Precious metals news

Despite a rocky start for U.S. stocks in 2024 and a general bearish sentiment among Wall Street analysts, James Demmert, Chief Investment Officer at Main Street Research, offers a strikingly optimistic forecast. Demmert, overseeing a firm with $2 billion in assets, predicts a significant bull run for U.S. stocks in the next decade, fueled by the burgeoning artificial intelligence technology sector. He anticipates major U.S. equity indexes, including the S&P 500, Dow, and Nasdaq Composite, could double or even triple their value. "Similar to the 1990s, we are experiencing a transformational change in technology that is going to have far-reaching impact," the chief investment officer says...

While investor sentiment in the mining shares has sunk to a LOW, one company has outperformed its competitors.  What company am I talking about, and the group's worst-performing silver miner may be setting up for a short-term opportunity?  Which one is it...

As 2024 unfolds, the financial markets face a new reality: the era of ultra-low, zero-percent interest rates is likely over. Investors, who initially believed the economy was deteriorating, adjusted their expectations towards the end of 2023, recognizing signs of improving economic conditions and a potential decrease in both inflation and interest rates. However, recent developments suggest that interest rates may not decline as significantly as hoped, given the stronger-than-expected economic performance. This change in perspective is causing some concern among investors.

Japan, once a dominant force in global gold importing during the 1980s and 1990s, has undergone a significant shift in its gold market dynamics. This change was initially influenced by the introduction of a consumption tax and further accelerated after the collapse of Japan's economic bubble in the 2000s. The country, which used to import gold extensively from various international sources, has now become a net exporter, primarily to Asia and London. This shift is exemplified by the author's experience at a Tokyo bank branch, where gold was mostly exported during their tenure. The evolving consumption tax, rising from 3% in 1989 to 10% in 2019, plays a complex role in this transformation. Although the tax is refunded upon selling gold, theoretically not impacting gold investment negatively, it has indirectly contributed to Japan's transition from a major gold importer to a net exporter.

Morgan Stanley's recent analysis highlights a significant shift in how gold prices react to US interest rates and bond yields. Traditionally, gold prices have been influenced by the US dollar and inflation-adjusted bond yields, but this relationship notably weakened in the latter half of last year. Despite the decrease in US real yields, gold didn't gain as much as expected, partly due to escalating geopolitical tensions. Morgan Stanley analysts observed that gold's connection with real yields has evolved, displaying reduced sensitivity to yields while increasingly being perceived as a safe haven asset.

Join us as we explore the S&P 500 chart, dating back to 1925, and uncover potential trends and risks.

Michael Barr, the Fed’s vice chair for supervision, announced that the Federal Reserve's Bank Term Funding Program, initiated during last year's regional banking crisis, will not be extended past its March 11 expiration. The program, designed as a temporary measure to alleviate financial system stress, allows banks and credit unions to borrow funds for up to a year. Despite a surge in borrowing due to anticipations of interest rate cuts, Barr emphasized its emergency nature and expects its usage to continue until the deadline. Barr also addressed questions about potential changes to capital requirements for major Wall Street banks and their impact on consumer credit and affordable mortgages.

This March, Republican primary voters in Texas won’t just be choosing which candidates to represent their party in November - they will also be voting on a series of ballot propositions that while not legally binding offer a way for voters to guide their leaders.
Here’s why what is happening in Texas matters and what it says about the future of gold. 

If history is a guide, the Stock Market is setting up for one heck of a Double-Top.  We saw a similar Double-Top in the S&P 500 Index in 2007 before all hell broke loose.  Is the market heading towards a similar fate?  If we look at the increasingly lousy economic fundamentals... I say YES...

PIMCO, a leading U.S. bond manager, has issued a warning against early optimism over conquering inflation and recession. Despite market hopes for a smooth economic trajectory, PIMCO advises caution, emphasizing the continued risk of recession. They predict bonds may outshine stocks in 2024 if a recession hits, offering a safeguard against potential inflation spikes. However, they remain neutral on duration, a key metric for interest rate sensitivity, following a recent bond rally driven by expectations of Federal Reserve rate cuts. This cautious stance comes as U.S. Treasury yields have significantly dropped in recent months.

Silver is currently underpriced when considering the supply and demand dynamics for 2023. The Silver Institute's preliminary projections suggest a record industrial demand for silver, leading to a significant market deficit. At the Silver Industry Dinner in New York City, it was revealed that industrial silver demand is expected to surge by 8% to an unprecedented 632 million ounces. This increase is fueled by investments in photovoltaics, power grids, 5G networks, consumer electronics, and vehicle production. However, this industrial demand is contrasted by a projected 21% decline in physical investment demand for silver coins and bars, primarily due to reduced investment in India and Germany, influenced by high local prices and tax changes, respectively.

