Bail-Ins And Deposit Confiscation Confirmed At ‘Future of Banking in Europe' Conference

Today’s AM fix was USD 1,219.00, EUR 898.50 and GBP 743.07 per ounce.
Yesterday’s AM fix was USD 1,237.50, EUR 913.08 and GBP 754.30 per ounce.

Gold fell $32.20 or 2.57% yesterday, closing at $1,219.00/oz. Silver slid $0.84 or 4.2% closing at $19.15/oz. Platinum dropped $20.95, or 1.5%, to $1,336.25 /oz and palladium fell $9.78, or 1.4%, to $708.72/oz.
 

Gold advanced from nearly a five-month low, after the biggest one-day drop since October, as investors assessed whether the U.S. economy is strong enough to warrant a move away from ultra loose monetary policies.

Gold fell despite the data yesterday being mixed. It showed that while U.S. manufacturing unexpectedly accelerated in November at the fastest pace in more than two years, retail spending fell on the weekend after Thanksgiving for the first time since 2009. The overly indebted U.S. consumer is struggling which does not bode well for the consumer dependent U.S. economy.

Gold in US Dollars, 5 Year (Bloomberg)

Bulls took solace in the fact that the price falls came on very low volumes - volume was 20% below the average for the past 100 days at this time of day, data compiled by Bloomberg showed.

Gold is down 26% year to date and many analysts agree that it is now very oversold.  The 14-day relative-strength index fell to 30 yesterday, signaling to some analysts who study charts that the price may be set to rebound.

Physical demand picked up on lower prices overnight - particularly in China and Asia. In China, now the largest buyer of gold in the world, premiums of 99.99% purity gold climbed to about $11 an ounce from $7 on Monday on the Shanghai Gold Exchange (SGE).

Bail-Ins And Deposit Confiscation Coming Noonan Confirms At ‘Future of Banking in Europe’ Conference
A major conference on the future of banking yesterday heard contributions on a European banking union which is being negotiated by Eurozone finance ministers. One of the aspects of that union will be a 'bail-in' of deposits when banks fail in the future. Michael Noonan, Ireland’s Minister for Finance confirmed yesterday that bail-ins or deposit confiscation will be used.

The toolkit underpinning the Single Resolution Mechanism is provided for in the bank recovery and resolution proposal (BRR) which was agreed last June in Council under the Irish Presidency. The proposal provides a common framework of rules and powers to help EU countries manage arrangements to deal with failing banks at national level as well as cross-border banks, whilst preserving essential bank operations and minimising taxpayers' exposure to losses.
 
One of the main pillars to the BRR framework to facilitate a range of actions by authorities are “resolution tools”. Noonan confirmed yesterday that resolution tools include the sale of business, bridge bank and asset separation tools and also the use of bailins.

The era of bondholder bailouts is ending and that of depositor bail-ins is coming.

Preparations have been or are being put in place by the international monetary and financial authorities for bail-ins. The majority of the public are unaware of these developments, the risks and the ramifications.

It is now the case that in the event of bank failure, your deposits could be confiscated.

Let's be crystal clear: The EU, UK, the U.S., Canada, Australia and New Zealand all have plans for bail-ins in the event of banks and other large financial institutions getting into difficulty.

Download our Bail-In Guide: Protecting your Savings In The Coming Bail-In Era (11 pages)

Download our Bail-In Research: From Bail-Outs to Bail-Ins: Risks and Ramifications (51 pages)