Precious metals news

The US is grappling with a monumental public debt issue, with the debt amount soaring by a staggering $57.2 billion in a mere span of four days. Recently, the total debt crossed the $32 trillion mark on June 16th, and by July 20th, it had already jumped an additional $590 billion, reflecting the gravity of the problem. David Rubenstein, a prominent billionaire investor, shared his insights on Bloomberg TV, offering a bleak assessment of the situation. He expressed that the US might resort to inflation as a method to manage this escalating debt, which can severely magnify income inequality in the country. Such an approach will disproportionately impact those at the lower income levels, as they often struggle more with the adverse effects of inflation compared to wealthier individuals. In addition to this, Rubenstein flagged the rising tensions between different socio-economic and age groups. He forecasts a clash between the older population, who are living longer but have inadequate retirement benefits, an...

Rumors are circulating that the BRICS countries (Brazil, Russia, India, China, and South Africa) are planning to introduce a new trading currency backed by gold. This announcement could have significant implications for the global financial system, but details remain sketchy. Some speculate that this new currency might only be used for settling international accounts. It raises questions about where the gold backing this currency will be held and whether the currency will be distributed based on the amount of gold a country holds in its treasury. There are also concerns about whether this currency will be available to companies and individuals or exclusively to governments. A currency backed by gold could bring many advantages. However, skeptics suggest that the governments' motivations might not be purely about economic stability. They may also be seeking more control over their national currencies and possibly limiting individuals' ability to move their assets across borders. Using gold itself as a unit...

In the ideal 'sound money system', a range of currencies, both state-issued and privately issued, would compete in a transparent global marketplace. But most importantly, a key role would be played by currencies backed by tangible assets, like gold. Currencies are fundamentally a reflection of the issuing nation's economy and institutions. The currencies backed by solid and diverse economies are stronger, but the constant manipulation by governments and central banks can lead to debasement that disproportionately favors the wealthy. Gold-backed currencies present a potential solution to this problem. Unlike fiat money, which is subject to inflation and financial repression, gold retains its intrinsic value and isn't as easily manipulated by central authorities. For a gold-backed currency to work, however, it must be convertible to gold, otherwise, it falls prey to the same manipulations as fiat currencies. A currency crisis often sees the wealthy moving assets overseas, only to return and buy assets cheap...

Caitlin Long's endorsement of Idaho's move to charter "uninsured, non-lending, 100% reserve banks" elicits grave concerns about the future of banking. Fractional reserve banking, where banks maintain a fraction of the total deposits as cash, poses a considerable threat in the digital age. If more than the maintained fraction is withdrawn abruptly, it could lead to bank failure, a phenomenon that's getting more frequent and swift with internet speed transactions. The trend of moving money to larger banks for a perceived safety is hardly a solution, as they hold only marginally more cash. Long proposes the return of narrow banking, a 19th-century norm, where banks hold 100% of their cash on deposit at the Federal Reserve. However, the Federal Reserve has shown resistance to this idea, as demonstrated by its rejection of TNB USA's application for a Fed master account in 2017. The emerging banking landscape paints a worrying picture. With bank runs speeding up due to the shift from paper to digital transactio...

The collapse of Silicon Valley Bank has unveiled serious vulnerabilities in the financial sector, shedding light on inadequate regulatory measures and financial missteps. The prevalent disregard of rising interest rates and reckless betting by financiers has significantly contributed to the collapse. Loose monetary policies and flawed accounting rules are among the key factors, with additional concerns being the overlooked roles of the Federal Home Loan Bank system (FHLB) and the use of collateral. The FHLB, an obscure entity in American finance, has facilitated loans for struggling institutions, masking their actual financial conditions. An alarming spike in FHLB's loan book from $344bn to over $1tn between September 2021 and March 2023, largely undetected due to lack of timely reporting, has been revealed. The banks that imploded, including SVB, Signature and First Republic, were found to be heavy FHLB borrowers. Further, the misuse of collateral to secure loans has been identified as another potential ...

The banking system in the United States has been left shaking following the collapse of three sizable banks in March and April, throwing into sharp relief significant inadequacies in bank regulation. The focus seems to have shifted to political finger-pointing rather than addressing the critical role that uninsured depositors played in these failures. The frightening reality that uninsured deposits continue to threaten the stability of the U.S. banking system has been grossly under-discussed. Deposit insurance in the U.S. is provided by the Federal Deposit Insurance Corporation (FDIC) for banks and by the National Credit Union Administration for credit unions. While the limit of insurance coverage is $250,000 per account, it's alarming to note that about 40% of all deposits are currently uninsured, a significant leap from 20% three decades ago. This large percentage of uninsured deposits is a ticking time bomb, posing a serious threat to the stability of the banking sector. This problem is especially prev...

