For a long time, I've been an advocate of Austrian economics. I've been anti-QE and in favor of trying to re-establish some type of control over the currency, instead of simply printing more and more of it, and assuming nothing would go wrong.
The truth is, the global economy is still in shambles. The U.S. is needing to raise its debt ceiling again and again, Europe is a mess with unemployment and taxes through the roof, and gold (NYSEARCA:GLD) - although momentarily pulling back - is up exponentially over the last 10 years.
Chase Bank has moved to limit cash withdrawals while banning business customers from sending international wire transfers causing speculation that the bank is preparing for a looming financial crisis in the United States by imposing capital controls. Bank officials confirmed Wednesday that the new capital limits apply to all business account holders, the bank will stop processing any outgoing international bank wire, and that any monthly cash transactions in excess of the new $50,000 limit will be subject to penalties and fees.
Fox News is reporting that Chase is denying - kind of - that these are new controls being put in place to control a U.S. Financial Crisis, but not denying that these measures are actually being put in place to begin with:
The fear is small and medium-sized businesses could be hurt by the restrictions. But the bank says these were typically mass accounts opened on the Internet, with no bank representative managing them, where domestic or international wire transfers could be sent without bank oversight.
The bank says it is "derisking" these accounts by streamlining the number of customer accounts from, say, six accounts with no bank contact or representative to three accounts with a bank rep managing them. Also the bank said some of the accounts customers had signed up for did not have wire transfer services that customers had wanted, or had limited withdrawal services, but that the bank is instead transferring these customers into new accounts that do provide these services.
Chase said it is not exerting new capital controls on customer accounts.
On this news, gold is rallying Thursday 3% so far.
I have been a longtime bull on gold, and this is just about the most serious piece of validation a gold bull's argument can get. Whether or not these implications apply to everyone, or just accounts in select countries (which is what is being speculated), the fact remains the same :
If true, the banks are holding your money hostage, and are no longer safe.
Call me a conspiracy nut if you want, but that's the truth. This is a case of a bank not letting an individual get to money that is rightfully his or hers. Regardless of this is limited to just some countries and some accounts, it's extremely scary to read about. If this is true, it's:
1. Unprecedented, and should be taken as a massive warning sign as to a road the banks could follow down.
2. Only a matter of time before this thinking makes it way from "select accounts" in "select countries" to across the board.
I am not joking - if I had accounts with JPMorgan Chase, they would be closed out immediately if this news holds even the slightest bit of truth, which it looks like it does.
Again, this is another excuse to be bullish on gold - very bullish - especially for the long term.
As I stated in my article "Gold 101: Do You Pass?":
However, gold remains the perfect hedge against financial meltdown. As early as the 1970s, gold was being used as a major hedge against inflation and it was working effectively. During the beginning of 2011, gold had a massive rally on the news of the U.S. debt being downgraded and economic issues overseas. The fact that gold never really moves in direct correlation to stocks or bonds makes it a great place for a permanent small part of your portfolio.
The facts are that regardless of whether or not this story holds serious water, buying gold with the intention of holding 10, 20, or 30 years is in no way a bad idea, and does well to limit a lot of long-term risk.
This is easily the scariest thing I've read about a bank - made the hair on my arms stand up when I read it. I will be keeping a close eye on this, and investors should as well. It's a great time, with the market at highs, to realize some gains and hunker down with some super conservative positions.
Gold ETFs : (NYSEARCA:IAU), GLD
As I've previously stated, I feel this market continues to be on borrowed time to begin with.
Often, I've shared how I would conservatively position myself for a bearish market. I've put some small spins on that of late, and am offering my new bearish portfolio :
- Small 5%-10% long position in dividend paying staple stocks like (PG, LO, GE, WMT)
- Medium-sized position in bond funds and bond ETF's for 2013-2014
- Medium-sized short position in companies that I believe are fundamentally in bad shape, that'll likely drop with the markets as well (BBRY, JCP)
- Medium-sized position in actual gold or silver bullion, and small long positions in gold and silver trusts (NYSEARCA:SLV)
- Medium-sized cash position in FDIC insured account (or several FDIC insured accounts) or in person
- Medium-sized long positions in inflation-adjusted Treasuries (AAA rated)
- None of the above in an account with JPMorgan Chase
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.