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Emotional Whirlwind: Chinas Real Estate Saga Casts a Tentative Mood Over Financial Markets

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Emotional Whirlwind: China's Real Estate Saga Casts a Tentative Mood Over Financial Markets

China's real estate market has become a focal point of global attention, generating uncertainty and raising concerns about the overall financial landscape. The economic situations of major property developers in China have been a cause for worry, leaving the world in suspense. This ongoing saga has evoked strong emotions and carries significant implications.

The consequences of a collapse in China's real estate market extend far beyond financial territory. It would have a profound impact on the lives of millions of people, including homeowners, investors, and those employed in the construction and related industries. The social and psychological implications cannot be overlooked.

Moreover, the interconnectedness of the global financial system means that any significant disruption in China's real estate market could have ripple effects worldwide. International investors, financial institutions, and markets are closely monitoring the situation, aware of the potential implications for their economies.

The stakes are undeniably high, and the outcome of this situation will shape the future trajectory of China's economy and reverberate throughout the global financial landscape. By understanding the complex factors and underlying emotions, we can gain a deeper appreciation for the significance of this unfolding event, the multifaceted factors at play, and the feelings underpinning this gripping narrative.


Image source: The Plaid Zebra

The Weight of Uncertainty, Fear, Anxiety, and Hope

Have you ever wondered what's happening in China's economy? A new twist keeps us on the edge of our seats every week. From massive property companies teetering on the brink of bankruptcy to sprawling construction sites sitting empty and skyrocketing youth unemployment rates, China's financial situation is anything but stable. And remember, this isn't just a problem for China alone. The global economy is closely tied to China's fate, like a ship anchored to its economic performance. So, what's the next wave of challenges that China is facing?

Let's start by painting a picture of China's current economic landscape before we delve into its implications for the global economy. It's a big task, but let's dive right in. When the COVID-19 restrictions were lifted late last year, many expected China's economy to bounce back like a sprinter out of the starting blocks. However, it has been more of a limp in recent months instead of a leap.

Disturbing economic data has been emerging, particularly in the housing sector. One major player in the news is Evergrande. This colossal property developer made headlines in 2021 when it defaulted on its debt, earning the title of the world's most indebted developer with over $300 billion in debt. Unfortunately, the company is facing even more bad news. According to the latest estimates, its liabilities have now climbed to $340 billion, and it has recently filed for Chapter 15 bankruptcy protection in the United States. But Evergrande is not the only troubled developer in China.

You might be wondering why a crisis in China's housing market is such a big deal. In most economies, the housing sector plays a significant role in the gross domestic product (GDP), which is a key indicator of a nation's financial health. But in China, housing is even more crucial, accounting for 25% to 30% of its GDP. That's practically double the figure for the United States. Why is this the case? In China, people have limited options for investing their excess cash. Stock markets are complicated to access and nearly impossible to tap into international trades.


The central plaza of Kangbashi district in Ordos City, Inner Mongolia. Dubbed China's
signature ghost city, the district is less than 10 percent occupied. Qilai Shen/Getty Images

As a result, people park their savings in housing, which has traditionally been seen as a safe investment. This explains the phenomenon of ghost cities and massive clusters of vacant apartment buildings. These empty flats are not just abandoned; they are investment properties that owners choose not to rent out, fearing it would decrease their value. Estimates suggest a staggering 65 to 80 million vacant apartments across China. The sight of these desolate urban landscapes is similar to a dystopian movie.

For many years, house prices in China were on a steady upward trajectory. However, in recent years, the situation has changed. Officially, new home prices have seen a 2.4% dip since August 2021, with existing homes faring even worse, experiencing a 6% decline. But other sources of evidence suggest that the situation is much worse than official figures indicate. Reports from property agents and private data providers show drops of at least 15% in prime neighborhoods in major metropolitan areas like Shanghai and Shenzhen.

This is not good news for real estate companies, private investors, or the economy. It creates an atmosphere of economic uncertainty and leads to reduced spending. It's also a nightmare for aspiring homeowners who worry that they have invested their life savings into projects that may never be completed. You may recall the protests last summer when displeased investors refused to pay their mortgages due to delays in completing their homes. Such outbursts are rare in China.

So, what has caused this drop in house prices? The reasons are complex, but let's unpack them as succinctly as possible. First, let's consider China's urban migration statistics. From 1990 to 2020, the urban population exploded from around 301 million to a massive 848 million. This rapid urbanization and relatively cheap credit led developers to go into overdrive, constructing buildings as fast as possible. However, despite the construction boom, housing soon became unaffordable for many, especially in major cities.

For example, in 2020, buying an apartment in Shenzhen could cost you about 43 times the average annual salary. The government implemented a series of regulatory measures around 2020 to cool down the housing bubble. These measures included higher mortgage down payments, restrictions on buying multiple properties, and stricter credit conditions for developers. While well-intentioned, these steps now appear to have been too aggressive. Developers hit the brakes; many defaulted on their debts, and potential buyers were spooked, leading to decreased demand and prices falling drastically.


Created with an investment of $161 billion in the early 2000s, Kangbashi can house over 
300,000 people. So far, only 30,000 have moved in. Qilai Shen/Getty Images

Assessing the full extent of this crisis is challenging because reliable data in China is hard to come by. The Chinese government wants to control the narrative and minimize the data release that could cause market panic and reflect poorly on the government. For example, in August 2023, the government stopped publishing youth unemployment data after it reached an unprecedented level of over 21% in June of this year. However, some facts cannot be hidden. Big companies are in trouble, and markets worldwide are paying attention.

While Evergrande has been grabbing headlines, it is not the only player in China's deteriorating real estate landscape. For example, Country Garden, a property developer four times larger than Evergrande with an estimated one million apartments under construction, missed bond payments in early August. Country Garden has until September 2023 to make payments or risk default. Regardless of whether it can come up with the money, the damage has been done. Confidence in China's housing market, which was already shaky, has taken another hit.

A Balancing Act of the Government’s Intervention

The Chinese government's interventions in the real estate market stimulate a range of emotions and frustration as homeowners face stricter regulations and hope these measures will bring stability. It's a delicate balancing act between economic growth and preventing a bubble from bursting. The world watches with bated breath to see if these measures will lead to a safe landing or a turbulent crash.

So, where does China go from here? What can the government do to steer the economy out of troubled waters? One straightforward solution might be a robust fiscal stimulus, such as slashing interest rates dramatically to encourage borrowing and stimulate exports, which have traditionally been a cornerstone of China's economy. However, this tactic has its risks. It could potentially trigger capital flight as corporations and households seek higher interest rates abroad. 

