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Banking Bail-Ins: Destroy the Depositors

Bail-ins are a very good thing. Burn the shareholders, and destroy the deposit savers...   SO the MONEY LENDERS didn't get thrown out of the temple again this Easter Week, writes Adrian Ash at BullionVault...   The Queen of England once more touched a few bag of silver coins...handing useless Maundy money to a small selection of her more aged subjects in an old ceremony...   And another, less ancient tradition was upheld by the European Parliament too.    Strasbourg's finest voted to confirm the €100,000 level of banking deposit insurance across the 18-nation Euro currency zone. But only that €100,000 limit. Above that, you're on your own.   So why the fuss at at cut-and-paste schlock-horror news site ZeroHedge...? "Bail-Ins Approved by EU Parliament," says a headline. "Deposits Over €100,000 Vulnerable. Coming Next in UK, US and Globally." Judging by some readers' comments, you'd think this was an evil plot by government to steal bank savers' money. Yet in truth, all bank accounts carry credit risk. Government meddling actually comes with the "deposit insurance" which the EU just confirmed.   The name gives it away. A bail-in is different from a bail-out. As the article says, it means that...instead of taxpayer money being used to rescue failed banks like in 2008..."the bank's owners and creditors will be first in line to absorb losses banks will incur, before outside sources of finance may be called upon."   Good. Excellent in fact. If a bank fails, burn the shareholders. Then destroy the creditors. It happens in every other field of business. It should happen to banks, too.    For too long, senior bank executives have relied on the promise of taxpayer rescue. So have bank creditors. Meaning you, me and everyone else with cash on deposit. It has made us lazy, and blind to risk.   When you put money into the bank, you are lending it. You don't own it anymore. So you are exposed to the bank failing. Or you should be. Yet if you hold up to €100,000 in a Eurozone bank, that money is guaranteed by government. US insurance is $250,000 and in the UK £85,000. Anything above that limit is not guaranteed. This is what the latest votes in Strasbourg confirm, as part of the much scarier "banking union" moves.    Forget the phrase "bail in". It's a new buzzword, and a silly one at that, to suggest banking failure might hurt people who aren't involved. Boo-hoo. Creditors are very involved. Money in the bank is exposed to the bank.   Fact is, you can either have price risk or credit risk. Yes, you can get one on top of the other (such as nominee brokerage accounts, structured investment products). But you can never escape them both. Make your choice, and know your risks.    Physical bullion, owned outright, carries no credit risk. This is why Bullionvault was set up. That's why you don't need or get "depositor insurance" on your gold or silver. Because you are an owner, not a depositor. So yes, you do get price risk alone when you own bullion. But we are not a bank (nor wish to be). So we must use the banking system to receive and return the cash you use to buy.   That money is on risk for the bank's solvency. The gold or silver you own isn't exposed to anyone. So if in doubt, buy bullion. Or withdraw excess funds back to your own bank account. Which you will of course have selected after thoroughly studying its risks.   Please also be sure to read this Help Page about how Bullionvault cares for unspent client money. Because the risks you take with your money are yours to know and understand. Relying on government to protect you...come what precisely what caused the banking bubble and crash.   It is also what will destroy very many savers and investors in the next crash, too. Because governments are now formally, and rightly, telling creditors they are on risk.

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Gold Prices Flat, "Consolidating" at 200-Day Average After Fed's Yellen Vows to Keep Rates Low

GOLD PRICES held tight around $1300 per ounce again Thursday in London, following what analysts called "a very quiet day" despite US Fed chief Janet Yellen stressing that Dollar interest rates won't be raised from zero any time soon.   "Traders are lightening positions prior to Easter," says ANZ Bank in a note.   "The comments from Yellen should have lifted gold prices," says analyst Robin Bhar at Societe Generale, "but arguably the Dollar hasn't weakened as much."   "Gold prices have been evolving within a massive flat range since last June," says a separate technical analysis from the French investment and London bullion bank.   "Short-term, gold prices should find support at $1295/90."   Yesterday saw "consolidation from Tuesday's large selloff" says SocGen's fellow London market-maker Scotia Mocatta in its technical analysis.   "The 200-day moving average for gold prices comes in around the 1300 area [and] seems to be supportive.   "Turning higher over the past month," says Scotia, the gold price's 200-day average "explains why the market has been getting comfortable with the bullish outlook."   Crude oil and base metals were also flat Thursday, while silver held near $19.60.   European stockmarkets reversed earlier losses, but US and UK government bonds ticked down.   Over in China, Shanghai gold prices ended little changed in Yuan terms, closing the day equal to London quotes in Dollar terms after a 7-week period of discounts.   Following China's sub-target GDP data this week, some rural banks saw Beijing cut the "required reserves" level of cash which they must hold back, aiming to boost lending to agricultural industries and forcing short-term interest rates sharply lower.   Gold bullion in China – the world's heaviest private consumer in 2013 – is more usually priced at a premium to London thanks to local demand vs. supply, plus import costs.   Shanghai's most active spot gold contract has now traded $3 per ounce below world prices on average since the start of March.    Here in London's bullion market today – closed for Easter from tonight until Tuesday – interest rates demanded by gold lenders reached new 8-month highs.   "Coupled with the expected tightening of US monetary policy," says today's new Gold Survey 2014 from Thomson Reuters GFMS, the market's leading consultancy, "an increased desire for gold [borrowing] may finally spark a more sustained upturn in leasing rates from their protracted period of ultra-low levels."

