US dollar is ‘the biggest asset bubble’ all roads lead to more money printing – Mark Moss

U.S. dollar is 'the biggest asset bubble,' all roads lead to more money printing – Mark Moss

The inevitable consequences of a recession in the U.S. are more money printing, liquidity injections and inflation, according to Mark Moss, Host of 'The Mark Moss Show' and Partner of the Bitcoin Opportunity Fund, who warns that the U.S. dollar is the biggest asset bubble.

"We're in the situation where all roads lead to more government printing and more inflation," Moss told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. "If we were to have a recession, that just means more inflation … The Fed is between the rock and the hard place; there's no way out. The government cannot afford a recession. Typically, when we see a recession, we see tax receipts drop by somewhere between 12 to 15%. They can't afford that."

 

There's a big difference between a recession and how asset prices perform, Moss noted, saying that the Fed will inevitably inject more liquidity into the economy, causing asset prices to "crash up" due to devaluation and debasement of the U.S. dollar's purchasing power.

For insights on Moss' 'crash up' theory, watch the video above.

He explained that it all comes down to the fact that the U.S. is running on a debt-based monetary system, with the national debt now surpassing $35 trillion.

"Money is created through debt issuance. That means the dollar is a liability, and the debt is an asset. Then, it becomes collateral for more debt. The problem is that if these asset prices start to fall, then there's not enough collateral for the other debt that's out there. And that will cause a massive downward spiral that we could not handle," Moss said.

This cycle ultimately leads to more liquidity injections into the economy, with more money ending up in assets like equities, real estate, Bitcoin, and gold.

We know that the S&P 500 moves up exactly like the global liquidity,” Moss noted. “Gold has a sensitivity ratio of 1.49. So that means for every 10% rise in liquidity, gold goes up by 14%. Bitcoin has an 8.95 sensitivity, which means for every 10% rise in liquidity, Bitcoin goes up by 90%.”

Moss also pointed out that individuals do not really own anything in a debt-based monetary system. “The money in the bank is legally not your money. That money is owed to you. Stocks – you don't actually own those legally, your broker owes them to you. The house that you've paid off, you don't really own that. You have to pay monthly to the County assessor, or they take that from you,” Moss stated.

Watch the video above for his explanation how the debt-based monetary system works.

Perhaps the biggest issue for investors is the state of the U.S. dollar. Moss stated that as the dollar continues to lose its purchasing power, it creates an illusion of asset price bubbles forming in areas like real estate and stocks. However, the real bubble lies in the dollar's value.

"It's not that stocks are in a bubble or homes are in a bubble. It's the dollars that are in a bubble," he said. "We're looking at the underlying denominator – the U S dollars – a manipulated denominator. We're not realizing the bubble is actually in the denominator – the dollars."

 

For more on Moss' "dollar is the biggest asset bubble" theory, watch the video above.

What's next for Bitcoin?

If former President Donald Trump wins the election, Moss sees Bitcoin hitting $400k towards the end of 2025. For his more precise timeline and Bitcoin price forecast for the end of this year, the start of 2025, and the longer term, watch the video above for insights.

 

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Kitco Media

Anna Golubova

Time to Buy Gold and Silver

Tim Moseley

Gold Market Experiences Fourth Consecutive Day of Decline

Gold Market Experiences Fourth Consecutive Day of Decline

 

The gold market has been experiencing a turbulent period in August, with prices declining for the fourth consecutive trading session. This downward trend began on August 1, when the December gold contract decline by the fractional amount of $2.50, after opening at $2,493.40. As of the latest report, the most active December contract has fallen to $2,432.10, representing a significant drop of $20. Gold is currently trading in Australia down an additional -$1.50, taking December gold to $2429.80

The recent decline in gold prices can be attributed to several factors, including concerns about a potential U.S. economic recession and fluctuations in Treasury yields. The latest jobs report revealed an increase in the unemployment rate to 4.3%, its highest level since October 2021, fueling worries about the economy's health.

 

U.S. Treasury yields have also played a role in gold's recent performance. The two-year note yield rose by 7.9 basis points to 4.016%, while the 10-year Treasury note yield increased by 11 basis points to 3.908%. These changes in bond yields, coupled with a slight strengthening of the U.S. dollar index (up 0.15% to 102.685), have contributed to the downward pressure on gold prices.

The economic uncertainty has led to increased speculation about the Federal Reserve's upcoming monetary policy decisions. The probability of a more aggressive rate cut at the September Federal Open Market Committee (FOMC) meeting has risen dramatically. Just one month ago, the likelihood of a 0.5% rate cut was only 5.5%. However, this probability surged to 85% yesterday before settling at 71.5% today.

 

According to the CME's FedWatch tool, which analyzes interest rate futures to predict monetary policy changes, there is now a 100% certainty of a rate cut next month. The tool suggests a 71.5% chance of a 0.5% cut and a 28.5% probability of a more modest 0.25% reduction.

These market dynamics highlight the complex interplay between economic indicators, monetary policy expectations, and precious metal prices. As investors and traders navigate this uncertain landscape, they must consider a range of factors, including employment data, Treasury yields, dollar strength, and potential Federal Reserve actions.

 

The gold market's recent volatility serves as a reminder of the metal's sensitivity to economic conditions and policy shifts. As the September FOMC meeting approaches, market participants will be closely monitoring further economic data and policy signals to gauge the future direction of gold prices and the broader financial markets.

 

For those who would like more information simply click on one of the links below:

 

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Wishing you as always good trading,

Kitco Media

Gary Wagner

Time to Buy Gold and Silver

Tim Moseley

Gold prices recover as equities stabilize silver and platinum face further downside risk FX Empire’s Zernov

Gold prices recover as equities stabilize, silver and platinum face further downside risk – FX Empire’s Zernov

Gold markets came under pressure as traders sold their strongest assets to cover positions during Monday’s global market downturn, but recovered as traders covered their positions, while silver lost more than 5% as the gold/silver ratio shot higher, and platinum prices are nearing critical support at $900, according to analyst Vladimir Zernov at FX Empire.

