Precious metals news

Major European banks including Deutsche Bank and Lloyds Banking Group warned about the increasing risk of bad loans due to slow global growth and high inflation. Lloyds' shares dropped 3% as it faced higher charges for potentially sour loans, up 76% to £662 million ($855 million), affecting its profit expectations. Meanwhile, UniCredit reported strong earnings in Q2 due to higher interest rates, although it anticipates a significant increase in its risk costs. The International Monetary Fund (IMF) slightly raised its 2023 global growth estimates but cautioned that persistent challenges were affecting the medium-term outlook. Also, the European Central Bank reported a record low demand for loans last quarter as banks continued to tighten credit access. Germany's Deutsche Bank said provisions for bad loans almost doubled to €401 million in Q2, indicating a softening in some sectors. Similarly, Spain's Santander saw a 52% YoY drop in Q2 net profit in Brazil due to inflation-driven cost rises and a 4.3% decre...

JPMorgan's Marko Kolanovic remains bearish on stocks, cautioning that the current fervor surrounding artificial intelligence is inflating a potential bubble in the stock market. According to Kolanovic, the bubble is evident from the record 60-year high stock concentration in the S&P 500, with the top seven companies comprising over 25% of the index. Such a heavy concentration is particularly evident in the Nasdaq 100, which recently had to implement a special rebalance as more than half of the index's weight was made up by tech behemoths. Kolanovic cites these trends as potential indicators of a bubble, adding that anecdotal evidence also points to a potential bubble driven by AI. Despite his belief in AI technologies, Kolanovic doesn't consider current AI incarnations, particularly chatbots, ready for widespread deployment due to their tendency to fail on basic queries and occasionally providing incorrect responses to more complex ones. Instead of focusing on the ongoing AI bubble, Kolanovic is paying cl...

After hitting the highest level since 2019 in the first quarter, Chinese gold demand continued on a solid path through Q2.
Through the first half of the year, Chinese gold consumption surged by 16%, according to the latest data from the China Gold Association (CGA).

John Hussman, a notable expert on asset bubbles and successful predictor of the stock market crashes in 2000 and 2008, has issued a bleak warning about the future of the S&P 500. In his view, the index could plummet by 64% from its current level. This drastic crash would be precipitated by extreme equity valuations and "unfavourable market internals" which, according to him, would result in the collapse of what he refers to as "the most extreme yield-seeking speculative bubble in U.S. history." Hussman is not dissuaded by the recent positive performance of the US stock market, which has seen the S&P 500 rallying almost 19% this year. He contends that the market's stretched equity valuations suggest that such a sharp plunge is necessary to return the market to more balanced conditions. He further adds, "At present, the valuation extremes we observe imply that a -64% loss in the S&P 500 would be required to restore run-of-the-mill long term prospective returns." High valuations can imply that stocks are exp...

John Hussman predicted the 2000 and 2008 stock market crashes. Now he's saying the current stock market bubble will "end in tears."
In a recent note, the Hussman Trust president said the S&P 500 needs to plunge 64% in order to "restore run-of-the-mill long-term prospective returns."

The global real-yield curve inversion suggests that central banks are nearing the end of their tightening cycles, providing a favorable position for risk assets. However, if inflation accelerates, it could pose a risk, forcing central banks back into action. Historically, the inversion of the nominal-yield curve has indicated a downturn, but it doesn't provide precise timing for risk management. The real-yield curve, which has recently re-inverted, offers more insights in an inflationary environment, signaling that central banks have elevated short-term real rates above long-term rates. Despite the decrease in global inflation and the slower pace of rate hikes by central banks, real conditions are still tightening swiftly. This isn't affecting the risk rally currently, as the flattening real-yield curve is increasing excess liquidity due to a weaker dollar. However, a resurgence of inflation, potentially driven by stimuli in China and a budding rally in oil, could diminish excess liquidity and raise rates...

Jeffrey Sherman of DoubleLine Capital has warned of a deep U.S. recession, urging a drastic one percentage-point interest-rate cut by the Federal Reserve. Contrarily, the Fed is currently anticipated to hike rates. Sherman's alarming forecast is based on weakening economic data indicating a probable recession next year. He explains that numerous economic indicators are flashing warning or recessionary signals. He expects that when the Fed reacts, it will necessitate a substantial 100 basis-point cut. In preparation, Sherman is investing in the safety of long maturity government bonds. He isn't concerned about further Fed rate hikes, believing long-dated yields have peaked. Sherman emphasizes that the bond market is signaling that the Fed has overtightened and will need to reduce rates. However, he believes the Fed will be slow to cut rates, potentially leading to an emergency meeting. He doubts that a mere 25 or 50 basis point cut will resolve the situation, painting a grim picture for the U.S. economy an...

