How Gold and Silver Can Protect Your Money from the Coming “Bank Account Tax”
May 3, 2016 by Justin Spittler
One of Europe’s biggest banks just made a shocking statement… one that could affect the money in your bank account…
Dispatch readers know governments have launched all sorts of crazy schemes since the 2008 financial crisis.
In an effort to “stimulate” their economies, they’ve borrowed trillions of currency units. They’ve printed trillions more from nothing. They’ve cut interest rates to record lows.
But perhaps the most reckless policy has been negative interest rates.
Negative rates are a bizarre concept. In a normal world, you earn interest on cash you hold in a savings account. With negative rates, you pay the bank to hold your cash. Negative interest rates are a perversion of saving and capitalism.
• Negative rates were unheard of until two years ago…
Today, more than $8 trillion worth of government bonds have negative rates.
The European Central Bank (ECB) introduced them in 2014. The Bank of Japan (BOJ) started using them in January. Denmark, Sweden, and Switzerland have them too.
These countries think negative rates will “stimulate” their economies. The thinking is that people will spend more money if their savings are taxed. Mainstream economists tell us this will make the economy grow.
Regular readers know that’s a lie. Saving and production drive an economy, not spending.
• Deutsche Bank (DB) thinks the ECB and BOJ should “double down” on negative rates…
Deutsche Bank is Germany’s largest bank, and one of the world’s most influential financial institutions.
ZeroHedge reported on Sunday:
[T]he ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes.
Today, only big banks and other large financial institutions pay negative rates. For the most part, these institutions have yet to pass along negative rates to their customers.
Deutsche Bank thinks central bankers should go directly after people’s savings accounts. In other words, it’s lobbying for a wealth tax—or “bank account tax”—that would be a more radical version of negative rates.
• Deutsche Bank thinks central banks are running out of tools…
It thinks quantitative easing (QE) has “run its course,” according to ZeroHedge. Dispatchreaders know QE is when a central bank creates money out of thin air and injects it into a financial system.
The U.S. used several rounds of QE after the last financial crisis. Europe and Japan are currently using QE.
We agree with Deutsche Bank that QE is doing nothing for the global economy. But launching even crazier policies is not the answer. A bank account tax would promote more reckless borrowing and spending than we’re seeing already.
In other words, it would only add fuel to an already huge problem…
• Negative rates don’t work…
Europe and Japan are growing at their slowest pace in decades.
Their stock markets are doing poorly too. The STOXX Europe 600, which tracks 600 large European stocks, is down 7% this year. The Nikkei 225, Japan’s version of the S&P 500, is down 15%.
Negative rates have also had unwanted side effects.
In Europe, large corporations are pulling money out of the banking system to avoid paying negative rates. Japanese people are hoarding cash at home to avoid negative rates.
• The U.S. doesn’t have negative rates yet…
But don’t rule them out.
In February, Federal Reserve Chair Janet Yellen said negative rates in the U.S. weren’t “off the table.”
Today, the Fed’s key rate is at 0.38%…well below its historic average of 5%.
Yellen’s kept rates low because the economy is hardly growing. In fact, the U.S. economy’s “recovery” from the 2008 financial crisis has been the weakest recovery since World War II. One piece of bad economic data could lead to the Fed dropping its key rate below zero. And if Europe or Japan introduce a bank account tax, you can bet the Fed would consider it too.
• Eight years of “easy money” have already warped the economy…
QE and rock-bottom interest rates have made it incredibly cheap to borrow money.
Americans have borrowed trillions of dollars since the last financial crisis. They’ve borrowed to buy televisions, cars, homes, commercial property, and even stocks and bonds. The Fed’s “stimulus measures” ignited a historic rally in stocks. Since 2009, the S&P 500 has more than tripled in value, hitting an all-time high. Bond prices have hit record highs too.
We’re now living in an “Alice in Wonderland” economy where stocks and bonds soar while the “real” economy barely grows.
• Casey Research founder Doug Casey says we’re in a very dangerous situation…
Here’s Doug:
These reckless policies have produced not just billions, but trillions in malinvestment that will inevitably be liquidated. This will lead us to an economic disaster that will in many ways dwarf the Great Depression of 1929–1946. Paper currencies will fall apart, as they have many times throughout history.
