First, it was Canada's central bank that lowered its key lending rate on Tuesday by 25 basis points or one quarter of one percent to 3%. Not only that, the Bank of Canada also announced the end of quantitative tightening and the restart asset purchases in March. This suggests Canada is about to turn on the printing presses again, just in time for the new 25% across the board tariffs imposed by the new Trump admin that went into effect today (Feb. 1). While the Canadian dollar is still relatively strong, it will buy only about 69 cents USD. Yet, if the tariffs persist into a flown blown trade war, the 'loonie' as the Canadian dollar is known, will likely suffer further. Let's hope we come to a resolution soon! More on this story: Bank of Canada Lowers Rates...

On Wednesday after the end of their first FOMC meeting of the year, the FED announced a pause, keeping rates at 4.25 / 4.5%, followed by a rebuke by President Trump against FED Chairman Jerome Powell. Trump wants rates lowered to boost the ecomomy. The FED has already lowered rates three times since last fall, starting in September with a rather large half percent cut. Their reasoning for the pause is that inflation is still high. Core CPI remains at around 3%. Interestingly but not surprising, M2 money supply crept up in December by 0.4%. May not seem like much but we're talking trillions here. About a year ago, the M2 money supply stood at $20.6 trillion. By December, that number has risen to $21.5 trillion. That's an extra $900 billion in currency added to the money supply in just the last year! Money Metals Exchange suggests this actually represents an annual inflation rate closer to 5%. More on this story: FED Hits The Pause Button.

Then, on Thursday the European Central Bank lowered their key lending rate to 2.75%, their fifth rate cut since June, 2024 'As Eurozone Economy Flatlines', according to an article posted by Yahoo Finance. The Eurozone is in panic mode, in my opinion, as the Trump admin prepares tariffs possibly set for March 1, although that is not set in stone yet. It is expected the ECB will lower rates again throughout the year, to the tune of a full percentage cut. The Eurozone economy grew by just 0.2% in the last quarter, thanks to Germany and France's faltering economies. More on this story: ECB Cuts Rates For Fifth Time.

The new 25% tariffs on Canada and Mexico, along with a 10% tariff on China starting today is sure to affect currency valuations. The big winner as of late in this boondoggle is none other than gold which hit a new record intraday high yesterday just above $2,820 before settling to close the week just below $2,800! This may be a record weekly / monthly close but I can't confirmed yet. Please let me know in the comments section if you know otherwise.

Gold has enjoyed about 40 record new record highs in the last 12 months and just keeps on chugging along. Gold is at record highs against every currency out there but as a Canadian, I can tell you we Canadians are definitely feeling the pinch. Gold hit a new high against the 'loonie' yesterday morning, climbing above $4,090 before retracing to $4,066 by the day's close. OUCH!

With trade wars on the horizon, expect central banks to scramble and fumble over themselves as they try to prop up their increasingly worthless currencies. The Canadian dollar is an excellent example that now is the time to hedge and gold is certainly proving itself to be a worthy hedge against their purposely imposed inflation , a.k.a, robbing us blind. Maybe that's why so many people can't see what's really going on.

Other central bank news:

Japan raises rates to 17 year high 0.5%!

Brazil lifts rates by 1% to 13.25%, again in March!

Here's to a great morning cup of coffee!

UPDATE Feb. 2, 2025: The consensus was that tariffs would be immediately applied starting February 1. As it turns out, President Trump did sign the executive order yesterday but the tariffs don't go into effect until Tuesday, February 4 which include 25% tariffs on manufactured goods, not across the board, along with 10% tariffs for oil and gas to go into effect later this month. Both the Canadian and Mexican governments have announced retaliatory tariffs against the USA. It is my hope this issue is resolved soon!