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A closely-watched report on US inflation showed consumer price increases cooled further during the month of June, according to the latest data from the Bureau of Labor Statistics released Thursday morning.The Consumer Price Index (CPI) declined 0.1% over the previous month and increased just 3.0% over the prior year in June — a deceleration from May’s flat month-over-month increase and 3.3% annual gain in prices. Both measures beat economist expectations of a 0.1% monthly increase and a 3.1% annual gain.Notably, this is the first time since May 2020 that monthly headline CPI came in below 0%. It’s also the slowest annual gain in prices since March 2021.On a “core” basis, which strips out the more volatile costs of food and gas, prices in June climbed 0.1% over the prior month and 3.3% over last year — cooler than May’s data. Economists had expected a 0.2% monthly uptick in core prices and a 3.4% year-over-year increase.It was the smallest month over month increase in core prices since August 2021.Markets jumped on the heels of the report, with the 10-year Treasury yield (^TNX) falling about 9 basis points to trade around 4.2%.Inflation has remained stubbornly above the Federal Reserve’s 2% target on an annual basis. But recent economic data has helped fuel a narrative that the central bank should cut rates sooner than later.Immediately following Thursday’s encouraging inflation data, markets were pricing in a roughly 87% chance the Federal Reserve begins to cut rates at its September meeting, up from 75% a day prior, according to data from the CME Group.The data adds onto other rate cut signals across the labor market and economy.On Friday, the Bureau of Labor Statistics showed the labor market added 206,000 nonfarm payroll jobs last month, ahead of the 190,000-plus expected by economists. However, the unemployment rate unexpectedly rose to 4.1%, up from 4% in the month prior. It was the highest reading in almost three years.Notably, the Fed’s preferred inflation gauge, the so-called core PCE price index, showed inflation eased in May. The year-over-year change in core PCE came in at 2.6% over the prior year in May, in line with estimates and the slowest annual gain in more than three years.FILE – Federal Reserve Board Chair Jerome Powell speaks at a news conference at the Federal Reserve in Washington, June 12, 2024. Powell testifies to the Senate Banking Committee on Tuesday, July 9, 2024. (AP Photo/Susan Walsh, File) (ASSOCIATED PRESS)Shelter prices cool, energy index fallsNotable call-outs from the inflation print include the shelter index, which rose 5.2% on an unadjusted, annual basis, a slowdown from May. The index rose 0.2% month over month.Sticky shelter inflation has largely been blamed for higher core inflation readings, according to economists, but June’s print showed more signs of cooling.The index for rent and owners’ equivalent rent (OER) each rose 0.3% on a monthly basis, slightly cooler than May’s rise and the smallest increases in these indexes since August 2021. Owners’ equivalent rent is the hypothetical rent a homeowner would pay for the same property.Meanwhile, lodging away from home decreased 2% percent in June, after falling 0.1% in May.Energy prices also fell again in June, driven by a significant drop in gas prices. The index declined another 2% over the prior month. On a yearly basis, the index was up 1%.Gas prices fell 3.8% from May to June after falling 3.6% the previous month.The food index increased 2.2% in June over the last year, with food prices rising 0.2% from May to June — proving to be a sticky category for inflation. The index for food at home rose 0.1% month over month while food away from home increased another 0.4%.Other indexes that increased in June included motor vehicle insurance, household furnishings and operations, medical care, and personal care.The indexes for airline fares, used cars and trucks, and communication were among those that decreased over the month, according to the BLS.Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.Click here for the latest stock market news and in-depth analysis, including events that move stocksRead the latest financial and business news from Yahoo Finance Continue reading →

Inflation has remained stubbornly above the Federal Reserve’s 2% target on an annual basis. But recent economic data has helped fuel a narrative that the central bank should cut rates sooner than later.Immediately following Thursday’s encouraging inflation data, which showed headline inflation falling month over month for the first time since May 2020, markets were pricing in a roughly 89% chance the Federal Reserve begins to cut rates at its September meeting, up from 75% a day prior, according to data from the CME Group.The data is the latest to build the case for Fed rate cuts.On Friday, the Bureau of Labor Statistics showed the labor market added 206,000 nonfarm payroll jobs last month, ahead of the 190,000-plus expected by economists. However, the unemployment rate unexpectedly rose to 4.1%, up from 4% in the month prior. It was the highest reading in almost three years.Notably, the Fed’s preferred inflation gauge, the so-called core PCE price index, showed inflation eased in May. The year-over-year change in core PCE came in at 2.6% over the prior year in May, in line with estimates and the slowest annual gain in more than three years.”The decline in the consumer price index between May and June won’t stick but it strengthens the case for the Federal Reserve to begin cutting interest rates in September, particularly as the labor market has softened,” wrote Oxford Economics chief US Economist Ryan Sweet.Still, the economist warned, “We caution about reading too much into the decline in the CPI in June and don’t believe that this is the new trend.”Seema Shah, chief global stratgiest at Principal Asset Management, agreed the latest numbers “put us firmly on the path for a September Fed rate cut” but that “a July policy cut is still off the table.””Not only would it spark questions of ‘what do they know about the economy that we don’t know?’ but the Fed still needs to gather additional evidence of waning price pressures to be absolutely certain of the inflation path.”Read more on the latest CPI print here. Continue reading →

Just_Super/iStock via Getty ImagesPreamble These days, gold bugs are grinning merrily and will tell anyone with ears to hear that the metal is up around 20% over the last 12 months (c$1,950 in July 2023 v Current price $2,370); not bad. What would surprise many of those grinning bugs (which I am one) is that copper has also had a similar increase. Back in July 2023, the spot price of copper per pound was $3.77 and now it is $4.58, which also represents an increase of approximately 20%. Of course, this increase in copper prices has had a positive impact on the financials of Taseko Mines Limited (NYSE:TGB). And the rise in copper prices is not the only reason that makes Taseko such an attractive investment. In my humble opinion, there are three data points to consider when contemplating an investment into a listed mining company; The jurisdiction of the operations, the financials and the quality of the company’s reserves. However, in the case of Taseko, there is also an underappreciated asset to consider; “Taseko’s 100%-owned Aley Project in northeast British Columbia is one of largest undeveloped niobium deposit in the world.” I suspect that few investors have heard of niobium compared to those who are familiar with the term “rare earths.” And this cannot be because the element is about as useful as a chocolate teapot, and sparsely used, far from it in fact. According to some reports; “The Niobium Market size is estimated at 106.85 kilotons in 2024, and is expected to reach 171.49 kilotons by 2029, growing at a CAGR of 9.92% during the forecast period (2024-2029).” This is not the first time I’ve covered niobium as I highlighted the importance of the metal in an article