Precious metals news

After nine straight negative years, the year-over-year change increased by 0.06%. This report has spurred discussions on more rate hikes. Despite rising bond yields and mortgage rates nearing 23-year highs, Paul Krugman optimistically claims, “We Won the War on Inflation at Very Little Cost.” However, skeptics point to the Federal Reserve's role in destabilizing the housing market and driving inflation.

The financial and health prospects for Americans nearing retirement remain bleak, especially for those in the lower economic bracket, a study finds. Dubbed the "forgotten middle," these individuals fall between low-income and middle-class thresholds, missing both government support and the ability to comfortably manage rising expenses. While the affluent saw increased life expectancies, those less privileged either stagnated or declined. The widening gap in homeownership and diminishing health insurance underscore the growing inequalities. Experts warn of the looming strain on healthcare and family caregivers.

In 1906 Alfred Henry Lewis once highlighted the fragile line between stability and chaos. Today, unchecked U.S. monetary practices have driven alarming inflation, particularly in food. Despite official figures, the reality is grim, especially for lower-income families. With cuts to SNAP benefits and rising costs, food insecurity is escalating. Amid debates on government spending, essential needs are sidelined for other initiatives, pushing many Americans closer to a breaking point.

Homebuilder confidence has declined over recent months, with the NAHB index at a 9-month low. High interest rates are deterring younger buyers and increasing costs for builders. As a result, 62% of builders are resorting to financial incentives to attract buyers. With mortgages nearing 8% and the Federal Reserve's efforts seeming ineffective, the housing sector faces looming challenges.

September's US industrial and manufacturing data revealed alarming discrepancies: - Industrial Production: Grew a mere 0.3% MoM (SA), but alarmingly plunged 1.7% MoM (NSA). - Manufacturing Output: Barely rose by 0.35% MoM (SA), while it worryingly declined 0.5% MoM (NSA). These figures suggest that seasonal adjustments are masking the true state of the economy under the Biden administration. With manufacturing production consistently lower year-over-year for seven months and the auto production plummeting by 6.2% MoM, looming challenges are evident, exacerbated by anticipated UAW strikes.

Join Mike Maloney and his research assistant, Alan Hibbard, as they dive into a mesmerizing gold price chart spanning over five decades.

Gold prices rose 6% recently, influenced by the Israel-Hamas conflict. However, ANZ Bank points to other driving factors: 1. **Fed Rate Cycle's End:** As the Fed's interest rate cycle concludes, declining US yields will make gold more attractive. 2. **US Dollar Outlook:** Despite short-term USD strength, ANZ predicts a bearish trend for the USD into 2024, supporting gold prices. 3. **Central Bank Purchases:** Continued buying from central banks will bolster gold prices. 4. **Seasonal Demand:** Q4 usually sees increased demand for physical gold. In essence, while geopolitical events can sway gold prices short-term, various elements support a longer-term upward trend.

Record debts and high interest rates in major economies are escalating fears of a looming financial crisis. The US is heading towards an unmanageable debt situation, potentially being unable to service its own interest. Political instability, wars, and ill-advised economic stimulations further exacerbate the problem. This debt not only impacts national stability but also inflates personal costs due to increased competition for credit. The rising debt and inflation threaten to cripple the nation, resulting in a sovereign-debt crisis. The situation promises significant turmoil in financial markets.

Russian President Vladimir Putin visited Beijing amidst the Ukraine conflict, highlighting the deepening Russia-China alliance. This is Putin's second international trip since the ICC issued an arrest warrant for him. Neither China nor Kyrgyzstan, Putin's earlier destination, are ICC members. Despite Western criticism, Beijing continues to support its partnership with Russia. Putin's presence at the Belt and Road Forum emphasizes their growing economic ties, especially in energy, though no new deals are expected during this visit.

