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The combination of geopolitical risks, fiscal concerns, and monetary policy shifts form a bullish case for gold as a hard asset regardless of who wins the election in November, according to Ole Hansen, Head of Commodity Strategy at Saxo Bank.
He said that “Trump wants to cut taxes with no credible plans for reducing spending,” while a Harris administration would most likely extend Biden’s massive fiscal programs. “Either administration would inevitably expand the deficit in an economic slowdown,” he added.
“Gold has long been a safe haven in times of trouble, and we could be nearing the end of an incredible run for stocks if we are headed toward a recession."
Hansen said. “A rate-cutting cycle will begin this month at the Fed’s 18 September FOMC meeting, and a lower interest rate environment would likely boost gold’s appeal, especially if the Fed ends up cutting more than expected in coming months.”

(Kitco News) – The combination of geopolitical risks, fiscal concerns, and monetary policy shifts form a bullish case for gold as a hard asset regardless of who wins the election in November, according to Ole Hansen, Head of Commodity Strategy at Saxo Bank.

“Gold's recent strong performance, with a 20% rise year-to-date and a high of USD 2,531.75 in August, has been driven by a combination of factors that have made it an attractive investment,” Hansen wrote. “There are several reasons that the post-election environment could continue to support the gold price, which has handily outperformed the S&P 500 index and Nasdaq 100 index through early September of this year. As of 10 September, gold is up over 21%, while the S&P 500 index is up just shy of 15% and the Nasdaq 100 12.5%.”

Hansen lists the key reasons why Saxo Bank expects gold to continue its strong performance after the election and through 2025.

The first reason is “the uncertainty surrounding the upcoming US presidential election, which brings intense unease on the course of fiscal policy and overall market stability,” he said.

“First Trump and then Biden threw caution to the wind in blowing up the federal deficits in good times and especially bad (the pandemic response), with the US debt ripping above 120% of GDP,” Hansen noted. “It doesn’t appear either party is set to deliver on fiscal austerity, which raises inflation risks, a gold positive.”

He said that “Trump wants to cut taxes with no credible plans for reducing spending,” while a Harris administration would most likely extend Biden’s massive fiscal programs. “Either administration would inevitably expand the deficit in an economic slowdown,” he added. “And even if we have a president Harris or Trump with a divided Congress, meaning political gridlock, it means point 3 below – the Fed – has to work that much harder by easing policy.”

The second factor supporting gold regardless of who wins the presidency is general safe haven appeal.

“Gold has long been a safe haven in times of trouble and we could be nearing the end of an incredible run for stocks if we are headed toward a recession, something the bond market and its recent ‘dis-inversion’ seems to be telling us,” he said. “A dis-inversion happens when short term yields fall below long term yields, as the market expects the Fed to cut rates.”

The third key factor is the upcoming Fed rate-cutting cycle. “[W]hether we are heading toward a slight slowdown or a full-blown recession, the US Federal Reserve’s monetary policy decisions will play a significant role in shaping gold’s trajectory,” Hansen said. “A rate-cutting cycle will begin this month at the Fed’s 18 September FOMC meeting, and a lower interest rate environment would likely boost gold’s appeal, especially if the Fed ends up cutting more than expected in coming months.”

He pointed out that lower rates “reduce the opportunity cost of holding non-yielding assets like gold,” which makes them more attractive to investors. “Historically, gold has performed well during periods of falling interest rates,” he said.

The last key drivers of gold’s strength going into the election and beyond are geopolitical risks and the de-dollarization trend.

“[T]he broader global environment—characterized by geopolitical tensions, de-dollarization efforts by central banks, and economic uncertainty—continues to underpin demand for gold,” Hansen said. “In particular, central bank purchases of gold and strong retail demand in key markets like China have helped sustain the shiny metal’s rise, as investors seek stability amid volatile economic conditions. There may be more of an angle here if Trump wins and he delivers on his huge tariff threats as a widening group of countries look to transact outside the US dollar system.”

“Overall, the combination of geopolitical risks, fiscal concerns, and potential shifts in monetary policy, particularly in the wake of the US presidential election, makes a bullish case for gold as a hard asset,” he said, adding that “gold should always be seen mostly as something that preserves its value than as something that will go significantly higher in real terms (beyond the rate of inflation).”

“Investors are likely to continue viewing gold as a hedge against the uncertainties posed by both economic and policy forces,” Hansen concluded. “Over the past decade, gold has provided an average annual return of 8.4% in U.S. dollars, consistently outpacing inflation. This makes it an attractive option for long-term investors seeking to preserve purchasing power.”

