Precious metals news

Are you aware of the looming threat that Central Bank Digital Currencies (CBDCs) pose to your financial freedom?

Major global banks, such as Barclays and JPMorgan Chase, are facing accusations of closing customer accounts due to political or religious affiliations, raising concerns about possible banking discrimination. Instances have occurred where customer accounts are being screened and rejected based on 'reputational risks', including political leanings and involvement in certain industries. Critics, including stakeholders and state officials, are arguing against the alleged politicization of banking practices and have raised concerns that this could evolve into a more comprehensive social credit system.

The June JOLTS report indicates that job openings were nearly stagnant, decreasing by just 34K to 9.582MM, marking the lowest level since April 2021. This drop in job openings was less than the expected consensus of 9.6 million. Additionally, the report showed a substantial drop in people quitting their jobs and a decline in the number of hires, suggesting a weakening labor market. These findings contradict the positive job market narrative presented by the Biden administration.

Global manufacturing PMIs across China, Turkey, Italy, France, Germany, the Eurozone, the UK, Canada, and Brazil have all dipped below 50, indicating contraction. Despite the US's positive economic data and the introduction of "Bidenomics," the US manufacturing sector has also faced a contraction, with July's PMI printing at 49.0. The ISM's Manufacturing survey showed the rate of employment slowing rapidly and new orders continuing to decrease. These conditions are a far cry from the thriving economy promised under 'Bidenomics'.

The higher education bubble, characterized by massive debt, profiteering, and mal-investment, mirrors the stock market bubble. It's driven by a misplaced confidence in future gains, fueled by recency bias and herd mentality. This results in perceived minimal risk and a euphoric rush to join the crowd. Such conditions can change quickly, though, leading to severe financial consequences, as seen in the South Seas Bubble. It all began promisingly, with early investors reaping rewards, but when the bubble burst, accumulated wealth vanished. The herd mentality and recency bias, also seen in the internet growth predictions of 1999-2000, are potent drivers of confidence. However, when these bubbles burst, as they invariably do, the downfall is precipitous.

Hedge funds are scrambling as they face escalating risks amidst unpredictable markets in 2023. In response, these funds are rapidly cutting both bullish and bearish equity positions, in a frenzy akin to the 2021 retail-fomented short squeeze. The unexpected and relentless equity rally is causing broad capitulation, leaving funds floundering. Additionally, despite market optimism, looming uncertainties such as potential bond defaults and a weak market seasonality forecast for August are breeding an undercurrent of caution. Amid this chaos, long-short funds have posted nine consecutive days of negative returns, making the situation increasingly untenable.

China's rising deflationary pressures spell disaster, threatening to drag the nation and potentially the global economy into a devastating slump. Plummeting prices erode corporate profits, suppress consumer spending, and risk increasing unemployment rates. As Frederic Neumann, chief Asia economist at HSBC in Hong Kong, warns, "The market is underestimating the deflationary impact on the global economy."

There's a big problem that pretty much everybody is just ignoring.
In just two months since Congress reached a deal and suspended the debt ceiling for two years, the national debt has surged by a staggering $1.2 trillion.
Within a week of the debt ceiling suspension, the national debt cracked $32 trillion and as of July 28, it stood at $32.66 trillion.

Sovereign debt defaults increased by 35% to $558 billion in 2022 as interest rates rose, hitting emerging markets and heavily indebted poor countries hardest, says a Bank of Canada and Bank of England report. Even though the number of countries in default reduced from 99 to 84, the amount of default debt expanded significantly, with the largest increases in poorer countries and emerging markets. This comes as global government debt remains high amid rising interest rates, and the IMF anticipates the global public debt will continue to increase over the medium-term.

Investment demand for physical gold was up by 20% in the second quarter compared to last year, continuing a trend we've seen over the last 12 months. This helped push overall gold demand up 7% year on year when including over-the-counter (OTC) sales and stock flows.

US national debt has spiked by $1.19 trillion to $32.66 trillion since the lifting of the debt ceiling. The Treasury Department increased borrowing plans to $1.01 trillion this quarter and an expected $852 billion in the next due to lower revenues and higher outlays. This flood of Treasury securities will need to attract investors with high enough yields, and an increase in longer-term securities issuance is expected soon.

