The Global Cyber Outage and Its Far-Reaching Impact on Financial Systems and Precious Metals

At this point, most Canadian citizens are likely aware of the massive cyber outage caused by a faulty driver sent out by the company CrowdStrike. Many found out hours after it happened, as reports began circulating in the early hours of Friday morning, July 19th, 2024. Initially, panic set in. Klaus Schwab from the World Economic Forum had long warned about the next “pandemic” being a massive cyberattack that could cripple industries and bring the world to its knees. However, since the Au Bullion newsletter was still being sent out this week, it’s clear the outage didn’t reach catastrophic levels. Most industries and companies continue to operate as usual.

The Scale of the Outage

It would be a mistake to dismiss this cyber outage as a minor glitch. Comparing it to sweeping a dog’s mess under the rug instead of cleaning up the dirt is apt. The outage affected over 8.5 million devices worldwide and shut down more than 1 million Fortune 500 workstations. By Sunday, over 7,000 flights were cancelled in the U.S., and with many flights full, reassigning passengers became impossible. Some U.S. travelers are still waiting to return home after five days. In the U.K., the healthcare system struggled, with appointment schedules and patient records tangled due to system shutdowns. This outage affected industries worldwide, from the U.S. to Europe, China, and Australia, and even up to Canada. In total, it had a massive global impact.

Global Banking System Impact

The global banking system was one of the most affected sectors, though this largely went unnoticed. Many banks across different countries reported problems with their online systems, bringing back memories of the Rogers outage a few years ago in Canada. Even though the Rogers outage only impacted one country, it exposed the fragility of a system we heavily rely on. In an instant, people could lose access to their bank accounts, debit cards, or credit cards. Unless individuals were holding cash or precious metals like silver or gold, their wealth would effectively be “turned off” like a light switch.

This is why economists emphasize the importance of owning physical silver and gold. With the global financial system’s interconnectedness, a crisis in one country can easily spread. This is why central banks have been buying record amounts of these precious metals, preparing for potential instability or a global banking reset.

Global Debt and Economic Fragility

Global debt has now surged to $350 trillion USD, while global GDP stands at $100 trillion USD. The debt-to-GDP ratio is now 350%, far beyond what is sustainable. This represents a looming global bankruptcy, further emphasizing the importance of tangible assets like silver and gold. Central banks are increasingly stockpiling these assets to shield themselves from potential risks.

India’s Strategic Gold Purchases

India recently lowered its import tax on gold bullion from 15% to 6%. This move highlights the country’s growing commitment to increasing its gold reserves. India holds over 24,000 tonnes of gold in household reserves, surpassing even the World Bank’s holdings. Meanwhile, in the West, citizens continue to rely on debt instruments, with credit card debt reaching record highs. For many, gold and silver are becoming vital for preserving long-term wealth.

The Power of Gold Over Time

A comparison of gold’s value over nearly 100 years shows its importance.

• 1929 Costs:
  • Gold: $20.67 per ounce
  • Average home cost: $6,000
  • 1 kg of gold: $664.56
  • It would take 9.03 kg of gold to purchase the average 1929 home.
• 2024 Costs:
  • Gold: $3,335 per ounce
  • Average home cost: $885,100
  • 1 kg of gold: $107,223.59
  • It now takes 8.25 kg of gold to purchase the average 2024 home.

Owning gold has proven more advantageous, as its purchasing power has outpaced inflation. Cash from 1929 would have lost over 1700% of its value, while gold has preserved its worth.

A Developing Crisis: The REPO System in Canada

Finally, let’s turn to a developing issue within Canada’s Overnight Repurchase Agreement (REPO) system, a crucial lifeline for banks in need of liquidity. The Bank of Canada recently raised the limit for cash injections from $1 billion CAD per bank to $3 billion per bank, signaling potential stress within the financial system. In mid-July, several cash injections were required:

• July 17th: $9.24 billion injected
• July 18th: $9.65 billion injected
• July 19th: $12.65 billion injected
• July 22nd: $13.35 billion injected
• July 23rd: $16 billion injected

In just five days, a total of $60.89 billion was needed to keep Canadian banks afloat. Some analysts believe this signals the beginning of a silent banking crisis. As we continue to monitor this, the importance of holding physical silver and gold becomes even clearer. These tangible assets remain a safe store of wealth, unlike digital currencies and accounts that may become inaccessible during future crises.