The War on Cash and Then on Gold

Technical analyst Clive Maund says liquidity issues with banks could lead to restrictions on cash and precious metals.

The global financial system continues to groan under the strain of the accumulated weight of trillions of dollars worth of debt and derivatives, which have built up to even more fantastic levels than those that precipitated the near collapse in 2008, thanks to the policy of solving liquidity problems near term by creating even more debt and derivatives, Quantitative Easing being the most obvious example. However, while the majority considers the situation to be hopeless, there is actually "light at the end of the tunnel."

cash and gold

If only a way could be found to freely tap the funds of savers at will, by imposing duties or taxes on bank accounts, with the additional option to appropriate savers' funds on occasion as required, then the systemic liquidity problems will be solved. Banks need never fear solvency problems again and they can simply fall back on the account holder's funds to meet any obligations. There are in fact already names for these restorative operations, they are called "bails-ins" and NIRP (Negative Interest Rate Policy).

Unfortunately, any immediate attempt to implement bail-ins and NIRP on a large scale will backfire because, faced with being charged significant sums for the privilege of keeping their money in the bank, savers will simply withdraw their funds and keep them as cash at home, or maybe even invest in precious metals. It is therefore imperative that these escape routes are blocked off.

We have already seen an interesting "trial balloon" in recent years with respect to bails-ins. This was the celebrated Cyprus bail-in. When Cyprus banks were about to go belly up a couple of years ago, they saved themselves by raiding customers' accounts, which is more palatably described as a bail-in. The reaction of global savers to this action by the Cyprus banks was one of horror and revulsion and they made it plain that they weren't going to stand idly by and watch banks plunder their funds—they would withdraw them as cash if any such threat should appear over the horizon.

This reaction set the great minds of the banking community to work on how to stop savers withdrawing their funds in the face of these threats. The solution was and is simple—abolish cash! Thus we have seen production of the 500 Euro note in the European Union stopped so that it gradually fades into oblivion and in the U.S. Larry Summers has proposed abolition of the $100 bill, which accounts for most of the money in circulation. The idea is to implement the policy for a global cashless society in stages—if it is done all at once the public will revolt. They need to be trained to go cashless and this will take time. By starting with high denomination notes you actually remove most of the currency in circulation at a stroke, but the masses can still buy cigarettes and candy bars at street corner shops with small denomination notes. The excuse given for the removal of the notes is that it impedes organized crime and money laundering, etc., which is, of course, a convenient smokescreen.

With plans for a cashless society already well advanced it was time for another trial balloon. India was selected. Anxious to demonstrate his credentials as a card carrying member of the New World Order, and oblivious to the effects of the operation on the hapless citizenry of his country, Indian Prime Minister Narendra Modi went ahead with the withdrawal of two key banknotes. This caused chaos across the country, especially in rural areas where many don't even have bank accounts, and citizens often had to travel long distances to get to banks to change these banknotes, only to find that the banks had in many cases run out of smaller denomination notes. Despite the economic dislocation and suffering experienced by the masses, including some deaths, the experiment was deemed a success by the elites, as they had gotten away with it, with the cowed and impotent citizenry accepting it as their fate—what they should have done is rioted until the measures were withdrawn. Globally, the plan therefore is to keep chipping away at it until the cashless society is universally accepted, the only cash likely to remain being small denomination notes and coins suitable for paying street vendors and bus fares etc.

The arrival of the cashless society will not only mean that banks will be able to avail themselves of citizens' funds as and when they please, it will also mean that the banks, and by extension the government, will know all your financial business, what you do and when. Tax evasion will be impossible, and eventually you will not be able to do business with companies that are not approved of by the government.

With the escape route into cash set to be blocked off, that leaves precious metals: gold and silver—gold as a store of value and silver more for everyday transactions. Gold bugs and others, especially survivalists, and many wealthy investors see this as THE way to escape the rapacious grasp of the banks and the government, and are busy squirreling away fortunes into overseas vaults, etc. However, it is unfortunate that if you can think of this, so can they, so can the banks and the government, and they have plans for you and your gold hoard. Remember, their power is absolute, no one dares stand up to them and they can and will do what they like, changing the law as required to suit their purposes. They are much more powerful than President Franklin D. Roosevelt, who in the 1930s, in an act of naked piracy, seized the gold of U.S. citizens, and furthermore their modern powers of surveillance and tracking are much more sophisticated than anything back then.

Thus we can expect governments to declare the holding of gold (and silver) to be illegal, and to demand forfeiture to the government in exchange for nominal compensation. Vendors of gold bars will be closed down and mints will not sell retail gold. Unlike the 1930s, this would be a coordinated global campaign, a kind of witch hunt if you will, and there will be no corner of the world that is safe, just as they finished off private banking in Switzerland. Those buying gold and stashing it in various pseudo anonymous remote foreign depositories will be in for a nasty shock as these vaults are arbitrarily raided and plundered, with local and international law being changed as required to facilitate this. Nothing will stand in the way of a system that will not permit alternatives.

We will end on a positive note. No one really wants to see a complete systemic collapse, which is what will happen if banks don't avail themselves of savers' funds quite soon, least of all the controlling elites at the top of the pyramid who live lives of scarcely imaginable opulence and luxury and wish to continue doing so. Such a collapse would lead to bank accounts being frozen, and a breakdown of the distribution system leading to anarchy and hand-to-hand fighting in the streets for essentials like food and gasoline. Should we not therefore be grateful to our illustrious masters who have ingeniously thought of a way out of the current impasse, by availing themselves of your funds as required? Is it not a small price to pay to go cashless and forego your privacy and independence, and forfeit your gold and silver on demand?