This would cause China's currency, the Renminbi, to weaken further against the dollar. So far, the government's steps have been more cautious than transformative. For example, on August 21, China's central bank modestly reduced its one-year loan prime rate from 3.55 to 3.45%. However, market watchers generally agree that this move is like bringing a pocket knife to a sword fight. Bolder reforms are urgently needed.

Fortunately, China has tools at its disposal to mitigate the crisis. For example, the government could compel banks to lend more, which, while not a magic bullet, could act as a firewall against a full-scale financial meltdown and a subsequent credit crunch. The Chinese government has been trying to prevent a disorderly default by imposing stricter regulations on the property market, injecting liquidity into the banking system, and urging Evergrande to negotiate with its stakeholders. 

However, the government has also clarified that it will not bail out Evergrande or other troubled firms, as it wants to avoid moral hazard and promote market discipline. The outcome of this crisis will depend on how well the government can balance its conflicting goals of maintaining stability and reforming the economy.


Image: Markethive.com

Fear, Excitement, and Optimism Grip

If Country Garden can't sort out this debt issue by September, it could have severe repercussions for the property sector and the broader Chinese economy, which will have a ripple effect on the financial markets. The fact that bond trading for them has already stopped is a clear sign that significant challenges lie ahead. Investors, policymakers, and homeowners are all bracing for a turbulent ride.

The potential fallout from Country Garden's troubles is substantial. Around 145,000 families anxiously await their homes; their dreams and investments hang in the balance. This situation is a stark reminder that even the mightiest companies can stumble, shaking confidence in the market. Small suppliers in the property development chain are also feeling the heat as they rely on timely payments from these giants. If things continue this way, it could reshape China's property development industry and lead to higher unemployment. 

Now, you might be wondering if state-backed firms are safe from this turmoil. Even they are showing signs of vulnerability. This isn't just a problem for China; it is a global problem. American investors, for example, have stakes in Chinese assets and debts, and any loss of confidence in the Chinese market can lead to sell-offs and affect U.S. portfolios.

So, in a nutshell, the story of Country Garden and Evergrande's financial struggles is not just about the two companies debts; it's about how it could send shockwaves through the Chinese and even the global economy. It's a situation being closely watched, and the outcomes will have far-reaching implications.

 

 

About: Prince Ibenne. (Nigeria) Prince is passionate about helping people understand the crypto-verse through his easily digestible articles. He is an enthusiastic supporter of blockchain technology and cryptocurrency. Find me at my Markethive Profile Page | My Twitter Account | and my LinkedIn Profile.

 

 

 

 

 

Tim Moseley

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Gold near steady silver weaker after hotter US data

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Gold near steady, silver weaker after hotter U.S. data

Gold prices are near steady and silver prices are moderately down in midday U.S. trading Thursday, following a batch of U.S. economic data that showed an uptick for producer inflation and solid retail sales. Both reports fall into the camp of the U.S. monetary policy hawks, and that's bearish for the metals. December gold hit a three-week low today and was last down $0.10 at $1,932.40 and December silver hit a six-month low today and was last down $0.231 at $22.95.

If you have not done so, I encourage you to try out my new “Markets Front Burner” email report. I think it's one of my best products yet (free!) in my 40-year quest to help you become a better trader and investor. It's a weekly email report that highlights the latest developments in the marketplace, and how you can better manage those developments in your own trading/investing. Just try it for one week—I guarantee you will want to keep it coming. Sign up to my new, free weekly Markets Front Burner newsletter.

Today's U.S. producer price index for August came in hot, at up 0.7% versus expectations for a rise of 0.4%. The “core” PPI reading (that's minus food and energy) was up 0.2%, which is right in line with market expectations. Meantime, U.S. retail sales in August were up 0.6% versus market expectations for a rise of 0.1%. These numbers suggest the Federal Reserve will continue to raise interest rates to choke off inflation, but also slow economic growth. That would likely mean less demand for raw commodities, including the metals.

In overnight news, China's central bank is again easing its monetary policy, this time by cutting is reserve requirement ratio for banks by 0.25%, effective Friday. The central bank is trying to revive the world's second-largest economy.

  Gold shopping spree continues for Poland, Czechia and India, Uzbekistan also buys in August

The European Central Bank held its regular monetary policy meeting Thursday and slightly raised its main interest rate by 0.25 percent, to 4.0%.

The key outside markets today see the U.S. dollar index solidly higher after the stronger U.S. retail sales and hotter PPI. Nymex crude oil prices are higher and trading around $90.00 a barrel. Prices hit a 10-month high overnight. The benchmark U.S. Treasury 10-year note yield is presently fetching around 4.28%.

Technically, December gold futures prices hit a three-week low today. Bears have the firm overall near-term technical advantage. A four-month-old downtrend on the daily bar chart has been restarted. Bulls' next upside price objective is to produce a close above solid resistance at the September high of $1,980.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at Tuesday's high of $1,947.50 and then at this week's high of $1,954.60. First support is seen at today's low of $1,921.70 and then at $1,913.60. Wyckoff's Market Rating: 3.0.

December silver futures prices hit a six-month low today. The silver bears have the overall near-term technical advantage and have momentum. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at this week's high of $23.515 and then at $24.00. Next support is seen at today's low of $22.555 and then at $22.25 Wyckoff's Market Rating: 3.0.

December N.Y. copper closed up 195 points at 381.25 cents today. Prices closed near mid-range. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 390.85 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 367.00 cents. First resistance is seen at today's high of 384.25 cents and then at 388.00 cents. First support is seen at 377.05 cents and then at 375.00 cents. Wyckoff's Market Rating: 5.0.

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Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

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Gold silver weaker after US CPI suggests still-hawkish Fed

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Gold, silver weaker after U.S. CPI suggests still-hawkish Fed

Gold and silver prices are modestly down in midday U.S. trading Wednesday. Although prices showed little reaction to a major U.S. inflation report that contained no big surprises, the data did fall into the camp of the U.S. monetary policy hawks. That's a negative for the metals markets. December gold was last down $3.60 at $1,931.50 and December silver was down $0.277 at $23.125.

If you have not done so, I encourage you to try out my new “Markets Front Burner" email report. I think it's one of my best products yet (free!) in my 40-year quest to help you become a better trader and investor. It's a weekly email report that highlights the latest developments in the marketplace, and how you can better manage those developments in your own trading/investing. Just try it for one week—I guarantee you will want to keep it coming. Sign up to my new, free weekly Markets Front Burner newsletter.

