Financial Crisis: Lessons from Cyprus Relevant for Everyone

Although officially “solved”, the Cyprus crisis is of significance to investors, savers and actually every private household in many countries. Seen as a “small scale” model scenario for a “real” crisis in the euro or, in fact, any paper currency worldwide, the handling of the Cyprus crisis offered very interesting reading and insight into how bureaucrats handle — or intend to handle in the future — any kind of lack-of-trust problem in the economy.

Said former German finance minister Wolfgang Schäuble: “Touching personal savings always is a very sensitive area, and we need to be very careful when doing so. In order to prevent a bank run, this should always be undertaken over a weekend.” He went on to demand procedures and policies for enacting “special rules” allowing to push through currency controls and ceasing of assets between Fridays and Mondays so there would be “no further need for extended bank holidays” as seen in Cyprus in March.

With this kind of thinking exposed, it is obvious what will happen in many additional places beyond Cyprus if there is any problem — which in light of the publicly known financial state of many countries, including core-European economies and the U. S., is not too far fetched at all.

U. K. Independence Party leader Nigel Farage, MEP, who due to his role in Brussels has significant additional insight into the inner workings of that bureaucracy and those bureaucrats’ irresponsible way of thinking, has already warned everyone having any exposure to the PIIG countries and even the rest of the EMU area to “get out your money while you can”.

The question to be answered, then, would be where to move those funds to. With all paper currencies effectively in the line of fire in the event of a euro, let alone dollar, collapse, there is little use even considering classical safe-heaven investments such as U. S. bonds (of all investments!), cash U. S. dollars themselves, or even Swiss francs and similar. The obvious answer would be moving into tangible assets like real estate or precious metals (the latter also being suitable for smaller quantities than your average minimum property price). Also, some “alternative” investments might be suitable, particularly if they offer regular returns (cash flow) and not just a chance of capital appreciation (which may or may not happen at some uncertain point in the future).

When there is nothing to be found offering such return, the point for “dumb” precious metals just sitting in one’s vault is even stronger: for precious metals offer the safest protection against economic turmoil even if they do not usually provide cash flow like dividends.

The Right Kind of Mix: What True Diversification Should Be Like

Diversification always needs to be across different Asset Classes. Only buying stocks from different industry sectors is usually considered “good diversification” these days — but actually is not diversification at all. (All are in the same asset class, namely stocks, a paper investment.)

Finally, some people appear to awake to more prudent measures. In light of Bitcoin and other Crypto coins, which may well be an emerging new asset class of their own, there is an easy rule of thumb, “Bitcoin for Transactions, Phyzz for Storing Value/Asset Protection”!

Actually, I would even go A BIT (pun intended), as in a few percent, more in favor of Crypto — even for “storing value” although that’s not really what Crypto coins are particularly good at (relying on external factors for STAYING valuable, that is — even if we expect, or hope, for electricity and computing to ALWAYS be ubiquitously available)…

The “mix”, from an Asset Management (or Protection) point of view is, therefore, a matter of personal choice. We need to update Swiss bankers’ 33-33-33 diversification advice of the 1980s to also include today’s “new asset class” though.

Retirements to Be Seized by EU and Other Countries

Just as savers in Cyprus have been fleeced by their government a few years back, and made to pay for the incapability and mistakes by bureaucrats and economic mis-allocation beyond the control the individual. Even though, it is individuals throughout the country who were footing the bill.

Cyprus is seen as a “model” for “solving” crises like that. And crises there are. Not only throughout all of Europe — including “rich” countries in the north and Britain having their very own demographic train wrecks coming up — but also in the U. S., Russia, and many other parts of the world. Ageing populations are not the problem, but limitless spending and business-as-usual in light of well-known facts while ignoring them is. Politicians want to get or keep their jobs by making even more outrageous promises while not caring about what happens when their terms end. Politicians are the ones to blame, not senior citizens or other recipients in systems that were designed by politicians (and not the elderly).

One of the politicians formerly responsible, German finance minister Wolfgang Schaeuble, even went as far as openly saying that Cyprus-style “bank holidays” needed to be scheduled on weekends to give bureaucrats a head start of two additional days, thereby openly admitting that “bail-ins” like in Cyprus will happen elsewhere.

