Precious metals news

Corporate bankruptcies are surging at double-digit rates in many advanced economies, driven by escalating borrowing costs and the withdrawal of extensive government support measures implemented during the pandemic.

During Argentina's 2001 debt crisis, Martin Guzman witnessed devastating economic collapse and severe austerity measures imposed by the IMF. This experience led him to study economics and eventually, as finance minister, negotiate a $44 billion debt restructuring with the IMF. Now, Guzman and other leading economists argue that the post-World War II economic framework, anchored by the IMF and World Bank, is failing to ensure growth and stability.

Corporate entities facing debt refinancing could encounter serious challenges if they fail to achieve synergies or earnings growth. Numerous headwinds are present: diminishing cash reserves accumulated during the Covid-19 pandemic, sales impacted by reduced consumer spending, and the looming threat of a recession endangering future profits, all pointing towards a potential financial reckoning.

Gold prices have escalated to nearly historic levels, fueled by an unexpected dovish pivot from the Federal Reserve, which has heightened gold's appeal among investors. Despite Consumer Price Index (CPI) data meeting expectations and initially causing a subdued reaction in the market, gold swiftly rebounded, approaching $1990 per ounce. Caught off guard by the Federal Reserve's dovish statements, economic forecasts, and Chair Jerome Powell's remarks, the market reacted sharply. The Fed, keeping its benchmark interest rate at a 22-year peak (5.25% to 5.50%), hinted at more substantial rate cuts in 2024, up to 0.75%—greater than the 0.50% cut anticipated in September. This adjustment in inflation outlook and the prospect of multiple rate reductions prompted market shifts: a weakened U.S. dollar, increased Treasury yields, a rally in U.S. stocks, and a significant rise in gold prices, breaking the $2000 per ounce barrier.

The European Central Bank and the US Federal Reserve have stated they won't eliminate physical cash with the introduction of a Central Bank Digital Currency (CBDC). However, recent policy briefs by the ECB and the Bretton Woods Committee advise against paying interest on CBDCs. This approach warrants reconsideration, as there are compelling reasons to not only expedite the introduction of CBDCs but also to consider paying interest on them and eventually phasing out cash.

The strategy of "kicking the can down the road" appears increasingly ineffective, especially in the realm of geopolitics. The situation in the Middle East, demanding serious and long-term solutions, represents a clear barrier to this approach. Similarly, the delicate balance in the China-Taiwan relationship, with the "one country, two systems" policy, is likely to face critical tests in the near future, underscoring the need for more sustainable and concrete solutions.

After the Federal Reserve effectively surrendered to inflation at its December meeting, projecting three rate cuts next year, New York Fed President John Williams tried to walk the surrender back. In his podcast, Peter Schiff analyzed Williams' more hawkish comments and compared them to Powell's dovish stance after the FOMC meeting.
Williams said, "We aren't really talking about rate cuts right now," and that it's premature to expect rates to fall in the opening months of 2024.

With the ongoing attacks on shipping vessels in the Red Sea, it reveals the fragile nature of the global economy and supply chain.  Due to these attacks, several companies have paused shipping through the Red Sea or rerouted ships around the Cape of Good Hope in South Africa...

Silver prices are expected to see an "explosive" rise in 2024, driven by a continued shortfall in global supplies and anticipated interest rate cuts by the Federal Reserve. Despite underperforming compared to gold this year, silver presents a fleeting opportunity for investors at its current lower prices. Peter Spina, president of SilverSeek.com, predicts that silver prices will approach the significant $30-per-ounce technical resistance next year, with strong belief in breaking this barrier.

The persistent geopolitical fragmentation is expected to keep institutional gold purchases high. Additionally, emerging market central banks are increasing their gold reserves to reduce dependence on the US dollar, and economic uncertainties in China's growth model are driving up gold demand among local investors. These combined factors suggest a sustained higher gold price level,

With the heightened risk of currency instability in 2024, it's unsurprising that central banks are heavily investing in gold. In the first three quarters of 2023, central banks' gold purchases hit a record high, exceeding 800 tonnes, marking a 14% increase from 2022. This surge in gold acquisition reflects their strategy to fortify and diversify reserves, lessen reliance on sovereign debt, which has led to net losses recently, and boost holdings in gold, an asset known for its stability and long-term purchasing power.

Billionaire investor Stan Druckenmiller, speaking on CNBC, issued a stark warning about the soaring U.S. government debt, stressing its potential to drastically hinder essential spending and erode America's global leadership. He sharply criticized Treasury Secretary Janet Yellen for failing to capitalize on low-interest rates during the pandemic to issue long-term bonds. Druckenmiller's outlook paints a grim picture of the U.S. economy's future under current fiscal policies.

Over three years since the 2020 Covid economic shutdowns, troubling signs reemerge in the financial markets. US investment-grade bond yields have experienced their largest two-day drop since April 2020. Additionally, the US Treasury 10Y-2Y yield curve continues to be steeply inverted, indicating potential economic distress.

Concerns are mounting over the Federal Reserve's potential miscalculation in its quantitative tightening strategy, risking disruptions in critical financial systems like the repurchase-agreement markets. Recent tensions in these markets have pushed one benchmark rate to a record high, reminiscent of the crisis in September 2019 when an overnight market rate spiked to 10%, prompting emergency intervention by the central bank.

The Composite US PMI's unexpected rise to 51.0 in December masks deeper economic issues, notably a worrying decline in Manufacturing, which fell to 48.2. This downturn in manufacturing, set against a backdrop of weak global data, signals significant and persistent challenges in the economy despite a marginal improvement in Services.

An inflation lesson from a beloved holiday classic, plus the latest on the Fed, interest rates, gold, and more.

Two weeks ago, Federal Reserve Chairman Jerome Powell said it would be "premature" to conclude that monetary policy is sufficiently restrictive. This week, the Fed indicated rate cuts are on tap for next year. What a difference two weeks makes! In this episode of the Friday Gold Wrap, host Mike Maharrey breaks down this week's Fed meeting and the status of the inflation fight.

Gold prices are heading towards a weekly increase, fueled by a declining U.S. dollar and reduced Treasury yields following the Federal Reserve's hint at lower borrowing costs next year. Spot gold rose by 0.3% to $2,041.70 per ounce, achieving a 1.9% increase this week, while U.S. gold futures climbed 0.6% to $2,056.40.

DoubleLine's founder warned in a CNBC interview that a drop below 4% in the 10-year rate could signal major economic troubles. Since then, the rate has decreased to 3.9%. He anticipates a further decline into the "low threes" in 2024, coinciding with a likely recession. Gundlach predicts the Federal Reserve will cut the fed funds rate by 200 basis points, significantly more than the 75 basis points projected by Fed officials for 2024, reflecting a severe economic slowdown.

The Empire State Manufacturing Survey, after three consecutive strong performances, plunged into contraction in December, falling from +9.1 to -14.5, far below the expected +2.0. This significant decline shifted the measure from a 7-month high in 'expansion' to a 4-month low in 'contraction'.