Drew Mason, CEO of St. Joseph's Partners, joins us to talk about the collapse of Silicon Valley Bancorp and the impact it has on the financial system, and what it means for the future of the world.
00:00:00.000But for investors who are overseeing the assets of our family, whose job is to be a good steward of the capital that we have, you can't just put blinders on and ignore these.
00:00:12.000This is a very significant data point that, again, hasn't happened in over 10 years.
00:00:15.920By now, I'm sure you have all heard of the collapse of this very significant Silicon Valley bank.
00:00:30.340And I wanted to bring you a financial expert who is associated with LifeSite because he can bring out not only the financial reality, what does this even mean for us, but also tie it in to the spiritual reality of what we're facing right now.
00:00:49.860I'm talking about Drew Mason, of course, who runs St. Joseph's Partners, who LifeSite has partnered with in order to be able to have you attain precious metals from a company that is both trustworthy and one that's truly faithful.
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00:03:10.180So, about a month ago, we had some clients describe to us issues they were having with getting cash out of the bank.
00:03:18.660News media did report certain branches of some of America's largest banks did have that experience.
00:03:26.900But it was perceived to be very contagious if you needed the physical cash.
00:03:32.020This week, we actually had clients who have connections with Silicon Valley Bancorp and also colleagues who have relationships there.
00:03:43.800And they began to tell us, we heard multiple stories of people who were trying to get their money out and were not able to get 100% of it out.
00:03:52.980Now, Silicon Valley Bancorp is primarily an institutional bank, meaning its deposits are primarily commercial, not consumer deposits, not individual deposits.
00:04:02.740But these were individuals who were unable to get their money out.
00:04:12.640And the FDIC has stepped in saying that they are going to now be taking over because of the inability of the bank to meet all of its obligations.
00:04:21.740Now, the press is saying that this is very contained, that it was only because of specific mistakes that this particular bank made and how they handled it in some specific circumstances as to their marks to market that other banks don't have to replicate.
00:04:43.560And we hope that that is the case, that this is not going to spread any further, that it is entirely contained to this one bank and that everything will be OK.
00:04:55.300But to us, it's very significant because in the past, as some viewers may know, we had experience with Lehman Brothers.
00:05:02.760And when Bear Stearns had problems in the spring of 2008, we were told it was ring-fenced and was specific to that.
00:05:11.040Subprime real estate was the only part of the real estate sector that was going to be hurt.
00:05:15.220And for those of us who had exposure to the financial system and built their entire plans and portfolios on the hope that everything would be OK, it was brutally painful.
00:05:26.760So our thought is, having gone through that, no one wants to experience that.
00:05:32.880And no one should have a portfolio built just on hope, especially when we have so much data that suggests how important it is at a time like this to prepare for something that could be problematic.
00:05:44.560Markets stress, especially given the tremendous debts that are rolling around in America, as well as globally, when you look at all the world's major currency issuers, are severely challenged to meet their debt obligations in the best case scenario.
00:06:01.960Right. Now, they were challenged prior to the whole COVID thing.
00:06:07.220But then with COVID, that debt was increased very, very much, was it not?
00:06:14.560So the debt was a concern in 2009 when Ben Bernanke and the Fed first began printing what they said was going to be very temporary.
00:06:23.420They promised quantitative easing, a fancy word for money printing, where they didn't have to back it by anything.
00:06:29.640And they told us back in 2009, we're going to quickly retract this money that we've put into the system, and we're going to right size our balance sheet.
00:06:40.060But what history tells us is, once a central bank starts doing this, they can never stop, because if they take the money out, it's like something that the markets are addicted to.
00:06:50.440And they know, that's why they haven't taken it out.
00:06:53.760It's not like they forgot their promise back to 2009.
00:06:57.520They just have continually chosen not to do it in any meaningful way.
00:07:01.620Then, as you're pointing out, John Henry, not only was that concerned building, but when COVID came out, we printed an incredible amount of money that, again, is backed by nothing, increasing our debts.
00:07:14.940And I want to say, John Henry, the money supply that we've issued, if you look at the chart, it almost literally looks like a hockey stick, where the money supply explodes higher.
00:07:24.460And I want to say an increase by well over 30%, a ridiculous number for a government to allow to happen.
00:07:32.920And so, to your point, these debts become even more problematic, heightening, even to a greater degree, the importance of having an allocation to a portion of one's wealth and something that thrives when debt crises metastasize.
00:08:05.080Are there any other banks doing something or any other signs that this is something more that we should be paying attention to than just the normal run of the mill?
00:08:14.140There certainly are other data points that are very concerning, John Henry, that we think people want to be aware of and not brush these under the rug.
00:08:20.960But think about, what is this really telling me?
00:08:23.660This year, we've had data points showing that the housing sector, broken up across the different verticals, meaning industrial, commercial, retail, and the darling of Wall Street, which they call multifamily or apartment housing, has begun to turn down.
