June 29 Episode
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Welcome to Money Talks. My name is Mike Campbell. Lots of stuff to discuss today, especially that Thursday night debate, presidential debate. I've got Don Villalobos on with me. Don does a cyclical analysis and the seasonal analysis that lets us know what is the probability of an up move between now and the presidential election. I'll get more into that with him. Also got Victor Adair. I've got Michael Levy on our inflation numbers, but I've got Ozzy Jurek.

Big question for me, at least coming out of the capital gains tax increase. And then that is, is that all there is? What's the next tax increase? And it got me thinking and got me worrying. Maybe they're going to put primary residences on the table. After all the rhetoric surrounding the increase for the capital gains tax, it would be very familiar with the rhetoric they'd use if they were indeed going to start taxing our primary residence. But as Ozzie will tell us,

Hey, they already are. More on that. But first, is there anybody in the country who doesn't think that Canada has serious divisions? I mean, we just got the Ipsos poll done, I think on Friday, released. And that leaves little doubt with 70% of respondents agreeing that Canada is broken.

And before those wanting to blame that on Pierre Palliev, Ipsos says that it's not his fault. Rather, in quotes, he's capturing a mood. It's not something that Pierre Palliev has created. He's simply identifying the condition that he's seeing in the Canadian public and calling it out and labeling it. Ipsos president Daryl Bricker sums up the findings by saying, he's been in the polling business 35 years and it's the worst outlook he's seen.

Well, I have a cheeky suggestion that could dramatically reduce the kind of rancor we're seeing, the vitriol, the confrontation, disharmony, nastiness. And the latest manifestation of that, of the serious divisions in the country, has to be with the increase in the capital gains tax. And as I said last week, there's going to be no reconciling the two sides. More taxes, bigger government versus lower taxes, reducing the size of government, eliminating the deficit.

Helped along, by the way, by Finance Minister Chrystia Freeland, who, reminiscent of Hillary Clinton's infamous depiction of anyone who didn't support her as deplorable, well, the Finance Minister said that anyone who didn't support the Liberals' progressive side was, in quotes, cold, cruel, and small, and reflected not believing in our communities and our neighbors. Well, come on, that isn't going to bridge any divides in the country.

You know, I think it's important, though, to note what Nelson Mandela said when he said, when we dehumanize and demonize our opponents, we abandon the possibility of peacefully resolving our differences. But, you know, no one should be surprised. I mean, as Quebec Liberal MP, was the head of the Liberal MP caucus in Quebec at the time, Joel Lightbound stated, from a positive and unifying approach, a decision was made to wedge, to divide and to stigmatize.

Well, you know, COVID was a wedge issue, but there's so many other examples with the latest being reviving that old class warfare divide with the increase in capital gains tax. And I think the rampant anti-Semitism. I'm not suggesting that divisions in the country are new. I mean, for goodness sakes, for decades, we dealt with a separatist movement in Quebec. We've had deep East-West divisions for years, especially when it comes to the energy industry. But the polling finds it's worse than ever.

I don't know, maybe social media plays a big part in amplifying and intensifying the divisions. But my point here is not to criticize or assess either point of view, but rather to point out they're irreconcilable. No matter what side of the issue, it's hard to argue, though, that the current level of disharmony is beneficial to Canada, especially if it escalates more into violence, as we've seen at times in other countries. And that brings me to my solution.

I say let's separate the two opposing sides and put them in different parts of the country. One side of the country will feature more government intervention, more regulation, higher individual tax rates aimed at the top 10% of income earners, along with a wealth tax for the top 1%, plus higher corporate taxes for mid and large businesses. And for that group, climate change will be the top issue.

In this area of the country, though, government's role in society will be increasing. More subsidies, more control of the internet, the workforce will be unionized, and they'll have government monopolies in healthcare, education, daycare, senior care,

with economic policy, though, secondary to the climate agenda. In short, it reflects the current progressive agenda. But the other region, on the other hand, will have lower personal and business taxes. The public sector would be smaller as government focuses only on core services like health care, education, trade, defense, while working towards a balanced budget.

Its focus would be on the economy, on increasing productivity, attracting capital investment. They'd welcome the energy industry. In other words, that area reflects the opposition to the government. It reflects the major political and philosophical divisions that are so evident in Canada today. But the benefit...

would be immediate. We'd have less confrontation. Of course we would. Less vitriol, less nastiness, a more harmonious society. Presto, mission accomplished. Well, let me finish with an important question though. And I know from past experience, it's a question that some people won't like. Let's visit the two regions in 10 years. See which one has a higher standard of living, which one has more money for hospitals, for schools, senior care,

which area has less unemployment, higher wages? Because you know what? I don't think it would be close. Any jurisdiction that hasn't figured out that wealth creation is actually the foundation of wealth redistribution has ended up with far less innovation, lower levels of economic growth, and a lower standard of living. Now, here's the really unpopular part of that question. I'm going to leave this one to you to answer. Which jurisdiction can better survive without the other?

Hey, just a reminder, by the way, you can join us on our YouTube channel. Great thing to do on the long weekend. You can go to past episodes, et cetera. So join us on YouTube, Michael Campbell's Money Talks on YouTube. Same thing you can do on Facebook, though, and join us on Money Talks tweets. You got some time this weekend? Hey, pass on some of this information. Share it with friends. Have a debate. Open up the discussion. Hey, that's a great way to start our summer. And we got more coming for you, so stay with us right here on Money Talks.

I want to welcome Ozzy Jurek back to the show. Ozzy, I want to talk about a particular thing. We've talked about it over the years, but I'm looking at the implementation of the capital gains increase. I'm looking at the rhetoric around it. Rhetoric being, hey, people aren't paying their fair share or upper income people aren't paying their fair share, etc. And some of the rhetoric was even worse than that. But that's the thing. And let's be clear.

