roller coaster

What’s next?

Well dear reader it has again been, without doubt, a very interesting and sometimes scary week. First we heart that the bailout plan will be approved and later we got the message that this will not be the case. Finally today we were informed that there is an agreement. Furthermore we had some more banks that failed. Wamu was the biggest bank failure in the US history. As mentioned an interesting week and I guess we will see more of the same kind.

Well before we go to the news, I’d like to make a personal comment. Last week a reader informed me that she/he is very much worried (which of course is normal under these circumstances) and this person let me know that she/he sold gold practically on the lowest point on the correction we just had to witness. Well dear reader receiving such information makes me feel sad. Why? Well first of all it makes me sad that the gold was sold practically on the lowest point of the correction and secondly it makes me sad because I tried to be some kind of a guide through the difficult situation with the falling prices.



Well dear reader the most important reason why I spend hours and hours to write these posts, is the hope to be able to be a guide, especially when needed. When I started the blog my idea was to give the readers the possibility to get some information that normally does not come across in the mainstream media. To go through these information pieces takes hours and it was my intention to make a short overview in order to save the readers time. Furthermore my blog was intended to be a kind of an education tool. An education tool in the sense that I try to explain certain things that normally are not explained at all or in case they are, they normally are only explain in a superficial form. If you have had the chance and time to read all my post and might not have had any idea about derivatives or any idea what a CDS is, I guess now you do. Thirdly I hope, that with my experience of 32 years active in the business I am actually (thereof more than 22 years directly connected to the investment part), that I can be of help in general terms and hopefully especially in special situation such as the one with the past down correction in the precious metals. I have gone through such situations before and I can let you know that I was scared a lot too. Apart from being scared, I had to learn a few things from the hard side, meaning that from time to time I made losses too. As an investor, one knows that from time to time losses are possible. Important is to learn from these mistakes and not to repeat them. Unfortunately most people do repeat again and again the same mistakes. Why? Well the reason are many but mainly it is human emotions. Following you can see a chart about human emotions (as a frequent reader you might remember that I posted the same chart recently).



Please keep in mind that even professionals go through the same emotions. In order not to fall into the scheme, it is important to be on one side very disciplined and on the other side to keep the emotions on the side and look at the fundamental data (this is certainly a difficult part). This of course is not always easy and mistakes are possible but it might be of help to have somebody who is a bit more neutral to consult. So please do not hesitate to contact me in such a situation. Of course I cannot guarantee you that I will be always right but I might be able to give at least some input that might be helpful.

Following some more recommendations. Please do not listen to people who do not have the particular knowledge about a particular investments or topic. As there are not many experts regarding for example the precious metals, oil & gas or other commodities, do not listen to those people who do not understand the market. Please check with people who have followed the market for a long time. Visit wepages that are specialized in these topics. Most probably you will find more valid information on those sites. In my last post Spanish version (for all readers who know Spanish, please read the post) I wrote about the sharks that are out trying to get their prey. I talked as well about the bankers that are just trying to optimize income for the employer and not necessarily for the client. Of course I have nothing about the advisor and his employer to earn well but only if they have really made their advises to the best of the clients. It cannot be that only the advisor and his/her employer earns a lot and the client not. Of course there are some very honest advisor too, but my advice to you is, whenever your advisor recommends you to buy something, please ask a lot of questions. Questions such as for example, what is the maximum loss risk, what is the maximum upside potential and so on. If you get recommended a product with a maximum upside potential of 10% per annum and a theoretical loss risk of 100% it certainly is not a good investment. If your advisor lets you know that the product is 100% capital guaranteed, ask how it is guaranteed. Remember that many institutions that guaranteed something are gone and therefore the guarantee too (AIG, Lehmann etc). So capital guarantee might not be as good as it sounds.

What can be expected the way forward? Well regarding the precious metal markets, we can expect a very high volatility. Don’t get scared when you see prices go down. If you have liquidity you should be happy because with each down swing you get the chance to buy precious metals at a bargain. Accumulate if you can. Although the bailout plan now is approved, I do expect that the situation will get nastier. There is no cash available, banks do not lend anymore and are basically trying to cancel credit lines whenever they are able to do so. New credit lines are practically a no go unless you put some solid collateral. Bankruptcies will increase and I mean not only bankruptcies of financial institutions but in the broad economy. So please be prepared. Having cash might not be that bad an idea. Of course holding precious metals (in physical form) might be an even better idea.