on NioCorp titled; “Time To Short This Overvalued Stock.” The reasons for my sell recommendation was due to the over valuation of the stock rather than the assets it controls. As regards jurisdiction, I’ve written quite a few articles highlighting the increasing risks of investing in miners which have operations outside of the collective West. Most recently, I’ve covered the perils of locating operations in Bolivia, Columbia and Africa. In my article covering Barrick Gold, I explored the Pandora’s box of potential hazards associated with developing new deposits in Mexico. Needless to say, Taseko’s operations are all in North America, which is considered a “safe” jurisdiction. Overview Of Operations Taseko Mines holds significant copper deposits across North America, both in active production and in development stages. Gibraltar Mine: Described as the second-largest open-pit copper mine in Canada, Gibraltar is Taseko’s flagship operation and a major contributor to the company’s revenue. Located in British Columbia, it has been in operation since 1972 and is expected to continue producing until at least 2038. Recent figures show a 26% increase in copper production in 2023, reaching 123 million pounds. Taseko holds a 100% interest in the mine after acquiring the remaining 12.5% from partners in March 2024. This mine also produces a significant amount of molybdenum, which was 247 thousand pounds in the last quarter. Given that the current price per pound is circa $20.00, the company gets around $5 million of extra revenue. Florence Copper Project: This fully permitted in-situ copper recovery project in Arizona represents Taseko’s strategic growth initiative. It is expected to begin commercial production in Q4 2025, promising to be one of the most efficient copper producers globally due to its low energy, water, and greenhouse gas intensity. According to the company; “When fully operational, the facility will have a production capacity of 85 million pounds of LME Grade A copper metal each year and a mine life of 22 years.” Yellowhead Copper Project: This early-stage exploration project located in British Columbia demonstrates Taseko’s commitment to resource expansion. While not yet in production, it holds potential for future copper extraction and contributes to the company’s overall resource portfolio. The mine has 458 million metric tonnes of reserves together with the added bonus of extractable gold and silver. This deposit is understood to have a mine life of 25 years. Despite the various hurdles that need to addressed, the company is making progress in developing the site; “The Company is preparing to advance into the environmental assessment process and is undertaking some additional engineering work in conjunction with ongoing engagement with local communities including First Nations. The Company is also collecting baseline data and modeling, which will be used to support the environmental assessment and permitting of the project.” New Prosperity: Whilst the company has defined a large porphyry gold-copper deposit at the New Prosperity site, hurdles remain due to the fact that it is located in an area of cultural significance for the local Indian population. However, despite the sensitive nature of the location, discussions with interested parties appears to be progressing well. The company has suggested that an agreement is in the offing; “In March 2024, Tŝilhqot’in and Taseko formally reinstated the standstill agreement for a final term, with the goal of finalizing a resolution before the end of this year.” Aley Project: The Aley Project entered the Environmental Assessment Process back in 2014 and there are indications that the company expects very few hurdles to their plans going forward. During their last report, the company stated that the Aley Project is making progress on environmental monitoring and product marketing. The company further confirmed that there is an ongoing pilot test, which is gathering data to help design commercial facilities and generate samples of niobium and its oxides for marketing. Clearly, this ongoing investment in pilots suggests that the project is moving slowly but surely towards development. Financials Given the more than nice rise in the price of copper, one can well believe that Taseko’s financials looked pretty good for the last quarter. Positives Revenues: From the graphic below, it can be seen that there was a huge up move in both revenues and cash flow, 27.21% and 112.77% respectively. Graphic showing revenues and cash flow (Obtained from Taseko quarterly report) Cost Savings: The acquisition of additional concentrate offtake rights, combined with record low smelter treatment costs, is expected to result in cost savings of $10 million in the second half of 2024. Progress at Florence Copper Project: Construction and wellfield development activities at the Florence Copper project are progressing well, with ten new production wells drilled. This indicates the project is on track for commercial operation. Successful Refinancing: The refinancing of senior secured notes, pushing the maturity to 2030 and upsizing the offering, strengthens Taseko’s financial position and provides additional cash proceeds and flexibility. Negatives There were a few concerns in the report, some of which could be described as one-offs, while others have the potential to impact profitability in the future. Lower Net Income: Taseko Mines Limited’s net income decrease from $33.8 million to $18.9 million, which was primarily attributed to an unrealized foreign exchange loss of $13.7 million, a $5.1 million increase in accretion and unrealized fair value adjustments for Cariboo and Florence royalty obligations, and higher finance expenses due to increased net borrowings, including Florence project financings. Impact of Concentrator #2 Downtime: Copper production and mill throughput were negatively affected by planned maintenance downtime in January 2024. Lower Copper Recoveries: Copper recoveries in the first quarter were lower than recent quarters due to lower head grades and increased milling of partially oxidized material. Environmental Liabilities: The company has significant provisions for environmental rehabilitation, primarily for the Gibraltar and Florence Copper projects, which could represent a long-term financial liability. The Future For Taseko Mines If we consider the negatives of the quarterly report given above, in my opinion, net income is more than likely to recover. One hopes that foreign exchange losses will be less going forward, and funding is now in place for the Florence project. The company’s presentation paints a rosy picture of both the demand for copper and its continued upward trajectory in the price of this essential metal. Graphic showing copper demand v supply (Obtained from Taseko presentation) As early as 2025, the company will have Florence adding to revenues and profits. Not forgetting the additional substantial assets of Yellowhead, New Prosperity and Aley, all of which appear to be on track for development. Valuation Considering the growth in revenues and cash flow, a Price to Earnings ratio of 16.36 puts the company in bargain basement territory. And compared to peers, the stock could well be thought of as good value using this metric. For comparison, Freeport-McMoRan (FCX) has a P/E of 29.92 and Southern Copper’s (SCCO) P/E is 27.72. If we check Seeking Alpha’s Factor Grades and match it with the company’s P/E, again investors can appreciate that the stock looks attractive. Certainly, the profitability of the company is likely to improve for the reasons outlined in this piece. Value of stock (Seeking Alpha) There are other ratios that suggest that Taseko is pretty good value relative to its peers, as the table below illustrates. Ratio Freeport-McMoRan Southern Copper Taseko Mines Return on Equity 10.00% 29.97% 16.55% Net Income Margin 6.97% 24.20% 12.19% Click to enlarge As you might expect for a relative newcomer, the differences lie in the level of indebtedness of the three companies. Ratio Freeport-McMoRan Southern Copper Taseko Mines Debt-to-Equity Ratio 33.54% 92.20% 140.46% Current Ratio 2.35 3.31 1.97 Click to enlarge Summary Taseko Mines has a diverse portfolio of copper and niobium projects. The company’s main producing asset, the Gibraltar Mine, is the second-largest open-pit copper mine in Canada. Taseko is also developing other copper projects that are expected to be online soon. The company’s financials have been positively impacted by rising copper prices, but it has had lower net income due to foreign exchange losses and increased finance expenses, which are not expected to be repeated for the next quarter. Finally, the company’s stock appears undervalued compared to peers based on various financial metrics. I do believe that I have talked myself into buying more of the stock. Continue reading →

