Coronavirus, Economic Slowdown Force Fed to Cut by Half a Percent

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For an up to date report on COVID-19 infection lethality rates, please read update provided in our Q2 Quarterly (see page 7).

Reporting from the PDAC conference in Toronto…

The Fed just cut rates by half a percent to combat the global slowdown effects caused by the Coronavirus. We just wrote that the Coronavirus appears to be much worse than reported by China (see video link). Indeed, top CDC officials have stopped just short of declaring the virus a global pandemic.

MIF and PDAC conference participants here in Toronto have been wagering on whether the Fed would invoke an emergency rate cut Monday. As it turns out, the Fed did just that on Tuesday amid strong uncertainty the market would recover given the spread of the virus and fear in the markets.

We wrote last year during the last Fed rate cut that the central bank would never be able to stop, and had ushered in the death of the dollar. This is before the Coronavirus hit markets, making the case of forever quantitative easing that much stronger. Who knows whether medical officials around the world will be able to stop the spread of the virus, or whether it reaches a more deadly stage across the world.

But what it has exposed is the paper thin facade the bull markets had been operating on. Fundamentally, they sit atop a house of sand of eroding debt and a tapped out consumer who can do no more. Regardless of what happens next with the virus, it appears the liquidation of the massive debt bubble around the world is beginning and will continue unabated, much to the chagrin of Trump during an election year.

That is why we are covering the precious metals here at the PDAC conference in Toronto. I am busy speaking with CEOs of many pm companies, and hobnobbing with many other industry experts. Look forward to important updates when I get back later this week and next.

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