Gold has become a lifeline for Indians in the midst of a severe credit crunch.
When the state-run lender refused to extend Babasaheb Mandlik credit, he used his wife’s gold jewelry as collateral for a loan in order to buy cotton seeds before the summer sowing season window closed.
Last week we got the updated federal budget deficit numbers. At $867 billion, the 2019 fiscal year budget shortfall has already eclipsed last year’s deficit of $779 billion.
The out of control spending and spiraling deficits are concerning enough on their own terms, but they become absolutely horrifying when you consider that these budget shortfalls are happening during an economic expansion. You would normally expect numbers like this during a major recession.
That raises an important question: what’s going to happen when the recession hits?
The yield on the 10-year Treasury fell below the yield on the 2-year for the first time in 12 years, stoking recession fears and tanking stock markets.
Yield curve inversions have preceded all nine recessions since 1955. This was the first time the 10-year Treasury yield has dropped below the 2-year yield since June 2007 – the cusp of the Great Recession.
China bought gold for the eighth straight month in July, adding another 10 tons to its rapidly growing hoard.
The recent purchases boosted the People’s Bank of China’s gold reserves to 62.26 million ounces – about 1, 945 tons. China has added about 94 tons of gold to its stash over the past eight months.
The Federal Reserve has the US economy on monetary life support and Daily Reckoning managing editor Brian Maher says it will never again breathe on its own. As hedge fund manager Kyle Bass put it, the economy is trapped within the inescapable tractor beam of zero percent interest rates.
The federal government continues to spend America into a black hole and has already topped last year’s budget deficit with two months left in the fiscal year.
The US budget deficit in July came in at $120 billion thanks to a surge in spending, according to data released by the Treasury Department.
Uncle Sam spent $371 billion in July. That was 23% more than the government spent in July 2018. The Treasury brought in $251 billion. That number was up 12% compared to July 2018.
In a podcast a couple of weeks ago, Peter Schiff said we now have all the elements of a gold bull market. Well, it looks like the mainstream might be starting to catch on. A headline at Bloomberg on Friday proclaimed “Hedge Funds Go All-In on Gold.”
According to the Bloomberg report, hedge funds increased their gold net-long position by 23% to 285,082 futures and options, this according to US Commodity Futures Trading Commission data that was published on Friday. This figure measures the difference between bets on the price of gold going up and bets on a decline. It was the highest since July 2016.
Consumer debt is driving American economic growth.
Total outstanding consumer debt surged over $4.1 trillion in the second quarter of 2019, according to the latest data released by the Federal Reserve.
American indebtedness grew by 4.9 over the year, and the quarterly gain from Q1 to Q2 came in at $60 billion — the biggest second-quarter increase since Q2 2016. Over the last 12 months, American consumers have piled on an additional $208 billion of debt.
Gold holdings in gold-backed ETFs globally surged to the highest level in over six years in July.
Gold-backed ETFs added 52 tons of gold last month, with net inflows totaling $2.6 billion, according to the latest data released by the World Gold Council. This follows on the heels of a June increase that totaled 127 tons.
Globally, gold-backed funds now hold 2,600 tons of gold. That’s the highest level since March 2013.
Gold pushed above $1,500 again Wednesday (Aug. 7) and silver joined the party, charting its biggest single-day gain in nearly three years.
Silver surged 73 cents on the day for a 4.4% gain, closing above the key $17 level for the first time since January 2018.
