Precious metals news

Mortgage purchase demand has significantly declined, dropping 1% week-over-week and 20% year-over-year. Despite a 3.0% increase in overall mortgage applications for the week ending November 17, 2023, the trend in housing demand is worrisome, with the worst home sales data seen since the 1970s. This downturn in the housing market is indicative of broader economic challenges, reflecting concerns about current fiscal policies and their impact on the economy.

U.S. inflation expectations have reached their highest since 2011, with the University of Michigan reporting increases to 4.5% for the one-year and 3.2% for the five to ten-year outlooks. Consumer concerns about persistent high food and gas prices are significantly influencing these expectations, with those mentioning these costs expecting over 5% inflation ahead. There's a notable downturn in business conditions expectations and weakening buying conditions across various segments. Younger and middle-aged consumers show a pronounced decline in economic attitudes, reflecting growing negativity about the financial outlook.

Global Investment Firm BlackRock strategists predict persistent market volatility due to high interest rates worsening the U.S.'s significant debt burden, now close to $34 trillion. Interest payments, which have soared to $1 trillion annually, are set to exceed Medicare spending soon. The Federal Reserve's aggressive rate hikes have not only aimed to curb inflation but also slowed economic growth, suggesting prolonged high rates and heightened market instability. This challenging financial environment is marked by fears of recession and the end of easy money, leading to increased unpredictability and economic strain.

The U.S. economy faces severe challenges, highlighted by the Conference Board’s index of leading economic indicators declining for 19 consecutive months, signaling an impending recession. This downturn is evident in the labor market, with over 106 million U.S. adults currently without jobs, including those not officially counted as unemployed. This figure surpasses the joblessness peak during the 2008-2009 crisis. Additionally, a large portion of Americans are living paycheck to paycheck, and the situation is worsening with increasing layoffs. Young Americans are particularly struggling, unable to afford homes due to low-paying jobs and student debt.

Even with a potential soft landing of the U.S. economy, gold remains a promising investment. Central banks, particularly in China, plan to increase their gold reserves for diversification and geopolitical security. In China, ongoing real estate challenges could drive households towards gold as a safe wealth store. Moreover, the global political landscape in 2024, marked by significant elections, might heighten economic and geopolitical risks, making gold an attractive hedge for investors. These factors collectively sustain gold's appeal in various economic scenarios.

The U.S. economy shows troubling signs as durable goods orders fell sharply by 5.4% in October, significantly more than the expected 3.2% decrease. This decline points to a slowdown in economic activity, with year-over-year growth now at a nominal 0.9%. Major reductions in defense and non-defense aircraft spending, alongside stagnant core capital goods shipments, indicate weakening industrial demand, signaling potential economic challenges ahead.

The number of Americans filing for first-time jobless benefits dropped to 209,000 from 233,000 the previous week. Continuing claims slightly decreased from 1.862 million to 1.84 million, remaining near two-year highs. However, Goldman Sachs warns that seasonal distortions affecting continuing claims are likely to reverse, potentially increasing these claims by 375,000 between now and March, indicating a worsening situation in the job market.

Big money managers view the recent uptick in U.S. stocks and bonds as a fleeting rally, overshadowed by looming concerns about fiscal and monetary policies, the 2024 presidential election, and potential recession. The market's optimism is countered by fears of the negative impacts of Federal Reserve's interest rate hikes and a global economic slowdown, leading to a cautious outlook for the coming year with expectations of minimal growth in major indices like the S&P 500.

Milei, following his election victory, plans to drastically reduce government spending to avoid hyperinflation, which is currently exceeding 140% annually in Argentina. He warns that without fiscal adjustment, the country risks spiraling into hyperinflation. Milei's focus will be on addressing the central bank's balance sheet and reducing interest payments on peso bonds, which constitute a significant portion of the GDP. He emphasized that spending cuts would target the political class, not ordinary citizens, and public works projects would seek private capital. Milei criticized the outgoing administration for excessive spending and pledged to eradicate inflation, avoiding a situation similar to Venezuela.

