Precious metals news

The US economic growth is artificially sustained by extreme fiscal stimulus and significant deficits. Domestic savings can't support this borrowing level, and global creditors are hesitant too. Rising US Treasury yields aren't due to inflation but rather a "credit crunch" by global bond investors skeptical of Washington's fiscal behavior. This results in speculation that the Federal Reserve will have to intervene massively. Many indicators, like declining home sales and the precarious position of many banks, suggest potential economic fragility. As uncertainties loom, traditional safe havens like long-term government bonds or gold may offer protection.

We've got some electrifying news for you!

Inflation and stagflation historically lead to devastating societal impacts, often unnoticed until they become overwhelming. Current sentiments in the US reflect rising concerns, with many citizens believing their life quality has deteriorated. Inflation acts as a silent tax, exacerbating societal issues when central banks introduce prolonged interest rate hikes. This combination of inflation and debt poses significant risks to the US economy. As inflation grows, we can anticipate labor strikes, increasing crime, more frequent looting, population migrations, and potential balkanization.

Sen. Bill Cassidy proposes a risky Social Security "solution" by creating a separate $1.5 trillion fund to be invested in the volatile stock market. While he envisions this fund growing over 70 years, such investments are unpredictable. Cassidy claims this might cover 75% of the deficit, but this approach leaves a concerning 25% gap and raises questions about the long-term viability of his plan.

The potential U.S. government shutdown could negatively impact the GDP. Despite stopgap measures, the real issue is rising deficit spending and a ballooning public debt, currently surpassing $33 trillion. The Biden administration's projection hints at a $14 trillion deficit by 2032. Such fiscal irresponsibility risks future economic stability, potentially leading to increased taxes, lower growth, and inflation.

Rising rates on overnight repurchase agreements are impacting liquidity, extending into areas like T-bills and bank credit. This exacerbates challenges for financial institutions already facing difficulties from the highest US benchmark rates in over two decades. The surplus cash from pandemic-related injections is now depleting, further straining the system.

"I haven't seen any evidence of dysfunction in connection with the increase in interest rates," Yellen told the Financial Times. Yellen also said she is not concerned about a repeat of this spring's bank failures, which were triggered by rising rates, saying that credit quality overall was "very solid."

The IMF has increased its global inflation projection to 5.8% for next year while cutting the economic growth forecast for 2024. Inflation is expected to exceed central bank targets in most countries until 2025. This outlook coincides with global uncertainties, including the recent attacks on Israel and the aggressive interest rate hikes by major economies to tackle soaring inflation.

Fed officials, including Vice Chair Philip Jefferson, signal caution over the recent surge in borrowing costs. The rise in bond yields has prompted the Federal Reserve to reassess its monetary policy, potentially delaying rate hikes.

U.S. small business sentiment declined in September, according to the NFIB, due to inflation concerns and labor shortages. The optimism index remained below its historical average, with significant economic uncertainties and labor issues in sectors like construction and retail. Many businesses expect worsening conditions.

China is considering a budget deficit hike for 2023 to stimulate its economy. Officials may issue an additional 1 trillion yuan ($137 billion) for infrastructure, potentially exceeding the 3% deficit cap. This reflects China's economic concerns amid a property crisis and deflationary pressures.

Twenty days.
That's how long it took the Biden administration to add another half-trillion dollars to the national debt.
Bidenomics certainly requires a lot of borrowing and spending.

Deutsche Bank warns of rising inflation risks reminiscent of the 1970s stagflation era, accentuated by recent geopolitical events like the Hamas attacks on Israel. Factors such as soaring oil prices, consistent inflation above target in major economies, and potential weather patterns like El Niño, known for driving up commodity prices, add to the concern. While current inflation indicators differ from the 1970s, the bank emphasizes the importance of not being complacent, referencing historical lessons where inflation surged due to premature policy easing.

War broke out in the Middle East over the weekend after Hamas attacked Israel. In his podcast, Peter broke down the possible economic ramifications here in the United States. He said the US can't afford peace, much less war.

Should Americans or foreigners who hold U.S. Treasuries be worried??  Well, not according to Secretary of Treasury, Janet Yellen.  Yesterday, she said, "There is no evidence of U.S. Treasury Market dysfunction."  If you can read through the lines... this should seriously concern people...

Central banks globally are significantly increasing their gold purchases, bolstering the metal's market. The World Gold Council reveals a 38% rise in gold buying by central banks in August compared to July. Despite challenges from rising bond yields and a strong U.S. dollar, gold maintains its crucial support levels. The trend suggests continued robust demand throughout the year, moving away from the earlier net selling trends. The World Gold Council remains optimistic about sustained central bank demand for gold in the long run.

China increased its gold reserves for the 11th consecutive month in September. The People’s Bank of China's addition of 840,000 troy ounces comes amidst a rising demand for the metal in the nation, despite global pressures from increasing interest rates. High domestic demand, spurred by economic slowdown concerns, has led to a surge in local gold premium. Although this premium has recently decreased, the bank's continued interest in gold highlights its value and importance in uncertain economic times.

BRICS nations, including founding members China and Brazil, as well as new entrants like Saudi Arabia, are reducing their US Treasury holdings. In July, China reduced its holdings by $13.6 billion, Brazil by $2.7 billion, Saudi Arabia by $1.1 billion, India by $2.3 billion, and the UAE by $300 million. Experts believe China's aggressive sell-off, amounting to nearly $500 billion since its peak a decade ago, may be due to economic slowdown concerns or a strategic shift. This trend is becoming increasingly significant in the global financial landscape.

Inflation continues to subtly deplete people's wealth, and its real impact is often understated. Changes in inflation measures, complexities in defining its effects, and overlooking quality degradations in products mask the true rate. Compounding inflation drastically reduces money's value over time. Adopting commodities as money, rather than inflating currency, could stabilize prices and even lead to beneficial deflation in a prosperous society.

Political turmoil in Washington and Wall Street's reactions are worsening America's financial outlook. Rising borrowing costs, driven by inflation and governmental disputes, may soon burden consumers. With the risk of a U.S. credit downgrade looming and potential interventions by "bond vigilantes," financial stability is at risk. Ray Dalio emphasized the deep concerns regarding the nation's finances amid political divisions.