Markets are Down Across the Board

Sep. 22, 2022

Friday morning, precious metals, cryptocurrencies, and the stock market started the day in the red, as financial markets react to 75 basis point interest rate hikes.

Markets Drop

The Dow Jones has fallen 400 points so far today, dropping below the 30,000 mark. 

The British pound has hit a 30-year low against the dollar, currently sitting at around $1.09. The euro plummeted as well falling to $.97 against the dollar.

Today, gold prices dropped 1.55% to $1,655.70 per ounce. Silver sank 4.08% to $19.08 per ounce. Platinum decreased 4.67% to $875.30 per ounce, while Palladium fell 4.42% to $2,124.50 per ounce. Bitcoin dipped 3.39% to $18,741.60.

Investors are worried that the Fed’s aggressive policy will continue to affect markets and are searching for places to park cash. The dollar is holding strong against most assets but is predicted to reverse course once the Fed stops interest rate hikes.

What do you think will happen when the Fed stops raising interest rates?

Jobless Claims Fall, Despite Numerous Layoffs

Sep. 22, 2022

The number of jobless claims fell by 5,000 to 213 k last week – the lowest since late May Continuing jobless claims also tumbled from 1.401 million down to 1.379 million in the same period.

Jobs market

This apparent job market improvement contrasts with negative data points showing weakening economic growth, tumblings markets, and increasing layoffs.

Investors are worried that lower unemployment figures will persuade the Federal Reserve to become more aggressive toward its monetary policy. The Fed’s chairman Jerome Powell has recently stated a desire to increase unemployment in order to help reduce inflation.

Today, gold prices rose 0.17% to $1,677.20 per ounce. Silver jumped 0.65% to $19.62 per ounce. Platinum decreased 1.20% to $932.00 per ounce, while Palladium fell 0.48% to $2,195.50 per ounce. Bitcoin grew 1.90% to $19,237.50.

How do you think the labor market will react to higher interest rates?

Investors Brace for Fed Interest Rate Hike

Sep. 21, 2022

The Federal Reserve is expected to increase the Fed Funds interest rate on Wednesday. It is rumored that the Fed will raise rates by 75 basis points (bps). 

Interest Rates

Some investors speculate that the Fed could go even further – increasing rates by as much as 100 bps. Ex-Treasury Secretary Larry Summers reportedly suggested himself that the Fed should consider a 100 bps rate hike.

Markets are currently pricing in a 4.50% terminal rate for 2023. Investors are projecting that the Fed will continue its “aggressive” monetary stance until inflation drops closer to its 2% goal.

Economists expect that higher interest rates will slow down GDP considerably and increase unemployment figures as a result of the Fed’s current monetary policy.

Today, gold prices rose 0.17% to $1,677.20 per ounce. Silver jumped 0.65% to $19.62 per ounce. Platinum decreased 1.20% to $932.00 per ounce, while Palladium fell 0.48% to $2,195.50 per ounce. Bitcoin grew 1.90% to $19,237.50.

Do you think the Fed will raise the interest rate by 75 or 100 bps?

China May Soon Announce Gold Reserve Figures

Sep. 20, 2022

Large amounts of gold are moving from west to east as China continues to stack what is believed to be one of the largest gold reserves in the world.

Gold Bars

This is leading to a massive transfer of wealth, as countries in the east continue to amass gold while western nations keep racking up debt. 

Many economists wonder why China is hoarding so much gold. To understand what is at stake, one should view the current currency war heating up between major global powers such as the US, the UK, Russia, and China. 

BRICS member nations (Brazil, Russia, India, China, and South Africa) are currently working towards creating a global reserve digital currency that is based on gold, which would have greater buying power than current leading fiat currencies.

China is already testing a Central Bank Digital Currency (CBDC), which is expected to grow in usage soon. Geopolitical analysts think that the introduction of this model among China’s allies will threaten the US dollar’s global hegemony.

Russia has already hinted at introducing a CBDC backed by gold and has partially backed its ruble with the precious metal. If China were to do the same and is revealed to have an extremely large reserve of gold, this would put the dollar in jeopardy.

Currently, China is undergoing de-dollarization by getting rid of billions of dollars in US Treasury bonds, while at the same time taking advantage of the West’s discount window to purchase tons of gold.

