Silver Rises Over 120% YTD 
Published: 09-02-2026, 11:30 am
Key Takeaways
- Loss given default on a bank-held home mortgage is currently near zero. The Case-Shiller national index rose about 47% from 2020 to early 2024, so a lender can sell the house and clear the loan.
- On multifamily property, by contrast, the loss at default has run close to 100%. Same economy, same inflation, opposite outcome.
- All other loans and leases, the Fed’s own category name, grew 17.9% between July 2025 and August 19, 2026. The whole loan book grew 8.0% over the same span [Federal Reserve H.8]
- US banks added about $1.04 trillion in loans over that span. Their loss reserves fell $0.7 billion, and coverage slipped to 1.439% of loans.
- Three of Whalen’s specific claims do not match the measured data. We checked each one and report what we found.
Between July 2025 and the week ending August 19, 2026, US commercial banks added roughly $1.04 trillion to their loan books. Over that same stretch, they set aside nothing extra to cover losses on it. Reserves for credit losses actually fell, from $202.4 billion to $201.7 billion [Federal Reserve H.8].
That is not an accounting error. It is the arithmetic behind every reassuring bank headline you have read this year.
Christopher Whalen has spent decades reading these statements, four of them by his own count. He worked at the Federal Reserve Bank of New York, at Bear Stearns and at Prudential Securities. He later ran research at Kroll Bond Rating Agency. Today he runs Whalen Global Advisors and writes The Institutional Risk Analyst.
On the Golds Show this week, he made a specific argument to Megan King Diaz. Bank numbers look clean, he says. The reason they look clean should interest you more than the fact that they do.
Why Are Bank Credit Losses So Low Right Now?
Loss rates are low because asset prices rose, not because borrowers got safer. That is the whole mechanism. It has a name bankers use daily: loss given default.
Loss given default measures what a lender actually loses after a borrower stops paying. The collateral gets sold, and the shortfall is the loss. Now consider a mortgage written in 2020. The Case-Shiller national index then rose about 47% by early 2024 [S&P Dow Jones Indices]. Whalen rounds that to 50%.
Therefore a borrower who defaults today usually leaves behind a house worth more than the loan. The lender sells the property and clears the balance. Whatever remains goes back to the former owner.
Whalen puts the result bluntly. He says the loss given default on such a loan is now “around zero incredibly.” At times, he adds, it has been negative.
A negative loss on a default sounds impossible. In practice, it means the recovery exceeded the exposure. So the loan book reads spotless.
Now notice what that figure is really measuring. It is not measuring borrower quality or underwriting discipline. It is measuring four years of house price inflation. As a result, the metric holds only while those price levels hold.
So that is the bet. Banks have priced their loan books on the assumption that collateral values keep doing the work.
The reserve numbers show banks behaving accordingly. Across that same span, loans grew 8.0%. Meanwhile reserve coverage fell from 1.559% to 1.439% of the book [Federal Reserve H.8]. In other words, the industry read the clean loss rates as durable.
The Knowledge That Changes Everything
Two essential guides — yours free. Understand why gold matters and why fiat currencies always fail.
Why Do Apartment Loans Lose Almost Everything While Home Loans Lose Nothing?
Because the same inflation reached house prices and was kept away from rents. Whalen says the loss at default on multifamily assets has run close to 100%.
This is the sharpest thing in the interview. It is worth sitting with. One economy. One inflation. Two collateral types secured by roughly the same bricks. Yet one recovers everything, and the other recovers almost nothing.
His explanation is political rather than economic. Single-family houses reprice freely, so inflation lifts the collateral. Rent-regulated apartment buildings cannot reprice their income the same way. Consequently the building’s value stalls while its operating costs climb. He points to the rent control debate in New York, and he notes that other countries ran the same experiment.
Treat that as his reading of the cause. The pattern itself, however, is what matters here. Collateral inflation is doing the work in one category and not the other. That tells you the clean numbers are conditional rather than structural.
What Is the Fastest Growing Loan Category on US Bank Balance Sheets?
It is a line item called all other loans and leases. Mostly, it is market risk rather than credit risk. The Federal Reserve defines it to include margin loans for buying securities. It also covers lending to non-depository financial institutions, unplanned overdrafts, and loans not classified anywhere else [Federal Reserve H.8].
Whalen calls it a sleepy corner that nobody watches. We checked the release ourselves rather than taking the characterization. The numbers back him up.
