Gold Standard News Daily

7.26.24 - The coming commercial real estate crisis of U.S. banks

Gold last traded at $2,387 an ounce. Silver at $27.91 an ounce.

EDITOR'S NOTE: Is it possible the next wave of bank failures could be among larger banks? For now, this remains to be seen; but the weak links within banks of all sizes are getting weaker by the day. The conclusion of this review doesn't hold much hope. Could your bank be next? What steps have you taken to protect your assets? Give us a call today to find out how we can help hedge against these threats to your savings.

CRE Concentration Review -GnS Economics Newsletter

by Mate Suto and Tuomas Malinen

Commercial real estate (CRE) issues have been getting more attention this year, causing significant headaches for the banking sector and raising questions about the severity of the situation. Rising vacancy rates, the short maturity of loans, and the loans made during low-interest periods have all contributed to escalating the current predicament. We have written about this several times, and now we aim to explore the problem through the lens of bank balance sheets to determine which ones really suffer under this issue.

To begin with, CRE loans are occupying a large portion of the U.S. banking sector's entire portfolio (Total Assets), standing at a significant 10%. CRE loans are also regarded as the most widely held loan type among banks, which is confirmed by the fact that the majority of banks (99%) have positive CRE loans. Basically, almost every bank in the U.S. is holding some type of CRE loan on their balance sheets. Therefore, it is no surprise that this is an area warranting close observation, especially because the risks posed by CRE exposure spread quite unevenly between large and small banks.

Figure 1 illustrates the average CRE concentration for banks based on their size, as a share of loans.

Community banks, which refer to small and medium sized banks, emerge as a primary source of concern due to their substantially higher exposure compared to their larger competitors. This is clearly visible in the figure, where, on average, these banks allocate 45% of their loans to CRE, while the largest banks maintain a more cautious concentration of around 12%. This difference is not unexpected, as community banks are inclined to take on more risks due to their lower capital requirements. This seemingly underscores the growing concerns surrounding community banks and their CRE portfolios, and this narrative is also heavily pushed by the media.

However, high CRE concentration alone do not inherently imply problems. The real issue arises from the combination of high concentrations, insufficient reserves, and delinquency issues. Therefore, it is essential to analyze the Coverage Ratio, which compares CRE to reserves for losses (Allowance for Loan Losses) plus Equity Capital.1 This ratio effectively measures the ‘leverage’ in the CRE portfolio. The higher the number, the higher the possible future risk. VIEW CHARTS AND READ MORE

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7.25.24 - Why is everything soaring?

Gold last traded at $2,364 an ounce. Silver at $27.85 an ounce.

EDITOR'S NOTE: If you've been wondering how it is that stocks, gold and equities can all be rising at the same time; you're not alone. The answer is pretty simple, and it's not likely to remain this way forever. Equities, in particular, are being driven by the strong demand that exists right now for AI tech stocks. If it's a battle between gold and AI for the last man standing, my money is on gold.

Why have US shares, gold and the dollar been soaring? -The Guardian

by Jeffrey Frankel

The US stock market has been on a tear over the past two years. The S&P 500 has increased by roughly 40% since Joe Biden assumed office in January 2021 and, along with the Dow Jones and Nasdaq, is repeatedly setting new records. Moreover, the dollar has strengthened sharply against every major currency, while the price of gold soared to an all-time record of $2,470 an ounce earlier this month.

Economists and commentators have struggled to explain these trends. While the increase in gold prices could be attributed to elevated risk perceptions stemming from political and geopolitical uncertainties, this explanation does not account for the booming stock market. Conversely, the decline in the Vix volatility index since 2022 might explain the US stock market rally but not the increase in gold prices.

One possible explanation for the boom in equities is the rapid emergence of artificial intelligence since late 2022, which has caused shares of companies such as the chip maker Nvidia to skyrocket. But while the tech sector has experienced the biggest gains and attracted the most attention, the market has been rising steadily across the board, even excluding tech stocks.

Some believe that the explanation for the rising prices of stocks and gold lies with US monetary policy. US interest rates have risen over the past two and a half years, including long-term rates. This should have reduced stock and commodity prices. Typically, stock markets fall when interest rates rise, assuming other factors remain unchanged. The reason is that interest rate increases reduce the present discounted value of future corporate earnings, prompting investors to shift from equities to bonds. Moreover, the price of gold also tends to fall when real (inflation-adjusted) interest rates rise and vice versa. READ MORE

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7.24.24 - World's Richest Person Says The US is Going Bankrupt

Gold last traded at $2,394 an ounce. Silver at $28.85 an ounce.

