24 February 2013

How Bank Guarantys work

I’ve had a chat with a new customer in an Irish pub. We sat and chatted in the middle of the South of this lovely Island.

She – was new to gold, so we talked naturally about gold and the markets and how owning gold protects one from an eroding purchasing power compared to holding money in the bank.

After one pint and a portion of cheesy chips… I was asked: “But Stefan, I haven’t invested in something else as the government guaranteed the bank deposits are safe for Irish citizens. Isn’t it safe to have the money in the bank?’

Honestly; I was a bit speechless. My fellow friend was guided a minimum for three years to invest in gold. If she would have followed this information three years ago, she could have made a lot of dough in the past three years. That means at least double her wealth.

But after all this years of international business and deluding government news… there you go… I felt sad that so many of us still trust the BS* that comes from officials.

Let’s take to the question ‘How Government and Bank guaranties work’.

To understand how that works, you have to imagine that you’re sitting next to the on/off button of the money printing machine.

So, imagine I’m a chancellor of a European Country and you’re Mario Draghi from Italy president of the European Central Bank. I’m ‘in need’ which means my country spend a bit too much money. Here’s the conversation taking place:

Chancellor: Hello, Mario, how are you?
ECB President: Bongiorno, si, si, very good.

Chancellor: Look, mate, would you mind giving us 4 billion EUR/USD (whatever currency) because we’re a bit short and need to pay out a couple of bondholders next month?

ECB President: No problemo – we’ll do that for you. Money is on the way.

Chancellor: Thanks my man – Grazie mille.

One second later, the 4 billion Euros are created – the problem is fixed- easy. Accounted to: National debt.

This is exactly how the ‘creation of money’ takes place – it’s a mouse click, digits in a computer.
Angela Merkel

The German chancellor Dr. Angela Merkel rocked up on the middle of 2008 in the Telly stations saying: “The bank savings are guaranteed!” Suffice to say, that I recommended next day to all our German customers, to move their money out of the bank into gold.

The ones that did follow the advice… made a good 100% profit. In the meantime the German debt rocked up by about the same… from one billion to two billion devaluing bank savings by 50% because of all the bank bailouts.

As I wrote in the ‘Goldbook’… ‘Let there be money’ which means money is created out of thin air.

Say, if you have 100,000 EUR/USD (whatever currency) in your bank account. In order to keep the promise the government just prints your 100,000 (whatever currency) to make up for it.

Do you see? The question is: How much House, Car, Food, Commodity (Oil, etc.), Gold do YOU get when you request your currency from the bank – in comparison when the government made the promise and you actually need the money? So it’s a timing thing. On a long enough timeline the purchasing power of your money in the bank goes to zero. Remember – Gold and Silver IS money.

How much car did you get just ten years ago for 20 grand – and how much car to get for the same 20K today?

The aspects of your life that are part of the system meet the same fate as the system. We’ve said that hundreds of times.

Throughout human history paper currency always failed – fact

‘Failed’ means it erases purchasing power by 99%. And we said a million times that

Gold has never failed – it protects and increases your wealth

Now, it’s up to you to understand, to internalize that, to act (or don’t) and become safe. As soon as you take the leap of faith and move; you start to feel free. You intuitively feel that you’re stored labour (money in the bank) does not longer go down the gurgler.

Here’s what I suggest: Should you decide to move out of the financial system and buy some gold…

Buy a very, very fancy bottle of Champagne or Wine. The day the package arrives, enjoy this wine or champagne and celebrate your freedom that you have waited for so long. No more advisor crap, no more bank crap, no more ‘Oh, I lost so much money with me shares!’ neighbour talk. Your life becomes calmer and more silent
. Champagne

And you’re not alone… everyone that moved out of the bank into gold is in a pretty good state as written in the ‘Magic of Gold’ article from 21 August 2011. And more about the calmness that is in people when owning gold in the ‘Natural Money’ article from November 13  2011.

Bottom line is: Forget about Government guaranties, create a reality on your own and preserve your wealth for what you have worked for. And always keep in mind it’s you that is responsible and that complacency is of good value for the politicians. Meaning, take action for yourself even if it feels the opposite of the main stream. As the wise Taoist sages said: When people run, walk. When people walk – run. Do the opposite of the mainstream and you’ll be safe.

Author: by Stefan Krämer

Older Surviving in the Gold Industry – A look behind the scenes Newer Massive Perception Change in Gold Coming Part II