Are US Exchange Controls Imminent?
By Egon von Greyerz
I have for quite some time warned investors to get out of the banking system.
We believe that it is now becoming more urgent than ever. Bank stocks in Europe and the US are falling fast. The market is clearly sensing that things are looking extremely precarious in most financial institutions. What else can can we expect with bank balance sheets being leveraged 20-50 times and with worthless derivatives a lot more. Everyone knows that Greek banks and Italian banks are bankrupt but few people realise that there are very few sound banks.
Banks refusing to transfer funds abroad
Very often when a client wants to transfer funds out of his bank to buy gold through our company, the bank puts up all kind of obstacles. Often the bank will tell the client that he can’t transfer more than 100,000 dollars or Swiss Francs. Recently one American bank froze the account when the client instructed it to make a transfer to Switzerland of several hundred thousand dollars. When the client then demanded to unblock the funds, the bank reported the transaction to a fraud investigation unit. This is a first in our experience but it does show that banks will go to any length to stop transfers. Whether this obstruction was from government organisations or just internal in the bank is hard to say. What is very clear however is that in the next few years, many countries will implement exchange controls and there will be no possibility of transferring funds out of the country.
Blocks, bail-ins and debasement
As the dollar fall accelerates, together with other currencies, it will only be a matter of time before investor’s money will be blocked by the bank. The next step will be to force bank depositors to buy government bonds to prop up the finances of the country. When that is not enough, there will be bail-ins and a major part of the money will be gone. If thereafter there is any money left, it will have lost all its value due to currency debasement and hyperinflation.
Gold is Life Insurance
All this might sound very pessimistic but the risk of having assets in the banking system is now greater than at any point in history. Getting your money out of the financial system and into physical gold and silver is not only ordinary insurance, it is LIFE insurance since it can make the difference between financial survival and total wealth destruction.
What is also essential is to keep your wealth preservation asset outside your country of residence so you can escape to it in case of an oppressive government.
Gold and silver to accelerate
Gold and silver is now starting the acceleration phase so we are likely to see much faster moves in coming months. For the next 1-3 years or more, silver will outperform gold substantially and probably move twice as fast. But it must be remembered that silver is extremely volatile and not right for people who want to sleep well at night.
Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management AG