Economics

Silver flying high 

The price of silver has performed very well since the beginning of the year, due to both investment and industrial demand (mainly due to the production of solar panels by China), but it was only recently that information emerged about a real decline in supply in this market. As a result, the silver price hit new all-time records.  

The supply crisis was to begin with India and the Diwali festival there. At this time, Indians bought millions of rupees worth of jewelry to worship their goddess of wealth, Lakshmi. In previous years, this demand was for gold and the supply came from Asian refineries. This year, however, was different. For months, there has been speculation on social media in India that after such a big rally in gold, it is now time for silver. The breakthrough was to be the statement by banker and investor Sartak Ahuja, who in one of the videos targeting his 3 million follower community, stated that the silver to gold price ratio, currently 100:1 makes silver the obvious choice this year. After the video with the statements was released, Indians started buying silver massively, leading to the first silver shortage at the largest precious metals refinery in India. As per various Indian sources, the demand for silver was huge, never seen before, leading to a situation where Indians had to pay 8 dollars more for an ounce of silver than in the world markets. 

Due to the fact that the Chinese refineries were not working at the time because of a week’s break (public holidays), demand from Indian refineries shifted to the West and in particular to the LBMA (Bullion Stock Exchange in London) in London. There it quickly became apparent that 83% of the accumulated silver in LBMA warehouses is in the hands of ETFs and cannot be lent out (the refinery borrows the silver, processes it and sells it, earns a margin on it and then buys it back and returns it to their lender). Considering that there are 790 million ounces of silver in the LBMA, only 150 million ounces can be made available to refineries and other institutions. Thus, the low availability of metal led to an increase in silver rental costs to 39% per year if the rental period of the metal is 1 month.

As Metal Focus reports, the cost of borrowing silver for one day (overnight) rose to 200%, and the difference between the buy and sell price (spread) rose so high that trading became impossible. Although there are currently already forecasts for higher silver prices in 2026 (Bank of America is betting on $65 per ounce in 2026, which seems very likely), the current crisis is expected to subside within a few days when the LBMA finally delivers silver from New York and China.  

Silver is important

The USA recently officially classified silver as a “critical mineral” on the Department of the Interior’s list. What is this list and what does it mean? It contains minerals that the United States considers critical to its economy and national security. Many come from countries that are considered political adversaries, such as Russia or China. What does it mean for silver to be included on this list? First of all, any project related to the extraction, exploration or processing of such a mineral can claim state financial support. In addition, the process of obtaining mining permits is reduced from 10 years to 1-2 years, which can significantly support the development of national resources of this mineral.

Silver, together with gold, has been a real hit for stock market players in recent years and is steadily gaining in value. Readers of our Bulletin may recall our multiple recommendations for gold and silver. The US government’s decision and the possible imminent upheaval in the financial world – the switch to digital currencies by some central banks (CBDCs) with a return to gold backing – will ensure that the two precious metals will continue to shine for a long time to come.

Americans will live in the offices

The situation of the average American is getting worse. The middle class is being hit hard by the rising cost of living.

While prices in general for consumers have risen by 35% over the last decade, car insurance rates have increased by 45% in the last 5 years.

Higher education is increasingly valued more highly. Over the past 40 years, tuition at US universities has risen by more than 700%, while general consumer prices (the US Consumer Price Index) have risen by 199%.

However, it is worst in the real estate market, which is becoming increasingly inaccessible for an ordinary citizen. As we can read from the chart below, the median household income in the US is 79 thousand dollars (blue line). The same median should be at least 123 thousand dollars (or 56% more – the orange line) for the average Americans to be able to afford to buy a house at an average market price. This was calculated on the condition that a US citizen can provide 30% of their annual income to repay the mortgage and cover the short-term obligations for the property they occupy. It is worth noting that the gap in question has widened very dynamically since 2020.

It is therefore not surprising that real estate prices have just recorded the second-highest year-on-year decline in the last ten years: -2.2% in May. This is mainly due to the growing oversupply. There are currently 1.9 million sellers compared to 1.4 million buyers. This is the biggest difference in the last twelve years.

In addition, HOA (Homeowners Association) fees, often associated with maintenance of common areas or infrastructure, are increasing, adding to owners’ monthly costs and deterring potential buyers. Insurance costs, such as those associated with increased risk of natural disasters (hurricanes, flooding), are also on the rise. Costs are also increased by additional, ever more expensive fees (e.g. for repairs to various facilities). An important point in the whole situation is the fact that potential buyers are finding it increasingly difficult to obtain a mortgage due to persistently high interest rates and increased caution on the part of banks. It is worth remembering that the USA currently has the most expensive loans in the last 15 years.

The above-mentioned phenomena are leading to lower real estate prices. In large cities, we are seeing discounts of ten to ten percent year-on-year. In Florida’s metropolitan areas, we can buy properties at a discount of more than 30%.

