Major Danish Bank Failure Sets the Stage for the Next European Gold Uptick

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Major Danish Bank Failure Sets the Stage for the Next European Gold Uptick

Post by JWK on Tue Feb 08, 2011 8:43 am


Major Danish Bank Failure Sets the Stage for the Next European Gold Uptick
...

One of the top 10 largest Danish banks, Amagerbanken had equity capital of 2.441 billion Danish Krona (approx. $440 million) as of September 30, but 4th quarter write downs wiped out the bank's capital and forced the Danish government to seize Amagerbanken under the new European rules implemented in October of 2010.

The importance of this action is that under the new rules, which protect taxpayers in the event of a bank bailout, bondholders will face haircuts currently estimated at 41%. Depositors who hold deposits in excess of the Danish guarantee of DKK 750,000 will see those deposits become claims in bankruptcy court. As of the 3rd quarter, Amagerbanken was thought to be a healthy Danish bank that had already recognized real estate losses. If the true extent of losses is in fact much greater, then what does this say about other Danish and European banks?

The ramifications for the price of gold are enormous. For the approximately 700 Amagerbanken depositors who now become creditors and will inevitably seek legal action to try to recoup their deposits above the guarantee, how many will now seek out the safety of gold in this time of stress and uncertainty? The market ignored this news on Monday but one can be sure that this is not the only problem bank in Europe and European investors will once again turn their eyes towards gold.



JWK
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Re: Major Danish Bank Failure Sets the Stage for the Next European Gold Uptick

Post by Mimi on Tue Feb 08, 2011 11:21 am

thanks for posting this. One thing I do miss about GLP is their global news contributors.
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Re: Major Danish Bank Failure Sets the Stage for the Next European Gold Uptick

Post by terviseks on Tue Feb 08, 2011 12:17 pm

Firstly I think they are hiding their losses : usually banks never reveal their real losses in case they can save something else... remember the Lehman Brother ?

Then if you were watching the gold and silver price they are really really up today +3.22% at this time and for the gold it's +1.25% (futures).
I don't think it's only related to the bank crash, but also with the Suez canal traffic being stopped because of the egyptian strike today. (crude oil is down, and that's strange by the way).

Plus, I read an article about China buying Gold in large quantity
( http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/2/7_KWN_Source_-_Expect_Massive_Chinese_Gold_Buying_Using_GLD.html ) So I guess price are going to increase really really rapidly these next weeks.

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Re: Major Danish Bank Failure Sets the Stage for the Next European Gold Uptick

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