June 7 Episode
01:04:52 Share

Welcome to Money Talks. My name is Mike Campbell. Hey, you're going to love this. I've got Peter Grandich with me. Peter's been on a real hot streak, telling our audience, too, and at the World Outlook Conference. First of all, that's when he first said, hey, I'm interested in silver again for the first time in years. Boy, recent highs there. But talking about gold's little dip and then back, talking about copper's resurgence, a lot of things. I think you're going to find what Peter's got to say fascinating, especially in light of sort of the political circumstances now around

coming out of the States, but also Canada's response. So more of that coming up. I've got Andrew Rulon with me also, Integrated Wealth Management. I've got Ozzy with me. I've got Rob Levy talking about no interest rate decrease this week, but there's a lot of implications to that. And of course, I've also, as I said, got Ozzy, but I've also got Victor Adair. But first, let me start with a fact, and it's arguably the biggest financial fact in Canada.

You know that the federal government needs to borrow, this is a huge number, $3.27 trillion between now and 2030. I mean, come on, that's a number so big that it's incomprehensible. And by the way, it's such a big number because we don't pay off our debt. So when past borrowing matures, we have to refinance it.

That part alone adds up to more than $2.8 trillion has to be refinanced over the next five years. Well, then we have to add on the borrowing to finance the new deficit, which amounts to another $270 billion to be borrowed between now and April 1st, 2030.

You're going to hear a lot more about this debt in the next five years. And it's interesting, though, because attitudes about government debt and deficits, I think, is one of the biggest political divides in the country. On the one hand, you have the Liberals and NDP continuing to show no sign of concern about the buildup in debt and deficits and the increasing interest payments versus Conservatives who

who worry about the increasing amount of tax dollars going to pay interest just on that existing debt. And by the way, that's up 300% in terms of the share of government spending in the last five years. Along with the financial burden we're passing along to younger generations. Again, obviously not a concern for some. But the key takeaway, and this is, I think, hard for a lot of people

to understand. The key takeaway is that it doesn't matter your party allegiance. Canada's still got to borrow $3.27 trillion in the next five years. And the second point to get is that the only realistic way to come up with that money is through borrowing in the credit markets by issuing bonds.

Which brings me to Prime Minister Carney's talk of dividing spending in the budget. The federal budget will be in two categories, one for operations and the other for investments. Now, he didn't provide any details or clear definition of what an investment is.

at least one that governments won't be tempted to manipulate for political reasons. I mean, balancing the operations side of the budget, by the way, is going to be easy as calling some expenditures investments. How about this? $1.4 billion given to the CBC, which the federal liberals have called consistently, in quotes, an investment in culture, journalism, and regional connectivity. They called ArriveCAN, in quotes, an investment in public safety and digital innovation.

And under Prime Minister Carney's scheme, presto, the $60 million spent could be moved from operations to the investment side of the budget. They called the infamous financial and ethical disaster Sustainable Technology Development Canada, in quotes, an investment in environmental sustainability and green jobs.

They called the GST holiday, which finance minister at the time, Chrystia Freeland, admitted was an unaffordable political gimmick, but they called it an investment in affordability. I think you get the idea. Just about anything the government spends money on can, and what's worrisome, probably will be called an investment. Presto, balanced operating budget, while the federal government debt actually grows.

But these aren't investments. They earn no return while the interest on the borrowing continues to compound. You know, unfortunately, I got to admit that I don't have confidence for the majority of the political commentary to appreciate in the real world.

The institutions and people we need to lend us money couldn't care less about some artificial distinction Prime Minister Carney proposes to make. Instead, what they look at is things like or metrics like debt to GDP, deficits to GDP, debt servicing capacity, economic growth and other measures. They couldn't care less whether the government is borrowing funds for operations or capital investments.

In short, it's an irrelevant bit of political theater I think we're going to be treated to when it comes to borrowing $3.27 trillion over the next five years. You know what? Prime Minister Carney knows this, by the way, but he hopes you don't.

I love the way George Mason, a university economist, got to the heart of this problem when he states, government should stop calling all spending investment. Real investment earns a return. If it did, the private sector would already be doing it. If it doesn't, it's just spending. Call it what it is.

Hey, just a reminder, depending on when you're listening, but tomorrow, the Special Olympics Golf Tournament auction. I'm chairman of the golf tournament. We need to raise money. It opens. Only opens for a few days till the 12th. So it's www.

S-O-B-C classic.com. Go to www.sobcclassic.com. There's 138 incredible items. And I know a lot of people will just tune in or go on the page, see if there's something they could use. And there's some fabulous, fabulous things. There's so many little vacation items, short-term and long-term. I'll be bidding on those. Wine lovers will find lots of things that they enjoy. But

Hey, I'm asking you, all proceeds 100% go to Special Olympics, so it's really easy. Go to www.sobcclassic.com, sobcclassic.com. I really appreciate you do. Stay with us. I got Peter Grandich. It's going to be terrific.

One of the things I so much enjoyed in my career over the years is getting a chance to talk to Peter Grandich. And I mean, I knew Peter, well, I don't want to say how long ago, because he still looks fabulous, but...

You know, it was a long time ago. I knew him when the Wall Street Journal was calling him the Wall Street whiz kid, et cetera, et cetera. Peter, first of all, appreciate you finding time here. And boy, I think it's fortuitous. I'm just looking at the kinds of things you've told our audience, told yours on PeterGrandich.com, told our audience, told them at the World Outlook Conference,

And man, things to be really unrolling the way unfolding the way you wanted them to or thought they would not want it, but thought they would. I'm talking about, boy, as recently as going back to the Outlook conference, you said you better get involved in silver as one example. I'm going to get to some other examples because you were right about gold taking a pause, right about resurgence in copper. So give me your overview at this point.

Well, first of all, it's always an honor to speak to you, Michael, after all these years. I consider you a refreshing breeze of financial journalism out of Canada. So it's always a pleasure to speak to you, my friend. Thank you.

