Dear Subscriber,
With today's frantic 24-hour news cycle, the story of Cyprus is already becoming stale ... just as deeper realizations about the mini-panic — and its unintended consequences — are coming to light.
Of course there's no need to dwell on events like this; but at the same time, this panic has offered us plenty to learn. And out of the hundreds of official statements and press releases from the last 48 hours, we've managed to find at least two or three that really shed some light on this whole debacle ...
The first — which comes from Deutsche Bank's Jim Reid via ZeroHedge — is enough to make you stop and think.
"Maybe the lesson from all of this is that if you are fortunate enough to have a fair degree of money, you might be better off spending it! Maybe that's the master plan here? Boosting activity by forcing people to use their money rather than deposit it! Indeed I wonder how long it'll be before an equity strategist suggests that this is bullish, as money might now leave deposit accounts and go into equities."
Without drifting into "conspiracy theory" territory, Reid makes a clear and legitimate point that this
whole panic could have been a kind of "indirect stimulus."
Or, if you speak English, you'd probably call it a "scare tactic."
And it's not especially difficult to believe.
With rates currently hovering just above zero and governments the world over printing new cash by the boatload, these bankers are reaching the end of their rope. They're giving this economy everything they've got — stimulating it and pushing it higher with every conventional tool in their arsenal.
So it stands to reason that their next step could involve more unconventional — perhaps even hostile — methods of "stimulus."
But at what cost?
* * *
The world's governments have printed trillions in fresh debt over the last few years; $7 trillion in new American debt alone, just since the beginning of the Obama administration. Much of it the result of bringing toxic debt from corporate balance sheets over to the federal balance sheets.
They've bailed out massive, failing companies and set the precedent for "too big to fail."
And now, they've demonstrated that they're willing to take their toxic debt all the way to
your personal balance sheet when push comes to shove. As we said yesterday; they've proven that they're willing to side with lenders and the financial system, even if that means violating the protection offered by something as basic as a bank account.
But these kinds of trends don't come without cost.
Because just the prospect of a bank account confiscation is starting to worry investors from all over the world — and could have a lasting impact on the way people save and invest ...
The "events in Cyprus are bullish for gold, as the sudden attitude that depositors' funds are subject to arbitrary confiscation by government must certainly make savers the world over think twice about leaving cash in the bank," said James West, portfolio adviser to the Midas Letter Opportunity Fund.
* * *
Meanwhile, our in-house resource expert Sean Brodrick has the last word on Cyprus, bank accounts and gold ...
"Monday played out pretty much the way I predicted when I talked about it last week.
"The European Union came to some sort of a deal to 'save Cyprus.' Gold sold off as a result, and dipped below $1,600. But what I didn't expect is that, by the end of the day, gold would claw its way back above that important level.
"For gold this was a sign of strength, probably fueled by Europeans who would rather trade their euros in the bank for gold under the floorboards.
"We may see gold trade in a range between support at $1,590 per troy ounce and overhead resistance at $1,620. Dips to resistance would be buying opportunities in select stocks, because the fundamentals are getting more bullish."
And the proof, as they say, is in the pudding.
In the middle of all the media mayhem last week, Sean's subscribers had the chance to bag a quick gain on a fast-moving gold stock. His outlook for the yellow metal is increasingly bright, but warns that any major buying opportunity could be a short-lived one.
In fact — to ensure that he makes the most out of 2013's promising gold markets — Sean has just scheduled a special interview with legendary resource investment manager Rick Rule.
With decades of experience and a top-flight team of earth science and finance professionals, Rick Rule's reputation for cutting-edge resource profits has been hard-earned and it's known worldwide. Combined with Sean's proven insights, these two are set to offer one of the most eye-opening events of the year — and you're invited!
Just
click here to reserve your spot and stay tuned for more ...
* * *
In Other Market News:
- The first of Boeing's (BA) two tests of its new lithium-ion battery system for the 787 Dreamliner went according to plan on Monday. Next up: The company's second test, slated for the coming days, is designed to gather flight data for the Federal Aviation Administration. Once the government gives the green light, the Dreamliner will be put back in service.
- Boeing is losing an estimated $50 million per week as 50 Dreamliners have remained grounded since January when one battery caught fire at the gate and another overheated mid-flight. Today's news sent shares of Boeing to a new 52-week high.
- The housing market continues to pick up steam. Single-family home prices, as measured by the S&P Case/Shiller Home Price Index, saw their largest annual increase in more than six years.
- Prices in the 20 metro areas the index measures jumped 8.1% year-over-year in January, beating expectations of a 7.9% gain. Average home prices are now back to their autumn 2003 levels but still have to appreciate 30% more before reaching their 2006 peak. All of the 20 cities showed gains, with eight cities gaining by double-digits.
- The Consumer Confidence Index dropped more than expected in March. Americans' economic outlook was affected by the budget battle in Washington, as $85 billion in spending cuts went into effect March 1. The index printed a reading of 59.7, well-below the 68 reading economists had expected. February's reading was revised downward to 68 from 70.8.
Good Luck and Happy Investing,
Brad Hoppman
Publisher
Uncommon Wisdom Daily
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