The Precious Return of Investment

precious metals

The financial powers, in the name of government treasuries (along with the IMF) have a keen eye trained on the lowest hanging fruits of monetary assets. What was once unthinkable is fast becoming a reality as bail-ins promise to morph into the confiscation that only precious metals investors have been known for fearing.

They are coming for your assets.

A long continuum of what began as rumors in the aftermath to the great financial crisis, have one by one become conspiracy facts.

The idea that retirement assets (but especially the already fee-bloated 401k's) would be eventually forcibly rolled into U.S. treasuries of some sort was floated long ago.

It is almost surreal to witness the unfolding of Obama's "MyIRA" program - soon to be a reality for many as the next inevitable equity shock arrives for the average investor.

While money on the sidelines is an overused euphemism, a great deal of fiat-denominated wealth sits on the sidelines. It has very little chance of re-entering the market, given that the majority who hold it still feel burned by the two previous bubbles.

The sad irony is that most investors fret over how to put it work, rather than consider the nature of what it actually is in terms the currency in which it is held.

But even before that, in the aftermath of panicked money market redemptions in the crash 5 years ago, proposals to limit cash redemptions were put in place to prevent a run on these accounts.

These were deemed as a necessary safety governor to prevent panic that begets more panic (altogether ignoring the much greater risk to panic from HFT-run trading algorithms). They are, in effect, a subtle behavioral attempt to divert the flow of trillions of dollars toward equities.

Indeed, behavioral finance is all we have left, mirroring the underlying the faced-based nature the financial system.

In what is essentially a draconian creep toward capital controls.

Now here comes the next step...

According to the FT, "Federal Reserve officials have discussed imposing exit fees on bond funds to avert a potential run by investors, underlining regulators’ concern about the vulnerability of the $10tn corporate bond market."

FT justifies this latest unprecedented pseudo-capital control by saying, "Officials are concerned that bond-fund investors, as with bank depositors, can withdraw their money on demand even though the assets held by their funds are long-term debt and can be hard to sell in a crisis. The Fed discussions have taken place at a senior level but have not yet developed into formal policy, according to people familiar with the matter."

Once this proposal is implemented, the Fed, or some other regulator, will effectively have full control over how much money market cash is withdrawable from the system at any given moment.

This new proposal gates (blocks) bond fund capital, just another attempt to get investors out of bonds and into equities.

The problem is that a brute force attempt to preserve a liquidity buffer is guaranteed to fail, as investors will simply quietly pull their money out at the convenience when they can, not when they have to.

However, instead of going into equities as the group of 30 and other central planners had hoped, the hundreds of billions of euros merely shifted into already negative nominal rate fixed income instruments.

No doubt this will have the same effect on precious metals investors. Any attempt at outright confiscation or taxation will likely be met with a further surge in buying and bury the remaining semblance of a real market deeper underground.

In the meantime, silver sentiment is more than handled by horrible sentiment based on the fatally erroneous of measuring value via manipulated price action.



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