The stocks of big banks are outperforming the rest of the S&P 500 this year, and that investor confidence is about to be put to the test.JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) all report their second-quarter results this Friday, kicking off another earnings season for the US banking industry. Bank of America (BAC) reports the following Tuesday.The stocks of these banks — the four largest in the US — have each climbed more than 20% since January, outperforming the S&P 500 (GSPC). That performance is also roughly double the gains of an index that tracks the wider industry, the KBW Nasdaq Bank Index (^BKX).Big bank investors are optimistic about the ability of the biggest financial institutions to thrive as the Federal Reserve slowly lowers interest rates, as regulators water down a set of new bank capital rules and as Wall Street dealmaking stages a comeback.The Fed’s policy path — which currently is expected to be 1 or 2 cuts in 2024 followed by more in 2025 — “really bodes well” for the group of big banks over the next year, said RBC Capital Markets bank analyst Gerard Cassidy.But the actual results from the big banks during the second quarter are not expected to stun, despite a headline number from JPMorgan that will likely blow away all rivals.JPMorgan is expected to report a sizable net profit due partly to a pre-tax multi-billion-dollar accounting boost from an exchange of shares in credit card giant Visa (V), but analysts say that won’t grab a lot of attention from market watchers.”I think the market will pretty quickly pull that out as sort of an unusual or one time event,” said Scott Siefers, a large bank analyst with Piper Sandler.Where there will likely be more focus is what JPMorgan has to say about a key measure of lending profit known as net interest income.Jamie Dimon, CEO of JPMorgan Chase. (AP Photo/Alex Brandon) (ASSOCIATED PRESS)That profit — which measures the difference between what banks pay out in deposits and take in from their loans — is expected to be down from the sequential quarter. Same goes for the other three big banks.Even the biggest banks have been struggling with this measure as deposit costs stay elevated, loan demand remains weak and the Fed takes longer than expected to bring interest rates back down.”Investors are hoping to see that net interest income for the second quarter will, ideally, be the trough for big banks this year,” Siefers added.The results from the big banks are also likely to reveal the cautionary stance these lenders are taking on credit as higher rates pose more challenges for their borrowers.New provisions set aside to cover future loan losses at the big four banks are expected to rise 26% from last quarter. By comparison, the pace of loan loss provisions across all commercial banks began to stabilize earlier this year, rising 0.30% over the quarter, according to Federal Reserve data.Where results should be considerably brighter are within the Wall Street operations of these big banks as dealmaking stages a comeback from poor performances in 2023 and 2022.The big four banks along with Wall Street specialists Goldman Sachs (GS) and Morgan Stanley (MS) are all expected to show sizable jumps — an average of more than 30% — in investment banking fees compared with a year ago. Goldman and Morgan Stanley report their earnings on Monday and Tuesday.Goldman Sachs CEO David Solomon. REUTERS/Mark Stockwell (REUTERS / Reuters)The big event that all banks are waiting for is when the Fed finally decides to start lowering rates from a 23-year high. The current market bet is that it could happen as early as September.For smaller regional banks, the sooner rate cuts come the better. They are more reliant on lending income and thus have been hit harder by a drop in net interest income across the industry. They are also more exposed to the weaknesses in the commercial real estate market.Investors have pushed down the stocks of various regional and small banks this year as new problems or concerns surface.It happened last week after Dallas bank First Foundation (FFWM) announced a $228 million infusion from new investors to help it reduce its concentration of multifamily apartment loans.It also happened in June following an analyst report calling out debt held by Bank OZK (OZK), and in May when a short seller targeted Axos Financial (AX) over the quality of its property loans.Commercial real estate worries first ignited at the start of this year when New York Community Bancorp (NYCB) set aside a surprising amount of money in case of loan losses in part to rent-regulated apartment complexes in the New York City area.NYCB’s stock plummeted but it was able to calm the market with an emergency equity infusion from a group that included former Treasury Secretary Steven Mnuchin.Former Treasury Secretary Steven Mnuchin. Alex Wong/Pool via REUTERS (REUTERS / Reuters)All of this turmoil has “subdued investor expectations” for regional banks, Bank of America analyst Ebrahim Poonawala said.Investors will be on the watch for more vulnerabilities as many mid-sized institutions report in the coming weeks.For these lenders “the bull case is that their actual credit losses will be significantly lower than what is being priced into their stocks,” Chris McGratty, a regional bank analyst with KBW told Yahoo Finance.But the institutions that rely heavily on commercial real estate lending aren’t likely to be given the benefit of doubt until the credit cycle has come full circle, McGratty added.An index tracking regional bank stock prices (KRE) has fallen more than 7% since the beginning of the year.David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.Click here for in-depth analysis of the latest stock market news and events moving stock prices.Read the latest financial and business news from Yahoo Finance Continue reading →

ayala_studioEditor’s note: Originally published at tsi-blog.com on May 31, 2024 [This blog post is an excerpt from a recent commentary at www.speculative-investor.com] With regard to the topics that we write about regularly, over the past year, we have been most wrong about the stock market and the US economy. It’s true that the average stock has not fared particularly well, but we have been consistently surprised by the strength of the S&P500 Index and other large-cap-focussed indices for about 18 months now. Also, we thought that the US economy would be in recession by the end of last year and would be very weak during the first three quarters of this year, but while the US economy certainly slowed during the first half of this year, it clearly has not yet entered recession territory. These mistakes are linked, in that major bearish trends in the stock market tend to encompass recessions. Today we’ll discuss, in broad-brush terms, a likely consequence of both the stock market and the US economy performing much better than we expected up until now. In our opinion, it’s not the case that the US economy has avoided a recession, but rather that the current cycle has been elongated. We use the commodity/gold ratio (the Spot Commodity Index (GNX) divided by the US$ gold price) to define booms and busts, with booms being multi-year periods during which the ratio trends upward and busts being multi-year periods during which the ratio trends downward. The vertical lines drawn on the following GNX/gold chart mark the trend changes (shifts from boom to bust or vice versa) that have occurred since 2000. It’s not essential that the bust phase of the cycle contains a recession, but it’s rare for a bust to end until a recession has occurred. Usually, the sequence is: 1) The commodity/gold ratio begins trending downward, marking the start of the economic bust period. 