. A bank is basically a big 9x leveraged hedge fund. Excessive leverage by the banks was one of the main causes of the Great Depression and of the 2008 financial crisis. Under normal circumstance and normal debt levels the fractional banking system works though these are not ordinary times!
You have to ask yourself when interest rates are so low and don’t compensate you for inflation and with the risk that there could be bail-ins, considering the incredible derivative positions banks have, why keep your money at the bank.
All Governments have silently built in the “bail in” template for when the roof comes down. Where is the accountability of the politicians and bankers?
The US, UK, EU, and Canada have recently all built the new "bail in" template into their laws in order to avoid imposing risk on “taxpayers” (and politicians and bankers of course). All taxpayers have bank accounts and therefore the avoidance argument basically is only important to get the government officials and the bankers off the hook i.e. their accountability! Under the new "template" all lenders (including depositors) to the bank can be forced to "bail in" their respective banks. Most depositors naively assume that their deposits are 100% safe in their banks and trust them to safeguard their savings. And most account holders don’t know that by law, when you put your money into a bank account, your money becomes the property of the bank. Your title “downgrades” from owner of your money to creditor of your money with millions of other creditors. You become an unsecured creditor with a claim against the bank. In other words if the bank goes bankrupt you share at pari (equally at fault) with other similar creditor/deposit holders. Great deal for the bank and bankers, no!
Deposit insurance is a fallacy with more than $1,000 trillion in derivatives
Before the Federal Deposit Insurance Corporation (FDIC) was instituted in 1934, U.S. depositors routinely lost their money when banks went bankrupt. These days your deposits are “protected” only up to the $250,000 insurance limit, and “only to the extent that the FDIC has the money to cover deposit claims or can come up with it”. The question then is how secure is the FDIC? The FDIC has only about $25 billion in its deposit insurance fund, which is mandated by law to keep a balance equivalent to only 1.15% of insured deposits.
See here, based on data reported on 2014-09-30, just the 5 largest US banks by total deposits amounting to roughly $4.8trn
Rank Total Deposits Bank Name
1 $1,377,661,000,000 JPMorgan Chase Bank
2 $1,202,846,000,000 Bank of America
3 $1,171,956,000,000 Wells Fargo Bank
4 $947,975,000,000 Citibank
5 $284,226,575,000 U.S. Bank
Do you really think that the FDIC will have enough money to bail out all the deposit holders at $250,000 a pop? I don’t think so! Especially when you also take into account the $1,000trn derivatives exposure that is hanging over the markets. Subsequently people could argue that the Treasury will come to the rescue. I doubt it; I think at that stage it will be too late anyway to rescue the currency. In other words when the bigger banks threaten to fall over don’t believe the authorities when they say that everything is under control because it won’t be. And when the banks start to fall over also don’t put too much faith in the FDIC or Treasury. It will be a lost case anyway.
Why would you still have a bank account with all its pitfalls?
Nonetheless my point is as follows. Why would you still have a bank account considering their zero return, high fees and abysmal services? Next to that we don’t know what kind of black swans (or whales as in JP Morgan’s case) are hidden in the banks operations and we always are the last ones to find out what the exposure to the incredible amount of derivatives has been. So as a deposit holder you are always one or more steps behind. Therefore the most logical step would be to withdraw “your” money from the bank. This in itself could be very interesting because as discussed here above at the most the bank is likely to have only 10% of your money in cash, remember the remainder has been loaned on the basis of the fractional reserve system - how many dollars a bank lends out compared to the amount of deposits it has on hand. In other words if more and more people would demand their cash, following its negative return, it would cause a run on the bank because the banks won’t have enough cash.
Remember a while ago when deposit holders with HSBC in London, England were told that they needed to have a valid reason if they wanted to take out £5,000 in cash from the bank and otherwise they were declined to withdraw the money from their own account! That in the end was quickly reversed but these things tell you a lot about the thinking and culture within the banks. And this was the situation whilst there was “no stress” in the system! When and if there is stress in the system they will say, “it is not your money”!
