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Katchum
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Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a... More
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Correlation Economics
  • ECB Overnight Deposits Drop By More Than Half 1 comment
    Jul 12, 2012 3:41 PM | about stocks: GLD, SLV, SPXL

    As I already predicted in this article, the ECB overnight deposit dropped. It didn't drop by a bit, it dropped in HALF and it's not a glitch.

    Now where will this 500 Billion Euro go, I wonder. I'll keep you posted, stay tuned.

    They could go to: bonds, gold, real estate, land, overseas currencies.

    500 billion euro is not a little bit of money, it is huge. The financial stimulus in 2008 was comparable to this 500 billion euro. You can buy a lot with this money. Deutsche Bank is only 20 billion euro in market cap. The whole silver market is only worth 20 billion euro. Even Citigroup is worth only 50 billion euro.

    So I expect something big to happen in the equity markets and especially in the precious metals market.

    Chart 1: ECB overnight deposits

    Disclosure: I am long GLD, SLV.

    Stocks: GLD, SLV, SPXL
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  • winningtrader
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    I think that the stupid damn banks should buy gold. They only make idiotic investments and then have to be bailed out. If they have a portion of their equity in gold (should be risk weighted like -10 and not 0), they will be a lot safer. If Germany has any brains, they should encourage their banks to buy gold. This would allow the banks to decouple from the EUR crisis. I doubt they would do it but again, who knows.
    12 Jul 2012, 05:55 PM Reply Like
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