Precious metals news

The economy is facing a slow-moving financial crisis fueled by escalating levels of private sector debt, warns GMO. Partner James Montier highlights the risk posed by the massive buildup of private debt, which can act as an amplifier during market declines. The US, in particular, faces a high risk due to its consistently high ratio of private sector debt to GDP. While current private credit growth remains relatively low, the mounting debt threatens financial stability and asset prices. Experts anticipate a potential recession, as interest rates overtighten the economy. Montier advises investors to choose assets that hedge against risk and retain value. Market observers, including GMO co-founder Jeremy Grantham, have also raised concerns about a potential crisis, with Grantham predicting a significant stock market crash and estimating a potential 50% drop in the S&P 500 over the next few years.

CMBS holders are facing losses as hotel REIT investors suffer significant setbacks. The intricate financial setup of hotels, involving publicly traded hotel REITs, variable-rate interest-only mortgages, and commercial mortgage-backed securities (CMBS), has created a convoluted situation. The hike in interest rates has caused mortgage payments to double, while hotel property values have plummeted. As a result, hotel REITs are abandoning properties, taking total equity losses, and leaving CMBS holders to bear the remaining losses. This third wave of defaults in 15 years is driven by soaring interest rates, leading property owners to walk away instead of seeking resolutions. The default rate for lodging CMBS has surged to 5.3% in June, surpassing even the default rate for office mortgages. Ashford Hospitality Trust and Park Hotels and Resorts are among the companies that have walked away from properties, leaving CMBS holders with substantial losses. This trend reveals the consequences of overleveraging and v...

PMI surveys by S&P Global Market Intelligence paint a grim picture of global trade at the end of the second quarter, with exports experiencing their sixteenth consecutive monthly decline. The slump in export orders for goods and services intensified, reaching its fastest rate of decline in five months. While service sector exports managed to show some growth for a fourth consecutive month, the rate of expansion cooled from the previous month's record high. On the other hand, the downturn in goods trade expanded across sectors, affecting intermediate goods, investment goods, and consumer goods. The decline in machinery exports signals reduced investment spending, while reduced exports of consumer goods point to weakened household demand. Although travel and tourism exports saw a spring surge, boosting service sector exports, there are signs of this momentum fading, likely due to interest rate hikes and increased global living costs. While professional and commercial services and financial services continue...

China's economy is facing a string of challenges, including the looming threat of deflation. The country's central bank has resorted to cutting interest rates in an attempt to prop up its struggling growth. This stands in contrast to the situation in the United States and raises concerns for the global economy. China's economic troubles, such as sluggish growth, a plunging yuan, and a sharp decline in industrial production, are now compounded by the risk of deflation. Deflation is seen as a nightmare scenario by economists because it leads to a drop in consumer spending, which hampers economic growth. China's battle with falling prices serves as a cautionary tale, and its impact could be felt worldwide due to China's position as the second-largest economy and a major exporter. The situation highlights the complex dynamics of the global economy and emphasizes the potential consequences of deflation.

This August, there's a pivotal shift taking place in the global economic landscape.

The whitepaper by the Federal Reserve mentioned in the article warns of a future slowdown in corporate profit growth and stock returns. The author, Michael Smolyansky, explains that the past three decades saw lower interest and tax rates, which provided a strong boost to corporate profits and stock performance. However, the article raises the question of whether profits can maintain their recent growth trajectory without the benefit of these favorable conditions. The article attributes the significant growth in corporate profits compared to GDP growth to the decline in interest rates and corporate tax rates. According to Smolyansky's calculations, these factors accounted for over 40% of the growth in real corporate profits from 1989 to 2019. Without this boost, corporate profits would have grown at a slower rate, closer to GDP growth. The decline in interest rates allowed companies to increase leverage and reduce interest costs, which positively impacted their profitability. Similarly, the reduction in co...

Consumer price inflation has slowed, and producer price inflation, which was expected to slow, fell further. The producer price inflation is at its lowest level since August 2020. Core producer price inflation, excluding Food, Trade, & Energy, is also at its slowest since February 2021. In terms of final demand services, prices increased overall, but the prices for transportation and warehousing services decreased. Prices for deposit services, food and alcohol retailing, traveler accommodation services, insurance, hospital inpatient care, and airline passenger services saw an increase, while prices for truck transportation of freight, food and alcohol wholesaling, and residential real estate loans declined. For final demand goods, prices remained unchanged after a decrease in the previous month. Rising energy prices offset the falling prices for goods excluding foods and energy. Gasoline prices increased, but prices for iron and steel scrap, diesel fuel, oilseeds, industrial chemicals, and residual fuels ...

