Pre 8 a.m. comments

The big news this morning is not from any company results (which are scarce today), but with the latest Eurozone bail-out, of Cyprus, which has really put the cat amongst the pigeons. For the first time, conditions have been imposed on a Eurozone Government which involve them directly plundering all bank accounts of Cyprus banks by up to 10%.

This seems a terrible mistake to me. The entire global banking system has always relied on one key fact - that depositors funds are sacrosanct. So by plundering everyone's bank accounts in Cyprus to fund the country's bail-out, the Eurozone have now made it rational for everyone to withdraw their entire savings from all Cyprus banks, at the earliest possible opportunity.

The initial plan did not even respect the Eurozone's own depositor guarantee for small depositors. They seem to be trying to back-track on that element now, but the damage to confidence is surely already done?

It's not just Cyprus either. This must surely trigger a fresh series of bank runs in the weaker Eurozone countries such as Greece, Spain, Portugal and maybe even Italy (where I understand a small, sub 1% bank account levy was done in the past, so they have form). Market Futures indicate that today will see a nasty sell-off, with the FTSE 100 due to open about 125 points down (almost 2%), the Euro has fallen 1.3% against the dollar (hardly a catastrophe though), and Gold is up 0.8% to $1605.

My Twitter timeline (which I use almost exclusively for financial news & views) was buzzing yesterday, when it's usually very quiet on a Sunday, so this has really rattled a lot of investors. As one commented, the market has been looking for a reason to sell off, and the Cyprus bail-out is probably it. I agree with that.

Personally I won't be selling any of my shares, because they are all long-term value small caps, so I don't respond to events like this. However, I have hedged myself by opening a new long in Gold at $1,605. It seems to me that there is a big risk now of bank runs in the Eurozone periphery, and people seeking the safety of physical assets (especially Gold), after this destabilising move to plunder the bank accounts in Cyprus. People don't believe politicians and officials assurances any more, so them saying it is a…

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