ATTENTION POTENTIAL INVESTORS
A March report by JPMorgan (JPM.N) indicated the bank expects about 21% of outstanding loans in commercial mortgage-backed securities to eventually default because of lower-than-expected lease rates in large (downtown) commercial buildings. This means one in five commercial real estate loans might fail and the losses may reach more than a TRILLION dollars. Most of these assets are held by smaller regional banks.
We believe the potential effects of one trillion dollars in real estate losses will continue to negatively impact the US economy.
Many banks are already at risk because of their over-reliance on Treasury bills that have plummeted in value due to the rise in insurance rates. These two factors, failing loans and worthless assets on the books meand that the FDIC is staffing up to close the banks that will fail.
A separate study which includes a University of Chicago analysis indicates that smaller banks are hiding substantial losses by using accounting maneuvers in an attempt to rename 10-year notes as Held-to-Maturity (HTM) assets rather than sell them at a loss or classify them as Available For Sale. (AFS)
We believe the financial crisis is disguised and under-reported and urge customers to CONSIDER diversifying their asset allocation to include some precious metals to reduce the impact of these potentially substantial losses and the subsequent economic impact.
To learn more about the current market dynamics and how precious metals can be a great hedge against the financial crisis, give us a call. Or visit us at our store in River Oaks.
You can also shop our current precious metal offerings.
