Daily Gold Market Report

China’s Economic Downgrade
A Deep Dive into Soaring Debts and Global Impacts

(USAGOLD – 12/11/2023) Gold and silver prices have slightly decreased in early trading on Monday in the U.S. Recently, the short-term chart positions for both metals have worsened, particularly for silver. Gold is trading at $1992.68, down $11.99 cents. Silver is trading at $22.88, down 12 cents. Attributed to the country’s soaring government debt and sluggish economy, Moody’s lowered its outlook for China’s sovereign bond rating from stable to negative. Government debt is a growing global concern, statistics from the IMF are showing alarming levels of debt in various economies: the Euro Zone at 85% of GDP, Britain at 98%, the US at 150%, and Japan at 263%.

China’s government debt, though lower than others at just over half of its GDP, is worrying due to its overall debt level, which is nearly 300% of GDP when household and corporate debts are included. Phil Rosen of Business Insider reports, “Data released last week showed China’s manufacturing and services activities contracted in November, and the readings reinforced the government’s case to prop up the economy with further fiscal stimulus.” The situation in China could have significant global implications, including the potential for a flood of cheap manufacturing products and a contagion effect on global financial markets. China has been a losing bet for investors for nearly two decades, with the Shanghai composite index below its 2007 level, despite China’s aggressive commercial policies.