Could Bullion Banks Be the Next to Face Bank Failures? | Alasdair Macleod

by | Aug 17, 2023 | Bank Failures | 46 comments




Rising rates and falling asset values have caused major bank failures, including the failure of First Republic Bank last weekend. What we are seeing is a credit contraction, says former bank director Alasdair Macleod. He expects the banking crisis to accelerate. Even some bullion banks could fail, he notes. Under that scenario, “the authorities…will probably lean on the gold price as much as possible to keep it under control.”

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INTERVIEW TIMELINE:
0:00 Intro
1:59 First Republic failure
6:11 JPMorgan takeover
10:40 Rising rates
15:15 FDIC
16:50 UK banks
18:57 Brokerage accounts
24:02 Bullion banks
35:47 Gold-backed currency
38:45 Currencies failling
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Bank Failures: Are Bullion Banks Next?

As the global economy faces unprecedented challenges, the possibility of bank failures looms large. With recent events causing major upheavals in the financial markets, experts are now questioning the resilience of bullion banks. These banks, which are heavily involved in the precious metals market, may be the next to succumb to the pressures and vulnerabilities that are surfacing.

Bullion banks, or precious metals banks, play a vital role in facilitating the trading and financing of gold and silver. They are responsible for offering a variety of services, including buying and selling these precious metals, providing liquidity to the market, managing storage facilities, and even offering derivatives tied to precious metals. As such, they are crucial in supporting the functioning of the physical precious metals market.

However, recent events have exposed the risks and vulnerabilities faced by bullion banks. The global pandemic has disrupted supply chains, leading to a shortage of physical gold and silver in the market. As a result, the disconnect between paper claims on gold and actual physical metal has widened, putting immense pressure on bullion banks to fulfill their obligations.

To make matters worse, the economic fallout from the pandemic has resulted in a surge in demand for safe-haven assets like gold and silver. This increased demand, along with supply chain disruptions, has led to significant price volatility and increased strain on bullion banks. For example, during the height of the market turmoil in March 2020, we witnessed unprecedented spreads between spot prices and futures prices for precious metals, leaving some bullion banks at risk of default.

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Furthermore, bullion banks are exposed to the risks of the derivatives market, particularly through their involvement in precious metal leasing and forwards. These complex financial instruments can expose them to potential losses and counterparty risks, especially in times of market stress.

Additionally, the regulatory landscape surrounding bullion banks remains murky. Unlike traditional banks, which are subject to rigorous capital requirements and oversight, bullion banks largely operate with less regulatory scrutiny. This lack of transparency may mask the true risks these banks are facing, raising concerns about their ability to weather unforeseen shocks.

Given these factors, it is reasonable to question whether bullion banks are prepared to withstand the current economic turmoil. While some argue that the unique characteristics of the precious metals market may act as a stabilizing force, there are growing concerns that the strain on bullion banks may push them to their limits.

Should a bullion bank fail, the consequences could extend beyond the financial sector. The disruption to the precious metals market would have far-reaching implications, potentially leading to supply shortages and soaring prices. In an economic environment already plagued by uncertainty, such a crisis could exacerbate the existing problems and further undermine confidence in the financial system.

To mitigate the risks, it is imperative that regulators and policymakers address the vulnerabilities of the bullion banking sector. Enhanced oversight, stricter capital requirements, and increased transparency are necessary to ensure the stability of these banks, safeguarding both the financial system and the precious metals market.

In conclusion, the fragility of the global economy has raised concerns about the resilience of bullion banks. With supply chain disruptions, increased demand for precious metals, and exposure to derivatives risks, these banks face significant challenges. Regulatory reforms must be implemented to strengthen the sector and prevent potential failures that could have severe consequences on the precious metals market and the broader economy.

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46 Comments

  1. Liberty and Finance

    Thank you for watching! I hope you find this comment section to be a fantastic way to share thoughts and ideas! Always REPORT AS SPAM any comments sharing a phone number, email, any contact info, or trading advice. Be aware of IMPERSONATORS offering phone numbers, and please know we will NEVER put contact info in the comments section or offer market trading advice.

  2. Sonix711

    Awesome !!! 🙂
    Cheers guys !!! 🙂

  3. Foxboro Consulting Group, Inc.

    We are witnessing the destruction of the Middle class and the small & medium sized businesses !!!

  4. Alexi Andria

    Does kinesis hold its precious metals in a bullion banks ???

  5. Janet Whitney

    Thank you for your perspective Alastair and you Elijah for the questions.

  6. Mr Me

    Oh dear oh dear, we can't catch it. Hahaha.

  7. Jimmy Prince

    I saw Mexico is trying nationalize their mines. Not good for the owners.

  8. Jimmy Prince

    I hope they do fail. The system is manipulated. The bullion banks work with those selling these paper contracts.

  9. Scott Wilson

    Did the Big Banks buy up successful smaller banks in the 2008/2009 Bank Failure? Using Our Money to Give us less Private Banks to choose From Purposefully ! Can you say Control?!

  10. Carl roberts

    J.p.morgan.is.a.isreal.ententy.and.must.safe.from.closer.by.the.goverment.