Now let’s get to the news. As usual I start with the overview from www.prudentbear.com
The stock market was almost a sideshow... For the week, the Dow dropped 2.2% (down 16% y-t-d), and the S&P500 was hit for 3.3% (down 17.4%). Economically-sensitive stocks were under pressure. The Transports sank 6.9% (up 3.9%), and the Morgan Stanley Cyclicals dropped 7.3% (down 19.4%). The Utilities declined 1.4% (down 18.7%) and the Morgan Stanley Consumer index fell 1.6% (down 8.9%). The broader market gave back a chunk of recent gains. The small cap Russell 2000 dropped 6.5% (down 8.0%), and the S&P400 Mid-Caps sank 6.4% (down 12.2%). The NASDAQ100 fell 4.2% (down 19.8%), and the Morgan Stanley High Tech index dropped 4.5% (down 20.1%). The Semiconductors declined 3.7% (down 21.2%); The Street.com Internet Index fell 3.9% (down 13.9%); and the NASDAQ Telecommunications index sank 8.5% (down 17.4%). The resilient Biotechs dipped 0.6% (up 2.2%). The Broker/Dealers dropped 9.1% (down 37.3%), and the Banks fell 10.5% (down 16.6%). With Bullion gaining another $6.20, the HUI Gold index rose 1.6% (down 19.6%



Will the bailout work? Well dear reader I have my serious doubts. I am clearly of the opinion that no blank check should be given to those asking for it. It is amazing that any intelligent person would even consider giving a blank check to the same people that created the problem in the first place. Furthermore even if the blank check would be given it should never be without any controls. Why? Well first of all I do not see why those who are the responsible should receive the check. Secondly the Treasury and the FED have shown poor performance as administrators. Thirdly how can it be avoided that the secretary will not do favours to his ex buddies? So far it seemed as he indeed has been too much on the side of the Goldmans and pals (more on that later).

Well following some comments, found on the net, regarding bailout
First of all I recommend reading the article on the following link which in my opinion is excellent
The banksters’ plan now is for icing on the cake – to take Mr. Paulson’s $700 billion and run. It’s not a “bailout of the financial system.” It’s as giveaway – to insiders, to sell out all their bad bets. Companies across the board will get rid of their bad mortgages, and also their bad car loans, furniture time payments, credit-card loans, student loans – all the debts that any competent actuary could have told them never could have been paid in the first place.
http://www.itulip.com/forums/showthread.php?p=50223#post50223


And Nouriel Roubinis opinion
Quote
The Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown.
Unquote
http://www.rgemonitor.com/roubini-monitor/253762/rge_conference_call_on_the_economic_and_financial_outlookand_why_the_treasury_tarp_bailout_is_flawed
and
http://www.rgemonitor.com/roubini-monitor/253783/is_purchasing_700_billion_of_toxic_assets_the_best_way_to_recapitalize_the_financial_system_no_it_is_rather_a_disgrace_and_rip-off_benefitting_only_the_shareholders_and_unsecured_creditors_of_banks


Bailout Could Deepen Crisis, CBO Chief Says
Asset Sales May Lead to Write-Downs, Insolvencies, Orszag Tells Congress
By Frank Ahrens
Washington Post Staff Writer
Thursday, September 25, 2008

The director of the Congressional Budget Office said yesterday that the proposed Wall Street bailout could actually worsen the current financial crisis.

During testimony before the House Budget Committee, Peter R. Orszag -- Congress's top bookkeeper -- said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems.
"Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said in his testimony. "Establishing clearer prices might reveal those institutions to be insolvent."

In an interview later yesterday, Orszag explained using the following example: Suppose a company has Asset X, whose value is recorded on the books as $100. Because of the current economic decline, Asset X's real value has dropped to $50. If the company takes part in the government bailout and sells Asset X for $50, the company has to report a $50 loss on its books. On a scale of millions of dollars, such write-downs could ruin a company.

Such companies "look solvent today only because it's kind of hidden," Orszag said. "They actually are insolvent" already, he said.


