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Gold prices hit a new all-time high and silver is finally starting to catch up. Platinum and Palladium are also on fire as the backdrop for metals continues to get stronger. A record-breaking trade deficit deflation fears and China as well as increasing odds that the Fed is going to embark on a rate cutting cycle is causing one of the biggest potential moves in precious and industrial metals in decades.

The rush to the gold market is happening because people are concerned that the economy is slowing, and consumers are out of money. The U.S. budget deficit reached $1.897 trillion for the first 11 months of the 2024 fiscal year, the Treasury Department said on Thursday, as annual interest costs on the public debt topped $1 trillion for the first time.

The pathetic jobs market report last Friday stated the US economy added 142,000 jobs last month. This was below economists’ expectations and a surging record breaking deficit that is raising concern that the US is running out of other people’s money, and deflation fears in China is causing a run to gold as global  central banks bought a record 483 tonnes of gold in the first half of 2024.

Chinese economic fears have been feeding the gold rush. The Wall Street Journal is reporting today that “China Is Risking a Deflationary Spiral, Pressures are building amid excess capacity and insufficient stimulus from Beijing.” They say that deflationary pressure is building up in the country. China’s consumer prices rose 0.6% from a year earlier in August, but that was largely driven by food prices, which were affected by extreme weather. Stripping out food and energy, China’s core CPI only rose 0.3%. Another way to look at this is the so-called GDP deflator, which is the difference between China’s nominal and real GDP growth, representing broad changes in prices. By that measure, China has already been in deflation for five straight quarters.

Even with China economic concerns we saw huge come back in the copper market as we were expecting we finally saw a big breakout on the upside in both platinum and Palladium and even aluminum has turned the corner and with the uncertainty ahead of the presidential election in the future of U.S. tax policy at stake we should see some more big movement into the metals both industrial and precious

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