Precious metals news

The Fed's aggressive Quantitative Tightening is slashing its balance sheet significantly, dropping by $89 billion in October alone to a low not seen since May 2021. Despite inflation easing slightly, it's still stubbornly high, nearly double the Fed's comfort zone, as the Fed unwinds the massive liquidity unleashed during the pandemic. This sharp reduction, totaling $1.1 trillion since the peak, is a drastic shift from previous, more cautious attempts at balance sheet normalization and indicates a tough stance that could have stark repercussions for the economy.

The writing of this market report was at a time of great volatility, due to it coinciding with the speech of the Hezbollah leader, Hassan Nasrallah. The drift of it appears to be that Hezbollah will support Hamas. If so, it means an intensification of the Palestinian crisis Which would presumably drive gold and silver prices higher. This market report should be read in this context.

Duke finance professor Campbell Harvey, creator of the inverted yield curve recession indicator, warns that the Fed's rate hikes based on an overestimated inflation are steering the economy towards recession. Despite halts in rate increases, the recent uninverting of the yield curve signals impending economic troubles, as witnessed before past recessions.

Yellen's defense falls flat against Druckenmiller's sharp critique. Despite touting an extended maturity for the Treasury's portfolio, she misses the mark on seizing historic low rates, a blunder highlighted as potentially the worst in Treasury history by Druckenmiller. Her strategy is now questioned, undermining confidence in her role.

Globally, democracy is in serious decline, with a Swedish study highlighting widespread backsliding on civil liberties, judicial independence, and electoral integrity across nations including the U.S. Political distractions like wars and climate change are overshadowing this erosion. Established democracies are not immune, with countries like the U.S. and Britain facing notable setbacks. The rise of informal watchdogs offers some hope against authoritarianism, but the overarching trend is grim, with fundamental democratic principles under threat worldwide.

China has eclipsed the US and the West in trading with developing nations, signaling a shift towards a bipolar global economy and heightened tensions. As the US enforces tighter controls on China, both sides face the potential drawbacks of decoupling, such as disrupted supply chains and slower growth, despite some job gains for Americans and Europeans. China is diversifying, sourcing more from within and other developing countries, further solidifying new economic blocs.

The October jobs report was abysmal, with jobs added plummeting to 150K—a massive 50% drop from September and a grim indicator of economic health. Widespread job revisions suggest previous data was overstated, likely for political optics. Unemployment ticked up, wage growth faltered, and manufacturing took a significant hit, eroding faith in a labor market recovery. The figures point unmistakably towards an impending recession.

Amid a grim global economic downturn, Møller-Maersk, a shipping behemoth, is taking drastic action by axing 10,000 jobs in response to plummeting demand. The Danish giant, once thriving, has already eradicated 6,500 positions and plans to ruthlessly cut 3,500 more by 2024. This stark 10% workforce reduction is a desperate measure to counter collapsing prices and rampant overcapacity. It's a bleak indicator of the post-pandemic "new normal" that's crippling global trade.

The Bank of Japan's continued loose monetary policy is creating serious global market imbalances, risking a sudden surge in volatility. Ignoring rising inflation and market cues to tighten policy, the BOJ's stance is primed to trigger a sharp yen rally and a destabilizing shake-up in asset prices worldwide. Japan's delay in policy normalization may lead to abrupt, wide-reaching financial consequences.

Central banks globally are aggressively purchasing gold, with China leading the charge, reflecting a strategic move to lessen reliance on the U.S. dollar. Amid geopolitical tensions and diversification efforts, central bank gold acquisitions have surged by 14% this year, with China contributing 181 tonnes to the 800 tonnes total. This shift comes as nations respond to the economic weaponization of the dollar, exemplified by sanctions against Russia, prompting a wider trend of de-dollarization.

