Precious metals news

The October CPI came in lower than expected, sparking a rally in stocks, bonds, and gold. Cooling prices reinforced the belief that the Federal Reserve won the inflation fight and the rate hiking cycle is over. In his podcast, Peter Schiff explained why the demise of inflation is greatly exaggerated.

David Stockman, a critic of Keynesian economics and monetarism, argues for the free market's ability to self-regulate without government intervention. He views government efforts to manage the economy through fiscal and monetary policies as ineffective due to global economic interconnections. Stockman also revisits the Great Depression, suggesting it was a necessary market correction and not a failure of capitalism. He criticizes the abandonment of sound money and the negative impacts of inflationary policies, especially on asset inflation in major companies, presenting a strong case against conventional economic theories.

Interestingly, the top four gold miners' costs declined slightly in Q3 2023 but are still much higher than the reported AISC - All-In Sustaining Costs.  Unfortunately, investors continue to be misled by the gold mining industry because the AISC artificially lowers the actual cost of production...

Japanese investors, responding to the yen's historic decline against the U.S. dollar, have driven the price of gold to a record high of ¥300,000. This surge, deviating significantly from the 30-year average of around ¥100,000, reflects a growing trend in Japan to use gold as a hedge against inflation. In response to escalating consumer prices, Prime Minister Fumio Kishida has rolled out a ¥17 trillion ($113 billion) stimulus package, featuring tax cuts, subsidies, and support for low-income households.

In a notable surge, the United States Mint reported significant increases in bullion coin sales for October. The Mint's flagship American Gold Eagles experienced a remarkable triple-digit percentage growth, while the core American Silver Eagles also saw substantial double-digit gains. Impressively, the year-to-date sales totals for both these coins have already surpassed their respective total sales for the entire year of 2022. This spike in demand indicates a growing interest in precious metals as investment assets.

Gold has successfully rebounded from $1935/ounce, with the significant psychological barrier of $2000 now in its sights. The Relative Strength Indicator suggests there's room for further growth without overbuying concerns, indicating the rally could potentially surpass $2000, aiming for October's peak of $2009. Current market sentiment is strongly bullish, evidenced by 65% of traders being net long, anticipating further price increases and reinforcing a bullish outlook for gold.

The US, once a dominant global power post-World War II, is facing significant decline. Its shift from the world's largest creditor to its largest debtor, and reliance on foreign manufacturing, have weakened its economic position. The 2021 decision to confiscate Russian assets has led many countries to align with China and Russia, reducing US global influence. Additionally, overinvestment in outdated military technology and changes in military policies signal further decline. The US is at a critical point, with its superpower status increasingly challenged.

David Einhorn's hedge fund, established in 1996, significantly boosted its investment in gold by 89.22% during the third quarter. The fund invested $34.9 million. This move reflects a substantial increase in the fund's commitment to gold as a strategic asset.

The ongoing banking crisis, worsened by fluctuating asset valuations and high-interest rates, has left many banks potentially insolvent. This is particularly true when assets are evaluated on a mark-to-market basis, as current higher rates significantly devalue the bonds many banks hold. The Federal Reserve, using historic cost accounting, masks its own technical insolvency, notably not reflecting the true value of gold.Investors should be wary of this precarious situation, as it could escalate into a more severe crisis. In this context, gold stands out as a more stable investment option amidst the potential for further banking system turmoil.

US cattle numbers are expected to keep declining through 2025-2026, maintaining high beef prices due to reduced breeding amid drought and high feed costs. This trend is impacting meatpackers like Tyson Foods Inc. and JBS SA, leading to soaring supermarket prices and a significant drop in beef exports. As beef becomes increasingly unaffordable, Tyson Foods plans to open an insect processing plant in 2025.

