I'm seeing a flurry of articles popping up that the BoC is holding rates at 5% after their latest policy meeting which was a widely expected move. Kitco News reports that gold has moved very little after the announcement and stated that the slowing economy has 'pushed the bank to the sidelines' while inflation, which we've all felt in the last couple of years, continues to be high. The Bank posted they're keeping a close eye on the economy and inflation and will raise rates if necessary. It pointed out that the economy has entered a period of weaker growth which (in theory) should tampen inflation a bit.
Gasoline prices in Ontario over the long weekend hovered around the $1.60 mark. It was $1.00 a litre in 2020. I've noticed prices going up everywhere this summer. Every late summer / fall, I like to buy several jars of honey to keep over the winter, which I like to sweeten my fresh brewed coffee with. Since 2017, I noticed drastic increases in the price of honey. I recall paying $18.50 for a large jar that year. Now, I'm seeing the sticker price is $28 and up. That's a huge increase in just 6 years!
Zero Hedge also put out an article this morning. Their article reminds us that the BoC's rate of 5% is the highest in 22 years and that it's increased 4.75% since March 2022. I've mentioned in previous articles that these rate hikes have been the most aggressive on record, same as with the FED's rate increases since April, 2022. The article also points out how central bank behavior has really started to get out of whack such as a 75 point basis point cut from the Polish central bank.
Let's not forget the 'rate hike lag effect', in which rate increases or decreases are felt 6 to 9 months later and onward. The BoC's rate increases this year won't be felt until early next year. The Rumble channel, Market Mania reports that close to 22% of Canadians who have mortgages can't afford them and that mass defaults are coming and also points out that Canada's commercial banks themselves are in deep trouble because of it.
Gold has dropped more than $20 in the last 24 hours but remains historically high at $1,917 USD at time of writing. The real news affecting the price of gold and the dollar is the announcement by Saudi Arabia and Russia to extend production cuts to the end of the year. The news sent oil to a new 2023 high. Both Brent and WTI crude oil are up more than 1% at $90.69 and $87.83 respectively. There are predictions that oil could go to $107 as a production deficit approached 3 million barrels per day.
Next up, will the FED pause as well? There are reports that several U.S. banks are in serious financial trouble. Steven Van Metre reported 5 days ago that a leaked report shows 7 major banks are in deep trouble. It's probably for the same reasons some of Canada's banks are in trouble. It's because a large portion of their portfolio is in the mortgage business. Whether residential or commercial, both are headed down from the pressure of rising rates. Mortgage delinquencies coupled with lowering real estate values are a recipe for disaster for these banks.
Is this a September to remember? The coming weeks and months should be interesting. All we can do is step back and watch it all play out.
Peace and love to everyone!
I'm now also on Substack where I will soon begin new podcasts as well as post extra material.
Previous Posts:
Why can't we all just get along?
When you witness a robbery in progress.
Oil prices in gold remarkably stable for last 70+ years.
Thief decides to rob wrong store.
Gold backed BRICS+ currency in the works?
Spent money is not saved money.
Tucker, Hunter and missing subs.
USA DEBT: $32 Trillion and counting...
San Francisco - Echoes of old Detroit
M2 money contraction + rate hike double lag effect
Silver's massive 237 million ounce deficit
Never before seen divergence between silver and gold.
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