Gold Is at a Record High. Why It Is Set to Rise Even More. - Kanebridge News
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Gold Is at a Record High. Why It Is Set to Rise Even More.

By GREG BARTALOS
Thu, Apr 4, 2024 8:52amGrey Clock 3 min

Is gold’s strength a flash in the pan or a golden opportunity?

The yellow metal just completed its best two-quarter stretch in eight years on its way to a record high of $2,319 per ounce today.

That performance comes as a bit of a surprise at first blush. After all, gold prices typically rise when interest rates decrease and fall when rates swing higher. Yet recent economic data suggest the Federal Reserve will have to keep interest rates elevated for longer than previously thought to tame inflation.

There has been some good news on inflation. Last Friday, for instance, we learned that the core personal consumption expenditures (PCE) index, which is the Fed’s preferred inflation measure, rose just 2.8% year over year and 0.3% month over month, as expected , in February.

Shorter-term trends paint a more challenging picture for the Fed, however, given that the three-month core PCE trend reflects 3.5% annual growth compared with 2.5% in late 2023.

“The relevant news is that recent inflation data are rising briskly,” writes Michael Lewis, who heads Free Market Inc., an economic consulting firm. This translates into higher rates for longer as the odds of a June rate cut have fallen to 58% from 73% a month ago. Mary Daly, the chief of the San Francisco Federal Reserve, said Tuesday there is “ really no urgency ” to cut rates. Fed Chairman Jerome Powell echoed that sentiment today.

Monday’s ISM manufacturing index report reinforces that narrative . In March, the index delivered its strongest growth since September 2022, rising to 50.3, easily exceeding the expectation of 48.4.

Not surprisingly, on Monday, stocks fell as the yield on the 10-year bond surged to 4.32%. Tuesday we saw more of the same with key stock indexes falling and the 10-year yield rising as high as 4.4% , its highest level in 2024 . Higher rates have been pressuring stocks, bonds, and cryptocurrencies .

Gold is powering higher, however. March 22 is the last day that gold prices fell. The price of gold has risen 9.7% this year while the yield on the 10-year has gained 10.4%.

“Gold is the near-zero yielder that is then showing record demand, despite a world where high nominal yields and carry are still dominant,” wrote Deutsche Bank macro strategist Alan Ruskin in a newsletter last week. “If gold prices won’t go down in an inflated nominal yield world, they can surely go up as the G-10 yield plateau gives way, and yields likely start their descent in” the second half of this year, Ruskin continued.

So what explains gold’s recent rise amid higher rates? Strong demand from China is one factor . The People’s Bank of China went on a buying spree last year, acquiring a net 225 metric tons of gold—the most among all central banks and the country’s biggest expansion of gold reserves since 1977.

With China’s central bank reserves at a record high, its consumers are also actively buying the precious metal, partly due to concerns about their economy and stock market. Among Chinese investors, demand for gold-related ETFs is “booming,” according to The Wall Street Journal, and Chinese imports of gold have surged 51% in the first two months of 2024 compared with the same period last year.

Gold’s more volatile counterpart, silver, surged to a two-year high today, gaining 5% to $27.22 per ounce. Unlike gold, which is at a record high, silver would need to rise more than 80% to reach its 2011 high of near $50.

“The formerly nonchalant silver finally appears ready to join gold’s advance,” John Roque, a technical analyst at 22V Research, wrote in a note, Barron’s reported . “$30 as the first target and then, presuming a breakout, $40 as the second target.” Silver prices are up 12.5% this year.

The entire commodities complex is showing relative strength as the Bloomberg Commodity Index is at its highest level since December . Crude oil is 20.6% higher this year.

Safe-haven demand for gold may increase given fast-rising geopolitical tensions in the Middle East. Moreover, concerns about the national debt are growing louder and more pointed from notable figures across the political spectrum. Unfortunately, there is no indication that politicians will quit pandering to short-term considerations (meaning votes) by making tough choices. As such, expect them to keep playing Kick the Can until one of them slices their foot.

