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Last week, I wrote of the roughly three-week period in May when all my neighbors spoke of was rising home prices.  However, such chatter abruptly died in June when interest rates suddenly surged; and today, my hypothesis that the entire housing “boom” – or more properly put, bubble – was predicated on Fed orchestrated, ultra-low rates has been decidedly PROVEN.

At the end of June, the all-important 10-year Treasury yield – which serves as the basis for most mortgage rates – was 2.48%, up from 2.16% at the end of May; and by July’s end, it was up to 2.59%.  In other words, rates rose a measly 32 basis points in June, and a scant eleven bps in July.  By Wall Street parlance, but a “dead cat bounce” from the ALL-TIME LOW mortgage rates generated by December’s “QE4” announcement – when the Fed started monetizing nearly ALL new Treasury issuance.

Well, here we are today – Friday morning – following the publication of July’s new home sales; which…drum roll please…plunged an astounding 21% compared to June.  In other words, amidst the most miniscule interest rate increase possible – from RECORD LOW levels, to boot – the housing bubble showed full-out signs of bursting; and worse yet, the median sale price fell to a six-month low.

The 10-year yield immediately plunged to 2.82%, and PMs have taken off.  Gold closed up $21 to $1,397/oz – with the Cartel desperately protecting the VERY KEY ROUND NUMBER of $1,400/oz (which will shortly be breached); whilst silver rocketed $0.90/oz higher, or nearly 4%, to $24.05/oz.  In other words, as of today, any doubts of what I have screamed of all along; i.e., that “QE to INFINITY” is here to stay – will be permanently silenced.

Harkening back to emerging “shadow world” leader Paul Craig Roberts, I bid you a pleasant weekend…

Here’s where the U.S. stands.  Without massive money creation, the game is over in the short-run.  With it, the game is over in the long-run.

Trends Journal

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