The Coming Bank Failure & Silver Collapse

Well, today is one heck of a crazy day

because you've got some insanity

happening in the silver market which is

leading to talk about a potential bank

failure. While at the same time, the

president of Iran in response to

protests going on in Tehran is

suggesting that they're at war with the

United States, Israel, and Europe. I

guess maybe we should have finished the

negotiations after Operation Midnight

Hammer, which Donald Trump and Carolyn

Levit said they would, but then that

next week negotiation never came. But

forget about that for a moment. What's

actually going on? Because there's so

much noise today from not just the

silver and banking drama, but also drama

with the Federal Reserve. We've got

minutes coming out tomorrow from the

last Fed meeting along with uh the

weekly uh job numbers from ADP coming

out tomorrow. We've got year-end

potential profit taking. We've got also

Tesla numbers to talk about because at

the end of this week, we're going to get

Tesla delivery numbers and Tesla is

doing what I call the end phase. There's

a lot to unpackage here. So, let's just

slowly go through it all and break it

down. So very first things first, this

is important to look at. Right now, the

S&P 500, which is the orange line, is

lagging substantially behind the rise in

gold, which is the black line. I don't

know why they didn't choose gold for

gold, but whatever. Uh and and the

silver line, which appropriately is

silver. So, uh I can't I wrote I can't

help but feel that safe haven assets

memeing is a risky signal. And then you

can see this divergence in these sort of

normalized numbers here. You can see the

divergence where usually gold and silver

align with the S&P 500. They've really

sort of wedged open right here. Right?

Look at this giant wedge that you've

gotten. Uh where gold has has really

rallied, which is something that you can

see happen before a recession. So it's

not the best of signals. And then of

course now you've got this silver uh

euphoria which part of the silver

euphoria and and rally has a lot to do

with China. See China is the world's

largest consumer of silver. Uh and uh

starting about October 15th they

pre-announced that they were going to

start requiring export licenses to be

able to export silver. Now Bloomberg

says that China is not a major net

exporter but not a major major net

exporter means they are a exporter like

net exporter of silver. So even though

they consume the world's most amount of

silver they are an exporter of silver

and by having export licenses they could

kind of signal that hey we want to keep

some of this for ourselves. And it sort

of goes back to the whole like critical

minerals drama. Like remember when China

was basically like, "Hey, we're going to

have export licenses on critical

minerals." Then Donald Trump is like,

"Fine, I'll invest in MP materials." And

then MP material goes from like $15 to

$80. And then I remember in my course

member live streams for my alpha report,

I'm like, "This is going to 100 bucks."

Went to $104. That morning in the course

member live stream, I go, "This sucker

is going down. It's going down fast. Get

out." Sometimes a negative call is just

as important as a positive call, right?

