Precious metals news

The U.S. bond market recently faced stress due to a spike in demand in the repurchase agreement (repo) market, causing overnight repo yields to exceed 5.50%. This situation, reminiscent of the September 2019 market disruptions, occurred when a shortage of bank reserves and increased government borrowing led to spiked financing rates, prompting Federal Reserve intervention.

Mohamed El-Erian from Allianz suggests the U.S. Federal Reserve is facing challenges in effectively communicating its interest rate strategy. He believes the markets are wrongly anticipating imminent rate cuts and that the Fed might tolerate higher inflation rather than risking a recession. El-Erian emphasizes the Fed's credibility issue and proposes that it may need to accept slightly higher inflation rates due to post-pandemic economic changes.

Euro zone business activity experienced a lesser downturn last month, but still suggests an economic contraction this quarter. The dominant services sector is facing challenges in generating demand, as indicated by recent survey findings.

Central banks gobbled up gold over the summer and the buying spree has continued into the fall.
Globally, central banks added another net 42 tons of gold to their reserves in October.

The Bank of England's plan for a digital pound could heighten the risk of bank runs and failures, as it allows for faster withdrawals during financial instability. The move may also lead to increased borrowing costs, as banks face higher funding costs. MPs have raised concerns about potential data misuse and the adverse impact on those reliant on physical cash. The need for clear evidence of the digital pound's benefits without escalating risks is emphasized.

Moody's Investors Service has lowered China's sovereign credit rating outlook to negative due to concerns over prolonged economic slowdown and challenges in the property sector. This change reflects the increasing financial support from the government to weaker regions, posing risks to China's overall fiscal and economic stability amidst broader economic challenges.

China faces a significant financial time bomb risk due to its banking system's exposure to a substantial amount of hidden debt, accumulated by cities and provinces through years of unchecked borrowing. Estimates by the International Monetary Fund and Wall Street banks place this off-balance-sheet government debt between $7 trillion and $11 trillion. This debt largely comprises corporate bonds issued by local-government financing vehicles for infrastructure projects and other expenditures.

China's central bank injected 210 billion yuan (approximately $29.52 billion) into the market through seven-day reverse repos at a 1.8% interest rate. This intervention, aimed at stabilizing liquidity in the banking system, reflects ongoing concerns about financial stability towards the month's end.

The Federal Reserve's Vice Chair for Supervision announced that the central bank is considering changes to its regulatory and supervisory guidelines for liquidity management. This reassessment is due to concerns that existing measures may not effectively handle the rapid pace of modern bank runs.

Gold surged to a new record high of $2135 early Sunday morning before pulling back sharply Monday. In this video, Peter Schiff explains why this is a buying opportunity.
After setting the record, gold quickly sold off and consolidated, dropping over $100 back to around $2,020. Some people see the quick selloff as a bearish sign. Peter said he doesn't think so.

We can thank the shale companies for their hard work producing tight oil, which we export nearly half.  Amazingly, the U.S. exports more oil now than what Iran, Kuwait, or the UAE produces.  The U.S. shale industry is exporting the highest-cost oil at bargain-basement prices...

Gold prices, after reaching a record high of $2,100, retreated, with investors anticipating Federal Reserve rate cuts next year. Bloomberg Intelligence's Mike McGlone notes gold is trying to maintain support around $2,000, previously a resistance level. McGlone sees gold in the early stages of a bull market, driven by significant purchasing from central banks.

The Bank for International Settlements (BIS) maintains a cautious outlook on inflation, despite some recent improvements, signaling ongoing challenges for central banks. The BIS underscores the necessity for central banks to adapt to a potentially worsening global economic climate, particularly as rising interest rates begin to strain consumer credit markets, including the burgeoning buy-now-pay-later sector. With the end of ultra-low interest rates, the BIS points to a persisting uncertainty and a possibly difficult road ahead in managing inflation and interest rate levels.

Central clearinghouses, with over $1 trillion in liquid assets, can worsen financial stress by creating "margin spirals." During crises, increased margin requirements by these clearinghouses can lead to widespread asset sell-offs, escalating market volatility. The Bank for International Settlements (BIS) highlights concerns about their $600 billion government bond holdings, which can exacerbate sell-offs when their value drops. This risk transforms counterparty risk into systemic liquidity risk. The BIS emphasizes that such spirals, even from small market segments, can threaten the broader financial system's stability.

What does Mike Maloney think of the recent price action in gold and silver? Tune in today’s video to find out…

The White House has alerted Congress that it is nearly out of funds for military aid to Ukraine, having spent approximately $111 billion. Without additional funding, the U.S. will be unable to continue supporting Ukraine with weapons and equipment. The Pentagon has already used 97% of its allocated funds, and the State Department has exhausted its budget for military assistance.

Increasing numbers of Americans are withdrawing from their 401(k) accounts, signaling rising financial strain amid high inflation. Fidelity reports a jump in hardship withdrawals and loans from retirement savings. This trend, along with growing consumer and executive pessimism, suggests concerns about an impending recession and the ongoing impact of inflation on household incomes. JPMorgan CEO Jamie Dimon also highlighted risks of an economic downturn due to rising interest rates.

The dollar started the week weak after cautious remarks from Federal Reserve Chair Jerome Powell, with markets anticipating a potential end to the rate-hike cycle. Powell indicated U.S. policy was slowing the economy, leading to a 60% chance of a rate cut by March. Meanwhile, Bitcoin surged to $40,000, its highest in over a year. The U.S. dollar index hovered around 103.28, while the Australian and New Zealand dollars strengthened. Upcoming speeches by European Central Bank officials and economic data could further impact currency markets.

A Penn Wharton study suggests the U.S. could reach its public debt limit of approximately 200% of GDP in about 20 years under current fiscal policy. Currently, U.S. public debt stands at about 98% of GDP, or $26.3 trillion. Without corrective measures, the U.S. risks defaulting on its debt. Market confidence in future fiscal adjustments could shorten this timeframe if lost. The study also notes that the severity of the debt issue is often exaggerated, and recent increases in gold prices indicate growing concerns about debt sustainability.

The U.S. Treasury yield curve has shifted from steeply inverted in May to nearly flat and is now steepening again. This unusual pattern, resembling an inverted double hump, suggests mixed market expectations about a potential short recession followed by inflation, risk aversion, or doubts about the Federal Reserve's control. The current shape of the yield curve raises concerns about the sustainability of U.S. federal debt and the temporary nature of recent inflation declines.