Summary
- SD Bullion extends Merry Christmas and Happy Holiday wishes to all.
- Financial markets react strongly to last week's fiat Fed pivot, with an 86% chance of rate cuts by March 2024.
- Market's base case anticipates 7 interest rate cuts in 2024, doubling the Fed's recent guidance.
- Two-thirds of asset managers expect a soft landing for the global economy, despite geopolitical tensions.
- Capital inflows into the US stock market are surging, reaching all-time highs, and corporate share buybacks are at record levels.
- The US and Europe consider using $300 billion in Russian assets to support Ukraine, facing potential legal and economic consequences.
- Concerns rise over the weakening US consumer economy, with high student loan defaults and credit card loan defaults reaching all-time highs.
- Banks have been taking out increasing amounts of revolving loans, potentially influencing the fiat Federal Reserve's recent pivot.
- Commercial real estate faces an estimated $160 billion in losses, with office loans underwater, and car payment defaults hitting a 30-year high.
- SD Bullion reports the highest weekly fiat US dollar gold price close in history, with spot gold closing at over $2053 per ounce and silver at over $24 per ounce. The gold market is seen as building a solid base for future moves higher, while demand in the eastern world, particularly China and India, remains significant.
Merry Christmas and a Happy Holiday season to all of you out there, from our team at SD Bullion.
Well the financial markets took last week's fiat Fed pivot to heart and there are growing expectations of rate cuts by March 2024 of next year, with an 86% chance for the first round of rate cuts by then.
The market's base case is for 7 interest rate cuts in 2024. So while just three weeks ago the fiat Fed claimed the market was then premature calling for rate cuts, they last week said they on average saw 3 rate cuts coming next year 2024.
So now nearing Christmas, the markets are pricing in more than double the rate cuts the fiat Federal Reserve was recently guiding in last week's public comments from chairman Jerome Powell we covered here.
Two thirds of asset managers are still calling for a soft landing for the global economy over the next 12 months. Never mind escalating proxy wars in the Suez Canal, eastern Europe, or what may eventually occur in southeast China seas.
Capital inflows into the historically bubble high US stock market have again gone berserk, while corporate share buybacks hit an all time record high level nearly double the spikes we saw following the post Covid stock market ramp late 2020 into 2022.
Greed and bonus pump and dumps seems to be alive and well in the unsecured stock market to close 2023.
The United States and Europe are eyeing the final theft of Russian assets to help Ukraine - after all, the last few years of slush funding has been drying up.
“Despite legal caveats, policymakers are weighing the consequences of using $300 billion in Russian assets to aid Kiev’s war effort. The Biden administration has begun urgent discussions with allies about using the funds as financial support erodes, according to senior U.S. and European officials.
“This amount of money simply changes the rules of the game,” explained former State Department official Philip Zelikow.
There are no precedents for the seizure of such a large amount from another sovereign state, and this could have unpredictable legal and economic consequences. And it will almost certainly lead to lawsuits and retaliatory measures from Russia. But officials say the start of using the funds could push Moscow to come to the negotiating table.”
To give you an idea of how ridiculously large a sum of current fiat US dollar buying power $300 billion is at the moment. It is the equivalent of just over 4,550 metric tonnes of gold. More than half the USA currently claims to still own, unaudited for generations.
Or just under twice what the Russian Federation has officially declared to date in their sovereign gold reserve pile which grew substantially following the 2008 global financial crisis.
Another way of picturing this potential wealth confiscation, it would be the current equivalent of taking over 365,000 of these 400 oz bars in purchasing power, and handing them to their adversary in war.
I know what you're thinking, what a plan this administration is cooking up.
It sure sounds like the recipe for a soft landing and no future long term western world blowbacks, right?!
Turning now back to our weakening US consumer economy. Student loans repayment schedules recently restarted and surprise not surprised, 2/5ths or 40% of outstanding student loan bills were not paid.
Various data sets of credit card loan defaults are now at all time high levels.
Not only that, but the rate of change in credit card defaults of late has been going up at a rate recently higher than the 2008 financial crisis.
I know, we are often told we have a small business and consumer driven economy.