Between July 2025 and August 19, 2026, the total loan book grew 8.0%, from $12.98 trillion to $14.02 trillion. All other loans and leases grew 17.9% over that same span, from $2.82 trillion to $3.32 trillion. Nothing else came close. Commercial and industrial lending managed 10.4%. Residential real estate grew just 1.8%. Reserves for credit losses actually fell 0.3%, from $202.4 billion to $201.7 billion [Federal Reserve H.8].
Two figures stand out once you do the division. First, this category is 23.7% of the loan book. Yet it took 48.5% of all loan growth. Second, lending to non-depository financial institutions crossed $2 trillion on its own. That single line absorbed 33.9% of the growth.
Is This Trend Actually New?
No, and that strengthens the point rather than weakening it. The FDIC reports this has been the fastest-growing loan segment since 2008. It compounded at 21.9% a year from 2010 to 2024, nearly three times the next-fastest segment [FDIC]. The St. Louis Fed put the outstanding balance at $1.14 trillion in early 2025. Borrowers include mortgage companies, private credit funds, insurers and broker-dealers [St. Louis Fed].
So banks increasingly lend to the firms that lend. Whalen’s conclusion follows from that composition. Growth now comes from margin credit and from loans to leveraged intermediaries. Consequently the risk profile tilts toward markets and away from traditional credit.
Does This Hold Every Quarter?
No, and the scope matters. Across the period in the table, this category grew fastest by a wide margin. In the second quarter of 2026 specifically, however, commercial and industrial lending grew faster on an annualized basis. That reading was 14.8% against 13.9% [Federal Reserve H.8]. The trend is real over a year. It is not the fastest line every single quarter.
Which of Whalen’s Claims Does the Data Not Support?
Three of them. We would rather tell you than let you find out later.
Are Almost Half of US Homes Falling in Value?
Not on the measured data. He says almost half are falling today. In the year to July 2026, 64 of the 300 largest US housing markets posted annual declines. That is 21%, while national prices rose 1.1% [ResiClub]. The count peaked near 89 markets earlier in 2026 and has since eased. His denominator may differ from the metro series. Still, no public series we could verify puts the figure near half.
Are Mortgage Rates Above 7%?
Not the benchmark rate. He says rates are at “seven and higher.” The 30-year fixed averaged 6.66% in the Freddie Mac survey of August 27, 2026 [Freddie Mac]. Specific borrowers and channels certainly pay more. The headline number, though, starts with a six.
Is Kevin Warsh Trying to Avoid a Rate Hike?
The market is positioned for the opposite. Whalen reads the Fed chair as avoiding hikes before the midterms. He also speculates that Warsh made a commitment to the president. Warsh has testified that he was never asked to commit to any rate decision. He added that he would not agree to do so.
At Jackson Hole, moreover, Warsh said underlying inflation had not meaningfully improved. He said the Fed has work to do. As of September 1, futures priced a quarter-point September hike at between 60% and 66%, depending on the reading [CNBC, Forbes]. Either way the direction is up, not on hold.
Note which claims survived. The mechanism held up under every check we ran. The forecasts and the political reads did not. That distinction is the useful takeaway from any interview like this one.
What Does This Mean If You Own Gold and Silver?
It means the diversification you already own is doing quiet work. The reason is correlation, not prediction.
Consider what the H.8 composition implies. Bank loan growth is concentrating in margin credit and in lending to leveraged financial firms. Therefore bank results increasingly track asset prices. Your equity holdings track asset prices too. So the defensive and growth parts of a portfolio can begin moving together. That happens exactly when you would want them not to.
Physical metal sits outside that chain. It has no counterparty. It carries no servicing asset held at an optimistic mark. It does not depend on collateral values holding.
The fiscal backdrop points the same direction. Whalen cites $40 trillion of federal debt and a possible $2 trillion annual deficit. Both figures check out exactly.
Total public debt crossed $40 trillion on August 18, 2026, according to Treasury data [Washington Post]. It had reached $39 trillion only five months earlier [The Hill]. On the deficit, the Congressional Budget Office raised its fiscal 2026 projection to $2.1 trillion in August. In February it had published $1.9 trillion [The Hill]. Borrowing had already hit $1.8 trillion through ten months [CBO].