Analyst Predicts Gold Price If Donald Trump Becomes President -watcher.guru

As we enter the thick of election season, the predictions are starting to roll in. After Biden's recent announcement, there are an overwhelming number of people who believe this might just do everything short of guarantee former President Trump a clear path to the White House. If you're wondering what this means for gold, read on.

by Vinod Dsouza

Donald Trump is all set to face off against Vice President Kamala Harris in November 2024 after President Joe Biden dropped out of the race. The markets remain on a slippery slope till November as two could dictate different economic terms for the country. The stock market, commodities, gold, and the US dollar are walking on a tightrope. On the heels of the presidential election, analyst Robert Kiyosaki has predicted the price of gold if Donald Trump is elected President.

Robert Kiyosaki, the author of the self-help financial book Rich Dad Poor Dad predicted that gold prices could turn bullish if Donald Trump gets elected. Kiyosaki predicts that gold prices could touch $3,300 in 2025 if Donald Trump becomes President again. READ MORE

BRICS: World’s Richest Person Says The US is Going Bankrupt -watcher.guru

It's no secret that the US economy and government have been standing on shaky ground for quite some time now, but how bad is it? According the world's richest person, it's really bad. Bankrupt bad.

by Jaxon Gaines

The world’s richest man has given good news to the ears of the BRICS alliance, claiming that the United States of America is going bankrupt. In a response to Billy Markus, known as Shibetoshi Nakamoto and the co-founder of Dogecoin, Musk says that the USA is going bankrupt.

“I am glad 76% of the income tax I pay goes directly to important things like interest on past government incompetence,” Markus posted on X. In a quote tweet, Musk replied “America is going bankrupt btw.” In a follow-up post, Musk shared the below image of the current status of dollar value destruction: READ MORE

BRICS Alliance Discuss Plan That Could be Catastrophic for the US Dollar -watcher.guru

BRICS may have not established with the intention of destroying the US Dollar, but their efforts toward de-dollarization can no longer be ignored. As the alliance continues to grow in numbers and in power, their efforts could very well be the final curtain call for the greenback.

by Joshua Ramos

Amid their ongoing de-dollarization efforts, the BRICS alliance has recently discussed a plan that could be catastrophic for the US dollar. The grouping has spent much of the last two years embracing expansion and decreasing international reliance on the greenback. One initiative could be a key aspect of the latter.

The collective had begun development on its payment system earlier this year. Although information is scarce, Iran has expressed interest in connecting all member central banks in the process. That would have a massive impact on global finance, but it isn’t the only step that could see the bloc do away with overreliance on the Western currency.

In 2023, the BRICS expanded for the first time in more than two decades. That saw Iran, Egypt, Ethiopia, and the United Arab Emirates (UAE) become its newest members. It also sent an invitation to Saudi Arabia. Although they have not yet declined, they have been pondering their admission into the group. READ MORE

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7.23.24 - Banks offer cash for new deposits

Gold last traded at $2,406 an ounce. Silver at $29.22 an ounce.

EDITOR'S NOTE: American depositors have been dealing with a myriad of issues in today's banking age. It has created quite a pinch on many households over the past few years. It would now appear that the banks themselves might be feeling a bit of that pinch as they are doing whatever they can to lure depositors back in.

JPMorgan Chase and Wells Fargo Offering $300 Cash As Banks’ Battle for New Deposits Intensifies for First Time in Years: Report - The Daily Hodl

Big banks in the US are boosting the amount of cash they’re handing to new customers as the fight for deposits intensifies for the first time in years.

JPMorgan Chase and Wells Fargo in particular are battling it out to curb deposit flight triggered by the Federal Reserve’s interest rate hikes, reports the Wall Street Journal.

Both banks are now offering $300 cash bonuses to new customers. And here’s the catch – newcomers must set up direct deposit in order to claim the reward.

Bank of America is offering $200 for the same set up, and Citi has a new promo offering 5% interest on new savings accounts for the first 90 days.

The moves come as earnings reports confirm banks are paying up to retain deposits and combat the rising popularity of money market funds. READ MORE

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7.22.24 - Central Banks Purchase Gold To Offset Their Own Money Destruction

Gold last traded at $2,397 an ounce. Silver at $29.13 an ounce.

EDITOR'S NOTE: Central banks are still gobbling up gold as it offers a time-tested and stable hedge against their own currency debasement. Individual investors alike would be wise to to create their own portfolio hedge, especially with any funds sitting in cash that is losing value by the moment. Markets around the world are starting to show their cracks, the time to protect yourself is now.

