Precious metals news

Congress, led by Republicans, is struggling to agree with President Biden and Senate Democrats on long-term funding, with a likely short-term bill instead. Despite the staggering $32 trillion national debt, spending cuts seem improbable. Both parties are heavily inclined towards welfare-warfare expenditures. The U.S.'s credit rating downgrade by Fitch was brushed aside by officials, relying on the Federal Reserve's low interest rate strategy. However, this approach has spiked Americans' living costs. With increasing debt, the U.S. faces potential economic collapse and political upheaval, jeopardizing liberty.

Joe Biden claimed "Bidenomics" boosted real wages for low-income earners. However, after adjusting for inflation, wages seem to have declined. Following significant monetary growth in 2020–21 due to Fed policies, unexpected inflation emerged, contradicting the Fed's "transitory" predictions. Ludwig von Mises' concept of "forced saving" suggests inflation might compel lower earners to curtail consumption as prices rise faster than wages. Current data, however, shows wages lagging behind inflation, making Biden's assertion questionable. In essence, the data, combined with Fed actions, challenges the notion that "Bidenomics" has benefited lower earners.

Philadelphia Fed President Patrick Harker expressed skepticism about the need for further interest rate hikes by the U.S. central bank. At the Fed’s annual research conference in Jackson Hole, Wyoming, Harker mentioned, "Right now I think that we've probably done enough" and suggested that it might be prudent to maintain the current rates to observe their impact on the economy. His comments are significant as they come ahead of a keenly awaited speech by Fed Chairman Jerome Powell. Given Harker's voting status in the Federal Open Market Committee, his perspective adds to the ongoing debate about the direction of future rate decisions, especially after the rate increase in July.

From a high-stakes BRICS Summit to 30-year mortgage rates hitting 7.49%, this week is a whirlwind for global finance and personal economics...

Offices present a significant financial challenge, contributing to over half of the $626 billion of vulnerable debt due by 2025. Since the Federal Reserve began increasing interest rates in March 2022, office values have plummeted by 31%. The decreasing property values and escalating refinancing costs due to higher interest rates are raising alarms about potential defaults. Prominent investors, including Blackstone Inc., Brookfield Corp., and Goldman Sachs Group Inc., have already defaulted or surrendered offices. Banks hold the majority of this at-risk debt, with $303 billion of these precarious loans set to mature by 2025.

Wells Fargo reports a worrying rise in Americans defaulting on credit card payments, signaling potential economic downturn. Small and medium-sized banks are feeling the strain as delinquencies soar, especially amidst recent major bank failures. Credit card debt has spiked to an unprecedented $1.03 trillion, up 4.6% in the last quarter alone. Amplifying concerns, the average credit card interest rate has peaked at a staggering 20.63%. With many using credit to counteract rising costs, this could result in extended debt periods, making purchases significantly more expensive in the long term.

The retail sector suffered a severe blow this week. Macy's and Kohl's reported significant sales declines, indicating deeper underlying problems. Stock values plummeted across the board, with major brands witnessing sharp drops. Furthermore, Dick's Sporting Goods and Foot Locker also slashed their annual profit targets. This cascading effect of poor performance and lowered expectations paints a dim view for the industry's future.

US jobless claims dropped to 230k last week, but the figures are skewed. Goldman points out two significant distortions inflating these numbers: potential fraudulent filings in Ohio and expanded unemployment eligibility in Minnesota. These distortions contributed to 28k of the initial claims. When these are factored out, initial claims levels closely resemble those from January, indicating the situation might not be as positive as it seems on the surface.

US durable goods orders plummeted by 5.2% MoM in July, marking the steepest decline since the COVID lockdowns, overshadowing the previous surge in June. This decline was primarily driven by a significant drop in non-defense aircraft orders. Defense aircraft orders also decreased. Though Durables Ex-Trans experienced a slight rise of 0.5% MoM, core capital goods orders, indicative of equipment investment, saw only a modest 0.1% increase. The data suggests a volatile and concerning trend in nominal prices.

Inflation is erasing real wage growth, leading to negative real wages. The government's unrestrained spending has led to nearly $1 trillion in annual interest. Corporate bankruptcies in 2023 are at their highest since 2010, with over 400 companies folding, particularly in sectors with significant debts. Corporate interest costs rose by 22%, pressuring businesses to cut costs or even declare bankruptcy. While some companies remain resilient, the S&P 500 earnings are dropping, and the structure of corporate debt has changed since the global financial crisis. Despite creative lending solutions by banks, the pandemic-induced corporate debt increase hints at future financial challenges.

