Forget ATM’s…The Bank will help you dig yourself further into debt $GLD $GC_F


Leverage yourself…. And buy gold.

As I was walking down in Buenos Aires, Argentina’s capital city, I noticed this advertisement by the City of Buenos Aires’ Bank. It is part of an advertising campaing recently were the bank is in fact offering loans at a “preferred” rate to buy gold.

The public AD states:

Gold Loan, as unique as your investments

Buy Gold, pay in installments

Some of the terms of the loan offering:

– No credit screening

-180 day term loan

– Maximum laon to an amount of the equivalent 25,000 US Dollars

– 19% APR

Looks like a sweet deal…. for the Bank.

You can find further info at Banco Ciudad de Buenos Aires’ website (in spanish)

Although ultimately I think the barbaric relic will probably reach higher prices, I aIso couldn’t help to think that when things are starting to get so widespread and eventually out of control, something is definitely not in the right place.

Let me explain my point: the mayority of Argentina’s economy in is cash-based. That means there’s little/no credit available. Financing is only available to a few. With the exception of Consumer credit thru credit cards (it is also important to note that only a small percentage of the population is bancarized) it is nearly impossible in Argentina to buy a house, for example, by applying for a loan. Loans are very difficult to obtain, and almost non-existent.

You can get “payment plans in installments” backed by a mortgage thru the owner/developer but most of them are locked in Foreing currency -US Dollar, generally- The Peso trades 0.24 to the US Dollar, currently

The same occurs when buying a vehicle, although to a lesser extent. It is really concerning to me to see this type of “products” targeted towards the general public, which smells like bubble to me.

Alternatively, those gold permabulls could argue that, provided what have been happening over the last few years, gold has certainly has became an asset class in itself.

I couldn’t help to think about someone who assumes a loan, locks the price thinking that the only way for the price of gold is up and -suddenly- gets also locked in into an important retracement or correction of the asset. They will be exposed to a loss-loss situation.

Real Estate anyone?


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