Credit Card Delinquencies Signal Economic Shifts: Impacts on Consumer Spending and Gold Prices


October 27, 2023


1. Credit Card Delinquencies and Economic Recession:

Rising levels of credit card delinquencies over 30 and 90 days in the United States are often precursors to an economic recession. As credit card holders delay payments on outstanding balances, it historically indicates an upcoming economic slowdown. Consumers, facing strained balance sheets, cut back on spending, affecting both discretionary items like dining out and travel, and essentials like medication and food. 段落图片2

2. Market Reactions and Federal Reserve's Monetary Policy:

Data since 2003 shows that once credit card defaults broke the declining trend in July 2007, it heralded an imminent economic recession and signaled a peak in the stock market. Conversely, when 30-day delinquencies form a double top and break support, it indicates economic improvement, acting as a bullish signal for the stock market. Increasing speculation that the Federal Reserve might end its rate-tightening cycle aligns with the recent approach of gold prices to $2000 per ounce. 段落图片3

3. Gold Prices and Economic Indicators:

The bullish trend in gold becomes evident once prices surpass $1940 per ounce. Gold is projected to reach new historical highs of $2075 in the coming months. A monthly close above $2100 could set the stage for long-term targets of $3500 or more. This trend reflects the market's response to economic uncertainties and shifts in monetary policy.