Central banks continue to cut rates on a global scale. The ECB, the central bank of Denmark and the Chilean central bank cut 25 bps each this week. But also did Turkey, Philippines, South Korea and New Zealand. Rates are going down to provide support to their respective economies in the understanding that inflation is under control, with the ultimate goal of avoiding a recession. As of today, perhaps with the exception of China, no central bank is talking about recession, but all of them are taking action. And because of that, gold keeps climbing to new highs. It is up 30% for the year and 62% over the last 2 years. It is the canary in the coal mine, telling us there is too much fiat money in the system and its value is being diluted. Next meeting for the Fed is on Nov 7th, and the odds for a cut are above 90%, and in China while the details in stimulus package are still being debated, GDP came lighter than expected at 4.6% YoY, and the governor of the PBoC said that a rate cut could come as soon as Monday. The global dovish trend is clear.
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