Uh and the stock's at like $52 now. I

think it's going to to 31. But it shows

you that that sort of meme stuff happens

in response to China and its export

license drama. So in some regard, the

drama with China around export licenses

with critical minerals for shadowed this

silver squeeze because now you've got

China going, "Well, we want export

licenses on silver." And even though

they're not that big of an exporter,

they're somewhat of an uh silver

exporter. And therefore, you get this

silver squeeze which is leading to

massive large uh massive losses from

companies that are hedging against a

rise in silver prices, which is usually

not very volatile. You know, typically

when you have something that's low vol

that all of a sudden becomes really

volatile, you risk margin calls. And

that's why there were a lot of rumors

circulating. Uh, and I don't I don't

like to give credence to a lot of these

these rumors because I see these rumors

and I said it this morning in my alpha

report. I'm like, look, the news of

today is everybody's freaking out about

this like, oh, a bank is going under or

whatever. And I said in my alpha report,

this is probably bull crap and you're

going to know, you know, pretty fast if

it's bull crap or not. We don't know. We

don't know. It could be accurate, but

it's one of those things where, you

know, it's easy to circulate stuff like

this, especially with AI these days. But

basically, there was this story that was

circulating that uh so I pulled a

screenshot up here. The story that's

circulating is uh at the time the story

is written 11:01 a.m. Eastern US time on

Sunday, there are reports claiming a

systemically important bank, a major

player in silver futures failed to pay

its margin call and they were

liquidated. uh the bank involved has

been one of the largest players in the

precious metals derivative market and it

blew past every risk limit, breached and

breached every covenant and exhausted

every line of credit. Like even the

grammar isn't that great. Like I hate to

say it, but like I looked at this and

I'm like I've got a double space over

here. I've got, you know, a missing

capitalization over here. you know, new

grammarians will say it's okay to start

a sentence with and, but, but, you know,

older writers, like probably people

actually writing these reports won't

start a sentence with an and. Uh,

typically, you know, younger writers

might start a sentence with and. This is

a big debate. I don't know why we're

going into a grimarian debate, but

anyway, this is a big thing that people

are talking about. Uh, oh yeah, and then

I have this up. This is totally

unrelated, but I don't know. Maybe

people are fleeing silver and they're

throwing money into house hack. But, uh,

I was showing this on my course live

stream. Just so you know what this is.

This was just these were just inflows

because we're ending our fund raise for

for House Hack. These were just our our

inflows, not rental revenues or AI

income, but uh, December's been great. I

mean, we're almost at $4 million of

inflows. Uh, I would say 98% of this is

is fundraising. A couple little deposits

are in there or not, but uh, the fund

raise for House Hack has been really

good. So, I don't know. May maybe that's

why the market's selling down is

everybody is fleeing uh you know the

markets 75 bips on the cues right now at

least could get worse who knows uh or

the silver market oh my gosh it's

rolling over or whatever and they're

diversifying into house act not

investment advice not a solicitation

every investment has risk I don't know

but it you know that was one of the

things that started a rumor mill this

morning you know copper is still doing

fine and a lot of precious metals have

absolutely been killing it you know uh I

mean look at palladium palladium's up

under 12% year to date, but today it's

down 16%. You don't usually see this

kind of volatility in metals. So that's

why like there is some idea or argument

that yeah, maybe when you have so much

volatility, you could create margin

calls that lead to a cascading effect

and a bank failure. But in my opinion,

if we were actually seeing a bank

failure unfolding right now, insiders

would be trading it. We would be seeing

the market dump way more than this. And

this yield curve would move because

people would fly into the 2-year. You

know, we're not seeing that. And so to

me, if I go look at the 2-year right

now, the 2-year is down two basis

points. The 10ear is down two basis

points. If we were seeing some form of a

crisis, like some kind of a uh, you

know, banking crisis style shock or

whatever, we would see the yield curve

skyrocket. Right now, look right here at

the banking crisis era right here. The

yield curve rapidly steepened and

uninverted because what happens

practically is the 2-year plummets and

the 10-year doesn't go down that much.

And so the curve widens in English. What

happened in the last banking crisis

ain't happening right now. Kevin, ain't

ain't the word. I know.

So anyway, I like I'm not seeing signs

in the market that actually say this is

anything other than just sort of like

meme style momentum, like a GameStop

style momentum that's slowing down in

the face of new margin requirements that

went into effect today on the 29th that

were announced on Friday, right? It kind

of aligns perfectly. Like sure, there's

some drama talk from Iran, but those are

drama mamas. There's always drama talk

out of Iran, right? Like I don't think

this is anything to get your panties in

a nod over. Uh, I've got silver over

here down, you know, uh, 8.7%. But I

mean, look at the meme it's done. This

is insane volatility. Now, you know,

this is why you have to be careful of

Twitter, uh, you know, X, whatever you

want to call it. But like, Poly Market

Money posts and they get like 1.6,000

likes on this. They post this odds of

bank failure by January 31st, 71%. And

so every idiot and their mom, you know,

sees those charts and they're like, "Oh

my god, honey, 71% chance of a bank

failure. Oh no, get your money out of

the banks." And like, you know, that's

the that's the noob. And then the pro

looks at this and they're like, "Dude,

what's the volume on this?" And so when

you zoom in, it's literally in their

screenshot. The volume is $800,

which means some jackass, you know, bet

like $400 on a bank failure. He

basically bet against himself and bought

up the order book to basically guarantee

a bank failure with $400.