The global rise in inflation and its financial ramifications is inadvertently making a case for the value of gold. Gold, which is typically under-owned by most investors, is anticipated to provide real returns of 2 to 3 percent per annum over the long term, after adjusting for inflation, according to John Reade, Chief Market Strategist for the World Gold Council (WGC). Given gold's robust performance in 2020 when it returned over 25 percent, Reade advises investors to temper their future expectations. However, he adds that the coming three years may yield returns slightly higher than long-term projections. The primary driver for this is the expectation that the U.S. could enter a rate-cutting environment in response to inflation, resulting in a weaker U.S. dollar. The potential for a weaker dollar and lower interest rates typically bodes well for gold, a well-known hedge against inflation and currency fluctuations. Lower interest rates decrease the opportunity cost of holding non-yielding bullion, while a...

Rising inflation is creating global financial stress, impacting both governments and businesses, including those in the U.S. With central banks raising key interest rates to combat inflation, the costs of borrowing, especially for inflation-linked debt, are surging. This represents a shift away from the era of cheap borrowing fuelled by low or even negative interest rates. Governments worldwide, including the U.S., are facing hefty debt interests. Estimates suggest governments will pay around $2.2 trillion in overall debt interest this year. The U.S. Treasury’s interest cost alone grew 25% to $652 billion in the nine months through June. In the bond market, yields on benchmark 10-year fixed-rate bonds, a proxy for government borrowing costs, have risen to 3.9% in the U.S., having been below 1% during the pandemic. This surge reflects the tightening financial conditions businesses also face. As existing fixed-rate bonds mature, they must be replaced with new, more expensive debt. The U.K. has been particul...

In the wake of JPMorgan Chase's controversial expansion into Israel and Singapore, concerns have been amplified due to the bank's troubling history of admitting to five criminal felony counts since 2014. The extension could add billions to its already problematic uninsured deposits, raising significant concerns for regulatory bodies. As of year-end 2022, JPMorgan held a staggering $1.48 trillion in uninsured deposits, equating to 60% of its total deposits, which are not insured by the Federal Deposit Insurance Corporation (FDIC). The recent large-scale bank failures in the US have underscored the risk of such massive uninsured deposits, leading the FDIC to propose a special levy of 0.125 percent on uninsured deposits above $5 billion, payable over eight quarters. If enacted, this measure would deal a severe financial blow to JPMorgan Chase and other banks holding large amounts of uninsured deposits. However, this proposal has met with fierce resistance from large banks. Their lobbying organization, the Ba...

Pierre-Olivier Gourinchas, Chief Economist of the International Monetary Fund (IMF), ominously warned about the grim potential of the US economy spiralling into a recession. In a sobering conversation at the IMF's headquarters in Washington, Gourinchas stressed that although a recession isn't explicitly predicted, it looms as an alarming possibility if the US fails to carefully navigate its current economic conditions and fails to manage its rampant inflation. The IMF, despite recently inflating its global growth prediction to 3% for 2023, primarily attributed this growth to developing economies, casting doubts on the ability of mature economies to contribute significantly. The US, along with Germany and Japan, are being outpaced by the rapid growth of emerging economies such as China and India. In another concerning revelation, the IMF's report spotlighted the burgeoning risks in the seemingly robust Chinese economy, focusing on its fragile real estate sector. Early signs of China's rapid post-pandemic e...

Will Artificial Intelligence enlighten, guide, care and inform us? Or will it confuse and divide us?

A BlackRock study has found that US retirement savers are increasingly worried about their ability to save for retirement due to high inflation and volatile markets. The proportion who feel they are "off track" in their savings plan has doubled to 24% since 2021, while the percentage feeling "on track" has dropped to 56%, the lowest since the survey's inception eight years ago. Almost 30% of retirement savers now plan to work longer due to economic conditions, with younger workers especially concerned. 31% of them believe they are off track, creating fears they may lose faith in 401(k) and other retirement savings plans. BlackRock's findings coincide with an Edelman survey, which found that only 40% of the global public expects their family will be better off in five years, with the US figure even lower at 36%. Despite this, the survey found that 78% of respondents trust their employers, compared to 50% who trust their government and the media. The market volatility has increased interest in retirement pr...

