GoldCore

The industry-leading In Gold We Trust Report was released this week.
So convinced are the authors “that the monetary and geopolitical situation as well as the chart development of the gold price suggest that a showdown in gold is imminent” that the 2023 report is entitled “Showdown”.
This is arguably one of (if not the) best pieces of analysis and commentary to come out each year. We highly recommend GoldCore readers (virtually) grab themselves a copy and settle down to enjoy this expertly produced report.
Intermediate gold price forecast update
They also give an update on their gold price forecast to the end of the year. They had previously given a price target of just shy of $4,800 by 2030. Given gold’s performance this year, let us know if you think the target seems a little ambitious, a little conservative or very realistic.

We frequently talk about the gold-silver ratio, but often the gold-copper ratio can be a more telling indicator when it comes to assessing the health of the economy. “Dr. Copper” is known for its ability to signal when the economy is ‘unwell’. As you will read below, the readings on the doctor’s chart are strong and this, combined with the gold price, tells us something many of us have been saying for years: we are about to head into some very tough economic times, indeed. 
The gold to copper ratio is pointing to slower economic growth and increased safe-haven demand.
The gold to copper ratio is an account of how many ounces of copper it would take to purchase one ounce of gold and history shows that the past peaks of this ratio coincides with the crisis. Copper is often referred to as “Dr. Copper” for its uncanny ability to predict economic health. Copper is an industrial metal used in building and performs well during economic expansion.  
Gold, on the other hand, is a safe-haven asset, which investors turn to in times of financial and geopolitical crisis, which makes it an indicator of fear in the market.
Gold to Copper Ration Chart As we discussed in the post on April 13 “Has the IMF Told the World to Buy Gold?”, the IMF in its April World Economic Outlook is forecasting slower world growth, in brief: Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. 
And just this week a Wall Street Journal headline read China’s Recovery Loses Stream, Signaling Trouble for Global Economy: Country’s youth unemployment hits record high as new economic data falls short of expectations. 
  The article went on to say that: China’s post-Covid growth spurt is sputtering and its youth unemployment rate hit a record high, signaling trouble for a recovery that was expected to boost global growth. A bundle of economic indicators for April, including retail sales, factory production, and fixed-asset investment, fell short of economists’ expectations, according to data released Tuesday by China’s National Bureau of Statistics. Investment in the country’s property sector also dropped in the first four months of the year.
Does the US need a lie down?
The signs of recession are prevalent in the US, unemployment claims are rising, negative leading indicators for the past several months, and the inverted yield curve to name a few of the major signs – see our March 8 post Reading the Signs: Is the US Economy Headed for Recession?
There is no shortage of potential geopolitical and financial crises on the horizon. Some will be swept under the rug, or ‘kicked down the road’, some will fester for several years before blowing up and others will crack open. Three key geopolitical/financial crises on the near-term horizon that could be the next ‘spike’ in the gold to copper ratio are: The US debt ceiling debate in Congress, the China/US political relationship, and U.S. banking/commercial real estate problems.
Congress is no doubt pushing the debate over raising the debt ceiling to the eleventh- and three-quarters hour – and possibly even beyond. U.S. Secretary Janet Yellen has warned Congress that the final deadline is June 1st before the U.S. is no longer able to pay all its bills. And even if she is ‘bluffing’, this dalliance until the very last moment is costing the U.S. due to higher interest and further eroding confidence in U.S. debt.
Treasury Secretary Janet Yellen warned that the US is already paying a price for its failure to raise the federal debt limit, as talks between the White House and lawmakers from both parties continued into a second week. 
The world’s health depends on US-China relations
The sanctions against Russia have added to an already tense relationship between China and the US. And the relationship between the two countries is likely to be one of the key points in the November 2024 U.S. election.  Martin Wolf in an article titled US-China relations have entered a frightening new era in the Financial Times writes: the relationship between the US and China is likely to determine humanity’s fate in the 21st century. It will determine whether there will be peace, prosperity and protection of the planetary environment, or the opposites. 
Both the US and China oscillate between warning the other and ‘being friends’ and pretending that there are no problems between the two countries. But it will not take much of a disagreement to bring the underlying issues to a head and for a fallout to be the outcome.
The banking sector problems are still unfolding. There are still banks that are struggling to meet deposit demand as higher yields lower the value of a bank’s assets. This is a topic we have covered many times over the last two months as it is a key reason central banks are likely to pivot to easier policy and more money printing despite inflation being above their two percent targets. Tied to this is the two-fold problem in the U.S. commercial real estate sector, which are low lease rates compounded by falling values.
All of this adds up to the gold to copper ratio going up as gold prices climb on safe haven demand while copper prices struggle on economic weakness. 
Did you see this week’s technical analysis with chart expert Gareth Soloway? Tune in to see what he thinks the catapult will be, to send the gold price higher. 
Gareth Soloway – This is the catapult that will send gold to new highs
 
 

Join Dave Russell as he speaks to one of our favourite gold and silver chart experts, Gareth Soloway. In this month’s technical analysis chat, Dave and Gareth discuss gold, silver, and all things price action.
Hear Gareth’s expert thoughts on where gold may head before breaking out to new highs, why silver is a tricky read and what major change investors are failing to understand.
As ever, let us know what you think and, of course, any questions you might have for Dave, the GoldCore team and our GoldCore TV guests!

Join Dave Russell as he speaks to one of our favourite gold and silver chart experts, Gareth Soloway. In this month’s technical analysis chat, Dave and Gareth discuss gold, silver, and all things price action.
Hear Gareth’s expert thoughts on where gold may head before breaking out to new highs, why silver is a tricky read and what major change investors are failing to understand.
As ever, let us know what you think and, of course, any questions you might have for Dave, the GoldCore team and our GoldCore TV guests!

Join Dave Russell as he speaks to one of our favourite gold and silver chart experts, Gareth Soloway. In this month’s technical analysis chat, Dave and Gareth discuss gold, silver, and all things price action.
Hear Gareth’s expert thoughts on where gold may head before breaking out to new highs, why silver is a tricky read and what major change investors are failing to understand.
As ever, let us know what you think and, of course, any questions you might have for Dave, the GoldCore team and our GoldCore TV guests!

When you invest in gold or buy silver coins with GoldCore you are choosing to invest in an asset that has no counterparty risk.

Sadly those who have been holding their bitcoin on the crypto exchange FTX, have not experienced the same level of reassurance and service from the exchange’s management.
This event is all part of a much wider lesson about which assets really are safe havens. Also how to reduce the level of counterparty risk your investment portfolio is exposed to. 
This time last year, cryptocurrency enthusiasts were still touting “Crypto as the new gold”– crypto touted as having the same ‘safe’ attributes as gold.
The main attribute is that it is a currency that government doesn’t control. Also, it is without counterparty risk. The latest debacle has once more proved this is not always the case for cryptocurrencies.
The news that the crypto exchange FTX was filing for bankruptcy on November 5 sent Bitcoin plunging down a further 25%.
This is on top of the more than 60% Bitcoin has already declined since its November 2021 peak. This brings the total decline to more than 75%.
Bitcoin Chart The extent of the collapse and its fallout is still unfolding as more details are uncovered. The main risk goes back to one we have discussed many times before counterparty risk.
What Happens to your Bitcoin as FTX Collapses
The FTX collapse has brought to light that the CEO, Sam Bankman-Fried, had authorized billions of dollars worth of customer assets to be lent to its affiliated trading firm Alameda Research to fund risky bets.
According to news reports Alameda Research owes FTX upwards of US$10 billion. This is more than half of its US$16 billion in customer assets!
The bankruptcy case is likely to take years to unravel. There could be more than one million creditors, and more than 100 other related corporate entities involved.
Everyone who thought they owned Bitcoin held by FTX became an unsecured bankruptcy creditor. These are the ones who must now rely upon some Court to confirm just how much, or any Bitcoin they will receive.
FTX is not the first crypto exchange to collapse – Mt. Gox, which accounted for over 75% of all Bitcoin transactions until it filed for bankruptcy in 2014 after being hacked. Hundreds of thousands of bitcoins were lost (removed from the network).
Some of these coins later recovered but withdrawals from the exchange were already stopped. It wasn’t until seven and a half years later, in November 2021, creditors and the court reached an agreement. 
The FTX web of deceit and ‘poor judgment’ in Mr. Bankman-Fried’s words, goes much deeper and is far more convoluted than the Mt. Gox bankruptcy.
Is the Dollar About To Go Digital?
Along the same lines of digital currency and counterparty risk, the Federal Reserve of New York announced on November 15 that it is “Facilitating Wholesale Digital Asset Settlement”.
The Federal Reserve of New York and a dozen major banks are launching a twelve-week test of a digital dollar. A news release on the Federal Reserve of New York website states that the test is to determine the feasibility experiment as a ‘proof-of-concept’ of transactions using a digital US dollar.
The twelve-week program will simulate digital money transactions between the participating bank customers. It then settles the transactions through a simulated Fed Reserve distributed ledger.
The experiment of ‘digital dollar tokens’ through the test program titled “The Regulated Liability Network” by banks through the Federal Reserve is to bring blockchain technology to the ‘real economy’ and speed up settlements between banks and the central bank. The FRBNY states: 
In a 12-week proof-of-concept project—the Regulated Liability Network U.S. Pilot—the NYIC will experiment with the concept of a regulated liability Network (RLN). RLN is a concept for a financial market infrastructure (FMI) facilitating digital asset transactions. This connects deposits held at regulated financial institutions using distributed ledger technology.
  How a Shortage of Rare Earth Metals Will Impact Us All
 
While the Regulated Liability Network could be an alternative to unregulated cryptocurrencies the potential fresh problems to arise are obvious given the transaction ledger is likely transparent for FRBNY purposes. 
Only time will tell if the timing of the test (on the heels of the FTX collapse) is simply ‘bad timing’ or an omen of a system building in even more risk. Investing in physical gold and silver are still the tried-and-true alternative!  
If you would like to hear more about the benefits to investing in gold or buying silver coins then have a look at our YouTube Channel, GoldCore TV. Here we bring you a wealth of news, commentary and analysis of the precious metals markets, as well as the wider macroeconomic situation.  

Gold is on the cusp of setting a new all time high – and the current economic and financial environment provides three key factors that are bullish for gold to move higher. 
Gold Price Chart 1. Monetary policy is being forced to ease as bank problems continue and waning economic growth
Berkshire Hathaway’s annual shareholders meeting was held on May 6. At the event monikered the ‘Woodstock for Capitalists’ Warren Buffett and his right-hand man Charlie Munger answered investor questions. In regards to the economy, Buffett told the packed auditorium
The Oracle of Omaha, Buffett went on to say,
Former Fed Insider Danielle DiMartino Booth Gives Us Her Interest Rate Predictions
 
When asked about the banking problems, Buffett told the audience that fear in the banking sector has been contagious historically, sometimes it is justified and sometimes it isn’t. He recalled how it used to be that if you saw people lining up at the bank you should join the line.
But the sector has changed over the years and the FDIC was very logical and helps to keep fear lower. However, the fact there is still fear in the market is partly due to poor communication by politicians and the press.  Munger added that bankers shouldn’t be in the investment industry, he stated
Buffett added that the CEO and directors should be the ones to ‘suffer the consequences’ of bank failures.
  One big red flag raised by the duo is the festering problems in the commercial real estate sector. Munger told the audience that
He added that “America will get through it but it will require a different set of owners”, meaning that the banks will get the properties back. Buffett added that the banks don’t want the properties so
Continuing problems in the banking sector and commercial real estate will keep central banks printing presses going to support these sectors – the amount of quantitative easing by central banks is essentially limitless, which devalues the fiat currencies!
2. Geopolitical tensions are high
Moreover, the East vs West divide is becoming more apparent. A Wall Street Journal headline on May 8 read “EU Targets Eight Chinese Companies in Russia Sanctions Push”. 
The article went on to say that “The European Union is considering sanctioning eight Chinese companies over Russia’s war in Ukraine, diplomats said, with the bloc looking to target firms they believe have provided Moscow electronic items, including semiconductors, that can be used for military purposes”.
The sanctions are not the first that targeted non-Russian companies but “they target a country with which Europe has important trade ties and which France and other EU countries had been hoping to prod to play a constructive role in Ukraine. The measures echo the Biden administration’s sanctions warnings against Chinese firms for supplying Russia not only with weapons but with products that can be used militarily”. The continuing tensions will likely accelerate the de-dollarization trend, which is a key factor in record central bank gold demand!
In an op-ed article published by Project Syndicate on May 3 titled No Respite from the Slow-Motion US-China Collision, Nouriel Roubini states “despite US officials’ efforts to establish guardrails for strategic competition with China, and Chinese officials’ insistence that they have no interest in economic decoupling, prospects for cooperation look increasingly remote. Fragmentation and decoupling are becoming the new normal, the two countries remain on a collision course, and a dangerous deepening of the ongoing “geopolitical depression” is all but inevitable”.
The continuing tensions will likely accelerate the de-dollarization trend, which is a key factor in record central bank gold demand!
3. Inflation is likely to stay higher than pre-covid levels for a significant period
The shift of central banks to easing is in contrast to their inflation fighting tightening. Central banks are in a tug-of-war between fighting inflation and saving their banking system and economies. As more vulnerabilities are exposed over the coming months the banking system and economy are likely to take precedence over higher than 2% inflation growth. See our March 30 post The Fed is now in a tug-of-war between fighting inflation and saving the banking system. Remember the 2% inflation targets are set by a fluke and could be changed either temporarily or permanently as the economic and political environment evolves.

