Marc Faber Agrees, ‘Get the Hell Out’

By Dominique de Kevelioc de Bailleul

The message to investors should be most clear by now: Quickly get your cash out of financial institutions and buy some gold.

“It’s very dangerous to put everything in cash with MF Global or another financial institution, because I’m not too sure about the law . . . if the law will protect you as a depositor or an account holder,” editor of the Gloom Boom Doom Report Marc Faber tells Bloomberg.

Whether the messenger comes way of an up-straight and straight-up N.Y. City Italian, an exiled American living in Central America, a young woman totting firearms and a Bible, or an eccentric Swiss-born money manager living in Chiang Mai, Thailand, each warn investors and savers that cash on account is not safe at financial institutions—no matter how much the FDIC or SIPC insures.

Gerald Celente, Jim Willie, Ann Barnhardt and, now, Marc Faber warn the runs on Greek, Spanish, Italian and several Eastern European banks will eventually come to the U.S.  And if investors and savers think they’re covered in the event of a failure, a media-downplayed ruling by United States Court of Appeals for the Seventh Circuit of Aug. 9, regarding the bankruptcy case of Sentinel Management Group, too many will come to know that their cash is most definitely exposed to what many say is legal theft.

“The system is rigged. . . if you don’t have it [assets] in your possession, you don’t own it,” said Celente, following word that his commodities brokerage account was seized in Jon Corzine’s MF Global bankruptcy of Oct. 31, 2011.

“JPM has seen fit to gobble private accounts at both MF Global and PFG-Best, with regulatory blessing as the courts sprinkled fascist holy water,” writes Jim Willie of the Golden Jackass newsletter.

“If you don’t understand what ‘get the hell out’ means, there’s not much I can do for you,” Ann Barnhardt commented, after hearing of the Seventh Circuit of Appeals ruling.

In the case of Sentinel, its creditor, BNY Mellon, contended that its secured loan with the Chicago futures brokerage firm takes priority over other loans which may have been secured by Sentinel’s pledge of allocated accounts.

“The appeals court affirmed an earlier district court ruling that the bank had a ‘secured position’ on a $312 million loan it gave to Sentinel, which turned out to have been secured by customer money,” according to Reuters of Aug. 9.

“I don’t think that’s what the Commodity Futures Trading Commission had in mind” with its requirement that brokers keep customer money separate from their own,” Reuters quoted Sentinel trustee Fred Grede.

“It does not bode well for the protection of customer funds,” he added, “I’m sure Mr. Corzine’s attorneys will get a hold of this ruling and use it for all it’s worth.”

Other than strongly recommending that idle cash be removed from U.S. banks and broker-dealers, Faber says investors and savers, alike, should hold some gold to protect their savings from another insidious means of ‘institutional’ theft in store from them in the future: the loss of purchasing power of their Federal Reserve notes.

“I think they [Fed] will print money and that eventually everything will become more expensive. . . and I would hold some gold . . . and I would hold some equities,” he says.

“And I happen to think that one day a lot of corporate bonds will have a higher credit rating than the U.S. government [bonds],” he adds, which coincidentally comes on the same day as another Bloomberg interview with credit rating agency Fitch, who warns the U.S. Treasury of an impending downgrade, if Congress cannot outline plans sometime in the first half of 2013 to narrow a $1.3 trillion annual budget deficit.

Gerald Celente: MF Global “Took my Money”

Trends Research Institute founder and director, Gerald Celente, told Russia Today (RT) in a Nov. 14 interview that the fall of MF Global took his futures account down with it.   Celente cannot access his account nor get answers to his inquiries from representatives of Lind-Waldock, the firm with whom he opened an account.

“They took my money; they took out of my account . . . it wasn’t being traded by anyone . . . this is like having money in a bank account,” Celente forcefully said.  “They took my money out of my account, six figures, and they have it.  They closed out two of my positions, and I cannot get any answers, and I can’t get my money.”

So far, Celente is the highest profile victim of politico operative John Corzine’s MF Global.  The firm filed for bankruptcy protection in October following credit downgrades of its debt and a collapse in its stock price weeks prior to the filing event.

Within days of the news of MF Global’s demise, it was learned that in addition to the bankruptcy, more than $600 million in 33,000 client accounts were unaccounted for, including Celente’s money, in an apparent case of MF Global’s ‘commingling’ of clients accounts with its corporate accounts. Sign-up for my 100% FREE Alerts

Ironically, Celente, who advocates holding physical gold as protection from a collapsing financial system, uses a futures to buy paper gold, temporarily, with the intention of taking delivery of physical gold at the COMEX in the future, which in his case is the most active delivery month of December.  Physical gold is the safest form (only form) of true ownership, according to Celente.  He stands as the most recent high-profile proof of the risks involved with entrusting savings and investment capital in today’s financial system.

In his tell-it-like-it-is manner of speech, Celente told viewers of RT that for a long time he has noticed an ‘elite’ cabal of criminal bankers and mafia-like political cohorts steadily taking over America’s financial, political, and regulatory institutions—and the freezing of his futures account as well as the lack of communication about the disposition of his money while MF Global’s bankruptcy proceeds is the latest example of a small group of corrupt Americans receiving special treatment at the expense of the nation’s decent and law-abiding citizenry.  In fact, specific laws and regulatory oversight bodies regarding client accounts were crafted and instituted to prevent a Celente case from ever happening.

“And you watch this guy, Corzine.  You know, Lauren, the word ‘justice’?  They spell it wrong; it’s spelled, J-U-S-T-U-S—just us,” Celente added to his usual colorful dialogue.  “This clown walks . . . he’s raising what, having dinners for Obama at $35,000 a pop.  This guy’s sitting at the casino, making bets 36-to-1.  You go down one dollar, but you bet 36?  And he’s cleaned out and ruined a lot of people.

“So maybe the name MF, I’m thinking the first word is ‘mother’ and we can put the other word in there, if you use your imagination, because that’s what they’re doing to everybody.”

Celente’s difficulties underscores a case repeatedly made, by Goldmoney’s James Turk, Eric Sprott of Sprott Asset Management and a number of other hard-money advocates, for owning physical gold.

The MF Global bankruptcy and well-publicized malfeasance of fiduciary duty in the aftermath will most likely serve as an example to investors who are not yet truly sold on the idea of holding some gold as protection from the global financial meltdown—as it continues unabated since 2008.

The UK Telegraph ran an article about the problem clients of MF Global now face retrieving their money, further promulgating Messrs. Turk and Sprott contentions to a wider general audience.

“What worries me is that if the SAR [Special Administration Regulations] does not lead to client money being rapidly distributed people will be quicker to withdraw their money from other firms at the first sign of trouble,” Paul Kavanagh, a partner at Killik & Co, told the Telegraph.

Killik refers to an old fashioned bank run, a situation that easily could become the additional catalyst for the anticipated Lehman-like event in Europe—or maybe the catalyst for another U.S. surprise.  No one really knows from where the next bankruptcy will come and to where it might lead.

It’s been more than two weeks since the MF Global bankruptcy, and there is no word yet regarding a resolution to clients’ ‘allocated’ accounts at the firm.