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Is it time for self-held hard physical assets?

Recent events in the American banking sector have brought to the fore the very real risk of holding money in the bank! The recent collapse of both Silicon Valley Bank and Signature Bank would have been far worse than it was, if not for President Joe Biden himself stepping in and ordering the Treasury to cover depositor’s funds. [The Treasury had previously stated that their “No bailout” policy stood].

The Treasury stated in their Press Release of March 12th Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system” What they really meant was “We are taking this action to avoid a catastrophic loss of public confidence in the banking sector, and the contagion, bankruptcies and economic chaos that would undoubtedly follow from that”.

The danger of further banking collapses is still present.

The potential catastrophe may have been averted for now, but the danger of this recurring is far from over. Small regional banks are now facing bank runs of customers pulling their funds and putting them in the much larger banks like JP Morgan, Chase and Citigroup which are less at systemic risk and considered too big to fail. This is particularly the case with deposits over the $250k threshold guaranteed by federal insurance. Many smaller regional banks may well be facing serious liquidity issues in the very near future, if this trend continues.

Global banking concerns.

Meanwhile on the global stage, one of the most respected European banking institutions Credit Suisse is facing its own serious problems which have caused its share prices to drop dramatically along with public confidence, leading commentators to speculate on its future. 

“Rich Dad Poor Dad” author and financial commentator Robert Kiyosaki in a recent interview on “Fox Business” expressed grave concerns for not only Credit Suisse, believing that its failure was imminent but also for the bond markets which he believes are crashing. In the interview Kiyosaki explains why he believes investors should be looking at gold and silver. Kiyosaki is famous for predicting the 2008 Lehman Brothers crash so his views are considered extremely credible.

Money in the bank is no longer “safe”.

At the very least this situation will have led the average American to question the “safety” of money in the bank particularly if those funds exceed the federal insurance limit. 

People are waking up to the fact that the banks are not “safe custodians” of their money, they are in fact “unsecured creditors” of their bank.

So what then is the solution? In times of economic turmoil at home, with rampant inflation, excessive money printing and war [and warmongering] on the global stage, not to mention the supply bottlenecks caused by sanctions and the lingering effects of the pandemic, how do you protect the wealth you have accumulated over a lifetime of hard work from erosion?

Physical “safe haven” assets may provide the answer.

More and more financially intelligent people are turning to hard physical assets such as gold and silver either self-held or held by registered non-bank custodial services. 

Unlike other asset classes, gold tends to perform well during extended periods of market volatility because it is not subject to market manipulation and losses in the same way that paper assets are. Investing in gold protects your portfolio from catastrophic losses from a single investment failing or a paper asset class experiencing a dramatic loss of value. 

Gold cannot be destroyed or devalued by governments and there is zero risk of default, unlike other investments backed by government guarantees. Gold has always been top of the list of “safe haven assets “and the savvy investor’s vehicle of choice to ride out tough economic times and hedge against losses.

Gold has historically kept up with inflation, making it a good hedge against ongoing high inflation such as the US economy is currently experiencing. This makes it a good investment for those looking for long-term returns. The price of gold does is far more stable than that of stocks and bonds. Historically, the price of gold have increased in value over time, making it a solid investment option even during long periods of high inflation. 

Golden prospects ahead for gold markets.

Gold has some pretty serious tailwinds operating in its favour. Global Central Bank gold purchasing hit an all-time high last year with China alone making a massive $4.6 billion purchase of Swiss Gold in July 2022, and it was far from alone in its gold stockpiling. 

Another potential boost for gold markets is that Russia and Iran are in talks about creating a gold backed stablecoin to facilitate trade between the two countries. Vedomosti, the Russian news site reported that the two countries intended to create a commodity-backed stablecoin that will be pegged to recognized assets like gold, so the value is clear and observable for all participants”.

With many nations currencies internationally being devalued by inflation it is well within the realms of possibility that other countries may well look to return to the “Gold Standard” and revalue their sovereign currencies by pegging that value to gold. Gold buying by sovereign nations has potentially huge implications for the future price of gold.

Market analysts are predicting that gold is heading for a major bull market for some years to come, and with the very real possibility of the US economy slipping into a recession in 2023, investing in physical gold or silver now could be a very timely and strategic decision under the current economic circumstances.

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