KITCO NEWS/Jim Wyckoff

Gold, silver prices down as risk appetite up late this week

April 17, 2020

Gold and silver futures prices are trading lower in early U.S. trading Friday, on some profit taking from recent gains and on some normal chart consolidation in price uptrends. Also, traders and investor risk appetite that is more robust late this week is working against the safe-haven metals. However, as has been the case lately, don’t be surprised to see traders step in to ‘buy the dip’ in the metals, especially gold.

Global stock markets were mixed to mostly firmer in overnight trading. U.S. stock indexes are pointed toward sharply higher openings and five-week highs when the New York day session begins. Traders and investors are more upbeat to end the trading week. President Trump Thursday afternoon laid out plans to reopen the U.S. economy in stages that could begin as early as today, as there are early signs the Covid-19 pandemic in North America and Europe has hit a peak for new infections. Also, there is new hope that a drug being tested by Gilead can greatly reduce the severity of the respiratory illness, based on early clinical trials. As one market analyst put it, the marketplace is presently viewing the Covid-19 situation as ‘the glass being half-full.’”

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CNBC/Jeff Cox

New York Fed President Williams says the economy won’t be back to ‘full strength’ by end of 2020

April 17, 2020

new york fed“New York Federal Reserve President said he sees some parts of the economy coming back online but doubts growth will return to normal this year. Construction should be among the first to return, he said. That echoed comments from the Philadelphia Fed on Thursday. ‘I expect that to be able to bounce back a little bit more quickly than maybe some of the other sectors,’ Williams said. ‘But I don’t see the economy getting back to full strength by the end of the year.’

The central bank official spoke ahead of what looked like a big day on Wall Street. Stock futures pointed to a sharply higher open on news of progress in coronavirus treatment from Gilead Sciences and as President Trump set out a three-stage plan to get the economy moving again. While Williams expressed some optimism about the longer-term growth prospects, he sees ‘some tough days ahead’ and ‘horrible’ second-quarter economic data.”

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MARKET WATCH/Chris Matthews

Slow Chinese economy casts doubt on speed of U.S. recovery, analysts say

April 17, 2020

chinese flag with chart“Investors have taken some solace in signs that China is beginning to dig itself out of the economic hole created by the coronavirus pandemic as restrictions aimed at fighting the disease have been lifted in recent weeks.  Analysts warn though that one should not extrapolate too much from the Chinese experience when predicting how the U.S. economy will rebound, given the varying government responses to the COVID-19 outbreak and significant differences between the U.S. and Chinese economies.

‘China has had a less terrible experience than we’ve had,’ said Carl Weinberg, chief international economist at High Frequency Economics in an interview. ‘The very drastic lockdown in the city of Wuhan and [the surrounding provence of] Hubei appears to have worked.’  Late Thursday China’s National Bureau of Statistics reported that economic growth in the first quarter shrank by 6.8% year-over-year, the sharpest contraction on record, while retail sales for the month of March fell by 15.8% and industrial production fell 1.1% … Meanwhile, the part of the Chinese economy that appears to be recovering more slowly is consumer spending, as economists polled by the Wall Street journal were expecting an 8% contraction in consumption, versus the nearly 16% contraction that occurred. If the American consumer mounts a similarly disappointing recovery, it could spell bad news for the U.S. economy, which is much more dependent on consumption than the Chinese.”

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THE WALL STREET JOURNAL/John Lyons and Bojan Pancevski

U.S. Coronavirus Infections Top 671,000 as China Revises Death Toll Higher

April 17, 2020

doctor with surgical mask“China revised its coronavirus death toll upward and recorded its steepest quarterly economic slide on record, as the U.S. braced for prolonged pain from extended lockdowns in some hard-hit states and the White House charted a gradual path to reopening. The confirmed U.S. death toll from the Covid-19 disease caused by the virus continued to rise a day after it nearly doubled to 4,591 over 24 hours Thursday, with New York, New Jersey and Michigan among the hardest-hit states. After appearing to stabilize, new confirmed cases in the U.S. have risen for three consecutive days, with the total now over 671,000, data showed.

With more than 2.1 million cases reported world-wide, the global death toll exceeded 146,000 on Friday, according to Johns Hopkins. Of those, more than 33,000 were in the U.S. China raised its official coronavirus death toll by almost 40% to 4,632 after officials in Wuhan, where the virus first emerged, declared the discovery of 1,290 previously uncounted cases. Wuhan health officials told China’s official Xinhua News Agency that some patients who died at home weren’t recorded in the system, while overwhelmed hospitals had mishandled the recording of other deaths. Epidemiologists, U.S. intelligence sources and some local residents have said in recent weeks they believe Chinese authorities substantially undercounted coronavirus infections and deaths. China’s government has defended the accuracy of its data.”

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FORBES/Christian Weller

The Recession Hits an Already Hollowed-Out Middle Class

April 17, 2020

recession chart“A massive recession is coming. Already financially weakened American families are desperate. In many regards, America’s middle class has not yet fully recovered from the last big recession, more than a decade ago. The government’s response to the current crisis thus has to do a heavy lift or fail to help millions of struggling families because of massive and growing wealth inequality in the past. The early signs of the recession point to a massive onslaught on jobs and economic growth.”

“Massive wealth inequality among American families is another reason why the government’s response needs to be big. Families build savings during good times to help pay their bills in an emergency and to allow them to plan for their future. Yet in many parts of the economy wealth has not recovered from the massive job losses, slow wage growth, falling house prices and rising health care and education costs from the Great Recession of 2007 to 2009. Broken down by income quintiles, average inflation-adjusted wealth was still lower at the end of 2019 than it was in December 2007, just before the Great Recession started, for the bottom 60% of the income distribution. In fact, for the bottom 40% of the income distribution, average wealth at the end of 2019 was either at or below the levels recorded in March 2001, before the recession before the Great Recession got underway. The current recession hits as many families are woefully unprepared.”

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MARKET WATCH/Paul Brandus

Thanks to COVID-19, Social Security’s day of reckoning may be closer than we thought

April 17, 2020

social security cards“Social Security is now dipping into its reserves—the so-called ‘trust fund’ to pay benefits. That’s because the system isn’t taking in enough cash from payroll taxes, which is how the Social Security program, the single biggest source of federal spending, is financed. Prior to the economic downturn that we’re now experiencing, the trust fund was projected to run out of money by 2035. This has gotten worse. Why? Because some 22 million Americans lost their jobs in the last four weeks. This means there are a lot fewer—millions fewer—people paying into the system.

And on top of a lot less money coming in, a lot more will soon be going out. People who are now out of work and eligible to draw benefits may do so, out of sheer economic need. This one-two punch could mean the depletion of the trust fund sooner than 2035. Perhaps two years earlier says one of the country’s leading experts on Social Security, Alicia H. Munnell, the director of the Center for Retirement Research at Boston College. ‘We are going to lose a lot of payroll tax revenue this year,’ Munnell says, while ‘expenditures keep at their regular pace, if not at an immediately higher pace, because older people who can’t find a job might turn to claiming early.’  This means the gap between what Social Security takes in and what it pays out … will widen further. ‘The trust fund has been filling that gap,’ Munnell adds, ‘but as that gap gets bigger, the trust fund will be used up faster.’”

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