Bank Failures, BRICS, Bitcoin, and You: How Can You Best Preserve Your Wealth Now?
There have been 3 large bank failures in 2023 so far- the largest being Silicon Valley Bank in the USA, and UBS absorbing Credit Suisse in Switzerland. With inflation still running rampant worldwide, how can you minimize the chance that your money gets trapped in a bank that fails going forward?
Should you put your money in a different bank? Should you convert your funds to Bitcoin and gold, which both have a finite supply? Should you convert part of your funds to other currencies which are backed by gold, which the BRICS nations desire to create? Understanding the history of banking, AND the current threats and opportunities in the global economy today, are key to making the best decisions.
Many want to address bank risk ASAP. A benefit of working in the gold industry since 2011 and publishing 3 books is that I often get insider information early; one Wall Street analyst I know found that in the USA alone, 187 banks are currently at risk of failing, and that list will likely grow larger. You don’t want to have all your money in one bank, have that bank fail suddenly, and lose your money.
To address banking risk, one strategy is to keep no more funds than are insured by your government in any one bank account ($250K per account in the USA). Another strategy is to keep minimum funds in banks that have lots of derivatives, which Warren Buffet calls “weapons of mass financial destruction.”
Addressing Inflation that is Growing Globally
Another factor many desire to address now is inflation, which is growing worldwide. All government issued currencies in the world have been fiat since 1971, which means they are no longer backed by gold. Given that 100% of previous fiat currencies became worthless- EVERY single one- it is no surprise that the BRICS nations want to have gold back their currencies again.
Having gold back a currency gives it real value, and preserves its’ purchasing power by greatly reducing inflation. To highlight this fact, from 1700 to the year 1900, the British pound was 100% backed by gold, and the British empire experienced NO inflation for that 200 year period. As current inflation levels rob people’s wealth and are unsustainable, going back to some sort of gold standard makes a lot of sense.
Challenges the BRICS block faces are being able to avoid the mistakes of the Eurozone, where the richest countries ended up subsidizing the poorer countries, and unelected bureaucrats have superseded member countries’ financial laws, greatly reducing trust in and weakening the Euro.
Knowing it could easily take the BRICS nations 4-5 years to agree on the mechanisms of having gold back their currencies, many individuals are addressing inflation now by buying Bitcoin and physical gold, as both have finite supplies. Bitcoin is easy to transport and spend globally, and only 21 million of them will ever be mined. Gold has a 4000 year track record of being used as money, and has ALWAYS maintained its’ purchasing power over that same period.
The challenges with Bitcoin is that it is technical to use, and if you leave your BTC on an exchange you can lose it, which many have
experienced. The challenge with gold is that it is heavy and challenging to spend worldwide. Given these challenges, many investors are buying both Bitcoin and gold they hold in their personal possession, to preserve their wealth from the ravages of inflation.
Where are the elephant tracks leading?
A common strategy used by professional investors is to follow the elephant tracks; that means they see what the elephants – i.e. the biggest investors in their field- are doing, and they follow their lead. Central banks are the largest investors in the world, and for the past few years they’ve been buying gold at high levels. They currently own about one third of all the gold in the world, and they’re buying more.
From one of my contacts that works with central bankers, I have become aware that some of them own as much as 20% of all the available coins for several large cryptocurrencies, including one central banker that owns over 1 million Bitcoin. That’s one person owning over 5% of all the Bitcoin that have been mined so far.
Given this data, many are “following the elephant tracks” and buying Bitcoin and physical gold.
As the trillions of extra COVID dollars that were printed are still making their way through the global financial system, the risk of bank failures and growing inflation will likely be around for awhile. Those who don’t like their hard-earned wealth being taken from them will take swift, decisive action to protect themselves.