Summary
- Economic Reality: The economy is not as strong as it seems, as it's propped up by historic deficits.
- Recession Looms: Without these deficits, a recession would be inevitable.
- Federal Reserve Pivot: The Fed is signaling a rate cut cycle due to rising unemployment.
- Consumer Strain: Corporate earnings reveal that consumers are struggling to afford basic necessities.
- Dollar General's Struggles: Dollar General's CEO highlighted the financial strain of their customers.
- Record Credit Card Debt: US consumers are carrying record-high credit card debt and have low savings rates.
- Price Rigging Scandal: Goldman Sachs, BASF, HSBC, and ICBC Standard Bank settled a price-rigging lawsuit for precious metals.
- Gold and Silver Manipulation: Evidence suggests that gold and silver prices have also been manipulated.
- Market Corrections: Historically, artificially suppressed markets eventually experience shortages and price spikes.
- Recession Indicators: Goldman Sachs' job cuts and other factors point towards a potential recession.
When people say that the economy is super strong, they almost always fail to mention that we are currently running HISTORIC deficits not seen outside of WW2, the 2008 GFC or 2020 Covid. If we weren’t running this deficit and balancing the budget, GDP would collapse and economic recession would already be admitted.
While the fiat Federal Reserve is now signaling it is pivoting next month to a rate cut cycle as US unemployment has been rising.
We are already seeing circumstantial evidence of recession from corporate earnings conference calls that the average US consumer is tapping out of funds to spend on the basics.
Major US retailer Dollar General CEO Todd Vasos stated this week that their core consumer is very price-sensitive at this time in looking for value wherever they can find. The core consumers at Dollar General — making up 60% of its customer base — come from households that earn less than $35,000 annually.
“Inflation has continued to negatively impact these households, with more than 60% claiming they have had to sacrifice on purchasing basic necessities due to the higher cost of those items, in addition to paying more for expenses such as rent, utilities and health care. More of our customers report that they are now resorting to using credit cards for basic household needs, and approximately 30% have at least one credit card that has reached its limit,” the CEO said.
His comments are corroborated by ongoing data of US consumer carrying a record high $1.34 trillion in credit card debt through Q2 2024 while the US savings rate is currently scraping at record low levels.
No surprise that defaults on credit cards have been on the rise across the age spectrum given the data.
This week Goldman Sachs, BASF, HSBC, and ICBC Standard Bank out of London made a Platinum and Palladium price fixing lawsuit settlement of a slap on the wrist of $20 million.
The price rig lawsuit occurred from the start of 2008 through nearly the end of 2014. This latest admitted precious metals price rig was during the twice-daily platinum and palladium "fixings" with the four guilty financial institutions sharing customer data, front-running expected price moves, and placing bogus "spoof" orders which enabled banks to avoid losses on "short" positions they maintained in futures markets.
Similar price rigging data points to gold and silver prices also being consistently rigged over a similar historical timespan. This data from 2006 to 2012 shows how the intraday gold price was consistently rigged lower during the London AM & PM fixes on a consistent basis over those years as well.
The last 24 years of data throughout this 21st Century suggests similar price suppression programs are still active though not as effective as perhaps they once were.
Looking back at the Palladium market during the settled lawsuit timeline illustrates what eventually happens to artificially suppressed markets, eventually they run into physical shortages, and the spot price explodes to eventually find a much higher equilibrium or price balance. Palladium for instance ran from a $180 oz low in the 2008 GFC to a price spike high of $3,400 oz by the start of 2022.
In another piece of circumstantial evidence of a potential recession underway, it was announced this week that Goldman Sachs would be cutting 1,300 employees or 4% from their overall staff.
Stick around, on the other side of this break we will run through the week's most interesting news in the silver and gold markets. And why many fundamental reasons cited are having analysts call for higher spot silver and gold prices through the close of 2024.
The spot silver and gold markets traded down on the week.
The spot silver price sold off hard to close trading today finishing below the $29 oz bid.
The spot gold price still managed to record its highest monthly price close, still settling above $2,500 oz on the week.
The spot gold silver ratio ballooned back up to 86 on silver's relative price weakness to gold over the week.
Craig Hemke of TF Metals reminded his Twitter followers of similar gold price tape paintings at months end that were more successful than perhaps this week's version. At the end of October last year 2023, we saw gold fail to close above $2,000 oz that month only to followed by a now more than $500 oz rally and price bull market breakout since.
This despite 25 gold market analysts calling for an average gold price this year 2024, of just over $2,250 oz.
Gold has been performing well this far in the year, typically up over 20% and every fiat currency you name.
And while today's bounce in relative fiat US dollar strength may have helped deter spot prices to close the week, the coming fiat Federal Reserve rate cut cycle has analysts believing there is more upside to soon come.
Lower rates will have bullish impact on gold, analyst says.
With central banks continuing to buy record volumes of gold bullion reserves. And China is now using more fiat yuan renminbi payment settlements, phasing out the once dominant fiat US dollar payment settlement over time.
The trend of de-dollarization with direct trade payment settlements and bullion over bonds on central bank balance sheets continues onward.
Turning to the silver market, this week UBS reiterated a call for silver spot prices to climb to $36 to $38 oz later this year citing further fiat US dollar weakness, the coming rate cutting cycle, growing industrial demand lending to further market supply deficits, and China's continued robust silver demand.
With recent import tax cuts in the Indian market chopped down from spot +15% to now only 6%, we are already seeing increases in gold and silver import demand in that market.
India is on pace regardless of record high gold prices locally to see another year of 1,000 metric tonnes of gold imports. With the potential for 2024 Indian silver import numbers to grow based on increasing solar, jewelry, and investment demands locally to near 7,000 metric tons.
And it is not just India's silver laced solar demand that is forecasted to grow in the coming years.
Bloomberg NEF reminded the world this week that demand for silver laced cells is not only rising but it is forecasted to continue into the middle of next decade, the 2030s.
So yea, while silver's gains thus far in 2024 have been relatively strong, spot price averaging up over +20% on the year in virtually fiat currency you can name. Already surpassing almost all of the 25 silver market analyst price predictions thus far.
The potential for further silver spot price climbing to close this year into next are fundamentally lining up in myriad ways mentioned.
Buy on the price dips and position for the long haul.
That will be all for our weekly SD Bullion Market Update.
And as always to you out there, take great care of yourselves and those you love.