Our message for this week remains resonant with each past week. The ‘systems’ are designed around maximizing banker leverage instead of minimizing counterparty risk. So, in the long-run silver and gold benefit from coming structural changes in how the world is financed.

We discuss the Federal Reserve often because the more the Fed tries to ‘undo’ its past policy mistakes and alters the markets through its poor policies, the more gold and silver prices are likely to rise! Yesterday’s meeting is an example: the more the Fed Chairman spoke the more the metals prices rose.
As largely expected, the Federal Reserve increased the Fed funds rate an additional 25 basis points to a range of 5.00% to 5.25%. The overriding message was “we will now wait-and-see”. 
The main change in the statement from the March meeting statement was the removal of the sentence: The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. 
And replaced it with: In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments (bolding added).
3 Reasons Why Patrick Karim is Bullish on Gold
 
In the press conference Powell then explained that this change means that they no longer anticipate that rate hikes will take place at future meetings but instead will be driven by incoming data meeting by meeting. Hence, the wait-and-see message. 
Vulnerabilities exposed
This week’s increase was the 10th increase in the fed funds rate since March 2022 for a total increase of 5% in just over a year. Inflation, although down from 2022 highs, still remains well above the Fed’s 2% target, but the rapid increases are exposing vulnerabilities in the economy, especially in the financial sector. 
Fed Fund Rate and Inflation Indicators’ Chart Chair Powell started his press conference by addressing the continuing problems in the banking sector saying: conditions in [the banking] sector have broadly improved since early March, and the U.S banking system is sound and resilient. We will continue to monitor conditions in this sector. We are committed to learning the right lessons from this episode and will work to prevent events like these from happening again.
Contrasting opinions
Although the Fed, FDIC and U.S. Treasury have made implicit guarantees of banks and the financial sector, markets don’t seem to agree that conditions have broadly improved, the Dow Jones Regional Banking Sector Index declined further on Wednesday. And gold and silver rallied further with gold on the verge of setting a new all-time high. (For more on the vulnerabilities lingering problems in the banking sector see our post Has the IMF Told the World to Buy Gold? from April 13th) 
Dow Jones Regional Bank Sector Index Chart The effects of the rapid increases are not only in the financial sector, but other interest rate sensitive sectors are also weakening, such as the housing, commercial real estate and investment sectors. 
Chair Powell addressed these vulnerabilities: Credit conditions had already been tightening over the past year or so in response to our policy actions and a softer economic outlook. But the strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses.
  In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. In light of these uncertain headwinds, along with the monetary policy restraint we have put in place, our future policy actions will depend on how events unfold.
As for the future path for monetary policy Powell stated: We will make that determination meeting by meeting, based on the totality of incoming data and their implications for the outlook for economic activity and inflation. And we are prepared to do more if greater monetary policy restraint is warranted.
Recession incoming: standby gold and silver
The yield curve and leading indicator continue to point to recession later this year. It is likely that the next Fed interest rate move will be easing later this year to support the economy and the banking sector. Inflation is likely to continue to rollover somewhat, but stay higher than pre-Covid levels due to changing policies – see our post from October 7 The Inflation Tide is Turning! Although Chair Powell continues to say that the Fed’s goal is inflation back to 2% growth – he always adds …. Over time, which could mean that inflation won’t return to 2% anytime soon. 
Bottom Line: Equity markets are still trying to figure out how to read central banks – but gold and silver are the smart ‘out of the fiat currency’ alternatives rising as the vulnerabilities from rapid rate hikes continue to unfold … and more are to be exposed.  
US Yield Curve Chart US Leading Indicator Chart  

We discuss the Federal Reserve often because the more the Fed tries to ‘undo’ its past policy mistakes and alters the markets through its poor policies, the more gold and silver prices are likely to rise! Yesterday’s meeting is an example: the more the Fed Chairman spoke the more the metals prices rose.
As largely expected, the Federal Reserve increased the Fed funds rate an additional 25 basis points to a range of 5.00% to 5.25%. The overriding message was “we will now wait-and-see”. 
The main change in the statement from the March meeting statement was the removal of the sentence: The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. 
And replaced it with: In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments (bolding added).
3 Reasons Why Patrick Karim is Bullish on Gold
 
In the press conference Powell then explained that this change means that they no longer anticipate that rate hikes will take place at future meetings but instead will be driven by incoming data meeting by meeting. Hence, the wait-and-see message. 
Vulnerabilities exposed
This week’s increase was the 10th increase in the fed funds rate since March 2022 for a total increase of 5% in just over a year. Inflation, although down from 2022 highs, still remains well above the Fed’s 2% target, but the rapid increases are exposing vulnerabilities in the economy, especially in the financial sector. 
Fed Fund Rate and Inflation Indicators’ Chart Chair Powell started his press conference by addressing the continuing problems in the banking sector saying: conditions in [the banking] sector have broadly improved since early March, and the U.S banking system is sound and resilient. We will continue to monitor conditions in this sector. We are committed to learning the right lessons from this episode and will work to prevent events like these from happening again.
Contrasting opinions
Although the Fed, FDIC and U.S. Treasury have made implicit guarantees of banks and the financial sector, markets don’t seem to agree that conditions have broadly improved, the Dow Jones Regional Banking Sector Index declined further on Wednesday. And gold and silver rallied further with gold on the verge of setting a new all-time high. (For more on the vulnerabilities lingering problems in the banking sector see our post Has the IMF Told the World to Buy Gold? from April 13th) 
Dow Jones Regional Bank Sector Index Chart The effects of the rapid increases are not only in the financial sector, but other interest rate sensitive sectors are also weakening, such as the housing, commercial real estate and investment sectors. 
Chair Powell addressed these vulnerabilities: Credit conditions had already been tightening over the past year or so in response to our policy actions and a softer economic outlook. But the strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses.
  In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. In light of these uncertain headwinds, along with the monetary policy restraint we have put in place, our future policy actions will depend on how events unfold.
As for the future path for monetary policy Powell stated: We will make that determination meeting by meeting, based on the totality of incoming data and their implications for the outlook for economic activity and inflation. And we are prepared to do more if greater monetary policy restraint is warranted.
Recession incoming: standby gold and silver
The yield curve and leading indicator continue to point to recession later this year. It is likely that the next Fed interest rate move will be easing later this year to support the economy and the banking sector. Inflation is likely to continue to rollover somewhat, but stay higher than pre-Covid levels due to changing policies – see our post from October 7 The Inflation Tide is Turning! Although Chair Powell continues to say that the Fed’s goal is inflation back to 2% growth – he always adds …. Over time, which could mean that inflation won’t return to 2% anytime soon. 
Bottom Line: Equity markets are still trying to figure out how to read central banks – but gold and silver are the smart ‘out of the fiat currency’ alternatives rising as the vulnerabilities from rapid rate hikes continue to unfold … and more are to be exposed.  
US Yield Curve Chart US Leading Indicator Chart  

More often than not, the international trade and currency system works to the benefit of the US and its friends, whilst others have to take what they can. ‘No more!’ seems to be the message from countries outside of the Western world. But it is more than an expression of frustration. Deals are being done, agreements are being signed and money (that isn’t dollars) is being exchanged. It’s hardly a coincidence that those at the table are also storing up and buying gold bullion.
In a speech on a state visit to China this month, Brazil’s president Luiz Inacio Lula da Silva stated: Every night I ask myself why all countries have to base their trade on the dollar … Why can’t we do trade based in our own currencies? … Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”
Lula’s visit to China was for the inauguration of former Brazilian president Dilma Rousseff as head of the New Development Bank formally referred to as the BRICS bank. 
The New Development Bank
The New Development Bank was first proposed in 2012 and the agreement on the new bank entered into force in July 2015 with all five of the BRICS countries’ support. Also, other nations can join the New Development Bank as long as BRICS nations’ voting share does not drop below 55%.
The bank is headquartered in Shanghai and according to its website has the mandate to “prioritise infrastructure and sustainable development projects that propel economic growth and improve the lives of people in our member countries.”
The New Development Bank agreement between BRICS countries wasn’t as well known, but with BRICS countries making headlines more often about de-dollarization and trade in their own currencies it is likely that the non-US-dominated institutions will also be highlighted more frequently in the media.  
The drive towards dedollarization has been on the minds of governments in China, Russia, and Saudi Arabia among others for many years now, but has gained major momentum in nations after sanctions on Russia limited its access to U.S. (and Euro) denominated reserves.  
  Indeed, it seems that de-dollarization is the buzzword for April 2023 in main street media. Recent headlines “De-Dollarization Is Happening at a ‘Stunning’ Pace” and “Dedollarization Gains Pace as BRICS overtake G7, React to War” (Bloomberg), “The dollar’s dominance would face a threat unlike any other from a BRICS currency, former White House economist says” (Markets Insider), “Explained: Why India & Other BRICS Nations Want to Create A New Currency For Trade Payments” (India Times).  
For how long will the US dollar dominate?
Trade in U.S. dollars still dominates global trade by a large margin, but more agreements between countries are being settled each month.

According to the Financial Times: Since Russia’s invasion of Ukraine “financing data from Swift, the international payments and financing platform, shows that the renminbi’s share by value of the market had risen from less than 2 percent in February 2022 to 4.5 percent a year later.
Moreover, those gains put China’s currency in close contention with the euro, which accounts for 6 percent of the total. Both are, however, still a tiny fraction of the dollar’s share. This stood at 84.3 percent in February 2023, down from 86.6 percent a year earlier.”   
If China’s growth of international settlement continues to grow even at 2 percent it will surpass the euro this year and the renminbi will account for more than 10 percent in 3 years. 
3 Reasons Why Patrick Karim is Bullish on Gold
 
And Russia does have access to the Cross-Border Interbank Payment System (CIPS), China’s alternative to SWIFT, whose settlements grew at 21 percent in 2022 compared with a year earlier. Bilateral trade on the CIPS between Russia and China that was settled in renminbi rose to a record US$185bn.  
The Federal Reserve’s rapid rise in interest rates last year has also increased the appeal of financing renminbi, while the Federal Reserve raised rates 9 times over the last year the People’s Bank of China has cut its prime rate twice, which on a relative basis, makes the renminbi financing cheaper. 
Russian lawmaker Alexander Babakov is reported to have said that the BRICS nations are in the process of creating a new medium for payments – established on a strategy that ‘does not defend the dollar or euro. Moreover, the reports claim that the new currency would be secured by gold and other commodities. 
A coincidence?
It is interesting that China starts to report its official gold reserves just before big international agreements are announced, such as the inclusion of the renminbi the IMF’s SDR basket of currencies.

