Silicon Valley Bank (SVB), the country’s sixteenth-largest bank with $209 billion in assets, failed on Friday in one of the most shocking developments to hit the banking sector since the global financial crisis fifteen years ago. SVB’s claim to fame was its deep connection to the venture capital and tech community of Silicon Valley, boasting that “44% of U.S. venture-backed technology and health care IPOs … bank with SVB.” Well, not anymore.
Is the broader banking sector at risk of contagion? This is the issue we need to look at as soon as possible.
SVB’s demise came suddenly (pdf). On Wednesday, the bank announced a loss of $1.8 billion from selling “available for sale” investment securities. Its holding company announced it would raise $2.25 billion to shore up the bank’s capital. Rather than comforting investors and depositors, this surprising announcement spooked them, “causing a run on the bank.” Within a few hours, depositors withdrew some $42 billion in cash, approximately 25 percent of total deposits, leaving the bank with a negative cash balance approaching $1 billion by the end of Thursday. Unable to shore up this shortfall overnight, the initially illiquid and then insolvent bank failed. California’s Commissioner of Financial Protection and Innovation took over the bank and appointed the FDIC as a receiver.
While the FDIC provides deposit insurance up to $250,000, representing less than 10 percent of SVB’s deposits. The vast majority of SVB’s $173 billion in deposits are uninsured. According to the FDIC, “uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds.” These certificates will receive dividend payments from future sales of assets, which may not be enough for depositors to be repaid in full.
The issue for SVB was that its assets were heavily weighted to its investment portfolio. Specifically, some 57 percent of SBV’s assets were in marketable securities, primarily U.S. Treasury and mortgage-backed securities. With the rapid rise of interest rates over the past year, the market value of these bonds fell substantially. That fact won’t matter if a bank can hold these bonds until maturity when they will be repaid at par.
But if a bank is suddenly forced to sell them to generate liquidity, i.e., to meet depositors’ demands for cash withdrawals, it is forced to sell them at a loss. A vicious circle ensues. Unplanned asset sales generate losses; losses weaken the bank’s financial position, and depositors get nervous and demand their money, requiring more assets to be sold, thereby stimulating further losses. As in the case of SVB, this can happen in days or even hours.
Illiquidity, not insolvency, typically causes banks to fail, which was undoubtedly true for SVB. The question now is, how many other U.S. banks are similarly exposed to this type of liquidity risk? Analysts are working overtime to review the data to see which other banks may be in a similar position to SVB. While SVB had the highest ratio of securities to assets, several other regional banks have more than a third of their holdings in similar categories. Should their depositors get nervous, bank runs could occur elsewhere in the coming days.
The collapse of SVB has sent shockwaves through banking and financial markets. The NASDAQ Bank Index fell nearly five percent on Friday. Crypto has been particularly impacted, as SVB was a preferred bank for the industry. Two of the largest crypto exchanges, Coinbase and Binance, suspended the sale or convertibility of USDC, the stablecoin pegged 1:1 to the U.S. Dollar. As a result, USDC depegged and fell to $0.90 early on Saturday. With USD 41 billion in circulation, this represents an unrealized loss of over $4 billion. Coinbase’s parent Circle confirmed on Saturday that it had $3.3 billion of reserves at SVB that it could not get out of the bank on Thursday. This situation represents a new challenge to the viability of the stablecoin model.
At a minimum, readers should take this opportunity to consider whether their banks are safe and sound and where they may face unknown risks. But that’s not enough. Banking crises are often driven by human nature and psychology as much as asset and liability mismatches.
Should investors and depositors gain confidence that the issues at SVB were bank-specific in the coming days, perhaps this storm will pass. However, fear is a highly contagious pathogen. To the extent that a broader panic ensues, we may be looking at a frightening banking and financial markets crisis. Keep a close eye on this one over the coming days.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
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.