Precious metals news

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.

The 2024 presidential candidates are being urged to commit to not altering Social Security. However, such a commitment indirectly supports a 23% benefit reduction by 2033 due to the impending insolvency of the Social Security retirement fund. This reduction equates to a $17,400 yearly cut for a typical dual-income couple retiring that year. The Social Security program's trustees forecast the fund's reserves will run out by 2033, leading to mandatory benefit reductions for all 70 million beneficiaries. Candidates avoiding the issue are essentially supporting significant benefit cuts for retirees in the near future.

The decline in the office market is hitting small and regional banks hard. Delinquencies for commercial property loans rose to 4.41% in July. Forecasts indicate a significant drop in office values by 2025, possibly not recovering even by 2040. Over half of the $2.9 trillion in commercial mortgages will need renegotiation soon. However, an uptick in future delinquencies is expected as more property owners return their properties. Meanwhile, the Federal Reserve continues its money-printing.

Despite Wall Street's optimism about avoiding a recession, several industry executives have reported sector-specific downturns. Industries facing recessions include manufacturing, real estate, freight, and tech, among others. Statements from leaders like Jordan Kaplan of Douglas Emmett Inc. and Jonathan Johnson of Overstock.com indicate significant industry challenges. The increasing number of industries in decline might eventually lead to a broader economic recession.

A.P. Moller-Maersk, a leading global container shipper, anticipates a sharper drop in global demand for shipping containers due to subdued economic growth and inventory reductions by customers. Maersk faces challenges from falling freight rates, a slowing global economy. The company's Q2 earnings showed a decrease in EBITDA to $2.91 billion, down from $10.3 billion the previous year, and revenues plummeted 40% to $13.0 billion.

U.S. Treasury sales are under pressure, testing investor demand as they face the largest refunding auctions since last year. Surging yields, driven by a stronger U.S. economy and increased borrowing signals from the Treasury, highlight concerns about the rising U.S. budget deficit. Fitch Ratings' recent downgrade of the U.S.'s top credit rating underscores these fiscal worries. This week, the bond market grapples with absorbing over $100 billion in auctions amidst looming inflation reports.

The Biden administration's push for a central bank digital currency (CBDC) raises alarming privacy concerns, as such currencies could enable extensive government surveillance of individual transactions. Globally, skepticism is mounting: Nigeria's CBDC adoption flopped, and a mere 16% of Americans support a CBDC. As this distrust grows, U.S. lawmakers are proposing bills to limit CBDC development. The CBDC push is a worrying step towards reduced financial freedom and privacy.

U.S. consumers are facing significant debt issues. In May, consumer credit growth plummeted over 50% from April. While credit card debt increased, student and auto loans unexpectedly dropped for the first time since April 2020. By June, credit card debt decreased. Usually, a decline in this area suggests an impending recession. This comes as credit card interest rates surge to an alarming 22%. Additionally, student loans decreased by $9.1 billion, and with mandatory repayments resuming soon, more financial strain is anticipated.

Australia has become the front line in the war on cash with an aggressive effort to ring physical money out of the economy.
Over the last financial year, more than a billion dollars worth of physical cash disappeared from circulation, according to data released by the Reserve Bank of Australia (RBA). The Australian news service 9News called it "the strongest sign yet" that the country is moving toward a cashless society.

There is something brewing in the silver chart that Mike Maloney wants you to see. To unpack this, Mike has invited Tavi Costa, a renowned portfolio manager at Crescat Capital, onto the show. Tavi's insights have been spotlighted by Bloomberg, The Wall Street Journal, CNN, and many other major outlets. Together, they delve deep into what might be on the horizon for silver. In this riveting discussion, they explore:

Flashing another recession warning sign, credit card spending suddenly fell off a cliff in June.
American consumers have been using credit cards to make ends meet for months, but with credit card debt at record levels, rising interest rates appear to have slammed the door on spending. Credit card debt contracted in June for the first time since April 20201, according to the most recent data released by the Federal Reserve.

Americans purchased more gold bars & coins in the first half of 2023 than any other period since the 2008 Global Financial Crisis.  More importantly, Americans' physical gold bullion buying is greater than during the Pandemic shutdown in 2020....

Russia and China are hinting at introducing a gold-backed trade settlement currency at the upcoming BRICS summit. This could pave the way for a return to gold standards using the currency board model. Both nations have sufficient gold reserves to implement such standards, allowing allied countries to align with the renminbi. Recent shifts of gold from the West to the East have left western nations with less bullion to back their currencies, emphasizing gold's stability. A rising sentiment against the dominance of the fiat dollar emerges, suggesting that gold-linked trade currencies might gain traction. This development could encourage nations to re-evaluate their relationship with gold and credit, with Russia and China leading the way.

During high-growth periods, interest rates rise as businesses vie for funds, while during low-growth, rates drop due to decreased borrowing and lending. Central banks often misinterpret these dynamics and resort to devaluing their currency as a strategy. However, in a globalized world, a cheaper currency can increase export costs and risk retaliation from trading partners. Such currency wars, a race to the bottom in devaluing currency, lead to more harm than benefit, as seen in prolonged economic downturns like the Great Depression. Japan's continuous economic struggles exemplify the pitfalls of this approach.

Claims of defeated U.S. inflation are misleading. Despite the CPI's presentation, real indicators show high, ongoing inflation caused by Federal Reserve stimuli and COVID-19 economic responses. Temporary tactics, like releasing strategic oil reserves, only offer short-term relief. Geopolitical disruptions in wheat and rice exports further fuel inflation. The U.S. economy is caught between inflationary and deflationary pressures.

The U.S. national debt has surged by over $276 billion in a month, reaching $32.608 trillion by July 31st. Recent data suggests that if this fiscal trajectory continues, the U.S. could accumulate a debt of $143.895 trillion within three decades. Immediate solutions are required, including changes in both spending and revenue, and addressing complex issues like entitlements. As of August 3rd, the federal debt stands at $32.604 trillion.

Bidenomics favors large-scale government intervention, resembling FDR's approach. Recent job data caused bond market fluctuations, with 10-year yields briefly dropping below 4.05% before rising to 4.12%. The upcoming CPI report could influence the market further. Despite a current trend towards a flatter yield curve, inflation concerns hint at a steeper curve. The challenges faced by central banks in managing large reserves amid inflation are becoming a topic of political attention.