Given all of this, the outlook for gold remains bright . On March 29, Barron’s cited an analysis by economist Charles Gave, founder of Gavekal Research. “The S&P 500 is on the verge of becoming overvalued versus the stock of capital, while gold is almost undervalued against my measure of retained earnings.”

Gave added, “Gold is ‘undervalued’ against the S&P 500 by a hefty -52% and -13% versus its own long-term trend. In contrast, the S&P 500 stands 33% above its own long-term trend level.” Recommending that investors hedge equity exposure with at least 20% of their portfolio in gold, Gave concluded, “At this point my preference based on the relative position of the two reserve assets is to favour gold, followed by equities.”



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More meetings and faceless chats. Fewer work friends. How the modern workday is fuelling an epidemic of isolation.

By TE-PING CHEN
Wed, May 29, 2024 5 min

More Americans are profoundly lonely, and the way they work—more digitally linked but less personally connected—is deepening that sense of isolation.

Nick Skarda , 29 years old, works two jobs in logistics and office administration in San Diego to keep up with his bills. After a couple of years at the logistics job, he has one friend there. He says hi to co-workers at his office job but doesn’t really know any.

“I feel sort of an emptiness or lack of belonging,” he says. Juggling two jobs leaves Skarda exhausted, with little energy or time to grab drinks with co-workers . “It makes it harder to go in and give it your all if you don’t feel like anyone is there rooting for you,” he adds.

Employers and researchers are just beginning to understand how workplace shifts over the past four years are contributing to what the U.S. surgeon general declared a loneliness health epidemic last year. The alienation affects remote and in-person workers alike. Among 1-800-Flowers.com ’s 5,000 hybrid and fully on-site employees, for instance, the most popular community chat group offered by a company mental-health provider is simply called “Loneliness.”

Consider these phenomena of modern work:

It is a marked shift from even a decade ago, when bonds fostered at work helped compensate for declining participation in church , community groups and other social institutions. As the American workday becomes more faceless and scheduled , the number of U.S. adults who call themselves lonely has climbed to 58% from 46% in 2018, according to a recent Cigna poll of 10,000 Americans.

The faceless workday

The disconnection is driving up staff turnover and worker absences, making it a business issue for more employers, executives and researchers say. Cigna, the health-insurance company, estimates that loneliness is costing companies $154 billion a year in absenteeism alone.

“Work is social, it’s a lot more than a paycheck,” says James McCann , founder and chairman of 1-800-Flowers.com.

Earlier this year, 1-800-Flowers.com moved from three days in the office to four to boost a sense of connectivity among workers. It has also begun tapping workers across teams to serve as designated hosts during lunchtime, encouraging people to sit with colleagues they don’t know in common areas and chat, and suggesting conversation topics.

While today’s workers have more ways to connect than ever, “there are only so many memes and jokes you can send over Slack,” says Maëlle Gavet , chief executive of Techstars, a pre-seed fund that has invested in 4,100 startups. “We tend to have more and more people with back-to-back calendars, more meetings and less connections.”

Gavet says that is especially the case for hybrid workers on in-office days, which they tend to use to dash from one meeting to the next.

Paradoxically, meetings can make people feel lonelier—and even more so if the meetings are virtual, behavioural researchers say. A 2023 survey by employee experience and analytics company Perceptyx found people who described themselves as “very lonely” tended to have heavier meeting loads than less-lonely staffers. More than 40% of those people spent more than half their work hours in meetings.

In Cincinnati, Kelly Roehm says she came to chafe at the meetings—sometimes as many as 12—consuming her day after joining a consulting company in 2021. She would often feel her eyes glazing over as she multitasked on other screens.

“It’s like you’re a zombie, there but not there,” says Roehm, who lived 10 minutes from the office but worked mostly remotely because she says few colleagues typically came in. It is a more common setup as companies distribute teams across more locations: At Microsoft , 27% of the company’s teams all worked in the same location last year, compared with 61% in 2019.

She compares that experience with her time more than a decade ago at a company now owned by AstraZeneca . There, she enjoyed lots of social outlets at work: a Weight Watchers group and a lunchtime crochet club.

