Dutch Finance Minister Loves Raiding Savings Accounts

Reuters is reporting this morning comments from the Dutch Finance Minister, Jeroen Dijsselbloem, who by the way heads up the group of European Finance Ministers, to the effect that the "solution" in Cypress is a "new template" to address future banking problems in the Euro area.

I want you readers, particularly those of you in the Eurozone,  to wrap your heads around this and consider the brazen audacity displayed by these people. What he is saying is that bank savings deposits no longer effectively belong to you the savers. They belong to the state and the state will confiscate them whenever it is deemed to be in that state's best interests.

If this does not send shock waves throughout the system and instill fear in individuals throughout the Eurozone, then there is no hope for any such people. Normal, rational, sane, thinking individuals will immediately recognize this for what it is; a complete reversal of the traditional role of banking in which banks makes loans to depositors and other individuals. Now, depositors are in effect making loans to banks. Yet even that is not an apt comparison for in the case of a loan, one usually expects to receive back the amount loaned plus interest. In this case, the depositors are having their money forcibly extracted from them with no hope of ever seeing it again and having that money used to bail out the banks instead! I never believed I would EVER witness this in my life and yet here it is. What is even worse is the blasé attitude displayed by the monetary authorities. Just who in the hell do these people think that they are?

These pestilential parasites, who sit in ivory towers and can glibly utter such rapacious comments, are literally undermining the entire banking system in their shortsighted idiocy.

Do these fools really believe that those citizens who have money in Eurozone banks, particularly high net worth individuals, are going to merely sit by and calmly observe this situation and do absolutely nothing? I cannot think of a better way to start a run on the banks. If individuals believe that the state now believes it has the right to raid their hard earned wealth at any time why would they feel the least bit secure about putting that wealth in harm's way?

As far as the price action in both gold and in the euro goes, Gold was down rather sharply early in the session as the safe havens were thrown out once a "deal" was announced. The Euro was down but not by much considering the backdrop. Once those Dutch official's comments hit the wires, the bottom fell out of the Euro and gold began working off its lows.

Gold in Euro terms shot sharply higher and is up nearly 1% as I type these comments. If it can push past the 1250 euro mark, it looks like it has room to make a run to 1280.

I am still thunderstruck as I contemplate those comments uttered by Mr. Bloem. This is like something out of fictional novel and yet it is happening right before our eyes.

Trader Dan Interviewed at King World News

Please click on the following link to listen in to my regular weekly radio interview with Eric King over at the KWN Weekly Markets and Metals Wrap. We will be discussing the implications of the market action in both gold and the Euro given the Cyprus situation.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/23_KWN_Weekly_Metals_Wrap.html

Cyprus Fears Rekindled?

Talk today was all about the resurgence of fears related to the situation in Cyprus. The US equity markets were heavy throughout the session as a result but from what I could tell, there was not that much demand for safe haven US Treasuries. Yes, those were higher but considering the extent to which the concerns surrounding Cyprus were in the headlines, I would have expected a much stronger tone to the US bond market.

Also, remember when the news first broke over Cyprus over last weekend and the markets opened for trading Sunday night here in the US. The Euro was absolutely mauled as a result. Today, while it was weaker, it refused to stay below the 1.29 level. From what I can see, there apparently is not that much worry over the Europe if the common currency will not stay down below 1.29 on the Cyprus news flaring up again.

The Yen on the other hand was acting as if the end of all things was upon us as it completely erased yesterday's sharp losses soaring over 150 pips at one point today. For the life of me I do not understand why anyone would call the Yen a "safe haven" currency but then again, I do not understand why anyone would call the US Dollar one either. Both nations are printing TRILLIONS of these respective currencies into existence and yet this is somehow a safe haven?

Like I and many others have said - there is nothing rational about markets, not any more.

Gold caught a firm bid today and managed to stay above $1610 for most of the session which is promising. It needs to prove it can clear resistance near $1620 if the bulls are going to be able to seriously squeeze that extremely large hedge fund short position. Frankly, I am not sure what it is going to take to push gold through this level if the Cyprus news and the reverberations related to that cannot do it. Whoever it is that is doing the selling up near the session highs is strong handed and will take some serious force to dislodge.

Gold in Euro terms is showing signs of life having broken out to the upside of its downtrending channel. It is no longer making a series of lower highs and lower lows but has stabilized and looks to have forged a bottom. With Yen gold strong, Sterling Gold looking decent and now Euro gold joining the chorus, the bears will have to dig in deeply to prevent the respective overhead chart resistance levels from giving way. We know that there is a deep pocketed seller present in New York - is that the only place?

Resistance in Euro Gold is near today's high at 1250 followed by 1270 and then 1280. After that, Gold has a shot at testing psychological round number resistance at 1300 euros.

U S Dollar priced gold is shown below on a two hour chart where the selling effort can be more clearly seen.