Story by Ernest Hoffman - Redacted shorter to keep to important points and bullet points added by HGG https://www.kitco.com/news/article/2024-09-10/trump-vs-harris-gold-wins-either-way-saxo-banks-hansen

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Key Factors Affecting Gold:

Geopolitical Tensions and China's Economic Issues Drive Gold Demand.
US Nonfarm Payrolls (NFP): The US added 142,000 jobs in August, falling short of the 160,000 forecast, indicating a softer labor market.
Unemployment Rate: Dropped to 4.2%, with wage inflation rising to 3.8%.
Fed Rate Expectations: Markets now see a 70% chance of a 25 basis point rate cut by the Federal Reserve, with a 30% chance of a larger cut.

Key Factors Driving Silver:

First Majestic’s Merger: This deal aims to increase production but raised investor concerns, as First Majestic’s stock dropped 16%.
US Economic Concerns: Weak jobs data and global uncertainties have supported Silver’s rise as a safe-haven asset.

Gold nears $2,500 as China's deflation sparks economic uncertainty, while Silver rallies on First Majestic's $970M acquisition of Gatos Silver, boosting market sentiment.

On Monday, Gold (XAU/USD) traded around $2,495, seeing brief gains before facing resistance below $2,500. The early rise was fueled by concerns over weak US employment data and rising geopolitical tensions, particularly the conflict between Israel and Hamas. These issues led investors to seek the safety of Gold. Additionally, China’s deflation adds to global uncertainty, further boosting demand for Gold, as Breaking Gold News highlighted.

Key Factors Affecting Gold:

US Nonfarm Payrolls (NFP): The US added 142,000 jobs in August, falling short of the 160,000 forecast, indicating a softer labor market.
Unemployment Rate: Dropped to 4.2%, with wage inflation rising to 3.8%.
Fed Rate Expectations: Markets now see a 70% chance of a 25 basis point rate cut by the Federal Reserve, with a 30% chance of a larger cut.

Despite these drivers, Gold’s gains were capped by a stronger USD and higher Treasury yields, making non-yielding assets like Gold less appealing. As InvestingHaven noted, inflation expectations remain the main driver for Gold, and the Fed’s rate decision will be a key factor going forward.

Geopolitical Tensions and China's Economic Issues Drive Gold Demand

Gold prices have also been influenced by geopolitical tensions in the Middle East. The ongoing Israel-Hamas conflict has led investors to seek refuge in Gold. Meanwhile, China’s deflationary spiral, expected to continue through 2025, raises concerns about long-term stagnation in the world’s second-largest economy.

Israel-Hamas Conflict: Heightened tensions have pushed investors toward safe-haven assets like Gold.
China’s Deflation: Falling wages and demand in China have raised fears of stagnation, further supporting Gold’s appeal

Additionally, China’s People's Bank reported steady gold reserves at 72.8 million troy ounces. Inflation data from China shows rising consumer prices, while producer prices continue to decline, reflecting mixed signals from the economy.

Silver Gains on Acquisition News and Economic Data

Silver (XAG/USD) also saw gains, trading around $28.11 with an intra-day high of $28.12. Concerns over the US economy and geopolitical issues lifted Silver prices, alongside corporate news. First Majestic Silver (NYSE) announced a $970 million all-share acquisition of Gatos Silver, consolidating mining districts in Mexico and increasing expected production to 30-32 million ounces annually.

Key Factors Driving Silver:

First Majestic’s Merger: This deal aims to increase production but raised investor concerns, as First Majestic’s stock dropped 16%.
US Economic Concerns: Weak jobs data and global uncertainties have supported Silver’s rise as a safe-haven asset.

Fed Policy and Jobs Data Limit Silver's Upside

Silver faced resistance from rising Treasury yields and a stronger USD after the mixed NFP report. While jobs growth underperformed, lower unemployment and wage increases lessened the chances of a 50 basis point rate cut by the Fed. Markets now see a 70% chance of a 25 basis point cut at the next Fed meeting.

Although the softer jobs data limited Silver’s upside, inflation remains a key driver for both Gold and Silver, as InvestingHaven pointed out. The upcoming CPI and PPI reports this week will be crucial in determining the Fed’s next steps.