“Now if I were to think about asking, ‘Hey, do you want to participate in something like this,’ it would just sound weird,” says Roehm, who left this year to focus on her own career-consulting business. “There wasn’t that emotional attachment that made it difficult to say, it’s time to move on.”

The power of small talk

Office chitchat, sometimes an unwanted distraction, seems to provide more benefits than many people realize, says Jessica Methot , an associate professor at Rutgers University who studies social ties at work.

In a study of 100 employees at different workplaces, Methot and fellow researchers surveyed participants at points throughout the day. They found those who had engaged in small talk reported less stress and more positivity toward co-workers.

Even exchanging pleasantries with a co-worker you barely know can help, says Sarah Wright , an associate professor at New Zealand’s University of Canterbury who studies worker loneliness.

“We used to think loneliness has to be overcome by developing meaningful relationships and having that degree of intimacy,” Wright says. “More and more, though, we’re seeing it’s these day-to-day weak ties and frequency of [interactions] with people that matters.”

Such interactions are substantially harder to replicate in a virtual environment. “The default now is, I have to schedule time with you, even if it’s five minutes, instead of just picking up the phone,” says Katie Tyson , president of Hive Brands, an online food retailer founded in 2020 as a fully remote company.

The frictions add up, she says. Last fall, the company added an office in New York where employees voluntarily gather a couple of times a week to foster more cohesion.

Coming to the office, even on a hybrid basis, tends to yield a roughly 20% to 30% boost in serendipitous connections, according to Syndezo, which analysed survey data and email and messaging traffic from more than two dozen large companies.

Yet there are diminishing returns to time in person, says Philip Arkcoll , founder of Worklytics, which analyses workforce data for Fortune 500 companies. Coming in once a month provides a significant boost in ties; two or three times a month adds a little more, Worklytics data show. Once or twice a week results in a smaller increase, though, and working in-person four or five days a week makes almost no difference.

A business priority

Ernst & Young has asked managers to use the first five minutes of team calls to engage in conversation “as real human beings,” says Frank Giampietro , whose title, chief well-being officer for the Americas, was created in 2021 to help support employees during the pandemic.

The professional-services firm is also training employees to spot and reach out to co-workers struggling with issues such as isolation. To date, more than 1,600 employees have taken the training.

One challenge is that American workers have sacrificed connection for productivity, says Julie Rice , co-founder of fitness chain SoulCycle. These days, with more business contacts preferring video calls, she finds breakfast meetings and coffee dates on her calendar have been replaced with Zoom. Though efficient, such video calls are less likely to yield conversations that can turn into useful professional connections or lasting friendships, she says.

“Even people I’m meeting with here in New York, we’ll just Zoom,” she says.

Last year, Rice co-founded Peoplehood, a company that runs “gathers” to improve connectivity and relationship skills, and employers are signing up. One, a beauty-services business with hundreds of field employees who never see each other, asked Peoplehood to host a series of gatherings for workers to meet and share job advice. Another, a marketing company with far-flung employees, requested help after surveys showed staff wanted to feel more connected.

“Whatever relationships we had pre-Covid have sort of run out of gas,” Rice says.

Good luck prodding employees to socialise, though. Nearly all the 150-odd staff at the Pleasanton, Calif., headquarters of Shaklee, the nutrition-supplements company, used to attend annual Earth Day gatherings, which involved community service, lunch and breaking early for the day, says Jonathan Ramot , the company’s North American human-resources director. Office happy hours, bowling outings and “mix and mingles” were also robustly attended.

Now that the workforce has gone remote, last year’s Earth Day event attracted 20 staffers, even though most workers live nearby.

“We have a lot of people asking for in-person events, but when we plan them, they don’t show up,” Ramot says. “Then they complain they’re lonely.”

This past April, Shaklee instead held a mandatory get-together with the chief executive, who had relocated to Florida during the pandemic and was in town. About 100 employees gathered at a brewery for food, drinks and conversation—and no speeches from the bosses.

There was a buzz in the air, Ramot says, as staff hugged and delighted in seeing each other, some for the first time. “People were saying, I miss this,” he says.