Gold Standard News Daily

5.1.24 - More Bank Failures to Come?

Gold last traded at $2,322 an ounce. Silver at $26.72 an ounce.

Billionaire investor David Einhorn shares an overlooked theory for why gold prices have spiked so much -Yahoo! Finance

Global central banks continue to gobble up gold. Billionaire investor David Einhorn believes this is why gold continues to shine even as hopes of a rate cut dwindle. But could there be a deeper reason? Other countries see the writing on the wall with the dismal future of our economy and it appears individual investors are starting to see it too. Gold, a long-trusted safe haven, is a harbor in this building tempest.

by Yuheng Zhan

Gold has had a record-setting year so far in 2024.

That being said, the commodity's sudden surge may come as a surprise. That's because the macro environment was supposed to create headwinds to gold's price appreciation, as the Federal Reserve's higher-for-longer interest rate stance typically makes other investments like bonds and saving accounts more appealing compared to the metal, as it's not a yield-bearing asset.

To explain the strong run for gold, billionaire investor David Einhorn offered a potential theory in his latest letter to investors published this week.

"While it's possible the advance was related to the market beginning to doubt the sustainability and wisdom of both monetary and fiscal policies, other indicia suggest that this was not the case," Einhorn said in the letter.

Instead, the Greenlight Capital founder said there's been a "secular trend" of the countries in the East buying gold from Western nations.

"Perhaps the West is running out of gold it is willing to sell, while Eastern demand has remained strong enough to force the price higher," he said in the statement.

Indeed, global central banks have been racing to buy gold, snapping up over 1,000 tonnes for the past two years straight, according to data from World Gold Council — and one of the biggest buyers is China. READ MORE

Republic First seizure signals more bank failures to come, expert warns -Fox Business

As the talking heads discuss news of each new bank failure, they seem to believe *this* will be the last one. And yet, another one bites the dust. But banking experts aren't wearing the same rose-colored glasses. Joseph Lynyak, a banking attorney, believes this is just the start of the next round of failures.

by Breck Dumas

Republic First Bank, a regional lender based out of Philadelphia, became the first bank failure of 2024 on Friday when it was shut down by Pennsylvania's bank regulator and the Federal Deposit Insurance Corp. (FDIC) seized control of the operation.

The FDIC quickly made a deal for Fulton Bank to buy Republic First's assets, but one expert on financial regulatory reform and bank failures says the collapse could be a harbinger of things to come.

"This bank failure indicates that additional failures will occur and will range between smaller community banks and larger banks," said Joseph Lynyak, a banking attorney at Dorsey & Whitney, regarding the seizure of Republic First by U.S. regulators.

"The cause is twofold: higher-cost deposits exceeding the yield on low-yield treasury securities and similar investments held by banks, and the deteriorating commercial real estate market and commercial real estate loans," said Lynyak, who specializes in bank receiverships and failures.

Regional banks have been struggling to retain deposits as customers seek the safety of larger "too-big-to-fail" rivals, and higher interest rates have diminished the value of their loan books due to increased unrealized losses and lower commercial real estate values. READ MORE

Bye-Bye, Goldilocks -Daily Reckoning

The Fed has touted that there would be three rate cuts by the end of the year. Wall Street rallied on this news even though there was little indication it would actually happen. Here we are on May 1, with no cuts made. Does the Fed have time, in an election year, to still squeeze in three? Perhaps, it will only be two, or one, or none. Larry Summers has even warned the Fed may end up having to raise rates yet again.

Last Friday’s GDP number came in weaker-than-expected at 1.6% annualized, the weakest quarterly gain in almost two years.

I’ve written for months that there would be no interest rate cut by the Fed at their June meeting. Wall Street was putting the odds of a rate cut at around 70% and the stock market was rallying in anticipating the cut.

They were wrong, I was right. That’s not to brag, it’s just that I use a better set of analytic tools than they do.

Today, every top Wall Street analyst is proclaiming there will be no rate cut in June, and maybe not in July either. Thanks, guys and gals. You’re only about three months behind the curve.

That’s worthless forecasting, but it’s what Wall Street does best.

Now there’s a chance that we won’t get any rate cuts this year. So Wall Street has been wrong about rate cuts for almost two years, and they’re wrong now.

