Precious metals news

**Gold's Market Dynamics** Unlike consumer goods, gold isn't consumed but held. Its market is unique: gold holders can be both sellers and buyers. An uptick in trades doesn't necessarily mean higher demand. Gold's supply represents owners' willingness to sell at certain prices. Miners, despite their minor role, accept market-set prices. Gold's value hinges on both its historical monetary status and the balance between current owners' and potential buyers' assessments. Misunderstanding this leads to inaccurate analysis.

A potential U.S. government shutdown looms on Sept. 30, and if it happens, it might be worse than previous instances. Historical shutdowns usually stemmed from policy disputes, but this one revolves around fundamental disagreements over government financing. A deeply divided Congress, especially within the Republican House caucus, and a history of policy fights make a resolution by the deadline uncertain. If the shutdown occurs and extends like the 35-day 2018 standoff, the economic implications could be severe, further straining an already fragile economy. Investors are advised to tread with caution.

Bank of America reported a staggering $105.79 billion in unrealized losses on its held-to-maturity (HTM) securities for Q2 2023. This amount represents 34% of all unrealized losses from 4,645 FDIC-insured banks. Despite being the second-largest bank in the U.S., its losses significantly outpace those of its peers like JPMorgan Chase and Citibank. Questions arise as to why Bank of America's losses are disproportionately high. Their press contact remained unresponsive when questioned about the discrepancy. The way these losses are recorded hides the real financial damage, as they don't affect the income statement.

The Case-Shiller indices show a significant rise in housing bubbles since 2000. Miami and San Diego lead with a 317% surge, with index values at 417, followed closely by Los Angeles at +316%. The index uses a "sales pairs" method, offering a more accurate representation of housing price trends. Essentially, it measures home-price inflation. However, not all cities experienced such growth. Chicago, for instance, saw only a 97% increase since 2000, excluding it from the top housing bubbles.

While a drastic 40% market plunge might not be imminent, the numbers suggest that a significant drop is plausible. If real rates dip and growth remains stagnant, the S&P could potentially fall to 3,500, marking an 18% descent from its September 26 position. The historically low real rates of recent years have inflated PE multiples and driven profit margins to unprecedented highs. As real rates begin to rise, this bubble is at risk.

The US dollar index soared to its peak since November, while the 10-Year Treasury Note yield reached a high not seen since 2007, causing stock markets to plummet. The Fed's recent announcements caught investors off guard, leading to instability in global markets. Both the dollar and the 10-year yield are nearing an alarming "overbought" status, a concerning signal not seen in a year.

Mortgage rates have hit their highest levels in over 20 years, with the 30-year fixed rate reaching 7.41 percent, the highest since December 2000. Consequently, mortgage applications have declined 1.3 percent, according to the Mortgage Bankers Association. Additionally, the volume of mortgage loan applications and the Purchase Index have also seen significant decreases compared to the previous week and the same period a year ago.

China's bullion market has surged, with gold prices in Shanghai rising sharply over international rates. Due to a declining yuan, a slumping property market, and capital control measures, Chinese investors are flocking to gold as a safety measure. This contrasts with earlier in the year when economic uncertainties had people conserving cash.

S&P's former chairman, John Chambers, suggests the U.S. is in a worse fiscal state than during its 2011 credit downgrade. With an imminent threat of a government shutdown due to deepening political divisions, the nation's credit is at risk. Current data reveals a U.S. deficit of over 7% of GDP and soaring government debt at 120%. The unstable political climate, marked by past shutdowns, debt ceiling crises, and a recent failed coup, further darkens the outlook. Internal disputes within the Republican party may jeopardize House Speaker Kevin McCarthy's position, adding to the instability.

The Fed people insist the economy is strong. They upped their GDP growth projections at their last meeting. Joe Biden thinks the economy is strong. He keeps bragging about the marvelous achievements of "Bidenomics." Mainstream economists keep telling us the economy is strong.
But the average American isn't buying any of it. (Perhaps price inflation makes it too expensive?)

