Precious metals news

The Federal Reserve's extensive bailouts of major banks, as shown by FRED's data, highlight the precarious state of the U.S. financial system. Since the 2008 crisis, these banks have fluctuated wildly in cash assets, indicating a shift from stable to chaotic financial operations. The Fed's actions, aimed at preventing bank runs and panic, have led to repeated, massive injections of emergency funds, underlining the banks' dependency on Fed support rather than robust regulatory oversight. This situation, further exposed by the recent major bank failures, calls into question the Fed's effectiveness as a regulator and the need for a more competent and independent supervisory body.

The November Conference Board Consumer Confidence index improved to 102.0 after a significant downward revision of October's data to 99.1, marking the lowest since July 2022. The Present Situation Index dropped to 138.2, the lowest since April 2021. Consumer expectations, remaining below the recession-indicative level of 80 for the third month in a row, signal growing concerns about an impending economic downturn. Around two-thirds of consumers anticipate a recession within the next year, and labor market indicators continue to worsen.

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Gold prices are surging, recently surpassing $2,013 per ounce and reaching a six-month high. Analysts are optimistic, predicting that gold might exceed its 2020 record high of $2,074.88. Key indicators suggest a breakout around $2,050 could lead to further gains, with targets around $2,500/oz. The rally is driven by falling real rates, geopolitical uncertainties, and speculation of the Federal Reserve pausing interest rate hikes. Gold's status as a safe-haven asset is reinforced by increased purchases from central banks like China, Poland, and Singapore, underscoring its positive momentum.

Market expectations of Federal Reserve rate cuts in early 2024 are at odds with the Fed's own signals of possible rate hikes to fight inflation. Monetary aggregates like M1 and M2 are decreasing, but total borrowings from the Fed are increasing, indicating that money printing is mainly aiding the banking sector, not the broader economy. This suggests that inflation may not drop as quickly as some anticipate. If the Fed does cut rates, it might be due to a decline in private sector demand, rather than a positive economic sign. Such rate cuts, driven by economic downturns, are unlikely to boost the markets as some expect, pointing to ongoing inflation and economic challenges.

The Federal Reserve has lost well over $100 billion dollars, and even when it returns to "profitability," it will likely take over four years before the central bank is completely in the black.
And you're going to foot the bill.

The Bank of Japan is grappling with a substantial financial challenge, recording a massive paper loss of ¥10.5 trillion ($70.7 billion) on its assets as of the end of September. This is the largest loss since fiscal 2004, significantly impacting the bank's balance sheet. The loss is attributed to the rise in yields, which has reduced the value of the bank's extensive bond holdings. This situation poses a serious concern for the bank's financial health, despite Governor Ueda's assurances that it won't impede monetary policy.

Deutsche Bank economists say the Federal Reserve will create more inflation in 2024.
OK, that's not exactly what they said. But that is the implication of their latest forecast.

China's banking sector is under severe stress, tasked with propping up its faltering $57 trillion property industry. Banks like ICBC face the prospect of issuing risky, unsecured loans to financially unstable developers. This move could dramatically spike their bad debt provisions, with an estimated additional $89 billion needed in 2024, severely impacting their profits. The situation is dire, forcing banks to contemplate drastic measures like reducing growth targets and cutting jobs, while juggling government demands and business sustainability. This predicament poses a significant threat to the overall stability and profitability of China's major banks.

Eurozone credit to non-financial corporations shrank by 0.3% in October, marking the first decline since 2015 and signaling the negative impact of the European Central Bank's aggressive rate hikes. This contraction in lending reflects a broader economic slowdown in the region, exacerbated by tighter monetary policy. Banks' rapid repayment of ECB loans is contributing to a significant reduction in the central bank's assets. The decrease in the broad money supply, M3, further indicates a shift away from credit and an increasing preference for savings. These trends, reflecting a worsening economic environment, are likely to persist into 2024.

