50% of Americans Say “Worse Off” Since Last Year

As official narratives about a strong economy convince some traders to turn bullish on the U.S. dollar, gold and silver markets are struggling to find solid near-term support levels.

Gold prices traded essentially flat for the week through Thursday's close. As of this Friday recording, the monetary metal checks in at $1,865 and is down 0.4% now for the week.

Turning to the white metals, silver shows a weekly loss of 2.1% to trade at $22.10 an ounce. Platinum is down 3.2% to come in at $962. And finally, palladium is trending 4.7% lower this week to trade at $1,599 per ounce.

On Tuesday, President Joe Biden delivered his State of the Union Address. He of course painted a rosy picture of the economy. He took credit for supposedly creating hundreds of thousands of jobs. He also deflected responsibility for the inflation that has been steadily eroding the purchasing power of salaries and wages.

Joe Biden: I stand here tonight after we've created, with the help of many people in this room, 12 million new jobs. More jobs created in two years than any president's created in four years. The unemployment rate is a 3.4%, a 50-year low. Inflation has been a global problem because the pandemic disrupted our supply chains, and Putin's unfair and brutal war in Ukraine disrupted energy supplies, as well as food supplies. My administration has cut the deficit by more than $1.7 trillion. The largest deficit reduction in American history.

Fact checkers pounced on many of Joe Biden's State of the Union claims. Some were technically true but presented in a highly misleading way.

For example, his boasts about reducing the deficit ignore the fact that it came down from a record high after pandemic-related stimulus spending expired. The budget deficit also came in significantly higher than what the Congressional Budget Office had projected due to excess spending insisted upon by the Biden administration. All told, Biden is on track to run up more debt during his first term than any other President in history.

Republicans don't have any realistic plans to balance the budget, either.

Establishment forces in both parties agree that the two biggest components of the federal budget – entitlements and defense – will never be cut. The relatively small amount of non-defense discretionary spending that could potentially be put on the chopping block would barely budge the government's multi-trillion-dollar fiscal gap.

More government borrowing means more currency creation from the Federal Reserve. That's the primary driver of inflation – not war in Ukraine or disruptions in supply chains.

As for Biden's boasts about a 50-year low in unemployment? Well, there are lies, damn lies, and government statistics. The official unemployment rate is as low as it is because millions of working-age people have been arbitrarily defined out of the labor force. The actual labor force participation rate still hasn't recovered from pre-pandemic levels.

Meanwhile, millions of people who are technically employed are engaged in temporary work or part-time gigs. They are looking for real jobs and struggling to make ends meet as prices for food and other basic necessities rise relentlessly.

Last week, ABC News reported that four in ten Americans say they're worse off financially since Joe Biden became president. That's the most who report worsening finances in 37 years.

A separate poll by Gallup found that only 35% of Americans say they are better off than they were a year ago while 50% say they are worse off. That's the second most since Gallup began asking the question in 1976, with the only worse reading coming in the aftermath of the 2008 financial crisis.

Yet if the story being told by Joe Biden and the government economists who produce official statistics is to be believed, then the economy is fully back on track. There will be no recession, the Fed will have plenty of leeway to keep hiking rates, and the U.S. dollar will be on track to appreciate in foreign exchange markets.

If the official story pans out as described, then it will be a difficult environment ahead for precious metals markets.

However, there is good reason to believe that the economy isn't as strong as officially reported, that federal finances are getting worse, not better, and that the long-term trend for the U.S. dollar's purchasing power is down, not up.

It's possible that misplaced optimism will drive markets for a while longer near-term.

Hedge funds and other speculators have been pulling out of exchange-traded funds tied to gold and silver prices and selling contracts on futures exchanges. But their positioning often serves as a contrary indicator.

Any further weakness in metals prices will create attractive buying opportunities for investors who are focused on the big picture fundamentals driving down the Federal Reserve note's value versus hard assets.

In other news, the Missouri Senate passed legislation this week that would prompt the state treasurer to hold at least 1% of state funds in gold and silver while eliminating all state income taxes on monetary metals.

In a growing national backlash to the rampant inflation caused by massive federal spending, debt, and central bank money printing, more than a dozen states are already moving forward on sound money bills during their 2023 legislative sessions

Sponsored by Sen. William Eigel, Senate Bill 100 passed the Missouri Senate by a vote of 21-12 and now heads to the House

If ultimately signed into law, SB 100 would reaffirm that gold and silver are money in Missouri and: 1) exempt taxpayers from state income taxes on “capital gains” from gold and silver reported on their federal income tax returns; 2) require the state treasurer to hold “an amount of gold and silver greater than or equal to one percent of all state funds;” and 3) require the state to “accept gold and silver coinage as payment for any debt, tax, fee, or obligation owed.

The Show Me State rightfully exempted gold and silver from state sales taxes years ago. Removing income taxes from the precious metals, holding gold and silver as reserve assets, and accepting gold and silver as payment are among the next steps a state can take to promote sound money. And we are pleased to see so many states pursuing these kinds of reforms

Arizona, Utah, and Wyoming have already enacted precious metals income tax exemptions – while Idaho, West Virginia, South Carolina, Tennessee, and Iowa are, like Missouri, considering such exemptions this year

On the sales tax front, sound money allies in Kentucky and Wisconsin introduced their precious metals sales tax repeal bill this past week. That means sales tax exemption bills are now pending in Mississippi, Wisconsin, Kentucky, Minnesota, and Alaska… with a bill expected in Maine soon as well

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend everybody.

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