Eurozone Being Derailed By Cyprus Ultimatums, Time To Buy Gold For Safe Haven

NEW YORK - March 24, 2013 - PRLog -- Right after riots in the streets along with a run on local banks, Cypriot lawmakers voted down a important element of the European Central Bank's (ECB) bailout proposal that would have required the nation to impose a one-time 9.9% tax on bank deposits of more than 100,000 euros along with a 6.75% tax on bank deposits below that amount. I can comprehend why individuals took to the street - the "tax" was little more than organized robbery under the guise of maintaining that nation afloat. Learn more >> http://www.gold-and-silver-market.com/KITCO-SILVER/

Why should you care about what occurs in Cyprus? Cyprus isn't Las Vegas. What occurs in Cyprus can't possibly remain in Cyprus. The world's monetary markets are too interlinked. In the end, it's a move intended to help keep the euro afloat at any cost.

In this case, 3 banks control 60% of the country's 150 billion euros in total banking assets, at a time when Cypriot bank assets exceed 835% of the country's 2011 national earnings, according to the IMF.

These exact same 3 banks - Bank of Cyprus, Laiki Bank and Hellenic Bank -- lent heavily to other failed economies all through Europe like Greece, exactly where loans to the troubled Mediterranean nation all by itself amounted to 1.6x the whole Cypriot GDP. Now they need to locate 5.8 billion euros to bail the mess out. Eurozone politicians and bankers are anxious to have the globe think this can be a cautiously measured negotiation. In reality it is a move that reeks of desperation regardless of what they call it - a tax, a levy, or perhaps a bailout.

Banks are fiduciary institutions. They rely nearly completely on trust and self-confidence. If there's a breach of trust - for any purpose - the banks are cooked. People deposit cash in banks rather of stuffing it in their mattresses because they think that their cash will be safe there. As soon as they understand, or perhaps suspect, that the cash they place in the bank is anything but safe, they'll take whatever's left and run - and also the bank will collapse in spite of the "bailout." How high will Gold go? Learn more >>  http://www.gold-and-silver-market.com/GOLD-COINS/

Because the Cypriot banks are linked to investments and deposits all through Europe, what is taking place there highlights some thing I've talked about since this crisis started - the euro is really a "house of cards," and should one nation -- regardless of how little -- determine to leave the European Union, the whole shooting' match comes tumbling down.

Anxious to stop a run and total chaos, the government has ordered the banks to remain closed till Tuesday in the wake of the ECB's newest ultimatum. That is the date the EU has set for Cyprus to get its affairs in order and stop a monetary collapse -- to not mention a messy exit in the euro.

Now you'd believe they could just figure a way out of this mess, but that is very unlikely because this crisis is taking place at a time when socialist leanings are overwhelming the need for fiscal reform. There is a leadership vacuum across Europe (and in the United states of America) that is stopping politicians from telling individuals the truth -- that is that they're going to have to make difficult, unpopular choices to resolve this mess.

It is made far worse by the truth that central bankers are repeating errors which are nicely documented in the historical record, not the least of that is considering they are able to print more cash to resolve everybody's issues.

Experts anticipate the ECB and IMF to resist extra losses so they'll inject, print, inflate, bamboozle and con their way through increasingly inventive stimulus packages - the EU's ultimatum is really a smokescreen for the larger image and also the larger players. So do not sell prematurely. The last place you would like to be is around the sidelines if a deal is reached in the 11th hour.

If it is not, that is not necessarily a bad thing. A bit monetary honesty would do Europe great at this point in the scheme of issues. But completely make certain you have trailing stops in place as we head in to the weekend. That way you are able to harvest gainers and shield your capital in the exact same time if issues do get bumpy next week.

Regardless of what occurs come Monday, I anticipate renewed interest in gold...but following a short-term decline. This may catch a lot of individuals who're expecting an instant run by surprise. The important to this lull will be the false sense of relief, which will accompany any newly injected "liquidity", regardless of how convoluted any "solution" really is.

Keep in mind that absolutely nothing in the underlying markets has changed. Whether or not Cyprus is really a part of Europe or not has no bearing around the euro. It is a wreck now and it will likely be a wreck come Monday. Traders know this, that is why the truly large move right here will probably be to the U.S. dollar and, to a lesser degree, the Japanese yen. The former is because it is the best-looking horse in the glue factory, while the latter is merely because it is a force of habit for traders seeking to go "risk-off."

This favors U.S. equities in the moment, and is really a renewed chance to short the yen if it rallies. Japan nonetheless has the worst demographics on the planet, and longer term that is an unfavorable, not a positive. As for the euro, there truly are not a lot of reasons to purchase it. In reality, it would best to be a net seller. Analysts looking at this mess recommend buying gold now to protect your wealth. What do the experts have to say about gold and silver prices? Learn more >> http://gold-and-silver-market.com/KITCO-SILVER/