Precious metals news

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.

U.S. factory orders in October fell sharply by 3.6% month-over-month, the largest drop since the COVID lockdowns in April 2020, with a year-over-year decline of 2.1%. Core factory orders also decreased, down 1.2% monthly and 2.2% annually. Durable goods orders plunged 5.4% in the same month. Despite these declines, defense spending increased by 24.7%. Year-over-year growth in factory orders for October was stagnant amid negative M2 Money growth.

The Case-Shiller National home price index indicates a slowdown in housing price growth since March 2022. Recent homebuyers, particularly in high-demand areas, are facing property value depreciation, making it harder to build equity and potentially leading to sales losses. However, long-term homeowners are still profiting, with 97% of sellers nationwide selling their homes at a gain. The current market's high prices are sustained by tight inventory and homeowners' reluctance to switch to higher mortgage rates.

At the current price, silver is a real bargain.
Gold went on a run late last week, setting an all-time record high last Friday and breaking the $1,100 level for a brief time in overseas trading Sunday night. Silver also rallied but continues to lag behind gold.
In fact, silver looks significantly underpriced based on both its historical relationship with gold and the supply/demand dynamics.

Gold's trend of rallying in December is expected to persist, recently hitting a record high of $2,089.70 an ounce. Factors such as seasonal patterns, economic uncertainties, potential recession, and declining real interest rates are contributing to its strength. Central bank purchases amid limited supply are also supporting gold's rise. Additionally, a weakening dollar due to lower interest rates is boosting gold's appeal. So far this year, gold has increased by over 14%.

Gold prices reached a record high of $2,100 per ounce, driven by geopolitical tensions, expectations of U.S. interest rate cuts, and a potential weaker dollar. Analysts anticipate gold maintaining above $2,000, possibly reaching $2,200 by end of 2024. The demand for gold, seen as a safe-haven asset, is bolstered by factors like the Israel-Palestinian conflict and central banks' interest in gold. A forecasted shift in Fed policy in 2024 could further increase gold's attractiveness.

A U.S. warship, USS Carney, and three commercial vessels were attacked in the Red Sea, linked to tensions from Israel's conflict with Hamas. The Houthis, an Iran-backed group in Yemen, claimed responsibility, targeting the ships with drones and missiles. The USS Carney, which had previously intercepted attacks from Yemen, responded without damage or crew injuries. The attacks raise concerns about the safety of international maritime commerce in a key global trade corridor and the potential wider impact on Middle East stability.

The U.S. faces fiscal difficulties with a rising national debt expected to reach 115% of GDP in a decade and concerns over who will buy the massive issuance of Treasuries. Despite rising Treasury yields and a credit rating downgrade, the U.S.'s economic strength and the dollar's status as a reserve currency offer some investor confidence. However, there's caution against complacency, with the UK gilt crisis serving as a warning of potential market reactions to fiscal instability.

Gold set a new record on Friday and broke it again over the weekend. The spot price went as high as $2,125 in overseas trading Sunday night. In his podcast, Peter Schiff explained why he thinks this bull run is just getting started and gold will go much higher.
In fact, Peter said he thought these records would be broken "many many times over."

ECB's Nagel stated that the battle against inflation is ongoing and challenging, with potential geopolitical tensions posing further risks. He couldn't confirm if interest rates have peaked, as ECB decisions are data-dependent. Nagel expects inflation to decrease gradually and unevenly, influenced by factors like ending energy price caps and strong wage growth in Europe.

Wall Street anticipates the Federal Reserve might cut interest rates as early as May, possibly in March, but Federal Reserve officials, including Chair Jerome Powell, indicate that further rate hikes are still possible. Despite recent slowing inflation, the Fed's focus remains on maintaining rates to reach a 2% inflation target, with some officials open to raising rates further if needed. This stance contrasts with investor optimism for early rate cuts in 2024.

The Vix, known as Wall Street's "fear gauge," has dropped to a four-year low of 12.4, suggesting investor complacency about the Federal Reserve managing inflation without economic downturn. This decrease in volatility coincides with a strong S&P 500 performance and a recent decline in U.S. inflation. However, analysts warn of potential future market instability, as longer-term forecasts indicate higher volatility ahead. Concerns also exist about overlooked risks in areas like commercial real estate and credit delinquencies.

European natgas inventories took a Big Hit this week as a record Cold-Snap hit the region.  Could this be a bad omen for Europe's natgas supply and demand situation this winter?  We will see... but the situation in the U.S. couldn't look any better as natgas inventories hit a 5-year high...

Gold and silver are setting records and building momentum. We got the latest official inflation numbers this week… and the Fed seems to live in a different reality than the rest of us.

Silver's demand remains high due to its industrial use, but the notable trend is the record pace of gold accumulation by central banks globally. Key factors driving the rise of precious metals include the U.S. national debt surpassing $34 trillion, high interest servicing costs comparable to the Defense Department's budget, and geopolitical tensions. Additionally, a weakening dollar and the Federal Reserve's expected shift from restrictive to more accommodative policies contribute to this trend.

Gold is at a critical juncture, benefiting from December seasonals and expectations of a dovish pivot by the Federal Reserve. The dollar's weakness adds to gold's favorable position. Recently rising to $2071, up $35, gold shows potential for further gains without being overcrowded. Short-term profit-taking might follow, but if gold stays above $2050, it's poised for a significant bullish breakout.

Gold prices hit a seven-month high at $2,060.69 per ounce, and U.S. gold futures rose to $2,080.60, following Federal Reserve Chair Jerome Powell's comments hinting at possible U.S. monetary policy easing. These remarks led to increased expectations of an early rate cut next year. Meanwhile, silver prices also climbed, reaching a six-month high of $25.39 per ounce. Both gold and silver benefited from lower interest rates and a weaker dollar.

IRS Commissioner Danny Werfel announced plans to increase hiring of tax enforcement agents in 2024, with a focus on complex cases involving big corporations and high-income earners. This is part of a broader initiative to enhance IRS capabilities using $60 billion in additional funding. Despite assurances that audits will not increase for Americans earning less than $400,000, there are concerns about the lack of a clear definition of "high income" at the IRS, which could potentially lead to more widespread audits. Additionally, the IRS is hiring more armed agents for its criminal investigations division, though Werfel emphasized these hires are not intended to increase the number of tax audits.

The Heritage Foundation reports that 40% of U.S. personal income taxes are now consumed by interest payments on federal debt. In October, $88.9 billion was paid in interest, with annual payments potentially exceeding $1 trillion. The article likens this to a person overwhelmed by credit card debt. Two solutions are suggested: hyperinflation, akin to Venezuela's model, which could drastically devalue the debt but with severe economic consequences, and a debt jubilee, an ancient practice of erasing debt, which is seen as an unlikely remedy in the modern context.