Precious metals news

Gold closed the week about the same at $2,326 as silver closes down $0.40 at $29.13.  JD and Joel explain what's behind the institutional demand for gold, recent upswing in money supply, and the catastrophic presidential debate.

With rising interest rates, Americans are now paying a record amount of interest, which is cutting into their household expenditures.  U.S. Households now spend $1.1 trillion a year to service their mortgage, credit card, and other commercial debt...

President Joe Biden is expected to argue in tonight's debate that Donald Trump's proposed policies could exacerbate inflation and harm the U.S. economy. This "Trumpflation" concept has gained traction in academic and political circles, with 16 Nobel Prize-winning economists recently warning that Trump's plans for tariffs, tax cuts, and strict immigration policies could slow economic growth and reignite inflation. However, it remains uncertain whether voters will find this argument convincing. The Biden campaign is leveraging this narrative, emphasizing that Trump's policies would benefit the wealthy at the expense of working Americans.

Jefferies Financial Group's recent earnings report, showing a 59% increase in investment banking revenue, signals a potential resurgence in dealmaking activity on Wall Street. This positive trend is expected to extend to larger banks like JPMorgan Chase and Citigroup, with executives from these institutions forecasting significant increases in investment banking fees for the upcoming quarter. The revival in investment banking comes at a crucial time, offsetting the impact of higher interest rates on traditional consumer banking margins. This upturn in dealmaking activity is seen as a welcome development after two years of uncertainty and false starts in the sector.

Join Alan Hibbard of GoldSilver.com and Tavi Costa from Crescat Capital as they dive deep into the implications of a rapidly evolving AI-driven world

The Federal Reserve's annual stress tests have resulted in unexpected increases in capital requirements for several major banks, according to JPMorgan analyst Vivek Juneja. Banks like Goldman Sachs, Wells Fargo, Bank of America, and others face significant boosts to their stress capital buffers, which will raise their overall capital requirements. This outcome has surprised the market, contradicting expectations of a routine "copy and paste" scenario. The results have led to mixed reactions in bank stocks, with some rising slightly while others dipped. Banks are required to wait until Friday to announce any dividend or stock buyback plans resulting from these stress tests.

Poland has experienced a surge in gold investments, driven by geopolitical tensions and economic uncertainties. The trend began during the COVID-19 pandemic and intensified following Russia's invasion of Ukraine. Many Poles view gold as a safe-haven asset, offering both financial security and psychological comfort in troubled times. The ongoing war in Ukraine and migration issues at the Belarus border have sustained this demand. While NATO membership provides some reassurance, concerns persist about potential Russian expansion. Gold's appeal lies in its portability and perceived stability, with some investors allocating a portion of their assets to precious metals as a precautionary measure.

The Global Precious Metals MMI (Monthly Metals Index) rose by 2.57% month-over-month but remained largely sideways overall. Platinum and silver saw price increases in May before retreating in early June, which pulled the index down. Gold and palladium prices stayed flat. Palladium has been trading sideways since Q2, failing to surpass its March 2024 high. Platinum also declined back to its spring levels after a brief rise in late May, though recent trends suggest a potential short-term uptrend. Overall, uncertainty persists in the precious metals markets regarding long-term trends.

Goldman Sachs Research highlights commodities as a robust hedge against inflation, outperforming stocks and bonds during inflationary periods. A 1 percentage point surprise increase in US inflation typically results in a 7 percentage point real return gain for commodities, while stocks and bonds decline by 3 and 4 percentage points, respectively. Commodities provide protection against negative supply shocks and lower stock returns due to rising prices and slowing GDP growth. Historical analysis of five inflationary periods over the past 50 years shows that commodities consistently outperformed equities and bonds, regardless of the inflation drivers.

A recent survey by the Federal Reserve Bank of Philadelphia reveals growing financial concerns among US consumers, including high earners. Over a third of respondents expressed worry about making ends meet in the next six months, up from 28.7% a year ago. Notably, even among those currently able to pay their bills in full, more than a quarter are concerned about the near future. High earners, particularly those making $150,000 or more, showed the highest levels of concern, with about 30% worried about their finances in the coming six months. The survey also indicates that many consumers, including high-income earners, have resorted to cutting back on spending to manage financial stress.