2) The economic weakness eventually becomes sufficiently pervasive and severe to qualify as a recession. 3) Near the end of the recession, the commodity/gold ratio reverses upward, thus signalling the start of a boom. Note that it is not unusual for the stock market to continue trending upward after the bust begins, but the stock market always peaks prior to a recession getting underway. For example, an economic bust began in October 2018, but the SPX continued to make new highs until early 2020. In the current cycle, the commodity/gold ratio has been trending downward since the first half of 2022, meaning that the US economy has been in the bust phase of the cycle for a little more than two years without entering recession. While this is much longer than average, it is comparable to what happened during 2005-2009. During 2005-2009, a bust began (the commodity/gold ratio commenced a multi-year downward trend) in Q4-2005, but a recession did not begin, and the stock market did not peak until Q4-2007. Evidence that the US economy is slowing is becoming clearer almost by the week, but a recession probably won’t start any sooner than September of this year and could be postponed, with help from the government and the Fed, until late this year or even early next year. This means that the coming recession probably won’t end any sooner than the second half of 2025 and could even extend into 2026, which has implications for all the financial markets. It’s the implication for the gold market that we are concerned with today. The US$ gold price tends to peak on a multi-year basis after it has fully discounted the economic, fiscal and monetary consequences of a recession. This usually happens in the latter stages of a recession, but before the recession has ended. Therefore, whereas a year ago, we were thinking along the lines of the cyclical gold bull market climaxing in the second half of 2024, the current economic cycle’s elongation and the postponing of a recession probably mean that gold’s cyclical bull market will continue until at least the second half of next year. Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors. Continue reading →

On Thursday, investors will digest one of the most important data points that will shape future Federal Reserve interest rate policy: June’s Consumer Price Index (CPI).The inflation report, set for release at 8:30 a.m. ET, is expected to show headline inflation of 3.1%, a deceleration from the 3.3% rise seen in May. This would be the smallest annual rise since January as another drop in energy prices likely will have contributed to further downward pressure on headline CPI.Over the prior month, consumer prices are expected to have risen 0.1%, a slight uptick from May’s flat monthly reading.Meanwhile, on a “core” basis, which strips out the more volatile costs of food and gas, prices in June are expected to have risen 3.4% over last year and 0.2% over the prior month, unchanged from May, according to Bloomberg data.”We expect the June CPI report to be another confidence builder following the undeniably good May report,” Bank of America economists Stephen Juneau and and Michael Gapen wrote in a note last week.The economists said while the anticipated numbers are “not quite as low as May, it would be a good print for the Fed.”Thursday’s inflation data arrives at a critical moment for the central bank after slowing job market growth, coupled with recent testimony from Federal Reserve chair Jay Powell, have kept rate cut hopes alive.Powell, who is set to complete his semiannual policy update to Congress on Wednesday, has largely stuck to his data-dependent narrative — a positive sign given recent encouraging data. On Tuesday, he told the Senate Banking Committee that although there’s been evidence of inflation cooling, the Fed still needs more “good data” to be confident that inflation is moving toward the Fed’s 2% target.Core inflation has remained stubbornly elevated due to higher costs of shelter and core services like insurance and medical care. In May, non-housing services “surprisingly edged down in May, owing in large part to a slight decline in motor vehicle insurance,” Bank of America’s Juneau and Gapen noted.But the economists expect the category (and motor vehicle insurance) to have increased in June, indicative of the “bumpy” path forward when it comes to price stabilization.”Non-housing services inflation should moderate over time given cooling services wage inflation; however, a sustained period of deflation is unlikely,” they warned.FILE – Federal Reserve Board Chair Jerome Powell speaks at a news conference at the Federal Reserve in Washington, June 12, 2024. Powell testifies to the Senate Banking Committee on Tuesday, July 9, 2024. (AP Photo/Susan Walsh, File) (ASSOCIATED PRESS)Meanwhile, price increases for rent and owners’ equivalent rent, or the hypothetical rent a homeowner would pay for the same property, are expected to cool in the coming months, BofA said, “which should add to the Fed’s confidence on the inflation outlook.”The team at Goldman Sachs, led by Jan Hatzius, agreed “further disinflation” remains in the pipeline this year, citing “rebalancing in the auto, housing rental, and labor markets.”Still, “we expect offsets from continued catch-up inflation in healthcare and car insurance and from single-family rent growth continuing to outpace multifamily rent growth.”Goldman anticipates year-over-year core CPI inflation of 3.2% and core PCE inflation of 2.7% in December 2024, down from their previous projection of 3.5% and 2.8%, respectively.To cut or not to cut?Inflation has remained stubbornly above the Federal Reserve’s 2% target on an annual basis. But recent economic data has helped fuel a narrative that the central bank should cut rates sooner than later.On Friday, the Bureau of Labor Statistics showed the labor market added 206,000 nonfarm payroll jobs last month, ahead of the 190,000-plus expected by economists. However, the unemployment rate unexpectedly rose to 4.1%, up from 4% in the month prior. It was the highest reading in almost three years.Notably, the Fed’s preferred inflation gauge, the so-called core PCE price index, showed inflation eased in May. The year-over-year change in core PCE came in at 2.6% over the prior year in May, in line with estimates and the slowest annual gain in more than three years.”Should the CPI report print [fall] in line with our expectations, we would maintain our expectation for the Fed to start its cutting cycle in December.” BofA said. “That said, we do acknowledge that another 0.2% month-over-month print for core CPI would tilt the risk towards an earlier cut especially given signs of softening activity.”Investors now anticipate a range of one to two 25-basis-point cuts in 2024, down from the six cuts expected at the start of the year, according to Bloomberg data.As of Wednesday, markets were pricing in a roughly 75% chance the Federal Reserve begins to cut rates at its September meeting, according to data from the CME Group.Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.Click here for the latest stock market news and in-depth analysis, including events that move stocksRead the latest financial and business news from Yahoo Finance Continue reading →

(Kitco News) Zimbabwe’s plan to sell gold coins to tame inflation is a missed opportunity to build better gold reserves, according to the International Monetary Fund (IMF).