Yeah, it's been a quite interesting journey for me. I have noted that in my 42nd year, it's hard to imagine that when half the financial service advisors in America right now weren't even born when I started. But the bottom line is it's been probably the best five-year period for me for my entire career in terms of successes over failures. And one of the areas that was a real blessing was

In the end of 2021, as I spoke to you, I said, you know,

Michael, we're one in 1,000. I thought gold would actually outperform both stocks and bonds for capital appreciation. A good part of that was because of what was happening with BRICS, and now we've seen it with this trade war. And so I got so involved in the physical gold, and then fortunately when it started to break above 3,000, I switched to the producers. And then a couple of months ago, I sent it all in, kind of speak, on the juniors. And that has really been rewarding along with turning bullish on silver,

Even at your conferences years ago, silver bugs would get mad at me because when they asked me, what do you think of silver? I say, well, it's like kissing your sister. I always put gold ahead of silver recently. And I actually said I thought silver could outperform. And as you and I speak today, it's finally breaking out. And so overall, it's been a great success, but it comes with concerns, Mike. And I know you express them because I listen to you every day. I think there's all this is the most troublesome I've ever felt.

about the whole picture in my 42-year career.

Well, one of the things that I'm, you know, you make some comments and they age poorly or age well. This one aged well, and this has been our theme, is if people are expecting government to bail them out, they're going to be, you know, really disappointed. I'm not talking the politics of it. I'm just saying government. And so you have to protect yourself. And I still think that's the case. And I think the things you elaborated on and recommended are exactly how you do indeed protect yourself.

Yeah, like seven out of 10 families that I still a part of a financial planning group here just for U.S. residents and still seven out of 10 families come in doing two things that are not going to lead to success. One is they're continuing to spend more than they make, which is a government success story. They do it at the best.

And they also have not an understanding of how difficult it's going to be and not the expectation that somehow, as you said, government will be there to support them at a time when the government is running to the point, at least here in the U.S., where we may not even be able to stop paying our interest payments, let alone forget about paying back.

you know, 36 trillion on the way to 50 trillion and all. And I think the other important thing that needs to be discussed, and if you don't mind, I don't want to change your course and all, but when I think about Canada, it was my home away from home. I spent more time there certainly than any other place. And I was there on a monthly basis for over 25 years.

And when I think about Canada, I think about the most ever there was a difference of opinion was an old movie called Canadian Bacon, which really made fun of both sides, but it really demonstrated underneath what great allies we were, what great dependents we were. And now I don't see that. I know I still have a lot of Canadian friends and I think the United States, and this is a

a big part of my planning. I think Trump did good in terms of immigration. I think he did some positive things in the Middle East that could work out. But I think he made a very big mistake carrying a big bully stick into this trade war instead of an olive branch. And I think it's going to come back to bite him, including with Canada.

Well, it's interesting how many people just discovered the word tariff means they're paying. And it doesn't matter if it's in the U.S., I find that consciousness, you know, increasing. And it's things like the 50% aluminum tariff. Well, you've got Alcoa saying, oh, good, that'll cost us 2,000 jobs in the States, you know, by raising the costs. Or I was reading about a tin can manufacturer, you know, pop cans, the aluminum pop cans.

saying how much this is going to be devastating. On the Canadian side, again, I can guarantee at first, people didn't understand when we put on a retaliatory tariff, Canadians are paying them. And I think all of that's working through. And no, it's just not sound economic policy. I couldn't agree with you more. It's a shame that that's how it was launched. You know, Mike, the shame of it really is, is that

Canada is, and you follow it much more closely than I do, but it's always been a favorite place of mine. So I still keep an eye on it. I used to write a newsletter called North to the Border about Canada. Canada has gone down the same road with us. We're going down the kind of same rabbit hole together, even though right now there's a lot of friction between us and all. And when you look around the world,

And you see it, there's not a lot of great spots. Like if you say like, okay, if I'm not going to stay in North America, where would I head? There's not a lot of places in Europe, at least Western Europe. I think France and England, even Ireland, they got huge problems with changes. Absolutely. All kinds of stuff and all.

And I think America, particularly Trump, although as you and I speak, he's talking again how he's going to talk to them and all. He's talking to them because hitting them with a stick didn't work. But I think China is a very formidable opponent, whether you like them or not. And I'm not a fan. And I think he underestimated not just them, but others. And as much as he'll spin it, you can't win a war of words with Trump. Right.

you can call him every name in the book and he'll just keep spitting out what he feels about you. But I think when you start to see what people are saying outside his little dome,

Uh, mostly everybody's going like this with the United States. And I think it's going to come back hard on us. We're already slipping economically here. We're close to recession. You never know until six to 12 months later that it actually was, but we're teetering on that. And I just think, uh, that makes the stock market even more concerning to me. And let me just add one thing, Mike, this, if I had to say any one thing on your show,

I've been advising people lately, please stop watching the stock market. Watch the U.S. bond market. The U.S. bond market is not only tremendously bigger, it's far more important. And how you know that?

It's very rare that the bond market reacts to something that the stock market does. But it's very often the stock market will react to what the bond market is doing or not doing. And there we have a very, very big problem. This deficit and this so-called big bill, I think if it passes the Senate in the way that it's currently constructed, I think it's going to be viewed detrimental by the few people that still want to finance us, which is going to make...

more of a problem for us to keep funding these deficit spending. And that's certainly what the bond market's saying at this point. You know, I remember going back, I think it was in October, and you had the Federal Reserve lowering interest rates and the yield on the 10-year bond went up. In other

what you're saying. We have other issues. And I think, you know, I agree with you completely that you look at the inflation numbers, they're not coming down. You know, they're stubborn in Canada, stubborn in the United States. If they do raise rates, I mean, it's a theme people have heard here on the show, and they're going to continue. If they raise rates because they're worried about inflation, well, presto, you've got a bigger deficit problem at a time when, what, $2 trillion in interest is going to be paid in the next 12 months? You know, we're getting to the

I'm not a fan of the Fed, Mike, but I will defend Powell on this much.

I think he recognizes this coming funding problem. That's one of the reasons why he hasn't wanted to cut interest rates because he thinks it would make it even more difficult to raise money that eventually we're going to have to raise rates or get some sort of, and this is just a pick of mine. I don't have anything to say it other than a gut feeling, but I believe in 12 to 24 months, we're going to need to use our gold to back bonds in order to keep getting the financing that we're going to need in all. So I think,

Again, watch the bond market as much as we watch the Dow each day and think that's important. What the bond market is doing or not doing, especially in terms even in other areas like Japan, that's a real critical thing that I think people have to watch.

