Daily Gold Market Report

US Deficit Concerns and the Growing Role of Leveraged Hedge Funds
Seabridge Gold Sheds Light on Gold’s Economic Significance

(USAGOLD – 10/10/2023) Gold has shed some of it’s gains from yesterday’s close. Gold is trading at $1853.65, down $7.76. Silver is trading at $21.72, down 16 cents. Seabridge Gold’s “Gold Market Update” from October 2, 2023, highlights the intricate relationship between gold prices and confidence in the U.S. dollar, which is closely tied to trust in the Federal Reserve’s management of inflation and interest rates. The prevailing belief in the Fed’s control over these economic factors might be misplaced, especially with signs of rising inflation due to underinvestment in commodities, increasing energy and food prices, and growing wage settlements in unionized sectors.

The escalating U.S. deficit is currently at 8% of GDP. The recent Treasury funding schedule indicates an urgent need to raise an additional $1.5 trillion by year’s end. Because Treasuries are considered the highest quality collateral, the prime brokerage divisions of major Wall Street banks take on significant leverage, sometimes up to 500 times, posing systemic risks that could lead to financial turmoil reminiscent of past episodes like the Long-Term Capital Management failure in 1998.