Precious metals news

Market shifts offer traders profitable opportunities. Gold prices remain strong, suggesting more growth. U.S. national debt has exceeded $33 trillion, adding to daily economic strains. With threats of a government shutdown and negative credit ratings, coupled with other economic challenges, the U.S faces potential financial crises. Past credit rating downgrades resulted in surges in precious metal prices. Current multiple crises present traders with numerous opportunities, making precious metals a key asset in portfolios. Buy on dips, as prices are predicted to rise.

Gold, an iconic and highly prized metal, is entrenched in global history and culture. Housed in the Bank of England's vaults are over 400,000 gold bars. Originally from meteorites, most of the gold settled in the Earth's core, with a fraction available in the crust. Its rarity and challenge in mining contribute to its value. Deriving its name from the Old English word ‘geolu’ (yellow), gold has been treasured for millennia for its beauty and symbolism. Its first monetary use traces back to Lydia, present-day Turkey, in the form of coins. Beyond its monetary use, gold's durability, malleability, and conductivity make it invaluable in electronics, dentistry, and even astronaut visors.

U.S. debt costs are surging, indicated by the record seven-year Treasury yield. As U.S. consumer strength wanes, experts predict an impending recession. Amidst these concerns, the Biden administration's economic data, initially optimistic, is frequently revised downwards, casting doubts on its accuracy. Meanwhile, rising oil prices nearing $100 per barrel exacerbate the economic strain.

The reliance on fiat currency, not backed by tangible assets like gold or silver, puts our economy at risk. This system lets the government produce more currency, leading to decreased purchasing power and inflation. Historically, the U.S. used gold and silver to limit money production and prevent inflation. Moving away from this system in the past century has given governments unchecked power to create excessive currency.

Under Bidenomics, bank credit growth fell by 0.5% YoY. Recent data reveals that the perceived robustness of the Bidenomics economy is short-lived, with figures typically revised downwards after initial positive announcements. This trend is evident in the U.S. labor data, where every monthly payrolls report in 2023 has seen subsequent downward revisions. Future revisions to payrolls also seem likely.

PCE indicators hint at rising inflation, echoing trends in CPI and PPI. UMich inflation outlooks increased, but were lower than August's readings. Despite the market predicting inflation growth, sentiment suggests a slowdown. UMich Sentiment, while up from its preliminary figure, declined from August. Economic uncertainty is fueled by potential government shutdowns and auto industry disputes. Historically, declining household item buying conditions signal rising unemployment, suggesting a potential disconnect in current unemployment figures.

As the yield on the 10-year US Treasury note soared, gold and silver came under selling pressure this week. But ahead of the weekend, bear closing in precious metals is evident. In European trade this morning, silver rallied to $23.00, down a net 55 cents from last Friday’s close. And gold traded at $1871, down a net $53. The numbers in other currencies were not nearly so grim due to dollar strength. The chart below shows the dollar’s Trade Weighted Index:

The TWI’s rally of almost 6% over the last quarter has hit minor currencies particularly hard., and gold priced in them has performed very strongly. Not only that, but energy prices being very strong in dollars are even more so in yen, rupees, and renminbi.
These currency developments have also led to significant premiums for gold prices on the Shanghai Gold Exchange, as domestic buyers do not have access to foreign currencies to escape yuan weakness. Furthermore, in early June China’s government embarked on a policy ...

The majority of Americans, with an average income of $71,214, can't afford homes in 99% of US counties, states an ATTOM report. Surging mortgage rates above 7% and a lack of homes for sale have driven up the national median home price to $407,100, a 3.9% increase from the previous year. This challenging market demands 35% of an individual's yearly salary, hitting first-time buyers hardest.

Under Biden's administration, Freddie Mac’s mortgage rate has skyrocketed to a staggering 7.31% - a peak not witnessed since December 2000, marking a 69% surge. Despite the Fed holding a colossal $2.5 TRILLION in agency MBS on its balance sheet, the 10-year Treasury yield has risen sharply to 4.67%.