Gold's value remains steady as investors evaluate the Federal Reserve's recent decisions and decreasing US consumer inflation. Gold's reputation as a risk hedge and alternative to the US dollar contributes to its 60% rise over five years, outperforming the dollar. The US's soaring public debt, predicted to reach $52 trillion by 2033, coupled with political resistance to spending cuts or tax hikes, may lead to a major debt crisis in the next decade. This could discourage foreign debt buyers, particularly non-allied nations like China, potentially leading them towards gold. Hence, it's likely gold prices will continue to excel in the upcoming decade.

Unusual changes in COMEX silver futures show a managed money trader taking a large short position. This trader must eventually buy back this short position, potentially positively influencing silver prices. Simultaneously, a new substantial silver long has emerged, hinting at a longer-term commitment to silver. Despite possible regulatory challenges, these developments could significantly impact the silver market and potentially lead to a surge in prices.

Eurozone inflation woes are escalating as the record-breaking surge in services sector prices persists, up 5.6% in July. Domestic price pressures, spurred by wage increases and robust profit margins, have taken center stage, overshadowing the significant decline in energy prices and tempering of food inflation. The stubbornly high "core" CPI at 5.5% underpins the growing problem. Despite the European Central Bank's attempts to mitigate this through asset reduction and policy rate hikes, they seem to be losing the battle against entrenched inflation, posing a substantial economic risk.

The US Treasury is preparing for a significant increase in longer-term security issuance in response to a worsening budget deficit and surging interest rates. The public borrowing requirements are escalating due to the Fed's rate hikes, which increase yields on government debt, thereby making it costlier. Concurrently, the Fed is reducing its Treasury holdings, which necessitates larger government sales to other buyers, potentially leading to more volatile auctions. An uptick in debt issuance doesn't immediately mean lower prices and higher yields but increases the potential for short-term volatility, especially given the banks' reduced market-making appetites. The combination of Fed rate hikes and inflation has spiked the cost of servicing US government debt by 25% in the fiscal year's first nine months. This rapid growth in public borrowing only underscores the seriousness of the country's financial situation.

The Federal Reserve's aggressive inflation-taming strategies, emphasizing swift and steep interest rate hikes, are questionable in achieving a "soft landing" without causing a recession or massive job losses. Timely rate reduction, a crucial part of the strategy, is even more challenging. The central bank's inability to prevent previous recessions, despite decreasing borrowing costs 3 to 13 months before downturns, showcases the difficulty in implementing effective monetary policy. With high inflation now a grave concern, the risk of doing too little might prompt yet another rate hike, despite investors believing the Fed may have finished.

Despite Democrats touting economic success under Biden, around 60% Americans are dissatisfied with his economic handling, and 70% report financial stress due to inflation. The claimed "manufacturing boom" is based on a surge in government-subsidized green tech factories. Critics argue this short-term boost, fueled by the "Inflation Reduction Act," merely inflates economic figures while draining American wealth. Meanwhile, U.S. manufacturing has significantly declined, with the ISM Purchasing Managers Index hitting a low not seen since the 2008 crash, and factory output falling for four consecutive months.

Corporate bonds currently yield a mere 0.12% above the Fed Funds rate, the lowest since 2007, before the Global Financial Crisis. History shows that such suppressed levels often precede economic downturns. Numerous indicators, including the major yield curve inversions - over 90% of the Treasury curve recently - suggest an impending severe recession. These inversions have reliably predicted past economic contractions. Furthermore, the delayed impact of the Fed's tightening monetary policies could trigger a significant credit contraction and more economic problems.

Eurointelligence's Wolfgang Münchau has criticized the ECB's forecasting model, stating it's biased towards its inflation target and increases the risk of policy errors. Analyst Jim Bianco suggests a possible inflation rebound, arguing that inflation expectations, a key component in central bank models, are irrelevant to most of the Consumer Price Index. Despite this criticism, the Fed continues to adhere to its belief in inflation expectations. The inflationary pressure could be further exacerbated by policies such as Bidenomics, electric vehicle mandates, and wage increases without corresponding productivity gains. These wage hikes, without productivity growth, are stoking inflation. Controlling this inflation may necessitate an economic or stock market crash.

Under Biden's administration, which heavily relies on the Federal Reserve's lax monetary policy resulting from the drastic overreaction to the COVID-19 shutdowns, the US economy is showing concerning signs. The growth of commercial and industrial (C&I) lending and bank credit are both plummeting. Moreover, the US Treasury's 10-year to 2-year yield curve is considerably inverted at -91.031 basis points and the M2 Money growth is nosediving. Additionally, the 30-year mortgage rate hovers around a high 7.27%.