Perhaps the government can make up for the coming difference, surely that will work out and safely land us away from coming recessions.
Remember that small paper over the US bank crisis we went through in March earlier this year?
At the time the 30 bank names you see there had about $7 trillion in uninsured deposits sitting among their unsecured creditor's bank accounts. Well the amounts of revolving loans banks have been taking out since those first of five US bank failures this year have only been rising of late.
Perhaps the recent spike in loans helped pivot the fiat Federal Reserve and Jerome Powell last week?
There is an estimated $160 billion in losses on commercial real estate loans.
According to a new paper by the National Bureau of Economic Research, 44% of office loans are underwater, and up to 20% of all commercial real estate loans could default.
In 2020, NYC office occupancy fell from nearly 90% to 10%. It has since rebounded back to just below 50% occupancy as of this past summer 2023. Large write downs and further losses are coming one way or another.
Another recent illustration that the US consumer is increasingly going broke, falling behind paycheck to paycheck. A near 30 year high in car payment defaults was hit just a few months back, surely car bubble price payment defaults have only climbed over the last few months since.
On the other side of this short break, we're going to dig into details on today's highest weekly fiat US dollar gold price close in history.
And examine some key long term bullish drivers for major physical gold and silver markets in the coming years this decade into next.
And be sure to check out our recently released SD Bullion mini series about how our Top 3 bullion dealer e-commerce website began and evolved since our 2012 founding.
Be sure to not miss the ending video with a great behind the scenes look at SD Bullion's state of the art silver and gold vaults and package processing facility.
I will leave a link to the playlist in the top comments and show-notes below.
It is honestly a remarkable story. We owe our success to you, our loyal customer base out there. Thank you, and we hope you enjoy this in depth series.
The spot gold price climbed to close at its highest weekly close in history over $2053 oz bid.
The spot silver price closed up as well over $24 oz bid.
The spot gold silver ratio stayed flat on the week at 84.
On a monthly 21st Century chart, gold in fiat US dollars looks very solid building its base for the eventual moves higher ahead.
The gold yearly chart to me throughout this full fiat currency era says it is cup and handle walk away much higher time soon enough as $2k gold becomes the floor not the last few years resistance.
On the US and western physical bullion side of the market, good news is that buying demand is down, supplies are plentiful, and thus premiums are as well slimming to old norms. Take advantage of this bullion market tranquility. By the end of Q1 2024 it likely will be a different story.
Moving on to the eastern world specifically China and India respectively.
The fiat Chinese yuan just passed the Japanese yen as now the third most widely used fiat currency in the global currency payment settlement game. Still a long way off from the still dominant fiat US dollar and fiat Euro but let's circle back once the m-CBDC grid gets put into place a few years following.
Since the last time the spot gold price fully accounted for fiat US Dollar debasement run amok by late 1979 early 1980s, China has gotten increasingly more wealthy and advanced as a leading world economic power. And as western derivative gold value suppression falls apart like it did in the late 1960s into the 1970s. This time China and India will be there to make continued cultural and manufacturing bids bang on.
China's love of gold and persistent use of silver in industrial manufacturing and solar panel inputs is only growing as will their price discovery power in many commodities as the coming years and decades unfold.
Its monthly and yearly gold price charts are on breakout cusp.
India on the other side of this two headed demand behemoth fell a bit short on the silver demand side in 2023 and that is understandable after a record year in 2022, they were swamped with inventory until a few months back.
For where gold in India rupee on the left hand chart has already gone, silver is going to follow.
And I'm looking forward to seeing more Indians increasingly bypassing gold and eventually catching silver price go up fever.
Let's check in on some ballpark conservative guesses for where Indians are being told average silver prices are going in 2024.
There will be one pause in the action, for a quick look back and laugh.
The World Bank in early 2018 had these killer average gold silver price predictions on where gold and silver prices would be through the 2020s and by the year 2030.
Thus far they have been off, but there is still time for a Great Taking to perhaps pursue. So deflation with no BRRR is their hopium I suppose.
Onwards...
That will be all for this Christmas edition of our weekly SD Bullion Market Update.
As always to you out there, take great care of yourselves and those you love.
