We’ve been warning investors repeatedly against falling into a false sense of security. Now, the next phase of the banking crisis is finally underway, and the dollar is facing its biggest challenge yet.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Founder Eric Sepanek and Precious Metals Advisor John Karow explain the massive banking shakeup, a possible return to the gold standard, and why the dollar is taking another hit.
The Next Phase of the Crisis
Following J.P. Morgan’s takeover of Silicon Valley Bank in the throes of the regional banking crisis, CEO Jamie Dimon made an interesting remark about “this part of the crisis” being over. The world’s banking leaders were evidently expecting the other economic shoe to drop at some point. Just a few months after the initial banking scare, the next phase of the catastrophe is already underway.
Government regulators recently announced a fresh gauntlet of strict banking requirements that most regional banks will struggle to survive. Banks must hold onto more money in a last-ditch attempt to restore the public’s waning confidence in the sector. This means less money to lend and spend which are the two primary ways banks earn money.
These measures seem more like artificial stumbling blocks than altruistic guardrails. Inevitably, the country’s regional banks will be pressured into acquisition which means the bigger banks keep getting bigger. Currently, 4,600 banks have their doors open, but that number is down over half from the 13,000 that used to exist. The trend is going to continue repeating until something fundamentally changes about the government’s failed fiscal policies.
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Fewer Banks = Fewer Options
It’s virtually impossible to rid hundreds if not thousands of lending institutions without some kind of economic blowback. This seismic shift in the banking landscape threatens to bring monumental changes for the average American, and we’re not talking about the good kinds.
“When you bring more banks together…your society [changes] entirely.”– Scottsdale Bullion & Coin Founder Eric Sepanek
Principally, a fewer number of banks results in less competition and a limited number of options for clients. That means our ruling elites will have no trouble exerting greater control as the invisible hand of the market is bound up. Many people are concerned about the rise of digital currency and whether that could lead to the elimination of cash entirely. A massive banking consolidation won’t do much to assuage those concerns.
BRICS Speed Up De-Dollarization
The BRICS nations – Brazil, Russia, India, China, and South Africa – have taken another massive step to speed up the process of de-dollarization. This week, the cross-border economic powerhouse has confirmed the development of a commodity-based currency aimed at limiting dependence on the US dollar and increasing control over their economies.
The proposed BRICS currency would be backed by a valuable commodity such as gold, oil, or rare earth metals, although gold is the most likely candidate given the vast supplies held by the BRICS country central banks (especially China). This move is effectively a resurgence of the gold standard, which directly opposes the petrodollar system that has propped up the US dollar for decades.
🔔 Stay Updated: Get your hands on our FREE de-dollarization timeline to stay ahead of this ongoing development with routine updates.
The Dusk of the Dollar
The US still clings to the top spot as the single largest economy in the world, but the combined economic power of the BRICS nations surpassed America in 2022. With 13 nations applying for membership and dozens more expressing interest, the impact of the BRICS is scaling exponentially.
Foreign governments see the US dollar as too risky to use as a foundation for their economies due to the weaponization of the greenback in the form of strict sanctions, the massive export of raging inflation, and the domestic banking crisis – among other concerns. The creation of a gold-backed currency might be the biggest blow against the dollar to date as it gives foreign economies a more stable and predictable alternative.
The Upside for Gold
What’s harmful to the US dollar is usually beneficial for gold and vice versa. As a result, the potential of a gold-based currency is great news for the value of gold. If the BRICS nations were to succeed, the demand for gold could skyrocket as nations flock to the precious metal not just as a store of value but as a global currency.
Smart money is taking these developments as a sign to increase their precious metal holdings. Of course, this raises the question of the best types of metal assets to own. That’s why we’re dedicating next week’s The Gold Spot to exploring the intrinsic value of gold and silver and the difference between bullion and numismatic coins.
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