Russia confiscated pension plans to convert funds to government bonds of dubious value only two months ago.

In the U. S., dictator Obama made it clear during his latest State-of-the-Union address in January that he always does what he wants without regard for any rules, other people or the constitution. He added that if he’d think it fit to add yet another Obamacare-style program he would do so by presidential decree and without even bothering to ask congress or follow some similarly “bothersome” constitutional rules. He also has a track record to not care about the overall economic consequences of his actions either.

The ongoing discussion about retirement funds, the alleged safety of pension plans, as well as recent events in the banking as well as retirement sectors themselves make it more than clear that confiscation of life savings is the new name of the game — be it in pension funds, plundering of savings, or other seizure of valuables such as real estate or similar.

Surprisingly, the game is still on, and nothing has really (visibly) blown up yet. Even the SBV and Credit-Suisse pre-quakes have been swepped under the carpet (so far). It’s only a matter of time, but it will happen sooner or later.

In light of these developments, it is not only obvious that “Savers Are Losers” but that everyone needs to re-think all pecuniary and financial matters before greedy governments are taking it all.

Why Amazon Might Be Dangerous to Your Health

Amazon.com has been all the rage for many years. Notorious for burning through investor money and venture capital for a period of over ten years, Amazon.com dominates most every consumer market there is, and it has increasingly established itself as The Top Address for online shopping.

That this has been achieved largely by killing off any kind of “competition” — and also at a high cost to Main Street, to the overall employment situation, and to small business in general — is not meant to be a matter of concern in this article. Though regrettable, it could also be argued that this is “a normal development” in the market (at least, and unlike Obama’s “achievements” through TARP and all the QE-s, it has been done without government money or similar subsidies) and it even comes with some limited amount of advantages for average buyers: the not-to-be-underestimated convenience of shopping from home and saving the time and gas expense for a trip to the local mall or garden center. Killing off only slightly-frequented but still area-consuming unsuccessful and unprofitable branches of certain big-box stores may also seem advantageous both from an efficiency and environmental point of view. Let us some day re-forest these extra acres and make our urban and even rural surroundings a bit greener again!

Still, there are huge drawbacks even for the supposedly better-off buyer when it comes to using Amazon.com.

In an attempt to grow their business even further, Amazon.com has discovered third-party sales and that opening their platform to small and large outsiders means more money for Amazon.com. While this is a good thing from a selection point of view and combines lots of eBay-style attractions with hassle-free Amazon.com fulfillment, it also means eBay-style dishonesty and all sorts of scams have now long entered the apparently controlled Amazon.com environment.

Just as eBay used to be notorious for stolen goods or scrap of no value hyped up and presented as the latest must-have at some “bargain price”, Amazon.com’s marketplace is also heavily contaminated with forgeries, low-quality copies and pirated brand items of all sorts.

At least eBay has improved measurably over the last years, and the platform can be seen as some sort of a useful product finder for the internet again.

Amazon.com cannot, or does not want to, do anything to effectively police the situation in order to protect their unsuspecting customers. This is particularly despicable when it comes to food, nutritional, and general health items that can pose significant dangers of bodily harm to victims of these less-than-wonderful “marketplace” sellers. A court case is now pending in the U. S. where certified organic foods (originally) meticulously checked for heavy-metal contamination and other toxins and then sold under a trusted label (if test passed and if authentic), have been commercially re-produced by a New Jersey pirate outfit and are sold via Amazon Marketplace under a forged label of that widely-respected organic brand. The pirated items are diluted down using cheap glucose syrup fillers instead of the actual wild berries intended and paid for by the customer; or they are made of cheap imported raw materials from China, highly contaminated with cadmium and other heavy metals, instead of the laboratory-checked ones the buyer is willing to pay extra for.

As Amazon.com, obviously keen to not touch their commission-generating business model, stipulates that these forged items are not illegal by themselves (because there are, curiously, no established USDA or FDA limits for heavy metals in those particular types of food indeed), it is apparent that Amazon.com does not really care about item quality the way any good merchant should.

There are also  other examples in different areas of the Marketplace platform where it has become equally and painfully clear that Amazon.com does not care about what you and I might take for granted, but only look at their self-interest and revenue stream instead.

