The Powers That Be know another Crisis is coming.
Behind the veneer of “all is well” being promoted by both world Governments and the Mainstream Media, the political and financial elite have begun implementing moves to prepare for the next Crisis.
One of the clearest is the decision to accept physical Gold bullion as collateral for “paper trades.”
The vast majority of “wealth” in the financial system is digital in nature. Because of this, when the next Crisis hits, there will be a scramble for actual “money” because the fact of the matter is a lot of the derivatives and other digital forms of currency are in fact worthless.
Consider that the large clearing houses (ICE, CEM and LCH which oversee the trading of the $700+ trillion derivatives market) ALL began accepting Gold as collateral back in 2012.
From 28 August 2012 unallocated Gold (Loco London) will be accepted by LCH.Clearnet Limited (LCH.Clearnet) as collateral for margin cover purposes.
This addition to acceptable margin collateral will be subject to the following criteria;
Available for members clearing OTC precious metals forwards (LCH EnClear Precious Metals division) or precious metals contracts on the Hong Kong Mercantile Exchange. Acceptable to cover margin requirements for all markets cleared on both House and ‘Segregated’ omnibus Client accounts.
Source: LCH Clearnet.
CME Clearing Europe will accept physical gold as collateral, extending the list of assets it’s prepared to receive as regulators globally push more derivatives trading through clearing houses.
CME Group Inc. (CME)’s European clearing house, based in London, appointed Deutsche Bank AG (DBK), HSBC Holdings Plc and JPMorgan Chase & Co. as gold depositaries. There will be a 15 percent charge on the market value of gold deposits and a limit of $200 million or 20 percent of the overall initial margin requirement per clearing member based on whichever is lower, Andrew Lamb, chief executive officer of CME Clearing Europe, said today.
“We started with a narrow range of government securities and are now extending that,” Lamb said in an interview today. “We recognize there will be a massive demand for collateral as a result of the clearing mandate. This is part of our attempt to maintain the risk management standard and to offer greater flexibility to clearing members and end clients.”
Source: Bloomberg.
China just joined this strategy last week:
China's Shanghai Gold Exchange said it will allow physical gold to be used as collateral on futures contracts from Sept. 29, according to a statement posted on its website on Thursday.
Physical gold will be permitted to be used for up to 80 percent of margin value, according to the statement. (Reporting by Meng Meng and Aizhu Chen; Editing by Subhranshu Sahu)
Source: Reuters
These are clear signals that the large financial firms are aware that most derivtiuves (futures, options etc) will be worthless during the next Crisis.
Another sign that the Powers That Be know something nasty is approaching comes from recent legislation being implemented to make it much harder to move money into physical cash.
If you find difficulty in taking my word for this, consider the recent regulations implemented by SEC to stop withdrawals from happening should another crisis occur.
The regulation is called Rules Provide Structural and Operational Reform to Address Run Risks in Money Market Funds. It sounds relatively innocuous until you get to the below quote:
Redemption Gates – Under the rules, if a money market fund’s level of weekly liquid assets falls below 30 percent, a money market fund’s board could in its discretion temporarily suspend redemptions (gate). To impose a gate, the board of directors would find that imposing a gate is in the money market fund’s best interests. A money market fund that imposes a gate would be required to lift that gate within 10 business days, although the board of directors could determine to lift the gate earlier. Money market funds would not be able to impose a gate for more than 10 business days in any 90-day period…
Also see…
Government Money Market Funds – Government money market funds would not be subject to the new fees and gates provisions. However, under the proposed rules, these funds could voluntarily opt into them, if previously disclosed to investors.
Source: Sec.gov
In simple terms, if the system is ever under duress again, Money market funds can lock in capital (meaning you can’t get your money out) for up to 10 days. If the financial system was healthy and stable, there is no reason the regulators would be implementing this kind of reform.
This is just the start of a much larger strategy of declaring War on Cash.
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Best Regards
Phoenix Capital Research