Precious metals news

Gold and silver prices fell this week in light trade, with US markets closed on Monday for Labor Day. In European trade this morning, gold was at $1925, down $15 from last Friday’s close, and silver was at $23.05, down $1.10.

Rising government debt levels in the U.S. and globally are likely to persist due to divisive politics, increasing spending, and slower growth. Attempts to reduce debt through budget surpluses appear unfeasible, and global economic challenges make the situation even more challenging. The implications include reduced fiscal space to respond to economic downturns in the future, potentially making recessions more severe, especially in emerging markets.

A potential U.S. government shutdown at the end of September could harm the economy, reducing growth by 0.2% per week, according to Goldman Sachs. Past shutdowns had limited impacts on stocks, but this time could be different. It might highlight political gridlock and instability following Fitch's credit rating downgrade, and lead to spending cuts amid other economic challenges.

Fed raised rates in July 2023, hiking credit card interest costs for 82% of adults. US prime rate shot from 3.5% in March 2022 to 8.5% in July 2023, impacting credit card APRs. Average American owns 3.8 credit cards, accounting for 21% of payments. Inflation fuels credit card dependence; balances neared $1 trillion in Q1 2023. Delinquency rates, especially among younger debtors, are rising. Banks are preparing for a recession, increasing contingency funds for loan losses. Consumer optimism falls, and the cost of credit keeps rising as real wages decline. The economy is heading toward a slow-motion default.

Usage of the Fed's emergency bank funding facility hit a record $108 billion, signifying growing financial stress. Money-market funds surged by $42 billion to a record $5.625 trillion. Institutional fund assets rose by $24 billion, and retail funds grew by $17.7 billion. The gap between fund assets and bank deposits widens, reflecting distrust in traditional banking. The Fed's balance sheet shrank by $20 billion, signaling potential economic challenges. Fed Quantitative Tightening (QT) continues with $18.4 billion sold last week, adding to market uncertainty.

We're fed up — fed up with the Federal Reserve. After all, it is the engine that drives the biggest government in history. In this episode of the Friday Gold Wrap, host Mike Maharrey explains what the Fed is, how it came to be, and how it enables reckless government borrowing and spending. He also talks about one reason why the recent drop in the CPI is likely transitory.

Over the past year, the Silver Mining Stocks have significantly underperformed the silver price.  Why?  Well, it looks like something changed for the silver miners in 2022 and continues to negatively impact them.  However, there is some light at the end of the tunnel...

The global shift away from the U.S. dollar in international trade is gaining momentum, with major trading partners increasingly opting to use their local currencies for global transactions. Recent formal agreements among the BRICS nations, including the admission of Saudi Arabia, signal this trend's acceleration. By admitting Saudi Arabia, the BRICS now include two of the world's top three oil producers (Russia and Saudi Arabia), along with UAE, Iran, Russia, and others. This new alignment grants them significant influence over oil output and prices. The BRICS, now representing 30% of global GDP, are positioning themselves to challenge the existing global order dominated by the G7. This shift also raises questions about the dollar's role as the world's reserve currency and opens the door for alternative assets like gold to gain prominence.

China's official gold reserves have steadily increased for ten consecutive months, reaching 69.62 million ounces at the end of August. Over the past ten months, China added 6.98 million ounces to its gold reserves, setting a new record high. Analysts suggest that this trend is likely to continue as China seeks to diversify its holdings away from US debt, making gold an attractive option as a high-quality credit asset. While short-term gold prices may face pressure from a strong US dollar, the long-term outlook remains positive due to growing gold holdings by China and other developing economies.

Decades of alleged silver price manipulation could be giving way to a new era of higher prices. Silver has been suppressed for years due to extensive short selling, causing an artificial scarcity. The emerging physical shortage, coupled with the reluctance of major commercial shorts to add aggressively to their positions, may drive silver prices significantly higher. This represents a potential turning point in the silver market's dynamics.

Gold investment has surged in the past year, fueled by central bank acquisitions. JPMorgan Chase & Co. analysts report that implied allocations to gold by non-bank investors are at their highest since 2012. This trend, which began during the pandemic, has led to historically high implied allocations to gold. The rate of central bank buying is now the key factor influencing the future direction of gold prices, surpassing the importance of ETF flows, which held sway before the pandemic.

