Credit Suisse's 17 billion bonds have been defaulted!

Facing the bankruptcy of numerous banks, might the 310 trillion US dollars in US debt also be defaulted?

In this situation, gold has become the safest asset, and it is said that the United States may use gold to repay its debts in the future. Now, in just the recent year, nearly 1,000 tons of gold have been transported from Switzerland to China.

01, 186 banks are at risk of bankruptcy

Recently, the European and American banking industry has been in turmoil.

On March 19th, UBS Group acquired Credit Suisse for 3 billion Swiss francs, with the Swiss National Bank providing a guarantee of 9 billion Swiss francs to cover potential losses that UBS might incur, in addition to providing 100 billion Swiss francs to UBS as liquidity support.

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On the other side, six central banks in Japan and Europe issued a statement that they would increase the supply of liquidity for the US dollar, which is understood as the six central banks joining forces to assist the United States in bailing out the market.

Subsequently, First Citizens Bank took over the related business of Silicon Valley Bank, and thus the three major bankrupt banks have been dealt with.

But in reality, it is not the case.

One hundred and eighty-six other banks in the United States face the same troubles as Silicon Valley Bank and are still at risk of bankruptcy.At the same time, the massive debt owed by the United States has also become a crisis that could be detonated at any moment. Does the United States want to default completely?

02, Will the United States default?

The problems in Europe have not been truly resolved.

The significance of acquiring Credit Suisse is enormous, marking the first global bank bailout since the 2008 financial crisis.

The reason why the Swiss government intervened in this acquisition is that Credit Suisse is too big to fail, affecting the financial security of the entire Europe, and is related to the economic lifeline of Switzerland and the stability of the European and American financial markets.

However, contrary to their expectations, this acquisition did not stabilize the Swiss banking industry and the European and American banking industries. On the contrary, the debates and doubts in the European and American banking industries have become more pronounced.

The reason is that about $17.2 billion worth of Credit Suisse AT1 bonds have become worthless, and overnight, the credit of European and American banking bonds has become the focus of investors.

Now, bondholders bear all the losses, while shareholders have gained $3.23 billion in the process of Credit Suisse's bankruptcy and acquisition, a scene that completely refreshes investors' perceptions.

The behavior of a country defaulting has shocked the entire market, and it is natural for everyone to spread their concerns to the United States. The U.S. government is carrying a $31 trillion U.S. national debt; what if it also defaults?

In the following week, overseas central banks sold U.S. Treasury bonds, setting a record high since 2014.Subsequently, the United States publicly stated that it would not prioritize repaying the U.S. debt held by China, but at the same time hinted that the U.S. is unlikely to default, and if necessary, it would use gold from the U.S. Treasury to settle the debt.

However, with gold as collateral, is U.S. debt safe?

03, Nearly a thousand tons of gold arrive in China

It is precisely the ongoing concerns about the creditworthiness of U.S. debt that have led to a continuous outflow of funds from Europe and America, turning towards other safe-haven assets such as gold. This move has caused increasing panic among U.S. debt holders, and future sales may become even more severe.

Due to worries about the uncertain situation in Europe and America, the demand for gold has surged dramatically, and its price may reach a historical new high. Since March, the price of gold has risen by about 10%.

Switzerland announced gold export data at this critical juncture. In January, China imported 53 tons of gold from Switzerland, and the amount of gold imported in February increased by 75% compared to the previous month, reaching as much as 93 tons.

From the beginning of 2022 until now, the total amount of gold transported to China through Swiss customs has approached 1,000 billion tons.

For many years, China has been the main export country for Swiss gold, and China is also a major gold buyer among global central banks.

China is well aware that once the United States defaults on its bonds and the status of the U.S. dollar is jeopardized, only gold, as a super reserve currency, is the most valuable and the safest.