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Why Gold Prices Are At Record Highs

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From central banks to Costco shoppers, everyone is purchasing gold these days. Spot gold touched $2,364 per ounce on Tuesday, following seven consecutive sessions of record highs and trading at $2,336 per ounce on Monday. Year on year, gold is up 16.5%.

Investors who expect the Federal Reserve to lower its benchmark interest rate are the primary drivers of price increases, but other factors, such as central banks buying gold, headed by China, to reduce reliance on US currency, are also contributing.

gold

Why Gold Prices Are At Record Highs

Central banks view gold as a long-term store of value and a haven during periods of economic and international crisis.

Gold is regarded as a reliable investment. When interest rates fall, gold prices often climb, as bullion becomes more tempting than income-paying assets such as bonds. Investors also view gold as a hedge against inflation, anticipating that it would preserve its value as prices rise.

According to Reuters, the People’s Bank of China purchased gold for the 17th consecutive month in March, adding 160,000 ounces to its stockpile of 72.74 million troy ounces.

According to a UBS research note dated April 9, central banks may wish to “diversify away” from the US currency and acquire it in the face of geopolitical instability. Demand drives up prices as China expands its reserves, which traditional investors have already increased.

According to a Capital Economics research report published on April 9, Chinese investors are looking to gold as an alternative asset due to recent downturns in property valuations and equity prices.

Other central banks, including India and Turkey, are expanding their reserves. According to UBS, India’s GDP growth is fueling these acquisitions.

gold

A sign of the times?

According to Ulf Lindahl, CEO of Currency Research Associates, central banks’ appetite for gold indicates a declining reliance on the dollar.

Lindahl said in an email that dollars are becoming increasingly undesirable to central banks seeking to reduce their economic dependency on the United States.

According to a March JP Morgan research note, nations not allies of the United States may accumulate gold to “mix away from dollars” and lessen vulnerability to sanctions.

According to the note, central bank purchases have fuelled the rise in gold prices since 2022. According to JP Morgan, gold may be entering a strong era, as central bank purchases of gold in 2022 were more than double the average annual buy over the previous decade.

The price increase coincides with US Treasury Secretary Janet Yellen’s visit to China to address financial stability in US-China relations and what Yellen refers to as Chinese electric vehicle overproduction.

Mark Zandi, chief economist at Moody’s, believes that rising oil costs threaten the US economy.

According to the UBS research report, higher oil costs are anticipated to raise inflationary fears, causing gold prices to rise.

The typical view of gold
The spike in gold prices indicates that investors expect the Fed to drop interest rates later this year, but they may be concerned about the prospects of containing inflation without causing the US economy to enter a recession, sometimes known as a soft landing.

According to an April 9 research note from UBS, the prospect of Fed rate cuts remains the primary driver of optimistic sentiment toward gold.

Fed Chair Jerome Powell said in remarks on April 3 that inflation remains on a “sometimes bumpy path” toward the Fed’s 2% target and that rate cuts to rebalance the economy are expected to begin later this year.

According to CME Group data, 51% of investors currently predict a quarter-point decrease in June. However, employment growth in March exceeded projections, casting doubt on the need for numerous rate reductions in an economy that remains strong.

The Personal Consumption Expenditures price index, the Fed’s favored inflation gauge, increased 2.5% in the year ended in February. According to Department of Commerce figures issued this month, this represents a little uptick from the 2.4% increase in January.

The core PCE price index, which excludes the more volatile food and energy sectors, increased 0.3% monthly. Fed officials consider the index a key indicator of underlying inflation, and it fell from 0.4% in January when it increased at the strongest rate in a year.

gold

So, why is gold soaring right now?

Some investors are buying into the frenzy around gold bullion as prices increase, pushing them further. On Reddit, proud buyers frequently create threads touting their collections.

Costco started selling bars online in August and silver coins in January. Wells Fargo estimates that the corporation currently sells up to $200 million in gold and silver per month. Chief Financial Officer Richard Galanti told analysts in December that the company had sold over $100 million in gold bars in the previous quarter.

The investment note, released on April 9, stated, “The accelerating frequency of Reddit posts, quick online sell-outs of product, and [the company’s] robust monthly eComm sales suggests a sharp uptick in momentum since the launch.”

Lindahl stated that “trend followers” and others capitalize on price increases as the long-term trend indicates much higher costs.

It’s also worth mentioning that gold has historically been a haven during political turmoil. Voters in almost 60 countries, including the US presidential election, will go to the polls this year. The increase in geopolitical and economic volatility highlights the value of precious metals.

SOURCE – (CNN)

Kiara Grace is a staff writer at VORNews, a reputable online publication. Her writing focuses on technology trends, particularly in the realm of consumer electronics and software. With a keen eye for detail and a knack for breaking down complex topics, Kiara delivers insightful analyses that resonate with tech enthusiasts and casual readers alike. Her articles strike a balance between in-depth coverage and accessibility, making them a go-to resource for anyone seeking to stay informed about the latest innovations shaping our digital world.

