Eric Sprott On The Real Banking Crisis: Global Depositor Bank Runs And Why Gold Is Going Much Higher As A Result
- Anglo Irish
- Bank Failures
- Bank Run
- Central Banks
- Eric Sprott
- European Central Bank
- Eurozone
- Fail
- Federal Deposit Insurance Corporation
- Greece
- Iceland
- Ireland
- Italy
- Meltdown
- New York Times
- Newspaper
- Portugal
- Precious Metals
- Reality
- Reuters
- Sovereign Debt
- Too Big To Fail
- United Kingdom
- Wall Street Journal
By Eric Sprott & David Baker
The Real Banking Crisis
Although the adjacent questionnaire is facetious, it does ask the right questions. If you’re a wealthy European depositor today, what do you do with your money? Do you really continue to keep cash in a Greek or Italian bank account?
European bank depositors all face a tough decision today – to withdraw their deposits, or not withdraw and take their chances. Their response to that decision may determine the financial future of the Eurozone. Since 2008, EU Government bailouts have transformed a traditional banking crisis into a full-blown sovereign crisis. The European Central Bank (ECB) has managed to keep the Eurozone banking system going for now, but the constant threat of depositor bank runs makes its future extremely uncertain. A bank run on deposits forces banks to liquidate assets to raise cash. Governments and central banks will go to extreme lengths to avert such a scenario, because a liquidation reveals what an asset is really worth – and they are likely worth far less than what the banks are claiming they’re worth on their balance sheets today.
Bank runs have wreaked havoc in Europe over the past three years. In Iceland, it was a UK-led bank run on its second largest bank, Landsbanki, in early October 2008 that led Landsbanki to block over 300,000 UK depositors from accessing their accounts in its online bank called Icesave. Fear of widespread deposit losses compelled the British government to promptly freeze the assets of Landsbanki in retaliation, inciting an effective lock-down of foreign capital in and out of the country.1 You certainly didn’t want to have an Icelandic chequing account when that happened – especially considering that the Icelandic Krona proceeded to lose 58% of its value by the end of November 2008.2
In Ireland, it was the withdrawal of almost €4 billion in deposits in less than three weeks that compelled the Irish government to nationalize Anglo Irish Bank in January 2009.3 Large depositors lost faith in the Irish government’s bank account guarantee and began to pull their cash out of Irish banks in droves. As a Trinity College Dublin professor was quoted at the time, "This is a nightmare scenario for the [Irish] government… they can’t stop further withdrawals from the bank unless we close the borders and turn into Cuba."4
Ireland experienced a second bank run in late 2010, when more than €67 billion was withdrawn from Ireland-based institutions in October alone.5 Ireland’s top six domestic banks, two of which are currently in the process of being shut down, have now lost more than €90 billion in corporate deposits since the crisis began in 2008.6 And the withdrawals continue – in May 2011 it was reported that Irish resident private-sector deposits had declined by 8.7% over the past 12 months.7 Private sector deposits from non-Irish Eurozone residents declined by 9.7% over the same period, while deposits from non-Eurozone residents were reportedly down 28.2%.8 Ireland’s experience makes it fairly clear: when depositors sense danger, and they are free to move their money elsewhere – they typically do.
The Irish deposit withdrawals have left Ireland’s banks in the hands of the ECB, which graciously bailed the country out back in November 2010, and has now lent Irish banks more than €103 billion as of the end of June 2011.9 This, in addition to the €55.7 billion the Irish banks have received from their own central bank, is amazingly still not enough to recapitalize the Irish banking system, which at the time of writing still requires an additional €24 billion of capital to remain solvent.10
In Greece, bank withdrawals have proven equally as damaging. Greek banks have seen deposit outflows of around 8% thus far in 2011, with an acceleration of outflows in May and June. Moody’s recently warned that such flows could cause a "severe cash shortage if they rapidly increased beyond 35% of deposits".11 Last week’s €109 billion bail-out suggests that may have already happened.
Just as with Ireland, the ECB has kept the Greek banks afloat, funding them almost €100 billion in 2010 and an additional €103 billion thus far in 2011.12,13 The recent bail-out will buy Greece time, but deposit outflows could still derail the ECB’s efforts to save the Greek banking system if they continue unchecked.
