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Last week another US bank failed, Philadelphia-based Republic First Bank. In a swift move, federal regulators announced Friday evening that another regional bank, Fulton Bank, was taking over Republic First’s operations.

Of course, Fulton may not be in better shape either, as it subsequently announced a new issuance of common stock in order to help fund the takeover, despite the Federal Deposit Insurance Fund taking a nearly $700 million hit to help with the acquisition.

While this week’s Federal Open Market Committee meeting is garnering headlines and attention, so that this bank failure has largely disappeared from the media, for Americans whose money is tied up in banks it is yet another reminder that the US banking system isn’t out of the woods yet.

Many Americans rely on banks for direct deposits of their paychecks, for checking accounts, or for saving up money for emergencies. But if banks are going to start failing like they did during the last financial crisis, how safe and secure is your money in the bank?

What Is Driving Bank Failures

There are a few factors that are driving bank failures and bank difficulties today. Some of them are longer-term causal factors and others are proximate factors. But many banks today are sharing some of these issues.

1. Commercial Real Estate Exposure

Many banks today are exposed to the commercial real estate market, which has been upended by a double whammy of increased working from home as well as higher interest rates. With commercial occupancy rates far lower than they were pre-COVID, and office costs rising due to higher interest rates, the commercial real estate market is poised for a bloodbath.

Banks that are most heavily exposed to commercial real estate loans could end up being among the hardest hit once the effects of these higher interest rates hits home. And with the Fed now looking poised to keep interest rates higher for longer, there is still no relief in sight.

2. Mortgages

Many smaller banks also remain involved in the residential mortgage market, which has also been hit hard due to higher interest rates. The combination of high real estate prices plus high interest rates has made house purchases essentially unaffordable to all but the very highest income households.

Overall mortgage originations today are about as low as they were in 2008. But adjusted for inflation, mortgage originations in 2023 were actually 33% lower than they were in 2008, by far the worst year for mortgage originations over the past two decades.

The fact that the mortgage market is worse now than it was in the depths of the financial crisis is a bit of unreported news that makes you scratch your head and wonder just how bad the economy really is. And banks that have relied on mortgage origination to make money may be at a point now where those parts of their business are more of a drag than a benefit.

3. Lack of Liquidity

Another aspect facing regional banks is changing depositor behavior as a result of reactions to last year’s major bank failures. After all, why keep your money in a small local or regional bank if there’s a higher risk of bank failure?

Why not keep your money in a big bank that is “too big to fail” and that enjoys an implicit government bailout guarantee? And that’s what many people have done.

Smaller regional banks have found themselves needing injections of liquidity to keep themselves afloat. Some of them have been successful in getting that additional capital, such as NYCB a few months ago.

But others, such as Republic First, have failed to drum up additional capital. With the ongoing weakness in the banking system today, it seems that any bank that can’t raise the money it needs to continue operating is almost doomed to fail.

How Safe Are Your Assets?

Many Americans learned the lesson from last year’s wake up call and started trying to protect their assets. Whether that was moving deposits into larger banks, moving funds into other financial investment products, or looking for safe havens like gold, silver, or US Treasuries, investor and depositor behavior is far different today than it was just a couple of years ago.

The question you have to ask yourself now is: is that enough?

Have we really seen the last of the bank failures, or is Republic First the bell sounding the alarm that not all is well with Main Street banks? And if this is just the first drop in the bucket, what will happen over the rest of the year?

Many Americans are already worried about inflation and recession, with inflation continuing to take a bite out of their finances and fear of recession raising questions about the safety of their assets. Because of those fears, more and more Americans are choosing to protect themselves with precious metals like gold and silver.

Both gold and silver entered tremendous bull markets in the aftermath of the 2008 financial crisis, with gold nearly tripling in price and silver more than quintupling in price. Many people looked at how gold and silver performed after 2008 and wondered why they hadn’t bought gold and silver earlier.

Gold and silver have recently begun to move upwards in ways strangely similar to how they did during the financial crisis. And with recent pullbacks from gold’s all-time highs, this could be one of the last chances to buy gold before the next bull market really takes off.

Gold’s history of performing well during times of economic weakness has made it a popular safe haven asset and store of value. And with numerous ways to buy gold, from direct cash purchases of gold to store at home, to gold IRAs to help safeguard your tax-advantaged assets, there are numerous ways to put gold to good use in protecting your wealth.

If recent events in the banking sector have got you worried, if inflation has you questioning how best to protect your money, and if your fear of recession is growing, now is the time to start thinking about how best to use gold to safeguard your financial well-being. Call Goldco today to learn more about the many gold purchase options available to you.