Chicago Gold and Silver Investing Fan Blog

France Prohibits Sending Currency, “Coins And Precious Metals” By Mail

Gold seek reports in an article that France is now prohibiting sending gold, silver, or precious metals by mail. This is just another way for a socialist regime like France to try to slow the tide of their citizens buying precious metals. They want people to use only government sanctioned notes as money. They do not approve of alternative forms of currency.

Can something like this happen in the Unied States? Of course it can. We have already seen government delve into Amazon and try to tax online transactions. We've seen an attack on privacy with the NSA having the right to snoop on anyone's email and phone records without a court order.

Next will be an attack on online and heck even in person sales of alternative currencies like precious metals.

The Cyprus Banking Crises in One Picture

Cyprus in One Picture

The Impending Cyprus Bank Run

Cyprus will open their banks tomorrow. I am predicting a run on their banks. Expect to see long lines of people at the bank withdrawing all of their money and hiding it on their own.

This is what happens when you have a tyranical government imposing their will on a populace that is unwilling. The run on banks will be a clear message to their government and to governments world wide that you cannot just go and steal money from it's citizens without their permission.

This bank run will spread to other countries like a contagion. Some will choose to ignore it. The smart ones will get their money out of teh government controlled banks before it is too late.

Cyprus Could Be the Snow Flake That Starts The Avalanche

All it takes is one snowflake in a tenuous mountainside to trigger an avalanche.

Cyprus could be the snowflake that starts a world wide run on banks and collapse the current fragile financial system.

Some people will blame Cyprus for agreeing to the crazy IMF terms. Some people will blame Germany for putting Cyprus against the wall and force them to make their decision. Some people will blame the Russians for using Cyprus as a tax haven.

It's not any of them. It is the powder keg that was created over the years.

As I right this, no one in mainstream America is even aware of the grave danger they are in. See, the United States is in an even bigger financial mess than Cyprus. One day - maybe much much sooner than anyone even thinks it could all blow up over here. One day Americans could wake up and see that their own governments have nationalized all banks and have confiscated- better yet stolen some of their wealth.

The United States government is already taking- no stealing - its citizens wealth. Maybe not as direct as the Cyprus government is doing. But they do it much more stealthily through currency devaluation, through interest rate manipulation, through various capital controls, through inflation, and more. The average American is not even remotely aware of the scam being perpetrated on them. The smart money is aware. The average middle class and average rich person has no clue.

One day a Cyprean type of event will happen here. When that happens there will be a scape goat. They could blame the conservatives, the Tea Party, the Republicans, the Democrats, the liberals, the Chinese, God, Wall Street greed, the Fed, George Soros, the banks, and/or a mutitude of other scape goats. But they cannot blame them, Americans must only look at themeselves, for only they are to blame because this is a situation that could have been prevented a long time ago. With courage, with strength, with conviction of doing the right thing.

Those who are smart, will take action before their money is confiscated and before their world collapses. The rest will have their money stolen and see their world collapse before their eyes and try to blame someone. Too late. A smart Cyprinian could have seen it all coming and got their money out of Euros and into something else of value. Now it is too late. Their money is gone and it won't be given back to them. The Russians will be very mad. They will not forget this. They will take corrective action and when they do some people will be even angrier.

 

Eurozone financial situation getting worse

Unemployment getting worse. Unemployment in Eurozone countries are now at 11.3%. That is the highest unemployment rate for Eurozone countries since the Eurozone started in 1999.

Government Debt getting worse.  As unemployment gets worse, people and businesses have less money to spend. As a result more people rely on government services. So government spending and government debt increases. Government debt to GDP is increasing for the Eurozone as a whole. In Greece, the ration is over 140%. In France it is at an unsustainable close to 120%.

So what will the ECB do to try to tackle this problem? Instead of focusing on growing the economy and collecting more tax revenue via a growing economy, the ECB will try to inflate their way out. They will print more money and thus further erode the confidence in the Euro.  Already, inflation is hitting the Eurozone. In 2009, the inflation rate was -0.7%. Now it is up to 2.2% annually.

Introducing....The Combibar

Swiss private mint refiner Valcambi has introduced a new product called the combibar. The size of a credit card, it can be made out of pure gold or pure silver. A gold bar is 50 grams and a silver bar is 100 grams. What makes it unique is that it can be broken up to upto 50 parts. Each part is the equivalent of 1 gram for a gold combibar and 2 grams for a silver bar.

The combibar is currently being sold in Eurpore and should be available in the United States in about a year.

For your information 50 grams of gold is the equivalent of 1.7637 ounces of gold. 100 grams of silver is the equivalent to 3.527 ounces of silver. At today's spot prices a gold combibar we be about $3,000, where as a silver combibar would cost about $120.

Detlev Schlichter

Famed Austrian economist Detlev Schlichter. If you want an Austrian economic, British and German perpective on the current monetary meltdown, you gotta read Schlichter.