Over the summer, Zimbabwe’s central bank started selling gold coins to fight inflation. The idea was that gold coins would provide a store of value to the country’s plunging currency and give the population an alternative to the U.S. dollar.
The one troy-ounce 22-carat gold coins named ‘Mosi-Oa-Tunya,’ meaning “Smoke that Thunders” in reference to Victoria falls, have been very popular. After the first week of being launched, which was at the end of July, the country’s central bank sold 1,500 gold coins. 
Each gold coin has a serial number and can be bought with local currency, the U.S. dollar, and other foreign currencies. The price is set based on the international price of gold and production costs. As of this week, each gold coin was going for $1,755, according to the central bank’s website.
The owners of the coins can convert them into cash or make a trade-in whenever needed. The gold coins could also be used as legal tender to transact in or as a security for loans.
The goal is to lower the demand for U.S. dollars following the collapse of the Zimbabwe dollar. Earlier, Zimbabwe revealed plans to adopt the U.S. dollar as legal tender for the next five years to stabilize the country’s exchange rate. This is the second time in more than a decade that Zimbabwe is legalizing the greenback as legal tender.
Surging inflation and currency devaluation have made things difficult for Zimbabwe’s population. The country’s annual inflation accelerated by 285% in August. In response to the crisis, Zimbabwe’s central bank has more than doubled its policy rate from 80% to 200%, a new record.
But the IMF sees this as a missed opportunity on the gold reserves side. “The sale of gold coins has contributed to withdrawing Zimbabwe dollar liquidity from the market, though it represents an opportunity cost in terms of foregone reserves for the Reserve Bank of Zimbabwe,” Bloomberg quoted an IMF spokesperson as saying Thursday.
Earlier in the week, the IMF noted that Zimbabwe’s monetary policy moves were helping with currency devaluation. “The recent tightening of monetary policy and the contained budget deficits are policies in the right direction and have contributed to the narrowing of the parallel market exchange rate gap,” the IMF said Monday.
Due to the popularity of one-ounce gold coins, the country’s central bank is also working on releasing a tenth of an ounce coins.
The gold coin idea also inspired the country to try incentivizing the nation’s biggest gold miners to produce above the state-planned targets.
Large miners are being encouraged by the government to produce more gold. And those who exceed their targets can receive 80% of the payment for the additional output in foreign currency. The current payment plan is a 60-40 split between foreign and local currency payments. 
Zimbabwe’s gold output is already up 47% this year, with the government looking for gold mining to account for a third of 2023’s overall mining industry targeted $12 billion in revenue. Continue reading →

(Bloomberg) — The price of copper — used in everything from computer chips and toasters to power systems and air conditioners — has fallen by nearly a third since March. Investors are selling on fears that a global recession will stunt demand for a metal that’s synonymous with growth and expansion.Most Read from BloombergYou wouldn’t know it from looking at the market today, but some of the largest miners and metals traders are warning that in just a couple of years’ time, a massive shortfall will emerge for the world’s most critical metal — one that could itself hold back global growth, stoke inflation by raising manufacturing costs and throw global climate goals off course. The recent downturn and the under-investment that ensues only threatens to make it worse.“We’ll look back at 2022 and think, ‘Oops,’” said John LaForge, head of real asset strategy at Wells Fargo. “The market is just reflecting the immediate concerns. But if you really thought about the future, you can see the world is clearly changing. It’s going to be electrified, and it’s going to need a lot of copper.”Inventories tracked by trading exchanges are near historical lows. And the latest price volatility means that new mine output — already projected to start petering out in 2024 — could become even tighter in the near future. Just days ago, mining giant Newmont Corp. shelved plans for a $2 billion gold and copper project in Peru. Freeport-McMoRan Inc., the world’s biggest publicly traded copper supplier, has warned that prices are now “insufficient” to support new investments.Commodities experts have been warning of a potential copper crunch for months, if not years. And the latest market downturn stands to exacerbate future supply problems — by offering a false sense of security, choking off cash flow and chilling investments. It takes at least 10 years to develop a new mine and get it running, which means that the decisions producers are making today will help determine supplies for at least a decade.“Significant investment in copper does require a good price, or at least a good perceived longer-term copper price,” Rio Tinto Group Chief Executive Officer Jakob Stausholm said in an interview this week in New York.Why Is Copper Important?Copper is essential to modern life. There’s about 65 pounds (30 kilograms) in the average car, and more than 400 pounds go into a single-family home.The metal, considered the benchmark for conducting electricity, is also key to a greener world. While much of the attention has been focused on lithium — a key component in today’s batteries — the energy transition will be powered by a variety of raw materials, including nickel, cobalt and steel. When it comes to copper, millions of feet of copper wiring will be crucial to strengthening the world’s power grids, and tons upon tons will be needed to build wind and solar farms. Electric vehicles use more than twice as much copper as gasoline-powered cars, according to the Copper Alliance.How Big Will the Shortage Get?As the world goes electric, net-zero emission goals will double demand for the metal to 50 million metric tons annually by 2035, according to an industry-funded study from S&P Global. While that forecast is largely hypothetical given all that copper can’t be consumed if it isn’t available, other analyses also point to the potential for a surge. BloombergNEF estimates that demand will increase by more than 50% from 2022 to 2040.Meanwhile, mine supply growth will peak by around 2024, with a dearth of new projects in the works and as existing sources dry up. That’s setting up a scenario where the world could see a historic deficit of as much as 10 million tons in 2035, according to the S&P Global research. Goldman Sachs Group Inc. estimates that miners need to spend about $150 billion in the next decade to solve an 8 million-ton deficit, according to a report published this month. BloombergNEF predicts that by 2040 the mined-output gap could reach 14 million tons, which would have to be filled by recycling metal.To put in perspective just how massive that shortage would be, consider that in 2021 the global deficit came in at 441,000 tons, equivalent to less than 2% of demand for the refined metal, according to the International Copper Study Group. That was enough to send prices jumping about 25% that year. Current worst-case projections from S&P Global show that 2035’s shortfall will be equivalent to about 20% of consumption.As for what that means for prices?