Gold rebounded from session lows as traders reacted to the better-than-expected ISM Services PMI report,” Zernov wrote. “From a big picture point of view, it looks that traders sold gold to raise money during global market sell-off.”

Meanwhile, silver continues to see strong selling pressure as the gold/silver ratio rallied above the 88.50 level.

If silver stays below the support at $27.20, it will move towards the next support level at $25.20 – $25.60,” Zernov warned. “RSI is in the moderate territory, so there is enough room to gain momentum in the near term.”

Platinum is also down over 5% as fears of a U.S. recession mount. “Unlike gold markets, platinum markets are not trying to rebound as traders fear that demand for platinum would decline in the upcoming months,” Zernov wrote.

A move below the $900 level will push platinum towards the support at $880 – $890,” he said.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Gold Price Forecast August 2024

Gold Price Forecast – August 2024

Gold News

Key Takeaways

Gold hits another all-time high above $2,483/toz in July as flows remain supportive.

Markets price in further easing of US rates for the remainder of 2024, softening the USD.

Gold now appears to be trading in a slightly widening ascending channel.

Gold Hits New High Amid Solid Sentiment and Political Risk

Gold hit yet another all-time high above $2,483/toz during July, with the attempted assassination of former President Trump appearing to give the precious metal a significant, if temporary, boost. At the time of writing much of these gains have been retraced, although this still leaves gold 0.4% higher month-on-month.

We discuss the most recent macroeconomic support for gold in detail below, but clearly, the precious metal continues to enjoy flow support from several sources. While the People’s Bank of China (PBoC) appears to have made no net purchases for two months in succession (May & June) the Reserve Bank of India (RBI) recorded its largest monthly purchase of gold in almost two years in June. Overall, the pace of central bank purchases seems to have moderated, though as highlighted in last month’s Gold Price Forecast, the longer-term prognosis remains favourable.

Turning to private sector demand indicators, we note that, despite elevated gold prices (1), physical gold ETF aggregate flows have remained positive in recent weeks, with both the US and Europe being notable sources of demand strength. Elsewhere, the most recent Commitments of Traders (CoT) report from the CFTC suggests that speculative gold futures positions are now at a 15-month high (2), while the newly announced reduction in Indian gold and silver import tariffs (from 15% to 6%) is also likely boost gold (and silver) demand going forward (3).

US Rate Outlook Also Lending Greater Support

Having rejected the Fed’s hawkish rhetoric in June, rate markets pushed back further in July, with an increasingly dovish outlook being priced in for the remainer of 2024. Two-year US Treasury yields are now trading some 30bps lower month-on-month while 10-year yields have moved 10bps lower.

A quarter-point rate is now all but priced in at the Fed’s next rate decision on 31 July, while Fed Fund Futures imply over a 90% probability of two or more quarter-point cuts by the end of 2024 (4). In response, the US Dollar Index (DXY) has traded mildly lower. All of this is supportive of ‘zero-yielding’ USD-denominated assets such as precious metals (5).

These dovish developments have been underpinned by both incoming US economic data and subsequent statements from the Federal Reserve. Inflation data, both at a headline and core rate, suggests a continued resumption of a downward trend, while growth indicators such as employment, services and manufacturing activity and jobless claims all point to a slowing US economy. Notably, Chairman Powell’s most recent testimony to Congress acknowledged that maintaining a restrictive monetary policy now entailed greater two-way risks to the Fed’s dual mandate on growth and inflation.

Technical Analysis

Gold now appears to be trading in a slightly widening ascending channel with the upper bound formed by the 12 April, 20 May and 17 July tops and the lower bound by the 3 May, 7 June, 26 June bottoms, having failed to sustain a breakout at the recent high. This channel currently ranges between $2,489/toz (resistance) and $2,300/toz (support). More immediate support is offered by the rising 50-day Simple Moving Average at $2,361/toz.

We note that gold is also currently trading above, but close to, the sharply rising 20-day Simple Moving Average at $2,386/toz. However, we would view this notional support as being rather weak, given the widespread 50-day Simple Moving Average and neutral momentum indicators.

Key Drivers Ahead

Upcoming events for gold investors include July Eurozone Flash Inflation on 31 July, FOMC US rate decision and press conference on 31 July, July US Non-Farm Payroll data on 2 August, July US ISM Services PMI on 5 August, July US CPI Inflation data on 14 August, July US Retail Sales on 15 August, US FOMC Minutes on 21 August, Jackson Hole Symposium 22-24 August, August Eurozone Flash Inflation and July US PCE Inflation on 30 August.

 

Citations

1. https://www.lbma.org.uk/prices-and-data/precious-metal-prices#/table

2. https://www.gold.org/goldhub/data/gold-etfs-holdings-and-flows

3. https://www.cftc.gov/dea/options/other_lof.htm

4. https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2024

5. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

Mike Ingram

Time to Buy Gold and Silver

Tim Moseley

Hoard of gold coins from 400 BC found buried in Turkey

Hoard of gold coins from 400 BC found buried in Turkey

An ancient treasure trove of rare Persian gold coins dating back to the Peloponnesian War was recently unearthed by archaeologists in Turkey.

University of Michigan archaeologist Christopher Ratté and his research team discovered the bullion coins purely by chance while digging beneath the courtyard of a house in the ruins of Notion, an ancient city-state in modern-day Turkey. “The coins were buried in a corner of the older building,” Dr. Ratté told the New York Times. “We weren’t actually looking for a pot of gold.”

