Stocks continued their weeklong slide into Friday as fresh fears over bad loans and balance sheet surprises rippled across Wall Street.
Shares of regional banks and even investment bank Jefferies were hammered Thursday after fresh revelations from Zions Bancorporation and Western Alliance Bancorp.
Zions dropped more than 13%, Western Alliance fell 10%, and the SPDR S&P Regional Banking ETF (KRE) plunged over 6%, with all but one member ending the session in the red. It’s not the size of the losses — it’s the pattern that’s unsettling, in what are ongoing ripple effects from the banking crisis that rocked regional banks in early 2023.
Add the implosions of First Brands and Tricolor earlier this week, and a pattern is re-emerging. Yesterday, traders in the era of easy money just got the memo.
“Credit stress is the sleeper issue of 2025,” one strategist told Bloomberg. “It’s not the big failures that matter — it’s the small ones piling up quietly in the background.”
Confidence, as Hemingway once said about bankruptcy, erodes “slowly, then all at once.”
Tariffs, Trucks, and Tenderloins
Having caused a stock rout with its fresh round of China tariffs negotiations earlier this week, the White House tried to soften the blow to manufacturing by easing levies on the U.S. auto industry yesterday — a concession to carmakers who’ve been choking on record import duties.
Trump also announced “an agreement” to lower the price of beef and the diabetes drug Ozempic, claiming victory for American consumers. But Wall Street wasn’t applauding. Shares of Eli Lilly and Novo Nordisk — the two biggest makers of the drug — fell sharply on fears that “cheaper Ozempic” really means price caps.
Meanwhile, Volvo is feeling the tariff whiplash from both sides, squeezed by rising component costs and export restrictions. “Trump’s trade deals are designed to look like victories while quietly rearranging the global supply chain,” wrote the Financial Times.
The financial media is begrudgingly accepting a complicated sort of progress.
Exter’s Pyramid Explains the Trade
As we noted yesterday, when confidence cracks, money starts running downhill.
Economist John Exter’s Pyramid remains the simplest model for this motion, describing it as a transition from speculative layers of leverage and derivatives at the top to hard, liquid assets at the base.
When trust fades, capital retreats — it doesn’t vanish; it migrates. From risk to safety. From paper to metal. From promise to possession.
That’s why gold and silver hit new highs yesterday. Gold reached another record above $4,100, and silver — the “working man’s metal” — surged 13% this week alone.
Silver’s story is both industrial and elemental. It’s not just for jewelry or coins; it’s in missiles.
Trump’s meetings yesterday on the phone and today in the White House, have pivoted on a single point: Tomahawk Missiles. Trump wants to sell hundreds to Ukraine.
What do we find interesting about that? A single Tomahawk Land Attack Missile (TLAM) can contain up to 500 ounces of silver. Poor man’s gold has unmatched conductivity, which makes it indispensable in solar panels, batteries, circuit boards, and weapons systems.
Given both monetary uncertainty, rising industrial demand… and its new role as a Trump-sanctioned “critical mineral” …silver’s cheap at $50.
The Great Digital Misfire
As if the monetary system needed any more scrutiny, this gem was reported yesterday from the digital frontier:
On Wednesday, Paxos — issuer of PayPal’s PYUSD stablecoin — accidentally minted $300 trillion worth of tokens on Ethereum.
Whoops.
For scale, that’s more than 2.5 times the entire world’s GDP and 125 times the U.S. money supply.
Here’s the fun part: The accidental $300 trillion minting by Paxos cost only $2.66 in transaction fees. The cost of the transaction was based on the fee paid to the network, not the amount of money being created.
Within 20 minutes, Paxos “burned” the tokens, blaming an “internal transfer error.”
They assured the financial press that “Customer funds are safe. ” But the image of $300 trillion appearing and disappearing in minutes for cheap — on a whim, on a screen — hardly inspires faith in digital money. But is a sign of the monetary system the Fed is meeting to discuss on October 21, next Tuesday.
One crypto analyst put it best: “If you can accidentally mint more money than has ever existed, maybe it’s time to rethink the plumbing.”
Still others have speculated, as Max Keiser and Zero Hedge did on X, it was an accidental run of a “bond market roll-up” that could use stablecoins to absorb the entire $60 trillion U.S. debt market, an aggressive form of digital yield curve control (YCC). (More on this thesis as our Dollar 2.0 forecast unfolds.)
In essence, the U.S. is quietly trying to take its entire economy — and by extension, the world’s — private.
The Hidden Holders
Meanwhile, the Federal Reserve announced its researchers uncovered a fascinating twist offshore: hedge funds based in the Cayman Islands likely hold about $1.85 trillion in U.S. Treasuries — a staggering $1.4 trillion more than official data shows.
That would make the islands the single largest foreign holder of U.S. debt, ahead of China, Japan, and the U.K.
The discrepancy comes from “basis trades,” complex arbitrage positions that hide leverage through derivatives. As one Wall Street Journal reporter dryly noted, “We may not know who holds our debt, but we do know they’re using it to bet against us.”
The Dollar Sheds Its Skin
Amid the chaos, the financial system itself continues to molt. The rollout of Dollar 2.0 — the digital backbone of a new monetary era — begins next week, Tuesday October 21, 2025.
It’s a brave new world, with US government backing. “We’re at the beginning of the tokenization of all assets,” Larry Fink assures us.
and signals the fruition of a forecast we made about a decade ago in the early days of speculative Bitcoin mania. When all the dust has settled, blockchain technology will make global markets and the monetary system more efficient and operate simultaneously at the click of a keystroke… 24/7.
The week’s events — from fat-fingered $300 trillion mints to collapsing regional lenders — suggest that this transformation will not be seamless. Your goal as a Grey Swan member is to understand the changes as they roll out and position your own money accordingly.
Signals in the Noise
Prediction markets are doing their best to make sense of it, too.
It almost feels like we should apologize for our fascination with the betting markets’ tech evolution.
The Polymarket platform — which just last week hit a world-record 95.2% accuracy rate — now forecasts continued volatility but no outright collapse. Its users, armed with AI forecasting tools, have effectively become the new crowd-sourced analysts of our age.
“Mass adoption here,” one trader wrote on X. “Prediction markets are in their supercycle.”
Maybe so. But for the rest of us — managing money, savings, and sanity — the signals are clear enough. When confidence wanes, cash tightens, gold and silver shine, the right move is perspective.
~Addison
P.S. Don’t miss our Grey Swan Live! replay of Dollar 2.0: The Final Countdown — where Ian King and I discuss how the next era of money will emerge from moments exactly like this one: when faith falters, and the system below the surface shifts. The critical date is Tuesday, October 21, 2025. The replay will also be taken down then. So, click here and review our forecast, right here, before it slips your mind.
If you have any questions for us about the market, send them our way now to: Feedback@GreySwanFraternity.
