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3.30.23 - Solved or Just on Hiatus?

Gold last traded at $1,980 an ounce. Silver at $23.90 an ounce.

EDITOR'S NOTE: Is the banking crisis over? Given the tangled web of our economy, how could it be? Many experts are suggesting this is a crisis still actively in play.

Bank Failures: Solved or Just on Hiatus? - Econ-Intel

charts The bank failures of Silicon Valley Bank and Signature Bank were significant economic events. These failed banks were taken over by the FDIC on March 10th and 12th. Regulators worked to calm the market on March 12th by issuing a statement that the banking system “remains resilient and on a solid foundation” .

To really understand what is happening, let’s examine the banking data directly. Recently released figures now allow for a look at how banks are actually handling the situation. This makes it possible to assess the level of stress remaining in the banking sector.

Direct borrowing from the Fed suggests the risk of bank failures has not been resolved

Leading up to and through the bank failures, one would expect banks to borrow more money. However, once assurances were made, if the crisis had passed, there would be no need for banks to borrow yet more money.

Borrowings not only increased, but increased more than the week of the failures. Banks pay interest on borrowed funds and would not borrow money without cause. It makes sense for a bank to borrow, if it can invest the money at a rate higher than the cost of borrowing. This is unlikely to be the case in the current interest rate environment. Due to the Fed’s rate increases, the cost to borrow exceeds the rate of return on safe investments.

The other reason that a bank would borrow is if it had to raise cash to meet depositor demand. This is more likely what is happening. READ MORE

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3.29.23 - Will Deutsche Bank be the Next to Fall?

Gold last traded at $1,964 an ounce. Silver at $23.32 an ounce.

This banking crisis isn’t 2008. That doesn’t make it a good thing: Morning Brief -Yahoo!Finance

We've been hearing several comparisons between our current banking crisis and the banking crisis of 2008. Which is worse? A banking crisis of any kind, whether its the worst of the worst or just plain bad, will leave many people with catastrophic losses.

by Myles Udland - Head of News

A daily refrain from investors and financial commentators has been to remind viewers, listeners, readers, and anyone else within earshot that this banking crisis is not 2008.

"Similarities with the lead-up to the global financial crisis are becoming more apparent each week, but we believe key differences make a reprise unlikely," wrote Tamara Basic Vasiljev, senior economist at Oxford Economics, in a note to clients on Tuesday.

"More banking sector upheaval and consolidation is possible, but we think broader economic damage is likely to be contained," Vasiljev added.

And indeed, current angst over FDIC insurance limits, business model risks among regional banks, and another iteration of fears about the commercial real estate market all remain a safe distance from the existential questions the 2008 crisis surfaced at its nadir. READ MORE

Will Deutsche Bank be the Next to Fall? Worried Investors Are Already Turning to Gold -Yahoo!Finance

Another bank is making the wrong kind of headlines. Deutsche Bank - of the most storied banks in the world - is on very shaky ground. Another reason to buy gold for smart investors.

by Henry Stater

gold After Silicon Valley Bank became the second-largest bank of all time to fail, investors and analysts across the world have been sounding alarm bells. Some fear that the entire banking system is still at risk, but many think that the Treasury Department’s decision to bail out depositors was enough to solve the problem.

The crisis raised concerns about the stability of all major banks, but Deutsche Bank, one of the world's largest and most scrutinized financial institutions, is worrying investors more than others. Deutsche Bank was already not in the best shape when the recent banking crisis started.

The German banking giant has faced numerous challenges in recent years, with its stock price dropping about 30% in less than two months. Despite a small recent rebound, investors remain skeptical about the bank's future prospects. Moreover, Deutsche Bank's interconnectedness with other financial institutions heightens the potential for a domino effect should it run into major liquidity issues. READ MORE

A famous market watcher who called the subprime mortgage crisis is warning that stocks are about to crash: ‘It’s the highest probability since COVID’ -Yahoo!Finance

As we draw nearer to May 11th - when the Biden Administration will let the emergency provisions related to COVID cases expire - it seems COVID is still finding ways to make headlines. This time a market watcher is claiming our markets are heading toward a severe market correction. This is one of several famed market watchers who have come out recently with very concerning predictions related to our financial futures.

by Will Daniel

In 2005, years before the subprime mortgage crisis kicked off the Great Recession and led millions of Americans to lose their homes, Larry McDonald was a vice president at the infamous now-defunct global financial services firm Lehman Brothers. As a young trader he, along with many of his peers, warned that something was wrong in the real estate market that year. It “was living on borrowed time,” he would explain years later in a 2009 New York Times article, and Lehman Brothers “was headed directly for the biggest subprime iceberg ever seen.”

