Precious metals news

JPMorgan Chase & Co. is forecasting gold prices to exceed $2,000 an ounce by the end of this year and reach new highs in 2024 as interest rates begin to decline.

With escalating political instability and a worsening fiscal situation, the U.S. credit rating has been downgraded from AAA to AA+ by Fitch. Global markets are rattled as this downgrade reflects a potential economic crisis. Elliot Hentov of State Street Global Advisors implies that one doesn't need to be a genius to see the poor fiscal profile and the deficient governance of U.S. public debt. Moreover, when queried about the likelihood of the U.S. regaining its AAA status with Fitch in the near future, Hentov emphatically answered, "no."

American credit card debt has hit crisis levels. With average balances at a record $7,300 and median savings at only $5,300, delinquency rates are escalating for the sixth consecutive quarter, last seen in 2008. Total credit card debt has surged past $986 billion, with some states nearing $10,000 in average debt. Interest rates have peaked at 25% and may soon cross 30%. As living costs rise, Americans are increasingly borrowing, exacerbating this worrying debt situation.

The year-on-year percentage fall is at a historical second-worst, surpassed only by the Great Financial Crisis. Alarmingly, federal tax receipts continue their downward trend, nearing an unsettling -10% on a year-on-year basis - a warning signal of the ongoing economic downturn. There is a stark contradiction between these indicators and the overvalued state of financial assets, highlighting an underlying and worsening economic situation.

The U.S. federal deficit is ballooning to a shocking $2.25 trillion run rate, far surpassing the $1.3 trillion of fiscal 2022. Skyrocketing interest costs, accelerated by the Fed's rate hikes, and an imminent need to roll over $9 trillion in maturing notes over the next two years, pose severe funding challenges. Amid dwindling foreign investment, political wrangling over the debt ceiling, and comparisons to third world economies, the fiscal situation in the U.S. is deteriorating rapidly.

Former U.S. Treasury chiefs Hank Paulson and Timothy Geithner have voiced concern over the U.S.'s escalating fiscal trajectory, warning of potentially painful solutions if action is not taken soon. They argue for proactive measures to address burgeoning deficits, projected by the Congressional Budget Office to reach $20 trillion over the next decade, with public debt poised to hit record levels.

If we look at the "Realistic Total Costs" to produce silver, First Majestic needs more than the market price to break even.  Again, this is my analysis which is much different from the industry's AISC - All In Sustaining Cost, which I discuss in my newest Video Update...

Despite a brief dip in response to a strengthening dollar and rising bond yields, the long-term outlook for gold remains positive. Over the past two decades, gold has consistently shown its value as a safe-haven asset during periods of economic uncertainty. While fluctuations are natural in any market, gold's steadfast rise underscores its enduring appeal to investors. Today's dip should be viewed in the broader context of gold's upward trend, rather than an indication of future performance.

The "soft landing" narrative has historically been a comforting yet risky belief that the economy can gradually slow down without entering a recession. This narrative has been disproven during major economic downturns, notably in 1989, 2000, and 2007. In each case, signs of economic instability were overlooked, and a hard economic downturn followed. Over-reliance on the "soft landing" belief in today's economic climate, despite clear red flags, may risk repeating these past mistakes and leading to a significant economic fallout.

The U.S. Treasury is increasing its quarterly sales of long-term debt for the first time in over two years due to rising borrowing needs. This has contributed to Fitch Ratings downgrading the U.S. credit rating from AAA to AA+. The debt surge, part of the Biden administration's deficit-focused policy, may lead to the U.S. hitting $1+ trillion in interest payments soon. Analysts predict this could lead to higher yields and potentially require another round of quantitative easing from the Federal Reserve.

Rising global food prices are outpacing overall inflation, with Canada experiencing a 9.1% YoY increase. The US is facing a similar fate, with all food prices expected to increase 6%, within a prediction interval of 5% to 7.1%, according to the US Department of Agriculture. These prices, amplified by factors like labor shortages and pandemic disruptions, are expected to remain higher than pre-pandemic levels. Concerns of "greedflation," where grocers use inflation to increase profits, have also been raised. Oxford Economics sees global food prices remaining 25% higher than during the pre-pandemic decade.

Efforts to prevent Social Security insolvency have stalled, likely to resume post-2024 elections, according to Sen. Bill Cassidy. Bipartisan talks led by Cassidy and Sen. Angus King, exploring solutions like adjusting retirement age, failed to produce a plan. Without action, Social Security will only be able to pay out 100% of benefits until 2034, after which there may be a 23% cut in benefits.

In his latest video, Mike explores the untapped investment potential of the groundbreaking Tesla Roadster.

Over 1,000 bank accounts are being closed daily, up from 45,000 closures in 2016-17 to over 343,000 in 2021-22, prompting controversy over "debanking." Banks often cite financial crime concerns with little explanation. The situation has sparked calls for investigation, led by figures like Nigel Farage whose account was closed recently. The closures affect not only politically exposed individuals, but also ordinary citizens and small businesses. Current policy allows banks to provide little to no explanation for these actions.

Global debt is alarmingly high at nearly $305 trillion as of Q1 2023, and expected to grow, causing concern for government leverage amidst rising interest rates and slowing growth. Projections suggest U.S. public debt-to-GDP will reach a record 134% by 2027, raising net debt servicing costs, with the next decade's interest costs on U.S. debt projected at $10.6 trillion. Similarly, China's debt is surging rapidly, predicted to exceed 100% by 2026, with new government debt issuance reaching record levels this year, largely from infrastructure bonds.

Following the Bank of Japan's (BOJ) recent adjustment to its yield curve control program that rattled global markets, Deputy Governor Shinichi Uchida stated that the BOJ is far from exiting its current policy or raising its negative interest rate. He warned that despite market upheaval, the end of the BOJ's negative rate policy is not near, suggesting a challenging economic landscape ahead.

Under Biden's administration, inflation has significantly impacted the middle and low-wage classes, with surges in mortgage rates being a key concern. Mortgage rates have risen by 134%, leading to a 45% decrease in mortgage purchase demand and a 90% decline in refinancing demand. Weekly data from the Mortgage Bankers Association reveals a 3% decrease in mortgage applications, contributing to an annualized increase in US interest expenses of about 50%, approaching $1 trillion.

Despite an overall job addition of 324k in July, the employment report by ADP paints a gloomier picture for some sectors. Manufacturing has been shedding jobs for five consecutive months. Worryingly, wage growth is on a slowdown, rising just 6.2% for those retaining jobs and 10.2% for job changers. This sluggish wage growth could signal troubled waters for the economy.

Despite significant selling by Turkey that slowed net central bank gold buying in the second quarter, central banks added a record amount of gold to their reserves through the first half of 2023.

Is price inflation really heading back toward the Federal Reserve's 2% target?
Most people in the mainstream seem to think so, and the recent drop in the consumer price index (CPI) appears to support this belief. Price inflation has trended downward over the last several months, with the annual CPI falling from a high of 9% last year to just 3% in July. But I don't think the Fed has won the inflation fight and I don't believe the central bank's sanguine inflation outlook is correct.
I think easing price inflation is transitory.