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Money Metals News Alert
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August 4, 2025
– Gold prices finished last week a bit higher while silver lost ground.
Silver???s move lower came on the heels of a melt down in the copper market.
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Copper prices had surged
in July after the Trump administration signaled a 50% tariff was coming. Last
week, though, the White House announced that refined copper would be exempted from
tariffs. Only fabricated copper products will be taxed.
Traders who had loaded up
on futures contracts for the commodity were caught flat footed. Copper prices
crashed 20% on Wednesday – the largest single day drop for copper in COMEX
history.
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Silver, which had risen some in
sympathy with copper last month, gave some of those gains back.
Stock prices were also clobbered last
week. The dollar finished higher and yields on the 10-year Treasury were down
sharply.
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Gold : Silver Ratio (as of
Friday's closing prices) – 90.7 to
1
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Is The Genius Act a Backdoor to CBDCs?
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Congress recently passed the Genius
Act which provides a regulatory framework for private banks and other
organizations to develop and operate stablecoins. These are digital tokens which
have their value pegged to another ???stable??? asset, such as the U.S. dollar.
There was plenty of cheering from
Washington and from Wall Street. We???re told the Act opens a new frontier for
innovation and development in finance.
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Innovation sounds nice.
Unfortunately Wall Street bankers have a terrible track record when it comes
developing new products and services which improve anyone else???s lives.
Mortgage backed securities
were hailed as an ???innovation??? prior to the 2008 financial crisis. Bankers used
them as a vehicle for making garbage loans and then packaging them for sale with a
bogus triple-A rating to pension funds and insurance companies.
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When that fell apart, they peddled
them to the Federal Reserve Bank (at full price).
The problem is that major financial
institutions aren???t really like small businesses trying to innovate and succeed.
There may be no cozier relationship than the one between Washington DC and Wall
Street.
Large banks enjoy practical immunity
from prosecution for their misdeeds. For example, no one in top leadership has
ever been prosecuted for the widespread fraud which led to the 2008 crisis.
These banks also claim the ultimate
protection against the consequences of bad decisions and/or poor luck. The public
will bail them out.
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This bizarre privilege for
banks used to be merely assumed. Politicians and central bankers were quick to
step in after events like the failure of Long Term Capital Management in 1997 and
the 2008 Financial Crisis.
Today, the 29 largest
banks are officially designated as Globally Systemically Important Banks (G-SIBs),
and governments are formally obligated to prevent them from failing.
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In return for immunity from the
consequences of bad judgment or misdeeds, the large banks tend to cooperate with
government officials.
Consider initiatives such as Operation
Choke Point. Bureaucrats and bankers worked together to prevent clients in
out-of-favor businesses, such as gun shops and coin dealers, from being able to
secure banking.
Now, Wall Street has a green light to
build stablecoins – digital tokens which can represent currencies such as
the dollar – in brand new payment systems.
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The large banks will build
centrally managed systems rather than decentralized networks like the one powering
Bitcoin. They may have complete tracking and control over who is allowed to
transact, what they can purchase, where they can buy or sell, and when
transactions are allowed.
The Genius Act offers zero
protections for privacy or against censorship to the users of stablecoins.
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What could go wrong?
Stablecoins could become be a backdoor
method of getting the public to adopt something very close to a Central Bank
Digital Currency (CBDC). To the exent the big banks are in charge of stablecoins,
government officials may get access to transaction data and a large measure of
control by proxy.
The recent spotlight on government
funding of ???Non-Governmental??? Organizations (NGOs) revealed the federal government
has a penchant for using ???private??? organizations as a workaround to citizens???
constitutional rights. Bureaucrats job out programs which are either illegal or
too unpopular to handle directly.
The strategy might be working. There
has been a lot of fear and consternation over CBDCs. Few seem worried about Wall
Street???s rush into launching stablecoins.
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More benevolent
organizations may launch stablecoins. However, it is hard to imagine how a
stablecoin might be built with decentralized control or the promise of privacy and
anti-censorship.
The Genius Act requires
token issuers to register as a ???financial institution???. That means built-in
requirements to screen users for Anti-Money Laundering (AML) and Know Your
Customer (KYC). Issuers will be keeping a close eye on who uses their tokens and
how.
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It will, of course, be framed as a
good thing – protecting society from drug dealers and terrorists.
One thing is clear. All these
developments only make ownership of private, off-the-grid, gold and silver even
more important for liberty-minded people.
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This week's Market Update was
authored by Money Metals Director Clint Siegner.
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be republished without express permission. Offer only available through email
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