It is tempting to blame others for all this, especially those in control of the system, but don't forget that for decades you voted for people who routinely lied before elections, and told you what you wanted to hear, that you could have it all right now and to hell with the future—well, that future has now arrived.

Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.

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Disclosure:
1) Statements and opinions expressed are the opinions of Clive Maund and not of Streetwise Reports or its officers. Clive Maund is wholly responsible for the validity of the statements. Streetwise Reports was not involved in the content preparation. Clive Maund was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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12 thoughts on “The War on Cash and Then on Gold

  1. The fiscal situation all most across the world became so version that now we bound to consider like "Too big to Bail" a "3D" Combo of Democracy, Derivatives and Debt is directly responsible for this blunder.

    "Cashless" system is fully depended on Banking, so Before emphasizing Cashless System One should must consider situation like what can be happened, if in case of mass bankruptcy of Banks, because we know and already experience such incidents in the last crisis of 2007-8, which was taken place due to "Structural Faults" of entire Banking System world wide. So i think it will be prove more denounces to fully shift on Cashless system. sitting on cash people will more safe.

    "No one really wants to see a complete systemic collapse," but this is not an issue of choice, this always imposed as a compulsion, so rather to depending on any "if and Then" probabilities, it is quite wise approach that one must consider and create it's own personal rescue arrangement and to adopt any personally suitable financial safety system

    And Finally, nobody can blame any one for all such chaos, because directly or indirectly, he himself also a part of it, contributor, and therefor, responsible for the same.

  2. really excellent article clive. india is the 7th largest economy
    in the world. 1 billion of the 1.3 billion people there are illiterate,
    cannot sign their own name, and live on $2 a day. they are
    now starving to death. the media has a blackout on this of
    course. india will soon be a totalitarian police state. this is
    ironic, since they have the lowest incarceration rate in
    the world. gold has been effectively banned. silver is NOT
    banned and they are the largest holders of gold and silver
    in the world.
    IT'S COMING TO AMERICA FOLKS!!!

    1. Dear Roger,

      Before writing figure of illiterate population of India, it was batter, if you have furnished your study with some evidence. For your information, I am giving such details as follows:

      74.04%.
      The literacy rates of different Indian states in 2001 and 2011. India's literacy rate is at 74.04%.Kerala is the most literate state in India, with 93.91% literacy. Bihar is the least literate state in India, with a literacy of 63.82%.
      Literacy in India - Wikipedia
      https://en.wikipedia.org/wiki/Literacy_in_India

      Further, not a single person is dead due to starving, as a cause of demonetization, if you are having any documentary evidence thereof, I will be pleased to find. Also as you are saying that "India will soon be a totalitarian police state" on the basis of which you have expressed alike? do you have any applicable or valid reasons therefore?

      And Finally... what do you want to say through "IT'S COMING TO AMERICA FOLKS"? accordingly, if you are having any negative views, then and then you are essentially required to make rigorous study and research on this issue.

  3. For Gold, $ 1094 and $ 1075 are Last supports, and most probably these will break, and there after,before getting any further down trend, which will break earlier bottom of around $ 1050 may consolidate around $ 1075 and $ 1050.

    Time study indicates that After third weak of January 2018, Gold will face more trouble and sharp fall can be easily anticipated. Gold Chart became absolutely bearish so There will be a wafer thin chances for any major bull run or any short term trend reversal.

      1. that's not the only one 😉 but I am still trying to make sens of all you said...

        So great that, according to your numbers, "only" about one fourth of India's population is illiterate -- doesn't really defy @roger_mason's point though, does it?! (Not a place for some local patriotism, I thought we're talking business here, and are looking at the horrors of a "cashless society". And yes, there have been reports of death due to R5000 note withdrawals on ridiculously short notice (of 4 hours) in India; of course not in the government-approved news and mainstream media, but I thought it is sufficiently apparent now that those cannot be trusted anyway.

        Everyone is free to be a sheep in the herd of naive believers (to be slaughtered by corrupted governments). It's like Germany re-electing Angela Merkel after what she's done! (They might do exactly that, though.) I, for my part, would rather go for the more cautious approach of @roger_mason and many other reasonable people and find a way to resist these outrageous goings-on.

        And hey, please note I am from Scandinavia where brainless Sweden is pushing forward with even more ridiculous utopian forms of government control -- so I should be expected to join in on your hopelessly naive approval song here, but I know better.

        1. Dear Harry,

          Thanks for frank and friendly feedback.

          First, said numbers of literacy rate is not mine, but provided in Wikipedia. Total numbers and Use of Cell Phones by Rural area also indicates "Technical literacy or Capabilities" of such people of hard core rural India, apart from their any formal education.

          I am fully agreed that some chaos taken place, and people also faced trouble to get cash from the Banks, however, corrupted and dishonest Bankers are fully liable for this unwanted situation. Bankers have paid huge amount, just limiting to isolated groups only, and that is too, in an totally unauthorized and illegal mode, so due to this practice, mass public bound to face long lanes to get cash withdrawal. thereafter, Media and oppositions have tried to twist this matter on the worst.

          I firmly believe that being an analyst, you must be neutral, bias free and evaluate issue fully on its merits and focus should and must be towards predicting possible end out come of the concerned issue only and there is no space for any patriotism, or no any specific "Love or Hate"me too, hate any blind, thoughtless and irrational patriotic approach so whatever, I have expressed, is being a Genuine Analyst only, and i just focus on the ultimate effect of this decision on Business and Economy only, without any political or other considerations. For many instance, whenever required, i have harshly criticized Government policies.

          With Regards,
          Rasesh Shukla.

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