We are not right on the precipice of currency collapse today. However, when the precipice is reached, it is very likely that it will come as a black swan, with the great majority of people reacting with surprise and confusion. We shall wake up one morning and find that, overnight, things have changed, just as the people of Cyprus did a few months ago.
For this reason, we would be best advised to prepare for its eventuality rather than to simply “wait and see.” It is always better to be a year early rather than a minute late.
Certainly, we are now in Phase II of the Great Unravelling – the more serious phase. In this phase, we shall see events of increasing magnitude, occurring with increasing frequency. Some of these occurrences will take place in public view, such as the decision in Cyprus to allow the banks to legally steal depositors' funds. Others will be more hidden from the public eye, like the recent passage of a similar option by the Canadian government to its banks.
In considering the Cyprus situation, many people will think, “Thank God it can't happen here. My government would never do that.” However, truth be told, it can. The bail-in idea was not created by the government of Cyprus. It was created by the EU and forced on Cyprus.
It is safe to say, at this point, that the bailouts in both North America and Europe have not worked, as they have not fixed the economies in which the bailouts were employed. However, they have “worked” in the sense that they delayed the inevitable by several years. Now, that illusion of effectiveness is running out, and there is every reason to believe that those governments that did irreversible damage to their economies through the bailouts would not shirk from the next logical step: the bail-in.
If we are wise, we shall go under the assumption that bail-ins may be coming to a bank near us sometime in the future. Whilst some of us believe we reside in countries in which this will not occur, we cannot be certain that that is the case. Therefore we would be best advised to assume that we are likely to be affected.
We can be certain that governments will claim that their respective confiscation laws are only in place to save the banks from collapse, should an emergency occur. However, history shows that when someone is given the legal right to steal money, they will do so. If an “emergency” is needed, it will be created.
We can also be fairly certain that there will be no warning. One day we shall wake to learn that our accounts have been frozen and we have made a “contribution” to our bank that we took no part in.
In addition, historically, when governments enter into a programme of massive money printing, such as the governments of the First World have been doing in recent years, one of the bi-products is dramatic inflation (if not hyper-inflation). Therefore, we stand to soon lose our savings through either confiscation, inflation, or both.
Of course it is entirely possible that readers of this publication have considered all of the above and are ahead of the curve as to the dangers that face them. Many will say that, when the time comes, they are prepared to get out of fiat currency as much as can be practically achieved and move into another storage of wealth – possibly precious metals, possibly foreign real estate, etc.
The fly in the ointment is that, by the time we are that close to collapse, the currency controls will already be in place and it may no longer be possible to exit the system.
Additionally, it is likely to be much more difficult to access the safe haven of precious metals at that point. Recently, we have seen the first warnings of that, as gold has dropped significantly in price due to what some feel is manipulation of the market. However, rather than dumping their gold due to the significant drop in price, the reaction by physical buyers and Asian central banks has been to scramble to buy more.
Further, it would seem very likely that, amongst the controls that are presently either being implemented or devised, a restriction of the expatriation of gold is likely. Again, this is likely to be implemented without warning, and whatever precious metal you have taken delivery of in your home jurisdiction may be a sitting duck. In future, you may not be allowed to expatriate it.
Therefore, the time to move will be before the situation becomes urgent.
At present, most countries allow both the purchase and the expatriation of precious metals, but it would be foolhardy to think that those who are presently restricting and, in some cases, confiscating wealth will stop short of precious metals. If your government is verging on desperation now, it is far more prudent to assume that the last resort of wealth preservation will also be swallowed up by them in some way.
The window of opportunity may be briefer than it appears. Act with care, and stay well ahead of the curve.