French Inflation Rates Hit New Highs

Oct. 31, 2022

According to the National Institute of Statistics and Economic Research (INSEE), consumer inflation in France rose in October.

french flag

Insee’s preliminary estimates show that inflation year-over-year (YoY) hit 6.2%, surpassing July’s 6.1% and hitting the highest since 1985.

The agency explained that the higher cost of living was related to soaring energy and food prices, which grew by 20% and 12% respectively. 

Insee is currently forecasting higher inflation levels for the next few months, with expected rates reaching 6.6% in December.

Today, gold fell 0.46% to $1,647.50 per ounce. Silver dropped 0.47% to $19.38 per ounce. Platinum decreased by 1.38% to $948.80 per ounce, while Palladium dipped by 3.33% to $1,877.00 per ounce. Bitcoin grew 1.38% to $20,346.50.

How will the French people react to higher inflation rates?

The Fed’s Favorite Inflation Gauge Rose 0.5% in September

Oct. 28, 2022

The core personal consumption expenditures (PCE) price index in September grew 0.5% month-over-month (MoM) and 5.1% year-over-year (YoY).

Consumer Prices

After including energy and food prices, PCE inflation grew by 0.3% MoM and 6.2% YoY, within expectations.

Personal spending jumped by 0.6% MoM, which is more than expected. But when adjusted for inflation, consumer spending only grew by 0.3% MoM.

Disposable income rose by 0.4% MoM, which remains flat after adjusting for inflation.

The Fed likes to use the PCE readings because it follows consumers more closely than the CPI. The PCE figures are used as a guide for their monetary policy adjustments.

Today, gold fell 1.24% to $1,651.20 per ounce. Silver dropped 2.40% to $19.33 per ounce. Platinum decreased 1.25% to $964.00 per ounce, while Palladium dipped 2.03% to $1,951.50 per ounce. Bitcoin grew 1.19% to $20,535.50.

Will the current PCE figures persuade the Fed to continue to hike rates well into 2023 or will they pivot? 

US GDP Grew More Than Expected in Q3

Oct. 27, 2022

The US’s gross domestic product accelerated at a 2.6% annualized rate in the third quarter. The current figure is higher than Dow Jones’s expected estimate of 2.3% year-over-year (YoY).

GDP

A shrinking trade deficit (due to a stronger dollar and consistent consumer spending) is the most significant economic factor that helped produce growth for the 3rd quarter.

Government spending also affected the quarter’s GDP’s positive growth.

The two sectors that supported economic growth the most were the exports of weapons to Ukraine and NATO partners plus an increase in the output of energy sources such as gas and oil.

Today, gold fell 0.07% to $1,673.80 per ounce. Silver dropped 0.10% to $19.78 per ounce. Platinum increased 0.84% to $984.70 per ounce, while Palladium dipped 1.85% to $1,955.50 per ounce. Bitcoin sank 0.82% to $20,605.70.

If the Fed pivots on its current monetary policy, what will happen to the US’s trade deficit? How will it affect GDP in 2023?

Bank of Canada Blinks; Raises Rates by 0.50% Instead of Proposed 0.75%

Oct. 26, 2022

The Bank of Canada increased its main interest rate Wednesday morning by a lower-than-expected 50 bps.

Canadian Flag

It was expected that the central bank was going to increase rates by 75 bps because of the country’s high inflation rate. 

The central bank expects that Canada’s GDP growth rate will remain close to zero for Q4 2022 until the summer of 2023, due to a decrease in consumer and business spending.

The Bank of Canada’s overnight rate rose from 3.25% to 3.75%, hitting its highest point in 14 years. Central bank officials anticipate a further rate increase in the future to help bring down inflation.

Today, gold rose 0.94% to $1,679.60 per ounce. Silver grew 1.29% to $19.83 per ounce. Platinum increased 3.93% to $973.80 per ounce, while Palladium spiked 2.32% to $2,006.50 per ounce. Bitcoin jumped 3.99% to $20,886.90.

Do you think the Fed will follow Canada’s lead and keep their rate increase lower than previously expected?

Russian Demand For Gold Depletes Bank Supplies 

Oct. 25, 2022

Russian banks are running low on gold supplies after Moscow abolished a purchase tax on precious metals, which spurred a buying frenzy from citizens.

gold bars

Andrey Vasiliev, Executive Director of Precious Metals Operations at Uralsib Bank, explained that the supply disruption is being exacerbated by a limited production capacity of refineries across the country.

