Precious metals news

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.

Milei, following his election victory, plans to drastically reduce government spending to avoid hyperinflation, which is currently exceeding 140% annually in Argentina. He warns that without fiscal adjustment, the country risks spiraling into hyperinflation. Milei's focus will be on addressing the central bank's balance sheet and reducing interest payments on peso bonds, which constitute a significant portion of the GDP. He emphasized that spending cuts would target the political class, not ordinary citizens, and public works projects would seek private capital. Milei criticized the outgoing administration for excessive spending and pledged to eradicate inflation, avoiding a situation similar to Venezuela.

The US Treasury's four-year cumulative deficit has soared to $9.0 trillion, with daily debt accumulation averaging $6.2 billion. This rapid increase signifies a drastic acceleration in national debt growth, raising serious concerns about fiscal management. Contributing factors include high interest rates and a declining commercial real estate market, marked by increased delinquencies and a slow recovery. This fiscal trajectory suggests an impending financial crisis, driven by unchecked government spending and rising debt service costs. The outlook for the US economy appears increasingly challenging with limited immediate solutions.

The commercial real estate market is experiencing a significant downturn, especially in the office sector where vacancy rates have surged. Experts predict up to 1 billion square feet of unused office space by decade's end. The current vacancy rate is close to historical highs. With higher interest rates reducing property appeal and causing asset value declines, the market's recovery appears to be years away. This slump extends beyond offices to sectors like hotels and shopping centers, compounded by rising commercial mortgage delinquencies. The situation is part of a broader economic downturn, with a recession and stock market declines expected. The commercial real estate correction is just beginning, signaling more difficulties ahead.

"Resilient" American consumers are digging into their retirement funds to pay their bills.
Mainstream financial pundits, politicians, and Fed officials keep telling us the economy is strong because Americans keep spending money. They just assume this is a sign of economic strength without ever asking exactly how they're paying for all of this "robust" spending.

Inflation robs you of purchasing power by driving up the price of everything you buy. You see the impacts of inflation every time you go to the store. But sometimes inflation hits you in a more subtle way that's difficult to see - through "shrinkflation."
I experienced shrinkflation first-hand last weekend.

Is the International Monetary Fund suggesting that "Gold is no longer a barbarous relic? "  Many central bankers are considering this excellent question.  Unfortunately, the IMF Gold Report totally excludes the most important factor why central bank gold reserves will surge in the future...