Paulson cannot be allowed a blank cheque
By George Soros
Published: September 24 2008 20:28 | Last updated: September 24 2008 20:28
Hank Paulson’s $700bn rescue package has run into difficulty on Capitol Hill. Rightly so: it was ill-conceived. Congress would be abdicating its responsibility if it gave the Treasury secretary a blank cheque. The bill submitted to Congress even had language in it that would exempt the secretary’s decisions from review by any court or administrative agency – the ultimate fulfilment of the Bush administration’s dream of a unitary executive.

Mr Paulson’s record does not inspire the confidence necessary to give him discretion over $700bn. His actions last week brought on the crisis that makes rescue necessary. On Monday he allowed Lehman Brothers to fail and refused to make government funds available to save AIG. By Tuesday he had to reverse himself and provide an $85bn loan to AIG on punitive terms. The demise of Lehman disrupted the commercial paper market. A large money market fund “broke the buck” and investment banks that relied on the commercial paper market had difficulty financing their operations. By Thursday a run on money market funds was in full swing and we came as close to a meltdown as at any time since the 1930s. Mr Paulson reversed again and proposed a systemic rescue.

Mr Paulson had got a blank cheque from Congress once before. That was to deal with Fannie Mae and Freddie Mac. His solution landed the housing market in the worst of all worlds: their managements knew that if the blank cheques were filled out they would lose their jobs, so they retrenched and made mortgages more expensive and less available. Within a few weeks the market forced Mr Paulson’s hand and he had to take them over.

Mr Paulson’s proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief. But if the scheme is used to bail out insolvent banks, what will the taxpayers get in return?

There was a tense moment during the House Banking Committee testimony when a senator asked about the 62 T$ CDS derivative market and that failed institutions have been revealed to have had massive exposure to it. She asked if Paulson intended to buy any CDS derivatives in the RTC fund. Paulson visibly froze. Chris Cox quickly jumped in and said it was a huge market and it needed regulating and is "ripe for fraud and manipulation" but it was far too much of a complex problem to tackle with the current bail-out bill but needed to be addressed! Bernanke then babbled on about how Tim Geitner of the NY Fed had been leading an initiative on this issue and was making good progress! It was like watching Ice Hockey players avoid the body-check. They got away with it because everyone was focused on the 700B$ problem and completely missed the 62 Trillion dollar elephant sitting in the room (good job no one mentioned the 1200 trillion dollar global derivative market elephant!). The other senators probably thought that they said "trillion" when they really meant to say "billion"!

http://www.forbes.com/afxnewslimited/feeds/afx/2
008/09/23/afx5459275.html



Bailouts and its cost inflation adjusted
http://www.propublica.org/special/government-bailouts



PAULSON SAYS WAS 'SHOCKED, ABSOLUTELY SHOCKED' AT FLAWED REGULATORY SYSTEM END
Do you think he was referring to the CFTC and the precious metals markets????
It was such irony to hear him blame a failed and outdated regulatory system and lack of oversight for the financial crisis and then propose that he should be able to have 700 B$ to do what he wants WITHOUT any oversight or regulation!!!
from www.lemetropolecafe.com
Quote
President Bush just finished his address. The common theme of Bush, Paulson, and Bernanke is if we don't pass the rescue package we will have a panic and an economic depression. Credit spreads blew out today and 1 month treasuries traded with negative yields again. At this point I think a crash is certain. If the bailout is not passed panic is immediate. If the bailout is passed [I give this a 99% probability] I think it only a matter of time before the Treasury has a failed auction.
"Panic" does not do justice to what the financial landscape will look like. Once an auction fails the thought process worldwide will go into hyperdrive. We have become so trained with bailouts that the thought of "who will bail out the Treasury" has never been contemplated before now. When this comes to pass there will be no turning back. In the past, "we always had a safety net", it was the government. Now they are telling us that all the safety nets except this last "$700 Billion" have failed. I smell fear on the part of Bush, Paulson, and Bernanke. If we can only borrow another $700 Billion everything will be fine! I'm sorry but with all the bullcrap that has come out over the last year, this goes to a new level. "Please, just give us another $700 Billion to pass out to our friends to save their butts and you won't lose your house, cars, 401K's, jobs, and everything else". Too much debt and leverage got us to where we are now, more debt is not the cure. If it was truly a cure, the $2 Trillion plus already pumped in would have done the trick. I can't believe these 3 stooges have put the integrity of both the Dollar and Treasury on the line, there is no "do over" here. This was no "fireside chat", and if you read between the lines today and this evening, they are panicking. How far away can we be when the President, Treasury secretary, and Chairman of the Federal Reserve use the term "financial collapse" in the same day? How far away from a financial panic can we be when our "leaders" are panicking?
Unquote