With increasing negative real interest rates gold and silver look more attractive by the day
Hence, based on the abovementioned, why I believe, considering the ultra low and even negative interest rates, that physical gold and silver look more attractive by the day. The ongoing free-fall in long-term interest rates has significantly reduced the opportunity cost of holding gold. Gold and silver keep their purchasing power in times of devaluations (as we are witnessing at present) and don’t run the counter party risks or bail-ins that you are exposed to as a creditor/deposit holder of the bank or as a holder of the currency (declining purchasing power). In my point of view silver will show the way, silver is a much cleaner chart see below! In the run up silver normally takes the lead as a result of which the gold/silver ratio should keep on declining from today’s high level of 72.5.
Chart: Gold price
The geopolitical problems don’t seem to get solved only postponed with Israel upping the ante!
And then I have even not touched upon the potential geopolitical causes for gold and silver to go up. To name a few: Ukraine, ISIS (Al-Asad air base in Iraq, could be potentially very destabilizing), Greece and Iran. In case of the Ukraine and Greece the politicians say they have agreements! But the problems are not being solved they are just being postponed. It is all cosmetics. Do you think that when Greece gets a bridge loan or any other loan that the problem will be solved? Of course not! The defaults will only get bigger and thus the cost to the European taxpayers. Really how can any politician justify further financing of Greece? If you don’t understand that Greece has been a lost case already for a long time and even more now (how can Greece pay back $320bn?) you are not capable of leading a nation.
In the Middle East Prime Minister Benjamin Netanyahu said on Sunday February 8 that "world powers and Iran are galloping toward an agreement that will allow Iran to arm itself with nuclear weapons that will endanger the existence of the state of Israel," adding that he would do everything in his power to foil such an accord before the March 31 deadline. Elections in Israel take place on March 17. It is clear to me that there are huge differences between the Obama administration and the Netanyahu government how the Iran situation should be solved though we all know that the Israelis have attacked nuclear facilities in Iraq and Syria when they felt it was justified. Time is running out.
The introduction of solely digital money would put the government and the bankers in full control of your money
The only question I have left in the context of the currencies, and some food for thought, taking into account the emerging presence and adaptation of the digital age we are living in, is if the authorities might try to create digital money, and abate tangible dollar bills and coins, to circumvent the bankruptcy of the US dollar and solve the gold issue.
Digital money entails any means of payment that exists purely in electronic form. Digital money is not tangible like a dollar bill or a coin. It is accounted for and transferred using computers. Digital money is exchanged using technologies such as smartphones, credit cards and the Internet. It can “still” be turned into physical money by, for example, withdrawing cash at an ATM. Though we should be very conscious of the fact that digital money would give the government and banks total control of your money and thus the financial system. After all where else and in what form are you going to keep your digital money if you don’t trust the banking system!
Will the Japanese Yen lead the correction of the US dollar?
And as many people have alluded to that the Japanese market might be the first one to go……………..triggering a lower dollar because people that are playing the carry trade might have to cover their short positions in Yen when interest rates in Japan start to rise because traders don’t buy the Abenomics (QE) nonsense any longer!!! We just witnessed another weak bond auction (lowest bid-to-cover and biggest tail since 2013), which spiked JGB yields.
Chart: 10-year Japan Treasury Yield
The Bank of Japan (BOJ) triggered a currency war after it expanded its monetary stimulus program on Oct 31st 2014. Since then most central bankers across Asia and Europe have resorted to similar tactics, in order to counter the deflationary impact of strength in their currencies and weakening oil prices.
The Japanese Yen could potentially lead the correction in the USD index, which would propel gold and silver, as the Yen was the leader in competitive devaluation and appears more likely to lead the way on the high side now, especially after BOJ’s surprising move communicating that further monetary easing is seen as “counterproductive” and stated that further depreciation in the Yen would hurt sentiment. Next to that the US economic data in the recent weeks have consistently missed the market expectations. Moreover, the “strong jobs data” have already been priced-in by the markets. Additionally, further upside in the 10y yield appears capped around 2.1%, in which case the Yen is unlikely to rise beyond the 83 level. Recovery in crude prices is negative for the US dollar, as most advanced world currencies had weakened in response to weaker crude prices since H2 2014.
Chart: Japanese Yen versus the USD index
And have a look how much the gold price is correlated to the Yen.
