zondag 24 maart 2013

Belgium deposits are not safe

I happen to live in Belgium and there are some people there arguing with me about gold. I keep telling them to buy gold but they insist not to buy it.

What they don't take in account is that Belgium is the next in line of the PIIGS. Belgium has one of the largest  debts in the Eurozone and has the highest taxes. As a result I don't think that higher taxes will be an option.

So the only other option is to take your deposits like in Cyprus. Belgium happens to have a lot of uninsured deposits ready for the taking (Chart 1).

With this chart I will have another argument up my sleeve. Of course I already prepared myself by taking all my money out of the bank.

3 opmerkingen:

  1. You are just one example of someone taking their money out and buying gold. There will be many more. I think it will probably take a few weeks for the outflow from the banks to really show up.

    I am interested in what are the leading indicators other than bank line-ups at atm machines. The real money flow will be via wire transfers. Physical gold or gold futures sales may be an indicator but it seems to be slow to react. How many people need to withdraw their money before it becomes a problem? With all the bank leverage could it be only 5% or 10%? If so, there will be a lot of pain in Europe.

    Good luck to you.

    1. Interesting topic. It's very easy to see.

      Just look at the bank liquid reserve to asset ratio. If you go above that percentage of bank run money, then you have a problem.

      Cyprus has a problem now because the deposits that are taken are higher than the liquid reserve to asset ratio.

      We'll see what happens when the market reopens, it is now closed in Cyprus:

  2. Thankyou Albert. Always educational.