The Consumer Price Index (CPI) increased by the smallest annual amount in more than two years in May.
This means the inflation fight is over and inflation lost, right?
Not so fast.
Given the current macroeconomic environment and the supply and demand dynamics, silver is significantly undervalued at $24 to $25 an ounce.
Despite the high interest environment intended to slow down borrowing, American consumers continue to run deeper and deeper into debt as they cope with sticky inflation.
Consumer credit spiked by another $20 billion in April, a 5.7% increase year on year, according to the latest data released by the Federal Reserve.
The debt ceiling drama ended with fake budget cuts and a shiny new credit card with no limit for the federal government. We can now expect a big surge in the national debt as the US government plays catch up after nearly six months up against its borrowing limit.
So, how might this impact the price of gold?
If history is any indication, it will likely drive it higher.
I warned you.
I said when the fake debt ceiling fight ended, the real problems would begin.
Well, the debt ceiling fight is over, and here we are.
On the first working day after the so-called Fiscal Responsibility Act went into effect, the national debt surged by $359 billion.
Most people in the mainstream concede that the economy is heading for a recession, but the consensus seems to be that downturn will be short and shallow. Projections by the World Bank undercut that optimism.
According to the World Bank, global growth in 2023 will slow to the lowest level since the 2008 financial crisis.
With a debt ceiling deal done, the threat of a US government default is off the table for the time being. But a wave of corporate defaults is on the horizon according to Deutsche Bank’s annual default study.
This is the inevitable consequence of central bank monetary policy and it was entirely predictable.
We have a debt ceiling deal.
And the deal is there is functionally no debt ceiling until January 2025.
In March, I warned that the commercial and investment real estate markets could be the next thing to break in this bubble economy. A recent article in the Wall Street Journal put a face on my warning.
Despite all of the mainstream talk about a strong, resilient economy, corporate bankruptcies through the first four months of 2023 came in at the highest level since 2010. Meanwhile, monthly bankruptcy filings have hit numbers last seen during the peak of the pandemic.
According to data from S&P Global Market Intelligence, there were 235 corporate bankruptcy filings through April. That’s a 116.5% increase over the same period in 2022.