Chart: Japanese Yen versus Gold
Conclusion: compared to bonds gold and silver are clearly the preferred assets
Finally when I look at the negative real yields on deposits and sovereign bonds, including the U.S. 10-Year Treasury, the conclusion has to be that in the gold and silver vs the dollar war gold and silver clearly are the preferred insurance against the wealth destruction currently taking place worldwide. As mentioned with historic low long-term interest rates the opportunity cost of holding gold and silver are close to zero or even negative, in other words you would “lose” money if you buy bonds (the benchmark) instead of gold and silver. Opportunity costs can be defined as the benefits you could have received by taking an alternative action. It will be just a matter of time before people realize the opportunity that gold and silver offer.
When people realize that their money is not “safe” with the banks they will start withdrawing cash from their accounts and buy physical gold and silver instead. Depending on circumstances this could possibly bring down the (fractional) banking system. Why keep money in an account that gives you a negative return? Swiss banks are already witnessing stronger than normal interest for physical gold.
It is important to stress that if you buy gold and silver that you buy the physical and not paper gold and silver (futures, ETF) because only the physical will shield you from counter-party risk and the loss of purchasing power.
And as mentioned in my earlier articles with respect to the “manipulation” of the gold and silver prices administered to “strengthen” the US dollar the moment the US dollar starts falling holders of paper (futures) contracts will demand physical delivery instead of cash (that is becoming worth less and less) settlement! At that moment the price setting of the physical will definitely take over from the bogus price settlement of the synthetic/paper contracts (at least 100+ the number of physical contracts). The same physical settlement is likely to happen when there will be not enough silver to satisfy the industrial users, who need the metal. Anyway I think that all these circumstances will ultimately converge. Interesting times!
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In a sane world, maybe.
This one isn't.
Still comes down to real vs a paper promise
Negative interest rates allow for paying banks to money launder for the Federal Reserve and get PAID to do it.
All of which explains why the CB's keep crushing Gold. They simply don't want the sheeple to have an "Escape" mechanism via Gold as they MUST be forced to perpetuate the Ponzi by staying in paper assets. And because the futures markets control the price of Gold (aka the paper tail wagging the physical dog) they can force the price of Gold down to zero. I wouldn't hold out much hope of finding any Gold at that price, however.......;-)
Anything & Everything to keep sheep ball & chained to the banking system [because the eventual 'bail-ins' are the low hanging fruit].
When people realize that their money is not “safe” with the banks they will start withdrawing cash from their accounts and buy physical gold and silver instead. Depending on circumstances this could possibly bring down the (fractional) banking system.
FFS. When people withdraw cash and buy PM's, the cash doesn't just 'vanish'. Whoever is selling the gold then deposits it into their bank, or spends it on something and then that seller deposits it into their account.
Now, if a significant number of depositors withdrew cash and stuffed it that under their mattresses, there'd be problems.
Reality is both bank accouns and retirement and everything else not nailed down, are fucked.
The magic of the equivalence of debt and money. bonds are banks assets retirement buy bonds everybody buys stocks also , money is not money and the stockpiles of gold are getting assimetrical.
What about that story about the gold and silver of the Chinese empire and the Taiwanese.
Transparency is minimal my friends. ZH thank you by tge way.
The mix of Computers AIs Google internet phones nanotec 3d printing genetics are clearly pointint to some singularity
the recent western/human tech advances are astounding. There is no coming back. and nobody is prepared and the corrupt elites are very bad people in every sense. It is clear we need a change and change is here right right now.
"because as we know of every $100 you deposit in the bank $90 is subsequently loaned on."
Gijsbert, in America they loan $1700.......
It's more than gone.
Thus the "barbarous relic" comments by Bernanke and the coordinated crushing of PM prices despite 7 years of strong demand.
They are a desperate lot I tell you, utterly desperate; and desperation 99.9% of the time leads to failure.
It occurs to me that 'they' control the money (and thus economy), the media, the military, the courts, the police.
How the HELL are we supposed to win? Do we sit quietly and hope for the best? Go out in a blaze of glory?
don't worry..economic works... Just as failed systems of government can hold on for extended periods(russia and China have capitalism...think you would live to see that?)...they can't deny the rules of nature for ever. Just as nature can't be denied forever...economic will destroy the fantasy world that that has been created. It is happening.
It will be a sweet day when Goldman fails! Lehman and Bear were good....but man oh man... Goldman within 10 years for sure. The unmitigated hatred they have earned and a change of politics.... BOOM! The Federal Reserve has outted itself as a bankers money machine for outragous bonuses...that can't last.
