Precious metals news

BlackRock experts predict prolonged economic stagnation for the U.S., marking it as "the weakest such period in the postwar era outside the Global Financial Crisis." Despite prior recession warnings, the real concern is now a labor shortage due to demographic shifts and early retirements, which could reignite inflation. The U.S. workforce is 4 million workers short compared to pre-COVID growth rates. This “full-employment stagnation” will negatively impact company profits and likely curb business investment. BlackRock emphasizes that this is not just a cyclical downturn but a significant structural shift that the Federal Reserve must address.

China's leader, Xi Jinping, made an unexpected move by replacing senior leadership in China's Rocket Force, responsible for most of China's nuclear warheads. These changes, combined with other military officer disappearances and suicides, hint at a major upheaval. While some speculate this was due to corruption, others believe it's because Xi is preparing for war, removing any opposition within the military. Xi's recent actions and rhetoric about war, military build-up, and threats to countries including the U.S. and Taiwan, suggest an aggressive shift. Amidst China's economic decline and Xi's unpopular policies, war might be a way for him to rally national support. The international community is now faced with the alarming possibility of China's aggressive intentions.

U.S. economic fundamentals and technicals are predominantly negative, with only unemployment and stock market figures appearing positive. Despite this, financial media often focuses solely on stocks and jobs. Searching for economic resilience in countries like China, Japan, and Germany also proves fruitless, as they face their own downturns. With signs pointing to a potential global recession, investors are advised to diversify, favoring cash, precious metals, and resilient sectors like energy and agriculture.

China's worsening economic downturn is negatively impacting major American businesses operating in the country, especially those linked to its declining manufacturing, construction, and export sectors. Notable companies like DuPont, Dow, and Caterpillar are reporting weaker sales, and some are revising their future sales projections downwards. Danaher CEO, Rainer Blair, highlighted a significant drop in orders, with June seeing a 50% decrease. This slump is attributed to decreased foreign investment and post-pandemic overcapacity. The economic slowdown in China is having ripple effects globally, with other regions experiencing reduced demand and revenue.

Former US Treasury Secretary Larry Summers warns of a dangerous fiscal trajectory for the US, with the budget deficit reaching $1.613 trillion. In an interview with Bloomberg, Summers suggests the deficit could approach 10% of GDP, casting doubt on the Congressional Budget Office's more conservative projections. Citing underestimated revenues, unrealistic expectations on defense spending, and skepticism about the phasing out tax cuts, Summers believes the true fiscal picture is more dire. Latest Treasury data reveals a $221 billion deficit for July 2023, with $67 billion spent on debt interest alone, equivalent to the total annual expenditure on education and transportation.

Silver is significantly undervalued right now. One analyst called the current price in the $22 an ounce range "inexcusably low."
But many analysts are bullish on silver in the medium term with projections of prices climbing to $50 to $100 an ounce over the next two to five years.
The question is when will we finally start to see this correction?

Bankers, including JPMorgan Chase & Co.'s CEO Jamie Dimon, warn that the Federal Reserve's proposed stricter capital rules may divert more risks from regulated banks to less-regulated financial entities, often referred to as "shadow banks". These shadow banks can experience tumultuous runs akin to traditional bank runs, threatening the stability of the financial system. Despite efforts to make the banking system more robust post the 2008 crisis, shadow banking has grown in significance and bears similarities to traditional banking. The Fed's interventions, such as the standing repo facility, aim to provide support to this system, but it underscores the risks and complexities that shadow banking brings into the financial landscape.

Global household wealth declined by 2.4% last year, marking the first drop since the 2008 financial crisis and resulting in a loss of $11.3 trillion in assets. North American and European households bore the brunt of this decrease, losing $10.9 trillion. The global number of millionaires also reduced by 3.5 million, and the world's top 1% saw their wealth share drop to 44.5%. The downturn was attributed to inflation, rising interest rates, and currency depreciation.

Retail sales in July grew by 0.7%, outpacing Wall Street's expectations of 0.4%. Most categories experienced growth, particularly online retailers, which saw a 1.9% increase from June, driven by events like Amazon Prime Day. However, furniture and home furniture stores faced a 1.8% decline. Notably, Home Depot signaled a downturn in spending on high-value items, with its CEO, Ted Decker, highlighting continued pressure on specific high-ticket categories.

Turkey's love affair with gold has had a major impact on global gold flows, especially through the first half of 2023.
Turks have historically held a lot of gold, both in jewelry and investment form. The country ranks as the fifth-largest gold market in the world. But with recent economic turmoil in the country demand for gold has exploded.