The capital gains tax is not really an income tax. It's a wealth tax. It's on assets, etc. Well, I want to come back to a topic you and I've discussed before, Ozzy, and that is how far away is that from taxing your primary residence?

the gains on your primary residence. And I'll add one more thing. You go back, I think it was 2018 British Columbia election. The Green Party had that in the platform. They said the first $500,000 in gain off of your primary residence when you sell it, fine. The rest you've got to take into income and pay your proportion on. Again, I don't want to go on and on, but you know why I want to talk about this. Well, the crazy thing is, you know, the government is planning it.

They put money to UBC to study it. They then said, but we don't really, we're never going to do that. But the key was, you and I talked about it eight years ago in October 2016, when we all of a sudden noticed that a principal resident sale is now, the reporting of that sale is mandatory in Alberta and all of Canada.

And that was new. And we said, well, why? Why do we have wallets to avoid fraud? Well, what fraud? We're not going to pay anything. We're not going to keep anything. There's no tax on it. So what is the point? But since then, actually, you have to report whether you buy or sell every single house, every single private residence has been registered. Right. So why did they do that?

They were getting ready to tax it. There's absolutely no other reason in my mind. And then so everybody like you and I, we cried and said, hey, just a minute. What is the goal here? And Trudeau said, to be clear, we will not put a 50% tax on it. And guess what? Then there was an underground debate.

memo floated where they already had 50% tax on any profit after one year, 25% and so on. A real schedule. Somebody had done a lot of thinking on this and they were getting ready to bring it in. And now it would be 66 and two-thirds percent, not on just the 50% of the gain. It'd be 66 and two-thirds. And again, let's emphasize the government vehemently said, no, we will never do this. But

First of all, again, I'll go back to the rationalization of the capital gains tax increases. But what about this? They commissioned or taxpayers paid for two separate studies on this very subject. So why are you doing that?

Yeah, well, exactly. It was Professor Kershaw, and it was Black Lock Reporter, which is sort of an online political newspaper. They reported in 2020 there was a $250,000 grant, and the government said this had nothing to do at all with the capital gain tax on residences.

But there is such a thing at UBC called the School of Population and Public Health. And they had an institution called the Generation Squeeze. Anyways, under that umbrella, the study was done. But it wasn't supposed to be on anything to do with real estate taxes. Guess what? In January 2022, Professor Kershaw, after studying the problem, says, let's put in a 2% tax on every $1 million house in Canada.

Well, just a minute. What do you mean? What kind of a tax is that? Well, just because you're so rich, that's what we should do. Well, 2% on a million is 20,000. And it's annual, Mike. So after 10 years, you owe 20,000. Well, the average house in Vancouver is 2 million. So it'd be 40,000. After 10 years, you owe 400,000. Well, in fairness,

It went over like a lead balloon. But that was, you know, you're sitting on this gain. You're this terrible bad person. Never mind how much renovation you did, how many times you were there, all the work you did on that. None of that is relevant because you're this bad person. Well,

Well, I'll say Professor Kershaw saying that again earlier in the year, basically talking about you could cut income tax on lower income Canadians, but take the money and make it up by taxing wealth. And again, that's the big debate. People hear the word wealth tax and they go, yeah, we should tax more. They have no idea where the wealth is in this country. It's in real estate, for goodness sakes. You know, I'm just saying.

Again, I was disturbed by the rhetoric around the increase in the capital gains. And I think you could have just substituted housing for whatever else they were saying and the same words would be used. And again, it could come in very much the same way. You get this much tax free and then the rest of that gain is taxed. In this case, it's 66 and two thirds percent. But, you know, it just doesn't go away. And one thing I'll say, Ozzie, and please disagree.

Does anyone really think that capital gains increases is the last one? Is that the last major structural change to our taxes? I think that's incredibly naive. Well, it's not only naive, it's non-factual. You see, like people always saying, Ozzy, you seem to be, you have a bone to pick with the government. No, no, no. I'm just looking at the facts of what is reality now. We already have a capital gain tax increase.

on our residents. It's not just a capital gain, though, because the government labeling it a flipper's tax. At any house in Canada you bought your residence, if you sell it in the first year, you have to pay what is called a flipper tax. So you think that would be a capital gain tax? 50% will be added to your income or 66%?

No, it's 100% tax. It's beyond anything that they had said they were not going to do. They have already done it. And people say, they'll never do it. Well, they've done it. Then they say, well, it's only one year. Yeah, but look how easy it is. Then it becomes two years and then three and four. And all of a sudden, you have 100% tax on a gain. Never mind what renovations you did. Never mind what you added value to it. You're just that bad person. Well, again, and I just want to emphasize that.

You know, people can say, no, I don't think there'll be another tax increase from a liberal government, liberal NDP government. And fine, you're not looking at this stuff. I think that's naive, as I said, to suspect that. But Ozzy, your point about the flippers tax is very important to take into account. A lot of people sort of overlook that, you know, in doing the calculations. And I think it's back on the radar. It should be for people. And I'm going to throw one more because it's something you wrote about consistently. And that is,

If you build like a laneway house, now the zonings have changed, you get a laneway house, well, that's certainly subject to capital gains. Well, that's the thing is, and you and I have talked about this literally for years, that the government wants us to build that laneway house, then get $60,000 to $70,000 worth of

and building fees and whatnot. And then you spend 400,000 building it to get 3,000 a month. And what you didn't realize is if you put that on a 33 foot lot, you have to have your head examined because more than almost the same square footage than on your houses. You've lost 50% of your tax-free, currently tax-free on your house because you're now making money off the residents. And now there's going to be a new one like this week,

We are allowing six plexes and four plexes. What is the impact if you were to add this to your residence? What would be the impact? That's a question you've got to ask before you build. Never mind that then a municipality is allowed to only put off-site costs up to one day before they give you a permit. So you have no idea what sewer cost or hydro cost or whatever is going to be added. I mean, they want more housing, but they do everything possible to make it more difficult.