House prices will certainly not be helped by the fact that the conversion of offices into residential buildings or apartments is rising sharply. According to the chart below, this phenomenon is expected to gain momentum and really take off within two years. The last, highest blue column corresponds to the announced conversion projects to be implemented from 2027.

The process of converting offices into living spaces is being accelerated by the fact that the number of unused offices is increasing. This is due to the recession (which has been kept quiet and swept under the carpet) and the increasing popularity of telecommuting.

Add to this picture of the US economy the fact that unemployment is rising and it becomes clear why President Trump is increasing the pressure on the Fed to lower interest rates. But would cheaper credit really be a way out of this downward spiral?

What do stats say?

First and foremost note that the stats that we are going to look at below are taken from the International Monetary Fund website. In other words, they are neither Russian nor Chinese propaganda. As the year 2024 is running to its end, the IMF has made predictions about the annual projected real GDP. That is, what is projected is the remaining one last month of 2024 because the data from the preceding eleven months are available.

The data show that the growth of GDP of the G7 countries ranged between 0.0 (zero) and 2.8. The United States’ growth is that of 2.8, while that of Germany – Europe’s economic powerhouse! – hit zero, nada, nil, naught, nix. Japan with its 0.3 is following in Germany’s footsteps, while the GDP of such countries as France, Italy, the United Kingdom and Canada oscillates around 1.0:

  1. United States 2.8
  2. Canada 1.3
  3. United Kingdom 1.1
  4. France 1.1
  5. Germany 0.0
  6. Italy 0.7
  7. Japan 0.3

What do stats tell us about the growth of the GDP of the five original BRICS countries? South Africa can boast 1.1, which does not come as a surprise, Brazil is just better off than the United States. Russia’s GDP stands at 3.6 – more than that of the United States by a large margin – while China’s and India’s – with 4.8 and 7.0 respectively – dwarfs that of the United States:

  1. India 7.0
  2. China  4.8
  3. Russia 3.6
  4. Brazil 3.0
  5. South Africa 1.1

If we compile a list that combines the G7 (in blue) and the five original BRICS (in red) countries in descending order, that’s what we get:

  1. India 7.0
  2. China  4.8
  3. Russia 3.6
  4. Brazil 3.0
  5. United States 2.8
  6. Canada 1.3
  7. United Kingdom 1.1 = France 1.1 = South Africa 1.1
  8. Italy 0.7
  9. Japan 0.3
  10. Germany 0.0

The BRICS countries take the first four places. What is more remarkable, Russia and China are doing very well despite the numerous sanctions and tariffs. Surprisingly(?), Belarus with its GDP of 3.6, and Serbia with its GDP of 3.9 – both non-EU states – are doing better than the G7 countries and better than Poland (3.0) and Czechia (2.3) – both the EU member-states whose GDP is among the highest in the Union.

Even Asiatic and African countries can boast higher GDPs than the G7 states:

  • Vietnam 6.1
  • Uzbekistan 5.6
  • Iran 3.7
  • Kazakhstan 3.5
  • Nigeria 2.9
  • Zimbabwe 2.0

Notice Iran – another country that has been beset with sanctions for decades – and Zimbabwe, known rather for its hyperinflation, with a GDP higher than that of the United Kingdom, Canada, Italy, France or Germany.

Haven’t we been told again and again that combining European states into one big economic organism would be beneficial to them all? It doesn’t seem it is. Haven’t we been told again and again that sanctions would ruin Russia and Iran? It doesn’t seem they have.

AU10TIX or how Israelis act

AU10TIX is an Israeli identity service that verifies people or companies on the Internet. For example, people who want to earn money on Twitter (X) have their identity checked and authenticated by AU10TIX. So far, so good, but there are two appalling facts about the Israeli company:

1. AU10TIX has close ties to Israeli intelligence. It was set up by members of the Israeli elite intelligence services Shin Bet and Unit 8200. Ton Atzomm, its CEO, was a member of Unit 8200 has been committed to the surveillance of Palestinians and has been utilizing the information gained in the process to politically persecute and divide them. Edo Soroka, the Vice President for Sales in Europe, the Middle East and Africa, previously worked for the Israeli startup AnyVision, which is accused of monitoring Palestinians in the occupied West Bank. Erez Hershkovitz had earlier been employed by the Israeli company Voyager Labs, which was sued by Meta for using dozens of fake Facebook accounts to collect data from more than half a million users.

2. AU10TIX suffered a serious security breach that exposed the personal data of millions of its users. Customers that fell victim to the June 2024 scandal include some of the world’s most renowned companies, such as X, TikTok, LinkedIn, Coinbase, eToro, PayPal, Fiverr, Upwork, Bumble, and Uber. Names, dates of birth, nationalities and images of identification documents such as driver’s licenses and passports, facial scans and authentication metrics for documents and photos were disclosed. It was a massive security breach with unforeseeable long-term consequences. The exposed data could be used by cybercriminals for various illegal purposes such as identity theft, financial fraud or even blackmail.