Well, we put that up as our shocking stat, I'm guessing at about three weeks ago, when that 40-year bond in Japan went up from a low, I'm talking the low, but 0.15% 10 years ago to 3.5%. You know, can you imagine the losses that anybody who'd bought a bond in the previous 40 years would be taking? You know, and that's the point. I just think you're absolutely right. Watch the bond market grow.

I'm worried that people aren't understanding it or because certain you can't stare at it and go, this would be anything good. What's going on in those markets. They'll have a large banking system in the U S that has a lot of unrealized losses. Yeah. It puts so much money in those bonds. Why not? Treasuries were only a percent percent and a half and they're down double digit losses. And the fed keeps that in their back of the mind too. And all. So again, uh,

Interest rates, geopolitical economy, when you start to mix them all together, it's hard for me to come up with a bullish scenario for general equities here in the U.S.

I think at the very least, people should have that caution sign, you know, flashing for them. And you have to decide what your risk parameters are, et cetera. To me, I know that losing money is a lot worse than not making as much as I could have. You know what I mean? And I've been on both sides, by the way. There's an old saying that I've used. It's not how much you make, it's how much you don't lose, which is actually going to separate you from the winners versus the losers.

Yeah, so very important. And back to what we were saying in the upset, though, is that people want to know, okay, how do I protect myself?

Yet we are getting tons of warning in the bond market. And in the States, it seems to be more prominent, the worries about the deficit, you know, the worries about the level of interest being paid on the deficit federally. You have state problems too and municipal problems in some specific areas, et cetera. That seems to be getting more play. And maybe it is that big, beautiful bill that's brought it to the forefront, at least added things. But then people want to know, I get you, but what should I do about it?

Well, I've been joking with my Canadian friends for a while now in all this 51st state and such an insult to tell people. I wouldn't want the premier prime minister of Canada telling me he wants me to become part of Canada. But I like to joke and say, if you guys don't mind taking California, Illinois and even New Jersey, and we'll just take Alberta and call it even because we have some states that are in very bad shape. People do not understand that.

They don't have the printing presses that the Federal Reserve has. We have tremendous underfunded pensions with a great part of the boomer group coming now, hoping that these money was going to be there. We have police and fire unions that were counting on that, that it's not there for them here in New Jersey. And so when you take all those issues and two thirds of Americans working paycheck to paycheck,

You know, our Secretary-Treasurer might just change a little. He's the only guy I like out of the Trump group. I'm not a fan of Nick and these other guys, but I kind of like this guy. And he made a comment two months ago, Mike, that I think we should all focus on going forward. He noted, and I found it to be true after I researched it, he said that the top 10% of wealthiest Americans own 86% of all the assets.

The next 40% have the remaining 14%, and half of Americans don't have any assets at all. In fact, the bottom 50% of working force not only can't have $2,000 saved for emergency, but half of them are using credit cards or the new gimmick in credit, this buy now, pay later stuff, which now you could actually charge it on door cash.

Get your taco on credit. But it's that whole mentality that's just poured to what's going on, on people borrowing and betting on they're going to be able to somehow pay it. I always like to say, Mike, the thing that changed when you and I were both young and now the young kids is our parents used to ask, can we afford this? Now it's asked, can we make the first payment?

And I think that's a huge change. And that's another big challenge that we face here. And I don't think it's alone here in the US, but I know it's acute because of the families that I still sit with and all. And I see how much they have acquired debt through car loans, home equity loans, two mortgages. I'll tell you this, Mike, first time I've ever seen this in 40 years of doing planning. Up until five years ago, a typical retiree coming in had no mortgage debt or really any debt at all.

Now they have a lot of debt, including mortgage debt. And that's another issue for those seniors, because now the biggest fear among seniors is no longer passing away. It's running out of money. And this is, again, a group that's going to look for the government to do something for them at a time when the government can least afford to.

Well, I spend a lot of time thinking about what are the implications? How is this going to play through? So one of my conclusions going back several years is, you know, the old the central bank can still print the money. Well, it just means your money buys less. And I know it's called inflation and a lot by a lot of people. I just think, no, it just doesn't buy very much. And that's what I love your distinction. I don't think that's in Canada. I can guarantee you it's not talked about this much.

gap between have and have not, which is at least half the population. In fact, surveys we get, it's about 55% say, I'm under tremendous financial stress. I'm borrowing money to meet necessities. Forget about having something in the bank. I think that's a social dynamic that is going to rear its head because at least again, I'll speak for Canada, completely ignored.

You know, I know that President Trump could make a case that he cares about the working class. And, you know, that's what I may think some of his things are ill-conceived. I do think the tariffs are ill-conceived as an example. But, yeah, it's not even on our radar here in Canada, this huge gap between have and have not. And if you look historically about that, because I did a lot of that in my work.

That's what killed most empires when the people more and more got to the bottom rung. And eventually, even though there was a very wealthy group, eventually the masses just had to react. And they don't react non-violently. They act very violently and all. And I keep talking about, Mike, and seeing more and more evidence. We are going to have a battle of the ages. And what I say about that is,

You and Canada have already experienced, and Americans were shocked to hear it, that sometimes it's been considered if an older person was desolated either financially or physically,

consider suicide. Well, we now have seven states that are basically allowing that too and more considering it. And why I say and bring that example up, it's a horrible thing to talk about is, think about this. I'm 60 now, now, Mike. 10 years from now, I'm still living off, but now some sort of operation to keep my life going is going to cost hundreds of thousands. Well, there's some 39-year-old or 29-year-old working tax the debt because taxes are already going to go up. He's got to be able to say, wait a minute, this guy, granted, he's

He's about to kick the bucket. I can't put food on my table and you want to tax me to pay for a plan that I'm never going to collect from. I think there's going to be a big fight someday between the ages and the groups. And it ain't that far off. So it's just one of many, many things that, you know, put me in the foxhole. More than happy to wear my chicken suit in that foxhole. But I think it's a good place to be.

