Precious metals news

Gold and silver prices have recently declined due to more hawkish central bank policies. This tightening has caused stress in various sectors, such as finance, real estate, and households. Fault lines in the economy have been exposed, and any one of them could lead to a major crisis involving defaults and debt restructuring. Central banks may resort to printing money to save select entities, further devaluing currencies. Not only precious metals, but equities, bonds, and housing markets have also seen value declines. However, historically, gold tends to rally during recessions as central banks cut rates to restore stability. The long-term gold to S&P 500 ratio suggests a potential rally in gold as fiat currency printing resumes.

There was a lot of economic data this month that seems to signal a strong economy. Does it though? Is everything really fine? In this episode of the Friday Gold Wrap, host Mike Maharrey digs deeper into the data and reveals a less sanguine reality. He also explains the inner workings of the spot price for gold, how it's determined, and the factors that influence it.

Moscow Exchange is set to introduce perpetual gold futures in July, following the recent launch of settled quarterly gold futures. The new futures contracts will provide additional opportunities for trading in gold. The exchange already offers settled futures in both Russian rubles and U.S. dollars, as well as a spot instrument for gold. This move highlights the growing interest in gold as an investment and reinforces its positive outlook in the market.

Core PCE inflation remains high at 4.6% YoY. Spending growth stalls, while wage growth re-accelerates. Real personal spending stays unchanged. The savings rate increases. The situation raises concerns of a consumer pullback and signals a potential onset of stagflation.

The US dollar's position as the world reserve currency is being challenged by calls for a return to a gold-backed monetary system. Dissatisfaction with the dollar's privileges and concerns about its hegemony have led to a push for change. States should prepare for a potential collapse of the dollar and consider adopting a competitive environment where currencies backed by gold can coexist. Timing is crucial, and leading the way in embracing sound money backed by gold can provide a significant advantage in the evolving global monetary landscape.

China's hidden reserves, estimated at $3 trillion, pose a significant risk to the global economy, warns former US trade and Treasury official Brad Setser. These "shadow reserves" are not reflected in the official books of the People's Bank of China but are held by entities such as state commercial lenders and policy banks. Despite China's lack of transparency, its economic influence is undeniable, with these reserves playing a role in funding initiatives like the Belt and Road Initiative. Setser emphasizes that China's actions, both seen and unseen, will have a profound impact on the world economy.

Japan's Finance Minister, Shunichi Suzuki, issued a warning as the yen plummeted to seven-month lows against the dollar. He expressed concern about the sharp and one-sided movements in the currency market, emphasizing that appropriate action would be taken if the weakening becomes excessive. A weak yen could have detrimental effects on the economy, particularly for consumers facing higher import costs amidst rising prices. While Suzuki did not explicitly state intentions for intervention, the currency's decline of over 9% against the dollar this year raises concerns for Japanese authorities.

California, once flush with a record surplus, now faces a $32 billion deficit as the tech industry wanes and pandemic funding ends. The state's reliance on wealthy residents for tax revenue, particularly from capital gains, leaves its budget vulnerable to fluctuations. In contrast, states like Florida and Texas, which rely on sales taxes, are experiencing revenue growth. The diverging fortunes between Democrat and Republican-led states highlight the ongoing divisions in the United States. While some states have built up reserves and prepared for economic downturns, others are enacting tax cuts despite a weaker fiscal environment. As the stock market rallies, state tax revenues are beginning to normalize, signaling an end to the days of booming revenues.

France is in the midst of widespread social unrest following the police killing of a 17-year-old during a traffic stop. The violence has resulted in over 600 arrests, with rioters targeting various buildings and engaging in looting. The government has deployed 40,000 police officers to contain the situation, and President Emmanuel Macron has left an EU summit to address the crisis. The extent of the unrest has prompted discussions about the possibility of declaring a state of emergency. The cause and identity of those instigating the riots are being questioned.

China's economy is grappling with multiple challenges, including weak consumer spending, a distressed property market, declining exports, high youth unemployment, and mounting local government debt. With limited options for recovery and strained US relations, China's growth prospects are bleak. As one individual put it, "It might be time to prepare for darker times ahead."

German inflation accelerated to 6.8% in June due to a surge in transport prices following a reduction in government subsidies. The rise in consumer prices in Europe's largest economy will likely impact overall eurozone inflation. Meanwhile, Spain recorded its lowest annual price growth below the European Central Bank's target in almost two years, with headline inflation falling to 1.6%. Despite these changes, the ECB remains concerned about underlying price pressures and is expected to maintain high interest rates.

The BEA released its final estimate of Q1 2023 GDP, revealing a significant discrepancy between Gross Domestic Product (GDP) and Gross Domestic Income (GDI), which are supposed to align. Real Final Sales, an inflation-adjusted measure of GDP, was also reported. The data suggests that the GDI view may be more accurate, as people are working fewer hours per week compared to pre-pandemic levels.

These losses are reportedly due to interest rate increases, the same reason that $SIVB and $FRC collapsed. The effects of rapidly rising interest rates are just starting. Bank of America (BofA) faces significant losses as bond prices drop and yields rise. BofA's portfolio alone accounts for a fifth of the total unrealized losses among banks. The bank plans to hold onto underwater bonds, potentially limiting income generation. This situation has impacted BofA's performance, with its shares falling 15% this year. The bank's net interest margin has also fallen behind its competitors.

Money market funds continue to see outflows, with institutional funds experiencing their third straight week of outflows. Bank deposits and money market funds show significant decoupling. The Fed's balance sheet shrinks for the third week, and emergency lending facilities reach record highs. Bank usage of the Bank Term Funding Program hits an all-time high, accompanied by rising yields and significant losses.

US bond yield curve deepens inversion, raising recession concerns as it has foreshadowed every major US recession since 1969. Negative spreads persist after the Federal Reserve signals more rate hikes, adding to market uncertainty.

Stock futures climbed as investors awaited the release of the Federal Reserve's preferred inflation gauge. All three major stock benchmarks are on track for a strong performance in the second quarter and first half of 2023.

In an unexpected investment strategy change, the folks at GOLDMONEY decided it was time to lower its precious metals holdings and acquire commercial real estate.  Go figure.  Actually, I was quite shocked that GoldMoney is now getting into the real estate market... at the worst possible time...

Gold prices declined towards the key $1,900 mark, reaching their lowest level since March, influenced by Federal Reserve Chair Jerome Powell's recent comments and the strength of the U.S. dollar and Treasury yields. Positive U.S. economic data raised the possibility of a July interest-rate hike, which further pressured gold prices. However, analysts believe that gold may be reaching a bottom and expect it to rebound as sentiment weakens and approach record price highs in the coming quarters. While prices have been sliding since May, some suggest that bargain hunters could step in as gold nears $1,900, preventing further declines and potentially sparking a modest recovery.

The U.S. dollar index reached a two-week high as positive economic data indicated a strong labor market and potential for further interest rate hikes by the Federal Reserve. Weekly jobless claims dropped significantly, and the revised first-quarter GDP estimate exceeded expectations. Fed Chair Jerome Powell and other central bank heads expressed support for rate hikes, citing resilient economic performance. However, concerns about inflation persist, with Powell not expecting it to reach the Fed's target until 2025. European data showed mixed inflation figures, highlighting the central banks' cautious approach.

Mike Maloney has updated his thesis for where the gold and silver markets could be headed, and as an Insider, he is releasing this presentation to you first.