Precious metals news

Inflation is set to persist due to altered perceptions and increased fiscal spending. Millennials, once oblivious to inflation, now constantly see its effects in daily prices. While the government and the Federal Reserve try to manage these perceptions, rising prices remain evident. Unions and fiscal spending amplify the inflation issue. Surprisingly, the 1970s stagflation wasn't primarily about oil prices but the decoupling from gold.

With mountains of data pointing towards a looming recession (if we aren’t in one already), how does one invest during these periods? What asset offers a proven track record of protection from hard times?

The U.S. deficit for 2023 was $1.7 trillion, up from the previous year, making it the worst GDP growth excluding debt increases since 1929. This hints at a recession masked by excess deficit spending. Despite tax hikes by the Biden administration, revenues fell by 9.3% from 2022. Higher taxes didn't yield expected revenues, indicating a weak economy. The U.S. can't spend less than 22.8% of GDP, and taxing the wealthy can't cover the deficit. Rising public debt and inflation challenges the U.S. dollar's position globally. China is rapidly selling U.S. bonds, and the U.S. 10-year Treasury yield exceeds 4.5%. High government spending doesn't guarantee growth or wage increases. The U.S. must reduce its deficit to protect its currency and economy.

Governments ignore debt crisis signs. Despite inflation, the U.S. borrows heavily. Investors avoid sovereign bonds, causing central banks to buy and amplify inflation. U.S. debt rises sharply with impending maturities and global tensions. Trusting global dollar demand and the Fed's adaptability is risky as countries cut U.S. Treasury holdings. Global fiscal imbalances and monetary debasement since 2009 diminish savings. Gold emerges as a more secure option than failing sovereign bonds.

U.S. fiscal policy is undermining the Federal Reserve's autonomy, increasing inflation risks, and devaluing the dollar. Central banks are losing independence, threatening fiat currencies' real value. Despite a brief dollar rally, its long-term purchasing power is set to decline further due to rising government debt and deficits. Historically, reduced central bank independence leads to higher inflation. As the Fed aligns more with government needs, the quality of its assets decreases, exacerbating the dollar's decline.

In 2023 Q3, real GDP grew by 4.9%. However, when breaking it down, real final sales accounted for a 3.5% rise, with the remainder being inventory adjustments, which balance out over time. The growth from private domestic sales was even more modest at 3.3%. GDI paints a grim picture with real disposable personal income dropping by 1.0%, reversing a 3.5% gain from the last quarter. The gap between GDP and GDI seems to be widening. The Fed faces significant challenges, largely due to its own actions, with seemingly no solutions in sight.

Bidenomics benefits the top 1% but is detrimental for the middle class. In August 2023, pending home sales plummeted 7.1%, affecting all U.S. regions both monthly and annually. Rising mortgage rates have deterred buyers, causing an 11% drop in transactions from the previous year.

This article defines credit, a subject upon which there is a lack of public knowledge. What people call money is in fact credit, and money itself, which is physical gold without counterparty risk, rarely if ever circulates. Nearly everyone, including most economists, don’t understand credit and the importance of its value being tied to money.
Nor do they understand that bank credit is just a minor part of the colossal system of credit.
A common mistake is to think that bank notes are money, because unlike a bank deposit they are possessed in hand. But they are a credit liability of the issuers, which today are central banks. Their value depends entirely on the public and foreign creditors’ faith in terms of their purchasing power, like any other form of credit.
The expansion of credit is fundamental to economic progress, but that expansion can only be determined between creditor and debtor. This does lead to disruptive fluctuations in bank credit, but they are self-corre...

Chris Watling, CEO of Longview Economics, warned that the U.S. consumer is nearing a financial crisis. Despite recent strong retail sales, household savings are depleting, and real income growth has been negative for three consecutive months. While recent data projects strong U.S. economic output, concerns grow about a potential recession. Watling believes the labor market will decline significantly, triggering this recession. Additionally, he advises caution regarding the stock market, predicting challenges ahead for the U.S. economy.

The $52 billion offering's yield rose to 4.899%, indicating demand didn't meet expectations, with dealers getting a significant share due to low investor interest. Despite stronger September new home sales data, yields increased, with the 30-year bond yield reaching its highest since 2007. Rising Treasury yields are driven by expectations of the Federal Reserve's prolonged policy rate and an expanded supply of notes and bonds. Forecasts suggest auction sizes may grow further, though some major banks anticipate smaller increments for the upcoming auctions.

