Up to the minute news about money and finance – your FAQ’s

Is my money safe in a bank?
With the recent Bail-in of large depositors funds in Cyprus, and the FDIC and Bank of England ratifying this for the US and the UK, you can be sure that this is just the beginning. If you have any money in a bank anywhere in the world, it could be taken from you. Don’t for one minute think that it’s confined to Cyprus because it isn’t. What it means is that your savings could be stolen by the bank or financial institution if it gets into financial problems. Because it seems so ridiculous after decades of banks paying us at times quite high interest rates on our savings, it’s a difficult adjustment to make initially to having virtually no interest over the last few years, to the banks swiping all our money and even legalising it!
But this is where we are now. For those that wake up to this, and who are not listening to the media who would have us believe that everything is going so well, there is still time to get your money out of the system and not to be a sitting duck for the banks to annihilate you. What should you do? Have at least six months cash to cover your expenses outside a bank. If you have to put it under your mattress or in a safe somewhere, then do it. Just make sure you don’t put it in a bank’s safety deposit box because in most countries you will find that the law is on the side of the bank, and if there is an emergency, they have the right to open your safety deposit box and to take whatever is in there. At best, they could freeze those assets and you may have to wait a very long time to get them back, if ever.
Are Credit Unions safer than banks? Credit unions have specific structural differences from banks including depositors as voting members. As long as the credit union doesn’t need bailing out, then you should be safe. However, if there is a systemic failure and the whole banking system collapses, then it would be a miracle to keep the credit unions from going down too and using bail-ins with depositors funds.
Should I take out debt as interest rates are so low? If you take out a mortgage, you need to be sure that you have at least six months payments outside of the banking system. If you can do that, and you feel pretty sure that your income will be able to finance that debt for many years to come, then it could be worth doing. But I would be very careful nonetheless and I would not take out a huge loan that could end up being a burden for you, especially if interest rates start to rise again. Remember too, that real estate is not a very liquid asset and you may not be able to sell it quickly if you do run into financial difficulties. It’s best to live according to your means and to have money set aside for lean times just in case.
Should I buy real estate? If you don’t have to take out a huge mortgage and if you are able to buy a property or some land for cash, then this is a good option that’s worth considering. The advantage with real estate is that it is a tangible asset and eventually it will go up in price. However, you may have to ride out some extreme volatility before you see a good return on your investment. If you are willing to hold on for 10 years, you should do very well.
Why are gold and silver at such a low price right now? They are being manipulated heavily by the paper gold market which does not give a true indication of the real gold price. Eventually, the physical gold market will free itself from the paper gold market and at that point the price of gold will skyrocket. The more that people insist on taking delivery of their gold, the more quickly this will happen. How long this will take is unclear but I doubt it will go beyond 2016. If you are holding physical bullion, try not to be emotionally swayed by the volatility in the market and hold onto it, as it will be worth a great deal of money in the years to come.
Do I need to be afraid of buying fake gold or silver? There are some fake coins coming on to the market, especially silver ones from China. However, there are machines that are relatively inexpensive (less than USD$200.00) that you can buy that will tell you if the gold you have purchased is fake. Gold fake coins are far less prevalent and as long as you have bought your bullion from a reputable dealer or directly from the mint, you should be fine.
Where do I store my precious metals? This is a question that I am asked all the time and it is not an easy question to answer. Here are my suggestions: Choose a storage place and put a small amount of gold in it and then try to take some of it out. If it’s not easy to get your gold out, then that is a definite warning sign. Make sure you have allocated storage. i.e. gold bars or coins that belong to you specifically and not lumped together with all the assets of the depository. Ask about the storage insurance policy of the depository you are considering. Does it insure you against the storage company, any employee, any consultant or associate stealing the gold via any method including accounting fraud. The next question is what member of the big four accounting firms reviews the accountant’s statement and signs off on it as accurate and audited as compliant with International GAPP (International General Accepted Accounting as compared to US or Canadian GAPP Procedures). Don’t be complacent. No matter how reputable the depository is, keep trying to take out a small amount of bullion from time to time just to keep on top of the situation. Try to store your gold in one or two or even three different depositories in different places or even in different countries. You could also store some gold in your home, but that should not be a large amount, or no more than you are willing to let go of should someone threaten you with a gun.
What about internet bullion sites such as GoldMoney.com and BullionVault.com? For many people these are very convenient and easy to use as you can trade 24/7 and you can take delivery of your metals if you so choose. However, once again, keep in mind that very few people take their gold out, so it is an unknown as to whether these companies actually own all the gold that they have in storage. The regulation of these internet sites is not as stringent as a depository, and they are deeply intertwined with the banking system. So if there is a freeze or shutdown of banks, then you may find that you cannot sell your gold nor can you access it. I would not recommend putting all your money into one of these sites. You might invest a small amount for flexibility, but not most of it due to your higher risk exposure.
What about confiscation? Is it likely to happen? It’s very unlikely that governments will confiscate precious metals. This is because the situation is so different now than what it was back in April 1933. At that time, the financial system was linked to a gold standard and when Roosevelt wanted to do QE, he had to control the gold market and he needed the gold. He couldn’t create money without the gold backing him up. So the gold confiscation at that time was a QE tool. Today, governments don’t need to have the gold in order to do QE, as you can see. So it’s much more likely that there will be some sort of tax on your gains, maybe a Windfall Gains Tax. This is more the kind of thing that I am anticipating.
How and when will all this turmoil in our financial world resolve? Ultimately the debts and liabilities of various countries will have to be cancelled as there are not enough assets to pay off those debts. This will result eventually in a total restructuring of the system and it’s quite likely that gold will be a part of a blend of currencies in the new system. Bank closures, Bail-Ins, manipulation of markets and of statistics, increased volatility, are all to be expected. I would imagine that we are in for very difficult and uncomfortable times for the next several years with a reset of the system happening before or around 2023. As long as you have protected yourself as best as you can and you haven’t panicked and sold your physical metals you will do very well.

