Author Archives: News
Big firms are filing for bankruptcy left and right — and it’s just the beginning
BusinessInsider/Joe Ciolli/5-16-2023
“Vice – saddled with liabilities of up to $1 billion – has filed for bankruptcy. It’s far from alone. Six other large companies threw in the towel within a recent 48-hour span, the most active such period for bankruptcies since 2008, according to Bloomberg data looking at companies with at least $50 million in liabilities.”
USAGOLD note: These are the sorts of things that happen when a real recession takes hold……
Powell’s legacy tested by inflation, bank crisis, new Fed dynamics
NASDAQ-Reuters/Howard Schneider/5-16-2023
“Federal Reserve Chair Jerome Powell, who navigated a combative White House and a pandemic in his first years as head of the U.S. central bank, is facing a critical chapter in his leadership with a battle against inflation still unresolved, worries about recession widespread, and developing criticism of the Fed’s oversight of the financial industry.”
USAGOLD note: The Fed has only itself to blame, though Powell inherited much of the problem from Bernanke and Yellen.
What are older office towers worth? San Francisco provides an example.
Wolf Street/Wolf Richter/5-9-2023
“Now we have the first sale in the new-era of working-from-home and office-downsizing in San Francisco, which has surpassed Houston and Dallas as the worst major office market in the US. There are a number of office towers on the market. One of them, the headquarters of Union Bank at 350 California Street in the Financial District, has found a buyer.”
USAGOLD note: Richter says that Union Bank building was first listed for $250 million in 2020. It pulled the listing in 2022 and then relisted at $120 billion in early 2023. It recently sold for between $60-$67 million – 75% below the original offer price. The sale, says Richter, “is sending cold shivers down the spines of Commercial Mortgage-Backed Securities.”
‘Genuinely worried’ Asian investors flock to safe haven gold amid US dollar woes
South China Morning Post/Biman Mukherji/5-15-2023
“Long considered an alternative currency and safe-haven asset, gold has soared in popularity over the past month as investors in Asia’s trading hubs of Hong Kong and Singapore have flocked to the yellow metal, which has an inverse relationship with the trouble-beset US dollar.”
USAGOLD note: One retailer in Hong Kong reports 40% increase for April over March and 110% year to date. Most of the buying has to do with investor concern about the eroding value of their savings.
Platinum demand predicted to surge this year, leaving a near 1-million-ounce deficit
CNBC/Hannah Ward Glenton/5-16-2023
“A previously anticipated platinum shortage will be worse than expected this year thanks to increased demand, particularly from the industrial sector, according to the World Platinum Investment Council.”
USAGOLD note: CNBC reviews platinum’s prospects for the rest of the year……
The Deutsche Bundesbank and gold: A bond that never breaks?
The Alchemist/Wolfgang Wrzesniok-Rossbach/5-11-2023
“Over the next few years, the gold reserves literally exploded. By 1959, when the European Payments Union was replaced by the European Monetary Agreement, Germany had already received 1,584 tons of gold from its European partner countries. As a result of further inflows from the Bretton Woods system, among others, the Bundesbank’s total holdings reached 2,344 tons by the end of 1959, and the inflows continued steadily.”
USAGOLD note: Germany owns the second-largest stockpile of gold in the world at 3,355 tonnes. “T]he knowledge of the existence of this treasure,” says Wrzesniok-Rossbach, “clearly allows many Germans to sleep better in light of the many financial and economic policy imponderables in the
present day.
Investors go for the gold as prices surge, poll finds
“Americans favor gold as the strongest long-term investment at the largest proportion in over a decade, a new survey found, as equities lose favor while the precious metal hovers at a near record high.”
USAGOLD note: A Gallup poll finds that 26% of Americans view gold as the best investment over the long run – a two-fold increase over last year. Only 18% cited stocks and mutual funds in the best investment category while 34% favored real estate.
Fewer Treasurys, more JGBs in the cards for Japan life insurers
NikkeiAsia/Toshihiro Sato and Kosuke Iguchi/5-10-2023
“Dai-ichi Life Insurance plans to cut its holdings of currency-hedged Treasurys, and Nippon Life Insurance also plans a more cautious approach to unhedged foreign debt. This comes amid a broad trend in Japan’s life insurance industry toward buying more JGBs, anticipating a change in policy by the BOJ.”
USAGOLD note: Japanese life insurance companies have been an important part of the demand picture over the past twenty years. The Council of Foreign relations puts the total holdings of foreign bonds by Japanese private investors (of which life insurers is one component at $740 billion) at $3 trillion. One investment manager stated the problem plainly. “After accounting for hedging costs, investing in Treasuries has no appeal in terms of yield.”
Wall Street becomes preferred destination for gold miners over London
Financial Times/Harry Dempsey and William Langley/5-13-2023
“Under a plan set out on Friday, the world’s fourth-largest gold miner (AngloGold Ashanti) will move its primary listing from Johannesburg to New York as part of an effort to lift its valuation.”
USAGOLD note: In making the announcement, AngloGold pointed out that Wall Street listed companies trade at a “significant premium” – an incentive difficult to overlook.
World Gold Council Demand Trends – Q1, 2023
World Gold Council/Staff/5-5-2023
“Q1 saw diverging trends in gold investment demand: a small decline in gold ETF holdings versus hearty bar and coin buying.”
USAGOLD note: There are no real surprises in the World Gold Council’s first quarter Demand Trends report just a continuation of the positive trends that have been in place since last year. That includes strong central bank and private investor demand. One standout statistic – first quarter central bank demand was 34% higher than the previous Q1 record in 2013.