Recall, by the late summer of 2022, Wall Street was already talking about the “pivot.”

This was jargon for a rate cut. No one expected it that soon, but early 2023 was Wall Street’s target date for the pivot. That never happened. Wall Street extended the pivot date of mid-2023. Then late 2023. Then early 2024. Wrong, wrong and wrong.

Moving the pivot date from June 2024 to later this year is just the latest blunder. READ MORE

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4.30.24 - Gold Demand Hits Highest Level Since 2016

Gold last traded at $2,286 an ounce. Silver at $26.29 an ounce.

EDITOR'S NOTE: If you have wondered why gold prices have continued to rise so sharply for so long, here's one reason. Countries, institutions, banks and individuals have been buying gold at a record pace, causing rapid price appreciation. The better news? According to many, we're just getting started.

Gold Demand Hits Highest Level Since 2016, World Gold Council Says -Forbes

by Royston Wild

Demand for safe haven gold rose to its highest level in seven years in the first quarter of 2024, according to the World Gold Council.

Total bullion demand (including over-the-counter trades) rose 3% year on year between January and March, the body said, to 1,238 tonnes.

Excluding over-the-counter business, gold demand reversed 5% from the corresponding 2023 period, to 1,102 tonnes.

Average gold prices rose 10% year on year in quarter one, or 5% from the final three months of 2023, to an all-time quarterly high of $2,070 per ounce as macroeconomic and geopolitical drove demand for the flight-to-safety asset.

The WGC said that "healthy investment from the OTC market, persistent central bank buying, and higher demand from Asian buyers" all drove gold prices skywards last quarter.

The metal has continued to rise and struck fresh record highs of $2,364 per ounce in early April. It was last dealing at $2,314. READ MORE

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4.29.24 - Republic First Bank seized by FDIC

Gold last traded at $2,335 an ounce. Silver at $27.10 an ounce.

EDITOR'S NOTE: It's not as though it wasn't expected, but more bank failures are upon us. Our banking system has been faltering for a while now, will one of these failures be the final straw?

Bank Failures Begin Again: Philly's Republic First Seized By FDIC -Zero Hedge

by Tyler Durden

Who could have seen that coming?

Admittedly, we were a couple of weeks off, but trouble has been brewing in the banking sector and tonight - after the close - we get the first bank failure of the year.

The FDIC just seized the troubled Philadelphia bank, Republic First Bancorp and and struck an agreement for the lender’s deposits and the majority of its assets to be bought by Fulton Bank.

Republic Bank had about $6 billion of assets and $4 billion of deposits at the end of January, according to the FDIC (considerably smaller than the $100-200BN assets with SVB and Signature).

The FDIC estimated the failure will cost the deposit insurance fund $667 million.

As The Wall Street Journal reports, Republic First had for months struggled to stay afloat.

Around half of its deposits were uninsured at the end of 2023, according to FDIC data.

Its total equity, or assets minus liabilities, was $96 million at the end of 2023, according to FDIC filings.

That excluded $262 million of unrealized losses on bonds that it labeled “held to maturity,” which means the losses hadn’t counted on its balance sheet.

Its stock, which was delisted from Nasdaq in August, had been near zero.

Republic Bank’s 32 branches across New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday, according to a statement from the FDIC.

Depositors of Republic Bank will become depositors of Williamsport, Pennsylvania-based Fulton Bank, the regulator said.

You should not be surprised given that rates are higher now than they were at the start of the SVB crisis - which means, unless banks have hedged hard or dumped their bonds at a loss, they are even more underwater...READ MORE AND VIEW LINKS/CHARTS

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4.26.24 - Is Something Starting To Break?

Gold last traded at $2,336 an ounce. Silver at $27.19 an ounce.

EDITOR'S NOTE: We've been hearing about the overvalued stock market and an impending correction for some time now, could that time finally be here? The bigger question is, will we really know before it's too late? This may shed some perspective for you.