• When people realize paper money is doomed, they’ll pile into gold and silver…
Regular readers know gold and silver are the ultimate wealth insurance. These precious metals have preserved wealth for centuries. They’re real money because they’re durable, transportable, easily divisible, have intrinsic value, and are consistent around the world.
Unlike paper currencies, governments cannot create more gold or silver with a few taps on a keyboard.
• Gold and silver have taken off this year…
The price of gold is up 22% this year. It’s at its highest price since January 2015.
Silver is up 27%. It’s at its highest level in a year.
Doug thinks this is only the beginning of a huge bull market for gold and silver. In fact, he thinks gold is in the early innings of a “true mania.” He says gold prices could easily triple in the coming years. Silver could see even bigger gains. As we recently explained,silver is cheaper than gold right now.
• Gold and silver miners are soaring too…
Mining companies are leveraged to precious metals prices. A 10% rise in the price of gold can cause gold stocks to jump 30% or more.
Gold’s 22% jump this year has caused the Market Vectors Gold Miners Fund (GDX)—which tracks large gold mining stocks—to surge 85%. Silver’s 27% move led to a 104% jump by the iShares MSCI Global Silver Miners Fund (SLVP), which tracks large silver mining stocks.
• Many Casey readers booked even bigger gains…and it’s not too late for you to join them…
Louis James, editor of International Speculator, has several HUGE winners in his portfolio.
If you don’t know Louis, he’s our resource guru. His specialty is finding small gold and silver miners with massive upside.
One of Louis’ latest picks is up 74%. Another is up 89%. One has skyrocketed 157%.
Like Doug, Louis thinks this is only the beginning. He expects the best gold stocks to rise 1,000% or more in the coming years. Those kinds of returns may sound impossible. But if you’ve ever seen a major gold bull market, you know they’re very real.
Opportunities to make 1,000% gains—like we have today—are rare. It could be ten years or longer before we get another chance like this. To help you take advantage of this incredible opportunity, we’re offering International Speculator for $500 off the regular price. If you sign up today, you’ll also receive our new special report, 9 Essential Gold Stocks to Buy Right Now. In it, you’ll find nine stocks with the potential to rise 1,000% or more in the coming mania.
If you’re interested, we urge you to act soon. This special deal closes this week. Click here to learn more.
Chart of the Day
The U.S. dollar just hit a 16-month low…
Today’s chart shows the performance of the U.S. dollar index. This index tracks the dollar’s performance against major currencies like the euro and Japanese yen.
You can see the U.S. dollar has plunged 6% this year. It’s at its lowest level since January 2015.
The dollar’s big decline this year has caught many investors off guard. After all, the Fed’s monetary policy isn’t quite as “easy” as Europe’s and Japan’s right now. The Fed is not currently printing money like the ECB and BOJ. It isn’t using negative rates like the ECB and BOJ either. Yet, the dollar is weakening relative to the euro and Japanese yen.
This suggests investors expect the Fed to join the ECB and BOJ in printing money and dropping interest rates to zero or lower. And Casey readers know a weaker dollar would be bullish for gold, which is “priced” in dollars.
We want to hear from you.
If you have a question or comment, please send it to feedback@caseyresearch.com. We read every email that comes in, and we’ll publish comments, questions, and answers that we think other readers will find useful.
http://www.caseyresearch.com/articles/how-gold-and-silver-can-protect-your-money-from-the-coming-bank-account-tax
Coming Bank Run Will Send Gold to $3,000+
May 6, 2016 by Dan Steinhart
Editor’s note: Today, we’re changing up our normal Dispatch schedule to bring you an extremely important warning. This could be one of the biggest threats you face today…and the likelihood of it happening has never been higher. (And make sure to read until the end… We have an incredible offer for you that closes tonight.)
You’re alone in a foreign country, far from your hotel.
You reach in your pocket to grab your wallet. It’s gone…
All your cash, credit cards, and debit cards are in it.
You can’t buy food…or a cab ride…or anything.
You try not to panic. What will you do?
This feeling, multiplied by 1,000, is what a bank run feels like.