Although we don’t have the data for Spain or Italy, it does not escape us that those countries’ governments are likely highly aware of the effect a bank run could potentially have on their fiscal stability. Italy is a much bigger fish than Ireland or Greece. Its €1.8 trillion of borrowing in nominal terms is more than the debt of Greece, Spain, Portugal and Ireland, combined.14 Italy and Spain are too big to fail and too big to bail-out, so the future of the Eurozone will be seriously compromised if Italian and Spanish depositors take flight with their euros. To that effect, we found it very instructive to read about new provisions that the Eurozone’s rescue fund, the EFSF, recently incorporated into the latest Greek bail-out. Included among them is the ability for the EFSF to buy sovereign bonds in the secondary market, give EU states "precautionary credit lines" before they are shut out of credit market, and "lend governments money to recapitalize their banks".15 The sovereign crisis, at its root, is still a banking crisis. The banks hold loads of Eurozone sovereign debt. If depositors withdraw capital, those banks must sell some of those sovereign bonds to stay solvent. The EFSF provisions are there to provide the banks with the liquidity they need to survive deposit withdrawals. The question now is what will happen if the EFSF runs out of the funds to do so.
In our view, the depositors that chose to transfer their money out of their local Eurozone banks deserve some recognition, because they ‘get it’. The EU banks are still the root of this problem, and depositors are right to question the security of their deposits held with them. We have always postulated that the real problem in our financial system is too much leverage in the banking system. We are continually reminded of this fact every Friday when US bank failures are released. When you compare the failed banks’ assets to the cost the FDIC pays to make their depositors whole, it reveals how many times the banks have lost their equity capital. The key to remember here is that banks lend out our money and keep very little in reserve. If we assume they keep 5 cents of capital for every 95 cents they loan out – a 25% ‘implied write-down’ in Chart A would mean that the bank has effectively lost its capital six times over.
The banking situation in Europe is no different from that above – EU banks are also highly levered, but their situation is further complicated by the fact that what was once the most liquid and secure loan on European banks’ balance sheets – sovereign debt – is no longer liquid and secure. This makes EU banks extremely vulnerable to deposit withdrawals as it forces them to approach the ECB for help to maintain liquidity. There is only so much the ECB can do – if a true ‘liquidity event’ takes place, we can all rest assured that there will be no buyers of distressed assets in the sizes that European banks hold today, sovereign bonds, or not.
We discuss the EU banking crisis this month to remind everyone that we have very recently lived through two instances where the entire financial system almost collapsed. The first took place during the height of the 2008 crash. The second transpired in May 2010 when the ECB stepped in with its $1 trillion bailout package to avert disaster. All financial bailouts up to this point have been instigated with a desire to avert the first domino from falling. They have been instituted to avert contagion – a total financial meltdown that would effectively turn the global banking system into an Icelandic money trap – where no money can get in, or out.
We still don’t know if a financial collapse can be averted in Europe because investors and depositors are not all naïve to reality. The financial malfunction is ongoing and will not be prevented through these continual perverse financial machinations. If Eurozone depositors move their capital – more bailouts will be required, thereby increasing the sovereign debt levels and exacerbating the seemingly hopeless situation that much more.
As the questionnaire above suggests, we believe a growing number of European depositors are transferring their money out of EU banks, and many of them are reinvesting their capital into gold and silver for safety. It does not surprise us to see gold hitting all-time highs in euros and dollars. It’s worthwhile to acknowledge that those investors in Iceland and Ireland who had the foresight to convert their cash to gold before their countries’ respective bank runs have all fared extremely well in both nominal and real terms. We believe that gold and silver are the ultimate alternative for a chequing account in a vulnerable banking jurisdiction, and whether the ECB prints more euros or eventually defaults, both outcomes will continue to support a robust demand for precious metals as an alternative currency.
