Everything seems to be lining up perfectly for individual investors with Joe Biden and Kevin McCarthy making a debt ceiling deal. In fact, a sentiment poll reflects an ebullient investor class. According to an Investors Intelligence article titled “Assume the Positioning” (reprinted in Almost Daily Grant’s, June 1, 2023), “Just 23.3 percent of respondents are bearish on stocks, the lowest since January 2022, [when] the market scaled the summit of the everything bubble.”
But that same debt ceiling fix will unleash a torrent of US Treasury issuance that will overwhelm the markets leaving stock investors in its wake. Cem Karsan of Kai Volatility Advisors told Maggie Lake on Real Vision, “By most estimations . . . we’re going to have to issue $1.4 trillion in debt before the end of the year. That is a massive sucking sound out of asset markets.”
“There’s got to be buyers of that debt,” Karsan said, stating the obvious, “which means that money is going to come from somewhere. And if that means interest rates go higher, as that supply comes on the market, demand has to be met. That means equity markets or somewhere else, some other risk asset has to reduce liquidity.”
Another expressing concern about liquidity is Eurodollar University‘s Jeff Snider who says those who think the Fed is just printing money are missing the real story. Snider told Raoul Pal on Real Vision,
Nobody ever stops and thinks about what are these bank reserves and what do they actually do? Are they actually a form of base money? And the answer is no. And they haven’t been in decades. In fact, this was a major problem that Paul Volcker confronted in the late 1970s and early 1980s. Banks had found different ways of doing money in liquidity that didn’t involve these bank reserves.
The hyperfocus on the size of the Fed’s balance sheet and in turn that its increase obviously means more money has been created is wrong, says Snider, who points out that people don’t see the money destroyed in the shadow system. He also points out that it’s not the amount of the money stock that’s important but the circulation of money and credit in the real economy.
This year money is leaving the banking system and not returning. According to Reuters, “The FDIC said the $472 billion in deposit outflows in the first quarter was the largest it had recorded since it began collecting such data in 1984.” This deposit exodus in search of higher yields likely continued in the second quarter.
While we’re left believing that the Fed has printed a bunch of money that’s highly inflationary, in certain circumstances—especially 2008, 2009, and to a degree 2020, 2021, 2022, and now 2023—we know that there’s more deflation in the monetary system than whatever the Fed might have created in terms of bank reserves. Snider says banks are supposed to do intermediation as well as money creation but haven’t done either since 2008. Banks, he says,
want to just hold to the safest and liquid assets, and just try to pick up as many nickels as they can. Understanding that whether it’s in a couple months or a couple years, they’re going to go through another liquidity problem again, and have to worry more about safety and liquidity than they do about risk-taking.
In the simplest terms, banks just haven’t created enough money. Murray Rothbard explained how banks create money in The Mystery of Banking. Banks create money by lending to individuals and businesses, not, for instance, by parking money at the Fed’s reverse repo facility, where balances have grown from zero in March 2021 to over $2.1 trillion currently, earning 4.3 percent.
So, in Snider’s view, “Even though the Fed is creating all these trillions of bank reserves, there isn’t enough bank money around in the Eurodollar system which leaves it susceptible to what should be nothing. The smallest little thing can set off this major issue, because it’s that fragile.” Banks aren’t taking risks, and neither are money market funds, which are looking for safety before return.
If this reminds you of 2008, it should. According to Snider,
The 2008 crisis wasn’t really about subprime mortgages. That’s just where it began. And once it started to infect all of these major functions in the banking system, it led to the situation that we’re confronting now, where money didn’t circulate freely throughout the global Eurodollar system, which led to all sorts of problems.
Likewise, falling commercial real estate prices are infecting other things, leading to disruptions in the market, which leads to a lack of liquidity and more risk aversion. And more risk aversion means more lack of liquidity in these markets. Don’t count on the Fed to fix this mess. As Snider said, “The Federal Reserve and central banks are always looking backwards. They don’t see these things coming so there’s no help from them either. And pretty soon before you look around, markets are illiquid. Banks are struggling for funding. Some more of them are failing.”
Lyn Alden is another who is being kept up at night worrying about liquidity. She tweeted on June 1, “However, now that the Treasury cash drain is finished, and we start looking ahead past the debt ceiling, we are potentially encountering the next period of negative liquidity (rather than sideways liquidity).”
She wonders what will break next. Last September it was the United Kingdom gilt market and nearly the US Treasury market. In March a few regional banks with unusually high duration exposure and uninsured deposit exposure failed, and now she says we have to watch the small banks and the Treasury market.
Jeff Snider has his eye on September for a liquidity crisis. “So, if you’re thinking ahead, there’s probably a really good chance that something happens in September, if not beforehand.” Karsan echoes that view: “It’s not a coincidence that mid-August into mid-September is often a scary time.”
You can talk with your registered investment advisor about your stocks’ fundamentals, but as Karsan says, “It hasn’t been about fundamentals for decades now. That’s the narrative you hear on CNBC.” It’s liquidity that moves stock prices.
Stock investors—danger lurks, and Uncle Sam is going to crowd you out.
