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.