So, this is the downside of very illquid

markets. This, by the way, is why Robin

Hood loves these markets. Robin Hood and

Poly Market and these companies love

betting markets because you could go bet

on the most arcane garbage

and there's no liquidity and guess who

makes most of the money? The brokers,

the Robin Hoods, the Poly Markets, they

make all the money on the spread. Why?

>> It's because that's why.

>> Yeah, it's because that's why. So

anyway, uh you know, sure enough, when

you then actually go look at the odds of

a bank failure and the volume has

actually increased, somebody put another

$400 in, basically took the opposite end

of the trade and bet it all the way down

to 9%. So it's probably like undervalued

now. It's it's so stupid because if you

go out to March 31st where there's

actually a little bit more volume,

$20,000 of volume, you're at about a

26%.

It's all fugazi. It's all fugazi. It's

all noise. It's all annoying. I don't

see anything right now in the market

that's saying this is actually like a

real issue right now. Other than it's

just anti-meing. That's what we've got

going on here. Anti-meing

along with, you know, Elon's like, "Oh,

this is not good. Our input costs are

going up." Yeah. Elon also got his fair

share of hate today. uh which is worth

talking about Tesla just a little bit

because Tesla's going to report delivery

numbers uh at the um at the end of the

week. We'll talk about Tesla in just a

moment though. I did want to talk

briefly about first the Fed and year-end

price targets uh and then we'll talk

Tesla. So, first of all, Federal Reserve

right now, we are down to a 16.1% chance

that we are going to get a rate cut on

my birthday, January 28th, which I'm a

little bit disappointed about. So, what

I'll probably have to do is I'll

probably have to go on like a Disney

vacation or something uh to make myself

feel better because we're not going to

get rate cuts. But that's okay because

it means the economy is booming. I think

I mean we pretty much all are of the

same mindset that the reason the rate

cut odds have plummeted is because GDP

came in so high for the quarter. Why is

GDP coming in so high? Oh, we should

look at the Atlanta Fed real GDP, too.

Well, it's because of artificial

intelligence spent. We already know

this. Goldman Sachs tells us bluntly if

it weren't for artificial intelligence

we would see an absolute collapse in

GDP. Right now the forecast by the way

for Q4 uh Q3 came in at like 4.3%. Q4

estimates are at 3%. A lot of this is as

we say uh based on artificial

intelligence spend. It's these are

really really high numbers and and the

spend is wild and that's why you know a

lot of people are jumping on the

bandwagon of data centers in space. I

don't mind I'm an investor in SpaceX but

I think it's looney beans. I don't think

we're going to artificial intellig

general intelligence. I think the chip

investments are overblown. Uh I've been

saying that since 2024 and I've not been

saying that that means sell the chip

stocks. I'm just saying like at some

point it's going to U-turn because we're

not going to hit artificial general

intelligence. I that is a stake I will

put in the ground. We're not going to

AGI. So that's why I think Sam Alman,

you know, will falter because he's

spending like AGI is coming tomorrow and

it's it's a bad investment. That's why

we're so excited about like what we call

real or practical artificial

intelligence. So I look at companies

like now service now or UiPath which I

think is a bargain right now uh or

Palunteer as companies providing actual

artificial intelligence for companies.

You know we're uh launching our AI at a

very small scale. We've got a coupon

code expiring uh soon for our AI. So if

you want to get in before we drop it,

you could get lifetime access to our

real estate AI. And you can learn more

about that at houseack.com or

reinvest.co co and the development

phases or whatever. Uh, but like these

are actual real products that, you know,

when somebody's like, "Wow, let me go

type in a zip code." And they look, they

go, "Oh, smokes, that is a good deal."

