UBS Cites it May Fail | Silver's New Fuel Cell Demand?

So far in 2023, we have witnessed 5 US Banks go insolvent and be shut down by the FDIC.

Challenges and Losses: The State of US Banks' Investments

Currently US banks are reported to be still sitting on over $1/2 trillion in unrealized losses on investment securities, of course there is no current estimate of collective losses on commercial loans for failing sectors like office space in major city centers at least not yet anyway.

The three year rolling average losses for US long-term nominal bonds has been -25% this year 2023 and -26% last year in 2022 respectively.

One is left to wonder which of the major commercial banks may be closest to another outright failure.

Perhaps the Global Systemically Important Bank that swallowed up recently failed Swiss bank behemoth Credit Suisse?

UBS Under Scrutiny: Allegations of Liquidity Challenges

Reports online today alleged that UBS a tier-1 G-SIB cited delays in customer deposit withdrawals to its customers explicitly citing 'unforeseen liquidity challenges'. The branch in this particular alleged correspondence is located in Basel, Switzerland.

Two days ago the current CEO of UBS, Sergio Ermotti, while speaking at a Swiss Risk Association event stated, "Even in the unlikely event of something going wrong at UBS, we have enough cushion before even speaking about a resolution of the bank and it's very unlikely risk of a loss for the taxpayer."

Would UBS need to be rescued, Ermotti said a private buyer would continue to be preferable. Saying "Of course, this would likely entail an international buyer."

This is yet another reminder that no matter how sophisticated are gigantic a bank portends to be, you do not actually own the fiat currency in your bank account with them and at any point in time the bank may not even have the fiat currency available to fulfill your IOU if and when you demand it withdrawn.

Central banks know this and likely that much of the global banking system is yet to be admitted insolvent on a mark to market basis.

Gold's Role in Financial Stability: Central Banks' Strategic Moves

Instead of being short sighted unsecured paper ETF net sellers over the last few years. Instead central banks collectively have been likely to be buying much of the gold ETF bar outflows the last few years to help them achieve record bullion buying volumes all time.

In fact, in the last three months of admitted data 33 central banks have been buying near 66 tons per month compared to only 28 tons per month over the past 5 years of data.

Even small countries like the Czech Republic have more than doubled their official gold reserves this year alone.

In the Financial Times this week perhaps one of the most important points about gold's mania phase ahead was cited regardless of what occurs in the short and even medium term.

The most persistent buyer of official gold bullion over the last few years has been China. Yet her percentage at only 4% of official gold compared to her over $3 trillion in sovereign reserves suggests there is massive room to increase her official gold holding in the years and decades ahead.

China's Growing Influence: Gold Reserves and International Dynamics

To date China and Russia appear to have been coordinating in the way they officially declare their growing official gold hoards.

Having already sold nearly $1/2 trillion in US bonds since the 2008 Global Financial Crisis while also having been the world's number one gold miner from 2007 to now pulling over 7,000 tonnes admitted. 

China doesn't and has not exported gold for decades, meanwhile it has been not merely the world's largest miner of new gold ore it has also been the largest net buyer over the last decade and a half with most of the gold the state has acquired yet to be officially declared until perhaps it behooves her long term strategies to do so.

I know we like to think we are larger than we really are in the west, but the world's physical gold buying powers will likely continue being in east Asia between China and India mainly.

For how much longer China pretends to carry a meager 4% of her sovereign savings in official physical gold reserves without adding a zero behind that underreported figure is probably going to be as long as we westerners keep the illusion that a fair spot price for gold doesn't also carry an additional $0 in its fiat US dollar price.

Market Update: Silver and Gold Prices Amidst Economic Uncertainty

Happy belated Thanksgiving holiday to our US customer base and bullion interested viewers out there.

Both silver and gold spot prices in fiat US Dollar terms closed higher to end this holiday shortened week. 

The spot silver price finished over $24.32 oz bid while the spot gold price closed this week over $2,002 oz bid. 

The spot gold silver ratio fell sharply in today's trading to finish at 82 for the week.

Silver's Growing Importance: Precious Metal Trends

In yet another reminder that silver is a precious metal we will increasingly need both as a long term store of value but also as a wonder conductor of cutting edge industrial applications.

Industry consultant Metals Focus again highlighted this week that this year 2023 will be the third year in a row of physical supply deficits citing that this supply demand deficit will continue for more years to come.

Be it new record high demand for silver bullion in cutting edge industrial applications in electronics, solar panel applications, and in the growing electrification of vehicles.

But also continued silver investment demand given recent bank failures in the USA. My strong suggestion is that the trend is just starting on both a USA and global basis.

Looking further to silver's potential industrial applications upcoming it was recently announced that silver may take a portion of platinum's demand for the growing hydrogen fuel cell market.

Silver in Fuel Cells & Hydrogen Powered Automobiles

Researchers at SLAC National Accelerator Lab, Stanford, and Toyota are revolutionizing hydrogen fuel cells by substituting costly platinum group metals with more economical silver. This innovation aims to reduce the cost of manufacturing fuel cells, making them more affordable and practical for widespread use. Silver catalysts are expected to offer a clean, sustainable, and efficient transportation alternative, addressing the challenges associated with traditional gasoline and battery-powered electric vehicles.

The Advantages of Using Silver Instead of Platinum in Fuel Cells Include:

Cost Reduction while still being an Effective Catalyst compared to complete PGM platinum heavy designs, yet also offering a Simplified Chemical Recipe possibly contributing to the advancement of fuel cell technology and its potential for widespread adoption.

That will be all for this week's SD Bullion Market Update.

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...