What to Expect Next: Key Events to Watch

Investors will focus on the release of key US inflation data this week, including CPI and PPI reports. Higher-than-expected inflation could push the Fed to enact a more significant rate cut, potentially boosting Gold and Silver prices.

Additionally, developments in Israel and China could further impact demand for safe-haven assets, particularly if geopolitical tensions escalate.

Conclusion: Mixed Signals Drive Gold and Silver Outlook

Both Gold and Silver remain influenced by rising US Treasury yields and a stronger USD, but growing geopolitical risks and economic concerns are providing support. Inflation expectations will continue to play a significant role in driving prices, while upcoming data releases and geopolitical events will shape the near-term outlook for these precious metals.

Story by ARSLAN BUTT - Redacted shorter to keep to important points and bullet points added by HGG https://www.jpost.com/business-and-innovation/precious-metals/article-819396

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Silver gains are expected, driven by a combination of favorable macroeconomic factors and robust demand fundamentals.
UBS analysts suggest that long-term investors should consider increasing their exposure to silver, with a target price range of $36-38 per ounce.
“In our base case, industrial application demand should still expand by 50mn ounces this year, or close to 10% y/y, driven by secular demand drivers (like the energy transition),” the analysts said.
UBS notes that China has shifted back to being a net importer of silver, with net imports reaching 5.0 million ounces in July, up from 3.2 million ounces in June.
Silver imports into China are expected to remain strong, providing further support to global silver prices.

Investing.com -- Silver prices are poised for further gains in the coming months, driven by a combination of favorable macroeconomic factors and robust demand fundamentals, as per analysts at UBS in a note dated Monday.

A weaker U.S. dollar, improving sentiment across financial markets, and record-high gold prices have all contributed to a recent modest rebound in silver prices.

UBS analysts suggest that long-term investors should consider increasing their exposure to silver, with a target price range of $36-38 per ounce.

The recent weakening of the U.S. dollar and a shift towards a more risk-on environment among investors have provided a supportive backdrop for silver.

While much of the market's focus has been on U.S. macroeconomic developments and the potential for lower interest rates, UBS analysts believe that silver offers more than just a play on U.S. economic news.

Despite recent weak manufacturing data from developed economies, UBS remains optimistic about the industrial demand for silver.

“In our base case, industrial application demand should still expand by 50mn ounces this year, or close to 10% y/y, driven by secular demand drivers (like the energy transition),” the analysts said.

This growth is expected to be driven by long-term secular trends, including the global energy transition, which is likely to require increasing amounts of silver for applications such as solar panels and electrical components.

Another positive factor for silver prices is the renewed demand from China. UBS notes that China has shifted back to being a net importer of silver, with net imports reaching 5.0 million ounces in July, up from 3.2 million ounces in June.

The brokerage expects that China will continue to report positive net imports in the upcoming August trade data.

This renewed appetite for silver in China is partly driven by falling yields in the country and expectations of further weakness in the Chinese yuan (CNY), which are likely to keep onshore silver price premiums elevated.

As a result, silver imports into China are expected to remain strong, providing further support to global silver prices.

UBS analysts also highlight the potential for increased demand for silver exchange-traded funds (ETFs) as U.S. economic outperformance, or "exceptionalism," fades.

Additionally, a recovery in manufacturing sentiment, which UBS anticipates in the coming months, could further boost silver demand.

Given these factors, UBS maintains a positive outlook on silver, advising long-term oriented investors to consider long exposure to the metal.

Furthermore, the brokerage suggests that investors could explore selling price downside risks to generate additional yield, given the favorable demand dynamics and supportive macroeconomic backdrop.

Story by Navamya Acharya - Redacted shorter to keep to important points and bullet points added by HGG https://www.investing.com/news/commodities-news/more-upside-seen-for-silver-prices-in-coming-months-says-ubs-3588575

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Even as gold prices set new all-time highs, net purchases by central banks more than doubled to 37 tonnes in July, and demand is expected to remain strong over the coming months, according to Krishan Gopaul, Senior Analyst, EMEA at the World Gold Council (WGC).
"In total, seven central banks added gold (of a tonne or more) to their reserves in July, while only one central bank reduced its gold holdings,” he wrote.
“This reinforces the findings from our latest central bank survey, which highlights several reasons (such as gold’s role as a store of value and its performance in times of crisis) why, despite the elevated price, central banks are still keen to accumulate gold,” he concluded.

(Kitco News) – Even as gold prices set new all-time highs, net purchases by central banks more than doubled to 37 tonnes in July, and demand is expected to remain strong over the coming months, according to Krishan Gopaul, Senior Analyst, EMEA at the World Gold Council (WGC).