Central Banks Purchase Gold To Offset Their Own Money Destruction -Daniel Lacalle

by Daniel Lacalle

Why is the price of gold rising if the global economy is not in recession and inflation is allegedly under control? This is a question often heard in investment circles, and I will try to answer it.

We must begin by clarifying the question. It is true that inflation is slowly decreasing, but we cannot say that it is under control. Let us remember that the latest CPI data in the United States was 3% annualised and that in the Eurozone it is 2.6%, with eight countries publishing data above 3%, including Spain.

This is why central banks need to give the impression of hawkishness and maintain rates or lower them very cautiously. However, monetary policy is far from being restrictive. Money supply growth is picking up, the ECB maintains its “anti-fragmentation mechanism,” and the Federal Reserve continues to inject money through the liquidity window. We can say, without a doubt, that monetary policy is beyond accommodative.

At the end of this article, the price of gold is above $2,400 an ounce, up 16.5% between January and July 19, 2024. In the same period, gold has performed better than the S&P 500, the Stoxx 600 in Europe, and the MSCI Global. In fact, over the past five years, gold has outperformed not only the European and global stock markets, but also the S&P 500, with only the Nasdaq surpassing the precious metal. This is a period of alleged recovery and strong expansion of the stock markets. On the one hand, the market is discounting the central banks’ continued accommodative and expansionary policies, even possible high debt monetization, given the unsustainable deficits in the United States and developed countries. That is, the market assumes that the Federal Reserve and the ECB will not be able to maintain the reduction of their balance sheets in the face of rising debt and public spending in many economies. As a result, gold protects many investors against the erosion of the currency’s purchasing power, i.e., inflation, without the extreme volatility of Bitcoin. If the market discounts further monetary expansion to cover the accumulated deficits, it is normal for the investor to seek protection with gold, which has centuries of history as an alternative to fiduciary money and offers a low-volatility hedge against currency debasement. READ MORE

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7.19.24 - Faulty software update wreaks havoc

Gold last traded at $2,400 an ounce. Silver at $29.21 an ounce.

EDITOR'S NOTE: A sobering reminder that anything handled digitally is vulnerable to external attacks - as well as internal operating error - and can be rendered useless. Today it was airlines, hospitals, local gov't offices and television studios; could banks experience this same type of outage? Do you trust their systems to keep a proper accounting of your holdings if they do? Just as major industries shouldn't put all of their eggs in one technological basket, so should you diversify your assets into safer havens to protect yourself from events such as this. Gold and silver may not be on the cutting edge, but they have been a reliable store of value since the dark ages.

A faulty software update causes havoc worldwide for airlines, hospitals and governments -AP News

By Charlotte Graham-McLay, Elaine Kurtenbach, David McHugh and Haleluya Hadero

NEW YORK (AP) — A faulty software update caused technological havoc worldwide on Friday, grounding flights, knocking down some financial companies and news outlets, and disrupting hospitals, small businesses and government offices.

The breadth of the outages highlighted the fragility of a digitized world dependent on just a few providers for key computing services.

The trouble was sparked by an update issued by cybersecurity firm CrowdStrike and only affected its customers running Microsoft Windows, the world’s most popular operating system for personal computers. It was not the result of hacking or a cyberattack, according to CrowdStrike, which apologized and said a fix was on the way.

Businesses and governments worldwide experienced hours-long disruptions — their computer monitors glowing blue with error messages — and scrambled to deal with the fallout. CrowdStrike’s CEO said some of their systems will require manual fixes.

Thousands of flights were canceled and tens of thousands were delayed, leading to long lines at airports in the U.S., Europe and Asia. Airlines lost access to check-in and booking services in the heart of the summer travel season.

Several local TV stations in the U.S. were prevented from airing the news early Friday, and some state and local governments reported problems at courts, motor vehicles departments, unemployment agencies, emergency call centers and other offices.

Affected hospitals had problems with appointment systems, forcing them to suspend patient visits and cancel some surgeries. READ MORE

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7.18.24 - Gold-to-Silver Ratio Near 70 Points

Gold last traded at $2,444 an ounce. Silver at $29.78 an ounce.

EDITOR'S NOTE: Numerous market forecasters believe the price of silver will bust through the $50 an ounce mark by year's end. With silver prices sitting at $29 an ounce right now, that would be an incredible gain; but the question is, why would it do that? The Gold-to-Silver Ratio explains it.

Gold-to-Silver Ratio *Breaking: Ratio Near 70 Points In July 2024* - Investing Haven

Since early July 2024, the gold-to-silver ratio chart has fallen near 70 points. A tiny push higher in the price of silver and this ratio breaks down which will trigger bullish energy in the silver market.

