Before I 'begin', I'll like to formally announce that my blog, 'The Brave New World' has been rebranded as 'Morning JAVA'. Practically all of my posts since about February have had the Morning JAVA title affixed to it. So this particular morning, I decided to go full JAVA, so to speak. All future posts will now be uploaded to my Morning JAVA blog.
'What is Morning JAVA', you might ask? I like to write and publish in the morning, fresh cup 'o coffee at my side. Hopefully, my posts provide for good reading in the morning (or anytime of the day) for my followers and casual visitors while you're enjoying a good cup of coffee as well. Please share your thoughts in the comments section and let me know how I'm doing. If you have any suggestions for future posts, please let me know.
Without further adieu...
Upon yesterday's close, August gold futures hit a new record high of $2470.20 per ounce and seems well on its way to striking $2,500. With the attempted assassination of Donald Trump on Saturday, I had a strong feeling precious metals would rise in following days. As it turns out, I wasn't that far off. The gold price didn't stop there.
By 10pm last night, gold hit another record intraday high of about $2,482, as shown in the real-time chart below, provided by Kitco News. At time of writing, gold stands as $2,469!
Silver is also doing fairly well, holding around $31 per ounce, although it probably should be closer to $300. Bix Weir, of roadtoroota.com posted a video just yesterday titled, 'Silver Alert! India Stops Silver Rigger Plans!' He pointed out last Spring that India has been buying astronomical amounts of silver to feed their solar panel manufacturing with February being a record haul. By the end of May, India's silver imports topped the previous year's total imports. It's not just India. China has been on a silver buying spree as well.
I don't need to explain why precious metals are doing so well but I'll give you a hint. Notice everything getting more and more expensive? Well, it's not. It's the purchasing power of your currency collapsing. Little by little at first till suddenly, everyone notices and feels the pinch. I think we've reached that point.
If central banks around the world (except the Bank Of Canada) are buying gold hand over fist, it tells you they know something is coming and aren't telling us but their actions speak volumes. If they're buying gold, maybe we should too!
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Then, there's the CRE (Commercial Real Estate) bubble that's bursting before our eyes. I started writing about this as far back as two years ago, when the BoC and the FED started raising interest rates. I knew about the 'lag time', that it could take a year to two years before the effects of rising rates take hold on markets and to get ready for coming turmoil in real estate. That lag time has arrived. We've already seen several banks collapse, including one of the most systemically important institutions in Europe, Credit Suisse! It's all directly related to rising rates and commercial real estate. One building in Los Angeles sold for 45% off... its 2014 selling price, last December. Somebody lost a lot of money on that one, including the banks. There are more and there will be more. The banks are holding on to so many bad CRE loans, filtering them as 'unrealized losses', meaning they will have to realize these massive losses sooner or later. Expect more banks to fail???
In fact, the Bank Of Canada, followed the next day by a similar move from the ECB, was the first of the G7 countries to lower rates by a quarter percent just last month. Are they starting to panic? After all, the last 2 years of rising interest rates have been the most aggressive on record, maybe just a little bit too aggressive? Now, they're paying the price, along with the rest of us. I fully expect a rate cut from the FED by September at the latest but it could come as soon as the next FOMC (Federal Open Markets Committee) meeting.
Incidentally, in an article published by Bloomberg two days ago, they give three reasons why there should be a FED rate cute in July, instead of waiting until September. The next F.O.M.C. meeting is set for July 30 / 31. There won't be another until September 17 / 18. With a general election set for November in the USA, a rate cut is highly likely and probable.
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Things are becoming so dire that just a couple of weeks ago, a century old Japanese bank, Norinchukin announced they were (suddenly) facing losses of almost $13 billion, triple the total they announced just the month prior! Now, they're forced to sell more than $60 billion in US and European bonds to cover their losses. They directly blame higher for longer interest rates. This amounts to a third of their sovereign holdings!
Just another sign that gold is headed higher. Now, as for the Bank Of Canada, which sold off the last of its gold holdings in 2016 but don't worry fellow Canadians, according to the state sponsored CBC, the BoC still has a whopping 77 ounces on its books. That should save us, eh?
Another thing I fully expect and very soon, a headline that reads something like this... 'Bank Of Canada buys a ton of gold to shore up empty reserves'!
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