Breaking News! Cyprus banks steal from their savers!

Great EU Bank Robbery – is your bank going to steal your money? Not only are the banks giving most of us a paltry 0.25% - 1% interest on our savings if we’re lucky, they now seem to think it’s their divine right to steal our money in order to protect themselves from going under due to their greed and terrible financial decisions. How incredible is that? This is a wake-up call! Cyprus is proposing to penalise its savers with a one-off levy on their bank deposits because it wants to save its failing economy and banks. Seventeen Eurozone finance ministers locked themselves in a room and decided that every Cypriot saver – whether super-rich or dirt-poor – will, without any warning, see part of their hard-earned money confiscated. Yet only a few weeks ago, the Cypriot President Nicos Anastasiades explicitly promised in his election campaign, that savers would be protected. What’s even worse is that deposits under €100,000 are supposed to be protected by EU law, not raided by EU leaders. Here’s what they want to do: • Savers with under 100,000 euros deposited must pay 6.75% • Those with more than 100,000 in their accounts must pay 9.9% Innocent people are being condemned for the greed and mistakes of their banks. They trusted their banks to take care of their savings and without warning, the bank steals from 6.75% to 10% of people’s wealth overnight. Cyprus is a tiny country and may not have as much power as one of the bigger EU countries, but what if this happens in Spain or Italy as it could?? Can you imagine the uproar and the civil unrest? And they say that the levy is a one-off measure – but of course the government could change their minds about that next month. Many elderly Britons had transferred savings to Cyprus when they decided to retire there. Someone said “no one can understand how they can do this – isn’t it illegal? How can they just dock money from your account?” What are the next steps? The Cypriot parliament is voting on this deal today which is conveniently a Bank Holiday in Cyprus. The president is encouraging parliament to accept the bailout deal or face a complete collapse of the economy with a possible exit from the euro. It looks as though this will be a very close call. It's daylight robbery!! It was announced at the weekend when most banks are closed, and people were desperately queuing at ATM's to try to get some money of their money out. No one could have prepared for this....so I am advising you ALL wherever you live to beware of the banks. All banks are interconnected and your money is not necessarily safe in a bank. Make sure you have enough cash out of the bank. And invest the rest in gold and silver. Right now, the prices are quite low and in the future, because of the uncertainty in the world economy, the value of your bullion will increase greatly. But don’t buy it for that reason. Buy it because it gives you insurance: something that is outside of the control of governments. Don’t buy shares in gold and silver, but buy the actual coins and bars that you can hold in your hand. Don’t let anyone else take care of your bullion, keep it yourself. The positive outcome that could come from this is that we can start to work together outside of the system. By using barter and exchange we can swap products and services within our communities without having to be penalised by our tax systems. The taxation regimes of failing states and governments are going to get more and more invasive and controlling as time goes on. Let’s not allow the banks rip us off and let's try to prepare for the coming changes. The biggest question is the possible precedent this sets. What if other depositors in other larger, and more influential European countries start to withdraw their funds from the banks? EU leaders keep saying that this depositor tax will not be repeated in other countries, but of course they could change their minds about that overnight. What this means is that your money is not necessarily safe in any country in the world. All the banks are connected in one way or another, so don’t think that you can relax just because your country isn’t involved in this latest robbery. In the US, for example, don’t be lulled into thinking that the FDIC will continue to pay out if the bank you have your savings in fails There is a possibility that this draconian action in Cyprus may not go ahead. However, the fact that it got so far and that authorities think that they have the right to steal from us should be a red flag and a wake-up call. Just because Cyprus is a small country, they may get away with it this time. Please don’t think that because stock markets have been booming all over the world in the last few months that the global financial crisis is over, it’s merely been delayed. There is still time to make protect yourself if you act swiftly and get your money out of the system.

