Precious metals news

Bidenomics is under intense scrutiny as indicators hint at catastrophe. Rising interest rates, a tool deployed to combat spiraling Federal spending, have triggered a concerning trend: bank credit growth has contracted to -0.41% YoY, marking 10 consecutive weeks of negative terrain. Meanwhile, short-term loan interest payments have skyrocketed, nearing a staggering 10%, magnifying the financial stress under the current economic strategies.

Great news! The inflation war is over and we won! At least that's how Paul Krugman sees it. But he's playing tricks with the data and making assumptions that are meaningless in the real world. In this episode of the Friday Gold Wrap, host Mike Maharrey dissects Krugman's claims in light of the September CPI data. He also talks about market reaction to the CPI and shares some interesting gold news from Zimbabwe.

CEO Jamie Dimon describes the global situation as potentially the most dangerous in decades, citing the Ukraine war, Middle East conflict, and significant financial threats from towering national debt and fiscal deficits. He stresses escalated risks from persistent high inflation and interest rates, alongside liquidity concerns amid Federal Reserve actions, with a gloomy outlook on potentially soaring interest rates ahead.

Gold is being touted as a critical investment, with experts urging purchases now, irrespective of current prices. The US Federal Reserve's monetary tactics, like interest rate hikes, draw parallels to the 1970s scenario, suggesting a significant gold price surge is imminent. Historical patterns indicate that with the current economic climate and trends in real interest rates, gold prices could potentially exceed US$3,000/oz, and even reach up to US$4,500/oz. Investors are advised to capitalize on gold's potential as a hedge against the unpredictable nature of paper assets.

Economist Mohamed El-Erian strongly advises turning to cash and cash-like assets as a shield against increasing market volatility. With stocks and bonds facing turbulence, El-Erian has significantly bolstered his holdings in cash and similar assets. Concurrently, he warns of a potential economic downturn, suggesting heightened caution in other investment avenues.

Brian Riedl warns of an impending "debt crisis" as the 10-year bond rate surges to 4.7%. Washington's failure to secure lower interest rates combined with rising deficits puts the economy at significant risk. Despite current market optimism, a high rate above 4% could spell disaster, not only for the bond market but also equities. With historic data suggesting negative impacts, about a third of Russell 2000 companies aren't profitable, a record high since 1985. The stock market's current vulnerability echoes the concerning patterns of 1987, hinting at potential turmoil ahead.

On October 13, 1989, "Black Friday” sent shockwaves through Wall Street... What can we learn about the crisis today?

The IMF warned of Joe Biden's high borrowing pushing global debt towards instability, primarily driven by the US and China. Contrary to Biden's claims, US debt reached an alarming $33 trillion. The IMF anticipates US debt will soon surpass 100% of GDP. While Treasury Secretary Janet Yellen asserts the US's debt interest is manageable, the Congressional Budget Office voices significant concerns about the rising debt's implications.

Credit card debt is a key indicator of how healthy U.S. households are financially. The average credit card balance is $10,170 per household - 56% have more credit card debt than last year. - 57% believe it will take over a year to clear their debt. - Over 25% would accrue debt for non-essential spending. - 45% feel stressed due to their credit card debt. - 85% think they manage their finances better than the government. - Over 33% would do anything to be free of credit card debt.

The U.S. housing market is alarmingly unaffordable for most potential buyers. Following the pandemic, housing prices soared. Yet, in 2022, mortgage rates spiked to over 7%, compounding the issue. Expert analysis reveals that for housing to be deemed affordable, U.S. incomes would need a staggering 55% hike or a substantial reduction in prices or mortgage rates.

US speculative-grade companies face increased refinancing and default risks due to sustained high interest rates and limited credit access, says Moody’s Investors Service Inc. Debt maturing between 2024 and 2028 for junk-rated firms is at $1.87 trillion, a 27% rise from last year's predictions. This rise in maturities, amidst unfavorable economic and credit conditions, amplifies the companies' refinancing and default threats.

"Hotter than expected."
This seems to be a recurring theme when it comes to price inflation.
The September CPI data gave us another variation on that tune. And it should once again remind us that the Federal Reserve is nowhere near its 2% target.

An important error in statistical analysis is that mathematical economists have lost sight of what their beloved statistics represent —none more so than with GDP.
In this analysis, I explain why GDP is simply the total of accumulating currency and credit which is wrongly taken to reflect economic progress — there being no such thing as economic growth, only the growth of credit. Once that point is grasped, the significance of this basic error becomes clear, and the fiat currency paradigm is revealed for what it is: a funny money game that will go horribly wrong.

The federal government's annual deficit for 2023 appeared to be $1.7 trillion, but due to irregularities involving President Biden's now-overturned student debt cancellation plan, the real deficit for 2023 is closer to $2 trillion. This marks an increase from 2022 and reignites debates in Washington over the expanding deficit, exacerbated by factors like lower tax receipts and higher interest rates.

First-time jobless claims in the U.S. held steady at 209k, with un-adjusted claims dropping to a year low of 175k. Ohio saw the largest decrease in claims, while California and Texas experienced a surge. Continuing claims rose slightly to 1.702 million. Seasonal distortions could affect these numbers in the coming months. WARN Act data, indicating potential future layoffs, suggests an increase in claims may be imminent.

Mike has discovered a critical indicator during his in-depth research.

An upsurge in labor protests is marked by widespread strikes across various major industries. A common thread marks most: protests originate in blue-collar jobs, where wages historically lag behind productivity and corporate profits. Labor unrest in the U.S. reached a peak this year, with 453,000 workers engaging in 312 strikes, the most since 2019. Rising inflation, social disparity, and increasing living costs highlight deepening societal fractures, threatening the foundation of the U.S. economy.

Social Security benefits will rise by a mere 3.2% in 2024, a significantly smaller increase compared to the previous year's 8.7% due to easing inflation. Despite the increase, concerns persist about the program's financial stability. Reports indicate that by 2033, the Social Security trust fund will only be able to pay 77% of scheduled benefits. Efforts to bolster the program have stalled, leaving beneficiaries uncertain about future adjustments and the program's long-term viability.

Higher interest rates have hurt bank deposits, and the outlook remains bleak. Investors brace for disappointing bank earnings tied to deposit costs. Despite rate hikes, banks may face further increases, especially if the Federal Reserve sustains elevated rates. A notable gap between deposit costs and federal-funds rate, along with a shift towards interest-paying accounts, exacerbates banks' challenges. Historical comparisons highlight worsening conditions.

September's inflation rate outpaced expectations, with a 3.7% annual increase. Core inflation matched forecasts. Rising shelter and energy costs were primary contributors. Real hourly earnings decreased due to inflation. The Federal Reserve remains divided on addressing inflation concerns, while wholesale prices also rose, exceeding the Fed's target.