Banks in Italy are on Meltdown Alert and May Close
August 7, 2011
I just heard from my friend Nico in Italy. He said the banks in Italy are on meltdown alert and may close down completely for a period of time. Now you are probably asking, what does this have to do with me living in America?
Everything, if you have money in the bank, or investments in a 401 (k), IRA, or a self directed trading account. You see, the major US Banks are heavily invested to the European banks. Likewise, all European banks are invested in each other. So if one major bank defaults, it can set off a chain reaction bringing down the other banks. This contagion will then spread to the US Banks who have major skin in the game.
So if you have significant holdings in equities, especially financial stocks, REITs, and retail stocks, be aware than over the next few weeks, you could lose 50% or more of your money. We have clearly passed the point of no return in the markets. The FED will make an attempt to to stimulate again, but it will be too little, too late. The sheer size of the bank defaults in Europe will be too much to bear for the US markets.
If you recall, Tuesday I sent out a warning email that insiders were dumping their stocks and that Korea made a huge gold purchase. This was a signal to me that something big was going to happen. Sure enough, Thursday came and so did a 508 point fall in the DOW. Even today, the markets were having spasms as market makers tried everything to maintain stability. The news media went from positive to negative to positive spin grabbing every headline they could to explain why the market looked like a roller coaster ride at Kennywood Park.
Well, I'm here to tell you this was just the dress rehearsal. The real show begins next week when the dominos begin to fall beginning in Europe. Most likely the banks in Italy. This will set off very unstable markets here in the US. By this time next Friday, I believe the markets will drop another 5-6%. This could continue for weeks to follow, or it could happen all at once when nobody expects it. My guess is, we could see a small rally one day and the very next day, a 1000 point drop out of nowhere. Another flash crash.
The safest place to be is in cash and out of the market. If you cannot get out, then consider moving into the safest cash positions secured by the US Treasury. One of the safest funds is symbol CPFXX. As I predicted, gold held while silver fell. I see this continuing a few more weeks. Long term, I still believe both will fall as the dollar gains in value as Europe's wealthy elites invest in US Debt. and bolster the US dollar.
On a side note, German taxpayers have said NO MORE bailouts from them to support the lazy, unionized socialists in Southern Europe. I have to agree with nick Guarino when he predicts a civil war between the north and the south of Europe and the unfortunate rise of another strong armed Dictator most likely in Germany. Isn't it strange how history repeats itself?
Please, please, please be safe with your investments and preserve every dime you can. The situation is getting more serious by the day. I just heard the S & P may downgrade the United States to AA status as soon as Monday. This will send shock waves into the markets worldwide.
There is no way this can be avoided as I look at the big picture. The Fed will try and fail this time. The media will be told to push the "Recovery" agenda, but it simple will not work. The fat lady will be singing. The Depression is now on the fast track. Prepare yourself and your family. Save as much cash as possible. Protect your investments by moving them into safety, or by using inverse ETF's to hedge against falling equities.
Over the next few weeks, I would not be surprised to see some kind of major distraction take place by the hands of the powers that be. I can't say what the event will be, but this is the normal modus operandi when things get ugly. Keeping the public distracted has been the favored method for the last Century. I fully expect another orchestrated event over the next few weeks or months. Anything to keep you distracted.
Be smart everyone, and be safe. Elvis has left the building in Europe.
Keeping it real,