Precious metals news

In a concerning move, Fitch downgraded America's credit rating, emphasizing the country's growing financial vulnerability due to prolonged Washington dysfunction. The Fed's attempts to combat inflation might be setting the stage for a major fiscal crisis. Historical investment patterns, which favored stocks and bonds over short-term government securities, are now in question. Ray Dalio, a prominent hedge fund figure, now advocates for cash over stocks or bonds. U.S. debt is set to exceed the country's GDP, and even minor deviations in financial projections could lead to trillions in additional federal debt. With constraints on America's financial flexibility, its global standing and economic stability are at risk.

To hear President Joe Biden tell it, the US economy is booming. Meanwhile, the Biden administration is running monthly budget deficits that you would normally see during a deep recession.
With two months left to go, the deficit for fiscal 2023 now stands at $1.61 trillion, after the federal government charted another massive shortfall in July.
And Biden wants to spend even more.

The recent CPI report showed a decline in rent inflation, contradicting previous predictions of a surge based on real-time indicators like Apartment List and Zillow. While year-over-year data indicates decreasing rent prices, actual monthly expenditures are rising. RedFin's data suggests that US rents are nearing record highs again. Despite some economic indicators suggesting a potential drop in rent, the resilient housing market, combined with potential Fed actions, might push rents higher. The focus should be on current rent trends rather than outdated annual data.

Consumers have been recklessly spending and accumulating debt, especially by borrowing heavily for home purchases. Despite the hype, foreclosures in Q2 have surged to 38,840. While this might seem lower than pre-pandemic levels, the rapid 340% increase since early 2021 is alarming. Foreclosure bans during the pandemic artificially suppressed numbers, masking potential issues. The real threat looms for homeowners if home values plummet. Current homeowners, especially recent buyers who minimized down payments, are vulnerable. Furthermore, delinquencies in mortgages and HELOCs are ticking up, hinting at a brewing crisis. Albeit from historical lows, the rise in third-party collections and consumer bankruptcies is concerning.

US Treasury yields and mortgage rates rose recently, despite a tame CPI report. On August 11, 2023, mortgage rates surged to 7.19%, nearing the high of 7.37% from October 2022, the highest in nearly 23 years. The chart patterns suggest potential for further hikes. Current yield inversions are among the steepest in history. Despite the CPI dropping to 3.2% year-over-year, signs indicate another inflation uptick and continued Fed hikes. The housing market is expected to suffer, especially with consistent shelter price increases. The recent rise in Producer Price Index and spikes in crude petroleum further fuel inflation concerns. The Fed's oversight of not including home prices in its inflation model has exacerbated housing market challenges.

CBDCs, introduced under Biden's questionable leadership, pose a dire threat to personal privacy. The government and Federal Reserve could potentially surveil every individual transaction, signaling a dangerous Orwellian shift. As the U.S. Dollar's value diminishes, efforts to undermine cryptocurrency alternatives hint at a larger agenda to trap citizens in a monitored financial ecosystem. Public trust in the government and Federal Reserve has plummeted, yet they continue to overreach.

The Consumer Price Index (CPI) data for July came out last week. Even though the headline number ticked up slightly compared to June, most mainstream analysts took it as a sign that the Federal Reserve made more progress in its inflation fight. In fact, most mainstream pundits seem convinced that the Fed is on the verge of winning that fight and pushing CPI back to its 2% target. In his podcast, Peter said they are wrong.

Europe stored a record amount of natural gas yesterday, pushing its total inventories well above the same period during the 2020 Pandemic shutdown.  And, if current trends continue, Europe may reach 100% Capacity a month sooner than usual.  This is undoubtedly very Bearish for the Natgas price...

With global oil production likely to decline after 2025, this is only part of the problem.  Why?  It doesn't consider the "Double Whammy" of falling Net Oil Exports.  As Oil Exporting countries continue to grow, they will consume even more Oil and export less...

Gold prices are anticipated to hit record highs in 2024 due to waning interest rates and looming recession fears. While the U.S. Federal Reserve has been hiking rates, experts like Bart Melek of TD Securities predict gold could surpass $2,100 by early 2024. David Neuhauser of Livermore Partners is even more bullish, seeing it reach $2,500 by the end of 2024. This upward trend is further supported by strong gold demand from China and India. Notably, BRICS countries (Brazil, Russia, India, China, and South Africa) are considering a shift away from the U.S. dollar in favor of a gold-backed currency.