And it is no coincidence in our mind that China started reporting its official gold reserves in November 2022 and Russia reported its official gold reserves this month, along with the missing data from last year. 
China Official Gold Reserves Chart Russia Gold Reserves Chart  

More often than not, the international trade and currency system works to the benefit of the US and its friends, whilst others have to take what they can. ‘No more!’ seems to be the message from countries outside of the Western world. But it is more than an expression of frustration. Deals are being done, agreements are being signed and money (that isn’t dollars) is being exchanged. It’s hardly a coincidence that those at the table are also storing up and buying gold bullion.
In a speech on a state visit to China this month, Brazil’s president Luiz Inacio Lula da Silva stated: Every night I ask myself why all countries have to base their trade on the dollar … Why can’t we do trade based in our own currencies? … Who was it that decided that the dollar was the currency after the disappearance of the gold standard?”
Lula’s visit to China was for the inauguration of former Brazilian president Dilma Rousseff as head of the New Development Bank formally referred to as the BRICS bank. 
The New Development Bank
The New Development Bank was first proposed in 2012 and the agreement on the new bank entered into force in July 2015 with all five of the BRICS countries’ support. Also, other nations can join the New Development Bank as long as BRICS nations’ voting share does not drop below 55%.
The bank is headquartered in Shanghai and according to its website has the mandate to “prioritise infrastructure and sustainable development projects that propel economic growth and improve the lives of people in our member countries.”
The New Development Bank agreement between BRICS countries wasn’t as well known, but with BRICS countries making headlines more often about de-dollarization and trade in their own currencies it is likely that the non-US-dominated institutions will also be highlighted more frequently in the media.  
The drive towards dedollarization has been on the minds of governments in China, Russia, and Saudi Arabia among others for many years now, but has gained major momentum in nations after sanctions on Russia limited its access to U.S. (and Euro) denominated reserves.  
  Indeed, it seems that de-dollarization is the buzzword for April 2023 in main street media. Recent headlines “De-Dollarization Is Happening at a ‘Stunning’ Pace” and “Dedollarization Gains Pace as BRICS overtake G7, React to War” (Bloomberg), “The dollar’s dominance would face a threat unlike any other from a BRICS currency, former White House economist says” (Markets Insider), “Explained: Why India & Other BRICS Nations Want to Create A New Currency For Trade Payments” (India Times).  
For how long will the US dollar dominate?
Trade in U.S. dollars still dominates global trade by a large margin, but more agreements between countries are being settled each month.

According to the Financial Times: Since Russia’s invasion of Ukraine “financing data from Swift, the international payments and financing platform, shows that the renminbi’s share by value of the market had risen from less than 2 percent in February 2022 to 4.5 percent a year later.
Moreover, those gains put China’s currency in close contention with the euro, which accounts for 6 percent of the total. Both are, however, still a tiny fraction of the dollar’s share. This stood at 84.3 percent in February 2023, down from 86.6 percent a year earlier.”   
If China’s growth of international settlement continues to grow even at 2 percent it will surpass the euro this year and the renminbi will account for more than 10 percent in 3 years. 
3 Reasons Why Patrick Karim is Bullish on Gold
 
And Russia does have access to the Cross-Border Interbank Payment System (CIPS), China’s alternative to SWIFT, whose settlements grew at 21 percent in 2022 compared with a year earlier. Bilateral trade on the CIPS between Russia and China that was settled in renminbi rose to a record US$185bn.  
The Federal Reserve’s rapid rise in interest rates last year has also increased the appeal of financing renminbi, while the Federal Reserve raised rates 9 times over the last year the People’s Bank of China has cut its prime rate twice, which on a relative basis, makes the renminbi financing cheaper. 
Russian lawmaker Alexander Babakov is reported to have said that the BRICS nations are in the process of creating a new medium for payments – established on a strategy that ‘does not defend the dollar or euro. Moreover, the reports claim that the new currency would be secured by gold and other commodities. 
A coincidence?
It is interesting that China starts to report its official gold reserves just before big international agreements are announced, such as the inclusion of the renminbi the IMF’s SDR basket of currencies.

And it is no coincidence in our mind that China started reporting its official gold reserves in November 2022 and Russia reported its official gold reserves this month, along with the missing data from last year. 
China Official Gold Reserves Chart Russia Gold Reserves Chart  

Some who are considering buying gold bullion or silver investment often look closely at the price and ask ‘is now a good time to buy gold’. This is understandable after all no buying decision should be one that you take lightly and often people want to feel like they have bought ‘at the right time’. So, in this week’s blog, we look at recent gold and silver price gains in the perspective of the financial crisis of 2008 – 2011. Remember, whether you buy gold today or tomorrow, it should be viewed not just as an investment but also as insurance for your portfolio. 
In our post on April 13 Has the IMF Told the World to Buy Gold? we discussed the IMF’s (International Monetary Funds) recent release of its Global Financial Stability Report and World Economic Outlook and pointed out that many of the major financial stress factors caused by the rapid tightening of the monetary policy outlined in the reports are positive for gold and silver prices. 
How does financial stress impact gold and silver prices
This week we start with putting gold and silver price gains from financial stress in perspective of the recent Great Financial Crisis of 2008-2011. 
The chart below shows that silver prices have already rallied 40% from September 1, 2022, with a steep climb starting in mid-March as the problems of Silicon Valley Bank started to unfold and gold prices have climbed almost 20%. We also remind readers that one of the signs of a bull market in precious metals is when the silver price is rising faster than the gold price. 
Gold and Silver Price Chart Looking back to the last financial crisis, from the first market concerns about liquidity, and when NetBank failed in September 2007, to the peak of that bank failures cycle, because of the series of quantitative easings by central banks, and the bailouts of Greece, Portugal, and Ireland; Silver reached a peak in April 2011 with a 400% gain and gold reached a peak in September 2011 with a gain of 280%.  
In other words, the rally in gold and silver prices is only now getting going and has quite a distance to run higher as current financial vulnerabilities are exposed.
Gold and Silver Price Chart There is the added complication of inflation (see our post on March 30 The Fed is now in a tug-of-war between fighting inflation and saving the banking system) and the much higher debt levels of governments and households. 
The third flagship report published by the IMF last week was the Fiscal Monitor which discusses fiscal policy (governments sending less) tightening after the rapid increase in spending to support their respective economies during Covid.
  Governments must deal with high debt levels, alongside modest growth (negative economic growth in the near term) while having to pay higher interest rates on their own debt.
The report states that governments are likely to face additional spending pressures in 2023 as ongoing geopolitical tensions may lead to further increases in defense spending and fiscal support to address negative effects from disruptions to international trade. Industrial policies, including government subsidies, may also emerge to foster import substitution … 
… Low-income developing countries, many of which are in or near debt distress or have limited fiscal space, face a particularly difficult balancing act. Many developing countries are grappling with tighter budgetary constraints.
The additional spending pressures, combined with slower growth, and tighter monetary policy due to ongoing inflation pressures will add to debt levels.
3 Reasons Why Patrick Karim is Bullish on Gold
 
Over the medium term, under current policies, public debt is expected to rise to close to the record levels seen at the height of the pandemic.…. Related fiscal risks typically manifest themselves in weak growth and tight financial conditions. (See chart below from the Fiscal Monitor report.)
Low Growth, Rising Rates and High Debt The IMF expects debt governments to continue to run deficits and debt levels to rise in all three major categories – advanced economies, emerging markets, and low-income developing countries.
General Government Primary Balance and Debt Chart, 2019-27 In China, it’s not the central government that holds massive debt, but instead the local governments in aggregate.
China, one of the world’s most indebted nations, has not experienced a full-blown financial crisis, yet. There were a few close calls. In 2019, the government had to seize a regional bank, for the first time in decades, to prevent a run on deposits.
Last year, a wave of real estate developer defaults ended up with homebuyers threatening mortgage boycotts. Both scares got defused. One may even argue that China is now a safer place for investors after Beijing tightened regulations on unruly local banks and aggressive home builders.
There is one more elephant in the room
But there is one more elephant in the room: Borrowings from local government financing vehicles. For years, municipalities have been relying on these off-balance-sheet entities to fund infrastructure and support the local economy.
LGFV debt rose to 57 trillion yuan ($8.3 trillion) in 2022, or 48% of China’s gross domestic product, according to estimates from the International Monetary Fund (Bloomberg, 04/16). 
Elephant in the room With land prices tumbling and slowing growth in China some provinces are appealing to the central government for a bailout.
And in the US there is the eroding of confidence due to the ongoing raising of the debt ceiling debate which will turn into a crisis and a possible US government shutdown in mid-June if Congress continues to bicker and stonewall (for more on the debt ceiling see our post from January 19 What happens if the debt ceiling raises).
Bottom line – there are many crises on the horizon which will turn more investors to precious metals thus propelling prices higher.

Some who are considering buying gold bullion or silver investment often look closely at the price and ask ‘is now a good time to buy gold’. This is understandable after all no buying decision should be one that you take lightly and often people want to feel like they have bought ‘at the right time’. So, in this week’s blog, we look at recent gold and silver price gains in the perspective of the financial crisis of 2008 – 2011. Remember, whether you buy gold today or tomorrow, it should be viewed not just as an investment but also as insurance for your portfolio. 
In our post on April 13 Has the IMF Told the World to Buy Gold? we discussed the IMF’s (International Monetary Funds) recent release of its Global Financial Stability Report and World Economic Outlook and pointed out that many of the major financial stress factors caused by the rapid tightening of the monetary policy outlined in the reports are positive for gold and silver prices. 
How does financial stress impact gold and silver prices
This week we start with putting gold and silver price gains from financial stress in perspective of the recent Great Financial Crisis of 2008-2011. 
The chart below shows that silver prices have already rallied 40% from September 1, 2022, with a steep climb starting in mid-March as the problems of Silicon Valley Bank started to unfold and gold prices have climbed almost 20%. We also remind readers that one of the signs of a bull market in precious metals is when the silver price is rising faster than the gold price. 
Gold and Silver Price Chart Looking back to the last financial crisis, from the first market concerns about liquidity, and when NetBank failed in September 2007, to the peak of that bank failures cycle, because of the series of quantitative easings by central banks, and the bailouts of Greece, Portugal, and Ireland; Silver reached a peak in April 2011 with a 400% gain and gold reached a peak in September 2011 with a gain of 280%.  
In other words, the rally in gold and silver prices is only now getting going and has quite a distance to run higher as current financial vulnerabilities are exposed.
Gold and Silver Price Chart There is the added complication of inflation (see our post on March 30 The Fed is now in a tug-of-war between fighting inflation and saving the banking system) and the much higher debt levels of governments and households. 
The third flagship report published by the IMF last week was the Fiscal Monitor which discusses fiscal policy (governments sending less) tightening after the rapid increase in spending to support their respective economies during Covid.
  Governments must deal with high debt levels, alongside modest growth (negative economic growth in the near term) while having to pay higher interest rates on their own debt.
The report states that governments are likely to face additional spending pressures in 2023 as ongoing geopolitical tensions may lead to further increases in defense spending and fiscal support to address negative effects from disruptions to international trade. Industrial policies, including government subsidies, may also emerge to foster import substitution … 
… Low-income developing countries, many of which are in or near debt distress or have limited fiscal space, face a particularly difficult balancing act. Many developing countries are grappling with tighter budgetary constraints.
The additional spending pressures, combined with slower growth, and tighter monetary policy due to ongoing inflation pressures will add to debt levels.
3 Reasons Why Patrick Karim is Bullish on Gold
 
Over the medium term, under current policies, public debt is expected to rise to close to the record levels seen at the height of the pandemic.…. Related fiscal risks typically manifest themselves in weak growth and tight financial conditions. (See chart below from the Fiscal Monitor report.)
Low Growth, Rising Rates and High Debt The IMF expects debt governments to continue to run deficits and debt levels to rise in all three major categories – advanced economies, emerging markets, and low-income developing countries.
General Government Primary Balance and Debt Chart, 2019-27 In China, it’s not the central government that holds massive debt, but instead the local governments in aggregate.
China, one of the world’s most indebted nations, has not experienced a full-blown financial crisis, yet. There were a few close calls. In 2019, the government had to seize a regional bank, for the first time in decades, to prevent a run on deposits.
Last year, a wave of real estate developer defaults ended up with homebuyers threatening mortgage boycotts. Both scares got defused. One may even argue that China is now a safer place for investors after Beijing tightened regulations on unruly local banks and aggressive home builders.
There is one more elephant in the room
But there is one more elephant in the room: Borrowings from local government financing vehicles. For years, municipalities have been relying on these off-balance-sheet entities to fund infrastructure and support the local economy.
LGFV debt rose to 57 trillion yuan ($8.3 trillion) in 2022, or 48% of China’s gross domestic product, according to estimates from the International Monetary Fund (Bloomberg, 04/16). 
Elephant in the room With land prices tumbling and slowing growth in China some provinces are appealing to the central government for a bailout.
And in the US there is the eroding of confidence due to the ongoing raising of the debt ceiling debate which will turn into a crisis and a possible US government shutdown in mid-June if Congress continues to bicker and stonewall (for more on the debt ceiling see our post from January 19 What happens if the debt ceiling raises).
Bottom line – there are many crises on the horizon which will turn more investors to precious metals thus propelling prices higher.

