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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Gold price hits record highs against Aussie dollar as banking crisis drives safe-haven demand – Surbiton Associates.
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Silver price forecast: XAG/USD waits patiently for Fed cues.
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Gold will outshine the other precious metals as fears of a global banking crisis grow – Mitsubishi’s Jonathan Butler.
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 More than $550 billion was withdrawn from banks, just last week.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.
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