Several questions could be brought up:

1. How does all that square with the U.S.-Israeli friendship and alliance?

2. Why does the Israeli intelligence agency want to collect – manage – control the data of millions of Americans?

3. Why do the US services do not hinder such deep intrusions into the security of US citizens?

Upgrading of Russia’s economic outlook

“Russia’s economy will expand much more rapidly this year than previously expected (…) Gross domestic product is forecast to rise 2.6 per cent this year, more than double the pace the IMF predicted (…) The Russian upgrade, by 1.5 percentage points, is the largest for any economy featured in an update to the fund’s World Economic Outlook.” That’s what Financial Times has to say.

“Russia is expected to grow faster than all advanced economies this year,” announces CNBC and continues that “Russia is expected to grow 3.2% in 2024, the IMF said in its latest World Economic Outlook published Tuesday, exceeding the forecast growth rates for the world’s advanced economies, including the U.S.” The growth forecasts for other countries are: the U.S. (2.7%), the U.K. (0.5%), Germany (0.2%) and France (0.7%), as we can read in the same source.

Also the BBC informs us that “Russia [is] to grow faster than all advanced economies” and refers its readers to an IMF report: 

Oops… So many sanctions (is it sixteen thousand by now?), so much anti-Russian propaganda, the freezing of Russian financial assets, and all for nothing! Yet, the collective West – its leaders – should have known better. When did ever sanctions had their expected effect? In recent history it was North Korea, Iran and Cuba to name just a few which were severely sanctioned for years and despite those efforts to break their leaders or populations they remain politically defiant. Drawing on examples from more remote history: Napoleon Bonaparte imposed a continental blockade of the British Isles and it, too, was to no avail. The whole continent against one isolated country and the country continued to scheme against Napoleonic France and eventually brought about Napoleon’s downfall.

Notice that it is the Western media and Western agencies that speak about flourishing Russian economy. No propaganda on the part of the Kremlin, you see. The West feels itself compelled to reveal such data, data that prove how ineffective the West’s sanctions are, data that undermine the West’s policies. What are they going to do now? Impose a further two or five thousand sanctions? But then I suppose they have run out of the items they can put on the sanction list… Besides, in the face of Russia’s developing close economic ties with most of the world – be it the BRICS group or otherwise – and in the face of Russia’s self-sufficiency in terms of resources and Russia’s growing autarky, any new sanctions will fail miserably. They will effect one thing, though: they will strengthen Russian resolve to defy the West and to rely on and develop self-sufficiency even more.

The Western leaders must really be uneducated. It was during World War Two that Americans and the British used to bomb German towns and cities on a more or less regular basis, razing them with the ground. The allies pinned their hopes on the calculation that the German people, the common people, being exposed to enormous suffering, would eventually lose faith in the victorious outcome of the war and would rebel against the authorities. As we know nothing remotely resembling a loss of morale or willingness to resist the allies occurred. Rather, quite the contrary was true. The people were united behind their leaders even if some of them did not hold those leaders in high esteem. Does anyone learn anything from the past? Does anyone study past events?

With all the natural resources in their territory, with a well-developed industry and millions of educated people, Russia can really develop an autarkic economy. If additionally the country can rely on the help from China, India, Iran, Brasilia, Vietnam, Kazakhstan, then all the sanctions in the world are doomed. Why impose them then?

To save face. The Western world is in a position similar to that that the American Democratic Party finds itself in: once the party has rolled out Joe Biden, it feels compelled to stick to this candidate for president, even though it is clear that he is a sorry sight to see. In for a penny, in for a pound.

Farmers against the European Union

Over the past few weeks, we have heard almost daily about farmer protests and other countries where farmers have taken to the streets with their tractors. According to the latest news, protests have taken place in at least 14 European Union (EU) countries, and they all had a common goal. The fight against EU policies and regulations to be introduced with the Green Deal. According to interviews with European agricultural organizations, the main reason for the protests is the increase in production costs for farmers, while the community is flooded with products that do not have to meet certain quality requirements. Farmers are protesting against EU directives that have been damaging their businesses for years by imposing significant restrictions on them. This leads to a reduction in the competitiveness of domestic agricultural production in favor of products from third countries. Worse, the new plans being considered by the EU could make agricultural production in the European Union completely unprofitable.

According to the latest information, the farmers’ protests have already begun to have an effect. For the time being, the European Commission is withdrawing from one of the projects unfavorable to farmers, but this will certainly not be enough for the protesters.

We hope that the farmers will not give up so easily and that they will get their way. The European Union and the whole world have just recently learned the lesson of the end of the globalization of supply chains, and now something as important as food is supposed to come from outside Europe? The direction in which the European Union is heading, largely due to its insane pursuit of zero emissions, is downright incomprehensible. Soon there will be nothing left to eat, home heating will become a luxury, and we will all switch to horses… unless it turns out that this mode of transportation also produces too much CO2.