Javier Milei faces significant challenges in Argentina, where many politicians have grown powerful and wealthy through policies that have led to economic decline. To restore prosperity, Argentina needs a stable macroeconomic and monetary system. This requires recognizing the failure of its currency and the bankruptcy of its central bank, and implementing urgent, market-friendly reforms. Despite the difficulties, the potential for Argentina's economy is vast. The country, once wealthy, has been impoverished by socialism. To regain its prosperity, Argentina must move away from socialist policies and embrace a more market-oriented approach.

Global central bankers are expressing concerns over the future of monetary policy amidst varying economic challenges. The Reserve Bank of Australia notes economic resilience and persistent services inflation. The Bank of England discusses ongoing uncertainties despite expectations of sustained high rates. The Bank of Spain warns of short-term profitability and upcoming credit risks, while the Bank of Thailand highlights high household debt and SME sector challenges. Former RBA Governor Philip Lowe emphasizes the need for central banks to effectively manage inflation to maintain credibility.

Silver prices are experiencing a surge, influenced by a combination of a weakening dollar, speculation that the Federal Reserve might pause interest rate hikes, and market expectations of a possible dovish shift in the central bank's future monetary policy. These factors are collectively impacting silver's future price trajectory.

Goldman Sachs analysts predict a brighter future for gold in 2024, linking potential price increases to U.S. real rates and dollar trends. They anticipate sustained consumer demand from China and India, along with central bank purchases, to counter any downward pressure. Similarly, Bank of America's commodities team expects gold prices to rise from the second quarter of 2024, driven by lower real rates due to Federal Reserve rate cuts.

Bloomberg's latest survey indicates the Federal Reserve's core inflation measure will stay elevated, likely keeping interest rates high into 2024. The core index is expected to be 2.5% by end of 2024, suggesting a prolonged period of tight monetary policy. Overall inflation is projected to decline, but economic growth is forecasted to slow, with a peak unemployment rate of 4.4%. The survey, conducted between Nov. 17-22, included 73 economists.

The German hyperinflation after World War I exemplifies the perils of excessive government control over currency. Initially, to fund war efforts, Germany removed the mark from the gold standard, triggering massive inflation. Post-war, efforts to manage reparations and increased spending further escalated the crisis, leading to skyrocketing inflation. This case illustrates the dangers when central banks fund government deficits, as seen with the Federal Reserve's actions during the Covid crisis. The key lesson is the need for a separation between government and money to avoid hyperinflationary scenarios.

The U.S. dollar's status as the world's reserve currency is waning due to various factors, including recent sanctions against Russia and global dissatisfaction with U.S. monetary policy. Countries like Brazil, Argentina, Bangladesh, and India are exploring alternatives like the Chinese yuan and Bitcoin for trade and payments. The dominance of the U.S. in global finance and trade, combined with the strong dollar's impact on emerging economies, is prompting a shift away from dollar dependency. Additionally, changes in global oil trade and strained U.S.-Saudi relations could further erode the dollar's reserve currency status.

The "Inflation Reduction Act," focused on green energy, is expected to cause Medicare insurance premiums to surge by 42-57% in 2024. Despite aiming to lower healthcare costs, the Act may significantly increase Part D premiums for most enrollees. Reports predict steep hikes in states with large senior populations, contrary to earlier projections of premium declines. This could impose a considerable financial strain on retirees dependent on Medicare's Part D coverage.

New home sales in the U.S. housing market fell more than expected in October, dropping 5.6% month-over-month. This decline comes amidst the lowest housing affordability since the early 1980s and a significant fall in home-purchase applications. The median new home price also decreased by 17.6% year-over-year. This trend raises concerns about Federal Reserve policies impacting housing affordability and the middle class's wealth.

The volume of delinquent Commercial Mortgage-Backed Securities (CMBS) rose by 49.4% over 10 months through October, reaching $27.91 billion, or 5.07% of the total CMBS market. This spike is mainly due to a 261% increase in office sector delinquencies, with $9.59 billion in loans now late. Factors include declining office occupancy rates and the high cost of interest-rate cap agreements for loans with floating rates. Rising interest rates are also significantly affecting residential mortgage payments.