A bank run is when banks run out of cash. It’s when too many folks try to pull their money out at the same time, and banks shut down. No one can access their cash.
Not many folks know this, but we came within hours of having a full-scale bank run in the U.S. during the financial crisis in 2008.
Customers pulled $5 billion of cash out of failing bank Wachovia, once the fourth largest bank in the U.S. This pushed it to the brink of collapse. The U.S. government bailed it out over a weekend, at the last second.
Carlos Evans, a Wachovia executive, said Wachovia went from “OK” to “in trouble” in less than a week.
He said “I don’t think people understand how quickly events unfolded.”
In this essay, I’ll explain why a real bank run could easily happen in the U.S. within the next two years.
And, if you don’t get money out beforehand, it will be trapped in the closed bank.
Folks who understand how this disaster will play out can sidestep it. You’ll even have a chance to make 200%+ gains because of it, as I’ll explain in a moment.
I know I’ll get angry emails for writing about this topic. Folks will point out that a major bank run hasn’t happened in the U.S. since the 1930s. They’ll say that a bank run in the U.S. is a one-in-a-million shot. They’ll call us fearmongers for even talking about such a catastrophic event.
I agree that a bank run would be catastrophic. It would blindside 999 out of 1,000 Americans. It would leave many Americans who keep all their money in the bank without a dollar to buy food or gas or medical care.
But unfortunately, I think most folks are vastly underestimating the likelihood of a bank run. The odds of one have risen dramatically since the 2008 financial crisis.
We are in much more danger of a bank run today than at any point since the Great Depression.
Why do I say that?
It’s not because banks don’t have enough money in their vaults—even though that’s true. These days, if even 1 in 10 customers tried to withdraw her money from the average bank, it would have to shut down.
But that’s not the reason why a bank run is highly likely in the next two years…
The Reason Is Negative Interest Rates
You’ve likely heard of negative interest rates by now. They’ve been all over the news.
In short, negative interest rates turn your savings account upside down. In a normal world, your bank pays you interest on your savings. It takes your money, pools it with other people’s money, and loans it out.
The bank makes money by paying out less in interest on your deposit than it earns in interest from borrowers.
This is how it has worked for decades.
Negative interest rates flip this on its head. Instead of earning interest, the government orders banks to charge you interest on your own money.
Negative interest rates could only exist in a crazy world where idiot politicians are in control.
Unfortunately, that’s just what we’re dealing with right now.
Politicians all over the world are ordering banks to charge you a fee for storing cash.
The Bank Account Tax
And the more cash you have, the more you pay in fees. We’ve called this the “bank account tax.” And it will likely lead to millions of folks pulling their money out of the bank to avoid paying the tax.
You see, government bureaucrats think that taxing your bank account will get you to save less and spend more money. This would lead to people buying more things like TVs, cars, and stocks.
This would “stimulate” the economy.
This thinking is dead wrong.
Negative interest rates won’t get folks to spend their hard-earned savings. Although mainstream economists claim spending drives the economy, many Americans instinctively know better. They’re not going to stop saving for retirement or for their kid’s college.
Instead, they’ll pull their cash out of the bank and put it in a safe or under their mattress. Folks will hoard money at home, where negative interest rates can’t tax their savings to death.
This is already happening in Japan, where the key interest rate is negative. Folks are pulling cash out of banks and locking it up in safes at home, causing an explosion in safe sales.
And here’s the thing…
It would only take a small fraction of withdrawals in the U.S. to force the banking system to shut down.
Here’s a little-known fact about the U.S. financial system. If you add up all the cash sitting in Americans’ checking and savings accounts, you get $11.1 trillion.
But according to the Federal Reserve, there are only about 1.4 trillion “paper” dollars in circulation in the U.S.
As you can see in the chart below, there are nowhere near enough “real” dollars in the system.
If even 15% of depositors tried to take their cash out of the bank, the banking system would collapse. Banks would be forced to shut down, locking you out of your account.
In normal times, this lack of dollars isn’t an issue. Less than 1% of folks try to withdraw large sums of cash each day. So banks can get away with having hardly any real physical cash.
But these are not normal times.
Remember, governments are ordering banks to tax your bank account with negative interest rates.
This has never, ever happened before. Not in the U.S. or anywhere else.
