Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Euro Crisis, Too Big To Bail?

Stock-Markets / Credit Crisis 2011 Sep 26, 2011 - 02:35 AM GMT

By: Bob_Kirtley

Stock-Markets

During the first financial crisis whereby the like of Lehman Brothers failed we heard the war cry ‘Too Big To Fail’ trotted out by our political masters. As the next financial crisis approaches we might hear a new mantra; ‘Too Big To Bail’ as one or more of the larger banking institutions enters into bankruptcy.


We are of the opinion that the previous financial crash was really only a crack in the system which was quickly papered over by the powers that be via the deployment of copious amounts of the tax payers cash. However, the next episode could well dwarf this event with its magnitude and the suddenness of its arrival. Lets face it, the same people are still in charge at both board room and ministerial level and they will do the same things, make the same mistakes as before, whilst expecting a different outcome. The definition of madness. After all there has been no punishment for their failures, so they are comfortable with taking even more risks, as you and I will bail them out if things come unstuck. In an attempt to probe a little deeper we made a few calls over the weekend to our old buddies in London. The mood appeared to be one of nervousness and tension, as if floundering for a solution that was yet to appear on the horizon. The latest rogue trader incident also added to the prevailing gloom as it raises questions of compliance, methodology, procedure and management.

Anyway, lets suppose that the next round of failed banks include the some of the larger ones, some of whom are rumored to be heavily leveraged, where would we get the money from?

Household debt is already at record levels so there is little room there for more financial impositions. The printing press is a strong possibility in a ‘print now, pay later’ strategy. A massive dose of inflation would surely follow a massive dose of liquidity, but that would a problem to be tackled in the future, whereas a major banking crisis has to be addressed as soon as it arrives.

As investors our core position is made up of physical gold and silver along with a small number of what we deem to be quality precious metal mining stocks, along with the occasional options trade. They include such companies as Agnico-Eagle Mines Limited (AEM) and Silver Wheaton Corporation (SLW) household names in the gold and silver space. Many of the companies in this sector are now profitable and the expectation is that they continue to do well.

But will they?

When we look back to the previous financial crisis we can see that none were spared, as the margin calls were fired out and investors sold all and sundry regardless of gleaming fundamentals, in a dash to raise cash and protect their positions.

Will it be different this time you ask? We very much doubt it, as we just cannot see what alternative actions could be taken if and when the cat hits the fan.

The prospect of another mishap in the financial sector casts a long and dark shadow over our doorway and fills us with trepidation when our research suggests that the mining sector is a good buy. If the mining stocks are once again thrown out, as the proverbial baby in the bath water, then these stocks would be at rock bottom and present us with the buying opportunity of a lifetime, as prices would be similar to that of late 1980.

In conclusion we intend to keep our powder dry rather than purchase more more stocks at the moment.

(Please note that the phrase ‘Too Big To Bail’ was borrowed from Nigel Farage, the leader of the United Kingdom Independence Party, UKIP, who in our very humble opinion is the only politician talking sense in the UK today.)

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.
Bob Kirtley Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in