We explore a fascinating phenomenon linked to the gold-to-silver ratio. In a natural way, the gold-to-silver ratio chart concludes that silver has the potential to stage epic price swings, from time to time. They tend to result in epic silver rallies that go into history books.

By analyzing historical data and observing the pattern, we notice the potential for significant price movements in silver whenever the ratio drops below the 80 to 100x range.

Update July 16th, 2024: The gold-to-silver price ratio broke down below 80 points now. Since May 29th, 2024, the gold-silver ratio moves between 73x and 78x. This is a twilight zone area with a bullish bias. A tiny move higher in the silver price relative to the gold price will put silver in a strong position to accelerate its move higher.

Understanding the Gold-to-Silver Ratio

The gold-to-silver ratio is a simple metric that compares the price of gold to that of silver. It is calculated by dividing the price of gold per ounce by the price of silver per ounce.

Historically, this ratio has exhibited considerable fluctuations, influenced by various factors, including market sentiment, economic conditions, and supply and demand dynamics.

However, epic turning points have been registered in the 80-100 points area. More importantly, any drop below 80 points came with strong silver price action.

Update July 16th, 2024: The big level to watch for the gold to silver ratio is 65 points: once below 65 points, silver has historically been able to stage an historic rally. However, very often, 65 points in the gold-to-silver ratio acted as support, meaning resistance in the price of silver. With a gold price steady around 2340 USD/oz, a gold-to-silver price ratio gives 34-37 USD/oz for silver as THE decisive price point. This is consistent with all our silver analysis so far in which we have always featured $34.70/oz as a critical price point (also the first bullish silver target). READ MORE

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7.17.24 - US Economy Presents a Global Recession Risk

Gold last traded at $2,458 an ounce. Silver at $30.37 an ounce.

Gold Soars To Record High As Stocks Do Something Not Seen Since Oct 1987 -ZeroHedge

"Gold soars to record high" as trouble brews in the stock market. The trouble is not a new kind of trouble, it's the type we saw when equity markets took a giant punch to the gut. Could it be happening again?

by Tyler Durden

There continues to be a very clear factor footprint across the market, with rotational pressures driving Small over Big / Low Momentum over High Momentum / Growth into Cyclicals / Popular shorts over Longs.

On the day, Small Caps literally exploded higher (+3.5%) with Nasdaq unchanged...

Today also saw a continuation of yesterday’s “Trump Trade” with Bitcoin (+370bps) and Infrastructure (+240bps) leading the market higher.

Since 'soft' CPI struck last week, the Russell 2000 has exploded over 10% higher... and the Nasdaq 100 has slumped...

Yes, The Dow has followed Small Caps higher (mostly due to Energy and Financials), but a glimpse at the S&P 500's lackluster performance destroys the hope-filled narrative that this is just a "healthy rebalance into a broadening rally." With the concentration and positioning in mega-cap tech so high, the majors will suffer no matter what and passively drag the 'broader' names down too. VIEW CHARTS AND READ MORE

BRICS: IMF Warns US Economy Presents a Global Recession Risk -Watcher.Guru

There's been a lot of discussion here in the US about the state of our economy; it's old news at this point. The IMF is now weighing in as they look at the global implications of a faltering US economy and the negative impact on the world's economy.

by Joshua Ramos

Source: watcher.guru

The IMF has expressed concern in the US growth slowing. Moreover, it has noted the continued high inflation only compounds the problem. They ultimately say that the two factors could all but prevent the world from avoiding a global recession.

The BRICS bloc has consistently sought to lessen its exposure to the US dollar, in what could be a smart move, as the IMF has warned the US economy could present a global recession risk. Specifically, they warn the nation’s economy slowing should lead to some worry.

The IMF warns that the world’s economy is in a “sticky spot,” despite projections that global output should stay at 3.2% in 2024. Specifically, they are concerned over potential weaknesses in the US. The country was key in the world’s return from the 2020 pandemic, but has slowed its growth projections.

The IMF has downgraded its growth projection for the United States economy. They had projected 2.7% growth in 2024, from a 2.5% forecast a year prior. However, that has not been changed to a 2.6% growth rate. It is rooted in a cooling labor market that could have a huge effect on the country. READ MORE

Auto Insider Warns More Americans Fall Behind On Car Payments As Repos Soar 23% -ZeroHedge

Unemployment numbers are skyrocketing, so it should come as no surprise that car loan defaults are doing the same. This reflects yet another area of our economy having a direct impact on US households.

by Tyler Durden

The delayed day of reckoning has arrived for millions of Americans who purchased vehicles with absurdly high monthly payments they no longer can afford. New data shows auto repossessions surged in the first half of the year, driven by elevated inflation and high interest rates, resulting in increased consumer distress (read: here & here) as the labor market slows.

