Bullion is Handing Mega-Banks Big Losses

We begin this week’s SD Bullion Market Update with a bullish 2007 through present day 2020 silver spot price chart.

Explosive tailwinds for silver as we look back the last time we saw silver go on an exponential price climb higher.

Back in late 2008 we had a $1.3 trillion injection of monetary stimulus in 70 days and the price of silver went parabolic for the next 2 yrs. 

This time in 2020 we have a situation where:

  • the Federal Reserve has already doubled the 2008 version, already adding near $3T
  • the spot gold silver ratio is currently near record high levels
  • we have the largest disconnect in physical & futures in over a decade of time

Hello this is James Anderson of SD Bullion.

In this week’s bullion market update video we cover some major reasons why some commercial banks who trade in precious metals derivatives have been recently getting their heads handed to them by the derivative gold price and physical gold bullion demand. 

First an update on unprecedented unemployment filings in the USA. 

Another 3 million have been added to this swelling total of 36.5 million who have lost their job. Reportedly 40% of this making less than $40k salaries have lost their employment over this viral crisis. Remember the Federal Reserve blog glibly has this figure clearing 50 million jobs lost by the end of next month June 2020.

The Federal Reserve balance sheet is on the cusp of clearing $7 trillion up now, almost $3 trillion since we began giving you these bullion market updates in mid-November 2019 here at SD Bullion. 

How much longer until the next $3 trillion gets dumped on their balance sheet?

HSBC & ScotiaBank Gold Losses Piled Up 

Less than 2 months ago we had major disruption in the gold markets - like we have never seen before. Not merely bullion shortages, but also massive trading losses were taken.

The gold futures vs gold spot price divergence gave many of the largest gold traders losses so large that one of the longest running commercial banks has now publicly declared its finally now quitting, on its way out of the business entirely after 100s of years trading precious metals.

We covered this Scotiabank precious metals trading desk closure story a few weeks ago, and their latest losses trading precious metals were likely the final straw for parent Bank of Nova Scotia.

Probably didn't help either that they too were under US Department of Justice probings. 

It was recently reported that Scotiabank handed over 800,000 documents surrounding the ongoing criminal investigations of themselves and most specifically regarding criminal JP Morgan's precious metals desk and commercial bank at large.

News from this week, another massive gold derivative commercial bank suffered huge losses during the late March gold spot price fall and fast rebound. 

Apparently HSBC ( in a recent filing, PDF ) lost anywhere from $200 to $300 million intraday in late March 2020 as some Exchange for Physical Trades that went wrong. Likely in part due to the large gold price discrepancy between London and New York at the time. Or perhaps they were just caught short as the price of gold rebounded quickly from $1475 back to $1650 in a matter of days.

Both these banks, HSBC and Scotiabank are probably still sitting on uncovered precious metal derivative losses. Meanwhile the price of gold looks set to make a run towards $1,800 oz in fiat USD as early as next week.

Negative Interest Rate Forecasts

Another Signal a Massive Bankruptcy Phase is Coming

IMAGE: Negative Interest Rates SD Bullion Market Update

Present day financial forecast charts in the US bond market (regardless of the lies the private Federal Reserve mutters) call for Negative Interest Rates or NIRP to arrive soon to the USA.

The bottom of this Guggenheim NIRP Forecast calls for US 10 year bonds to nominally yield as low as -2% by the start of 2022. That chart forecast basically says the next two years of time, the tumultuous financial trends we're currently on, should continue and in many cases worsen. 

That may sound extreme and ridiculous on its nominal face. But in reality we have been under real negative interest rates for nearly 25 years now in the USA.

And how ridiculous would we have looked at ourselves, saying what we know now has to come to pass, only three or so months ago?

We are already dwarfing the 2008 financial crisis. 

Who yet fully understands how bad the bankruptcy phase is going to get in the coming years?

The combined fiat financial powers that be can paper over short term financial market disruptions, but they cannot bailout large scale insolvencies nor inefficient business models that can no longer remain solvent in this post viral landscape. 

Once we near the peak of the insolvency phase, this NIRP chart forecast says that big capital may be fine with guaranteed losses and at the very least the return of some capital. Judged versus other failing options and the potential complete outright loss of their capital.

This the undisciplined comeuppance that former Fed governor John Exter warned us all about.

Keep your eyes on the bond and bullion markets to come.

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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...