The US Treasury's four-year cumulative deficit has soared to $9.0 trillion, with daily debt accumulation averaging $6.2 billion. This rapid increase signifies a drastic acceleration in national debt growth, raising serious concerns about fiscal management. Contributing factors include high interest rates and a declining commercial real estate market, marked by increased delinquencies and a slow recovery. This fiscal trajectory suggests an impending financial crisis, driven by unchecked government spending and rising debt service costs. The outlook for the US economy appears increasingly challenging with limited immediate solutions.

The commercial real estate market is experiencing a significant downturn, especially in the office sector where vacancy rates have surged. Experts predict up to 1 billion square feet of unused office space by decade's end. The current vacancy rate is close to historical highs. With higher interest rates reducing property appeal and causing asset value declines, the market's recovery appears to be years away. This slump extends beyond offices to sectors like hotels and shopping centers, compounded by rising commercial mortgage delinquencies. The situation is part of a broader economic downturn, with a recession and stock market declines expected. The commercial real estate correction is just beginning, signaling more difficulties ahead.

"Resilient" American consumers are digging into their retirement funds to pay their bills.
Mainstream financial pundits, politicians, and Fed officials keep telling us the economy is strong because Americans keep spending money. They just assume this is a sign of economic strength without ever asking exactly how they're paying for all of this "robust" spending.

Inflation robs you of purchasing power by driving up the price of everything you buy. You see the impacts of inflation every time you go to the store. But sometimes inflation hits you in a more subtle way that's difficult to see - through "shrinkflation."
I experienced shrinkflation first-hand last weekend.

Is the International Monetary Fund suggesting that "Gold is no longer a barbarous relic? "  Many central bankers are considering this excellent question.  Unfortunately, the IMF Gold Report totally excludes the most important factor why central bank gold reserves will surge in the future...

His hedge fund returned a staggering 4,200% over a 7-year span. Now, he’s turning his attention to gold and silver...

Gold futures have surpassed $2,000 an ounce, the highest since late July, buoyed by strong central bank buying and easing U.S. inflation expectations, which suggest a possible end to Federal Reserve interest rate hikes. The surge is partly due to increased gold imports by India and sustained interest from global central banks. Factors like lower interest rates, a weaker U.S. dollar, and geopolitical risks are positioning gold to potentially exceed record highs.

The period after 2005 marked the boom phase of the gold and silver bull market, peaking in 2011. Despite debates about whether this was the final high, many believe it wasn't due to ongoing global fiat currency debasement. The bear market that followed since 2011 is often compared to the mid-1970s' two-year downturn, which came after a strong rally and was followed by a significant parabolic increase. The expectation is that precious metals will regain prominence once the current asset bubbles in other markets burst, an event that appears imminent.

The European Central Bank alerts to increasing losses and high debt burdens in the Eurozone property sector, surpassing levels seen before the 2008 crisis. Higher financing costs, reduced property values, and declining rental income are key issues. This distress in the commercial real estate market, a significant part of eurozone bank loans, could lead to considerable losses in the financial system. With ECB interest rate hikes, borrowing costs have risen sharply, and Moody's Analytics has downgraded numerous European real estate firms. The ECB warns of a potential surge in bank loans to unprofitable real estate businesses, exacerbating the sector's financial strain.

The Federal Reserve, using its power to set interest rates, attempts to influence economic and social outcomes, often exacerbating problems. Global mortgage rates are rising sharply due to central bank tightening post-Covid, as they try to control inflation fueled by excessive government spending. This situation has led to most homeowners being locked into low borrowing rates, negatively impacting home sales. Under the Biden administration, the U.S. conforming 30-year mortgage rate has increased by 156%, and the 10-year Treasury yield has risen by 304%.

Since the Fed's meeting on November 1st, the dollar has dropped over 3%, boosting stocks, bonds, and bitcoin, with a marginal increase in gold. Markets now expect more rate cuts in 2024, forecasting nearly 100 basis points reduction next year. Concurrently, the yield curve has significantly flattened. Despite this, recent U.S. economic data has been underwhelming, and financial conditions have loosened. The market anticipates an end to rate hikes and potential rate cuts soon, though the Fed maintains a hawkish stance with Chair Powell emphasizing persistent inflation challenges.