Before we delve into the data from Cox Automotive, let's revisit several of our reports from mid-2022, showing how we have been diligently tracking the perfect storm brewing for auto repossessions:

July 2022: Are We Headed For An "Auto Loan Crisis" As Delinquencies Begin To Rise?

December 2022: Perfect Storm Arrives: "Massive Wave" Of Car Repossessions And Loan Defaults To Trigger Auto Market Disaster, Cripple US Economy

January 2023: "It's The Perfect Storm": More Americans Can't Afford Their Car Payments Than During The Peak Of Financial Crisis

November 2023: Americans Panic Search "Give Car Back" As Subprime Auto Loan Delinquency Erupts

February 2024: "Garbage Deals": Dealership Puts Customers In Cars With $3,000 Monthly Payments

Two years later, the deterioration has accelerated. Cox data shows repos jumped 23% in the first six months of this year compared with the same period in 2023. Repos started moving higher last year and have now exceeded pre-Covid levels, up 14% compared to the first half of 2019. READ MORE

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7.16.24 - Gold heads for record high

Gold last traded at $2,467 an ounce. Silver at $31.23 an ounce.

EDITOR'S NOTE: It seems like no matter what happens in the news, gold tends to respond quite well to it. With the Fed expected to cut rates, investors believe gold will reach new highs as a direct result.

Gold heads for record high close on view that Fed is poised to cut rates-CNBC

by Sarah Min

Gold jumped to a record Tuesday as rising expectations of a September interest rate cut bolstered demand for bullion.

Gold futures settled up 1.6% to an all-time closing high of $2,467.8 per ounce, after also hitting a new intraday record high of $2,474.5 during the session. Gold futures prices have climbed more than 19% this year.

Spot gold jumped 1.9% to $2,468.68 an ounce during the session. LSEG data shows that's an all-time high going back to 1968, without adjusting for inflation.

Gold prices hit record highs earlier this year before pulling back as the prospect of higher-for-longer interest rates dampened investor enthusiasm for the precious metal. But interest in the asset has grown after June's softer inflation data and some recently dovish comments from Federal Reserve Chair Jerome Powell combined to raise the odds of rate cuts coming this year. Markets are pricing in 100% odds of a rate cut in September now, according to futures trading tracked by the CME FedWatch tool.

A weakening dollar has also supported demand for bullion. On Tuesday, the U.S. greenback rebounded after falling to a five-week low.

"Interest to 'buy-the-dip' remained prevalent among investors amid strong sentiment towards gold, which is likely why the market was quick to rally on soft U.S. data prints and dovish Fed expectations," UBS strategist Joni Teves said in a note on Friday. READ MORE

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7.15.24 - Trump assassination attempt lifts gold

Gold last traded at $2,421 an ounce. Silver at $30.65 an ounce.

EDITOR'S NOTE: As everyone knows by now, there was an assassination attempt on former President Trump's life. This speaks to the volatility and tensions that exist in the United States today; and we still have a long way to go before November. The price of gold jumped upwards as this event unfolded, reminding us once again that - in times of uncertainty - gold is a safe haven.

How the Trump assassination attempt is helping lift gold prices toward record highs -MarketWatch

by Myra P. Saefong

Gold futures climbed closer to fresh record highs on Monday, as the assassination attempt on former President Donald Trump raised political uncertainty, boosting safe-haven demand for the precious metal.

The assassination attempt is “on everyone’s mind … so it stands to reason that political uncertainty is playing into the picture here,” said Jake Hanley, managing director and senior portfolio specialist at Teucrium Trading.

“Was the assignation attempt the mass unifying event America desperately needs? We’ll see,” Hanley said. “A unified American electorate committed to getting our fiscal house in order would likely be bearish [for] gold. Status quo means continued deficit spending and potential domestic unrest,” which is also bullish for gold.

Gold futures rallied Monday, but gains for the precious metal eased as the session moved closer to the settlement. Gold for August delivery GC00, +0.23% GCQ24, 0.23% traded as high as $2,445 an ounce on Comex before settling at $2,428.90, up $8.20, or 0.3%.

Based on the most-active contracts, prices traded near the previous record-high finish of $2,438.50 on May 20. On an intraday basis, prices have yet to surpass the record-high intraday price of $2,454, which was also seen on May 20. READ MORE

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