The newsletter is a roundup of financial news, investment status, and other financial trivia, giving you the insight you need to manage your money in any economic situation.

In the US, job creation in May was a net 272,000, exceeding expectations. This allows the Federal Reserve to start cutting interest rates at the earliest in September, especially as wages rose by 0.4% month-on-month and 4.1% year-on-year.

As for the unemployment rate in the US, The recent rise in unemployment rates from 3.9% in April to 4.0% is a stark reminder of the volatility of labor markets and the broader economic environment. Such a surge could have far-reaching consequences, including reduced consumer spending, weakened business confidence, and possible spill-over effects in various sectors of the economy.

Source: Tavi Costa

Fear of a new inflation cycle

The aim of the interest rate mechanism was to restrain economic activity by raising borrowing costs and reducing demand from households and businesses in an attempt to curb inflation. Over the past year, lending in euro countries has contracted, slowing economic activity. The euro area economy contracted by 0.1% in the third and fourth quarters of last year, compared with growth of 0.3% in the first quarter of this year. Employment, however, remains relatively high.

The prevailing view among analysts is that further interest rate cuts will be slow. If Frankfurt were to loosen monetary policy too quickly and too much, this would stimulate economic growth but also increase the risk of inflationary pressures rising again before the 2% inflation target is reached. Will we ever reach it?

Source: Forbes Slovenija

Alarm from Germany – the “engine” of Europe

New month, same trend! Germany’s industrial production fell again in May. The level remains 15% lower than the peak of 2017!

Source: Jeroen Blokland

Germany is lagging behind in the global stock market race due to the lack of large technology companies. The value of all German shares now represents only 2.1% of global market capitalization. In 2023, this figure was much higher, at 2.4%. Only two German companies, SAP and Siemens, are among the 100 largest listed companies.

Source: Holger Zschaepitz

Precious metals market

Global physical gold-backed exchange-traded funds (ETFs) recorded their first inflows in a year in May, boosted by growth in assets held by funds in Europe and Asia, the World Gold Council (WGC) reported.

Demand for safe-haven investments, fuelled by geopolitical and economic uncertainty, and persistent central bank buying contributed to the rise in the gold price from March to May, pushing spot prices up to a record USD 2,449.89 per ounce on May 20.

The news that China did not announce any official gold purchases in May seems to have made the most noise in the past week.

This was to be the end of a massive buying spree that had lasted 18 months and helped push the price of the precious metal to record levels. Personally, I doubt that China will stop buying altogether, as the markets are not registering the unofficial Chinese purchases that are taking place in the background. China has also not officially announced that it has stopped buying, only that no gold purchases are recorded in official announcements. Let us not forget that China is the largest gold producer in the world.

Why should this matter? Could China have ‘problems’ with its gold supply?

World gold production levels are in decline

According to the WGC, the gold mining industry is struggling to maintain production growth as deposits of the yellow metal are becoming harder to “find.” We saw record mine production in Q1 2024, which was 4% higher than last year, but the bigger picture on mine production is that it effectively leveled off around 2016, 2018, and we haven’t seen any growth since then, according to the WGC. According to the International Trade Association, mine production in 2023 is up just 0.5% year-on-year, compared to 1.35% growth in the previous year.

New gold deposits are becoming harder to find around the world, as many potential areas have already been explored.

Gold and silver are showing their strength both in the short and long term. Inflation protection, even further out, will be key. The current lower inflation rates should not mislead us in our search for real-value protection.

Source: Goldprice.org

In the commodities trend, it’s always a good time to buy. In certain months, even more so?

Looking back at the past rise in precious metals, we can see which months have proven to be the best months to buy, based on averages over several years. By analyzing long-term trends, we can see that certain months have offered better buying opportunities compared to others. Of course, based on averages and ignoring exceptional events,

Gold price advantage over the year.

Source: Equityclock

Silver price advantage over the year.

Source: Equityclock

The newsletter “Financial insights and trivia” does not constitute an investment advisory service. Its content does not constitute recommendations to buy or offers to buy, but is intended to inform the public about developments in the financial field. Past returns are not a guarantee of future returns. Please consult a financial adviser for advice.