Precious metals news

Initial jobless claims rebounded higher last week, with 248,000 Americans filing for unemployment benefits. Continuing claims, however, continued to decrease, reaching the lowest level since February 2023. The divergence between initial and continuing claims could indicate a rotation from high-paying to low-paying jobs.

ECB's balance sheet has decreased by €1.62 trillion, or 18%, since June last year, reaching its lowest level since March 2021. The reduction is attributed to the unwinding of QE, including loans to banks and bond purchases. The pandemic-era loan QT has unwound by €1.58 trillion, while bond QT is proceeding faster than expected, with holdings down by €105 billion. The ECB has hiked policy rates by 4 percentage points in 12 months, and inflation in services remains a concern, driving the rate hikes and balance sheet reduction.

Mortgage applications saw a decline of 4.4 percent from the previous week, as reported by the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending June 30, 2023. The seasonally adjusted Market Composite Index, which measures mortgage loan application volume, also decreased by 4.4 percent. However, on an unadjusted basis, the Index saw a 6 percent increase compared to the previous week. The Refinance Index decreased by 4 percent from the previous week and was 30 percent lower than the same week last year. The seasonally adjusted Purchase Index dropped by 5 percent from the previous week, while the unadjusted Purchase Index increased by 6 percent compared to the previous week but remained 22 percent lower than the same week last year.

The U.S. economy continues its downward spiral, leaving many Americans dissatisfied. Inflation is soaring, the cost of living is rising, the housing bubble is bursting, and the commercial real estate market is in disarray. While the Biden administration touts a low unemployment rate of less than 4 percent, the reality is much different. The Bureau of Labor Statistics classifies unemployed individuals as those actively seeking work, leaving only 6.097 million Americans in that category. Shockingly, 99.800 million working-age Americans are considered "not in the labor force," resulting in a total of 105.897 million unemployed individuals. This surpasses the numbers seen during the Great Recession. The government's claims of low unemployment are misleading, with the real rate estimated to be around 25 percent by John Williams.

Many older Americans are defying conventional wisdom by remaining heavily invested in the stock market instead of shifting to bonds to protect their nest eggs. They continue to take risks and maintain a strong interest in stocks, challenging the perception that it's primarily baby boomers who exhibit such behavior.

Goldman Sachs predicts a potential 20% or more stock market sell-off in the coming months due to an anticipated recession. They advise investors to prepare for losses and hedge their portfolios against the downturn. The market's recent narrow rally and elevated drawdown risk further amplify concerns.

The economy "will soon be one of the biggest threats to equity prices." US stocks could crash 25% as the Federal Reserve's aggressive rate hikes may trigger a recession by year-end, warns FS Investments' chief market strategist. The economy, previously not a concern, now poses a major threat to equity prices. Limited upside remains in the current rally, with potential downside of 20% to 25%. Higher borrowing costs and weakened job market could exacerbate the situation.

US Treasury yields rose while stocks declined as investors analyzed the minutes from the Federal Reserve's recent meeting. The yield on two-year Treasuries, a gauge of market expectations for interest rates, reached 4.94%, while the 10-year yield climbed to 3.93%. The inverted yield curve, a possible indicator of an impending economic downturn, has raised concerns. The Fed's decision to pause its rate-hiking cycle after 10 consecutive increases during the June meeting surprised the market. With the central bank forecasting two more rate hikes this year, there are concerns about their impact on economic growth and corporate profits. The next rate decision is expected in three weeks. Ed Hyman, founder and chairman of Evercore ISI, expressed his bearish outlook on the economy due to the yield curve, monetary contraction, and simultaneous rate hikes.

World stocks extended their decline for the third consecutive day due to concerns over another U.S. rate hike and escalating trade tensions between China and the United States. The 10-year U.S. Treasury yield reached a four-month high, signaling rising borrowing costs, while Europe experienced a broad-based fall in stocks, particularly in the travel and leisure sector. The inversion of the U.S. yield curve for a year has raised recessionary concerns, and the upward movement of Treasury yields further heightened market fragility. The renewed tensions between the U.S., Europe, and China added to the negative sentiment in the markets.

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As the Western Empire crumbles, the Eastern & Southern Empire gains significance with over 30 countries wanting to join BRICS and the Shanghai Cooperation Organisation (SCO). The Eurasian Economic Union (EEU), consisting of ex-Soviet Union states, further strengthens this alliance. This enlarged group, representing 2/3 of global population and 1/3 of global GDP, will experience rapid growth. The US dollar's value diminishes, and gold emerges as a central asset. Weak leadership plagues the West, while the East prepares for a prosperous future. The shift towards commodity-backed currencies and the decline of sovereign debt present investment opportunities in the commodity market. The precious metals market, along with oil and uranium, holds potential for substantial growth.

Amid concerns about the future of the U.S. dollar and the rise of digital currencies, alternatives like gold and silver offer stability. A unique product called Goldback, made of laminated gold, could potentially emerge as a form of currency in times of monetary collapse. Cryptocurrencies like Bitcoin faced scaling issues and regulatory challenges, hindering their widespread adoption. As people prepare for potential scenarios, they are seeking alternatives to safeguard their financial independence.

