Precious metals news

Ex-Fed Chairman Bernanke foresees that the Federal Reserve will likely raise interest rates again at its next meeting, potentially driving a slowdown in the U.S. economy. This rate hike, as per futures market predictions, could be the last for a while, but not before causing potential damage. Bernanke's forecast resonates with his infamous "No Recession On Horizon" statement before the 2008 crisis, raising doubts about the accuracy of his predictions. Inflation is expected to drop "more durably" to the 3% to 3.5% range over the next six months, according to Bernanke, but only after triggering substantial financial stress. He believes the Fed will then take time to get down to its 2% target, implying prolonged economic unease. Bernanke also voiced concerns about the overheated job market. Despite a decline in job vacancies, there remains about 1.6 positions open for each unemployed person. This imbalance between demand and supply in the labor market needs to be addressed before the Fed can claim victory ov...

Governments in dire straits often resort to devaluing their currencies, and surprisingly, this tactic often leads to positive outcomes, as found by an Institute of International Finance (IIF) study. It examined 51 of the most substantial and persistent devaluation instances since 1990 and reported an upturn in economic growth just three years following devaluations. Countries see a rise in export volumes and a narrowing of current-account deficits, with some even shifting to surpluses. However, the decision to devalue is not without significant downsides. It tends to diminish the purchasing power of citizens, causing potential social upheaval. Despite this, some of the most indebted countries globally, including Egypt, Pakistan, Lebanon, and Argentina, have opted for or are considering devaluations in a desperate bid to address fiscal challenges and secure International Monetary Fund bailouts. The IIF suggests that in light of these findings, policy consensus should shift towards viewing currency devaluat...

David Rosenberg, veteran economist and president of Rosenberg Research, draws chilling parallels between today's frenzied stock market and the investment manias leading up to devastating financial crashes like those of 1929, the early 2000s, and 2008. In a recent research note, he points out the dangerous similarities between investors' current unflinching confidence and the misguided optimism from past catastrophic periods. This includes Irving Fisher's 1929 proclamation of a 'permanently high plateau' for stocks and Abby Joseph Cohen's erroneous prediction of 'profit expansion' ahead of the tech bubble burst. According to Rosenberg, today's surge in the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average is fueled by a fear of missing out (FOMO), similar to past speculative manias. He suggests the current market 'balloon' is filled with hot air and warns it's uncertain when it will burst and fundamentals will regain their rightful place. He also paints a bleak picture of the US economic outlook....

Janet Yellen recently said she doesn't think the US economy will slip into a recession. Friday Gold Wrap host Mike Maharrey explains why he doesn't think we should put a lot of stock on Janet's prognostications, and he goes on to point out some major fissures in the economy and financial system that are opening up under the surface.

The US existing-home sales have been on a consistent decline since February 2022, with only slight upticks in May and February, according to data from the National Association of Realtors (NAR). June 2023 saw a further 3.3% drop in sales to a seasonally adjusted annual rate of 4.16 million, a significant 18.9% decrease from the previous year. Despite the median existing-home sales price for June reaching $410,200, the second-highest ever recorded since NAR began tracking in January 1999, sales have not recovered. Inventory of unsold homes remained static at 1.08 million, equivalent to a mere 3.1 months' supply at the current sales pace. First-time buyers, a vital component of the housing market, were accountable for only 27% of sales in June, a decrease from 28% in May and 30% in June 2022. Furthermore, all-cash sales rose to 26% of transactions, indicating a decrease in traditional financing. The slump in home sales mirrors the scenario of the mid-1990s and appears to be directly linked to higher mortgag...

Barry Sternlicht, the billionaire investor and head of Starwood Capital Group, recently warned of a growing crisis in US commercial real estate (CRE), characterizing it as a "Category 5 hurricane." Sternlicht's firm recently defaulted on a $212.4 million mortgage for an Atlanta office tower. His warnings stem from the Federal Reserve's 16-month campaign of aggressive interest rate hikes to combat inflation, which he states is the primary cause of the CRE downturn, not speculation. In the aftermath of the regional bank crisis in March, refinancing existing buildings has become challenging for landlords, especially as vacancies increase. Sternlicht recalled his firm's attempt to secure a bank loan for a small property, where out of 33 banks, only two responded with offers. Adding to the distress, Morgan Stanley has identified a debt maturity wall of CRE loans amounting to $500 billion in 2024, ballooning to $2.5 trillion over the next five years. Landlords' inability to refinance properties, coupled with ri...