“It’s going to get extreme,” said Mike Jones, who has spent more than three decades in the metal industry and is now the CEO of Los Andes Copper, a mining exploration and development company.Where Are Prices Heading?Goldman Sachs forecasts that the benchmark London Metal Exchange price will almost double to an annual average of $15,000 a ton in 2025. On Wednesday, copper settled at $7,690 a ton on the LME.“All the signs on supply are pointing to a fairly rocky road if producers don’t start building mines,” said Piotr Kulas, a senior base metals analysts at CRU Group, a research firm.Of course, all those mega-demand forecasts are predicated on the idea that governments will keep pushing forward with the net-zero targets desperately needed to combat climate change. But the political landscape could change, and that would mean a very different scenario for metals use (and the planet).And there’s also a common adage in commodity markets that could come into play: high prices are the cure for high prices. While copper has dropped from the March record, it’s still trading about 15% above its 10-year average. If prices keep climbing, that will eventually push clean-energy industries to engineer ways to reduce metals consumption or even seek alternatives, according to Ken Hoffman, the co-head of the EV battery materials research group at McKinsey & Co.Scrap supply can help fill mine-production gaps, especially as prices rise, which will “drive more recycled metals to appear in the market,” said Sung Choi, an analyst at BloombergNEF. S&P Global points to the fact that as more copper is used in the energy transition, that will also open more “opportunities for recycling,” such as when EVs are scrapped. Recycled production will come to represent about 22% of the total refined copper market by 2035, up from about 16% in 2021, S&P Global estimates.The current global economic malaise also underscores why the chief economist for BHP Group, the world’s biggest miner, just this month said copper has a “bumpy” path ahead because of demand concerns. Citigroup Inc. sees copper falling in the coming months on a recession, particularly driven by Europe. The bank has a forecast for $6,600 in the first quarter of 2023.And the outlook for demand from China, the world’s biggest metals consumer, will also be a key driver.If China’s property sector shrinks significantly, “that’s structurally less copper demand,” said Timna Tanners, an analyst at Wolfe Research. “To me, that’s just an important offset” to the consumption forecasts based on net-zero goals, she said.But even a recession will only mean a “delay” for demand, and it won’t “significantly dent” the consumption projections going into 2040, according to a presentation from BloombergNEF dated Aug. 31. That’s because so much of future demand is being “legislated in,” through governments’ focus on green goals, which makes copper less dependent on the broader global economy than it used to be, said LaForge of Wells Fargo.Plus, there’s little wiggle room on the supply side of the equation. The physical copper market is already so tight that despite the slump in futures prices, the premiums paid for immediately delivery of the metal have been moving higher.What’s Holding Back Supplies?Just take a look at what’s happening in Chile, the legendary mining nation that’s long been the world’s largest supplier of the metal. Revenue from copper exports is falling because of production struggles.At mature mines, the quality of ore is deteriorating, meaning output either slips or more rock has to be processed to produce the same amount. And meanwhile the industry’s pipeline of committed projects is running dry. New deposits are getting trickier and pricier to both find and develop. In Peru and Chile, which together account for more than a third of global output, some mining investments have stalled, partly amid regulatory uncertainty as politicians seek a greater portion of profits to resolve economic inequalities.Soaring inflation is also driving up the cost of production. That means the average incentive price, or the value needed to make mining attractive, is now roughly 30% higher than it was 2018 at about $9,000 a ton, according to Goldman Sachs.Globally, supplies are already so tight that producers are trying to squeeze tiny nuggets out of junky waste rocks. In the US, companies are running into permitting roadblocks. While in the Congo, weak infrastructure is limiting growth potential for major deposits.Read More: Biggest US Copper Mine Stalled Over Sacred Ground DisputeAnd then there’s this great contradiction when it comes to copper: The metal is essential to a greener world, but digging it out of the earth can be a pretty dirty process. At a time when everyone from local communities to global supply chain managers are heightening their scrutiny of environmental and social issues, getting approvals for new projects is getting much harder.The cyclical nature of commodity industries also means producers are facing pressure to keep their balance sheet strong and reward investors rather than aggressively embark on growth.“The incentive to use cash flows for capital returns rather than for investment in new mines is a key factor leading to a shortage of the raw materials that the world needs to decarbonize,” analysts at Jefferies Group LLC said in a report this month.Even if producers switch gears and suddenly start pouring money into new projects, the long lead time for mines means that the supply outlook is pretty much locked in for the next decade.“The short-term situation is contributing to the stronger outlook longer term because it’s having an impact on supply development,” Richard Adkerson, CEO of Freeport-McMoRan, said in an interview. And in the meantime, “the world is becoming more electrified everywhere you look,” he said, which inevitably brings “a new era of demand.”Most Read from Bloomberg Businessweek©2022 Bloomberg L.P. Continue reading →

