According to the BBC, the Bank of England lowered rates earlier on Thursday by 25 basis points to where the key lending rate now sits at 4.5%. The base rate is now at its lowest since June, 2023. They forecast inflation to rise to 3.7% later this year, blaming it on rising energy costs and even rising bus fares but the big kicker is their growth forecast, which has been slashed by half! Previous forecast saw 1.5% growth but now, they see only 0.75% growth. This year's 'disastrous' budget likely spells fewer rate cuts this year, according to the Conservatives.
The U.K. saw interest rates begin to rise in earnest in January, 2022, from near zero to a peak of 5.25% before introducing rate cuts starting last fall. This is now the third 25 basis point cut from the BoE in this new 'easing' cycle.
But... it wasn't just the Bank of England lowering rates. The Reserve Bank of India cut rates the following day, also by 25 basis points to 6.25%. Also, the South African Reserve Bank too has lowered rates by 25 basis points (one quarter of one percent) to (just) 11%! It was the Bank of Canada who led the charge in late January, being the first of the G7 to lower rates this year, followed by the European Central Bank.
More on this story: Bank of England Lowers Rates.
I think it's safe to say that the strong US dollar has sent a shiver through the spines of these central banks as they scamper to prop up their weakening currencies amid President Trump's tariff threats. Even the Bank of Canada has specifically stated that monetary tightening is over. That is a sure sign that more money printing is on the way.
The one hold out has been the Federal Reserve (which is not Federal and has NO reserves). The FED chose to pause the week prior, leaving rates unchanged but with the spot price and futures price of gold hitting new all-time highs this week against the USD and with strong expectations that gold will surpass $3,000 soon, a FED rate cut is likely sometime over the next few months. Maybe it might come sooner!
On Thursday, gold futures hit an intraday high $2,906, surpassing the $2,900 threshold for the very first time. The daily spot price also hit a new record high this week, as shown in the graph below provided by Kitco News. We can see that on Wednesday and Thursday, gold passed $2,880 per ounce. In fact, by Wednesday, gold hit new intraday record highs for the fifth consecutive day!
Most might say the threat of tariffs are fueling the high gold prices and that surely is playing a part but word is out that there's a great disconnect between the LBMA and the COMEX. Many of you are aware that these two behemoths have run up a giant scam, printing up as much as 500 paper ounces for every physical ounce of gold in their vaults. Most of the time, these futures contracts are just rolled over, perpetuating the scam. Lately though, investor have been demanding physical delivery. They want their gold!
In an article published this weekend on Zero Hedge titled, 'Is someone attacking the Comex? January sees $5.2B in gold deliveries' by Peter Schiff, he says that in the last five years he's been keeping an eye on this, he's never seen anything like it! As a result of this unprecedented demand for physical, the Comex now has a 4 to 8 week delivery lag coming from London. According Kenesis Money, the Comex may actually fold later this year.
It wouldn't be the first time something like that has happened. The London Gold Pool collapsed in 1968, just as silver was being taken out of circulation and only three years before the 'Nixon Shock', when the USA decoupled gold from the dollar and it's been fiat ever since. In other words, the London Gold Pool collapsed right before the emergence of the new financial paradigm introduced in August, 1971. I think it's safe to assume that if the LBMA and Comex collapse this time around (which will happen eventually), it will mark the beginning of a new financial paradigm. We can all feel it already with the emergence of cryptos so it should come as no surprise to those in the know.
Another key factor regarding gold is the insatiable appetite coming from central banks themselves! While not a record, central banks cumulatively hauled in over 1,000 tonnes of gold for the year 2024, making this the third year in a row central bank purchases surpassed 1,000 tonnes. I can tell you this is unprecedented and a clear sign central bankers are up to something and it all relates to gold.
Total demand for 2024, when including industry, investors, jewelry, etc., did indeed hit a fresh new record high 4,974 tonnes. Let that sink in. Demand for physical gold almost surpassed 5,000 tonnes in the last year, even as prices continue to hit fresh new highs, seemingly on a daily basis now. High prices are usually detrimental to sales but it seems the opposite is true for gold. The higher the price goes, the higher the intensity of total sales.
I don't know everything. That's impossible but I do know one thing with certainty. These are amazing times!
Comments are welcome.
More on gold futures: Gold futures surpass $2,900 for first time!
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