Daily Gold Market Report

Gold bolts higher as worry about the banking system persists
JP Morgan warns that the new Fed rescue package could carry a $2 trillion price tag

(USAGOLD – 3/17/2023) – Gold bolted higher in early trading as worry about the banking system persisted, and Wall Street braced for today’s $2.7 trillion in option expirations. It is up $24 at $1946. Silver is up 27¢ at $22.05. Bill Ackman, the well-known hedge fund manager, said that a $30 billion rescue package for First Republic thrown together by top Wall Street banks yesterday provided a “false sense of confidence” and “raised more questions than it answered.” He added that he is extremely concerned about a “financial contagion spinning out of the Fed’s control.” [Source: Bloomberg]

In something of a shocker, JP Morgan warned yesterday that the Fed may end up pumping as much as $2 trillion into the US banking system through its new Bank Term Funding Program. Degussa, the Swiss refiner, sounded the alarm about the new rescue package in a client advisory released this morning:

“How would the markets react to a sudden and enormous increase in central bank money pumped into the banking system and the Fed’s balance sheet expanding like never before? How will people react when the Fed cuts interest rates to prop up the banking system despite elevated inflation? And suppose confidence in the greenback, the world’s reserve currency, dwindles. What will happen to all the currencies essentially built on the US dollar?”

“It is high time to realize that the fiat US dollar monetary system faces tremendous challenges and that the risks of higher inflation and/or creditor defaults are increasing. Granted, this is an uncomfortable truth. However, holding at least some physical gold and silver is one possible solution to protect one’s portfolio from the vagaries of a fiat money system spiraling out of control.”

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