Precious metals news

Global inflation remains persistently high, causing concerns for central banks worldwide. Delgado, a prominent figure at the European Central Bank (ECB), highlighted that despite inflation's decline, it remains worryingly elevated. Recent rate hikes, meant to counteract soaring inflation, have significantly tightened financing conditions, suppressing demand. As central bankers worldwide meet, the focus is on whether interest rates need to be maintained longer than anticipated. After a historic rise in inflation, the ECB has rapidly increased rates, but there's growing skepticism about its effectiveness, evidenced by J.P.Morgan's prediction of a halt in the ECB's tightening cycle after disappointing euro zone business activity results.

As global debt and deficits rise, Central Banks might be compelled to maintain low interest rates to manage borrowing costs and support weak economic growth. U.S. rates are unlikely to spike due to their attractiveness to foreign capital when compared to countries with low or negative yields. This dynamic can push U.S. rates downward. With Washington's increased spending, the U.S. budget deficit could soon exceed $2 Trillion, leading to a greater issuance of government bonds, especially during economic downturns. Furthermore, Central Banks will intensify their bond purchases in recessionary periods; for example, the Federal Reserve's next easing could push the 10-year yield towards zero, a situation reflected in Japan's prolonged low-interest-rate environment.

The global economy is teetering on the brink. The eurozone's PMI is contracting for the third consecutive month, signalling deeper troubles ahead. Citi economists are raising alarms, stating the US may need to confront a severe recession to combat spiraling inflation. TS Lombard anticipates an imminent worldwide recession, with particular concerns about China and Europe, while the US seems on a collision course with an economic downturn due to escalating interest rates. Investment giants like Nomura forecast dire economic outcomes not just for the US and Japan, but also for major players like the UK and the eurozone. The sudden spike in interest rates worldwide threatens to destabilize an economy that has grown reliant on lower rates.

Japan began discharging treated radioactive water from the damaged Fukushima nuclear plant into the Pacific Ocean. In response, China announced a blanket ban on all aquatic products from Japan due to fears of radioactive contamination. While Japan asserts the water release is safe and received approval from the U.N. nuclear watchdog, China opposes the move, saying Japan hasn't adequately proven the water's safety. Protests arose in various locations, with activists expressing concerns about the environmental and health impacts.

The BRICS economic bloc announced it will add six new members, including Saudi Arabia. The growing influence of BRICS could ultimately dent Western economic power and undermine the dollar's role as the world's reserve currency. In this episode of the Friday Gold Wrap, host Mike Maharrey talks about the ramifications of BRICS expansion, de-dollarization, and the possibility of a BRICS currency. He also talks about how silver is inexcusably low.

The world's largest primary silver miners saw their costs hit new All-Time Highs in Q2 2023.   Unfortunately, even if we get some deflationary forces to lower costs in the short term, the Silver Miners will likely experience much higher energy & material costs in the years ahead...

Silver's remarkable ascent continued yesterday, propelling Gold along with it. The driving force behind this uptrend appears to be the dip in benchmark treasury yields across the US and Europe, triggered by lackluster PMI data. There's growing market optimism that key central banks might be nearing the end of their tightening phase. The upcoming Jackson Hole Symposium is drawing significant attention, and while Fed Chair Jerome Powell's speech is highly anticipated, remarks from other leading central bankers are equally expected to shape the market's trajectory.

In a move signaling a growing anti-Western sentiment, BRICS is expanding its members to include Saudi Arabia, the United Arab Emirates, Argentina, Egypt, Ethiopia, and Iran by 2024. This marks the bloc's first growth in over a decade and now encompasses three major oil producers. Established in 2009, BRICS nations account for 40% of the global population and over a quarter of the world's GDP. Despite internal disparities, BRICS's collective GDP surpassed the G7 in 2020. While the G7 has denounced Russia's invasion of Ukraine and imposed sanctions, no BRICS member has criticized Russia's actions or supported these sanctions.

The stock market experienced a surge in the first half of the year, driven in part by significant investments from foreign investors. As the saying goes, "foreigners are often the last to buy." Additionally, the hype around artificial intelligence boosted the market, but what if its promise doesn't deliver? A brief relief from an emerging "liquidity hole" further bolstered stocks, but this seems to be short-lived. Escalating long-term interest rates, due to increasing treasury demands, might destabilize asset prices. This situation could also corner the Fed. Eventually, investors might turn to a time-tested refuge amid financial chaos and rising inflation: gold.

Congress, led by Republicans, is struggling to agree with President Biden and Senate Democrats on long-term funding, with a likely short-term bill instead. Despite the staggering $32 trillion national debt, spending cuts seem improbable. Both parties are heavily inclined towards welfare-warfare expenditures. The U.S.'s credit rating downgrade by Fitch was brushed aside by officials, relying on the Federal Reserve's low interest rate strategy. However, this approach has spiked Americans' living costs. With increasing debt, the U.S. faces potential economic collapse and political upheaval, jeopardizing liberty.