My worry is that in the event of a collapse (inevitable IMO) they'll take advantage of widespread despair and desperation and impose something even worse than the current system upon us.
I always find it funny when the 99.9% think they need the 0.1% to survive and that they control us, while in fact it's the opposite. Just like revolution is needed to bring us 'change'...could it be that 'change' causes revolution in the first place? If only a small amount of complacency was replaced by critical thinking, humanity would be much better off. Remember the British Empire tried to impose 'something even worse the current system' as well. It didn't prevent the resulting inevitable collapse. Remember the French revolution? The royal family tried to flee France, with the king disguised as a valet and the queen as a governess...they failed. That's why it's better to convince poeple rather than force, otherwise as always, it works, until it doesn't.
I think it will be easier than you assume. Remember Katrina? Where was the "enforcement" side of the police? Went away, if I recall. A little scarce. There wasn't even a real threat, per se. If the "system" at the enforcement level takes up arms against the people then a few sacrifices will scare most of the "enforsers" away. Whose left to protect those higher up in the system then?
Central Banks don't have Ag on their balance sheets. Hmmmmmmmmmmmmmm
Well it is true no one wants their debt denominated in dollars because the dollar is so expensive.
So we really do need to print, devalue and inflate more then I guess.
If we don't that would be bad for gold, right?
Well how about Ireland then?
They guarantee all deposits to infinty.
"Forcing Deposits Into Gold"
Which is why the Gold price keeps... plummeting. Up is down. Black is white.
Its fear mongering. The Congress and Federal resererve will print the short fall. That was the entire premise behind the Fedral reserve system -> to protect JPM, BOA, WFC, and other big guys. The smaller banks will get F*cked. The way it was designed is for small banks, when they become insolvent, will close the doors on Friday, be picked up by the usual suspects (JPM, et al) on Sunday for pennies on the dollar, and open on monday with a new Chase "under new management sign" on the door. People will have access to their money. I keep hearing "bank runs in the US". Not going to happen. You heard Ben with his helicopter speech. The are serious when they say depositors will have access to their cash, as long as you have an account with bank who has access to the discount window.
Greenspan: "We can guarantee cash, but we cannot guarantee purchasing power!
http://www.merkfunds.com/merk-perspective/insights/2005-02-16.html
There is an outfit called "Jackson" that makes wheel barrels. Several of the models have solid steel construction and solid rubber tires. They are very good, and very useful (blue in color typically). If you are a man, and don't own one ... just sayin. Pride goes before the fall. Nobody really like wheel barrels or short handled shovels, but ...
“A deposit insurance system is like a nuclear power plant. If you build it without safety precautions, you know it’s going to blow you off the face of the earth. And even if you do, you can’t be sure it won’t.”
—L. William Seidman, Chairman, FDIC
All money is currency but not all currency is money and currency is what you will have access to, good luck.
"Gold" in America will never go up until the Crimex is taken apart brick by brick and the hard drives where the traderbots live are magnetied. That's okay, I don't expect to ever trade PMs for any amount of Mr. Yellen's currency.
Good read, and nice chart porn though.
Double Top-ville on the $GOLD:$SILVER [with a gaping unfilled gap down at the other end]
Even if you don't buy gold, liberate your cash from the no-interest giving, scum-sucking banks. In my mind its much safer in the ground. Possession at the end of the day is 9/10ths of the law. Everyone, please think about that!
Keep enough cash in a bank, just for doing day to day activities.
Might be more believable if not for the factual errors about reserve ratios and bank capitalization in beginning, which sort of killed any desire to finish reading the article. It's bad enough when the peanut gallery screws up like that...
Can you expand for those of us who still find banking mechanics mystifying?
More precisely, if I deposit $100, does the bank loan out $90 of that existing money as claimed? I thought that was not the true dynamic.report. More like it keeps the $100 and can create up to 9x that of new money through loans. Anyone help?
The short answer is the bank doesn't loan out $90, it will loan out under $50, but it doesn't keep thr $50+ in paper banknotes available for withdrawal. The reserve ratio is only 1 of many factors constraining a banks activity, it takes an academic (and limited) viewpoint to arrive at the conclusion that $90 even could be loaned out. There are three measures which are critical to daily bank operations - capitalization, available balance, and reserve requirement. The rerserve requirement is the least important because it is the "breached" the least often.
