Precious metals news

Just when I thought it would be hard to shock me again, after everything I have seen, wait until you see the details behind the Financial Disaster called "CEASARS Entertainment."  I decided to look into Ceasars Palace after the humor in trying to get a Free Cup of Coffee in my hotel room, LOL...

Gold reached a record price of $2058 oz. in 2020, marking a hundred-fold increase from its initial $20.67 oz. value. This surge reflects the decline in the U.S. dollar's purchasing power over the past century due to inflation. Essentially, a century ago, what you could buy with one dollar now costs a hundred dollars. Today's gold price acts as a barometer of the dollar's diminished value. Despite its dip to $1850 oz. post-2020, gold remains a solid defense against inflation. When adjusted for inflation, gold would need to be $2336 oz. to equal its 2020 peak, indicating it's undervalued by nearly $500. Gold's future price will mirror inflation's continued impact.

Bidenomics, the economic policies under President Biden, has come under fire for its alleged shortcomings. Critics point to rising inflation, unprecedented debt levels, and escalating mortgage rates that are pricing many out of the housing market. Additionally, many view the administration's push for price controls as a superficial attempt to address deeper economic challenges, rather than a sustainable solution. Such controls, they argue, might hinder economic growth and negatively impact everyday Americans. It's suggested that both political parties reassess and reject these measures to ensure a healthy economic future.

Small businesses are increasingly feeling the economic squeeze, with nearly 1,500 Subchapter V bankruptcy filings this year alone. This number is quickly approaching the total for all of 2022, as per data from the American Bankruptcy Institute. Further signs of distress include rising small-business loan delinquencies and a decline in confidence among small-business owners. Over half of the respondents in a survey by Vistage Worldwide believe we are either approaching or are already in a recession.

Investors are growing increasingly alarmed as long-term borrowing costs skyrocket at an alarming pace, unseen since 2007. JPMorgan's David Lebovitz forewarns of a looming financial crash if this surge continues. Equities appear blindly optimistic, ignoring warning signs from the bond market. Political instability brews with Republican Matt Gaetz taking on House Speaker Kevin McCarthy. The yen and euro's declining stance against the dollar further adds to the growing list of economic concerns.

The US economy has been deteriorating for years, with issues amplifying since 2009. While economist Noah Smith optimistically suggests the wealth of the working class is improving, data from the Federal Reserve's FRED database contradicts his claims. The bottom 50% of Americans have seen their share of total assets decline by 25% since 2009. In contrast, the top 1% and 0.1% have seen their wealth share grow immensely. Smith's assertions overlook the stark reality of growing wealth inequality and the struggles faced by the majority.

Federal spending surged 30% since January 2020, yet Republicans can't reduce it to pre-Covid levels. M2 Money skyrocketed by 36%. The US Federal debt exceeds $33 trillion with massive unfunded liabilities. Despite a rise in manufacturing data, the sector remains in contraction for months. Overall, the economic outlook appears bleak.

The world's largest hedge fund founder warns of a looming "debt crisis" caused by skyrocketing government debt and fiscal deficits. With major players withdrawing from the market, interest rates on the debt are surging. This combination mirrors the dangerous patterns seen in some emerging markets. The Fed might intervene, but this could further fuel inflation.

Bloomberg predicts a significant crash in the US office real estate market, with recovery not expected until late 2024. The looming $1.5 trillion debt crisis by 2025 is worsened by the Federal Reserve's tight monetary policies. Regional banks, which hold a chunk of the debt, are facing financial strain, and property values are dropping. A slow recovery is anticipated, with lease adjustments extending till 2027. The reluctance to return to US offices, combined with commuting challenges, exacerbates the sector's downturn.

US manufacturing data for September shows slight improvement but remains in contraction. A disparity exists between 'soft' survey data and more pessimistic 'hard' data. Both PMI and ISM indicators suggest manufacturing struggles, with rising inflation and slowing production hinting at 'Stagflation.' Concerns for policymakers, including Mr. Powell, intensify.

Mike delves into some groundbreaking research from the esteemed team at Incrementum Capital.

Economic indicators suggest the US might be headed for a downturn despite recent optimism. While the summer saw a boost in consumer confidence, looming challenges like an auto strike, the resumption of student loan payments, potential government shutdowns, and increased oil prices could severely affect GDP growth. Bloomberg Economics sees a recession as probable, with factors like dwindling pandemic savings, rising interest rates, and a tightening credit market amplifying concerns. Despite some positive signs, historical patterns and emerging economic pressures signal that complacency may be misplaced, and a downturn is closer than many anticipate.

Banks are more vulnerable to the housing market now than they were in 2007.
Most people in the mainstream will scoff at that statement. They'll tell you that the situation is very different today. After all, we don't have a big problem in the subprime mortgage market. We're not seeing a big spike in defaults. That's true. The problem is different this time. And it's actually worse.

Rising gas prices and a decade-high delinquency rate on credit cards are straining US consumers. Declining consumer confidence in September poses a risk to the US economy, heavily reliant on spending. Moody's warns of worsening debt quality. Major retailers, including Target, report reduced spending. Young and low-income consumers are especially vulnerable, with subprime auto loan delinquencies reaching unprecedented levels. Citigroup anticipates a sharp increase in default rates by next year.

The World Bank has significantly reduced its growth forecast for China in 2024, predicting a mere 4.4% increase, down from an earlier 4.8% estimate. East Asia’s economies are bracing for their most sluggish growth in decades, primarily due to US protectionism and escalating regional debt. Recent US policies aimed at reducing dependency on China are harming not just Beijing but the entire East Asian region. Southeast Asian nations, once beneficiaries of US-China trade rifts, are now experiencing declines in exports to the US. This bleak economic outlook is raising concerns about the long-term repercussions for the global economy.

China's property market is on the brink, reminiscent of the U.S. 2008 crisis. Despite housing sales plummeting, Beijing's intervention might not save the day. Banks, tied closely to indebted local governments and industries, face heightened risks. While big banks seem stable for now, smaller ones, especially rural banks, are on shaky ground. The government's efforts might fall short, threatening the financial stability of the region and potentially slowing down China's economic growth.

In the early '90s, rising bond yields due to budget deficits influenced Washington's fiscal decisions. Now, despite a $1.5 trillion budget deficit and soaring federal debt, bond markets may not hold the same sway. Current federal spending is hard to cut, and significant tax hikes seem unlikely. Facing limited options, the US might resort to inflation or financial repression, hurting savers and benefiting the government. Unlike the prosperous late '90s for bond investors, upcoming years look challenging.

Financial regulators are tightening controls on shadow banking due to hidden risks and the potential impact of rising interest rates. The UK and the Bank of England are actively monitoring "non-banks" such as hedge funds and insurers, which now hold half of global financial assets. This sector's growth stems from post-2008 regulations that shifted risks outside traditional banking. Recent market disruptions, like the Archegos collapse, have heightened concerns. Current solutions include cautious lending to hedge funds, but comprehensive oversight is still in development.

The markets seem to think that everything is fine. They believe the Fed has effectively beat price inflation and it can mop it up without crashing the economy. In his podcast, Peter Schiff said in reality the Fed is at a fork in the road, and there is an imminent disaster waiting no matter which way it goes. He also warned that the biggest crisis is the one nobody sees coming.

What an "Interesting" time at the 2023 Silver Symposium.  In this update, I will share my experience as an attendee and speaker and answer questions and comments from the last two SRSrocco Report posts.  And, what about the big selloff in the precious metals prices today...