Last year, during the Cypriot banking crisis, Europe had an epiphany and decided to try something new. When the major banks in Cypress failed due to bad investment and lending decisions, instead of bailing out the banks with European Union tax money, the authorities decided to take depositor money instead. Of course, it didn’t hurt that most of the large depositors were Russian and that a large part of the money was likely dirty.

What really surprised the IMF and other international, regulatory, financial bodies, was that it worked so well! Think about their realization that they could spend as much money as they want now on their socialist programs for the cradle to grave nanny state, and in addition to taxing their citizens and the makers into oblivion, if there came a crisis, they could just take the bank depositors money! What a deal!


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Now fast forward to November 2014. The European economy is bogged down by massive debt and welfare spending. The US economy is creeping along. The United States federal debt is approaching $18 trillion dollars. In the face of this crippling economic scenario, our Dear Leaders meet in Australia for the G-20 annual pot roast. And low and behold, they announce a plan to unlock the safe doors to depositor money in the developed nations; ie, they have found a way to take depositor money, by moving depositors’ place in the capital structure much further down, down with the other serious investors with power. In other words, in the next banking crisis in the US, they are going to take your money.

Peter Reagan of Birch Gold Group, a national dealer of physical precious metals, explains the situation this way: “In the most simple of terms: If these measures are implemented, your bank savings will be jockeying for position with other creditors if your bank suddenly goes under. Or, as Russell Napier put it, ‘With deposits then subjected to a decline in nominal value following a bank failure, it is self-evident that a bank deposit is no longer money in the way a banknote is.’”

But what about the FDIC you ask? Yes, depositor money in the USA is supposed to be insured by this quasi-governmental agency. However, this entity is seriously underfunded. The United States has already spent its safety cushion in the last crisis. Will there be funding to absorb all of the small investor losses in the event of another major financial crisis (which is surely coming after the Fed’s actions over the last few years – there is no free lunch!)?

The scenario where the US government saves all of the small depositors again is problematic at best. In some ways, this new rule is a good thing. It will force depositors to do their homework on banks and make sure they are putting their funds in a sound institution. The moral hazard we have built up since the Great Depression with the government safety blanket could start to diminish. But there will always be people chasing yield and ignoring the risks.


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What is likely to remain a valid currency and store of value? Here’s the take of Birch Gold’s Peter Reagan: “Wouldn’t these same savers be better off owning physical gold instead of cash dollars? Over the past 100 years, the U.S. dollar, rapidly declining as the world’s reserve currency, has lost more than 90 percent of its value. Meanwhile, precious metals have held firmly.”

The bottom line for Americans is this: do your homework! Look at the financials of any bank you put your money in. Don’t put all your eggs in one basket as far as banks or assets in general are concerned. People ask me all the time where to put their money. I tell them put it in something you can touch; ie, real-estate, precious metals, etc. Be careful out there!

To discover how you can protect your bank deposits and other savings, contact Birch Gold Group today. Right now you can learn how to secure your family’s future by requesting a free Information Kit on Gold – there is zero cost and zero obligation to you. All you need to do is enter your details at www.birchgold.com