The refinery’s main target market before the tax repeal was wholesale purchasers who would buy large bars of gold in bulk. Now, the market has shifted to a growing demand for small ingots and refineries failed to adapt fast enough to meet demand.

It is also more expensive to produce smaller bullion products, which is off-putting to many refineries. 

Currently, refineries are beginning to retool and adapt to fulfill the increasing market demand for gold in Russia.

Today, gold rose 0.36% to $1,665.60 per ounce. Silver grew 0.21% to $19.52 per ounce. Platinum decreased 1.08% to $934.70 per ounce, while Palladium fell 3.01% to $1,955.50 per ounce. Bitcoin jumped 0.83% to $19,490.80.

Aside from the tax exemption, why do you think Russians are interested in purchasing gold in higher quantities?

Another EU Member Faces Double-digit Inflation

Oct. 24, 2022

Danes are facing double-digit inflation rates, reaching 11.1% in September year-over-year (YoY).

Denmark

The latest inflation figures from Statistics Denmark show that inflation surpassed the nation’s 1982 record inflation rate of 10.1% YoY.

High inflation rates in Europe are crippling household budgets, with around 18 other countries also facing double-digit inflation. The Baltic region is facing even higher rates, surpassing 20% YoY. 

The biggest culprit for inflation in Denmark is rising energy and food prices. Another factor that is hurting Danes is wage reduction, which has been decreasing purchasing power.

Analysts believe that if the conflict in Ukraine escalates and energy supplies diminish, prices can continue to move upward – potentially causing political turmoil in the country.

Today, gold prices dropped 0.40% to $1,661.30 per ounce. Silver dipped 1.13% to $19.43 per ounce. Platinum decreased 0.86% to $942.00 per ounce, while Palladium fell 1.64% to $2,032.00 per ounce. Bitcoin sank 1.37% to $19,305.00.

How can Denmark lower the cost of living and help increase wages?

US Budget Deficit Shrinks to Biggest Drop Ever

Oct. 21, 2022

The US budget deficit was cut in half for the new fiscal year. This will be the largest drop in history.

US Treasury

The new budget will fall to $1.375 trillion for fiscal 2022, less than 2021’s fiscal $2.776 trillion budget.

The deficit soared during the two years of Covid when the government gave out massive amounts of cash to people, businesses, and local governments to fight the pandemic.

For fiscal 2021, the government shelled out $1.9 trillion under the American Rescue Plan. The plan proposed to help the country with health services and economic stability during the pandemic. Many critics believe that the funding fueled high inflation rates and was unnecessary.

Today, gold prices rose 0.90% to $1,650.80 per ounce. Silver jumped 1.31% to $19.08 per ounce. Platinum decreased 0.44% to $929.70 per ounce, while Palladium fell 3.62% to $2,038.00 per ounce. Bitcoin grew 0.23% to $19,085.50.

How will government agencies manage the new fiscal year with a significantly lower budget?

Japanese Yen Weakened to 150 Against the Dollar, Lowest Level Since 1990

Oct. 20, 2022

The Japanese yen has been in freefall this year and continues to struggle against the US dollar – and recently hitting 150 against it.

Japanese Flag

The current value of the yen against the dollar is at its weakest since August 1990. Lowering to 150 crosses a critical psychological threshold that has many Japanese economists deeply concerned. 

The Bank of Japan is set to hold a two-day meeting next week, but so far the central bank has ruled out interest rate increases.

The Nikkei 224 stock index also fell Thursday, shedding close to 1%.

The Japanese Finance Minister Shunichi Suzuki vowed to intervene and take appropriate measures to control the yen’s volatility in currency markets.

Today, gold prices grew 0.77% to $1,651.50 per ounce. Silver jumped 2.55% to $19.17 per ounce. Platinum increased 3.29% to $932.70 per ounce, while Palladium spiked 4.10% to $2,124.50 per ounce. Bitcoin rose 0.90% to $19,288.10.

Why do you think the Bank of Japan is forgoing interest rate hikes?

UK’s Inflation Rate Reaches a 40-Year High

Oct. 19, 2022

The UK is currently dealing with a critically fragile economic situation that almost wiped out the country’s pension fund. Now, to make matters worse, the UK is dealing with a freefalling currency amidst a 40-year high inflation rate. 

Rates

The inflation rate in September rose to 10.10% year-over-year (YoY) and 0.5% month-over-month (MoM), way above consensus expectations. 

The higher-than-expected inflation rate was fueled by the highest food prices recorded in years. Restaurant and hotel prices also jumped significantly. 

UK economists believe that inflation will increase in October and then increase significantly in April after energy price guarantees expire.