The Congressional Budget Office (CBO) reported a $1.7 trillion US budget deficit for the 2023 fiscal year, up $300 billion from 2022. While government spending hit $6.131 trillion, revenues were only $4.441 trillion. Amid this rising deficit, the IMF's director, Pierre-Olivier Gourinchas, expressed concerns at the 2023 World Economic Outlook, urging the US to reconsider its fiscal strategies in light of prevailing inflation and high interest rates.

China is pushing state banks to extend local government debt amid growing concerns over economic instability. Local debt rose to 76% of the GDP in 2022, highlighting financial risks intensified by a property crisis and pandemic fallout. This move may challenge bank operations and inadvertently increase financial recklessness. The property sector's decline and significant upcoming debt maturities further amplify these concerns.

Global debt rose $10 trillion to a record $397 trillion in the first half of 2023, according to the Institute of International Finance (IIF).
The big increase in debt occurred despite tightening credit conditions, and it is an increasingly worrisome problem because the "free lunch" of artificially low interest rates is over.

US yields have been erratic due to mixed Fed signals and geopolitical tensions, adding to uncertainties about the Federal Reserve's policy stability. As bond markets face headwinds, concerns about the future buyer base for US government debt rise. With the Fed reversing its bond-buying stance and foreign buyers showing hesitancy, the bond market's resilience is under threat. The financial outlook is increasingly unstable, emphasizing the fragility of major financial systems.

Despite reports of plunges in credit card spending from Citi and Barclays, and a huge downward revision in US consumption (per GDP) U.S. retail sales surpassed expectations, rising by 0.7% MoM compared to the anticipated 0.3%. This significant uptick marks a six-month growth streak, leading to a 3.8% YoY increase, the highest since February 2023. However, sectors like Building Materials, Appliances, and Furniture experienced sales declines, suggesting potential headwinds for the housing market. Observers recommend caution for the upcoming month of October.

After the CPI data came out last week, gold rallied. On his podcast, Peter Schiff talked about the rally and the trajectory of gold. He said we can expect even bigger moves up when the markets figure out the inflation problem isn't solved.

Today, Newcrest came out with its preliminary report for Q3 2023, which wasn't pretty.  With the higher energy prices during the third quarter, I expect the gold miners' costs to increase... but how much?  Also, the EIA is forecasting a decline in U.S. Shale Oil production...

The global economic and political landscape is shifting, impacting gold flows from West to East, as "Gold goes where the money is." Eastern central banks are significant gold buyers, with 2022 witnessing a record purchase of 1,136 tons. The trend persisted in 2023, with central banks acquiring 378 tons of gold from January to June, surpassing the previous 2019 record. The most substantial purchases were made by China, Singapore, Poland, India, and the Czech Republic, highlighting the eastern tilt in gold demand.

In Q3, the LBMA Gold Price AM and Shanghai Gold Benchmark PM saw a decline of 3.7% and 2.8% respectively. Despite this, 170t of gold was shipped out of the Shanghai Gold Exchange, an increase from the previous month, in preparation for peak gold consumption season. The gold price premium between Shanghai and London reached a new record in September, averaging US$75/oz, possibly due to reduced net gold supplies. However, it decreased in October. Chinese gold ETFs experienced a rise in assets for four consecutive months, reaching RMB27bn by September's end. Additionally, the People’s Bank of China bought 26t of gold in September, making the total gold reserves 2,192t.

In a speech in Council Bluffs, the 2024 Republican presidential candidate criticized the issues with "fiat currency" and the Federal Reserve's continuous use of Quantitative Easing, especially post-2008. DeSantis emphasized that such policies favored the wealthy and harmed the middle class. While not endorsing a return to the Gold Standard, he supported auditing the Federal Reserve and prioritizing price stability. He also highlighted the negative impact of "boom-and-bust" policies on average Americans.

Many financial experts were convinced that interest rates would remain eternally low, dismissing concerns about surging government debt. Despite historical fluctuations, they saw recent low rates as the new norm. Now, with rising rates revealing the dangers of their complacency, the true costs of unchecked debt accumulation are emerging, threatening economic stability.