Today's U.S. data point of the week saw the consumer price index report for August come in at up 3.7%, year-on-year, with the core CPI up 4.3% in the same period. The CPI was expected to be up 3.6%, year-on-year, versus a 3.2% rise in the July report. The core reading in July was up 4.7%. The metals and the general marketplace showed little reaction to the numbers.

Said Nigel Green of the deVere Group right after the CPI report: “The Federal Reserve will hold interest rates steady in September, before hiking them again next time. Inflation heated up again last month in the world's largest economy, driven mainly by rising oil costs. This latest U.S. CPI data is unlikely to move the needle on the Fed's highly anticipated move to hold rates steady at their meeting next week, which has already been priced-in by financial markets." He added, “But the uptick in inflation gives the U.S. central bank extra reason to be hawkish moving forward. As such, we also expect the Fed will start to prepare the market for a rate increase at its November meeting."

  Gold shopping spree continues for Poland, Czechia and India, Uzbekistan also buys in August

The U.S. producer price index is out Thursday morning. The European Central Bank also holds its regular monetary policy meeting Thursday and is expected to slightly raise its main interest rate by 0.25 percent.

The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices are weaker and trading around $88.50 a barrel. The benchmark U.S. Treasury 10-year note yield is presently fetching around 4.3%.

Technically, the gold futures bears have the overall near-term technical advantage. Bulls' next upside price objective is to produce a close in December futures above solid resistance at the September high of $1,980.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at Tuesday's high of $1,947.50 and then at this week's high of $1,954.60. First support is seen at $1,925.00 and then at $1,913.60. Wyckoff's Market Rating: 3.0

The silver bears have the overall near-term technical advantage. A bearish pennant pattern has formed on the daily bar chart. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at last week's high of $24.655. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at this week's high of $23.515 and then at $24.00. Next support is seen at $23.00 and then at $22.585. Wyckoff's Market Rating: 3.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and Silver

Tim Moseley

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Headline inflation is expected to rise and technical selling moves gold lower

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Headline inflation is expected to rise, and technical selling moves gold lower

Market participants are waiting for the CPI (Consumer Price Index) report which will be released tomorrow. According to economists polled by the Wall Street Journal, the report will reveal that headline inflation increased by 0.6% last month. If their predictions are correct this would be the largest increase since June 2022. This would take inflation from 3.2% in July to 3.6% last month.

The primary cause of this large increase in inflation is dramatically higher oil prices. Oil has risen almost 25% since the end of July. Also, the cost of housing has increased by approximately 7.7% in the past year, considerably higher than the housing and rent costs before the pandemic.

That being said, the Federal Reserve is expected to leave its benchmark interest rate (fed funds rate) unchanged at next week’s FOMC meeting. According to the CME’s FedWatch tool, the probability that the Fed will not raise rates next week is 93%. The probability that the Federal Reserve will maintain its current rate has been 90% or higher for a month now. The probability indicator for rate hikes by the Fed is predicting that there is a 59.3% probability that the Fed will stay the course in November with a 38.1% probability of a ¼% rate hike.

According to a poll conducted by Reuters News service, “The Federal Reserve will leave its benchmark overnight interest rate unchanged at the end of its Sept. 19-20 policy meeting and probably wait until the April-June period of 2024 or later before cutting it, according to economists in a Reuters poll.”

This is in line with recent statements from Chairman Powell who has been on record since his speech at the Jackson Hole economic symposium to maintain the current elevated interest rates "higher for longer". The chairman and other members of the Federal Reserve have been resolute as they continue to keep the possibility of additional rate hikes on the table if needed to reach its 2% inflation target.

The result of the forecast for tomorrow's CPI report combined with next week’s FOMC meeting was traders actively selling gold futures which traded to a low of $1929.80 in trading this morning. As of 4:40 PM EDT, the most active December contract of gold futures is currently down $11.40 and fixed at $1935.80. Spot gold is also under pressure and currently fixed at $1912.50 according to the KGX (Kitco Gold Index). The KGX revealed that the vast majority of today’s decline is directly attributable to market participants bidding the precious yellow metal lower by $8.30 with a $1.00 decline directly attributable to fractional dollar strength resulting in today’s total decline of $9.30.

Today’s decline in gold is the result of traders factoring in the most recent predictions for tomorrow’s inflation report. We could see extreme volatility tomorrow if the report differs to any large extent from the current forecast.

Gary S. Wagner

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Gary Wagner

Contributing to kitco.com

Time to Buy Gold and silver

Tim Moseley

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Gold silver firmer ahead of key US inflation report

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Gold, silver firmer ahead of key U.S. inflation report

Gold and silver prices are modestly up in quieter midday U.S. trading Monday. A solidly lower U.S. dollar index is a supportive outside market element for the metals on this day. Short covering in the gold and silver futures markets is also featured ahead of a key U.S. inflation report on Wednesday. December gold was last up $5.10 at $1,947.80 and December silver was up $0.206 at $23.38.

If you have not done so, I encourage you to try out my new “Markets Front Burner” email report. I think it’s one of my best products yet (free!) in my 40-year quest to help you become a better trader and investor. It’s a weekly email report that highlights the latest developments in the marketplace, and how you can better manage those developments in your own trading/investing. Just try it for one week—I guarantee you will want to keep it coming. Sign up to my new, free weekly Markets Front Burner newsletter .

Traders and investors are waiting for the next major U.S. data point, which is the consumer price index report for August out Wednesday morning. The CPI is expected to be up 4.3%, year-on-year, versus a 4.7% rise in the July report.

The European Central Bank also holds its regular monetary policy meeting this week and is expected to slightly raise its main interest rate by 0.25 percent.

Asian and European stock markets were mixed overnight. U.S. stock indexes are up just a bit at midday, as equities traders are also awaiting the CPI report Wednesday.

In overnight news, a Wall Street Journal headline reads, “An important shift in Fed officials’ stance is under way.” In the article, reporter Nick Timiraos, who is said to have close ties with the Fed, writes that Fed officials, including Chairman Jay Powell, now have a more balanced approach on monetary policy. That’s a dovish shift from the more hawkish approach the Fed had in recent months, which was one of erring on the side of raising interest rates too high, to make certain inflation is choked off. Now, the Fed is more worried about further interest rate increases causing an unnecessary U.S. recession.

