Gold and Silver Industry & Investing News
Today’s gold and silver market news, curated from the best of GoldSilver's team and around the web. Everything precious metals investors need to know including updates on big price swings, macro analysis, and breaking stories. Check back often or subscribe to get the highlights in your inbox. Monitor live spot prices on our charts page.
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Because it Doesn't Know What Else To Do - The Fed Holds the Fed Funds Rate Steady
Reading between the lines reveals the Fed's desperate wish for inflation to subside to a politically palatable level without further rate hikes or a looming recession. Yet, their strategy seems rooted in mere "hope" rather than clear foresight. The FOMC members' hesitancy to forecast rate reductions before the end of 2024 speaks volumes, hinting at their underlying concerns about persistent, politically perilous inflation. It's striking, given the FOMC's typical aversion to hinting at further tightening.
READ MOREUS New Home Sales Crashed -8.7% MoM In August As Mortgage Rates Surge
August witnessed a drastic 8.7% MoM drop in new home sales, the steepest since September 2022. With the median sales price of new homes slightly declining to $430,300, it's still alarmingly higher than pre-pandemic rates. A Redfin report revealed a worrying trend: about 60,000 home deals, or 16% of homes under contract, fell through. Veteran agents report unprecedented deal cancellations. As homebuilders struggle to bridge mortgage rate gaps, and investors grow wary, the housing market's stability is under serious threat.
READ MORERegulators on Edge as Debt-Fueled Bet on US Treasuries Intensifies
A year ago, the UK bond market saw upheaval. Now, there's growing unease over the $25tn US government bond market. The Bank for International Settlements and the US Federal Reserve are alarmed by increased hedge fund bets, especially the high-leverage basis trade. With leveraged positions nearing $900bn, any disruption to the US Treasury market could have global repercussions. Past interventions by the Federal Reserve might be fueling these risky bets, raising concerns among regulators.
READ MORECBDC's, It’s Not Coming - t’s Already Here: Rickards
The push for a cashless society is growing, backed by digital payment conveniences. However, there's a risk of losing control and privacy. Central bank digital currencies (CBDCs) amplify these concerns by granting governments direct oversight of transactions. Citibank's "Citi Token Services (CTS)" mirrors these CBDC features, signaling an accelerated move towards this model. Protecting oneself involves diversifying assets, like holding physical gold and silver.
READ MOREThe Meltdown of the World’s Biggest Crypto Firm
Binance, once the dominant force in the crypto world after FTX's crash, is now facing challenges. U.S. agencies' enforcement threats have led to over a dozen senior executives departing and the layoff of 1,500 employees. Binance's market share has decreased from 70% to 50% this year. With the SEC suing both Binance and Coinbase, there are concerns about the future of the crypto industry. If Binance collapses, it could cause a short-term market liquidity crisis, potentially driving crypto prices down significantly. Some traders are even preparing for a potential Binance meltdown.
READ MORETumbling Deposits, Rising Unrealized Losses: The Perfect Storm Hits Big Banks
JPMorgan Chase has controversially moved significant securities into the held-to-maturity (HTM) category, resulting in an unrealized loss of $36.7 billion. Many of these transfers weren't initially designated as HTM. Despite these alarming practices, CEO Jamie Dimon challenges federal regulators' efforts to increase capital levels for large banks. Widespread unrealized losses across the banking sector total $558.4 billion, with the 25 biggest banks also experiencing a $920 billion decline in deposits, intensifying concerns about the stability of the U.S. banking system.
READ MOREWhy Rising Long-Term Treasury Rates Could Ripple Across the Economy
Longer-term interest rates are surging, negatively impacting stocks and potentially the broader economy. The 10-year Treasury yield hit a 16-year high at 4.52%. This uptick threatens to further depress the housing market and deter corporate investments. Despite market concerns, Fed chair Jerome Powell appears unfazed, prompting critiques from experts who believe the Fed may be underestimating the impact of these rising yields.
READ MOREJamie Dimon Warns: World Unprepared for Fed's Stagflation Response
JPMorgan's CEO warns of the risk of stagflation and believes the world is unprepared for central banks raising interest rates. He suggests the jump from a 5% to a 7% rate would be notably harmful. Emphasizing caution, he questions if businesses can handle a 7% rate alongside stagflation. Some experts argue such high rates could burst asset bubbles.
READ MOREAmericans Begin to Feel the Sting of Fed Rate Hikes
Rising interest rates due to Federal Reserve's decisions are straining American finances. Consumers face higher costs for home and car loans, and existing debts are becoming pricier. While the Fed intends to maintain these high rates, families reliant on borrowing are feeling the pressure. New mortgages now average a 7% rate, nearly doubling from two years ago, significantly raising monthly payments. The current borrowing landscape renders homes and cars "completely unaffordable" for many, with households needing substantially more income to manage costs.
