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Memorable Reads Of The Week 10

Memorable reads of the week 10

Post Series: Memorable reads of the week

Another two weeks flew by in a jiffy.

Now we are really getting close to year’s end, only two more weeks. With only a couple of weeks left, you can expect my last overview on the 30th of December. In January, I’ll share my favorite news articles out of the ones I posted these past 4 months.

I can already tell you I will continue to do this series next year, but instead of trying to get something out on a weekly basis, it’ll be bi-weekly from the start.
While news appears on a daily basis, really memorable news and news that is linked to the financial markets or with a link to FIRE is limited.

For now though, lots of things happened once more. Here are my memorable reads that I wish to share with you.

My memorable reads

Raw Palladium, The Most Precious Of Metals

Palladium dethrones gold as world's most expensive precious metal

Original source: J. Van Kuppeveld (2018, December 6). Palladium onttroont goud als duurste edelmetaal. De Tijd, p. 21

Because of the ever-increasing demand for palladium to be used in the car industry, the precious metal has only gone up in the last 4 months.

This rapid price increase resulted in gold being dethroned by palladium as the most expensive precious metal. At the close of the Brussels’ stock exchange on Wednesday 5 December, palladium was at 1,254 dollars per troy ounce (a little over 31 gram), whereas gold was at 1,237 dollars.
This meant 1 kilogram of the silvery white metal also called “white gold” would set you back a cool 40,000 dollar.

Elly Ong of Bloomberg Intelligence states that the major reason for the price increase is the shortage caused by the large demand in the car industry.
She also notes, as expressed by a broker that talked to Bloomberg, that the metal is very expensive to let, which might be the biggest booster of the price.

The shrinking and already limited supply are mostly provided by Russia and South-Africa while the growing demand is ever increasing, especially in China.
According to the article, 84% of the demand originates from the car industry.

I was not only drawn to this article for the fancy metal I saw in the picture, but also because I found it interesting that the metal most people think is the most expensive in the world isn’t anymore.

A New-born Life On A Dark Background

One second can cost you 27541 EUR

Original source: D. De Smet (2018, December 13). Eén seconde kan 27.541 euro verschil maken. De Standaard p. 5

With a new year always comes new laws and regulation. It’s no different for 2019 that brings a new system for child allowance.
This new system can create a big financial difference if your newborn is born before or after the new year. Literally, one second can make the difference.

While I knew it would impact the child allowance, I didn’t realize how much it was until I read this article. They clarify that depending on your family situation.

  • Those who don’t have children yet better wait till after new year. You get an additional 52.79 EUR/month.
  • If you already have kids, it’s best if you planned it for this year:
    • Having 1 kid already means you get an additional 9,032 EUR over the course of 22 years.
    • When you already have 2 or more kids the benefit increases to 27,541 EUR over a 22-year period.

Important to note is that the greater the age difference between the kids, the smaller the difference becomes between the old and the new system.

An exception to the above rule is when already have two kids and your household income is between 30,984 and 61,200 EUR.
If that is the case, it’s best to wait till 2019 because from then on, you get a social bonus. This bonus grants you a cool 7,000 EUR.

Finally, there is obviously a lot of criticism from the family associations due to the huge discrepancy. The minister responsible ignored this because the government agreed to keep the reform budget neutral.

It’s clear that there are winners and losers to this, but unfortunately for those that are off worse, there isn’t a lot that can be done about it. It sucks, but at the same time, you don’t get kids for the financial benefit cause even with this additional support, it still costs a lot to have and support children.

Mario Draghi - World Economic Forum Annual Meeting 2012

ECB removes economic training wheels

Original source: R. Mooijman (2018, December 13). ECB haalt economische steunwieltjes weg. Retrieved from: http://www.standaard.be/cnt/dmf20181213_04032778

As of December 13, it became official, the European Central Bank (ECB) will stop it’s Quantitive Easing (QE) program this month. After pumping a staggering 2,600 billion euro in the European financial market, Mario Draghi, Italian economist and sitting president of the ECB, believes the economy has recovered enough to continue without support from the central bank.

While this QE is stopping, isn’t news, ECB announced it last summer, it’s still somewhat surprising given the current market turmoil and global recess.

This QE has no impact on the average consumer though. The interest rates that impact savings accounts and mortgages are mainly influenced by the negative deposit rates used by the ECB. And this will remain unchanged for a long time. According to Draghi at least until the end of next summer, but perhaps even longer.

You might wonder why I picked this article if there is such a minimal impact on us the consumers? Well, it’s because it’s the first step in going back to the “normal” situation, the interest rate level before the financial crisis of 2008. It’s also important to remember this because it shows how different (read: slower) the ECB reacted to the financial crisis.
Where The Fed has increased interest rates up to 2%, the ECB only now stopped QE and isn’t even starting the increase in the rates.

These were my memorable reads of the past 2 weeks.
Do you have anything that you want to share? Leave a comment with a link or a summary and why you find it interesting.

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