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EU Bail-Ins Coming As Germany OKs Depositor Bail-In

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Published : July 14th, 2014
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Category : Market Analysis

Today’s AM fix was USD 1,321.25, EUR 969.87 and GBP 771.53 per ounce.
Friday’s AM fix was USD 1,336.50, EUR 981.78 and GBP 779.39 per ounce.

Gold climbed $1.90 or 0.14% Friday to $1,337.70/oz and silver rose $0.05 or 0.23% to $21.43/oz. Gold and silver were both up for the week at 1.37% and 1.42%.

Gold pulled back from its recent highs from $1,340/oz to $1,316/oz. There are a number of factors supporting gold’s price level and we believe will likely give it a boost in the near term.

Quantitative Easing or money printing and ultra low interest rates have flooded the market with cash and that cash is seeking yield. As a result equity markets at are near all time highs, bonds are on the floor and mad speculative bets on anything that moves, are on the rise. Risk is being ignored on an industrial scale, with corporate bonds yields at risk defying lows.

The U.S. dollar as a reserve currency is increasingly under review. With the removal of dollar clearing access from parts of the French bank BNP the U.S. government has scored a spectacular goal. A cornerstone to U.S. economic strength is the reserve currency status given to the old greenback. By tinkering with the currency clearing for whatever reason the U.S. has opened Pandora's box of uncertainty. The fact that these measures against BNP smack of nationalism, by conveniently ignoring the illegal actions of U.S. corporations in foreign jurisdictions over the last decade or two or three, is not even the biggest concern. No, the biggest issue is this; it creates doubt. Now every financial entity worth their salt will ask themselves "But what if?"

You see gold has no master, it answerable to no one. It is no one else's liability and as such the greenback pales in comparison to gold as a true safe haven asset.

We wonder if China, and their 4 Trillion in Foreign Currency exchange reserves, will have their U,S, treasury "trading wings" clipped because they have broken U.S. laws, but what if..?

Conflict is again on the rise with Israel launching upwards of 1,200 sorties on Gaza in the last few days. This is in response to Hamas's rocket attacks. In recent days Hamas has started launching drones, marking a step up in sophistication. So far in is estimated 166 civilians (including 30 children) have died in the conflict, almost all Palestinian. Unemployment is at 86% in Gaza. A shell from Ukraine fell on small Russian border town, killing one person. Russia warned of "irreversible consequences".

Bail-ins are a reality and they are likely to figure greatly in future financial crisis's as one of the chief tools in global regulatory arsenals. Cyprus was of the first modern economy to undergo "the procedure" in 2013. Depositors had 47.5% of their deposits, over €100,000 "removed" from their bank accounts and in return they were given shares in the bank as compensation. A small number of these holders have sought to sell their shares fearing that their holdings will become diluted if the Bank of Cyprus seeks to raise a possible €1 Billion in fresh capital buy issuing shares in advance of the forthcoming European bank Stress tests. Debt has become endemic in western economies and bail-ins will be come the new normal unless the debt mountain is curtailed.

Total Public debt is growing at an enormous rate. Public Debt as percentage of GDP in the U.S. has swelled from 36.2% in 2004 to 83.9% in 2014, this is unsustainable.


When governments become over indebted they tend to raise taxes and or confiscate wealth and capital. Consider holding a portion of your wealth in gold bullion in safe segregated and allocated storage accounts.


Germany Oks Bail-ins
BERLIN--Germany's cabinet Wednesday approved plans to force creditors into propping up struggling banks beginning in 2015, one year earlier than required under European-wide plans that set rules for failing financial institutions.

The new bail-in rules are part of a package of German legislation on the European banking union--an ambitious project to centralize bank supervision in the euro zone and, when banks fail, to organize their rescue or winding-up at a European level

Germany's new bail-in rules
BERLIN—Germany plans to force creditors into propping up struggling banks beginning in 2015, one year earlier than required under European-wide plans that set rules for failing financial institutions, according to a senior German finance ministry official.

From next year, struggling bank creditors, in addition to shareholders, will have to help financial institutions, covering up to 8% of liabilities, before the banks can tap Germany's financial markets stabilization fund SoFFin, said the official, who declined to be identified.

Data and Statistics for these countries : China | Cyprus | Germany | Israel | Russia | Ukraine | All
Gold and Silver Prices for these countries : China | Cyprus | Germany | Israel | Russia | Ukraine | All
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Mark O'Byrne is executive and research director of which he founded in 2003. GoldCore have become one of the leading gold brokers in the world and have over 4,000 clients in over 40 countries and with over $200 million in assets under management and storage.We offer mass affluent, HNW, UHNW and institutional investors including family offices, gold, silver, platinum and palladium bullion in London, Zurich, Singapore, Hong Kong, Dubai and Perth.
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