1 Lyall, Sarah (November 1, 2008) "Iceland, Mired in Debt, Blames Britain for Woes". New York Times. Retrieved July 28, 2011 from: http://www.nytimes.com/2008/11/02/world/europe/02iceland.html?pagewanted=all
2 Onaran, Yalman (February 1, 2011) "Iceland Shows Ireland Did ‘Wrong Things’ Saving Banks". Bloomberg. Retrieved July 28, 2011 from: http://www.bloomberg.com/news/2011-02-01/iceland-proves-ireland-did-wrong-things-saving-banks-instead-of-taxpayer.html
3 Lyons, Tom and O’Brien, Stephen (January 18, 2009) "€4bn ‘run’ triggered Anglo move". The Times. Retrieved July 28, 2011 from: http://www.timesonline.co.uk/tol/news/world/ireland/article5537566.ece
4 Ibid.
5 O’Brien, Dan (June 1, 2011) "€12bn decline in bank deposits in April is smallest since September". The Irish Times. Retrieved July 28, 2011 from: http://www.irishtimes.com/newspaper/finance/2011/0601/1224298206493.html
6 Humphries, Conor (July 8, 2011) "Irish banks’ ECB borrowing inches up in June". Reuters. Retrieved July 28, 2011 from: http://uk.reuters.com/article/2011/07/08/uk-ireland-centralbank-borrowings-idUKTRE76728R20110708
7 Finfacts Team (June 30, 2011) "Irish household bank deposits fell by €709m in May; Domestic banks’ central bank borrowing was €74bn". Finfacts.ie. Retrieved July 28, 2011 from: http://www.finfacts.ie/irishfinancenews/article_1022646.shtml
8 Ibid.
9 Humphries, Conor (July 8, 2011) "Irish banks’ ECB borrowing inches up in June". Reuters. Retrieved July 28, 2011 from: http://uk.reuters.com/article/2011/07/08/uk-ireland-centralbank-borrowings-idUKTRE76728R20110708
10 Ibid.
11 Brereton-Fukui, Natasha (June 27, 2011) "Moody’s warns on deposit outflows for Greek banks". Wall Street Journal. Retrieved July 28, 2011 from: http://www.marketwatch.com/story/moodys-warns-on-deposit-outflows-for-greek-banks-2011-06-27
12 Georgiopoulos, George (June 23, 2011) "ECB funding to Greek banks rises 12.3 pct m/m in May". Reuters. Retrieved July 28, 2011 from: http://www.reuters.com/article/2011/06/23/greece-ecb-idUSATH00620520110623
13 Koutantou, Angeliki and Melander, Ingrid (July 25, 2011) "ECB funding to Greek banks rises 5.6 pct m/m in June". Reuters. Retrieved July 28, 2011 from: http://www.reuters.com/article/2011/07/25/greece-banks-ecb-idUSATH00628220110725
14 Davis, Andrew (July 12, 2011) "Plunge Brings Europe Debt Crisis to Italy". Bloomberg. Retrieved July 28, 2011 from: http://www.bloomberg.com/news/2011-07-11/italian-plunge-brings-debt-crisis-to-europe-s-biggest-borrower.html
15 Baker, Luke and Toyer, Julien (July 21, 2011) "Europe agrees sweeping new action on debt crisis". Reuters. Retrieved July 28, 2011 from: http://www.reuters.com/article/2011/07/21/us-eurozone-idUSTRE76I5X620110721
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Gold, bitchez!
Yesterday Bloomberg reported that gold coins have become unavailable in Lisbon as supplies were sold out
Begining of reversion to the mean, i.e., GOLD!
Bouy Says GoldToTheMoon ...
Defacto GOLD STANDARD is on... (CB's are Buyers) ...
$10k will still be cheap.
New F150 = 2ozs.
Decent house = 10 ozs.
Peace Of Mind = Priceless
Better tell us when the price will drop again in the short term, thats what I am interested in. Since nothing goes up in a straight line, when will the time come to buy? Will gold hit $1650 first and then drop a while?
If you wait for a drop, you are doomed. Why wait? $40 dollar drop here, $100 drop there? It will not matter ten years down the road. All that will matter is how many ounces you possess.
I had a conversation with my Pops back in 2008 - "What ?!?? Are you friggin' crazy !!" he said, "It's $900 an ounce - that's near a thousand bucks!".
He's still waiting for it to drop.
Will be waiting a looooooooonnnnggggggg time.
I have BTFS for decades. Every time I bought gold, it seemed "expensive". Most of the time I have bought gold, the price immediately goes down..., for a few days.