The researchers first uncovered a small clay jug, called an olpe, which was reason enough to rejoice. But hidden inside the olpe were dozens of gold coins, known as darics.

In the fifth century B.C., darics were mainly used to pay soldiers and mercenaries, with one daric equal to a month’s salary, so Ratté speculated that one such soldier may have buried his life savings, representing years of pay, in the jug before being killed in battle.

University of Oxford archaeologist Andrew Meadows, who was not involved in the dig, said he was not aware of any other gold coin stash of this type ever being discovered in Asia Minor. “This is a find of the highest importance,” Meadows said. “The archaeological context for the hoard will help us fine-tune the chronology of Achaemenid gold coinage.”

The Notion archaeological site covers 80 acres in western Anatolia, which divides Asia from Europe and has been a strategically critical piece of land for thousands of years. Notion was one of the Greek-speaking communities that arose during the beginning of the first millennium B.C. and the gold coins were buried during a time of war between the regional powers over the contested frontier zone.

 

This was true in deepest antiquity, as remembered in the story of the Trojan War,” Dr. Ratté said. “And it remains true to this day, as demonstrated by the Syrian refugee crisis.” He pointed out that the small harbor to the east of the city was one of the departure points for Syrian refugees fleeing to Europe during the refugee crisis of 10 years ago.

Anatolia is the birthplace of the stater, the first state-issued coin in Western world history, which was minted by the seafaring Lydian people. The weight and design of the Lydian stater was standardized by King Alyattes around 610 B.C., who struck the coins in electrum, a natural alloy of gold and silver.

The king’s son and successor, Croesus, is credited with minting the first true gold coin, known as the Croeseid, and the expression ‘rich as Croesus’ is a reference to the massive gold riches of Lydia during his reign.

According to the Greek historian Thucydides, an Athenian general named Paches attacked and killed a group of Persian-aligned mercenaries at Notion In 427 B.C. after luring their commander into a trap. The Persian loyalists were then expelled, and Notion came under Athenian rule. Twenty years later, an important naval battle in the Peloponnesian War between Athens and Sparta was fought off the coast of Notion, which the Athenians used as a naval base.

Archaeologists digging at the Notion site – Credit: Notion Archaeological Project/University of Michigan

Dr. Ratté said that the buried gold coins might have been connected to the events of 427 B.C., or with the Athenian evacuation of Notion.

It is possible it was not associated with either of these dramatic events,” he said, “but was simply the savings of a veteran mercenary soldier in a time and place when soldiers of fortune could make a lot of money if they were willing to risk their lives for the highest bidder.”

In 387 B.C., Notion and the rest of Ionia were reconquered by the Persian Empire, until the conquest of Alexander the Great in 334 B.C. Alexander and his immediate successors had many of the existing gold darics melted down and recast with their own image instead, which is why darics like the Notion trove are so rare today.

The Notion darics bear the likeness of the Persian king kneeling in a long tunic with a bow in his left hand and a long spear in his right, while the backs of the coins were left blank.

Dr. Ratté said that the fact that the treasure was never reclaimed is a clear indication that its owner was killed. “No one ever buries a hoard of coins, especially precious metal coins, without intending to retrieve it,” he said. “So only the gravest misfortune can explain the preservation of such a treasure.”

The gold coins are being stored at the Ephesus Archaeological Museum in Selcuk, Turkey, along with Athenian pottery also recovered at the Notion site.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Wall Street experts see gold gaining on renewed recession fears Main Street bullishness not far behind

Wall Street experts see gold gaining on renewed recession fears, Main Street bullishness not far behind

Gold enjoyed one of its strongest runs of the year this week, as downbeat U.S. data and a more dovish Fed combined to boost the yellow metal, and even Friday's flash crash did little to dampen precious metals traders' enthusiasm.

Spot gold kicked off the week trading only a couple of dollars below the $2,400 per ounce level, and the yellow metal’s price held steady between $2,375 and $2,400 before breaking definitively through resistance at 1:00 pm EDT on Tuesday as weaker-than-expected U.S. manufacturing data cemented traders’ certainty that the Fed would lean dovish on the last day of the month.

Gold traders kicked off Wednesday’s North American session by pushing spot gold to a fresh weekly high close to $2,430 per ounce, before pulling back to await the Fed’s rate announcement and Chair Powell’s press conference.

The yellow metal liked what it heard, with spot gold rocketing from $2,422.43 just before the 2:00 pm release of the monetary policy statement to a fresh weekly high of $2,457.86 shortly after 9:00 pm EDT. Gold then traded in its newly established elevated range between $2,430 and $2,460 as weekly jobless claims reinforced the view of a weakening U.S. economy.

Friday morning, however, brought the ultimate confirmation, with U.S. nonfarm payrolls for July coming in well below expectations, and the unemployment rate ticking up two-tenths to 4.3%. This drove spot gold to a double top above $2,470 per ounce, after which precious metals followed the broader market sharply lower as traders abandoned risk assets across the board. Spot gold saw one of its sharpest selloffs of the year, falling from $2,471.96 per ounce at 10:00 am EDT all the way to $2,413.69 just one hour later.

But gold prices bounced along with equities, and spot gold returned to trade above $2,430 per ounce for the remainder of the North American session.

The latest Kitco News Weekly Gold Survey shows retail investors overwhelmingly expect the yellow metal to make further gains next week, while industry experts are even more convinced of gold’s upward trajectory.

Adrian Day, President of Adrian Day Asset Management, expects gold prices to push higher next week.

Gold has a real shot at breaking above its previous high as the U.S. economy weakens and the odds of a rate cut increase,” Day said. “At his press conference earlier in the week, Fed Chairman Jerome Powell was almost champing at the bit to cut rates but waiting for the opportunity to do so. He now has that opportunity. In the last several rate-cutting cycles, when the Fed starts to cut rates, gold moves up.”