Bill Bonner from Daily Reckoning comments as follows:
The measure includes a provision in which the public debt is raised to over $11 trillion. This will put it at about 85% of US GDP. We recall from a couple weeks ago that Louis 16th lost his head after France’s debt rose to about 80% of GDP. The problem is, when you get to that level of debt, lenders balk and the borrower runs room to manoeuvre. In the modern world, that probably means higher interest rates...and what was once unthinkable, a downgrade of America’s debt rating from AAA to something less than that – and possibly junk
Unquote


Until Friday it was not clear if the deal will be approved. Following a short info on what happened after the meeting on Thursday in the Oval office

In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to “blow it up” by withdrawing her party’s support for the package over what Ms. Pelosi derided as a Republican betrayal.

“I didn’t know you were Catholic,” Ms. Pelosi said, a wry reference to Mr. Paulson’s kneeling, according to someone who observed the exchange. She went on: “It’s not me blowing this up, it’s the Republicans.”
Mr. Paulson sighed. “I know. I know.”

Well it seems as there is desperation in the air. Although it seems that something has to be done, I do not believe that the plan will work and as mentioned at the beginning I do certainly not believe that a blank check is the correct way to go. Why is Paulson so desperate? The pressure (maybe from his buddies) must be enormous. Does he still have some personal interest involved? I have my serious doubts that he is the saviour or white knight or whatever else he would like us to worship him. He has been for too long a time in the group that managed markets. Unfortunately the way this was done only helped a few but ended in a disaster for almost everybody. Suppressing certain markets and popping up others is not the solution but rather the trigger of today's problems. Today we see the results of this reckless behaviour. Well I wonder what really is going on in the secretary's mind. What is it that makes him bend down on one knee? As I seriously doubt that it is his humanitarian touch that made him do so, I really wonder what might have been the reason.

Well without doubt the whole thing has turned political. Following a comment about that
3 Questions The Government Doesn't Want You To Ask About the Financial Crisis
http://www.safehaven.com/article-11344.htm


John Crudele
BAILOUT PLAYS INTO BERNANKE'S DEFLATION FIGHTING THEORY
http://www.nypost.com/seven/09252008/business/bailout_plays_into_bernankes_deflation_f_130678.htm?page=0

More about the possible conflict of interest

Conflict Of Interest? Report Says Goldman Sachs ‘Among Biggest Beneficiaries’ Of Paulson’s Bailout»
But the conflicts are also visible. Paulson has surrounded himself with former Goldman executives as he tries to navigate the domino-like collapse of several parts of the global financial market. And others have gone off to lead companies that could be among those that receive a bailou
Read on, the rest of the info can be found on the following link
http://thinkprogress.org/2008/09/22/paulson-goldman-bailout/

and
Rescuing AIG, U.S. saved Goldman Sachs $20 billion
By Gretchen Morgenson
The New York Times
http://www.nytimes.com/2008/09/28/business/28melt.html?_r=2&hp&o&oref=slogin


Well the party seems to stop soon. Those guys who so far have financed the orgy are more hesitant

Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says
Sept. 25 (Bloomberg) -- Japan, China and other holders of U.S. government debt must quickly reach an agreement to prevent panic sales leading to a global financial collapse, said Yu Yongding, a former adviser to the Chinese central bank.
``We are in the same boat, we must cooperate,' Yu said in an interview in Beijing on Sept. 23. ``If there's no selling in a panicked way, then China willingly can continue to provide our financial support by continuing to hold U.S. assets.' ..
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anZHfo6tQi60

China banks told to halt lending to US banks-SCMP
http://www.reuters.com/article/marketsNews/idUSPEK16693720080925

Following two links with interesting info
http://www.nypost.com/seven/09252008/business/bailout_plays_into_bernankes_deflation_f_130678.htm?page=0

http://www.journalinquirer.com/articles/2008/09/25/chris_powell/doc48db9d8625518811197071.txt

From predator to prey and back to predator or Goldman taking over



If the bailout plan is approved it could mean that Goldman or others of course, could buy distressed papers. Let's say for 10 cents a dollar and sell it to the bailout pool for much more. Would be nice and quick profits. All those in important public positions and these positions, especially in positions related to finance, are now almost all occupied by ex Goldman boys, have thanks to their job received go out of jail card in the ongoing monopoly game. What could that mean?

