A potential repo market crisis could trigger a banking crisis, as banks unwind trades dependent on repo funding, with basis trades now twice the size of 2019 levels, potentially causing contagion across markets.
Gold and silver prices are reacting to monetary instability, with gold near all-time highs and silver breaking above $30 into the $33-34 range, while bullion bank shorts are at record levels.
Physical silver premiums at 6-7% for junk silver indicate moderate demand without a bubble, contrasting with 2011 when premiums briefly fell below zero.
The next round of quantitative easing may follow a repo crisis, potentially requiring the Fed to cut rates by 100 basis points overnight, driving retail demand for gold and silver as concerns about the dollar’s value increase.
Aligning geopolitical tensions in the Middle East, China, and Russia create potential for a major conflict, which could impact financial markets and drive investors towards precious metals for safety.
BRICS gold-backed currency proposal failed due to India’s lack of gold reserves and China’s export dependence on Western markets, highlighting the complexity of creating alternative financial systems.
China and Russia are developing non-dollar markets for precious metals and replicating Western financial institutions like the IMF, as part of a 30-40 year project to reduce dollar dominance.
The US Treasury’s short-term debt funding strategy with a 65-month maturity profile poses significant risks, potentially leading to a crisis similar to the 1970s high-interest rate scenario.
US consumer debt at 71% of GDP and declining savings rates contrast sharply with China’s 50% household savings rate, indicating fundamental differences in economic structures and potential future challenges.
The widest ever recorded gap between rising bond yields and falling equity values suggests an impending equity market crash as historical correlations reassert themselves.
Banks face increased duration risk due to high leverage and long-term bond holdings, with rising yields potentially wiping out equity and triggering a credit crunch in mortgage markets.
Private equity firms leveraging stable utility income streams 4-5 times with debt are now facing defaults and bankruptcies across Europe and Japan as refinancing becomes impossible due to rising rates.
Gold’s rising price primarily reflects the falling value of currencies against real money (gold, silver, copper), rather than a gold bull market, emphasizing the historical role of precious metals as stores of value.
Central banks globally are shifting away from the dollar towards gold and silver, recognizing these as monetary metals without counterparty risk and a hedge against US imperialism.
BRICS nations are incorporating gold in trade balancing, potentially supporting the gold price without creating a new reserve currency.
Central banks have become net purchasers of gold for the third consecutive year, establishing a price floor and actively buying during dips.
The Bank for International Settlements in Basel hosts monthly secret meetings where central bank directors coordinate to orchestrate a stairstep increase in gold prices.
European central banks have prepared gold revaluation accounts to potentially revalue gold prices and improve their solvency, while the Federal Reserve could significantly boost its solvency by revaluing gold certificates from $422 to $1,000 per ounce.
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