Worldwide Economic And Political Woes
Could Soon Boost Gold And Silver Prices!

With the regular American media right now focused on what is happening in Israel and the Gaza Strip, the U.S. elections and the economy, Patrick Heller, editor of Liberty’s Outlook, said it would be easy for people to not even notice the developing global economic crisis.

All four of the US stock indices that Heller tracks are down from 2.3% to 8.8% over the past nine weeks through October 10th. Of the seven foreign indices he follows, six of them are down 2.0% to 5.7% over the same period. The seventh, the London FT 100 was up 1.3% as measured in British pounds, but the value of the pound fell 3.6% versus the US dollar during that nine week period. Thus, as measured in US dollars, even that index was down, notes Heller.

While some politicians are trying to pretend that the U.S. economy is recovering or strong, there is a lot of data coming out showing otherwise, some of which he highlighted in his newsletter. Here are Patrick Heller’s observations:

“To measure the impact of the pandemic lockdowns, the Census Bureau began taking the Household Pulse Survey in 2020. The August 7, 2023, survey results are dismaying:

• In January 2021, the survey reported that 80.53 million Americans found it “somewhat” or “very” difficult to pay their household expenses. In the August 2023 survey, that number had grown to 86.92 million people.

• The August 2023 survey found that in the prior month, 85.46 million Americans had turned to credit cards, personal loans, and other forms of debt to meet spending needs within the past seven days. In the August 2022 survey for July 2022, that number of people was just 74.89 million.

• Credit card delinquency rates – which measures the proportion of credit customers who have fallen behind on their bills – have increased for seven consecutive quarters and are now higher than before the pandemic lockdowns. Auto loan delinquencies in the second quarter of 2023 also were higher than before the pandemic.

Other US data is equally dismaying.

• In early September, the US Bureau of Labor Statistics (BLS) released its annual Consumer Expenditures Report for 2022. From the end of 2020 to the end of 2022, the average income per consumer unit rose 11.4 percent. While that might sound good in some circumstances, it was dwarfed by the 19.0 percent rise in consumer unit expenditures. Income less expenditures fell by $1,984 per consumer unit.

• Last month’s BLS monthly reports on the Consumer Price Index showed a sharp increase in consumer prices.

• Similarly, the BLS monthly Producer Price Index for September showed that final demand prices rose 0.5% from August. That continues the recent pattern of a 0.6% rise from in July from June and a 0.7% increase in August over July. The Producer Price Index is an indicator of the coming changes in consumer prices.

• Last month’s BLS monthly Import and Export Prices Indexes also showed comparable increases, which portend continuing accelerated consumer prices going forward.

• In mid-September, the US Census Bureau reported that last year real income in America declined, and the poverty rate increased. As measured in 2022 dollars, median household income in 2022 was 2.3 percent lower than in 2021. As this was happening, the cost of living rose at the third highest rate over the past 42 years. Further, the official US government poverty rate was virtually unchanged from the prior year. However, the Census Bureau admitted that this figure is not correct because it only considers money income without any consideration of rising prices or higher taxes. The news release went on to disclose that the Supplemental Poverty Measure (SPM), established 12 years ago to more accurately reflect poverty (it starts with pre-tax income, adds stimulus payments, tax credits, and other poverty transfers, then subtracts income taxes paid) jumped from 7.8% of the population in 2020 to 12.4% in 2022. That means 15 million more people are impoverished now than two years earlier.

• The fiscal year ended September 30, 2023 federal budget deficit soared from the year before, partly from higher interest rates being paid to borrow ever more debt, now over $33.5 trillion (it was $28 trillion in early 2021). The federal government’s interest costs for the just concluded fiscal year are approaching $1 trillion, up 50 percent from the previous fiscal year.

• There is a continuing disconnect between the headline reports of US job gains using employer data versus the much lower numbers from the survey of the number of people actually working. In early October, the headline statement was +336,000 jobs in September compared to August, but the household survey only showed gains of +86,000.

