Silver Dollar Values Prices Leap, Now Is The Time To Buy Gold & Silver, Learn From Cyprus

NEW YORK - March 27, 2013 - PRLog -- You are able to bet more than a few Cypriot bank account holders are paying much closer focus on gold now. Since the announcement that Cyprus was seeking to confiscate up to 10% of bank deposits, gold has risen by as much as $24/ounce on safe haven demand. In the end, gold is real wealth, and it's the only real asset that's not simultaneously another person's liability. Learn more >>  http://www.silverpricestoday.cc/KITCO-SILVER/

Central bankers, even in the West, know this too. As former Fed Chairman Alan Greenspan once said: "Gold may be the canary in the coal mine. It signals issues with respect to currency markets. Central banks should pay focus on it."

The Eurozone's debt crisis of 2012 has devastated Cyprus' banking system to the point where it now needs a bailout to the tune of 10 billion euros. Cypriot banks are teetering around the edge, thanks to overexposure to the ongoing economic crisis in Greece. The European Central Bank (ECB) has threatened to chop emergency lending assistance, and Nicosia isn't willing to liquidate the two large Cypriot banks in trouble since that may drag down the entire financial industry.

For Cyprus, finance is essential. According to Eurogroup president Jeroen Dijsselbloem, Cyprus' banking sector is more than five times its GDP. Further, Eurogroup predicted the island's public debt would reach 100% of GDP by 2020.

Cyprus' banks have been able to swell, thanks to an influx of cash from Russian oligarchs and banks. Some estimates for that amount of Russian money in Cyprus run as high as $30 billion. Based on Moody's Investors Services, adding in loans to Cyprus-registered corporations doubles Russia's contact with about $60 billion. So a proposed 10% tax on Cypriot accounts would effectively be a tax on Russian money. Gold Coins, Learn more >> http://www.silverpricestoday.cc/GOLD-COINS/

But that plan, hatched through the Europeans to raise $7.5 billion, was rejected by Cyprus' Parliament, throwing the bailout into doubt. For the time being, Europe has pledged unlimited liquidity to help keep banks afloat, so long like a deal is reached in short order.

Keep in mind, though, that the bailout of Cypriot banks is essentially a bailout of Russian depositors in those banks, not something the Europeans are particularly keen on. It is probably why they pushed so hard for that "one time" tax on those accounts, as opposed to a "regular" bailout of extended loans and lower interest payments like other deadbeat euro members have been getting. Besides contributing deposits, businesses, and a large number of expats, Russia also has a 2.5 billion euro loan to Cyprus. So clearly, Russia has lots of reasons to care about the future of Cyprus.

For the time being, Russia has declined to offer any extra help to stave off a potential banking crisis in Cyprus. My view is that they don't want to alienate Europe, because when the Europeans step away from Cyprus, an instantaneous crisis is more likely. Which would probably mean capital controls, as well as a reversion to the Cypriot pound as legal tender.

A newly- set exchange rate would force customers to take an immediate haircut. When the exchange rate was allowed to be set through the market, the Cypriot pound could be worth a fraction of the euro, and living standards in Cyprus would plummet. Russian customers would be left holding a near-empty bag.

Now Europe has given Cyprus an ultimatum: T hey must secure a contract with the European Union and International Monetary Fund in order to help keep receiving the low-interest loans that are floating their banks.

The Europeans have decided that Cypriot accounts, whether held by Cypriots, Russians, or other people for that matter, ought to be fair game. They may be calling it a tax or perhaps a "one off" levy, but those are simply other names for outright theft.

Faith in the fiat money system was already in a steep decline since 2007. Trust is wearing down. Europe wants to avoid a run on banks, but their desperate actions are encouraging just that.

It makes one wonder what people in other troubled economies, like Italy or Spain, should be thinking about the risks to their deposits. Accounts - private property - can now easily be confiscated by ordering a bank holiday and skimming right from the top. It's a lesson in the dangers of fiat money.

In the mean time, Russia's been quietly contributing to its official stash of gold reserves. The central bank recently became the world's top gold buyer, adding 570 metric tons in the last decade. Today, Russia's central bank holds 936.7 metric tons, a lot of gold, equal to 9.6% of national forex reserves. There's little question that Russian tycoons have been one of the recent wave of gold buyers.

Presented with Russia's central bank buying spree, it's entirely likely they've seen the snowballing risks underlying the Cyprus banking system. And also the gold buying by Russian oligarchs and central bankers alike is anticipated to be stepped up.

As Evgeny Fedorov, a lawmaker with Putin's United Russia Party, said last month, "The more gold a country has, the more sovereignty it will have should there be a cataclysm with the dollar, the euro, the pound, or other reserve currency." It may sound to me like gold is in fact the best reserve currency. It's just ironic the center of the former communist empire may be the country that "gets it."

While Cyprus struggles, it is simply another example of why now is the time to purchase gold and silver. Learn more >>  http://silverpricestoday.cc/KITCO-SILVER/