You know, I could snipe 100 grand on

that deal or whatever. Like, that's how

people are building their net worth

through real estate. That's great. These

are practical AI applications, not to be

confused with sort of artificial general

intelligence. AGI bets, I think, will

all crash. But longer term like actual

practical I call it um uh e AI

encyclopedic AI those sort of

investments that actually help people be

more productive. Snipe deals in real

estate or you know what Palanteer does

for businesses with ontology or what

UiPath does uh or or Service Now does or

even Salesforce does. Those are ways

that people can become more efficient.

Uh and ultimately it's good for

companies. It's good for S&P 500

earnings, which leads us to earnings

forecast for next year. Do keep in mind

though that as we see these earnings

forecasts for companies, uh the people

who generally lose when these companies

do so well uh are well people, right? So

people unfortunately don't get the

benefits of these earnings calls talking

about operational efficiencies. In our

course member live stream this morning,

we were talking about how Service Now

was talking up how their margins are

going up because of AI operational

efficiencies. To me, all that really

means is less hiring. They're going to

hire fewer people because they don't

need as many more people and and who

wins companies. Now it makes sense also

why margin has gone up but this is also

part of a risk in the market is we have

concentrated into these mag seven stocks

mostly with significant margin levels

that we've never seen before. These are

the highest margin levels we've ever

had. We're 1.2 uh trillion dollars. Uh

is this millions? No, wait hold on. This

is millions times millions. Shoot. How

many more zeros is that? If I add three,

that'd be billion. That's $1.2 trillion

in margin at FINRA. That's insane. And

we're rising between October and

November. And November ended as a red

month. Remember when we're like, "Hey,

it's probably going to be red until

December 9th and then bullish, right?"

But anyway, uh that was one of our calls

in the alpha report. And it was spot on.

Knock on wood that we could keep doing

that. You could join and get lifetime

access before the coupon expires. Meet

Kevin.com. But uh you know, like this is

insane. We are growing margin right now

in this month at a 31% annualized pace.

People are going ham overdrawing on

margin and it and it's like M1 Finance

and Robin Hood. All the brokers are

like, "Please take on more debt because

they make more money off of you." But

it's so bad. It's so so bad for the

economy because it's going to create a

massive crash. And this is why I think

the forecasts are looney. Like Wall

Street expects its fourth straight year

of gains next year. Bloomberg

interviewed uh like 21 different

institutions and forecasters. So think

like Bank of America, City, whatever.

Goldman Sachs, right? UBS. Of the 21

surveyed, there was not a single

negative forecast.

Every single institution thinks that the

market will be positive next year with

an average increase of 9%. While margin

is at all-time highs, while Sam Alman's

doing the Sam Alman, this would be the

first time in 20 years, by the way, you

would have had the fourth straight year

of gains if it happens in 2026. So, to

me, as a contrarian, it sounds kind of

bearish. But on the flip side, I hope

it's true because like, you know, I kind

of want the market to keep going up and

then we can IPO, you know, an AI

startup.

Recessions delay those things, right? So

anyway, uh you know, that's why like I'm

on the middle. I I'm just going to I'm

going to share what I'm seeing and and

you know, ultimately you do you, right?

But uh these year-end price targets are

wild uh in my opinion. Not only that,

but it's worth remembering that

bullishness pays, right? You make a big

prediction, you pump the stock market,

you get more people throwing AUM into

your bank, you make more money, you win.

So there's there's a reason like it pays

to be bullish. They say like Tom Lee

doesn't raise, you know, billions of

dollars to buy Ethereum by being

bearish. He raises money for Ethereum by

telling you it's going to 10x within the

next two months by the end of the year,

he says. All right. Uh similar story by

the way at Tesla. So we did a little bit

of an analysis on Tesla. Uh Tesla is a

little bit of a problem right now

because uh Tesla has quite a few

negative catalysts coming up. I'm going

to put some of these up on screen. Uh,

but I'm not very excited about the

catalyst that Tesla is facing right now.