Finance

Trudeau’s Policies Caused Surging Food Prices in Canada “Not Corporate Greed”

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Trudeau's Policies Caused Surging Food Prices in Canada
Trudeau bears primary responsibility for this tremendous inflation: Fiel Image

This week, new government data revealed that food costs in Canada are still rising as a result of Prime Minister Trudeau’s carbon tax. On April 1, 2024, Trudeau increased the carbon price by another 23 percent.

Trudeau’s carbon tax has forced Canadians to choose between heating their homes and putting food on the table; an average family of four will spend $700 more on groceries in 2024 than last year.

Though year-over-year consumer price inflation fell to 3.8% in September, food prices rose 5.8%, owing to increases in bakery items (up 8%), fresh vegetables (7.6%), pasta products (10.8%), and chicken (6.5%).

Canadians have long been dissatisfied with food prices. Even before 2023, figures showed that approximately 7 million Canadians, including 1.8 million children, lived in households trying to put food on the table. As inflation continued to drive food costs higher in 2023, customer discontent grew.

Last month, Trudeau threatened grocery chains with extra taxes if they did not find a way to reduce food prices.

“Large grocery chains are experiencing historic profits. “Those profits should not be made at the expense of people who are struggling to feed their families,” Trudeau stated.

By focusing on grocers and “record profits,” Trudeau is echoing the rhetoric of some US politicians who claim that inflation is fuelled by “corporate greed.”

The notion that firms suddenly became greedy in the aftermath of the epidemic did not pass the economic smell test, and it was recently refuted in a Federal Reserve report. “Corporate profit margins were not abnormally high in the aftermath of the COVID-19 pandemic,” according to Jon Miltimore from Fee.Org.

Trudeau threatens more tax

However, politicians, particularly Trudeau, who less than a year ago attacked the concept of imposing a windfall tax on grocery stores to reduce food costs, have repeatedly claimed that greedy corporations are the main source of inflation.

However, Trudeau bears primary responsibility for this tremendous inflation.

Pierre Poilievre, the leader of Canada’s Conservative Party, hit the nail on the head when he stated that the Canadian government’s policies, as well as people who lead it, are responsible for inflation.

“[Justin Trudeau] prints $600 billion, grows our money supply by 32% in three years,” stated Poilievre. “That means the money is increasing eight times faster than the GDP. No wonder we’ve seen the worst inflation in four decades.”

Trudeau flooded the economy with printed money, devaluing the Canadian dollar.

Economics 101 explains that expanding the money supply faster than an economy can produce new products and services causes price inflation, which is exactly what has occurred in Canada.

Inflation is the increase in the supply of money and credit. Its main effect is rising costs,” Poilievre explains. “Therefore inflation — if we misuse the term to mean the rising prices themselves — is caused solely by printing more money.”

Trudeau’s nasty deception

Trudeau, of course, cannot say that their own policies and money printing are to blame for rising food costs. So they give speeches condemning grocery stores and food manufacturers for the inflation they generated and threatening them with new taxes.

It’s questionable whether Canadians will see through Trudeau’s nasty deception. What is evident is that Canadian merchants are not responsible for Canada’s increasing food prices. Justin Trudeau and the Bank of Canada are.

Meanwhile, Justin Trudeau and the Liberals continue to oppose the common-sense Conservative measure, C-234, which would save Canadian farmers billions of dollars in carbon taxes and bring relief to families at the grocery store.

Trudeau’s carbon price has caused Canadians to choose between heating their homes and feeding their families. However, it is evident that the carbon tax has done virtually nothing to combat climate change.

According to the Climate Change Performance Index, Canada now ranks 62 out of 67 countries, a four-place dip from last year. That is because the carbon tax is a tax strategy rather than an environmental one.

It is evident that Trudeau must reverse this ineffective tax increase on Canadians. Only common sense Conservatives would reduce prices by eliminating the tax on everything for everyone.

By Geoff Thomas

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Finance

Freeland Dodges Media After Omitting Capital Gains Tax Adjustment from 2024 Budget

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Freeland Dodges Media After Omitting Capital Gains Tax
Finance Minister Chrystia Freeland Refuses Questions: Getty Images

The Liberal government’s resolution to introduce Budget 2024 in the House earlier today did not include Chrystia Freeland’s proposed capital gains tax adjustments.

These measures, which include raising the capital gains inclusion rate from half to two-thirds, increasing the Lifetime Capital Gains Exemption, and creating a new incentive for entrepreneurs, have sparked strong opposition from the country’s technology elite.