I'll just tell you briefly an anecdotal story. I was doing a Zoom call with a group of, I'd say, 30-somethings. And one of the questions they asked was, where do you think we end up? What do you think's next? Well, what I was shocked with, they thought revolution. It's anecdotal completely, but they recognize what you're talking about. We just saw a dynamic in the Canadian federal election where the likelihood to vote liberal who won was 55 plus. But the younger...

youth of Canada, voted Conservative because they were the one talking about cost of living or maybe convincingly talked about housing, however they dynamic, but there was definitely a split in the vote that way. Yeah, we're seeing it here too. What's interesting, the polls, not knowing that was

specific about Canada's our polls down here of the young, the real younger generation is they're already talking about, they don't think they're going to be able to have the things that the boomer generation had. They've already accepted that in a sense, and they might accept it now, but as it becomes even more stressful for them and they see boomers steal that are around living a better life, I think it's going to be hard for them not to say, Hey, you know, you've gotten too much and you know, we should, you've had enough, whatever's left, we want it, not you.

It's interesting. Today's young people in Canada pay twice as much for the retirement group today than the retirement group paid when they were younger for that next retirement group. So that may have been confusing. They pay twice as much is what I'm trying to say, you know, along that dynamic. I come back then.

what your thesis is for the market, so you're cautious. But let's come back to precious metals and especially delve into a little bit about the stocks and the juniors with that in mind. Yeah, so I, like you said, really from $1,200, $1,300 on gold, it was banging the tables. But once we got up to the most recent high a couple months ago, we went to track, and now we're working back towards it.

I shifted my focus to the producers, but then I just went all in on, is the only way to be fairly described, but on the juniors because of the anomaly of never imagining that valuations of the thing that they're looking for is so high and yet no one was giving them any sort of value. And at the end of the day, the people that end up

Looking and finding the major ore bodies or the big companies is

They have not spent real money on exploration for almost 15, 20 years since basically the 211, 212 high. Because by 2015 or 16, barracks and reels were fighting to stay above water. They got so indebted and all. So they're not about to spend a 10 or 15 year program to start to develop projects on their own, especially with their currency now going up so high and record cash flow, Michael, free cash flow on producers is off the board.

And think about this goal was maybe 3000 a few months ago and they had record

free cash flow. Now it's 33, 3400. So that 3400 is added, but they didn't get that same increase in expenses. So their free cash flow is actually going to be higher the next few quarters. They're going to go out on the merger and acquisition mode. They're already starting. In fact, today, as you and I speak, there's been several worldwide and some great bought deals where people don't even have to try to raise the money. The bankers are telling them, we got it. We want to have it and all.

So I think finally the sun is shining. Just always remember this about the junior markets, Michael, because you and I have seen several cycles. Bull markets are always shorter than the bear markets. So don't get too caught up in it. But I think we're in the early stage of the junior market. And I think the interesting thing is,

It's a market that has been so ignored for so long. There's not a lot of overhang. There's not like a lot of people just 50 or 100 percent above are going to get out. This has basically been rung through. Basically, everybody that's in now has been in for a while. So the costs are very low. So I think that market has a lot of upside to it in the coming months.

And people can follow you on PeterGradage.com to get more updates and hear his broadcasts also. Peter, as usual, I can't tell you, you put a smile on my face every time. Thoughtful, prescient in many, many ways, and an absolute pleasure to get a chance to chat. Thank you. Same here, Michael. God bless you.

Time now for the quote of the week. You know, one of the most interesting aspects of the current, well, energy debate is the reluctance of virtually every member of the no fossil fuel crowd. You know, I'm talking politicians, special interest groups, members of the media, supporters in the public to admit there's been any errors in their agenda, which guarantees no lessons will be learned. But why?

And that brings me to the quote of the week by Steve Patterson, author of Square One, The Foundation of Knowledge. He's also the host of Patterson in Pursuit.

The longer the orthodoxy exists, the higher the cost of revision, potentially costing an entire class their relative social position. If, for example, the notion of the complete infinity in mathematics turns out to be bunk, or the cons of the vaccination outweigh the benefits, or the science of global warming is revealed to be corrupt, the social hierarchy will be upended, and the status of many intellectuals will be permanently damaged.

Some might end up tarred and feathered. With this perspective, it's not surprising that ridiculous dogmas can often take centuries, even millennia, to correct.

I was just thinking this past week where so much of what's going on talks about dollars, about interest rates and about debt. Well, I'm going to bring Rob Levy in now because we had our central bank weigh in earlier in the week and decided to hold our rates steady. It still seems like an aura of uncertainty is certainly controlling their decision making.

Absolutely right, Mike. You know, the big announcement anticipated from the Bank of Canada, but it seems in the weeks leading up to this announcement, the anticipation for them to cut interest rates again slowly, slowly dissipated. And, you know, no surprise, but the Bank of Canada not in a position to be able to cut interest rates, despite what we're seeing elsewhere in the market and the Canadian economy as they were on hold for yet another meeting.

Yeah. And again, we're back to the tariff uncertainty, the retaliatory tariff uncertainty impacts on that. They want to see the data. I'm a little worried, though, when they get the data, it might be a little late. You know, that's one of the criticisms. But I guess they're meeting what, July 30th is next. And still the consensus now, once again, and they've been wrong all the way along until, you know, moments before they announced. But the consensus is still for a couple more rate cuts this year. Yeah.

Yeah, you know, it is interesting because, as you said, the criticism, you know, one example, Dave Rosenberg in the Financial Post this past week, looking at the Bank of Canada, he says when you have an economy where the jobless rate has increased by 1.8 percentage points in a two-year period, that's about a 90% chance of a recession. You look at some of the other economic data and it's showed, you know, statistics.

holding up in this kind of environment. But okay, well, how much of this demand is brought on by the fact that Canadian businesses are importing more now because there's potential for tariffs? So we're just bringing forward future demand. We're still losing jobs. So it's not exactly a resilient economy. And this would have been an environment

that likely the next move in terms of interest rates is going to be lower anyway. So are you really putting yourself offside by lowering interest rates today if you're just going to do it later anyway? And that's kind of the attitude. Was this another missed opportunity for the Bank of Canada? But it is the fact that, you know, as you've talked about on this program within the last couple of weeks, inflation.

Core inflation is at the highest level before the Bank of Canada started cutting interest rates. So that's sort of the ugly part that they're looking at and focused on.

Well, it's fascinating because if they raise rates to try and quell inflation, now you've got a bigger deficit problem. I mean, that's also lurking there in a significant way. But, Al, what you're saying, what the OECD came out and certainly didn't give us a rosy forecast this week? No, I mean, yeah, the update from the Organization Economic Cooperation and Development, it's member nations, it's developed nations like Canada and Western Europe.

