Precious metals news

Ray Dalio, founder of Bridgewater Associates, warns that the soaring U.S. government debt, now at $33.7 trillion, is nearing a critical point. The rapid 45% increase in debt since early 2020 and a $1.7 trillion deficit last year have escalated the financial burden, with $659 billion spent on debt interest in fiscal 2023. Dalio highlights the danger of this trend, noting that the U.S. is reaching an inflection point where continued spending and borrowing will exacerbate existing political and social issues. Additionally, he points out a supply-demand problem in U.S. Treasurys, with foreign buyers, who constitute 40% of the market, reducing their holdings significantly.

U.S. government spending has skyrocketed, with $6.3 trillion spent as of Q2-2023, and mandatory expenses consuming 113% of revenue, requiring heavy debt issuance. Since 2008, Congress has abandoned traditional budgeting, contributing to this financial strain. Soaring deficits and debts now challenge fiscal sustainability, with interest payments reaching levels not seen since the 1990s. This growing financial burden necessitates serious fiscal responsibility from both political parties and Congress. If left unchecked, especially with a recession looming before the 2024 election, it could trigger significant political upheaval.

The U.S. national debt clock has passed a staggering $33 trillion, which begs the question – what comes next?

Everybody seems convinced that the Federal Reserve has won the inflation fight, there will be no more interest rate hikes, and rate cuts are right around the corner. But as Friday Gold Wrap host Mike Maharrey reminds us, it's not over until the fat lady sings. And she hasn't sung a note. In this episode, he breaks down the latest CPI data and explains why the victory dance might be premature.

The U.S. is grappling with significant financial challenges under the Biden administration, with Treasury Secretary Janet Yellen facing criticism for her handling of government spending. The national debt has soared to $33.7 trillion, translating to a staggering $259,103 per taxpayer, and the debt-to-GDP ratio has reached 138%. Additionally, unfunded liabilities like Social Security, Medicare, and Medicaid have reached an alarming $211.6 trillion, equaling about $629,000 per citizen. Despite claims of economic progress, the reality includes record-high budget deficits, unaffordable rents for many Americans, and a decline in real hourly compensation by 5.1% under Biden's tenure, contradicting the administration's narrative of successful economic policy.

The U.S. Treasury Department faces mounting challenges due to increasing deficits and diminished investor interest in long-term U.S. debt. As high interest rates turn investors away from longer-term Treasurys, the Treasury is being forced to deviate from its traditional approach of "regular and predictable" debt sales. This shift signals potential instability and increased complexity in managing the nation's burgeoning deficit.

Crude demand is waning, with China, the largest oil importer, reducing refinery processing rates in October and US unemployment benefits hitting a nearly two-year high. This indicates a slowdown in oil consumption in both the world's largest oil importer and the biggest crude consumer, hinting at a deflationary trend in the global crude market.

Brad Gerstner, CEO of Altimeter Capital, warns that AI will lead to the largest displacement of human labor in capitalism's history. This shift won't result in immediate mass layoffs, but rather a gradual impact on employment trends. AI's efficiency improvements mean companies can achieve more with fewer employees. For instance, a 50% increase in engineer productivity coupled with a company's 20% growth rate could eliminate the need for additional engineering hires. This slow yet profound change in hiring practices due to AI advancements will significantly reshape the job market.

The Pentagon has once again failed its annual independent audit due to insufficient financial data for a full evaluation. Despite efforts to audit its $3.8 trillion in assets and $4 trillion in liabilities, the Defense Department has yet to pass any audit since they became federally required in 2018. This consistent failure highlights ongoing challenges in the department's financial accountability and transparency.

The Biden-Xi meeting, despite diplomatic overtures, doesn't change China's goal to outpace U.S. global dominance. Minor agreements on climate and AI don't soften the core strategic rivalry. China's military and tech advancements signal its intent for regional and global influence. This evolving competition underscores the stark reality of the U.S.'s challenge in maintaining its international leadership role.

Well... there have been some interesting things happening in the Silver Market that I thought I'd share in this update.  You have to see how much silver India imported last month... WOW!!  I also answer some of the excellent questions from the GoldMoney post...

Gold prices surged 1.1% to $1,986 per ounce following unexpectedly high US jobless claims, signaling a potential economic slowdown. This development has led to market speculation that the Federal Reserve might pause its rate hikes in December, after significant increases in recent months. The likelihood of rates remaining unchanged next month is now nearly 100%, as per the CME FedWatch tool.

In 1923, Germany halted its central bank's debt monetization and introduced the Rentenmark to address hyperinflation. This crisis stemmed from World War I, when the gold-backed Reichsmark was suspended and excessive paper money printing began to fund the war and reparations. The situation deteriorated with political turmoil and foreign occupation, leading to economic chaos. This underscored the perils of unchecked fiat currency systems and highlighted the need for stringent monetary reforms.

The U.S. uniquely sets its interest rates and maintains an open capital account without pegging the dollar, exploiting its "exorbitant privilege" as the dominant global reserve currency. This allows the U.S. to print dollars without needing foreign exchange. However, this advantage is increasingly challenged as nations, especially BRICS countries, seek alternatives to the dollar-centric system to avoid dependency and sanctions. This shift signals a potential decline in the dollar's dominance, hinting that its reign might be nearing an end.

Brace yourself for this one.

Cathie Wood, head of ARK Investment Management, predicts deflation across various industries in the United States, leading to significant interest rate cuts by the Federal Reserve. She believes the Fed has been too aggressive with rate hikes and expects the consumer price index inflation rate to potentially turn negative next year. Wood notes the deflationary trend, initially in commodities, is now spreading to airline and auto prices. She attributes this expected era of falling prices to advancements in technologies like AI, electric vehicles, and blockchain, while also warning of the risks of a deflationary bust due to the Fed's policies.

Walmart CEO Doug McMillon expects deflation in the U.S. in the coming months, potentially leading to lower prices for consumers. Despite Walmart's Q3 profit and sales beat, their stock dropped due to lower-than-expected 2023 guidance. McMillon cited high food prices as a concern but noted declining general merchandise prices could benefit Walmart in the holiday season. The Bentonville, Ark.-based retail giant (WMT) posted net income of $453 million, or 17 cents a share, for the third quarter, after a loss of $1.8 billion, or 66 cents a share, in the year-earlier period.

A recent Gallup poll reveals a historic low in American confidence towards key institutions and leaders. Trust in the federal government, big business, media, education system, scientific and medical establishments, big tech, and law enforcement is at an all-time low, highlighting a significant crisis in public faith and confidence in these fundamental societal pillars.

The Federal Reserve's latest study reveals a troubling trend: most American households, especially those not among the wealthiest 20%, have depleted their extra savings accumulated during the COVID-19 pandemic. As of June, these households, adjusted for inflation, have lower bank deposits and liquid assets than before the pandemic. This contrasts sharply with the initial pandemic phase, where government aid and limited spending options led to a build-up of excess savings.

The technical position for gold is looking very positive for higher prices. But technical analysis should be backed by fundamentals.
To a large extent fundamentals are in the eye of the beholder, whose opinions in any situation can vary from positive to negative and everything in between. But even for the economic optimists, there are gathering clouds on the horizon likely to continue undermining the global economic outlook, the dollar, and all financial asset values. Fiat currencies are being downgraded relative to real money, which is gold.
Current thinking is that inflation is a diminishing problem and that the interest rate spike is over. In this article, I point out where inflation expectations err and the mistake of believing that interest rate control is the solution.
It follows therefore that G7 debt traps are a more serious problem than generally realised. Furthermore, China and Russia are aware of the likely impact of current events on G7 currencies, and this i...