Therefore, Amazon.com should not even be considered for sourcing certain goods, particularly “important” ones or something you are going to put in your body, and that the company might well be in the process of ruining their own revenue model after all, albeit in a different way.

This all means that it still pays to not blindly click through Amazon.com for “other items” after ordering that book or computer parts, but use a trusted and proven smaller vendor instead.

The Regular Sunday Read: Friedman, Why Government Is the Problem

In our section where we recommend The Regular Sunday Reads that we come across, we showcase some essential reading for everyone who is Fed Up with the Stupid News.

Today we cover a book by Austrian School of Economics co-founder Milton Freedman. The book can be freely accessed on Sribd. Enjoy and Continue a Great Weekend with a Great Read!

Why Government Is the Problem by Milton Friedman by Hoover Institution

Surfing the Economic Cycles

The precious metals bull market that started around 2000 is still in full swing. Despite a few temporary setbacks which, on closer scrutiny, were all caused by some sort of manipulation (either central bank and cartel intervention or surprise increases or decreases in Comex margin requirements) the overall upward trend continues to be intact. There is a lot more to come in precious metals price increases, both nominal and real. The unsustainable levels of government debt around the world have not decreased a tat and Keynesian world improvers only have one set of tools (or, to borrow from Mr Bernanke over at the Fed, a “technology”), called the printing press. Central planners have no other way than using it to put off a full-blown economic collapse for an additional few years. Even if they do, and even if they succeed, it means just more “kicking the can down the road” and some sort of major correction still needs to come. Until it does, a continued or, in a not-so-good scenario, even abrupt price increase in gold and silver is only natural.

Economic history shows that throughout the millennia the markets have always sought equilibrium (for this is what markets do). With respect to government debt and money supply, this equilibrium would need to be between money supply and real assets as represented by paper currencies on one hand and precious metals (or similarly durable, storable, divisible and fungible assets of any kind — though historically there are few of those).

It is therefore expected, that precious metals will have to have a value equivalent to all other valuables in the market, namely paper currencies, stocks, bonds, derivatives etc. As the latter do not have any intrinsic value and are only worth what the market thinks the should be worth on a sunny day, these can significantly fall in value while assets with intrinsic value just continue on having that intrinsic value. The most likely and easy-to-understand scenario, therefore, would be some sort of zeroing-in between a major stock index and the price of gold. Historically, this is exactly what has happened every time since there are useful data on stocks available (which is back to roughly the 1850s and, thus, includes all the major economic crises during the last century from the 1920s to 1980 on an international and beyond on a more local level).

To get an idea of how long the current precious metals bull market is bound to run, it may be advisable to look at the DJIA and gold per ounce in USD to be equivalent. While there are other factors to be used as a filter to yield a more precise result, current market numbers show that there is still a long way to go before numbers are at that turning point. Holding on to ones precious metals up to that point will provide the best cover against losses from paper currency devaluation and a very good starting point for moving in to the next asset class once its time has come.

Bitcoin Facilitating a New-New Economy

As the European banking and currency crisis unfolds, Bitcoin and the other emerging digital currencies have become a refuge for people fleeing from the euro and striving to protect their assets and savings from confiscation.

Many analysts believe that Bitcoin, which facilitates unmediated fund transfers between individuals, poses a potential threat to conventional banking. Bitcoin and other Crypto coins are certainly exposing the weakness of the US dollar as the world’s incumbent reserve currency, as well as all other similarly stricken paper currencies.

“Faster and easier than One-Click Buying on Amazon.com”, but actually for unlimited amounts of money.

Watch the following explanatory video for details about how — and why — Crypto currencies function:

Why Bitcoin, Other Crypto Coins Have Value

“Where is the value of Bitcoin coming from, actually…?”

Pretty simple: Bitcoin has evolved into something that a lot of people want — like, or even more so than, a dollar or a yen — and Bitcoin is in limited supply due to the complex proof-of-work requirements underlying Bitcoin. This means, that even tough the system continues to crank out “coins”, this will stop when it reaches 21 million.

The underlying idea of Bitcoin was to create a currency whose value, unlike that of the dollar, could not be watered down by some central authority like the Federal Reserve.