Uh, Tesla has deliveries coming up at

the end of the

week. Uh, I've gone ahead and thrown the

estimates on the Meet Kevin app.

So, the delivery estimates for the year

end per Wall Street are that we are

going to sit at 1.65

million deliveries. Uh, Wall Street is

expecting that to rise again next year,

which is very interesting because Troy

Teslike, whom I respect as a Tesla

analyst, he actually thinks that the

decline will accelerate for Tesla

deliveries in 2026.

Now, this also compounds with some of

the other negative catalysts that we

have. Tesla's going to have to realize a

loss in GAP earnings due to their

Bitcoin losses. uh given that we have to

mark to market every quarter. The

vehicle tax credit ended in Q3. That

pain shows up in Q4. Now we have another

negative pain though. While we have the

home tax credits for the purchases of

home energy or solar systems ending in

Q4, that pain shows up in Q1.

Obviously we have seen delays in robo

taxi and Optimus. uh we could see that

you know over here very clearly the uh

information has sort of a reconciliation

here about how Elon Musk made these

promises or these forecasts of robo taxi

service being available to half the

population by the end of 2025 subject to

regulatory approval in October dialed

that back to eight out of 10 metros and

now we're still only in Austin in San

Francisco with humans in every single

customer ride and we're 2 days before

the end of the year. You know, Elon at

one point mentioned you could go to

sleep in your Tesla and wake up at your

destination by the end of the year. Uh

this idea that we would have 5,000

Optimus robots by the end of 2025 turned

into 2,000, which turned into basically

very few because of technical challenges

with the hands. Now, they're pitching

that SpaceX is going to take Optimus

robots and send them to Mars, and the

Optimus is going to go to Mars.

So obviously the information is casting

a little bit of jade here. Uh and so you

know make of Elon's predictions what you

want. You you kind of can't take away

like you got to give Elon credit.

They've done some incredible things.

He's got the best ads software that

exists. Uh I think you've got a great

company. I think the valuation is very

very high. But uh he's done fantastic

things with Starlink and SpaceX as well.

I mean everybody's trying to copy him

with the reusable rockets. I mean good

for them. Uh, so like hey, you know,

some of it might be hype, but um, you

know, I do think that these delivery

forecasts, which for Q4, Troy is not

very happy. You could obviously follow

his Patreon to get the exact numbers.

I'm not going to give away his numbers,

but I will say that uh, his forecasts

are much lower than the analyst

consensus of 448,000 deliveries. Q4 last

year was 495. This year analyst

consensus is 448. He's way lower and he

thinks it's going to keep going down.

I personally don't disagree because I

mentioned that uh you know I was

expecting a more aggressive Model Y like

cheap Model Y pricing when they went for

$399. I made a video and I said this

isn't this isn't like enough to get

volume going. And so it seems like

Tesla's pulling what I call an NPhase.

So Nphase did this really interesting

thing where and I didn't like it where I

said hey like this is probably going to

go back down to $30. If you watch my

videos, you see me say that even even

when it's like 70 bucks, I'm like,

there's a shot this is going back down

to 30 bucks. And sure enough, it has.

But one of the problems that NFACE has

is uh they they basically said, listen,

we're not going to risk reducing our,

you know, 40% margins because we want to

maintain our margins. We want to

maintain our pricing power. We're not

going to reduce our uh uh margins. We'll

just sell fewer inverters.

Well, it got so bad that their sales

have plummeted so far that now they're

saying, "Yeah, we're going to have to uh

make deals with power purchase uh

agreement companies." Well, I'm like,

"Well, that's terrible because those

companies don't care about the quality

of the product. They just want the

cheapest product. So, your margins are

going to have to go down. So, now your

sales are down and now you're going to

have to lower your margins. So that's

what I call the Nphase footprint. You

know, we've been warning about this for

quite a while and certainly in our alpha

report. Uh remember you can join

that.com.

