Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. In this column, JWR also covers hedges, derivatives, and various obscura. Most of these items are from JWR’s “tangibles heavy” contrarian perspective. Today, we look at guns as an investment and ongoing strong gun sales in the United States. (See the Tangibles Investments section.)
Precious Metals:
Gold and silver prices have both jumped up substantially in Dollar terms, since the banking crisis news broke on Wednesday, March 8th. Here is some analysis, posted over at Gold-Eagle.com: Bank Failures and Inflation: What It Means for Silver and Gold.
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Silver price forecast: XAG/USD waits patiently for Fed cues.
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Economy & Finance:
One of my long-time readers wrote me yesterday to ask if I thought that the worst was over, in the banking crisis. My reply: No. We are just seeing the beginning of what could be a huge nationwide bank panic. More than $550 billion was withdrawn from banks, just last week. The U.S. Treasury essentially nationalized American banking, by providing a huge new pool of cash. Silicon Valley Bank was just the first of many bank failures.
The allegedly “safe” banks dove in and took $152 billion of Treasury Department “discount window” loans, in just a few days. Also last week, the Federal Reserve offered another $25 billion, and $12 billion of that has already been taken.
The FDIC’s remaining +/-$100 billion fund could be drawn down after just a couple of days of bank runs at a few banks. Thereafter, with the U.S. Treasury as the “creditor of last resort”, FDIC obligations would presumably all be electronic dollars created out of thin air, handed out in the forms of cashier’s checks. Therefore, don’t expect to be handed greenback cash. That quantity of printed cash simply doesn’t exist. Yes, they could print hundreds of billions of new “dollars” in $100 bills, but that could take several months to accomplish. This situation is going to get a lot worse before it gets better! Ultimately, American taxpayers will foot most of the bill for the bailouts. This could quickly add another $2-to-$5 trillion to the national debt.
You might ask: Cui bono? As smaller banks fail and get bought out by big banks, it consolidates wealth and power in the hands of the biggest “too big to fail” banks, and thus consolidates the control of the Federal Reserve banking cartel. – JWR
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Reported on Friday: Stock market news today: Stocks lower as First Republic weighs on banks.
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A terse video from Steve Forbes: Brace Yourself—Here’s Why More Trouble Is Coming To The World Of Banking.
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Charles Hugh Smith: Banks, Banks, Banks: The Elephant Nobody Even Sees.
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Linked over at the Whatfinger.com news aggregation site: Bank of America won big from the Silicon Valley Bank collapse. JWR’s Comment: With the recurrent history of bailouts, folks instinctively shift their deposits to the “too big to fail” banks. It is noteworthy that 95% of the SVB depositors held more than the $250,000 FDIC threshold. They are very fortunate that they are being made whole. But this sets a dangerous precedent for any upcoming bailouts.
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UBS to buy Credit Suisse for more than $3B in government-brokered deal aiming to restore confidence. (Thanks to D.S.V. for the link.) JWR’s Comment: That might sound like a lowball figure, but there is a long-standing precept of law that when you acquire a business, you are buying both its assets and its liabilities.
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At DNYUZ: Bank Runs, Crypto Concerns and Takeovers: A Timeline of the Panic.
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Brandon Smith: Silicon Valley Bank Crisis: The Liquidity Crunch We Predicted Has Now Begun.
Commodities:
SVB Fallout Spreads Through Energy Markets. Here is a quote:
“The collapse of Silicon Valley Bank and the risks of seeing other U.S. banks going down the drain have shaken the oil markets, sending WTI below $75 per barrel and Brent below the $80 per barrel mark. The oil narrative has been almost completely taken over by macro news, as even the relatively few newsworthy stories to come out did not provide any surprises – OPEC oil demand growth is still 2.3 million b/d and U.S. oil inventories seem to be relatively stagnant.”
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Commodity prices forecast to be strong in 2023.
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USDA: World Agricultural Supply and Demand Estimates
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Natural gas price seasonal weakness.
Derivatives:
Fidelity: U.S. yields fall as Credit Suisse woes renew global bank slide.
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CDS chaos: Swiss National Bank Issues Statement: “Will Provide Liquidity If Necessary.”
A quote:
“Officials at the Treasury Department are working closely with European regulators, said one of the people, who spoke on condition of anonymity.
That appears to have been the final straw as 1Y CS CDS is now trading 17% upfront as counterparty hedge flows soar (implied spread around 2700bps or around a 30% prob of default)…”
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A video interview with Matt Maley that outlines one of those dreaded “disappearing counterparty” scenarios: Banks ‘almost guaranteed a contagion taking place if Credit Suisse goes under’: Strategist.
Inflation Watch:
CNBC: Consumer inflation may have cooled in February but only slightly. JWR’s Comment: Don’t let the mass media’s obfuscation deceive you. When they talk about “less inflation”, what they mean is a decrease in the rate of increase. Inflation is still eating up our substance. Any of our savings that we leave in Dollars are still melting away in the unrelenting heat of inflation. We are gradually being robbed of purchasing power. Get into tangibles, folks!
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Up, up, up: Grocery Store Food Prices.
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Teneo: U.S. Economic Outlook 2023: A ‘Soft Landing’ or ‘Deep Recession’.
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France 24 news video: Argentina inflation shoots past 100% for first time since 1991.
Forex & Cryptos:
Dollar gains in safe-haven buying as Credit Suisse sparks wider banking fears.
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At Currency Thoughts: Fresh Wave of Concern Surrounding Financial Institutions.
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Reported on March 15th: Bitcoin Rally Cools Following CPI Release, But Bulls May Not Be Done.
Tangibles Investing:
“Guns, lots of guns.” 1.3 Million Guns Sold Last Month: Firearms Sales Still Near Record Levels.
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Some useful data points: Top Selling Guns — January 2023. JWR’s Comments: Keep in mind that current sales popularity is not a good indicator of long-term collector interest. For modern guns as an investment, look for guns that are well-made, with low-production numbers, in excellent to new condition, and if possible, still in their original factory boxes. Save those boxes! And as for antique guns, it is all about scarcity, design quality, condition, and originality. Original cardboard boxes for 125-year-old guns are rare, but definitely a plus!
Provisos:
SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.
News Tips:
Please send your economics and investing news tips to JWR. (Either via e-mail or via our Contact form.) These are often especially relevant because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News items from local news outlets that are missed by the news wire services are especially appreciated. Thanks!