Since early 2023, regional banks have been sitting on massive unrealized losses on their bond holdings:
Bank losses are off their 2023 lows, but are still over $300 billion. (Source: FDIC)
When the Fed began hiking rates to combat inflation, bond holdings tanked. Banks have been sweating it out, anticipating a rate cut cycle.
If the Fed cuts rates in December — odds now 80% — bond prices will continue to rise. Banks will be in better shape as unrealized losses decline. Hopefully, before a crisis breaks out.
But banks are not out of the woods, yet. And increased competition from digital assets (Dollar 2.0) will further squeeze the traditional banking business model.
Lower interest rates will drive hard assets higher. In our view, gold’s recent pause in the low $4,000 range is just that – a necessary breather after the run-up this year from $2,800 to $4,400 at the peak.
Don’t fret the safety of the banking system, buy gold… and digital assets.
~ Addison
P.S. While this is a holiday-shortened week, we’ve arranged for a unique video presentation of Tim Sykes’ novel trading strategy on Thanksgiving Thursday.
Tim is one of the top traders in the game today – and he’s sharing details on a strategy he uses to find stocks on Fridays that will likely pop on the Monday open after a restful weekend.
Tim’s innovative strategy will be worth your consideration:
If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.