Robust U.S. economic activity to support dollar, weigh on gold prices next week

The key outside markets today see the U.S. dollar index solidly lower. Nymex crude oil prices are near steady trading around $87.50 a barrel. The benchmark U.S. Treasury 10-year note yield is presently fetching 4.294%.

There was no major U.S. economic data released Monday.

Technically, December gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the September high of $1,980.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at today’s high of $1,954.60 and then at $1,965.00. First support is seen at $1,939.00 and then at $1,925.00. Wyckoff's Market Rating: 3.5?

December silver futures bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at last week’s high of $24.655. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at today’s high of $23.515 and then at $24.00. Next support is seen at the September low of $23.13 and then at $23.00 Wyckoff's Market Rating: 3.5.

December N.Y. copper closed up 900 points at 380.65 cents today. Prices closed near the session high. The copper bears have the slight overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the September high of 390.85 cents. The next downside price objective for the bears is closing prices below solid technical support at the August low of 367.00 cents. First resistance is seen at 385.00 cents and then at 388.00 cents. First support is seen at 375.00 cents and then at last week’s low of 371.15 cents. Wyckoff's Market Rating: 4.5.

By

Jim Wyckoff

For Kitco News

Time to Buy Gold and silver

Tim Moseley

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BRICS Alliance Expanding Sets A Challenge For The World Reserve Currency Crypto In Good Stead

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BRICS Alliance Expanding Sets A Challenge For The World Reserve Currency. Crypto In Good Stead 

In August 2023, the BRICS countries had their annual summit in South Africa, where some expected a new reserve currency to be unveiled backed by commodities, primarily gold. However, this was not on the agenda for this meeting. The BRICS revealed something arguably more significant when they invited six essential countries to join the coalition. This is in addition to the dozen other countries that have applied to join the BRICS. 

This article explains the BRICS alliance, including how it got started, why it’s more potent than people think, how it could challenge the US dollar as the reserve currency, and how crypto fits into this picture in the next ten years. 


Russian President Vladimir Putin delivers his remarks virtually at the 2023 BRICS 
Summit in Johannesburg on August 24. Source: CNN

The BRICS Background

BRICS is an acronym for Brazil, Russia, India, China, and South Africa. The term was coined in 2001 by Jim O'Neill, the former chairman of Goldman Sachs’ asset management division. Back then, the acronym was BRIC; South Africa wasn't part of the original lineup. Naturally, Jim was interested in the BRIC countries because he believed that they would be the fastest-growing economies of the coming decades and the most significant economies by 2050.

Jim believed this would be due to their low labor costs, rapidly growing populations, and abundant natural resources. Today, this prediction seems crazy to many, but back then, it made perfect sense to most. For context, many of these countries had started joining US-affiliated organizations at the time, notably China, joining the World Trade Organization. Note that the Commodity markets were also booming, which is significant.

In a 2012 interview, Jim revealed that the performance of the BRICS countries had exceeded his expectations. By then, it was the BRICS because South Africa had joined in 2010. Jim had predicted that the BRICS would account for 14% of global GDP by 2010. They ended up accounting for over 18%. By then, Goldman Sachs had introduced a BRICS investment fund that had accumulated almost $1 billion in assets under management, which was a lot back then. 

Wall Street was exceptionally bullish on the  BRICS, but this sentiment had turned bearish by 2014. This shift in sentiment has been due to two factors. The first was that Xi Jinping became the president of China in 2013. Xi immediately began embarking on various initiatives that were more in the interests of China and less in the interests of the United States, such as the Belt and Road Initiative. 

The Belt and Road initiative marked the end of the so-called age of debt, wherein the West benefited from Eastern countries' purchasing debt. Instead of buying Western debt, China started building global infrastructure. It's possible, if not likely, that Wall Street giants, like Goldman Sachs, were pressured by the US government to stop investing as heavily in the  BRICS because of China going rogue. 

The other factor that caused Wall Street sentiment on the  BRICS to flip was that commodity prices collapsed in 2014, primarily oil. This was caused by an oversupply of oil coming from the United States. US oil producers had discovered new reserves in Texas a few years earlier. You may recall the subsequent decline in oil prices decimated Nigeria’s economy. The same was true for other commodity-reliant economies in the global South. By 2015, the BRICS narrative was as good as gone, and all the BRICS-related funds on Wall Street had closed or consolidated. 

In a recent interview regarding the most recent BRICS conference, Jim O'Neill revealed that China was the only BRICS country that had continued to grow according to his expectations. Jim said that the growth in the other BRICS countries was disappointing and said the same about BRICS’s evolution as an organization. In retrospect, he said it made no sense that South Africa was added and that it made no sense that all the countries under consideration by the BRICS also had weak economies. But that is just the US side of the story. 

The BRICS Side Of The Story

The BRICS view on things sounds very different, and what It suggests about the BRICS economies and their evolution is much more nuanced. For starters, the BRICS technically isn't an official organization. It has yet to have an official website or social media. The current website for The BRICS appears to be run by Russians. 

Russia was the one that turned the acronym into an actual thing driven by President Vladimir Putin. At a United Nations meeting in 2006, the Foreign Ministers of the BRICS countries gathered for their first informal meeting. However, it wasn't until 2009 that the BRICS countries held their first formal meeting in Russia. Interestingly, it's possible that the 2008 financial crisis was the catalyst that brought the BRICS together. 

For reference, it's believed that 2008 shook global confidence in the US-led system. In 2012, things started to get truly interesting for the BRICS. The countries collectively pledged to give $75 billion to the International Monetary Fund (IMF) in exchange for reforms. Note that the IMF is an international organization closely affiliated with the US that gives USD loans to developing countries, and these loans come with unfavorable conditions; hence, the BRICS wanted reforms.


NEW DEVELOPMENT BANK – The headquarters of the BRICS-founded New 
Development Bank is in Shanghai. Source: DN Africa

Not surprisingly, the BRICS didn't get these reforms. The result was India proposing that the BRICS set up its versions of the IMF and the World Bank, another international organization closely affiliated with the US that issues USD loans to developing countries for infrastructure development. So, in 2014, BRICS countries created the BRICS Contingent Reserve Arrangement (CRA) and the New Development Bank, colloquially called the BRICS Development Bank.  

Whereas the CRA is just a framework, the BRICS Development Bank is an official organization headquartered in China. BRICS countries have an almost equal stake in both. The framework includes a capital contribution of $100 billion, primarily meant for a payment emergency in a member country.

It’s understood that the bank can issue up to $100 billion of loans for infrastructure development. This is significant because the IMF and the World Bank were the international organizations that set the stage for the US-led world order. Both were created at the famous Bretton Woods conference in 1944, where the US dollar was established as the world's reserve currency. 


