Precious metals news

Investors are fleeing corporate bond ETFs, with a record $9.4 billion exodus in October, and are massively shifting to lower-risk government bond ETFs. This move, driven by fears of an economic slowdown and persistent high interest rates, marks a stark shift to risk aversion in the market. The trend is further underscored by significant outflows from emerging market assets, reflecting widespread investor uncertainty and a cautious approach in a volatile financial landscape.

Retail traders sold off nearly $16 billion in stocks last month, indicating a significant decline in market enthusiasm. This broad sell-off, nearly double that of September, spanned most sectors, reflecting growing caution among investors as the S&P 500 struggles amid high interest rates and increasing geopolitical risks. While institutions also reduced their equity holdings, hedge funds took a different approach, buying into the weakening U.S. stock market.

Economist Mohamed El-Erian foresees credit risk becoming the market's primary concern in 2024, overtaking interest-rate risk. With the Federal Reserve's intense rate hiking cycle ending, the focus shifts to economic growth and debt challenges. El-Erian warns of a more difficult global economy ahead, impacted by dwindling savings and high interest rates. He predicts continued volatility in the market, influenced by debt issuance and a softening economy. This shift poses significant threats to market stability and the U.S.'s financial standing, with corporate and government debt issuance playing a crucial role in shaping future yields.

Mainstream pundits and government officials keep talking about the strong economy and resilient consumers while ignoring what's driving them - borrowing. To listen to them, you would think the road to prosperity is paved with credit cards. In this episode of the Friday Gold Wrap host Mike Maharrey breaks down the recent household debt data and explains why this isn't the sign of a strong economy. He also highlights some interesting silver demand news.

Money-market funds have reached a record $5.71 trillion, marking a significant shift away from bank deposits. The Federal Reserve's reverse repo facility usage has notably dropped below $1 trillion, signaling a decrease in excess liquidity. Concurrently, the Fed's balance sheet contraction is minimal, and its quantitative tightening is faltering. Alarmingly, banks' dependence on the Fed's emergency funding has hit a new high, suggesting deeper financial issues. Despite a temporary uptick in equities, the escalating borrowing costs and financial challenges faced by regional banks indicate ongoing economic instability.

Federal Reserve Chairman Jerome Powell, speaking at the IMF, expressed uncertainty about whether current monetary policies are enough to continue slowing inflation. Despite some progress, Powell emphasized that inflation remains high and the journey to the 2% target is far from over.

The wind power industry's death by a thousand cuts will result from the massive increase in "service cost inflation."  We are just beginning to see the first troubling signs: utilities that purchased wind power units now face increasingly high service costs...

M2 money supply is enduring its first meaningful drop in 90 years. A rarity with only five such occurrences in history, is sounding alarms for a potential economic downturn. With a 3.17% year-over-year drop and a more significant fall since July 2022, this contraction in available capital hints at reduced consumer spending and possible deflationary pressures. Historically, similar declines have preceded severe depressions and high unemployment. While modern monetary policy may mitigate some risks, the current shrinkage in money supply poses a stark threat to the economy and stock market stability.

Amid a global economic slowdown signaled by China's faltering exports, oil prices have plunged over 4%, with the world's largest oil consumer pulling back on imports. This drop reflects deepening concerns of a widespread demand collapse, overshadowing OPEC+'s production cuts. Suspicions of Russia exceeding export quotas add to the market's unease, while a stronger U.S. dollar further depresses oil prices, intensifying the gloom enveloping the global energy sector.

Mario Draghi, the former ECB head, has painted a grim picture of the Eurozone's future, forecasting an almost certain recession by the end of 2023. Meanwhile, ECB Governor Pierre Wunsch's admission of looming stagflation points to a deeper economic malaise. The Eurozone appears to be on a dismal trajectory towards not just recession but a potentially prolonged period of economic stagnation and financial distress.

Today's 30-year Treasury auction was an absolute debacle, with the worst tail on record since 2016 and the lowest bid-to-cover ratio since December 2021. Indirect (foreign) participation plummeted, leaving dealers to absorb nearly a quarter of the offering, signaling distress and hinting at imminent Federal Reserve intervention. This fiasco sent shockwaves across financial markets, causing Treasury yields to soar, stocks to plunge, and the dollar to surge, all amidst crumbling Treasury liquidity. The Federal Reserve faces a significant challenge ahead.

The U.S. government's financial situation is bleak with soaring debt and entitlements that the nation cannot afford. Misguided policies have led to increased dependency, eroded personal responsibility, and put the country on a path to economic collapse. Defense spending inflates the budget without clear benefits, and the massive national debt, exacerbated by rising interest costs, is unsustainable. Without radical and politically unviable reforms, a fiscal implosion seems inevitable.

The US is heavily burdened by debt, with federal debt at $33.71 trillion and unfunded liabilities at a staggering $211 trillion. This implies severe future financial challenges, possibly resulting in more debt, higher taxes, or cuts in social benefits. Federal debt costs are escalating as the government fights inflation. Additionally, consumer credit card debt has surged as people grapple with the rising cost of living.

Silver demand for industrial applications, jewelry production and silverware fabrication is expected to nearly double over the next 10 years.
According to a report by Oxford Economics commissioned by the Silver Institute, the demand in these three sectors is forecast to increase by 42% between 2023 and 2033.

Initial jobless claims in the U.S. slightly decreased to 217,000 last week, but the number of continuing claims has been rising for six weeks, reaching the highest since April at 1.834 million. This suggests underlying issues in the labor market. Goldman Sachs warns that seasonal factors could further inflate these numbers by 375,000 by March, indicating worsening conditions ahead.

Declining Treasury yields have spurred a short-term surge in stocks, but investors are increasingly anxious that this trend could backfire by encouraging the Fed to extend its aggressive rate policies. The worry is that persistently low yields might overly loosen financial conditions, compelling the Fed to keep rates high to prevent a resurgence in inflation. This could negatively affect asset values and sustain economic pressure. Such a scenario poses a tricky balancing act for the Fed, which could result in prolonged market turbulence and economic strain.

Bank of Japan Governor Kazuo Ueda signaled concern over raising interest rates, underlining the potential for severe market disruption and strain on the economy. Despite nearing their inflation target, the central bank faces a tough path ahead, with the looming threat of market instability and long-term low-rate repercussions adding to the grim outlook.

China's economy experienced deflation with a 0.2% drop in the CPI last month, largely due to a significant decline in pork prices. Producer prices continued to fall, marking a 13th consecutive month of declines. Weak domestic demand persists, challenging the government to further stimulate the economy amid mixed recovery signals.

US Treasury bond auctions are causing significant volatility in stock markets, with the S&P 500 showing about 1% swings on auction days. This effect is now greater than the market impact of employment data. Recent auctions, including a key 30-year bond sale, have shown weaker demand, raising concerns over high yields and their negative effect on stocks. Equity traders are alert to these auctions as critical indicators of market direction amidst uncertainty over Federal Reserve interest rate policies.

Mainstream financial network pundits and government officials keep telling us that the economy is chugging along because Americans continue to spend money. But it's clear that borrowing is the only thing sustaining this spending spree.
Meanwhile, the "resilient" American consumer is drowning under a surging tidal wave of debt.