Precious metals news

The bond market is experiencing intense conflicts, dubbed "covenant wars," as companies exploit weakening debt terms to pit creditors against each other. Over the past decade, covenants protecting lenders have eroded due to low interest rates and fierce competition to lend to riskier, higher-yielding companies. Now, with rising interest rates causing financial strain, companies are increasingly using tactics to circumvent covenants, often by favoring new creditors over existing ones. This trend is causing concern among investors about the stability of the high-yield debt market and is even spreading to the traditionally more cooperative private credit sector.

Goldman Sachs advises investors to invest in gold as the Federal Reserve is expected to cut interest rates soon. Despite a slight dip from its all-time high, gold has risen nearly 22% this year, making it the second-best performing asset after cryptocurrencies. Goldman Sachs views gold as a preferred safeguard against geopolitical and financial risks, supported by central bank purchases in emerging markets. The firm has set a target price of $2,700 per ounce for 2025, recommending a "long gold" position as the metal's upward trajectory continues.

A recent Federal Reserve Bank of San Francisco study suggests that U.S. housing inflation is expected to decrease in the coming year as housing supply and demand balance out. This decline in housing costs is likely to contribute to overall lower inflation rates. Despite the Fed's efforts to curb inflation through interest rate hikes, housing costs have remained stubbornly high. However, the researchers predict that shelter inflation could drop to around 2% by year-end, before settling back to pre-pandemic levels of about 3.3% next year.

The U.S. stock market experienced a significant selloff, driven by growing concerns about a potential recession amid weak manufacturing data and anticipation of upcoming jobs reports. This volatility has spread globally, affecting markets in Europe and Asia, particularly hitting tech stocks hard. Investors are now reassessing their optimism about potential interest rate cuts and seeking safer assets as they brace for potential economic challenges ahead.

Gold prices continued to decline on Wednesday, falling to a two-week low despite a broad market sell-off. This unexpected behavior is attributed to investors selling gold to cover margin calls in other markets, particularly equities. The precious metal's weakness persists ahead of important U.S. economic data releases, including non-farm payrolls, which could influence Federal Reserve rate cut expectations.

While there is a lot of FAKE NEWS in the media, I decided to discuss some of the Fake News that is taking place in the precious metals industry.  In this update, I cover what I believe are Two Fake News events taking place, but this is only the Tip of a massive Iceberg....

UBS predicts a bullish outlook for gold in 2024 and beyond, forecasting prices to reach $2,600 per ounce by the end of 2024 and potentially exceeding $2,800 over the next two years. This optimistic projection is based on strong central bank purchases, sustained physical demand, and ongoing macroeconomic and geopolitical uncertainties. UBS analysts believe these factors have effectively raised gold's trading range and will continue to support higher prices, even as they expect some seasonal quietness during the summer months. The bank also sees potential upside catalysts in the second half of 2024, including the U.S. elections and concerns about the U.S. fiscal deficit.

In July 2024, central bank gold demand surged, with net purchases more than doubling to 37 tonnes despite rising gold prices. The National Bank of Poland led the buying, followed by Uzbekistan and India's central banks. This marked the highest monthly total since January, indicating a strong commitment by central banks to accumulate gold. The ongoing demand is expected to continue, as central banks seek to bolster their reserves amidst economic uncertainties.

Ukrainian President Volodymyr Zelenskiy has renewed his plea for air defense systems following a devastating Russian missile attack that killed at least 41 people and wounded over 180 in Poltava. The strike, which targeted a military educational facility and a nearby hospital, is one of the deadliest since Russia's invasion began in 2022. Zelenskiy emphasized the urgent need for air defense systems and long-range strike capabilities to protect Ukrainian civilians from further Russian attacks, highlighting the human cost of delays in providing such support.

The Argentine province of La Rioja has introduced its own currency, the "chacho," to combat economic hardships resulting from President Javier Milei's austerity measures. Governor Ricardo Quintela implemented this quasi-currency to stimulate the local economy after federal funding cuts led to provincial default. The chacho, distributed to government employees as bonus payments, is accepted by local businesses at a 1:1 ratio with the peso. While the move has provided some economic relief, it also highlights the financial struggles of provinces under Milei's strict fiscal policies and raises questions about the sustainability of such local currency initiatives.