Don't try to time the market. BTFD my butt. Just buy! Gold is cheap at $1640.
Buy gold when you have the money to do so! Note Caviar's note at the very top, NO GOLD is lisbon! Get while the getting's good.
Don't get left behind!
It's all about the ounces you have in the end.
I repeat, GOLD IS CHEAP at $1640. Yours, Maverick
Waiting for Buffett's latest rant against gold. Also next up should be CNBC pundits start opining on things they no nothing about. The Barbarous Metal.
I wonder when people will finally stop listening that that old geezer insider trader?
Second that! Just hearing his name puts me in a rage.
If the BIG money is taking their money out of banks, looking around at everything out there and concluding 'Its time to park it in gold and silver', then we know things are about to get REAL bad.
They seem to be busy taking their money out of the Dax at the moment.
Should we all yell FIRE!?
GOLD!
Gold seems to be the ultimate fiat lie detector.
Just 9 more ticks upward until Robotraitor's call of Gold 1650 & DOW 13500 is blow to pieces.
Robo has a bad case of Schizophrenia. Leo is in even worse shape. I've been patient with the boys, but they make me look almost normal. And I'm seriously mentally ill. :)
http://en.wikipedia.org/wiki/Schizophrenia
I think Robo just likes to stir the pot.
And Leo?
Leo is just part of the system. He is still trapped in the Matrix. I like to think of him as Cypher.
You could very well be correct my good Doctor.
And I'm seriously mentally ill. :)
A little off on your diagnosis. You took the red pill. Did you forget? Now you are living in reality. It's not easy. If you didn't take that damn red pill you would be so happy after returning from the mall with your new $300 True Religion jeans.
http://www.youtube.com/watch?v=CfZRUci-Rec
Meanwhile gentleman "Jim" sends his regards to Robo and uncle guerrilla and his paper.
With you there in the asylum CogDis...
A little OT, but can someone comment?
Is RobotTrader the same person as the old RoboTrader (note the one letter difference)?
Both seem to be contributors, but as I recall the old RoboTrader's posts smacked of irony at the absurdity of the market in 2009 and 2010.
But the "new and improved" RobotTrader (with 2 t's) seems a shill.
RobotTrader's posts:RoboTrader's posts::LeoKolivakis's skanky pictures:RoboTrader's very nice pictures
Ah Ah Ah choooo-suspect-oooo!
Bless me.
You're typing a lot, but you're not saying anything.
will not be long, before its not safe to wear gold chains and jewelry
It's been that way for years. You must live a very sheltered life.
My friend the cop says that hardly anyone, not even the bangers, is wearing old on the streets mow.
Remember what our pal FOFOA sez:
"As the price of gold goes up, it becomes harder to get."
Maybe not EXACTLY his quotation, but pretty close.
I pity da fools dat do!
In the immortal words of Goldmember " I love gooolllldddd"
iznt dat veird?
Inslovent European banks sitting on sovereign debt timebombs. Who would want their money on deposit with those outfits? When Europe implodes there will be too many banks to bailout, even insured deposits could vanish, or be repaid with printed trillions of increasingly worthless paper money.
Gold? Silver? Why not?
Silver needs to keep battling The Morgue's stock price at $40, from there the Gold ratio still needs to get to 15:1 or 10:1 === currently at 40:1. Still more fight left but the die has been cast for victory in the long run
There's a big difference with gold and silver trades.
Less and less people are trading the paper silver because there simply isn't enough silver to back it up which means the comex will one day default. It could be in 1 month, it could be in 3 years but it will happen.
So that's why, not everybody wants to put it's money in that trade which suppresses the price to what it is right now.
The December 2015 contract is now trading at a 0.65 discount to front month silver because of it!
IT'S CHEAPER TO BUY SILVER IN 2015 THAN IF YOU BUY IT NOW!!
THAT MEANS A SURE DEFAULT BEFORE 2015!!! SEPTEMBER 2012 IS WHERE A DEFAULT IS EXPECTED.
