Thursday
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March 20, 2023/0 Comments/by Monetary Metals
Last week, we had this to say about the implications of SVB’s collapse…
Everyone in the market has to think about an unpleasant reality and come to grips with it. They have to consider the risks of things that previously they may have thought absolutely safe. Such as bank deposits, and Treasury bonds (and government-guaranteed mortgages). This line of thinking has but one destination. Gold…
FTX vs SVB
Are my bank deposits safe? Was SVB an anomaly? Will more banks fail?
While FTX was allegedly a clear case of fraud, SVB’s collapse was different. It was a result of a duration mismatch of its balance sheet and high-interest rates.
And investors are rightfully scared because SVB looks different only in degree to other regional and specialty banks, not different in kind.
SVB was the marginal bank, but certainly not the only bank at risk of collapse. And we can prove it. The risks are not bank-specific they are inherent to the banking system.
Saying the Quiet Part Out Loud
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