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We are told that the financial system is
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safe, banking system is safe,
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accountable, accountable, regulated, uh,
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regulation. But what if the most
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powerful players aren't inside the
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system at all? Welcome to shadow
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banking, an offthebooks playground of
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risk, power, and zero oversight. There
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are threats to financial stability that
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have come from the growth of activity in
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the shadow banking sector. You didn't
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sign up to fund these risky bets, but
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your bank did. And if these bets blow
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up, guess who's on the hook? Not the
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shadow bank, not your bank, but you, the
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depositor. See, behind the scenes, there
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are trillions flowing through a hidden
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network of leverage, barely visible,
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barely regulated. But yet, it's directly
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connected to the very banks holding your
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savings. Right now, hedge funds and
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private equity firms are operating using
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extreme leverage. Often 10, 20, 100
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times their actual assets with no
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regulation, no accountability, and no
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oversight, operating in the shadows. But
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when their bets go bad, it doesn't stay
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in the shadows. It spills over into your
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401k, your retirement, your savings,
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your future. So, how much are you really
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exposed to? What happens the next time
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liquidity dries up? And are you prepared
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for what happens next when this all
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comes crashing down? Let's get into it.
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Shadow banking, or a financial
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underworld of unregulated lenders and
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investors operating outside of the reach
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of traditional banking, has exploded.
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Now accounting for $250 trillion or
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roughly half, 49% of the world's
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financial assets. But while these
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institutions aren't inherently bad,
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often providing liquidity and services
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to the greater financial system, they
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also create tremendous risk. Something
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that was exposed in the aftermath of the
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great financial crisis. In 2008, it was
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investment banks and mortgage
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originators who were at the center of
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easy credit and helped fuel the subprime
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mortgage crisis that almost took down
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the entire financial system globally. A
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threat that still remains today, except
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this time it's hedge funds and private
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equity firms. But while not new to the
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system, the amount of leverage and
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therefore the amount of risk is. See,
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today hedge funds manage nearly 15 times
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as many assets as they did in 2008. But
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unlike banks which use deposits to
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create illquid assets like mortgages or
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loans, hedge funds borrow heavily to
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make their services worthwhile.
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oftentimes using up to 100x leverage,
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which is exactly what we saw two weeks
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ago with the hedge fund basis trade. a
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risky maneuver that uses small price
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discrepancies between current treasury
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prices and futures contracts, which is
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fine as long as nothing goes wrong in
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the slightest, like say extreme market
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uncertainty caused by tariffs, leading
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investors to margin call these hedge
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funds, jeopardizing not only the hedge
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funds, but the banks backing them, which
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we'll get to in a minute, as well as the
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entire Treasury market, which I don't
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know is only relatively important given
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that it is the foundation of the entire
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global monetary system. So you might be
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wondering, well, if there's this much
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risk, surely there's some kind of
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regulation guard rails put in place to
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slow them down. But in fact, the
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opposite is happening. They are
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expanding rapidly. Hedge funds more than
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doubled the growth rate of traditional
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banking in 2023. While hedge funds and
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private equity are the fastest growing
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areas of the US banking system, which is
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concerning given the fact that they
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operate outside of traditional banking
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regulation, which if you ask me is
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already too lax. So you can only imagine
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the amount of risk that these
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institutions are taking on. But it's not
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just risk to them, it's risk to all of
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us. This is where it gets messed up. In
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addition to not having the same
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regulations, they also don't have the
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same reporting requirements. Meaning
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there's a tremendous lack of visibility
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around who is backing these institutions
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and by how much. But what if I told you
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that the lenders backing these high-risk
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bets were the same lenders backed by the
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US government? Too big to fail banks.
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Meaning that this entire shadow banking
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sector becomes too big to fail itself.
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This isn't just a theory. We've seen a
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small taste of the ripple effect of how
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this could play out. Massive losses at a
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hedge fund that's impacting all sorts of
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big companies. That's right. It's called
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Archagos Capital Management. This after
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the littleknown firm of former hedge
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fund manager Bill Wang defaulted on
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margin loans. In 2021, Archagos Capital,
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a seemingly successful hedge fund,
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abruptly collapsed in what should have
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been a contained incident. but instead
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it sent shock waves through Wall Street.
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Why? Archos was using complex, highly
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leveraged risky derivatives. But because
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they operated outside of the traditional
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system, there were no reporting
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requirements, meaning there was no
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visibility into their positions and who
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backed them. Even the brokers who lent
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money had no idea the real exposure
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until they collapsed. This is the shadow
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banking debt, hidden debt that we can't
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see until it's too late. But this
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impacts you because its losses were
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significant and half of them were
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sustained by Credit Swiss, a regular
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bank that didn't realize how deep they
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were inside of this until it was too
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late, leading to their collapse and
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ultimate takeover by UBS. Should these
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kinds of risks escalate, there might not
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always be another bank willing to step
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in and assume liability, which would
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leave you, the depositor, at risk. We
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will talk more about the scenario in a
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minute, but first, in our current
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system, the amount of volatility that
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we're experiencing is the new norm. Even
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traditionally safe assets such as US
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Treasury bonds or commercial real estate
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have proven themselves time and time
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again to be the new mortgage back
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securities. Assets that were once
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considered safe are no longer safe as
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long as there is counterparty risk.