When all 21 million “coins” are issued and the system quits making new money, the value of each Bitcoin will necessarily rise further as demand rises.

Along the way, there is currently very high and sometimes extreme volatility and, always will be some degree of price volatility — and this is where speculative Bitcoin traders can make a profit (or loss).

Crypto coins will settle and cease being overly volatile once common uses bot online and in point-of-sale transactions become more widespread than today. That is exactly what our organisation is supporting by publishing information on merchants accepting “normal” Bitcoin, Litecoin, and other crypto currency payments.

A Single Bitcoin is now sometimes worth as much as a full 1 oz of gold. That is not to say that Bitcoin is a proper long-term “store of value”. As that is the very monetary function Bitcoin is lacking, the prudent strategy would be to use Bitcoin for transactions (very efficient and low cost) but gold and silver for asset protection (tested and proven throughout all of history, commonly known intrinsic value, very secure).

If you are looking for highly aggressive and potentially very profitable trading, this is your time to get aboard the Bitcoin express — also remember that high profit opportunity comes with equally high risk of losses (so always remember to invest risk capital only, i e capital you can afford to lose).

With its long-term upward trend and its extreme volatility Bitcoin may in many ways be a perfect currency for traders, but we’d rather see an era of less volatility enhancing usability and suitability of (all) crypto currencies for transactions online and off. This will likely be brought about as acceptance of crypto currencies increases and the user base for every-day transactions expands to outweigh their mostly speculative uses by traders.

Gold Bars Collection at the Bank of England Museum

The International Gold Bars Collection is at the Bank of England Museum from 19 February to 14 May 1998. The article below outlines basics of exhibits and general precious metals information for well-versed investors. More related information can be found in the Gold and Silver Bullion & Coin Investing Guide available here as an audiobook edition.

Bar Types, Weights and Purities — Cast and Minted

Most gold bars are classified into two ‘types’, depending on their method of manufacture: cast and minted. Cast bars are those made by the pouring of molten gold into a mould of specified dimensions. Markings are then applied manually or by a press. Minted bars are made from gold blanks that have been stamped out to the required dimensions from a flat strip of gold. Markings are normally applied by minting presses (as in the case of gold coins).

Bar Weights, Precious Metals Denominations

Gold bars can be denominated in different units of weight to accommodate the preferences of different geographical regions:

* Grammes – International
* Ounces – Mainly English-speaking countries: USA, UK and Australia
* Tolas – Mainly India, Pakistan, Middle East, Singapore
* Taels – Mainly Chinese-speaking countries: Hong Kong, Taiwan, China
* Bahts – Thailand
* Chi – Vietnam
* Dons – Korea

Gold Weight Conversion Table

Grammes Troy Ounces
100 g – 3.2151 oz
1 oz 31.1035 g –
10 tola 116.638 g 3.75 oz
5 tael 187.145 g 6.017 oz
10 baht 152.44 g 4.901 oz
5 chi 18.750 g 0.603 oz
10 don 37.500 g 1.206 oz

Cast Bar Weights: Grammes and Ounces

Twenty-seven internationally accredited manufacturers produce small cast bars in grammes (500 g or less) and ounces (20 oz or less). In grammes, 10 weights are available, from 500 g to 10 g. In ounces, 7 weights are available, from 20 oz to � oz. The smallest cast bar in grammes weighs 10 g, first made in Brazil by Degussa (since 1985) as well as subsequently by Ourinvest and CRM.

The most popular small cast bars in Europe, Brazil and Japan are 500 g, 250 g and 100 g bars. Ounce bars are preferred in English-speaking countries: USA, UK and Australia.

The smallest cast bar in ounces is the � oz ‘button’ bar made by the Perth Mint (Australia) since 1976.

Standard Minted Bars

The manufacture of minted bars worldwide is dominated by 4 accredited manufacturers in Switzerland, providing around 35% of all minted bar types available.

* Argor-Heraeus – Subsidiary of Union Bank of Switzerland
* Metalor – Subsidiary of Swiss Bank Corporation
* Valcambi – Subsidiary of Credit Suisse
* Pamp SA

The three Swiss manufacturers, which are subsidiaries of banks, normally issue their bars internationally with the brand name of the bank.