A Kentucky man made a stunning discovery earlier this year while working in his field—a collection of over 700 coins dating back to the American Civil War. Dubbed the "Great Kentucky Hoard," the trove includes numerous U.S. gold pieces minted between 1840 and 1863, alongside a handful of silver coins. The man, whose identity and exact location remain undisclosed, exclaims, "This is the most insane thing ever: Those are all $1 gold coins, $20 gold coins, $10 gold coins." Certified by the Numismatic Guaranty Co. (NGC) and sold through GovMint, the hoard is primarily composed of gold dollars, accounting for 95% of the collection. Additionally, there are 20 $10 Liberty coins and eight $20 Liberty coins. Notably, the collection boasts 18 of the rarest coin, the 1863-P $20 1-ounce gold Liberty coin, which can fetch six figures at auction. The $20 Liberty coins in the hoard are even more exceptional as they lack the inscription "In God We Trust," added after the Civil War's conclusion in 1866. Beyond their monet...

Gold prices climbed on Wednesday, reaching their highest settlement since mid-June, driven by the latest U.S. consumer-price index data that showed a slowdown in inflation. This development has increased the likelihood that the Federal Reserve may soon halt its interest-rate hikes. The U.S. June consumer price index rose by a modest 0.2%, indicating a slowdown in inflation to the lowest level since 2021. This was lower than economists' forecast of 0.3% and the previous month's rate of 4%. Jeff Klearman, portfolio manager at GraniteShares, highlighted that gold prices reacted positively, reflecting the market's sentiment that the Fed is nearing the end of its tightening cycle. Despite some aspects of inflation remaining relatively high, the overall trend has been lower. Concerns about the effects of previous rate increases on sectors like banking, real estate, and debt-laden companies are expected to influence the Fed's future actions. This is likely to result in a less aggressive approach, leading to lowe...

The Dollar's Dominance Wanes as Countries Seek Alternatives S&P Global's chief economist, Paul Gruenwald, stated that the grip of the US dollar as the dominant global currency is weakening. Aggressive US sanctions, like the freezing of Russia's reserves, have prompted countries to explore non-dollar trade and repatriate gold reserves. Gruenwald highlighted the growing trend of circumventing the dollar, citing increased trade in China's yuan and the availability of cheap financing from China-based development banks. While the US dollar will remain a significant global currency, it is no longer expected to maintain its dominant position.

The federal budget deficit has surged to $2.2 trillion over the past 12 months, a 64 percent increase from the previous fiscal year and more than twice the pre-pandemic deficit. In June alone, the deficit reached $225 billion, compared to $89 billion in the same month last year, contributing to a 12-month rolling deficit that is $136 billion higher than the previous month. Total nominal spending has risen by 14 percent to $6.7 trillion, while revenue has dropped by 7 percent to $4.5 trillion compared to the prior 12 months. Deficits as a share of GDP have reached 8.6 percent, surpassing the historical average of 3.5 percent over the past 50 years. Spending on Social Security, Medicare, and interest has outweighed declining pandemic relief spending, pushing total spending to 25.6 percent of GDP. Revenue, on the other hand, has fallen to 17.0 percent of GDP, below the historic average of 17.4 percent and projections from the Congressional Budget Office. Substantial policy changes are necessary to align spen...

Global public debt soared to a record $92 trillion in 2022, surpassing economic growth rates and burdening developing countries the most, according to a United Nations report. Developing nations account for nearly 30% of the global public debt, with China, India, and Brazil representing 70% of that share. Fifty-nine developing countries face high debt levels, with a debt-to-GDP ratio above 60%. Limited access to financing, rising borrowing costs, currency devaluations, and sluggish growth have compounded the debt burden for developing countries, leading to an impossible choice between debt servicing and serving their people. Inadequate and expensive financing options, coupled with exorbitant interest payments, particularly in Africa, have resulted in countries prioritizing debt over critical sectors like education and healthcare. The global debt crisis puts immense strain on the world's most vulnerable, perpetuating a cycle of poverty and inequality.

WEF's Great Reset Agenda Threatens Global Economy and Food Security The World Economic Forum (WEF) and its Great Reset agenda have raised concerns over privacy and individual rights. The push for a digital euro and the elimination of property rights have sparked fears of surveillance and a top-down dictatorship. Additionally, the WEF's agenda includes depopulation as a solution to environmental damage, undermining global food supplies and resources. The reduction of human population through wars and conflicts has historically led to famine and mass casualties. The control of the money supply, particularly the extensive printing of money by the US Federal Reserve, is contributing to hyperinflation and a potential global economic collapse. The consequences will exacerbate the already imminent global famine. It is crucial to resist the neofascist agenda of the global oligarchs and protect individual rights and food security before it's too late.

