Cyprus was “fixed” overnight. The decision was made that 40% of deposits over 100,000 Euros would be lost (stolen) at the Bank of Cyprus and 100% lost (stolen) at Laiki bank. The decision was made by the Troika and the bankers. The Cypriot legislature has no say one way or the the other. So much for sovereignty. One can only wonder what Mr. Putin and the Russians will think of this as they have a “few” of these uninsured deposits that are being “lost.” Mind you these “Russian deposits” are not those of the working class. No, these deposits represent the “silent polonium” class. It will be quite interesting to watch what “happens” to the international banking class over the next weeks and months.
So, like the title implies, “nothing here to see, please move along” …which is what you may be seeing soon in Italy, Spain, Portugal and even France. Depositors holding balances above (and even below) the “insured” amounts may have been incentivized to move their monies around. Will they move 1 million Euro balances into 10 different banks? Will some of this “movement” have a little bit of leakage which finds its way into the precious metals held outside of the banking system? Which country is next? Which bank? How will the next bank be handled? Oh, and the “stress tests,” didn’t all of the Cypriot banks pass these with flying colors over the last 6 months? Questions, lots and lots of questions and only one answer… “please move along, nothing to see here.”
THE most important lesson that I hope people learn from Cyprus is just how fast something, anything, can happen. Two weeks ago Cyprus was not even mentioned in the news. 99.9% of CNBC employees could not even pinpoint it on a map (even with names printed on the map). I wanted to mention “speed” because as I’ve written before, in today’s computerized world things can change faster than even a floor trader can react in real time. You, sitting at home or in an office stand zero chance of moving fast enough or competing in any fashion with the “computers.”
Just look at what happened in Cyprus with no warning. Look at what happened across the board if you needed to buy shells for duck season or rounds for deer season. Ammo is basically gone… and this happened over a 30-60 day period of time based on fears that politicians would ban and confiscate arms. My point is this, if you are “waiting” to buy the dips in precious metals, what are you waiting for? A lower price? Really? When the day comes that you can no longer source or buy metals will it matter whether you paid $1,900 an ounce for gold or $250? Will it matter whether you paid $50 an ounce for silver or $4?
What WILL matter? What will matter is how many ounces you own and control; “price” will be meaningless. If you were hungry, really really hungry would it matter whether you paid 50 cents for a can of baked beans or $10? Or even $100? What will matter is whether you have them or not and whether there is enough to satisfy you and your family’s hunger. Please understand that the supply and demand numbers in the precious metals markets make no sense and do not add up any way. Sprott Group shows how for the first 3 months of the year the U.S. Mint has sold every single ounce of U.S. Silver production in Eagles alone. What about jewelry demand? Industrial demand? A shortage is already here, it has not shown up in “price” yet because COMEX sets the price. When the physical market finally sets the price there will be no physical to be had. Everywhere you go to search for ounces will tell you “nothing here, please move along!”