Is Something Starting To Break? Stocks Plummet And Bonds Go Nuts As Economic Data Disappoints -The Economic Collapse

Are the financial markets headed for trouble? There was quite a bit of panic on Wall Street on Thursday after more bad economic numbers were released. But honestly I simply do not understand why the financial markets responded with such surprise. By now it should be apparent to everyone that we have a “Weekend at Bernie’s economy” that is being propped up by unprecedented levels of government spending. If we actually tried to live within our means, we would immediately plunge into a depression. Our politicians definitely do not want that, and so about every one hundred days they are adding another trillion dollars to the national debt, and the vast majority of that borrowed money goes directly into the veins of the corpse that we call the U.S. economy.

But even though we are absolutely flooding the system with cash stolen from future generations of Americans, economic performance has been extremely anemic.

On Thursday, the government reported that the U.S. economy grew at a 1.6 percent annualized rate during the first quarter of this year…

Gross domestic product, the broadest measure of goods and services produced across the economy, grew by 1.6% on an annualized basis in the three-month period from January through March, the Commerce Department said in its first reading of the data on Thursday.

That is much lower than the 2.4% increase forecast by LSEG economists and marks a sharp slowdown from the 3.4% pace seen during the fourth quarter. It is the slowest pace of growth in two years.

“This was a worst of both worlds report — slower than expected growth, higher than expected inflation,” said David Donabedian, chief investment officer of CIBC Private Wealth US. “The biggest setback is the acceleration in core inflation, and in particular, the services sector rising above a 5% annual rate.” READ MORE

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4.25.24 - Chinese Have "Grabbed Gold By The Throat"

Gold last traded at $2,332 an ounce. Silver at $27.40 an ounce.

EDITOR'S NOTE: When financially concerned over market volatility, currency vulnerabilities or geopolitical turmoil, historically the sound strategy has been to move assets into gold. This is exactly what is taking place in China today. Why does this matter to Americans? The type of problems they're heading straight toward sound eerily identical to what we're facing here in the US.

Chinese Have "Grabbed Gold By The Throat" As Capital Flight Accelerates -ZeroHedge

“Chinese speculators have really grabbed gold by the throat...”

That is how John Reade, chief market strategist at the World Gold Council, describes the scramble in the communist nation among investors looking to move money anywhere but in the yuan or Chinese assets.

As evidenced by soaring Chinese FX outflows, the recent surges in 'alternate currencies' such as bitcoin and gold strongly suggest where the Chinese are seeking safety.

Of course, worsening geopolitical tensions, unprecedented fiscal profligacy by the Biden administration that shows no signs of slowing, and a Fed that seemed willing to support that spending with rate-cuts that were wholly un-necessary based on the 'data' they are so 'dependent' on (prompting fears of a policy error) are all factors driving precious metals higher, but, as Bloomberg reports, juicing the rally is unrelenting Chinese demand, as retail shoppers, fund investors, futures traders and even the central bank look to bullion as a store of value in uncertain times.

China and India have typically vied over the title of world’s biggest buyer. But that shifted last year as Chinese consumption of jewelry, bars and coins swelled to record levels. China’s gold jewelry demand rose 10% while India’s fell 6%. Chinese bar and coin investments, meanwhile, surged 28%.

And there’s still room for demand to grow, said Philip Klapwijk, managing director of Hong Kong-based consultant Precious Metals Insights Ltd. Amid limited investment options in China, the protracted crisis in its property sector, volatile stock markets and a weakening yuan are all driving money to assets that are perceived to be safer. READ MORE

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4.24.24 - Wave Goodbye To Another Set Of Freedoms

Gold last traded at $2,319 an ounce. Silver at $27.23 an ounce.

What The Rising Gold Price Signals (Spoiler Alert: Nothing Good) -Zero Hedge

As I'm sure you realize by now, we believe the gold market is primed for what could potentially be explosive future gains, and that's after the increases we have already seen. What's of no less significance as the gains is the 'why' behind them ... it's not because of how great things look in the economy.

Authored by Antonius Aquinas

The recent run-up in the gold price has not garnered the attention among the mainstream financial media outlets as it should.

Gold has, in part, been overshadowed by the rise in the price of bitcoin and other cryptocurrencies.

Naturally, the financial press, which is really an arm of the government and its central bank, wants to ignore, as much as possible, references to gold as protection against the continuing increase in the price level which itself has been deliberately understated by monetary officials. The media and government understand that precious metals are the ultimate security against runaway inflation and economic collapse.

While the increase in the gold price has reached nominal highs, it and the price of silver have not passed their all-time 1980 highs in real terms.