(will it happen in september? No. But the wheels will start to come off and become visible which will trigger hoarding of silver and a price explosion)
Silver futures:
Month Settle Estimated Volume
Prior Day Open Interest
JLY 11 39.546 108 380
AUG 11 39.549 551 417
SEP 11 39.558 58,320 60,423
DEC 11 39.581 1,939 26,443
JAN 12 39.582 6 133
MAR 12 39.578 99 5,269
MAY 12 39.565 110 1,578
JLY 12 39.552 91 1,759
SEP 12 39.532 9 218 >>>>>>>>>>>>>>>>>> TIPPING POINT!!! <<<<<<<<<<<<<<< HERE IS WHERE BETS ARE PLACED ON A DEFAULT!!
DEC 12 39.480 273 8,004
JAN 13 39.462 - 1
MAR 13 39.423 25 400
MAY 13 39.381 - -
JLY 13 39.338 44 2,212
DEC 13 39.251 145 6,744
JLY 14 39.191 9 228
DEC 14 39.102 49 1,174
JLY 15 38.981 - 166
DEC 15 38.901 30 450 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Compaired to gold:
Daily Settlements for Gold Futures (PRELIMINARY)Trade Date: 07/20/2011
Month Settle Estimated Volume
Prior Day Open Interest
JLY 11 1596.7 6 81
AUG 11 1596.9 135,98 250,826
SEP 11 1597.5 415 8,880
OCT 11 1598.0 1,361 15,618
DEC 11 1599.0 13,380 169,279
FEB 12 1600.4 826 11,459
APR 12 1601.9 160 6,146
JUN 12 1603.6 86 14,424
AUG 12 1605.5 1 5,016
OCT 12 1607.7 1 4,112
DEC 12 1610.2 159 11,711
FEB 13 1612.9 - 1,560
APR 13 1616.1 - 201
JUN 13 1619.8 7 11,065
DEC 13 1634.1 8 12,48
JUN 14 1651.8 - 3,136
DEC 14 1673.9 - 9,270
JUN 15 1700.0 - 3,725
DEC 15 1730.1 - 2,768
This means that those wishing to purchase gold for delivery in December of 2015 must pay a PREMIUM of $133.40/oz to cover costs such as storage, insurance, etc. This is 8.35% of the cost of the front month contract!
So while Gold is clearly going to run a lot higher, Silver will go parabolic once the Comex crashes. The paper price is actually what's really killing the silver market. If the price would be at 150$, the comex might still make a shot because that would lower demand at bit and trigger some profit takers to sell silver.
EXCELLENT work Sudden Debt! Good digging up some curious facts.
Oh well, we didn't have a bankrun yet, but my PM's also already did VERY WELL! :)
A average 38% rise on investment :)
And that's why, I SUPPORT OUR POLITICIANS!
GO AHEAD BOYS! FUCK THINGS UP EVEN MORE THEN YOU ALREADY DID!!
What happens if said liquidation of assets include US Treasuries? Oh... I get it...
solid article. thank you very much. paper money for speculation, real money for preservation. just have to get the timing right!
We are Barbaric Bitchez!
Let's go Clubbing and get ourself some ass :)
Could someone PLEASE tell me how a small investor in the USA can buy gold in euros or in sterling? Is there an ETF, or other easy way to make that trade?
Are you holding physical Euros and/or Sterling? If not you would trade in Europe converting US Dollars to Euros or Sterling before making the trade. That conversion is an additional cost to the trade. You may also be hit with a VAT tax as well. If you are holding physical Euros and/or Sterling you'll need to convert them to US Dollars which will be an additional cost.
Egad, you've been listening to Dennis Garpman? The man's a doorstop with a well developed vocabulary.
Buy gold in OUNCES (preferably troy). Ounces, ounces, ounces. Physical. From that point forward, the price of your holdings will be priced in every currency in the world: dollars, euros, swissies, take your pick. The price of your holdings in Euros can be seen via the internet daily if that floats your boat.
In future days, you can then take yourself (and some of your ounces) to any part of the planet you wish, convert them to paper, and spend away. (There are risks that go with physical transport, but it can be done). Or if you like, just before traveling, convert ounces to your cheesy local fiat paper, put it in an internationally accessible electronic account, and then spend/withdraw from that account when you reach your destination
Dennis is a nit wit. The concept of buying gold in euros because you're worried about the dollar only makes sense if the price of gold in dollars and euros gets seriously out of whack. Arbitrage players keep that from happening, unless price controls on gold are enacted, at which point trust me when I say you'd really, really want physical under those conditions.
