from Birch Gold Group:
The Brookings Institute calls gold’s rise “weird” – but it isn’t. Nations are dumping dollars, debt demand is down and silver faces historic scarcity. The message is clear: Government promises have fallen out of favor, and here’s what’s replacing them…
Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:
- Brookings Institution says precious metals markets are acting up – but are they really?
- Meanwhile, misreporting on silver goes from bad to worse
- China’s gold lies are going mainstream (but the full picture still isn’t here)
TRUTH LIVES on at https://sgtreport.tv/
Precious metals markets aren’t puzzling to well-informed investors
Brookings Institution’s Robin Brooks is puzzled. Ever since Federal Reserve Chair Jerome Powell’s Jackson Hole speech, the one where he vaguely hinted at rate cuts, Brooks says financial markets have been “super weird.”
Here’s what’s supposed to happen: Every asset that’s boosted by debt, from corporations to governments, should go up. Every intrinsically-valuable asset (commodities) should go up. Essentially, all risk-on assets from Brent crude to bitcoin are supposed to go up.
Instead, Brooks notes:
“The only thing that’s moved is gold, with a massive price rise of almost 10 percent.”
In order to understand why Brooks is concerned, you have to understand why lower interest rates are good for procyclical assets.
When the Fed lowers interest rates, essentially that is expected to lower the cost of borrowing throughout the economy. (The Fed doesn’t control this directly – really, all the Fed does is tell banks what APY they’re going to pay on reserve cash. When that number is low, reserve cash goes elsewhere.)
So lower interest rates means more circulating cash, less saving and more lending. As you probably remember from the Great Financial Crisis, more lending leads to higher asset prices.
Brooks is worried because the feedback loop between capital markets and the Federal Reserve seems to be breaking down.
He’s right to be concerned! I’ve been pounding my keyboard about this for months now. Two things have changed:
- Thanks to dollar weaponization, the world no longer considers the dollar generally, or U.S. government debt specifically, a “safe haven”
- They’re pivoting to a real safe haven asset instead
I’ve been telling you about record-shattering central bank gold buying since 2022. Global demand for gold, and lack of demand for our federal government’s debt, has hit a tipping point:
Consider China. Officially, its central bank reports modest monthly purchases of one to ten tons. But according to World Gold Council strategist Joe Cavatoni, actual buying may be as much as ten times higher. Even at the low end, that puts China on track for an extra, unofficial 100-1,000 tons in its gold reserve every year. Whether you take the conservative or aggressive estimate, the signal is the same: nations are steadily moving reserves away from the dollar and into gold.
The U.S. is struggling with weak demand for government debt. It’s not just the U.S. either – other G7 nations are facing difficulties in managing their debt burdens. Both France and the UK have experienced debt crises this year. We’ve talked about President Trump’s ongoing campaign to bully the Fed into lowering interest rates, too – bad news for the dollar. Which is bad news for everyone who owns dollars, saves or spends dollars, especially those of us who are paid in dollars. (Yes, me too.)
