It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
Another busy week is crossed off the list. So without further ado, let’s get right to the commentary …
The silver market is nothing but a swindle, wrapped in a scam, surrounded by fraud.
– Craig Hemke
More and more people are asking if a gold standard will end the financial crisis in which we find ourselves. The question isn’t so much if we’ll resort to gold, but when. All great inflations end with the acceptance of real money – gold – and the rejection of political money – paper.
– Ron Paul
Credits and Debits
Debit: Did you see this? The inventory of existing homes for sale increased nearly 21% from a year ago, but the increase in home listings failed to spark homebuying. In fact, US home sales fell to their slowest pace since April 2009, which was the in the depths of the Great Financial Crisis. Probably because the increase in supply also failed to bring prices down; the median sales price climbed 1.8% from a year ago to $414,000. This is just more proof that the housing market is completely broken – not that you have to tell that to young people looking to buy their first homes. And it looks like only a significant market crash can fix it.
Credit: Perhaps ridiculously-high home prices are why approximately 17% of Americans now shop at thrift stores annually. Among those pre-owned product consumers, 93% primarily shop online, with bargain hunters spending an average of $1760 a year. Last year, America’s second-hand market generated $53 billion in revenue. As for the most popular second-hand product? It’s clothing. Since 2023, the apparel resale sector has grown 15 times faster than the overall retail clothing industry – that’s even faster than the artificial intelligence (AI) industry. Although that seems rather hard to believe these days …
Credit: On the other hand, while a growing number of Americans are shopping at second-hand stores, a new study found that the share of registered voters saying their household financial situation is worse than the year before fell to 31.8% – that’s the lowest figure since January 2022. So more people believe things are looking up (at least on the surface). Just don’t tell that to Bernie and Ben & Jerry. Oh … and apparently actor Mark Ruffalo too:
Credit: It’s possible rising economic sentiment is tied to falling energy prices. That’s because gasoline prices hit their lowest inflation-adjusted price level in more than two decades on Memorial Day. The average pump price was the lowest nominal level since 2021 and the lowest inflation-adjusted price since 2003. Well … except in states like California that are seeing little to no relief at the pumps, and gasoline prices that are almost as high as they’ve ever been. Ask us how we know.
Source: GasBuddy
Debit: Speaking of low prices, over the past several months, silver has been near a historic low relative to gold. The current gold-to-silver (GSR) ratio is currently at 100. Compare this to most of recorded history, when the GSR rarely exceeded 16. Today’s ratio is increasingly exhibiting extremes that defy the historical norm. As a result, market analyst Bart Brands notes that with the GSR at 100, “silver is dirt-cheap; the GSR makes no logical sense given silver’s utility.” Indeed. Which is why it’s important for current holders of physical silver advocates to maintain their strength of conviction until prices normalize — or else:
Credit: In other news, the US National Debt will soon reach $37 trillion. As for how we got here, James Howard Kunstler correctly points out that we Americans “fooled ourselves into thinking that we could replace … factory production with financial games based on jiggering interest rates and innovating ever more complex swindles. That merely produced a fantastic divide between the financial gamesters raking in billions while the former factory workers were left broke (and) demoralized.” Indeed. Now you know why Treasury Secretary Scott Bessent admitted this week that spending cuts can’t fix this; instead the US needs to “grow” – a.k.a. borrow – its way out of the situation.
h/t: @the_niall_r
Credit: Meanwhile, macro analyst John Rubino warned this week that, “We’re in the early stages of a currency death spiral where interest rates start to go up and the government can’t control that. Then their debt goes parabolic until everything breaks down. There are going to be currency crises, which we’ve never seen in our lifetimes.” And it’s not just the US dollar (USD) – it’s every other national fiat currency too. In the meantime …
Credit: With that in mind, nobody should be surprised that, after a long hiatus, central banks have been heavy buyers of gold for the past four years because they know gold is the ultimate protection from monetary tail risks, regardless of whether it’s catastrophic deflation or inflation — although emeritus Fed Chair, Ben Bernanke, will never admit it because, in order to sell their fiat-currency snake oil, he needs you to believe central banks buy the yellow metal for an entirely different reason:
Credit: Needless to say, it’s also no coincidence that, thanks to the growing lack of trust in the current USD-centric debt-based monetary system, the BRICS nations are in the process of creating of a multi-jurisdictional gold custody network using certified vaults that are currently under construction or negotiation in China, Saudi Arabia, Southeast Asia, and Africa. As macro analyst Vince Lanci reports, “These vaults will act the structural backbone of a new settlement system where gold is the primary collateral asset, replacing US Treasury (UST) bonds as the standard bearer of trust.” Meanwhile, back in the United States …
Credit: The new BRICS system under development, participants will not be required to convert yuan (and presumably other BRICS currencies) into gold, but they may do so, thereby introducing a convertibility layer into any BRICS currency by mimicking the gold window of Bretton Woods without forcing a formal gold standard. On the other hand, there are lots of “experts” out there who insist that the BRICS nations are making a mistake by using gold to anchor their new system because cryptocurrencies are the ultimate answer to the world’s monetary woes. So there’s that.
Debit: Of course, the BRICS planned move to gold is yet another signal that the end of the USD as the world’s premier reserve currency is drawing nigh. And until the US can reestablish its domestic manufacturing base, a loss of reserve currency status will result in at least a temporary reduction in American living standards. No matter what happens, the good news is gold holders can sleep soundly knowing that it doesn’t take a significant amount of the yellow metal to ensure that they’ll be properly compensated for a sharp drop in the USD’s future purchasing power.
By the Numbers
Researchers at the US Census Bureau looked at how many residential homes are vacant compared to the total number of homes in each state. Here are the states with the highest – and lowest – home vacancy rates:
50 Connecticut (vacancy rate: 6.7%)
49 Oregon (6.8%)
48 Nebraska (6.9%)
47 New Jersey (7.0%)
46 California (7.2%)
5 West Virginia (13.9%)
4 Florida (14.2%)
3 Alaska (16.0%)
2 Vermont (18.1%)
1 Maine (18.7%)
Source: US Census Bureau
The Question of the Week
Which of these promotional perks have you received for