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Expecting a US Bank Failure Per Week

Summary

  • Burnett Plaza, a 40-story office building in Fort Worth, Texas, recently sold in a foreclosure auction for a significantly lower price than it was sold for in 2021.
  • The investor Barry Sternlicht believes there will be more bank failures in the USA due to commercial loan losses.
  • Market analysts predict that the price of gold could nearly double in the next 2-3 years.
  • There are several reasons why the price of gold is expected to rise, including increased buying by central banks and a potential return to the historical norm of larger gold investment allocations.
  • The price of gold needs to be much higher than it is currently to back up the amount of fiat currency in circulation.
  • The gold market has been performing well recently, even with a strong US dollar.
  • Silver and platinum are also expected to see price increases due to supply deficits.
  • There is a trend of investors raiding unsecured ETFs to meet the demand for precious metals.
  • The holdings of silver and gold bullion in London are at historic lows.
  • The price of precious metals is expected to continue to rise as supply dwindles.

This is the Burnett Plaza, a 40-story, 1.02 million-square-foot office building, the tallest building in Fort Worth, Texas.

The building sold in 2021 for $137.5 million. 

It recently sold in a foreclosure auction for just $12.3 million. A loss of over $125 million. 

Billionaire investor Barry Sternlicht is expecting bank failures to become commonplace given ongoing commercial loan losses in the USA.

Have a listen to what he said this week about his expectation for US bank failures coming on a weekly basis.

Market analysts at commercial banks such as UBS are now floating the idea that the spot price of gold could nearly double within the coming 2-3 years.

There are unbacked hundreds of trillions of reasons for this, and we'll cover a few of them in this Week's Bullion Market Update.

Tavi Costa cites over 10 reasons on the right hand side of this gold fiat US dollar spot price chart for why this building gold bull has lots of room to run to come.

A coming reversion towards the historical norm of much larger gold investment allocations is but one reason a doubling of the gold price by the second half of this decade is not out of the question.

World governments and their central bank partners have been net buying bullion in record volumes since 2022 and their building preference for bullion over bonds shows no signs of slowing but instead regressing to the historic average of 40% gold bullion allocations throughout this full fiat currency era.

Ever since the US freezing of Russian central bank assets, net global central bank gold buying has gone to the next level.

When asked, emerging market central banks cite they are increasingly buying gold bullion as a hedge against geopolitical risks and given ongoing sanctions concerns.

Even in the face of relatively strong fiat US dollar versus other devaluing fiat currencies.

And even with real yields rising both gold and silver have been performing relatively well regardless in fiat US dollar terms.

Gold has clearly broken out and it is currently threatening to drag stubborn silver along with it as it is again threatening another run at the $30 oz TAMP down resistance level.

Brent Johnson of Santiago Capital just updated the G8, China, and Switzerland fiat currency aggregates versus official gold piles by region.

On a net basis to back the amount of hard fiat currency with official gold requires a current spot price north of $14,000 oz.

Even a move back towards the historic 40% coverage level requires gold to be priced over $5,700 oz.

In US financial history a 40% coverage of the outstanding currency issuance versus gold price has already happened 3Xs. During the Great Depression when about 3/4ths of the population did not turn in their gold coinage. And twice during the 1970s gold bullion bull market.

My expectation is we have another future convergence with the blue line at the very least before this building gold bullion bull market mania phases and peaks out.

Stick around, on the other side of this break we will examine how the ongoing raiding of unsecured ETFs is the predictable move to meet ongoing precious metals market supply deficits in gold, silver, and platinum. 

We'll show you how in recent financial history raiding ETFs for bullion has been followed by a raging precious metal spot price to follow.

The silver and gold markets traded positively this week.

The spot gold price finished over $2,360 oz bid while the spot silver price closed above $28 oz as it threatens for another rally towards $29 and possibly $30 soon.

Johnson Matthey, a major platinum group metals and autocatalyst maker, stated in a report this week that platinum in 2024 is set for its largest supply deficit in over a decade.

With the spot price of platinum now nearly equal again to the spot price of palladium. 

Perhaps we should take a look at how precious metals supply deficits inevitably lead to futures exchange withdrawals and then unsecured ETF raids for remaining bullion supplies.

NYMEX Platinum warehouses have already been raided by mostly Chinese demand since Covid 2020, and it appears the taking of underlying Platinum ETF supplies has since followed and is likely to continue with this year's decade high supply deficit to come.

On the silver demand outstripping available new line supplies, we're on course this year to again see mammoth deficits, the supposed second highest throughout most of this 21st Century to date.

Raiding the COMEX warehouses kicked off in 2021, and unsecured silver ETF raids are ongoing as well.

LBMA data updated this week revealed the City of London's holdings of silver bullion have never been lower.

Gold in the City of London has also been diminishing and flying out the doors of late as well.

Underlying silver bullion stockpiles backing the Shanghai silver futures market are also hitting historic low levels while the Chinese continue paying premiums of more than $3 oz on large commercial 1,000 oz bars.

The red line bottom half of this chart demonstrates on a fiat Chinese yuan per ounce premium paid for silver at exorbitantly high levels currently versus the last 15 years of data.

Turning to vanishing available gold bullion supplies.

The never before seen divergence between the spot gold price climbing record breaking walls while western unsecured gold ETFs lose underlying physical bars to eastern demand and record buying central bank demand can easily be seen in the collapsing COMEX gold warehouse stock piles.

Over 20 million ounces of gold have upped and left since the COVID 2020 4GC agreement between COMEX and London.

If you want to pay annual fees to day trade unsecured precious metal ETFs, here's a picture of the proxy you don't own on the right. I suggest your core holding be physical bullion owned outright.

Turning finally to this week's reminder of how market riggings eventually end in exploding spot prices.

Goldman Sachs just resolved a decade-old platinum and palladium market rigging lawsuit that began in 2014.

My guess is that Goldman had a hand in raiding NYMEX palladium warehouses, then unsecured ETFs only to have the spot price of palladium more than 6 fold trough to peak over the last decade spanning the time it took to settle this latest precious metal market rigging lawsuit.

In the end, supply and demand won out and the spot price climbing walls multi-folding in a handful of years of recent fiat financialized history.

It most certainly will not surprise me to later this decade see a similar situation play out of gold, platinum, and silver respectively.

I hope you have your prudent bullion positions before supply shortages make spot prices go manic.

That will be all for our weekly SD Bullion Market Update. 

And as always to you out there, take great care of yourselves and those you love.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...

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