And lowering their forecast for 2025 and 2026 in particular about their call was it's the economies related to North America and impacted by most impacted by the Trump tariffs. So they call out the U.S., Canada and Mexico, but lowering their forecast, their economic forecast for Canada and in doing so saying we're in a vulnerable position to already deal with a scenario looking forward where there's so much, as you said, trade uncertainty.

Well, there you go. That's the tug of war going on. Lower rates to help the economy. But if you do that, you may spur on more inflation. And I guess that's maybe why they're saying I'm sitting on the sidelines. So we decide which way it's going. Exactly right. I mean, to go full circle and back to the Bank of Canada, their view.

So many's view that the next move is lower. It's safe that it's going to be lower. I guess the magnitude is still up to debate. And maybe that's where it ties into what the U.S. Fed does is the United States potentially facing that weaker economy as many forecasting slower growth south of the border as well.

Well, as I say, I mean, this is why, you know, what's driving things has to be the inflation worries. And I still think that's the central bank's main concern, but inflation. Then you got the economy. Then you got the debt problems. You know, the list goes on. And we've got a note this week that showed from the parliamentary budget office that their projection is by in the next four years, that 229 fiscal year, we're going to be paying out 70 billion in federal debt. 70 billion. That's more than we transfer to the provinces and health care.

You know, and so if they raise rates, that number goes up. Yeah, exactly right. And there's less from the monetary stimulus side to be able to support that. I mean, that's the question, too, as we've seen in these debt issuances from sovereign nations around the world is who's the buyer? And, you know, buyers get a little anxious in these markets, too, as deficits and debt become that sort of central concern.

I mean, this is a huge subject. We'll have time to talk about it more. But Rob, thanks for finding time today for us. Always a pleasure to be with you. Thank you, Mike. And you can find Rob at bordergold.com, bordergold.com. They're on the firing line right now. People buying gold, worried about some of these issues. Fascinating time.

Action in the real estate market. Yeah. Did you see last Saturday, there was a 25% discount sale out in Vancouver for a brand new high rise. I'm going to bring Ozzy Jurek in here. Ozzy, that's exactly the kind of thing you've been talking about, that these kinds of markets, you know, are very difficult if you're trying to sell, but also an opportunity for buyers. Well, I thought there were lineups for this last week.

Yeah, even some overnighters. We hear key marketing, which is a large condominium marketer sort of

staged it a little bit by inviting them all. They all had to make a decision on one day, which was Saturday, May 31st. And I'm not sure exact number, but around 70 units were sold at an actual 25% discount. Now people saying, well, how can they sell them this discount? The whole market is kaput. No, these are units that were built, but were not sold. And they're sitting in the developer's inventory.

And at the Outlook conference just a couple of months ago in February at your great show, I made the point that that inventory was building. And now we don't know the exact amount, but there may be several thousand units that are held by developers. And let's say, Mike, if you had 100 units at a million each, that's $100 million that you're paying interest on. It's not that the developer is so filthy rich you can just read it out. No, he needs to sell, and that's what we're seeing.

And again, let me just repeat those numbers because at the outlook, you said 1,600 finished but unsold condos. How high is that now approximately? Well, it's inside information, sort of it's guesswork because we don't, nobody reports them, but closer to 5,000.

Wow. Now, let me come to one aspect of real estate, of course, you know, because I look at the Toronto market and it's a disaster in this very way. You know, there's huge amounts of money on individuals. I mean, if you walk away from a presale, you could be looking for a court case and you'd lose your deposit, wouldn't you? You'd lose your down payment of whatever you put up at that point.

Yes, and there's a mistake that people have. They feel that's the only thing I'm going to lose is my deposit. But there are several cases in BC, one in Kelowna, one in the Lower Mainland, several in Ontario, where the developer will actually sue for the difference. He, by law, has to put it up for sale if you don't close. He freezes the deposit. And if he sells it for less, he'll come after you for the difference. It could be a very large amount of money. So

Closing is probably a good advice, but certainly sit down with your lawyer and get your legal situation if you're in that position. We have been in this position before. I mean, off the top of my head, you look at 2008, the great financial crisis, etc. But the market recovered very quickly. I'm not saying it will at this point quickly. I'm not saying that, but it does recover. There's no example where the market didn't recover over time.

You are so right, Mike. And we're always sitting on the top of the roof shouting, the world is falling. And then we go through a leaky condo crisis and a Russian crisis and a currency crisis. And in 2008, the financial crisis, you rightly saw in Vancouver, everybody, all developers dropped their new product by 25%. And, you know, we thought it might take a year to get out of that. Well, eight months later, the very developers that cut their

Their price blamed the realtors and the marketers for doing it because the market had recovered. Like you said, I don't think it's going to be that quick this time.

But I think it's a psychological, we've talked about that, you know, so what's changed, you know, specifically because the interest rates are much more attractive, you know, than they were even a year ago or two years ago, you know, when the market was more active. But so interest rates haven't changed. I think it's just psychology. You know, there's that feeling of uncertainty and then you get some negative numbers and people say, well, I'll wait it out at this point. And, you know, that's what I think we're having to get over.

Well, and there's so much bad news, you know. And there's four more before the fear of missing out, and now we have four me. Is it fear of staying in or whatever it is? The thing that just reverberates through the economy, the news about our exports and our trade deficits and then core inflation is over three and unemployment is –

So all that I'm sitting back as a buyer and I'm saying, oh, geez, I'm going to wait this one out when maybe now is the time to knock on the door on that 25% discount, which is a real deal. But there's also what happens is the land that we're putting it on is now under great pressure. We have some distressed forced sales. The Western Investor did a great story on it this weekend.

And, you know, when you take a look at what it costs the developer, as Collier has mentioned, one and a quarter acre high density site in Burnaby was valued at $30 million. The owner ended up paying $42.5 million because of the costs, the development cost charges, the regional development charges, the DCC, the provincial amenity costs, building permits, and so on.

Hello, you've been saying about this for 12 years. You've been saying that the government is just too close to us. Well, they're the problem. You know, if affordability, you know, is your goal, they've been the problem. I mean, they can do it so many different ways. Let me finish with this, Owazi. And again, what's fascinating is one piece of advice we can give people, I'm sure you'll agree, is, yeah, if you were thinking about getting in the market, get pre-approved.