Adjusted for inflation, gold would have to rise to about $3590 an ounce while silver would have to surpass $50 an ounce.

Both are poised to exceed these watermarks in the not-too-distant future. READ MORE

Wave Goodbye To Another Set Of Freedoms With The New Digital ID -Zero Hedge

There's little to no question that technology has created a lot of conveniences for us all, but at what cost? When these digital conveniences are coming from the government, there may be more to the story than what we're being told.

Authored by Graham Young via The Epoch Times

“Papers please” used to be the ostinato of totalitarian systems, at least in the movies.

With the passing of the government’s Digital ID bills, Australians will have to become used to the digital equivalent - so what does that say about present-day Australia?

A few things have surprised me over the last few years, not the least the way the famous Aussie spirit of insubordination has been subsumed into a goody-two-shoes compliance with whatever capricious orders the authorities made.

I can’t imagine our forebears accepting lockdowns and forced vaccinations, and I certainly couldn’t see them accepting an identity card linking not just government accounts but private sector ones as well.

While the first proposition is an assertion based on a gut feeling, the second is very much based on fact. READ MORE

This “Emperor” Has No Clothes -Daily Reckoning

This childhood story is one I remember reading countless times. Who would've known there would be more current day applications to the nude emperor. Probably not good when describing the actions and abilities of the Fed.

by James Rickards

Does the Fed even matter that much to the real economy and investor portfolios?

That’s an important question that doesn’t get nearly enough scrutiny. It’s possible that neither the Fed nor the reporters who cover the Fed want to ask hard questions about what the Fed really does.

Could it be the case that the emperor has no clothes?

Financial journalists often refer to a Goldilocks economy (“not too hot, not too cold, just right!”) as a tribute to the Fed’s finesse in handling rates. It’s also called the “soft landing” scenario because the Fed supposedly tamed inflation without causing a recession.

These narratives have no factual foundations; they’re just stories designed to get you to buy stocks and pump up stock prices.

The truth is the Fed is always behind the curve and doesn’t finesse the economy. And there’s no such thing as a soft landing; the economy does not gradually shift gears. It’s either growing fast or going into recession.

So where does the Fed stand today? Will it start cutting rates as Wall Street keeps (wrongly) predicting? READ MORE

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4.23.24 - Ray Dalio: Gold a "good diversifier"

Gold last traded at $2,322 an ounce. Silver at $27.28 an ounce.

EDITOR'S NOTE: Swiss America has always advised our clients to diversify a portion of their portfolio into precious metals to hedge against geopolitical and economic turmoil. Many billionaires follow this same advice but they never talk about it until we are in these types of market conditions. Yes, today is a great time to enter the market if you have yet to follow this advice but it's advice that stands the test of time in all market conditions.

Billionaire investor Ray Dalio says he's owning gold to hedge the risk of debt and inflation crises -Business Insider

by Jennifer Sor

Ray Dalio is holding onto gold as a buffer against risks stemming from higher inflation and a potential debt crisis hitting the economy.

The billionaire investor and former Bridgewater Associates CEO has pointed to mounting debt balances around the world, with the US debt notching $34 trillion for the first time ever this year. Debt problems have also plagued China, Japan, and European nations — which poses a big risk for the currencies in those nations, he wrote in a post on LinkedIn this week.

"History and logic show that when there are big risks that the debts will either 1) not be paid back or 2) be paid back with money of depreciated value, the debt and the money become unattractive," Dalio wrote on Thursday.

When nations are deeply indebted, central banks are likely to print out more cash to pay off the debt, he noted, which is itself a problem.

"This prevents a big debt squeeze from happening by devaluing the money (i.e., inflation)," Dalio warned. "Gold, on the other hand, is a non-debt-backed form of money. It's like cash, except unlike cash and bonds, which are devalued by risks of default or inflation, gold is supported by risks of debt defaults and inflation."

That's the main reason Dalio says he has gold in his own investment portfolio, he added, calling it a "good diversifier" against the backdrop of high debt levels.

Gold has been on a record-setting run in recent weeks. Investors have been keen to buy the precious metal amid the looming risk of recession and inflation remaining stuck at elevated levels, as well as fears of wider geopolitical turmoil out of the Middle East. READ MORE

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