Image source: DN Africa

In the following decades, other international organizations closely affiliated with the US were established, such as the United Nations (UN), and many countries were corralled into these organizations by the IMF and the World Bank. This was done using those conditions mentioned earlier on loans, which favor US policy. 

The BRICS are in a different position than the US was in the 1940s. The majority don’t believe that the Chinese Yuan, the Russian Ruble, the Indian Rupee, or a combination of these currencies will become the world's reserve currency. However, the BRICS wants to compete with other US-affiliated international organizations like the UN. The CRA and the BRICS Development Bank are precursors to this, but if the BRICS genuinely want to compete first, they must become an official organization. 

The BRICS Shows The World Its Serious

This ties into the BRICS' most recent Summit in South Africa, where Xi Jinping was physically in attendance. It’s significant because Xi has only left the Chinese mainland once since January 2020. Not only that, but Xi was there when the Chinese economy was reportedly on the brink of collapse, suggesting that the BRICS is even more important than China to Xi. 

Regardless, Xi’s presence was significant, and it begs the question of why he made the effort. The answer seems to be that Xi wanted to show the world that the BRICS is serious, notably to the countries that the BRICS invited to join their coalition. These countries are Saudi Arabia, the United Arab Emirates, Iran, Egypt, Ethiopia and Argentina. All six countries will join the BRICS starting January 2024 if they accept the invitation. 

These new countries are significant for many reasons. The main one is that they are all major oil or agriculture producers. Saudi, UAE, Iran, And Egypt are the major oil producers, while Ethiopia and Argentina are the primary agricultural nations. 

As a fun fact, Argentina is the most self-sufficient country in the world. It's estimated that it could feed its entire population with just a fraction of its resources. It's a shame that inflation is ruining everything. They also aren't being helped by the IMF, which recently forced the Argentine government to curb crypto adoption. 


The Chinese President Xi Jinping addressed the BRICS summit in Johannesburg. 
Source: The Guardian

There are other reasons why these countries are significant. In Saudi Arabia's case, it's because it has supported the so-called Petrodollar system since 1974. For those unfamiliar, the Petrodollar system ensures that all oil is bought and sold using US dollars. More recently, Saudi Arabia is reportedly looking into de-dollarization from the Petrodollar. This is evident in its experimentation with accepting payment for oil in other currencies, namely the Chinese Yuan. Oddly enough, every country trying to move away from the US dollar has been in conflict. 

On that note, Iran is significant because it's been heavily sanctioned by the United States due to its alleged involvement in terrorist activity. Therefore, Iran's admission to the BRICS could cause geopolitical issues for its other member countries and potentially discourage other prospective applicants. The main likely reason the BRICS has yet to become an official organization is because its members are concerned about pushback from the US. 

India is the outlier as it's been the most hesitant to side with the other BRICS countries on issues like a new currency, yet a dozen other nations have formally applied to join the BRICS over the last year or so. This list includes Algeria, Bangladesh, Belarus, Bolivia, Cuba, Honduras, Kazakhstan, Kuwait, Palestine, Senegal, Thailand, Venezuela, and Vietnam. 

Over a dozen other countries have expressed interest in joining, too. The BRICS is already bigger than many people think. “The five existing BRICS countries account for almost 31.5% of global GDP compared to 30.7% for the G7.” Furthermore, with 3.14 billion people, BRICS nations account for 41% of the world's population. 

It's believed that BRICS will establish a formal organization once it becomes large enough, and the recent and future additions could do the trick in that respect. If the six invited countries join the BRICS, the bloc will account for almost 40% of world GDP. Also, if the applications from other countries are approved, they will account for more than 50% of the world's population. 


Source: Adobe Stock

Commodity Market Prices Crucial For The Rise Of BRICS 

It could also account for most of the world's commodity exports by that point. The only thing missing in the BRICS’ rise is commodity prices. You'll recall that one of the main reasons Jim was bullish on the BRICS was their abundant resources and high commodity prices. You'll also remember that the BRICS narrative fell apart when commodities crashed. But the other reasons Jim was bullish on the BRICS haven't changed. The labor cost in these countries is still very cheap, and most of their populations continue to grow. When you realize this, adding South Africa and the other countries makes sense; all that's missing is commodity prices. 

Prices follow a cycle that repeats every 20 to 30 years. As the image below indicates, oil prices, agriculture, livestock, and base metals are highly correlated, although they peak and trough at slightly different times. Even so, they follow a trend of 10 to 15 years up and 10 to 15 years down. The last commodity cycle peaked in the early 2010s. This means the next peak could happen as soon as the mid-2030s; however, commodity prices could continue to fall until the mid-2020s. The caveat is that commodity prices will likely vary by type and region, with some rising first and others rising later.


Image source: Visual Capitalist

The BRICS narrative will likely flip back to bullish during the next commodity cycle, not just because they have many natural resources. The profits from extracting resources and turning them into commodities are much higher in current and future BRICS countries. It’s due to many factors, such as developed countries having exhausted the most accessible resources. They also have higher labor costs and fewer people. Developed countries also have more regulations. 

The BRICS countries are at the opposite end of the spectrum for all these factors. If the BRICS Coalition manages to add all the major commodity exporters, it could establish monopolies on the most valuable commodities and force countries to side with the BRICS in exchange for these commodities, the same way that the US has forced countries to side with it in exchange for US Dollars. 

Of course, the US and some of its allies also have lots of natural resources. Again, the difference is that the US and select allies have less accessible resources, higher costs of labor, and more regulations. 


Image source: The Washington Post

The Commodity Monopoly

Investors will see this dynamic and take their money to the BRICS for more significant profit margins. At the same time, US allies, unable to secure most of their resources, such as Europe, will face extreme pressure to buy less expensive commodities from the BRICS. The inevitable result is that the BRICS will have a de facto monopoly on commodities outside of everywhere except North America. This pertains to an essential question that nations worldwide must ask themselves when the next commodity cycle inevitably occurs. Which do they value more, the US dollars used to buy commodities or the commodities themselves? 

Again, the answer will ultimately depend on geography. Countries that produce most of their commodities will likely be the first to ditch the US dollar. Most of the BRICS countries produce their own commodities and have been actively trying to ditch the US dollar in recent years. This is not a coincidence from a commodity perspective. 