A potential strike by 340,000 unionized workers at United Parcel Service (UPS) could significantly exacerbate the already pressing issues of inflation and supply-chain disruptions in the U.S. economy. If an agreement isn't reached by August 1, a walkout by the International Brotherhood of Teamsters could not only halt the delivery of 19 million packages per day but also lead to a rise in shipping prices by competitors like FedEx Corp. This labor unrest may boost the inflation rate, which has already been soaring to a four-decade high of 9.1% last year, challenging the Federal Reserve's aggressive efforts to rein it in. Additionally, if UPS agrees to the Teamsters' demand for significantly higher wages, it may instigate a trend of large wage increases across industries, further impeding the Fed's attempts to stabilize price growth. As per Kathy Bostjancic, chief economist at Nationwide Mutual Insurance Co., this could lead to a change in the employer-employee relationship, pushing other workers to negotiat...

The world's largest gold miner saw its costs explode to record highs due to increased costs and declining production.  The company's decline in gold production may be temporary, but I believe the costs will continue to increase in the quarters and years ahead...

We're thrilled to bring you a full-length interview featuring the highly respected and widely followed precious metals expert, Rick Rule.

Ishabaka shared valuable insights from the book "The Great Depression, a Diary." The lessons learned from this historical account hold significant relevance to our current global economic situation, particularly the 2023 "Everything Bubble." Key takeaways from the diary include: 1. Diversification: Investments varied in success during the Depression. In the U.S., those invested in stocks and real estate suffered, while those who held Treasury bonds did well. Conversely, in Germany, bondholders faced ruin, but real estate investors thrived. 2. Cash Reserves: A common problem during the Depression was a lack of liquid assets. Roth, the diary's author, repeatedly expressed regret for not having cash on hand to seize investment opportunities in depressed stocks or real estate. 3. Repeated Failure of Market Predictions: The book underlines the difficulties, even for an intelligent individual like Roth, of predicting market trends. It stresses the dangers of investing based on market predictions, which are ofte...

In 2022, US Treasuries experienced their worst year in American history, with the 10-year Treasury falling almost 18%, and the 30-year Treasury plunging over 39%. This collapse challenged the long-held belief that Treasuries are a risk-free, reliable store-of-value asset, pushing many investors to rethink their strategies. The global bond market, worth an estimated $133 trillion, is predicted to become a capital graveyard as the value stored in it may have to move elsewhere. Underpinning these developments are several critical factors. The US federal government's enormous and rapidly growing debt (over $32.5 trillion) is unsustainable, with default being an inevitable but still uncertain outcome. The debt is expected to continue growing, and the recent weaponization of the US dollar and Treasuries, shown in the sanctions against Russia, has amplified political risks associated with these assets. Moreover, foreign interest in Treasuries has declined, with major holders like China significantly reducing the...

There's an ever-growing concern about who will purchase the skyrocketing US government debt that has ballooned to an alarming $32.5 trillion. The overwhelming demand for long-term Treasury securities can't be ignored, as it's causing yields to remain lower than anticipated. Instead of the 10-year yield being at an expected 6.8%, it is lingering at a mere 3.8%, with the 30-year yield not far behind. There are fears that yields may have to inflate to attract more buyers, with the simple principle of high yield equating to higher demand. Although this strategy works for junk bonds, the same can't be said for Treasuries, at least not yet. Foreign buyers, especially from Europe, are still piling on to the buying spree. However, China and Japan, previously the two largest holders of Treasury securities, are shedding their holdings. As per the Treasury Department's TIC data, the total amount of Treasuries held by foreign holders in May was $7.53 trillion, a slight drop from April's record holdings, yet up by a m...

The U.S. is irresponsibly wasting billions of dollars on energy subsidies, which is leading allied nations down a similar, damaging path. The Inflation Reduction Act (IRA) favors domestic production and allocates excessive subsidies to wealthy companies, creating a global financial imbalance. Even foreign firms stand to benefit, with projections suggesting that Korean battery manufacturers could receive $8 billion annually from US taxpayers by 2026. In a desperate bid to retain companies lured by U.S. subsidies, Japan, South Korea, and the EU have introduced costly incentives, further escalating this global subsidy war. An alternative approach of enhancing the business environment, instead of carelessly throwing around taxpayer money, is overlooked. Disturbingly, the Southern U.S. states are gaining dominance in automotive jobs, fueled by lower costs and the appeal of cheaper living. Most businesses base their investment decisions on factors other than subsidies, yet governments persist in this wasteful p...