Today, gold prices dipped 1.11% to $1,643.90 per ounce. Silver fell 1.63% to $18.70 per ounce. Platinum decreased 1.99% to $910.30 per ounce, while Palladium jumped 2.00% to $2,024.00 per ounce. Bitcoin dropped 0.92% to $19,152.40.

What steps do you think the Bank of England will take to control inflation in the last quarter of the year?

High Inflation Pushes France into a National Strike

Oct. 18, 2022

On Tuesday, a nationwide strike shut down schools and train services as France’s trade unions protest the energy crisis, soaring inflation, and stagnant wages. 

french flag

One of the country’s largest trade unions, CGT, is calling for “an increase in wages, pensions and social minimum, and the improvement of living and study conditions.”

The trade union explained that Tuesday’s protest is an extension of the refinery strike that has shuttered gas stations throughout the country.

CGT is accusing Exxon and Total of making large profits and turning a blind eye to employee demands throughout the economic crisis.

The protest has encouraged employees of other sectors, both public and private, to take to the streets and strike.

The national strike has forced the closure of SNCF, the nation’s nationalized rail company. Eurostar is also planning on shutting services down due to a lack of employees. Maritime shipping is also expected to experience disruptions.

France’s inflation rate has surpassed 6%, with some analysts hypothesizing it may double at the peak of winter due to the energy crisis. Higher energy prices have lowered production across all industrial sectors, leaving many employees out of work. 

Today, gold prices dipped 0.10% to $1,656.90 per ounce. Silver fell 0.27% to $18.85 per ounce. Platinum decreased 1.31% to $922.90 per ounce, while Palladium jumped 0.73% to $2,050.50 per ounce. Bitcoin dropped 1.03% to $19,346.60.

Do you think higher wages will reverse the effects of inflation in France? What solutions do you think would help alleviate the French employee’s discontent during this economic crisis?

China Cuts Off LNG Exports to the EU

Oct. 17, 2022

Beijing instructed all of its state-owned gas companies to stop reselling liquefied natural gas (LNG) to overseas buyers as the Chinese Communist Party (CCP) prepares to secure its own supply for winter. 

China

The National Development and Reform Commission told Sinopec, PetroChina, and CNOOC to save their energy supplies for domestic consumption.

China began reselling its LGN supplies to Europe, South Korea, and Japan due to falling local demand for the energy source. Chinese-supplied LGN was providing some alleviation to EU buyers facing a winter natural gas shortfall. Now, the EU will need to find a replacement elsewhere. 

Chinese President Xi Jinping addressed the country on Sunday. He claimed his administration will focus on China’s energy security and pledged to keep households warm during the winter.

Today, gold prices spiked 1.03% to $1,680.30 per ounce. Silver rose 2.52% to $19.28 per ounce. Platinum increased 2.45% to $901.60 per ounce, while Palladium jumped 0.88% to $2,155.00 per ounce. Bitcoin rose 1.71% to $19,590.70.

How will the drop in LGN supplies to Europe affect the continent during the upcoming winter months?

Inflation’s Running Hot

Oct. 13, 2022

Americans paid more money in September than expected, according to the Bureau of Labor Statistics.

cpi

The consumer price index (CPI) rose 0.4% month-to-month (MoM), which was slightly higher than the Dow Jones 0.3% MoM estimate. Year-over-year (YoY) inflation jumped to 8.2%, approaching all-time highs of the 1980s.

Core CPI, which excludes energy and food prices, jumped 0.6% MoM and 6.6% YoY. This is the largest yearly gain since the inflationary era of the early 1980s. 

Food prices grew by 0.8% MoM and 11.2% YoY. Energy prices also increased, with the average cost of regular gasoline reaching 20 cents per gallon more than the previous month.

The price of shelter also rose, reaching 0.7% MoM and 6.6% YoY. Medical care is up 1% MoM and transportation services bumped up to 1.9% MoM.

Workers are facing harder economic times with rising prices. Average hourly earnings fell 0.1% MoM adjusted for inflation, which is 3% lower compared to a year ago.

The CPI reports are having a negative effect on trading, crypto, and the bullion markets since analysts predict that the Fed will become more aggressive toward its monetary policy. It is expected that two more interest rate hikes will occur, with some analysts saying that the Fed could go as high as 75 basis points in November and December.

The Fed’s goal of lowering inflation is hard to see with a growing cost of living. Several items have dropped in price. Used vehicles and apparel declined by 1.1% and 0.3% respectively. Egg prices also fell, dropping 3.5% MoM but still up 30.% YoY.

