Precious metals news

Gold set a new record on Friday and broke it again over the weekend. The spot price went as high as $2,125 in overseas trading Sunday night. In his podcast, Peter Schiff explained why he thinks this bull run is just getting started and gold will go much higher.
In fact, Peter said he thought these records would be broken "many many times over."

ECB's Nagel stated that the battle against inflation is ongoing and challenging, with potential geopolitical tensions posing further risks. He couldn't confirm if interest rates have peaked, as ECB decisions are data-dependent. Nagel expects inflation to decrease gradually and unevenly, influenced by factors like ending energy price caps and strong wage growth in Europe.

Wall Street anticipates the Federal Reserve might cut interest rates as early as May, possibly in March, but Federal Reserve officials, including Chair Jerome Powell, indicate that further rate hikes are still possible. Despite recent slowing inflation, the Fed's focus remains on maintaining rates to reach a 2% inflation target, with some officials open to raising rates further if needed. This stance contrasts with investor optimism for early rate cuts in 2024.

The Vix, known as Wall Street's "fear gauge," has dropped to a four-year low of 12.4, suggesting investor complacency about the Federal Reserve managing inflation without economic downturn. This decrease in volatility coincides with a strong S&P 500 performance and a recent decline in U.S. inflation. However, analysts warn of potential future market instability, as longer-term forecasts indicate higher volatility ahead. Concerns also exist about overlooked risks in areas like commercial real estate and credit delinquencies.

European natgas inventories took a Big Hit this week as a record Cold-Snap hit the region.  Could this be a bad omen for Europe's natgas supply and demand situation this winter?  We will see... but the situation in the U.S. couldn't look any better as natgas inventories hit a 5-year high...

Gold and silver are setting records and building momentum. We got the latest official inflation numbers this week… and the Fed seems to live in a different reality than the rest of us.

Silver's demand remains high due to its industrial use, but the notable trend is the record pace of gold accumulation by central banks globally. Key factors driving the rise of precious metals include the U.S. national debt surpassing $34 trillion, high interest servicing costs comparable to the Defense Department's budget, and geopolitical tensions. Additionally, a weakening dollar and the Federal Reserve's expected shift from restrictive to more accommodative policies contribute to this trend.

Gold is at a critical juncture, benefiting from December seasonals and expectations of a dovish pivot by the Federal Reserve. The dollar's weakness adds to gold's favorable position. Recently rising to $2071, up $35, gold shows potential for further gains without being overcrowded. Short-term profit-taking might follow, but if gold stays above $2050, it's poised for a significant bullish breakout.

Gold prices hit a seven-month high at $2,060.69 per ounce, and U.S. gold futures rose to $2,080.60, following Federal Reserve Chair Jerome Powell's comments hinting at possible U.S. monetary policy easing. These remarks led to increased expectations of an early rate cut next year. Meanwhile, silver prices also climbed, reaching a six-month high of $25.39 per ounce. Both gold and silver benefited from lower interest rates and a weaker dollar.

IRS Commissioner Danny Werfel announced plans to increase hiring of tax enforcement agents in 2024, with a focus on complex cases involving big corporations and high-income earners. This is part of a broader initiative to enhance IRS capabilities using $60 billion in additional funding. Despite assurances that audits will not increase for Americans earning less than $400,000, there are concerns about the lack of a clear definition of "high income" at the IRS, which could potentially lead to more widespread audits. Additionally, the IRS is hiring more armed agents for its criminal investigations division, though Werfel emphasized these hires are not intended to increase the number of tax audits.

The Heritage Foundation reports that 40% of U.S. personal income taxes are now consumed by interest payments on federal debt. In October, $88.9 billion was paid in interest, with annual payments potentially exceeding $1 trillion. The article likens this to a person overwhelmed by credit card debt. Two solutions are suggested: hyperinflation, akin to Venezuela's model, which could drastically devalue the debt but with severe economic consequences, and a debt jubilee, an ancient practice of erasing debt, which is seen as an unlikely remedy in the modern context.

