The White Walkers are coming...
Posted: Sun Mar 12, 2023 8:44 pm
Something snapped in the US banking system on Friday... In fact it started in Japan on Thursday night... Major bond buying erupted, markets crashed, three banks collapsed and Silvergate Capital and the biggest being Silicon Valley Bank SVB America's 16th largest bank... And by Saturday an "Emergency Fed Meeting" was called for Monday...
This looks like a lot of moves to try and prevent a bank run... Something is going off. Is this it..? Is this the Credit event coming that I flagged was implied by the MOVE INDEX around 3-4 months ago.
The consequences: By late friday gold rocketed... GDXJ was flying.. The Vix rocketed. The dollar tanked. The 2y Treasury yield crashed to long term 2 year support. ( That's long term support going back to covid...)
Previously, One of our biggest SH contacted me a few weeks back to say his old mate had been sacked from Credit Suisse, and they'd claimed CS was essentially bankrupt. From another direction, my fund manager mate, keeps flagging to me that if Credit Suisse goes that's it.. its so big it will cause a major crisis in banking confidence. Does the market think Credit Suisse is next..? Is this Covid's real 'Lehman' moment?
Then today :
YELLEN: PEOPLE SHOULD FEEL CONFIDENT THE BANKING SYSTEM IS SAFE AND SOUND
YELLEN: DEPOSITORS DON'T HAVE TO WORRY ABOUT LOSING ACCESS TO THEIR MONEY
YELLEN: CERTAINLY NOT LOOKING AT REPEATING BANK BAILOUTS OF PAST...
They are obviously worried . What they going to do to hide a banking crisis ...?
Question is why did SVB collapse...? Well Becuase it transpired they had far 'less capital' than thought ... deposits were seriously down, the housing market has been stopped in its tracks, plus the banks liquid and illiquid assets like treasuries and $120bn in securities mark to market at $100bn so showing huge unrealised losses... AND far greater than expected.
SVB is a venture capital bank. They support profitless tech startups basically. VC funding is just a
business plan for years now facing hangover, and suddenly wants government intervention. When the crap hits the fan, they beg for corporate socialism. Sorry, but IMO that's simply not how true capitalism is supposed to work. Like us You play, you pay.
AND We want money to move to real assets, real money... like gold... and miners. And companies that make useful stuff. Not pump and sell the
future promise of it.
A rush into bonds will tank yields - at least continue to drive them lower. Any whiff of cowbell ( liquidity support ) by central banks - like the Bank of England last September - will send yields even lower. And that should be a mega tail wind for goldā¦ lower rates, higher sticky inflation signifies āhigher negative real rates for longerāā¦ hopefully?
Could this be the prefect set up for the next leg up in gold.
Hold tight.. becuase if gold rerates it could absolutely rocket.
Becuase banks blowing up are part of soft landings, did you not know that?
" Risk happens slowly, then all at once" ....Got Gold ?
This looks like a lot of moves to try and prevent a bank run... Something is going off. Is this it..? Is this the Credit event coming that I flagged was implied by the MOVE INDEX around 3-4 months ago.
The consequences: By late friday gold rocketed... GDXJ was flying.. The Vix rocketed. The dollar tanked. The 2y Treasury yield crashed to long term 2 year support. ( That's long term support going back to covid...)
Previously, One of our biggest SH contacted me a few weeks back to say his old mate had been sacked from Credit Suisse, and they'd claimed CS was essentially bankrupt. From another direction, my fund manager mate, keeps flagging to me that if Credit Suisse goes that's it.. its so big it will cause a major crisis in banking confidence. Does the market think Credit Suisse is next..? Is this Covid's real 'Lehman' moment?
Then today :
YELLEN: PEOPLE SHOULD FEEL CONFIDENT THE BANKING SYSTEM IS SAFE AND SOUND
YELLEN: DEPOSITORS DON'T HAVE TO WORRY ABOUT LOSING ACCESS TO THEIR MONEY
YELLEN: CERTAINLY NOT LOOKING AT REPEATING BANK BAILOUTS OF PAST...
They are obviously worried . What they going to do to hide a banking crisis ...?
Question is why did SVB collapse...? Well Becuase it transpired they had far 'less capital' than thought ... deposits were seriously down, the housing market has been stopped in its tracks, plus the banks liquid and illiquid assets like treasuries and $120bn in securities mark to market at $100bn so showing huge unrealised losses... AND far greater than expected.
SVB is a venture capital bank. They support profitless tech startups basically. VC funding is just a
business plan for years now facing hangover, and suddenly wants government intervention. When the crap hits the fan, they beg for corporate socialism. Sorry, but IMO that's simply not how true capitalism is supposed to work. Like us You play, you pay. AND We want money to move to real assets, real money... like gold... and miners. And companies that make useful stuff. Not pump and sell the
future promise of it.
A rush into bonds will tank yields - at least continue to drive them lower. Any whiff of cowbell ( liquidity support ) by central banks - like the Bank of England last September - will send yields even lower. And that should be a mega tail wind for goldā¦ lower rates, higher sticky inflation signifies āhigher negative real rates for longerāā¦ hopefully?
Could this be the prefect set up for the next leg up in gold.
Hold tight.. becuase if gold rerates it could absolutely rocket.
Becuase banks blowing up are part of soft landings, did you not know that?
" Risk happens slowly, then all at once" ....Got Gold ?
