WOW !Urgent - Is it time to buy gold/silver with the European Banking Industry collapsing

Hi steemers,

It would appear that the European Banks are starting to fail, again!! Is now the time to act and protect your wealth?

On Friday evening the European Central Bank [ECB] effectively put two more banks to sleep and to never wake up again; the ECB has yet again in the last few weeks had to step in to the Italian banking crisis and effectively wind up a further two banks, namely Veneto Banca and Banca Popolare di Vicenza, both based in northern Italy.

Earlier this month Banco Popular, Spain’s fifth biggest bank was the first to fail and be closed down and Bank of Santander was the lucky buyer for $1.

IS THIS CONTAGION?

Well, in my opinion once is bad luck luck, but two have two further banks fail certainly smells of something!

So what could be the answer and what has been happening to the European Banking arena; well I have considered this in relation to gold; as this shiny precious metal has always been considered the ultimate 'risk off' asset.

Below is a chart of the iShares MSCI Europe Financials ETF [EUFN] versus gold; as you should notice there was a strong correlation between the two assets up to autumn 2012 at which point they started to diverge.

I know not why they diverged, except to say that someone or something thought that the banks were a better buy than gold.

What does this mean?

Well from my perspective I'm now going to go long gold and long the banks; that may seem a strange play, but the logic is this; if gold goes down, then the banks will go up and vice versa. With both assets diverged so far apart something has to happen to bring them back together again; once this trend of converging becomes clear, then I will sell the banks. This is purely a hedging play, but I would not want to be just long the the banks anymore.

This past month is now showing the banking sector, especially in Europe to be fragile; not only that with the world baking system so 'connected' can contagion be just kept to Italy?

For me, the time is NOW to buy gold, the banks have had a tremendous run and I feel as though the wheels could be starting to come off the cart; the minimum I will be doing is starting to take some profits from the banking sector and putting back into the hard physical shiny assets that are #silver and #gold.

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