The August jobs report, set to be released on Friday, is a crucial economic indicator that could influence the Federal Reserve's decision on interest rate cuts in September. Following a volatile month in the markets, investors are eager to see if July's weaker-than-expected job growth was an anomaly or the start of a broader economic slowdown. Economists expect the U.S. economy to have added 163,000 jobs in August, with the unemployment rate potentially decreasing to 4.2%. The report will be closely watched for signs of labor market resilience and its implications for monetary policy.

Canadian stock futures declined on Tuesday due to falling oil prices and investor focus on the upcoming Bank of Canada policy decision. The energy sector faced pressure from lower oil prices linked to China's sluggish economic growth, while the materials sector was affected by easing gold prices and falling copper prices. Investors are anticipating a potential third consecutive rate cut by the Bank of Canada, with attention also on upcoming economic data including Canadian manufacturing PMI and U.S. jobs reports. These factors are influencing market sentiment and expectations for both Canadian and U.S. monetary policy decisions.

Argentina's central bank has sent a portion of its gold reserves abroad for financial validation, potentially to use as collateral for future financing. This move could provide the country with much-needed financial flexibility amid low international reserves and economic challenges. The central bank confirmed the transfer but did not disclose specific details, citing confidentiality. This action underscores the ongoing economic difficulties faced by President Javier Milei's administration, including the struggle to lift currency controls and manage debt obligations.

Earthquakes may be the key to forming large gold nuggets through a process involving piezoelectricity in quartz. When quartz is subjected to seismic stress, it generates electric fields that can extract gold from surrounding fluids. This process causes gold to accumulate on existing particles, potentially explaining how substantial nuggets form despite low gold concentrations in underground fluids.

Gold prices remain stable as investors await U.S. employment data, which could influence the Federal Reserve's decision on interest rate cuts. The market is split between expectations of a 25 or 50 basis point reduction in September. Upcoming economic indicators, particularly Friday's payrolls report, will be crucial in determining gold's trajectory. A weaker jobs report could fuel recession fears and support gold prices, while stronger data might lead to a decline. Gold typically performs well in low-interest-rate environments and is seen as a hedge against economic uncertainty.

Is the United States natural gas market heading into a supply deficit by the end of the year?  And why do I believe the next six months will be Critical for Bitcoin but not precious metals?  What happens to Bitcoin could have a direct and positive impact on gold and silver...

A potential oil spill stretching 2.2 nautical miles has been detected near the Sounion tanker in the Red Sea, following an attack by Houthi rebels earlier this month. The Greek shipping authority reported this finding to the UN maritime agency, based on satellite imagery from the European Maritime Safety Agency. While the exact nature of the spill is unclear, with US officials stating the main cargo remains intact, there are concerns about potential fuel leakage from the damaged engine. The situation poses a significant environmental threat to the Red Sea, prompting Greece to call for international assistance in addressing the hazard and resolving the crisis involving the Greek-flagged vessel carrying 150,000 tons of crude oil.

Vice President Kamala Harris has firmly stated that she will not ban fracking if elected president, despite her previous support for such a ban in 2019. This shift in stance reflects her evolving perspective on balancing environmental concerns with economic realities, particularly in key swing states like Pennsylvania where fracking is a significant industry. Harris emphasizes that while her position on fracking has changed, her commitment to addressing climate change remains strong, pointing to the Biden administration's investments in clean energy through the Inflation Reduction Act. This stance aims to appeal to both environmentally conscious voters and those concerned about energy sector jobs and costs.

Bank of America strategists are recommending investors consider replacing bonds with commodities in the traditional 60/40 investment strategy. They argue that commodities may offer better returns in a high-inflation environment, with annualized returns of 10-14% since the decade's start, compared to significant losses in 30-year US Treasuries. The strategists believe a long-term commodity bull market is beginning, driven by factors like debt, demographics, and inflationary policies. However, they still view bonds as the best hedge against a potential economic hard landing in the US.

South Africa's platinum mining industry is facing a significant downturn due to declining prices, reduced demand, and years of underinvestment. Northam Platinum CEO Paul Dunne predicts a 10% drop in South African platinum output over the next five years, from 3.9 million to 3.5 million ounces annually. This decline is attributed to aging mines, lack of new investments, and the growing popularity of electric vehicles, which don't require platinum-based catalytic converters. The industry's struggles are exemplified by Northam's 81.6% drop in headline earnings per share and an overall slump in platinum, palladium, and rhodium prices.