Financial Predictions for 2012-2013

Precious Metals:
I’ve been predicting a long bull market in gold since 2008 when the price was just $850 an ounce and silver was only $11. This year it gold shot up to $1900 and is now a bargain at $1555. Silver too nearly hit $50 again and is now hugely underpriced at $27 an ounce.

My predictions are that gold will go over $2000 in 2012, possibly closer to $3000 and silver will hit $50 or more. I think that gold will be the investment of the year because none of the fundamentals have changed. We have the Euro crisis, US debt, QE…and yet Central Banks have more than doubled their purchases of gold in the last year. That’s got to tell you something. If you haven’t already got some physical gold and silver, I strongly suggest you get some while the prices are still so low.

Stocks and Currencies:
The Dow Jones and the S&P will close lower at the end of 2012 than this year, despite it being an election year which is often bullish for stocks. Unless you have money you can afford to lose, I would suggest you sell your stocks and put the money into precious metals.

There will probably be a major dollar rally for at least the first half of 2012 if not for the whole year. If you wish to diversify your risk and invest in currencies other than the US dollar, I would suggest the Canadian dollar, Swiss Franc and Australian dollar. However, it will be very volatile and my first preference would be gold and silver above currency investment which is far more speculative.

QE
The Federal Reserve will resort to more QE in 2012 and so will Europe.

Banks
We’ll see the collapse of more banks, the most likely large one being the Bank of America. The US banks I would be very careful of are: Wells Fargo, US Bank and of course Bank of America.

Downturn Markets:
Cosmetics, jewellery, clothing, the law, police, security, insurance, the funeral business, banks, financial institutions.

Growth Markets:
Communications, technology, computers, mobile apps, writing, cellphones, transportation, social networking, nanotechnology, robotics, mind power, new payment systems, educational and learning devices.

Real Estate
Further falls are anticipated in most major markets. There will be small pockets of real estate that may not be affected by the huge price decreases, but they will be far and few between. In the main, I see property prices falling much further, probably another 40% and in some areas up to a 70% drop. If you are going into debt to buy a property right now, be aware that that same property might be considerably cheaper in a few years time. Don’t be in too much of a hurry to buy real estate or you might be kicking yourself for not waiting until prices fall even more.

Property prices have tumbled in the US and in the UK and Europe leaving a few bargains out there. However, be very careful with buying any property and land during 2012. We will see so many more natural disasters it’s going to be like a lottery finding safe places around the globe. This would not be a time to take out debt but to pay in cash for any assets that you buy. With events happening so suddenly and property being such an illiquid asset you may be stuck with something that you cannot sell and is worth much less than the amount you paid for it.

Top Tips:
• Have at least 3 months living expenses in cash outside of a bank.
• Keep a small amount of cash in bank.
• Spread your money between different banks.
• Don’t take out any debt.
• Pay down any debts you have.
• Buy physical gold and silver bullion.
• Think carefully before investing in real estate – prices will come down further and with increased seismic activity and natural disasters, land could be a risky investment.
• Find a backup source for your electricity, e.g. a small solar panel to charge your mobile phone and laptop.
• Have emergency supplies on hand: at least 3 months water, 3 months food.
• Make sure you have copies of all your important documents.
• Have an evacuation pack near the door so that you can move at short notice.

Gold Panic - time to buy or sell??

