Gold has all the potential to go unprecedentedly high. But silver will be gold on
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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...
Oct 9, 2023 - 12:31:04 PDT
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.
Gold is viewed as the safest asset due to its limited supply and historical stability. Although cash is often deemed king during a liquidity crisis, gold stands out because of its finite nature and its role in backing currencies prior to 1971. In contrast, other assets like private businesses, real estate, and even U.S. government bonds present varying degrees of risk. The traditional reliance on paper money and the present-day fiat currency system only highlight gold's enduring value.
Oct 9, 2023 - 08:34:46 PDT
US Treasury Secretary Janet Yellen downplayed concerns about the surging borrowing costs and their potential impact on US financial markets. Despite a significant sell-off in the $25tn US government bond market, Yellen asserted that she hasn’t witnessed any signs of dysfunction linked to the rising interest rates. However, the labor market's overheating and the Federal Reserve's decision on future interest rate hikes remain points of contention.
Skyrocketing Treasury yields are stoking anxieties about potential defaults across emerging markets. Currently, 21 of these nations have their sovereign dollar debt approaching distressed thresholds, with their bonds trading at a significant premium to Treasuries. The recent tensions in Israel exacerbate these concerns, as the potential for broader regional conflicts might further dampen investor confidence and elevate debt-related risks in affected countries.
October's spooky historical track record shows it's wise for investors to be prepared.
Following the Golden Week holiday, gold prices in China soared, reaching a premium of over $112 an ounce compared to London's prices. This is the second-highest premium on record, with the gap exacerbated by global bond sell-offs impacting the international benchmark. However, gold's appeal remains strong in China due to economic uncertainties and a weakening currency.
Oct 9, 2023 - 06:23:05 PDT
In just three weeks, the US government's debt surged by over half a trillion dollars, raising concerns among leaders and financial experts. Senator Cynthia Lummis warns of the severe implications for future generations if current spending continues. Additionally, billionaire Ray Dalio predicts an impending US fiscal crisis. The Federal Reserve Bank of St. Louis states the government is now paying $909.5 billion in quarterly interest on its debt.
Oct 9, 2023 - 06:18:15 PDT
US credit card spending has decreased, sparking worries about the financial stability of consumers and the potential impact on holiday sales. This decline is attributed to consumers grappling with unprecedented interest charges on their credit cards. Additionally, increased interest rates and mounting debt, especially from credit card borrowing, are putting further strain on consumers' finances. Notably, credit card debt in the US has surged recently, surpassing $1 trillion for all citizens.
October 9th might seem like just another day, but 21 years ago, the NASDAQ-100 dropped a staggering 78% from its peak during the Dot-Com mania...
Rising business bankruptcies are sounding alarm bells, especially as they increasingly involve large companies such as SVB Financial, Bed Bath & Beyond, and Yellow. Factors like inflation, supply-chain issues, diminishing government aid, and rising interest rates are cited as key challenges. The trend of big corporations filing for bankruptcy is concerning because it can destabilize financial markets, lead to massive layoffs, and potentially signify an impending economic downturn, as witnessed with Lehman Brothers in 2008.
The 10Y yield spike might lead US banks to incur approximately $140 billion in unrealized debt losses, given their duration exposure of $5.4 trillion at the end of Q2. This would push total cumulative losses to an alarming $700 billion, possibly prompting the Fed to extend its bailout facility. Additionally, the broader fixed income investor community faces significant risk from the rising yields. With these assets often serving as "ultra-safe" collateral in the global repo market, the situation could ignite massive margin calls, threatening financial stability.
The global economy faces a significant threat: the potential onset of a third wave of inflation. As tensions rise in the Middle East, there's a growing concern that energy prices could spike, which would hinder central banks' current efforts to manage inflation. The geopolitical environment has grown notably unstable over recent years, and this makes the outcomes of the current crisis harder to predict. Markets might not be fully prepared for the broad implications of such developments.
American consumers continued to pile up debt on credit cards while borrowing for big-ticket items fell into the basement in August.This is the behavior of extremely financially stressed people.
The Bureau of Labor Statistics (BLS) released the non-farm payroll report for September on Friday. Once again, the headline numbers didn't reflect reality.Peter Schiff talked about it in his podcast. He said all of the people like President Biden probably shouldn't be bragging about creating jobs people wish they didn't have to have.
METALS & ENERGY MARKET UPDATE OCT 8th: Is The Metals Selloff Over & What's Next For The Oil & Natgas MarketOctober 8, 2023
Is the gold and silver price sell-off over? In this update, I share the charts and fundamentals taking place in the precious metals as well as the oil and natgas market. While many believe the oil price is heading much lower, I think the opposite is the case...