Fear & Greed Index Back To Extreme Fear For The First Time in 6 Months; US May Have China Cornered With Coming Gold Revaluation

The US may be in a much better position relative to China than rare earths rumors would have us think.

If the U.S. lets the dollar drift down while pushing gold up, it weaponizes the thing China must keep buying.

A forced gold revaluation would:

• Squeeze your rival 

  • (they pay more for every ounce) while you de-lever (mark U.S. gold reserves higher → shrink real debt burden).

• Turn gold into the liquidity sponge that absorbs excess dollars instead of bonds.

• Signal a new currency regime: less trust in paper IOUs, more value in base-layer collateral.

Implication: this is how a currency war flips into a gold race to the top.

If that playbook’s in motion, front-running the captive buyer = own gold, and high-beta silver/miners, before policy (or necessity) reprices them.

Confidence in paper money is cracking, so investors are stampeding into anything but cash—stocks at highs, gold/silver, crypto—while institutional cash levels sink to 3.8% (a 12-year low).

With global debt at ~$337.7T and governments shoveling billions into AI, the path of least resistance is more money printing, not less—meaning more inflation risk and wilder markets.

Dollars will continue to buy less and less over time, so people are grabbing scarce assets that can’t be printed; expect prices of real stuff (especially monetary metals) to keep getting bid, with big swings along the way.

Marin Katusa is a legend in the natural resource investing space.

When a calm, no-hype guy like Marin hints “bank or country,” he’s reading the metal’s heartbeat:

gold ripping this fast usually means someone big needs cash or credibility—now.

• Signal: 

  • Explosive moves in gold (and silver chasing) = flight to the safest collateral when balance sheets or currencies look shaky.

• Translation: 

  • if a major bank’s books crack or a country’s currency wobbles, big money hides in gold first.

  • Prices don’t sprint like this without stress somewhere in the plumbing.

• Implication: 

  • expect headline risk (bank/country), tighter liquidity, and volatility.

  • If the stress escalates, safe-haven bids keep winning; if it cools, the move pauses—but the message is clear: trust is thinning.

  ⚠️ Liquidity & Funding

  Signal	Latest Level	Interpretation	Zone
  10-Year Swap Spread	−20.6 bps	Still deeply negative — collateral premium elevated; dealers prefer synthetic over cash USTs.	🟠 Orange
  Reverse Repos (RRP)	$6.96 B	Buffer remains near empty — tiny refill, pressure valve still dry.	🔴 Red
  USD/JPY	150.15	Carry still on; intervention risk lingers under the surface.	🟠 Orange
  USD/CHF	0.7914	Near fear extreme — rotation toward hardest-fiat safe zone.	🟠 Orange
  3-Year SOFR–OIS	26.4 bps	Elevated and sticky — mid-term funding stress persists.	🔴 Red
  SOFR Overnight Rate	4.29 %	Big jump — potential serious stress in overnight funding.	🔴 Red
  SOFR VOL	$3.059 T	Heavy reliance on overnight funding — market running hot to maintain flow.	🟠 Orange

  🪙 Gold & Silver

  Signal	Latest Level	Interpretation	Zone
  SLV Borrow Rate	14.19 % (150k shares avail, −10.09 % rebate)	Still hard-to-borrow, but borrow loosened a bit; squeeze risk remains.	🟠 Orange
  COMEX Silver Registered	172.32 M oz	Deliverable supply keeps bleeding.	🔴 Red
  COMEX Silver Volume	160,395	Elevated — aggressive repositioning continues.	🟠 Orange
  COMEX Silver Open Interest	177,036	Firm — shorts under pressure as conviction builds.	🟠 Orange
  GLD Borrow Rate	0.61 % (2.6 M shares avail, 3.49 % rebate)	Tightening showing up in gold — early shortage signal.	🟠 Orange
  COMEX Gold Registered	21.0 M oz	Thin but steady — physical backing tight.	🟠 Orange
  COMEX Gold Volume	403,735	High churn — institutions rotating toward real collateral.	🟠 Orange
  COMEX Gold Open Interest	493,360	Solid — conviction intact in monetary metals.	🟠 Orange

  🌍 Global Yields

  Signal	Latest Level	Interpretation	Zone
  UST – JGB 10-Year Spread	2.355 %	Wide and sticky — Japan stress bleeding into global funding.	🟠 Orange
  Japan 30-Year Yield	3.122 %	BOJ cornered; long-end pressure remains.	🔴 Red
  U.S. 30-Year Yield	4.587 %	Long end repricing; collateral layer still shaking.	🟠 Orange

The canary just screamed.

The S&P is barely ~2% off its all-time high, yet the VIX exploded yesterday while equities only slipped about -0.5% to -1.0% (Nasdaq closed -0.47%).

That’s not “noise”—that’s what exponentially increasing leverage looks like when it finally twitches.

When a small dip triggers a big volatility spike, it means the market’s short-vol/levered machinery is starting to bite: dealers hedge, sell begets more sell, correlations climb, and tiny cracks become step-downs.

This is exactly the regime we’ve warned about with mounting leverage in markets —prices near highs, but risk premia repricing violently underneath. Next moves get faster and wider, not smoother.

Extreme Fear at 23 = leverage getting yanked.

When the needle jumps from Neutral/Greed to Extreme Fear this fast, it’s not just “feelings”—it’s positions.

In a highly leveraged market, a small drop forces hedge funds and algos to sell to meet margin, which triggers more selling, which scares others into selling. That spiral makes volatility jump, liquidity vanish, and correlations go to 1.

Translation: everyone borrowed to buy; now a tiny wobble means they must dump stuff fast. Expect gap risk and sharp swings—and money hiding in what doesn’t blow up when margin calls hit (cash-like, gold/silver).

Banks puking = leverage showing its cracks.

When a bank ETF drops ~5% in a day, the market’s saying: funding is getting tight and someone leveraged is wobbling. Here’s the simple loop:

• Higher rates → bond losses + pricier funding for banks.

• Shadow banking/private equity = lots of debt + hard-to-sell assets. 

  • If lenders or repo desks demand more cash, they’re forced to dump stuff.

• Forced selling → prices fall → more margin calls on the same collateral (CLOs, CRE, LBO loans)

  • …which feeds back into banks that provide the credit lines.

If the big borrowers outside the spotlight can’t pay fast enough, they sell at any price, and banks feel it first.

The slide in KBE is the market sniffing smoke before the fire—not proof, but a classic warning that a leveraged player (or sector) might be in trouble.

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Luke Lovett
Cell: 704.497.7324
Undervalued Assets | Sovereign Signal
Email: [email protected]

Disclaimer:
This content is for educational purposes only—not financial, legal, tax, or investment advice. I’m not a licensed advisor, and nothing herein should be relied upon to make investment decisions. Markets change fast. While accuracy is the goal, no guarantees are made. Past performance ≠ future results. Some insights paraphrase third-party experts for commentary—without endorsement or affiliation. Always do your own research and consult a licensed professional before investing. I do not sell metals, process transactions, or hold funds. All orders go directly through licensed dealers.