Marc Chandler, Managing Director at Bannockburn Global Forex, sees the price action settling down next week. “The sharp drop in US rates and a weaker dollar helped push gold higher,” he said. “In the spot market gold had its best week in nearly four months, rising by about 3.6%, with about a third of the gains coming at the end of the week.”

Chandler noted that the U.S. 2-year yield fell more than 40 basis points last week, the biggest weekly decline of 2024. “Gold looks set to challenge last month’s record high (~$2483.75, spot),” he said. “The upper Bollinger Band is slightly above $2480. It is difficult to talk about resistance in uncharted waters, but $2500 is the next psychological target. Expect a quieter week ahead.”

I’m taking a different tack this week,” said Darin Newsom, Senior Market Analyst at Barchart.com. “Technically, it is a coin toss with no clear trend signals. The daily chart for Dec gold shows the contract has rallied off the low end of its recent range, meaning it could test the high end near $2,540.”

Michele Schneider, Chief Strategist at MarketGauge.com, is bullish on the yellow metal for next week. “Gold needs to hold $2450,” she said.

Bob Haberkorn, Senior Commodities Broker at RJO Futures, said Friday’s dramatic selloff was driven by fears of a recession following the weak U. S. job report. “I think if anything, there's an opportunity right here to buy gold,” he said as the yellow metal’s spot price traded near $2,420 per ounce. “I think they're throwing the baby out with the bath water.”

Haberkorn said he didn’t see gold’s sharp drop as evidence that traders were taking short positions. “I think it's profit-taking, stops getting triggered,” he said. “As well, there could be people having some margin issues across the board in equity-type accounts, so they're liquidating everything. I think that's what this whole move is all about.”

If you look at the headlines and what's going on in the world at this moment, gold is a safe haven asset,” he added. “It should be trading higher.”

Haberkorn said he expects gold to trade higher into the weekend, and to pick up wherever it leaves off on Monday. “In the next week, I would not want to be selling gold,” he said. “People are looking to get out of stuff heading into the weekend. There is a lot of risk this weekend with Iran and Israel. This selloff looks way overdone to me.”

I think we'll see gold higher in the next week, just because I think it'll flip after today's selloff,” he added. “I think the reality sets in, you get the flight to safety in this market here. The fear of recession and weak jobs number alone should be pushing gold higher, and it continues higher next week to take out that $2,500 level again.”

This week, 14 analysts participated in the Kitco News Gold Survey, with Wall Street optimism on gold surging after equities were staggered amid economic and geopolitical threats. Eleven experts, fully 79% of the total, expect to see gold prices post further gains next week, while only one, or 7%, predicts a price decline. The remaining two analysts, or 14%, see gold trending sideways during the week ahead.

Meanwhile, 191 votes were cast in Kitco’s online poll, with the bullishness of Main Street investors coming in just behind the experts. 140 retail traders, or 73%, looked for gold prices to rise next week. Another 28, or 15%, expected the yellow metal to trade lower, while 23 respondents, representing 12%, saw prices in a consolidation pattern next week.

After digesting a multiplicity of significant economic news events this week, markets will get a well-earned breather during the week to come. The highlights, such as they are, will be the ISM Services PMI for July on Monday, and the Reserve Bank of Australia's monetary policy decision on Tuesday.

Markets will also keep a close eye on the U.S. 10-year bond auction on Wednesday and the 30-year auction on Thursday after the dramatic rally in Treasuries seen at the end of the week.

Christopher Vecchio, head of futures strategies and forex at Tastylive.com, is neutral on gold next week, but he is bullish into the year-end. “Dips should be bought,” he said.

James Stanley, senior market strategist at Forex.com, sees no reason to doubt the precious metal. “Bulls are still in control,” he said. “Once $2500 trades in spot, that could change, but in my view, buyers still have the handle.”

Adam Button, head of currency strategy at Forexlive.com, said he’s looking through the equity selloff and watching Treasuries as a true barometer for market sentiment. “The bond market is sniffing out some big trouble and it has been all week,” he said. “The job report's not that bad.”

Button said that with the benefit of hindsight, he thinks the Fed has made a messaging error. “They should have spent a lot more time earlier saying ‘we're going to ease, we're going to start to ease, we want to move slowly and gradually, so we need to start to ease well before inflation moves down,’” he said. “Going from five and a half down to five and a quarter, it still leaves us very restrictive, and you're not waiting.”

Now everybody's past inflation,” he said. “Nobody's seeing real inflation now that we're getting Intel laying off 20,000 people. So inflation is over, they got a little bit screwed by the data early in the year, that was a bit tough. But [they thought] they had to have this high level of confidence.”

Generals always fight the last war, I say that a thousand times,” he added. “You knew the Fed was going to be late because of that, and they're late, and now the market thinks they're late. Now they're in a position where in order to catch up, the Fed has to start cutting pretty dramatically.”

Button said the tail will now begin wagging the dog. “The market has an ability to bully the Fed, and I think we've forgotten that a little bit, because the COVID cycle was a different kind of cycle,” he said. “But you got to go back to the QE era… it's been a while since the market has bullied the Fed.”

The irony for gold, Buton said, is that when markets get too scared, they sell the precious metal as well. “Gold has that problem with too much of a good thing,” he said. “And everybody remembers COVID. Everyone who was long going into COVID and thought gold would be the place to be, it eventually was, but it certainly wasn't in March 2020.”

It's high,” he added. “In an uncertain environment, the instinct is to always take profits on good trades. And gold has been a wonderful trade this year.”

Button said the smart move might be to stay on the sidelines in the near term. “I like gold into the fall,” he said. “I just don't like rushing to buy it. I still think it probably can go higher next week, but it's just not that easy to buy gold right here.”