The latest US labor market data shows a mixed picture, with recurring jobless claims rising to 1.84 million in mid-June, the highest since late 2021, suggesting longer job search periods for the unemployed. While initial claims slightly decreased to 233,000, the overall trend indicates a softening labor market. The unemployment rate has increased to 4%, and hiring has slowed significantly compared to the post-pandemic recovery period. Economists and Federal Reserve officials are closely monitoring these trends to assess the labor market's resilience and potential future developments.

As President Joe Biden and former President Donald Trump gear up for the 2024 presidential debates, a significant disparity exists between the actual health of the U.S. economy and the public's negative perception of it. Despite the Federal Reserve's aggressive interest rate hikes, the economy is thriving with low unemployment, rising real wages, and strong GDP growth. Wall Street reflects this optimism with booming tech, low equity volatility, and record-high stock markets. However, public sentiment remains pessimistic, with surveys showing Americans favoring Trump's economic approach over Biden's.

Zimbabwe's central bank has maintained its key interest rate at 20%, anticipating that inflation will remain subdued and fall below 5% by year-end, thanks to its new bullion-backed currency, the ZiG. Governor John Mushayavanhu stated that the monetary policy committee aims to sustain current economic stability. The ZiG, introduced in April, has helped reduce monthly consumer prices, which fell by 2.4% in May. Despite this, the currency weakened to a record low of 13.68 against the dollar.

Japanese authorities, concerned about the yen's sharp decline to a 38-year low against the dollar, have signaled their readiness to intervene in the currency market. Finance Minister Shunichi Suzuki emphasized the need for stable exchange rates and expressed worries about the economic impact of rapid, one-sided moves. Chief Cabinet Secretary Yoshimasa Hayashi also indicated that Tokyo would take appropriate action against excessive currency fluctuations. The yen was trading at 160.52 per dollar on Thursday, close to its recent low of 160.88.

Gold prices increased by 0.7% to $2,314.22 per ounce on Thursday as the dollar weakened, with traders focusing on upcoming U.S. inflation data that could influence the Federal Reserve's interest rate decisions. The dollar index fell by 0.2%, making gold more appealing to investors holding other currencies. Analysts note that gold has consistently found support when dipping below $2,300 since April. However, if expectations for Federal Reserve rate cuts by the end of 2024 diminish, gold prices may struggle to stay above this key level. Currently, traders estimate a 62% chance of a rate cut in September.

“Retaliatory measures will definitely follow,” Kremlin officials promise the U.S. ambassador after a Ukrainian missile strike was allegedly conducted with U.S.-supplied weapons and intelligence.

Gold futures experienced consecutive losses on Wednesday, with the most-active contract reaching its lowest settlement since early May. The spot price briefly dipped below $2,300 an ounce, attributed more to technical factors than fundamental changes. Despite the downward movement in gold, silver prices increased slightly. Experts suggest that gold may be entering a typical summer trading range following its strong spring rally, with potential for a price breakout in the near future as volatility narrows.

A recent study by State Street Global Advisors and the World Gold Council reveals that financial advisors are maintaining or increasing their gold allocations. 29% of North American advisors plan to increase gold holdings over the next 12-18 months, while 62% will maintain current levels. Gold's price has risen significantly in 2024, and advisors are increasingly viewing it as a core asset for long-term investment. The survey shows that nearly 90% of advisors currently allocate to gold, with physically backed gold ETFs being the most popular investment vehicle.

Money Supply is a very important indicator. It helps show how tight or loose current monetary conditions are regardless of what the Fed is doing with interest rates. Even if the Fed is tight, if Money Supply is increasing, it has an inflationary effect.

The Federal Reserve's efforts to combat inflation by maintaining higher interest rates are exacerbating the national debt. Although inflation has decreased since the Fed raised rates to a two-decade high, officials remain concerned about the pace of price increases. Higher interest rates mean the federal government must borrow money at greater costs, contributing to rising deficits. Projections indicate that interest payments on the national debt could surpass defense spending in the coming decade. The Congressional Budget Office forecasts that public debt, currently over $27 trillion, will grow from 99% of GDP in fiscal 2024 to 122% in ten years. Experts note that while government spending is a primary driver of the debt increase, the Fed's high interest rates also play a significant role.