Joe Biden claimed "Bidenomics" boosted real wages for low-income earners. However, after adjusting for inflation, wages seem to have declined. Following significant monetary growth in 2020–21 due to Fed policies, unexpected inflation emerged, contradicting the Fed's "transitory" predictions. Ludwig von Mises' concept of "forced saving" suggests inflation might compel lower earners to curtail consumption as prices rise faster than wages. Current data, however, shows wages lagging behind inflation, making Biden's assertion questionable. In essence, the data, combined with Fed actions, challenges the notion that "Bidenomics" has benefited lower earners.

Philadelphia Fed President Patrick Harker expressed skepticism about the need for further interest rate hikes by the U.S. central bank. At the Fed’s annual research conference in Jackson Hole, Wyoming, Harker mentioned, "Right now I think that we've probably done enough" and suggested that it might be prudent to maintain the current rates to observe their impact on the economy. His comments are significant as they come ahead of a keenly awaited speech by Fed Chairman Jerome Powell. Given Harker's voting status in the Federal Open Market Committee, his perspective adds to the ongoing debate about the direction of future rate decisions, especially after the rate increase in July.

From a high-stakes BRICS Summit to 30-year mortgage rates hitting 7.49%, this week is a whirlwind for global finance and personal economics...

Offices present a significant financial challenge, contributing to over half of the $626 billion of vulnerable debt due by 2025. Since the Federal Reserve began increasing interest rates in March 2022, office values have plummeted by 31%. The decreasing property values and escalating refinancing costs due to higher interest rates are raising alarms about potential defaults. Prominent investors, including Blackstone Inc., Brookfield Corp., and Goldman Sachs Group Inc., have already defaulted or surrendered offices. Banks hold the majority of this at-risk debt, with $303 billion of these precarious loans set to mature by 2025.

Wells Fargo reports a worrying rise in Americans defaulting on credit card payments, signaling potential economic downturn. Small and medium-sized banks are feeling the strain as delinquencies soar, especially amidst recent major bank failures. Credit card debt has spiked to an unprecedented $1.03 trillion, up 4.6% in the last quarter alone. Amplifying concerns, the average credit card interest rate has peaked at a staggering 20.63%. With many using credit to counteract rising costs, this could result in extended debt periods, making purchases significantly more expensive in the long term.

The retail sector suffered a severe blow this week. Macy's and Kohl's reported significant sales declines, indicating deeper underlying problems. Stock values plummeted across the board, with major brands witnessing sharp drops. Furthermore, Dick's Sporting Goods and Foot Locker also slashed their annual profit targets. This cascading effect of poor performance and lowered expectations paints a dim view for the industry's future.

US jobless claims dropped to 230k last week, but the figures are skewed. Goldman points out two significant distortions inflating these numbers: potential fraudulent filings in Ohio and expanded unemployment eligibility in Minnesota. These distortions contributed to 28k of the initial claims. When these are factored out, initial claims levels closely resemble those from January, indicating the situation might not be as positive as it seems on the surface.

US durable goods orders plummeted by 5.2% MoM in July, marking the steepest decline since the COVID lockdowns, overshadowing the previous surge in June. This decline was primarily driven by a significant drop in non-defense aircraft orders. Defense aircraft orders also decreased. Though Durables Ex-Trans experienced a slight rise of 0.5% MoM, core capital goods orders, indicative of equipment investment, saw only a modest 0.1% increase. The data suggests a volatile and concerning trend in nominal prices.

Inflation is erasing real wage growth, leading to negative real wages. The government's unrestrained spending has led to nearly $1 trillion in annual interest. Corporate bankruptcies in 2023 are at their highest since 2010, with over 400 companies folding, particularly in sectors with significant debts. Corporate interest costs rose by 22%, pressuring businesses to cut costs or even declare bankruptcy. While some companies remain resilient, the S&P 500 earnings are dropping, and the structure of corporate debt has changed since the global financial crisis. Despite creative lending solutions by banks, the pandemic-induced corporate debt increase hints at future financial challenges.

In a difficult year for banks, four major ones collapsed since March, prompting billions to move out of traditional bank accounts. Regulators introduced potential restrictive measures. Midsize banks, with assets between $85 billion and $250 billion, face heightened scrutiny and regulatory changes, leaving them in an uncertain position in the industry. Recently, ratings for several of these banks were downgraded due to falling deposits and the repercussions of higher rates. Zions Bancorporation highlighted increasing deposit costs. Stricter capital requirements are on the horizon, pressuring these midsize institutions.