Federal Reserve Chairman Jerome Powell indicated Friday that it's too early for aggressive interest rate cuts due to inflation concerns. He emphasized maintaining restrictive policies until inflation is reliably near the 2% target, hinting at further tightening if necessary. This statement contrasts with market expectations of the Fed easing in 2024, which has recently boosted Wall Street. Powell's remarks received a mixed response in the markets.

Buy low, sell high... Sounds easy enough. But history shows that timing the market could have dire consequences for your overall returns...

In October, U.S. pending home sales plunged 1.5%, reaching their lowest level since 2001, surpassing the downturn observed during the Great Financial Crisis. This significant drop, which marked an 8.5% decline from the previous year, reflects an acute crisis in the housing market. High mortgage rates, which momentarily exceeded 8%, combined with a severe shortage of available homes, have drastically suppressed housing demand. The situation is particularly dire in the West, where the decline in home sales has been most severe, indicating a market contraction worse than what was experienced during the Great Financial Crisis.

November's U.S. manufacturing PMI data indicates a downturn, signaling economic stagnation. The S&P Global Manufacturing PMI fell to 49.4, showing a contraction driven by reduced new orders and employment. The ISM Manufacturing PMI remained unchanged at 46.7, missing expectations and reflecting broad sectoral weakness. This slowdown, marked by a significant drop in factory employment not seen since 2009, raises concerns about reduced consumer spending and weaker wage growth. The data points to a stagnating economy with reduced manufacturing activity and potential GDP contraction, underlining the risks of stagflation.

Javier Milei's election as the world's first anarcho-capitalist president is historically significant. It's unprecedented for someone elected to run a state to aim at abolishing it, proposing minimal government involvement. His victory, especially among young and poor supporters, could signal a trend towards greater individual freedom. Milei understands the government's negative role in the economy and money. He proposes sound money policies and free-market principles, aiming for Argentina to become an investment magnet. His foreign policy should focus on neutrality, being friendly to all but allied to none. If Milei's reforms succeed, Argentina could become one of the most prosperous countries, attracting capital and educated immigrants seeking freedom.

The Euro-zone faces a persistent risk of a "sovereign doom loop," where banking sector troubles could severely impact sovereign states. Despite attempts to disconnect banks from state finances, S&P Global Ratings warns of heightened risks in 2024 due to recession concerns and uncertain fiscal policies. This situation, similar to the UK's 2022 financial crisis, could lead to significant market confidence loss. Banks, heavily invested in government bonds, may further increase their holdings, deepening the interlinkage and risk. The region could face further destabilization due to potential austerity measures and tight monetary policies.

The persistence of high bank reserves in the US despite the Federal Reserve's balance sheet reduction hints at underlying financial strains. Banks are hoarding cash, incurring higher costs to maintain liquidity due to substantial unrealized losses on bond portfolios. This cautious approach is fueled by recent bank failures and regulatory shifts, fostering a climate of financial insecurity. The situation raises concerns about the Federal Reserve's quantitative tightening policy and suggests potential early termination of this strategy if financial stress intensifies. The declining use of the Fed's reverse repo facility further underscores these mounting pressures in the banking sector.

Michael Barr, the Fed's Vice Chair for Supervision, highlighted the discount window as essential for financial stability and monetary policy. Speaking at an ECB event, he urged banks to use this funding source regularly, not just in crises. His comments follow recent U.S. bank failures and a report recommending Federal Home Loan Banks to guide lenders to the Fed in severe stress. Barr reassured that using the discount window is a positive action and shouldn't be seen negatively by banks or regulators.

The IMF, World Bank, BIS, and Switzerland’s central bank are collaborating to explore tokenization, which converts financial assets into digital tokens. This project aims to speed up fund transfers to developing economies and enhance regulatory compliance. It also examines integrating central bank digital currencies with existing payment systems.