Fitch Ratings warns that the U.S. banking industry is nearing the risk of major rating downgrades, potentially affecting top banks like JPMorgan Chase. A further downgrade of the industry's score could force Fitch to reassess the ratings of over 70 U.S. banks. This action could decrease the ratings of the country's leading banks, possibly driving some weaker institutions toward non-investment-grade status. This move follows recent actions by credit rating firms that have disturbed the markets. The potential consequences of widespread downgrades could squeeze banks' profit margins and impact their ability to access debt markets.

Central banks globally are increasing their gold reserves, moving away from traditional holdings like currencies and bonds. This trend is driven by gold's stability as a hedge against economic instability and the move towards de-dollarization, as countries seek alternatives to the U.S. dollar. The surge in gold acquisition by central banks aims to strengthen economic resilience and increase their global negotiation leverage. This could impact gold's market dynamics, currency values, and global economic stability. Experts are watching this shift, highlighting the importance of preparedness in today's uncertain economic environment.

Goldman Sachs forecasts a rate cut by the Federal Reserve in the second quarter of 2024, likely by 0.25 percentage points, as the bank seeks to control inflation while addressing concerns over the US economy's stability. Despite the present high interest rate, the highest in over 20 years, Fed Chair Jerome Powell's main concern remains inflation, which was 3.2% in July, above the targeted 2%. Powell has stated that while inflation is decreasing, the future remains uncertain. Investors are concerned that continuous rate hikes might lead to a recession.

Michael Burry, known for anticipating the 2008 crisis, has been rapidly adjusting his portfolio. Three months ago, he offloaded several 2022 holdings and invested in Chinese stocks, energy firms, and distressed banks. However, recent filings reveal he's sold many of these assets, including stakes in JD.com and Alibaba. He's now invested in companies like Expedia and Charter Communications. Significantly, Burry has acquired puts on both the S&P 500 and Nasdaq 100, suggesting he's hedging against a market downturn.

U.S. tax receipts are declining, historically a sign of upcoming economic recessions. With rising Washington spending, the focus has shifted from infrastructure to social welfare and debt service. In 2022, the Federal Government funded $1 Trillion of its $6 Trillion expenditure through debt. Current economic indicators, especially dropping tax receipts, point towards a potential recession. This rise in debt and decrease in tax revenue threatens future economic growth and could negatively impact the stock market.

The U.S. has witnessed a significant surge in homelessness, with preliminary data indicating an 11% rise from 2022, marking the largest increase since 2007, according to a Wall Street Journal review. This analysis included data from over 300 entities responsible for counting homeless individuals across various regions. The increase is attributed to mounting pressures such as escalating housing costs, limited affordable rental options, and the ongoing opioid crisis. As pandemic-era support measures, like eviction moratoriums, conclude, housing expenses have become an even more prominent factor.

Interest rates are going up. While some might shrug it off, it's wreaking havoc in the commercial real estate world.

The Federal Reserve's harsh monetary stance seems more detrimental than beneficial. While certain statistics like the Consumer Price Index might indicate reduced inflation, the true picture suggests potential economic disruptions. With interest rates soaring way above the natural rate, the Fed's excessive constriction is evident. The central bank's recent inflation data might be within target, but past high rates taint this achievement. Alarmingly, the predominant influence of the shelter component in the CPI highlights pressing concerns, likely sidelining broader economic health. The Fed's current trajectory threatens its already dwindling credibility. Facing these tactics, the economy's future stability is genuinely uncertain.

The Western Roman Empire's collapse in 476 AD wasn't due to a single cause, but a combination of factors termed a "polycrisis." Key issues included external pressures from migrating tribes, notably the Huns, which pushed other groups into Roman territories. Economically, challenges like the depletion of silver mines in Spain strained Rome's resources. Societal problems also arose, with the overproduction of elites leading to internal conflicts, while escalating wealth inequality undermined social cohesion. Additionally, missteps in integrating Barbarian tribes, once assets to Rome's military, further destabilized the empire. All these internal and external challenges highlight the vulnerability of even the most dominant empires when multiple crises converge.

While recent U.S. inflation data appears positive, history urges caution. The 1970s saw inflation attempts lead to recessions, and post-war booms often followed downturns. Despite current optimism tied to Biden's investments, China's economic decline is worrying. Rising U.S. interest rates and mounting corporate debts hint at potential financial strain. Additionally, geopolitical tensions, especially with China and the Ukraine conflict, may impact the global economy. Relying solely on positive short-term indicators without considering historical patterns and global pressures could be misguided.