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Which is exactly why central banks are
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moving away from the dollar and towards
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gold. The same way that many individuals
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are now choosing to protect their wealth
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outside of the system with physical gold
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and silver because it is not exposed to
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these risky bets the same way that your
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deposits, your savings, or your
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retirement might be inside of your bank.
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Not saying that you should run and take
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everything out of your bank, but the
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scary part of this is that it happens
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with no warning. Because of the lack of
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regulation, because of the lack of
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transparency, you won't know what
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happened until it's too late. You could
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be doing everything right, but your bank
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could be doing everything wrong and they
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might not even know it because they
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don't even know their own exposure.
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That's how wild and risky all of this
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is. But the sad part is at the end of
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the day it's not them who have to pay,
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it's you. But what would this actually
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look like? Well, yes, it is true. The
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Federal Reserve is still the lender of
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last resort. They bailed out hedge funds
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in 2020 and they have said they are
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quote absolutely prepared to do it
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again. In fact, there has already been
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moves for the Federal Reserve to create
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a hedge fund emergency bailout facility.
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Except this time we might not be talking
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about billions. We could be talking
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about trillions. The only thing that
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would be the same is that it would still
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come at your expense at the purchasing
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power of your dollar chipping away at
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the value of your savings. Except this
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time it might not just be bailouts.
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Depending on how serious the exposure
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is, they might resort to bailins. It's
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not something they want to do because
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they don't want everyone to lose faith
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in the banking system, but if they have
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to, they will. Believe me, they've done
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it in other countries. And if you don't
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think that they can do it here in the
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United States, please, I urge you, do
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your own research. You will be shocked
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to find out that balance or the
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capability of banks to take your
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deposits, your savings, your retirement,
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and hold on to it to make themselves
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whole, take what they need out of your
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deposits to make sure that they keep the
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system running is not only an option,
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but is 100% legal. The reason that this
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is even an option that it's being talked
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about is because of how much risk
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they've created with all of the leverage
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for profit, their profit at our expense.
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That's where I draw the line. That is
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why I make sure that I am protected
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outside of their system because the
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system was not designed for you and I.
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It was designed for them. Personally for
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me, my strategy involves physical gold
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and silver. And if anyone out there is
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saying, "Oh, she's just promoting gold
00:09:05
and silver." Yes, absolutely. I am a
00:09:07
sound money advocate. I have been my
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whole life. I was raised with sound
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money principles and I am proud of it.
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You can call me oldfashioned. But
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there's a reason I believe in gold and
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silver and it's because it's been around
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since the dawn of time as true money.
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And that is why I know that I am
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protected because if I hold it, I own
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it. If I can't access my money, is it
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really my money? No. I say no. And that
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is why I do not trust to keep my entire
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future, my savings personally in their
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control. Not that I'm saying that you
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have to run and take everything out your
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bank. I am not proposing a bank run. I
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also can already picture the comments of
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someone saying that. But I am saying
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that you should be prepared and you
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should understand the risks. At the very
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least, we all deserve to know the risks.
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This way, you can make your own
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decisions and you can sleep well at
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night. At least I can. I have peace of
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mind going to bed at night because I
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know I'm protected and I feel blessed
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that I have this platform to help
00:10:05
educate people on what is really going
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on out there because the banks certainly
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aren't going to tell you. The hedge
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funds aren't going to tell you. The
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Fed's not going to tell you. Someone has
00:10:13
to make sure that this message gets out.
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So, if you have anyone out there that
00:10:17
you want to share this with, please do.
00:10:19
If you want to learn more about how you
00:10:21
can protect yourself, how you can get a
00:10:23
strategy in place, download our free ITM
00:10:27
gold and silver guide. You can scan the
00:10:29
QR code. You can click the link in the
00:10:31
description below. Whatever is easiest
00:10:33
for you, download your free guide today.
00:10:35
There's a ton of great information in
00:10:37
there. And if you want to learn more
00:10:39
about how we can help you prepare the
00:10:42
same way we have helped so many other
00:10:44
people, call us at the number below or
00:10:47
click the link in the description below.
00:10:49
Set up a time to talk to one of our
00:10:51
expert analysts. And as always, I so
00:10:55
appreciate you being here. I'm Taylor
00:10:56
Kenny with ITM Trading, your trusted
00:10:59
source for all things gold, silver, and
00:11:02
lifelong wealth protection.
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