Cyprus Crisis Investor Opportunity and Risk Rockets

By: DeepCaster_LLC

A Climacteric began in the International Economy and Markets last week. Its Ramifications have not been widely acknowledged. It provides Great Opportunity and Great Risk. Moreover, this Mega-Development signaled that a Great Opportunity Window is beginning to close. And it signaled loud and clear that The Great Danger of which we have earlier written is approaching ever nearer.

The Opportunity which may well not arise again in our lifetimes. So it is important to carefully consider the implications of that Mega-Development for citizens, savers, and investors around the entire World, including the Great Risks to which it also gives rise.

The Mega-Development to which I refer is the unsuccessful attempt by the government of Cyprus to confiscate the Deposits (ostensibly insured under 100,000 Euros) of Savers by imposing a “Tax” of 9.9% or more on deposits in excess of 100,000 Euros and 6.75% on deposits from 20,000 to 100,000 Euros.

Yes, the Cypriot Parliament rejected this outright Confiscation, but The Crisis which the Attempt precipitated has only just begun. The Russians have thus far refused to help, and IMF, EU and ECB are thus far allowing Cyprus to hurtle toward default.

More importantly, the Ramifications extend far beyond Cyprus, and regardless of whether this or any similar Scheme succeeds or fails.

Cyprus is a physically small EU Member, with a relatively large Banking System. Prominent among the depositors reportedly are Russian KGB and Oligarchs.

The mere Attempt – at the behest of the European Central Bank and the U.S. led IMF, important to note – of an ostensibly Democratic EU Member to Confiscate Savings Deposits (of Oligarchs/KGB yet!) set an extraordinary and dangerous precedent – Depositors including Prospective Retirees around the world are no longer safe from being forced to contribute to Bailing out Sovereigns and Mega-Banks whether or not the Cyprus Confiscation Scheme Succeeds. The “mere” Attempt at Confiscation sets a Precedent. The Cyprus Contagion has been loosed from Pandora’s Box and cannot be put back in.

In sum, the IMF/ECB/EU made a Major error and the Russian Cypriot interests won Round 1. Thus, the Cypriot/Eurozone situation is not yet resolved and may not be for several weeks. Given that it represents a precedent of Attempted Investor Asset Seizure by Multinational Powers, it thus represents a Great Threat to the Global Financial System, and even to Major Economies. Depositors will likely never feel their deposits are secure again.

There are similar Threats – for example, as we have earlier noted, there is a proposal being seriously considered in Washington, DC, that would force 401(K) and IRA Account holders to buy U.S. Treasuries (before that Bubble breaks, of course). All of the foregoing dramatically increases systemic risk but also opportunities.

One consequence (and our earlier forecast) was that the Euro would continue to weaken short-term,  vis-à-vis the $US down to $1.28.

Thus, short-term, the $US (Deeply Flawed for the Long-term) is the least Dirty Shirt in the Fiat Currency laundry.

But looking at the ongoing Bullish Equities Market performance, it is almost as if the market is saying, “Disregard (for the short-term) the fact that the Cyprus/Eurozone Situation coupled with the ongoing Orgy of Central Bank Money Printing, calls the value and legitimacy of all Fiat Currencies into question. We shall ride the Fed and other Central Banks liquidity up to Infinity.” Or course, the evidence indicates that the powers-that-be are boosting Equities and Treasuries covertly as well as overtly – that is certainly in their interest.

But the Reality is the Eurozone Financial System and, indeed, the Eurozone continue to deteriorate. The ECB is forbidden by Treaty to monetize debt, but without that, it is hard to see how Cyprus avoids bankruptcy and an exit from the EU. That could precipitate a Domino Effect. Bear in mind that Italy, Spain, Portugal and France are still weak as well.

The Cyprus Contagion is becoming the Eurozone Contagion, and, Potentially the International Contagion.

Of course, the Major Beneficiaries of the Cyprus Debacle are Real Money, Gold and Silver, and especially Gold.

We expect Cyprus will be the spark to touch off The Precious Metals Rally.

But, CAVEAT, because The Cartel (Note 1) now has everything at risk because of Cyprus (Power, Wealth, its Global Financial System) they will fight tooth and nail to continue to suppress Gold and Silver Prices. Deepcaster has forecast the Outcome for Gold and Equities and makes a Buy Recommendation aimed at Profiting from this Crisis in his Latest Alert.

More broadly consider that, the Economic Fundamentals of the USA, Eurozone, and Japan, collectively 53% of the International Economy, including Debt Saturation, ever higher Unemployment, and Economic Stagflation, including the OECD outright Economic contraction, have not disappeared. And the currency “war” among them has only just begun. And Cyprus, and the Italian election stalemate, remind us that Eurozone problems are still very much with us. Neither Bank Deposits nor Fiat Currencies can ever again be legitimately regarded as impregnable Stores of Value.

And Dr. Copper is telling us the Equities Rally is built on Sand and Fed Paper. This is what the multi-year Hindenburg Omen Chart Pattern is also telling us.

Taken together, all the aforementioned mean much higher Volatility going forward. Physical Gold and Silver are thus both provide Investors Safe Haven and Great Profit Potential.

We face both Opportunity and Risk Rockets.

Best regards,

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