Malaya “Banana Money”

Last week, Cyprus banks opened for the first time in almost 2 weeks of “forced-close holiday“. The Central Bank of Cyprus imposed a €300/day limit withdraw limit and restriction of transferring money outside the country. If you have no idea what is happening in Cyprus, visit here (a simple explanation of the situation).

The previous proposed tax was 3% tax on deposits below €100k, 6.75% on those €100 – €500k and 15% on those more than €500k. In my previous article, I mentioned:

…The reality is, the government can steal as much as they want….

In the latest discussion in Cyprus, bank accounts exceeding €100,000 ($128,000 or RM397,000) will be taxed at 60% with the reason of saving the country from bankrupt. The remaining 40% amount of cash will be frozen to ensure the liquidity of the country. For example, if you have RM400,000 in Cyprus, RM240,000 (60%) will be taken away by the government while RM160,000 (40%) will be frozen until further notice.

Cyprus Bank

Instead of as earlier proposed STEALING 15%, the government decided to ROB 60% of the deposit money and then said, you can’t touch the remaining 40% because the government said so. Sorry, you don’t have an option to disagree, you only accept it. Depressing? Unfortunately, this is the reality in Cyprus.

This is an extremely important financial event in the history. Never in the financial history such “legal robbery” has happened to the people. It is a matter of time, the people  will wake up and riot at streets and tell the government “who the hell you think you are to rob us?!”

What’s next? Cyprus very likely will continue restricting transferring money outside the country. Cypriots will be withdrawing the fiat currency and spend within the country like crazy with the mentality “If I don’t spend it, government is going to take it“. Hyperinflation is on it’s way hitting Cyprus.

Similar event has happened to Germany after World War 1. Hyperinflation hit Germany between 1921 and 1924. Due to war spending, Germany has printed massive amount of fiat currency that caused hyperinflation. The effect started to hit the middle class and everyone spent as fast as they could. Hyperinflation is never a funny matter. It is not about Nasi Ayam increased from RM4 to RM5. To put hyperinflation into Malaysian perspective, 2 years back if we could buy a bread with RM0.50 and then in the next 3-4 years, the same bread will cost RM201 Billion.

German Mark

Germany was fighting a war with weapons; while Cyprus is fighting a war with financial instruments. Unfortunately the financial war is now invisible and most people do not even realize it is here.

Too drastic to happen in Malaysia? 70 years ago, Malaysia have it’s own version of hyperinflation through “Banana Money” issued by the Japanese during their occupation of Malaya between 1942 and 1944. In order to supply the ruling authorities with money whenever needed, they simply kept printing more and more banana notes.

banana-money

During time of financial uncertainty, gold and silver remain as the best option to store one’s wealth. Not only gold and silver price will shoot up during such crisis time, but also the government cannot steal your gold and silver. (Remember, if you don’t hold it, you don’t own it) Between gold and silver, silver has much better potential than gold. Apart from the precious metal status (like gold), silver has an additional demand in industry usages. Computer, smartphone, air-cond, TV, battery, RFID, and much, much more. Almost every electronic devices uses silver as silver is the best electrical conductor in the world. The anti-bacteria element also made silver highly demanded in medical usage. To discover more silver industry usages, please visit here.

The total physical silver owned by ETP Silver Holdings continue to go up:

etf

For individual silver investors, I highly recommend you start buying some silver coins, bars or even rounds. There will be short term fluctuation of silver price, which I call them as “market noise”. For most people, it’s NOT worth the effort to pay too much attention to.

silver-eagle

American Silver Eagle coin is one of the favorite coins I keep (a lot!). Beside the beautiful design and low premium, I like the constant reminder of ONE DOLLAR minted on the coin, where right now the market is selling the coin for about $30 (RM100 – RM120, depending on the quantity and which dealer you buy from). This coin could once be bought at merely $1. It’s a perfect example / effect of inflation that pushed silver price up to such height.

Typically, investment grade silver in Malaysia can be categorized into coin, bar and round. For beginner, I highly recommend you start with American Silver Eagle which has many advantages over the other silver items in the market. The size is reasonably small where most middle class can afford to buy / invest. The premium is relatively low compared to other numismatic coin (which means you get more silver for every Ringgit spent), yet the coin has an impressive design. It is one of the most common and most demanded silver coin in Malaysia, in fact it is the best selling coin the world!

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies and tricks you never thought of in silver market. Please click here to find out more.

 

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