Since 1974, an innovation of Credit Suisse, many minted bars have a plain decorative design (incorporating the name of the issuer) on the reverse side of the bar. An example of this is displayed in the Exhibition.

Minted Bar Weights: Grammes and Ounces

Minted bars are a modern phenomenon. Among accredited refiners worldwide, Argor-Heraeus (Switzerland) is believed to have been the first to issue a range of minted bars, in 1952. Now, 23 internationally accredited manufacturers produce minted bars in grammes or ounces.

In grammes, 16 weights are available, ranging from 500 g to 0.3 g. In ounces, 8 weights are available, from 20 oz to 1/10 oz. The Exhibition displays the world’s largest minted bars: the 20 oz and 500 g which are manufactured by Johnson Matthey (Canada).

Smallest Minted Bars

Tanaka (Japan) has manufactured the world’s smallest minted bars, mainly for the jewellery industry since 1990. They weigh only 0.5 g and 0.3 g. 1 g minted bars, first issued by Credit Suisse (Switzerland) in 1980, are manufactured by 12 accredited manufacturers worldwide, including Degussa and Heraeus.

Bar Purities

All bars record the assayed purity of the gold content, expressed in units per 100, 1000 or 10000.

Although there is an international trend to 99.99% gold bars, standard bars still vary among countries. For example:

* Dubai – 99.9%
* Iran – 99.5%
* Hong Kong – 99%
* Thailand – 96.5%

Large 400 oz (12.5 kg) ‘London Good Delivery’ bars, held by central banks, normally have a minimum purity of 99.5%.

(Source of gold bar information and photographs: “The Industry Catalogue of Gold Bars Worldwide” and Gold and Silver Bullion & Coin Investing Guide; please note that the link is to its audiobook edition).

The Right Tools for These Unusual Markets

5x-leveraged long and short, called "Bull" or "Bear" coins
Bull- and Bear-market ups and downs illustrated. Image (c) 2022 ffWeb. All rights reserved.

To trade Crypto coin calls or puts, Gate.io is a great exchange offering 5x long and short positions along with many other trading choices. Of course, it’s FREE to sign up for a trading account there. Wondering what to do in falling Crypto markets? Looking for smart strategies to make the best of a pretty bad situation? Then read this post and discover pro trader methods! In this article, you will discover the tools you need for the type of free-falling markets we have been witnessing in Crypto coins for multi-months a little while ago.

Tools to Apply to Any Market Situation

Find the right tools for any market, good or very bad ones! In this article, you will be introduced to and find some explanations about the tools and strategies you need in order to prepare and turn big profits on the back of the breakdown we’ve been experiencing in bitcoins across the board. No matter if it gets worse, or how nasty it’s going to be specifically, here’s how you can turn the tables on markets “doing this to you” right now! There are “Tools of the Trader” that are meant to be used specifically in markets like this! It’s not simply “buy low, sell high” or “buy now and wait for better times” but something more refined (and much more effective).

Call and Put Options for Crypto Markets

To do the same on Bitcoin as an underlying asset, you can use Crypto Long-Instruments and Short-Instruments. These are similar to Calls and Puts as we know them in other markets. Here they are structured as “perpetual leveraged positions” in a Crypto asset, i e a specific coin such as Bitcoin, Ether, Litecoin, Dogecoin, and many more. To see what this looks likein real life, use this chart and link to register for a trading account on Gate.io. Again, tt’s FREE to sign up.

If you like this post and want to stay in the loop on available “Tools of the Trader” and strategies, then please subscribe on this website in order to be notified of news and updates like this one WHEN the markets change and WHEN they’re needed.

Disclaimer: This article is for general informational purposes only, as are all articles and posts on this website. None of the information in this or our other publications or articles on this site is financial advice. Content authors do not even know your individual situation and, therefore, cannot and do not offer such financial advice here.

Opinions expressed in these articles and posts  are observations, thoughts, and analyses of the article or post author and opinions derived from them. Do not rely on them or any other content of our videos for your own trades or investments; do your own due diligence and/or seek any necessary financial advice from licensed professionals before investing your money.

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