September 20, 2022  by SchiffGold  0   0This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail. The charts and tables below specifically analyze the physical stock/inventory data at the Comex to show the physical movement of metal into and out of Comex vaults.Registered = Warrant assigned and can be used for Comex delivery, Eligible = No warrant attached – owner has not made it available for delivery.Current TrendsGoldIt’s been four months of a relentless decrease in gold holdings at the Comex. This was highlighted last month and the momentum has continued into September. Since May, almost $9M ounces of gold have left Comex vaults.Figure: 1 Recent Monthly Stock ChangeOver the last 30 days, Registered has seen a fall of 1.47M ounces with Eligible losing 170k. As shown below, nearly every day shows a net loss in metal.Figure: 2 Recent Monthly Stock ChangeSilverSilver is slightly different than gold. The action has been focused primarily on Registered metal (metal available for delivery). Only one month (March) has seen an increase in Registered since December of last year. In fact, since March of last year, Registered has only seen a meaningful increase in inventory in two months.Figure: 3 Recent Monthly Stock ChangeThe bleed-out of Registered can be seen below with consistent movement out throughout the last 30 days. Nearly 11M ounces have left Registered during this time.Figure: 4 Recent Monthly Stock ChangeThe table below summarizes the movement activity over several time periods to better demonstrate the magnitude of the current move.GoldOver the last month, gold has seen Registered fall by 10.2%, or 1.4M ouncesCombined with the outflow in Eligible, total inventories dropped 5.7% or 1.6MIn the last week, the action has been Registered moving to EligibleInventory is down over the past year by 20%Eligible is down 11% and Registered down almost 30%!SilverSilver Registered is down by almost 20% in the last monthRegistered silver is down an incredible 56% in the last year and 69% over three yearsEligible is nearly flat over the month, with a fall of 1.2%Combined, inventory has dropped 4% in the last month, but the fall in Registered is clearly acceleratingAt the current pace, Registered silver could be fully depleted by January!Figure: 5 Stock Change SummaryThe next table shows the activity by bank/Holder. It details the numbers above to see the movement specific to vaults.GoldEvery vault has seen inventories fall over the last year with 5 vaults seeing supply fall by more than 30%Over the last month, 5 of 8 vaults lost gold with only meager gains seen in Delaware Depository and HSBCSilverSilver has seen massive outflows MoM with 3 vaults seeing almost 10% or more reduction. 2 other vaults saw 5%+ reductions.Over the last year, only Delaware and Malca have seen increases in silver, with 7 vaults seeing sizable reductions (+10%)Figure: 6 Stock Change DetailHistorical PerspectiveZooming out and looking at the inventory for gold and silver shows just how massive the current move has been. The decline has been swift and steep, with losses seen in both Eligible and Registered.Figure: 7 Historical Eligible and RegisteredSilver has seen a massive move down in Registered as a % of the total (black line). In September 2020, Registered made up 40% of total Comex inventories. The number has crashed to 13.8%, which is now the lowest level since at least Jan 2015.Figure: 8 Historical Eligible and RegisteredThe chart below focuses just on Registered to show the steepness of the current fall. In Feb 2021, there were 152M ounces of Registered. That number now sits at 44M, which is a net fall of 108M ounces. Considering the recent acceleration, total holdings could fall below 2016 levels within a few months.Figure: 9 Historical RegisteredComex is not the only vault seeing big moves out of silver. Below shows the LBMA holdings of silver. It should be noted that much of the holdings shown below are allocated to ETFs. Regardless, total inventories have fallen every single month since November. Holdings fell below 1B ounces in June and now sit just above 900M as of August.Figure: 10 LBMA Holdings of SilverAvailable supply for potential demandThese falls in inventory have had a major impact on the coverage of Comex against the paper contracts held. There are now 3.4 paper contracts for each ounce of Registered gold within the Comex vaults. The coverage would actually be far worse if the total open interest had not plummeted in recent weeks.Figure: 11 Open Interest/Stock RatioCoverage in silver is far weaker than gold with 15 paper contracts for each ounce of Registered silver. This is the worst coverage since June of 2018 when total open interest was almost 61% higher.Figure: 12 Open Interest/Stock RatioWrapping UpThe physical demand for gold and silver has been voracious. While the price is still being controlled by the paper market, it’s clear that something in the physical market could trigger a major shift. As supplies continue to dwindle, it’s only a matter of time before shorts will get stuck without being able to deliver. At the current pace, this is not something that will happen in a few years. It could be a few months!The price action in gold and silver does not suggest that supplies are starting to run thin, but the data is ringing the alarm bell for anyone who wants to listen. Physical is in demand and investors want it now! Prices will catch-up. Make sure you are positioned before they do.Data Source: https://www.cmegroup.com/Data Updated: Daily around 3PM EasternLast Updated: Sep 19, 2022Gold and Silver interactive charts and graphs can always be found on the Exploring Finance dashboard: https://exploringfinance.shinyapps.io/goldsilver/Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today! Continue reading →

(Bloomberg) — Economist Nouriel Roubini, who correctly predicted the 2008 financial crisis, sees a “long and ugly” recession in the US and globally occurring at the end of 2022 that could last all of 2023 and a sharp correction in the S&P 500.Most Read from Bloomberg“Even in a plain vanilla recession, the S&P 500 can fall by 30%,” said Roubini, chairman and chief executive officer of Roubini Macro Associates, in an interview Monday. In “a real hard landing,” which he expects, it could fall 40%.Roubini whose prescience on the housing bubble crash of 2007 to 2008 earned him the nickname Dr. Doom, said that those expecting a shallow US recession should be looking at the large debt ratios of corporations and governments. As rates rise and debt servicing costs increase, “many zombie institutions, zombie households, corporates, banks, shadow banks and zombie countries are going to die,” he said. “So we’ll see who’s swimming naked.”Roubini, who has warned through bull and bear markets that global debt levels will drag down stocks, said that achieving a 2% inflation rate without a hard landing is going to be “mission impossible” for the Federal Reserve. He expects a 75 basis points rate hike at the current meeting and 50 basis points in both November and December. That would lead the Fed funds rate by year’s end to be between 4% and 4.25%.However persistent inflation, especially in wages and the service sector, will mean the Fed will “probably have no choice” but to hike more, he said, with funds rates going toward 5%. On top of that, negative supply shocks coming from the pandemic, Russia-Ukraine conflict and China’s zero Covid tolerance policy will bring higher costs and lower economic growth. This will make the Fed’s current “growth recession” goal — a protracted period of meager growth and rising unemployment to stem inflation — difficult.Once the world is in recession, Roubini doesn’t expect fiscal stimulus remedies as governments with too much debt are “running out of fiscal bullets.” High inflation would also mean that “if you do fiscal stimulus, you’re overheating the aggregate demand.”As a result, Roubini sees a stagflation like in the 1970s and massive debt distress as in the global financial crisis.