Has New Zealand Been a “Test Case” for Depositor Haircut Scheme?

depositor-haircut

 

Gold Survival Gold Article Updates:

April 2, 2013

This Week:

  • Has New Zealand Been a “Test Case” for Depositor Haircut Scheme?
  • Finally, More Reporting on RBNZ OBR from the NZ Mainstream Press
  • More on RBNZ Looking to Increase Banks Capital Ratios


Overnight gold and silver took a shellacking. Gold dropped down into the US$1570 region and silver down into the low $27 range.

A stronger kiwi dollar pushed both metals even lower in NZ dollar terms. Gold is now almost as low as it was back in mid February, sitting at NZ$1876 and towards the bottom of the downwards trend channel it has been in for the past year.

NZD Gold Chart


Meanwhile silver has fallen even further in percentage terms and now sits around the same level as the lows it made in July of last year at around NZ$32.50 per oz.

NZD Silver Chart

So take your pick of either metals – they’re both at very cheap levels compared to the past 18 months or so. Could they go lower? Of course, but these areas have been good for taking a position in the past.


Has New Zealand Been a “Test Case” for Bank Depositor Haircut Scheme?

Perhaps Jim Sinclair is right with his recent call that the central planners are aiming to scare people out of banks in a bid to increase the velocity of money and get the global economy moving again.

At the end of last week we exchanged emails with a friend after he had forwarded on a piece from Anglo Far East – entitled “Inside Source Confirms Wealth Confiscation Coming to a Bank Near You”

This piece commented on the RBNZ Open Bank Resolution (OBR) plans and talked of an “Inside source” –  a programmer at a major NZ bank.  In reply to this email we answered only half jokingly:

“I see NZ got a mention by Jim Sinclair on KWNs too a few days ago.  Wonder if we could be the next “test case”. Cyprus has pop. 1 million we have 4 million. 

Jims latest today is that this was designed to scare people into removing funds from banks to crank up the velocity of money. He sure has been vocal lately.

Enjoy your Easter break too. At least we know about this weekends 2 “bank holidays”. Seems we could get an unexpected one down the line sometime!”

Somewhat spookily no sooner had we hit send when an email from Jim Sinclair’s JSMineset arrived outlining how:

“The official 2013 Canadian budget contains an explicit provision that Canada will pursue the bail-in model for systemically important banks for future bank failures!”

Titled ECONOMIC ACTION PLAN 2013 

From Plan 2013 Page 145: (pg 155 of pdf)

The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.

This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants…

This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are “too big to fail”. 

Click here to read the full report… 

  

So Canada looks to be following our lead now too. When I forwarded Jim Sinclair’s email on, our friend replied (also perhaps only half jokingly):

“I’ve been thinking… Cyprus is 1m people, NZ is 4m, Canada is 35m.  So that’s quite a jump, from NZ to Canada.  Surely, Australia is in play as well (22m)…  Hummm… something else that’s interesting here: all 4 countries are mostly Christian and this is the long Easter weekend coming…  Maybe they all flick the switch this weekend, eh?!  Who needs a bank holiday when you already have a long Easter weekend!”

Well nothing exciting happened over the long weekend in terms of the banks but since then there have also been other articles mentioning NZ leading the way and now possibly followed by the USA and UK. The article linked below discusses a joint FDIC (US Federal Deposit Insurance Corp) and BoE (Bank of England) report that also looks at the “bail in” or “haircut” model to recapitalise failed banks.

The Confiscation Scheme Planned for US and UK Depositors

Similar plans have been discussed in Spain recently also. So given the RBNZ has been discussing their OBR plans for a couple of years now without any backlash or concern from the public, the argument that we have been a “test case” might well stack up? We haven’t kicked up much of a fuss so why not roll it out elsewhere too?

Therefore Sinclair’s call that the Central Planners are trying to scare us into getting money moving into the economy might well stack up too.


At Last, More Reporting on RBNZ OBR from the NZ Mainstream Press

It was nice to see a bit more reporting in the past week on the Reserve Bank of New Zealand’s Open Bank Resolution (OBR). Here’s a few pieces we came across over the Easter Break with coverage on the OBR:

Rod Oram makes a good point in this piece with the fact that once a bank has been shut down and funds frozen, any new funds that are deposited will be back stopped by the government. So this in itself could cause a flow of funds (AKA bank run) from other banks (which have no government guarantee) into the failed but now backstopped bank. Definitely worth reading…

Opinion – Rod Oram: Reserve Bank’s depositor farce Maintaining the confidence of depositors is the paramount priority in bank rescues. Governments can easily stump up new bank capital. But if people won’t lend their money to the banks then the financial system and economy collapse… Read more 

Financial Advisor Martin Hawes make the point that no investment is 100% safe. He does mention gold, but only in passing (we recall reading somewhere a while ago that he did have a very small percentage of his own wealth in gold as a hedge against collapse). But he fails to say physical gold (and silver) in your possession are the only assets where you don’t rely upon a third party remaining solvent to get your money back. An important difference to every other diversified asset he discusses. And in this diversification he doesn’t mention gold either.