In the WGC’s latest report, Gopaul noted that central banks have continued to accumulate gold in recent months.

“While the overall level of reported demand has cooled as the gold price has continued to rally to new record highs, it has nonetheless remained positive,” he said. “This commitment continued in July, as global central banks are reported – via the IMF and publicly available data – to have added a net 37t to official reserves. This represents a 206% m/m increase and the highest monthly total since January (45t)”

In terms of the national breakdown, Gopaul said that the same list of central banks drove the month’s activity. “In total, seven central banks added gold (of a tonne or more) to their reserves in July, while only one central bank reduced its gold holdings,” he wrote.

The National Bank of Poland was the largest buyer in July, adding 14 tonnes to record its largest monthly increase since November 2023. “This purchase lifted its gold holdings to 392t, or 15% of total reserves,” Gopaul said. “Poland has been on a gold buying spree since April, accumulating 33 tonnes over the last four months.”

The Central Bank of Uzbekistan was second for the month, buying 10 tonnes to bring its total gold holdings to 375 tonnes. “July’s purchase has flipped the Central Bank of Uzbekistan from a net seller to a net buyer on a y-t-d basis (+3t),” he noted.

The Reserve Bank of India increased its gold reserves by 5 tonnes in July, bringing net purchases of gold to 43 tonnes in 2024 and raising its total reserves to 846 tonnes. “[T]he RBI has now added gold every month so far this year,” Gopaul said.

The Central Bank of Jordan (CBJ) bought a net 4 tonnes in July, as did the Central Bank of Turkey, which has now marked 14 consecutive months of net buying.

The Qatar Central Bank and the Czech National Bank (CNB) each increased their gold reserves by 2 tonnes. “The CNB has now added to its gold reserves for 17 consecutive months, with net purchases totaling over 31t during this period,” he noted.

“Based on available data at the time of publication, the Central Bank of Kazakhstan was the only net seller in July,” Gopaul said. “Its gold reserves fell by 4t, reducing its gold holdings to 295t or 55% of total reserves.”

“One other noteworthy change relates to the State Oil Fund of Azerbaijan (SOFAZ) – the only sovereign wealth fund in our data set,” he added. “Second quarter results show that its gold holdings rose by 10 tonnes between April and June, representing the biggest quarterly increase in gold holdings since Q2'19 (+23.7 tonnes). Total gold holdings at the end of Q2'24 were 114.9 tonnes, 13t higher than at the end of 2023.”

Gopaul said that while the gold price rally is likely impacting central bank gold demand this year, the long-running trend of net sovereign buying remains intact.

“This reinforces the findings from our latest central bank survey, which highlights several reasons (such as gold’s role as a store of value and its performance in times of crisis) why, despite the elevated price, central banks are still keen to accumulate gold,” he concluded. “Based on these findings, we continue to be confident in our expectation that more buying is to come.”

Story by Ernest Hoffman - Redacted shorter to keep to important points and bullet points added by HGG https://www.kitco.com/news/article/2024-09-03/central-bank-gold-purchases-doubled-july-demand-will-continue-through-2024

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The behavior of U.S. Treasuries during and after the COVID-19 pandemic calls the label as hands-down the world’s “safe haven” securities into question.
That's the key finding of new research presented at the Kansas City Fed's annual research conference in Jackson Hole, Wyoming. It examines a shift in investor behavior in that period that raises questions about the "exorbitant privilege" the U.S. government has long enjoyed borrowing broadly on the global market even as federal budget gaps grow ever wider.
They found that investors did not, as they had during previous episodes of global financial stress, pile into Treasuries and drive up their value. Instead, investors marked down Treasury securities, much as they did for bonds from other countries.

JACKSON HOLE, Wyoming (Reuters) - No safer than a bund. Or a gilt. Or an OAT.

Long touted as hands-down the world's "safe haven" securities, the behavior of U.S. Treasuries during and after the COVID-19 pandemic calls that label into question, suggesting they are little different from the debt issued by the likes of Germany, Britain, France, or even big corporations.

That's the key finding of new research presented at the Kansas City Fed's annual research conference in Jackson Hole, Wyoming. It examines a shift in investor behavior in that period that raises questions about the "exorbitant privilege" the U.S. government has long enjoyed to borrow broadly on the global market even as federal budget gaps grow ever wider. It's a timely question given growing deficits are seen as a near certainty regardless of who becomes the next U.S. president.