Some who are considering buying gold bullion or silver investment often look closely at the price and ask ‘is now a good time to buy gold’. This is understandable after all no buying decision should be one that you take lightly and often people want to feel like they have bought ‘at the right time’. So, in this week’s blog, we look at recent gold and silver price gains in the perspective of the financial crisis of 2008 – 2011. Remember, whether you buy gold today or tomorrow, it should be viewed not just as an investment but also as insurance for your portfolio. 
In our post on April 13 Has the IMF Told the World to Buy Gold? we discussed the IMF’s (International Monetary Funds) recent release of its Global Financial Stability Report and World Economic Outlook and pointed out that many of the major financial stress factors caused by the rapid tightening of the monetary policy outlined in the reports are positive for gold and silver prices. 
How does financial stress impact gold and silver prices
This week we start with putting gold and silver price gains from financial stress in perspective of the recent Great Financial Crisis of 2008-2011. 
The chart below shows that silver prices have already rallied 40% from September 1, 2022, with a steep climb starting in mid-March as the problems of Silicon Valley Bank started to unfold and gold prices have climbed almost 20%. We also remind readers that one of the signs of a bull market in precious metals is when the silver price is rising faster than the gold price. 
Gold and Silver Price Chart Looking back to the last financial crisis, from the first market concerns about liquidity, and when NetBank failed in September 2007, to the peak of that bank failures cycle, because of the series of quantitative easings by central banks, and the bailouts of Greece, Portugal, and Ireland; Silver reached a peak in April 2011 with a 400% gain and gold reached a peak in September 2011 with a gain of 280%.  
In other words, the rally in gold and silver prices is only now getting going and has quite a distance to run higher as current financial vulnerabilities are exposed.
Gold and Silver Price Chart There is the added complication of inflation (see our post on March 30 The Fed is now in a tug-of-war between fighting inflation and saving the banking system) and the much higher debt levels of governments and households. 
The third flagship report published by the IMF last week was the Fiscal Monitor which discusses fiscal policy (governments sending less) tightening after the rapid increase in spending to support their respective economies during Covid.
  Governments must deal with high debt levels, alongside modest growth (negative economic growth in the near term) while having to pay higher interest rates on their own debt.
The report states that governments are likely to face additional spending pressures in 2023 as ongoing geopolitical tensions may lead to further increases in defense spending and fiscal support to address negative effects from disruptions to international trade. Industrial policies, including government subsidies, may also emerge to foster import substitution … 
… Low-income developing countries, many of which are in or near debt distress or have limited fiscal space, face a particularly difficult balancing act. Many developing countries are grappling with tighter budgetary constraints.
The additional spending pressures, combined with slower growth, and tighter monetary policy due to ongoing inflation pressures will add to debt levels.
3 Reasons Why Patrick Karim is Bullish on Gold
 
Over the medium term, under current policies, public debt is expected to rise to close to the record levels seen at the height of the pandemic.…. Related fiscal risks typically manifest themselves in weak growth and tight financial conditions. (See chart below from the Fiscal Monitor report.)
Low Growth, Rising Rates and High Debt The IMF expects debt governments to continue to run deficits and debt levels to rise in all three major categories – advanced economies, emerging markets, and low-income developing countries.
General Government Primary Balance and Debt Chart, 2019-27 In China, it’s not the central government that holds massive debt, but instead the local governments in aggregate.
China, one of the world’s most indebted nations, has not experienced a full-blown financial crisis, yet. There were a few close calls. In 2019, the government had to seize a regional bank, for the first time in decades, to prevent a run on deposits.
Last year, a wave of real estate developer defaults ended up with homebuyers threatening mortgage boycotts. Both scares got defused. One may even argue that China is now a safer place for investors after Beijing tightened regulations on unruly local banks and aggressive home builders.
There is one more elephant in the room
But there is one more elephant in the room: Borrowings from local government financing vehicles. For years, municipalities have been relying on these off-balance-sheet entities to fund infrastructure and support the local economy.
LGFV debt rose to 57 trillion yuan ($8.3 trillion) in 2022, or 48% of China’s gross domestic product, according to estimates from the International Monetary Fund (Bloomberg, 04/16). 
Elephant in the room With land prices tumbling and slowing growth in China some provinces are appealing to the central government for a bailout.
And in the US there is the eroding of confidence due to the ongoing raising of the debt ceiling debate which will turn into a crisis and a possible US government shutdown in mid-June if Congress continues to bicker and stonewall (for more on the debt ceiling see our post from January 19 What happens if the debt ceiling raises).
Bottom line – there are many crises on the horizon which will turn more investors to precious metals thus propelling prices higher.

The big news this week is that gold has popped back up over $2,000. When it will exceed its all–time high of $2,070 is as yet unknown but the pieces are lining up to send it well on its way. This week we look in depth at what poor economic policies mean beyond interest rates, inflation and high gold prices. 
Latin America suffered a lost decade in the 1980s and Japan in the 1990s. Both instances came from misguided government policies and too much debt. The World Bank now warns if government policies continue the current course that we are facing a global lost decade. 
The World Bank’s report Falling Long-Term Growth Prospects: Trends, Expectations, and Policies opens with: 
The overlapping crises of the past few years have ended a span of nearly three decades of sustained economic growth that brought the world a massive reduction in extreme poverty. Starting in 1990, productivity surged, incomes rose, and inflation fell. Within a generation, about one out of four developing economies leaped to high-income status.
Today nearly all the economic forces that drove economic progress are in retreat. In the decade before COVID-19, a global slowdown in productivity—which is essential for income growth and higher wages—was already adding to concerns about long-term economic prospects……. International trade—which from the 1990s through 2011 grew twice as fast as GDP growth—is now barely matching it. The result could be a lost decade in the making—not just for some countries or regions as has occurred in the past—but for the whole world (bolding added).
A lost decade in making?
Readers should note that the World Bank is not infallible. Yet the above discussion does ring true for a key reason. Also, 1990 was the year Capitalism defeated Communism. Communism was discredited by the fall of the Berlin wall in November 1989.
That a global superpower could no longer deny its people the standard of living provided by Capitalism in West Germany meant that East Germany’s reason to exist (namely the iterative perfection of communism by the state on behalf of the people) had expired unfulfilled.
Months later in August 1991, the Soviet Union itself imploded when hardline communists tried to oust Gorbachev but ended up with Yeltsin. Further, Yeltsin declared democracy and the end of communism. Additionally, within a few short years, an entire region of Earth had decided to join the global economic competition for the first time in several decades.  Instead of building tanks, the Russians began to build products of more peaceful export like steel.
Western Europe and America as a result were also able to become more productive since military spending could fall simultaneously for everyone. Global GDP grew because jeans and movies were better thing to sell than missiles.
1990 also saw the discredit of communism in favour of capitalism inside China. Deng Xiaoping’s idea that Marxism could not feed all Chinese dates back to 1978. But 1990 was the year, following 1989’s Tiananmen Massacre that communist party leaders struck a new social contract with the population.
  Moreover, getting rich through capitalism was now acceptable within China and communism was redefined. This new social contract could be summarized as ‘the communist party allows everyone to better themselves through capitalism, but no matter how rich all we get, the party shall remain in power’. As with Russia’s change, the Chinese change gave global GDP a huge boost which lasted decades until the 2020s.
Now that China wants to turn away from capitalism under Xi, and Russia has abandoned global trade since invading Ukraine; the World Bank concerns seem very timely. What we find very interesting about the World Bank report is that no mention is made of communism’s absence from 1900 until 2020.
The report goes on to say that it will take a big and broad policy push to rejuvenate the global potential growth rate that is expected to fall to a three-decade low of 2.2% a year between now and 2030, down from 2.6% average from 2011-21, and a steep drop from the 3.5% that prevailed in the first decade of this century. 
DON’T MISS 
This has been an exciting week for both gold and silver. We welcomed chart guru Patrick Karim back to the show, to take us through his expectations for the new quarter and he was even kind enough to give us some tops tips for any newbies to technical analysis. 
3 Reasons Why Patrick Karim is Bullish on Gold
 
The World Bank said that the potential growth rate can be raised, but it will take government policies that grow the labor supply, increase productivity, and incentivize investment. 
Six policy actions that will affect demand and supply for silver and or gold
There are six policy actions that the World Bank outlines as ‘priority interventions’ to boost growth.
As you read this list below please consider how each one will affect the demand and supply for silver and or gold. Moreover, if you read them all and understand that achieving them requires more borrowed money to keep the economy spinning, you are on the right track!
Increasing investment
Greater investment initiatives to reach climate goal initiatives that do not undermine fiscal sustainability. The World Bank report also suggests reforms that address a range of impediments to private sector development, such as high business startup costs, weak property rights and corporate governance, inefficient labor- and product-market policies, and shallow financial sectors.
Aligning monetary and fiscal frameworks
Robust macroeconomic policy frameworks are critical to support investor confidence and can moderate the ups and downs of business cycles.
Cutting trade costs
Trade costs—mostly those associated with shipping, logistics, and regulations—can double the cost of internationally traded goods.
Capitalizing on services
As international trade in goods has ebbed, the services sector has become an increasingly important engine of growth for developing economies.
Upping labor-force participation
If overall labor-force participation rates, especially among women and older workers, could be boosted to match the best ten-year increase on record, this could increase global potential growth rates by 0.2 percentage point on average by 2030.
Strengthening global cooperation
From 1990 through the mid-2010s, the global economy fired on nearly all cylinders partly because of broad-based international cooperation following the breakup of the Soviet Union.
The problem for World Bankers is that many current policies are working in the opposite direction from the above list of recommendations – and the initiatives above would take a massive change in trade policies.
Despite a low likelihood of success, any money printed or invented to fund the above initiatives will sustain today’s high inflation to the benefit of people holding physical gold and silver.
The investment initiatives, such as the U.S.’s Inflation Reduction Act, and the European Union’s expanded tax breaks on clean-tech companies might be too little too late, and add to already massive debt levels.  
Many of the initiatives, in one way or another, involve expecting increased global cooperation, which is instead clearly on the decline – See our April 20, 2022 post “The Friend-Shoring of Gold – A New World Order?”
 

