Precious metals news

Dollarizing Argentina, as some suggest, could plunge the nation into a devastating and prolonged economic crisis, mirroring Ecuador's grim fate, warns economist Robin Brooks. Ecuador's dollarization has led to chronic economic stagnation, and Argentina must steer clear of this perilous path, Brooks strongly advises. The Argentine peso's catastrophic decline, hyperinflation, and mounting debt issues have prompted calls for dollarization, but Brooks and other experts caution against it, highlighting potential catastrophic consequences. The ongoing currency crisis is deepened by a severe shortage of the US dollar, aggravated by challenges in agricultural exports.

Initial jobless claims unexpectedly remained low, hitting the lowest levels since February, despite predictions of a rebound. This may be linked to previous data distortions, including potential fraud cases in Ohio and expanded unemployment insurance in Minnesota. Continuing jobless claims also fell below 1.7 million, reaching the lowest point since January. Despite this, the unemployment rate remains elevated since February 2022, indicating ongoing job market challenges.

Mike is on the hunt for an assistant who could also become a potential business partner in his latest groundbreaking venture.

Falling energy prices were a significant factor in the big decline in the Consumer Price Index (CPI) earlier this year.
Bad news: energy prices are now heading up. That means the CPI relief was almost certainly transitory.

After returning to net gold buying in June, central banks continued to add to their gold reserves in July.
Globally, central banks reported net purchases of 55 tons in July, according to the latest data compiled by the World Gold Council.

In 1933, Herbert Hoover's advice on currency devaluation was ignored, leading to Roosevelt's pro-inflation tactics. Fast forward to August 1, 2023, Fitch Ratings downgrades the US government debt as the nation's debt-issuing spree continues unchecked. US public debt is projected to rise by $5.2 billion daily for the next decade, reaching well over $33 trillion. The downgrade escalates the threat to the US dollar's reserve currency status, especially with BRICS nations meeting to counter Western dominance. Diversifying portfolios with gold remains wise, as gold exposes the dollar's shortcomings and Central Bank demand for gold remains robust, signaling a shift away from the US dollar.While caution is advised, buying gold during dips can offer protection against potential currency crises.

The BRICS alliance, expanded by adding six new countries: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. Saudi Arabia, a linchpin in the dollar's reserve status due to the petrodollar, recently signed a deal with Brazil to accept Brazil's currency for oil purchases.Their shared objective is to challenge US political and economic dominance, with a central focus on undermining the dollar's global reserve currency status. This move signals growing international discontent with the dollar's weaponization and mounting concerns about the staggering US national debt.

Taxpayers are unknowingly bailing out Federal Reserve member banks. Historically, the central banking system generated profits and contributed to the U.S. Treasury. However, a shift has occurred due to sharp rate hikes. The interest expenses the Fed now faces outweigh its earnings, accumulating nearly $93 billion in cash operating losses since September 2022. Rather than assessing member banks for these losses, the Fed is borrowing to cover them, adding to the consolidated federal debt. This alarming trend is escalating, with several district banks teetering on insolvency, raising concerns about the growing financial burden on taxpayers.

The rise of "debanking," where banks close accounts of those with differing views, is a growing concern. This trend disproportionately affects conservatives. Central bank digital currencies (CBDCs) are expected to exacerbate this issue. Owning decentralized cryptocurrencies like Bitcoin and gold can provide individuals with financial sovereignty, offering an alternative to the discriminatory banking system and ensuring financial independence from repressive institutions. Gold, in particular, is regaining popularity as a safe haven asset amid increasing financial uncertainties.

Regional and community banks, which have heavily invested in commercial real estate, now face risks as the Federal Reserve raises interest rates. With rising rates, banks must offer higher deposit rates to retain customers, reducing the funds available for lending and absorbing loan losses. As office vacancies surge in major cities, real estate investors struggle to refinance debt, leading to defaults and losses for lenders. This situation threatens the commercial real estate market and the banking system, causing concerns among industry experts.

Gold prices in Japan hit an all-time high due to the yen's historic slide against the US dollar and rising inflation concerns. The retail gold price in Japan, now above ¥10,000 per gram, tracks global spot prices influenced by the pandemic, the Ukraine conflict, and US-China tensions. Japanese households, with significant cash holdings, are turning to gold as a hedge against inflation. Currency analysts predict the yen will remain weak unless the Bank of Japan tightens its policy and closes the interest rate gap with the US and Europe. Japanese consumers are increasingly seeking inflation protection as consumer prices rise after years of deflation.