New York University's Roberto Gomez-Cram, London Business School's Howard Kung and Stanford University's Hanno Lustig also throw into question the assertion that the Treasury market was dysfunctional in that period - as asserted by the Federal Reserve when it launched its massive bond buying - or just rationally pricing the risk of a massive unfunded spending shock then being prepared in response to the health emergency.

"In response to COVID, U.S. Treasury investors seem to have shifted to the risky debt model when pricing Treasurys," wrote New York University's Roberto Gomez-Cram, London Business School's Howard Kung and Stanford University's Hanno Lustig in the paper. "Policymakers, including central banks, should internalize this shift when assessing whether bond markets are functioning properly."

The researchers looked at the behavior of Treasuries securities during the pandemic shutdown of 2020, when yields shot higher not just for U.S. debt but for bonds issued by nations across the globe.

They found that investors did not, as they had during previous episodes of global financial stress, pile into Treasuries and drive up their value. Instead, investors marked down Treasury securities, much as they did for bonds from other countries.

Meanwhile the U.S. Federal Reserve responded to the spike in U.S. Treasury yields as if it were a result of market dislocation, they said, buying up bonds to bring back order to the world's usually most liquid debt market as they had during the Global Financial Crisis.

"In the risky debt regime, valuations will respond to government spending shocks, which may involve large yield changes in bond markets," the researchers said, noting that they found especially big market moves on days when fiscal stimulus was announced.

"In this environment, large-scale asset purchases by central banks in response to a large government spending increase have undesirable public finance implications," they wrote in what is sure to be a hotly discussed finding at the central bankers' gathering here. "These purchases, which provide temporary price support, destroy value for taxpayers but subsidize bondholders" and may also encourage governments to overestimate their true fiscal capacity, they wrote.

Story by Ann Saphir & Howard Schneider- Redacted shorter to keep to important points and bullet points added by HGG https://www.reuters.com/markets/rates-bonds/us-treasuries-not-safe-bet-they-once-were-research-says-2024-08-23/

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With no resolution to the gap in sight, as the deficits are widely expected to continue for years into the future, a recent Bank of America report suggests that the declining inventories are starting to 'make the deficits count.'
Their report also commented on China's surging silver consumption, which has continued to grow in 2024 as their solar production has again exceeded expectations. And with governments calling for a tripling of 'green energy' by 2030, the demand for silver is going to have to increase if the governments are going to get anywhere even close to meeting their targets.

The Silver Institute shows that the silver market has been in a deficit for the last 5 years. And during that time, we've seen substantial decreases in global inventories.

Which makes sense, as the metal has to come from somewhere to meet the shortfall.

Yet with no resolution to the gap in sight, as the deficits are widely expected to continue for years into the future, a recent Bank of America report suggests that the declining inventories are starting to 'make the deficits count.'

Their report also commented on China's surging silver consumption, which has continued to grow in 2024 as their solar production has again exceeded expectations. And with governments calling for a tripling of 'green energy' by 2030, the demand for silver is going to have to increase if the governments are going to get anywhere even close to meeting their targets.

China has already shifted to being a net importer of silver. And we've personally talked with one of the larger silver producers, who told us about how Chinese smelters have been going directly to Latin American silver producers and offering substantially reduced treatment charges because they're able to take advantage of the increased premiums in China.

Keep in mind that Bank of America's research reaches the institutional market, and they’ve been writing about the deficit for over a year now. And with the gold and silver ETFs finally starting to see inflows in recent weeks, after months of outflows during the rally earlier this year, we could see more money coming into silver. Particularly with the Fed on the verge of interest rate cuts.

Of course, if any of that investment is in physical form, that only further exacerbates the deficit.

Arcadia Economics

Story by Jerusalem Post By PR - Redacted shorter to keep to important points and bullet points added by HGG https://www.jpost.com/business-and-innovation/precious-metals/article-814643

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The major reason is stubborn inflation cutting into people’s paychecks.
Consumer sentiment in the U.S. dropped to an eight-month low in July, according to the Consumer Sentiment Index from the University of Michigan.
In a 2024 poll, Gallup found that one-third of Americans mentioned economic issues as the nation’s most important problem.

Consumer sentiment in the U.S. dropped to an eight-month low in July, according to the Consumer Sentiment Index from the University of Michigan.

