Monthly Archives: January 2024

Turning Crisis into Opportunity:
Banks Exploit Fed’s Rate Cuts for Profit

(USAGOLD – 1/16/2024) Gold and silver prices are down in early trading Tuesday, coming out of the holiday weekend. Gold is trading at $2038.78, down $17.77. Silver is trading at $22.92, down 30 cents. The Wall Street Journal recently reported on how banks are exploiting the Federal Reserve’s Bank Term Funding Program (BTFP), initially created during the 2023 banking crisis. While intended for emergency lending, banks are now using it for profit, borrowing at low rates and earning higher returns on overnight deposits. This situation arose due to market predictions of Federal rate cuts, which lowered the BTFP’s borrowing costs. The program’s usage increased significantly, not due to new financial stresses but due to this favorable rate differential. The Fed’s vice chairman suggests the program, which is set to expire soon, might not be extended. This situation illustrates banks’ ability to utilize monetary policy changes for financial gain.

Navigating Investment Waters:
Gold’s Enduring Legacy in the Era of Bitcoin ETFs

(USAGOLD – 1/12/2024) Gold and silver prices are sharply up in early trading Friday, on safe-haven buying following news of U.S.-British air strikes against Houthi rebels in Yemen. Gold is trading at $2062.01, up $33.10. Silver is trading at $23.45, up 70 cents. The SEC approved 11 Bitcoin spot ETFs that began trading today with a record $4.6 billon exchanging hands. Charlie Morris of ByteTree highlights how gold ETFs transformed the gold market, the rise of Bitcoin ETFs, and the comparative flows between gold and Bitcoin. The question of gold versus bitcoin is set to become more prominent, and in light of this important occasion, examining Graham Tuckwell’s responses to this query, as outlined in his article in the Alchemist, is merited:

Are gold and bitcoin similar?

Yes, in some ways. They have a near fixed supply, earn no return, are cheap to hold and are not fiat currencies.

Will gold go more electronic and bitcoin more mainstream?

Yes. They are coming from opposite ends of the spectrum and there will be some convergence and overlapping.

Will bitcoin replace gold as a safe-haven investment?

No. Institutional investors have always wanted allocated gold in their ETFs as it is more secure, and they want to be able to see it is there in the vault. It cannot just be wiped out on a computer screen.

Will both gold and bitcoin be sought after?

Yes, whilst yields remain low to negative and, better still, if interest rates rise and bond prices fall. Maybe a bet on both gold and Bitcoin will work, but for security, a gold ETF for me please.

Rising Debt Delinquency
Millennials and Gen Z Struggle with Debt Payments Across Major U.S. Cities

(USAGOLD – 1/11/2024) Gold and silver prices strengthened in early trading on Thursday, but retreated from their daily peaks after a U.S. inflation report was released, which was slightly higher than anticipated. Gold is trading at $2029.33, up $4.92. Silver is trading at $22.91, up 7 cents. LendingTree researchers analyzed the anonymized credit reports of about 310,000 users on the LendingTree platform from July 1 to Sept. 30, 2023, and found that nearly 30% of Americans in the 100 largest metropolitan areas were behind on their debt payments as of late 2023. This includes various debts, such as credit cards, auto loans, personal loans, mortgages, and student loans. Debt delinquency is notably higher in Southern cities, with McAllen, Texas; El Paso, Texas; and Baton Rouge, Louisiana, having the highest rates of late payments. Additionally, the study reveals that millennials and Gen Zers are significantly more likely to be behind on debt payments compared to older generations. Moreover, MarketWatch reports that total consumer credit exceeded $5 trillion for the first time ever.

Projecting Silver’s Future
Industrial and Jewelry Sectors Lead Global Demand Growth by 2033

(USAGOLD – 1/10/2024) Gold and silver prices are steady in early trading Wednesday as investors await the December consumer price index report on Thursday and the December producer price index report on Friday. Gold is trading at $2029.32, down 32 cents. Silver is trading at $22.86, down 13 cents. The Oxford Economics report, “Fabrication Demand Drivers for Silver“, predicts significant growth in silver demand across industrial, jewelry, and silverware sectors by 2033. Industrial silver, particularly in electrical and electronics, is expected to grow by 46%, with major consumption in China. Jewelry sector output is forecasted to increase by 34%, with a market shift towards China from India. The silverware sector is projected to grow by 30%, mainly in India, though its global market share may decline.

The report emphasizes the importance of long-term demand forecasting for better-informed supply and resource allocation decisions in the silver industry. It also acknowledges challenges in forecasting, such as the possibility of technological changes in manufacturing processes that could alter silver usage. The overall analysis provides valuable insights for stakeholders in the silver industry, highlighting where and how demand for silver as an intermediate input is likely to evolve over the next decade.

