NEWS | August 9, 2023
Silicon Valley Bank, Signature Bank, and First Republic Bank have already been seized and partially swept away by the banking crisis in the USA. PacWest Bancorp is also affected. After it was reported in the newspaper on Wednesday that the bank was considering “strategic options,” its stock price dropped by over 50%. In Europe, Credit Suisse has made the “start.” Among investors, the question is circulating whether this is already a domino effect. And when can one actually speak of a wildfire?
A total of $400 billion has already been withdrawn by customers from banks in the USA. A large part of the sum has flowed into money market funds. To offset the loss, banks have been given numerous bailout loans. However, these loans must be repaid at some point – and the interest rates are certainly not at zero anymore.
No one knows when the day of reckoning will come, but it will. The limited options that banks could use to balance their balance sheets all have their pitfalls. Ultimately, the only realistic option is to wait for interest rate cuts from the Fed. However, this would undermine the interest rate reversal and further increase inflation.
If customers were to leave their money in the bank, a crash could quickly erode a large part of it. However, a money market fund is not a solution either if the central bank postpones the interest rate reversal, as inflation relentlessly nibbles away at wealth. In such a case, the best option is to invest in tangible assets. Commodities are not only inflation-resistant but also a secure commodity trade that enables attractive tax-free returns.