Another European Domino

I am not going to spend much time providing the details of the events unfolding in Cyprus since the readers of this site are all well aware of those by now.

I do wish to note a couple of things however.

First - We are watching the inevitable effects of the experiment in socialism when it reaches its logical conclusion. When generations are either taught or have it implied to them that they can allow their governments to run up ruinous levels of debt and yet suffer no consequences whatsoever, they have little to no incentive to throw out the political leaders who hold the actual purse strings. The cradle to grave policies of the nanny state are not sustainable over the long haul. The reason is clear - politicians make promises to pay that they cannot keep. Eventually there is not enough money to cover the promises and the government is forced to borrow to the point that it can no longer afford to pay the rate of interest that creditors demand to compensate them for the risk.

We all know that the proposal to confiscate up to 9.9% of the savings accounts of those who have worked hard to amass that money is nothing more than government sanctioned THEFT. Spare us the insults of calling it a "tax" and thereby seeking to justify this reprehensible policy. People use banks because of one reason and one reason only - TRUST. Take that away and you have destroyed the foundation of the banking system.

Put yourself in the place of an average European citizen who is watching this debacle unfold before their eyes. Would you feel the least bit secure if you had now been awakened to the fact that your government's leaders had spent the nation into bankruptcy and were suggesting that as part of the solution to their folly that those same fools who ran up the debt in the first place now be permitted to raid your personal savings account to somehow solve a problem of their creation? What would you do in their situation? I tell you what I would do; I would immediately begin transferring money out of banks in any of those nations which had been on the receiving end of bailouts from the ECB and the IMF. I would move that money into gold and would not think twice about doing it. If those deposits are no longer sacred, then what is to prevent futures politicans from raiding them whensoever they please?

Once again we have collusion between the financial elites that run the monetary system and the big banks. I have nothing but scorn and contempt for these large banks who gorged themselves on various government bonds and are now in the position of watching their balance sheets go to hell in a handbasket as the value of those bonds plummet. What really makes my blood boil however is that these banks have adopted a mentality that they can go running and screaming like spoiled children to their respective political leaders to use the PUBLIC's MONEY to save them from their own damned stupidity and greed.

Excuse me, but I was once naively of the opinion that the banks existed to make loans to the public. Apparently that is no longer the case - now the banks exist in order to see money taken from their depositors to save their own rear ends for buying debt that no one in their right mind would have purchased.

I do wish to add however, that even though I am disgusted at this unholy alliance between the big banks and the monetary masters, the people in these respective nations do bear some culpability in this matter; they are not without any blame whatsoever. Last time I checked these people vote and they voted to put enough politicians in power to continue spending. As long as the people keep putting the same kind of irresponsible, short-sighted lackeys into positions of power, why should they expect these leaders to change their ways. Those who would ruin their own nations for the sake of short-term political gain deserve to be unceremoniously thrown out of office.

By the way, America, are you watching what is happening here because we are following in the same trajectory as many of these Euro Zone nations.

On gold - the flight to safe haven was on display today with that buying strong enough to propel gold through the psychological $1600 level. Watching it soar throught that level overnight during the Asian session was noteworthy because at one point, a wave of fierce selling came out of nowhere and took the price all the way back down to below its Friday settlement price. The dip did not last long - if you blinked you missed it - but it was very obvious that someone was trying to cap the price and prevent the metal from moving even higher.

All day long the move higher was being resisted by a strong overhead seller. My guess is that this is not hedge fund selling but rather selling originating from the official sector. I also noted today that the Euro, which was slammed down in Asia at one point today moved all the way back up to above the 1.30 level. The manner in which it did so looked very peculiar to me.

I hate to say that the ECB was involved when I have no proof of this but it was very odd to see anyone at all anxious to buy that currency for any reason today given the ramifications of the Cyprus mess. Maybe, just maybe, the monetary masters were out in full force today attemping to prevent a meltdown of their dearly beloved Euro. I simply have no other explanation for the midday move higher in the Euro off its worst levels.

I want to add here that their best efforts notwithstadning EURO GOLD soared higher adding 1.5% today. It is near 1237 euros as I write this. As a matter of fact, gold took off today in terms of all the major currencies again. This is continued evidence to me that gold is getting some serious attention by those who are growing increasingly disconcerted with the policies of the Western Central Banks and their respective finance ministers/leaders.

The chart below notes that various levels that have technical significance for gold. It will take a push through $1620 to really begin a short covering process in earnest. I noted in my KWN Weekly Metals Wrap interview that the hedge fund short position was the largest on record. Some of that began to come off today. There still remains a large number of those shorts however.

Ideally, gold will stay ABOVE $1600 but at the very least, it should remain above $1585 or so to suggest that it has entered yet again into a new and higher trading range.

Once again the useless gold mining shares did nothing to aid the upward progess of the actual metal as they were weak all day long and ended closing down on their lows. No wonder no one wants to own the damned things. As far as providing any decent returns on investment, they suck. What else can I say...

