themarketNZZ/Sadra Rosa interview of Jim Rogers/3-21-2023

“That is certainly one possible approach. I own silver and I expect to buy more silver and more hard assets in general, because historically, if you have inflation or chaos, the way to protect yourself is with real assets.”

USAGOLD note: Rogers updates his thinking and outlook in the wake of bank failures and the Fed’s rescue plan. As you can tell from the chart below, when silver goes up, it can go up in a major way.

Silver: Average Annual Return
(%, 2000-2022)

Chart by USAGOLD • • • Data source: Macrotrends.net • • • Click to enlarge

Credit Bubble Bulletin/Doug Noland/3-18-2023

“Federal Reserve Total Assets surged $297 billion last week to $8.639 TN, in one week reversing four months – and over half – of recent QT (quantitative tightening). A $10 TN balance sheet by year end would not be surprising,” says Credit Bubble Bulletin’s Doug Noland in his regular Saturday update.” I appreciate that officials last weekend believed they needed to ensure all SVB and Signature depositors to stem a potential systemic bank run. Just as the Bernanke Fed had justification for opening the floodgate for unprecedented money printing… Where does it all end? For one thing, the Fed’s balance sheet will be getting much larger. I’ll assume global central bank balance sheets will also inflate.”

USAGOLD note: The additions to the balance sheet amount to a very large pool of printed money sitting in the financial system waiting to be unleashed – eventually as price inflation, as we are seeing now. In this case, the Fed is likely to argue that it expects the money to be repaid and therefore removed from the money supply, but it is being loaned to banks that are insolvent or nearly insolvent and struggling to keep their doors open. How likely is it that these loans will be repaid? There is much to this bailout that needs to be explained. For instance, if and when the rescued banks pay off their loans will they receive back the underwater securities they put up as collateral– at par?

Bloomberg/Catarina Saraiva and Craiig Torres/3-13-2023

“Federal Reserve Chair Jerome Powell’s strategy to speed up the central bank’s inflation-fighting efforts is unraveling in the wake of Silicon Valley Bank’s collapse.”

USAGOLD note:  Nothing alters Fed tightening policies faster than a financial crisis…… And it did so as if it knew it was coming – rolling out a major rescue plan within 48 hours of SVB’s collapse. Economist Nouriel Roubini warned yesterday of “endless inflation.”

Financial Times/ Mohamed El-Erian/3-12-2023

“In a narrow sense, it demonstrates that even seemingly small banks can pose systemic risks. In a broader sense, it illustrates the inherent trilemma of the ongoing monetary policy regime change. Namely, the challenge for the Federal Reserve to simultaneously deliver on both its 2 percent inflation target and the employment part of its dual mandate while ensuring financial system stability.”

USAGOLD note: El Erian is among the first to weigh in on the Fed’s options now that something has actually broken. All the concerns registered here and elsewhere about the Fed’s policy conundrum are coming to a head. Nothing has changed. If the Fed goes neutral on rates, or heaven forbid, raises them, more SVBs are likely to surface. The return of quantitative easing is a distinct possibility. If it doesn’t tighten monetary policy (as originally planned), inflation will likely settle in for the long run.

Reuters/Scott Murdoch and Carolina Mandl/3-13-2023

“U.S. regulators may have stemmed a banking crisis by guaranteeing deposits of collapsed Silicon Valley Bank (SVB), but some experts warn that the move has encouraged bad investor behaviour.”

USAGOLD note: There was already considerable moral hazard built into banking philosophy. Sunday’s rescue package – especially the Fed’s taking in the banks’ underwater bond positions at par instead of market – will solidify it for a long time to come.

CNBC/Jeff Cox/3-14-2023

“In a harsh blow to an already-reeling sector, Moody’s Investors Service on Monday cut its view on the entire banking system to negative from stable.”

USAGOLD note: The same problem that brought down SVB – an underwater bond portfolio – is present in a large swathe of the banking industry making this bank crisis much different than anything that preceded it. Moody’s is right to sound the general alarm.

No DGMR today.

Zero Hedge/Tyler Durden/3-18-2023

“Gundlach called Silicon Valley Bank’s failure ‘a rate policy collision with stupid accounting rules”‘for banks, but warned of The Fed’s reaction was inflationary and antithetical to their inflation-fighting stance. ‘By bailing out depositors at SVB, that’s essentially a quantitative easing by the Fed, he said. ‘Making those depositors whole is about the same as a month or two of reversing quantitative tightening.'”

USAGOLD note: This article will bring you up to date on Gundlach’s thinking…… “I think gold is a good long-term hold,” he concluded in the same CNBC interview. “Gold and other real assets with true value, such as land and collectibles.”

Markets Insider/Spriha Srivastava/3-20-2023

“You know something is wrong when six big central banks from around the world decide to join hands in order to reassure financial markets. That too on a Sunday night.”

USAGOLD note: While Wall Street takes a ho-hum attitude, Main Street moves to protect savings, braces for another financial crisis.

Bloomberg/Justin Lee, Kathering Greifend, Vildana Hajric and Isabelle Lee/3-20-2023

“Steve Chiavarone doesn’t want to scare anyone, but what he remembers most from the last banking crisis was how sure most people were that it wouldn’t happen.”

USAGOLD note: An inside look at what it is like to be on the front lines of the investment business during a financial storm…… Now, like then, the prevailing view is that the crisis will be contained. Some will see that attitude as an acute case of denial. We recall Queen Elizabeth’s query at the London School of Economics with respect to the 2008 financial crisis: “Why did nobody see it coming?…If these things were so large, how come everyone missed them?”

MarketWatch/Steve Goldstein/3-17-2023

“A week ago it was possible to argue that this observation was theoretical, now we know that it is not going to be different this time.” – Graham Secker, Morgan Stanley, chief European equity strategist

USAGOLD note: It’s because it is never different this time around that the prudent, long-term investor owns precious metals. Own metals, Sit back. Watch the show.

MarketWatch/Vivien Lou Chen/3-15-2023

“Contagion fears triggered by the speedy collapse of two regional banks in less than a week is raising the risk of a crisis in confidence in U.S. banks, one in which government bonds would be the ‘toxic asset’ at the center of it all.”

USAGOLD note: Who would have believed that US Treasury securities would ever be viewed as toxic? Yet here we are……

MarketWatch/William Watts/3-15-2023

“Dalio argued that SVB’s failure was a ‘very classic event’ in what he termed the ‘very classic bubble-bursting part of the short-term debt cycle.’ That phase occurs when tight money aimed at curtailing credit growth and inflation leads to a ‘self-reinforcing’ contraction in debt and credit. That means a ‘contagion process’ that sees dominoes fall until central banks relent and create ‘easy money,’ which then sets the stage for the next big debt problem.”

USAGOLD note: A view similar to that of Blackrock’s Larry Fink featured below – two of Wall Street’s top money managers forecasting the same future. Dalio is a long-time advocate of gold ownership.

Financial Times/Brooke Masters/3-15-2023

“BlackRock chief executive fears ‘more seizures and shutdowns’ of banks possible after ‘decades of easy money.’”

USAGOLD note: Fink says rapidly raising rates was the first domino to drop, SVB the second. More could follow. FT points out that Fink’s annual client letter is required reading among corporate executives.