High interest rates have a dual impact on the economy. On one hand, they help slow down bank lending and encourage holding onto the currency, reducing money supply growth and speculative attacks. However, in an environment of high sovereign debts and deficits, high interest rates can worsen deficit-driven inflation. This situation is currently observed in many developed countries, including the United States. While low interest rates are needed to prevent fiscal-driven money creation, they can also lead to excess bank lending and inflationary pressures. This dilemma forces governments to manage interest rates to balance national interests and liquidity requirements, resulting in the politicization of interest rates. Although interest rate increases have yet to fully affect the private and public sectors, their long and variable lag will eventually have disinflationary and inflationary consequences, respectively. The interplay between these forces creates somewhat stagflationary conditions, and future peri...

Federal Reserve Chair Powell's speech on "Financial Stability and Economic Developments" reveals a bleak reality. It highlights the failures of past interventions during the Great Recession, which brought misery to countless people despite massive government efforts. The speech also underscores the alarming levels of spending and expansion of the Fed's balance sheet during the 2020 recession, indicating a reliance on unsustainable measures. Powell's discussion of bank failures and the shifting of blame exposes a recurring pattern of denial and lack of accountability. This narrative suggests that future crises will likely result in further interventions, burdening the economy and perpetuating a cycle of failed policies.

Allow me to explain why we have not seen a recession yet despite the collapse in base money supply. We are witnessing the stealth nationalization of the economy. What does this mean? The stealth nationalization of the economy is burdening families and small businesses while leaving large corporations and governments unaffected. The decline in real disposable income, wages, and margins for SMEs is concealed by bloated government spending, masking the private sector recession. The rapid decline in global money supply and rising government indebtedness drain liquidity from the private sector. Central banks' rate hikes negatively impact families and SMEs, while large corporations remain relatively unscathed. Inflation persists due to governments' increased consumption of newly created money, maintaining imbalances. The current money supply slump and rate hike path are destroying the backbone of the economy, leading to stagnation without fiscal normalization.

The delinquency rate of Commercial Mortgage-Backed Securities (CMBS) backed by office properties has spiked to 4.5% in June, up from 1.6% just six months ago. This is the fastest increase in delinquency rates in Trepp's data history. The rise in defaults is due to a structural change as companies realize they no longer need large amounts of office space. Variable-rate mortgages have become problematic as interest payments have doubled with rising rates, leading to landlords walking away from properties and causing significant losses for CMBS holders. This situation is not a temporary blip but a long-term issue that will require years to address, potentially through tearing down or converting office towers. Existing investors are facing substantial losses, and even lower interest rates cannot make these properties economically viable.

The Federal Reserve's history of erratic policy-making in the past, including drastic interest rate hikes, serves as a cautionary tale. However, the Fed now faces the daunting task of raising rates without jeopardizing the economy, markets, banks, and consumer confidence. The significant amount of retirement savings tied to the stock market creates the risk of shrinking portfolios, which can dampen consumer spending. With consumer spending being a vital component of the US GDP, any misstep by the Fed could lead to a negative impact on economic growth. Furthermore, the unexplained divergence between the soaring Nasdaq and lackluster performance of the Dow Jones Industrial Average suggests irrational exuberance and hype are driving the markets, reminiscent of past episodes.

As the 2024 Presidential election approaches, the economy shows signs of decline. The recent interest rate hikes by Powell and The Gang are contributing to this slip-slide. In May, US Manufacturers' New Orders YoY declined by -1.0% for the first time since Covid. Additionally, M2 Money growth is slowing, indicating that we are reaching a critical point in the election cycle. Is it too soon to worry?

The recent FOMC meeting indicated a 'pause' in rate hikes, but market expectations have shifted more hawkish. Gold and bond prices are down, while stocks and crypto have rallied. The Minutes are awaited for confirmation of the majority's hawkish view. Most participants anticipate future rate hikes and express concerns about inflation and unanchored inflation expectations. Despite the pause, a July hike is seen as likely. There are discussions on potential upward pressure on money-market rates and anxieties about credit tightening in the banking sector. Fed staff economists forecast a mild recession starting later this year, contrasting with Chair Jerome Powell's expectation for slow growth.

Globalization and financialization, the driving forces of the global economy for four decades, are now entering the decline phase. In a deep, prolonged global recession, some will suffer less than others, leading to potential social and political consequences. Small changes in complex systems can trigger cascading failures and bring down the entire economy. Stability is always contingent in tightly-bound emergent systems, and a prolonged recession can push nations towards stagnation or even off a cliff. Supply and demand dynamics, behavioral changes, and production costs will determine the winners and losers. Nations relying on domestic production of essentials will fare better than those dependent on global surpluses. Fragile socio-political regimes tied to rising prosperity will face instability, while those ensuring equitable distribution of essentials will maintain stability. The decline of globalization and financialization poses challenges as there are no substitutes to fuel growth. Complex systems ...