It feels as though we have had a few days off when it comes to news of bank failures, collapses and ‘rescues’. But, do not be lured into a false sense of security, very little is resolved and problems are systemic across the financial system. Below we discuss the fragilities exposed by the collapse of Silicon Valley Bank. The problems are unavoidable for the banking system and its players. It’s little surprise that we have seen a surge in demand for gold and silver investment. 
There is blood in the water …
The Fragilities in the Financial System
The collapse of Silicon Valley Bank (SVB) has brought the fragilities in the financial system to mainstream news outlets, which are now ‘investigative reporting’ on all aspects of the fallout.
After SVB’s collapse, depositors withdrew $109 billion from small banks, while large banks deposits grew by $120 billion. Moody’s noted that the 1.5% decline in year-over-year deposits in small banks was the first annual decline since 1986.   
U.S Bank Deposits In testimony to Congress on March 28, Federal Reserve Board Vice Chair for Supervision Michael Barr blamed SVB management and Congress for the failure.
While it is true that SVB management failed to hedge against the risk of rapid rising interest rates, it is the Federal Reserve that created the false complacency for banks in the first place with the massive amounts of quantitative easing and holding interests at the zero bound for so long – even after inflation as clearly taking hold.
  As the chart above shows bank deposits grew at a rapid pace in 2020 as central banks printed money at full speed and government programs handed it out to anyone that would take it. It was not only bank deposits that grew, but equity valuations were also inflated.
Federal Deposit Insurance Corp (FDIC) Chair Martin Gruenberg told Congress that the tripling of SVB’s balance sheet from 2019 to 2022 “coincided with rapid growth in the innovation economy and a significant increase in the valuation placed on public and private companies”.
The excess deposits that rolled into SVB were invested in securities deemed low risk by regulators; long dated Treasuries, and mortgage-backed securities. Interest rates had been low for more than a decade.
Why I Think This Is The Next Financial Crisis
 
For its own part, the Fed was still spouting that inflation was ‘transitory’, and that some inflation is okay. They cited a good thing that inflation was above the Fed’s target for a period of time because inflation had run below the target for so long.
It’s not only SVB that invested in these securities, the chart below from the Wall Street Journal compares SVB’s losses in long-date Treasuries, asset-backed securities (commercial and mortgage) with the losses ‘across all banks.

Federal Funds Effective Rate We also remind readers that the Federal Reserve’s own assets are ironically also U.S. Treasuries and mortgage-backed securities. Therefore, the central bank is racking up losses – and it is now ‘carrying’ more than $40 billion loss in its balance owing to the U.S. Treasury. 
However, the Fed can ‘carry’ this loss as a ‘deferred asset’ for as long as it takes, presumably until the interest cycle eases and the value of the assets gains as interest rates decline.
The Fed is the King
It is always good to be King. Among banks, the Federal Reserve is the King.
Federal Reserve Earnings Remittances Due to US Treasury As the Fed finally caught on that inflation was not transitory and started tightening policy, it did so at the fastest rate in over 40 years, which caught out banks holding longer-dated Treasuries rapidly losing value. This was not an issue until depositors started withdrawing deposits and assets had to be sold to cover the withdrawals – and for SVB, as they say, the rest is history.  

Source: Wall Street Journal   As much as regulators and government officials are trying to ‘brush the problems under the rug’ the banking problems are not over. The excess money central banks created, and governments gave away during the pandemic is still at risk of being pulled out of banks, and upwards of $8 trillion in deposits at the end of 2022 was above the FDIC’s $250,000 limit (this is an increase of more than 40% from 2019), leaving it vulnerable to being pulled out as investors weigh the newly exposed risks.
What Does Credit Suisse Mean for Gold
 
A paper published by economists from several U.S. universities shows that because banks hold assets at purchase value until they have to sell them that bank assets are worth $2 trillion less than they appear to have on paper.
As a result close to 200 banks would be at risk of failure if half of these uninsured depositors pulled their money from the banking system. Researchers conclude that “Overall, these calculations suggest that recent declines in bank asset values very significantly increased the fragility of the U.S. banking system to uninsured depositor runs”.
The Fed and FDIC have both said they will loan banks money against assets at par value. However, this just moves the risk elsewhere or ‘kicks-the-can’ down the road and alters the market risk even further. The call for the FDIC to insure all deposits creates an even deeper moral hazard for bank management.
The Fed is now in a tug-of-war between fighting inflation and saving the banking system – and it is currently trying to do both. On one side they continually raise rates, while at the same time creating new lending programs for banks. But alas the Fed has no magic. Stretching to accomplish one goal means the other goal becomes unreachable. 
The Federal Reserve policy setting committee forecasts lower rates in 2024 and 2025. Everyone else expects that rates will drop 75 basis points this year after it becomes clear to all that banking has systemic solvency problems caused by rising rates.
 Investors who hold physical metals have placed themselves outside the circus tent of central banking.
Many times, before we have explained that being inside the system means unavoidable counterparty risk. Only gold and silver are assets which do not need validation from anyone else.

Central banks seem to be on a credibility drive at the moment. Last week it was the ECB, yesterday it was the Fed and today it was the Bank of England. All of them are on a mission to reiterate their approach of ‘because I said so!’ when it comes to raising rates. It seems that a snowballing banking crisis isn’t enough to spook them into thinking that maybe they have taken the wrong approach for a while now. Unsurprisingly, the more they bury their heads in the sand, the more savers and investors start to insure their portfolios with gold and silver bullion. 
Do Central Banks really have everything under control?
Wednesday the Fed said…’don’t let the bank failures make you forget that we are invincible!
The message from the Fed this week literally was: yes, some banks collapsed after we raised rates but don’t worry …. we will create additional bailout mechanisms if more banks fail and meanwhile, we will continue raising rates too. 
Despite problems in the banking sector, the Fed raised the fed funds rate by a further 25 basis points to a range of 4.75% to 5.00%. The Summary of Economic Projections released with the statement shows that, on average, members of the Committee think there will be one more rate hike to come this year, but are projecting the fed funds rate to decline to 4.3% by the end of next year, and down to 3.1% by the end of 2025. 
The slightly higher fed funds rate projection contrasts with the change in statement language to The Committee anticipates that some additional policy firming may be appropriate… from the language used in the last meeting statement on February 1 that read The Committee anticipates that ongoing increases in the target range will be appropriate…. 
That .25% increase in interest rates comes just ten days after a coordinated effort by the U.S. Treasury, Federal Reserve, and FDIC (Federal Deposit Insurance Corporation). In a joint statement released on March 12 the three agencies went to great lengths to assure markets (and depositors in U.S. banks) by guaranteeing all deposits at the failed Silicon Valley Bank and at Signature Bank. 
 
Then just two days ago the Federal Reserve engaged in another coordinated effort, this time with other central banks to ensure U.S. dollar liquidity. U.S. dollar liquidity often becomes strained in global markets because upwards of 60% of global transactions are in U.S. dollars.  
What Does Credit Suisse Mean for Gold
 
It’s not just the Federal Reserve who refuses to stop raising rates despite banking messes caused by higher rates. Not paying attention to the strain in markets; the ECB raised rates by 50 basis points last week, despite global volatility and the obvious problems with Credit Suisse. 
One could argue that the banking problems are so far only in isolated cases and if one believes Powell, there is not a larger contagion effect. So central banks should continue to raise rates to combat the much larger problem of inflation being too high. Although inflation is coming down it is still well above the 2% target. 
Fed Fund Rate and Inflation Indicators Chart Federal Reserve Discount Window Chart But can the central bank really have it both ways? Isn’t it impossible to rescue the banking sector yet tighten monetary policy at the same time? Does the ‘implicit guarantee’ stop at just financial institutions, or what about the pension funds that invested in the banking sector that have lost money … Or the teacher’s unions … when does the rescue stop?
Readers know we have always warned central banking is a club of people helping themselves. Eventually, the pattern of central banks causing problems and saving only their own friends will risk becoming a class warfare style political issue.
Central banks don’t know the future!
Yet if they decide to save everyone all the time then inflation will go up instead of down. Exactly by stepping in to ensure all depositors and creating new facilities to lend to banks with ‘shaky balance sheets’ central banks are confirming an environment of complacency and risk taking.
Central banks later launch costly and long stretching ‘investigations’ into where regulation and supervision of the financial institution failed and write new rules to ‘make sure it never happens again’ … at least until the next time. 
Central banks don’t know the future, and as our post on March 8  Is the US Economy Headed for Recession? discusses, central banks often use data that looks backward not forward. In a speech in May 2007, Federal Reserve chair Ben Bernanke said,
  He was epically mistaken. Does that statement sound familiar today? In the opening statement to the press conference, Powell assured markets that the isolated banking sector problems are contained and “Our banking system is sound and resilient, with strong capital and liquidity.” 
The majority questions asked by the press at Powell’s press conference were focused on the problems in the banking sector and how the central bank intends to contain the fallout of the already failed banks and prevent others from failing.
The Dow Jones Regional Bank Sector Index shows that the equity prices of banks, in general, have stopped falling, but the index is still 30%+ down from where it was two weeks ago.  
Dow Jones Regional Bank Sector Index Problems in the banking sector do affect the overall economy. Powell told reporters that “We are looking at what’s happening among the banks and asking, is there going to be some tightening in credit conditions, in a way, that substitutes for rate hikes.”
Both president of the ECB, Lagarde, and Fed Chair Powell have said that they think further ‘monetary tightening will probably be needed’ but do not know how much or to what extent and where the next financial fragilities will become a crisis of confidence.
The decline in US Treasury yields, and of course the rise in gold and silver prices tell us that markets in general do not think that central banks have contained the fallout of the rapid rise in rates as much as they think they have.
Watch our market update with GoldCore CEO Stephen Flood where he discusses what happened last week with Credit Suisse and why it means that the ‘next’ financial crisis is here.
 

From the desk of GoldCore CEO, Stephen Flood
This morning gold moved above $2,000/oz. The previous intraday high (seen in 2020) was $2,080. If you saw our recent interview with Patrick Karim then you might be recalling his comments that a close here on a monthly basis would signify a break of a trend line going back to 2011. This, of course, would be very bullish.

I spoke to Dave Russell about what has been going on, these last couple of weeks:
 
So where are we at? It’s been over a week since the millennial of the banking world, Silicon Valley Bank, ‘stunned’ markets by filing for bankruptcy and setting off a chain of events that has sent financial markets from one firestorm to another.
The steps that followed the SVB collapse have not been termed as a bailout, but they were basically a bailout. Major banks’ stocks (and markets) have been under pressure ever since, as this is near confirmation of contagion and weakness within the banking system. 
The Federal Reserve and five other leading central banks have announced plans for improving global access to dollar liquidity. This measure was last used in 2020, during the peak of the global pandemic. 
Bank liquidity is something else Dave Russell and I discussed this week, and considered it in relation to the rush to own gold. 
 