An opinion found on the net:
Quote
The details are a little complex, so here is my quick and dirty take on what happened:
Buffett puts together a fantastically, amazingly great deal for a piece of Goldman Sachs... a deal that is set to earn Berkshire billions in profit at near zero risk
The risk on the Goldman deal was zero, or close to zero, because Buffett likely got a federal guarantee that Goldman would not be allowed to fail. That was Buffett’s reward for stepping up, knowing he could lend stability with his mere presence.
Treasury Secretary Hank Paulson (who used to run Goldman Sachs and put this whole thing together) then pulled Buffett aside and said something like “OK, Warren. You’re going to make out like a bandit here... How about you help out Ben (Bernanke) and me a little, too? If you could get Congress to put up or shut up, that would be swell.”
Buffett says “OK, Hank. I’m your man,” and agrees to be interviewed on CNBC... where he states loudly and clearly that the bailout deal must get done, that Paulson is a good man doing a necessary thing, and that we will face “economic Pearl Harbor” if Congress doesn’t approve the whole shebang pronto.
So the Oracle of Omaha locks in another killer deal (the kind that only he could pull off)... burnishes his image as the wise man who keeps his head while others lose theirs all around him... maintains his folksy “aw shucks” style by voicing his belief that Republicans and Democrats will “do the right thing”... and gets credit for helping save the system to boot.
Unquote

Toxic waste, toilet paper and derivatives that according to Warren Buffet are weapons of mass destruction of financial markets
To emphasize the point, Buffet himself called derivatives "Weapons of Mass Financial Destruction". And we’re supposed to believe that he is putting $5 billion of his own money into Goldman, the king of derivatives which only days ago was on the brink of collapse due to all those derivatives on its balance sheet.
Some years ago the government "forced" Buffett to sell silver and this may be more of the same
Well Buffet injected funds into Goldman. Is it a wise investment?

Following a comment found on the net.
Quote
Maybe, maybe the amount injected is less than what he would have lost if Goldman would have entered Chapter 11. Goldman in Chapter 11 would mean a lot of losses for the 5B$ investment in GS by Warren Buffett is extremely unusual. You don’t have to even be half as smart as Buffett to realize that this is not a time for bottom fishing financials! He was interviewed on CNBC and said he didn’t even tell Charlie Munger about the deal until AFTER it was agreed. That is also VERY unusual. I think Buffett is injecting cash into GS because things are desperate. It doesn’t matter if it is a "good investment" or not because if GS were to declare chapter 11 right now Buffett knows that his portfolio would drop by a lot more than 5B$. Once the 700B$ package is approved no doubt GS will get access to cash but it looks to me like they needed a lot and quickly
Unquote


Dear reader the following video is a must see in my opinion
http://www.youtube.com/watch?v=H-F89sIDDVI


Dear reader already a couple of months ago, I told my friends that would not be surprised at all if we would have to witness major riots in the US in a couple of months. I came across some reports detailing, that the US government was building huge detention camps. The following news piece I found on the net might indicate that my forecast of riots might not have been that out of the blue
Army Unit to Deploy in October for Domestic Operations
Beginning in October, the Army plans to station an active unit inside the United States for the first time to serve as an on-call federal response in times of emergency. The 3rd Infantry Division’s 1st Brigade Combat Team has spent thirty-five of the last sixty months in Iraq, but now the unit is training for domestic operations. The unit will soon be under the day-to-day control of US Army North, the Army service component of Northern Command. The Army Times reports this new mission marks the first time an active unit has been given a dedicated assignment to Northern Command. The paper says the Army unit may be called upon to help with civil unrest and crowd control. The soldiers are learning to use so-called nonlethal weapons designed to subdue unruly or dangerous individuals and crowds.


