Precious metals news

Commercial real estate (CRE), specifically office spaces, are experiencing a significant downturn due to rising Federal Reserve rates and inflation. The NCREIF Office Property data reveals a steady decline in office value since Q2 2022. A report from Trepp highlights a severe value loss in the past decade, with newer buildings losing 52% of their value. Coupled with $528.7 billion of commercial mortgages maturing this year and a decrease in real gross domestic income, the outlook for the US economy and CRE market is troubling.

Home sales are slowing as buyers reach their financial limits, with October 2022's median home sales price peaking at $496,800, and since falling 16.4%. This downturn is generally associated with recessions. The drop in mortgage transaction rates is mostly tied to elevated mortgage rates nearing 7.0%, and increasing asking prices. Existing home sales have been in a decline since February 2022, despite efforts by homebuilders to stimulate the market through price reductions, offering smaller homes, and absorbing interest rate differences.

June 2023 report from the RV Industry Association highlights a steep 46.4% fall in RV shipments, largely due to high borrowing costs. However, the striking trend is a 7.7% rise in "Park Model RVs" demand, reflecting a concerning shift in housing preferences. This trend echoes a deepening housing affordability crisis, effectively pushing the 'American Dream' out of reach for many amid stagnating wages. Consequently, more people are resorting to alternatives like Home Depot's "Gateway Pad" trailers.

JP Morgan forecasts $2,000 gold by the end of the year with the price continuing to rise to record highs in 2024.
In his latest note, JP Morgan executive director of global commodities research Greg Shearer projects the price of gold will average around $2,175 an ounce by the fourth quarter of 2024. That would represent an 11% increase from the current price.

Good news. The looming US recession has been canceled.
Or has it?

Even if the Global Economy continues to weaken, it will face the next round of Energy Cost Push Inflation towards the end of the year and into 2024.  The dynamics of the oil market have changed considerably while economists still ignore the negative implications of the ENERGY CLIFF...

Historically, gold has been acknowledged as real money, maintaining a consistent and unchanging value. The varying price of gold is not indicative of its intrinsic value but rather showcases the declining purchasing power of the currency used to price it, such as the U.S. dollar. Increases in the price of gold merely signify the depreciation of a currency, not gold's appreciation. Importantly, all governments inflate and destroy their own currencies. Hence, regardless of its market price in any currency, the value of an ounce of gold stays the same, effectively rendering gold priceless.

Advocates of interventionism habitually lay the blame for inflation on a myriad of factors, yet they overlook the single most influential cause: the issuance of more currency units than what the real demand dictates. This notion of 'seller inflation' is merely a derivative of the 'cost-push inflation' fallacy. It's a clever strategy designed to obfuscate the true source of the issue and attribute the root cause to factors that cannot, in reality, trigger an aggregate price increase. This misdirection not only confounds citizens but also shifts the focus away from the genuine economic dynamics at play.

The Congressional Budget Office reveals that the US budget deficit rose by 156% to $225 billion in June, leading to a $1.4 trillion deficit for the first nine months of fiscal 2023, marking a 171% increase from the same period in the previous year. The US national debt officially stands at $32.6 trillion. However, the situation is more severe, with the real obligations, including entitlements like Social Security and Medicare, estimated to be around $200 trillion. Amid these circumstances, potential solutions such as severe spending cuts, considerable tax increases, or hyperinflation pose significant risks. Given these challenges, the Federal Reserve might resort to hyperinflation by printing more money, despite the long-term economic dangers.

Americans' financial health is showing signs of strain, as pandemic-era savings deplete and credit card debt hits record levels, recent Federal Reserve data indicates. During the pandemic, direct stimulus spending allowed for lower credit card debt and a surge in savings, amassing a collective $2.3 trillion. However, Gen Z and millennials are now seeing significant credit card debt increases, and the overall cash balance in American households is at its lowest since April 2020. With inflation persisting and the student-loan payment pause potentially expiring in September, further economic distress is feared. Despite positive trends in wages and GDP, many Americans continue to struggle with mounting bills and dwindling savings, challenging the economic recovery narrative.

A new study by BlackRock reveals a worrying trend: Americans' confidence in their financial readiness for retirement is plummeting. Now, only 56% believe they're on track, a sharp fall from 63% in 2022 and 68% in 2021. Gen Z displays the highest volatility, showing a propensity to sell investments during market downturns. These alarming statistics highlight growing fears about money depletion amidst inflation and market instability.

Gold demonstrated resilience as it rebounded in response to anticipated inflation figures, marching confidently past the $1950 an ounce mark. Despite facing headwinds due to a strengthened dollar and surging Treasury yields spurred by robust economic indicators, the lustrous metal appears to be curbing its steepest weekly drop in over a month.