With the price of gold steadily dropping since its peak in September, we’re seeing pessimism and panic in the market. Try not to be swayed by short-term events and realise that in the long run the price of gold will rise. This is because money printing is the most likely solution the leaders will choose to solve the European banking crisis and there’s a good chance we’ll see QE3 in the US during 2012. The more money they print, the less valuable the currency becomes which is positive for gold.

You’ll find many examples in history where nations opted to solve similar problems we face today in the world using QE to create liquidity. During the great bull market of the 1970s, for example, gold went from $35 to over $850 per ounce. In that spectacular rise there were several 50% corrections in the gold price and I’ve been saying all along that the market will become more and more volatile, so I would be using these periods of pessimism and panic as a wonderful buying opportunity.

Gold will rise as investors realise that gold is a valuable asset to store and protect wealth during periods of inflation or recession. Whichever economic environment persists, the value of gold will be driven upwards by the efforts of central banks to create liquidity and debase fiat currencies.

To quote the legendary Jim Sinclair:
“Don’t allow your emotions to direct your decisions. Your emotions will always be your best contrary indicator you have. You have to examine the circumstances and ask whether or not the reasons why you’ve committed to something have changed. And if they haven’t changed, you simply need to buck up and go the course because you’re right.

People are beginning to literally crack, defined as shifting their total focus to their emotions and away from their intellect. I’ve seen emotionalism in areas where it doesn’t belong, where it’s never existed before. I’m in total shock.”
If you’re already freaked out by the movements in gold so far, you might want to sell up because I’m warning you that the ride is going to get much bumpier on the way to gold at $5000. In 2012, I anticipate that we will see gold going at least to $2500 an ounce.

Central banks remain buyers of gold. South Korea, for example, increased its gold reserves by 39% in November alone. The fundamentals for gold remain intact. No market ever moves in a straight line. The long-term picture for gold remains positive. So hang in there, it will be well worth the ride!

For those of you who have not yet invested in gold and silver, this is a wonderful opportunity to get in at a good price before everything skyrockets once again.

Gold Price Down - Great Buying Opportunity!

As I write, gold is at USD$1572 an ounce and silver is at $28.13 an ounce and many are getting very jittery and selling their precious metals. This is normal, especially for those who have bought recently at around $1800 – 1900 an ounce. However, remember I have said all along that we were going to see massive volatility. This is to be expected, but fundamentals haven’t changed. Our global economic system is based wholly on debt and the value of fiat currencies is gradually eroding as QE continues and while banks are “too big to fail.”

The fact that prices have dropped so significantly is one of the main reasons I always tell people NOT to borrow money in order to buy gold and silver. This is where you can come unstuck. It’s much too risky and it’s going to get riskier as time goes on. I wouldn’t be surprised if gold went as low as $1300 an ounce and the lower it falls the higher it’s likely to bounce back in the future.

No one can tell exactly where the bottom is for this current dip, but I can see on the charts that this looks like a wonderful time to buy. The sensible people are buying while the sheeple are selling.

If you have cash in the bank and no precious metals at all, you are fully invested in the fiat currency system and you have all your eggs in one basket. This is a huge risk as you could lose an enormous amount of money or you might lose it all. In Lithuania right now, there are huge runs on the banks with people scrambling to get their money out. In Greece and Italy, depositors are withdrawing their money in droves from the banks. I would suggest that you have AT LEAST 10% of your cash in gold and silver (mainly gold), and you will at least know that you have insurance in case there is economic collapse and that 10% will be your saviour.

To quote the legendary Jim Sinclair,
“The most important thing is volatility. One thing this shows you, and it increases continually, is this is the wildest chop we’ve ever been in, in the history of trading gold, in terms of ups and downs. It means to me that gold is going to rise to prices even higher than I expected....” and Jim has been saying that gold will go into the $2000s and possibly even up to $4500 or more…

So what are you waiting for? This is a wonderful buying opportunity folks! Don’t be scared off, act as a contrarian, buy when others are thinking of selling.

Is Gold Confiscation on the Cards??

France Bans Cash Sales of Gold/Silver over €450 / USD$600
A couple of weeks ago some Austrian banks began to restrict the sale of gold and silver to €15,000 (USD$20,000 USD) reportedly because of money laundering issues. Governments are starting to make it more difficult for individuals to buy gold anonymously.