00:08:40.820And the significance of this is that if you go back and look at the data, particularly in the apartment setting, has not had a downturn since we came out of the 2008 crisis.
00:08:55.200And the trajectory of it is even faster than what we saw going into the 2008 crisis.
00:09:02.880So again, it doesn't mean it has to continue.
00:09:05.340But for investors who are overseeing the assets of our family, whose job is to be a good steward of the capital that we have, you can't just put blinders on and ignore these.
00:09:17.540This is a very significant data point that, again, hasn't happened in over 10 years.
00:09:21.400Additionally, we just saw the data from the auto loan sector, which is a very important barometer of the health of the American consumer.
00:09:31.640And auto loan delinquencies were north of 6%.
00:09:39.460So we're already at a delinquency rate that we hadn't seen at the worst part of the crisis, the financial crisis.
00:09:46.220And additionally, we realize unemployment now is about a third of what it was at that time.
00:09:52.620So again, we hope it's peaking right there, that things are going to get better in terms of the debt problems, in terms of consumer delinquencies and the problems individuals are having with their debt burdens.
00:10:04.420But we want to encourage people not to just base their plans, their whole portfolio, on hope.
00:10:10.880And then we had something that we thought was pretty notable, John Henry, because I think the viewers appreciate the mouthpieces that come from the nation's largest financial institutions are very measured.
00:10:23.760And they're well-scripted so as not to create major concern.
00:10:28.320One of the country's largest investment banks and investment houses came out in print and told their clients that they are perceiving a 25% downturn in the equity markets, the stock market, within a few months.
00:10:53.540But again, we want to be aware of all these data points that are going off, which are consistent with history.
00:11:00.580See, history has this unbroken track record.
00:11:03.340There comes a tipping point where when debts become too great, wealth begins to transfer to the metals, and investors want to have that allocation before that really accelerates.
00:11:15.520And so those are some of the things we're looking at, John Henry.
00:11:17.440There's a lot of others we could touch on, but if you let those sink in, those are pretty significant points, in our opinion.
00:11:25.800What does – and I know you just have to make a guess, but what does rollout time on this look like to you?
00:11:33.580It's one bank has fallen, a pretty big bank.
00:11:37.620Could that sort of lead to a domino effect or likely not?
00:11:42.240Or what's that, if you can unpack that for us?
00:11:45.440Well, there's a lot of reasons to think that it will not spread, in that, again, this bank was very differentiated from most banks, the people whose name most people know, in that it was predominantly commercial.
00:12:00.360They had to mark to market their portfolio in a way that banks that are more consumer-oriented will not.
00:12:06.200So there's a lot of reasons to hope that it won't happen.
00:12:10.460However, again, having made that mistake of just basing things on hope, thinking about the best outcome, I think, John Henry, that it is unconscionable for anyone who is a steward of capital, whether it's of your own family or if you're a financial advisor, guiding the lives of so many people who are dependent on your advice.
00:12:32.880I think it's unconscionable, and it will be seen as having been negligent to have not taken some precautions in case these things matter.
00:12:43.040It's not that they sell everything and just buy the metals, not at all.
00:12:49.000But we would say to have no metal exposure, which is what is the case for most Americans today.
00:12:56.660Estimates are less than 1% of Americans have begun to prepare for an uncorrelated, or I should say, excuse me, for a market transition here that will benefit gold as an uncorrelated asset, less than 1%.
00:13:09.040So we think that people will be remorseful at having known, after this plays out, that it was so easy to diversify just a portion of one's wealth in the metals that we hope we're wrong, we don't need it.
00:13:28.400If an investor puts in 10% to 20% of their wealth into gold, which is what we think history has clearly shown is an appropriate amount to offset market corrections, so let's say they put in that type of allocation.
00:13:43.160John Henry, an investor really still wants to hope that they lose money on their gold.
00:14:05.920History suggests that it is critical for people to have this allocation in light of what we're seeing going on in the various debt metrics.
00:14:14.060And so that's why we just want to say to families, you can pray about it.
00:14:18.840Ask the Holy Spirit to guide you, as we know there are so many believers watching this.
00:14:28.320Ask yourself, why is it that every time there's been a debt crisis, gold and silver have worked in protecting families and protecting wealth?
00:14:35.700And then if you come to a conclusion that it makes sense, don't procrastinate.
00:14:40.480Get yourself ready, be in place, and we think you'll be very happy down the road.
00:14:48.920Just so that our viewers know, I mean, yes, I mean, we're going to admit it freely, we're in a partnership with Drew and St. Joseph's Partners, his company.
00:14:59.240But that's because it was a very providential relationship how that happened.
00:15:02.900We were actually looking to get into this to provide our viewers with a company that was reputable.
00:15:09.360And Drew called because he was an advertiser with LifeSite anyway.