Today, gold prices dipped 0.68% to $1,674.50 per ounce. Silver jumped 1.97% to $19.42 per ounce. Platinum increased 0.22% to $943.50 per ounce, while Palladium fell 3.98% to $2,179.00 per ounce. Bitcoin sank 2.51% to $19,093.30.

Do you think China will back its new CBDC with gold to challenge the US dollar? If so, how soon?

Investors Eye Key Economic Events this Week

Sep. 19, 2022

This week, several economic events will take place which will affect global markets significantly. 

US economy

Several central banks worldwide will announce updated monetary policies and other details amid meetings taking place throughout the week. 

Many market analysts believe that the Federal Reserve will deliver a 75 basis point (bp) interest rate hike Wednesday, as the Fed continues to work towards bringing down inflation. In contrast, a small number of analysts actually project a 100 bp increase – but that opinion falls in the minority.

The Bank of England is expected to vote on a 50 bp hike with several dissenting voices calling for a 25 or 75 bp increase. Economists expect the BoE will reach a terminal rate of 4% by Q2 of 2023.

The Bank of Japan will also meet this week, but will likely remain the outlier among the world’s central banks when it comes to tightening the money supply and increasing rates. The yen has currently hit its weakest level against the US dollar since the 1990s and many worry that the BoJ has lost control of the yen.

Today, precious metals and cryptocurrencies are struggling against the dollar. Gold fell 0.45% to $1,679.70 per ounce. Silver dipped 0.54% to $19.71 per ounce. Platinum increased 0.44% to $935.00 per ounce, while Palladium jumped 0.63% to $2,185.00 per ounce. Bitcoin sank 0.68% to $19,285.00.

What do you think the Fed will announce this week and how will it affect the economy?

The British Pound Crashes to 37-Year Low Against the Dollar

Sep. 16, 2022

The British Pound Sterling has plummeted to a 37-year low, hitting $1.135 against the dollar.

British flag

The currency slump comes after the Bank of England announced Friday that little can be done to avert a recession in the UK. Also, the latest retail figures for August showed that purchases dropped 1.6%.

The British pound is also trading lower against the euro at €1.1407. 

The UK is currently going through a period of high inflation and record high energy prices which are contracting the country’s economy. Economists believe that as the temperatures get colder and energy supplies tighten, inflation can reach record levels

Today, gold prices rose 0.69% to $1,684.70 per ounce. Silver jumped 1.28% to $19.63 per ounce. Platinum decreased 0.22% to $922.30 per ounce, while Palladium fell 1.64% to $2,154.00 per ounce. Bitcoin sank 0.06% to $19,716.10.

How low will the British pound go? Let us know in the comments!

Retail Sales Struggle to Grow as Consumers Try to Manage Inflation Woes

Sep. 15, 2022

Retail sales slightly increased in August by 0.3% month-over-month (MoM), more than expected. The pick-up in sales was supported by an increase in demand for vehicles and vehicle parts.

Cars

A drop in gas prices also encouraged consumers to make more purchases in previous months when inflation ran hotter.

Excluding vehicle sales, consumer purchases actually dropped by 0.3% MoM, suggesting that consumers aren’t as confident as the overall data suggests.

Sales continue to show signs that US household budgets are hurting due to a slowing economy and higher cost of living. Investors believe the economy will shrink even further over the coming months as markets prepare for more interest rate hikes.

Today, gold prices dipped 1.58% to $1,676.70 per ounce. Silver dropped 1.94% to $19.45 per ounce. Platinum increased 0.11% to $928.70 per ounce, while Palladium fell 0.95% to $2,186.50 per ounce. Bitcoin sank 1.95% to $19,833.30.

Will inflation accelerate more over the next couple of months and will the Fed react more aggressively?

Wholesale Prices Slightly Fall in August

Sep. 14, 2022

According to a Bureau of Labor Statistics report released Wednesday morning, the producer price index (PPI) fell 0.1% month-over-month (MoM) in August.

Palladium Mine

Excluding energy, food, and trade services, PPI grew by 0.2%, MoM. Wholesale inflation is still running hot and currently sits at 8.7% year-over-year (YoY). 

The index fell due to a dip in energy prices which dropped 6% in August. 

This news, combined with the CPI report released Tuesday morning, is worrying traders who fear that inflation will continue to linger throughout the rest of the year. These traders are therefore encouraging the Fed to become more aggressive with interest rate hikes.