About the Author
Douglas French is President Emeritus of the Mises Institute, author of Early Speculative Bubbles & Increases in the Money Supply, and author of Walk Away: The Rise and Fall of the Home-Ownership Myth. He received his master’s degree in economics from UNLV, studying under both Professor Murray Rothbard and Professor Hans-Hermann Hoppe.
Article cross-posted from Mises.
Why Bullion Beats Numismatics and Collectible for Your Safe or IRA
Precious metals continue to attract Americans seeking reliable ways to protect their wealth amid inflation, geopolitical risks, and stock market swings. Whether stored in a home safe or held inside a self-directed IRA, physical gold and silver deliver tangible value that paper or digital assets often lack. Yet investors must choose carefully between bullion—pure bars and coins valued mainly for their metal content—and numismatics or collectibles, where rarity, history, and collector demand heavily influence pricing.
Advisor Bullion serves as a dependable source for straightforward, high-quality bullion. The company specializes in physical gold, silver, platinum, and palladium, emphasizing transparent pricing and products that deliver maximum metal content for every dollar spent. This approach makes it ideal for both personal holdings and retirement accounts.
Bullion consists of refined precious metals in standard forms like one-ounce coins (American Gold Eagles, Silver Eagles, Canadian Maple Leafs) or bars. Their value tracks closely to the current spot price of the metal. A typical gold bullion coin trades near the live gold spot price plus a small premium. This structure keeps costs clear and predictable.
Numismatic coins and collectibles add substantial value from factors such as age, rarity, minting errors, or historical significance. A pre-1933 U.S. gold coin or graded proof piece can carry premiums of 30%, 50%, or even 200% above melt value. While this appeals to hobbyists, it creates complexity. Pricing depends on subjective grading, collector trends, and auction results instead of daily spot prices.
For investors focused on wealth preservation and retirement security rather than building a collection, bullion often delivers better results.
Lower Costs and Better Liquidity for Home Storage
When keeping metals in a home safe or private vault, liquidity and efficiency count. Bullion offers clear benefits:
- You acquire more actual gold or silver per dollar invested. Numismatics divert a large share of your money into rarity premiums and massive sales commission, reducing your metal exposure.
- Selling bullion involves tight bid-ask spreads, so you recover nearly full spot value with minimal fees. Collectibles require finding the right buyer and may sell at a discount if demand for that specific item weakens.
- Bullion prices remain transparent and update with global spot markets. You can track gold near current levels or silver accordingly and know exactly where your holdings stand. Numismatic values are priced by the Gold IRA companies with hefty margins applied.
- Standardized coins and bars store efficiently and divide easily for partial sales. Rare coins often need protective slabs and controlled conditions, adding hassle and expense.
- Bullion enjoys worldwide acceptance. A 1-oz Gold Maple Leaf or Silver Eagle sells quickly to dealers anywhere. Niche numismatic pieces may appeal only to limited buyers, slowing liquidation when speed matters.
In times when quick access to value becomes important, bullion’s simplicity stands out.
Stronger Fit for Precious Metals IRAs
Precious metals IRAs continue gaining traction as investors diversify retirement portfolios beyond stocks and bonds. IRS rules permit certain bullion products in self-directed IRAs if they meet purity standards (.995 fine for gold, .999 for silver) and are held by an approved custodian. Eligible items include American Gold and Silver Eagles plus many generic bars and rounds from recognized mints.
Numismatic and most collectible coins generally face heavy scrutiny from custodians due to valuation disputes and elevated markups. These higher premiums mean less actual metal ends up working inside the account.
Bullion avoids these issues. Its value links directly to verifiable spot prices, which simplifies reporting and lowers the risk of regulatory challenges. More of your IRA contribution purchases real metal instead of dealer profits or speculative upside. Over time, owning additional ounces that appreciate with the metal itself can create meaningful outperformance compared with high-premium alternatives that deliver fewer ounces.
Regulatory guidance from the CFTC and state securities offices repeatedly cautions against aggressive sales of expensive numismatics or “semi-numismatic” coins for IRAs. For retirement planning, transparent bullion from established providers reduces risk and aligns better with long-term goals.
How to Get Started with Bullion
Begin by clarifying your goals. Are you protecting savings in a safe, or moving part of a retirement account into a precious metals IRA? Focus on the number of ounces you can acquire at current prices rather than chasing marked-up collectibles.
Diversify sensibly: use gold for core preservation and silver for its blend of industrial and monetary qualities. Mix coins for easier divisibility with bars for lower per-ounce costs on larger buys. Arrange secure storage—whether at home with proper insurance or through professional facilities.
As economic uncertainties linger and faith in conventional assets erodes, bullion continues proving its worth as a dependable store of value. Its direct approach avoids the hype that sometimes surrounds collectible markets and keeps the focus on the metal itself.
For investors prepared to strengthen their portfolios, Advisor Bullion supplies the expertise and selection needed to acquire high-quality bullion efficiently. Whether building personal holdings or integrating metals into an IRA, their emphasis on transparent, investment-grade products helps secure more ounces today that support greater financial security tomorrow. In a complicated financial landscape, bullion’s clarity and reliability make it the smarter foundation for protecting what matters most.