During a news conference today, Finance Minister Chrystia Freeland reiterated the federal government’s support for these policies but declined to answer journalists’ inquiries about why they were not included in today’s motion. It now looks that Freeland intends to seek approval from Parliament through separate legislation.

“We are very committed to the capital gains measures that we put forward in the budget,” said Freeland, who added that “further details and implementing legislation will be forthcoming,” but did not provide a particular date or explain why they were absent from today’s motion.

When asked if she had removed these capital gains tax provisions from this bill to compel the Conservatives to vote on this specific issue, Freeland replied, “No,” and grinned.

The motion contains several of the other measures outlined in Budget 2024. The federal government restated its plans for the new capital gains measures to take effect on June 25, but has yet to provide draft legislation or a detailed technical briefing on these changes.

Capital Gains Tax a Political Football

Ben Bergen, president of the Council of Canadian Innovators, told BetaKit that it is unclear whether implementing capital gains changes through separate legislation is a “political football,” or if it simply indicates that the government has “not done its homework” on what the capital gains changes will mean for the economy.

“[This government] really struggles at some of the most basic elements of execution, and whether or not they’re able to deliver it on the 25th [is a] question mark,” Bergen told CNN. “But given what we’ve seen so far from this government over the last eight years, don’t hold your breath.”

“One simple reason for not including the capital gains tax changes in the budget implementation bill is that the government has not yet written them,” CD Howe Institute CEO William Robson told BetaKit.

“The budget provided only additional details on the rules before the higher rates go into effect on June 25th. “We may not have clarity even then,” Robson warned. “The government might believe this is smart politics. “It’s bad tax policy.”

BetaKit has contacted the Ministry of Finance for comment on why these changes were excluded from today’s motion, when it intends to share the full details of these changes and introduce legislation to support them, and whether such legislation is expected to be implemented by June 25, when the changes are scheduled to take effect.

Canadian tech executives outraged

These capital gains tax adjustments are intended to fund billions of dollars in new expenditure on housing and other priorities while also increasing tax equity between middle-class and wealthy Canadians. Freeland referred to them as the “fiscal foundation” for the government’s other investments.

“Our view is it is absolutely fair to ask those in our country who are at the very top to contribute a little bit more, and that is why we put forward a plan—which we are absolutely committed to—to increasing the capital gains inclusion rate,” Freeland said in a statement.

However, many Canadian tech executives are outraged by them: over 2,000 have signed an open letter urging the federal government to reconsider, claiming that they will hinder tech entrepreneurship and investment while exacerbating Canada’s already-existing productivity difficulties.

In a recent op-ed for The Globe and Mail, Robson stated that the next two months will likely be a “scramble” as the government attempts to issue the rules before June 25. Robson said that the government should “back up the budget’s capital gains tax proposals with rules or abandon them.”

Robson also remarked that the government may not be concerned about completing its deadline. “The June implementation of a higher inclusion rate that is retroactive—affecting past gains, not just those that accrue in the future—matters more to its revenue plans than the permanent changes,” Robson stated in an email.

Bergen noted that putting the capital gains measures to a vote suggests the government is attempting to “line up political parties” by positioning the Conservatives to vote against the reforms. On the other hand, he speculated that given the extensive—but not universal—backlash from Canadian tech executives and others, the government may be aiming to “remove the problem child” from the budget.

Bergen stated that the impact of these measures on businesses, employees, and investors will be highly depending on how the new laws are implemented. “The fact that we have so much ambiguity and chaos in this process is again just another indication of where this government is,” he said.

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Canada’s Household Debt Nears $3 Trillion Under Trudeau

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Household Debt Nears $3 Trillion Under Trudeau

With the cost of living consistently on the rise, more Canadians are continually turning to credit. Canadian’s owe more debt relative to their income than they did before Justin Trudeau and his liberals came to power in 2015.

Many Canadians are on the verge of going bankrupt due to increased debt carrying costs, living expenses, and concerns about the possibility of further interest rate and price increases.

Higher interest rates may have deterred Canadians from borrowing, but they remain optimistic. I’m hoping that interest rates will be reduced and the debt they’re collecting will become more affordable.

According to Bank of Canada data, household credit increased in February and has accelerated slightly since then. This raises some concerns for the country, which is already experiencing slowing economic growth as a result of its enormous debt levels.

Canadian households have recently reduced their borrowing, yet they have nonetheless accrued a significant amount of debt. Household debt increased by 0.3% (+$10.1 billion) to $2.94 trillion in February.

This boosted yearly growth to 3.4% (+$96.1 billion), marking the fourth consecutive month of acceleration.

household debt canada

Canadians Under Mountains of Household Debt

The roughly $3 trillion in debt sounds monstrous, and it is. Between March 2020 and the most recent figures, consumers added $541 billion to their debt load. After just under four years, accumulation was 50% faster than in the years prior rate reduction.