The U.S. budget deficit is worsening this year due to the Inflation Reduction Act and CHIPS and Science Act of 2022, adding over $1 trillion to the deficit over the coming years. This is in line with falling real gross domestic income (GDI) in three out of the last four quarters. Larger interest payments and diminished tax revenues increase the deficit without boosting economic activity. Research suggests that the government expenditure multiplier is positive for the first four to six quarters after the initial deficit financing, then turns negative after three years. This means debt-financed federal expenditures could ultimately reduce private GDP. Two studies found that government fiscal policy actions that increase government size or debt relative to GDP significantly weaken economic growth. The impact of government size relative to GDP is becoming increasingly negative. In early 2023, the government's size was 34.3%, and real per capita GDP/GDI average growth was 1.3%, indicating an increase in govern...

The Dow Jones Industrial Average (DJIA), S&P 500, and Nasdaq Composite Index have experienced a decline over the past 18-20 months, with a steeper dip when adjusted for inflation. The DJIA, for instance, is down 6.42% inflation-adjusted from its all-time high in January 2022. Despite certain stocks like Apple and Nvidia performing well, investors are often blind to the overall market downturn due to the influence of these giant companies. Market indexes, such as the S&P 500 and Nasdaq, being cap-weighted can exaggerate the performance of mega-cap stocks. Hence, even when most stocks in an index may not perform well, a few key players can mask this underperformance. The extreme concentration on a few companies adds vulnerability to market reverses. Automated trading dominates over 80% of the market, pushing traditional active investing to the sidelines. This automation, based on flawed assumptions like the inevitability of matching market performance and the future resembling the past, can lead to disastro...

A bag of "junk silver" given to a woman by her father more than 50 years ago is now worth at least five figures.
The Oklahoma woman received a bag of 2,000 silver half-dollar coins as a gift back in 1970. While the face value of the coins is just $1,000, the silver alone is worth over $17,800.

US capitalism's shifting geography has led to various regions being abandoned and depressed, starting with New England, then moving to New York and the mid-Atlantic, then the Midwest, the Far West, South, and Southwest. As capitalists sought higher profits, they moved facilities and investments out of the US, especially to China. The result: wage stagnation, growing income inequality, and social division in the US. This exodus, justified under "neoliberalism" and "globalization," chiefly benefited the rich corporate shareholders and executives, intensifying income and wealth gaps. The argument was that this global movement was good for all citizens. Meanwhile, China, unlike other countries, ensured foreign investments served its own development plan, leading to a fast-paced economic growth. With China and its allies (Brazil, Russia, India, South Africa) posing the first sustained economic challenge to the post-WWII US empire, the US has responded with resentment, provocation, and denial. Yet, the capitali...

For the first time, the yuan has topped the dollar in China's cross-border transactions, accounting for 49% of the total in the last quarter, according to a Nikkei analysis. This rise is largely attributed to China's more open capital market and increased yuan-based trade with Russia. Despite the dollar's global share remaining the largest at 42.02%, according to SWIFT, the yuan's international usage has grown from 1.81% to 2.77% in the past five years, reflecting China's increasing economic influence. In 2022, cross-border settlements in yuan totalled $5.85 trillion, and its international payments last quarter grew 11% year-on-year to $1.51 trillion, surpassing dollar payments. This shift is linked to China's capital market liberalization and an increased use of the yuan in trade, particularly with Russia due to Western sanctions. Beijing continues to encourage international use of the yuan, making bilateral agreements to facilitate its use. This is fostering a potential currency decoupling, as China and...

US Secretary of Treasury, Janet Yellen, continues to rubber-stamp America's growing debt, yet these checks miraculously clear. Despite the nation's insolvency, this process persists, with Washington spending the borrowed money. Yellen appears to live in an economic fantasy, recently claiming at a G20 meeting, "Our labor market is strong, I don't expect a recession. The inflation data is encouraging." This is despite the creation of low-quality jobs that won't stimulate economic growth, increasing bank losses, and inflation data that is skewed by the draining of the Strategic Petroleum Reserve. The economic reality is bleaker. The US government ran a budget deficit of nearly $1.4 trillion in the first 9 months of 2023, a 170% increase from last year. Interest on Treasury debt securities for the same period increased 25% to over $652 billion. Since 2000, federal debt has risen over 480% while GDP has only grown 165%. The government's reckless debt accumulation has left the US economy in a precarious state, ...

The number of corporate debt defaults in 2023 has already exceeded the total number of defaults last year.
According to data from Moody Investment Services, 55 American-based companies defaulted on loans through the first half of 2023. That was a 53% increase over the total number of defaults in 2022.