Banks use FR2900 to report required reserves - it's a simple with 1 page-form (with about 100 pages of instructions). The assertions the author makes with respect to the deposits of individuals and corporations being treated differently based on the identity of the deporsitor is pure crazy pill talk. But that's what happens when hedge fund guys try to explain banking, which they don't often understand.
Some of the Icelandic banks collapsed in 2008.
The Icelandic banks had spread into Europe offering good interest rates for UK account holders.
After the event, I found out that my rich friend had heard about the problems and got his money out in time, I got caught.
In this case the UK Government made good on all insured deposits.
Cyprus was the first country to use bail-ins and the Russian Oligarchs that were expected to get caught, got their money out in time.
Due to the same communication channels where my friend had heard about the Icelandic banks collapse, I have no doubt.
One can assume that with all bail-ins, the rich and well connected will hear in advance and have a chance to get their money out before the collapse.
This is not good news for the rest of us.
" The Icelandic banks had spread into Europe offering good interest rates for UK account holders"
I remember this time well! Following financial blogs and discussion boards in Britain, I read the desperate panic of posters who had put everything into Icelandic Banks, IceSave or whatever it was. I also remember the adds by Iceland banks all over Britain offering that extra interest that UK banks could not match. Everyone thought they were so clever by jumping into Icelandic Banking accounts.
Then it fell apart. Britian made good for these people, but Iceland did not make good to Britain.
As a side note, the Iceland supreme court ruled against 5 Icleand bankers who have used up all appeals and now face 5+ years in jail.
Yes, it'll all implode, but realisitcally it's almost impossible to operate in the world if you have any signficant financial life without a bank account. It sucks, but that's how it is. That's why I bet virtually everyone on ZH has at least a checking account. The hystrionics don't change that fact. Now, as far as how much of your savings you hold as digits on bank's balance sheet, that's up for discussion.
That is point well taken. You literally HAVE to have a bank account in order to pay simple monthly bills. Good point.
While I am just as licking my chops ready for an implosion of this fiasco, fiat system, IMHO, yes opinion, PM's are just not going to provide a hedge. I have some, so I'm being kind of disinginuous here, but again IMHO, don't expect to be suddenly ressurected into some utopia because you planned ahead and bought PM's. We are FUCKED, FUCKED I tell you, when, not if the dollar goes tits up and the shit really hits the fan. I mean, sure, if there was some hybrid form of collapse where the chosen ZH folks like us were waiting it out for a resurected republic while the city dwellers raped and pilaged one another for a can of beanie weenies...then maybe it would make sense. Counting on a thriving black market saturated with those of like mind where a shilling in silver or gold could buy something of use just doesn't seem plausible. We are talking a full on the "Road" scenario coming here. My strategy is to keep a bearish bias on the markets and try to profit from them (mainly by selling premium/options to the ever growing hoards of BTFD'ers when markets reach full on retard like today). Ever converting any fiat gains into more and more preparedness tools, abolishing debt and establishing a cushy fiat buffer for the present while this maddness continues to defy all logic. Let's face it, we can spend our short lives storing up goods for SHTF but in the meantime, life passes us by...why be miserable waiting for that wonderful moment when we get to say, "ha, yep, I told you this shit would happen" to some sheepole we are surrounded by. Why not enjoy life until this shit breaks and then jsut be the quietly prepared ones who gets to keep on getting it. PM's have been a great investment up until now if the goal was to convert them into a higher valued fiat, but going forward, if you can't eat it, cover yourself with it, or protect yourself with it, then it just seems like an excersise in futility. Any and all investments hencforth should be force multipliers, meaning, it should increase your purchasing power in fiat wonderland or increase your preparedness for what is to come, if it doesn't do one of those two things, then it is simply a distraction. Copper Jacketed Lead is far more useful, but even then, at some point, you reach critical mass. Same with arms....at some point if you are lucky enough to survive whatever comes your way, then the spoils of such encounters will likely keep the arsenal awash with additional armaments. Sustainable food supplies and a place to bug in away from the herd will be far more important than a stack of shiny coins once this hell storm kicks off in rearnest. JMHO.
Your position is fundamentally flawed as you suppose that holding bullion as well as the other means for a sustained existence are mutually exclusive.
