The Shift Is Underway

Written by Gerardo Del Real
Posted July 22, 2019

All eyes are on the Fed next week as it is widely expected that it will cut rates for the first time in 10 years.

The only question is whether the Fed cuts by 25 or 50 basis points.

In the end, it doesn’t matter. The Fed is now the world’s central bank as central banks from South Korea, Indonesia, and New Zealand have already begun to reduce rates in a futile effort to stimulate growth.

Expect monetary policy from here to year-end to be aggressive as the world attempts to pull off one last artificial great reflation before the next global contagion.

Sound alarmist? Let’s chat by the end of next year.

In the meantime, while everyone is paying attention to what’s happening here in the U.S., the next hint of just how much trouble central banks are in happens this week as the ECB meets and decides whether to cut in September or get right to it and lower rates now.

A few weeks back, I told you that Managing Director of the International Monetary Fund Christine Lagarde had been nominated to become the next president of the European Central Bank.

She’s been confirmed and the question now is not if the ECB starts cutting rates — it will because it has to — but when it decides to announce the next round of quantitative easing.

Again, like with the uranium space, it’s a matter of when, not if.

The ECB will absolutely be bidding up assets in a new round of quantitative easing. Ms. Lagarde starts her term on November 1, 2019.

She takes over a region with severe structural issues.

I’ve told you in the past about the weak links in the Eurozone but a quick peek at the strongest member in the Eurozone — Germany — is telling.

Unemployment rose the most in a decade in May.

Martin Armstrong recently highlighted that Germany now shows 47% of its population is employed, with 22% being retired.

It’s predicted by Bundesbank that construction has declined in the three months through the end of June.

Car production is down, same for exports.

Despite the clear trend for interest rates around the world, the mainstream media is likely at least a year away from shining a real light on the opportunity in the space.

Hedge fund titan Ray Dalio recently wrote an excellent piece that not only highlighted the “paradigm shift” we’re in, but why it’s favorable for gold, calling it a top investment.

For the serious speculators among you, the article is a must read.

I’ll leave you with a quote that summarizes the piece well:

“In paradigm shifts, most people get caught overextended doing something overly popular and get really hurt,” he wrote. “On the other hand, if you’re astute enough to understand these shifts, you can navigate them well or at least protect yourself against them.”

The shift is underway. The ECB will show its hand this week. Pay attention to that.

Also pay attention to the new home sales and durable goods orders scheduled for Wednesday and Thursday and the economic data on Friday.

The data will point the way and indicate whether we get a 25 or 50 basis point cut on the 31st of this month.

In the end, it won’t matter. The great reflation begins this month with the first rate cut in a decade. Remember what happened last time?

Ray Dalio is right. Get into gold.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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