When a bank run hits, the Yankee government and the Fed have two and only two weapons: liquidity and blarney. Today Biden was shooting off that blarney cannon fast enough to melt the barrel while the FDIC and Fed opened up the floodgates of liquidity from the earth’s bowels.
By Franklin Sanders / The Moneychanger Newsletter
How do you know they’re lying? Their lips are moving. So Biden today made one of the most hilarious comments in the history of blarney: “Americans can have confidence that the banking system is safe.” Here’s a sterling example of the Law of Contrary Assertions: whatever government spokesman asserts is precisely contrary to the truth. They have 25.5 billion bucks to plug a $5.5 trillion hole.
Shucks, Biden must have been so busy that he missed the closing of a third bank in four days, this one (Signature Bank) on Sunday. Y’all know it took some kind of emergency to get the bureaucrats out to work on a Sunday.
Under the “systemic risk exception” the FDIC will guarantee not only insured deposits but uninsured as well, in other words, will bail out the uninsured depositor corporations. This is the same tack Powell took in 1990 during the savings and loan crisis, voting for the “exception” then, too. The blarney cannon assures us none of this bailout will come from the taxpayers, but who else has any money? Not the banks they say they will ding for it. By the way, a major reason these banks went belly up was the Fed’s interest rate raising. Rising rates mean falling bond prices, so all the bonds these banks were holding as assets had dropped so much in price that they lost billions selling them to raise capital. This is grrrrreeeeat, the snake is eating its own tail.
There’s more, enough to gag a Poland China hog living in the manure pile at a rendering plant, but I’ll have to deny myself that fun for now and turn to markets.
Do not overlook the way this bank run is rolling out, NOT as a run into the US dollar, but into gold and silver. So far this is totally unlike the 2008 and 2020 panics.
Glance at markets
The US dollar index sank today like a lump in a churn, down 90.5 basis points (0.94%) to 103.595. Does anybody really think the FOMC at its next meeting will raise interest rates amidst a systemic bank run? Not a popsicle’s chance in Hades. Therefore investors and traders fled the dollar and sold the interest rate. Look at that unbelievable, never before seen in history 10 year T-note yield chart gapping down two days and thudding into its 200 DMA. Ain’t coming back soon.
And stocks? They were, as they say, “mixed” today with the Nasdaqs up a little but the Dow Industrials down 90.5 (0.28%) to 31,819.14 and the S&P500 down 5.83 (.15%) to 3,855.76. Rest assured, fellow mushrooms, that these declines occurred in spite of heavy lifting from Nice Government Men on the Plunge Protection Team, which makes them even more ominous.
Whoops — did I forget to tell y’all about bank stocks in particular? Here’s a chart of the S&P bank stock index, which fell only 7% today. Oh, and here’s one for the history books, the gold/BKX stock index spread Ooooooo — three gaps up as if shot out of a cannon, and clearly not a blarney cannon. Lawsy, I ain’t never seen nothin like that! Money is streaming, cascading, torrenting from bank stocks into gold.
Gold has risen $97.90 (5.4%) in three days. Today it rocketed $49.70 (2.67%) to end well over $1,900 at $1,911.70. Silver rose an eye-popping 6.96% or 141.8¢ to 2179.3¢. And the gold/silver ratio? It collapsed, down 4.01% to 87.721 oz of silver to one of gold, nearly falling through the 200 DMA. I told y’all it was overbought on its RSI.
Where does gold go from here? It has cleared its 20 and 50 day moving averages and is knocking on resistance about $1,916. Real question is, can it better the last peak at $1,975.50? If so, it will clear $2,100 very soon.
Don’t y’all think the Federal Reserve and the Nice Government men will sit back moaning and whining about the black eyes gold has given them. No, they will counterattack some way, I know not how, but they must try to suppress gold. Well they succeed? Can a cockroach write a piano sonata? No, but y’all have to keep your heads in the up and down turbulence, because now gold’s price has become secondary to snatching your wealth from the banking system’s jaws Rather than fretting about price, be concerned that you salvage as much as you can from the banking wreckage, while you still can.
Another gold and silver buying panic is building. Today wore us all slap out. Prices on some silver items are already rising, some items disappearing. Silver rounds jumped from $1.15 over spot silver to $1.40. Watch out!
I also warned y’all silver was overbought, but didn’t expect it to rally like this. Today it clear its 200 and 20 day moving averages. All indicators point up. All.
I don’t want to spread panic, but this isn’t over by a long shot. Y’all had better protect yourselves, because the Fed and the yankee government sure won’t protect you.
Please have patience with us at Volunteer Precious Metals. We are shorthanded and the phones are eating us alive. Please, when you call, stick to business and keep the time to a minimum. We will return all calls, I promise, or die at our phones trying.