By now, you've probably heard of Silvergate and Silicon Valley Investment Bank collapsing in the last few days. SVB is the second largest bank in U.S. history to collapse, Lehman Brothers being the biggest. I've read one report that stated SVB was the 18th largest bank in the U.S.A. while another report stated it was the 20th largest. Regardless, this is likely to spread as contagion to other banks and investment firms as well as corporations, Including video streamer Roku which has (had) just under half a billion dollars in cash locked up in SVB.
For this, I expect Roku's share price to drop in following days. In fact, I expect it to be a rough week for stocks in general, especially banks. I've read reports that the FED's aggressive and historic rate hikes since April of last year, of which there is a lag time of 6 months to a year and half before effects of the hikes are felt, is the true cause of this new banking crisis.
It has a lot to do with it, of course. It also has to do with the trillions in new money created in 2020 and 2021. It's very complicated and even I have a hard time understanding but many banks seem to be awash in cash but aren't lending out because of rising rates and economic uncertainty. Mortgage applications are at 28 year lows. Car / truck repos are through the roof. From the info I've gotten, there are so many vehicles that have been repossessed, they don't know what to do with it all. Are we to see deflated home and car prices over the next two years or so?
Even SVB was awash in cash until they experienced a massive bank run which, between Thursday and Friday saw depositors withdraw money to the tune of over $40 billion, which left the bank insolvent and an almost $1 billion cash deficit by Friday morning. The State of California has stepped in, created a new bank in order to move all deposit accounts to it. Any account with more that the $250,000 insured coverage is likely out of luck and we're talking billions and billions of dollars.
I'm also keeping a close eye on Euro banks, especially Credit Suisse. They are one of the most systemically important banks in Europe and the world yet the bank's shares plunged to a new record low this week to an intraday low of just 2.61 francs. On April 30, 2007 just before the GFC hit, Credit Suisse peaked at 76.74 francs. They've been topsy turvy ever since.
Going back to SVB, it sure looks like there was some insider trading, as Zero Hedge reports, that the CEO, CFO and CMO all sold shares in the previous 2 weeks totaling millions. I see lawsuits brewing over that one. They also paid out bonuses in the last 12 hours of operation. I see lawsuits brewing over that too.
This all reminds me of when I was a kid and listening to the elders in my family at get-togethers talking about the banks in general. This was at the height of Paul Volcker's inflation busting double-digit rake hikes of the late 70s and early 80s. The 1930s depression was still fresh in older folks' minds back then and they would repeat the same thing, 'Never trust the banks'!
In fact, after the 1930s, it actually took decades to convince people to put money in bank accounts again because there was so much distrust. The people preferred to hide their money under the mattress or a safe. Another parallel to the 1930s are struggling farmers. Back then, they were among the first to go bankrupt as they had borrowed a lot of cheap money in the 1920s for expensive farming equipment.
Sound familiar? Today, a similar pattern is emerging with farmers who borrowed hundred of thousands (millions?) for new land or equipment such as a combine machine and tractor. Farmers are facing an increasing debt load as the good ol' FED aggressively raised rates to 4.5% in less than a year.
The FED has another FOMC meeting later this month. Chair Jerome Powell truly is caught between a rock and a hard place. They will likely hike again. Protecting the dollar is more important than any little bank, right? Jerome, what I can say to you is, be ready to run for the hills when all the millions of people who've lost their entire life savings because of your actions come calling.
Gold and silver, on the other hand immediately went in the opposite direction as bank stocks.
Unlike gold, silver has taken a beating in the last month which I explained in previous articles. I expect silver to outperform gold in the coming bull run. It always does and it is historically proven. Silver's price chart since 2011 shows that a massive cup and handle has formed which strongly suggests we are close to a moonshot. Amazingly, silver's spot price is still below $21. This is ridiculous!
It may be ridiculous indeed but wow, back up the truck! This may be our last chance. As we get word of more banks collapsing and shares plummeting, I fully expect silver and gold to benefit. Look at how well silver's performed since year 2000...
Former Gold Corp CEO Rob McEwen, in an interview on Kitco News, predicts that silver will rise by 1,000% by 2027. Remember, silver always overshoots. I think it's safe to expect an even higher percentage.
As for gold, let's see how well it's performed since year 2000....
Am I seeing this right? Wow, gold has ratcheted a whopping 549% increase since 2000. Amazing but why is silver's performance half that of gold? That's because it is so undervalued and manipulated by the big exchanges. On Friday, the silver to gold ratio hit at 91.85:1.
It's time for silver to play catch up. Coming weeks and months should prove me right. Time is running out to get your hands on precious metals, my favorite being silver as it is too cheap to almost believe which in turn equates to much higher returns. Consider investing in a bit of silver while there's still time because I can almost guarantee that as word spreads, there will be bank runs.
There's not enough silver to go around. My followers know there was a 194 million ounce deficit last year that was carried over into this year. I'm already set as I saw this coming years ago, literally as I thought things would implode in 2015. Instead, we got trillions more in Q.E., the likes humanity has never seen before. It's all hot air folks and a big hole has just been poked through the balloon, starting with Silicon Valley and Silvergate Banks.
Would you rather keep your money in a bank that could go belly up any second or park in gold and silver? For years, I've been reading that a great wealth transfer was coming and it looks like that time has finally arrived. So many people will get burned but it doesn't have to be that way.
Did you know that more millionaires were minted during the 1930s Great Depression than at any other time in history? It's absolutely true. Will the same ring true this time around? The parallels are uncanny!
Consider investing in precious metals. The window of opportunity may be closing and you may never get the chance again. Check out the OwnX referral link below to get started. I've been buying $50 USD in monthly recurring payments for a few years now. A payment just went through on Friday and I was able to add another 2+ silver ounces to my account. I can cash out anytime in whole or in part, for cash or metals. Give it a try.
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