Precious metals news

The world is just beginning to get a WHIFF of the coming ENERGY CLIFF.  The symptoms are beginning to show with the problem of providing ample global diesel supplies.  While the OPEC cuts have contributed to the tightness in the diesel market, a much bigger chronic problem is coming in the years ahead...

It wasn't surprising to see the August CPI - Consumer Price Index rise due to Energy Cost-Push Inflation, but this is just the beginning.  The market has no idea how to function when energy prices remain elevated as the ENERGY CLIFF produces ongoing shortages and energy scarcity...

Gold recovers from three-week lows early Friday, aided by the dollar’s retreat after better-than-expected Chinese data. Traders now turn their eyes to next week’s meeting of the Federal Reserve for guidance. It’s widely expected that the Fed will leave interest rates unchanged.

Chinese gold premiums surged this week, with dealers selling at premiums between $90 and $135 an ounce over global spot prices, a significant increase from $55 the previous week. This spike is attributed to Beijing's efforts to stabilize the depreciating yuan and import restrictions. Also Japan's robust buying at high prices remains noteworthy.

Amid the weakening yen and relentless money-printing by the Bank of Japan, the country's aging population is flocking to gold as an inflation hedge. Yen-denominated gold prices have hit historic highs, and with the yen's further devaluation likely, gold demand in Japan is set to rise. This shift underscores a change in Japanese households' financial strategies, favoring gold over holding depreciating cash. Notably, central banks globally have also upped their gold purchases.

Decades-long disinflationary trends are over, replaced by mounting inflationary signals. The current inflationary path risks leading to either severe economic stagnation or a damaging deflationary or hyperinflationary climax, potentially upending the entire system. Inflationary "rescue" policies have long been the norm.

Housing affordability is in crisis according to a Redfin report, with record deal collapses in August due to skyrocketing mortgage rates and home prices. About 15.7% of home contracts were terminated, the most since mortgage rates surpassed 7% in 2022. High costs are causing homebuyers to abandon deals, with the average 30-year-fixed mortgage rate at 7.27% and monthly payments 20% higher than last year. With housing affordability at historic lows, experts predict prolonged high mortgage rates and reduced housing supply, trapping homeowners.

Despite data indicating rising inflation, the UMich survey reveals that respondents expect decreasing inflation in the near future. Meanwhile, the overall sentiment for September dropped, and consumers are less optimistic about buying conditions. There's also concern that a potential government shutdown could further dampen consumer views on the economy.

Gold prices rose Friday, recovering from a three-week low, as recent inflation data didn't significantly alarm the Federal Reserve. Despite inflation's uptick in August, it didn't heavily impact markets or central bankers. Meanwhile, the European Central Bank indicated a halt on interest rate hikes after a recent increase. Additionally, the U.S. dollar's stabilization also boosted gold, according to analysts.

Goldman Sachs warns of a conflict between anti-inflation efforts and surging debt loads, emphasizing US debt challenges. Rising rates to combat inflation increase government interest costs. Central bank actions limit debt reduction via inflation. Countries prone to high inflation and fiscal laxity are especially vulnerable. As the US faces a forecasted $2 trillion overspending in 2023 and $7.6 trillion of its debt maturing within a year, pressures on rates intensify.

Gold and silver drifted lower this week, before a modest recovery this morning which can be put down to bear closing. In European trading this morning, gold was $1918, unchanged from last Friday’s close after testing the $1900 level yesterday. Silver was $23.05, down 3 cents, after testing $22.30. Comex volumes in gold were moderately healthy, and they picked up in silver yesterday on the sell-off.
The performance of gold and silver has been disappointing for dollar bulls, but looking at it from the bears’ point of view prices refused to go lower yesterday when the ECB raised its deposit rates and the dollar’s TWI powered ahead. The TWI is next.

Perhaps the bears need a little more time. Their hopes will devolve on interest rates and bond yields going higher or at least remaining firm, which is seen to be bearish for gold. The short positions of the Swaps on Comex have reduced in value, but probably not enough. The next chart is of their net position, and it can be seen...

Griffin highlighted the U.S. government's continued reliance on significant fiscal deficits to boost the economy, foreseeing increased future fiscal burdens. The White House is still throwing money at stimulating the economy. This approach places Fed Chairman Powell in a no-win situation. The projected U.S. fiscal deficit was 3% of GDP for the year, but it now approaches 6%. With forecasts suggesting a near 5% deficit in coming years, market jitters are increasing due to the unsustainable nature of such deficits. Griffin suggests that these economic challenges will negatively impact the stock market.

Despite growing confidence in Wall Street and Washington that the Federal Reserve can stabilize the economy, the Treasury market tells another story. For 212 consecutive days, 10-year yields have remained below 3-month yields, a pattern which has historically preceded the last eight recessions. On Thursday, this trend broke a record from 1980, marking the longest such stretch since Bloomberg began tracking in 1962. This contrasts starkly with the resilience of the economy, highlighting the uncertainty since the Fed's aggressive rate increases in March 2022.

Billionaire investor Ray Dalio warned of potential issues in the global bond market, emphasizing the oversaturation of US debt. He highlighted that the US must offload large amounts of bonds due to soaring federal deficits, creating a worldwide concern. If bonds don't offer sufficient real interest rates, investors might sell them, leading to rising interest rates. Dalio believes long-term bonds aren't a wise investment. With $7.6 trillion in US debt maturing within a year, the cost of debt servicing could further increase rates.

French grocery chain, Carrefour, has labeled products that shrunk in size but increased in price, spotlighting suppliers who raised costs despite stable raw material prices. This "shrinkflation" tactic, which is more prevalent in inflationary periods, was applied to items like Pepsi, Lipton Iced Tea, and Lindt chocolates. Carrefour's move intends to urge manufacturers to reevaluate their pricing strategies, especially as brand negotiations with retailers are imminent.

Oil prices are nearing their highest level this year, with the potential to reach $100 per barrel soon, due to tightening supply. Brent crude futures traded at $93.90, while U.S. West Texas Intermediate futures stood at $90.41. These surges are largely attributed to decisions by Saudi Arabia and Russia to cut oil production through the end of the year, leading to significant global inventory drawdowns and added inflationary pressures.

Around 13,000 U.S. auto workers went on strike after failing to reach an agreement on union demands with Detroit’s three major automakers. For the first time in its 88-year history, the United Auto Workers union simultaneously walked out on General Motors, Ford, and Stellantis. This strike comes at a critical juncture for the U.S. auto industry, which is transitioning to electric vehicles, signaling major challenges for the sector's future.

The economy is in a slow burn. You can't even see the flames. But you can smell whiffs of smoke every now and then if you're paying attention. In this episode of the Friday Gold Wrap, host Mike Maharrey calls attention to that smoke with a breakdown of August's CPI  and some other data that came out this week. He also busts a myth about silver.

Investors are totally unprepared for the coming Major Non-Linear Financial & Economic events because they continue to listen to analysts who focus on a BUSINESS AS USUAL WORLD.  Unfortunately, those days are over, especially when we see the massive debt being used to prop up the system...

Famed Author and investor Robert Kiyosaki highlighted on X that silver remains the "Biggest Investment Bargain," Still trading 50% below its all-time high and being crucial for the green revolution in solar and EVs. Esteemed for its inherent value, silver, like other precious metals, offers an age-old protection against inflation, outshining fiat money that central banks can print limitlessly.