QUESTION: Martin, thank you very much for all that you have done for the middle class reader. I am a Canadian that only discovered you about a year ago. In this short time your teachings have still had a positive impact on my financial situation. I was one of the Gold believers but have sold most of my positions based on your daily writings and the Gold report. I would be in a much better position if I would have discovered you before 2012. When you talk of moving money to the stock market; is it safe to keep stocks in a trading house or should they be in certificate or DRS form? Is it only cash accounts like checking and savings accounts that are at risk or are RRSP’s held at banks also at risk? Thanks again for all the good that you’re doing for those of us that aren’t in the financial position to make use of your management services. There are not many people like you, willing to help others without asking for anything in return. You are one of the good ones!
ANSWER: I have pretty good sources because everyone contributes to what we do. In that way, it is in everyone’s self-interest to share info to achieve the correct answer. So we will scrutinize the end result very carefully.
It is a difficult question with the banking system as is. I invite those in the banking community that would like to carve out a new notch in business that this is the time. Nevertheless, from a Canadian perspective this is what has been going down up there contributed by our Canadian sources.
There were some changes recently to the types of securities that can be issued by Canadian banks with some additional changes coming in early 2015. I am certainly not an expert on the subject but I will pass along what I believe to be correct. The changes have come into the preferred and sub debt securities. The Senior Deposit Note changes are expected in the first half of 2015.
1) NVCC Preferred Shares — “non viable contingent capital” – currently these are just being issued by the Banks and RBC has done one. Rules for insurance companies will follow. The concept is that if the price of the Bank’s share price hits a certain price determined by a multiple, then the pref share become equity as well on a 5 for 1 basis.
2) NVCC Sub Debt – replaces all previous sub debt on maturity/ refinancing. The concept is similar to the pref shares, however, when the shares hit a certain price, then there is a predetermined formula to determine that price and when hit, the Sub debt get an immediate conversion to equity.
They are still contemplating Bail-ins for Senior Deposit Notes and I will keep you apprised as I hear anything new.
Of course, if we go into that Phase Transition and the Dow hits 40,000, where will we put the money at that point? That is the end game and at that point I believe we will emerge with a new monetary system 2.0.