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There is a fear in America today, and it is a real one. It is part of the reason you keep seeing destruction of value in the stock market every day. That growing fear is the new “N” word. That word is nationalization. If you bank with any of the large money center banks, there is a chance that your bank will essentially be none other Uncle Sam. But let’s forget about the scary predictions for a moment. There is one very annoying and very pressing issue at hand. No one seems to know what nationalization really is, at least not in practice. We have been in discussions with more contacts than we’d like to count over this notion. Our conclusion is rather simple: nationalization means something very different from person to person. And nationalization may be very different from institution to institution, case by case.
We hope that nationalization does not come to pass. After all, we are Americans who live here and rely on the same system as everyone else. But there is a growing chance that nationalization could occur at one or more of the large money center or super-regional banks. What is most important is what nationalization will really mean to banks…. AND TO YOU. Here is what we think this means for the major money center banks of Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC), Wells Fargo & Co. (NYSE: WFC), and J.P. Morgan Chase & Co. (NYSE: JPM). And you better not forget about some other nationalization candidates like American International Group (NYSE: AIG), Fannie Mae (NYSE: FNM), and Freddie Mac (NYSE: FRE).
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We have probably covered more gold stocks over the last couple of months than we care to recall, but we have been getting more and more inquiries on the ETF’s and on how to play the shiny yellow stuff directly. When we see the media covering any topic with this frenzy and traders getting more and more interested, history and calm dictate that an inflection point has been reached. Following this inflection point is almost certainly what will be a sharp move in either direction. Gold breached the $1,000.00 threshold Friday as panic set further and further in, so in theory we could either be at $1,200.00 or $800.00 with a near-equal probablity in just a few months.
The White House said that the President is in favor of keeping the US banks private. That caused a mild rally in their shares yesterday after they had dropped like rocks though most of the session.