The US inflation is showing signs of cooling, failing to reach the Fed's 2% target, which potentially spells uncertainty for the country's economic health. Kevin Gordon, the Senior Investment Strategist at Charles Schwab, has questioned whether the Federal Reserve will maintain its existing interest rate cycle or opt for a different strategy. Despite inflation slowing down, the Fed appears to be far from achieving its goals, thereby casting a shadow over the economic outlook. While market participants anticipate further rate hikes, Gordon underscores that the Fed's actions are not on a predetermined course. Its decisions will be guided by a complex interplay between inflation trends, labor market dynamics, and overall economic conditions. However, there seems to be a disconnect between the market's understanding of the Fed's strategies and the institution's actual intentions. In the beginning of the year, the market was expecting rate cuts before the end of the year, contradicting the Fed's signaling. Now...

Euro zone business activity contracted sharply in July, driven by falling demand in the service sector and rapid decline in factory output, according to a survey. The downturn was broad in scope, affecting Germany and France, and increased concerns of a recession in the region. This downturn is seen as a result of the European Central Bank's continued interest rate increases, which appear to be hurting consumers and the service sector. The Composite PMI for the euro zone fell to an eight-month low of 48.9, indicating contraction. The manufacturing sector was particularly weak. Consequently, the euro slipped, and the bloc's government bond yields fell. The downturn is causing significant concerns for the future of the euro zone economy.

The latest S&P Global US Flash Composite PMI report paints a grim picture of the country's economic health. The PMI for July slipped 1.2 points to 52, indicating the slowest rate of growth since February due to a milder increase in service sector output. Furthermore, the issue of high costs persists, particularly in the service sector. Manufacturers too are grappling with a renewed increase in input prices, while services companies report a slower, but steady rise in operational expenses. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, commented on the gloomy data, highlighting a distressing blend of slowing economic growth, decelerating job creation, plummeting business confidence, and stubborn inflation. He stated that the current rate of output growth suggests an approximate 1.5% annualized GDP growth rate at the beginning of Q3, which is a decline from the 2% growth indicated in Q2. Moreover, he pointed out that the only saving grace for the economy was the service sector...

The latest New York Fed Credit Access Survey report reveals a concerning trend - stricter lending practices and reduced consumer demand for loans. Key highlights from the June report include: 1. The credit application rate dropped to 40.3%, its lowest since October 2020. 2. Credit application rejection rates surged to 21.8%, the highest since June 2018. 3. Auto loan rejections skyrocketed to a record 14.2%. 4. Despite fewer applications, rejection rates for all loan types increased dramatically. Moreover, Americans' credit scores are taking a nosedive as people halt their debt repayments. The housing market is faltering, with home sales dipping 15 of the last 17 months. The retail sector is also grappling with weak inflation-adjusted sales for four out of the past five months. Furthermore, the Fed's reported industrial production fell by 0.5% with a downward revision for May. Despite some economic pundits shifting their prognosis from recession to soft landing, these troubling signs suggest a challenging ...

Currently, monetary and fiscal authorities seem to be operating unsustainably divergent policies. With a simultaneous increase in debt cost by central banks and reduction in their asset balance sheets, these policies contrast with the rapid increase in government debt. Post-COVID, major developed economies are experiencing fiscal dominance, causing rapidly escalating debt burdens. To sustain current government spending levels, monetary authorities like the Fed will likely have to resume their role as principal financiers of government debt. Our research is focused primarily on the U.S., currently experiencing significant deficits, contributing to the weakening of the US dollar and suggesting an ongoing structural issue. This situation underscores the necessity of tangible assets in such an environment. The worldwide fiscal agenda is expansive due to severe inequality and wealth-gap issues, rising geopolitical tensions, and the push for a green-energy revolution. In the U.S., high government expenditure le...

