- Governments move toward ever greater financial repression - Repression includes suppression of rates, capital controls, outlawing of cash and bail-ins- Finance ministers discuss cashless society, giving banks total control over public’s money- Bail-in legislation is at advanced stage internationally- Bail-ins coming to indebted western nations – question is when …- Legislation is devised to protect larger banks- Ramifications of bail-ins have not been thought through- Bail-ins will be destructive and may contribute to deflationary collapse- Diversification both in asset classes and geographical diversification essential
Goldcore’s Director of Research Mark O’ Byrne joined Gordon T Long of Financial Repression Authority for an in depth discussion on the deepening financial repression in the world today, with particular focus on bail-ins.
Mark identified a number of elements which he believes amount to financial repression including the suppression of interest rates using QE, capital controls, the move towards a cashless society and most importantly – bail-ins.
He points out that bail-in legislation, while under reported in the mainstream media, is actually at a very advanced stage. He quotes from the Bank of England’s former Deputy Governor, Paul Tucker, who following a meeting between the Bank of England and the Federal Deposit Insurance Corporation (FDIC) in October, 2013 said:
“U.S. authorities could do it today — and I mean today … ”
Bail-in is the confiscation of bank deposits of savers and businesses which were formerly viewed as sacrosanct in the event of a bank failure. The deposits of “widows and orphans” are now at risk and treated akin to bondholders.
The Fed’s Stanley Fischer has said that the U.S. was preparing such legislation – after Tucker had indicated that such legislation was in place.
The EU is also at an advanced stage in forcing countries to ratify bail-in legislation. The legislation is being devised to protect the larger banks against the interest of both depositors, taxpayers and the wider economy.
The various “state guarantees” for deposits or deposit insurance – generally a big round figure of €100,000 in most EU states and £75,000 in the UK) is purely arbitrary and can be adjusted lower with the stroke of a pen lulling the public into a false sense of security.
The ramifications of bail-ins have not been thought through. With central banks taking unprecedented measures to fight deflation, Mark points out that bail-ins would create “deflation like you would not believe” by taking a large portion of cash out of the system and with further consequences for future spending and investment, consumer confidence, trade, commerce and all our economies.
Gordon points out the EU finance ministers in Dresden recently discussed moving quickly to a cashless society which would give the banks total control over the money of the public.
They could charge for “services” arbitrarily and the public would be unable to protect itself from bail-ins and reckless bank activity.
View Interview Here
Must Read Bail-In Guides:
From Bail-Outs To Bail-Ins: Risks And Ramifications
Protecting Your Savings In The Coming Bail-In Era
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,162.40, EUR 1,041.20 and GBP 750.30 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,162.10, EUR 1,053.96 and GBP 755.37 per ounce.
Gold climbed $2.60 or 0.22 percent yesterday to $1,161.40 an ounce. Silver rose $0.32 or 2.11 percent to $15.46 an ounce.
Gold in USD – 1 Week
Both gold and silver are lower in major currencies for the week but have recovered tentatively from the latest bout of intense selling on the futures market on Tuesday which again led to sharp price falls despite robust physical demand.
Gold bullion in Singapore for immediate delivery was up 0.3 percent at $1,162.71 an ounce near the end of the day, while gold in Switzerland was essentially flat.
The Greek government sent reform proposals to its eurozone creditors last evening in an effort to secure new funds to avoid bankruptcy and will seek a parliamentary vote on Friday to endorse immediate actions. European stocks have risen sharply on hopes for a resolution or at least some form of reprieve and another exercise in “extend and pretend.”
Gold in GBP – 1 Week
Chinese stocks rose again today after ministry officials try to stop the 30 percent market drop from mid-June, by banning shareholders with large stakes in listed firms from selling. Asian stocks were buoyant on Chinese gains.
The financial repression in China will not end well and may lead to an even greater bubble – followed by an even greater crash.
Other economic news has been poor with the IMF cutting global growth forecasts and U.S. jobs data poor and this has supported gold today.
The IMF cut its global economic growth forecast this year to 3.3 percent from 3.5 percent, citing recent weakness in the United States which also supported the yellow metal.
New applications for U.S. unemployment insurance benefits rose last week to their highest level since February, suggesting a slowdown in the labour market. Initial claims for state unemployment benefits rose 15,000 to a seasonally adjusted 297,000 for the week that ended July 4, the U.S. Department of Labor said on Thursday.
The U.S. and indeed global ‘recovery’ remains on tentative grounds at best.
Members of the Chinese Gold & Silver Exchange Society (CGSE) in Hong Kong began trade on the Shanghai Gold Exchange (SGE) directly on today, expanding ways to access to one of the world’s fast-growing bullion markets, China.
The CGSE members can now trade the Shanghai gold in Hong Kong through the CGSE’s membership in the Shanghai Gold Exchange, a CGSE spokeswoman said today.
Gold in EUR – 1 Week
London’s role in the benchmark gold fix will be challenged by China’s Shanghai Gold Exchange (SGE) who reported last month it will launch a yuan-denominated gold fix by the end of 2015.
China is the world’s largest producer and buyer of gold bullion, making China’s dominance of the gold market a foregone conclusion.
In late morning European trading gold is up 0.50 percent at $1,164.56 an ounce. Silver is up 0.45 percent at $15.60 an ounce, and platinum is up 1.47 percent at $1,035.00 an ounce.
