Uncharted Waters
Never in the past half-century has the market been so off-sides relative to prior tipping points. Every other time since the 1970s when the 10-year Treasury yield approached this trend line, a major crisis occurred.
We have already seen a banking crisis in 2023, but the yields are still so far outside of the established trend channel that only the biggest crisis in world history will bring things back in line… or permanently break the system. Our fate may have been sealed as soon as it crossed above 2.7% in early 2022. At this point, the financial system may be so hopelessly bankrupt behind the scenes that an unstoppable global bank run and derivatives collapse is inevitable. Watch for the fireworks to start when the yield curve reverts or any number of black swans emerge — such as a GSIB facing mark-to-market losses, especially as the Bank Term Funding Program (BTFP) approaches its expiration on March 11, 2024.
The FDIC cannot save you if you have funds in the banks and there’s a quadrillion dollar crash in the worldwide interbank market. The Deposit Insurance Fund (DIF) balance was only $119.3 billion as of September 30, 2023. That’s only about $375 per American citizen. And there won’t be a bailout from the Treasury — which is $33 trillion in debt — if the bond market blows up.
What happens next will be unprecedented in modern history. We’re truly in uncharted waters. Whatever rules of thumb worked over the past 50 years will not necessarily work anymore with the 10-year yield so far outside of its historical trend channel.
How do you protect yourself? Make sure to have silver and gold in your own possession (in a bolt-down fire-proof safe) as well as in “allocated” accounts (not pool accounts) in secure, insured, NON-BANK vaults.
BullionVault (https://PassantGardant.com/BullionVault) -- secure, insured, non-bank vaults in Switzerland, Singapore, Toronto, London, & more
OwnX (https://PassantGardant.com/OwnX) -- secure, insured, non-bank vaults in Texas and Delaware
MoneyMetals (https://PassantGardant.com/MoneyMetals) -- buy physical gold & silver coins and bars for holding in your own possession