While the U.S. technically isn’t in a recession, a survey by Affirm found that roughly 3 out of 5 Americans believe it is. In a 2024 poll, Gallup found that one-third of Americans mentioned economic issues as the nation’s most important problem.

“I think that the economy is really top of mind for people,” said Joanne W. Hsu, the director of the Surveys of Consumers at the University of Michigan. “We are in a very strange situation where people don’t feel like they’re thriving in spite of many strong indicators in the economy.”

The Biden administration has presided over the highest inflation in 40 years, hitting a four-decade peak of 9.1% in June 2022. While declining since then, stubborn inflation has eaten into American consumers’ purchasing power.

In May 2024, the Heritage Foundation estimated that the average, inflation-adjusted, weekly paycheck shrunk by about 4.4%,,or $50, during President Joe Biden’s term. That’s despite the fact that wages have risen faster under Biden than under former President Donald Trump’s administration, according to calculation by Bankrate.

“When you have buying power that’s been eroded, what in the past might have seemed like a necessity is all of a sudden at risk,” said Mark Hamrick, a senior economic analyst from Bankrate. “It feels recession-like to many.”

Story by Story by Juhohn Lee - Redacted shorter to keep to important points and bullet points added by HGG - https://www.cnbc.com/2024/08/14/heres-why-the-economy-feels-recession-like-for-many-americans.html

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Central bank digital currencies (CBDCs), often referred to as digital dollars, are rapidly gaining traction on a global scale.

Over 100 nations are in various stages of developing their own versions. While advocates argue that these currencies could revolutionize financial efficiency and broaden access, there are significant concerns among freedom advocates that they could also lead to unprecedented levels of financial surveillance and control. As these digital currencies advance, fintech platforms serve as an interim step, but they come with substantial risks of their own. The urgency to consider physical precious metals as a protective measure is intensifying before the full shift to digital currencies occurs.

Resistance to the Digital Dollar

Despite growing resistance to the digital economy, it might already be too late to turn the tide. The United States successfully conducted a pilot test of the digital dollar with several major banks in November 2022, demonstrating that the infrastructure for a digital currency is already in place, albeit in an exploratory phase. House Republicans have passed the CBDC Anti-Surveillance Act, although all 192 opposing votes came from Democrats.

Rep. Patrick McHenry expressed grave concerns, citing examples where governments have "weaponized their financial systems against their own citizens." He firmly stated that financial surveillance enabled by a CBDC "has no place in the United States." However, the bill still needs Senate approval.

The act doesn’t outright ban the creation of a digital dollar; instead, it requires the Treasury to obtain explicit authorization from Congress. This means that a future Democratic-majority Congress could still push for the introduction of a digital dollar. Given that the digital dollar has already been successfully piloted, resistance at this stage may indeed be too little, too late.

Reservations about the digital dollar aren’t limited to Republican lawmakers. Federal Reserve Governor Michelle Bowman also voiced concerns, noting that "the potential benefits of a U.S. CBDC remain unclear, and its introduction could pose significant risks and tradeoffs for the financial system." Bowman highlighted the potential unintended consequences for the U.S. banking system and significant privacy concerns for consumers.

Bowman also pointed out the dangers inherent in stablecoins, a proposed digital dollar alternative. Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset like the U.S. dollar. While they aim to offer the benefits of digital currency without the volatility of traditional cryptocurrencies, Bowman argues that stablecoins are less secure, less stable, and less regulated than conventional forms of money, posing risks to consumers and broader financial stability.

The Hazards of Fintech

Fintech applications are exposing consumers to the perils of digital banking, often with harsh consequences. These mobile apps offer banking services like account management, payments, and money transfers, promising greater convenience and sometimes even offering perks like higher interest rates or sweepstakes. Some even claim to be FDIC insured.

However, these promises have often proven unreliable. Since May, over 200,000 fintech customers have been locked out of their so-called "FDIC insured" accounts following the bankruptcy of fintech provider Synapse Financial Technologies. Investigators estimate that between $65 million and $96 million have simply disappeared. The FDIC has stated that it cannot intervene because no bank failure is involved. As the fintech industry becomes more volatile, customers need to understand that FDIC insurance doesn’t protect against a company’s bankruptcy.

The government suggests that customers might have some recourse if the fintech company maintains clear records, but transparency is rare in this industry. It’s difficult for consumers to gauge how well fintech companies manage the accounts they claim to insure. In certain contexts, these companies can become custodians of people’s assets without having to register as anything.

