Why SVB's Collapse May Make Gold The Best Asset Class This Year

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The recent collapse of Silicon Valley Bank (SVB) has sent shockwaves through the financial world.

The bank, which was the largest financial failure since the 2008 financial crisis, collapsed after investing heavily in bonds, which they believed would provide a "safe income." However, as the Federal Reserve raised interest rates, the value of these bonds plummeted, causing the bank's losses to rise to unsustainable heights. Panic ensued when news of the depletion of the bank's reserves spread, triggering withdrawals of up to $42 billion in a single day and leading to what is called a "bank run." SVB was unable to meet the needs of its depositors and was forced to shut down.

The collapse of SVB has put significant pressure on the US banking system due to the interconnectedness of the industry. It was the go-to bank for 44% of venture capital-backed tech companies and had ties to other banks, including Signature Bank, which collapsed soon after. As a result of the public's perception of a weakening banking system, First Republic Bank and Credit Suisse have both felt the ripple effects of SVB's collapse in their stock prices.

Investors are understandably concerned about the state of the banking system, especially with the memory of the 2008 financial crisis still fresh in their minds. Despite intervention from the Federal Reserve and reassurances that taxpayers will not bear the losses, many people remain distrustful of banks. This situation is compounded by fears about inflation, leading many to worry about protecting their savings.

The lack of trust in banks and broader fears about the economy have led to a growing demand for precious metals such as gold and silver, which have a history of serving as safe havens during times of economic hardship. Precious metals have been observed to have an inverse relationship to stock markets, making them an ideal haven amid the economic turmoil that 2023 seems to hold. This was also evident in the rally in the price of gold during the 2008 financial crisis. In fact, between the 1930s and 2020, the US dollar lost 99% of its value against gold, with other reserve currencies like the British pound and the Japanese yen doing even worse.

Gold also offers the benefit of being a more “solid” investment – something that seems all too attractive in the wake of SVB’s collapse. In the current scenario, the price of gold futures has risen roughly 22% and the price of silver futures has risen roughly 25% since November 2022.

Price Chart of Gold Futures. Source: TradingView.

Despite its inherent advantages, gold is a commodity that fluctuates like any other investment, and it is crucial to ensure that your hard-earned money is truly safe. In such uncertain times, it is best to leave the task of safeguarding your assets to professionals like Birch Gold Group.

Birch Gold Group is a leading dealer of physical precious metals in the United States. The company has a team of veterans and experts in the gold and precious metals market, making it a trusted and reliable partner for investors looking to protect their savings.

Birch Gold Group offers a range of investment options, including physical gold, silver, platinum, and palladium, and the opportunity to invest in these precious metals via an Individual Retirement Account (IRA). Using Birch Gold Group as a partner, customers will be able to diversify beyond the typical allocation of stocks, bonds, mutual funds and CDs and into the precious metals listed above.

The benefits of this unique procedure include diversifying retirement savings, developing a stream of alpha-generating returns in poor market conditions, relative stability in the asset’s price and security over one’s purchasing power. All anyone needs to convert to a precious metal IRA is an IRA or 401(k) account!

Finally, you can be sure that you’re in safe hands with Birch Gold Group. The company prides itself on being a proven trusted partner for its customers, and its team of former wealth managers, financial advisors, and commodity brokers works to help customers diversify their savings with precious metals so they can sleep better knowing they have industry-leading expertise in their corner. The company services customers in all 50 states and regularly features on major news and media outlets like the Ben Shapiro Show.

Featured photo by Jingming Pan on Unsplash

Original story found here.