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Consequences of the Cypriot Deposit Tax

Obviously, the events in Cyprus will lead to a worse situation: several banks will be closed down, a huge portion of deposits will be lost, the population and foreign investors will be outraged. This will strongly undermine the island nation both economically and socially.

Ths, the minimum price to which gold could fall is around 638 $ an ounce.

The Cypriot economic crisis (before the deposit taxation) wasn't as severe as the crises in other European countries (Spain, Greece - for instance), but despite this, the EU has forced a drastic measure on Cyprus, which will eventually worsen their economic situation.

The effects of this forced wealth-taxation will propagate to the rest of Europe, then later they might affect other regions of the World as well...

Here are several consequences, some of which are already felt:

 Depositors will lose confidence in banks: your money isn't safe in the banks, your deposits aren't guaranteed - the state could simply tax your wealth at any time and block you from withdrawing by imposing a bank holiday.

 Withdrawal fever: it's already happening, but to lower extent than on Cyprus - Europeans have rushed to the banks in order to withdraw and spend much of their holdings (especially Cypriot and Greek banks are witnessing a substantial amount of withdrawals from their foreign offices).

 Cyprus will be socially and economically affected: as a result of wealth taxation, poverty will rise; as people feel that holding money in the banks is risky, they will avoid keeping deposits - thus, affecting the bank-driven economy; the loss of confidence in the banks has already lead to capital withdrawals, which will weaken the banking system, which in turn will negatively affect the economy

 Cyprus' trading partners will be the first affected countries: Greece, but Turkey and Central and Eastern European countries will be the first whose banking systems will feel the "Cyprus punch" on themselves - any company that has been doing business with affected Cypriot companies could suffer tremendously

 Less paper money was left in Cyprus: the demand for physical money rose and it's highly probable that people will request more banknotes from their banks in the near future - this might lead to more money-printing (literally), as banks will request more paper currency in order to satisfy (at least partially) the demand

 More confidence in precious metals: as people's trust in the banks and fiat money sinks, the importance of precious metals will rise, propelling their prices higher

The withdrawal fever has spread to other countries in Europe - citizens are emptying bank accounts and withdrawing their money from ATMs.

The Bank of Cyprus and the Laiki Bank are the two largest in the country. Many analysts suggest that they will both go bankrupt or will suffer tremendously following this EU-IMF-imposed wealth taxation measure.

The Bank of Cyprus is already closing down offices in some foreign countries, following a run on their offices - especially in the UK, where they have a separately-capitalized incorporated bank. Some of the foreign branches of the company will be sold to other banks.

Laiki Bank's offices in the UK could be taken by assault by (approximately) 15,000 account holders - according to

Prime Values has already published an article about why the country of Cyprus was chosen for an experiment for deposit taxation. This will most likely spread to other European countries.

In order to protect your wealth, it would be wise to start investing in precious metals. For starters, the precious metal investor's guide is available, where you can find plenty of free information about how to start investing.

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