Mass Exodus From 25 Biggest US Banks Amid Exponential Silver Demand

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US Federal Reserve has reported that a major deposit withdrawal took place last week from the nation’s bank accounts. The financial system has not seen such a fund outflow since the 9/11 attacks.  $114 billion was withdrawn in the first week of January 2013 from the US’s 25 biggest banks. Deposits fell to below $5.37 trillion as a result, according to the Fed.  The exodus from the US banking system took place in the week on the heels of the end of the Transaction Account Guarantee, as SV hitherto covered.

The current pace of withdrawal has surprised many “analysts” who the mainstream media proclaims did not foresee the exodus as these were banks that heretofore were considered safe banks. But, this was a delusion all along,as the nation not only has lost faith in Congress and the President, but also its banks.  If Congresses’ approval rating is below 10%, there is no reason why the financials should have a higher approval rating.

One data set from the US Federal Reserve demonstrates that some deposits moved with the banking system from one type of an account into another, perhaps from cash into derivatives schemes. Nonetheless, it is quite important to remember that where this money went is important.

As of late, massive amounts of money have been put into silver, setting records for investment in the metal. The US Mint recently ran out of Silver Eagles, and are supposed to continue selling the coin tomorrow. We’ll see. Then, the RCM began managing the Silver Maple Leaf. Then, the amount of inflows into ETFs reached record proportions.  Is there any correlation between the increased demand for silver and the exodus from the 25 largest banks in the US?

Another set of data from the US Federal Reserve shows some deposits may have moved within the banking system from one type of account to another.

As SV wrote about the expiration of FDIC account insurance:

According to the FDIC website: From December 31, 2010 through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the account balance and the ownership capacity of the funds. This coverage is available to all depositors, including consumers, businesses, and government entities. The unlimited coverage is separate from, and in addition to, the insurance coverage provided for a depositor’s other accounts held at an FDIC-insured bank.

A noninterest-bearing transaction account is a deposit account where:

  • interest is neither accrued nor paid;
  • depositors are permitted to make an unlimited number of transfers and withdrawals; and
  • the bank does not reserve the right to require advance notice of an intended withdrawal.

A noninterest-bearing transaction account also includes all deposits placed in an Interest on Lawyers Trust Account (IOLTA) or its equivalent.

Note: Money Market Deposit Accounts (MMDAs) and Negotiable Order of Withdrawal (NOW) accounts are not eligible for this temporary unlimited insurance coverage, regardless of the interest rate, even if no interest is paid.

For more information see FDIC Frequently Asked Questions on the Dodd-Frank Act at www.fdic.gov/deposit/deposits.

 

It is reasons such as this it is so important to diversify where your assets are kept.  And this does not just mean across accounts, but also across currencies and assets. Alongside a comfortable cash position, one in life must also remember to buy tangible assets liberally such as gold, silver, platinum and palladium,and also diversify into food and water. Moreover, Bitcoin offers an excellent opportunity to diversify, despite the risks along with which it comes.

Many recommend “$0 across the board.”

But why?

Well, that might be because the FDIC is bankrupt:

That is, the FDIC, an “insurance” agency backed by taxes, has a negative $20.7 billion to satisfy the illiquidity of global monetary instruments such as derivatives and yadda yadda.  From ZeroHedge:

Luckily, depositors decided to get the hell out of deposits in the last quarter, pulling out $29 billion from the not all that Too Big To Fail any longer.

Total assets of the nation’s 7,932 FDIC-insured commercial banks and savings institutions increased by $248.6 billion (1.9 percent) during first quarter 2010, funded primarily by an increase in nondeposit liabilities. Total deposits decreased by $28.6 billion, with domestic deposits almost flat, decreasing by $5.1 billion (0.1 percent), and foreign office deposits declining by $23.5 billion (1.5 percent). Domestic noninterest-bearing deposits decreased by $26.4 billion (1.7 percent), and domestic time deposits decreased by $116.1 billion (4.9 percent). Savings deposits and interest-bearing checking accounts increased by $137.4 billion (3.6 percent) during the quarter. The share of assets funded by domestic deposits declined from 58.7 percent to 57.6 percent, and the share funded by foreign office deposits decreased from 11.7 percent to 11.3 percent. Federal Home Loan Bank (FHLB) advances as a percentage of total assets continued to decline, from 4.1 percent to 3.6 percent on March 31, 2010, the smallest percentage on record (2001 to present).