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Gold Trading Tight Around $1300 After China Extends "Surprising" Stop-Loss Drop, London Borrowing Costs Reach 8-Month High

GOLD TRADING in London's wholesale market was muted on Wednesday morning, failing to break more than 0.5% either side of $1300 per ounce while equities rose worldwide despite fresh military confrontations in eastern Ukraine.   Silver prices spiked to $19.80 per ounce but held nearly 2% down for the week so far, doubling the drop in gold.   Gold trading "had a very ugly day Tuesday," says a technical note from Canadian ScotiaBank's bullion division Scotia Mocatta.    "We have been stopped out of our bullish view, and have shifted to neutral."   "Surprising as it was," says US brokerage INTL FCStone of Tuesday's near-$40 plunge, "the sell-off in gold was likely attributable to heavy stop-loss liquidation," with "hectic" gold trading as the price fell through its 200-day moving average at $1300.   Falling some $15 per ounce "just in the span of a minute," says the note, gold's trading action was "indicative of stops being set off."   Playing catch-up with Tuesday's drop in New York futures, Shanghai prices today extended that fall to end the day equal to $1299 per ounce – a discount of $3.50 to London quotes this morning.   Gold trading was brisk however, with the Shanghai Gold Exchange seeing the strongest volume in its most active "spot" contract for almost 3 weeks.   Although China's retail sales grew sharply overall in March, rising 12.2% by value from the same month last year, sales of gold, silver and jewelry fell 6.1% new data showed today.   Forecasting a "year of consolidation" for China's gold demand in 2014 after the huge consumer response to 2013's gold price crash, a new report from market-development organization the World Gold Council said Tuesday that "Physical gold demand is likely to further growth over the medium term" as China's middle class swells from 300 to 500 million people by 2020.   Over-stocking by Chinese wholesalers is capping new demand, reckons Societe Generale analyst Robin Bhar, who tells Kitco News that "There is less metal being drawn out of US Comex warehouses and being exported to Asia, which had been particularly strong in 2013."   But with gold stockpiles in US Comex warehouses growing to new 10-month highs however, the cost of short-term gold loans in London rose Wednesday to new 8-month highs, suggesting tighter supply in the world's main wholesale market.   One-month GOFO rates – an incentive offered to would-be gold borrowers, who must pay storage and lose cash interest during the term of a loan – today went to minus 0.11% annualized.   That means London bullion lenders are asking the highest payment since mid-August, as the surge in 2013 Asian demand pulled gold out of UK storage.

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中国の金需要、今後 4 年間力強い伸びを持続 ワールド ゴールド カウンシルが予測

ワールド ゴールド カウンシ ルが本日発表した レポート『 中国の金市場: その歩みと 展望( China's gold market: progress and prospects)』は、中国の民間セクター金需要が現在の年間約 1,132 トンから 2017 年 には少なくとも 1,350 トンに達するだろうと予測しています*1。中国の金需要は 2013 年に記録的なレベルに 達し、中国は世界最大の金市場となりました。2014 年は小休止となるものの、その後はさらに継続的な成長 が続きそうだと同レポートは述べています。 同レポートは、中国で金市場の自由化が始まった 1990 年代後半以降に、中国を世界最大の金の生産・消費 国に押し上げた各種要因を分析しています。また需要の急増にもかかわらず、今後、経済の短期的な鈍化が あっても、...

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Weak China Data Sees Gold Prices Sink 2.7% on Anniversary of Worst Crash in 3 Decades

GOLD PRICES fell hard Tuesday lunchtime in London, dropping 2.7% on the 1st anniversary of the worst gold price crash in 30 years as new data from China showed a marked slowdown in money-supply growth.   15 April 2013 saw gold prices drop nearly 15% at one point, ending more than 9% lower at $1351 for the worst day since 1983 and the fifth sharpest loss since prices were floated in 1968.    April 2013's crash in gold prices meant "Chinese consumers [brought] forward jewelry and bar purchases," says a new report on China's gold demand from market-development organization the World Gold Council.   Despite forecasting 20% growth by 2017, "That may limit growth in demand in 2014," says the report, China's gold market: progress & prospects.   Investment bank Goldman Sachs – which called for a sharp drop in prices last April – last week repeated its call of $1050 by year-end.   A new Reuters survey Tuesday put the consensus gold price forecast amongst 28 analysts and consultants at $1,254 on average in the last three months of 2014.   Reversing all of last week's gains on Tuesday, gold prices had "found stiff resistance" Monday above $1330, says French investment and London bullion bank Societe Generale.   The metal's charts then "formed a daily bearish [pattern] and gold is poised for a further correction."   "The market stretched as far as $1331 before it capitulated and sold off," agrees technical analyst Karen Jones at Germany's Commerzbank.   "Near-term risk remains on the downside."   "Overall sentiment [in metals] is weak," says a note from Canada's RBC commodity team, quoted by Bloomberg today as nickel prices fell at the fastest pace since October, "because China's economy is still a worry."   "Compared to macro-economic indicators," China's official Xinhua news agency quotes head statistician Sheng Songcheng, commenting on the slowest money-supply growth in more than a decade at 12.1% annually, "the current M2 growth rate has stayed at normal levels.   "Liquidity conditions are still ample to support the development of the real economy."   Gold prices in Shanghai today fell 1.1%, down to a 3-session low in the Yuan but cutting the discount to London settlement to 60¢ per ounce.   Now at a discount for 7 weeks running, gold bullion in Shanghai typically trades at a premium to international quotes, hitting $50 per ounce and more above London prices on spring 2013's crash.   Shanghai equities ended Tuesday sharply lower, but European stock markets reversed earlier losses as New York opened.   The Euro currency fell with gold prices, dropping near 1-week lows to the Dollar.   New US data showed consumer-price inflation rising to 1.5% per year, in line with analyst forecasts.

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