According to the most recent data, Canada’s household debt-to-GDP ratio was around 132% in February. Statistics Canada announced Wednesday that Canada has the highest household debt-to-disposable income ratio of any G7 countries.

According to Canada’s 2023 Financial Stress Index, money is the top stressor for Canadians, with 40% citing it as their primary source of stress, surpassing personal health, relationships, and job for the sixth year in a row.

And financial problems are affecting people’s quality of life and sleep.

Leger’s poll of more than 2,000 Canadians discovered that 48% of adults had lost sleep and 36% have experienced mental health issues as a result of financial stress. Nearly half of poll respondents (48%) reported having less disposable income than a year ago.

According to writer and political commentator David Moscrop, Canada’s housing problem is unprecedented, and half the country lives paycheck to paycheck.

In a classic example of disconnect, some Trudeau Liberals believe the party’s biggest problem is that people don’t realize how terrific a job they’re doing.

According to Moscrop, half of the country is living paycheck to paycheck, suffering from crippling debt, and dealing with a housing and homelessness crisis, while working families are increasingly reliant on food banks to get by.

Household debt Canada

Inflation and Interest Rates Rising

More than half of Canadians feel their personal finances are worse now than they were in 2015, when Prime Minister Justin Trudeau campaigned on a promise to support the middle class and those aspiring to it.

A jump in inflation, and the interest-rate hikes intended to combat it, have pinched deeply indebted Canadians, who have also stated that the high cost of living is the most important factor influencing how they intend to vote.

According to a Nanos Research study for Bloomberg News, 53% of people say their personal finances are worse now than they were eight years ago, while 24% say they are better off and 21% say nothing has changed.

Those aged 35 to 54 were the most likely to be experiencing financial difficulties, with 61% reporting a worsening situation.

The poll explains why Trudeau’s government is finishing the year with low ratings. “When the economy is flat and people are concerned about paying their bills, they become agitated and seek to punish the incumbent government,” said Nik Nanos, the polling firm’s chief data scientist. “If you are struggling to pay for housing or the groceries, you might think, ‘What do I have to lose with a change in government?'”

If an election were conducted today, over 45% of Canadians indicated the cost of living, including housing, groceries, and energy costs, would be the most important factor influencing their vote. The environment (14%) and health care (12%) are next on the list.

Between November 30 and December 2, Nanos conducted a telephone and online poll of 1,069 Canadians. The margin of error is 3 percentage points (19 times out of 20).

Household debt Canada

Soaring Inflation in Canada

In Canada, inflation is certainly easing. It remained constant at 3.1% annually in November, down from 8.1% in June 2022. While this is improvement, it is cold consolation for some Canadian households, which have experienced one of the most precipitous declines in purchasing power in history.

According to Bloomberg calculations, Canada’s consumer price index is 10% higher than it would have been if inflation had remained at its pre-pandemic pace. Shelter and food inflation are both roughly 14% higher.

Prices rose at an annual rate of roughly 1.8% during the time the Bank of Canada introduced inflation targeting in the early 1990s and 2020.

According to the central bank, property prices in Canada have not been this high since the early 1980s.

Though an election isn’t due until 2025, Trudeau’s biggest adversary, Conservative Leader Pierre Poilievre, has launched campaign-style advertising attacking the prime minister for rising housing, food, and energy costs. “After eight years, Justin Trudeau is not worth the cost,” Poilievre frequently states.

Household debt Canada

Majority of Canadians Can’t Afford a Home

Despite a rush of affordability announcements from Trudeau’s Liberals, including a $4-billion fund for cities to develop housing and competition-law revisions aimed at decreasing supermarket prices, most polls place the Tories roughly 10 points ahead.

“The Conservative party continues to vote against funding for housing,” Trudeau said Thursday in Toronto, where he unveiled $471 million to accelerate home building. “If it were up to them, we wouldn’t be here today.” But our Liberal strategy is to collaborate with municipalities. Our strategy is to invest in individuals. It is to invest for the future.”

Trudeau is not alone in facing an angry electorate frustrated by the loss of purchasing power. Many US voters do not appear to be buying President Joe Biden’s economic message, despite the fact that price rises have slowed since last year.

“Inflation kills governments,” said Mike Moffatt, senior policy director at the Smart Prosperity Institute and Trudeau’s former economic adviser from 2013 to 2015.

Moffatt stated in an interview that U.S. President Jimmy Carter lost his campaign for a second term by a landslide in 1980 when the Federal Reserve aggressively raised interest rates to combat inflation.

In the midst of recent price increases, voters in Australia and New Zealand ousted their incumbent administrations, and the ruling Conservative Party in the United Kingdom is now polling poorly.

“There is unrest. “People see costs going up and up, but they don’t see their paychecks going up,” he said. “It’s going to be a very difficult thing for the federal government to deal with because so many of these factors are global in nature.”

 

 

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