Federal Reserve Chairman Jerome Powell said he's not confident interest rates are high enough to slay price inflation. He also said he's not confident they aren't. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey wonders out loud why we should have any confidence if Powell doesn't. Along the way, he breaks down the November Fed meeting and talks about the "colossal" year for central bank gold buying.

When a country peaks in its liquid fuel demand, this typically points to the inevitable plateau in "Real Economic Growth."  This seems to be true for Americans, as U.S. gasoline and diesel consumption per capita peaked more than 15 years ago... regardless of the massive money printing by the U.S. Government...

Public Law 93-373, an unremarkable one-page bill, revolutionized U.S. financial policy by allowing private gold ownership after four decades, reflecting a stark transformation from Roosevelt's 1933 gold ban. With gold prices escalating from $35 to $850 per ounce between the Nixon Shock and 1980, the law acknowledged gold's crucial role as a safeguard against economic instability. Today, with a $33.7 trillion national debt and potential fiscal crises looming, gold's status as a financial bastion endures, hinting that its current valuation may just be the floor for future appreciation.

Political parties and precious metals – is there any correlation between election cycles and metals prices?

The Fed's pause on interest rate hikes signals uncertainty, with all eyes on forthcoming economic data. Should upcoming reports indicate a sustained drop in inflation and a slowdown in the robust US economy, the door opens for discussions on rate cuts, a scenario that could significantly undermine the Dollar's strength.

Target CEO Brian Cornell reports that consumers are cutting back on spending across the board, including essentials like groceries. The retailer has seen a consistent decrease in sales of non-essential items for seven quarters straight, and now even the quantity of food items sold is dropping. Despite some economists backpedaling on recession predictions and signs of inflation slowing, Target is bracing for a tough holiday season, having already lowered its sales and profit forecasts earlier in the year.

Janet Yellen's Treasury is set to auction off $1.6 trillion in debt, with surging interest rates poised to hike the government's annual interest bill to an unsustainable $1.7 trillion. This massive outflow, siphoning off 6% of US GDP, could cripple economic growth and hamper effective monetary policy. As the US pivots to longer-term debt issuance, liquidity concerns mount, overshadowing the Fed's rate decisions and compounding risks in an already fragile global financial system. With traditional debt buyers like China and Japan potentially stepping back, the burden of absorbing this debt remains a looming question.

Wolf Richter at Wolf Street views the Fed's recent meeting as another "Hawkish Hold," signaling that rate hikes could still be on the table, while the end of hikes seems to lead to a 'higher for longer' plateau. Despite Powell's assertion that the Fed isn't considering rate cuts, the general stance from the meeting suggests a hold bias rather than a tightening bias. The stock market, after initial uncertainty, seems to have interpreted this as signaling the end of hikes. Upcoming jobs reports and economic data will be crucial in shaping the Fed's next moves, with recent ISM figures hinting at a potential cooling in the economy. I think hikes are done.

Markets reacted positively to Jerome Powell's comments, as he suggested that rising bond yields could reduce the need for further rate hikes. This led to a drop in Treasury yields, easing financial strain but also potentially leading to looser financial conditions than the Fed desires, which could undermine their efforts to combat inflation. Powell's message has raised concerns that it might prematurely signal the end of the Fed's tightening cycle, creating a challenging situation for the central bank.

The day of reckoning for unproductive credit is in sight. With G7 national finances spiralling out of control, debt traps are being sprung on all of them, with the sole exception of Germany.
Malinvestments of the last fifty years are being exposed by the rise in interest rates, increases which are driven by a combination of declining faith in the value of major currencies and contracting bank credit. The rise in interest rates is becoming unstoppable.
Do not be surprised to see a US Government deficit exceeding $3 trillion this fiscal year, half of which will be interest payments. And in the run up to a presidential election, there’s every sign of deficit spending increasing even further.
We now face America and her allies being dragged into another expensive conflict in the Middle East, likely to drive oil and natural gas prices higher; far higher if Iran becomes a target. With the Muslim world united against western imperialism more than ever before, do not discount th...