“It’s not going to be a short and shallow recession, it’s going to be severe, long and ugly,” he said.Roubini expects the US and global recession to last all of 2023, depending on how severe the supply shocks and financial distress will be. During the 2008 crisis, households and banks took the hardest hits. This time around, he said corporations, and shadow banks, such as hedge funds, private equity and credit funds, “are going to implode”In Roubini’s new book, “Megathreats,” he identifies 11 medium-term negative supply shocks that reduce potential growth by increasing the cost of production. Those include deglobalization and protectionism, relocating of manufacturing from China and Asia to Europe and the US, aging of population in advanced economies and emerging markets, migration restrictions, decoupling between the US and China, global climate change and recurring pandemics. “It’s only a matter of time until we’re going to get the next nasty pandemic,” he said.His advice for investors: “You have to be light on equities and have more cash.” Though cash is eroded by inflation, its nominal value stays at zero, “while equities and other assets can fall by 10%, 20%, 30%.” In fixed income, he recommends staying away from long duration bonds and adding inflation protection from short-term treasuries or inflation index bonds like TIPS.(Adds previous Roubini debt warnings in fourth paragraph)Most Read from Bloomberg Businessweek©2022 Bloomberg L.P. Continue reading →

September 15, 2022  by SchiffGold  0   0The CPI data for August came in hotter than expected, sparking the biggest market crash since the 2020 COVID lockdowns. The price of gold also dropped on the news in anticipation of the Federal Reserve taking interest rates higher. Peter Schiff talked about the inflation news on his podcast and said investors need to get gold now before the entry point rises a lot higher. Because at some point the markets are going to figure the Fed can’t bend this inflation curve.After the CPI data came out, stocks plunged. The Dow Jones fell by over 1,276 points. It was the seventh-biggest drop (based on points) in history. Other stock market indices charted similar declines. The NASDAQ fell 5.16%.As Peter noted, gold also fell, but not nearly as much as stocks. The yellow metal was off about 1.3%. But gold did manage to close above $1,700, although it traded below that level interday.The dollar index charted a huge swing, moving from 107.68 prior to the CPI data and then rallying to close at 109.9. Peter said it was one of the biggest moves in the dollar he’s seen.The markets were preparing for a softer CPI. Everybody was under the impression that inflation had peaked and that it was coming down, and that when we got validation that inflation was coming down by the August CPI, that would take a lot of pressure off the Fed — that it wouldn’t have to raise rates as much because the inflation problem was solved. That’s one of the reasons the dollar sold off. It’s one of the reasons gold and silver rallied. In fact, it’s one of the reasons the stock market had been rallying, because the Fed was going to be taken out of the game. Maybe not completely sidelined, but at least it was going to tone down its rhetoric and maybe not raise rates as much as people thought. But now that we got this hotter than expected number, people think the Fed is going to raise rates more than they thought.”Peter said the markets still don’t understand that even if the Fed hikes by 100 basis points at the September meeting, it will not bend the inflation curve.I don’t know why everybody continues to be surprised when the inflation numbers come out worse than expected. They assume that what the Fed is doing is going to work. It’s not going to work. The people who think it is don’t understand the nature of the problem.”[embedded content]The numbers indicate that Fed can’t win this inflation fight. Part of the solution is positive real interest rates. If you look at all of the Fed tightening cycles since 1973, the central bank has never stopped tightening before the Fed funds rate was higher than the CPI.As long as we have interest rates below the inflation rate, even if they’re higher, they’re still negative, and negative interest rates put upward pressure on inflation. You can’t fight inflation with negative interest rates. It’s like saying, ‘I’m going to fight this fire by pouring gasoline on it. It’s just that I’m only going to pour a little bit of gasoline, not as much gasoline as I was pouring on before.’”Clearly, the fire will keep getting bigger.But the markets don’t seem to get this. Otherwise, they wouldn’t be selling gold into rising inflation.After all, gold is an inflation hedge. And if investors expect more inflation, they’re going to hedge with gold. And if you expect inflation to continue, gold is going to discount that future inflation into the present, and it’s going to be reflected in the current price of gold.”The question is when will those expectations change?How many more months can the CPI come out hotter than expected and investors still believe that inflation is going to go away? How many more rate hikes do we need that are ineffective at reducing inflation before investors figure out that it’s not going to work? And of course, how many rate hikes will the Fed be able to get away with without crashing the stock market? Without crashing the real estate market? Without causing a financial crisis?”And if the Fed keeps pushing that envelope until it rips, will the Fed continue to hike rates? Or will the Fed pivot when it anticipates or acknowledges the next crisis?As long as it pivots at all, that means inflation is going to run out of control. And if it is, the dollar needs to go way down and gold needs to go way up.”Peter said he doesn’t personally think the Fed will get away with very many more rate hikes.He pointed out that gold didn’t fall all that much given the plunge in stocks. In fact, gold didn’t even close on the lows.Maybe that’s some indication that investors are beginning to question that narrative. They haven’t completely figured it out yet, but some of the selling may in fact have been exhausted.”Peter said at some point there will be divergence and gold will start rising when inflation is worse than expected. The dollar will fall. And the long end of the bond market will start getting beat up.If you’re waiting for a sign, some indication that everything is about to blow up, that’s what you should look for. You should look for a reaction in the bond market and the currency market and the precious metals market that is opposite of the reaction that we’ve been having.”Peter said you shouldn’t wait for that signal to position yourself.I think it’s possible that by the time we get that signal, it could be a much worse entry position than the one we have right now. Because the markets can start anticipating that signal before we actually get it. I know it’s going to happen eventually. But when it does happen, that’s when you’ll know the end has finally begun. But before it does, take advantage of other investors’ misunderstanding of what’s going on by increasing your exposure to both gold and silver, and gold and silver mining stocks.”Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today! Continue reading →