Well, because there's one thing they want more than housing, and that's money.

And I'm serious. The governments want more money to expand the role of government in society. That's a political choice that people can say yes to or no to. We're just pointing out, again, the rhetoric of that wealth tax can be used in a lot of different areas in our country. And real estate is where most people have the majority of their wealth. That's why it's been on the table already with different moves. In British Columbia, you've got a speculation tax. In Vancouver, you've got an empty homes tax.

You know, real estate is a target for a good reason. And I'm just wondering, it's a good debate to have. People should be aware of it. And you can get much more on this on ozbuzz.ca, ozbuzz.ca. Ozzy, yeah, we turned up the heat. Let's take some. Have a great week.

Have a great long weekend, by the way. Yes, Mike, and you too. And I've been wondering lately, not trying to think about the government, just wondering, have you ever noticed that anybody that's driving slower than you is an idiot? Have you wondered how anyone going faster than you is a maniac? That's a great point. Absolutely. Yes, because they are. Ozzy Jurek, jurek.com.

The Western Canada Monthly Income Fund is starting pre-sales on its new project called Portal. This waterfront development in Maple Ridge is expected to sell out quickly. The fund is making limited amounts of investment available. If you're looking for a secure investment in real estate and relatively quick turnaround, what would be better than using your RRSP and TFSA to help build much-needed homes for Canadians? It's common sense investing. A

Established in 2018, the fund pays a monthly fixed target interest plus a generous participating profit share. Request your investor package today at easy-invest.ca. That's easy-invest.ca. Conditions apply. Past results are no guarantee for future results. Check the website for details.

Well, what a great time to have Don Villalob join me. He's with timingthemarket.ca. But why? In case you're not familiar with his work, he has this whole approach that's first with cycles and then seasonality. And for example, we're in a season right now. We're in the presidential election season. That's the overlay. And then we can talk. We'll drill down into what happens in the particular months, the summer, individual stocks. Don does timingthemarket.ca. Don Villalob, thanks for taking time with me.

Thanks for inviting me, Mike. Well, Don, let's start with the presidential cycle. I mean, obviously, it's on people's minds, you know, the big debate on Thursday and all the talk about it since. So, you know, is there sort of a trend that we can sort of start with? It's not the definitive, but it says, what are the sort of kind of tendencies when you get into the year of an election?

Historically, during the launching year for the president, the markets moved significantly higher from approximately the last week in June right through until about the middle of August.

And that has worked out on average return of about 2.5% per year. So a pretty good chance that we'll see something like that again. That fits in with the regular seasonal cycle where 15 of the last 20 periods for the month of July, the S&P 500 has moved up significantly.

So you look at those two things and all we're trying to do is put the probability of, you know, making money in our corner, you know, as you say. So you add up both of those and, you know, puts a checkmark by the list, you know, there. Let's talk a little bit further about the summer and the summer movement. I mean, there's that famous saying that says, you know, sell in May and don't come back till Labor Day, you know. So that's another one of those sayings that has a lot of validity in sort of history.

That's true. But remember, this cycle happens every four years for the presidential cycle. And there are certain sectors which tend to do very well during this period in March, I mean, in July. A good example, something else happens during presidential election years. And that's the Olympic Games happens every presidential election year.

And historically, there are certain sectors that do very well in the summertime in a U.S. presidential election year. Most notably, the consumer or the communication services companies, companies like Meta and Comcast and companies like that, their stocks normally do very, very well in the month of July.

That's fascinating. I hadn't even thought of, of course, as soon as you say it, I know the correlation or the relationship. I mean, yeah, the Olympic Games, the summer games coming up, you know, in July in Paris, of course. But you sort of go, oh, yeah, that's every that happens every election year. So interesting to see there's a pattern that develops out of that, or at least there's some core relationships there.

The key is we see the correlations, but the reasons for it happening are usually fundamental reasons. The question is, will the fundamentals there this year to cause U.S. getting in equity markets to move higher into the month of July? And the answer is yes, there is.

As you say, I mean, in this case with the Olympics, I mean, it's got to help the travel season, that's for sure. And communications, you say the people who are broadcasting now, of course, expanded the social media. That's got to be big time in that. So, yeah, kind of interesting the way that relates. And as I say, it fits your seasonality pattern, though, too, when we look at that.

That's correct. The key this year is earnings coming from major Canadian and U.S. companies. Yet the earnings for the S&P 500 companies look for a big surge in earnings gains coming into the second quarter. Of course, those results will be reported sometime in the month of July.

On average earnings in the second quarter for the S&P 500 companies are expected to increase by about 8.8%. That's versus only 5.9% in the first quarter. So we have an acceleration in earnings gains coming our way. Let me move to the TSX for a second here. Is it sort of a similar kind of positive seasonality?

It does, and this year in particular, it looks particularly promising in certain sectors in the Canadian market, most notably in the natural resource sectors.

If you look at the natural resource companies, whether it be in gold or base metals or energy, all of them are expected to report significantly higher earnings coming into the second quarter. Earnings, for example, for the energy sector are expected to be up about 16%. Earnings in the base metal sector are expected to be up 20%.

Earnings in the gold and silver areas are even going to be better. For example, silver producers, earnings are expected to be up about 29% on a year-over-year basis. Added to that is currency. The Canadian dollar has been significantly weaker than the U.S. dollar over the past year. In fact, the U.S. dollar relative to the Canadian dollar is up an extra 8%.