Good answer. Thanks.
It's just a little slower to get in and out of as a trade, but good for a longer term hold.
Exactly the right reply. Just BUY the real thing! And buy it now! $1640 is still cheap! But it with whatever fiat you have.
Physical gold. Ounces. The more the better.
fofoa.blogspot.com
I am not FOFOA, but I contribute to him.
Croak : reading your comment reminded me of something i've been thinking about recently regarding physical Au ownership : do u think it matters how diversified one's stash (of 1-oz. coins) is in terms of country of origin/mint i.e. should one own Amer Eagles &/or Buffalos,AND Canadian Maples,AND S.Af Kruggs, etc etc OR just stay w/American stuff ? of course the context of my question is regarding Au as long-term investment/wealth storage and NOT as a trading vehicle. thanx for any advice .....
tsx - In historical times, it was very common for cultures to honor other country's bullion. (The US and China both semi-officially used Spanish reals around the time of the Colonies, as neither had any sizable access to their own bullion supplies at that point). I suspect that this form of sharing was not due so much to neighborly respect, but leaned on the fact that the common people were wise in the ways of telling what was honest coin and what was phoney. Back then it would have taken a very wealthy sort of scam artist to contemplate faking coins; and he'd literally risk his neck by doing so. Most pilferage was carried out by governments that debased during re-minting, or small time shaving of coins by everyday folk.
The whole set up resulted in widespread skills of assaying (determining the weight & metal content) among a largely illiterate populace. In Argentina's recent brush with collapse, the same skills re-emerged, with people moving links of gold chains and bracelets as a form of black-market currency. These skills already exist at jewelers, pawn and coin shops. Should pms become culturally common, I would think we'll all re-learn them, and in that regard, bullion is bullion, and the cheapest you can get per oz is the deciding factor. People will obviously be more comfortable accepting bullion that is well-known over obscure, but even off-beat bullion in an odd form can find a buyer near spot if you stick with buyers who have assaying skills.
There can be some tax issues in various countries that might sway your decision. In the US, when you sell your bullion to a business, such as a coin store, they are required to try to file a 1099 on the deal if certain parameters are not met (quantities over a limit for a given type of coin). One description of those parameters can be found here: http://goldsilver.com/article/privacy-facts-on-selling-gold-silver-irs-1... , which shows that the US is moderately picky about coins other than their own. Note that laws can and do change, and that the IRS expects you to self-file any and all gains from sales, whether a 1099 is sent in on the transaction or not.
even off-beat bullion in an odd form can find a buyer near spot if you stick with buyers who have assaying skills...
Here in CA, there are many mom and pop operations with holes in the ground shuffling out high grade ore that continues to be crushed, sluiced, smelted and flattened out in wafers that find their way to places like Chinatown in the city. The Barbary Coast doesn't use 1099s. But neither does the fed.
duplicate post
Why would you want to do that? If you really want to, just sell short the Euro or Sterling ETF for the same amount that you are purchasing gold for, e.g., if you are spending $1 million on gold, sell $1 million short of the Euro or Sterling ETF. But that is really two trades, not one. I'd just settle for buying gold in whatever currency you currently hold.
you could buy it for dollars and sell it for Eu or GBP at any time thro www.bullionvault.com or similar ?
The music is and will stop on the Euro infinite bailouts so why would someone holding significant wealth even risk the inevitable and leave their cash in these zombies. Of course bankruns and flights to safety only exacerbate the problem which is that even with government and intervention the distortions the free market is always hard at work seeing through the fog seeking both return and safety. So yeah metals make sense..even in a deflationary scenario the relative buying power to other assets if gold falls will still retain it buying power.
Ben cannot launch a QE3 with gold at these levels. Even he has to see that the 2QE programs have do nothing to stimlulate the economy judging from the data of the past 2 months so how could he possibly posture that this wold be an effort to stimluate growth anywhere but in bankster pockets at our expense?
Aug 9th FOMC will say we need more as economy slows below 1%
Bloomberg pumping it now.
