Precious metals news

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.

The US Mint's American Silver Eagle (ASE) 1 troy oz silver coin is a significant investment for many small American investors, with purchases exceeding 619 million coins, worth over $15 billion. However, despite the Liberty Coin Act requiring the Mint to meet market demand for ASE coins, it has significantly cut production recently. This cutback began with the appointment of new Mint Director, Ventris Gibson, and resulted in the production dropping by 50% and premiums soaring as high as 75%. The Mint's production is the lowest since 2018, and investors have paid an excess cost of $350 million due to restricted supply. The cut in production during a period of record-high coin premiums raises questions about the Mint's compliance with federal law. Congressional hearings involving Treasury Secretary Janet Yellen and Ventris Gibson are sought to address this matter.

The Federal Reserve recently launched FedNow, an instant fund transfer system between banks. Some critics worry this is a step towards a central bank digital currency (CBDC) which may threaten financial privacy and freedom. Concerns arise that widespread use of Fed accounts may lead to the creation of "FedCoin," a digital token issued directly by the central bank. Critics argue that CBDCs could lead to financial privacy loss, easy asset seizure, and monetary system weaponization for social engineering. Despite these fears, it is argued that FedNow is an upgrade to the outdated ACH payment system. Those seeking financial privacy and preserved purchasing power should consider alternatives like gold and silver.

Due to increasing debt and financial instability, Western governments, particularly the US, might target retirement savings for wealth acquisition. This strategy was seen previously in Argentina, suggesting that similar measures might be implemented in Europe and North America. Given these circumstances, the traditional retirement savings approach, heavily reliant on "safe" assets like bonds, could be at risk. Despite the challenging environment characterized by high taxes, inflation, and regulatory hurdles, individuals are advised to save diligently, accumulating capital in physical assets like precious metals and land or in personally managed businesses.

BlackRock has issued a somber prediction for the US economy, suggesting a rollercoaster inflation pattern and an unprecedented "full employment recession." Considering BlackRock's broad financial interests, their views should be interpreted cautiously. The firm points to conflicting pressures in the economy: a shift from goods to services spending causing goods deflation, and a tight labor market prompting wage inflation. This could see inflation oscillate before settling near 3%, surpassing the Fed's 2% target, negatively impacting stocks and corporate margins. Worker shortages could also encourage companies to retain staff despite falling sales, potentially triggering a full employment recession. This grim forecast is underscored by the New York Fed's prediction of a 67% chance of an economic downturn by June 2024.

The Biden Administration has been quick to praise the 2.4% Q2 Real GDP growth, a figure that seems underwhelming at best considering the monumental volume of government stimulus spending and aggressive monetary policy tactics implemented by the Federal Reserve. Despite these extraordinary measures, they have only managed to produce a mediocre growth rate. To add to the grim state of affairs, the housing market is presenting a dire scenario. June witnessed a severe slump in pending home sales, which fell by a startling 14.8% year-over-year. This precipitous drop stands as a brutal testament to the underlying weaknesses in the housing sector, which is being hammered by issues like high unemployment rates, soaring construction costs, and a critical shortage of affordable homes. The end of eviction and foreclosure moratoriums also looms ominously, likely to add further downward pressure on the housing market. With these alarming indicators, it's clear that the economic policies being pursued might be less abo...

In its attempt to curb painfully high inflation, the European Central Bank (ECB) raised interest rates for the ninth consecutive time. ECB President Christine Lagarde indicated the possibility of more hikes despite increasing fears of recession. This relentless drive to control inflation, coupled with rising energy prices and supply chain disruptions, is dealing a double blow to households and businesses. Higher rates make loans for homes, cars, and business expansions more expensive. These interest rate hikes, while designed to decrease spending and reduce prices, are causing a significant drag on economic growth. The eurozone is already experiencing consecutive quarters of contraction, and the continued rate hikes might worsen the situation.

