29 November 2014

Banks: The Unfair Advantage

There has been a lot written recently about the scandals that have hit the big banks. Whether it is interest rates, currency rates or commodities the fines on banks seem to keep growing and growing. 

Recently, Goldman Sachs came under fire over accusations that its aluminum business improperly influenced prices and that the firms traders had an unfair access to market moving data. (Source: Bloomberg 11/20/2014)

According to Bloomberg, Senator Carl Levin, called the Goldman Sachs aluminum transactions “merry-go-round deals” that had little purpose other than to move aluminum around from storehouse to storehouse to influence the fees customers pay for storage and financial aluminum products.

Cozy Relationship with Regulators

In a separate Bloomberg article it was reported that two bankers were fired from Goldman Sachs after one of them allegedly shared confidential information from the New York Fed within the firm. (Source: Bloomberg 11/21/2014) One has to wonder whether this is a common practice or is it an isolated incident?

One of the more staggering statistics we found is that the four biggest banks in the US have paid fines, penalties and legal settlements that are approaching 100 Billion dollars, according to data complied by Yahoo Finance. (Source: Yahoo Finance 7/10/2014) According to the article US bank penalties exceed the GDP of most countries!

The bank headlines are never ending. According to a recent article in Business Insider, Goldman Sachs, HSBC and others have been accused of rigging the metals market. The suit, filed in New York, accuses the group of conspiring since 2007 to rig platinum and palladium "fixings" and the prices of futures and options based on those fixings. (Source: Business Insider 11/26/2014)

One Reason We Like the Precious Metals

We have mentioned before that it is very difficult to determine the true value of an investment in the current environment. Banks and professional traders have the clear advantage. However, in our view owning physical Gold and Silver enables an average investor to limit the exposure one has to banks and riskier financial assets.

 Stocks, bonds and other financial assets may have there place in a portfolio for some people, which is fine. The precious metals give today’s investor extra protection in case something goes very wrong in the global financial system. Gold and Silver also can be held as a form of money, and if need be, exchanged for virtually any currency on the planet.

Author: celticgold.eu

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