One bank director remarked that "FinTechs have exploited the industry, enjoying all the benefits of a bank without bearing the risks and costs." Banks, in their pursuit of higher fees and deposit balances, have allowed this to happen.

The Risks of a Fully Digital Economy

While fintech apps and the digital dollar are not identical, they both lead to the same destination. Both aim to enhance financial inclusion, improve transaction speed, and reduce costs, fundamentally transforming the traditional financial landscape.

However, as these technologies evolve, the risks are becoming more apparent. Both fintech platforms and digital currencies pose serious privacy threats. Digital transactions can be monitored and tracked, potentially allowing third parties, including the government, to approve or deny your purchases and donations. Additionally, because assets are now digital code, they are at a greater risk of loss due to hacking, technical failures, or the collapse of a service provider.

Just as some fintech customers discovered the limits of FDIC protection, users of digital currencies may find that government safeguards are insufficient against fraud or financial loss compared to traditional banking. Furthermore, the rapid pace of technological advancement may outstrip existing laws and regulations, increasing the potential for abuse or exploitation in digital financial services.

Conclusion

The transition to a fully digital economy is fraught with unprecedented economic risks. New challenges to privacy and financial security are emerging, and despite efforts to slow this shift, regulators may struggle to keep pace with the changes. For many, the only way to truly safeguard wealth is to hold it physically. By existing outside the digital economy, physical precious metals can protect both the value of your savings and your privacy. To learn more about the benefits of a Gold IRA, call us today at 844-977-GOLD(4653).

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HGG is BBB-accredited, holds 5-star ratings across the board, and provides free consultations and metals overviews. We offer tax-free purchases, free 2-day shipping, the best pricing, and direct access to our co-owners, who have over 15 years of experience specializing in precious metals, moving over a hundred million dollars into tangible assets for people's IRAs/retirement accounts and for direct delivery. Customers enjoy lifetime account care and a straightforward buyback program without hassle or liquidation fees.

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Source: U.S. Bureau of Labor Statistics
Source: Dec 30, 2023: https://www.resumebuilder.com/due-to-inflation-1-in-5-retirees-likely-to-go-back-to-work-this-year/

The gold market now finds itself in a longer-lasting gold run than any since the U.S. fully abandoned the gold standard in August 1971.
“Over the past five years, the weekly spot price of gold has increased by more than 70%, from around $1,400/oz. in June 2019 to over $2,400/oz in July 2024.”
“Prices resumed their upward trajectory after the dot-com bubble burst and recession of the early 2000s, then skyrocketed in the wake of the Great Recession of 2008 as the federal government implemented expansionary monetary policies to stimulate the economy,” he added. “Prices remained elevated post-recession and have accelerated in recent years.”

(Kitco News) – Gold has a long and storied history as a reliable store of wealth during times of economic strife, and according to an analysis of the yellow metal's largest price runs over the past 50 years, “The market now finds itself in a longer-lasting gold run than any since the U.S. fully abandoned the gold standard in August 1971.”

“Gold possesses several critical qualities that have solidified its reputation as a wise hedge against instability,” said Brad Chastain, director of education at U.S. Money Reserve. “Gold’s conductivity, corrosion resistance, and malleability give it intrinsic value, particularly in electronics. As a physical asset, gold has no counterparty risk, making it safer than some other financial instruments reliant on issuers or other parties.”

Chastain said these attributes have become more relevant to consumers in recent years amid an uptick in political turmoil, trade wars, the COVID pandemic, and inflation, which has helped boost the price of gold as demand increased.

“Trends in the price of gold demonstrate the asset’s growing appeal among those seeking a stable, reliable store of wealth during this period,” he said. “Over the past five years, the weekly spot price of gold has increased by more than 70%, from around $1,400/oz. in June 2019 to over $2,400/oz in July 2024.”

Chastain noted that “Relative to the performance of the Dow Jones Industrial Average, gold has exhibited stability. After a sharp decline early in the pandemic, coinciding with a spike in gold prices and declining stock performance, the Dow-to-gold ratio has leveled off over the last few years.”

“The recent surge in gold prices amid political and economic instability is merely the latest instance of gold’s price increasing during periods of broader uncertainty,” he said. “Gold prices climbed in the years following the U.S.’s abandonment of the gold standard in the early 1970s and continued to rise throughout the ‘stagflation’ of the late 1970s and early 1980s.”

