Precious metals news

The overuse of the U.S. dollar in financial warfare has led to its declining global dominance, a concern raised a decade ago and now being realized as countries like Russia and China reduce their reliance on the dollar. U.S. Treasury Secretary Janet Yellen acknowledges the risk sanctions pose to the dollar's hegemony. Recent proposals to seize Russian assets for Ukraine's war efforts could further undermine the dollar, potentially triggering a broader financial crisis and underscoring the need for careful U.S. policy decisions regarding the dollar's role in international finance.

China, the world's second-largest economy, has been significantly reducing its holdings of U.S. Treasury securities for over a decade. The U.S. Treasury Department reports that China's holdings have dropped to their lowest in 14 years, decreasing by over $491 billion from a peak of $1.297 trillion in May 2013 to $805.4 billion as of August 2023. This divestment coincides with Moody's changing the U.S. credit rating outlook from stable to negative, citing America's deteriorating financial position and political gridlock. While this doesn't guarantee a credit rating cut, Moody's indicates an increased likelihood of such a move in the future, especially if effective fiscal measures to manage government spending or increase revenues are not implemented.

Biden, Congress, and The Federal Reserve are increasingly disconnected from the struggles of America's middle class. The Federal Reserve, a private entity, has the unique ability to pass its massive unrealized losses, now exceeding $1.3 trillion, onto the U.S. Treasury. This situation highlights the Fed's controversial role in interest rate manipulation and its impact on the national economy. Additionally, FDIC-insured banks are facing significant losses, further exacerbated by negative bank credit growth for 16 consecutive weeks. These developments call into question the current financial policies and the very existence of the Federal Reserve in its current form.

The Biden administration claims to have made Thanksgiving more affordable, but this perspective is challenged by the reality of persistently high prices. Since Biden's inauguration, turkey prices have increased by 235% and gasoline prices are still up by 47%, despite recent minor decreases. The administration attributes the recent price declines to their efforts, but these reductions are more likely linked to a decrease in M2 Money growth, now at -3.6% year-over-year, following extensive federal spending during the Covid crisis. The significant rise in turkey prices under Biden's tenure is a stark reminder of the ongoing economic challenges.

In the past year, global interest rates have sharply increased from historic lows, with notable disruptions including a UK market panic and a U.S. banking crisis. Despite easing inflation, there's skepticism about achieving a "soft landing" for the economy. Financial historian Edward Chancellor, in his discussion on Merryn Talks Money, highlights that low interest rates for extended periods have led to the misallocation of capital across numerous sectors, indicating deeper economic issues beyond just controlling inflation.

Did you know Thanksgiving almost didn't happen thanks to the Pilgrims' experiment with socialism? It didn't work. Fortunately, they figured out some economic truths and the rest is history. In this episode of the Friday Gold Wrap, host Mike Maharrey tells the Thanksgiving story you almost certainly didn't hear in school. He also explains why today is called Black Friday.

The dollar's decline and the yen's rise signal mounting investor skepticism about the sustainability of current U.S. interest rates, amid growing expectations of an impending rate cut by the Federal Reserve. This trend, marked by a notable 2.8% drop in the dollar index this month, reflects deepening concerns about the potential for an economic downturn, despite the market's premature optimism for rate cuts. The complex global economic situation, with indicators like the inverted yield curve, points towards a challenging financial future, possibly necessitating more drastic rate cuts in response to a looming recession.

The U.S. dollar fell as investors anticipated a peak in U.S. interest rates, while the Japanese yen strengthened due to rising consumer prices. Expectations that the Federal Reserve may halt rate hikes and start cutting them next year contributed to the dollar index's decline, potentially its weakest monthly performance in a year. Analysts predict that the Federal Reserve and the European Central Bank may cut rates around mid-2023, with the Bank of England possibly leading rate cuts as early as May.

This article concludes that the current downturn in bond yields is part of a continuing market manipulation by central banks in order to restore confidence in the global economic outlook.
There is a long history of government intervention in markets. In the nineteenth century, it was by legal regulation, the most notable of which was the 1844 Bank Charter Act, which had to be suspended in 1847, 1857, and 1866.
From the early 1920s, the emphasis on intervention changed under Benjamin Strong, the first Fed Chairman, who started to deliberately expand central bank credit to stimulate the economy. Coupled with the expansion phase of the commercial bank credit cycle, this led to the roaring twenties, the stock market boom, and its collapse.
Presidents Hoover and Roosevelt compounded the errors with economic interventions which only succeeded in prolonging the 1930’s depression. It was the start of modern government economic and monetary manipulation, which took on a new urgen...

