Welcome to the Chicks on the Right show. We are super excited today to
have with us Philip Patrick from Birch Gold because Philip, there's some stuff going
down that's not getting a lot of airplay. But like just within the last
few days, the FDIC has just sort of quietly under the radar announced the
first bank failure of twenty twenty four. I don't know why it's not getting
talked about more so, what can you tell us about why it collapsed?
Yeah, you're first of all, you're right. It was surprisingly quiet,
almost swept under the rug. So Philadelphia based. It was a bank called
Republic First. They had thirty two branches, about four billion dollars in total
deposits. By the way, a little over half of those deposits were uninsured.
So what happened the bank failed. The FDIC arranged a takeover by another
Pennsylvania base bank and they kicked him out. Six hundred and sixty seven million
dollars of its deposit insurance fund over to support them. And it looks like
at this point even the uninsured depositors are going to be made whole. Now
this bank has been and I know it's crazy. This bank's been in trouble
for quite a while. I have no doubt they're on the FDIC secret list
of fifty two problem banks. And here's why. Right, we've got this
combination of rising interest rates and falling commercial real estate values, especially for these
office buildings that are really struggling post COVID, and what we're seeing is a
heightened risk for the entire banking system. We see loans that are backed by
properties that have lost value make them very challenging to refinance. And essentially,
banks have been counting on interest rate reductions from the Fed this year because they're
still sitting on about half a trillion dollars in unrealized losses, so lowering interest
rates would really help the banks rate now. But the latest inflation reports almost
since October have made it look like we're going to have higher interest rates for
longer, and I think that virtually ensures more bank failures this year unfortunately.
Okay, so does this mean more bailouts? And if so, I mean,
can we handle that with all the inflation that we have. That's a
really good point, and I think more bailouts are certainly a possibility given I
think more failures on the horizon and I don't think the government want to let
depositors lose money, because if they do, there'll be a run on the
banks and the problem gets much much worse. But your right to be concerned.
Bailouts at this point are certainly going to drive inflation higher, right,
As I mentioned before, it's crazy, right, more spending. But I
mentioned before like the US banking system is already very fragile, any increase in
rates at this point I think will threaten to cause another wave of bank failures.
And I think that's why the FEDS stopped raising rates shortly after SVB collapsed
last year. So you know, they're in a very tough position, and
they're facing a tough choice. They can do nothing and let inflation continue to
smolder. They can raise rates to fight inflation, but risk destabilizing the banking
system, and I think ignite another recession. Given the choice, though,
I think they're always going to choose systemic stability over the American family. If
we ever doubt this, we've just got to remember who got bailed out in
the Great Financial Crisis, right, Okay, Well, so then I'm a
person who who has been waiting and waiting and waiting for these interest rates to
get cut because I'm going to be taken out a new mortgage at the end
of the year. So is the what do you think is going to happen
with the rates? It's so tough to work out. Look, one thing
that's very clear is rates at the current levels clearly are not doing the job
to tame inflation. Like I said, it's been going up consistently six since
October. So I think this idea of speculating about lowering rates I'm sorry to
break the news anytime soon seems a little bit insane. Outside of your mortgage,
I think for that they should look at doing it. But you know,
from an inflation standpoint, just for you, I don't see it.
Inflation is basically double the Federal Reserves target, and at this point it looks
like it's becoming entrends. Expectations are that prices are going to keep rising,
and I think it seems realistic. Cumulative inflation under the Biden administration has been
about nineteen percent, averaging about six percent a year, and the last numbers
coming out of the Fed were terrible as well. So, like I said,
it puts the FED in a very tough position. They could raise rates
torpedo the banks, and I just don't think they're going to take that route.
Lowering interest rates means surrendering the fight to inflation, which I don't think
they can do publicly. So I think at this point it's going to be
a case of leaving rates where they are and just hoping that things subside.
It hasn't been successful so far, but I don't see too many choices for
the Fed. Wow, my god, that's just a depressor. OK.
So tell us why is gold as smart investment for people? Look, golds
shooting up in this climate, and it is because of the climate. These
problems that we talk about inflation, We've talked before about dollar devaluation, potential
recessions on the horizon. These things are all very negative. Of course,
that they drive very positively safe haven assets like gold and silver. On top
of that, we're seeing unprecedented demand I've mentioned before from central banks twenty two
twenty three also heading into this year, more gold buying by central governments than
any other years before in history. And it's partly for the same reasons.
Right, we're alting our dollars to other countries. They feel our inflation as
devaluation and a loss of purchasing power, and they're hedging their dollar exposure with
gold because things like inflation drive gold up, and that's how people protect their
purchasing power. And it's working in today's climate well. And it's why especially
for people who have thought about investing in gold or other precious metals but don't
really understand the mechanics of it. You guys have always been so good at
Birch Gold about teaching people and offering that information for absolutely free. If you
text nine eight nine eight nine eight, or you text the word chicks to
nine eight nine eight nine eight, you can get that free information, that
free gold kit to tell you all about how to invest in gold. One
more quick question, just because of the whole bank collapse thing. Should people
be more feeling more secure with their money in big banks like the Chases and
the pncs or should they be looking to credit unions and smaller It's like,
what is the safer choice for me at this point? That's a tough question
to us. But I've always heard on the side of big banks. I
mean, look, at the end of the day, too big to fail
is a thing right in the government. I think any big institution looks shaky,
I think the government will step in and bail them out. Quite honestly,
I think they'll do that for the smaller banks as well. Like I
said, if they let depositors lose money on one or two banks, you
know we're going to be waking up tomorrow going to our bank accounts trying to
withdraw funds. And that creates a bigger problem than the FED can handle.
So I think they'll continue to bail out. But we know what that means.
That means more inflation, more loss of purchasing power. There isn't and
I hate to be the bearer of bad news all the time, but there
isn't really a positive outcome here. We have hardship in one form or another
to get through, and it's just about how to weather that storm. And
I think Gold does an incredibly good job of doing that. Yeah, people
forget that, Yeah, ye that Yeah. Text chicks to the number nine
eight nine eight nine eight and that's nine eight nine eight nine eight. Do
that because Birch is the place to do it. Thank you, Philip.
We always appreciate all of your insight. Thank you for having me, guys.
I always enjoy it very much, thank you