Wamu Gone



Well Washington Mutual is so far the biggest bank failure in the history of the US. There will be more banks to follow.
Government Seizes WaMu and Sells Some Assets
By ERIC DASH and ANDREW ROSS SORKIN
September 26, 2008
Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night in the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual to JPMorgan Chase. The remainder of WaMu, the nation’s largest savings and loan, will be operated by the government. Shareholders and some bondholders will be wiped out. WaMu deposits are guaranteed by the Federal Deposit Insurance Corporation up to the $100,000 limit for each account. WaMu customers are unlikely to be affected.



JPMorgan Chase is to take control on Friday of all of WaMu’s 2,300 branches, which stretch from New York to California, and will oversee its big portfolio of mortgage and credit card loans. It will also acquire all of WaMu’s deposits with the sale.

For weeks, the Federal Reserve and the Treasury Department had been nervous about the fate of WaMu, among the worst-hit by the housing crisis, and pressed hard for the bank to sell itself. As panic gripped financial markets last week following the collapse of Lehman Brothers, the government stepped up its efforts, working behind the scenes and at points going behind WaMu’s back to work privately with potential bidders on a deal.
Indeed, the seizure and the deal with JPMorgan came as a shock to Washington Mutual’s board, which was kept completely in the dark: the company’s newly minted chief executive, Alan C. Fishman, was in midair, flying from New York to Seattle at the time the deal was finally brokered, according to these people




Well dear reader as you certainly remember I was warning constantly about the derivatives and lately about the Credit Default Swaps. It seems that the market of the CDS is decreasing. Well on one side it is certainly due to the fact that some very important players are now gone (Lehman and AIG) and on the other side the reduction can be attributed to the market participants netting out positions when possible. However the total amount of CDS (which is only a minor part of the total outstanding derivative cake) is still high. The total of CDS is still higher than the total world GDP
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3PO453H_A58&refer=home

Well dear reader the question is if the Titanic finally has hit the iceberg. It certainly does seem so. Like with the Titanic, the first ones on the lifeboats were saved. Maybe there will not be enough life boats for everybody. Do you have your life boat ready?


Gold
Well Gold did hold well this week until Thursday where we saw again the typical procedure. Please see the following chart



Why did that happen? Well maybe because it was option maturity and some put option holders had to be saved from heavy losses. Manipulated markets? Well you know already my opinion.
There is a concerted, coordinated effort on the part of central banks, the International Monetary Fund, the Bank for International Settlements and many others to restrain the price of gold, as they have actually admitted over and over again, and thus the price of gold is artificially low.

Physical versus paper
David Morgan
"Question – Russell, would you talk a bit more about your preference for gold coins in one's possession vs. GLD, which you term "paper gold" and SLV, which you call "paper silver."

“Richard Russell’s Answer – Yes, as I see it, the authorities are doing whatever they want. I'm more inclined to hold actual gold coins. The SEC now disallows shorting in 799 financial equities, an amazing turn of events. Now with central banks all over the world releasing vast quantities of fiat money, it's entirely possible that gold will embark on a major rise. If this happens, it will throw suspicion on all fiat currency, which is the last thing the central banks want. Under these conditions, it would not surprise me for the Fed and the SEC to halt all trading in gold, and the easiest place to monitor such an edict would be GLD. In 1933 the government ordered in all gold held by the US population. I can't see that happening, but I can see all trading halted. This would throw gold into the black market and make it very difficult to price or sell your gold. In France, people are forbidden to take any gold out of the country. Remember, gold is the enemy of fiat paper, and in that, there is a story. Rising gold throws suspicion on ALL fiat and central bank issued currency.”
Please read on
http://www.silver-investor.com/davidmorgancommentary/articles/9-25-08_ibtimes31_PreciousMetalsinthePhysicalRealm.html


Following a comment from another savvy silver investor and guru
Ted Butler
The Sensible Swiss
This week I received an e-mail from a Swiss money manager, a friend and trusted source. He informed me that a very large and conservative Swiss bank had informed a number of their clients that they would no longer be offered paper gold or silver certificates in the bank’s name. It seems the bank had previously granted the accounts because it was able to protect itself against an upside move with a derivatives contract with another financial institution. Due to the financial turmoil, the bank was no longer comfortable with the counterparty risk from the other financial institution. Instead, the Swiss bank informed its clients, all paper transactions had to be converted to physical or physical ETF positions (There are Swiss ETFs for gold and silver). My friend informed me that other Swiss banks were likely to follow this bank’s lead.
http://www.investmentrarities.com/09-23-08.html