Now you translate that into the earnings of these natural resource companies and you see some significant earnings increases coming into the second quarter. So you've got of course if you're operating in Canada your costs are down versus the US but of course commodity prices are measured in US dollars too so that's not a bad formula for making a little bit more money. Sure but it is interesting like music to my ears when you start talking commodities and oil because

I'm very comfortable with the demand long term. We're talking shorter term here, but demand long term is going to be there as purchasing power continues to erode in all the paper currencies. So yeah, I got a little smile on my face when you say that.

It's getting lined up quite nicely. But even today, we had some encouraging news from the states, which will help both Canadian and U.S. stocks. And that's the PC price index that came out last. Historically, if it's heading higher, that's bad for equities. But when they're trending lower, that is very, very positive for equities because it sets the scene up for the Federal Reserve to consider reducing interest rates coming into the second half of this year.

We saw the PCE price index on a core basis drop to 2.6%. That is setting the stage up for the Federal Reserve to reduce their Fed fund rate probably by September of this year.

Wow. And that's interesting. Of course, that's a really hot debate because will the Federal Reserve keep an eye on the federal election and maybe not want to be seen as influencing it either way, I guess, you know, but I mean, and that's back to that presidential cycle in terms of, you know, the attention that pays in the market, like the uncertainty coming out of that debate is it's

it's going to be Donald Trump, but versus who, you know, so, you know, that adds to it too. I mean, it's, I guess it's the, I don't know if it's recency bias on my part, but it seems like, you know, that old sign on the stock exchange in New York, gosh, when I was there 30 and 40 years ago was now is always the most difficult time to invest, but it seems like balancing. And that's why I like things like to see what you are sort of traditionally historically has the

the pattern been in your favor if you do X or Y? Then you drill down, of course, with timingthemarket.ca, and I'll tell people that's absolutely free. Just put in timingthemarket.ca, your commentary on a daily basis there, different markets, different

specifics in there. When you're looking right now in the market, I get you to reiterate to some degree though. So which sectors would I be focusing on if I want to get long here as we enter this positive season in July?

In the case of the U.S., look at the communications services sector. The easy way of doing that is there's an ETF, the symbol is XLC. In the case of Canada, look at the natural resource companies in general, because they're all going to show some very, very strong second quarter results over the next month or two.

Okay, so this is really crystal ball time on this way. But again, it's hard not to be thinking the presidential election because we've got the primary, not the primaries, pardon me, we have the conventions coming up. They're going to be part of this session, obviously the vote. What, again, what are the probabilities for after the election? What's the first year of a new presidential cycle look like generally?

historically in the first year after the president is elected, you see equity markets in the US go significantly higher because by then the president, whoever he happens to be, will set his agenda and will start doing the things that he thinks are going to help the economy. That's a good sign for equity security prices going forward. Yeah. Well, as I say, I'm not going to... Well, I will hold you to that as the general because that's what's happened in the past, but we'll visit with you again before that.

you know, to get an update from you. So in parting, Dawn, you're positive on the equity outlook. You know, this is the time to sort of get interested. Do we get nervous again in the fall?

Historically, markets during the presidential election year do well in the month of July, right through until the middle of August. Then they go into a corrective phase prior to the actual election itself. We get into October, and from the beginning of October right through until the end of the year, equity prices in the U.S. in particular go significantly higher.

Well, that's a great roadmap, but people don't have to wait to visit with you again. They can go to timingthemarket.ca. Don Villalo, thanks for finding time. Thank you, Michael.

Time now for the quote of the week. You know, one of the comments I get, but I also hear throughout whether I'm looking at social media in some way, I just don't understand how someone could vote for X or Y, or I just don't understand how people could oppose this issue or conversely support this issue. You know, that's a bad sign because I'll tell you, not understanding opposing views, I think is a hallmark of

Anti-intellectualism. And that brings me to the quote of the week by revered philosopher John Stuart Mill from his widely acclaimed work On Liberty. You know, it's published 1859 and super relevant today. He says in quotes,

He who knows only his side of the case knows little of that. His reasons may be good and no one may be able to refute them. But if he is equally unable to refute the reasons of the opposite side, if he does not so much as know what they are, he has no grounds for preferring either opinion. Well, I'm hardly the first person to mention it, but people increasingly live in a sort of an echo chamber and only expose themselves to views that are consistent with their own thinking.

Maybe not a surprise given that social media giants like Facebook or YouTube or Twitter only push content that reinforces your opinions and the huge push on universities to prevent uncomfortable views, the definition of which is something the progressive left disagrees with. But the point is, as Mills says, you should appreciate and understand what the alternative views are. So to simply say, I don't understand them, well, reflects that you don't know the issue.

The Western Canada Monthly Income Fund is starting pre-sales on its new project called Portal. This waterfront development in Maple Ridge is expected to sell out quickly. The fund is making limited amounts of investment available. If you're looking for a secure investment in real estate and relatively quick turnaround, what would be better than using your RRSP and TFSA to help build much-needed homes for Canadians? It's common sense investing. The

Established in 2018, the fund pays a monthly fixed target interest plus a generous participating profit share. Request your investor package today at easy-invest.ca. That's easy-invest.ca. Conditions apply. Past results are no guarantee for future results. Check the website for details.

I want to turn my attention now to Silver. And the thing I really like to do is to get to people who are actually in that business, you know, who are on the ground because of course they're putting their money where their mouth is, but also they're paying incredibly close attention. That's why I'm really pleased that Jason Weber is giving us more of his time here. He's the CEO of Silver North Resources.

Jason, thanks for taking time. Let me just throw the big question out, of course, short and long term. What are your thoughts? I mean, we had that nice move in the spring and it seems to have quietened down quite a bit. But again, it isn't influencing my long term view. No, mine either. I think you're exactly right. And my pleasure to be on, Mike. Just thanks for having me here to talk about what we do. But I

I do agree. The short-term move we had sort of end of February through to end of May, I think that was a real eye-opener for a lot of people in that it was a very strong move. It wasn't driven by crazy things like silver Reddit crowd and stuff like that.