It's no time to be a hero,” he added. “I think that's just the message here. If this is a dollar-weakening cycle, a recession cycle, there's going to be plenty of time to make money in gold, and I like it as much as anyone. Just not in August. Maybe in October.”

Michael Moor, Founder of Moor Analytics, sees downside risks for gold prices next week. “The trade above 23276 (-2 tics per/hour) warned of decent strength—we have attained $185.8,” he said. “The trade above 24296 (-4.8 tics per/hour) projects this upward $55 (+)—we have attained $83.8. Decent trade below 24543 (+4 tics per/hour starting at 1:30 pm EST) will project this downward $30 minimum, $70 (+) maximum; but if we break below here decently and back above decently, look for decent short covering.”

A maintained gap lower Monday will leave a minor bearish reversal above,” Moor noted.

And Kitco Senior Analyst Jim Wyckoff said he expects the recent consolidation to continue next week. “Higher, as the fundamentals and technicals are both bullish at present,” he said. “New highs likely in the near term.”

At the time of writing, spot gold last traded at $2,436.21 per ounce for a loss of 0.42% on the session, but a gain of 2.02% on the week.

Kitco Media

Ernest Hoffman

Time to Buy Gold and Silver

Tim Moseley

Gold gains on safe-haven demand weak US data easy Fed

Gold gains on safe-haven demand, weak U.S. data, easy Fed

Gold prices are firmly higher in midday U.S. trading Thursday, on some safe-haven demand amid heightened Middle East tensions, some weaker U.S. economic data and a dovish lean by the Federal Reserve this week. December gold was last up $18.00 at $2,490.10. September silver was down $0.308 at $28.635.

Middle East tensions are running even higher late this week following air strikes in Iran and Lebanon that killed senior Hamas and Hezbollah officials. The strikes are widely believed to be Israel’s doing. That has boosted safe-haven demand for gold and to a lesser degree for silver.

A weaker-than-expected U.S. manufacturing purchasing managers index for July also fell into the camp of the precious metals markets bulls, suggesting the Federal Reserve will be able to cut interest rates this fall. The 10-year U.S. Treasury note yield is falling and fell below 4.0% today, presently yielding 3.98%, which is also bullish for gold and silver.

The marketplace has digested the latest FOMC meeting’s results that left U.S. interest rates unchanged but saw the Fed and Chairman Powell lean dovish by implying the Fed can lower interest rates as soon as September, providing inflation numbers remain tamer. The marketplace is presently factoring in a 100% chance for a rate cut in September.

Meantime, the Bank England cut its main interest rate by 0.25% today.

Traders are awaiting Friday morning’s U.S. monthly jobs report for July from the Labor Department, with the key non-farm payrolls numbers seen coming in at up 185,000 versus the June gain of 206,000.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are lower and trading around $77.25 a barrel.

Technically, December gold bulls have the solid overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the contract high of $2,537.70. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,400.00. First resistance is seen at the overnight high of $2,506.60 and then at the April high of $2,516.60. First support is seen at the overnight low of $2,474.00 and then at $2,450.00. Wyckoff's Market Rating: 7.5.

September silver futures bears have the slight overall near-term technical advantage. Prices are still in a downtrend on the daily bar chart, but just barely now. Silver bulls' next upside price objective is closing prices above solid technical resistance at $30.00. The next downside price objective for the bears is closing prices below solid support at the July low of $27.45. First resistance is seen at today’s high of $29.29 and then at $29.50. Next support is seen at Wednesday’s low of $28.39 and then at $28.00. Wyckoff's Market Rating: 4.5.

(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Sign up here; it’s real easy. https://www.kitco.com/services

Kitco Media

Jim Wyckoff

Time to Buy Gold and Silver

Tim Moseley

BRICS Countries Advancing with a New Payment System A Breakthrough for Global Commerce Potentially Disrupting the Dominance of the US Dollar

BRICS Countries Advancing with a New Payment System. A Breakthrough for Global Commerce Potentially Disrupting the Dominance of the US Dollar

Recent headlines suggested that the longstanding 50-year agreement between the United States to exclusively price oil in US dollars had expired, sparking concerns that the era of the Petrodollar may end. Despite initial fears, it was later confirmed that this information was inaccurate. Nevertheless, significant developments occurred during this period as BRICS introduced a new payment system, and Saudi Arabia subsequently became a participant in this initiative.

A potentially game-changing development is on the horizon as a consortium of emerging nations, known as BRICS, prepares to unveil a new payment system, which it has been working on for years and is based on the Ethereum blockchain. This innovation, with its potential to disrupt the US dollar's dominance, could signal a long-awaited breakthrough for global commerce and provide relief to countries struggling with crippling economic sanctions and the exploitative petrodollar system.

BRICS Explained

BRICS stands for Brazil, Russia, India, China, and South Africa. The original acronym was BRIC, coined by former Goldman Sachs Economist Jim O'Neill in 2001. At that time, four countries were involved. O'Neill's forecast suggested that these countries would experience significant economic expansion by 2050 due to increasing populations, low labor costs, and abundant natural resources.

Geopolitical dynamics and fluctuations in commodity prices also played a significant role. The timing coincided with China's accession to the World Trade Organization and strong commodity demand for developing countries aligning themselves with the US. However, as a previous article on the BRICS nations noted, this dynamic began to shift following the global financial crisis. As Xi Jinping took the helm, China began to chart its course, coinciding with a sharp decline in commodity prices.

Unsurprisingly, Wall Street's sentiment regarding the BRICS shifted. Despite this shift, the article highlighted that the underlying factors that initially drove Goldman Sachs’ optimism about the BRICS remain unchanged. The BRICS countries still have growing populations, low labor costs, and commodity abundance. The only element missing in this equation was a vital commodity market. Some may have noticed that commodity prices worldwide have been rising over the last few years, increasing the geopolitical power of the BRICS. 

