As I learn more about the regional banks that failed in the last week at opposite ends of the continental U.S.A. in California and New York, it is becoming clear that the FED's aggressive rate hikes starting last April are beginning to rear their ugly heads as there is a lag time of several months to over a year before effects are noticeably felt. Silicon Valley Bank held 'Hold To Maturity' securities which were stuck at the low rates before the rate hikes began. This is where the arrow pierced through the heart, so to speak. The spread between HTM low rates and new rates proved to be unsustainable for SVB.
Canada's central bank also raised rates to 4.5% starting a year ago this month. Coincidental that they paused on hiking rates mere days before Silvergate and SVB crashed. Nevertheless, this should also cause similar effects to the banking system in Canada, wouldn't you think? Now, they're on the news telling us Canadians our banks are fine and remain unaffected by what's going on Stateside. I don't really blame them for trying to keep things calm but we also have a right to know the truth. Entire life savings may be in danger so this is definitely something to be paying close attention to.
Gold and silver reacted positively with gold increasing by almost $100 while silver increased by almost $2. Above all though, it's that truly shines as we see extreme volatility suddenly spreading like contagion. Even the USD, which had risen to 105.657 just prior to the banks failing, has fallen by a couple of points to 103.739 as of writing.
Since the start of the new year, when Bitcoin was priced at 16,531, it began climbing in earnest at the start of the second week of January and by the 15th, Bitcoin was at $20,954 for an incredible $4,400 increase. Since then, it hasn't looked back. In spite of a little volatility, Bitcoin peaked on February 15th at $24,828. From there, it eventually slipped down to hit a low of $20,207 on March 11, the day SVB closed its doors permanently.
It appears the regional bank failures have sparked a run for Bitcoin because just since Friday, Bitcoin has risen to $25,822 as of writing. This is $1,000 more than the peak seen on February 15 while its high in the last 24 hours peaked at $26,507.
So far, the clear winner for the last 7 days of financial sharting from the regional banks is Bitcoin, by far! Coming in strong at second and third place are silver and gold. Don't they look just fine on the podium together?
There's more to come as I still expect the Fed to raise rates. It's either the banks of the dollar. I'm betting they'll try and save their own '' first. Without the '' also nicknamed the '', there is no FED.
FRN stands for Federal Reserve Note. It would kind of make sense they'd try to save their own notes first before anything else, wouldn't they? Regardless, as I've explained before, the FED is stuck between a sock and a hard face. We won't have to wait long. A week from tomorrow to be exact, whether they rate rates or now.
Looks like Bitcoin, gold and silver are good things to have in your possession in these '' times. Remember to diversify to increase your chances of saving your wealth. You can also diversify your silver holdings by purchasing '' silver, generic and sovereign coins / bars.
Junk silver are the old silver dimes, quarters, 50 cent pieces and dollar coins which '' stopped minting in the 1960s. Generic silver are silver products made by private mints, such as the Sunshine Mint. Products can range from bars and rounds to rolling dice and even ornamental silver bullets! Sovereign products are those created by official mints such as the U.S. Mint which produces the iconic Gold and Silver Eagles.
What do you think the FED will do next week? Do you think Bitcoin is going higher? What are your thoughts on silver and gold? Do you think it's worth it? Share your comments below.
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