There was some felt like there's some real fundamentals behind it. And I think part of it is just the fact that the realization of what silver's role is industrially is much more widely recognized now. And we're starting to see, you know, you get the economic factors that affect the precious metals. I think that's a wonderful backstop for the price. And then now you add this fact that we're not meeting demand for silver on the industrial level.

And that I think that played a big role in that move. And I think, you know, when you look at it now, we're into the summer doldrums. Not surprising that things come off. The metal prices actually haven't come off all that much. We had a couple of really big down days that seems to really infect or affect the investment community's outlook.

But, you know, as we come back through the summer into September and onwards, I think that that silver, quote unquote, rally resumes. And maybe it doesn't start September 1. I think this is not something that's going to take off right away as soon as people come back from their summer holidays. But that longer term trend, I think, is in place and the fundamentals are there. I just I can't help but think that that's going to continue as we move forward.

Well, we can't wait for the MPs to come back from their summer holiday. My goodness gracious. Aren't they taking off right to the December now? I don't know what it is, but for the normal people, as you say, Hey, let me just ask, you know, now bring it down to you guys as junior minors. What's it like, what's the kind of environment you're, I'm thinking about how is it for raising money? Cause I think it was pretty good. You know, if we went back just a month or two ago, you know, and you know, challenges that you're facing now.

Yeah, so preceding that February start of the Silver Rally, and I'll speak for Silver specifically, it was quite quiet. It was basically a downtrend through the fall last year into the early part of 2024. And then at the end of February, it really kicked off.

Money raising was much, much easier. But some of that's just a factor of when your share price is moving. And what we see with silver stocks, even at the expiration stage where we are, you see...

the shares of a company trade almost with the price of silver, which is crazy for me in my 20 plus years of being in this business. When we were exploring for copper or gold or anything else, we wouldn't see that activity happening

early on, that was much more a delayed response until the investment community sort of worked its way down the food chain to the small juniors like us. With silver, it was almost instant. So we really saw a period where your share price was up. If you announced a financing, your share price would be up 10%, 15%, 20%, 25% in the next few days. It was no problem getting orders to fill it up. And in fact, we were oversubscribing financings.

But that really kind of came to an end at the end of May. There was some big down days in silver and gold for that matter. But I think that really kind of put the halt on that activity. And

Probably a big factor in that is that we were into the summer or what should have been the summer doldrums by that point. But the market had been hot enough and had been enough activity that it sustained itself, you know, further than it would in a normal year. And now that's really dried up. So I think we're looking at a quiet summer financing wise.

So if you haven't raised money for summer programs, I think it's going to be fairly difficult until we get into the fall period again and look at that kind of classical cyclical uptick.

Well, the key, of course, for investors is unless they're a short-term speculator, I appreciate that. But most people, I think, are looking at silver as an investment, you know, handling things like the renewable revolution that's going on out there and the needs that that gets produced. On my side, I look at it as, you know, a hedge against the declining purchasing power of the dollar. So we're looking a little longer term. So, you know, has anything changed in your long-term positive outlook? No, I think it's, I think that,

positive outlook for silver is very much intact. And I think when you look at just the fact that, you know, the money that was raised through to the end of May here this year is

a lot of that money hasn't even been put to use yet. So you don't have drills turning. You don't have discoveries being made. You don't have ounces added to silver deposits. So we won't see that for another two quarters probably. By the time you start work, get your lab results back, we're into late 2024. And this is kind of the disconnect that's in place right now with the way –

quote unquote traders are. Back in the day, you would have an investor coming to your stock and they would hold for one or two years and give you a real shot at doing what you've said you were going to do. Now it's more quarterly. So I think we see this quarterly trading pattern, but as we go, I think we'll see investors coming back in and probably out again, but back in as that silver trend continues. So my outlook

It's not changed at all, you know, as far as I look at it, being very positive going forward.

Now, obviously, this is a broad question. You know, I mean, we have to know individual circumstances, et cetera, et cetera. But just as a general rule of thumb, if somebody came to you and said, look, I'm thinking about investing in, you know, a junior silver. What's my time frame? A realistic one you just alluded to. Some people don't give it a chance to play out. But what would you say? I think you have to give a company a year. You have to give them a full season to –

put their drills, their money to work, get those holes drilled, get the results back, and then actually interpret what those results mean. In an ideal world, we get super high-grade results over really wide widths, and it's a no-brainer. But life doesn't work that way. So you've got to give the companies a chance to evaluate what they're doing and see how it affects them.

their metrics going forward, where they're going to be exploring drilling their next holes. And then I think it enables everybody to make a better decision as far as what they're going to do with their investment dollars. And so for us as a company, you know, I really need that a year to really assess, you know, a program and what's been done. And it's just a fact of,

These things take time. It takes time to get lab results back and labs are busy. It's slower than it used to be. So these timelines have been extended and we see that actually in all aspects of the mining business now. Everything's been attenuated.

