Why cyber attacks make precious metal investments more appealing than ever in 2021
When we asked bankers to identify the one issue that would most affect the financial industry in 2021, FAILING CYBERSECURITY was the clear winner. With 34% of the vote, it far outranked the other two leading issues—meeting customer expectations (20%) and regulatory changes (17%).
Emerging Cybersecurity Threats in 2021
Cybercriminals are constantly evolving their tactics to gain access to financial systems and data. In the age of the pandemic and employees working from home, institutions are navigating new and unknown risks from their remote workforces.
- At the time of writing this article, first-order, single-point failures with profound second and third-order effects are devastatingly common in cyberattacks against U.S. financial systems.
- The Federal Reserve Bank of New York (FRBNY) recently did a report assessment suggesting that a cyberattack could impair a bank’s ability to service creditors. More specifically, impairment of any of the five most active U.S. banks could result in significant spillovers to other banks, with 38% of the network affected on average.
- Perhaps even more alarming, the FRBNY identified a subset of smaller banks that, when (not if) compromised, will threaten the solvency of the top-five institutions. In particular, the FRBNY estimated it would take the financial distress of six small banks, each below $10 billion in assets, or just one institution with between $10 billion and $50 billion in assets.
- More than 80 U.S. banks fall into the midsize bank category, with aggregate assets of approximately $1.8 trillion, while there are about 4,440 small banks, with cumulative assets of around $4.7 trillion. Combined, the midsize and small banks account for about 36% of all commercial banking assets.
- A cyberattack on ANY of these banks, which appear benign in isolation and have simpler balance sheets, could ultimately cause a cascading failure of interbank funding, leading to a tipping point for a broader systemic liquidity crisis.
- This means that storing wealth in any quantity within either a bank or in the bank-dominated global financial system in any capacity has inherent risks. A major attack could take a bank offline for weeks or even months, resulting in a crash in confidence, leaving customers being without money.
Wealthy investors have already been looking for an alternative form of investment that is not vulnerable to online attacks – PHYSICAL GOLD AND SILVER.
- The facts are – any money held electronically, from bank accounts to IRAs, savings, or other share-dealing accounts, are vulnerable to massive or small-scale cyber-attacks.
- As a physical investment storage medium, physical gold can’t be hacked or electronically removed, and its value only rises at times of major economic uncertainty – such as during major cyberattacks. If you’re looking for a safe haven for your wealth outside the banking system, physical gold and silver provide insulation and reduction of investment risk as part of a balanced portfolio.
- Some sources believe that the kill-switch on the Wannacry worm may be replaced by its creators in the near future, meaning that it will continue to spread. Worse, the cost of upgrading global IT security to deal with it is massive, and many institutions can’t or won’t update their systems.
Worse still, the next major cyber-attack may be impossible to block, reverse, or even stop!