Tags: federal reserve | banking | interest rates | inflation | gold | silver

Trevor Gerszt: Gold and Silver Performing Just as Expected

Trevor Gerszt: Gold and Silver Performing Just as Expected
(meredithheil / 123RF Stock Photo)

Trevor Gerszt By Thursday, 23 March 2023 10:24 AM EDT Current | Bio | Archive

With so much focus on inflation over the past several months, or worsening economic productivity, or mounting job losses in the tech sector, who would have thought that the most acute problems in our economy would have manifested themselves in the banking system?

Certainly the 2nd- and 3rd-largest bank failures in U.S. history happening back to back couldn’t have been anything that anyone foresaw at the beginning of the year. And yet these failures have highlighted weakness in the U.S. banking system and the underlying fragility of fractional reserve banking.

The response of Americans to these bank failures was immediate. Money began to flow out of smaller banks into larger banks, which people evidently believed were too big to fail and thus more likely to be bailed out in the event of a crisis. Money also began to flow into mutual funds and Treasury securities, anything to get it out of the banking system. And perhaps most important of all, money began to flow into gold and silver.

The price of gold shot up nearly $200 an ounce, with gold prices at one point pushing over $2,000 an ounce for the first time in years. It was not entirely surprising to see that happen, as the prospect of bank failure tends to bring with it a flight to safety.

Since then there has been a bit of profit-taking by those looking to capitalize on those big gains. And gold markets were, just like markets everywhere, waiting to see what the Federal Reserve was going to do on Wednesday before they decide which way to move. After all, with the banking system still not out of the woods yet, all eyes will be on the Fed, wondering what it will end up doing.

Is 2023 Gold’s Time to Shine?

Gold bulls can’t help but be ecstatic at gold’s latest performance. To climb so far in such a short amount of time shows once again that gold is a safe haven asset that people trust to protect them during times of turmoil and uncertainty. And with continued focus on the likelihood of recession in the months ahead, gold could continue to rise in price.

In the aftermath of this week’s FOMC meeting, in which the Fed raised the target federal funds rate another 25 basis points, gold continued to rise, gaining more than $25 on the day. Being able to shrug off rate hikes is yet another sign that markets are finally starting to pay attention to WHY the Fed is hiking rates, not THAT the Fed is hiking rates.

That reason is because inflation remains elevated, and the Fed has to make sure that it tackles inflation before any recession, otherwise it risks holding a tiger by the tail. The 2008 recession was bad enough as it was, but can you imagine how much more difficult it would have been if inflation had been at 6% or higher?

Even at 2% or lower inflation, the losses inflicted during 2008 were enormous and, for many investors, catastrophic. The Fed today is facing a situation in which the banking system is showing weakness it hasn’t since 2008, inflation has remained elevated for the longest time in 40 years, and the economy is facing a recession. If nothing else, the Fed has to at least give itself some breathing room by raising interest rates.

Pushing rates to 5% means that the Fed now has plenty of room to cut rates, should it feel the need to do so later in the year if a recession occurs and especially if it becomes severe. That’s something it couldn’t have done when interest rates were at zero.

Inflation is still a concern, and inflation rates remain stubbornly high, meaning the Fed will have to continue pushing interest rates higher until inflation subsides. With worrying signs that inflation may be rising again, the rate hike cycle is far from over.

Even Fed Chairman Jay Powell can’t continue to put a good spin on things. In fact, the FOMC’s policy statement that “the U.S. banking system is sound and resilient” is almost laughable given the events of the past few weeks. A banking system that is sound shouldn’t have to borrow hundreds of billions of dollars from the central bank in order to keep things from breaking down.

More and more Americans see through the charade, however, and they’re starting to take matters into their own hands. They realize that their financial future could be in danger, and they realize that the banks they thought were safe may not be. And that’s why so many are now turning to gold and silver to help protect their wealth.

Protect Your Assets With Gold and Silver

Gold and silver have served as safe haven assets and stores of wealth for centuries, and have helped numerous people weather financial crises and economic turmoil. During the stagflation of the 1970s, gold and silver both posted annualized growth rates of over 30% per year over the course of the decade.

In the aftermath of the 2008 crisis, gold and silver saw incredible gains, with gold setting all-time highs and silver coming close to setting all-time highs. During 2020, gold once again set all-time highs as ordinary Americans sought safety and security during a time of crisis. And now that we’re staring down the barrel at a recession that could end up looking like a repeat of the 2008 financial crisis, Americans are once again placing their trust in gold.

With so many options available to buy gold, it can seem daunting, especially if you’ve never bought gold or silver before. Thankfully Goldco’s experts have years of experience helping people just like you benefit from owning gold and silver.

If you have retirement savings in a 401(k), 403(b), TSP, IRA, or similar account that you want to protect, you can choose to buy gold with a gold IRA. You can do a tax-free transfer or rollover of your existing retirement savings into a gold IRA, allowing you to buy gold without having to pay taxes or penalties for distributing your funds.

If you would rather have gold or silver to keep on hand at home for a rainy day, Goldco also offers direct cash sales of gold and silver. You can choose to have that gold and silver delivered to you at home, or if you make a significantly large order, even to a depository of your choice. And because Goldco works directly with the mints who produce them, we can guarantee that the coins you receive are authentic gold and silver.

Don’t let your hard-earned money fall victim to bank runs, inflation, or financial panics. Call the experts at Goldco today to learn more about how to protect your financial future with gold and silver.
Trevor Gerszt is the founder and CEO of Goldco, a precious metals dealer in Los Angeles. For more than 20 years, Trevor has sought out ways to help people build long-term wealth through the security and stability of precious metals and other alternative assets. Goldco is A+ Rated by the Better Business Bureau, a 5-Time INC 500 Winner and has countless 5-Star Reviews for its quality customer service, dependability and strong reputation.

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With so much focus on inflation over the past several months, or worsening economic productivity, or mounting job losses in the tech sector, who would have thought that the most acute problems in our economy would have manifested themselves in the banking system?
federal reserve, banking, interest rates, inflation, gold, silver
Thursday, 23 March 2023 10:24 AM
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