Well, let me just finish with a couple of quick things here. You know, certainly the attitude about the need for something like silver or other critical metals, you know, we're talking about the battery revolution, et cetera, et cetera. Do things like government incentives actually work? They do and they don't. You know, there's a crazy thing going on right now where we're building these battery plants back east in Canada and that's government subsidized yet illegal.

we don't have the subsidies for the metals necessarily to go out, actually find them to supply the battery plant. And this is, I think that's one of the areas that really needs to be addressed. And, you know, the federal government's tried, there's a, you know, there's critical metals flow through silver is not a critical metal. So you can't actually use that exemption as a silver Explorer. But then again,

we go and play with CRA rules like the minimum exclusion rate, which actually has a hugely negative effect on companies' abilities to raise critical flow through. So, you know, we're kind of

These things get introduced, but then they get knocked back by other government policy. And then you also get environments where investors will solely focus on one type of incentive and forget about some of the other incentives that are out there. So while they do work, I don't think they're very well thought through and they could work much, much better than investors.

than what we see. So I think what really needs to happen though, is you have to be, if you want to build these, these battery plants in Ontario, fine, but you really then have to be pushing for more exploration, more development to feed the materials to those plants. Cause the whole critical metal strategy is really around being your own, you know, domestic supply of the metals you need and,

uh right now we don't have that for for these battery plants so so in all i think it's failing well we see that across government by the way read an auditor general's report as you see they work at cross purposes i mean it's incredible when we had sort of these announcements uh you know

favorable toward resources in general. And then, you know, then the environment minister announces we're not building any new roads. And I thought, well, that doesn't work. And that's typical. I'm not trying to just cherry pick something that is absolutely typical. Yeah. We want battery plants. Well, you better make sure you got the metals to supply it. And silver is one of those metals, you know, as they into that, but yeah, it seems still confused. Uh,

I don't know. I don't want to force you into the politics, but I think it's important for people to understand that we need more consistency in the direction we want to go, especially with major commitments. You know, in the battery plant thing, it's like 50 billion, you know, in some form of subsidy. And I'm saying, well, that better work.

you know that really better work so you better sit back and say what do we need to do to make it work and certainly critical minerals and and things like silver have got to be part and parcel of that yeah absolutely without question

I was going to say, you come on the show and I give you a headache by talking. The trouble is you've got to talk a little politics because the intervention and the footprints everywhere on that. Jason, let me just finish with saying I appreciate you taking time. And this is important information for people to understand. You know, we're going in a single direction. Silver's got a role to play. And there are opportunities, especially not when the...

For traders, they love it when the market's melting up, melting down. That's an opportunity. But I think this is a time to do some work, do some research, because I don't want to buy in when everybody else is already excited. Yeah, and I think this summer could be a great opportunity if the silver market does continue like we think. There's going to be some depressed prices. You've got companies doing drill programs that can lead to discoveries. Silver North will have two drill programs this year. Both of those could produce opportunities.

Silver Discoveries that would send our shares obviously higher. That's how our shareholders benefit. So I think there'll be lots of opportunities like that through the summer for any investor who's looking at these earlier stage opportunities. Well, we'll be paying attention, Jason. Jason Weber is CEO of Silver North Resources. Thanks for the time. Thank you. My pleasure.

Time now for the shocking stat of the week. You know, it's not difficult to make the case that housing shortages, along with skyrocketing rents, are the most important economic-slash-social issue facing Canada.

The bad news is that while affordable housing has been an issue for decades in major urban centers like Vancouver and Toronto, it's far worse today, especially when it comes to finding affordable rents. I sense that we're just starting to appreciate the ripple effect of the housing crisis. I mean, for example, looked at a KPMG poll and they said that 94% of businesses say the lack of affordable housing and rents is their number one challenge.

But despite this, I don't see any sign that governments at all three levels understand the seriousness of this crisis. I mean, finally, after decades, it seems to me that the public is understanding the massive costs that governments add to the price of a new build. I won't go into the details here, but it's estimated between 25 and 30 percent of the ultimate price you pay as a consumer is due to government.

Now, politicians claim to care about affordable housing over the years, but that's on the short list for one of the biggest con jobs in history. I mean, but I want to talk about the latest problem that we need more housing. Obviously, at least that's a consensus. We get it from all the political parties.

I mean it's easy to understand why as I said but look at the estimates and you can go from the CMHC CIBC the government itself they suggest in order to return to some semblance of affordability we need an estimated 500 000 plus new builds every year now some estimates are higher by the way but look at this so we need 500 000 in 2023 housing starts we're only 240 000 in other words

We're already 260,000 short of the needed target. This year, CMHE's most optimistic estimate for 24 is 232 housing starts. Well, that's 270,000 below the target.

And one more, let's go out another year, 2025. CMHE's most optimistic estimate is we'll build 240,000. Again, well behind the 500,000 needed. So here's the shocking part that I think is regularly overlooked. In just three years, Canada is 780,000 housing starts behind the needed number. And again, that has to be added to the 500,000 per year we need going forward.

Well, the point is it's not going to happen. If we assume that 780,000 starts needed just to get back to the target on top of the 500,000 in each year, you average that out over six years, well, we need an extra 130,000 every year on top of the 500,000. I mean, we are never going to catch up. In fact, the problem of affordable housing and rents is going to get worse as long as the population continues to grow at even a half or maybe a third of the current rate.

We can't keep up with the demand.

Now, the government's promise has significantly reduced the number of temporary entrants, but it's not even going to be close, not close to enough, thanks to the lack of planning as targets for newcomers rose. As I said going back years, the failure to anticipate the most straightforward relationship, population grows, housing needs do too. I'm telling you, it's going to have repercussions for years to come. Maybe that's why we're seeing the most disillusioned group of Canadians, according to that Ipsos read poll,

is that 18 to 35-year-olds know that without parental help, they are never going to own a house. And you can file this one under some mistakes by government are far worse than others.

Of course, one of the big stories this week was the inflation numbers that came out. And inflation means, hey, what are the implications for interest rates? Well, Michael Levy joins me now. Mike, I guess it was a surprise whether you're looking at the three-month number was now bounced back up to 3%. You know, the May number was 2.9%. Yeah. Once again, the interest rate debate's on. Will they or won't they lower in July? And it only took a week for...

That to unwind for what the Bank of Canada Governor, Tiff Macklem, had to say a week ago. He was saying, you know, we're looking at it. The numbers are going the right way. And all of a sudden, they took this big wet towel and slapped them across the face with these new numbers. And certainly, a July rate cut is now not definitively on the table. It's probably off the table so they can see some more numbers.