• What the regular media did not report was that in July, August, and September there was an increase of 1,200,000 part-time American jobs along with a decrease of 700,000 full-time jobs.

• US consumer spending struggles to increase as much as the rise in consumer prices, which means that the number of units being purchased is not growing.

• The National Association of Realtors recently reported that homes purchased in August on a 30-year mortgage had an average mortgage payment of $2,170, up 18% from a year earlier. As a result, the pending home sales index slumped 18.7% from a year earlier. This could lead to more layoffs in the construction, mortgage, and banking industries.

• From the fourth quarter 2014 to the fourth quarter 2022, the quantity of US Treasury debt held by foreign central banks fell $444.5 billion. Over the same time frame, foreign central banks added $816.5 billion of physical gold.

• The Federal Deposit Insurance Corporation (FDIC) reported that at June 30, 2023 US banks had unrecognized (meaning not included on their financial statements) losses of almost $310 billion on hold-to-maturity bonds. As interest rates rise, that puts even more pressure on banks to liquidate these bonds and book the losses, as happened to Silicon Valley Bank. The FDIC report is a clear sign that more US bank failures are looming.

• US GDP is made up of four components – consumer spending, business investment, the net change in exports versus imports, and government spending. Over the past few years the first three have been stagnant or negative. The only reason an overall increase has been reported was because of soaring government spending.

• Recently, the interest rate yield on 10-year US Treasury debt rose to a 16-year high, since August 8, 2007, of 4.81%. In early October, the interest rate yield on 3-month US Treasury debt rose to its highest level, 5.63%, in more than 22 years ¬– since January 3, 2001!

Data like this helps explain why the U.S. government’s increase in its expansion of the money supply (the current M2 money supply in August was higher than it was in April, despite the Fed pretending that it is reducing it every month), spending, and budget deficits are accelerating the decline in the purchasing power of the U.S. dollar.

This happened during President Carter’s administration, when gold and silver prices reached $800 and $50, respectively, in January 1980. It again happened during and after the Great Recession, where the Levy Economics Institute 2011 working paper found that the federal government had extended $29.6 trillion in subsidies, loans, and bailouts, resulting in silver soaring to $50 at the end of April 2011 and gold reaching over $1,900 five months later.

The World Is Also Suffering

China’s recession is so severe that its exports are down sharply. Lower demand for products has resulted in all ten industrial metals that I track, including platinum and palladium, to be down in price year to date, from -1.4% for tin to -40.0% for nickel.

The downturn in the highly leveraged speculative real estate market in China is resulting in massive bankruptcies and government bailouts.

To discourage its citizens from dumping their yuan currency to purchase gold and silver, the Chinese government limited imports of the two metals. This resulted in the Chinese spot prices rising as much as $120 higher for gold and $2.00 for silver compared to London spot prices. Not only did gold’s price as measured in yuan recently reach an all-time high, it also reached record highs as measured in the Saudi Arabia riyal.

Europe is also in a recession where in late September the German 10-year Bund Government Bond interest rate yield rose to 2.832%, its highest level since July 2011.

Recently, the International Monetary Fund released its latest forecast for expected global consumer price increases through the end of 2024. Three months earlier, it had projected an increase of 5.2%. The IMF raised it to 5.8%.

What Is Really Happening?

There simply isn’t enough space her to list all the negative data that the regular media is failing to report to you. Unfortunately, the combined impact of this information will almost certainly result in higher future inflation of the world’s currencies. In other words, the purchasing power of paper currencies will fall even faster in the future. The gold and silver buying rush already underway in China will become a global phenomenon.

The end result is almost certain to be a repeat of what happened in 1980 and 2011 – far higher gold and silver prices.

Editor’s Note: Patrick A. Heller is editor of the award-winning Liberty’s Outlook, newsletter, published by Liberty Coin Service, a buyer and seller of gold, silver, platinum and palladium bullion and quality rare coins since 1971. For more information visit www.libertycoinservice.com.