The more I research, the more I am certain that this world is going to go through a monetary meltdown. Few have an expert understanding of our situation. One man that seems to get it is Detlev Schlichter.

Here is Schlichters biography from his website:

Detlev S. Schlichter is an Austrian School economist and author. His book Paper Money Collapse – The Folly of Elastic Money and the Coming Monetary Breakdown was published by John Wiley & Sons in September 2011. Paper Money Collapse was named winner of the getAbstract 2012 International Book Award.

Mr. Schlichter had a 19-year career in international financial markets, predominantly in investment management. He worked at J.P. Morgan & Co. (1990-1998), Merrill Lynch Investment Managers (1998-2001), and Western Asset Management Co. (2001-2009). During his career Mr. Schlichter has overseen billions in assets under management for institutional clients from around the world. He left the industry in 2009 to focus exclusively on his first book, Paper Money Collapse.

Mr. Schlichter has appeared as a commentator on television and radio (Sky News, Reuters TV, Russia Today, BBC Radio 4 Analysis and BBC Radio 4′s Start The Week) and his editorials have been published by The Wall Street Journal, City A.M., TheStreet.com and mises.org. He is a senior fellow at the Cobden Centre, London, a free-market think tank devoted to issues of money and banking.

Mr. Schlichter holds a degree in economics (Diplom-Ökonom) from Ruhr-Universität Bochum, Germany. He lives with his family in London.

Dutch Want Their Gold

There are some Dutch that want their gold, and I'm not talking gold medals.

GATA reports that:

Almost 300 "concerned Netherlands citizens" have joined the German initiative for insight about the gold reserves.

In a petition the citizens committee demands "full openness on the quantity and storage location of the Netherlands' physical gold, and on the extent and nature of the gold claims."

In Germany a lot of uneasiness has risen about the quantity, value, and quality of the gold reserves, which have not been audited in many years at various storage locations. Led by the tabloid newspaper Bild, German news media are wondering whether the 3.4-million kilograms of ingots are really there (valued at about E150 billion).

The False Free Market

Mario Draghi, European Central Bank President

Many people feel that we live in a free market. But what is a free market? Whenever government intervenes in the market, it hampers the free market. Free market economist Adam Smith said this about government's role:

"To protect its people against foreign invasion; to protect its people from one another; and to construct certain public works such as roads and infrastructure for which private individuals would not reap sufficient benefit to justify the cost."

When you look at contemporary governments, they have definitely swayed from Adam Smith.

European Union countries are in a financial mess. They are simply spending much more than they are taking it in. In a free market and I consider governments just one organization in a market, any entity that can't pay it's bills will go bankrupt or default on its bills.

However, the European Central Bank, led by President Mario Draghi feels they have to intervene. Instead of letting the free market take its course and allowing EU countries (Greece, Portugal, etc.) default, they are interfering.

One way of doing this is buying their debts. See, when a sovereign country needs money they issue government bonds. A bond is simply a way for a country to raise money. The problem is that for a country like Greece, the perception is that they are a greater risk to default on their bonds than other bonds. So to alleviate this concern in a free market bond buyers expect a higher interest rate to make up for the perceived risk. This is where the ECB comes in, per a Wealth Cycles article:

"In early September the European Central Bank (ECB) announced another program of buying up bonds issued by Eurozone nations in the secondary, or retail, market. The program, known as Overt (as opposed to covert) Market Operations, is said to be aimed at lowering the cost of borrowing for struggling Eurozone nations, several of which are buried in debt and declining economies. Of course history shows that interest rates rose in the most ironic of unintended consequences the last two times this was tried in Europe. The ECB’s intervention comes with strings; in order for it to buy a nation’s debt, the nation’s government must agree to the demands of EU leaders, implementing tax rate hikes, and other fake austerity programs."

The ECB has temporarily bailed out troubled EU countries that need money. By buying their bonds dubbed as Overt Market Operations, the EU is basically printing money to these EU countries that have overspent. As a result, these countries are now even worse in debt. Not only that but the EU has expanded the money supply and will probably cause long term inflation.

This bond buying by the ECB is nothing new. In the United States the Federal Reserve has been buying US Treasury bonds and other ot it's own government bonds for years.

Draghi justifies their government bond buying by saying:

Investors, he told the Bundestag, are “charging interest rates to countries they perceived to be the most vulnerable that [go] beyond levels warranted by economic fundamentals and justifiable risk premia.” This fear, he said, is “unfounded.” The market is wrong.

In other words Draghi is blaming the free market. That is what is wrong with most heads of central banks, they hate the free market. They want government intervention.

To me, however this is part of a bigger problem. In most countries the people vote politicians in who advocate this type of government intervention. In Europe, in America, in Japan the results are the same. The people keep voting government officials who want the government to "do something." What they don't realize is that the more governments "do something" the worse the problem becomes.