Election Year Surge
How Political Changes Could Boost Gold Prices

(USAGOLD – 1/9/2024) Gold prices are moderately higher and silver near steady in early trading Tuesday. Gold is trading at $2036.40, up $8.33. Silver is trading at $23.09, down 2 cents. Heraeus’ recent Precious Appraisal discusses the potential positive impact of global elections on gold prices, particularly focusing on the US and India. The US faces a potential recession, and the Federal Reserve might cut rates in response, possibly weakening the dollar and boosting gold prices. Over 50% of the world’s population will participate in elections in 76 countries this year, significantly influencing gold demand. The US, undergoing a presidential election, and India, with its price-sensitive gold market, are key players.

Central Banks’ Appetite for Gold
44 Tonnes Added in November

(USAGOLD – 1/8/2024) With no significant new fundamental developments to begin the trading week, gold prices have fallen in early Monday trading, reaching a three-week low. Gold is trading at $2019.75, down $25.70. Silver is trading at $22.96, down 23 cents. In November 2023, central banks globally increased their gold reserves by a net 44 tonnes, with gross purchases of 60 tonnes significantly surpassing gross sales of 15 tonnes, the World Gold Council reports. This trend reflects the sustained momentum in central bank demand for gold. Major buyers were predominantly from emerging markets, with the Central Bank of Turkey leading the acquisitions by adding 25 tonnes, followed by the National Bank of Poland and the People’s Bank of China. Throughout 2023, the People’s Bank of China was the largest gold purchaser, with emerging market banks being the primary drivers of both purchases and sales. Interestingly, the Monetary Authority of Singapore was the only developed market bank adding gold to its reserves, aside from the ECB’s addition due to Croatia joining the eurozone.

Decade of Stability
Gold’s Consistent 4% Q1 Performance Over 10 Years

(USAGOLD – 1/5/2024) The gold market is flat as the U.S. labor market remains robust, generating a higher number of jobs than anticipated in December. Gold is trading at $2042.06, down $1.59. Silver is trading at $23.04, up 2 cents. Over the past decade, gold has demonstrated a consistent yet moderate performance, yielding an average return of approximately 4% in the first quarter of each year. This steady increase reflects its enduring status as a safe-haven asset, particularly in times of economic uncertainty. Despite fluctuations in the market and changes in global economic conditions, gold’s 10-year performance in Q1 underscores its appeal to investors seeking a reliable store of value and a hedge against inflation and currency devaluation. Its behavior during this period reinforces its role in diversifying investment portfolios and preserving wealth over the long term.

Bracing for Impact
Navigating Layoffs, AI Disruption, and the Unsteady Job Market

(USAGOLD – 1/4/2024) Gold prices dropped lower this morning as the count of U.S. workers filing for initial unemployment benefits significantly decreased in the final week of 2023. Gold is trading at $2039.98, down $1.51. Silver is trading at $22.76, down 23 cents. As the stock market fails to stage a “Santa Claus rally” in a rough start to 2024, reality is starting to set in. The Resume Builder survey forecasts mass layoffs in 2024, with nearly half of companies affected, primarily due to anticipated recessions and the rise of AI. “In the survey, nearly four in 10 companies said they are likely to have layoffs in 2024, prompting increased fears of a recession around the corner. More than half of companies also said they plan to implement a hiring freeze in 2024,” Suzanne Blake of Newsweek reports.

U.S. Debt Hits Record $34 Trillion as Congress Faces Crucial Funding Deadlines
3 Months After We Hit $33 Trillion…

(USAGOLD – 1/3/2024) Gold and silver prices are sharply lower in early trading. Traders are starting to look ahead to Friday’s U.S. employment situation report for December. Gold is trading at $2034.82, down $24.14. Silver is trading at $23.00, down 66 cents. The U.S. public debt has surpassed $34 trillion, marking a concerning milestone as Congress prepares for imminent funding debates. The rise in debt is attributed to increasing federal deficits, driven by lower tax revenues and higher expenditures. As Congress reconvenes, it faces deadlines to resolve spending for the fiscal year, with Republican calls for reduced discretionary spending and discussions over emergency aid for Ukraine and Israel. The potential failure to pass spending bills risks a government shutdown, and the upcoming elections further complicate negotiations. Maya MacGuineas of the Committee for a Responsible Federal Budget highlighted the gravity of the situation, urging for decisive actions to mitigate the escalating debt through measures like tax increases, spending cuts, or the formation of a fiscal commission.