Precious metals news

Gold prices dropped to a near two-week low due to a stronger dollar, as the market anticipates interest rate directions from upcoming Federal Reserve speeches. Spot gold fell 0.5%, and gold futures declined 0.8%. The dollar's rise makes gold costlier for international buyers. Investors are now focused on Fed Chair Jerome Powell's upcoming addresses for potential rate insights.

U.S. housing is at its least affordable since 1984, with record-high monthly payments due to 23-year peak mortgage rates. The typical home payment consumes 41% of household income, well above the historical average. Significant mortgage rate drops, income increases, or price reductions would be needed to improve affordability.

Minneapolis Fed President Neel Kashkari asserts that the fight against inflation isn't over, indicating readiness for further rate hikes if needed. Despite recent stable rates, Kashkari remains cautious, emphasizing the need for more economic data to determine future actions. He notes ongoing economic strength, suggesting no immediate rate cuts are on the table until inflation significantly slows.

Foreign companies are withdrawing profits from China, with over $160 billion taken out over six quarters through September, marking a shift in foreign investment patterns as growth slows and U.S.-China tensions rise. This has led to China experiencing net foreign direct investment loss for the first time in 25 years, contributing to the depreciation of the yuan and reflecting concerns over geopolitical risks and the attractiveness of financial returns elsewhere.

Emerging markets are facing a severe debt crisis due to high US interest rates and a strong dollar, with 23% of these countries paying borrowing costs over 10 percentage points higher than US rates, up from less than 5% in 2019. This has pushed their debt service costs to the highest levels since 2010, leading to defaults in countries like Ghana and Sri Lanka and leaving others on the edge. High borrowing costs are squeezing economies, reducing access to international finance, and forcing governments to adopt austerity measures, which may stifle economic growth and exacerbate fiscal deficits.

The Eurozone economy is in a deep slump, with key PMI indicators signaling contraction. Despite energy price drops and ample stimulus, growth is absent, hindered by central planning and inefficient allocation to unproductive sectors. High government spending and regulatory costs, especially in energy, undermine competitiveness. The ECB's challenge is not inflation versus growth, but choosing between stagnation and stagflation amid government pressure to maintain easy monetary policies.

President Biden keeps saying the economy is great. Fed officials say the economy is expanding at a "strong pace."
Peter Schiff isn't buying the narrative.
He says we may already be in a recession and he made a strong case in his podcast.

President Joe Biden is selling the latest proposal to send military aid to Israel and Ukraine as an economic stimulus plan. But this notion that spending money for somebody else's war somehow boosts the American economy is rooted in a pervasive economic fallacy.
When you boil it all down, Biden is basically saying that the spending isn't really foreign aid. It's corporate welfare.
Ron Paul asks the operative question: should that make us feel better?

The Federal Reserve operates under a dual mandate from Congress — to achieve maximum employment and stable prices. In a recent podcast, Peter Schiff explained why the Fed won't achieve either.

China, the world's top gold producer, has been actively buying gold internationally, with its central bank purchasing 181 tons out of the global central bank total of 800 tons in the first nine months of 2023. This surge in gold reserves, now at 2,113 tons, reflects China's strategy to diversify away from the dollar amidst financial and geopolitical uncertainties, and could also be a hedge against potential sanctions similar to those faced by Russia and Iran. While transparency is limited, this trend is part of China's broader move to reduce dollar dependency and possibly strengthen its own currency.

In Q3 2023, central banks worldwide purchased 337 tons of gold, marking a significant investment in the precious metal, as reported by the World Gold Council. This activity underscores a trend of consistent high demand, with implications for a considerable total gold accumulation by the end of the year. Central banks' strategy reflects a diversification effort and a hedge against volatility, indicating the value placed on gold in the current economic climate.

Hedge funds' record short positions in Treasury futures triggered a cascade of events leading to an abrupt reversal in yields. The Treasury market experienced volatile shifts, partly fueled by a popular but risky leveraged trade known as the basis trade. These dynamics, amid regulatory scrutiny, have raised concerns over financial stability and prompted proposed reforms targeting hedge fund activities in the Treasury market.

The U.S. is witnessing the dire consequences of a soaring $33 trillion national debt, with the government forced to issue more Treasury securities than the market can absorb, driving up interest rates. This hike in borrowing costs impacts consumers and businesses, adding stress to the economy. With the deficit reaching $2 trillion in fiscal 2023 and a startling Treasury announcement to borrow $1 trillion in just one quarter, the pressure on financial markets is intensifying, contributing to a downturn in stocks. Partisan politics has hindered any real solutions, leaving the nation with no credible plan to manage the debt as it spirals out of contro

Inflation has significantly increased mortgage rates by 174% under Biden's tenure, exacerbating the affordability crisis in housing as the tilt effect causes a heavier financial burden early in the mortgage period. Additionally, the 10-year Treasury yield has soared by 402%, complicating the refinancing of the U.S.'s substantial debt. Despite these challenges, record call volume in TLT (iShares 20+ Year Treasury Bond ETF) was observed on Friday, signaling a notable event in the market.

China is likely facing deflation again as October's consumer prices dropped, with a continuous decline in producer prices for over a year. This persistent price weakness suggests a faltering economic recovery and may prompt the central bank to cut reserve requirements to bolster the economy. Despite government efforts to stimulate trade and imports, economic indicators point towards a deepening downturn.

China has reduced its U.S. Treasury holdings to the lowest level in 14 years, fueling speculation about its intentions and contributing to a potential bond rout in the U.S. Some suggest this sell-off is to support the yuan as it faces capital flight and hits its lowest value against the dollar since 2007. Analysts see China's actions, including possible intervention by state banks, as a defense mechanism for the yuan, amidst a broader economic slowdown and decreasing foreign reserves. This trend raises concerns for U.S. bond yields and poses a new challenge for global financial stability.

The U.S. is facing a significant Treasury bond crisis, with yields soaring to levels not seen since the global financial crisis, raising alarms over the country's ability to attract enough buyers for its massive debt issuance. This trend signals a deepening concern about the sustainability of the U.S. fiscal policy, with a budget deficit ballooning to 8% of GDP and no political will to curb spending. Key foreign investors are pulling back, and while domestic buyers are stepping in, the shift may not be enough to stabilize the market. This financial turbulence underscores the pressing need for a reassessment of U.S. debt dynamics.

The price of a currency, crucial in the global economy, is shaped by supply and demand dynamics. Central banks impact short-term interest rates, but the underlying "natural rate of interest" reflects the equilibrium between savings and investment, keeping inflation stable. Over the last 30 years, this natural rate for currencies has fallen, largely due to slower economic growth affecting investment demand.

The global diesel and jet fuel shortage may lead to economic trimming of non-essential sectors and could cause central governments, especially those with large pension obligations, to fail. Political stalemates, like the ones in the U.S., could hasten such collapses, possibly ending federal programs and leaving states to manage independently.

A former White House economist suggests that BRICS nations, with their growing influence and control over global precious metals markets, could threaten the US dollar's supremacy in global trade. Despite the skepticism of some experts, the BRICS' increased economic clout, especially with new members like Saudi Arabia, could chip away at the dollar's dominance.