Based on the French government’s official website, as of September 1, 2011, anyone attempting to buy or sell ferrous or non-ferrous metals, which includes gold and silver, will be required to pay for their purchase via a credit card or bank wire transfer if it exceeds €450 (USD$600).
According to independent reports the law was passed to stop the illegal sale of stolen metals like copper, steel, etc. The fact that gold and silver were included in this cannot be ignored. This new law makes it illegal to buy even one ounce of gold or around 18 ounces of silver in cash.
It makes you wonder when other countries will use a similar excuse of the rise in the theft of metals to introduce similar draconian laws?
Central banks are presumably so concerned that more people are getting out of fiat currencies and are trying to preserve their wealth through gold and silver that governments are cracking down on the anonymous purchase of gold and silver.
Be aware that USD$600 isn’t even enough to purchase a half ounce of gold at today’s prices. This guarantees that people who transfer their savings over to precious metals will be known to the authorities, leaving them vulnerable to government confiscation of their gold and silver later on down the line. Let’s not forget that the US government confiscated gold in 1933 and this could so easily happen again.
What can you do proactively right now:
• Buy precious metals anonymously with cash while you still can
• Store some of your precious metals outside the country in which you live
• Be aware of small changes in laws around the world that may give you clues as to what do with your assets in advance
• Consider buying gold and silver now while the price has fallen
• Watch out for the “man in the street” buying gold and silver. That’s the point you should probably sell.

Gold Going Higher and Higher

As fears mount that global markets are no longer safe, investors are turning to gold as insurance in case the economy collapses, and as an investment. Stock markets are extremely volatile as we’ve seen over the past few weeks, unemployment is rising, prices of food and essentials are going up, and gold is the one safe haven in the midst of all this turmoil. This week, the price of gold went as high as $1881 per ounce which marks a 7% increase in this week alone and a 25% increase since July of this year.

Since my last article and video on August 7th, gold was at $1666 an ounce and closed this week at $1851, an increase of nearly $200 in just under two weeks. I have been encouraging my clients to buy gold and silver now, even at these prices because it looks inevitable that the price of bullion is going to go considerably higher. The clients who asked me when gold was at $1200 “is it too high to buy now?” are now very thankful that they went in at that price. The same can be said today. It’s not too late to buy now. Central banks are buying more gold than ever. According to the World Gold Council, they purchased more than four times the amount this quarter compared to a year ago. That should be telling you something. They don’t invest in anything that they don’t think is going to increase in price.

The US economy is headed into an even deeper recession as companies like Bank of America, Sears and UPS continue to announce layoffs. In Europe, the ongoing debt crisis is pushing the markets into a downward spiral.

Morgan Stanley along with other analysts expressed their concern that the US and the 17 countries in the Euro were hovering close to a recession. In my view, they are already in recession and heading dangerously toward a world depression. Because of these concerns, gold will continue rising in price for the foreseeable future.

As I have been predicting, $2000 an ounce for gold is just around the corner. At some point, when there is real panic in the markets, the gold price could go parabolic and reach $5000 and more per ounce.

Silver broke through the $40 mark and saw an increase of 8.5% this week alone. And for silver, $50 is very close, with $100 being a very conservative estimate of the price it will reach in the not too distant future.

Many people ask me how they can invest in gold. If you live in a big city, check out your local bullion dealer. They buy and sell gold and silver coins. Go along and see how much they are charging above the spot price for gold. Depending where you live, you can expect to pay a premium of 3-7% above spot for your gold, and a little more than that for silver.

If you don’t find a local bullion dealer you feel comfortable with, or if you live in a small place, then check out various dealers online.

I am often asked about storage places such as GoldMoney and Bullion Vault. On the plus side, they are excellent for the liquidity they provide and you are able to trade 24/7 and have easy access to your funds should you require them. On the minus side, they can only continue to trade if the internet stays alive, and if we don’t have any nuclear disasters, and if the technology survives any major earth changes. Keep in mind that whenever you have anyone else store your gold, in the event of an emergency, you may not be able to reach them to sell your gold or to have them send it to you. There is always that risk when someone else stores your gold. However, these companies do have a place and as long as you are aware of the risks, then that might be an option for you.

If you are unable to store your metals yourself, have a trusted family member or friends store them for you, or consider storing them with a depository in the country in which you live and also somewhere outside of where you live. That way, you haven’t got all your eggs in one basket.

As I have being saying for the last five years, the price of gold and silver will go up considerably, and I feel strongly that this is still the case right now. Don’t miss out on this opportunity to be able to protect yourself. If you don’t have any precious metals, then do your research and get some. If you already have some, buy more.