See if the deals, you know, you might be able to get a deal, et cetera, but make sure your mortgage is pre-approved. I was looking at the five-year fixed rate again. You're still hanging around 4%. Absolutely. And traditionally, when you look at 50-year history, there's only just under nine years where we actually were below five, right? And now we're under five and even as low as 3.9. So, yeah, take a good hard look. If you believe in the future, believe in British Columbia, this may very well be a place.

for you to go jump in to your new home. I was going to say, and if you believe in Toronto, then I stopped myself. Okay. Ozzy, people can get more information on ozbuzz.ca. It's absolutely free, but they need to know where to send it. So sign in, ozbuzz.ca, put in your email address. Ozzy, go out and have a great week.

Thank you, Mike. And I just want to tell you, I know that we have a big golf tournament coming up next week, the Special Olympics, and we're going to be there. And, you know, I'm always looking forward to it. You know, I actually can tell you that I'm hitting fewer spectators. But somebody said to me the other day, he says, Ozzy, do you know why the pro tells you to keep your head down?

It's so you can't see him laughing. And first of all, seriously, I appreciate you reminding our audience of that because we have the Special Olympic auction that starts, well, tomorrow, Sunday, depending on when you're listening, of course. On Sunday, there are some fabulous auction items. We're going to put it on Mike'sMoneyTalks.ca. We'll send out some emails, social media, et cetera. Ozzy will even help me with that as he's helped us so much with Special Olympics.

But, Ozzy, thank you for putting a smile on my face because every time I think, oh, my gosh, we're back to seeing you, well, let's call it golfing. Others call it other things. And we appreciate your support and your friends. Is Ralph coming too this year? Yes, Ralph is coming. Oh, good. It's going to be great. Great day on the 12th with Special Olympics. Thanks, Ozzy. Take care. ♪ music playing ♪

You know, as I was talking to Ozzy earlier, you get a decline and slowdown in the markets, especially in the real estate market. We were talking, hey, that produces opportunity too. You know, there's some opportunities out there, whether we're talking stocks or things. So I don't want the psychology to overwhelm you. And that's why I asked Andrew Ruland to come on with me, Integrated Wealth Management. He's got a webinar coming up on Tuesday. And it's called Debunking the Gloom, The Case for Optimism in 2025 and Beyond. Andrew, thanks for finding time.

My pleasure. Well, let's debunk that. What is the case? What's the first thing that jumps out at you when you start talking about the case for optimism, you know, later this year and beyond? I would say that when price is highest, risk is highest. And when price is lowest, risk is lowest. And essentially, the gloom and doom has been overdone. And the existential angst that seems to be out there because of geopolitical events and the like is

that the pessimism is far greater in the mind of the investor than it is in the actual market. Yeah, I think that's definitely, by the way, what's changed in real estate. You know, the same house that, you know, 10 people lined up for, you know, and now nobody wants it. I appreciate that Trump uncertainty has a lot to do with that. We don't know what the next truth social crisis

tweet is going to be, you know, so, but you're right. It's the psychology changed. And, you know, as you're saying, maybe the numbers don't justify that psychological shift. They don't. And what ends up happening is that the baby ends up getting thrown out with the bath water. Like, of course it was the big, uh, the magnificent seven that, that really drove the upside and the S and P 500. And of course the NASDAQ for, for several years.

And then with the so-called Liberation Day announcements, everybody ran for the exits and Chicken Little was in charge. But what also happened besides the the Mag 7 that were fully valued, if not overvalued, everything else kind of gets painted with the same negative brush. And we've had a solid recovery. That's for sure. But that's in the indexes. And that's mostly in the large cap stuff in the U.S. large cap tech.

So there are a lot of bargains out there and it just kind of underscores the need to not just be an index investor or be fully invested all the time.

It speaks to the need to be a stock picker as well as active management that is always having cash available for when situations like this arise. Yeah, I think, you know, the point you just made is an important one that we may have if we've exited the era of, you know, just index buying, you know, indiscriminate. When I say indiscriminate, I mean, you're not really picking past, I think, the stock markets going up. And we've entered where the opportunities may be in individual stock picks.

Definitely, as well as in specific sectors. And that's what ends up getting, again, the baby thrown out with the bathwater and painted with the same, you know, or tar brush, so to speak, to mix metaphors there. But the reality is that when you have cash that's available in your pools because you are not always fully invested, and when you have maybe some put protection on, you can really, really dampen the downside volatility.

So what's happened in the last month, six, seven weeks is that the markets have dropped considerably, but our client portfolios have been really, really well protected and they're recovered and mostly up on the year, which is very interesting. I mean, it beats the heck out of just the kind of a blind ETF or index investment. Yeah.

No, interesting. And it's funny, you happen to decide to do this webinar at a time when I've certainly been thinking the same way, you know, thinking about those things. I'll talk with Victor about that coming up, that there's opportunity, you know, selective though is the word you're, you know, we're both using here, but don't be just all or none. You know, I just don't think that's how the market's presenting itself at this point. So in the webinar, you'll be looking at

opportunities you see, for example, in equities as an example? Yes, absolutely. Some key sectors. We don't typically go into the individual stocks, but we certainly identify sectors that our managers like. And, you know, from time to time, we'll get questions in the Q&A about individual stocks, but we tend to focus mostly on sectors and kind of broad portfolio management.

But of course, there and there are some very real issues. There are some very real reasons to be cautious. So it's not like we are blindly bullish or, you know, table pounding by type of scenario. But we're cautiously optimistic and optimistically cautious, I'll say.

Well, I like what you've been doing in the last couple of years, though, as you say, you had protection on. You anticipated the risk in the market. As it went up, you take more protection. And yeah, anybody who did that is now rewarded for that. So I think I was asked about this environment and I said, my biggest worry is that people's decision making doesn't reflect the uncertainty in this market. And that was not negative or positive. It's just, okay, approach it.

you know, in a measured way, you know, that's all there is to it. And part of the measure for me is look for opportunity. Yes. And one of the things I have to say is that, uh, aside from money talk, the mainstream financial journalism is really, really corrosive. They, they push the, they push the, the human emotions of fear and greed beyond, beyond what is rational. Um,

And that drives extremes. And of course, you get these algorithmic trading models that get triggered below certain levels. Selling begets selling begets selling. And then the margin clerks get involved. And when that happens, you sell what you can, not what you want to. And so it's really unfair. It's like literally fanning the flames of counterproductive human emotions.