In a difficult year for banks, four major ones collapsed since March, prompting billions to move out of traditional bank accounts. Regulators introduced potential restrictive measures. Midsize banks, with assets between $85 billion and $250 billion, face heightened scrutiny and regulatory changes, leaving them in an uncertain position in the industry. Recently, ratings for several of these banks were downgraded due to falling deposits and the repercussions of higher rates. Zions Bancorporation highlighted increasing deposit costs. Stricter capital requirements are on the horizon, pressuring these midsize institutions.

As the Argentine peso spirals downward, citizens are taking a bold step: they are seeking dollar-denominated jobs as a financial safe haven...

It is slowly coming clear that the fiat dollar’s hegemony is drawing to a close. That’s what the BRICS summit in Johannesburg is all about — rats, if you like, deserting the dollar’s ship. With the dollar’s backing being no more than a precarious faith in it, it is bound to be sold down by foreign holders. Being only fiat, it could even become valueless, threatening to take down the other western alliance fiat currencies as well.
How do you protect your paper wealth from this outcome? Some swear by bitcoin and others by gold.
This article looks at what is likely to emerge as a replacement currency system, and concludes that from practical and legal aspects, bitcoin and the entire cryptocurrency industry will fail with fiat, while mankind will return to gold, as it has always done in the past when state control over currency fails

While the Mighty Permian Shale Field continues to supply a record amount of oil, the rapid increase in the natural decline rate suggests peak production is coming sooner rather than later.  Thus, the Permian is also running up against the RED QUEEN SYNDROME. It's truly amazing how the Shale Industry...

Amid rising inflation and concerns over the U.S. dollar's future as the global reserve currency, both governmental and private sectors are considering gold and precious metals as potential safeguards. U.S. Rep. Alex Mooney has proposed the "Gold Standard Restoration Act," suggesting that linking the dollar to a fixed weight in gold could bolster its international reputation. In Texas, efforts are underway to enable commerce using gold through the Texas Gold Depository. Previously, the U.S. dollar was backed by gold, providing stability, but that link was severed in 1971. Today, with global economic uncertainty and countries like China seeking alternatives to the dollar, there is a renewed interest in a gold-backed monetary system. Notable voices like Ron Paul emphasize the importance of sound money rooted in tangible value, like gold, to ensure economic stability and resilience.

Drawing parallels with the 1970s, precious metals like gold and silver have displayed promising trajectories. By 1974, silver had a notable rally, surging 125%. Central banks' robust gold buying activities have dampened the effects of sell-offs and have influenced trading patterns. Silver, meanwhile, has experienced heightened selling pressure due to the absence of central bank buying, making its market more bearish. However, recent trading trends suggest potential buy signals for silver. Even though the market may face challenges with expected rate hikes by the Fed, if the trends of the 1970s persist, we can anticipate a explosive upswing in the precious metals market.

Several payroll reports and new home sales data under the Biden administration have been consistently revised downwards. Today, the Bureau of Labor Statistics (BLS) highlighted an overestimation in US job growth, with an expected downward revision of at least 306,000 jobs. This data is based on a more comprehensive source than prior reports. Further negative revisions are anticipated in 2024, potentially decreasing job counts even further.

America's major entitlement programs, Medicare, Medicaid, and Social Security, face imminent bankruptcy. Consuming $2.7 trillion of the 2023 federal budget, these programs are strained by an aging population and declining birth rates. Medicare's reserves might deplete by 2031, while Social Security's could run out by 2033, causing a 23% cut in benefits. The future of these programs is uncertain, and their potential insolvencies threaten to impact millions of Americans.

Global PMIs are showing signs of improvement despite disappointing European data. The US and European PMIs were weaker than expected, with manufacturing globally still in a recession. However, a notable trend is the gradual increase in DM manufacturing PMIs over recent months, indicating some recovery from low points. Historically, when more DM manufacturing PMIs rise, the dollar weakens. This pattern, combined with the current data and the "dollar-smile theory," suggests that the dollar's recent rally is likely to fade, leading to a resumed downward trend.

Gold remains in demand among money managers, with none planning to reduce their exposure over the next year, despite the metal's recent price dip. A survey from Bloomberg News indicated a prevalent optimism regarding gold's price prospects for 2024. Many predict a rise in prices, with some even forecasting an all-time high. Key factors influencing gold's allure include uncertainties in the global economy, geopolitical tensions, and its reputation as a diversification tool in investment portfolios. Current gold price sits near $1,900 an ounce, with some experts, like Darwei Kung of DWS Group, projecting a record peak at $2,250 an ounce in the foreseeable future.