Boomers, born between 1946 and 1964, could see their Social Security Cost of Living Adjustment (COLA) drop to 3.1% in 2024 from this year's 8.7%. Smaller COLA increases may make it harder for boomers to pay off debt accumulated during periods of high inflation. This could impact those with median incomes of $41,000 to $44,000, as boomers often have fewer pensions to rely on than the Silent Generation.

Silver is much more than just a precious metal... It’s a marvel that has fascinated humanity for thousands of years.

The U.S. records a shocking 11% increase in homeless individuals living on the streets, reaching almost 600,000 rough sleepers. This spike is the largest since tracking began in 2007, with places like Oakland, San Francisco, Los Angeles, and Seattle becoming hotspots for homelessness. The issues of crime, drug abuse, lack of housing, and the end of pandemic relief programs exacerbate the problem. In downtown LA, tent cities struggle with an opioid crisis, while Seattle faces criticism for leaving hundreds of tiny homes meant for the homeless locked up.

U.N. Secretary-General António Guterres warns of a potential "great fracture" in global economic and financial systems, marked by divergent strategies in technology, AI, and conflicting security frameworks. He calls for debt relief mechanisms and re-channelling $100 billion of IMF's Special Drawing Rights through multilateral development banks to aid developing economies. This follows a 2021 agreement by rich countries to re-channel unused funds to poorer nations and a June 2023 initiative to boost lending by multilateral development banks.

Developing-nation currencies slid for a fourth day, almost wiping out 2023 gains. Concerns over prolonged Fed interest rates, China's iPhone ban, and weak German data hurt sentiment. Eastern European currencies, including the Polish zloty, performed poorly. Turkey's lira weakened for a fifth day. China's economic struggles and a stronger dollar weighed on emerging assets. The yuan hit a 16-year low against the dollar. To attract capital, Beijing may need significant reforms, while the Fed might need to signal rate cuts in early 2024.

Euro-zone GDP growth in the second quarter was only 0.1%, down from the initial 0.3% estimate. This could add weight to concerns of stagflation as the European Central Bank considers another interest rate increase to combat inflation. PMI data signals private-sector contraction, and the outlook for the rest of the year remains bleak. Germany's industrial production also declined in July. The ECB's previous 0.9% growth projection for the year may need to be revised downward in upcoming forecasts. Economists anticipate near-stagnation in the euro-area economy for the second half of 2023, possibly leading to a modest recession.

As the world descends into a much-heralded recession, the surprise will be that interest rates will continue to rise as economic activity contracts. This is not what the economic establishment expects.
This article puts the outlook in the context of classical economic theory, when it was the principles behind the division of labour which went unchallenged. Adopting the theme of Say’s law, this article permits a forecast with a high degree of certainly that far from a recession leading to lower prices, lower interest rates, and therefore investor heaven, it will lead to higher prices, higher interest rates, budget deficits soaring out of control, and liquidation of the dollar by over-exposed foreign holders.
Far from being the investor’s salvation, it will be the recession that will be the fiat dollar’s greatest challenge, and for the fiat currency system upon which it is based.

China's renminbi hits its lowest level against the dollar since 2007 as exports shrink for the fourth consecutive month, declining by 8.8% in August. The renminbi has fallen nearly 6% against the dollar this year due to disappointing economic data and a strong US dollar. Analysts suggest the People's Bank of China may weaken the currency further. China's economic recovery remains sluggish, with no major stimulus measures in sight. While some indicators improve, a shallow global trade recession is expected, with potential impacts on industrial expansion and commodity prices.

The US dollar's recent rally could be reaching its limits, potentially driving up bond yields. While the dollar has surged against a basket of currencies this year, other central banks are expected to hike rates. This dollar strength has implications for Japan, which might intervene to protect its yen, and China, which could also take action. These moves could push the dollar down and add pressure on US rates to rise further. Carry trades, like those involving the Mexican peso, are already showing strain, hinting at potential shifts in foreign exchange trends.