Gold, Cyprus & Europe

Goldwatcher c0-author Frank Holmes recently published this analysis titled In Gold Not Cyprus We Trust

His comment ends with this chart:

In this article address the recent developments that have brought gold back on asset allocation agendas as investors seek security and protection from capital controls, currency and systemic risks.

Cyprus & Europe – Bankruptcy & Pregnancy

You can##Q##t be a little bit bankrupt. Yet we have known for a long time that some of Cyprus##Q##s banks were de facto bankrupt and, somehow, they escaped formal bankruptcy until now.

It##Q##s also a fact of life that you can##Q##t be a little bit pregnant. Such an incontrovertible fact that the analogy has resonance for other improbable situations such as inconsistencies in the structure of the European Union that include:

  • Sovereign states that are no longer altogether sovereign working in an association that is neither a political federation or a fiscal union;
  • Supporting a euro currency for a eurozone that exists like another Europe within Europe;
  • A European Central Bank that is not supported by a banking union between its member states; and
  • Financial markets that expect any European Union member state in financial difficulties will get bailed out even though European Treaties prohibit sovereign bail outs.

While the financial tide was flowing in Europe##Q##s inconsistencies weren##Q##t seen as life threatening or even dangerous. But, now with the tide out, it##Q##s been revealed who has been caught swimming naked and the spotlight is on Cyprus and Europe.


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