Two years ago, we saw the dramatic collapse of Silicon Valley Bank (SVB) and First Republic. Since then, the banking sector hasn’t found its footing. In fact, the problems that triggered the 2023 banking crisis are still lurking beneath the surface, waiting for the next shock to send them crashing down again. The Federal Reserve’s aggressive interest rate hikes to combat inflation forced banks into massive losses, losses that are still festering today.
The Rise of Unrealized Losses
Let’s talk numbers. By the end of 2024, U.S. banks reported a jaw-dropping $482.4 billion in total unrealized losses. That’s a $118 billion, or 32.5%, increase from the previous quarter alone. During the height of the 2023 banking crisis, these losses peaked at $684 billion. While the numbers have wobbled, the risk hasn’t gone anywhere.1
But what are unrealized losses? They occur when the market value of an asset, like a bond or mortgage-backed security, falls below its purchase price These are losses that only exist "on paper" because the assets haven’t been sold—yet.
But make no mistake, that doesn’t make them any less real. Banks, especially regional and mid-sized ones, are stuffed with long-term bonds and mortgage-backed securities that have tanked in value as interest rates spiked. When long-term rates rise, the value of these investments falls off a cliff. Higher interest rates make older bonds with lower yields less attractive. This, in turn, drives down their market value. It’s basic math. And it’s eating away bank balance sheets every single day.
A Rock Hanging Over the Banks
These unrealized losses don’t appear on a bank’s income statement unless the assets are sold. Many of these investments are labeled as "held-to-maturity". Which is a fancy way of saying the banks plan to hold onto them until they’re paid back, no matter what they’re worth right now. It’s a convenient way to hide risk until it’s not.
“It’s like a rock hanging over the neck of the banks,” said Rebel Cole, a former special adviser to the International Monetary Fund and World Bank. "All it takes is one bad news story about any of these banks, and we could have another banking crisis like we had in March of 2023. I’m amazed we haven’t had one since then."2
He’s right to be amazed. The 10-year Treasury yield, a crucial benchmark for long-term interest rates, has been whipsawing all through 2025. It is currently sitting above 4.5%. At that level, banks start sweating. At 5%, things get ugly, fast. We’re talking $600 to $700 billion in unrealized investment losses. That’s not a crack in the system. That’s a sinkhole that can bring down the whole sector.3
SVB: A Warning Shot, Not a One-Off
Silicon Valley Bank’s collapse should have been a wake-up call. SVB bet big on long-term securities like Treasuries and mortgage-backed securities back when interest rates were at rock bottom. But when the Fed turned up the heat, those investments tanked. SVB couldn’t keep up with withdrawals. Regulators stepped in, and the bank was acquired. But let’s be clear: the risks didn’t vanish. Interest-rate dangers, unrealized losses, and poor hedging strategies are still sitting on bank balance sheets across the country.
Amit Seru, a finance professor at Stanford, put it bluntly: "So while we may not see another crisis exactly like SVB’s, the ingredients for stress are still present—especially if macroeconomic conditions deteriorate."4
And if we slip into stagflation? The pressure multiplies. "In a stagflation scenario, the risk is that rates will be higher for longer and credit losses will begin to accumulate," warned Torsten Sløk, chief economist at Apollo Global Management. Tech, growth, venture capital, these sectors are especially vulnerable. They have low earnings and thin margins. When credit tightens, they’re the first to fall.5
A Tinderbox Waiting for a Spark
Rebel Cole also warned of another threat: commercial real estate. He sees a looming crisis that could hit regional and super-regional banks especially hard. Many of these banks hold deposits way above the FDIC’s $250,000 limit for insurance. In short, these banks are a “tinderbox,” and as Cole put it, "It’s just going to take one spark." And that spark could be right around the corner.
Trouble on the Horizon
Look, the economy isn’t doing banks any favors right now. A recession is looming, and whispers of stagflation are getting louder. Peter Berezin of BCA Research recently said, "We continue to see a recession as our base case… The U.S. economy was also on a weaker footing than widely believed even before the trade war began." This is coming from a guy who correctly predicted there would be no recession in 2022 when everyone else on Wall Street braced for one. He now puts the odds of recession at 60%. If he’s worried, maybe you should be too.6
Protect Yourself with Real Wealth
The writing is on the wall. We’re staring down the barrel of inflation, recession, stagflation, and market volatility. All while banks sit on a pile of hidden losses. That’s a recipe for disaster. But here’s the good news: you don’t have to be trapped when it happens. Gold doesn’t crash when banks do. It doesn’t lose value in a bank run, and it doesn’t disappear in a financial meltdown. Physical gold is real. It’s solid. And it can be yours.
Don’t wait for the spark to ignite the tinderbox. Call American Hartford Gold at 800-462-0071 and learn how you can protect your savings before it’s too late.
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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.
Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.
Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made numerous high-ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot from thousands of American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.
AHG offers investment-grade gold and silver coins and bars at competitive prices. Clients also benefit from its buy-back commitment with no back-end fees. To learn more, visit American Hartford Gold.
Notes:
1. https://fortune.com/2025/05/14/banks-500-billion-unrealized-losses-stagflation-svb-crisis/
2. https://fortune.com/2025/05/14/banks-500-billion-unrealized-losses-stagflation-svb-crisis/
3. https://fortune.com/2025/05/14/banks-500-billion-unrealized-losses-stagflation-svb-crisis/
4. https://fortune.com/2025/05/14/banks-500-billion-unrealized-losses-stagflation-svb-crisis/
5. https://fortune.com/2025/05/14/banks-500-billion-unrealized-losses-stagflation-svb-crisis/
6. https://finance.yahoo.com/news/why-wall-streets-biggest-bear-still-expects-a-recession-and-much-lower-stock-prices-132051165.html