Conversely, countries that import most of their commodities will likely continue to value US dollars more if it's commercially viable. The inflation of the US dollar, high commodity prices from US allies, and geopolitical tensions with the BRICS will likely force them to side with the BRICS in the end. Many speculate the EU will be the first to fold. Large European countries, like France, have already hesitated to side with the US regarding China. So, an EU country could break ranks and join the BRICS in the coming years. 

Crypto To The Rescue

So, where could crypto fit into this picture? As the US dollar continues to decline, an alternative currency will rise. The BRICS want a common currency they can use for commodity payments instead of the USD. As mentioned earlier, it's doubtful that any of the BRICS currencies could play this role and even less likely that a combination of BRICS currencies could either. That's because there will be constant disagreement about the composition and governance of these currencies. 

Case in point, BRICS countries apparently couldn't agree on the details of the CRA and the BRICS Development Bank when first proposed, never mind that many of the BRICS countries also have significant geopolitical tensions, such as China and India, over disputed territory. The BRICS countries require a credibly neutral currency, preferably digital, so it's easy to store and transfer across borders. 

Now, as impressive as having a gold-backed currency of some kind would be, it would not be very user-friendly. Believe it or not, the ideal BRICS currency would be Bitcoin’s BTC. That's because BTC is created by proof-of-work mining, which requires lots of commodities for computers. The Bitcoin blockchain is secured by the energy commodities that computers use. Notably, BRICS countries have most of both. 

This makes BTC a credibly mutual currency that the BRICS can collectively control, albeit to a much lesser extent than a fiat currency. In furtherance, BRICS countries must account for most of Bitcoin’s mining power and collectively agree on changes with Bitcoin developers and the community. 

By contrast, if the BRICS adopted a proof-of-stake cryptocurrency, the US could easily print the dollars required to buy up the stake to maintain blockchain control. So long as the US dollar retains its supremacy, it could undermine any proof-of-stake crypto adopted by the BRICS.


Amid Sanctions, Bitcoin Mining Machines Are ‘Flowing’ Into Russia, as Industry Thrives
Image source: CoinDesk

Interestingly, the BRICS have been discussing using crypto for payments since at least 2017. In 2019, BRICS countries discussed creating a unified crypto payment system, with Russia proposing a unified stablecoin less than a year later. Interestingly, this push for the BRICS to adopt crypto comes primarily from Russia. This could be because of Russia's immense development of crypto-related technology. Whatever the reason, Russia seems more open to adopting crypto than ever. Multiple reports have mentioned Russia considering using crypto for international trade and mining its own BTC for these purposes. 

One Russian bank is using crypto for international trade already. Of course, Russia's recent willingness to adopt crypto is reinforced by the unprecedented sanctions imposed on it by the US and its allies after the Ukraine/ Russia war last year. This is a position that Iran was familiar with and probably why Iran is also reportedly using crypto for international trade as of August 2022. 

Incidentally, Iran joining the BRICS in 2024 could be one of the catalysts that opens the door to BTC adoption within the bloc. The fact that central banks worldwide will be allowed to hold up to 2% of their balance sheets in crypto starting in 2025 sets the stage for non-BRICS countries to follow suit, and then Bitcoin will be just a few steps away from becoming the world's next reserve currency. 

 

 

 

Editor and Chief Markethive: Deb Williams. (Australia) I thrive on progress and champion freedom of speech. I embrace "Change" with a passion, and my purpose in life is to enlighten people to accept and move forward with enthusiasm. Find me at my Markethive Profile Page | My Twitter Account | and my LinkedIn Profile.

 

 

 

 

Tim Moseley

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Dollar strength wanes gold pops to 1954 but quickly retreats from high

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Dollar strength wanes, gold pops to $1954 but quickly retreats from high

Gold futures opened at $1943.80 then rose to $1954 in one hour beginning at 9 o'clock EDT. This rise was not sustainable with gold giving back those gains and trading to a low of $1940 before slightly recovering. As of 5 PM EDT gold futures basis the most active December contract is currently fixed at $1942.60 which is a net gain of $0.10.

However, today's price range marks the first time that gold has gained on the day (although fractional) this week. Gold will finish fractionally higher on the day but lower on the week. There is however solid technical evidence that a support level was tested on Wednesday and Thursday and at least this week has held.

Gold finds possible technical support at the 61.8% Fibonacci retracement

Gold's short-term corrective cycle began after a high of $1980 was reached on Friday of last week and then traded lower for three consecutive days on Tuesday, Wednesday, and Thursday. The weekly low at approximately $1940 occurred on Wednesday, September 6, and although gold has traded to a higher low yesterday and today it remains close to the weekly lows.

Yesterday we spoke about a potential technical level of support that occurs at $1939.20 which is based upon a Fibonacci retracement of 61.8%. The short-term data set used for this retracement begins at $1914 and concludes at last Friday's high of $1980.

A 61.8% price correction is an acceptable but deep retracement for a market in a bullish scenario. However, gold has been in a defined corrective period since the beginning of May. This means that on a technical basis, gold must challenge and take out the most recent high that occurs just above $2020 before we would get technical confirmation that this week's low marks the end of a correction and a bullish key reversal.

According to the CME's Fedwatch tool, there is a 93% probability that the Federal Reserve will not implement another rate hike at the FOMC meeting later this month. Recent bearish market sentiment is the result of dollar strength and uncertainty as to how long the Federal Reserve will maintain the current elevated interest rates.

Earlier this week one of the more hawkish Federal Reserve officials Fed Governor Christopher Waller remarked about how recent data suggested that their monetary policy tightening has had a strong effect on inflation saying, "There is nothing that is saying we need to do anything imminent anytime soon… We can just sit there and wait for the data."

Market participants are now waiting for the CPI index report which will be published on Wednesday. They will look for information to see if the current level of inflation confirms that the U.S. economy can withstand interest rates at this elevated level. More importantly, they will look to see how inflation is responding to the Fed's restrictive monetary policy to determine whether recent steps have put inflation on a trajectory to reach its target of 2%.

By

Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

Tim Moseley

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Organic Soil: Discover the Benefits of Godesana’s Sponsorsite

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Organic Soil: Discover the Benefits of Godesana's Sponsorsite

GoDesana is a company that offers a variety of organic products, including essential oils, nutritional supplements, and personal care items. One of their product lines is focused on organic soil products, which are designed to help gardeners and farmers grow healthy, nutrient-rich plants. These products are made with natural ingredients and are free from harmful chemicals and additives.

