‘Things tend to break’ when Fed gets aggressive

MarketWatch/William Watts/3-10-2023

“Analysts played down the threat to the U.S. banking system after the collapse of a regional lender Friday, but the failure of Silicon Valley Bank served to underline longstanding worries that the Federal Reserve’s aggressive series of interest rate hikes will eventually cause something in the world’s financial plumbing to break.”

USAGOLD note 1: We recall Jeffrey Gundlach’s warning about a year ago that the Fed will raise rates “until something breaks.” Well, it seems something has broken and the problem is systemic. The only question is what the will Fed do now.

USAGOLD note 2: In Friday’s Daily Gold Market Report, we posted an observation from Capitalight Research’s Chantelle Schieven made during a Kitco News interview before SVB’s collapse. “The faster you raise interest rates, the faster something is going to give, that something is going to break. Gold doesn’t need a crisis to move higher, but it definitely loves a crisis.” The metal gained $38 in Friday’s trading to close at $1870, as safe haven buyers returned to the market.