Euro's Loss = Gold's Gain?

Discussion in 'Bullion Investing' started by fatima, May 16, 2012.

  1. fatima

    fatima Junior Member

    Many news sources in Europe are reporting that in the last 2 days, 1.5B€ has been pulled from Greece banks in relatively small amounts by people standing in line at banks and cash machines. Could this be the beginning of a bank run there? Could it spread to other very nervous people who pay attention to these things? There were also dire warnings today from the Bank of England and more specifically from David Cameron, the prime minister of the UK.

    If this spreads, where is this money going? Presumably someone pulling their cash is going to put it into a safe currency. Since PM act as the ultimate currency what does this mean for silver & gold bullion?

    IMO, right now and based just observing the Forex, it appears to be headed to the USD, GBP, CHF, CAD (odd that), and Gold. Gold was on the rise today. Silver does not appear to be a place where safety seekers are headed as it continues to fall.

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  3. medoraman

    medoraman Supporter! Supporter

    Fair point. I remember a story about massive outflows of gold from Italy recently as well. It was being transported to Switzerland. Sounds like some rich Italians are concerned with the tax man.

    IMO a couple of billion Euros would not really affect FOREX rates much, so I am unsure if rate changes would be attributable to that. I think many in Greece are holding the Euros for fear of all of their deposits getting converted to drachmas overnight, and then of course the drachmas will probably lose at least half their value. I simply believe the Greeks are withdrawing the Euros to guarantee a sound currency, and hold the Euros.

    How would a conversion from Euros to drachmas work? Bank account would be simple, but what would happen to Greek printed Euro notes? Are they still Euros? Would the be drachmas in disguise? If a Greek wanted to be safer with his Euros, I would suggest trading his Greek printed Euros and getting German printed ones.
  4. coleguy

    coleguy Coin Collector

    If my currency was at all-time lows against other world currencies, I sure wouldn't be buying bullion with it unless I could buy and then sell quickly and receive foreign currency that was doing better as the exchange. Personally, I'd be taking advantage of the situation, like I did in 08 here with the dollar, and make investments when they are cheap and wait. Had I bought gold with 2008 dollars I might have made a small amount, but it would have been peanuts compared to smarter investing.
  5. fatima

    fatima Junior Member

    The guy on Sky News, which I spoke about earlier, said that one possibility would be that the banks would stamp a big D on the Euro Notes and they then become Dracma. In the process of doing this, they would also default on all their Euro denominated debts, which I assume, means demand deposits at banks. (which is why people are getting out while the getting is still good)
  6. fatima

    fatima Junior Member

    What would you do in California faced with converting your money to something else was to physically take those dollars and exchange them because the financial system was breaking down? It would make no sense to put them in another FR bank. All of a sudden, gold coin becomes very attractive.
  7. webomatic

    webomatic Member

    It certainly appears to indicate a run is starting to move. The pace of 3 billion per month has been moving from Greek banks. With about 160 billion remaining in the Greek banks I'll assume a withdrawal moratorium will be imposed very soon.

    We'll likely see a sharp upswing on the dollar over the coming days, possibly week, as monies are moved from Greek banks.
  8. coleguy

    coleguy Coin Collector

    I suppose they might. But more importantly I'd be looking for a currency I could feed my family on first. Preserving wealth is fine, as long as you don't starve to death in the meantime.
  9. fatima

    fatima Junior Member

    When in human history have those with gold starved to death?
  10. Marsden

    Marsden Member

    Never, unless they were divested of their gold by someone with a gun. And then they would no longer be people with gold [​IMG]

    You guys are making me glad I unloaded my dollar shorts.

