Precious metals news

With inflation still at high levels, it is becoming overwhelmingly evident to Americans that Federal Reserve notes steadily depreciate in value as a form of currency. In 1913, an item costing a silver dollar would now require around $31 unbacked dollars. Specie money, backed by gold, silver, and copper, provided stability and value. Despite the U.S. Constitution granting Congress the power to coin money, fiat currency replaced specie money. Federal Reserve notes lost 98% of their purchasing power since 1913, highlighting the need for stable monetary systems like specie money.

Rising threats to free speech and dissent have surged, particularly with the rise of social media and political polarization. Instances like bank accounts being frozen for supporting protests highlight how banks can be used to suppress dissent. The debanking scandal involving Nigel Farage exposed the power of establishment forces, showing the need to protect against such actions. Holding savings in physical precious metals outside the banking system is crucial to safeguard against government and bank influence.

Best Buy warns of credit card payment struggles as net credit losses rise, mirroring a trend seen in Macy's and Nordstrom. Macy's Q2 credit card sales plunged 36% due to rising interest rates and bloat in Citibank-powered card balances. Consumers facing almost 32% annual interest rates struggle to pay off bills, leading to write-offs. Macy's points to households earning $75,000 and below as most affected. Higher bad debt assumptions and write-offs offset revenue gains from increased interest rates. Best Buy also sees sales drops in credit-dependent departments due to higher interest rates.

Investor home purchases plummet 45% YoY in Q2, exceeding the 31% overall home sales drop, the largest decline since 2008, says Redfin. Cooling housing and rental markets have dimmed the appeal of home investment. Low-income households face affordability issues amid stagnant wages and high costs. Despite above-pre-pandemic levels, investor purchases fell to the lowest in seven years. Stubbornly high home prices and mortgage rates, limited inventory, and economic uncertainty have dampened housing demand. Housing sentiment has eroded among the lowest-income households, hinting at financial distress and a looming economic slowdown.

Deficits rise, yields fall, defying common expectations. Since 1980, as debt to GDP increases, yields drop, contrary to concerns. Hoisington Investment Management highlights that history shows a paradox: initial deficit-fueled stimulus leads to negative effects on private GDP after a few years. Rising government debt outpaces revenue, requiring lower interest rates to manage costs. This expanding debt is predicted to hinder growth and inflate inflation. While the market fears higher yields from more debt, history suggests otherwise. The Treasury aims to avoid locking in higher rates for longer, acknowledging this trend.

When Mike's latest book first launched, it was flying off the virtual shelves. Then, something unexpected happened.

Growing financial distress: More low-income Americans struggle to pay rent and afford food. 42% on boosted SNAP benefits skipped meals, 55% ate less due to money issues - double from last year. Worsening conditions in a month, utility shut-offs and rent affordability challenges rise. Consumer finances erode, sentiment drops amid cooling labor market, expiring pandemic supports.

Year-over-year price drops hit cities like San Francisco, Seattle, Las Vegas, and more. The June S&P CoreLogic Case-Shiller Home Price Index reflects fading spring season effects with a slower month-to-month rise (+0.9%) compared to prior months. Yearly, the index fell 1.2%, marking the fourth month of declines. In contrast, the National Association of Realtors' July median-price index saw the first month-to-month dip after spring season, amid declining sales. This suggests concerns about a potential housing bubble.

Despite predictions of a 1.0% decline, US Pending Home Sales unexpectedly rose by 0.9% in July, though year-over-year sales remain down 13.8%. Rising mortgage rates, hitting a two-decade high, have hit affordability hard, keeping homeowners from selling and limiting available properties. This has led to elevated prices. Chief economist Lawrence Yun sees potential for further gains, but rising rates and limited inventory are obstacles. The disconnect between existing/pending sales and surging new home sales adds to concerns.

"When you go from record-low mortgage rates to levels that we haven't seen for almost 20 years, you've destroyed both demand and supply," El-Erian said. High mortgage rates, with the 30-year fixed rate at 7.48%, have frozen the market, impacting supply and demand. Prospective buyers are priced out, while existing homeowners hold onto low-interest mortgages, keeping prices elevated. The market's caught in limbo, needing significant mortgage rate reductions to improve affordability. El-Erian highlights the central role of the housing market in the economy and the risk of a recession due to Fed's rate hikes.

