Gold rose above $1,900 an ounce with gains of 2% today in the wake of creditor anxiety and massive buying of the precious metal by China, as well as the collapse of three US banks, Silicon Valley Bank, First Republic Bank and Signature Bank, caused a rally in bond prices worldwide as investors seek “safe havens” en masse.
Recent events show that gold remains a safe haven as it is able to benefit from market uncertainty. Also, investors are moving towards gold considering that there will be no increase in interest rates.
In this climate, the gold contract for April delivery strengthened by 2% or 25.90 dollars to 1,904 dollars per ounce, while a strong 5% rally is also made by silver with its own price at 21.5 dollars.
All this while China and Russia are hitting the US economy “wherever they can find it”: The Chinese are buying gold and selling bonds, which have skyrocketed, making billions of dollars in one day.
Russians are also buying gold and de-dollarizing their transactions.
The cost of supporting the Zelensky regime has exceeded half of the funds allocated for the strengthening of the US armed forces in one year, and it is all from the pocket of the American taxpayers.
As a result, the Central Bank of the USA to support the American economy, raised interest rates which resulted in the collapse of the banks!
China is “getting rid” of American bonds at a rapid pace, while correspondingly it is buying large amounts of gold, amounting to almost 100 tons, in the last 4 months alone, boosting its reserves which reached 2,011 tons at the end of 2022, while at the end of in January 2023 these had risen to 2,025 tons.
Hundreds of Americans lined up outside First Republic Bank in southern California to withdraw their money in the wake of the collapse of Silicon Valley Bank. In vain!
Fears of a mass flight of deposits from regional banks have peaked just hours before the opening of Asian markets, with the Fed putting on the table emergency measures to boost their liquidity
As of December 31, 2022, Signature Bank had $88.59 billion in savings!. This is the second US bank to collapse in a few days.
Former President N. Trump believes that the country is on the brink of a new great depression worse than the one of 1929, as he declared on his social network Truth Social.
“Based on what’s happening to our economy and based on the proposals being made for the biggest and dumbest tax increase in US history, Joe Biden will become Herbert Hoover. 1933) of the modern era. We will have a Great Depression, much stronger than in 1929. As proof, the banks have already begun to collapse,” he wrote.
Shares of First Republic Bank plunged 67% at the start of the session on Wall Street, despite efforts by its management to reassure investors that it is not facing a liquidity problem.
Trading in the stock was halted after a dramatic drop in its price, which accelerated despite the bank’s announcement late Sunday that it had more than $70 billion of unused cash to finance its operations through deals , among others, with the US Federal Reserve and JPMorgan Chase.
The picture is similar for bonds, with the two-year US note seeing its yield slip to its lowest level of the year with losses of more than 60 basis points, or more than 10%, to 3.99%. Meanwhile, the US 10-year is down 6.45% with its own yield at 3.457%.
In Europe, mass buying brings the German 10-year yield to 2.216% down -11.3%, similarly the French 10-year bond sees its own yield fall 8.2% to 2.753%, while even the Italian 10-year loses 4 .3% with its performance at 4.130%, as well as Spanish falling 6% to 3.314%
Indicative of the climate, the 10-year yields in the Netherlands and Ireland also fell by more than 10%, while the Swiss 10-year bond fell by 19%. It is recalled that the higher the price of a bond moves in the secondary market, the more its yield declines.