PLEASE Get your Assets out of the Banking System

by Egon von Greyerz - Matterhorn Asset Management

I have pleaded with investors for years to get their assets out of the banking system.

One of the very few men who understands what is happening within the financial system has done the same. Time and time again he is both advising and imploring investors to protect themselves by getting out of the financial system and to own physical gold stored in private vaults in safe jurisdictions. Jim has also advised investors in detail how to achieve direct registration of their precious metals stocks.

Please read and re-read the extremely wise words of Jim SInclair how to protect yourself.

Here is a link to his latest GOTS (Get Out of The System) advice:

jsmineset.com/the-black-hole-in-all-major-and-some-minor-banks/

In this post Jim states that there is 

“A BLACK HOLE IN ALL MAJOR AND SOME MINOR BANKS IN NORTH AMERICA AND EUROLAND”.

I fully agree with Jim’s statement. But investors must also remember that the world financial system is totally interconnected and a single problem in one major bank is likely to lead to a worldwide systemic problem.

Therefore due to the risk of contagion, any asset in any bank is at risk. The ultimate investment for preserving wealth is physical gold (and possibly some silver at the present ratio) stored in your name, outside the banking system in a safe jurisdiction and with direct personal access to your metals.

After the collapse of the Cyprus financial system I wrote an article called 

“Get your Assets out of the Banks now”.

Please re-read this article which I am republishing below.

Please also remember that 

you cannot buy fire insurance after your house has burnt down..

Egon von Greyerz

“Get Your Assets out of the Banks – NOW”

by Egon von Greyerz - March 18 2013

Note: Video Nigel Farage European Parliament on April 17 2013

“THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS A RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION, OR LATER AS A FINAL OR TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED” – Ludwig von Mises

CYPRUS

The Cyprus event may later, in the history books, be seen as the catalyst of the fall of a century long Ponzi scheme. This could rank in line with the shot in Sarajevo as the start of WW1 or the collapse of Kreditanstalt in 1931 as the start of the Great Depression.

Isn’t it ironic that exactly 100 years after the creation of the Fed (a private bank created for the benefit of bankers) that the fragile and bankrupt financial system is likely to fall due to the insolvency of a couple of Cypriot banks.

But what is happening in Cyprus will not be the reason for a collapse but just the trigger for what has always been inevitable.

There are only two possible outcomes of the crisis we are now in:

- Either there will now be a run on the massively leveraged (25-50 times) banking system which would lead to no debt being repaid and a deflationary collapse.

- Alternatively, we will now see the beginning of the most massive money printing that the world has ever experienced, leading to a hyperinflationary depression.

The second outcome is the most likely although the risk of an systemic implosion is very high if central banks are too slow in flooding the system with money. The deflationary outcome would lead to no banks surviving and no money in the system. And the hyperinflationary outcome would lead to money being totally worthless. In both cases gold will be a major beneficiary.

But printing money will of course not solve anything since worthless pieces of paper with ZERO intrinsic value can never create wealth. At best it will just kick the can down the road for a very short time.

Cyprus is a mini model of the world financial system. The IMF, ECB and the politicians thought they could get away with the depositors taking part of the loss. But they have clearly not considered the consequences. This action (if ratified) will not only lead to a run on the Cypriot banks but also on banks in other weak areas such as Ireland, Spain, Portugal, Italy, Greece etc. Eventually it could spread worldwide.

The IMF, Fed, ECB, BoE, BoJ and other central banks are likely to very soon come out with a concerted action to support the financial system in order to avoid a total collapse.

For well over ten years I have advised investors to get their assets out of the banking system. This doesn’t mean just their money but also all other investments (stocks, bonds, gold etc) which are likely to be lost when banks go bankrupt.

Wealth preservation is now absolutely critical. This involves eliminating counterparty risk whenever possible. EverythIng within the banking system has counterparty risk even if it is segregated or allocated. Lehman, MF Global and Sentinel are all examples of client assets being lost in the financial system.

Gold (and silver) will continue to reflect the total destruction of paper money that the unlimited money printing will lead to. But investors must hold physical precious metals and they must be stored outside the banking system.

Is Gold at a Turning Point?

Adam Taggart

Precious metals have lagged in recent weeks, but revisiting the reasons for owning them reveals no cracks in the foundation. In fact, there are several new developments that indicate the gold and silver doldrums will soon be over.