Today, gold prices rose 0.21% to $1,715.80 per ounce. Silver jumped 1.50% to $19.78 per ounce. Platinum increased 3.30% to $921.90 per ounce, while Palladium grew 2.86% to $2,179.50 per ounce. Bitcoin sunk 6.13% to $20,230.30.

After seeing August’s inflation numbers, do you think the Fed will raise the interest rate by 75 or 100 basis points?

August CPI Figures Rose 0.1%, Showing That Inflation Has Yet to Cool Off

Sep. 13, 2022

The consumer price index (CPI) figures for August were released Tuesday morning. CPI increased by 0.1% month-over-month (MoM), higher than the expected -0.1% figure. The current CPI rate year-over-year now sits at 8.3%.

CPI

Core CPI, which excludes, energy and food costs, rose 0.6% MoM and 6.3% YoY. Current core CPI figures beat the Dow Jones estimated 0.3% rise.

Higher prices were driven by increases in shelter, food, and health care services. On the other hand, fuel prices dropped due to a significant release of oil from the US Strategic Petroleum Reserves.

Real average hourly earnings adjusted for inflation grew 0.2% MoM, but remain lower YoY at 2.8%.

Today, gold prices fell 1.03% to $1,715.80 per ounce. Silver dipped 1.16% to $19.78 per ounce. Platinum decreased 0.66% to $921.90 per ounce, while Palladium dropped 6.00% to $2,179.50 per ounce. Bitcoin sunk 6.13% to $21,027.80.

Inflation ran hot for the month of August despite a drop in energy prices which was facilitated by the release of oil from the US Strategic Petroleum Reserves. What do you believe will happen to the cost of living once the US Strategic Petroleum Reserves are depleted?

Key Economic Events This Week: All Eyes on CPI 

Sep. 12, 2022

The consumer price index (CPI) will be released Tuesday morning, worrying many investors about the implications of that figure combined with the Fed’s next interest rate hike later this month.

Rates

Many economists believe the Fed will move forward with a 75 basis points increase for the FOMC meeting and settle on a 4.1% terminal rate for 2023. 

The inflation rate is expected to decline slightly month over month (MoM) but remains high. Core inflation is expected to rise by 0.30% MoM.

It is believed that inflation has cooled because of a recent drop in commodities, such as oil and gasoline prices. However, rents have continued to climb significantly.

Due to high inflation rates, investors continue to purchase gold and silver as a way to hedge against inflation.

Today, gold rose 0.87% to $1,740.80 per ounce. The silver price jumped 5.55% to $20.13 per ounce. Platinum increased 2.96% to $924.40 per ounce, while Palladium grew 3.94% to $2,301.00 per ounce. Bitcoin spiked 1.79% to $22,175.40.

Do you think inflation ran higher for the month of August?

US Treasury Issues Digital Dollar Recommendation if in National Interest

The US Treasury Department advises the government to issue a digital dollar if it is deemed necessary and in the country’s interest.

Blockchain

President Biden’s administration and possibly Congress will address the national interest question. The bigger question legislators will have if the Federal Reserve will be the entity to mine and issue the CBDC (central bank digital currency) tokens.

In 2021, President Biden signed an executive order requesting cryptocurrency recommendations from several government agencies. The US Treasury was one of the agencies tasked with researching and issuing guidance on CBDCs. 

Economists and investors are highly vested in the outcome and issuance of a digital dollar as it can upend retail banking and the digital assets industry. Many politicians and citizens are also concerned with the obstruction of civil liberties and privacy if CBDCs become legal tender.

Ultimately, the Fed’s Chairman Jerome Powell will have the final word for the CBDCs issuance. Powell has said little about the matter but many speculate that the Fed will move towards its issuance as the currency war continues to heat up. 

Today, gold prices grew 0.41% to $1,713.40 per ounce. Silver jumped 1.08% to $18.59 per ounce. Platinum increased 0.34% to $898.10 per ounce, while Palladium soared 1.35% to $2,186.00 per ounce. Bitcoin rose 9.64% to $21,184.50.

How soon do you think the issuance of the CBDC will occur? 

The Japanese Yen Crashes to Lowest Point Since 1998

Sep. 8, 2022

On Thursday morning the Japanese yen stood at 144.35 against the US dollar – the lowest point in 24 years.