Moody’s warns of escalating systemic risks in the US financial system due to a "race to the bottom" between banks and private credit funds backing high-risk leveraged buyouts. With worsening economic conditions, there's a surge in banks and private debt sectors financing subpar deals. As private equity picks up pace and hunts bigger deals, banks attempt to reclaim their dominant position in the buyout business. However, this aggressive competition could degrade pricing, terms, and credit quality, magnifying systemic risks, especially in an already fragile economy facing rising interest rates.

Amidst a fragile economy, Japan's government bonds experienced their most severe quarterly selloff in over two decades, plunging 3% in Q3. This downturn underscores the market's heavy dependence on the central bank's actions. With rising speculation of the Bank of Japan terminating its negative-rate policy, Japan's looming debt crisis becomes increasingly worrisome.

The Fed's preferred inflation indicator, Core PCE Deflator, dropped to 3.9% YoY in August. Goods prices surged, while services inflation remained high. Adjusted for inflation, real personal spending rose, but Real Disposable Income declined 0.2% MoM for the third consecutive month. Wage growth slowed across the board. The savings rate fell sharply to a one-year low of 3.9%, underscoring persistent inflation concerns and dwindling savings.

The 30-year Treasury bond yield has surged since Ackman's early August remarks, experiencing its steepest quarterly rise since 1987. With anticipated enduring inflation and the U.S. government's growing budget deficit, Ackman warns of inadequate returns from bonds. He foresees the 10-year Treasury yield potentially exceeding 5% soon due to these deficits and adverse market dynamics. The rising bond yields have adversely impacted stocks, with the S&P 500 heading towards its fourth weekly decline.

US money market funds saw a $6.3BN inflow this week, nearing record highs after a previous outflow. Retail funds increased by $7.8BN, but institutional funds declined by $1.5BN. The Fed's balance sheet shrank by $22BN, its smallest since June 2021. The emergency funding facility use remains at a high of $108BN. Concerns grow as banks might face a $108BN deficit soon, possibly leading to prolonged use of the "emergency" facility in an election year.

The economy is great! Inflation is dead! We're on our way to a soft landing! We keep hearing messages like this over and over again from Fed officials, the Biden administration, academics, and financial news pundits. But doesn't the spin seem a little detached from reality? In this episode of the Friday Gold Wrap, host Mike Maharrey exposes the political class's gaslighting operation. He also talks about the big selloff in gold this week.

Amid the cost-of-living crisis, the Royal Mint reported a surge in gold and silver investments as alternatives to disappointing traditional savings and stock returns. First-time precious metal investors increased by 17% in the first half of 2023, with gold investments up by 10% and silver by 16%. Andrew Dickey, the Royal Mint's director of precious metals, noted that individuals are diversifying portfolios and seeking "safe haven" assets like gold, which has seen its price rise by nearly 65% in the last five years.

In the event of a US recession, Treasury 10-year yields might approach a robust 3%, and the S&P 500 might stabilize around 3,000. This adjustment aligns with the anticipated movement of copper towards a solid $3 a pound. The rise in precious metals compared to industrial metals is consistent with a slowdown in global growth, positioning gold and other precious metals favorably. Bloomberg Economics anticipates this trend to become more evident by year-end.

A noted financial analyst argues that despite the historical advantages of capitalism, the average living standard is now declining because of heightened government interventions, including taxation, regulations, and inflation. He refers to the present economic scenario as the "Silent Depression" and anticipates it will escalate into a "Greater Depression," surpassing the severity of the 1930s. Emphasizing the shrinking middle class and the perils of uniform media perspectives, he suggests delving into economics and stockpiling essential commodities as pragmatic measures against inflation. He cautions about the deepening repercussions of this under-recognized economic slump.

Ray Dalio, founder of Bridgewater Associates, warns of a potential U.S. debt crisis, especially as U.S. debt surpassed $33 trillion. The rise in debt, accelerated by a 50% increase in federal spending from 2019-2021, has heightened concerns of a slowing economy and rising interest rates. Dalio predicts economic growth could plummet to near zero. This comes amidst fears of a government shutdown if a spending bill isn't finalized by October 1.

The financial news media, previously optimistic, are now blatantly pessimistic. Past assurances about inflation control and a "soft landing" for the economy have been replaced by stark warnings. Stock markets are faltering, fears of a recession loom, and the U.S. economy shows signs of strain. Today's narrative starkly contrasts past predictions, casting doubt on the media's credibility.