In October, the US Producer Price Index (PPI) for Final Demand saw its sharpest decline since COVID-19 lockdowns, dropping by 0.5% month-over-month. This drop, mainly due to plummeting gasoline prices, led to a year-over-year decrease in PPI Final Demand to 1.3%. The downturn aligns with the negative growth in M2 Money supply. As the economy weakens, there's growing anticipation that the Federal Reserve might start reducing interest rates in 2024, after halting rate hikes.

US retail sales in October slightly outperformed expectations with a modest 0.1% month-over-month decline, marking the first drop in seven months. However, this minor dip indicates a worrying trend in consumer spending, hinting at potential broader economic weaknesses. With key sectors like furniture and motor vehicles seeing significant declines, the overall retail landscape shows signs of strain, raising concerns about the health of the US economy.

Under President Biden's tenure since January 2021, the US dollar's purchasing power has plummeted by roughly 15%, reflecting a troubling economic trajectory. Critics contend that the administration, seemingly under the sway of the elite 1% and large corporations, has prioritized extensive spending while sidelining the middle class. This perception is fueled by discontent over issues like border security and a growing sense of economic disparity, casting the current state of the economy in a starkly negative light.

Surging US borrowing costs have unexpectedly surpassed those of lower-rated nations like Vietnam, Morocco, and Bulgaria, upending traditional bond market norms. This shift, driven by the Federal Reserve's aggressive anti-inflation rate hikes, has elevated US Treasury yields to unexpected levels, raising concerns about America's ballooning public debt, now exceeding $33.7 trillion. Recent downgrades by Moody's and Fitch Ratings reflect the growing unease about the US's financial health in the face of a global debt market totaling $235 trillion.

The global debt binge fueled by years of low interest rates is leading to a staggering interest payment crisis. Governments are projected to spend a net $2 trillion on debt interest in 2023, over 10% more than in 2022, with costs potentially rising to $3 trillion by 2027. This surge in interest payments, triggered by rising rates, poses a severe financial strain on governments worldwide.

The European Commission has downgraded its growth forecast for the eurozone in 2023 and 2024, attributing this slowdown to the rising cost of living and higher interest rates, which are adversely impacting consumers and businesses.

The Japanese yen's value has plummeted, hitting a 15-year low against the euro and a record low against the Swiss franc. Its recent rally against the US dollar was brief and driven by US inflation data, not by changes in Japan's monetary policy. Japan's central bank maintains a negative short-term policy rate, contrasting sharply with the rate hikes in Europe and the US. This significant interest rate disparity, coupled with Japan's recent economic contraction, has left the yen as the weakest among major currencies. With Japan likely to maintain negative rates longer than expected, the outlook for the yen remains bearish.

The People's Bank of China has injected a massive 1.45 trillion yuan ($200 billion) into the economy, the largest in nearly seven years, while maintaining loan rates at 2.5%. This desperate move aims to revive a struggling economy and stabilize the property market, amidst the challenge of preventing the yuan's depreciation. Despite earlier measures like rate cuts and reserve requirement reductions, the economic outlook remains bleak, prompting this significant intervention. Simultaneously, the PBOC's plan to issue bills in Hong Kong indicates a cautious approach to balance economic stimulus with currency stability.

Investor Jim Rogers believes gold and silver will surpass other assets in the current inflationary climate and looming recession. He suggests that commodities generally fare well during periods of inflation. Rogers sees a further rise in inflation and views a significant economic downturn as almost inevitable. He favors silver over gold due to its lower price and warns about the potential decline of the US dollar as the world's reserve currency. Rogers anticipates increased government money printing, which could exacerbate inflation.

Despite enduring the worst year for long-dated Treasuries in U.S. history, Dr. Lacy Hunt, a prominent 'deflationist' and treasury bull, remains steadfast in his bullish stance on these bonds. He believes that the Federal Reserve's current tight monetary policy will lead to a severe economic downturn, causing long-term rates to plummet. While Hunt's unwavering conviction is noteworthy, especially after a challenging 18 months for his fund, there's growing speculation about whether this anticipated 'hard landing' might keep getting pushed further into the future.