We’ve got negative real interest rates, fiscal deficit spending, unserviceable sovereign debts, and loose (if not reckless) monetary policies, all while newly mined ounces are more expensive than ever because of reduced ore grades and higher costs for fuel and equipment.

Add to that list several new drivers: MF Global proving that client accounts can be looted; Cyprus proving that the banking system will make depositors pay for its mistakes; politicians calling for various wealth taxes to be levied on anyone with savings; and lastly a new secular change in rising interest rates that threatens to create havoc in world economies and financial markets across the world.

Those are the old reasons, but there are new and compelling arguments for precious metals, including: A seismic change in the commercial trader positions (returning to a bullish stance not seen since 2004); unprecedented retail investor appetite for bullion; accelerating East-to-West demand for physical gold and silver; continued accumulation by world central banks; and shockingly depleted Comex inventories available for delivery.

For all these reasons, precious metal investors should sleep well at night, secure that the foundational rationale for holding gold and silver remains intact.

Times like these are designed to wear you down and force weaker hands to capitulate before reversing. But the precious metals bull market remains intact, and the real price action has yet to come. There is increasing evidence that the next big upward reversal is near.

Read full article

The Cyprus Depositor Haircut

This commentary is written by Tony Alexander, Chief Economist of the Bank of New Zealand. The views expressed are my own and do not purport to represent the views of the BNZ. tony.alexander@bnz.co.nz www.tonyalexander.co.nz To receive Tony Alexander’s publications click here http://feedback.bnz.co.nz/forms/lFdYSs5FGEq4kAjP95uzTA

In August 2005 a Helios Airways airplane crashed killing 121 passengers plus air crew and leaving 33

orphans. Each orphan received about €1mn in compensation which carers mainly placed in bank accounts for when the children grew older. The Cyprus bailout means most of their money is now gone. Hotels in Cyprus during winter took large advance payments from foreign travel agencies for bulk bookings of rooms over the coming summer. The money they received has now all but been forfeited to the government but they are legally obliged still to provide the accommodation and food services the travel agencies purchased. Losses will be huge.

An amount equivalent to 60% of GDP has been taken from all business and individual depositors in the

two biggest banks in Cyprus accounting for over 60% of the banking system. All accounts bar a select few have lost all amounts above €100,000 at the now closed down Laiki Bank, and 60% of amounts over €100,000 at the larger Bank of Cyprus have gone. So if you had €500,000 on deposit at Laiki, or €50mn, you now have €100,000. Families have lost their life savings, potential home buyers have lost funds from their previous house sale, businesses have lost the funds they were going to use for expansion. How did this happen?

These money confiscations are the result of Cyprus’s €23bn bailout agreement reached with the Troika of the European Commission, European Central Bank and IMF on April 2 – the first time ever that depositors in a bank have been “bailed in” on a large scale. It is not something which was forced upon depositors in either of the two Greek bailouts or the Portugeuse or Irish bailouts. It has shattered Cypriot confidence in any concept of “solidarity” in the Eurozone, was made necessary by poor bank and central bank governance in Cyprus, and it is probably the model to be used for all future bailouts in Europe and other countries.

I was in Cyprus from the evening of Saturday 4 to the morning of Thursday 9 May, saw in Easter Sunday and celebration of the Rising of Christ after midnight on Saturday, and partook of the copious meat eating people engage in after 50 days of avoiding animal-based food products. I spent Sunday in the beautiful valley village of Palaichori which supplied about 90% of New Zealand’s Cypriot migrants, crossed briefly into the buffer zone in Nicosia between the Greek Cypriot part of Cyprus and the 37% of the country seized by Turkey in their 1974 invasion, and spoke with many senior government and business community figures. These included the former Finance Minister who negotiated the bailout deal with the Troika, senior representatives of the Ministry of Finance and Central Bank of Cyprus, people from the Cyprus Investment Promotion Agency, Union of Cyprus Municipalities, and the Cyprus Chamber of Commerce and Industry. All experiences and visits were wonderfully arranged by New Zealand’s Honorary Consul in Cyprus Tony Christodoulou who with his wife Mickey were excellent hosts. The weather was hot, the people friendly (90%

speak English), and if you are heading to Europe and want a relaxed hot weather holiday Cyprus is a great place to go with good food, great service, and wonderful beaches – though I did not have time to see any of them.

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