U.S. government bond prices have plummeted, unsettling the stock market. Treasury yields have surged to 16-year highs, negatively impacting stocks, with tech giants like Amazon and Apple seeing notable declines. The robust U.S. economy and Federal Reserve's rate hikes contribute to the instability. The S&P 500's growth has been stunted, and the persistent rise in bond yields, driven by changing demand dynamics, paints a grim outlook.

July's durable goods orders were revised downward to a -5.6% MoM drop, the most significant since COVID lockdowns. August saw a slight rise of 0.2% MoM, against an expected -0.5%. Excluding transports, orders increased by 0.4% MoM, after July's revision from +0.4% to +0.1%. Core capital goods orders, a measure of equipment investment, grew 0.9% in August after a 0.4% decline in July. This metric has been revised downward five times in the past six months. It's worth noting these values are in nominal dollars.

Economic momentum is dwindling. With this, we can anticipate decreased economic activity and potentially falling asset prices. High leverage and soaring interest rates might trigger a significant crisis, possibly worse than last March's banking situation. Historically, the Federal Reserve's interventions, such as reducing interest rates and implementing quantitative easing, haven't always accurately addressed financial system challenges. Notably, in 2008, amidst evident financial strain, the Fed's overly optimistic GDP projections missed the mark.

Retail crime increased in 2022, leading to a loss of $112.1 billion in inventory, a jump from $93.9 billion the previous year, according to the National Retail Federation. The rise caused retailers to adapt: many heightened security measures, increased employee training against violence, and modified store operations. A notable reaction was Target's decision to close nine stores. This escalation in theft and associated violence has alarmed the retail industry nationwide.

Interest rates continue to push relentlessly higher. As Peter Schiff explained in his podcast, that's a big problem when the entire economy is built on a foundation of cheap money. But most people in the mainstream don't seem to grasp the gravity of the situation. They don't realize that we are at the beginning of the end of this whole phony economy.

While the bears were calling for weak energy prices in the second half, oil hit a new high this year as the world struggles with supply issues.  Unfortunately, this is just the beginning for much higher oil and natgas prices in the future as the world hits the Energy Cliff...

Comparing gold only to fiat currencies can only capture its properties so far. This is why we are comparing it to the iPhone. In the realm of tech and economics, the iPhone 15 Pro costs 0.78 oz. of gold, a notable drop from the iPhone 14 Pro's 0.87 oz. and the first iPhone's 0.92 oz. in 2007. For gold investors, it means a cheaper iPhone in gold terms, even though its USD price has increased by 150% since 2007, averaging a 5.9% yearly inflation rate. This highlights the interesting relationship between technology, economics, and gold.

Since 1791, there have been six significant Commodities Supercycles, each spanning 12 to 24 years. We're currently navigating the seventh, which started in March 2020. The previous cycle from 1999 to 2011 witnessed remarkable price escalations: oil jumped from $10 to $150 a barrel, copper rose from 60 cents to $4.60 a pound, gold leaped from $250 to $1921 an ounce, and corn surged from $2 to $8 a bushel. The current trends closely mirror those of the past.

BRICS nations are aggressively divesting from U.S. Treasury bonds in a move against the U.S. economic policies. They dumped $18.9 billion just this month, totaling a staggering $122.7 billion in 2023. China, leading the trend, offloaded $117.4 billion of U.S. debt this year. Other members like Brazil and India have also reduced their holdings, with India even abandoning the U.S. dollar in forex markets. The collective action aims to undermine the U.S. dollar's dominance in favor of local currencies.

The decades-long fiat paper money system has led to global economic instability. Central banks' manipulation of interest rates since 1981 has caused surging debts, devaluation of savings, and promoted speculation over hard work. This has also fueled wars and birthed unsustainable businesses, while exacerbating societal wealth disparities and inflating prices. Gold offers a potential solution as a stable, resistant alternative to such manipulation.