Friday the hedge funds were short a staggering 68,700 contracts. What makes this number even more amazing is that it represents an astounding 10+% of the entire open interest in the gold market of 667,000 contracts. So this is by far the hedge funds’ largest short position in percentage terms in history.
–Trader Dan Norcini
Jim Sinclair’s Commentary
The funds withdrawn in Cyprus by depositors via the use of ATM machines this weekend already had 10% deducted from the cash balance in the account by the banks.
The ATM use was a "run on the system" and not a trick to avoid the 10% confiscation.
Could, and would are two different things. Maybe a call from Russia has had an impact on Cyprus’ leadership.
Revenge can be a bitch when it is Russian style. LaGarde has made the mistake of her career. Central banks everywhere have put $4 trillion into the system to save it from the effects of the OTC derivative meltdown and the flushing of Lehman. $10 billion is about to blow that all up.
The greatest conspiracy in history may well end up being stupidity and hubris. It might be Europe’s consideration of Russian money as too Russian to care about.
The Fed will be swapping the hell out of the dollar from 11pm tonight forward.
Tomorrow, Cyprus could vote to leave the euro. This is political dynamite
By Mats Persson March 17th, 2013
There are two ways to look at the hugely controversial bailout agreed for Cyprus in the early hours of Saturday morning, in which the small island nation – accounting for only 0.2 per cent of eurozone GDP but whose troubles will have an impact far beyond its size (including on some 25,000 Brits in Cyprus) – received a €10bn rescue package in return for a series of unusually harsh conditions. In a shock to everyone, including admittedly Open Europe, the deal included a “tax” on depositors: 6.75 per cent for anyone with less than €100,000 in a Cypriot bank account, 9.9 per cent for anyone with more than that.
The first way to look at the deal: lessons have been learned. Unlike in the case of Greece, Cypriot debt will come down to around 100 per cent of its GDP, following this deal. While not great, it’s not the type ofmaddening cocktail of continued austerity and increasing debt that Greece has been forced to swallow (the country’s debt is at 160 per cent of GDP this year). At least the combination of the deposit tax and privatisations in Cyprus will give the country some breathing space. And the alternative, letting Cyprus sink and leaving the euro, showing the world that the single currency is no longer "irreversible", would have been far worse.
The second way: All bailouts are unfair – the people who screwed up almost never pay – but this is in a league of its own. Seventeen Eurozone finance ministers locked themselves in a room and decided that every Cypriot depositor – whether super-wealthy or dirt-poor – will, out of the blue, see part of their hard-earned money seized. Remember, Cypriot President Nicos Anastasiades explicitly promised in his election campaign, only a few weeks ago, that depositors were safe. The Cypriot electorate now faces losses on deposits as well as years of austerity (under the bailout loan). What’s worse, deposits under €100,000 are supposed to be protected by EU law, not raided by EU leaders. And Cypriot banks have frozen close to €5.8bn, i.e. imposed capital controls which is meant to be illegal under EU single market rules. This is political dynamite.
Regardless of one’s interpretation, in the entrenched eurozone North-South stand-off, this clearly represents a victory for the German government and German taxpayers over their southern counterparts, as it was Berlin that drew a line in the sand. In many ways, Cypriot depositors fell victim to the forthcoming German elections in September.
Jim Sinclair’s Commentary
Ms. Lagarde trying to smile after grabbing KGB money.
Jim Sinclair’s Commentary
A lot more than that Peter. Do the UAE banks really want this money?
$50-58bn to flood out of Cyprus due to 9.9% bank deposit confiscation by the EU and into gold and even UAE banks
By: Peter Cooper, Arabian Money
Posted Sunday, 17 March 2013
Depositors who are waking up to find that up to 10 per cent of their bank accounts in Cyprus have been confiscated as a part of a European Union rescue operation are unlikely to leave their money in the country because of the risk of it happening again. ATM machines have already emptied on the Mediterranean island in a bid to drain accounts. All electronic money transfers have been stopped.
An estimated $50 to $58 billion of deposits are being subject to the so-called tax or special levy, which gets around what was supposed to be an EU bank deposit guarantee scheme. This is the first EU banking bailout to involve such a mandatory confiscation of depositors’ money and was agreed by finance ministers yesterday.
Ending money laundering
It is aimed squarely at the huge offshore funds held in Cyprus by Russians, much of it said to be from money laundering though how an offshore banking centre is suppposed to adjudicate on the source of offshore funds presented to them by depositors is unclear.
The EU would evidently rather not have this money deposited inside the bloc and has made its draconian ruling to frighten this money away as well as to help refinance the beleaguered Cypriot banking sector. Ironically the impact of this $50 to $58 billion leaving the system will of course be devastating and almost certainly result in another crisis for the banking system.
The cost of securing German support for the rescue package has been high indeed: the whole future of Cyprus as an offshore banking centre. Will depositors risk leaving their money in such a jurisdiction for a second round of this banking system’s collapse?
How much more of depositors’ money will the EU want then? Depositors, who are far from all being Russian oligarchs and mainly ordinary people and pensioners are hardly likely to stick around to find out. That’s why there has been a run on the banks and ATMs.
German finance minister Wolfgang Schaeuble commented: ‘The Cypriot banking sector will be significantly reduced to a sustainable level and business model.’
Gold to benefit
Where will this flood of money leaving Cyprus go? Mr. Gold, veteran trader Jim Sinclair says gold will rise past $1,600 on Monday and never look back as a consequence. Rival offshore benking centres will benefit and the nearest outside the EU are Istanbul, Beirut, Bahrain and Dubai.
Jim Sinclair’s Commentary
Anyone having second thoughts about playing with the KGB’s money?
Cyprus parliament delays vote on deposit levy to Monday
By Michele Kambas
NICOSIA | Sun Mar 17, 2013 1:31pm EDT
(Reuters) – Cyprus’s parliament has postponed until Monday an emergency session to vote on a levy on bank deposits after signs that lawmakers might block the surprise move agreed in Brussels to help fund a bailout and avert national bankruptcy.
In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit up to 9.9 percent of their deposits in return for a 10 billion euro ($13 billion) bailout to the island, which has been financially crippled by its exposure to neighboring Greece.
The decision, announced on Saturday morning, stunned Cypriots and caused a run on cashpoints, most of which were depleted within hours. Electronic transfers were stopped.
The move to take a percentage of deposits, which could raise almost 6 billion euros, must be ratified by parliament, where no party has a majority. If it fails to do so, President Nicos Anastasiades has warned, Cyprus’s two largest banks will collapse.
One bank, the Cyprus Popular Bank, could have its emergency liquidity assistance (ELA) funding from the European Central Bank cut by March 21.
A default in Cyprus could unravel investor confidence in the euro zone, undoing the improvements fostered by the European Central Bank’s promise last year to do whatever it takes to shore up the currency bloc.
A meeting of parliament scheduled for 10.00 a.m. ET on Sunday was postponed for a day to give more time for consultations and broker a deal, political sources said. The levy was scheduled to come into force on Tuesday, after a bank holiday on Monday.