And they will get those numbers. Of course, the June inflation numbers will come early in July. So they'll have another set of numbers before they have to make that decision on July 24th. But yeah, I'm with you. I just think the uncertainty has reemerged. You know, I think we got about 15 minutes off from I'm not sure. And I think, Mike, that's comes to the economy is a complicated organism. I mean, yeah.

Like I'm looking at jobs. Well, public sector jobs aren't the jobs that interest rates try to influence. So, you know, they're going up no matter what. And we have a predominance of public sector jobs. You know, pick your timeframe over the last 12 months, three months, whatever you want. There's been, yeah, job creation, but it predominantly has been in the public sector. It certainly has. And when you look at the, the, uh, employment rate, uh,

hit 6.2% in May, Mike. And I mean, that's up close to pandemic levels. And if you're going to have that, and there's not been a large increase in layoffs, Mike. The fact is more than a percentage point over the past year, hitting 6.2% in May, as I said, just about pre-pandemic levels. But

There hasn't been layoffs. It's businesses pulled back on hiring as high interest rates have weighed on consumer spending and dulled corporate investment. But we're not adding jobs, really and truly adding jobs. And that's going to be serious and it's going to impact where the Bank of Canada can go.

Yeah, again, the distinction is public versus private. You know, we're not adding, you know, private sector jobs, pardon me. And full-time is another distinction you want to make. How many are part-time, how many are full-time? You know, but what was interesting is that that spells for a rate reduction is Tiff Macklin, governor,

you know, said that policymakers and politicians, you know, we got to figure out why we're not attracting capital investment. And I know apologists, you know, for the big government apologists are out there, you know, they try and doctor the numbers. The fact is we have had weak capital investment since 2015, you know, a decline, inflation adjusted decline of around 14%. I mean, that's serious stuff. That's how you build an economy.

And yeah, so the governor says, again, Mike, I only mention it because that would sort of weigh on behalf of having an interest rate cut. Absolutely. And, you know, it is about productivity in Canada. And he said it's been declining out of the pandemic instead of

picking up as expected. But Mike, what Carolyn Rogers, the deputy governor, had to say, and I think this is so apropos of what you just said, she called poor productivity and low levels of business investment in machinery and equipment an emergency. This is your deputy governor of the Bank of Canada. Isn't there a message for government there? This is an emergency as far as the Bank of Canada is concerned.

Well, it's a concern for anyone who's sophisticated, you know, in my opinion, that, you know, because this is our standard of living. Your productivity per capita has a huge impact, but the capital investment has a huge impact on whether you're going to add, as you were just alluding to, the machinery, the equipment, intellectual property, the whole list that goes to, you know, create the foundation for growth. So, yeah, I just find it interesting, the debate. Hey, we had a little break. The debate's right back on.

where it was. And I smile, by the way, when they start talking about what can we do? And I'm going, I think it's pretty obvious. You've got to create a tax and regulatory environment that says, yes, please come to Canada. I want to add, as Paul Martin did when he lowered the capital gains two separate occasions, the only government to do that is

over 50 years, a capital gains exemption, was a liberal finance minister, Paul Martin. So, you know, let's not overly politicize. I think he's right because he was talking economics, not politics. And so is Macklem because he agreed with Carolyn Rogers. And these are serious words that he's saying, Mike. He says, politicians, listen, politicians and policymakers need to get a grip on

why business investment is relatively weak in Canada. I don't think he could put it any stronger without going right into the politics of it, but he's making it very clear productivity is a huge problem in our country.

Yeah, so all that to say back to where we started, which is whether we're going to cut rates July 24th again after the next numbers. That's important. We'll get more, but it's still up in the air. So, yeah, same old, same old, Mike. We'll get a definitive answer probably in the next couple of weeks when we do get the inflation numbers for June. In the meantime, you go out, love your long weekend. Have a great week, too. And you, too, Mike. And remember, as you go to the long weekend, Canada needs a rate cut. Have a good week.

Okay. I want to go live to the trading desk now, Vic. What a surprise. Same thing I asked Don Villalo on a bigger side. Let's talk the U.S. presidential debate on Thursday. But my question to you is, now, I think it was a consensus that it was sort of a disaster for President Biden and the Democrats. I'm talking about Democrats are saying that too. So I'm not trying to introduce a big political controversy, but what did the markets make of it? You know,

Yeah, Mike, we've had a pretty quiet week as it is. It feels like it's been a summer week. But it's almost, in terms of the markets that I look at, the financial markets, it's like, what

whatever the debate didn't happen, other than to say bond yields have gone higher today, not by a country mile or anything, but they're higher. Maybe just on both parties made it clear last night, that's the Republicans and the Democrats, that they're going to continue with deficit spending. So U.S. dollar was strong this week anyway. It's at a two-year high. Gold market's been in a $50 range this week, and it's unchanged with last Friday's close. So

Yeah, pretty limited reaction, it seems, to the debate last night. I want to come to a couple of things. Sorry, it's always burning since you talked to us last week. What about that short position on the Canadian dollar? I'll get back to what we're talking about in a second, but I don't want to lose time without asking you about that. Yeah, I mean...

We measure who's doing what in the futures markets. And basically, speculators, that's small speculators and large ones, have the largest ever net short position against the Canadian dollar that we've seen in the futures markets.

Now, why? One of the things would be that our short rates, like I say, at a two-year tenor, American interest rates are about 75 basis points premium to Canada. That is, in my trading career, that's unusual to have that. And that's usually not good news for the Canadian dollar.

