Precious metals news

China's gold consumption rose by 16.37% year-on-year to 554.88 tons in the first half of 2023, driven by a rise in incomes and increased risk aversion to equities and bonds, according to the China Gold Association (CGA). There was a 30.12% surge in gold bar purchases to 146 tons and a 14.82% increase in gold jewelry sales to 368 tons. However, industrial gold usage dropped by 7.65% to 40 tons. The surge in gold consumption aligns with a recovering economy and a volatile global financial climate, marked by the US banking crisis and the US debt ceiling issue. The retail sector saw significant growth contributions from gold, silver, and jewelry in the first half of the year. Meanwhile, China's raw gold production increased 2.24% to 179 tons in the same period, with raw gold imports growing 17.5% year-on-year to 65 tons. The People's Bank of China, the country's central bank, has also been augmenting gold reserves for eight consecutive months since November 2022, bringing the total gold reserves to 2,113.48 t...

Elon Musk is embarking on a bold new venture: transforming Twitter into a comprehensive hub for financial services. While this audacious plan might seem familiar – tech titans such as Facebook, Google, and Amazon.com Inc. have previously flirted with similar initiatives – Musk brings a unique blend of unpredictability and proven fintech expertise to the table. In contrast to others, Musk's tech journey has been far from conventional. This is illustrated by his sudden rebranding of Twitter's familiar bird logo to the letter X, among other surprising moves. Plus, his success in establishing PayPal Holdings Inc. underscores his formidable credentials in financial technology. Although tech firms have historically encountered stiff competition and lengthy approval processes in their attempts to disrupt banking, Musk is not deterred. In fact, his venture stands a fighting chance, given his knack for achieving ambitious objectives. Pranav Sood, executive general manager at cross-border payments platform Airwalle...

The Federal Open Market Committee (FOMC) of the Fed has raised its five key policy rates by 25 basis points, resulting in an upper limit of 5.5%, the highest level since January 2001. The hike was broadly anticipated following the June meeting when the Fed forecasted two additional rate increases for the year. This rise marks a 525 basis points increase over the last 16 months, the swiftest rate-hike cycle since 1980, aimed to combat severe inflation. The policy rates revised are: the federal funds rate target (now between 5.25% and 5.5%), the interest on bank reserves (5.4%), the overnight Repo charges (5.5%), the interest on overnight Reverse Repos (5.3%), and the primary credit rate (5.5%). Furthermore, the Fed has suggested the possibility of additional rate hikes this year. The same language was used in the June statement, indicating the potential for further tightening of monetary policy. The FOMC will consider the overall tightening of monetary policy, the delay in monetary policy effects on the ec...

JPMorgan Chase & Co., in its latest analysis, expects gold to shine brighter in the coming years. The bank predicts that gold prices could cross the $2,000 an ounce mark by the end of this year, and achieve new record highs in 2024. This optimism comes from an expected downturn in the US economy and the Federal Reserve's potential response of reducing interest rates. Greg Shearer, the executive director of global commodities research at JPMorgan, stated during a recent online briefing that falling real yields in the US will significantly drive gold prices upward. The anticipated rate cuts by the Fed, expected to be implemented in the second quarter of next year, will act as a catalyst for the precious metal's performance. Gold has already seen a 15% rally over the past year, spurred by signs of the US interest rate hike cycle nearing an end, increased purchases by central banks, and periodic surges in demand for safe-haven assets. In May, the gold price came close to its record high of $2,075.47 an ounce,...

Even as inflation rates have begun to stabilize this year, the Federal Reserve remains concerned about the fast-paced increase in prices. It's likely to respond with a quarter-point interest rate hike on Wednesday. This would mark the 11th increase in 17 months, pushing the Fed's short-term rate to roughly 5.3%, the highest since 2001, and inevitably increasing the costs of mortgages, auto loans, credit cards, and business borrowing. Despite recent positive developments boosting stock prices and consumer confidence, another rate hike is anticipated. The hope is for a "soft landing", where inflation slows towards the Fed's 2% target without triggering a recession. While inflation was only 3% in June, down from 9.1% the previous year, and the economy shows signs of robustness, there are still concerns. Core inflation, which excludes unstable food and energy costs, rose 4.8% in June, well above the Fed's target. As long as such figures remain high, the Fed may be prompted to keep rates elevated or even incre...

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...