On Friday, the Commerce Department and Census Bureau will release last month’s retail sales report, which will reflect how consumers have been affected by the swing in prices.

Today, gold prices dropped 1.23% to $1,662.40 per ounce. Silver sank 1.34% to $18.94 per ounce. Platinum decreased 0.23% to $900.70 per ounce, while Palladium dipped 2.03% to $2,150.00 per ounce. Bitcoin dipped 3.28% to $18,522.80.

Have you seen a significant change in prices where you live? What prices for products and services have you seen change over the last 30 days?

PPI Increased 0.4% in SeptemberMore Than Expected

Oct. 12, 2022

Wednesday morning, the Bureau of Labor Statistics reported that wholesale prices rose in September. 

PPI

The Producer Price Index (PPI) increased by 0.4% month-over-month (MoM), more than the Dow Jones estimate of 0.2% MoM. Yearly PPI rose to 8.5%, which is slightly lower than August’s 8.7%.

The PPI measures wholesale prices for the products and services US industries use for production. Excluding trade, food, and energy services, prices jumped 0.4% MoM, and 5.6% year-over-year (YoY).

Rising inflation is an ongoing issue in the US and abroad. The problem has grown significantly enough that the Fed shifted its focus for its monetary policy in 2022 primarily towards lowering inflation. Investors are now worried that the Fed will continue to raise interest rates, with many industry leaders signaling higher unemployment rates, lower GDP, and a stock market crash would ensue if the Fed continues to stick to its “hawkish” policies.

Today, gold prices spiked 0.34% to $1,680.30 per ounce. Silver sank 0.44% to $19.28 per ounce. Platinum decreased 0.45% to $901.60 per ounce, while Palladium dipped 0.68% to $2,155.00 per ounce. Bitcoin rose 0.59% to $19,104.00.

How do you think the Fed will react to higher-than-expected inflation data? 

Top US Bank Gives Grim Economic Warning

Oct. 11, 2022

Bank of America (BofA) has warned that the Federal Reserve’s aggressive monetary policy will destroy the nation’s job growth in 2023.

Jobs market

BofA says that as many as 175,000 employees a month will lose their jobs, which will lead to a hard landing for the economy and stock market. 

In a perfect world, an aggressive monetary policy would work well to lower inflation without causing too much disruption in the job market. However, in today’s current economic climate, too many variables are contributing to the already complex situation – making it increasingly difficult to manage.

Currently, the job market is slowing down, but not enough to curb inflation by the Fed’s standards. The unemployment rate dropped to 3.5%, while the Fed’s target rate is 4.4%. Fed officials believe that the US unemployment rate has to be at least 4% to lower inflation. This means that the Fed will probably continue to raise interest rates until it can achieve that goal.

Today, gold prices grew 0.67% to $1,688.10 per ounce. Silver sank 0.38% to $19.74 per ounce. Platinum decreased 0.56% to $911.30 per ounce, while Palladium dropped 1.66% to $2,187.00 per ounce. Bitcoin fell 0.01% to $19,139.80.

Do you agree with the Fed’s plan to reach a 4.4% unemployment rate goal? How will the economy react if 175,000 employees lose their jobs in a month?

Important Key Data to be Released This Week: PPI, CPI, and FOMC Minutes

Oct. 10, 2022

This week, investors will be focusing on significant data reports that will seriously affect the economy.

Balance sheet

The Producer Price Index (PPI) and the Federal Open Market Committee (FOMC) Meeting Minutes will be released on Wednesday, followed by the consumer price index (CPI) on Thursday. The University of Michigan’s inflation expectation (MICH) and US sales data are expected to be released on Friday. 

These reports will provide investors and economists with important inflation data and forecasts which will likely inform them of the Fed’s next monetary steps.

Also, top US banks, such as JPMorgan, Citi, and Morgan Stanley, will release earnings this week. Retail-oriented companies, including Delta, PepsiCo, and Domino’s Pizza will release their earnings reports too. 

The combination of all of these key events might lead to a shaky two weeks of volatile trading. 

Today, gold prices dipped 1.01% to $1,686.20 per ounce. Silver sank 1.94% to $19.98 per ounce. Platinum decreased 0.77% to $928.20 per ounce, while Palladium rose 2.97% to $2,296.00 per ounce. Bitcoin fell 0.59% to $19,326.70.

Do you think inflation ran hotter for the month of September than in previous months? If so, what next steps should the Fed take to curb inflation?

