Here is yet another upside catalyst for the gold bull market.
Another Gold Bull Catalyst
July 8 (King World News) – Gerald Celente: PUBLISHER’S NOTE: The private credit industry will not disappear. Public filings show that the funds are still performing, even if the number of defaults and troubled loans is creeping higher.
The funds overreached by inviting individual investors to put their money into an illiquid asset. Private credit funds were designed as niche investments for institutional investors that could allot a small portion of their money to something that offered a higher return for taking a higher-than-usual risk.
In contrast, most individuals who invested put in a larger share of their assets into the funds. Those individuals were more apt to panic when the industry’s flaws were exposed.
As we have been reporting, the private credit industry’s current shakeout will winnow out rich individuals unable to tolerate higher-than-average risk.
PRIVATE CREDIT’S WITHDRAWAL REQUESTS AGAIN EXCEEDED THE LIMIT
Investors in 20 private credit investment funds monitored by the Financial Times asked to withdraw $22 billion from the funds during the second quarter, or about 8.7 percent of the funds’ assets. The standard among private credit funds is to allow investors to redeem no more than 5 percent in any quarter.
Fund managers honored only $5.9 billion of the requests. In the previous quarter, the funds were more lenient, returning $7.4 billion, according to investment bank Robert A. Stanger. Some funds held fast to the 5-percent rule.
As the run on the funds continued into the second quarter, asset managers felt a more urgent need to protect the funds’ existing assets and to hold firm to the withdrawal limit to discourage the flood of redemption requests.
Overall, the funds the FT watches refused 40 percent of second-quarter withdrawal requests, denying investors access to about $14 billion.
It was the second consecutive quarter in which investors asked for more than $20 billion of their money back. Requests totaled 7.1 percent of assets during this year’s first three months…
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Blue Owl Capital has been at the center of recent redemption requests. In the second quarter, investors attempted to withdraw 38 percent of the assets of the company’s Blue Owl Technology Income Corp. and nearly 19 percent from Blue Owl Credit Income Corp. Both funds shut down payouts after they reached the 5-percent cap.
Blue Owl is seen as a bellwether in the private credit industry. It was the first private lender to open its funds to wealthy individuals and families, from which it raised about 20 percent of its $315 billion in assets. Those are most of the investors who now want out.
Investors discovered private credit funds in the wake of the Great Recession when banks tightened their lending criteria and companies that seemed even slightly risky were less able to find funding. Private lenders stepped in, charging premium interest rates for their services and sharing hefty returns with their backers.
Investors turned away from the funds beginning last fall after two back-to-back bankruptcies by companies heavily in debt to private lending funds. In March, Glendon Asset Management published a report ripping private lenders for slipshod practices in evaluating possible borrowers’ ability to repay their loans.
Two key Blue Owl funds have together attracted less than $40 million in June compared to $640 million in June 2025. The company’s share price has plummeted about 40 percent this year.
In May, the private credit industry drew about $500 million in new funds from investors, The Wall Street Journal said. It was the least in 18 months and 75 percent below January’s inflow.
A shrinking pool of capital will curtail lending funds, denying money to worthy borrowers, and leaving riskier companies in danger of default and failure.
PRIVATE CREDIT: WHAT WENT WRONG?
In the wake of the 2008 Great Recession, rules governing banks were tightened, banks became more cautious in their lending, and businesses that might have borrowed from banks before were no longer qualified.
Private equity firms saw a new market and stepped in, offering loans to companies that were a little riskier than banks could deal with. In return, private equity charged interest rates higher than banks did.
To amass capital for loans, asset managers pooled money from institutional investors, promising them – and, for years, delivering – a steady return higher than traditional bond investments were able to.
With stalwarts such as Apollo Global Management and Blackstone involved, as well as new entries such as Blue Owl Capital, the industry grew to more than $1 trillion a decade ago.
Private credit was on a roll. To gather even more money to make more loans at premium yields, Blue Owl opened its funds to wealthy individuals and family offices. Other lenders quickly followed.
Now private credit is in a tailspin, with those individuals and family offices – and also some institutions – who are requesting their money back.
Analysts, investors, and some industry executives say private lending funds grew too big and too fast. Fund managers made tens, or hundreds, of billions of dollars in loans to companies – particularly software businesses – that now are seen as unable to ever repay.
In March, Glendon Asset Management released a report rebuking the industry, alleging widespread carelessness in assessing potential borrowers’ ability to repay.
Unlike stocks or bonds, private credit funds are not traded on markets so investors cannot cash out at will. Instead, private lenders allow their investors to withdraw up to 5 percent of a loan fund’s assets in each quarter.
Until recently, private lenders were taking in so much money from investors that it was never difficult to meet those quarterly withdrawal requests. The funds simply paid 5 percent to existing investors using the new investment money flowing in. The funds had no need to sell valuable assets to raise cash.
That business model no longer works.
Investors grew more risk-averse last year. In fall 2025, twin bankruptcies by businesses deep in debt to private lenders shocked the funds’ investors. Individuals and small investors began looking for the exits.
As JPMorgan Chase chief executive James Dimon wrote in his annual letter this year, “It has always been true that not everyone providing credit is necessarily good at it.”
This year, redemption requests have climbed as high as 38 percent of a loan fund’s assets. At first, many fund managers met requests beyond the 5-percent limit. However, as the requests mounted during the year’s second quarter, managers were more stringent about sticking to that limit to protect funds’ assets.
Despite an uptick in the number of troubled loans and outright defaults, the funds continue to deliver robust returns, managers insist, and patient investors will be rewarded over the long term.
To give private lenders a boost, the Trump administration has proposed that private credit funds be allowed as assets in 401(k) retirement plans. Paul Atkins, chair of the U.S. Securities and Exchange Commission, and a former executive at Cliffwater, a now-troubled private lender, has endorsed the idea.
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