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Silver Showing Strong Signs of Breaking Out

GoldSilver Nuggets 
AUG 11, 2023

In this week’s Nuggets, we bring you key updates on the banking crisis, economic indicators that challenge the Fed's optimistic outlook, and some compelling research on why now might be the time to add to your silver portfolio...

Concerning Data from China Shakes Global Stock Markets — Many expected China to have a strong recovery after the end of their zero-COVID policy, but so far, that’s not the case. The latest data indicates shows China is seeing slowing growth, high youth unemployment, and the country's exports suffered their steepest decline since the pandemic began.

Behind Closed Doors... Big Banks are Struggling — The four largest banks in the U.S. are experiencing a sharp deposit decline, according to a new report from Yahoo Finance. Collectively, they've seen a staggering $262 billion drop in deposits compared to the same period last year.

Retirees Face a $17,400 Cut if Social Security Isn't Saved — As the 2024 presidential race heats up, candidates face calls to preserve Social Security as is. However, without intervention, the fund is projected to run dry by 2033, resulting in a yearly loss of $17,400 for a typical dual-income couple retiring that year.

Gold Heating Up in The Summer — Gold gained 3.1% in July to $1,971/oz, bringing the year-to-date return to 8.7%. According to The World Gold Council, August is historically one of the strongest months for gold, due to seasonally weak U.S. treasury yields, wholesale buying in China, and restocking in India.  

Gold’s Returns Outshine the Dollar — Many see gold as an alternative to the US dollar and a shield against inflation. In terms of performance, gold has outshined the dollar. Over the past five years, gold's value is up 60%, while the dollar index has only climbed 10%.

Americans Are Piling on Tons of Credit Card Debt

The Federal Reserve Bank of New York's recent data reveals that U.S. credit card debt has surged to an unprecedented $1 trillion by the end of July. Approximately $45 billion, was added in the second quarter of 2023 alone, emphasizing the growing reliance on credit by Americans. 

US Credit Card Debt

Alarmingly, the number of Americans lagging in their credit card payments is on the rise too. According to a New York Fed economist's blog post, delinquency rates have reverted to their pre-Covid levels.

Several factors are driving this uptick in credit card usage. Consumers, buoyed by increased confidence and the purchasing power brought about by waning inflation, are tapping into their pandemic-era savings. This is particularly evident in spending on travel and experiences.

However, it's worth noting that, when viewed against the backdrop of the GDP, the current credit card debt is still below the levels seen in 2010 or at the pandemic's onset. The U.S. economy remains steady, defying expectations even in the face of the Federal Reserve's interest rate increases.  

The spike in credit card debt is a complex phenomenon, reflecting both the recovery of the U.S. economy and changing consumer behavior. As the situation continues to evolve, it will be essential to monitor these trends and their potential impact on both individual financial health and the broader economic landscape.

Silver’s Future Looks Bright Amid Supply Constraints

Silver Mining

The World Silver Survey 2023 by the Silver Institute unveils a trend that's hard to ignore: the silver market has been grappling with a deficit for two straight years. In 2022 alone, the market was short by a significant 237.7 million ounces, and 2023 is expected to follow suit with a projected deficit of 142.1 million ounces.

The reasons for this tightening supply are multifaceted.  

The mining industry, for one, is facing rising costs, both in energy and labor. This is made worse by new stringent environmental regulations, which add several new layers of complexity to the mining process.  

Adding to this supply strain is a significant decision from Mexico. Historically one of the world’s largest producers of silver, Mexico has instituted a ban on open-pit silver mining.

Meanwhile, demand for silver continues to increase.  

The rapid growth of electric vehicle batteries, solar, and wind energy sectors has bolstered silver's industrial demand, given its essential role in the components of these technologies. Silver also is extensively used in electronics, from everyday devices like smartphones and laptops to sophisticated medical equipment.  

Moreover, silver is gaining traction from an investment perspective. A growing number of investors now view silver as a dependable store of value, adding another dimension to its demand.

As the world pivots towards sustainable energy and technology continues to advance, silver's significance is only set to grow. Given the current supply-demand dynamics, the long-term future for silver investors looks very bright.  

But what about the short term?

To shed light on this, Mike Maloney recently sat down with esteemed portfolio manager Tavi Costa, where he shared some compelling data suggesting a silver breakout could be coming soon.

Is Silver About to Surge? This Chart Might Hold the Answer

This week, Mike Maloney invited Tavi Costa, a renowned portfolio manager at Crescat Capital, onto his show to talk about the markets and all things gold and silver. Tavi's insights have been spotlighted by Bloomberg, The Wall Street Journal, CNN, and many other major outlets.  

Together, they delve deep into a riveting discussion about the markets including:

  • The concerning rise in interest payments on federal debt and the ever-expanding fiscal deficits.
  • The ripple effects of deficits, Treasury yields, and international trade flows.  
  • The looming shadow of inflation and what it means for you.  
  • The timeless value of gold, with a deep dive into historical gold cycles and what they predict for the future.

Yet, the highlight of their discussion was a chart Tavi presented, suggesting we might be on the brink of a significant silver breakout.

silver Monthly Candles

Tavi says, “Going back to 2011, you can see the monthly chart, the resistance has lessened for over a decade now. And we’re very, very close to a breakout with this chart. This could happen any month really.”  

Is the long-awaited silver breakout just around the corner? Don’t miss Mike and Tavi’s comprehensive analysis of the precious metals markets, the dollar’s trajectory, international trade, and so much more.

That’s it for this week’s edition of GoldSilver Nuggets. Until next time!

Brandon S.