India’s Gold Demand Remains Strong Through September

Oct. 7, 2022

Indian gold purchases in September were robust, and this trend is expected to continue until the end of the year.

India Flag

A spike in demand occurred in September, pushing premiums up by $2 to $3 an ounce for the first time since May.

Lower gold prices sparked a buying frenzy in India for the first week of September which cooled down in the following weeks. Still, gold purchases remain strong as many Indians prepare for Diwali.

Premiums on gold pulled back in late September after importers used a tax loophole: The government implemented lower taxes for platinum alloys, which importers then used to their advantage by fabricating rods comprised of 4% platinum and 96% gold. It is estimated that around 27 tons of gold were imported using this workaround. 

Gold is a very important metal in Indian culture and is not treated as a luxury. In 2018, an ICE 360 survey showed that one in every two Indian households has purchased gold since 2012. The survey also showed about 87% of households total own some amount of gold, including even the lowest-income households. About 75% of households in the bottom 10% owned some form of the precious metal.

Today, gold prices dipped 0.60% to $1,711.50 per ounce. Silver sank 1.55% to $20.52 per ounce. Platinum increased 0.33% to $884.30 per ounce, while Palladium dropped 0.82% to $2,293.00 per ounce. Bitcoin fell 1.80% to $19,606.10.

How much gold do you think a household should possess for a rainy day?

OPEC+ Drop in Oil Output Pushes US to Seek Alternative

Oct. 6, 2022

OPEC+ has agreed to drop its daily oil output by 2 million barrels, a decision viewed by the West as an alignment with Russia. 

Oil

The decrease in oil production will begin in November and last through 2023. Analysts say that the drop in oil production will increase energy prices and inflation. Prices could soon exceed $100 a barrel.

The US didn’t take the OPEC+ announcement lightly, with the White House saying that they are disappointed by the decision and accusing OPEC+ of siding with Russia. 

US officials have stated that they will look toward policy responses that will help bring energy prices down. The US is preparing to release another 10 million barrels from its Strategic Petroleum Reserve and possibly hiking local production as well. 

Many economists speculate that the US will struggle to meet its oil price goals due to current green initiatives that have stifled energy production.

Today, gold prices dipped 0.30% to $1,720.60 per ounce. Silver sank 0.56% to $20.75 per ounce. Platinum increased 0.22% to $938.90 per ounce, while Palladium soared 1.10% to $2,314.00 per ounce. Bitcoin fell 0.44% to $20,071.70.

How will the US increase oil production in the short term and will it be enough to bring down energy prices?

Central Banks Continue to Add Gold to its Reserves 

Oct. 4, 2022

Gold reserves at central banks throughout the world grew for the fifth straight month in August, according to World Gold Council.

Gold Bars

Central banks added at least 20 tons of gold to their existing reserves. This brings the total amount of gold procurement by central banks globally to 100 tons so far this year. 

Turkey is the leading buyer of the precious metal this year, purchasing 8.9 tons in August. That brings the total gold reserves for Turkey to 478 tons.

Qatar was the largest buyer of gold in July purchasing 14.8 tons of the metal.  

In total, 270 tons of gold have been purchased by the central banks for the first half of the year and is expected to match the same amount by end of the year.  

Today, gold prices dipped 0.43% to $1,664.90 per ounce. Silver sank 1.22% to $18.94 per ounce. Platinum decreased 0.23% to $884.30 per ounce, while Palladium soared 3.75% to $2,277.50 per ounce. Bitcoin fell 0.52% to $19,234.21.

Why do you think central banks are in a gold-buying frenzy?

Significant Drop in Ocean Freight Orders Signals Slowing Consumer Demand

Oct. 3, 2022

US shipping companies saw a 20% drop in freight orders for September and October, signaling a consumer slowdown for the coming months.

Port

The drop in demand spans an array of products including housing, machinery, apparel, and industrial goods. This is due to the high amount of retail inventory and a drop in consumer spending amid inflation concerns. For example, Nike just announced an overstock in inventory that has led to a significant drop in its share price. 

Ocean carriers have canceled up to 50% of shipping to stabilize vessel capacity according to demand.

Freight prices between Asia and the US have dropped by 80% compared to 2021. Analysts believe this trend can help relieve inflation pressures in the US.

Today, gold prices rose 1.97% to $1,702.60 per ounce. Silver jumped 7.04% to $20.58 per ounce. Platinum increased 3.96% to $918.70 per ounce, while Palladium soared 4.73% to $2,295.00 per ounce. Bitcoin spiked 2.01% to $19,441.30.

How do you think the drop in freight orders will affect inflation in the short run?

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