It's also no surprise that the general public has begun to take notice, but many Western elites remain in denial about the resurgence of the BRICS nations. Despite this skepticism, the BRICS nations have continued to make significant strides, impressing with their resilience and determination. 

Consequently, accessing reliable information about these countries' developments has become a challenge, especially for those living in Western societies. This scarcity of credible details makes it even more daunting to stay informed about pressing issues, and one topic that has garnered significant attention is the prospect that the bloc will launch its shared currency to rival the US dollar. 

Numerous sources suggest that gold or cryptocurrency might support the proposed BRICS currency, yet no proof exists to confirm its imminent arrival. Upon examination of the origins of these reports, it becomes apparent that they mainly consist of informal remarks by officials from BRICS nations or concepts that have yet to progress beyond the initial proposal stage.

For the time being, establishing an actual BRICS currency is not a current priority. However, developing an alternative payment infrastructure is definitely under consideration. It's essential to note that a BRICS currency and a BRICS payment system are two distinct concepts. A BRICS currency would be akin to the US dollar or the euro. In contrast, a BRICS payment system refers to a network of payment channels that can facilitate transactions in any currency.

Russian companies have been engaging in trade with Chinese companies by utilizing the USDT stablecoin from Tether, which is linked to the value of the US dollar. This development is highly noteworthy as it brings attention to a significant issue. The challenge the BRICS countries face is not the US dollar itself but rather the infrastructure for carrying out financial transactions on which the US dollar relies. This significant issue is represented by SWIFT, which is recognized as the most extensive payment system globally.

Evidently, SWIFT's allegiance lies with Western nations, and it's been increasingly used as a financial weapon to exert and restrict transactions to specific entities. In reality, the SWIFT system poses a more significant challenge for the BRICS nations than the US dollar itself. Consequently, the BRICS have been actively developing a substitute for the SWIFT system.

This new payment system was unveiled during a week when the media was abuzz with speculation about the impending demise of the US-Saudi oil agreement. Interestingly, Saudi Arabia joined the BRICS payment system just before the rumored expiration date, a move that could potentially shift the balance of power in global trade. 

It's tempting to suspect that the frenzy surrounding the US-Saudi oil deal was intentionally exaggerated to divert attention from the fact that BRICS had introduced a rival to SWIFT. This development has far-reaching implications, dwarfing the significance of any oil deal or BRICS currency. If the BRICS payment system gains widespread adoption, it could potentially dislodge the US dollar from its dominant position.


Source: Central Banks Payment News

BRICS Payment System

The BRICS Payment System, known as mBridge, was developed by the central banks of Thailand, Hong Kong, China, and the United Arab Emirates in collaboration with the Bank for International Settlements (BIS), often referred to as the "bank for central for central banks.” Notably, mBridge is a digital currency platform that utilizes Central Bank Digital Currencies (CBDCs). The BIS has been instrumental in supporting central banks globally in developing and implementing their respective CBDC systems.

Those familiar with CBDCs are likely aware of their unsettling implications, as they grant governments and central banks unprecedented control over individuals' financial decisions, habits, and savings limits. However, it's worth noting that CBDCs come in various forms, each with distinct characteristics and intended uses.

CBDCs have two categories: retail CBDCs, intended for public use, and wholesale CBDCs for a select group of individuals and organizations. The mBridge system falls under the latter category, designed exclusively for institutional use. As previously noted, mBridge is built on the Ethereum network, essentially replicating its architecture. It utilizes a blockchain called mBL, written in Solidity programming language, and employs the Ethereum Virtual Machine (EVM) to execute smart contracts.

A critical distinction between Ethereum and the mBL lies in the mBL's private and restricted access. Utilizing the mBL is exclusive to central and commercial banks, which also control the network's infrastructure. Specifically, participating central banks operate as de facto validators, while participating commercial banks act as de facto relays, overseeing data flow within the network.

Another critical distinction between mBridge and Ethereum is their transaction speeds, with mBridge appearing much faster. This is attributed to its innovative Dashing consensus protocol, developed by Chinese researchers, which validates blocks by inspecting random segments rather than the entire block. The primary objective of mBridge is to empower users to circumvent the existing US-dominated financial infrastructure. This includes sidestepping the SWIFT system, avoiding all intermediary banks in cross-border transactions, and trading the US dollar in Forex. 

The US dollar is a bridge currency, especially for large transactions. For example, if you want to swap a large amount of New Zealand dollars for Canadian dollars, you'll have to swap New Zealand dollars for US Dollars and then US dollars for Canadian dollars. That's because it's not always possible to trade large amounts of New Zealand dollars directly for Canadian dollars. 

Using mBridge, you can convert New Zealand dollars to Canadian dollars in a seamless, direct transfer between New Zealand and Canadian banks. The mBridge network system bypasses the need for the US dollar as a bridge currency, eliminates the involvement of intermediary banks, and circumvents the traditional SWIFT infrastructure, marking a significant breakthrough.


Source: Cointelegraph Magazine

Besides facilitating international trade, removing the US dollar as the bridge currency means the demand for tens of trillions of dollars from large Forex transfers disappears. Simply put, the reduced reliance on the US dollar for international transactions substantially decreases demand, undermining the currency's value. As with any asset, the value of the US dollar is ultimately determined by the balance of supply and demand. Suppose the demand for US dollars dwindles as countries turn to alternative currencies for Forex transactions, coupled with a steady or increasing supply. In that case, it will inevitably lead to a decline in value.

To the many who believe a retail CBDC for the general populous is dystopian, including the presumptive 47th POTUS, Donald Trump, this report from the BIS CBDC survey indicates that central banks are shifting their focus away from retail CBDCs and toward wholesale CBDCs and this is likely a saving grace for us. The data reveals that 94% of central banks are more inclined to launch a wholesale CBDC than a retail one, sparking speculation that this shift may be driven by a desire to participate in the mBridge initiative.


