Precious metals news

Anticipation was high for today's CPI report. The headline CPI for July increased by 0.2% MoM, pushing the YoY to 3.2%, breaking 12 months of consecutive declines. Core CPI saw a 0.16% MoM increase, while YoY growth slowed to 4.7%. Major factors include a significant contribution from the shelter index and varied changes in food and energy indexes. With 'real' wages slightly up by 0.2% YoY in July, the question becomes - is this an inflection point in inflation? Is the over-optimistic view of the world heading for a disinflationary soft-landing about to crash on the shores of commodity's reality island?

Gold prices (XAU/USD) soar towards $1,930.00, bolstered by the anticipated persistence of the U.S. Consumer Price Index (CPI). July's monthly headline and core inflation both saw a growth of 0.2%. Though the annual headline CPI at 3.2% was slightly below the forecasted 3.3%, it exceeded the previous 3.0%. Core inflation, which excludes fluctuating food and oil costs, slightly eased to 4.7% compared to expectations and its previous 4.8%. The diminishing influence of decreased demand from central banks appears evident.

There are some Important Key Silver Charts you need to see.  The Silver Price is now at an Important Key Level, and with most of the Primary Silver Miners breaking even, I believe the Downside Risk is minimal.  One Key Factor is the U.S. Dollar which is also at a key level...

Gold saw a minor setback with a less than 1% drop last week, yet the future looks bright. Ahead of the anticipated US inflation report, Commerzbank's economists have cast an optimistic lens on the metal’s prospects. With the forthcoming US inflation data, we anticipate a further easing of price pressures in July, reinforcing our view that we've seen the pinnacle of interest rates. As the market sheds its rate hike expectations, gold is poised for a rebound. While gold may momentarily stabilize around the $1,950 level, we confidently project a surge to $2,000 by the close of the year.

Businesses are hitting the panic button due to looming recession fears and dwindling profit margins. As banks, both big and small, tighten lending standards, the economy is starting to falter. The surge in yields has already led to the downfall of Silicon Valley Bank (SVB). This cautionary atmosphere among banks and the subsequent economic slowdown means corporations, anxious about falling profits, are halting their expansion plans. The cycle is self-perpetuating and we're currently witnessing its damaging effects. The Inflation Reduction Act's temporary relief, thanks to its hefty subsidies, is on the verge of dissipating. With a decreasing demand for loans, hopes of a smooth Landing may well end up being quite the opposite.

The Federal Reserve Bank of Philadelphia introduced GDPPlus in 2013 as an enhanced measure of GDP that incorporates both GDP (expenditure-side) and GDI (income-side) data. Unlike the National Bureau of Economic Research's (NBER) method which averages GDP and GDI, GDPPlus optimally extracts data from both, aiming to represent unobserved U.S. economic activity. Although GDP is widely used, some studies suggest that GDI might be a superior metric in certain contexts. However, blending both GDP and GDI could provide a more accurate estimate than using either metric alone. Recent data indicates potential discrepancies between GDP measurements and signs of recession, raising questions about the true health of the economy.

The lingering effects of pandemic stimulus combined with ongoing personal consumption are buoying the economy, even as it grapples with the rising challenges posed by high-interest rates. Given the data at hand, a central question emerges: Will economic and consumption patterns return to their typical trajectories, or will the mounting pressures of high interest rates lead to a decline, or even reversal, in personal spending? The future trajectory largely hinges on the state of the labor market. If it remains robust, it's plausible that consumption and economic trends will settle back to pre-pandemic levels. However, historical patterns suggest that increasing interest rates and credit shrinkage can suppress the economy. In such scenarios, consumers often prioritize boosting their savings and decreasing their debt over spending.

Under the weight of soaring inflation, attributed to Bidenomics, US citizens are being forced into deeper credit card debt, which has alarmingly surpassed the $1 trillion benchmark. Mismanagement by The Federal Reserve coupled with reckless Federal spending has been a significant driver of this economic quagmire, with core inflation stubbornly remaining at a high 5.63%. Drawing a parallel between credit card debt and The Fed’s balance sheet reveals the depth of the crisis. Moreover, the combined weight of credit card and auto loan balances has skyrocketed to an unprecedented $1.6 trillion.

China, the world's second-largest economy, faces a deflationary spiral threat as prices dropped by 0.3% in July. This decrease could be an alarming precursor to a larger economic challenge globally, given China's extensive trade links. Deflation risks business profitability, undermines investment, and can surge unemployment. China's post-pandemic consumer activity plummet, combined with oversupply from past stimulus measures and a crisis-stricken property market, compounds the situation. Any prolonged deflation could strain global supply chains, undercutting foreign businesses and curbing China's demand for imports, adversely impacting economies worldwide.

With much stronger-than-expected second-quarter GDP growth and continued labor market strength, a growing number of people in the mainstream now think the US has escaped the clutches of a recession despite the Fed driving interest rates to the highest level in 16 years. But there are plenty of signs that a recession is looming. For instance, a big plunge in the sale of cardboard boxes indicates a slowdown in economic activity.
There's another off-the-beaten-path indicator that flashes recession — a big drop in the demand for gold in the technology sector.