Gold is held as a hedge to preserve wealth and is not intended to replace either cash for transactions or useful goods for bartering.
Nor is bullion intended to replace arable land, a store of food, skills to provide for one's wellbeinge, usedul tools and equipment, a good means of defence, a community network and various forms of satisfying entertainment and learning (languages, history, literature, music, rearing animals, travel).
Your supposing that those with the foresight to stack PMs are too naive to meet their wider needs in a sustainable manner is simply a poor reflection on your capacity for intelligent thought.
And as amusing it may be to hold bullion throughout the ongoing market manipulations, having a stack sure as shit does not cause me either misery or unhappiness.
You'll need to do better if you wish to troll bullion.
X
Well, I believe that fractional reserve banksterin' needs to be killed. I will volunteer to do that job. Avec plaisir.
I agree with the article up to a point. The problem is that the metals markets are rigged.
So 'buy gold' and 'buy silver' has significant risk in the fact that to use that gold and silver the value will be converted back into federal reserve notes at whatever price the manipulated market says.
Without total collapse gold and silver could end up worse than having just having a bank account.
If gold and silver were safe then the people running this human farming operation would have left the back gate open for the smarter humans to escape and then others would follow.
Everywhere for regular people to turn is fraught with danger.
The gate is still open.
You'll know it is shut when your local coin shop has no more shiny.
Stack On
European Union can NIRP the host until the carret bleeds a tulip boom. History repeats.
What would be the end to fractional reserve banking is transparency. How do the Primary Dealers continue to perform actual "global Terrorist acts", while the FED has their backs? Covert policy and covert financial backing.
Even HSBC in their current situation has nothing to fear, since governments wouldn't dare prosecute the TBTJ/TBTF financial intitutions or prosecute their management. For fear of upsetting the fragile financial system that the corrupt banks themselves maintain as such. It's just another day in court and another insignificant fine -- all part of business as usual.
Transparency will only come through a the acts of the few brave enough to put their careers and reputations on the line. So are the brave 30 cosponsors of the bill in the Sanate who seek to audit the FED, and perhaps then will will be realizing it is not just the FED at the controls of the temple, but the dark state under the control of the FSB and Basel itself?
Before you take a stand on the "Audit the FED" legislation, first understand what changes it would make to current law. This blog site below has a simple post which shows these proposed changes to the US Code. It is not a lot to read and it is simple enough for a 5th grader to understand, yet most are not even aware of the bill that would put an end to fractional reserve banking and the global terrorism of the Federal Reserve System.
Audit-the-Fed.blogspot.com
I greened you even though you didn't hyperlink your link. I am sure that it is a good link but I suggest abolishing the Federal Reserve period. That won't happen through legislation. Trying to do anything with CONgress other than making large campaign donations is pretty futile. I am jaded a bit after trying to do this since 2008. Please try though.
In God We Trust.... all others must pay in bourbon bullets bullion or blowjobs
So if i invent a coin stamp that turns a 1 OZ round into 8 pieces ? I could sell it to Preppers and Get rich ?
The spreads are wide on PM's right now and in fact are the largest I have ever seen. That tells you something. I have been at this a while and I only buy physical. The market is very skinny. No one really wants to sell right now. The metal is there but you will never pay near to spot price these days. I have worked with five different dealers over the past two weeks and it has been a challenge but most of the orders have come through. I paid dearly though. At these current prices dealers do not want to sell physical and I do not blame them. On that note, some of what I have been recieving is not of the quality that I am used to recieving. It is OK but I woouldn't brag about it.
It really is just getting hard to come up with physical that is decent in terms of not having some sort of problem. Silver especially so. I only move on physical PM when I think it is the right time. PM's have been flat on their back for some time now so I had to go in. I have my reasons why. The physical is disappearing from the market again. PM's never go "Poof" and disappear; they are always somewhere. Someone has them. The beauty of PM's is that they are their own underlying asset and have no debt. I am not saying to jump in because to be honest I don't want any extra competition. You really do not know what will happen and if you do not have time on your side then you should NOT invest in physical PM. I will not trade paper. This is my way of investing. It is a very different mindset. I have plenty down on the table now but I am hedged against my six dollar silver so I won't lose but I may not win. No leverage though. No debt.