We have got what I was writing about in my blog last week, this refinancing wall coming where there's a hell of a lot of Canadians who are going to need to refinance their mortgage this year, next year at substantially higher rates. And that will probably crimp consumer spending. So there's that. Now, the thing is,

This huge short position is no secret. I mean, everybody that's trading currencies knows it's there. So the thought would be if there's some news comes out that's, say, bearish Canada and the Canadian dollar doesn't fall, then the people who are short might go, oh, wait a minute. Am I doing the right thing here? And if they start to cover it, then we could have a rust to the upside. If.

In fact, though, they're right. The Canadian dollar here is only about a half a cent or a cent away from multi-year lows. And if we fall through that, you know, it could be like the floor of a building caving in.

Okay, let me finish with this. Going back to, you know, looking at the U.S. presidential election, they're, what, factoring in one or two rate cuts. But here's the thing. Going back a few months, we've been saying nonstop, man, if they ever lower rates, it's going to be sort of like a green light to jump into stocks. Well, people didn't wait for that green light. We still haven't had a drop in U.S. rates. People didn't wait.

What do you think the impact will be now then if they drop rates? Because it seems like the market certainly anticipated it. Yeah, the...

I guess I've said a few times a green light special like that golf commentator we used to have. God, what's his name now? Anyway, yeah, we're both having a Biden moment on that one. But yeah, it seemed as though if the Fed would have cut rates at any time over the past year and a half or so, the market would have gone crazy to the upside. Right now, I'm having second thoughts about that. I think we're seeing slowing consumer buying of stuff, especially lower income cohort,

And we're seeing actually rising claims for unemployment insurance being sustained over a period of time. So maybe the employment side is weakening. So I'm thinking now an interest rate cut might actually be bad news for the stock market, given that it would be interpreted as a sign of the economy slowing. We better get in front of that and start cutting rates or we're going to have a problem here. So I think that's kind of how I see it right now in terms of whether or not we have a cut.

Well, plus we built so much in anticipation of cuts. So it's the old buy on rumor, sell on news on this. Well, it's not going to be disinteresting. That's good news for you as a trader. Vic, I'll invite people to go to victoradair.ca, victoradair.ca. Vic, enjoy the long weekend. Happy Canada Day.

Well, thanks, Mike. By the way, just before we go, next Thursday is the 4th of July, which means it's a holiday in the States. And the unemployment figure gets released early Friday morning in a market where, like, nobody's there. And that employment figure is going to be hugely important, happening at a time, like it couldn't come along at a worse time for a lot of traders. But we'll be there, Vic. We'll be here. That's right. And you'll be back with us next week. Vic, have a great week. Thanks, Mike.

Time now for this week's Goofy Award. Wow. Do I have to say any more than Thursday's presidential debate? Gosh, sad, troubling demonstration of the declining mental powers of President Biden. That's nothing to do with Donald Trump. I thought his performance was pathetic too, but not like this. It was so visible.

You know, and exposes the lies and deceit surrounding the competence of President Joe Biden to lead the United States. I think that's what should be troubling. Our card of the week in February, you might remember this, was from Special Counsel Robert Herr. He was charged with looking into the presidential, you know, President Biden's handling of the classified documents.

And he said he wouldn't recommend prosecution at trial because Mr. Biden would likely present himself to a jury, as he did during the interview of him, as a sympathetic, well-meaning elderly man with a poor memory.

But here's the thing. Her was immediately attacked by Democratic heavyweights and friends in the media. I mean, Vice President Kamala Harris stated the way that the presidential demeanor in that report was characterized could not be more wrong on the facts and clearly politically motivated, gratuitous. New York Times takes another credibility hit with its consistent defense of Mr. Biden's mental acuity. I mean, Thursday's debate left no doubt that he's lacking credibility.

Just last week, the Times ran a piece entitled, in quotes, how misleading videos are trailing Biden as he battles age doubts. Well, there's nothing misleading about the live debate on Thursday. Mr. Biden looked feeble at times, slack-jawed, blank, confused. But the goofy isn't about that. It's about the apologists, the cover-up. As Bari Weiss states, she's from the Free Press, anyone who committed the sin of using their own eyes on the 46th president was accused...

variously of being Trumpers or MAGA cult members who didn't want American democracy to survive, ageists or just dummies easily duped by misinformation, disinformation, fake news, and more recently, cheap fakes. Even on Thursday, I mean, there were apologists out. I mean, it was laughable. MSNBC's Joy Ann Reid said the real problem was that he was on the right-hand side of the screen.

I mean, this is the disease of partisanship evident on all sides of the political spectrum. Unprincipled with a lack of integrity, they put their own agenda and that of the party ahead of the good of the country. And in President Biden's case, the world. I mean, I can't do justice to the contempt I feel for these people. As the Wall Street Journal's Peggy Noonan wrote, allowing Biden to run for a second term is elder abuse.

But it's going to be interesting. Let's face it, the next, well, the next several weeks until the Republican convention, but, you know, it's going to be filled with, is he going to be replaced and by whom? Well, one has to wonder, I mean, did Mr. Biden's performance actually surprise Democratic heavyweights? I suspect not. I also think you could make a case that maybe we held this presidential debate the earliest ever. Why to give them time to change candidates if it went as badly as it did.

I mean, there's going to be lots of talk of intrigue. But given the evidence, you know what? I have my doubts this is going to be about what's best for the country as opposed to what's best for the Democrats. That's all the time we have this week. And a reminder, you can find us on our YouTube channel. I invite you to do that. Just go to Michael Campbell's Money Talks on YouTube. You can go to Michael Campbell's Money Talks on Facebook, too, and Money Talks tweets on X.com.

formerly Twitter. And you can sign up for five minutes with Mike on mikesmoneytalks.ca. I know that's a lot of stuff. My point is, I hope you join us on a daily basis on all of those platforms. In the meantime, hope you have a terrific Canada Day, a terrific long weekend.