Households and businesses grapple with high prices as the Federal Reserve remains optimistic about receding inflation. The consumer-price index has risen 18.9% from pre-pandemic levels, with lower-income households bearing the brunt. The Fed's policies have inflated home prices, benefiting the wealthy but making housing unattainable for many. Root causes include excessive deficit spending, the Fed's strategies, and supply constraints. Current efforts to address inflation are insufficient, with both monetary and fiscal policies needing urgent reevaluation.

Bidenomics relies heavily on Federal spending and borrowing, leading to significant price hikes and market distortions. In just one month, the US Federal government accrued $600 billion in debt, with a staggering $10.47 trillion borrowed since Covid began in Q1 2020. Retail credit card APR has reached an alarming 28.93%, and credit card debt surpassed $1 trillion. Health insurance costs for families surged to $24,000 this year, the largest increase in over a decade. Despite GDP growth of 4.9% in Q3 2023, accelerating inflation is adversely impacting the middle class.

September saw a remarkable 4.7% MoM increase in preliminary durable goods orders, greatly surpassing the expected 1.8% and marking the largest monthly jump since July 2020. Yearly, orders have risen by 6.0%. Excluding transport, the orders climbed a modest 0.5% MoM, while orders excluding defense surged 5.8% MoM. Defense spending saw a significant drop of 14.4% MoM, but non-defense aircraft spending skyrocketed by 92.5% MoM. It's important to note that these figures are nominal and do not account for inflation.

The U.S. unemployment situation worsens as first-time jobless claims climb to 210k from 200k last week, surpassing expectations. Oregon and New York are leading the surge in claims, while areas like Tennessee and Michigan saw minimal improvement. Notably, continuing claims have been on an alarming upward trend for four consecutive weeks, peaking at 1.79mm - the highest since May. With ongoing seasonal distortions, experts anticipate a further surge in claims, projecting an increase of 375k by March. The current economic indicators suggest a bleak employment outlook for the coming months.

Chinese gold demand was up 7.3% year on year through the first nine months of 2023.
China ranks as the world’s biggest gold market, and Chinese demand has a significant impact on the global gold market.

The European Central Bank (ECB) is laying the groundwork to roll out its version of a central bank digital currency (CBDC).
According to the ECB's website, the "preparation phase" for the digital euro begins in November and "builds on the findings from our investigation phase."

Researchers from the University of Liverpool and the University of Warwick discovered that the process of extracting and refining silver by ancient Romans resulted in lead pollution found in Greenland's ice. This pollution likely drifted across the Atlantic from Roman mints. The Romans, especially after conflicts in Iberia and southern France, recycled silver to produce coins, a practice which became more prevalent when coins with lower gold levels emerged. According to Jonathan Wood, recycling coins was more cost-effective and environmentally friendly for the Romans than extracting new silver.

The AI boom is expected to increase industrial demand for precious metals. ChatGPT's popularity has driven demand for AI-powered chips, benefiting companies like Nvidia. As AI tech becomes more advanced, it will require components rich in precious metals. Metals Focus predicts a rise in demand for metals such as platinum, silver-palladium, gold, and palladium in various AI components. Spot gold prices have recently risen by 9%, influenced by geopolitical events, boosting the outlook for other precious metals.

In the first nine months of 2023, China's gold production rose by 0.47% to 271.248 tonnes. Gold consumption increased by 7.32% to 835.07 tonnes, with gold jewelry consumption at 552.04 tonnes (up 5.72%) and gold bars and coins at 222.37 tonnes (up 15.98%). However, industrial gold consumption decreased by 5.53% to 60.66 tonnes. Gold-backed ETF holdings in China grew by 9.53 tonnes in the third quarter, totaling 59.69 tonnes by September's end.

Government debt is surging due to excessive spending and inadequate tax revenue. Attempts to balance the budget are faltering in Congress. Past administrations missed chances to lock in low rates with long-term bonds. With rising interest rates, the U.S. faces potential annual interest payments of $1 trillion. We are going to reckon with this debt for a long time.”