But it is happening all around the world right now. Key interest rates in Japan and Europe are already negative. And Janet Yellen, head of the Federal Reserve, recently said negative interest rates aren’t “off the table” in the U.S.
Your 3-Step Protection Plan
So, how can you protect yourself from this lunacy?
Well, at a minimum, you should have an emergency backup plan in the event of a bank run. We recommend keeping enough cash in your home to live on for at least three months. Six months’ cash is even better.
You can keep the cash in a safe hidden in your house. Or you can bury it in your backyard in an airtight, waterproof container. PVC pipes work well for this. You can buy them at Home Depot.
You should also own lots of physical gold and silver. As a general rule, we recommend having 10%-15% of your investable assets in physical gold and silver.
Gold and silver have served as money for centuries. They’ve outlived bank runs…hyperinflations…and every other kind of financial crisis.
Gold is the ultimate currency because it doesn’t rot or corrode…it is durable…easily divisible, portable, has intrinsic value, is consistent around the world…and it cannot be created from thin air. It cannot be debased by the government.
That last part is extremely important. As you likely know, governments often do reckless, destructive things during times of financial trouble.
How do you think the government would react to the ultimate financial crisis…a bank run that locks Americans out of their own bank accounts?
There’s no way to know for sure. But if you’re familiar with the reckless policy of “quantitative easing,” you know the government has created 3.5 trillion new dollars from thin air since the 2008 financial crisis.
You can bet the government will not hesitate to create trillions more dollars during a cash shortage.
And, as basic economics teaches us, creating new dollars destroys the value of the dollars in your bank account.
I expect this to create a “mad scramble” for physical gold and silver. This will cause their value to skyrocket.
Right now, probably less than 1% of Americans own a single gold or silver coin. If that number rises to just 2%, it would create a huge swell of demand for gold. It could easily push gold prices to $3,000 and beyond. And it could easily push silver prices to $35 and beyond.
Keep in mind, these are conservative estimates. Casey Research founder Doug Casey expects gold to hit $10,000/oz. Many well-known analysts agree with him. Jim Rickards, gold expert and former CIA insider, also expects gold to hit $10,000. So does Porter Stansberry, who’s famous for predicting the 2008 mortgage crisis and the demise of fraudulent companies Fannie Mae and Freddie Mac.
Despite all the evidence I’ve showed you, I know some of you will refuse to believe a major bank run could happen in the U.S.
Just remember, citizens of Greece thought the same thing before its banking system collapsed last year. As you may have heard in the news, Greek banks closed for 20 straight days. Many folks couldn’t buy basics like food or medical care.
And keep in mind, Greece isn’t a third-world country. It’s a member of the European Union with rich countries like Germany and France. And it uses the euro, the second most important currency in the world.
As I explained, you should take two critical steps to protect your money from a bank run. After you’ve taken step 1 (keep cash at home) and step 2 (own physical gold and silver), you may also want to play “offense” by owning gold stocks.
While gold is up 21% this year, gold stocks are up more than 70%. This is possible because gold stocks often offer 3x, 4x, or 5x leverage to the price of gold. So if gold goes up 100%+ like we expect, gold stocks could easily gain an average of 300%, 400%, or 500%.
And the very best gold stocks could gain 1,000%, 2,000%, or more. We saw this happen during the last gold bull market, when the average gold stock gained 602%.
In short, we have an extremely rare opportunity to make “10-bagger” gains in gold stocks right now. Doug Casey recently invested $800,000 of his own money into gold stocks for this very reason.
We want as many people as possible to profit from this opportunity. That’s why we’re offering a special $500 discount on International Speculator. In this gold stock research service, Editor Louis James shares the very best gold stocks to buy right now. But you’ll have to act quickly. This offer expires tonight at midnight.
When you sign up, you’ll get instant access to our new special report: “9 Essential Gold Stocks to Buy Now.” You’ll also be enrolled in a trial membership, which gives you the right to try out this service risk-free for 90 days.
But remember, today is the LAST DAY we’re offering this discount. And with gold prices surging, the window of opportunity to buy gold stocks could slam shut at any time. Once it closes, we likely won’t get another chance like this for years. Learn more here.
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