But uh Tesla is unfortunately now trying

to follow a similar path. Now I'm not

saying they're going to have a similar

outcome as NPhase, but I think it's

really bad to say, "Oh, we're going to

be stubborn. We're not going to drop

prices. We're just going to cross our

arms and go whatever." And you know, if

sales go down, who cares? we're on to

bigger and better things like Optimus or

robo taxis. I'm like, that's cool. I

mean, that's not how I would run the

business, but uh you know, I I'd be

creating more models that people can buy

today with the best ADAS system they

have. They like that's what pisses me

off, man. You literally have a company

that could so easily print many

different models of vehicles that people

want. a Model 2, a minivan, a Sprinter

van. Put a Tesla, make every Amazon

delivery van a Tesla. Sign a contract

with them already, would you? Like,

that's where the money is. Like, don't

go straight to semi-truck. Let's do box

van. Let's go. Like, there's so much we

could do. So much safer with the best 8S

that exists. Who cares? It's not 100%

full self-driving. It's 99.9% better

than every damn human out there. It's so

good. That's what you need at Tesla. So,

I get frustrated, right? But anyway, um

as a result of unfortunately sort of

these bearish catalysts, uh when we look

at their current PEG ratio, their

current PEG ratio is sitting at 6 uh 86,

which does suggest a downside of 75% to

Tesla's fair value as a manufacturer and

a 60% downside as a serer, which makes

Tesla a very very desirable stock to

sell right now. Uh I am uh very bearish

Tesla in the near term uh for their

price action. I think it's uh it's built

up on a lot of uh hope and and I

wouldn't be surprised if a lot of people

are diversifying out of Tesla or at

least setting some trailing stops or

selling calls or or whatever. But um um

you know whatever like I'm not short

Tesla, you know, I've got no no horse in

the in the negative race. I mean I've

got I've got Tesla stock left in in like

retirement accounts or my HSA and stuff.

So, hey, like those accounts are great.

Uh, thanks Tesla. But like I share this

to also share my enthusiasm that

hopefully somebody at Tesla can listen

and be like, you know what? Yeah, like

why don't we just sell what we know

works now, [laughter] you know? Uh, but

you know, whatever. So, you know,

putting all this together, there's a lot

of noise right now. I think the market

is unfortunately having to discount that

we're not going to get a rate cut in

January. The silver and banking thing, I

think, is just noise. Based on what I'm

seeing in the bond market, I'm not

seeing anything that suggests this is a

real issue. I do think there are real

risks, some valuations at companies that

are very high, but on the flip side, I

think there are also very cheap

companies out there uh that uh that that

will have a a some great opportunities

for long-term growth. Um so, uh yeah,

there you have it. Uh if you haven't yet

checked out houseack.com, remember our

investment closes in two days

and um

our we will also be releasing our uh AI

app within the next uh couple days here

which means uh we're going to be raising

the price and so we'll be ending the

coupon code which is release the app.

You could use the coupon code release

the app for both uh the meet Kevin

membership or the house hack AI. Cool

thing about if you get the lifetime

access for the House hack AI is if we

move this to a or I should say when we

move this to an annual billing model,

you know, you'll have lifetime access

and other people will be paying what I

expect to be 230 bucks a month. Uh and

so I think you can get in a bargain by

basically being one of our alpha or beta

testers, if you will. You can do that at

househack.com.

And then of course, if you want to join

the Meke Kevin membership and get all

those courses and the top 10 stocks that

I'm buying for the next 10 years, uh, as

well as the alpha report every morning,

you can do that at me.com. Remember, the

coupon code is

release the app. And so there you have

it. Yeah, Tom from MySpace. Yeah, that

that's what we need. So there we have

it. Thanks so much for being here and uh

we'll see you on the next one. Goodbye

and good luck out there.

>> Why not advertise these things that you

told us here? I feel like nobody else

knows about this.

>> We'll we'll try a little advertising and

see how it goes. Congratulations,

[music] man. You have done so much.

People love you. People look up to you.

>> Kevin Papra there, financial analyst and

YouTuber. Meet Kevin. Always great to

get your take.