But McDonald’s bosses ignored his warnings, and the 158-year-old institution that was Lehman eventually went under in 2008 after the housing bubble cracked. The S&P 500 would go on to lose roughly 50% of its value in the 17-month bear market that ended in March 2009.

Now, McDonald, the editor and founder of the widely read investing newsletter The Bear Traps Report, is warning that another stock market crash is on the way. He says the “Lehman systemic risk indicators” that he developed after the subprime mortgage crisis—which include things like the corporate default rate, stock market short-interest ratios, and investor sentiment surveys—are all flashing warning signs. READ MORE

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3.28.23 - $4.7 Trillion Increase in Taxes

Gold last traded at $1,974 an ounce. Silver at $23.33 an ounce.

EDITOR'S NOTE: President Biden is proposing a $4.7 trillion tax increase targeted at corporations and the wealthy. That's if you believe that increased taxes won't eventually filter down to all of us. This is just another misguided attempt by our government to fix the things they messed up in the first place.

Biden's New Budget Proposes a $4.7 Trillion Increase in Taxes -Yahoo!Finance

by Caleb Naysmith

money President Biden's Fiscal Year 2024 Budget has proposed a series of major tax increases, totaling nearly $4.7 trillion, aimed at businesses and high-income individuals. These proposals include higher marginal tax rates on corporate, individual, and capital gains income; a new minimum tax on high-net-worth individuals; and increases to Medicare taxes. Several tax credits would also be expanded or created, offsetting the gross taxes by about $900 billion and resulting in a net tax increase of $3.8 trillion. After factoring in $1 trillion of additional new spending, the FY2024 Budget would reduce the deficit by $2.8 trillion over the next decade.

However, the Biden budget does not include a concrete proposal for extending the individual income tax cuts from the 2017 Tax Cuts and Jobs Act (TCJA) that will expire after 2025, nor the temporary expansion of the Child Tax Credit (CTC). These extensions would likely offset the projected deficit reductions.

The recent help to small businesses with PPP loans and expanding of the Jumpstart Our Business Startups (JOBS) Act have helped small businesses considerably in recent years. But this proposed tax plan would be a considerable hit to small and large businesses in the U.S. The JOBS Act allows everyday investors to invest in startups and small businesses, which has resulted in billions raised for American small businesses on platforms like StartEngine and Wefunder. This includes StartEngine itself, which has raised over $70 million from everyday investors and $12.5 million in its current funding round, which anyone can invest in. READ MORE

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3.27.23 - Is Commercial Real Estate Next?

Gold last traded at $1,957 an ounce. Silver at $23.10 an ounce.

EDITOR'S NOTE: According to BofA, commercial real estate could be the next victim of this struggling economy. It should come as no surprise; our entire financial system is all part of the same web. When these major sectors of the market are hit, the bigger concern for us is the ripple effect it will have on our investments and savings.

Commercial real estate is the next shoe to drop for regional banks and the stock market -Business Insider

by Matthew Fox

real estate The next domino to fall in the ongoing banking crisis could be commercial real estate loans, according to a Friday note from Bank of America.

A potential credit crunch in the sector, sparked by a wave of upcoming refinancings of commercial real estate loans at much higher interest rates than in the past, could send stocks spiraling and the economy into a recession.

"Commercial real estate [is] widely seen as next shoe to drop as lending standards for CRE loans to tighten further," Bank of America's Michael Hartnett said.

What's not helping is the fact that occupancy rates in offices across the country are still far from their pre-pandemic levels. According to Hartnett, office occupancy rates are still less than 50% as work-from-home trends persists.

At the same time, growth in national rent levels peaked over a year ago and has been steadily falling according to data from Zillow, which means of the office buildings that are collecting rent, it's likely less than what it was in the past. READ MORE

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