Jim Sinclair writes:
Reports on Cyprus are more the imagination of the reporters
I believe Cyprus is the defining moment whereby the physical market for gold overtakes the paper market for gold as the arbiter of price. When that occurred in 1979 the price of gold began its move to seek its maximum valuation.
Every article written on Cyprus carries the statement of huge percentages to be lost by depositors carefully using the words may, could, or some similar disclaimer. The published statement by the Dutch Minister of Finance who is captain of this initiative was that there would be no particulars until mid April. Simply put, the official EU statement set out broad goals without any specifics. This means that nothing has yet happened in Cyprus to a major deposit holder other than their inability now to access whatever funds they have left in their accounts.
Lets look at how a bank fails. We need to remember that this is a tax haven. Normally in a tax haven the depositors are hostages as they are usually unlikely to make a public legal claim for their secret funds. Management in a tax haven historically feel they had more leeway in how they might conduct themselves compared to a regulated entity in the USA, EU, GB, Switzerland or elsewhere. Deposits are looked at as the means for making banks money in many dicier ways than generally accepted. The entire worldwide banking system from 1991 to 2009 gambled in OTC derivatives as well as every market everywhere with disastrous results industry wide. It is reasonable to assume that the banks in Cyprus, like other banks elsewhere, lost their capital and beyond. That means the accounts held above the insurance level have already been significantly reduced by the losses the banks took in all areas of their business. The bank statements to their depositors have been cartoons. Up until now the bank rescues have made the depositors ...