“Prices resumed their upward trajectory after the dot-com bubble burst and recession of the early 2000s, then skyrocketed in the wake of the Great Recession of 2008 as the federal government implemented expansionary monetary policies to stimulate the economy,” he added. “Prices remained elevated post-recession and have accelerated in recent years.”

Due to the gains seen since the start of the COVID pandemic, Chastain said, “The market now finds itself in a longer-lasting gold run than any since the U.S. fully abandoned the gold standard in August 1971.”

He noted that a gold run is defined “as a period of at least six months of spot price growth without a 30% decline.”

“The current 228-week run began in March 2020 – when COVID-19 initially disrupted large portions of the global economy – and has resulted in a 59% increase to the spot price of gold,” Chastain said. “While exceptional in duration, the current gold run ranks only eighth in terms of price growth.”

While most of the price runs with the largest percent increases occurred in the 1970s, the conditions that existed during those times provide insight into what gold traders can expect moving forward as global economic and geopolitical conditions worsen.

“Among the end of the gold standard, post-Watergate political turmoil, multiple energy crises, and rampant inflation, the era was marked by the type of instability that leads consumers to gold,” he said. “During the largest gold run on record, prices surged more than 300% from November 1978 to January 1980, coinciding with historically high inflation that profoundly impacted the economy.”

Story by Jordan Finneseth - Redacted shorter to keep to important points and bullet points added by HGG https://kitco.com/news/article/2024-08-06/golds-safe-haven-appeal-its-highest-1971-economic-storm-brews

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The carry trade refers to investors borrowing money at near-zero interest rates in Japan, and then redeploying that cash into higher-yielding assets around the world, such as stocks and bonds.
The unwind of the global yen "carry trade" is a force battering stocks.
The Bank of Japan's rate hike and potential Fed rate cuts triggered margin calls as the yen strengthened.

Stocks plunged on Monday, and market pros say a lot of it has to do with the global unwind of the yen "carry trade."

The carry trade refers to investors borrowing money at near-zero interest rates in Japan, and then redeploying that cash into higher-yielding assets around the world, such as stocks and bonds.

"The selloff here is to a large extent attributable to the unwind of the so-called carry trade," Ed Yardeni told Yahoo Finance on Monday.

Typically, the cheap cash raised in Japan is redirected into higher-yielding US Treasurys, with investors collecting the difference between the interest rates set by the Bank of Japan and the Federal Reserve.

But in times of strong risk-on sentiment, like the long period of bullishness that's fueled the stock market since the rally began in November 2022, the yen carry trade has spilled over into other assets like stocks.

"They took that money in and invested it in assets around the world including the Magnificent 7, Mexican assets, Brazillian assets, and some of that didn't go that far, they went into the Japanese stock market," Yardeni said.

But after the Bank of Japan unexpectedly raised interest rates 15 basis points last week amid the prospect of rate cuts by the Federal Reserve, the yen has strengthened. That's sparked a wave of margin calls, leading to speculators unwinding their positions and selling stocks.

"I think the proof of that is that it's a global sell-off, which suggests a lot of money was raised in Japan at 0% interest rates and used to speculate in other parts of the world, so I think that's all coming unglued and I think it's a lot of margin calls and I think it's going to happen pretty quick and the unwind should be over by the end of the week," Yardeni explained.

The unwind in the yen carry trade will go down as the biggest ever, according to a Monday note from Societe Generale.

SocGen's chief global currency strategist Kit Juckes said that while he is treating Monday's plunge in stock prices with suspicion, as big moves on Monday tend to "happen in a vacuum," there is still room for downside in the stock market and economy.

The risk going forward for markets isn't what the Japanese yen does, but rather what US tech stocks do, according to Juckes.

"The rally was huge, the valuations were stretched and Warren Buffett's liking for cash is making headlines again. If that market keeps falling, it will affect the economy and the Fed," Juckes said.

Juckes added: "The labour market remains tight, the economy is still growing. That would change if equities fell too far/fast, and it would change if the August jobs report at the start of September was very weak."

Yardeni maintained his positive outlook on stocks despite the sharp rise in market volatility.

"It's too late to panic is sort of my attitude towards this sell-off," Yardeni said. "I think the economy is doing better, and I'm blaming the weather for a lot of the weakness in July's employment report… and I still don't think we're going to get a recession out of all of this."

Story by Matthew Fox - Redacted shorter to keep to important points and bullet points added by HGG https://markets.businessinsider.com/news/stocks/stock-market-crash-yen-carry-trade-unwind-fed-japan-rates-2024-8

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