Currency traders had best prepare to go another week without much sleep. Sigh... maybe we can get some ingenius inventor to come up with a pill that provides the human body with the same benefits of getting a decent 7 - 8 hours worth of sleep in a night. I know I will be the first in line to sign up for that...

Trader Dan Interviewed at King World News Markets and Metals Wrap

Please click on the following link to listen in to my regular weekly radio interview with Eric King over at KWN Markets and Metals Wrap. We'll be covering the Commitment of Traders report in depth this week laying it out against the price action in the metals. We will be providing some insight into why the metals are moving in consolidation patterns noting key technical levels that need to be taken out for some additional strength to be seen.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/16_KWN_Weekly_Metals_Wrap.html

Gold Clears Initial Hurdle

Gold put in some strong gains in today's session clearing its first overhead level of resistance in the process. Since the beginning of the month of March, it has not been able to clear $1585 - $1587 as it attracted selling on approaches to this region. Buying in today's session was strong enough to absorb the offers that emerged in a rather easy fashion which is a bit surprising to me considering the duration of this resistance zone. I would have expected shorts to put up a bit more of a fight up here. That they did not has to be rather disconcerting if you are a bear as it illustrates that they are wavering in their conviction of lower prices ahead.

I mentioned last week when I first put this chart up that the bears were being frustrated in their efforts to break the metal down below this strong buying zone noted. We are now seeing the signs of that frustration as the newcomers are starting to cover.

Now that the bulls have cleared that $1585 - $1587 level, it is essential that they prove their mettle if prices retreat back down towards this area. That will signal that the bulls have regained the short term initiative from the bears.

I would look for fiercer resistance at the next resistance zone  where the "16" handle will emerge. Not only is that a psychological resistance level but it is also a technical one. If the gold bulls can take the price up and through this level and maintain the price ABOVE this level, we should see a run towards the late February peak up near $1620.

I want to again note here that gold put in another strong day in terms of the major currencies such as the Yen, Pound, Euro and Swiss Franc. It continues to display strength across a wide variety of currencies, which is always good for a bullish cause.

The other thing of note - the HUI regained its losses from late last week after it put in that huge upside reversal on Wednesday. It once again encountered selling pressure as the various stocks that comprise this index rose to their last week highs. This is showing up on the chart near the 360 level. I need to see this index CLEAR 372 and do it with authority to prove to me that this is indeed a lasting bottom in the mining sector. I am of the opinion that if it does this, the gold and silver charts will both show markets that are taking out their respective overhead resistance levels.

Remember, it has been the shares which are dragging on the metals; if those shares are done going lower as it appears that they are, then it is going to be difficult for the bears to beat the actual metals down any longer. Keep in mind that there is a very large, multi-year high, hedge fund short exposure in gold. That position will be vulnerable if the bulls can continue to peel off the weaker-handed shorts that have tagged along for the downside ride. There are significant stops above this market that if breached, will provide some nice upside fireworks.

As usual, the key will be whether the bullion banks emerge as sellers on any rallies. They have been using this downdraft to cover their previously built short positions and have reduced that significantly. Are they content to leave that as is or are they looking to rebuild it? We shall see. One thing is for certain however; those hedge fund computer algorithms are not going to ask any questions if the bulls can take out the overhead resistance levels that trigger the buy signals on those infernal machines of theirs. They will be buying back at the same speed that they have been selling for some time now.

NO FEAR

Remember when those two words were popping up all over the place, whether on T-shirts, Bumper Stickers, Skate Boards, etc.? It was like so many other fads that have come and gone although it is apparently back in vogue, at least when it comes to the lemmings that the Fed has piped into piling back into equities.

Take a look at the Complacency Index as I like to call it or the "Fear Index" as others have dubbed it- the Volatility Index. It reached levels in today's trading session not seen since April 2007, that is a month shy of SIX YEARS AGO!

Wall Street hasn't a care in the world and apparently the sky is the limit for the equity indices. And I used to think Wall Street loved Easy Al (Alan Greenspan)! They are so in love with Uncle Ben (Ben Bernanke) that I think we are going to see them start naming streets after him in New York's financial district.

I have said it before and will say it again, you cannot fight the tape on this rally in the equities. Everything we ever learned about being able to print your way to prosperity is obviously utterly wrong; the modern day alchemists have proved that not only that it is, but that every age/generation that has ever come before us completely missed the mark.

The Central Banks have managed to create an environment in which Bear markets are a thing of the past, never to be witnessed again in our lifetime. And Yes, Virginia, there really is a Santa Claus...

Trader Dan Interviewed at King World News Metals Wrap

Please click on the following link to listen in to my regular weekly radio interview with Eric King on the KWN Weekly Markets and Metals Wrap.

http://tinyurl.com/advjr6t