Over 40 countries applied to join the BRICS Alliance – who's in and who's out. And why Sept 1st could be the best day of the year to buy gold...

At its recent summit, the BRICS economic bloc announced it will add six new members, including Saudi Arabia. Many people believe the growing influence of BRICS could ultimately dent Western economic power and undermine the dollar’s role as the world’s reserve currency.
Many people frame the rise of BRICS as a battle between East and West, but economist Patrick Barron said it's more fundamental than that. It's actually a war between diametrically opposed economic ideas.

Global equities edged up on Wednesday, but August marked their worst month of 2023, reflecting concerns about extended central bank interest rate hikes. MSCI's global index reached a two-week high, boosted by China's investment efforts and weak US jobs data. However, caution prevailed in Europe, leading to softer equity markets. Eurozone bond yields rose due to August inflation data, prompting expectations of a European Central Bank rate hike in September. US futures for S&P 500 and Nasdaq slipped, signaling a potential decline in Wall Street shares. Despite recent job data, MSCI's global stock gauge dropped over 3% in August, driven by hawkish Fed signals.

More downward revisions from the Biden administration: the first Q2 GDP revision cut growth to a meager 2.1% from an initially touted 2.4%. Personal consumption contributed just 1.14%, fixed investment dropped to 0.66%, and private inventories swung negative at -0.09%. Net exports were trimmed lower too. Government consumption, a debated economic metric, surprisingly rose to 0.58%. Inflation indicators painted a mixed picture, with gross domestic purchases prices at 1.7% and PCE prices at 2.5%. Corporate profits, as per the BEA, plunged 0.4%. The widening gap between official data and business realities is concerning. The upcoming Q3 GDPNow estimate is likely to adjust sharply downward.

President Biden might be optimistic about the economy. Federal Reserve Chairman Jerome Powell might be optimistic about the economy. But the average American?
Not so much.

After the JOLTS data suddenly exposing cracks in the 'oh-so-strong' labor market, the latest ADP employment report brought more disappointing news. Job growth slowed notably in August, adding only 177k jobs, the lowest figure since March 2023. This decline was particularly pronounced in the leisure and hospitality sector, which added a mere 30,000 jobs after months of strong hiring. Even across different employment sizes, the gains were modest, with larger companies leading. Wage growth also took a hit, with year-over-year pay increases slowing to 5.9% for job stayers and 9.5% for job changers. This data raises concerns about the impact of tightening measures by the Fed and the overall health of the labor market.

For the first time, gold prices in Japan surged to a record 10,001 yen ($68.31) per gram on Tuesday due to the yen's decline against the dollar. This reflects rising interest in gold as a secure investment amid global economic concerns. The XAU/USD rate remained above $1,920 due to a slight dip in the U.S. Dollar (USD) value. Despite potential factors like Federal Reserve rate hikes and China's economic situation, gold's safe-haven appeal remains strong.

Gold prices reached a three-week peak on Tuesday, buoyed by a drop in U.S. consumer confidence and job openings, which led to a weakening dollar and Treasury yields. This surge in the precious metal's value arrives just before the release of U.S. inflation and labor market data later in the week. As Treasury yields have eased from their 15-year highs, gold prices have seen gains over the past week. A strategist at Morgan Stanley also expressed interest in purchasing gold, highlighting growing optimism for the yellow metal.

Mounting US debt, coupled with persistent deficits, paints a bleak picture of potential dollar inflation turmoil. Uncontrolled deficits could lead to fiscal dominance and soaring real interest rates, triggering a chaotic monetization spiral, with global repercussions. In this grim scenario, desperate measures might eliminate interest on reserves, driving rampant inflation as a revenue source. Consequences include bond market losses and potential banking disintermediation, paving the way for stifling regulations. The recent debt ceiling agreement overlooked ballooning deficits tied to entitlements, signaling a grim future of high inflation and economic stagnation with no remedy in sight.

U.S. regulators unveil plans for regional banks to issue debt and enhance living wills, aiming to protect against failures. Banks with over $100 billion in assets must hold long-term debt for absorbing losses during government seizures. These measures stem from the regional banking crisis earlier this year. New requirements are expected to increase funding costs, potentially impacting earnings and credit ratings. The proposal reflects a response to sudden collapses and emerging risks in the banking system.