(Mike Maharrey, Money Metals News Service) A former Fed insider has sold all his bank stocks, and he’s piling money into gold.
Christopher Whalen has worked for over three decades as a writer and financial analyst in Washington, along with a stint as a researcher at the New York Fed. Whalen also held various positions at Bear, Stearns & Co., Prudential Securities, and Carrington Mortgage Holdings. He currently serves as Whalen Global Advisors chairman.
During a Kitco News interview, Whalen said he recently sold all of his bank stock.
“I actually put a couple of short positions down on some consumer lenders because I think credit is going to go up in terms of expenses. And I emphasized precious metals, energy stocks, and also income.”
Whalen predicted lean times for lenders, as credit prices (interest rates) climb.
“Bank earnings and credit, those are the two immutable concepts in banking. When credit costs go up, earnings go down, and bank stocks suffer accordingly.”
He also warned that we will soon see “higher consumer delinquency” as massive borrowing over the last few years catches up with American households.
In fact, LegalShield’s Consumer Stress Index indicates American financial stress has reached pandemic-era levels.
So, what has Whalen replaced his bank stocks with?
Gold.
Whalen said he’s taken advantage of the “softness in gold and silver in the first half of this year” to add to his positions.
He called precious metals an “asymmetric trade” with far more upside potential than risk. He noted the ongoing debasement trade, saying he thinks it will continue.
“The global central banks are continuing to shift away from dollars, shift towards gold, and to a lesser extent silver, simply because they want an independent reserve asset that is not controlled by another country.”
Whalen said he doesn’t think the dollar is in any danger of losing its reserve currency status.
“But I do think that the dollar is going to be competing with other fiat currencies.”
As I have noted many times, even a modest de-dollarization spells trouble for the U.S. economy. The federal government depends on global demand for dollars to absorb its money creation and support its borrowing and spending. If the world needs fewer dollars, they will flow back to the U.S., creating additional inflationary pressure.
Whalen called gold “a measure of inflation.” He noted that Andrew Jackson’s face is on the $20 bill and urged listeners to consider what that $20 buys today.
“He would not be happy, I’m telling you.”
As for the Federal Reserve, Whalen said he doesn’t think the central bank wants to hike rates any further, and he believes a slowing economy will force a rate cut as early as Q1 2027. He also thinks the Fed will relaunch quantitative easing (QE) to support the bond market and drive down the federal government’s borrowing costs.
“I think the Fed will have to print. In other words, they will have to start buying Treasury securities again the way they did during and immediately after COVID.”
He noted that we are already “very familiar” with this kind of debt monetization, pointing out that the central bank bought $10 trillion in securities between 2008 and the end of the pandemic era.
“Essentially, they forgave the debt. And what happened was, the banking system grew. That’s where the inflation is. Deposits grow. Assets grow. And the system gets bigger.”
Meanwhile, the U.S. national debt grows as well. The Trump administration ran the third-largest budget deficit in history in fiscal 2026. Whalen warned that the U.S. is in “a very tenuous situation.” However, nobody in Washington, including at the Fed, wants to talk about the deteriorating fiscal situation.
“We’re kind of in a daydream. It’s like we’re having a nice nap, and we’re not even worried about anything that’s remotely important.”
Whalen emphasized that hard assets, including gold and silver, are a way people can protect themselves.
“You know that the government is going to continue to spend, and that eventually, the central bank is going to have to inflate the currency.”
Mike Maharrey is a journalist and market analyst for Money Metals with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
