Consumers continued to pile on debt in August, according to the latest data released by the Federal Reserve. But credit card debt fell slightly, raising a troubling question: are consumers close to maxing out the plastic?
Total consumer credit grew by another $17.9 billion in August. That represents an annualized increase of 5.2% and pushes total consumer indebtedness to a new record of $4.14 trillion (seasonally adjusted).
Central banks globally added a net 57.3 tons of gold in August, continuing a gold-buying spree that’s been going on for months. Countries like Russia and China are seeking to minimize exposure to the US dollar and undermine the ability of the US to weaponize the greenback as a foreign policy tool. But there are even more fundamental reasons central banks hold gold, as outlined by De Nederlandsche Bank (DNB), the central bank of the Netherlands.
The Federal Reserve is set to begin what a MarketWatch article called a “massive” bond-buying program.
Jerome Powell announced the program last Tuesday and the central bank released more details about the plan on Friday. The Federal Reserve will buy $60 billion in short-term Treasury bills each month. According to a statement, the purchases will continue, “at least into the second quarter of next year.” That would amount to around $400 billion worth of Treasurys added to the Fed’s balance sheet.
The budget deficit for fiscal year 2019 came in just a hair under $1 trillion according to the Congressional Budget Office estimate.
Even if it does come in under the trillion-dollar mark, it would still rank as biggest deficit since 2012. The budget shortfall has only eclipsed $1 trillion four times, all during the aftermath of the 2008 financial crisis.
The central bank gold-buying spree shows no signs of letting up. In fact, it ramped up again in August after ebbing slightly in July, according to the latest data released by the World Gold Council.
After a relatively modest net increase of 13.9 tons in July, central banks globally took in a net 57.3 tons of gold in August.
The unicorns are dying.
Markets seemed to really wake up to the plight of the unicorn when WeWork aborted its much-anticipated IPO, but the air started coming out of the unicorn bubble long before WeWork’s IPO demise.
Unicorns are privately held companies valued over $1 billion. Companies like Lyft, Chewie, Uber and WeWork were the darlings of WallStreet. Their IPOs were much-anticipated by investors. They are also the poster children for easy-money induced market mania, and their IPOs were crucial for maintaining the bubble.
ETF gold holding reached all-time highs in September.
Globally, gold-backed ETFs added 75.2 tons of metal to their holdings last month, according to the most recent data released by the World Gold Council. That brought total gold holdings to 2,808 tons, eclipsing the previous record set back in 2012 when the price of gold was near $1,700 per ounce.
China has accumulated more than 100 tons of gold since it resumed buying the yellow metal last December in a quest to diversify its reserves away from the US dollar.
The People’s Bank of China added another 5.9 tons of gold to its hoard in September, according to data on its website reported by Bloomberg. It was the 10th straight month of gold-buying for the Chinese central bank and it added to the 99.8 tons accumulated during the prior nine months.
Interest in silver investment has increased significantly in recent months. According to a report commissioned by the Silver Institute and put together by Metals Focus, silver investment has increased across a range of available instruments including physical metal, exchange-traded products (ETP) and in the futures markets.
Increased market volatility, a return to easy-money policies by central banks, geopolitical uncertainty and deteriorating economic conditions have spurred investment in safe-haven assets including silver. The silver price began the year at $15.44 per ounce. As of the end of September, the white metal was up 11%. Silver posted a yearly high of $19.30 on Sept. 4, a level not seen since 2016.
The US national debt increased by $1.2 trillion in fiscal 2019, which ended Sept. 30. This follows on the heels of a $1.27 trillion increase in the national debt in fiscal 2018.