Precious metals news

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.

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.