Investing.com — inched down on Thursday amid a stronger dollar, as investors digested mixed signals from the Federal Reserve on the likelihood of a September interest rate hike.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,081.90 and $1,098.20 an ounce before settling at $1,089.10, down 4.20 or 0.38% on the session. Gold has remained relatively flat over the last four sessions after surging by more than 1% at the start of the week during its strongest one-day move in more than a month. It was preceded 10-day rout, the longest in nearly two decades, as the precious metal came under downward pressure from a crashing Chinese equities markets and mounting speculation that the Fed could raise interest rates in 2015.
On Wednesday, the Federal Open Market Committee (FOMC) concluded its two-day July meeting without offering any indications on whether it will adjust its benchmark Federal Funds Rate later this fall. U.S. short-term interest rates have remained level between zero and 0.25% for nearly six years since the end of the Financial Crisis. Nearly a decade has passed since the Federal Reserve last instituted a rate hike.
In its July monetary policy statement, the FOMC said the labor market has shown signs of progressing, citing indicators that showed the underutilization of labor resources have diminished in recent months. Last month, the U.S. unemployment rate fell by 0.2% to 5.3%. In addition, the FOMC noted that it has observed signs that the U.S. economy has grown moderately during the second quarter of the year.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.
The U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) in a quarterly release on Thursday morning reported that U.S. GDP for the second quarter increased by 2.3%. The reading fell below high end of consensus estimates of a 3.5% increase, but was above the low end of forecasts for a gain of 1.9%. The BEA also upwardly revised first quarter GDP to a 0.6% increase from a prior reading of negative 0.2%.
The , which measures the strength of the greenback versus a basket of six other major currencies, surged to an intraday high of 97.88, before falling back to 97.82 (up 0.60%) in U.S. afternoon trading.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Elsewhere, the closed on Thursday down 83.44 points or 2.2% to 3,705.73, one day after halting a three-session, 11% romp. On Monday, Chinese stocks fell by 8.5% experiencing their worst session since 2007.
Silver for September delivery fell 0.008 or 0.05% to 14.735 an ounce.
Copper for September delivery dipped 0.029 or 1.19% to 2.378 a pound.
China is the world’s largest consumer of and second-largest consumer of gold, behind India.
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Here’s When You Can Expect Social Security Cuts
Social Security is a retirement cornerstone for tens of millions of Americans. According to the Centers for Budget and Policy Priorities, every year it keeps 15 million retirees out of poverty.
Unfortunately, the program is facing massive financial hurdles. It has been collecting a net cash surplus for the last 38 years. However, starting next year, it is projected to run a $21.1 billion net cash outflow.
The program entered the decade with a reserve of $2.9 trillion in assets. Although, many expect the net outflows to increase each year and chip away at the reserve by $1.1 trillion. This leaves the program with only $1.8 trillion in reserves by 2029.
The program isn’t facing bankruptcy or insolvency. Instead, it is more and more likely that retirees will soon face reductions in their benefits to keep the program afloat.
Two trusts actually make up Social Security. The first one is the Old-Age and Survivors Insurance (OASI) trust. It provides payouts to retired workers and survivors of deceased workers. The other is the Disability Insurance (DI) trust. This one supplies payments to workers that are long-term disabled.
When reporting on the state of the program, the Social Security Board of Trustees generally lumps the two trusts together. However, each trust is independent and faces individual risks.
Of the two, the OASI is projected to be in financial distress the soonest. The latest Trustee report estimates that the OASI will deplete its asset reserves by 2034. Meanwhile, the DI trust could possibly depleat its reserves in 2065.
But because the OASI is much larger than the DI trust ($2.8 trillion of the combined $2.9 trillion in reserves), the combined trusts are projected to become insolvent in 2035.
So expect the first major cuts to come in 2035 in an effort to avoid insolvency. Those efforts will involve a potential bitter pill for retirees to swallow.
Unless Congress finds a way to raise additional revenue and/or reduce outlays, retired workers and survivors of deceased workers can expect a 24% reduction in monthly benefits starting in 2035. While that seems a long time from now, it’s only 15 years away and will be here sooner than you think.
In real numbers, a retiree who receives the average monthly Social Security benefit of $1,503 today would see their monthly benefit reduced to $1,142 per month, or $361 less to live on. A married couple receiving $2,531 in monthly benefits would see their check cut by $608 per month, down to $1,923.
While the monthly reduction stings, looking at it from a lifetime benefit approach magnifies the worries for retirees trying to live out their golden years. A hypothetical worker who retires this year and starts receiving benefits would typically expect to collect about $500,000 in Social Security benefits. A 25% reduction means they would see their benefits cut by $120,000, down to only $380,000 in retirement benefits.
A married couple would see their projected $1 million in benefits reduced by $240,000 down to $760,000. That’s not an easily-replaced amount of retirement income.
If there is a glimmer of hope, it’s that Congress can take action to avoid – or delay – the day of reckoning. Yes, they’ve known since 1985 that the program would one day run out of money. But if there is one thing that the government is good at, it’s waiting until the last minute to really dig in and find a solution.
Let’s hope they can set aside their differences and put America’s retirees first.
‘The Great Reset’ Will Push Socialist Agenda Across The Globe
Quietly, while the coronavirus pandemic distracted the world, a group of liberal “key global governmental and business leaders” met in Switzerland and planned the next coup d’etat to take over the global economy. Many call it The Great Reset. It also means “dangerous times for those who support individual liberties and free markets.”
