SD Bullion

The Worst Year Ever to be a Bond Investor?

Last week's substantial financial market selloffs continued as the fiat Federal Reserve raised its Federal Funds Target Rate again by 75 basis points. While we continue to read headlines about raising rates by central banks led by the fiat Federal Reserve, the bigger story constant here is the speed at which they are moving to raise interest rates.

In 2022, relative continued strengthening by the still world's dominant fiat currency has produced massive selloffs in most commodities and precious metals and unprecedented losses in the world's largest financial asset classes like stocks and bonds.

The fiat US dollar index had another massive jump this week on the rate rise, climbing above parity versus the fiat euro to close this week, nearing a 20-year high relatively in that fiat currency pairing.

Lebanese Citizens Have to Rob Their Own Banks

This week we witnessed a growing trend of Lebanese citizens robbing their own banks to retrieve fiat currency demand deposits they have already made.

While the official exchange rate for fiat Lebanese pounds to fiat US dollars is claimed to be just over 1500 to 1. But the freer black market truth is the fiat Lebanese pound's ongoing devaluation has blown out to now over 38,000 to one. 

Lebanon defaulted on its sovereign debt two years ago, then declared bankruptcy early this year in 2022. The middle eastern country has proposed a typical “solution” used by hyperinflating nations — to have Lebanese citizens pay for the failures of their government and the country's banking sector by holding customer deposits hostage & forcibly converting from fiat US dollars to highly inflating fiat lira.

Eastern Nations Now Own Over 1/4 of Government Gold Bullion Holdings

This week, citizens of the United Kingdom, those in once colonies of the former British empire, and people around the world are mourning the loss of Queen Elizabeth the 2nd. 

Passing away at age 95, her reign of 70 years and 214 days was the longest of any British monarch and the second-longest recorded ruling of any monarch of a sovereign country in world history.

It was common to see Queen Elizabeth's resemblance to many popular modern bullion gold, silver, and precious metals coins struck by the Royal Mint (Silver Britannias), Australia's Perth Mint (Silver Kangaroos), the Royal Canadian Mint (Silver Maple Leafs), and others.

The former British empire's dominant reserve currency status gave way to the current US dollar following World War 1 and especially after World War 2, respectively, as Queen Elizabeth II began her reign in 1952. 

Silver Bullion COMEX & London Piles Shrink at Unprecedented Pace

Recent silver spot price selloffs propel unprecedented silver bullion market demand. Especially on the retail side with retail buyers picking up thousands of ounces of silver bars and silver coins.

Late last week, fiat Federal Reserve Chairman Jerome Powell addressed his western central bank allies and the larger investing world at the annual Jackson Hole meeting. His speech of eight and half minutes can be boiled down to the following 30 seconds of hawkish inflation fighting tough talk.

Taken at their word, the Federal Reserve plans to raise its Federal Funds Effective Rate again soon ahead. Currently sitting at a paltry 2.33%, the fiat Federal Reserve note or fiat US dollar continues losing likely negative double-digit percentages in real purchasing power on an annualized price inflationary basis. 

Russia Wants Their Own Gold Spot Price - The Moscow World Standard

The eastern world continues moving against western world commodity price discovery market systems, as Russia plans a new gold price and silver price discovery alliance proposing its own international standard of precious metals exchange, dubbed the “Moscow World Standard” (MWS). 

The MWS would have Eurasian Economic Union partner nations such as Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan. It aims to add major gold and physical precious metals trading nations like India, China, Peru, Venezuela, and other countries in both South America and Africa where precious metals are mined.

Moscow has decades of western vs eastern precious metals price data, and can also easily deduce that for decades running the London Bullion Market Association or LBMA system has allowed precious metals values to be artificially kept low. Moscow understandably believes the LBMA runs an unfair practice of precious metals price discovery that negatively affects precious metal exporters.

Monthly Mortgage Payments Increase by 81% in Two Years

The fiat Federal Reserve note (i.e., fiat US dollar) continues illustrating relative strength versus other full fiat currencies. The last time the fiat US dollar was this relatively strong was nearly two decades ago, in the summer of 2002.

Meanwhile, quickly rising US mortgage rates have now put a full damper on home sales to the lowest levels in 22 years. And it is all for good reason. People are being priced out of US real estate.

Two years ago, the 30 year mortgage rate was 2.96% and today the 30 year mortgage rate is 5.60% and the median existing-home price is $404k.

With a 20% down payment, that’s an 81% increase in monthly payment (from $1,026 to $1,855).

If we are ever to get back towards 2011 levels on this chart, silver and gold values will need to outperform real estate for many years.

 

Two More Traders Found Gullty of Silver Market Rigging

Last week, two former JPMorgan precious metals traders were found guilty of precious metals market rigging spanning nearly a decade. Unfortunately this misleads the real price for physical gold bullion and physical silver bullion.

The former co-head of JPMorgan's precious metals trading desk and his top gold trader got convicted by a federal jury after a three-week trial.

US Department of Justice prosecutors presented precious metals market rigging evidence, including detailed trading records, chat logs, and testimony by their old co-workers.

Physical Silver Bullion Continues to Disappear

Silver spot price weakness, especially over this past month of July 2022, has only added to increasing physical silver off-take and demand pressures worldwide. 

Global silver mining supplies are just not keeping up with ongoing demand, so silver is being withdrawn and sold at premiums from places like London and silver COMEX warehouses.

The massive persistent western silver bullion demand and increased silver bullion demand out of India now put enormous pressure on silver warehouses globally.

Billionaires Becoming BULLIONaires

This opening footage is from a room in the US Mint's New York West Point facility.

This camera pan shows off 20 wooden pallets with 50 American Silver Eagle Mint Cases strapped, stacked, and plastic wrapped for distribution warehouse shipments by truck.

Each green case is heavy, like 40 pounds each. Nicknamed monster boxes in our industry contain 500 ounces of silver bullion coins.

So we just garnered about 500,000 ounces of American Silver Eagle coins.

Could Your Purchasing Power Decrease by 50% In 4 Years?

Underreported consumer price inflation came at a new over 40-year high this past week as the US government's Bureau of Labor and Statistics admitted to a 9.1% loss in the fiat Federal Reserve notes or fiat US dollars year purchasing power.

Of course, the US government's statistics department has the motive to underreport price inflation constantly and seemingly forever more since the Federal Government makes payments to Social Security, pensions, and many other unfunded liabilities owed accordingly growing to the official inflation rate.

There are only a few developed economies in the world with worse price inflation than the United States is currently suffering.

Hide the Pain Harold inflation meme got an update. Unfortunately, his tiny raise at work won't come close to covering his loss in living standard. At the very least, he got tons of likes on Twitter.

Hopefully, Harold does not investigate the inflationary rip-off further, for if and when he finds out that real price inflation is more likely in the middle teens at the moment, it may be difficult to distract his ongoing pain with social media memes mocking the insanity of our fiat financialized world.

One thing you can take away from this week's SD Bullion Market Update is a simple mathematical formula you can use to understand how badly inflation ruins people's purchasing power. The RULE of 72 is simple to use. Simply divide 72 by the inflation rate to determine how quickly your power halves or loses 50% in real terms.

For instance, if we continue this 9.1% CPI official inflation rate, we'll halve our collective fiat US dollar purchasing power by half within eight years. Before this time of the year in 2030, whatever your income is, it buys half what it does today in summer 2022.