Cyprus, Money Velocity & A Potential Inflationary Holocaust
March 27, 2013
With investors around the world now watching in fear after as government theft has become a reality, today Kevin Wides out of Switzerland reports on the ongoing nightmare of the ‘Cyprus Solution’ and what investors must do to protect themselves. Below is what Wides had to say:
“The reason why there has not been excessive inflation or a hyperinflationary environment, despite all the money printing, is due to the subdued levels of the velocity of money. In the US the velocity of money is at its lowest in over 50 years….
“As a gold bull I would like to say that with Cyprus Bank depositors now losing a large percentage of their cash on deposit, that this will cause an immediate move by other European depositors into the physical gold and silver markets in order to get their wealth outside of the banking system.
I believe that this will be the case, but it is likely a delayed event. With the superb manner that the gold and silver markets have been managed to date by Western governments, the average citizen in Europe is still not looking at or noticing gold and silver as an investment or store of wealth.
What we should see now is cash withdrawals from European banks in other troubled countries – Italy, Portugal, Spain, Greece, etc. That cash should then be used by those individuals to start transacting in goods and hard assets. That is in “stuff” which cannot be taxed easily. This may be the catalyst for inflation as it will impact heavily on the velocity of money.