So he was not rounding up. He was, if anything, slightly conservative. Meanwhile the 30-year Treasury yield pushed above 5.3% in August, its highest since 2007 [The Hill]. That is the long-end pressure he describes.
None of this requires a forecast. It requires only the arithmetic. The money supply must keep expanding to service that debt. Inflation remains the mechanism that reduces the real burden. Sound money, by definition, is money whose supply cannot be expanded by decree.
That is the entire case. It needs no dread attached to it.
Watch the Full Conversation
This article covers the mechanism. The interview covers the judgments, and that is where Whalen is most direct.
In the full episode he explains what happened to United Wholesale Mortgage. He describes how Oaktree ended up holding the company. He also uses a phrase for Oaktree that we have deliberately left on the tape.
He says the mortgage sector problem is not a one-off. Then he names what he expects before year end. He walks through why Treasury bond buybacks net to nothing, using the Treasury General Account mechanics. He describes the Treasury as the dog and the Federal Reserve as its alter ego. He says what he would demand of Congress as Treasury Secretary.
Finally, he says something about the US dollar that few American commentators will say on camera.
He is also asked the hardest question a bearish analyst can face. What would convince him he is wrong? His first response is not words.
Watch the full interview with Christopher Whalen here.
Stay On Top of Gold & Silver Prices
Get important market alerts sent straight to your inbox.
People Also Ask
Loss given default is the share of a loan a lender loses after the borrower stops paying. The collateral is sold and the shortfall is the loss. On US home mortgages held by banks it is currently near zero. The Case-Shiller national index rose about 47% from 2020 to early 2024, so recoveries have occasionally exceeded the loan balance.
Yes. Reserves for credit losses fell to $201.7 billion by August 19, 2026. In July 2025 they stood at $202.4 billion, and loans grew about $1.04 trillion in between [Federal Reserve H.8]. Reserve coverage fell from 1.559% to 1.439% of the loan book.
The Federal Reserve uses this category for lending that does not fit the main buckets. It includes loans to non-depository financial institutions and margin credit for securities purchases. It also covers unplanned overdrafts, loans to foreign banks and governments, and lease financing receivables [Federal Reserve H.8].
Banks increasingly finance the firms that lend, rather than lending directly. Those borrowers include mortgage companies, private credit funds and broker-dealers. The FDIC reports this has been the fastest-growing loan segment since 2008. It compounded at 21.9% annually from 2010 to 2024 [FDIC].
Christopher Whalen argues the Treasury drives policy. He describes the Federal Reserve as its alter ego. That is a contested view rather than a settled one. The Fed sets rates through the FOMC by vote. Recent meetings have produced open dissent, including a 9-3 split in July 2026.
When bank loan growth concentrates in market-facing credit, bank results track asset prices more closely. Portfolio assets can then correlate more tightly under stress. Physical gold and silver carry no counterparty and no collateral dependency. That is the structural reason they are held alongside financial assets rather than instead of them.
SOURCES
1. Federal Reserve, Assets and Liabilities of Commercial Banks in the United States (H.8), release of August 28, 2026
2. FDIC, Bank Lending to Nondepository Financial Institutions
3. S&P Dow Jones Indices, S&P CoreLogic Case-Shiller national home price index
4. Freddie Mac, Primary Mortgage Market Survey, week of August 27, 2026
5. ResiClub analysis of the Zillow Home Value Index, July 2025 to July 2026
6. The Washington Post, US debt surpasses $40 trillion
7. The Hill, CBO raises its fiscal 2026 deficit projection to $2.1 trillion
8. Congressional Budget Office, Monthly Budget Review: August 2026
9. CNBC, Warsh’s Jackson Hole speech and September hike pricing
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.
You May Also Like:
- Four “Imminent Collapse” Arguments Are Everywhere Right Now. Here’s What the Data Actually Shows.
- Gold Beat Aircraft and Oil to Top America’s Export List. Nobody Agrees Why.
- One Freeze Taught Every Government a Lesson. China Is Still Acting on It.
- Rick Rule Sold 80% of His Silver. He Won’t Touch His Gold.
- Your Bank Balance Is Lying to You. The Number Is Real. The Wealth Isn’t.
- The Economy Lost 23,000 Jobs. Gold Climbed Toward $4,400. Here’s the Mechanism.
- Who Really Owns the World’s Gold? The Answer May Surprise You.
- The AI Trade Has Four Disguises and One Is in Your Portfolio