The organic soil products offered by GoDesana are designed to improve the health and vitality of soil, which in turn leads to healthier plants and higher yields. These products are made with a blend of natural ingredients, including organic compost, worm castings, and other beneficial microbes. They are formulated to provide the right balance of nutrients and minerals that plants need to thrive.

For those interested in purchasing GoDesana's organic soil products, they can be found on the company's website. The website offers a user-friendly shopping experience, with detailed product descriptions and helpful customer support. Customers can also find answers to frequently asked questions on the website, as well as information on how to contact customer support for additional assistance.

Key Takeaways

  • GoDesana offers a line of organic soil products that are designed to improve the health and vitality of soil, leading to healthier plants and higher yields.
  • These products are made with natural ingredients, including organic compost, worm castings, and other beneficial microbes, and are free from harmful chemicals and additives.
  • Customers can purchase these products on the company's website, which offers detailed product descriptions, helpful customer support, and answers to frequently asked questions.

About GoDesana

Company Overview

GoDesana is a US-based company that specializes in providing pure, organic, and wild-crafted essential oils and plant-based nutritionals from around the world. The company was founded in 2015 and has since then become a leading provider of essential oils and plant-based products.

GoDesana's mission is to provide customers with unique products that are made with the highest quality ingredients. The company is committed to using only the purest and most natural ingredients in their products, and they work closely with farmers and suppliers to ensure that they are sourcing the best quality ingredients.

GoDesana offers a wide range of products, including essential oils, carrier oils, diffusers, plant-based nutritionals, and skincare products. All of their products are made with natural ingredients and are free from harmful chemicals and additives.

Leadership Team

GoDesana is led by a team of experienced professionals who are passionate about natural health and wellness. The company's founder and CEO is Alexandria Brighton, an aromatherapy formulator, educator, and owner of the Brighton Institute of Botanical Studies. Brighton has over 30 years of experience in the Ayurvedic medicine, aromatherapy, herbal, and natural remedy world.

The company's leadership team also includes Vice President of Operations, Paul Kline, who brings over 25 years of experience in operations and supply chain management to the company. Additionally, GoDesana's Director of Marketing, Stephanie Gunning, has over 25 years of experience in marketing and branding, and is responsible for the company's marketing and branding efforts.

Overall, GoDesana is a company that is committed to providing customers with high-quality, natural products that promote health and wellness. With a strong leadership team and a commitment to using only the purest and most natural ingredients, GoDesana is a company that is well-positioned to continue growing and expanding in the natural health and wellness space.

Organic Soil Products

Product Range

Godesana offers a variety of organic soil products that are designed to improve soil health and promote plant growth. These products are made from natural, organic ingredients and are free from harmful chemicals and synthetic additives.

Some of the organic soil products available from Godesana include:

  • Organic Soil Conditioner: This product is designed to improve soil structure, increase water retention, and enhance nutrient availability. It contains a blend of organic matter, including composted plant material, worm castings, and fish emulsion.

  • Organic Potting Soil: Godesana's organic potting soil is a nutrient-rich blend of composted plant material, worm castings, and other organic matter. It is formulated to provide the ideal growing environment for container plants.

  • Organic Garden Soil: This product is designed to improve the quality of garden soil by adding organic matter and essential nutrients. It contains a blend of composted plant material, worm castings, and bone meal.

Benefits

Using organic soil products from Godesana can provide a number of benefits for gardeners and growers. Some of the key benefits include:

  • Improved soil health: Organic soil products are rich in organic matter, which can help to improve soil structure, increase water retention, and enhance nutrient availability.

  • Healthier plants: By providing essential nutrients and promoting healthy root growth, organic soil products can help to produce healthier, more robust plants.

  • Environmentally friendly: Organic soil products are made from natural, renewable resources and are free from harmful chemicals and synthetic additives, making them a more sustainable choice for gardening and agriculture.

Overall, Godesana's organic soil products offer a natural, effective way to improve soil health and promote plant growth. Whether you are a home gardener or a professional grower, these products can help you achieve your gardening goals in a safe, sustainable way.

Product Quality

goDésana Organics is known for its high-quality products. The company uses only the finest ingredients in its formulations, and its manufacturing process is designed to ensure that every product is of the highest quality. This section will explore the ingredients and manufacturing process that go into making goDésana Organics products.

Ingredients

goDésana Organics uses only the highest quality ingredients in its products. The company sources its ingredients from trusted suppliers, and each ingredient is carefully selected for its purity and potency. The company is committed to using only natural and organic ingredients in its products, and it does not use any synthetic fragrances, colors, or preservatives.

The company's products are formulated by Alexandria Brighton, a renowned aromatherapist with over 30 years of experience in the field. Brighton's formulations are based on the principles of Ayurvedic medicine, and she uses only the finest essential oils and botanical extracts in her products.

Manufacturing Process

goDésana Organics' manufacturing process is designed to ensure that every product is of the highest quality. The company uses a proprietary process to extract essential oils and botanical extracts from its ingredients, which helps to preserve their purity and potency.

The company's products are manufactured in small batches to ensure consistency and quality. Each batch is tested for purity and potency, and the company uses third-party labs to verify the quality of its products.

goDésana Organics is committed to sustainability, and the company uses eco-friendly packaging materials whenever possible. The company's products are also cruelty-free, and it does not test on animals.

In conclusion, goDésana Organics is committed to producing high-quality products that are both effective and safe. The company uses only the finest natural and organic ingredients in its formulations, and its manufacturing process is designed to ensure that every product is of the highest quality.

How to Purchase

Purchasing from goDésana Organics is simple and easy. Customers can conveniently shop for their favorite products online and choose from various delivery options.

Online Shopping

To make a purchase, customers can visit the goDésana Organics website at https://godesana.com/index.asp?sponsorsite=organicsoil and browse through the available products. The website provides detailed information about each product, including its ingredients, usage instructions, and benefits.

Customers can add the desired products to their cart and proceed to checkout. During the checkout process, customers will be prompted to create an account, provide their billing and shipping information, and choose their preferred delivery option.

Delivery Options

goDésana Organics offers various delivery options to meet the needs of its customers. Customers can choose from the following delivery options:

  • Standard Shipping: This option is available for all orders and typically takes 3-7 business days to arrive.

  • Expedited Shipping: This option is available for an additional fee and typically takes 2-3 business days to arrive.

  • International Shipping: This option is available for customers outside of the United States and typically takes 7-14 business days to arrive.

Customers can track their order status and delivery information through their goDésana Organics account.

Overall, purchasing from goDésana Organics is a hassle-free experience. Customers can shop online, choose from various delivery options, and enjoy the benefits of high-quality organic products.

