Precious metals news

Apollo reports that a fresh default cycle has begun, with soaring default rates. U.S. corporate bond default rates have surged from roughly 1% in 2021 to 3% following the Fed's rate hikes. For speculative grade bonds, the default rates have climbed from 1.5% to 5% within a year. If the Fed manages to prevent a recession, it would be remarkable, especially as historical patterns suggest an impending recession.

The Federal Reserve maintained rates within the target range of 5.25%-5.5%, a 22-year high. Despite this, they indicated a 'soft landing' and increased growth forecasts. The 'Dot plot' reveals policymakers predict one more rate hike this year. By 2024 and 2025, rate projections increased by half a percentage point, indicating prolonged high rates. The growth forecast for 2023 is now 2.1%, up from the 1% predicted in June. Unemployment is expected to peak at 4.1%, down from the earlier 4.5% estimate. Since the last FOMC statement, the dollar has risen, while bitcoin and bonds have declined, gold basically unchanged

Jared Bernstein, chairman of the Council of Economic Advisers, displays alarming ignorance regarding economic realities. Despite rising national credit card debt and inflation, Bernstein falsely claims improved financial conditions for Americans. His analysis contradicts his administration's data, and with such misguided advice, the U.S. is on a concerning path towards recession.

The financial system teeters on collapse. Commercial real estate values and credit card defaults surge. A global dollar crisis emerges, with China offloading U.S. Treasuries. The banking system faces another potential crisis wave. Alarmingly, the Federal Reserve reports significant losses. Efforts to tame inflation falter as energy prices spike. With looming recession risks and potential rate hikes, the financial outlook is bleak. Investors, be wary.

U.S. Treasury yields declined, with the 10-year yield retreating from 15-year highs ahead of the Federal Reserve's latest update. Despite a recent dip, Treasury yields have soared to multi-year highs amidst fears of higher rates potentially leading the U.S. economy into a recession. While the market anticipates the end of the Fed's rate-hiking cycle, the possibility of further rate hikes remains. Even as the expectation for additional hikes by the Fed this year lessens, concerns over inflation and its impact on the economy persist.

Today, China faces concerning deflationary trends, with consumer prices dropping for the first time in two years, largely driven by falling meat prices. While there are isolated price surges, notably in tourism, a vast majority of sectors, including home appliances, transport, and the broader manufacturing sector, are seeing declines. This sustained deflation in China, the world's largest manufacturer, poses the risk of exporting this deflation globally, potentially impacting advanced economies.

For the majority of this century, Germany showcased remarkable economic achievements, leading global markets with luxury cars and industrial machinery. With exports driving half of its economy, employment flourished, and while other European nations grappled with debt, Germany's financial strength became a model for many. Now, Germany is the world’s worst-performing major developed economy, with both the International Monetary Fund and European Union expecting it to shrink this year.

Expectations are rising for the termination of the subzero rate policy by March, marking a significant departure from over a decade of extensive stimulus by the central bank. Such a move could lead to a stronger yen, a decline in stocks, and alter capital flows in Japan, signaling potential economic turbulence ahead.

US home sales are predicted to face their steepest decline since 2011, with Fannie Mae projecting sales to plunge to a mere 4.8 million this year due to soaring mortgage rates, reaching a staggering 7.18%, the highest since 2001. This financial strain, combined with a looming economic slowdown anticipated by Fannie Mae economists for next year, casts a bleak shadow over the housing market. Despite some pointing to current consumer spending as a positive sign, Fannie Mae warns of the unsustainability of these trends, especially given the drop in real disposable personal income.

The FOMC is anticipated to keep rates steady at 5.25%-5.50% tomorrow. Experts are divided on whether this is the final rate hike or if another is expected in November. Goldman's Jan Hatzius and UBS's Jonathan Pingle believe July might have been the last hike. Fed Chair Jerome Powell is likely to focus on addressing inflation concerns, while the possibility of a November rate hike remains contingent on future data.

With price inflation running rampant in Japan, Japanese households are rushing to buy gold.
The sudden surge in demand, along with the devaluation of the yen, has driven the price of gold to record highs in yen terms.

The Federal Reserve continues to bail out US banks as the financial crisis that kicked off last March continues to smolder behind the walls.
Banks borrowed an additional $2.2 billion from the Federal Reserve’s bank bailout program in August. This was on top of the $3.7 billion they borrowed in July.

Last month, the BRICS economic bloc extended invitations to six new members, including Saudi Arabia. What are the ramifications of this expansion? That remains to be seen.
But as Ron Paul pointed out, it could further erode the West's economic power, and ultimately threaten the status of the dollar as the exclusive global reserve currency.

The Federal Reserve held interest rates steady at the September FOMC meeting, but the committee indicated that it plans to hold rates higher for longer than originally projected.
As you digest the Fed meeting, it's important to remember that there is a big difference between "saying" and "doing."

In a recent conference, renowned economist Jim Rickards shared a promising outlook on the future of the BRICS currency. He highlighted that the new currency might be "gold-linked", emphasizing the strength and stability it would bring to global markets. Rickards clarified that while the US possesses more gold, it wouldn't be advantageous for BRICS to be merely backed by gold. Instead, being "linked to gold" offers an edge, drawing upon gold's consistent value and minimal volatility.

High inflation, escalating credit costs, and a massive debt burden are dampening the economy. The US's inverted yield curve suggests a looming recession. Rising yields depress asset values, notably in real estate, leading to cautious bank lending. As refinance challenges grow, economic contraction looms. Stock valuations are uncertain, with gold and silver becoming attractive. A potential recession and high unemployment are imminent threats.

The Bank for International Settlements (BIS) warns of potential instability in the $25tn US Treasuries market due to leveraged bets by hedge funds. Short positions in Treasury futures are hitting alarming levels, around $600bn. Such high leverage, if unwound abruptly, could cause significant market disruptions. Recent historical events have shown the consequences, and multiple financial bodies are expressing similar concerns. The stability of the massive Treasury market is at risk.

Inflation and currency issues, exacerbated by currency printing during the pandemic and lockdown measures, are emerging as a global crisis. As a response, Central banks and investors are turning to gold as a safer asset. Central banks worldwide are attempting to stabilize economies that have relied heavily on artificial measures. The failure of these measures could precipitate substantial economic downturns.

Global debt skyrocketed to a staggering US$307 trillion in Q2, with a notable US$10 trillion increase in just the first half of 2023, the IIF reported. The global debt-to-GDP ratio hit 336%, reversing a seven-quarter decline. Predominantly, developed countries like the US and Japan contributed to this surge, with emerging markets like China and India also showing significant increases.

Gold prices reached a two-week high on Tuesday, benefiting from a softer U.S. dollar ahead of the Federal Reserve's policy meeting. Spot gold rose to its highest since Sept. 5 at $1,934.40 per ounce, while U.S. gold futures increased by 0.2% to $1,957. The market awaits the central bank's upcoming economic forecasts.