And as I say, though, that's the environment that produces opportunity. So it'll be interesting. And so, again, let me just reiterate the seminar is on Tuesday or the webinar. The webinar is on Tuesday. And is it seven o'clock?

a mountain and six o'clock Pacific. Yes, absolutely. And we realized that there are still a lot of people who want to listen, who are working or maybe have other obligations. So people can register without, uh, without having to watch it live. They can get a recording sent to them right after.

So there's also another thing that's really, I'll say, kind of the elephant in the room, particularly out here in Alberta. And you might recognize what that is, which is the rising separation movement that's happening here.

And so we're going to do a little bit of a primer on that one, not taking sides, but just talking about a little bit of the development of how it's how it's coming around. And frankly, it, of course, it's all an interplay with what's happening with the new federal liberal government and the history that is brought into this, not just with the current government, UTP government here in Alberta itself.

or the new, not-so-new liberal government in Ottawa, but it's all about the history and all about the structure. So we're going to touch on that. Let me ask you the 25 words or less answer to this question.

My feeling is, obviously, there's a ton of talk about this, like a ton of talk. My feeling is if they just made a clear commitment to allowing pipeline east and maybe another into the West Coast, the push or the anger that is part of that separation movement would be dissipated in a terrific degree of it. If they just, hey, you know what?

We're going to do this. And they're not willing to do it, at least at this point. And they're fueling that anger. What I mean? So I'm sorry. That was too big a thing, but yes or no. Am I right? If they just agreed to that stuff, you think it would dissipate? If they did something like that, that was concrete and guaranteed in legislation, there's been a lot of talk around, um,

around, you know, becoming an energy superpower and all that sort of stuff. And of course there was a meeting out in Saskatoon, uh, with, uh, with the premiers and the prime minister, except David Eby, because I guess he couldn't make it. Um, but anyways, the fact is, is that there has not, there has been general talk in the right direction, but there's been nothing concrete. And that is what's frustrating. Um, and you know, Jean Crenshaw, uh,

for all of his faults, said one time when he was criticizing, I think it was probably Stephen Harper, he said, well, at least I only talk out of one side of my mouth. And he was mocking himself because it was Bell's palsy. But the fact is that politicians who don't speak clearly and don't make a commitment and say one thing to one audience and another thing to another audience, they create a lot of ambiguity and

And animosity. And animosity, yes. I'll add that second word there. Yes. Just interesting, obviously a huge subject. I just find myself thinking that, you know, all of it would be dissipated to a great degree if they were clearer. And I agree with you. It's got to be a concrete commitment. The credibility issue is huge. We can leave that for another time. In the meantime, I remind people. So that's June 10th. That's Tuesday, six o'clock on the West Coast, seven o'clock. Sign up.

We'll put it on Mike'sMoneyTalks.ca, Mike'sMoneyTalks.ca. Sign up for the webinar. Unfortunately, there's always a limited number that can attend those kind of events due to the technology. Andrew, thank you for taking the time. Pleasure.

Go live to the trading desk. Victor, I'm going to start with something that put a smile on my face because I've been keen on silver. What was it, a 14-year high this week? Well, yes, it was actually. Silver did trade to a 14-year high. We got up to $36.50 on the COMEX.

That's a 10% jump on the week. I think we're up about 30% or so from earlier this year. No, from the Liberation Day lows that we had in early April. You know, silver, when I say $36.50, that was this week's high. Silver was about $50 back in 2011. And that was at the tail end of that bull market in commodities that we had from 2008 to 2011. But the all-time high

high for silver. It was back in January of 1980. That's when gold made its all-time high back then at $8.50.

I want you to adjust that for inflation because, you know, I'm always doing that. I mean, that's an important adjustment to get proper comparison. So any idea off the top of your head, silver in 1980, 50 bucks, 1980, what would that be today? Roughly speaking, that would be $200 an ounce. This is using a four times multiplier and kind of a CPI derived term. And that is just off the top of my head too. Yeah.

Well, no, very good on your part. Get a big checkmark there. But of course, I'm old, so I remember those days. But it is an interesting, it's noteworthy that it does make a move. A lot of people who've been keen on the precious metals are saying, where's silver? I mean, because it's an industrial metal. It's not...

the same kind of store of wealth that gold provides, but it's been a nice move. It'd be interesting to see where it goes from here. I'm back to that old Hemingway line. I'm proud to say I used it a thousand times is how did you go bankrupt slowly? And then all of a sudden I said, that's how the market seems to move to me.

move to me is like, so there's silver building a base, building a base. Oh, all of a sudden you got a nice. It did seem to just come out of nowhere, but I can give you a little background on this. You know, we had the gold market make this tremendous run peaked out here a few weeks ago, just a couple of weeks ago, out of nowhere, platinum kind of took off to the upside and it had been like going nowhere for years, it seemed. And then I thought, I wonder, I wonder if like,

The people that were trading silver kind of caught the platinum bug, so to speak. Whatever. We popped up three bucks just in a week. And we're at, as I said, 14 year highs. And anybody that's been patiently waiting in the silver market probably feels pretty good about it.

Now, I'm going to come to something else, talking about highs. I see the Canadian dollar has shown its strength. You know, what is it, about an eight-month high? And we'll chat about that in a second. But what's been happening in the trading markets? In the Canadian dollar in particular? Yeah, Canadian, sorry. Yeah, well, we're up.

Five cents or about 7% from the lows that we made on February 3rd. That day will go down in infamy in Canadian history forever. That's when Trump said Mexico and Canada are going to get whacked with a 25% tariff. And then, of course, an hour or two later, he paused the tariff and the Canadian had its biggest one-day rally in years today.

But I have to say, Mike, the Canadian dollar is up, as I say, 7% from those lows, but it's not because of Canada. I've said so many times that the value of the Canadian dollar is usually tied to things that are going on outside of Canada. Now, sometimes there's something in Canada that's important and it has an impact, but

The Canadian dollar's had this rally, but it's not up nearly as much as, say, the British pound or the euro currency. And we've had this rise in the Canada. I'm going to say it's been more a function of weakness in the U.S. dollar rather than strength in Canada. So Canadians shouldn't go around patting themselves on the back like they've done something special that's caused the world to push the Canadian dollar up. That's not the story.