Source: Bitcoin Magazine @ X

BRICS Endgame

The BRICS nations' financial plans have taken a significant step forward in conjunction with Saudi Arabia's recent announcement of joining the mBridge initiative. The BIS announced they would introduce the new payment platform on the same day. The BIS also reported that the number of observing members, such as central and commercial banks, who are interested in joining mBridge has increased to 26.

The significance of this development goes far beyond the adoption of mBridge. Notably, the BRICS grouping recently expanded its reach by inviting six nations to join its expanding network, now dubbed BRICS Plus. The invitees were Egypt, Ethiopia, Iran, Saudi Arabia, the UAE, and Argentina. It is worth noting that all of these countries, except Argentina, accepted the invitation. Argentina's decision to decline is interesting, particularly in light of the perceived alignment of its new president, Javier Milei, with the Western bloc.

Regardless of the circumstances, it is intriguing that Saudi Arabia's intentions regarding BRICS membership have been shrouded in ambiguity, sparking curiosity. The media has reported conflicting news, with some sources citing official statements to claim that Saudi Arabia has joined the group, while others, also referencing official sources, assert that it has not.

The proverbial expression holds that actions speak louder than words, and Saudi Arabia's decision to become a part of mBridge clearly demonstrates this. Various political analysts have highlighted that Saudi Arabia's ambiguity regarding joining the BRICS is likely a strategic move to avoid antagonizing its Western counterparts. Similarly, India has maintained a low profile regarding the BRICS, which is understandable given that the BRICS doesn't have a formalized structure.

The BRICS, or BRICS Plus, functions as a group of nations from the global South; as mentioned in an earlier publication, no headquarters, official website, or charter outlines its objectives. This could be due to the need for the BRICS countries to create a financial framework before forming an official entity. 

To provide context, it is essential to note that the United Nations, dominated by Western interests, was founded after establishing the Bretton Woods system. A key factor contributing to the Bretton Woods system's dominance was the influence of institutions such as the International Monetary Fund (IMF) and the World Bank, which effectively ensnared many nations in a web of debt denominated in US dollars, often with unfavorable conditions.

If history is any guide, the BRICS should follow a comparable route. As it happens, the BRICS have already taken a significant step in this direction by establishing the New Development Bank (NDB) in 2015, a financial institution analogous to the IMF and World Bank. The NDB stands out as a tangible entity within the BRICS framework, boasting a substantial $100 billion allocated for infrastructure projects and loans. This positioning, in theory, grants the NDB the ability to exert influence similar to that of its Western counterparts, providing critical financial support to countries in need while encouraging them to adopt policies that align with the interests of the BRICS nations.

In practice, the primary challenge lies with the current payment system. If the NDB were to pursue aggressive lending practices comparable to the IMF, it could attract scrutiny from the US and its supporters, resulting in complications for the NDB and its borrowers.  Moreover, providing loans to nations that are not strong allies of the US could also lead to payment difficulties. The mBridge system, however, resolves these issues.

While there is no definitive proof that the NDB will utilize mBridge, several indicators suggest a strong connection. The NDB is headquartered in China and is one of the five founding members of mBridge alongside Hong Kong. Additionally, the UAE, another key player in mBridge, holds a stake in the NDB. Furthermore, Saudi Arabia has been actively seeking to become a member of the NDB since last year, bringing the number of mBridge participants with ties to the NDB to four out of five.

The fifth is Thailand, which has reportedly expressed interest in joining the BRICS partly because of their discontent with the treatment they receive from Western countries. The governance procedure of mBridge still needs to be fully understood. Still, it is known to exist, and most participants are expected to vote to integrate the NDB if the matter arises.


Source: Blockstreet

Looking Ahead: What's Next for BRICS and mBridge?

The future of the BRICS nations and the mBridge payment system is multifaceted. It's essential to note that mBridge is still in its infancy, having only recently launched as a minimum viable product (MVP), which, as the name suggests, is its initial public release. However, it is evident that BRICS primarily serves as an economic endeavor. Furthermore, the increasing number of countries joining the initiative highlights their interest in the financial advantages of affiliating with major commodity producers, underscoring the profound importance of mBridge.

The primary factor behind the substantial value of the US dollar is its necessity in global trade, particularly for purchasing essential commodities such as oil that are denominated in dollars. This raises a significant question: As a nation, do you require the commodities themselves more, or do you need the dollars to acquire them?

The degree to which a country relies on US dollars is primarily determined by its natural resources. Nations with an abundance of exports, such as oil or minerals, tend to be less dependent on the US dollar, whereas those with limited resources often rely heavily on it. This dynamic significantly impacts global politics, leading to a predictable pattern of geopolitical alignments. Nations with solid commodity reserves wield greater independence and are more likely to challenge the US and its allies, whereas those without must form alliances with the US to ensure access to the dollar.

However, it's important to note that the focus is not solely on the US dollar per se; it's the rails on which it runs. The primary purpose of mBridge is to provide nations lacking in commodities the ability to buy these goods directly from producers, bypassing the need for US-dominated infrastructure. In other words, this platform grants them liberation from American influence, empowering them to act with greater autonomy.

This value proposition is quite appealing because, like most individuals, most nations desire to be independent and avoid getting involved in conflicts between major powers. They aim to exist peacefully, and mBridge offers them the means to maintain neutrality. However, implementing this may pose challenges, leading to intriguing situations. A notable instance is the extensive financial sanctions imposed on Russia, hindering its ability to utilize US dollars in trade and forcing it to rely on the currencies of other trading partners.

