Precious metals news

In a strategic move to fortify their economies, the BRICS countries - led by China, Russia, and India - have significantly ramped up their gold reserves, becoming the top gold buyers in 2023. According to the World Gold Council, China alone added a staggering 225 tonnes of gold to its reserves last year. This trend is not just a fleeting one; early 2024 data indicates that these nations are continuing their aggressive gold acquisition. Analysts suggest this gold buying spree is a defensive measure against potential economic repercussions from a looming recession in the US and the forthcoming presidential elections. By increasing their gold reserves, BRICS nations aim to shield their economies from the volatility of the US dollar, with gold serving as a vital hedge against market crashes and inflation.

In a promising start to 2024, U.S. business activity has shown a notable uptick in January, alongside signs of cooling inflation. S&P Global's latest survey reveals that the flash U.S. Composite PMI Output Index, encompassing manufacturing and services sectors, has risen to a robust 52.3, marking its highest point since the previous June. This surge from December's 50.9 is attributed to significant gains in both the services and manufacturing domains. Furthermore, a key highlight is the reduction in prices charged by companies for their products, reaching their lowest in over three and a half years, signaling a potential easing of inflationary pressures.

XIB Asset Management, a Canadian hedge fund that soared by 227% during the first two years of the pandemic, is now strategically focusing on gold and uranium, anticipating their strong performance as interest rates are predicted to fall. The fund's founders, Sean McNulty and Peter Hatziioannou, foresee a near-future where policymakers start reducing borrowing costs, boosting prospects for global resources and revitalizing Canadian capital markets.

As the conflict continues to accelerate in Gaza and beyond, 2024 is set for a somewhat terrifying boom in global uncertainty — and will take gold prices with it.

The Atlantic Council has identified the Federal Reserve's rate hikes as a key driver behind the growing trend of de-dollarization globally. The Fed's rate increases, coinciding with the aftermath of Russia's invasion of Ukraine, have made dollar borrowing costlier and less accessible. This change has encouraged emerging market firms to explore alternatives like the Chinese Yuan (RMB). The think tank also acknowledges the geopolitical elements in play, particularly the Western sanctions against Russia, which have frozen Moscow's currency reserves and restricted its access to the global financial system, further accelerating the move away from the U.S. dollar.

As the global economy enters a critical phase in managing inflation, central banks are hesitant to declare victory too soon, fearing the consequences of maintaining tight monetary policies for an extended period. The current financial landscape sees a significant slowdown in the pace of inflation, shifting the focus from when to how much interest rates will be reduced this year. Despite market expectations of imminent rate cuts, possibly as early as March, and some economists predicting a phase of below-target inflation, decision-makers remain skeptical. This cautious stance was evident in recent discussions at Davos, where the sentiment was clear: victory against inflation is not yet secured.

Anyone who has been to a restaurant, a grocery store, or the car lot during the Biden administration can’t deny the reality of inflation. But despite what the federal government is saying about the success of its anti-inflation efforts red flags for inflation keep popping up in the strangest places.

Brevan Howard's chief economist warns that the Federal Reserve's significant misjudgment of inflation levels has steered the United States towards an inevitable recession in 2024. The central bank's aggressive monetary policy, marked by the sharpest interest rate hikes in forty years - from near-zero in March 2022 to between 5.25% and 5.5% by July 2023 - is exerting considerable downward pressure on the economy. This tightening of monetary policy, described as one of the most stringent on the brink of a recession, has been a critical factor in the economic downturn. The labor market shows significant signs of strain, with hiring nearly at a standstill and a notable drop in the number of people moving from the labor force into jobs.

Morgan Stanley has issued a report, "Digital (De)Dollarization?", shedding light on the potential shift in the currency landscape due to digital assets. Authored by Andrew Peel, the bank's executive director and head of Digital Asset Markets, the report highlights the increasing scrutiny of the US dollar's dominance amidst geopolitical changes and the growing US twin deficits. Peel points out that the rise of digital assets like bitcoin, the expansion of stablecoin volumes, and the emergence of central bank digital currencies (CBDCs) could significantly impact the global currency dynamics. He notes that recent US monetary policies and the strategic use of economic sanctions are prompting some nations to seek alternatives to the dollar.