The Federal Reserve Board of Governors has scheduled a contentious open meeting next Thursday to debate a controversial proposal pertaining to the final execution of the Basel III international regulatory framework. The meeting is set to occur at 1 p.m. at the Martin Federal Reserve Board Building in Washington and will be broadcasted live on the Fed's website, according to a published notice by the Fed. The contentious draft of the rule, which is expected to demand increased risk-capital requisites for all banks with total assets exceeding $100 billion, will be uploaded on the Fed's website about 20 minutes prior to the meeting, as stated in the notice. This public meeting could expose the internal dispute over the capital rules under consideration, some of which have been hinted at through public comments made by individual board members. Fed Governor Michelle Bowman has disputed the need for higher capital requirements, casting doubt on the proposal. In contrast, Vice Chair for Supervision Michael Barr...

People are confused about the definition of inflation. And because they don't really know what inflation is, they can't grasp what's causing it.
Or how to fix it.
That's why it's imperative that we reclaim the meaning of inflation.

Millennials are buying more gold than Boomers or Gen-X, according to a recent survey. But there's a catch. Millennials are also more likely to invest in paper gold instead of physical metal.

The surge in global oil demand recently is putting a great deal of pressure on the limited supply.  Thus, the term I will use a lot in the future is... "WHERE IS THE BEEF?"  And, but they, I mean energy, not meat.  It seems like we are heading into the next stage of the ENERGY CLIFF during the second half of 2023...

If you want to understand the foundation and implications of the ENERGY CLIFF, this interview with Jesse Day at Commodity Culture helps Connect-The-Dots.  Unfortunately, most individuals and investors still do not understand how much the world will change in a relatively short period of time...

A recent report by the world's fourth-largest asset manager reveals an intriguing plot twist. The millennials, not the baby boomers or Generation X, have emerged as the dominant players in the field of gold investment. State Street's report based on a survey identifies millennials as the largest contributors to gold investment, exceeding the older generations by a substantial margin. Millennials have exhibited an enlightened understanding of wealth preservation, allocating an impressive 17% of their portfolio to the timeless asset, outdoing the 10% invested by boomers and Gen X. This enlightened approach to investment indicates a profound shift in how the younger generation views wealth management, underlining their appreciation for enduring value in uncertain times. Gold continues to maintain its warm glow in 2023, with prices rising by almost 9%. As the economy continues to navigate turbulent waters, the demand for this timeless safe-haven asset remains buoyant, with the prospect of a recession doing li...

The alarming depth of the current yield curve inversion is signaling a potential major economic downturn, even a severe crisis. The degree of inversion is measured by the difference between long-term and short-term yields, usually the gap between 10-year and 3-month Treasury yields. The inversion is currently the most significant in over 40 years, with an average gap of -1.67 in June, a negative value unseen since 1981. Historical data shows such drastic inversions have always been followed by economic recessions, even going back 50 years. The only instance of a larger inversion occurred in the late 1920s, preceding the Great Depression. While some might question the absence of mass unemployment and recession despite the severe yield curve inversion, it's important to remember the lag between an inversion and the onset of recession. For instance, recessions started 13 and 16 months after the yield curve inversions of 1989 and 2006 respectively. While the curve inverted again in November 2022, we are only ...

Higher borrowing rates and stringent lending standards in 2023 have caused a 53% YoY increase in US corporate loan defaults, according to Moody's. The Fed's aggressive monetary policies, coupled with reluctance from banks to issue new loans, are driving companies into bankruptcy. Experts warn of a potential recession as the Fed continues to raise rates amidst economic uncertainty. The cost of debt has also soared to 9-13%, further hampering debt repayments. Bank of America predicts nearly $1 trillion in corporate debt defaults in the event of a full-blown recession. Sectors like business services, healthcare, and retail face the brunt, with record corporate defaults expected this year. Moody's projects the global corporate default rate to potentially reach 4.7% by year-end, and worst-case scenarios hint at a rate of 13.7%, surpassing the 2008 financial crisis levels.

The U.S. economy, while currently still growing, shows alarming signs of a looming recession. The leading economic index, a measure of ten key indicators, declined by 0.7% in June. This represents the 15th consecutive month of shrinkage, a recession red flag reminiscent of the Great Recession in 2007-2008. Furthermore, seven of the ten indicators tracked by the Conference Board have shown a downward trend, suggesting a broad-based economic slowdown. This continued contraction is worrying many economists, leading to an increased prediction of a recession within the next year. The potential downturn is driven by factors such as escalating prices, tighter monetary policy, increasingly difficult-to-acquire credit, and reduced government spending. The Federal Reserve's sharp uptick in borrowing costs, aimed at countering inflation, is an additional headwind for the economy. The Conference Board is forecasting a recession from Q3 2023 to Q1 2024. Although the current growth rate is higher than expected, the sus...