    I'll buy them back one day when they're cheaper.
  11. justafarmer

    justafarmer Senior Member

    Where are the people who are making all these tiny withdrawls putting their money - they are putting it in Euro currency and that is where the majority of this money is going to stay. They are not concerned about the Euro failing - they are concerned about the bank holding their Euros failing and their Euros held in the bank being transformed into Dracma. As Coleguy is saying the answer is this simple.
  12. Anthorn

    Anthorn New Member

    Personally, I think that anyone keeping their money in currency has to be a little bit bonkers. The Euro has been teetering over the edge for a long time and and the rescue packages temporarily cure the effect but not the cause which is lack of growth. The U.K. which is said to be in recovery is actually in a double-dip recession. The effect of the Euro falling is likely to be yet another worldwide recession affecting a world which is already in recovery mode from the last one. It will hit the U.K. like a ton of bricks, have a profound effect on U.S.A., other foreign countries like China will be affected and of course all countries in the Eurozone will fall along with the Euro.

    So taking the above into consideration which is a worst-case scenario, probably the only place to put money is into gold.
  13. justafarmer

    justafarmer Senior Member

    Actually I believe in the event of a financial collapse; in the beginning and for a period afterwards cash will be king. That is when the real window of opportunity is - well those flush with cash anyway. I am not talking about cash being held as deposits in the bank - I am talking about cash being held in your wallet.
  14. medoraman

    medoraman Supporter! Supporter

    When those oppressing them either do not value it or cannot be bought.

    Did the citizens of Samarkand escape slaughter if they had an ounce of gold? Did Intelligentsia not have to work in the gulags if they happened to have a 5 ruble piece?

    There is no guarantees in life, even if you have a hold of your precious gold.
  15. Anthorn

    Anthorn New Member

    I too believe in financial collapse but not in my lifetime and probably not in your's either. History disagrees with cash being king in the event of a financial collapse. Basically growth at all costs, rampant inflation, devaluation, taking a barrow-load of notes to the shop to buy a loaf of bread, widespread unrest and revolutions. It's all happened before. Capitalism itself is fizzling out and whatever we get to replace it is going to be bad.
  16. medoraman

    medoraman Supporter! Supporter

    I would say sir its not capitalism that is fizzling out, its socialist welfare states that are having trouble sustaining themselves. As your own Maggie Thatcher said, "the only problem with socialism is that eventually you run out of other people's money to spend".

    Please do not blame bailouts, excessive social program costs, etc on capitalism. All of the problems we are experiencing are because we are NOT capitalist countries anymore.
  17. fatima

    fatima Junior Member

    No there are not, and I never said there was. On the two situations that you mention, the issue wasn't holding currency to prevent starving. The issue was holding gold as a currency to keep from starving. Holding paper currency wouldn't have helped in either of your examples either, so your answer is a logical fallacy.

    So I ask the question again. When in human history has someone with gold starved because they couldn't spend it.
  18. fatima

    fatima Junior Member

    This wasn't the case in the South at the end of the Civil War with those who held Confederate dollars. They were completely SOL. In fact by the time Atlanta was burning, you couldn't trade 100 Confederate dollars for one gold one. Those who held gold dollars at the end of the war were unaffected.

    (The North didn't get away with it either. Northern fiat currency became subject to heavy inflation and people would not take it for payment. Again, those with gold dollars had no issue.)
  19. Cloudsweeper99

    Cloudsweeper99 Treasure Hunter

    This apparently happened to the Mayans...

    ... and I'm sure there are countless other cases where widespread death by famine could not be prevented by gold or other physical wealth.

    That said, I think Greece has a banking crisis more than a currency crisis. This might turn into a currency crisis because the Europeans haven't shown the talent to manage their currency properly. The Fed is far ahead of them in central banking theory and practice regardless of what the enemies of the Fed say. As said above, the Greeks are probably afraid of the forced conversion of their currency and are moving the money to other European, and probably some American banks.
  20. jjack

    jjack Captain Obvious

    Yet you can argue India, China, Germany and Brazil are more socialist than capitalist IMO yes socialism leads to laziness but IMO in current times we tend to blame each other left vs right or the government. Rather than looking at our society. Ultimately IMO it is not Government that determines the state of the economy but the populace.
  21. fatima

    fatima Junior Member

    That article does not say anything about gold or for that matter any currency. The context of what I said was in terms of holding gold as a currency. Obviously in a situation where ANY currency is worthless then all bets are off. You and your other half here seem to have a remarkable ability for missing context of a post.
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