Precious metals news

Investors are facing uncertainties due to increased geopolitical risks, as noted by UBS economists. Gold has surged, closing at $1,981 an ounce recently, while Brent Oil's price also increased, indicating concerns about potential Middle East conflict disruptions. The oil market is tight, with rising demand and limited supplies by OPEC+. Gold gains advantage as the Fed's actions lower costs of holding such assets.

Three major US banks—Bank of America, BNY Mellon, and Morgan Stanley—lost over $44 billion in deposits in just one quarter. This concerning trend isn't limited to them; JPMorgan Chase, Wells Fargo, and Citigroup collectively saw an outflow of $84.5 billion in the same period. In a desperate attempt to retain customers, these banks are now spending billions. JPMorgan's interest expenses surged by 170% from the previous year, Wells Fargo's by 275%, and Citigroup's jumped by about $185 billion. The confidence in these financial giants appears to be waning rapidly.

Corporate America's spending on share buybacks, which has fueled the US stock market for years, is waning due to rising interest rates and economic uncertainty. After a record $923 billion in stock purchases last year, the trend is reversing, with buybacks seeing a decline. Bank of America strategists warn that as the era of nearly-free money ends with higher interest rates, buybacks are endangered. The S&P 500 Buyback Index's performance has notably lagged this year, marking its worst performance since 1998, excluding 2020.

Jamie Dimon of JPMorgan lambasted central banks for their glaring past forecasting errors, casting doubt on their ability to navigate the looming economic uncertainties. He drew a grim parallel between today's economic situation and the wasteful 1970s, while dismissing the potential impact of rate hikes. Concurrently, Bridgewater's CEO, Ray Dalio, predicted a dire economic outlook for 2024, highlighting risks like soaring public debt and potential conflicts.

The Federal Reserve's recent Financial Stability Report paints a concerning picture, despite attempts to cast the outlook in a positive light. A standout alarming detail: $20.3 trillion of "runnable" money, especially considering smaller liabilities recently caused banking panic. The report cites vulnerabilities, such as banks under stress, prime MMFs prone to runs, and life insurers with risky assets, reminiscent of the 2008 AIG bailout. This emphasizes the Fed's questionable approach: limitless electronic money creation to mask its supervisory failures, which undermines the U.S. financial system's stability.

In a recent statement, Elon Musk declared, "interest rates have to come down."

The U.S. federal deficit doubled to $2.02 trillion, stoking fiscal worries and deepening partisan tensions in Washington. The surge, impacted by significant drops in tax receipts and inflationary pressures, threatens to ignite political disputes, especially with looming changes to tax policies by 2025.

U.S. officials are deeply alarmed by escalating tensions in the Gaza Strip, prompting rapid military preparations. Israel and Iran's confrontational rhetoric fuels fears of a broader conflict, with Iran-backed groups being a major concern. Meanwhile, China's activities amidst this chaos add to the global apprehension. The U.S.'s immediate focus on defending its troops suggests the potential for violent confrontations. Amidst this Middle Eastern turmoil, there's heightened unease over China's intentions in the South China Sea and Taiwan. The global stage teeters on the brink of widespread conflict.

US yields are set to rise due to retail investors hedging against inflation. Bond rallies will be short-lived with a downward trend for Treasuries. After experiencing steady inflation for years, both professional and retail investors are adjusting to the new inflationary reality. With inflation not expected to stabilize soon, households are diverting investments to commodities and inflation-protected securities. Despite the market's predictions, household inflation expectations surpass those of the Federal Reserve. There's a renewed interest in real assets like commodities

Are the Chinese selling US dollar-denominated assets to buy gold?
It sure looks that way.

Following a drastic monetary tightening, experts scramble to address the looming cost-of-living crisis. With mounting tensions in the Middle East and soaring interest rates, financial markets are on edge. Key debates highlight potential failures in central bank strategies, over-reliance on Quantitative Easing (QE), and fiscal policies potentially undermining monetary efforts. Increasing concerns surround the competence of central banks in managing solo operations amidst rising inflation and fiscal overspending.

Bidenomics has strongly emphasized green energy, sometimes sidelining the concerns of the middle class. The shares of US firms that don't meet profit expectations have seen their most significant decline in four years. Furthermore, under Biden's administration, the cost of diesel fuel, crucial to the shipping industry, has increased by 118%, and the food CPI has risen by 20%. In the housing sector, there has been a noticeable increase in pre-foreclosure sales.

Last week, Federal Reserve Chairman Jerome Powell delivered a speech at the Economic Club of New York luncheon. In his podcast, Peter Schiff broke down some of the Fed chair's comments and concluded that Powell is not qualified to be a member of any economic club.

With the depletion of U.S. conventional gas reserves, and just in the nick of time, we made it up with the Great Shale Gas Miracle.  And, indeed... it is quite amazing to have more than doubled U.S. domestic natgas production over the past 15 years.  How fast the years have gone by...

The Bloomberg Commodity index rose for the fourth consecutive week, influenced by concerns over the Israel-Hamas conflict potentially escalating and impacting crude oil and natural gas supplies to Europe. Deteriorating crop conditions in the Southern Hemisphere boosted the agriculture sector. Additionally, the spike in US bond yields has driven investors towards the Swiss Franc and gold. Gold's significant $160 increase over the past two weeks underscores growing apprehensions about geopolitical events, US fiscal policy, and whether the recent jump in both real and nominal yields will break ‘something.’

Escalating government debt, unprecedented in peacetime, has pushed 10-year Treasury yields to levels unseen since 2007. The surge from $23 trillion in debt in 2019 to $33 trillion now has pressured bond prices, driving yields up. This fiscal year's federal deficit exceeds $1.5 trillion, a 61% jump from last year. By 2025, rising yields and debt might make debt service costs surpass defense and, by 2026, Medicare spending. The U.S. is in a concerning debt spiral, risking either skyrocketing debt payments, increased inflation, or harsh austerity measures.

The U.S. government's interest payments are soaring, reaching $659 billion this year. As the Federal Reserve hikes rates, borrowing costs are skyrocketing. With the growing national deficit and increasing interest expenses, analysts warn of a looming financial crisis. These escalating costs could soon challenge major federal programs, threatening the country's fiscal stability and impacting everything from mortgages to corporate financing.

The US Fiscal Doom Loop presents a severe financial concern. Government spending has escalated, rising 14% year-over-year, while tax revenues have declined by 7%. Astonishingly, the 2023 fiscal year is predicted to conclude with a deficit exceeding $2 Billion, equating to roughly 8% of GDP. Historically, such significant deficits were linked to major economic crises, making the current situation alarming given the relative strength of the economy. If the FED's aggressive rate hikes trigger a recession in 2024, the US might face deficits nearing 20% of GDP, potentially reaching a staggering $5 Trillion if the downturn is severe.

Home sales plummeted to a decades-low, worse than the 2010 foreclosure crisis. Despite plummeting sales, prices surged, echoing pre-2008 trends. Goldman Sachs foresees an even bleaker 2024. Most homeowners are financially trapped with lower mortgage rates, discouraging moves. With a grim outlook, even potential rate drops won't help current homeowners. The market's future looks dire.