Well, I'll tell you the other thing that I'm thinking about, Vic, is at some point.

I'm going to want to, this is just me talking as an investor, not a trader. At some point, I'm going to want to take advantage of that strength and buy more U.S. dollars. I don't think, you know, this is something that I'm bringing this up only as people looking longer term have to make a decision. Do they think this is a permanent move or short-term move, whatever? And I'm, no, I know that, and I'm proud to say on this show very clearly, and I tweeted it out several times, that Trump wanted a weaker U.S. dollar.

I said, that changed my opinion on what was coming up, that he's going to get that, and

And he has getting it. But I think that weakness in the U.S. will have an end, especially our chat with Martin Armstrong. If the geopolitical tensions increase, like aggression increases in the Ukraine, European theater, which certainly they have been heating up, then he says all bets are off. Money's going to leave Europe and jump into the U.S. So it's really an interesting situation right now. As traders, you're looking at the money.

much shorter term moves. I absolutely agree with Marty on that. Over the past decades that I've been trading currencies, you see it when there is a really stressful geopolitical situation like, you know, things, the Russian-Ukraine war ramps up, capital will come to America for safety and opportunity. I keep saying that. But, you know, that sort of poses the question, why?

Has the U.S. dollar weakened here since January? Now, I'm going to say one, the U.S. dollar in January was effectively at 23-year highs. Certainly, the trade-weighted U.S. dollar index was at an all-time high in January. So, you know, the market maybe was due for a correction. There was, as you just mentioned, people in the currency market thinking that Trump and his

the folks around him wanted the dollar down to help rebalance trade. And there's arguments for and against whether or not that's a good idea. But certainly I think there was stepped up hedging by

by people, foreigners, who owned U.S. dollar assets and were under hedged. And they said, hey, you know, maybe the tide's shifting here. We should be shorting some U.S. dollars just to protect ourselves in case the thing takes a real tumble. There certainly was selling, outright selling,

by speculators in particular of the U.S. dollar on the, they were catching the wave as it were. Trump wants the dollar down. It's at a 23 year high. It's starting to slip. Let's jump on the short side. So, you know, we had that. And I think also, if I could just put it in two words,

There's been some Trump fatigue that has not only hit the currency market, but it's hit other markets as well. It's like, oh, my God, you know, let's just sell some of those U.S. assets.

Oh, I think you're dead right. I feel it myself, by the way. But let me just finish with this quickly. Something we talked about a couple times, and as recently as last week, just interesting how the bond market has shown higher rates. And I go back to that period in September where you had the Federal Reserve lower rates by a half percent in the next month, a quarter, and the next month, a quarter. In that very time frame,

the U.S. 10-year bond yield went from 3.6 to 4.8. So that reminder that the central banks don't control the bond market. Well, go back to that time before the Fed started to raise rates and the short-term interest rates were actually higher than long-term interest rates. We call that an inverted yield curve. Since that time a year ago, we've seen the yield curve

steepen, which means that long-term rates are now much higher than short-term rates in the U.S. Now, just at the end of this week, the American employment report came out and Donald Trump, true to form, got on social media, uh,

I'm going to say commenting, and that's a polite term, that the Federal Reserve ought to get on the ball and slash short-term rates by 1%. And I thought, you don't understand. You really don't. If the Fed was to do that,

the bond yields would go through the roof because, you know. Exactly. So anyway, there's always a lot of parts, some of them visible, some of them not visible, happening in and behind the market. So right now it looks as though the Fed, and this is what the market is pricing, may only do one cut this year. The American economy looks relatively strong. I know there's folks out there saying that it's going to, you know, go into a recession any day now.

They may be right, but the market is pricing. There's less and less of a chance of the Fed cutting rates this year.

And if they do, that doesn't mean bond yields go down. That's the other point. So, so much happening, Vic. And that's why I think people would find it very valuable to go to victoradair.ca, victoradair.ca. And that's because when you do see the charts, you get the idea, you know, of what's going on in the areas that you're just talking about. So I invite people to do that and hope you have a terrific week, Vic. Thanks, Mike.

I'm out for this week's Goofy Award. You know, it's amazing to see that some bad ideas just refuse to die.

You know, socialism immediately comes to mind, but that's not what I'm talking about today. No, the bad idea I'm referring to is that 16-year-olds should be allowed to vote, as put forward again by independent Senator Mary Lou McFadren. She was appointed by Prime Minister Trudeau in 2018. That's the same year, by the way, the B.C. Green Party leader, Andrew Weaver, launched the Vote 16 campaign, supported by the NDP.

And that was 13 years after interim, now he's now interim NDP leader Don Davies proposed Bill C-261 to lower the federal voting age to 16.

But what about you? Do you want grade 10, grade 11 students who've never paid taxes through no fault of their own, by the way, but they have never paid taxes, don't work full time, never made a mortgage payment, whose own parents would never let them make a major financial decision on a big ticket item like what car to buy or whether to take out a fixed or variable rate mortgage? Do you want them making decisions on health care and the taxes you pay after you work?

or other aspects of economic policy. You know, no bank or credit union would allow a 16 or 17-year-old to take out a loan or a mortgage. They can't be tried in adult court because it's assumed they're not yet capable of making adult decisions. We don't let them buy marijuana because the research shows that their brains aren't fully developed. But you know what? Of all that, the laziest argument I hear in favor of 16-year-old voting is that government policy impacts them. Well, no kidding.

I was talking about the massive debt we're passing on earlier. I mean, but the same argument could be made for letting eight-year-old vote, two-year-olds vote, newborns. Why? Because government policy affects them too. You know, I think it's hard to disagree that we're living in the most precarious social, economic, and financial environment in generations. And putting 16-year-olds in a decision-making role, I think shows a distinct lack of appreciation and understanding of the problems we face.

That's all the time we have. I want to again remind you that starting tomorrow, so Sunday, depending on when you're listening here, Special Olympic Auction for the golf tournament, all proceeds to Special O, it starts. It's www.sobc, Special Olympics BC, classic.com, sobc.com, SOBC and the classic, first letter of classic are all capital. So SOBC, a capital, plus classic, that's a capital.

I feel like I didn't make that that clear, sobcclassic.com. But it's got 138 fabulous items. Really appreciate it. If you just check it out, there might be something for you there. In the meantime, I hope you go out and have a terrific week.