Manufacturing contracts, services expand. S&P Global US Services PMI disappoints, while ISM Services soars to strongest since February. Survey responses reflect opposing views. Rising stagflation risks loom as prices surge amid slowing business activity. Chris Williamson of S&P Global Market Intelligence suggests a faltering economic growth outlook, with persisting wage growth and upward pressure on costs.

Stimulus ended, savings depleting, and rents soaring - a troubling credit cycle emerges. Mortgage delinquencies remain low, thanks to rising home prices. However, consumer loans, especially auto loans, are problematic. Younger borrowers face higher delinquency rates, reaching a 13-year peak for 18-39-year-olds. This could flood used car lots with repossessions, potentially easing inflation. Credit card delinquencies are even more concerning, doubling lately, with one in 12 borrowers aged 18-29 over 90 days late on payments, signaling growing financial strain and economic turbulence.

Soaring living costs and stagnant standards of living are straining American households. Consumer debt has risen 19% under Biden, while public debt has increased by 16.5%. Over 60% of Americans are living paycheck to paycheck, with debt levels reaching unprecedented highs. UBS predicts that 50,000 stores could close in the US by 2027 due to reduced consumer spending and the shift to e-commerce. Housing affordability is at its worst this century, with a 7.48% average 30-year fixed mortgage rate in August 2023. Home prices are dropping, and many homeowners are facing negative equity.

Tropical Storm Lee is swiftly intensifying, set to undergo "explosive intensification" into an "extremely dangerous" Category 4 hurricane by the weekend as it moves west-northwest. While its exact path isn't certain, it poses a significant threat. Current predictions keep it north of the Leeward Islands and Puerto Rico, but the trajectory may change. Beyond five days, it could turn northeast, away from the U.S. mainland, but uncertainties persist. Preparations and monitoring continue.

Biden heads to G20 in India, but Xi and Putin won't attend. Divisions on Ukraine, fossil fuels, and global debt restructuring may hinder progress. Climate change and Russia's war in Ukraine are on the agenda. China's absence impacts economic cooperation, potentially hampering US efforts. India asserts itself as a global player. G20 faces resistance to fossil fuel phase-outs due to economic concerns from countries like Saudi Arabia and Russia.

US home-purchase mortgage applications hit a 28-year low due to high mortgage rates. The 30-year fixed rate, at 7.21%, is near historic highs. Overall mortgage demand also fell to a nearly 27-year low, pushing housing affordability to its worst point in decades. High rates make homeownership less affordable, and low-rate holders are reluctant to sell, limiting supply and driving up prices. Until borrowing costs drop, the issue may persist, despite new construction. The Fed doesn't seem to lower rates soon, aiming to curb inflation.

Bidenomics appears to be heading into a dark phase. The real-time GDP tracker from the St. Louis Fed, Nowcast, is projecting a -0.07% GDP for Q3, coinciding with a sharp decline in M2 money growth. However, if you're looking for optimism, the Atlanta Fed's GDPNow estimate, led by housing economist Raphael Bostic, paints a brighter picture with a Q3 GDP projection of 5.6%. The question on many minds is when the Federal Reserve will return to its days of low-interest rates.

Japan and China have raised concerns over the rapid depreciation of the yen and yuan, respectively, as both currencies face pressure from the strengthening US dollar. The yen has fallen nearly 8% against the US dollar since mid-July, while the yuan has declined more than 6% since May. Traders anticipate the Federal Reserve will maintain higher interest rates for an extended period, causing pressure on other currencies like the euro and pound, which may need to cut rates faster to mitigate the impact of rising borrowing costs.

Japan and China have raised concerns over the rapid depreciation of the yen and yuan, respectively, as both currencies face pressure from the strengthening US dollar. The yen has fallen nearly 8% against the US dollar since mid-July, while the yuan has declined more than 6% since May. Traders anticipate the Federal Reserve will maintain higher interest rates for an extended period, causing pressure on other currencies like the euro and pound, which may need to cut rates faster to mitigate the impact of rising borrowing costs.