The United States, the world's wealthiest nation, has seen its public debt skyrocket to a staggering $34 trillion, setting a new record even when adjusted for inflation. This alarming increase in debt levels is a trend mirrored in many major economies globally. The situation raises critical concerns about the long-term financial sustainability of key entitlement programs like Medicare and Social Security in the U.S., with debates intensifying in Washington. An impending battle over the debt ceiling is on the horizon, with the current agreement set to expire in January 2025. The U.S. debt-to-GDP ratio has climbed to a concerning 123%, according to the International Monetary Fund (IMF).

Bill Gross, the renowned co-founder and former chief investment officer of Pacific Investment Management Co., has advised the Federal Reserve to immediately cease its balance sheet reduction and start cutting interest rates within the next six to 12 months. Speaking on Bloomberg Television, Gross criticized the Fed's current approach of quantitative tightening as inappropriate under the present economic conditions. He strongly believes that changing this policy and lowering interest rates soon is crucial to prevent a looming recession.

UBS strategists forecast a potential 10% increase in gold prices by the end of the year, driven by anticipated interest rate cuts, despite initial declines in early 2024. In a recent note, UBS referred to the current price fluctuations as minor compared to gold's 15% rise in 2023, emphasizing the significant impact of the Federal Reserve's policy changes. They predict gold may reach $2,250 per ounce by year-end, maintaining its position above the crucial $2,000 mark. Contrasting UBS's optimism, Scotiabank analysts maintain a cautious stance but have revised their year-end gold forecast upwards to $2,000 per ounce. Gold prices, influenced by factors like geopolitical instability and market uncertainty, often rise as they are seen as a "safe haven" asset. However, market confidence in the Federal Reserve initiating rate cuts as soon as March is waning, with current probabilities around 48%, a decrease from previous higher expectations.

Peter was recently featured on Real America hosted by Dan Ball.
It's no secret that the government has been spending more than it collects, and there are indications that the Biden administration is addressing this issue.

The U.S. Mint has sold nearly 5 million Silver Eagles in the first three weeks of the year compared to only 87,500 oz of Gold Eagles.  This is a Big trend change compared to the previous three years, as the Silver-to-Gold Eagle buying ratio has more than doubled...

Mike highlights the economic perplexities surrounding this decision and questions the implications of creating “free currency.”

China's gold market witnessed a notable surge in 2023 despite the country's economic recovery facing challenges and consumer spending remaining cautious. The Shanghai Gold Benchmark Price PM saw a significant 17% increase. Gold withdrawals from the Shanghai Gold Exchange rose to 1,687 tons, a 7% year-over-year increase. Impressively, Chinese gold ETFs attracted an additional RMB 5 billion (around US$654 million), pushing their total assets under management to a record RMB 29 billion (US$4 billion), with holdings increasing by 10 tons to 62 tons. The People’s Bank of China (PBoC) consistently purchased gold throughout the year, increasing their reserves by 225 tons to a total of 2,235 tons. This robust demand, coupled with stable production and a drop in imports late in the year, led to unprecedented local gold price premiums.

The president touted a manufacturing renaissance. However, economic indices show US manufacturing entering a Dark Age. Home sales are not looking bright, either.

This week, two significant economic reports are poised to shape the Federal Reserve's approach to interest rate policy, amid growing market skepticism about imminent rate cuts. Firstly, the Commerce Department's initial estimate of the fourth-quarter GDP for 2023 is set to be released on Thursday. Experts predict a modest 1.7% growth, marking the slowest pace since the 0.6% decline in Q2 of 2022. This data will provide a comprehensive overview of the U.S. economic growth in the final quarter of 2023. Following this, the Commerce Department will unveil the December reading of the personal consumption expenditures (PCE) price index on Friday. This index, a crucial measure for the Fed, is anticipated to show a 0.2% increase for the month and a 3% rise for the year, excluding the volatile food and energy sectors. These reports will be key in determining the Fed's future monetary policy direction and are likely to significantly impact market reactions.

A recent study by the Groundwork Collaborative highlights a striking trend in the current economic landscape: over half of the inflation surge in the past year is attributed to 'greedflation,' a phenomenon where corporations leverage excessive profit-taking. Despite a decrease in the overall pace of consumer inflation, it has settled around 3%, with recent months seeing unexpected rises. This trend persists even as prices for wholesalers show stability or decline, indicating that the inflationary pressures are not entirely driven by market fundamentals. The study's findings emphasize that corporate profits are at record highs, suggesting a link between these profits and the sustained inflation rates.

According to the EIA, total World Petroleum Supply reached a record high in September 2023, surpassing the previous peak in November 2018.  However, there's a CATCH.  While the total world petroleum liquid supply hit a new high, crude oil production is down considerably...