  11. Iwona Stas

    Possibly, if you don't hold it, you don't own it.

  12. First_Principals

    After the second world war japan became one of the biggest economies in the world and they didn't have much gold.

  13. The Eleven

    Thank you Elijah for bringing us Alistair’s wealth of knowledge regarding banks, finance, and geopolitical trends. Enlightening as usual!

  14. Jerry McManus

    which of the BRICS do you trust? Noone does. so why trust a currency issued by all of them, when you can't trust a currency of any of them.

  15. nick upton

    Excellent discussion.

  16. Scott

    I disagree with owning miners. Mexico just nationalized their silver miners.

  17. Paul Gill

    My favourite guest by a very long way. Thanks for sharing.

  18. Boris Perez

    I believe what’s most insidious of all is that the price of silver specifically seems to be oblivious to losing purchasing power of fiat, take advantage of that ppl I dunno why there’s still silver around. Beginning to think it’s all fake

  19. lowbloodprsure

    No way will i own anything with QUEEN ELIZASHIT.

  20. Joanne Wolfe

    Always like to listen to Alasdair! I think actually more people know what's going on than he thinks, which is why things could go to hell really fast.

  21. David Lauer

    The United States cannot go to war when debt to GDP is already at levels not seen since the end of WWII. The US no longer has the backing of it's former allies. War is a non-starter, unless they powers in control want to neuter the US completely.

  22. Aaron Sterlind

    It's not just a joy to listen to Alasdair, it's a privilege.

  23. Aaron Sterlind

    Looking forward to your new article on Thursday, thank you Alasdair.

  24. G.V. Bangkok

    Try a new mike, or readjust the present one. Every breath you take sounds like it is your last one.

  25. Adam Brown

    So…. blue skies ahead then?

  26. Wolfgang Wüst

    Alistair's last point is crucial: Prices do NOT rise. In terms of real money they stay the same. It's the fiat currency that is losing buying power.

    Personally, I look at currencies by their given price in grams of gold. In mid 1971 it took 885,7 grams to buy 1.000$ US, as of today it's a mere 15,5 grams. Now, this I call devaluation.

  27. Will Wonder

    Thank you Elijah and Alasdair for this report. Great as always, will in Florida

  28. be a wally

    Thanks for your hard work

  29. Candy Cane

    GREAT job on the questioning and keeping the length of your questions short. PLEASE teach your dad this skill, ask a short question and then shut up and let the guest talk!! Nice job, Alastair is a wicked smart guy! thanks 😉

  30. Joseph Feury

    Do you think Loomis International in Zurich is ok to store precious metals?

  31. sharon pearson

    Great guest as usual . My favourite speaker

  32. Fast Eddy

    Dont Forget Copper Rounds

  33. Dave Nelson

    Informative guest always look forward to hearing what he has to say. I have been missing your weekly interviews with Andy Schectman hope all is well and I am looking forward to seeing him back.
    God Bless

  34. Marc Ritchie

    Queen Elizabeth on the kangaroo, interesting

  35. Daniel Laney

    $4.85 over spot that is high as can be. How about $1.50 over spot I can find that where im from. Good luck people shop around before wasting your currency. Thats just my take on the subject.

  36. Vlad Vorkocz

    Alasdair is amazing! Love to listen this man

  37. Morgan

    Coming SCO's gold exchanges will set price independently of Comex

  38. Mike Herrera

    It would be nice if this channel brought on different opinions. Even maybe a counter one once in a blue moon. Without different opinions it is clear it’s just a shill channel. Again I’m a stacker, but this channel is a ad and nothing else

  39. John Brown

    This podcast was brought to you by the same man who predicted, back in June 2020, the banking system would collapse by the end of the year (2020). Three years on it's hard to take any of his predictions seriously.

  40. L.A. Mottern

    No Alasdair. You don't put Submarines through the Straits of Hormuz into the Persian Gulf. The place is too shallow.

  41. ꧁ ̧.•'Adnan corner ̧.•'꧂

    If the west want to increase the financial power, they NEED more people to have financial strength. The artificial prosperity at the expense of the rest of the world is coming to an end. If we look at the last 2000 years you can clearly see Asia was always the largest and powerful economically and financially. There was not willy nilly that brit wanted to take India, (India was known as the golden sparrow) they wanted subcontinent into the British empire to steal the wealth. furthermore to keep Asia poor they installed this paper backed system which sucked the wealth from the world into west. That is what is collapsing US militarily is not supreme, hence Asia is taking this chance to liberate themselves from colonial style covert system.

  42. northcliffe

    Be your own central bank!

  43. Aonoymous Andy

    Amazing insights for mccloud

  44. virgil kane

    Why do so many of your guests talk about and seem to promote ,at times , the ' paper ' market ? Isn't buying , accumulating , keeping [ hoarding ] precious metals the exact opposite of owning ' paper products ' such as stocks/bonds /treasuries/derivatives or anything else wall street and our government prefers that we invest in and own ? I am very aware of and kind of resentful of some of your guests talking about ' investing ' in paper products ' . And that includes mining stocks .

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