This move comes as part of an agreement among the Fed, European Central Bank, Bank of England, Swiss National Bank, Bank of Canada, and Bank of Japan that will see dollar swaps occur on a daily basis until at least April 30th.
The announcement came just hours after another major development in Switzerland’s banking sector: news that UBS and Credit Suisse would be merging following negotiations that stretched through the weekend. 
Announced last night, UBS agreed to takeover Credit Suisse for a paltry $2 billion, just a few years after it was valued at over $100 billion (the fickles of the fiat system). The bank’s collapse resulted in $17bn worth of its bonds being wiped out, upending traditional debt recovery norms and throwing yet further doubt on the confidence placed in many financial markets around the world. Credit Suisse was, after all, one of Europe’s 25 largest banks. 
Other than a surprising move by the ECB to hike rates, it looks like central banks will be forced into some new form of quantitative easing and potentially abandon their fight against inflation lest they collapse the banking system.
It all feels a little…desperate… “If you’re explaining then you’re failing,” the wise words from one of the GoldCore team members this week. And boy has there been some explaining going on from the world’s leading central banks. 
Last week, the ECB inexplicably decided to push on with rate-hikes (arguably the catalyst to this inevitable implosion). They did this whilst citing concerns that the current rate was too high and could potentially have long-term effects on the region’s economic stability.
The ECB noted that its banking system is resilient in spite of reportedly warning EU politicians that some euro area banks may be vulnerable due to the current economic climate.
Some say they did this to maintain credibility. As if there was any credibility to be maintained at all. 
It’s like a scene from Friends, ‘we can’t tell them that we know…that they know…that we know we screwed up by hiking too fast, too late… So we need to keep hiking rates.”
Christine Lagarde has subsequently had to hint that she is more than happy to bring out the liquidity big guns in order to ‘smooth’ over the massive cracks that are opening up, 
This came around the same time the Bank of England (due to hike rates this week) released a statement in response to the Credit Suisse news that read,  “The UK banking system is well capitalised and funded, and remains safe and sound.” Currently, markets are pricing in an even chance of a further rate hike from Threadneedle Street. 
Meanwhile, the Fed is also due to make an announcement on interest rates this week, following the FOMC meeting. According to an FT poll of leading economists, the Fed will raise rates, keeping them above 5.5%. 
Of course, even if we get through this week without another bank collapse, the fear has been prevalent in financial markets over the past week or more, causing lenders to exercise extreme caution when it comes to the flow of credit.
This hesitation could lead to a recession and put further strain on vulnerable sectors such as commercial property, both of which would have dire consequences on banks’ balance sheets.
Unsurprisingly investors are turning to real assets. We covered this in a YouTube short, released earlier today:
 
There are a lot of nervous people at the moment not knowing what banks to trust and who is potentially next to fall. Deposit guarantee schemes will come under a lot of scrutiny now and understandably folks are looking to move into hard assets. Here at GoldCore we’re experiencing ‘unprecedented demand’ for account openings and we’re doing all we can to help.
At the risk of sounding like grave dancers, the contagion we are currently witnessing is something we’ve been waiting to see for a good long while. But despite how long it’s taken us to get here, the dominoes sure are falling fast. We even wondered if we should write anything at all today, it feels like the second we think of what to write, something else has changed.
We realise some will have a lot of questions and concerns. Later on this week I and a couple of members of the GoldCore team will be answering your questions on our YouTube channel. If there is anything you would like to ask, whether about gold, markets, or investing with GoldCore, then please email us at support@goldcore.com and we’ll address as many as we can. 

Each year professional analysts and forecasters shine up their crystal balls to submit their precious metal price forecasts to the LBMA. The contest is to be the most accurate predictor for the gold price average for the year; the analyst with the closest average price for the year wins a 1oz. gold bar. The 2023 forecasts, which analysts submitted in mid-January, were published on February 27.
The forecasts always draw a wide range of possible outcomes and 2023 is no different with the lowest annual average forecast for the gold price at US$1,594 and the highest at US$2,025; the average of all analysts coming in at $1,859.90, which is 3.3% above the average set in 2022 of US$1,800.09.
The outlook for silver is somewhat more optimistic. The low average price forecast submitted was US$17.50, the high was US$27 and the average of all analysts came in at US$23.65, which is 8.8% higher than the actual average for 2022 of US$21.73.
Along with the forecasts, each analyst must also provide the top reasons behind their forecasts. The overall top three drivers for gold were: the US dollar and the related Fed Monetary Policy, followed by inflation, and finally geopolitical Factors. 
  The analyst that submitted the lowest gold price average for the year cited rising real interest rates for the decline of the gold price in 2023. However, he does note that gold will start rallying once the next interest rate easing cycle can be priced in.
The analyst with the highest gold price thinks that the US economy will turn weaker soon and the US dollar will start to decline turning the investment environment towards gold’s favour.
These two forecasts bracket the entire spectrum of conventional wisdom. Neither of them is a groundbreaking idea.
Regarding silver, analysts cite many of the same reasons as gold for their forecasts, but the lowest price forecast comes from an analyst expecting ‘lackluster industrial demand growth” as a headwind for silver.
But he then adds that this will also turn more positive in the medium-term. On the high end of the price forecasts analysts look for support for the ‘clean technology movement’ in the way of increased demand for solar panels and electric vehicles to boost silver demand.
A look back at previous forecasts
Analysts’ forecasts summited at the beginning of 2022 calculated an average price that was US$1,801.90 and the actual price came in at $1,800.09 – only US$1 off – which is an amazing result. Analysts were too optimistic on silver however, with an average analyst expectation of US$23.54 in 2022, and the actual average coming in at $21.73.
 The chart below, from the LBMA’s website, shows the actual average and analysts’ average over the last 12 years.
The actual average and analysts’ average over the last 12 years chart Two important things should be pointed out from these charts. First, is that when averaged together, expert analysts’ predictions are generally not ‘too far’ off from the actual average. This makes sense because physical metals prices do move around over time but are not completely unpredictable nor particularly volatile.
Second, is that professional forecasters, even when using the average of a bunch of forecasts, tend to lag the price by one to two years – meaning that they are slow to see the turns in the market. Said another way, the expert opinion and conventional wisdom unconsciously assume that whatever happened over the past 24 months is likely to continue for the next 12 months.
Do gold and silver price predictions matter?
Price predictions are just predictions. The analysts who make them do not really have a crystal ball, but they do have experience of precious metals markets and the factors that affect them. They are interesting from an investor’s point of view as they give insight into what major players in the gold and silver market are looking out for, what they are anxious about and how confident they are feeling about the next 12 months.
But, really how much predictions matter just comes down to whether or not prices matter. We are often asked ‘is now a good time to buy gold?’ and the question comes from a concern about missing out on a ‘good price’. In truth, if your decision is to buy now or next month, then there is unlikely to be much in it and you might be looking at gold from the wrong perspective.
Why Gareth Soloway is “unbelievably bullish” on gold and silver
 
People invest in gold not primarily to make a profit from year to year but because they see it as a way of holding insurance for their portfolio. The gold (and silver) is there to protect the value of your portfolio, rather than make a quick buck month to month.
Purchasing gold is similar to purchasing insurance. We don’t consider if it’s a good time to purchase home insurance when we make the purchase, because we are aware that we wish to protect our homes with insurance in the event of any unforeseeable circumstances.
We also never question ourselves when going without insurance would be a smart idea. The same is true with gold. When is a good time to be without gold is a better question to ask than when gold is a good price.
Read more about if it’s a good time to buy gold.

As the Russia/Ukraine conflict continues to intensify, the risk of deglobalization only grows. Amid escalating tactics from both sides, Vladimir Putin has issued nuclear warnings, while President Joe Biden has been rallying allies in an effort to defend democracies. All this is happening as gold makes its own appearance in this equation, being at the centre of new sanctions and driving a shift away from U.S. dollar hegemony.
In this post, we will explore how gold is playing a pivotal role in this conflict and how that could shape the future of global stability.
Putin gives a nuclear warning, Biden rallies allies – reads a Reuters headline three days before the one-year mark of Russia invading Ukraine. Also, the escalation of tactics and rhetoric is seen on both sides. The Reuters article went on to say:
U.S. President Joe Biden and Russian President Vladimir Putin have been sparring verbally, presenting starkly different views of the world and the Ukraine war, with Biden promising to defend democracies and Putin asserting the West was a threat to Russia.
  Biden made an unannounced visit to Kyiv and Poland this week to show United States (and NATO) support for Ukraine “there should be no doubt: Our support for Ukraine will not waver, NATO will not be divided, and we will not tire”.
For his part, Putin suspended a bilateral nuclear arms control treaty, announced new strategic systems were on combat duty and warned that Moscow could resume nuclear tests. Putin said:
“The elites of the West do not hide their purpose … They intend to transform a local conflict into a phase of global confrontation. This is exactly how we understand it all and we will react accordingly because in this case, we are talking about the existence of our country.”
Also, the U.S. and European allies are set to impose a new round of sanctions on about 200 Russian individuals and entities. This newest package of sanctions, expected to be announced later this week, are expected to target Russian governors, family members of Russian government officials, and defense and technology firms.
The alleged sanctions
This round of sanctions is also expected to include provisions for “alleged sanctions- evasions networks”. These alleged networks help Russian oligarchs make investments in assets where it is difficult to track ownership, such as complex commercial real estate deals.
While the United States is “rallying its allies”, top officials from China are visiting Russia and China is increasing its verbal support for Russia. According to reports, Wang Yi, director of the Office of Central Foreign Affairs Commission of the Chinese Communist Party, will meet with the Russian Foreign Minister.
This visit is mere days after  Secretary of State Antony Blinken said China is “considering” taking on a more active role in the Russia-Ukraine conflict, including providing “lethal weapons”.
Why Gareth Soloway is “unbelievably bullish” on gold and silver
 
With the growing chasm between, for simplicity of labels, the West versus the East, we have to look at the effects of this on global stability, and afterward consider the physical metals
Moreover, the pre-covid quest for globalization and increased trade among countries had driven certain conflicts underground or into the background.
For example, the U.S. did not want to upset China “too” much over policies such as human rights, and China was careful in its criticism of the countries and international institutions and followed the guidelines of the World Trade Organization when it wanted to join in 2001, and the guidelines of the IMF when it wanted to get the renminbi as part of the IMF’s special drawing rights. However, as these relationships erode the underlying differences and issues start to be uncovered and fester.     
Is this the decline of the U.S. dollar?
One thing that is clear: the hegemony of the U.S. dollar and U.S. influence is eroding further. This decline is a long process however, as it takes many years for systems to be changed – but it is changing, less “trust” in the U.S. and in the U.S. dollar is an emerging sentiment, not only in China and Russia but also in other countries around the world.
It is yet to be seen what will replace the U.S. dollar as the ‘main trading’ currency. As ‘trust’ in the U.S. dollar erodes so does the ‘trust’ in other governments’ currencies. Would we ‘trust’ China’s government if the renminbi was the reserve currency, what about the euro bloc, or even the U.K. government, each of these have their own issues to sort out!
Moreover, for the U.S. dollar to lose its ultimate status something else must take its place. Neither the Russian currency nor Chinese currency are viable alternatives since those economies are closed to investment from western outsiders.
The Euro would fail to usurp the U.S. dollar because of internal politics, including the ability of members to leave the bloc, and the inability to project regional dominance over matters of security – during either peacetime [shutting nuclear generation in favour of Russian gas imports] or wartime [Germany initially offered only helmets to Ukraine, now it offers tanks only after UK and U.S. did so].
The increased sanctions from the West will only accelerate the transition to a ‘New World Order’. Remember Russia and its allies have already proposed several alternatives, such as the ‘The Moscow World Standard’ as an alternative to the LBMA (see our post  The Russian Gold Standard and there is an alternative to S.W.I.F.T. China’s Cross-Border Interbank Payment System (CIPS) (see our post: SWIFT Ban: A Game Changer for Russia?).
And as we discussed as recently as our February 16 – even central banks are losing ‘trust’ in other countries’ currencies and have turned to gold. Unlike China or any BRICs member, gold has no armies of tanks under its command. Which means it has no neighbours to conquer or friends to lose.
Because gold is neutral geopolitically and inert chemically the physical metal stands a great chance of being the U.S. dollar usurper or at least the backer of one; whenever such a divisive idea finally gains global momentum.

