Precious metals news

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.

As the Argentine peso spirals downward, citizens are taking a bold step: they are seeking dollar-denominated jobs as a financial safe haven...

It is slowly coming clear that the fiat dollar’s hegemony is drawing to a close. That’s what the BRICS summit in Johannesburg is all about — rats, if you like, deserting the dollar’s ship. With the dollar’s backing being no more than a precarious faith in it, it is bound to be sold down by foreign holders. Being only fiat, it could even become valueless, threatening to take down the other western alliance fiat currencies as well.
How do you protect your paper wealth from this outcome? Some swear by bitcoin and others by gold.
This article looks at what is likely to emerge as a replacement currency system, and concludes that from practical and legal aspects, bitcoin and the entire cryptocurrency industry will fail with fiat, while mankind will return to gold, as it has always done in the past when state control over currency fails

While the Mighty Permian Shale Field continues to supply a record amount of oil, the rapid increase in the natural decline rate suggests peak production is coming sooner rather than later.  Thus, the Permian is also running up against the RED QUEEN SYNDROME. It's truly amazing how the Shale Industry...

Amid rising inflation and concerns over the U.S. dollar's future as the global reserve currency, both governmental and private sectors are considering gold and precious metals as potential safeguards. U.S. Rep. Alex Mooney has proposed the "Gold Standard Restoration Act," suggesting that linking the dollar to a fixed weight in gold could bolster its international reputation. In Texas, efforts are underway to enable commerce using gold through the Texas Gold Depository. Previously, the U.S. dollar was backed by gold, providing stability, but that link was severed in 1971. Today, with global economic uncertainty and countries like China seeking alternatives to the dollar, there is a renewed interest in a gold-backed monetary system. Notable voices like Ron Paul emphasize the importance of sound money rooted in tangible value, like gold, to ensure economic stability and resilience.

Drawing parallels with the 1970s, precious metals like gold and silver have displayed promising trajectories. By 1974, silver had a notable rally, surging 125%. Central banks' robust gold buying activities have dampened the effects of sell-offs and have influenced trading patterns. Silver, meanwhile, has experienced heightened selling pressure due to the absence of central bank buying, making its market more bearish. However, recent trading trends suggest potential buy signals for silver. Even though the market may face challenges with expected rate hikes by the Fed, if the trends of the 1970s persist, we can anticipate a explosive upswing in the precious metals market.

Several payroll reports and new home sales data under the Biden administration have been consistently revised downwards. Today, the Bureau of Labor Statistics (BLS) highlighted an overestimation in US job growth, with an expected downward revision of at least 306,000 jobs. This data is based on a more comprehensive source than prior reports. Further negative revisions are anticipated in 2024, potentially decreasing job counts even further.

America's major entitlement programs, Medicare, Medicaid, and Social Security, face imminent bankruptcy. Consuming $2.7 trillion of the 2023 federal budget, these programs are strained by an aging population and declining birth rates. Medicare's reserves might deplete by 2031, while Social Security's could run out by 2033, causing a 23% cut in benefits. The future of these programs is uncertain, and their potential insolvencies threaten to impact millions of Americans.

Global PMIs are showing signs of improvement despite disappointing European data. The US and European PMIs were weaker than expected, with manufacturing globally still in a recession. However, a notable trend is the gradual increase in DM manufacturing PMIs over recent months, indicating some recovery from low points. Historically, when more DM manufacturing PMIs rise, the dollar weakens. This pattern, combined with the current data and the "dollar-smile theory," suggests that the dollar's recent rally is likely to fade, leading to a resumed downward trend.

Gold remains in demand among money managers, with none planning to reduce their exposure over the next year, despite the metal's recent price dip. A survey from Bloomberg News indicated a prevalent optimism regarding gold's price prospects for 2024. Many predict a rise in prices, with some even forecasting an all-time high. Key factors influencing gold's allure include uncertainties in the global economy, geopolitical tensions, and its reputation as a diversification tool in investment portfolios. Current gold price sits near $1,900 an ounce, with some experts, like Darwei Kung of DWS Group, projecting a record peak at $2,250 an ounce in the foreseeable future.

Putin addressed the summit remotely and emphasized in his speech that de-dollarization is "gaining momentum" and the declining global dominance of the dollar is an "objective and irreversible" process. He projected an optimistic view about BRICS's future, especially when China's Xi Jinping is promoting BRICS as a geopolitical challenger to the G7. Xi, attending the summit in South Africa, sparked discussions on BRICS's potential to counterbalance the G7, causing tensions about whether BRICS should focus on economic interests or position itself against the West.

Existing home sales dropped, but new home sales surged by 4.4% month-over-month, a 31.5% annual increase. The gap between new and old home sales widens. With a decreasing supply, new home prices rose in July despite higher mortgage rates. The current disparity between standard 30-year mortgage rates and what homeowners pay is the largest since the 1980s, making new homes, bolstered by builder subsidies, a primary option. How long can homebuilders maintain this trend without impacting profitability?

Manhattan tops the U.S. for living costs, 122% above the national average, according to C2ER's Cost of Living Index. This index uses a composite score derived from six categories: housing, utilities, groceries, transportation, health care, and miscellaneous goods/services. A score of 100 is the national average. The 15 priciest urban areas based on these scores are: 1. Manhattan: 222 2. Honolulu: 179 3. San Francisco: 169.9 4. Brooklyn: 159.1 5. Orange County, CA: 150.3 6. Los Angeles: 149.1 7. Washington, D.C.: 148.7 8. Boston: 148.4 9. Seattle: 144.5 10. San Diego: 142.5 11. Arlington, VA: 140.1 12. Oakland, CA: 140 13. Queens: 136.3 14. Bethesda-Gaithersburg-Frederick, MD: 135.8 15. Nassau County, NY: 135.2.

Mortgage applications plummeted 4.2% in the week ending August 18, 2023, as revealed by the MBA's grim data. This includes a sharp 5% dive in new purchases and a 3% slump in refinancing. The widening chasm between Bankrate’s 30-year rate at 7.62% and the meager effective rate of 3.595% signals a turbulent housing market, further destabilized by concerning economic policies.

Workers' desired wages to accept a new job hit a record high this year, reflecting ongoing inflation in the labor market. The New York Federal Reserve reported that the average minimum acceptable salary to switch jobs surged to $78,645 in Q2 2023, an 8% rise from the previous year and a 22% increase over the past three years. This wage growth is a primary contributor to inflation, which remains above the Fed's 2% target. While employers are offering higher salaries, there's still a gap between what workers expect and what they're offered. This tight labor market could pressure the Fed to maintain higher interest rates. The labor market also displayed other concerning trends: a decline in job seekers and job openings, and a reduced likelihood of job-switching.

Global interest rates are set to rise, further destabilizing the already vulnerable banking system. The contraction of bank credit, indicative of a severe credit crunch, is just beginning. Rising price inflation is eroding currency purchasing power, leading to even higher interest rates and bear markets. The potential withdrawal of $32 trillion of foreign investment from the fiat dollar and BRICS's move away from the dollar could exacerbate the crisis. Broad money, mostly comprised of commercial bank deposits, is contracting globally. China's credit issues are becoming evident, defaulting on bond payments. Past financial safety nets may prove ineffective this time, as mounting unproductive debts threaten to overwhelm banks and drive the economy to a critical tipping point.