What is it that has prompted Mike Maloney to interrupt his Thanksgiving holiday and create a new presentation?

Gold is experiencing an upswing due to increased geopolitical risks, a weakening US Dollar, and falling US Treasury bond yields, leading to a recovery in investment flows. Central bank purchases of gold have been robust, with projections suggesting they could reach 1,050 tons in 2023. Additionally, physical gold demand remains strong, as evidenced by a 60% year-over-year increase in India's gold imports in October.

The U.S. fiscal situation is dire, with a significant portion of federal spending going towards interest payments on the national debt. Around 40% of the $2.5 trillion collected annually from personal income taxes is now used to pay this interest. If current trends continue, soon all personal income tax revenue could be required just to cover these interest payments, leaving little for other government obligations. This burden on taxpayers is escalating as the national debt, currently at $33.75 trillion, continues to grow rapidly.

Mortgage purchase demand has significantly declined, dropping 1% week-over-week and 20% year-over-year. Despite a 3.0% increase in overall mortgage applications for the week ending November 17, 2023, the trend in housing demand is worrisome, with the worst home sales data seen since the 1970s. This downturn in the housing market is indicative of broader economic challenges, reflecting concerns about current fiscal policies and their impact on the economy.

U.S. inflation expectations have reached their highest since 2011, with the University of Michigan reporting increases to 4.5% for the one-year and 3.2% for the five to ten-year outlooks. Consumer concerns about persistent high food and gas prices are significantly influencing these expectations, with those mentioning these costs expecting over 5% inflation ahead. There's a notable downturn in business conditions expectations and weakening buying conditions across various segments. Younger and middle-aged consumers show a pronounced decline in economic attitudes, reflecting growing negativity about the financial outlook.

Global Investment Firm BlackRock strategists predict persistent market volatility due to high interest rates worsening the U.S.'s significant debt burden, now close to $34 trillion. Interest payments, which have soared to $1 trillion annually, are set to exceed Medicare spending soon. The Federal Reserve's aggressive rate hikes have not only aimed to curb inflation but also slowed economic growth, suggesting prolonged high rates and heightened market instability. This challenging financial environment is marked by fears of recession and the end of easy money, leading to increased unpredictability and economic strain.

The U.S. economy faces severe challenges, highlighted by the Conference Board’s index of leading economic indicators declining for 19 consecutive months, signaling an impending recession. This downturn is evident in the labor market, with over 106 million U.S. adults currently without jobs, including those not officially counted as unemployed. This figure surpasses the joblessness peak during the 2008-2009 crisis. Additionally, a large portion of Americans are living paycheck to paycheck, and the situation is worsening with increasing layoffs. Young Americans are particularly struggling, unable to afford homes due to low-paying jobs and student debt.

Even with a potential soft landing of the U.S. economy, gold remains a promising investment. Central banks, particularly in China, plan to increase their gold reserves for diversification and geopolitical security. In China, ongoing real estate challenges could drive households towards gold as a safe wealth store. Moreover, the global political landscape in 2024, marked by significant elections, might heighten economic and geopolitical risks, making gold an attractive hedge for investors. These factors collectively sustain gold's appeal in various economic scenarios.

The U.S. economy shows troubling signs as durable goods orders fell sharply by 5.4% in October, significantly more than the expected 3.2% decrease. This decline points to a slowdown in economic activity, with year-over-year growth now at a nominal 0.9%. Major reductions in defense and non-defense aircraft spending, alongside stagnant core capital goods shipments, indicate weakening industrial demand, signaling potential economic challenges ahead.

The number of Americans filing for first-time jobless benefits dropped to 209,000 from 233,000 the previous week. Continuing claims slightly decreased from 1.862 million to 1.84 million, remaining near two-year highs. However, Goldman Sachs warns that seasonal distortions affecting continuing claims are likely to reverse, potentially increasing these claims by 375,000 between now and March, indicating a worsening situation in the job market.

Big money managers view the recent uptick in U.S. stocks and bonds as a fleeting rally, overshadowed by looming concerns about fiscal and monetary policies, the 2024 presidential election, and potential recession. The market's optimism is countered by fears of the negative impacts of Federal Reserve's interest rate hikes and a global economic slowdown, leading to a cautious outlook for the coming year with expectations of minimal growth in major indices like the S&P 500.