Customer Support

Contact Information

Customers can get in touch with goDésana's customer support team by phone, email, or mail. The customer service phone number is 1-800-405-5545. The customer support email address is support@godesana.com. Customers can also send mail to goDésana at the following address:

goDésana
754 Cincinnati-Batavia Pike, Suite A
Cincinnati, OH 45245

Support Services

goDésana offers a range of support services to its customers. These include:

  • Product Information and Education: Customers can find detailed information about goDésana's products on the company's website. The website also includes educational resources and articles about essential oils and other natural health products.

  • Order Tracking: Customers can track their orders on the goDésana website. They can log in to their account to view their order history and track the status of their current orders.

  • Returns and Refunds: goDésana offers a 30-day money-back guarantee on all of its products. If customers are not satisfied with their purchase, they can return it for a full refund within 30 days of the purchase date.

  • Wholesale Program: Customers who are interested in becoming wholesale distributors of goDésana's products can contact the company's customer support team to learn more about the program.

Overall, goDésana's customer support team is knowledgeable and responsive. Customers can expect prompt and helpful service when they contact the company with questions or concerns.

Frequently Asked Questions

What is Godesana and how does it work?

Godesana is a company that offers a range of essential oils and natural products for personal care, home care, and wellness. The company sources its ingredients from organic and sustainable farms and uses a unique extraction process to ensure the purity and potency of its products. Godesana products are designed to promote physical, emotional, and spiritual well-being.

What are the benefits of using Godesana products?

Godesana products are made from natural and organic ingredients, free from harmful chemicals, and are environmentally friendly. The essential oils used in the products are carefully selected for their therapeutic properties and are known to promote relaxation, reduce stress, and boost the immune system. Godesana products can be used for a variety of purposes, including aromatherapy, massage, skincare, and cleaning.

How do I become a Godesana member?

To become a Godesana member, you need to sign up on the company's website and purchase a membership kit. There are two types of memberships: Wholesale Customer and Product Consultant. Wholesale Customers can purchase products at a discounted price, while Product Consultants can earn commissions by selling products and building a team.

What is the Godesana compensation plan?

The Godesana compensation plan is a multi-level marketing (MLM) plan that rewards members for selling products and building a team. Members can earn commissions on their personal sales, as well as on the sales of their downline. The compensation plan includes various bonuses and incentives, such as the Fast Start Bonus, the Leadership Bonus, and the Car Bonus.

What is the Godesana business opportunity?

The Godesana business opportunity is a chance to start your own business by becoming a Product Consultant and selling Godesana products. As a Product Consultant, you can earn commissions on your sales, as well as on the sales of your downline. You can also earn bonuses and incentives by achieving certain sales targets and building a team.

What are some popular Godesana products?

Some popular Godesana products include the Essential Oil Singles and Blends, the Body Care Collection, the Home Care Collection, and the Wellness Collection. The Essential Oil Singles and Blends are made from pure, therapeutic-grade essential oils and can be used for aromatherapy, massage, and skincare. The Body Care Collection includes natural and organic products for hair care, body care, and oral care. The Home Care Collection includes cleaning products made from natural and non-toxic ingredients. The Wellness Collection includes supplements and other products designed to support overall health and well-being.

Tim Moseley

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Bullion trades above 1950 whilst markets wait central banks decision

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Last week gold jumped close to the psychological threshold of $2,000 before slowing down on Thursday and Friday, while the US dollar showed recovery signals. Despite this time, the price of bullion remained above $1,950. Overall, the trend for the gold price still appears positive. Investors are, once again, in a wait-and-see mode. Indeed, we have just entered a week with a very busy macroeconomic agenda that could break the recent low volatility scenario.

The focus will be on central banks, starting with the FOMC meeting on Wednesday, at which the Federal Reserve is expected to announce a rate hike from 5.25% to 5.50% after last month’s pause. On Thursday, the European Central Bank will likely move in the same direction, raising rates from 4.00% to 4.25%, while on Friday morning, the Bank of Japan will hold its traditional conference. Any dovish surprise, particularly from the Fed, could be positive for gold, with good chances of seeing a new attack to the $2,000 mark. Vice versa, if the US central bank opens the door to new raises (after the one already expected by the markets), stocks and gold could be negatively impacted.

The week’s busy agenda also includes the preliminary release of the US Q2 GDP and the initial jobless claim. Analysts expect GDP growth of 1.8% (compared to the previous +2.0%), while the jobless requests should remain steady or slightly grow. These data will be strictly monitored by the Fed for its next monetary policy decision and, of course, by gold traders looking for new catalysts that could help bullion continue its rally.

Time to Buy Gold and silver

Tim Moseley

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Gold price firmer in quieter trading US CPI next focal point

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Gold price firmer in quieter trading; U.S. CPI next focal point

Gold prices are firmer and silver prices near steady in more quiet early U.S. trading Friday. More mild short covering is featured in gold futures, along with some perceived bargain hunting following recent losses. December gold was last up $4.80 at $1,947.30 and December silver was up $0.050 at $23.29.

Asian and European stock markets were mostly weaker overnight. U.S. stock indexes are pointed to slightly weaker openings when the New York day session begins. Traders and investors are waiting for the next major U.S. data point, which will likely be the consumer price index report for August, out next Wednesday. Trading may remain quieter until that time.

The key outside markets today see the U.S. dollar index slightly down but not far below this week’s six-month high. Nymex crude oil prices are firmer and trading around $87.50 a barrel—not far below this week’s 10-month high. The benchmark U.S. Treasury 10-year note yield is presently fetching 4.24%.

  China buys 29 tonnes of gold in August, stretches buying spree to 10 months

U.S. economic data due for release Friday is light and includes monthly wholesale trade inventories and consumer credit.

Technically, the gold futures bears have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the September high of $1,980.20. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,913.60. First resistance is seen at Wednesday’s high of $1,954.50 and then at $1,965.00. First support is seen at this week’s low of $1,940.00 and then at $1,925.00. Wyckoff's Market Rating: 3.5

The silver bears have the overall near-term technical advantage. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at this week’s high of $24.655. The next downside price objective for the bears is closing prices below solid support at the August low of $22.585. First resistance is seen at $23.50 and then at $24.00. Next support is seen at this week’s low of $23.13 and then at $23.00. Wyckoff's Market Rating: 3.5.

By

Jim Wyckoff

For Kitco News

Contact jwyckoff@kitco.com

www.kitco.com

Time to Buy Gold and silver

Tim Moseley