A Richard Koo classic.
http://www.bloomberg.com/news/2011-08-02/fed-policy-makers-may-consider-additional-stimulus-as-u-s-economy-slows.html
Yeah but we all know this game now. Whenever there is a pullback a rumor comes out of left field to try to prop. Rhetoric does not make growth. I think we all expected a QE3 rumor from the Fed with the markets cratering like they have been and if there is another pull back today we should see another rumor by tomorrow afternoon. The half-lifes on not only bailouts but rumors must be having em them quaking. I just cannot see how he can launch a QE3 with oil and metals this high.
Greened.
But, it is NOT a bad idea to start pulling $$$ from our own US banks, what with the 0% they pay us to protect our money.
I know nothing, but I suspect that QE3 is underway or will imminently be underway. Run and hide!
QE3 will go forward in secret. It's probably already happening.
Tyler, This seems to be playing out as expected:
http://www.zerohedge.com/article/guest-post-how-equity-market-prices-recession-0
This was the second posting of this chart. Does anyone have the link to the first posting (I believe we were only at point D)?
Gold, silver and Sprott for the win!
Paging KidD & Brian OFlanagan. Your table is ready.
Today's Blue Plate Special is a big pile O'Shite for you.
LOL!
Indeed, and add MethMan to that list as well.
Just for old time's sake:
Only $5 to dig it from the ground!
Only $5 to dig it from the ground!
Only $5 to dig it from the ground!
Only $5 to dig it from the ground!
Only $5 to dig it from the ground!
Only $5 to dig it from the ground!
Only $5 to dig it from the ground!
Only $5 to dig it from the ground!
Agree completely, but the real "risk" trade is at what price will an all out war (including confiscation) on PM holders begin in earnest. All transactions over $10,000 have been recorded thanks to Obama.
Focusing more on the Gold:Silver spot ratio now, more comments on this please, something has got to give, what is it going to be?
When the stormtroopers come, say it was stolen.
Damn boating accidents...
Law o' physics, Keep trades small<10k. I like <1965 US dimes....i does not get any smaller than that.
Tyler, you are slacking.....city in Rhode Island has officially filed for Bankruptcy
http://finance.yahoo.com/news/Cashstrapped-RI-city-files-apf-1809896377....
ZH had this story posted yesterday afternoon.
I know, I'm just busting his chops, the Twitter texts are rolling out so fast today, I thought he forgot about the website LOL
man landed on the moon
I'm annoyed by all this Gabby Giffords is doing so well B.S. I was watching CSPAN when she showed up on the House Floor. I didn't realize it was her at first and thought "who is that challenged lady waving like a slow six year old?" She is lucky to be alive but I wouldn't call her recovery "living well" as the MSM is portraying.
Well and with her massive brain damage it finally gives Sheila Jackson Lee an intellectual compatriot in the Democratic caucus.
Which of course means that they are intellectual giants compared to theother side of the aisle.
You cannot lobotomize a puppet. I still believe the judge was the target too. Sadly, she was in the wrong place at the wrong time. Did anyone ever get the wound details on the judge? How many times was he hit and where? The devil is in the details!
Bringing her out was an utterly pathetic effort and sickening display by congress to improve their image. I'm sure people who were watching and felt a certain admiration for her bravery in the the line of duty couldn't help feeling that all the brave men and women of this fine congressional body also take substantial risks in their pursuit to serve the people.
Fuck you congress.
exactly , plus it served as sort of a 'distraction' from the whole debt ceiling ass-rape debacle. they are definitely squirming bigtime in d.c.
is anything not fucked up?
No
The euro is built on 10000 tons of the ultimate collateral. It will not fail.
FOA:
"Basically, this is the direction the Euro group is taking us. This concept was born with little regard for the economic health of Europe. In the future, any countries money or economy can totally fail and the world currency operation will continue. What is being built is a new currency system, built on a world market price for gold.
Wiki says it's even 10792.6
http://en.wikipedia.org/wiki/Gold_reserves#Officially_reported_gold_holdings
Line 1
http://www.ecb.int/press/pr/wfs/2011/html/fs110706.en.html
In the week ending 1 July 2011 the increase of EUR 12.6 billion in gold and gold receivables (asset item 1) reflected quarterly revaluation adjustments
I did the math. If gold doubles its value in EUR, each euro banknote will be backed 100 % with gold.
