“[T]here could be up to 300 or more regional banks that will fail.”
– Senior Precious Metals Advisor Damian White
After a relatively quiet week, we’ve been treated with a fresh set of economic threats. Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Founder Eric Sepanek & Senior Precious Metals Advisor Damian White dissect these serious risks, why your money isn’t safe, and what you need to know to protect your wealth.
Commercial Real Estate is Imploding
In this month alone, payments on three different multimillion-dollar projects ceased in San Francisco. The owner of the city’s two largest Hilton hotels stopped paying back his $725 million loan while another owner of a massive hotel defaulted on a $550 million loan. In each situation, the city’s rising crime and deteriorating economic climate were blamed.
People are simply walking away from these loans and leaving the banks to handle the outstanding debt. Commercial real estate accounts for roughly 5% of the US GDP, making it a crucial support beam for the economy.
300+ Banks Could Fail
Commercial buildings tend to depreciate dramatically when they’re sold in distress. While the building owners get away scot-free, the banking sector takes it on the chin. We’re not just talking about the J.P. Morgans or Well Fargos either. Around 80% of all commercial mortgages are held by regional banks.
Having flashbacks to the Silicon Valley Bank collapse? Well, things could get a lot worse. There are murmurs that an additional 300 small banks could go under1 as this issue of commercial mortgage defaults spreads across the country. San Francisco is just the first city to be hit partially due to their failed governing policies.
It’s worth noting that issues in the real estate sector can take a handful of years to pan out which means this problem isn’t going anywhere soon. Investors will have to deal with this massive problem for the foreseeable future without knowing exactly when the worst blows will be dealt. As regional cash dries up in local banks, the largest institutions will only get wealthier.
China’s Stranglehold on US Economy
As the financial situation heats up at home, the US economy faces existential threats from abroad. Despite its hostile position to America, China is the second largest foreign creditor of US treasuries. When Treasury Secretary Janet Yellen was pressed about the government’s plan for a potential overnight dumping of these bonds, she admitted that no such plan even existed.
In reality, the CCP has been dumping US treasuries for a while in their ongoing effort of decoupling from the US dollar. An alarming number of countries are in the process of de-dollarization as embarrassing financial domestic policies export inflation across the globe. At a time when the treasury needs countries to buy its debt, interest has never been lower.
Harsh Reality of Rate Hikes
Amidst rising economic instability, the Federal Reserve has doubled down on its one-trick strategy against inflation. Our economic czars met yesterday and admitted that inflation wasn’t abating as quickly as they had hoped.
They held off on a rate hike to avoid shocking the markets but agreed on two more later in the year. These increased interest rates will only lead to more mortgage defaults which further squeezes already strained regional banks. At this point, the move almost seems intentional.
Saudi-Biden Bad Blood
The special relationship between the US and Saudi Arabia was instrumental in upholding the US dollar’s position as world reserve currency. That’s why the current bad blood between Mohammed bin Salman and Biden is so disconcerting. Despite the president’s attempt to stand up to the Crown Prince, one of the world’s largest oil producers is giving us the cold shoulder.
The Washington Post recently revealed MBS’ promise of “major economic consequences” for the US if the government were to continue pressuring his regime to lift limits on oil production. With an ongoing energy crisis spurred by the Russian-Ukraine war, Saudi Arabia is flexing its political muscles by cutting production by a million barrels a day.
Stay Informed to Protect Your Wealth
“The reserve currency status of the US dollar is going to come to an end.”
– Scottsdale Bullion & Coin Founder Eric Sepanek
The cracks in Saudi-US relations are further proof of the dollar’s weakening influence on the world stage. Nearly every week, more events unfold that point to the rapid deterioration of American authority and power. These developments directly impact the stability of the US economy and the wealth of individual Americans.
That’s why we’ve put together a in-depth, and regularly updated, timeline report that follows the most important events from the very beginning all the way until today. Our Petrodollar De-Dollarization Timeline is always updated with the latest events so investors can follow it in real-time to stay informed and up to date. The report is completely free and full of valuable insights.
Request your FREE COPY of our Petrodollar Report: A Retrospective Reporttoday to put yourself in the best position to protect your wealth from this series of economic blows.