President Biden and Congress have set alarming records with their skyrocketing spending and deficits. In just the first 10 months of the fiscal year, the deficit reached a staggering $1.62 trillion, a 131% increase from the previous year, despite a growing economy and no ongoing domestic crises. With revenues dropping by 10% and outlays rising by 11%, the fiscal mismanagement is evident. Interest on the federal debt alone surged by 34%, nearly overshadowing the entire corporate tax revenue. Biden's fiscal performance is one of the worst in presidential history.

Long-term inflation expectations in the eurozone have spiked alarmingly to their highest since 2010, casting serious doubts on the European Central Bank (ECB)'s ability to control inflation. Driven by factors such as escalating oil prices and the economic fallout from Russia's actions in Ukraine, the unsettling rise indicates the ECB's measures might be insufficient. With the bank hinting at halting interest rate hikes, experts are sounding the alarm about the potential onset of stagflation in the eurozone, a devastating scenario of economic stagnation combined with runaway prices.

Agency will no longer rank companies’ environmental, social and governance risks from 1 to 5. Amid mounting skepticism and political scrutiny, S&P Global abruptly stopped its ESG scoring system for corporate borrowers. This decision starkly contrasts with its rival, Moody's, which continues to rate ESG criteria. Critics argue that such scores are unreliable, while some believe S&P's U-turn signifies either the ineffectiveness of the ratings or is a capitulation to increasing political pressures against ESG metrics.

Italian bank shares took a hit earlier this week following the government's sudden announcement of a 40% tax on excess profits, erasing over 9 billion euros from the market capitalization of the Italian banking sector. This unexpected move was later slightly softened by the finance ministry, leading to a minor recovery in shares. Critics argue the initial decision was poorly communicated and ill-calculated, raising concerns over the Italian government's fiscal decisions and causing instability in the banking sector.

After the Federal Reserve incentivized borrowing with more than a decade of artificially low interest rates and easy money, the debt chickens are coming home to roost.
Last week, Fitch Ratings downgraded the US’s long-term credit rating from AAA to AA+, and on Monday, Moody's cut the credit rating of 10 small and midsize banks.

Amid a staggering 116% inflation rate, Argentina is in turmoil, with its populace eagerly awaiting the results of the upcoming presidential elections in hope of stability. For countless citizens, skyrocketing prices have made daily sustenance a challenge. Stories of professionals taking multiple jobs or parents foregoing meals for their children's sake depict a nation in distress. Despite being a country renowned for cattle, many, like young mother Oriana Gago, lament being unable to afford basic meat or milk. The unsettling reality for Argentines is the potential for an even steeper economic decline, irrespective of the election outcome.

The shift towards a cashless society is accelerating, particularly in Australia, where cash payments have plummeted from 70% in 2007 to 13% recently. Advocates highlight the convenience of digital transactions, including Central Bank Digital Currencies (CBDCs). However, the move to digital poses risks: loss of privacy, increased government control, and susceptibility to power grid failures. Despite the appeal of cryptocurrencies as an alternative, governments are unlikely to give up their monetary control. It's prudent to retain some assets in tangible forms like cash, gold, or silver to ensure financial security.

Wall Street is reevaluating U.S. government bonds as the Treasury Department aggressively sells bonds to finance a rising federal deficit. Concerns arise about how long fiscal spending, which might have driven recent inflation, can continue, especially given Fitch’s recent downgrade of the U.S.'s credit rating. There's a realization that bond yields could increase due to the current economic landscape. As we approach an election year, market volatility is anticipated. Despite some predictions of the U.S. curbing spending due to massive debt and low unemployment, others believe rising inflation pressures might push the bond market and the Federal Reserve to reassess their strategies.

China's economy is nearing deflation, with a predicted 0.4% drop in consumer prices for July. Retailers are cutting prices after a slower post-pandemic recovery than anticipated. Moreover, trade data showed a significant decline in exports and imports. Jim Reid, a strategist at Deutsche Bank, emphasized that the data indicates the Chinese economy is being impacted by both weak global demand and a domestic slowdown.

In 2018, CBO projections optimistically predicted the interest expense on the national debt would rise to 3.8% by 2035, surpassing defense spending. These projections assumed steady economic growth and consistent inflation. By 2020, the Covid recession occurred, followed by inflation and increasing interest rates amidst high deficit spending. Now, the interest on the national debt has soared to nearly a trillion dollars, or 3.7% of GDP. The CBO's forecasts, which still predict only a slow rise in interest rates, appear unrealistically hopeful, especially as the current treasury market yields exceed 4%. With the deficit projected at $1.5 trillion for 2023, but already reaching $2.2 trillion, the CBO's pessimistic projections may even be too rosy. The nation's escalating debt crisis is intensifying.