Precious metals news

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...

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.