Something tells me the Cyprus "deal" is not all sugar and spice. Closing the second largest bank in the country and freezing all deposits over 100 euros is not something I would wet my pants over if I held all my Cyprus money in their largest (for now untouched) bank. I'd withdraw like hell. Banks are going down in that country due to the runs about to happen. And as far as contagion to the rest of the Euro's southern periphery banks....don't hold your breath. If you held a bank account of more than 100 euros in Spain, Portugal or Italy, what would you be thinking of doing right about now. Run, baby, run!
And what about those $700 trillion in derivatives worldwide? Runs on banks equates to a crush on derivatives...as in, can counter parties actually cover insured risks?
And for that matter, who even knows how much Russian money is deposited in the bank scheduled for closure? Maybe the Cypriots ran scared and closed the country's bank holding the lowest Russian deposits. Time will only tell!
The markets really are something aren't they. I'm sure many people are sitting there and saying "well, if banks are closing and taking people's money, why aren't gold and silver shooting for the stars?"
It is what it is. When we had the banking failures at Bear Stearns and Lehman I wondered the same thing. What happened? There were steps. First, everyone needed to raise money and that meant liquidating your winning trades which at the time were gold and silver.
I imagine a similar mechanism is happening now with the exception that gold and silver have been a short. I'm reading hedge funds are pulling every last cent out of europe. If the winning trade has been to short,gold and silver, a cover will happen to raise money. If the winning trade has been to be long the US market, raising money would involve closing those long positions and that should cause a downward pressure on equities.
Then, there's the physical move of the money out of europe which will take days to several weeks. Thereafter, there'll be thought of where to put your money now. Most definately not banks--you'd think. Maybe back into the US economy. Is it possible gold and silver will catch a bid. Canada currency and the Mexican currency seem good plays.
Silver had a intraday reversal that I got long at $28.617 with. Gold was pulled back up. They both looked tike they were going to push lower but they both caught bids.
I'd like to see silver remain above 28.725 to remain in my long position.