The World Bank's recent report paints a grim picture for the global economy, predicting the poorest half-decade growth in 30 years. Global growth is expected to slow down further in 2024 to 2.4%, marking the third consecutive year of deceleration. Although a slight increase to 2.7% is anticipated in 2025, this growth rate still falls significantly below the average of the 2010s. Geopolitical tensions, including the war in Eastern Europe and conflicts in the Middle East, are major contributing factors to this slowdown, potentially impacting energy prices, inflation, and overall economic growth. The World Bank warns of a "decade of wasted opportunity" without significant policy changes.

The credit card debt situation in the U.S. is becoming increasingly concerning, with a record $1.08 trillion in balances as reported by the Federal Reserve Bank of New York. Ted Rossman, a senior analyst at Bankrate, highlights a staggering 40% rise in credit card balances over the past two years. Notably, nearly half of all cardholders are now carrying their debt month-to-month, a significant increase from last year. This shift indicates growing financial strain, as 56 million Americans have been in credit card debt for over a year. Factors contributing to this trend include inflation, higher borrowing costs, and possibly shifts in lending practices. The Fed researchers suggest that this could be a sign of deeper economic distress.

The year 2023 proved difficult for commodities, with most experiencing lackluster returns. However, gold emerged as a notable exception, reaching an all-time high of $2,135 an ounce. This surge in gold prices was largely driven by increasing investor interest in safe-haven assets, spurred by the growing likelihood of rate cuts in 2024 and a weakening dollar. Copper, on the other hand, showed marginal gains, its performance dampened by a declining property market in China. VisualCapitalist put together a great graphic, based on U.S. Global Investors interactive research, that shows commodity returns over the last decade.

December saw a resurgence of “degrowth” advocates in the media, with two articles published by Nature garnering special attention on X (formerly Twitter).
The fallacies underlying the degrowth movement are not new in economics, but it’s worth revisiting them and their important connections to monetary policy in the age of central banking.

Real estate expert Russ Gray opens up about ‘losing it all’ during the 2008 financial crisis and the valuable lessons he learned.

As of January 8, 2024, key mortgage rates have seen an increase over the past week. The average rates for both 15-year and 30-year fixed mortgages have risen, along with a climb in the average rate for 5/1 adjustable-rate mortgages. Current rates are as follows: 7.07% for a 30-year fixed mortgage, 6.46% for a 15-year fixed mortgage, and 6.41% for a 5/1 adjustable-rate mortgage. Despite a drop from a peak of 8% in November, the most common mortgage rates are now hovering between 6% and 7%. Keith Gumbinger, vice president of HSH.com, notes that fluctuations in interest rates are typical in January. The housing market remains challenging due to high mortgage rates, elevated home prices, and limited inventory, making homebuying difficult for many. Experts advise potential homebuyers to focus on financial preparedness rather than trying to time the market.

Cam Harvey, the economist known for identifying the predictive power of the Treasury yield curve for recessions, warns of a likely downturn in 2024. His model indicates that a recession follows when yields on 3-month Treasury bills exceed those on 10-year notes for at least three months, a situation known as an official inversion. This pattern has consistently predicted the last eight recessions without any false signals and has been in place for 12 months now.

In 2024, the Federal Reserve's interest rate setting committee will see new members, leading to speculation about how this might affect the balance between hawks (who favor higher rates) and doves (who support lower rates) in setting monetary policy. The change is a result of the Fed's rotation system, where four of the 12 seats on the Federal Open Market Committee (FOMC) are annually reassigned to regional Fed presidents. This year, the new members are from the regional Fed banks in Cleveland, Richmond, Atlanta, and San Francisco. According to Gregory Daco, chief economist at Ernst & Young, these additions could potentially shift the committee towards a more dovish stance, potentially increasing openness to rate cuts to stimulate the economy.

The "Magnificent 7" stocks, including major tech and consumer giants like Microsoft, Meta Platforms, Amazon, Apple, NVIDIA, Alphabet, and Tesla, experienced a slowdown at the beginning of 2024, following an impressive 107% gain in 2023. This trend was also seen in the broader S&P 500, where mega-caps underperformed and the equal-weighted index outdid the capitalization-weighted one. Small-cap stocks, in particular, faced challenges, as seen in the Russell 2000's performance. This downturn is partly attributed to market rebalancing in the new tax year and profit-taking from previous winners. This shift suggests a growing uncertainty about the economy's ability to achieve a soft landing, impacting investor confidence and the market outlook.