Chart courtesy of World Gold Council • • • Click to enlarge
Jerome Powell faces lowest public confidence for Fed chairman on record, Gallup says
Bloomberg/Gergory Korte/5-9-2023
“Public confidence in Jerome Powell’s leadership of the Federal Reserve has dropped precipitously, according to a new survey, and is now at or below his predecessors’ as the central bank wages its war against inflation.”
USAGOLD note: With regional banks still on the ropes and a warning from the Fed that a credit crunch is in the offing. Powell’s slipping popularity only adds to the uncertainty.
This debt-ceiling fight is different — and it means we could actually default this time
BusinessInsider/Juliana Kaplan, Ayelet Sheffrey and Eliza Reiman/5-9-2023
“When it comes to raising the debt ceiling and averting an entirely preventable economic catastrophe, the US is on a road to nowhere — and time isn’t on Congress’s side.”
USAGOLD note: Hardly anyone believes that Washington will throttle its spending habits no matter what the parties agree to…… So why bother with these negotiations?
‘Taking out the hike that just happened’: Traders ignore Powell and begin pricing in a Fed rate cut as soon as June
MarketWatch/Vivien Lou Chen/5-4-2023
“Just one day after Federal Reserve Chairman Jerome Powell signaled that rate cuts anytime soon are off the table, following the central bank’s 10th consecutive hike, traders took in all of his words — and ignored them.”
USAGOLD note: So much for “Don’t fight the Fed?” For a Fed chairman already worried about credibility, Wall Street’s rebellion is not likely to sit well – especially if it ends up getting in the way of policy implementation. We do not recall any former Fed chairmen being faced with the same problem.
China takes the yuan global in bid to repel a weaponized dollar
Bloomberg/George Lei, Tania Chen and Jacob Gu/5-3-2023
“China is putting the yuan front and center in its fight back against the US’s unique influence over global money. President Xi Jinping’s government has been busy striking deals over the past year to expand the ways in which the currency is used, with new agreements linked to the renminbi stretching from Russia and Saudi Arabia to Brazil and even France.”
USAGOLD note: As we have said many times in the past, the dollar is likely to remain the world’s premier currency for trade invoicing, but its diminished status as a reserve currency is already a fact of life. This article concentrates on China’s efforts to undermine the dollar’s status as the dominant transactional currency.
Giant loans on 10 major US office towers are due soon, stoking fears of more defaults that could be the next crisis to hit banks
BusinessInsider/Alex Nicoll/5-5-2023
“The large loans that landlords use to purchase and operate office buildings were once a topic only niche watchers of the commercial-real-estate industry cared about. Now economists and analysts wonder whether these debts could push a wobbling economy into a recession when they come due.”
USAGOLD note: The commercial real estate market and supportive cast of bank lenders are at the epicenter of the radical demographic shifts underway around the world. The article lists the ten towers at risk and their credit circumstances. Banks will want appraisals before rolling the loans.
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Photo attribution: Zakarie Faibis, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons
US Treasury announces first buyback scheme in decades to boost liquidity
Financial Times/Kate Duguid/4-4-2023
“The programme would allow the Treasury to buy back older bonds, which are typically harder to trade, from primary dealers — banks that act as market makers for the Federal Reserve — and help improve functioning in some corners of the market.”
USAGOLD note: Being practical business folk, it is difficult for us to understand how an entity that borrows monthly to pay its bills can find the money to repurchase prior debts. Isn’t that a bit like paying off one credit card by drawing on another?
Central bank gold demand hits first-quarter record, investments surge on U.S. banking turmoil
“Gold prices broke through the $2,000 per ounce barrier this week and are flirting with record highs as global economic uncertainty, a possible pause in Federal Reserve interest rate hikes and potential further trouble in the U.S. banking sector drive investors toward the precious metal.”
USAGOLD note: This article summarizes the World Gold Council’s Demand trends for the first quarter of 2023. Of interest, gold ETFs experienced “significant” inflows. Bar and coins demand was up 5% with the US posting its best quarter since 2010.
Fed can’t protect US economy from debt default, Powell says
Bloomberg/Jonelle Marte/5-3-2023
“We’d be in unchartered territory and the consequences on the US economy could be highly uncertain and adverse. No one should assume that the Fed can protect the economy from the potential short and long-term effects of a failure to pay our bills on time.” – Jerome Powell, Chairman of the Federal Reserve
USAGOLD note: O c’mon, Chairman Powell, do you mean to say that the Fed’s not interested in adding a trillion-dollar platinum coin to its balance sheet?
Silver hit a 1-year high. Here’s why it can keep climbing.
MarketWatch/Myra P. Saefong/5-3-2023
“Demand for physical silver, and gold for that matter, is showing overall investor concern over the state of the economy, geopolitical turmoil, and potentially persistent inflation. The risks are creating a growing willingness to park money in safe-haven assets.” – Stephen Gardner, director, ETF Managers Group
USAGOLD note: The demand for silver coins and bullion is running at levels we have not seen for years. Investors see it as an undervalued safe-haven alternative to gold with the added benefit, as this article points out, of tech-based industrial demand. Silver sentiment got a big boost from a recent Silver Institute study revealing a record 237.7 million ounce supply deficit for 2022.
Gold market primer: Market size and structure
Gold Hub/World Gold Council/4-27-2023
“Gold is an attractive means of helping investors diversify their portfolios. Its relative scarcity supports its long-term investment appeal. But its market size is large enough to make it relevant for a wide variety of investors, from individuals to institutions and central banks. This Primer gives an overview of the available above-ground stock of gold, the relative size of the financial gold market, and the composition of demand and supply that supports gold’s investment credentials.”
USAGOLD note: The World Gold Council offers an informative look at gold market dynamics for beginners and a refresher course for long-time investors.