Precious metals news

Real estate and banking authorities have issued a stern warning to the Federal Reserve, urgently pressing them to cease interest rate increases amidst skyrocketing housing prices and a severe lack of available homes. Their letter to the Fed and Chair Jerome Powell paints a dire picture of the housing market, emphasizing the detrimental consequences of the current monetary policy.

Janet Yellen, via a recent statement to the press, implies that interest rates will be much lower than current levels for the next 10 years. She is treading carefully amidst rising interest expenses. Though the Fed is combating inflation, the critical need for lower rates is clear. A CBO graph by Bianco Research shows interest costs could overwhelm tax revenues, suggesting that without maintaining lower interest rates, the nation faces potential bankruptcy.

High interest rates are causing concern among World Bank officials due to potential impacts on nations with large debts. The World Bank predicts prolonged elevated borrowing costs leading to slowed global growth. Past situations with high rates resulted in many economies going bankrupt, suggesting similar challenges may arise for heavily indebted countries.

Former Walmart U.S. CEO, Bill Simon, warns that consumers are facing challenges not seen in a decade, due to factors like inflation, higher interest rates, budget issues, polarized politics, student loan debts, and escalating tensions in Israel. These pressures are causing consumer caution, leading to a potential slowdown in spending.

The US is flagged as one of the worst performers among major economies, with its debt trends alarming. Government debt is predicted to approach 100% of global GDP by decade's end. The US deficit is set to exceed 8% of GDP this year and hover around 7% in five years. The surge in the 2022-2023 deficit is attributed to a sharp revenue drop. After recent political disputes in Washington, the IMF emphasizes the need to adjust policy ambitions or tax approaches to ensure financial stability.

Wholesale prices in September surged more than anticipated, underscoring escalating inflationary pressures in the U.S. economy. The producer price index shot up by 0.5%, significantly surpassing the predicted 0.3%, according to the Labor Department. This inflationary trend was predominantly fueled by goods prices, notably with gasoline prices skyrocketing by 5.4%. Despite the Federal Reserve's aggressive interest rate hikes to curb inflation, these mounting pressures show no sign of abating.

After a more than 3-year pause, government student loan repayments started again this month and it's already putting the squeeze on borrower's wallets. This is bad news for an economy already strained by massive levels of debt and rising interest rates.
Interest accrual on student loans resumed on September 1 with the first payments coming due in October.

The Reserve Bank of Zimbabwe (RBZ) has launched a digital payment system backed by physical gold.
The RBZ rolled out its digital gold-backed token in April after successfully implementing a program to produce physical gold coins in 2022. On Oct. 5, the central bank announced that these gold-backed digital tokens could be used as a method of payment for domestic transactions.

I write a lot about the national debt.
And most people don't care.
That's because there's a widespread belief that the dollar is invincible.
It isn't.

Today's big news was the Giant Shale Permian Merger of Exxon & Pioneer.  But, why would Exxon buy Pioneer if there is BIG TROUBLE brewing in the Permian?  Good question.  I provide my analysis with an update on the Texas & New Mexico Permian and why Exxon overpaid dearly for Pioneer...

Hedge fund magnate Paul Tudor Jones expressed concerns over increasing geopolitical risks and the U.S.'s rising debt, making stocks less appealing. Speaking on CNBC's Squawk Box, he highlighted the precarious U.S. fiscal situation, the worst since World War II. Jones warned of a vicious cycle where rising interest rates amplify funding costs and debt, leading to further financial strain. He believes bitcoin and gold offer better investment opportunities in the current scenario.

Germany, a leading global economy, is heading towards a recession, facing consecutive monthly drops in wholesale prices, indicative of a broader deflationary trend. Both exports and imports have plummeted, with trade being a significant driver of the German economy. Past supply chain disruptions masked this decline, but deflation is now highlighting the issue. Challenges like an energy crisis, strained relations with Russia, and dependence on a slowing China further weaken Germany's position. The country is in no shape to stimulate global economic growth.

The US economic growth is artificially sustained by extreme fiscal stimulus and significant deficits. Domestic savings can't support this borrowing level, and global creditors are hesitant too. Rising US Treasury yields aren't due to inflation but rather a "credit crunch" by global bond investors skeptical of Washington's fiscal behavior. This results in speculation that the Federal Reserve will have to intervene massively. Many indicators, like declining home sales and the precarious position of many banks, suggest potential economic fragility. As uncertainties loom, traditional safe havens like long-term government bonds or gold may offer protection.

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Inflation and stagflation historically lead to devastating societal impacts, often unnoticed until they become overwhelming. Current sentiments in the US reflect rising concerns, with many citizens believing their life quality has deteriorated. Inflation acts as a silent tax, exacerbating societal issues when central banks introduce prolonged interest rate hikes. This combination of inflation and debt poses significant risks to the US economy. As inflation grows, we can anticipate labor strikes, increasing crime, more frequent looting, population migrations, and potential balkanization.

Sen. Bill Cassidy proposes a risky Social Security "solution" by creating a separate $1.5 trillion fund to be invested in the volatile stock market. While he envisions this fund growing over 70 years, such investments are unpredictable. Cassidy claims this might cover 75% of the deficit, but this approach leaves a concerning 25% gap and raises questions about the long-term viability of his plan.

The potential U.S. government shutdown could negatively impact the GDP. Despite stopgap measures, the real issue is rising deficit spending and a ballooning public debt, currently surpassing $33 trillion. The Biden administration's projection hints at a $14 trillion deficit by 2032. Such fiscal irresponsibility risks future economic stability, potentially leading to increased taxes, lower growth, and inflation.

Rising rates on overnight repurchase agreements are impacting liquidity, extending into areas like T-bills and bank credit. This exacerbates challenges for financial institutions already facing difficulties from the highest US benchmark rates in over two decades. The surplus cash from pandemic-related injections is now depleting, further straining the system.

"I haven't seen any evidence of dysfunction in connection with the increase in interest rates," Yellen told the Financial Times. Yellen also said she is not concerned about a repeat of this spring's bank failures, which were triggered by rising rates, saying that credit quality overall was "very solid."

The IMF has increased its global inflation projection to 5.8% for next year while cutting the economic growth forecast for 2024. Inflation is expected to exceed central bank targets in most countries until 2025. This outlook coincides with global uncertainties, including the recent attacks on Israel and the aggressive interest rate hikes by major economies to tackle soaring inflation.