Opinion – Martin Hawes: The myth of the safe investment I have watched the Cyprus story with more than a little interest. A banking problem, with the solution being that depositors will take a haircut (that is, have a percentage of their deposits expropriated)… Read more

More on RBNZ Looking to Increase Banks Capital Ratios

We mentioned last week how the RBNZ is looking at measures to control how much banks lend to those with little or no deposit when buying residential property. Bernard Hickey commented over the weekend to get in while you can and it seems people are. The bankers have done well to convince us to borrow ever greater amounts. 20-25 year mortgages used to be the norm, now 30 is pretty common plus “A third of all new loans are for loan-to-value ratios of more than 80 per cent – double what it was a year ago.” …

Opinion – Bernard Hickey: Borrow now while stocks last and the price is right. In the past couple of years, borrowers and bankers haven’t thought of money as being in short supply… Read more

Interestingly we read some comments last week that property investor Olly Newland reckoned to keep an eye out for “some form of ‘disincentive’ brought in by the government, and we should be ready for that”. So perhaps the Loan to Value Ratio controls is it?


This Weeks Articles

We have 3 new articles posted on the site this week. Particularly interesting is one that looks at precious metals news items from the press in the mid 1970’s (when the metals were having a prolonged breather in the last bull market) and compares it to news today. And also another looking at silver ETF inflows. As usual the links and intros to these are at the end of this email.

Do You Agree With “Mr Gold”?

We mentioned a couple weeks back how Jim Sinclair felt that once through $1600 that might be the last time we see that price. But then a week he backtracked slightly and said: 

“The worst thing that could happen to the paper shorts is that, yes, they do get it through $1,600 (on the downside), but barely.  Gold may trade to $1,575 to $1,580 in that event, but gold will immediately come back through $1,600 and all the way through the $1,800 level.  This action would be the beginning of the end of the paper market controlling the price of gold.”

 

So today we find ourselves right on this level in US dollars for gold. We are also right on the lows of gold in NZ dollar terms. And silver is as low as it was in July of last year.

Then this morning he said “I think this week should wrap this (long corrective period) up.”

So if you’re willing to back Sinclair’s view that this could be the last of the weakness, then today is a prime opportunity to add to or start you bullion reserves of either metal.


1. Email: orders@goldsurvivalguide.co.nz

2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)

3. or Online order form with indicative pricing 



Have a golden week!

Glenn (and David)

goldsurvivalguide.co.nz

Ph: 0800 888 465
From outside NZ: +64 9 281 3898
email: orders@goldsurvivalguide.co.nz

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This Weeks Articles


 

Jim Sinclair’s Big Calls Continue
Jim Sinclair2013-03-19 20:49:15-04

  Gold Survival Gold Article Updates: March 20, 2013 This Week: Bank Failures: Will New Zealand be Cyprussed? Why We’ve All Been Cyprus’d Already Jim SInclair’s Big Calls Continue Bank Failures: Will New Zealand be Cyprussed? The big news this week has of course been all about Cyprus. And funnily enough it has put New […]
read more…

On the Cyprus Solution and What About NZ?
NZ and Cyprus2013-03-25 15:16:34-04

  Gold Survival Gold Article Updates: March 26, 2013 This Week: On the Cyprus Solution and What About NZ? The Now Infamous RBNZ OBR  RBNZ Looking to Increase Banks Capital Ratios Easter Opening Hours   Gold is down over NZ$40 an ounce since last week. Care of the “solution” in Cyprus maybe? The kiwi dollar […]
read more…

Ignore Banks’ Bearish Statements on Gold
Gold Bears2013-03-27 20:16:00-04

Here’s something really different if you’ve been worrying about all the negative sentiment towards gold lately. We’ve been here before! This is a fascinating look at news items from 1976. It’s quite uncanny just how similar some of them are to today. What else was similar about 1976? Gold had been down for over 18 […]
read more…

The Chess Game of Capital Controls
Capital Controls?2013-04-02 19:20:13-04

With capital controls still in place in Cyprus this article is very timely. And given it was actually written before the Cyprus fiasco erupted, also shows a fair amount of foresight. The threat of capital controls are not merely the rantings of some doom merchants but a very real threat – according to the German […]
read more…

Recent Action in Silver ETFs Is Bad News for Precious-Metals Bears
Silver ETFs2013-04-02 19:35:10-04

With silver down sharply this morning, the following read shows that there is still plenty of buying going on in both the physical and paper silver markets at the moment. Even with a lower price for the past 18 months. Read on for some very interesting numbers and charts… Recent Action in Silver ETFs Is […]
read more…

 

 

The Legal stuff – Disclaimer:


We are not financial advisors, accountants or lawyers. Any information we provide is not intended as investment or financial advice. It is merely information based upon our own experiences. The information we discuss is of a general nature and should merely be used as a place to start your own research and you definitely should conduct your own due diligence. You should seek professional investment or financial advice before making any decisions.

Today’s Spot Prices

Spot Gold
NZ $1876/oz
US $1576.03/oz

Spot Silver
NZ $32.50/oz
NZ $1045/kg
US $27.31/oz
US $877.90/kg

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2 thoughts on “Has New Zealand Been a “Test Case” for Depositor Haircut Scheme?

  1. Pingback: Gold Prices | Gold Investing Guide Bank Failures - could they happen in NZ? The Reserve Bank thinks so

  2. Pingback: Record short positions sign of a bottom -

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