Gasoline prices are starting to surge globally, presenting a worrying inflationary omen for central banks and governments worldwide. Futures in New York recently soared to a nine-month high, sending shockwaves to consumers at the pump. This surge is primarily due to unexpected refinery outages and lower-than-usual stockpiles in major storage hubs like the US Gulf Coast and Singapore. As US gasoline contracts have rallied by over 20% while crude oil futures remain relatively static, central banks, including the US Federal Reserve, are grappling with the impact on inflation. High energy costs could inflate consumer prices and potentially decrease consumer spending power, leading to broader economic repercussions. The situation also puts additional stress on emerging market governments, where fuel subsidies are often used to support poorer citizens. Despite attempts to expand refining capacity, the global demand for gasoline continues to exceed the supply.

China's debt-to-GDP ratio reached a record high of 281.5% in Q2, reflecting a deep lack of confidence that is hampering economic growth. Despite the increase in total debt, household and corporate borrowing has slowed considerably, indicating a cautious "wait and see" approach amid uncertain economic prospects. This shift towards a more conservative financial stance raises concerns of a potential "balance sheet recession," similar to Japan's economic stagnation in the 1990s. This would involve a significant focus on paying down debt, thereby driving down consumption and investment. With households becoming more focused on their balance sheets and corporations hesitating to borrow for expansion, China's GDP growth could be under threat, signaling potential economic instability. Additionally, the government's efforts to decrease financial sector risks have resulted in a concerning shift in behaviour among households and firms, further intensifying economic uncertainty.

The Consumer Price Index (CPI) cooled in June. Year on year, the CPI increased by 3%. That was trumpeted as great news with some pundits suggesting perhaps 3% is low enough.
It's not.

In Episode 8 of ‘Hidden Secrets of Money’ viewers were introduced to ‘Hashgraph’. Fast forward to today...

The US GDP growth for Q2 outpaced expectations, reporting at 2.4%, despite the Federal Reserve's stringent measures to curb the economy via aggressive interest rate hikes. However, skeptics believe this surprising growth figure is grossly manipulated, raising concerns about the accuracy of the presented data. The uptick, mainly driven by an upturn in private inventory and business investment, somewhat overshadowed a significant downturn in exports and slowdowns in various spending sectors, including consumer, federal, and state government spending. The Fixed Investment sector demonstrated a remarkable turnaround contributing 0.83% to GDP growth, a stark contrast to the prior quarter. Despite these seemingly robust numbers, many experts are concerned that the economy's resilience could pose challenges to accomplishing the Fed's 2% inflation target, thereby prolonging economic instability.

Biden's Press Secretary, Karine Jean-Pierre, recently asserted that "The American people are beginning to feel Bidenomics." However, the reality seems to be hitting harder than she may have anticipated. Under the Biden administration, prices have surged 16.6%, whereas real wages have dropped 3%. Consumers are indeed feeling the weight of Bidenomics, particularly in their grocery bills and gas expenses, with food prices increasing 56% and regular gas prices inflating by 52%. Moreover, home buyers are facing the brunt too, as the 30-year mortgage rate has jumped a massive 153%. Wage growth, often seen as a cushion against price increases, isn't offering much relief either, with real weekly wage growth plunging 90% since Biden took office. Consequently, while the administration might consider these trends as "feeling Bidenomics," for many, they translate to an undeniable financial pinch.

Despite President Biden's positive spin on his economic policies, the Mortgage Bankers Association’s survey for the week ending July 21, 2023, presents a different story. Mortgage applications fell by 1.8% from the previous week, with the Market Composite Index, a measure of mortgage loan application volume, echoing this decline. The Refinance Index also dropped 0.4% from the previous week, marking a 30% decrease from the same week last year. The Purchase Index saw a 3% decrease from one week earlier, contributing to a 23% drop year-on-year. Since April 2021, there has been a significant slump in the mortgage market: purchase mortgage demand is down by 49%, refinance mortgage demand has declined by 87%, and mortgage rates have spiked by 115%.

I'll say this about the Federal Reserve: it tends to follow the script.
Everybody expected that the central bank would hike rates at the July FOMC meeting, and that's exactly what it did. The Fed boosted the federal funds rate another 25 basis points to 5.25 to 5.5%.

If you can't increase energy consumption, the best way to increase the Gross Domestic Product is to use massive debt and money printing.  Economics 101.  This is precisely what has occurred in the United States as the GDP ballooned past two decades...