In the previous year, a Russian official disclosed that Russia had collected a substantial amount of Indian rupees from selling oil to India. Typically, Russia would exchange these rupees for US dollars, which could then be spent on goods from other nations. However, this is no longer an option. As a result, Russia is limited to using these rupees solely to buy goods from India, despite already having most of the products India offers.

India's major export is petroleum products, which Russia already has in abundance. India's other export offerings, such as rice and textiles, are limited in their appeal to Russia, which already meets most of its needs in these areas. It's akin to having an open-ended line of credit that can only be used at a single store that predominantly sells items you already possess in abundance.

A critical challenge comes to the forefront as the mBridge system expands to include more currencies. This will lead to the necessity of introducing a bridge currency similar to the US dollar. This is where the conflicting information regarding the BRICS currency begins to clarify. 

While there has been a widespread belief that the BRICS currency would be accessible to the general public and function as a standard retail currency, it is more probable that it will be utilized on a wholesale level within the confines of the mBridge system, exclusively by the central banks and commercial banks involved in the system.


Source: Rich Turrin Substack

The primary function of the BRICS currency is likely to prevent countries from accumulating large amounts of any given currency. The concept of a commodity-backed BRICS currency becomes more plausible when viewed as a bridge currency within the mBridge platform. Moreover, establishing this currency will enable smaller nations with more minor currencies to participate in the mBridge system.

Overall, introducing mBridge may signal the beginning of the end of the US dollar's supremacy and potentially a shift away from the increasingly fragmented global trade landscape. Progress in this direction will be gradual, with various obstacles to overcome. The existing US powers will unlikely relinquish their grip on the financial system without a fight and will likely employ all available means to preserve their control. 

What Else Could Be On The Horizon?

A lot is happening behind the scenes, and a significant development is unfolding. Speculation is mounting that a coalition is forming between influential leaders, including former US President Trump, Russia's Vladimir Putin, China's Xi Jinping, India's Narendra Modi, tech mogul Elon Musk, and Prince Mohammed bin Salman of Saudi Arabia. 

This alliance is becoming increasingly apparent as the year advances with widespread optimism, fueled by the belief that a golden age is on the horizon, where nations can peacefully coexist, united in mutual understanding and cooperation.

Just recently, the presumptive President Trump vowed to fully support cryptocurrency and make Bitcoin a crypto powerhouse. This includes setting up crypto mining operations in the US, implementing transparent regulatory guidance to benefit the crypto industry, and ‘cleaning up’ the corrupt banking system. 

This initiative will create an extensive new banking system linked to the BRICS system in the Americas, paving the way for a global trading network based on blockchain technology that can monitor illicit activities like money laundering and human trafficking and ensure full financial transparency.

As Trump said at the 2024 Bitcoin Conference,

“Bitcoin is not threatening the dollar; the behavior of the current US Government is threatening the dollar. The danger to our financial future does not come from crypto; it comes from Washington, DC.”


 

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

Gold Price News: Gold Hits Two-Week Low After US GDP Growth Surprises

Gold Price News: Gold Hits Two-Week Low After US GDP Growth Surprises

Gold prices fell sharply on Thursday, after US GDP figures showed surprise growth in the second quarter.

Prices fell as low as $2,354 an ounce on Thursday, down from just under $2,400 an ounce in late trades on Wednesday. The latest action means gold prices have fallen to their lowest for more than two weeks — testing the lows of around $2,350 an ounce last seen on July 9.

KAU/USD 1-hourly Kinesis Exchange

US GDP figures were released on Thursday, showing that the economy grew by an annualised 2.8% in the second quarter, up from 1.4% in Q1, and well above market expectations of 2%. That’s a bearish factor for gold prices, which tend to fare worse during times of economic strength when other assets perform more positively.

The latest GDP figures appear to have had little impact on the outlook for US interest rates, with interest rate traders fully pricing in a first rate cut by the US Fed at its September 18 meeting. However, the stronger GDP numbers may indicate that the number and scale of rate cuts needed in the coming months may be lower than previously assumed, and the markets will be watching for further data to support or challenge that outlook.

Also released Thursday, US durable goods orders fell by 6.6% in June, far below the market’s expected increase of 0.3%, and this may have helped stem the day-on-day losses for safe-haven gold.

Any further price downside for gold would bring the $2,300 an ounce level into renewed focus, as this has been a key area of price support in May and June.

Looking ahead, Friday will see the release of the US core PCE price index for June – the Fed’s preferred measure of inflation – for further clues on the trajectory for interest rates, followed by the Michigan consumer sentiment figures for July, which cover the US as a whole, for a further pulse-check on the US economy. The figures have shown four consecutive monthly drops in sentiment up until June, and any further declines could help strengthen the case for more accommodative monetary policy in the US.

Time to Buy Gold and Silver

Tim Moseley

Breaking: Trump vows to make Bitcoin a strategic reserve currency

Breaking: Trump vows to make Bitcoin a strategic reserve currency

Breaking: Trump vows to make Bitcoin a strategic reserve currency teaser image

(Kitco News) – Breaking news from the Bitcoin 2024 Conference as Presidential candidate Donald Trump said he intends to make Bitcoin a strategic reserve currency for the United States.

Many Americans do not realize that the U.S. government is among the world's largest holders of Bitcoin – The Federal Government has almost 210,000 Bitcoin or 1% of the total supply that will ever exist.”

But for too long, our government has violated the cardinal rule that every Bitcoiner knows by heart: "NEVER SELL YOUR BITCOIN."

And so, as the final part of my plan today, I am announcing that if I am elected, it will be the policy of my administration to KEEP 100% of all the Bitcoin the U.S. government currently holds or acquires in the future.”

This will serve, in effect, as the core of a Strategic National Bitcoin Reserve,” Trump said.

Kitco Media

Jordan Finneseth

Time to Buy Gold and Silver

Tim Moseley

The Artist that came out of the Winter