Markets might be too optimistic about decreasing inflation, overlooking two major challenges: 1. **Persistent Price Inflation**: Due to base effects, consistent price rises may seem like declining inflation. If monthly U.S. inflation exceeds 0.2%, 2024 could see even higher inflation rates, potentially above 6%. 2. **Temporary Commodity Disinflation**: Global commodities' prices have dropped but recently rebounded, indicating that the inflation dip might be short-lived. Real wages are decreasing, weakening consumer purchasing power. Key economic indicators, like the Employment Cost Index, are trending downwards. With the Fed's balance sheet still bloated, the economic outlook remains precarious, suggesting that the worst of inflation might still be ahead.

The U.S. consumer's financial health directly impacts the country's economic outlook. Recent indicators hint at a situation reminiscent of the period leading to the 2008 Great Recession. Key signs of concern include: 1. Household income, adjusted for inflation and taxes, has dropped 9.1% since April 2020. 2. Credit card debt exceeded $1 trillion, with average interest rates over 20%. 3. Rising credit card delinquency rates, highest since 2012. 4. More Americans are withdrawing from their 401(k) plans due to financial distress. 5. The cost of homeownership has risen by 20% in the past year. 6. The national rent-to-income ratio has been over 30% for two consecutive years. 7. Vehicle repair costs have surged by nearly 20% in a year. 8. 69% of urban consumers live paycheck to paycheck.

COVID-19 has cast a long shadow over the commercial real estate (CRE) sector. Although federal regulators have flagged potential risks, the Fed’s stress test may be misleadingly optimistic. While major banks seem fortified against CRE loan losses, small banks have aggressively expanded their CRE loans, doubling their stakes since 2006. These smaller institutions, having already grappled with deposit challenges earlier this year, are precariously overexposed. Their deep entanglement with the vulnerable CRE market could amplify the US economy's fragility, potentially hastening or intensifying a recession.

The US is unlikely to cut spending, significantly raise taxes, seek an IMF bailout, or default on its $32 trillion debt, said David Rubenstein, co-founder of the Carlyle Group. Instead, the solution might be to "inflate your way out," he told Bloomberg TV. However, he cautioned that increased inflation would disproportionately affect the lower-income population, leading to heightened income inequality and potential societal turmoil, particularly between age groups.

The collapse of unbacked credit value was only a matter of time, which is now rapidly approaching. The Great Unwind is underway. US Treasury bond yields are set to surge, contradicting the prevailing belief they'd stabilize or drop. This mirrors the end of the post Bretton Woods era and the shift towards tangible-backed credit. The "Great Unwind" looms due to long-standing monetary imbalances, with capital fleeing the dollar, leading to a US funding crisis. Global bonds, including Eurozone and UK gilts, show similar worrisome patterns. Those banking on declining interest rates might face stark disappointments as the currency and dependent credit must be sound.

Major US banks, including JPMorgan, Wells Fargo, and Bank of America, are poised to pay billions to the Federal Deposit Insurance Corporation (FDIC) to replenish an insurance fund crucial for propping up the financial system. Altogether, these institutions will shell out $8.2 billion, with JPMorgan contributing the largest sum at $3 billion. This payment stems from the FDIC's "special assessment" system, primarily targeting large banks that greatly benefited from the protection of uninsured depositors.

Credit cards are great until the bill comes due. And the US economy has about maxed out the plastic. The Federal Reserve incentivized borrowing and the economy is buried under trillions of dollars in debt. As Friday Gold Wrap host Mike Maharrey explains in this episode, the bill is about to come due. He also goes over the July CPI data and digs into some of the ramifications.

Market expectations for rate hikes for the remainder of the year barely shifted post the CPI release. Before the inflation data, there was a 14% probability of a quarter point increase by the Fed in September. This expectation slightly dipped to 11% after the release. The November and December expectations experienced minor alterations of only about 1 to 2%. Essentially, the CPI data seemed to have minimal influence on market forecasts regarding Fed rate adjustments.

Seniors face a disappointing 3% Social Security cost-of-living adjustment (COLA) in 2024, a stark contrast to the previous year's 8.7%. This rise, estimated by The Senior Citizens League, amounts to an underwhelming average monthly increase of less than $54. Despite inflation cooling down, seniors continue to grapple with high prices, notably in housing and healthcare. The current COLA calculation method is under scrutiny as it doesn't accurately reflect the spending patterns of retirees. Many older individuals, burdened by healthcare costs, have deferred essential services, from dental work to medical prescriptions.

The chief investment officer of Guggenheim Partners, managing over $225 billion, is focusing on high-quality bonds and anticipating challenges in the credit market. Despite market optimism, she foresees potential risks, especially for lower-quality borrowers, given the Federal Reserve's stance and the likelihood of increasing defaults and bankruptcies. While high-quality credit remains relatively stable, weaker credits without significant cash reserves could struggle.