If that is what happens then W Buffett will be the first to feel the pain since he has declared that owning physical is dumb money!
Another thing with counterparty risk is that if there is a melt down in the system, even owning gold stocks may be difficult to clear because within those holders will be some margin players whether arranged through their banks or CFD traders. A credit crunch will force money lenders of all kinds to start demanding unleveraged positions among their client base since every broker will have their leverage funds curtailed. Snow ball effect...
If people feel smart and hid their investments in brick and mortar, think of all the mortgage holders with the rug pulled under their feet because the fix fractional banking would not cope with a sudden rush or credit contraction. As I was made aware today from another poster, commercial paper or very short term credit to fund payroll will cease and inter banking overnight lending will be highly limited if they still exist.
Do people reckon there is still a credit card limit beside a direct debit card facility?I can only imagine what I am anticipating is only scratching the surface..... Be very careful what you wish for.....
