Gold Backed?
Gold backed Credit Union? Sign of things to come in these high inflation and high debt economic times?
With the collapse of the Silicon Valley Bank and Signature Bank due to loose federal banking regulations, and discrepancy between returns on bonds and bank run on deposits causing billions in losses on bond sales (bought at low rate and sold at high rate)...
Collapse of Credit Suisse due to similar circumstances resulting in takeover by UBS...
The Bow Valley Credit Union (BVCU) based out of Alberta, Canada sounds too good to be true.
According to the Bow Valley Credit Union President and CEO the Credit Union ceased derivative financing to reduce risky investments (and getting over stretched). And the Credit Union is only partially invested in gold in order to have financial liquidity. Makes sense.
Based on its 2023 first quarter return, the Credit Union has invested around 13% of its assets in gold or less. That gold amount would cover just 14.31% of current deposits and accrued interest. However, in a financial crisis such as a fiat currency collapse, gold spot price would conceivable reach $5000 an ounce or higher, and therefore the Credit Union would be able to cover the deposits and accrued interest using gold. Yet, since the fiat currencies have collapsed, the deposits would be pretty much worthless.
Therefore, it is much wiser for depositors to invest in gold and other precious metals themselves, and keep a minimum amount of liquidity in banks and credit unions.
It should be noted that deposits at the BVCU are backed 100% by the Credit Union Deposit Guarantee Corporation, which is backed by the Government of Alberta corporation. The Government of Alberta chief source of revenue is fiat currency in the form of taxation, and the government finances are not backed by gold. So in a financial crisis resulting in a fiat currency collapse, the government would face insolvency, and therefore the 100% guarantee is worthless like the fiat currency.
It should be noted further I found no legal document at BVCU that its gold holdings would be used to guarantee deposits and accrued interest.
Central Banks most notably Chinese, Russian, Indian... have been buying large quantities of gold. In 2022, Central Banks from mostly emerging economies bought the most gold on record in a year: 1,136 tonnes. They are not doing this for fun. Gold is real money that is insulated from the fiat financial system, hence safe haven asset.
Unfortunately, globalist vassal states like Canada have sold off all of its gold reserves, making it highly vulnerable to fiat currency collapse.
BRICS (Brazil, Russia, India, China, South Africa) are working on an alternative currency backed by gold and possibly other commodities to the US reserved currency. When this new currency is made public the collapse of the US dollar should accelerate.
As mentioned and not providing financial advise, people may want to consider doing what some central banks have been doing. A partially gold backed Credit Union will not protect you in fiat currency collapse, and may not protect you in a scenario like the Silicon Valley Bank collapse.
Stephen.Garvey@EmergingGlobalRealities.com