The hegemony of the American dollar as the global reserve currency appears to be crumbling, chipped away not by a single competitor, but through a multitude of strategic partnerships and regional initiatives that bypass the dollar entirely. In an alarming development, India and the UAE have recently agreed to use their local currencies for cross-border transactions, an indication of a potential large-scale exodus from dollar-dependency. Furthermore, China's assertive push to break the dollar's stranglehold on oil trade through close ties with Saudi Arabia, coupled with discussions between Brazil and Argentina about creating a common currency, paint a dire picture for the future of the dollar. Collectively, these developments signal a seismic shift in the global economy, with the dollar's dominance hanging in the balance.

China's major state-owned banks were seen selling U.S. dollars to buy yuan in both onshore and offshore spot markets in early Asian trade on Tuesday, three people with direct knowledge of the matter said, moves aimed at supporting the Chinese currency. China's state banks usually trade on behalf of the central bank in the country's foreign exchange market, but they could also trade on their own behalf. Advertisement · Scroll to continue The dollar sales come after China's top leaders pledged on Monday to step up policy support for the economy amid a tortuous post-COVID-19 recovery, focusing on boosting domestic demand and signalling more stimulus steps. Policymakers also said China will keep the yuan exchange rate basically stable at reasonable and balanced levels, and vowed to invigorate the capital market and restore investor confidence.

The Federal Reserve raised interest rates yet again during its July meeting. So, what's next? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the Fed meeting and the weird messaging, and then speculates about the central bank's next move given the current economic backdrop. He also talks about a lucky Oklahoma woman and her bag of "junk" silver.

The solution is straightforward. The Federal Reserve needs to promptly address inflation and strive to bring rates back down to near-zero levels, reminiscent of past years. This strategy would provide a much-needed window for the Treasury to accumulate debt at a faster pace than the rate of economic growth. The phrase "buys time" is crucial here. Admittedly, this approach is reaching its limits, necessitating a constant decrease in interest rates and more Quantitative Easing (QE). Eventually, even zero rates may not suffice. Regrettably, many government leaders choose to defer this issue, leaving the resolution of the looming debt crisis to future administrations. Thus, we anticipate that the Federal Reserve's mantra may soon shift to advocating for lower interest rates over an extended period.

Recent data suggests the Fed may be facing a sticky situation. Core inflation indicators are decelerating, yet the acyclical portion of inflation remains uncomfortably high. Additionally, Americans' spending is outpacing their incomes, prompting a decrease in the savings rate. However, what could truly stoke the fires of inflation is the consistent rise in wages for both private and government workers, which has been ongoing for four months. Could these financial dynamics ignite the next inflation upsurge?

Rising US debt and deficits are hindering economic growth. Despite the Keynesian theory advocating deficit spending to boost economic activity, the shift from productive investments to social welfare and debt service yields negative returns. This leads to an increasing reliance on debt to fuel growth, pulling resources away from investments to service debt and social welfare. To reduce debt to manageable levels, a $50 trillion cut from the current debt would be required, potentially triggering major economic downturns. Persistently high debt levels may result in frequent recessions, lower market returns, and a stagflationary environment.

(This story was originally published on March 29. Bank of Japan policymakers meet today, with investors speculating that they will loosen their tight grip on interest rates.)"Bracing for financial seismic shocks, investors await a pivotal meeting as the Bank of Japan contemplates a policy shift likely to end a decade of ultra-low interest rates. This impending end of the world's boldest monetary experiment risks ripple effects on the global economy, given Japan's extensive overseas investments and their status as the largest foreign holders of US government bonds. In an era of rising global interest rates, the potential reversal of Japan's 'easy-money' era could destabilize markets from Brazil to Europe, heightening scrutiny of lenders and echoing recent bank turmoil in the US and Europe."

The COMEX silver market is heading towards a market emergency, similar to the 2022 LME nickel market crisis. The hard data shows a surge in futures positioning, with an increase of over 130 million oz. The scenario resembles the LME nickel market, which faced a physical shortage and a massive derivatives position, leading to an explosion of prices. The COMEX silver market now exhibits the same signs, with the physical silver market experiencing a shortage, and a substantial increase in derivatives positions. Concerningly, the big banks, despite previous fines and sanctions for price manipulation, appear to be the significant short sellers in silver. Regulators CFTC and CME Group are accused of inaction in the face of this potential crisis. There are warnings about extreme price volatility ahead due to this situation, with either a sharp price drop or a sudden surge. Regardless of the response from regulators, the ongoing physical shortage of silver may drive prices up.