The World Economic Forum will hold a summit next year to further their initiative. According to them, “The Great Reset is a commitment to jointly and urgently build the foundations of our economic and social system for a more fair, sustainable and resilient future. It requires a new social contract centred on human dignity, social justice and where societal progress does not fall behind economic development.”
What it really is trying to accomplish is using the coronavirus pandemic as a cover. They’re aiming for a renewed push for socialism and climate change initiatives.
The Economy and the Pandemic
You have to ask yourself, how did capitalism or climate change create the COVID-19 pandemic? They obviously didn’t, but remember, never let a crisis go to waste.
Klaus Schwab, the founder and executive chairman of WEF, said “COVID-19 has shown us that our old systems are not fit for the 21st century,” and “we need a global reset… we must not miss this unique window of opportunity.”
António Guterres, the UN Secretary-General, also weighed in on the topic. He said, “We must build equal, inclusive, sustainable societies, that are more resilient in the face of pandemics and climate change.”
Kristalina Georgieva, the Managing Director of the International Monetary Fund, made it very clear that the expansion of social programs should serve as the goal of The Great Reset.
“If we were to concentrate in investing in people, in the social fabric of our societies, in access to opportunities and education for all, in expansion of social programs – then we can have a world that is a better world for all.”
And Al Gore, Mr. Climate Change himself, spoke during the summit. “This is a time for a reset to fix a bunch of challenges,” he said. “First among them, the climate crisis.”
Folks, viruses don’t care about socialism or capitalism. Viruses don’t care if we have zero global carbon emissions. To hide behind these agendas and blame a global pandemic on capitalism and global greenhouse gas emissions is xxxxx.
A Complete Overhaul?
In a recent article on Fox Business, Justin Haskins, who’s no fan of the agenda, offers his two cents. He says, “The purpose of the Great Reset isn’t merely to enact policies that would lead to additional wealth redistribution, but rather to completely overhaul the world’s existing structures and institutions.”
Haskins then points to comments by Schwab. He says, “the world must act jointly and swiftly to revamp all aspects of our societies and economies, from education to social contracts and working conditions.”
Haskins continues, “How, exactly, are these leaders planning on convincing Americans and citizens of every other industrialized nation to abandon modern capitalism? By scaring people into believing that these changes are essential for stopping the next great ‘crisis’ the world will face when the COVID-19 pandemic finally subsides: climate change.”
“At the World Economic Forum’s June meeting, one speaker after another cited climate change and environmental sustainability as the key justifications for radical economic changes that would include massive new regulations and restrictions on economic activity, wealth taxes and expansive government programs comparable to the Green New Deal.”
Ultimately, according to Haskins, the goal is for the global elites to control more of our lives. This also comes under the guise of helping the world.
“The elites at the World Economic Forum can effectively control economic activity on a scale” that no one has achieved before, he says. “These are truly dangerous times for those who support individual liberty and free markets.”
Proposal: Cut Taxes On Two Lowest Income Brackets By 50%
Democrats hope to pass the $3 trillion HEROES Act. On the other hand, Republicans discuss another round of stimulus checks or “back to work” bonuses. These bonuses aim to help Americans struggling to financially recover from the coronavirus pandemic. While all this is happening, a new idea has been proposed: cut taxes in the lowest two income brackets by 50% or more. This will really help those who need it the most.
The idea is from John C. Yoo, a professor at the UC Berkeley School of Law, and he says it would “turbocharge” the economy.
“Little doubt exists that the U.S. economy needs the help,” Yoo says. Additionally, his proposal, although unconventional, would immediately help those in need.
“The president could establish an economic recovery deferred action program that cut taxes immediately for those in the lowest brackets by 50 percent or more. This could accelerate the economic recovery far faster than current proposals for more unemployment payments or business aid, which help alleviate suffering but do little for growth. Trump could establish an economic recovery deferred action program that cut taxes immediately for those in the lowest brackets by 50 percent or more,” says Yoo.
“Turbocharging” the Economy
The tax savings, according to Yoo, would far exceed any potential stimulus check the government would issue. It would also provide immediate help.
“Imagine the boost to the economy if Trump cut taxes on the lowest two brackets to zero. A married couple making up to $20,000 would save $2,000 in federal taxes, while a married couple making $80,000 could save an additional $7,000 or so.”
“These families would not have to wait upon government checks in the mail; they could see the funds immediately in their paychecks.” Yoo said.
Yoo points out that the benefits would be more than just a tax break, it could also revitalize small businesses.
“Tax cuts would mean larger paychecks, which would create an incentive to return to work rather than remaining unemployed and on public assistance. Middle-class families would have a greater incentive to run the risks of starting or operating small businesses if they could keep more of the profits, instead of handing them over to the federal government.”
A Plus for The Administration
Yoo says cutting taxes on the lowest income brackets will help President Trump show support for the poor and minorities.
“A broad tax cut could answer accusations that the administration does not care about the poor or minorities. Trump could focus his deferred tax collection program to benefit the poorest the most, says Yoo, before adding, “He could also target certain geographic areas, such as the inner cities, for full tax breaks regardless of bracket. State COVID lockdowns have impacted the poor the most by shutting down restaurants, travel and hospitality, retail stores, and other businesses dependent on face-to-face interaction.”
While Yoo’s proposal is unconventional, it’s also practical. It avoids adding to our already ballooning national debt. It also satisfies the need to provide immediate relief to families. Also, it shows a good-faith effort to bridge the wealth gap by truly giving a tax break to those that need it most.
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