In a grim testament to President Joe Biden's recklessness and incompetence, the federal government deficit has reached alarming levels. The Treasury Department reported a deficit of almost $1.4 trillion for the first nine months of the fiscal year, more than 2 1/2 times the deficit of the previous year. This massive borrowing surge is occurring despite near-record-low unemployment, which should result in a decreasing deficit. However, Biden's policies have exacerbated the problem, with extravagant spending and falling revenues. His American Rescue Plan, infrastructure law, Inflation Reduction Act, and other legislation have contributed to a projected $4.8 trillion increase in deficits between 2021 and 2031. The Federal Reserve's loose monetary policy, combined with Biden's spending binge, has fueled the worst inflation in four decades, leading to higher interest rates and increased federal interest payments of over $650 billion. Tax revenues have also fallen, partly due to Biden's regulatory agenda and hi...

Record-breaking heatwaves in the western U.S. are pushing already strained power grids to the brink, raising alarming concerns of imminent blackouts. While Texas, scarred by a devastating grid failure in the past, has managed to hold up due to increased battery installations and solar power capacity, the larger issue looms over the nation's outdated and inadequate infrastructure. The power grid's vulnerability to extreme weather events and its unpreparedness for the transition to renewable energy exacerbate the risks. Although the Biden administration's $13 billion investment through the Building a Better Grid Initiative is a step forward, it falls woefully short of the estimated annual investment of $4 trillion needed by 2030 to modernize and strengthen the power grids. Without substantial upgrades and investments, the likelihood of blackouts and the mounting challenges of an aging infrastructure will continue to cast a dark shadow over the stability and reliability of the power grids.

Keynesian policies, which involve extensive government spending and currency printing, have had unintended negative consequences in the United States. Despite the intention to stimulate the economy, these policies have resulted in a weaker labor market and financial hardships for citizens. Employment statistics reveal that the labor force participation rate and employment-population ratio remain below pre-pandemic levels, indicating a struggling job market. Furthermore, the country has experienced 26 consecutive months of negative real wage growth, meaning workers' earnings are not keeping up with inflation. Americans are heavily reliant on debt, with credit card debt reaching record highs and personal savings remaining significantly lower than before the pandemic. This has led to a decline in consumer sentiment, as evidenced by the University of Michigan Consumer Sentiment Index. The story raises concerns about the growing federal deficit, which has been exacerbated by stimulus measures, and warns that f...

The New York Federal Reserve Bank's monthly Survey of Consumer Expectations has revealed worrisome trends in credit application rejections in the United States. The report shows that the overall rejection rate for credit applicants has soared to its highest level since June 2018, reaching 21.8 percent compared to 17.3 percent in February. This rise in rejections was observed across various age groups, with the most significant impact felt among individuals with credit scores below 680. The rejection rates for different types of credit applications also saw substantial increases. Auto loan rejections hit a record high since 2013, rising from 9.1 percent in February to 14.2 percent. Rejections for credit card applications, credit card limit increases, mortgages, and mortgage refinance requests climbed to 21.5 percent, 30.7 percent, 13.2 percent, and 20.8 percent, respectively. The survey further noted that the average probability of loan rejection sharply increased for auto loans, credit cards, credit limit...

The U.S. Federal Reserve's upcoming launch of "FedNow" has sparked concerns and criticism within the financial industry. While the service aims to modernize the payment system by enabling faster transactions, there are apprehensions about its potential negative consequences. Many major banks initially opposed FedNow, deeming it redundant compared to existing private sector real-time payment systems. However, they reluctantly joined in to expand their service offerings and maintain a competitive edge. This move has raised questions about the necessity and effectiveness of FedNow. Some market participants worry that the rapid outflows facilitated by FedNow could potentially lead to bank runs, especially in light of the recent failure of Silicon Valley Bank. These concerns are further amplified by the limited tools available to banks to mitigate such outflows. There are also uncertainties regarding the costs associated with FedNow. While it is stated that consumers will not be directly charged, it remains un...

While FedNow, the new instant payments service launched by the U.S. Federal Reserve, dramatically speeds up transactions, the central bank has clarified that it is not related to a central bank digital currency (CBDC). Despite the increase in discussions around the world about the implementation of CBDCs, the Federal Reserve has stated that FedNow is neither a form of currency nor a step towards eliminating any form of payment, including cash. FedNow is designed to improve the infrastructure of financial transactions, making it faster and more convenient, and operates 24/7. Its real-time payment network uses commercial banks as intermediaries and can process payments within seconds. On the other hand, a CBDC would represent a fundamental change to the monetary system, creating a digital form of a nation's currency managed by the central bank. The development and implementation of a CBDC would have broad implications for monetary policy, financial stability, and the banking sector. Officials such as Treasu...

The Precious Metals Rally since the beginning of July was due to a weaker Dollar.  So, what's next... especially after the Dollar rallied today, pushing the metals lower.  In this update, I show longer-dated charts that may provide us with some interesting clues...