Japan

It is believed that the yen’s value will continue to drop as the Bank of Japan (BOJ) works towards devaluing the nation’s currency. Some analysts believe that the yen might reach 150-160 against the dollar over the next couple of months.

There are several factors contributing to the yen’s recent fall against the US dollar. One reason is that the BOJ is refraining from increasing interest rates due to low inflation. The country has faced deflation for many years and now the central bank wants to raise inflation as a way to increase corporate profit, which they believe will fuel growth.

Another reason the central bank wants to keep the yen’s value low is to compete with China. Japan believes that if a conflict between China and US allies arises, countries will look toward Japan to fulfill its needs for goods and services at a more competitive price.

Today, gold prices fell 0.77% to $1,713.40 per ounce. Silver dipped 0.51% to $18.59 per ounce. Platinum increased 0.81% to $898.10 per ounce, while Palladium jumped 5.34% to $2,186.00 per ounce. Bitcoin sunk 0.14% to $19,266.10.

What do you think will happen to Japan’s economy due to its loose monetary policy in the near future?

Credit Card Debt Jumps Once Again – Highest Increase in 23 Years

Sep. 6, 2022

For the second quarter of 2022, US households’ average amount of credit card debt rose by 13%, marking the highest surge since 1999.

Credit Card

Credit card debt increased by $46 billion year-over-year and interest rates hit a record high of 17.96%.

The total amount of US household debt jumped by $312 billion for 2022’s second quarter, totaling $16.15 trillion as of June 30th.

As a result of rising interest rates, inflation, and stagnating wages, economists are seeing a spike in delinquencies for all debt account types.

Today, gold prices fell 0.39% to $1,712.00 per ounce. Silver dipped 0.44% to $18.28 per ounce. Platinum increased 0.59% to $872.20 per ounce, while Palladium sunk 1.94% to $2,043.50 per ounce. Bitcoin spiked 0.08% to $19,809.60.

Which debt bubble do you think will pop first, and what will the be the main outcome(s)?

G7 Agrees to Set Price Cap on Russian Oil

Sep. 2, 2022

The Group of Seven (G7) wealthy nations on Friday consented to implement a price cap on Russian oil exports.

Oil tanker

The price cap mechanism would ban maritime services from shipping Russian oil if the price exceeds G7’s price cap level.

In an effort to drain Moscow’s war chest, the G7 proposed a price cap. The International Energy Agency reports that higher oil prices have helped Russian crude revenues to reach $20.4 billion, a 40% increase year-over-year.

Analysts are skeptical about the effectiveness of the G7’s oil price cap proposal, stating that it will probably backfire because India and China are not involved in the price cap coalition and will aid Russia.

Deputy Prime Minister Alexander Novak issued a warning Thursday stating that countries that support the price cap will be excluded from future Russian oil supplies.

Today, gold jumped 1.11% to $1,726.40 per ounce. Silver price rose 2.64% to $18.52 per ounce. Platinum increased 1.93% to $862.30 per ounce, while Palladium jumped 0.41% to $2,058.50 per ounce. Bitcoin spiked 1.23% to $20,378.50.

How will oil prices react to Russia’s decision to stop oil shipments to nations that support the G7’s oil price cap?

Gold and Silver Prices Drop Amid Dollar Index Spike

Sep. 01, 2022

Gold Bars

Today, the price of gold fell 1.14% to $1,700.50 per ounce and the silver price dipped 1.95% to $17.87 per ounce. The dip in precious metal prices is attributed to the strengthening of the DXY Dollar Index.

The US dollar has reached its strongest value against a basket of fiat currencies since 2002. 

The Feds “hawkish” monetary policy of increasing interest rates and reducing its balance sheet has led to a strong dollar.

Several economists and investors believe that the dollar seems to be benefiting from its status as a safe-haven currency. As a result, investors are exchanging other currencies for dollars and are choosing to hold them instead of purchasing US assets. This can hurt the value of the dollar if the Fed reverses course and lowers interest rates.

Also, platinum prices decreased 3.06% to $839.00 per ounce, while palladium jumped 4.03% to $2,042.50 per ounce. Bitcoin spiked 0.89% to $19,868.90.

How will the dollar react to a retracement in the Fed’s monetary policies in the future?

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