READ MOREHow Gold Fits in Your Portfolio
In 2023, gold continues to be a valuable asset for diversified portfolios, showing resilience even with market shifts. The World Gold Council reported a 20% year-over-year increase in gold investments, mainly driven by bar, coin, and OTC market growth. Historically, gold thrives during financial turmoil, offering portfolio diversification and liquidity. Since 1971, gold has matched equities in returns and surpassed bonds. Over the past 20 years, it has outperformed most major assets with a 15% annual increase in global investment demand. High demand from institutional investors, central banks, and markets like China bolster gold's value, emphasizing its portfolio benefits.
READ MORERecord High Estimated for World Official Gold Holdings
In Q2 2023, global gold reserves peaked at 38,764 tonnes, surpassing the 1965 record. This shift suggests a new gold era, with central banks diversifying from the US dollar, especially since the 2008 crisis. As gold's value has grown by 66% and its share in international reserves rises, it's clear that its significance in the global monetary system is increasing.
READ MOREThe SEC Is Now Tracking Your Stock Trades by Your Social Security Number
The SEC's 2012 rule for a Consolidated Audit Trail has raised significant privacy concerns. Originally intended to monitor trading activity following the 2010 flash crash, the rule now mandates tracking of every trade order, modification, and execution across U.S. markets. Alarmingly, it also collects personal information like account and Social Security numbers, accessible to multiple organizations, 3,000 outside contractors, and susceptible to hacking attempts from international cyber threats.
READ MORE“Wealth Disparity Monitor” of the Fed’s Money Printer Era, September 2023
The Fed's latest quarterly data reveals significant wealth disparities in the US. The top 0.1% of households hold nearly 13% of total wealth, while the top 10% possess 56%. In contrast, the majority of Americans, falling between the top 10% and bottom 50%, have an average net worth of $807,000. Although many in the bottom 50% have some assets, the lower 20% are near or at the poverty line.
READ MORE3rd Consecutive Year Of Negative Returns On 10-year Treasuries, Which Has Never Happened In History
US 10-year Treasury yields are nearing 4.50%, the highest since 2008, risking a third consecutive year of negative performance, unprecedented in history. Mortgage rates have increased by 156% to 7.3% since Biden took office, with the US Treasury 10y-2y yield curve staying inverted. US debt is projected to reach 181% of GDP, far surpassing previous concerns of an 80% threshold.
READ MORESlowly, BRICS Will Change The World
China and Russia lead in global gold production. Historically, gold has been significant in money systems and may become crucial again, countering central bankers' habits of money printing since 1914. Critics have dismissed gold, ignoring its historical prominence. Nixon's departure from the gold standard underscores its value. Many anticipate the decline of the Petrodollar and consequently, the U.S.'s global dominance. The shift away from the U.S. dollar in trade is evident, and groups like BRICS aim for a multipolar world.
READ MOREChinese Gold Buying Sparks Bullion Paradigm Shift
The traditional link between gold prices and interest rates seems to be breaking. Previously, low rates meant high gold prices, and high rates led to a drop in gold prices. However, despite recent hikes in inflation-adjusted rates, gold prices remain steady. Factors like central bank buying and bets on a US economic slowdown are keeping gold prices up, challenging conventional wisdom.
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Gold's Ominous Warning: Is China's Economy in Peril?
Is the canary in the coal mine signaling trouble in China?
READ MORECan the U.S. Economy Survive Four Simultaneous Shocks at Once?
The U.S. economy is facing simultaneous threats: potential auto worker strikes, a possible government shutdown, the resumption of student loan payments, and rising oil prices. Together, these could exacerbate an already cooling economy due to high interest rates. Predicted economic growth for the fall shows a sharp decline. Strikes might stall auto sector recovery, while a government shutdown could reduce economic output. Resuming student loan payments may also impact consumer spending.
READ MOREConsumers Say They’re Still Paying Too Much as the Fed Is Tries to Curb Inflation
Despite a reported slowdown in inflation, Americans are still grappling with high prices for essential items like gas and food. This ongoing financial strain is contributing to a growing discontent towards the Biden administration's economic policies, with many individuals struggling to manage their daily expenses. The perceived economic relief is not aligning with the public's lived reality, leading to increased frustration and financial stress.
READ MORECredit Card Losses Soar to Heights Unseen Since the Great Financial Crisis
Goldman Sachs reports that credit card companies are facing their fastest rate of losses since the 2008 recession. With current losses at 3.63% and U.S. credit card debt exceeding $1 trillion, these losses are expected to rise to 4.93%. Analyst Ryan Nash finds this trend unusual as it's occurring outside of a recession, and he predicts the peak won't be reached until late 2024 or early 2025.
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