It is all a game anyway. But whoever holds the metal is the winner. They can keep beating up the so called gold and silver "spot" prices but that is just more for for my wife and children. Don't think that I am doing this to get "rich". I only need to what I need to get by day by day. All of it goes to my children when they are ready. It is not meant for me.
I Think the bankers are nervous
I haven't used our big chartered bank for years, to borrow for the farm because I have self financed our growth. I use a $30,000 line of credit for monthly cash flows, and after living expenses and business capital purchases, I put the rest into silver, the odd time I buy gold.
In January I asked the bank for an increase of the $30,000 to $60,000 on the line of credit, because some months we ship $70,000 but the buyers don't send a check until the following month,...some months are big expense months and we just about use the $30,000 limit that was set up 12 years ago. Inflation...everything is more expensive.
I haven't any debt on the bank's books, nor the line of credit, or even credit cards.... but I have an old $140,000 mortgage from the original farm in 1988. It was paid off in 1999. We left it registered to arrange a cheaper interest rate on the original Line of credit.
I could finance my own line of credit by keeping less silver, and more in the bank account...but my ulterior motive was to see how the bank would handle my request? See if credit was drying up? See if the bastards are nervous.
The local branch was accomodating...but the head office is making me feel like a begger. Bastards are asking for more info...more mortgage...all on farm assets of more than $3,5 million...I never told them about the silver.
I have a meeting with them on Tuesday. I going to tell them I advised my lawyer to release the old mortgage, and go fuck themselves. I am moving the last of my equities into cash today from their trading house and will take it out as cash next week...I am lining up new credit cards and truck insurance that is handled by other of the same bank's divisions also. I just finished my books and I had given the local branch over $5,000 last year in service fees and interest on the line of credit.
I should have split things up more over the years...it's about time to batten down the hatches.
I Think the bankers are nervous
I haven't used our big chartered bank for years, to borrow for the farm because I have self financed our growth. I use a $30,000 line of credit for monthly cash flows, and after living expenses and business capital purchases, I put the rest into silver, the odd time I buy gold.
In January I asked the bank for an increase of the $30,000 to $60,000 on the line of credit, because some months we ship $70,000 but the buyers don't send a check until the following month,...some months are big expense months and we just about use the $30,000 limit that was set up 12 years ago. Inflation...everything is more expensive.
I haven't any debt on the bank's books, nor the line of credit, or even credit cards.... but I have an old $140,000 mortgage from the original farm in 1988. It was paid off in 1999. We left it registered to arrange a cheaper interest rate on the original Line of credit.
I could finance my own line of credit by keeping less silver, and more in the bank account...but my ulterior motive was to see how the bank would handle my request? See if credit was drying up? See if the bastards are nervous.
The local branch was accomodating...but the head office is making me feel like a begger. Bastards are asking for more info...more mortgage...all on farm assets of more than $3,5 million...I never told them about the silver.
I have a meeting with them on Tuesday. I going to tell them I advised my lawyer to release the old mortgage, and go fuck themselves. I am moving the last of my equities into cash today from their trading house and will take it out as cash next week...I am lining up new credit cards and truck insurance that is handled by other of the same bank's divisions also. I just finished my books and I had given the local branch over $5,000 last year in service fees and interest on the line of credit.
I should have split things up more over the years...it's about time to batten down the hatches.
Banks are telling people they don't want your money anymore. So transpose it to anything else. Pounds of assets that hold their value.
Get out of the CB's fiat. It's why stocks are so high.
"because as we know of every $100 you deposit in the bank $90 is subsequently loaned on"
This guy does not have a clue about how the banking system works. Banks do NOT lend customer deposits, they first lend and then search for the deposits. So the lending decision is unrelated to deposits, it is related to the cost of finding the funds after the lending has taken place. In large open economies with currencies that have some reserve currency status, part of the newly created money leaves the country as it is spent on imports, whereas large sums of domestic money flow in through financial flows, tourists, investment from abroad etc. All these flows together with the level of imports and speculative demand for the currency determine the level of deposits which move up and down wildly every day.
"...because as we know of every $100 you deposit in the bank $90 is subsequently loaned on."
I think it is, for every $100 you deposit, $900 of credit is created.
If it were as you say, banks would have more money in the vault than loans. No banker would bother being a banker under such a system.
Gijsbert Groenewegen not Gijsbert Groenewgen