The First Republic’s failure became the second largest bank collapse in U.S. history. Ultimately, JP Morgan Chase had to buy First Republic Bank over the weekend. In the midst of these developments, a macro analyst talks about $3,000 for gold.
Probably A “big problem” arises but
According to global macro and Bitcoin expert Andrew Axelrod, the banking crisis is just getting started. Axelrod highlights that many banks are exposed to commercial real estate, an industry that is expected to collapse as remote work and companies shrink their assets. Axelrod comments:
The fact that remote work is such a big deal means there’s plenty of open office space. When the time comes to turn down these mortgages, they won’t. Within banks, the layers of collateral are starting to crumble.
Axelrod’s comments echo those of Tesla CEO Elon Musk and Berkshire Hathaway’s Vice President Charlie Munger, both of whom have warned of the risk from commercial real estate loans. In an interview with former Fox News host Tucker Carlson in April, Musk predicted that commercial real estate is the “next anvil” to fall in the ongoing banking crisis.
Axelrod says people are pulling their money out of banks and investing it in higher-yield bonds. In addition, he notes that a “big problem” will likely arise as mortgage loans expire.
Gold rally coming?
cryptocoin.com As you follow, gold continues to hold above 2 thousand dollars. Axelrod suggests that heightened economic uncertainty could push gold to $3,000 in the next 12 months. “I don’t think $3,000 is crazy,” says Axelrod in this context. Axelrod’s prediction comes amid a gold buying spree, with 2022 seen as the best year for central bank gold purchases.
Fed ‘prints money’
Axelrod says that as banks fail and the economy slows, the Federal Reserve will turn on “money taps.” He also notes that the Fed will use quantitative easing (QE) to save the economy. He expresses his views on this matter as follows:
We are already in the perfect storm for the Fed’s balance sheet to continue to balloon. We’re already seeing that with these rescues. At some point the Fed will absorb these toxic assets… It’s possible that these are astronomical numbers.
While the Federal Reserve continues its loose monetary policy, Axelrod estimates that 100% inflation by 2026 is a distinct possibility. Axelrod also draws attention to de-dollarization trends in the BRICS (Brazil, Russia, India, China and South Africa) countries. He states that these countries will abandon the dollar and send the US dollar back to their countries where they will cause prices to rise. In addition, Axelrod makes the following statement on this subject:
You have all these countries that want to save money by borrowing in dollars. But if that starts to decrease or disappear, the Fed will have to step in and close the gap.
Gold will rise, well What will happen to Bitcoin?
The US dollar depreciates due to inflation and de-dollarization. In this environment, Axelrod claims that Bitcoin carries “zero counterparty risk”. So he suggests that there is a way out of the system. In this context, he shares the following comment:
I think Bitcoin is an alternative to the current system. If we can agree on a Bitcoin standard… in the short to medium term, this could be a very good way to act as a pressure valve against the exploding debt system.