As the Russia/Ukraine conflict continues to intensify, the risk of deglobalization only grows. Amid escalating tactics from both sides, Vladimir Putin has issued nuclear warnings, while President Joe Biden has been rallying allies in an effort to defend democracies. All this is happening as gold makes its own appearance in this equation, being at the centre of new sanctions and driving a shift away from U.S. dollar hegemony.
In this post, we will explore how gold is playing a pivotal role in this conflict and how that could shape the future of global stability.
Putin gives a nuclear warning, Biden rallies allies – reads a Reuters headline three days before the one-year mark of Russia invading Ukraine. Also, the escalation of tactics and rhetoric is seen on both sides. The Reuters article went on to say:
U.S. President Joe Biden and Russian President Vladimir Putin have been sparring verbally, presenting starkly different views of the world and the Ukraine war, with Biden promising to defend democracies and Putin asserting the West was a threat to Russia.
  Biden made an unannounced visit to Kyiv and Poland this week to show United States (and NATO) support for Ukraine “there should be no doubt: Our support for Ukraine will not waver, NATO will not be divided, and we will not tire”.
For his part, Putin suspended a bilateral nuclear arms control treaty, announced new strategic systems were on combat duty and warned that Moscow could resume nuclear tests. Putin said:
“The elites of the West do not hide their purpose … They intend to transform a local conflict into a phase of global confrontation. This is exactly how we understand it all and we will react accordingly because in this case, we are talking about the existence of our country.”
Also, the U.S. and European allies are set to impose a new round of sanctions on about 200 Russian individuals and entities. This newest package of sanctions, expected to be announced later this week, are expected to target Russian governors, family members of Russian government officials, and defense and technology firms.
The alleged sanctions
This round of sanctions is also expected to include provisions for “alleged sanctions- evasions networks”. These alleged networks help Russian oligarchs make investments in assets where it is difficult to track ownership, such as complex commercial real estate deals.
While the United States is “rallying its allies”, top officials from China are visiting Russia and China is increasing its verbal support for Russia. According to reports, Wang Yi, director of the Office of Central Foreign Affairs Commission of the Chinese Communist Party, will meet with the Russian Foreign Minister.
This visit is mere days after  Secretary of State Antony Blinken said China is “considering” taking on a more active role in the Russia-Ukraine conflict, including providing “lethal weapons”.
Why Gareth Soloway is “unbelievably bullish” on gold and silver
 
With the growing chasm between, for simplicity of labels, the West versus the East, we have to look at the effects of this on global stability, and afterward consider the physical metals
Moreover, the pre-covid quest for globalization and increased trade among countries had driven certain conflicts underground or into the background.
For example, the U.S. did not want to upset China “too” much over policies such as human rights, and China was careful in its criticism of the countries and international institutions and followed the guidelines of the World Trade Organization when it wanted to join in 2001, and the guidelines of the IMF when it wanted to get the renminbi as part of the IMF’s special drawing rights. However, as these relationships erode the underlying differences and issues start to be uncovered and fester.     
Is this the decline of the U.S. dollar?
One thing that is clear: the hegemony of the U.S. dollar and U.S. influence is eroding further. This decline is a long process however, as it takes many years for systems to be changed – but it is changing, less “trust” in the U.S. and in the U.S. dollar is an emerging sentiment, not only in China and Russia but also in other countries around the world.
It is yet to be seen what will replace the U.S. dollar as the ‘main trading’ currency. As ‘trust’ in the U.S. dollar erodes so does the ‘trust’ in other governments’ currencies. Would we ‘trust’ China’s government if the renminbi was the reserve currency, what about the euro bloc, or even the U.K. government, each of these have their own issues to sort out!
Moreover, for the U.S. dollar to lose its ultimate status something else must take its place. Neither the Russian currency nor Chinese currency are viable alternatives since those economies are closed to investment from western outsiders.
The Euro would fail to usurp the U.S. dollar because of internal politics, including the ability of members to leave the bloc, and the inability to project regional dominance over matters of security – during either peacetime [shutting nuclear generation in favour of Russian gas imports] or wartime [Germany initially offered only helmets to Ukraine, now it offers tanks only after UK and U.S. did so].
The increased sanctions from the West will only accelerate the transition to a ‘New World Order’. Remember Russia and its allies have already proposed several alternatives, such as the ‘The Moscow World Standard’ as an alternative to the LBMA (see our post  The Russian Gold Standard and there is an alternative to S.W.I.F.T. China’s Cross-Border Interbank Payment System (CIPS) (see our post: SWIFT Ban: A Game Changer for Russia?).
And as we discussed as recently as our February 16 – even central banks are losing ‘trust’ in other countries’ currencies and have turned to gold. Unlike China or any BRICs member, gold has no armies of tanks under its command. Which means it has no neighbours to conquer or friends to lose.
Because gold is neutral geopolitically and inert chemically the physical metal stands a great chance of being the U.S. dollar usurper or at least the backer of one; whenever such a divisive idea finally gains global momentum.

“The soul of money is trust. To operate effectively, businesses must maintain the trust of investors. And central banks must maintain the trust of the public.
Governments also have a role to play in the face of today’s central banks’ losses. Because these institutions are ultimately backed by the state, trust in money requires sound government finances and good financial management.”
The above quote is an excerpt from an Op-ed article on February 9, 2023, from Mr. Agustin Carstens, General Manager of the Bank of International Settlements (BIS: The BIS’s website states its mission is to support central banks’ pursuit of monetary and financial stability through international cooperation and to act as a bank for central banks.)
The purpose of the February 9 speech was to try and convince the public that central bank losses don’t matter. And that ‘central banks are designed to make money only in the literal sense’.
Also, their mandate is not to make a profit but to act in the public interest. And to safeguard the value of the money they issue so that people can make financial decisions with confidence.
Safeguarding the value of money?
Woah! How is printing trillions worth of currency and buying assets that are now losing value from their own doing ‘safeguarding the value of money’? The European Central Bank, Bank of England, and Federal Reserve more than doubled their bond holdings since 2020 to over $12 trillion. Many of those bonds are worth less today than when purchased.
At the same time, central banks pushed interest rates to zero and encouraged everyone – households, businesses, and governments to spend! And now all that money is chasing too few goods – the simple definition of inflation and central banks are raising interest rates at a rapid pace. As they raise interest rates the bonds held on their balance sheets lose value. 

Central Bank Bond Holdings Chart The Federal Reserve was the primary culprit in the bond buying spree and it is now ‘carrying’ a $30 billion loss to the U.S. Treasury.
The ironic part is that it is U.S. Treasury securities that it holds on its balance sheet, that are racking up the loss, and that it now has a balance owing to the U.S. Treasury.
Federal Reserve Earnings Remittances Due to US Treasury Chart Up until September 2022, the Federal Reserve transferred its ‘excess earnings’ to the U.S. Treasury on a weekly basis. However, since September 2022 the Fed’s earnings have not been sufficient to cover costs (operating costs, payment of dividends, etc.) and the Fed started recording the shortfall as a ‘deferred asset’.
This deferred asset will continue to grow as losses mount on the Fed’s balance sheet and then, in theory, will start to decline once the central bank starts to make a profit again. Once this ‘deferred asset’ is exhausted the Fed will then start to remit profits to the U.S. Treasury again.
If it is all accounting fixes, when does the ‘line in the sand’ get crossed that makes it different than a country like Venezuela or Zimbabwe where the central bank printed money to fund the government directly, were all ‘trust’ was eroded with hyperinflation?
  In the literal sense, central banks are not unsound if their assets lose value. However, the ‘trust of the public’ is eroded. The reason the assets are losing value is the quick pace of interest rate hikes. This as stated above is only an accounting adjustment for the central bank, but the same is not true for mortgage holders.
Can we trust governments?
Mortgage holders don’t get to tell the bank to add it to ‘a deferred asset’ column on the account – or what about the homeowners trying to sell houses as interest rates rise? One could argue house prices were overvalued because of the ultra low interest rates, which again goes back to central banks ‘public trust eroded’.
What about governments – how can we have trust that governments will make ‘sound financial decisions’. Most governments were debt burdened before the covid pandemic by running deficits year after year. Then during the crisis, governments issued trillions of debt. All that have to be paid back or rolled over, but at what cost? To pay it back means reducing their spending relative to income. This means either cutting government services or raising taxes, or both.
Austerity measures (defined as difficult economic conditions created by government measures to end a budget deficit, especially by reducing public expenditure) don’t last as governments that implement these measures are voted (or forced) out of office.
Why Gareth Soloway is “unbelievably bullish” on gold and silver
 
Plus, many government programs are designed to support lower income households that need the support, especially during times of rising prices. And to raise taxes, well that is also challenging for governments to do in a meaningful way without creating more bureaucracy that ends up sucking up the amount raised through higher taxes.
It is not only since the pandemic that central banks have not been safeguarding the value of the money. As our post on February 9, This Will Be The Biggest Theft of This Century shows – money depreciation is an ongoing phenomenon, the British pound and US dollar are worth about three times less than they were in the early 1980s.  
It is no coincidence that World Gold Council data shows that Central Banks themselves bought the most gold on record in 2022 – goes to show that even central bankers know that “trust in money” is eroded!
 

In 1983 a total of 6,840 gold bars were stolen from a high security vault in Heathrow in what is still considered to be ‘the crime of the century’.
40 years on and the gold heist is still the biggest single-theft of gold in history. What’s incredible is that the perpetrators never even expected to steal any gold. They were instead expecting to find around £3 million in cash. 
After failing to get into the targeted vault the armed robbers discovered three tons of gold bullion as well as diamonds and cash. Recorded testimony of one of the security guards recalls the delight of one of the robbers when he realises some previously looked over grey boxes contain gold bars that are ‘four nines!’ the purest of gold bullion bars. 
This weekend sees the release of the six-part drama The Gold, in the UK. The series is based on the infamous 1983 Brinks Mat heist that saw six-armed men steal over £26 million of gold bullion from the security depot at Heathrow. Today that same gold would be worth over £100 million. 
Accidental Treasure Hunting
What was supposed to be a quick smash and grab involving a few bags to help carry away £3 million in cash, soon turned into a protracted, drawn out operation. The operation ended up taking over two hours and catapulted the six men into history books as the perpetrators of the ‘crime of the century’. In many ways, the crime is still ongoing. Only half of the gold has ever been recovered. 
In total 6,840 gold bars were stolen along with cash and diamonds worth £113,000. Of course, the tale doesn’t end there. It is very difficult to make gold just ‘disappear’ and convert into far more easily hidden cash.
A trail of death and violence has followed the Brinks Mat gold for the last forty years. The gang ended up roping in a number of nefarious individuals to help them smelt and disperse the gold in order to realise some of its cash value. The proceeds from the robbery are thought to have fuelled the London Docklands property boom as well as the UK cocaine market. 
Worried about the integrity of the London Gold Market, the Bank of England had to step in and rescue the gold’s owners, the banking and gold-trading arm of Johnson Matthey, when they collapsed less than a year later. 
Our Obsession with Gold
The trailers for the BBC series have prompted many viewers to recall back to the time when the robbery had just happened. It’s fixed in many peoples’ memories; it was such a significant theft. But I wonder if a standard robbery of cash would have had the same lasting effect? I suspect not. 
There is something about gold that grabs most people’s attention. Take the robbers who stole the gold, for example. There is nothing to suggest that these were men familiar with the spot price of gold, no indication that they saw those 6,000 bars of gold and knew how much it was worth. But, they did know it was worth making the extra effort to steal, instead of trying to get at the planned £3 million in cash. 
Gold is one of the few things we have in common with ancestors from long ago. We desired it 1,000 years ago, 500 years ago, 100 years ago, and (clearly) forty years ago. Just as we do today. There are few things we instinctively know about finance and investments, but the need to own gold is one of them. 
Why Gareth Soloway is “unbelievably bullish” on gold and silver
 
This has something to do with the fact that the yellow metal has stood the test of time. Some psychologists have also postulated that we are attracted to precious metals and stones because they shine and sparkle.
Much like the reflection of the sun on the water, the most necessary resource that the human brain is designed to spot and identify. This might be one of the reasons, but I think it’s because we know that the gold our multiple-great grandfather dug up and wore proudly round his neck or exchanged for livestock and land, still exists today.
Gold is timeless. As we see from the disaster that was the aftermath of the Brinks-Mat robbery, it is near-impossible to disappear. 
In fact, it is rumoured that much of the unrecovered gold has made its way back into the gold market through various ways and means. It’s still pure gold and arguably back in its rightful place. 
Small fry in today’s money
What’s really fascinating though is that the theft of over (in today’s money) £100 million of gold was the crime of the century but of the 20th century. Because there is no way that it compares in any way to the ongoing theft that we are currently experiencing in the 21st century. 
I am, of course, referring to the inflationary efforts of central banks. 
The Bank of England inflation calculator shows that £10 in 1983 (the year of Brinks Mat robbery) would now be worth £29.95. That’s not because interest rates have been so generous or because your money has been so wisely invested. It’s because the pound is now worth three times less than it would have been worth, then. Something that cost you £10 then, would now cost you nearly £30. 
For the US Dollar, an item that cost you $10 would today cost you $29.33. A similar rate of depreciation that has occurred to the GBP. 
It’s a similar story in the Eurozone, since its launch in 1999, €10 is now worth €16.40. 
That gold today might have gone up over 5 times in price (and so arguably outperformed inflation), but we’re still talking about the same amount of gold. The thieves haven’t managed to make more gold. Instead, as time passed, gold has hugely increased in price relative to the British pound, dollar, etc. But, more importantly, it has held its value. 
Whoever has been holding onto that gold since 1983 will have stolen something that was worth around £280 per ounce, and today is worth £1,560 per ounce (at the time of writing).
 