Digital Euro Plan Marred by Privacy Concerns The European Commission's introduction of draft legislation for a digital euro has been met with apprehension due to privacy fears. Critics argue that the digital currency could provide governments with unprecedented access to individuals' buying habits, raising concerns about surveillance. Even though the Commission has attempted to address these concerns by imposing limits on digital euro holdings and promising fee caps for shopkeepers, industry criticism and opposition within the European Parliament threaten the proposal's success. The launch of the digital euro plan is overshadowed by doubts and skepticism regarding its potential consequences for privacy and personal freedoms.

Argentina Faces Mounting Challenges in Dedollarization Efforts Amid Currency Crisis - Over the past decade, the US dollar has surged nearly 5,000% against Argentina's peso, exacerbating the country's debt and inflation crisis. - Calls for Argentina to adopt the US dollar as its currency are growing, but this contradicts the nation's efforts to reduce its reliance on the greenback for trade and debt payments. - Argentina's currency, the peso, has experienced a deepening plunge, with the US dollar skyrocketing 4,800% against it over the past decade. - The country's escalating external debt and hyperinflation have fueled the campaign for dollarization as a way out of its debt trap. - However, Argentina's recent efforts to diversify away from the US dollar, such as using the Chinese yuan for debt payments and discussing a joint currency with Brazil, are in conflict with the call for dollarization. - Weakening currency worsens inflation due to higher import prices, a factor contributing to the suggestion of do...

The Dark Side of Inflation: An Unsettling Outlook Inflation's essential role in the current economic system has several concerning implications: - Reliance on credit and debt expansion fuels a cycle of perpetual debt, benefiting the wealthy while burdening everyday consumers. - Excessive borrowing and stagnant incomes lead to recessions, as discretionary income is consumed by debt service. - Limited policy options, such as government borrowing and central bank interventions, only postpone the inevitable collapse. - Inflation's impact on debt is temporary, as wages fail to keep up, widening wealth disparities. - Savers suffer as inflation erodes their savings, pushing them into risky investments to combat its effects. - Speculation driven by inflation exacerbates economic inequalities, favoring the wealthy and leaving ordinary individuals at a disadvantage. - Capital is diverted from productive investments, hindering long-term growth and neglecting critical infrastructure. - Rising global risks and interes...

The global surge in business bankruptcies is reminiscent of the aftermath of the 2008 financial crisis, with some countries experiencing volumes not seen in years. This wave of corporate defaults is anticipated to escalate further due to a combination of factors. A decade of easily accessible cheap money led to a false sense of invincibility among business executives and private equity managers, causing them to overlook the cyclical nature of the economy. Now, weaker borrowers are facing a daunting combination of weakening demand, surging inflation, over-indebted balance sheets, and significantly higher borrowing costs. In the United States, bankruptcies among companies covered by S&P Global Market Intelligence during the first half of 2023 reached their highest levels since 2010. Corporate insolvencies in England and Wales are nearing a 14-year high, while Swedish bankruptcies have hit the highest levels in a decade. Germany saw a nearly 50% year-on-year increase in bankruptcies in June, marking the high...

In a recent podcast, Peter Schiff warned that we could be on the verge of a further breakdown in the bond market and that a bear market in bonds could also maul US stocks and the dollar.
Financial commentator and investment guru Jim Grant has similar concerns. In a recent interview on Odd Lots Podcast, Grant said he thinks we're at the beginning of a long-term trend of a weak bond market with higher interest rates that could last decades.

- The headline Consumer Price Index (CPI) rose by 0.2% month-on-month (MoM), lower than the expected 0.3% MoM increase, resulting in a year-on-year (YoY) rate of 3.0%, the lowest since March 2021. - The decline in the YoY headline CPI marks the 12th consecutive month of declines, which is the longest streak of declines in history since 1921. - Core CPI, which excludes shelter, fell to a YoY rate of 4.8%, the lowest since October 2021. - Services inflation remains persistent, even as goods inflation fades. - The significant drivers of the YoY drop in headline and core CPI are yet to be specified. - Real wage growth saw a year-on-year increase of 0.6% in June, the first rise in 27 months. - There are indications from M2 (a measure of money supply) that deflationary pressures may be building up. Overall, the CPI figures show a cooling trend in inflation, with lower than expected increases in both the headline and core CPI. Services inflation remains steady, while goods inflation is slowing down. Real wage gr...

In the wake of Western sanctions on Russia after the invasion of Ukraine, many central banks are bringing their gold home for safekeeping, according to an Invesco survey of central banks and sovereign wealth funds.