Green for the FOFOA Tough Guy!
"The Government Lied... There is No More Silver!" Feb 21, 2011
http://www.youtube.com/watch?v=T2w7wGwUZ9Y
Oh really!? Please explain why I can still purchase silver?
You're not a very good troll.
On the job training is not what it used to be.
Can we keep it realz? Plz. Explain the silver conundrum facing investors but don't attempt to blame it on some conspiracy.
If you own a silver ETF i'd say you know the silver market well enough to give an educated answer. Not a conspiracy answer implying government coverups and secret worldwide manipulation by the boogeyman.
Go.
Very nice. Only this time give it to me with some real feeling. From the heart man, from the heart. Dig for it.
"There is No More Silver!"
His words from his mouth. I did not say it he did. Why? Motive. Was it true?
Just seeking the truth my friend. LoL!
I just posted enough proof for that quote.
________________________________________________________
There's a big difference with gold and silver trades.
Less and less people are trading the paper silver because there simply isn't enough silver to back it up which means the comex will one day default. It could be in 1 month, it could be in 3 years but it will happen.
So that's why, not everybody wants to put it's money in that trade which suppresses the price to what it is right now.
The December 2015 contract is now trading at a 0.65 discount to front month silver because of it!
IT'S CHEAPER TO BUY SILVER IN 2015 THAN IF YOU BUY IT NOW!!
THAT MEANS A SURE DEFAULT BEFORE 2015!!! SEPTEMBER 2012 IS WHERE A DEFAULT IS EXPECTED.
(will it happen in september? No. But the wheels will start to come off and become visible which will trigger hoarding of silver and a price explosion)
Silver futures:
Month Settle Estimated Volume
Prior Day Open Interest
JLY 11 39.546 108 380
AUG 11 39.549 551 417
SEP 11 39.558 58,320 60,423
DEC 11 39.581 1,939 26,443
JAN 12 39.582 6 133
MAR 12 39.578 99 5,269
MAY 12 39.565 110 1,578
JLY 12 39.552 91 1,759
SEP 12 39.532 9 218 >>>>>>>>>>>>>>>>>> TIPPING POINT!!! <<<<<<<<<<<<<<< HERE IS WHERE BETS ARE PLACED ON A DEFAULT!!
DEC 12 39.480 273 8,004
JAN 13 39.462 - 1
MAR 13 39.423 25 400
MAY 13 39.381 - -
JLY 13 39.338 44 2,212
DEC 13 39.251 145 6,744
JLY 14 39.191 9 228
DEC 14 39.102 49 1,174
JLY 15 38.981 - 166
DEC 15 38.901 30 450 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Compaired to gold:
Daily Settlements for Gold Futures (PRELIMINARY)Trade Date: 07/20/2011
Month Settle Estimated Volume
Prior Day Open Interest
JLY 11 1596.7 6 81
AUG 11 1596.9 135,98 250,826
SEP 11 1597.5 415 8,880
OCT 11 1598.0 1,361 15,618
DEC 11 1599.0 13,380 169,279
FEB 12 1600.4 826 11,459
APR 12 1601.9 160 6,146
JUN 12 1603.6 86 14,424
AUG 12 1605.5 1 5,016
OCT 12 1607.7 1 4,112
DEC 12 1610.2 159 11,711
FEB 13 1612.9 - 1,560
APR 13 1616.1 - 201
JUN 13 1619.8 7 11,065
DEC 13 1634.1 8 12,48
JUN 14 1651.8 - 3,136
DEC 14 1673.9 - 9,270
JUN 15 1700.0 - 3,725
DEC 15 1730.1 - 2,768
This means that those wishing to purchase gold for delivery in December of 2015 must pay a PREMIUM of $133.40/oz to cover costs such as storage, insurance, etc. This is 8.35% of the cost of the front month contract!
So while Gold is clearly going to run a lot higher, Silver will go parabolic once the Comex crashes. The paper price is actually what's really killing the silver market. If the price would be at 150$, the comex might still make a shot because that would lower demand at bit and trigger some profit takers to sell silver.