They have the same amount of gold and it has the same amount of value, just an increased price. Yet the £3 million in cash they wanted to steal would be worth significantly less, three times less. 
When we admire how much the price of gold has gone up since the Brinks Mat robbery, we’re actually grave dancing. Because what we’re celebrating is the theft of value from fiat currencies or a loss of wealth for those who have been saving in cash and cash-based assets.
That is why the central banking antics of the 21st century will be the biggest theft of the century and we’re not even a quarter of the way through it yet. 
Looking forward to watching The Gold but no access to the BBC? It’s due out in the US later in the year, but in the meantime check out our gold short for a bit more Gold drama. 
 

In 1983 a total of 6,840 gold bars were stolen from a high security vault in Heathrow in what is still considered to be ‘the crime of the century’.
40 years on and the gold heist is still the biggest single-theft of gold in history. What’s incredible is that the perpetrators never even expected to steal any gold. They were instead expecting to find around £3 million in cash. 
After failing to get into the targeted vault the armed robbers discovered three tons of gold bullion as well as diamonds and cash. Recorded testimony of one of the security guards recalls the delight of one of the robbers when he realises some previously looked over grey boxes contain gold bars that are ‘four nines!’ the purest of gold bullion bars. 
This weekend sees the release of the six-part drama The Gold, in the UK. The series is based on the infamous 1983 Brinks Mat heist that saw six-armed men steal over £26 million of gold bullion from the security depot at Heathrow. Today that same gold would be worth over £100 million. 
Accidental Treasure Hunting
What was supposed to be a quick smash and grab involving a few bags to help carry away £3 million in cash, soon turned into a protracted, drawn out operation. The operation ended up taking over two hours and catapulted the six men into history books as the perpetrators of the ‘crime of the century’. In many ways, the crime is still ongoing. Only half of the gold has ever been recovered. 
In total 6,840 gold bars were stolen along with cash and diamonds worth £113,000. Of course, the tale doesn’t end there. It is very difficult to make gold just ‘disappear’ and convert into far more easily hidden cash.
A trail of death and violence has followed the Brinks Mat gold for the last forty years. The gang ended up roping in a number of nefarious individuals to help them smelt and disperse the gold in order to realise some of its cash value. The proceeds from the robbery are thought to have fuelled the London Docklands property boom as well as the UK cocaine market. 
Worried about the integrity of the London Gold Market, the Bank of England had to step in and rescue the gold’s owners, the banking and gold-trading arm of Johnson Matthey, when they collapsed less than a year later. 
Our Obsession with Gold
The trailers for the BBC series have prompted many viewers to recall back to the time when the robbery had just happened. It’s fixed in many peoples’ memories; it was such a significant theft. But I wonder if a standard robbery of cash would have had the same lasting effect? I suspect not. 
There is something about gold that grabs most people’s attention. Take the robbers who stole the gold, for example. There is nothing to suggest that these were men familiar with the spot price of gold, no indication that they saw those 6,000 bars of gold and knew how much it was worth. But, they did know it was worth making the extra effort to steal, instead of trying to get at the planned £3 million in cash. 
Gold is one of the few things we have in common with ancestors from long ago. We desired it 1,000 years ago, 500 years ago, 100 years ago, and (clearly) forty years ago. Just as we do today. There are few things we instinctively know about finance and investments, but the need to own gold is one of them. 
Why Gareth Soloway is “unbelievably bullish” on gold and silver
 
This has something to do with the fact that the yellow metal has stood the test of time. Some psychologists have also postulated that we are attracted to precious metals and stones because they shine and sparkle.
Much like the reflection of the sun on the water, the most necessary resource that the human brain is designed to spot and identify. This might be one of the reasons, but I think it’s because we know that the gold our multiple-great grandfather dug up and wore proudly round his neck or exchanged for livestock and land, still exists today.
Gold is timeless. As we see from the disaster that was the aftermath of the Brinks-Mat robbery, it is near-impossible to disappear. 
In fact, it is rumoured that much of the unrecovered gold has made its way back into the gold market through various ways and means. It’s still pure gold and arguably back in its rightful place. 
Small fry in today’s money
What’s really fascinating though is that the theft of over (in today’s money) £100 million of gold was the crime of the century but of the 20th century. Because there is no way that it compares in any way to the ongoing theft that we are currently experiencing in the 21st century. 
I am, of course, referring to the inflationary efforts of central banks. 
The Bank of England inflation calculator shows that £10 in 1983 (the year of Brinks Mat robbery) would now be worth £29.95. That’s not because interest rates have been so generous or because your money has been so wisely invested. It’s because the pound is now worth three times less than it would have been worth, then. Something that cost you £10 then, would now cost you nearly £30. 
For the US Dollar, an item that cost you $10 would today cost you $29.33. A similar rate of depreciation that has occurred to the GBP. 
It’s a similar story in the Eurozone, since its launch in 1999, €10 is now worth €16.40. 
That gold today might have gone up over 5 times in price (and so arguably outperformed inflation), but we’re still talking about the same amount of gold. The thieves haven’t managed to make more gold. Instead, as time passed, gold has hugely increased in price relative to the British pound, dollar, etc. But, more importantly, it has held its value. 
Whoever has been holding onto that gold since 1983 will have stolen something that was worth around £280 per ounce, and today is worth £1,560 per ounce (at the time of writing).
 
They have the same amount of gold and it has the same amount of value, just an increased price. Yet the £3 million in cash they wanted to steal would be worth significantly less, three times less. 
When we admire how much the price of gold has gone up since the Brinks Mat robbery, we’re actually grave dancing. Because what we’re celebrating is the theft of value from fiat currencies or a loss of wealth for those who have been saving in cash and cash-based assets.
That is why the central banking antics of the 21st century will be the biggest theft of the century and we’re not even a quarter of the way through it yet. 
Looking forward to watching The Gold but no access to the BBC? It’s due out in the US later in the year, but in the meantime check out our gold short for a bit more Gold drama. 
 

In 1983 a total of 6,840 gold bars were stolen from a high security vault in Heathrow in what is still considered to be ‘the crime of the century’.
40 years on and the gold heist is still the biggest single-theft of gold in history. What’s incredible is that the perpetrators never even expected to steal any gold. They were instead expecting to find around £3 million in cash. 
After failing to get into the targeted vault the armed robbers discovered three tons of gold bullion as well as diamonds and cash. Recorded testimony of one of the security guards recalls the delight of one of the robbers when he realises some previously looked over grey boxes contain gold bars that are ‘four nines!’ the purest of gold bullion bars. 
This weekend sees the release of the six-part drama The Gold, in the UK. The series is based on the infamous 1983 Brinks Mat heist that saw six-armed men steal over £26 million of gold bullion from the security depot at Heathrow. Today that same gold would be worth over £100 million. 
Accidental Treasure Hunting
What was supposed to be a quick smash and grab involving a few bags to help carry away £3 million in cash, soon turned into a protracted, drawn out operation. The operation ended up taking over two hours and catapulted the six men into history books as the perpetrators of the ‘crime of the century’. In many ways, the crime is still ongoing. Only half of the gold has ever been recovered. 
In total 6,840 gold bars were stolen along with cash and diamonds worth £113,000. Of course, the tale doesn’t end there. It is very difficult to make gold just ‘disappear’ and convert into far more easily hidden cash.
A trail of death and violence has followed the Brinks Mat gold for the last forty years. The gang ended up roping in a number of nefarious individuals to help them smelt and disperse the gold in order to realise some of its cash value. The proceeds from the robbery are thought to have fuelled the London Docklands property boom as well as the UK cocaine market. 
Worried about the integrity of the London Gold Market, the Bank of England had to step in and rescue the gold’s owners, the banking and gold-trading arm of Johnson Matthey, when they collapsed less than a year later. 
Our Obsession with Gold
The trailers for the BBC series have prompted many viewers to recall back to the time when the robbery had just happened. It’s fixed in many peoples’ memories; it was such a significant theft. But I wonder if a standard robbery of cash would have had the same lasting effect? I suspect not. 
There is something about gold that grabs most people’s attention. Take the robbers who stole the gold, for example. There is nothing to suggest that these were men familiar with the spot price of gold, no indication that they saw those 6,000 bars of gold and knew how much it was worth. But, they did know it was worth making the extra effort to steal, instead of trying to get at the planned £3 million in cash. 
Gold is one of the few things we have in common with ancestors from long ago. We desired it 1,000 years ago, 500 years ago, 100 years ago, and (clearly) forty years ago. Just as we do today. There are few things we instinctively know about finance and investments, but the need to own gold is one of them. 
Why Gareth Soloway is “unbelievably bullish” on gold and silver
 
This has something to do with the fact that the yellow metal has stood the test of time. Some psychologists have also postulated that we are attracted to precious metals and stones because they shine and sparkle.
Much like the reflection of the sun on the water, the most necessary resource that the human brain is designed to spot and identify. This might be one of the reasons, but I think it’s because we know that the gold our multiple-great grandfather dug up and wore proudly round his neck or exchanged for livestock and land, still exists today.
Gold is timeless. As we see from the disaster that was the aftermath of the Brinks-Mat robbery, it is near-impossible to disappear. 
In fact, it is rumoured that much of the unrecovered gold has made its way back into the gold market through various ways and means. It’s still pure gold and arguably back in its rightful place. 
Small fry in today’s money
What’s really fascinating though is that the theft of over (in today’s money) £100 million of gold was the crime of the century but of the 20th century. Because there is no way that it compares in any way to the ongoing theft that we are currently experiencing in the 21st century. 
I am, of course, referring to the inflationary efforts of central banks. 
The Bank of England inflation calculator shows that £10 in 1983 (the year of Brinks Mat robbery) would now be worth £29.95. That’s not because interest rates have been so generous or because your money has been so wisely invested. It’s because the pound is now worth three times less than it would have been worth, then. Something that cost you £10 then, would now cost you nearly £30. 
For the US Dollar, an item that cost you $10 would today cost you $29.33. A similar rate of depreciation that has occurred to the GBP. 
It’s a similar story in the Eurozone, since its launch in 1999, €10 is now worth €16.40. 
That gold today might have gone up over 5 times in price (and so arguably outperformed inflation), but we’re still talking about the same amount of gold. The thieves haven’t managed to make more gold. Instead, as time passed, gold has hugely increased in price relative to the British pound, dollar, etc. But, more importantly, it has held its value. 
Whoever has been holding onto that gold since 1983 will have stolen something that was worth around £280 per ounce, and today is worth £1,560 per ounce (at the time of writing).
 
They have the same amount of gold and it has the same amount of value, just an increased price. Yet the £3 million in cash they wanted to steal would be worth significantly less, three times less. 
When we admire how much the price of gold has gone up since the Brinks Mat robbery, we’re actually grave dancing. Because what we’re celebrating is the theft of value from fiat currencies or a loss of wealth for those who have been saving in cash and cash-based assets.
That is why the central banking antics of the 21st century will be the biggest theft of the century and we’re not even a quarter of the way through it yet. 
Looking forward to watching The Gold but no access to the BBC? It’s due out in the US later in the year, but in the meantime check out our gold short for a bit more Gold drama.