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September 21 2018
Oil Prices, War Fears, and Rising Inflation All Point to Gold Strength Audio Player
Well now, without further delay, let’s hear this week’s exclusive interview with the man who famously advises people to have always have guns, gold and a getaway plan.
Mike Gleason: It is my privilege now to welcome in Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is perhaps most well-known Trends forecaster in the world, and it's always great to have him on with us.
Gerald, thanks for the time again today, and welcome back.
Gerald Celente: Oh, thanks for having me on, Mike.
Mike Gleason: Well Gerald, one of the hot topics in the markets today is the escalating trade tensions. Trump just announced another $200 billion in tariffs on China and he looks ready to more than double that if the Chinese should retaliate. The President is confident the U.S. can win a trade war. Do you share that optimism? How do you see this playing out?
Gerald Celente: I absolutely share that. Because I mean, here's the deal. If your or I were to do business and I'm making $350 billion more than you are, are you going to want to renegotiate this? Hey listen, something's wrong over here. So, when you look at even with the tariffs that Trump is putting on, that still amounts to a very small percentage of China's GDP, about 0.3%, or something like that, 5%, 6% tops. So China's going to negotiate. They're not going to give up a very lucrative business deal, so they could keep making more when the other business partner wants a better share.
Mike Gleason: And how do you see the escalating tariffs impacting markets? So far the response appears mixed. The dollar seems to be benefiting, and metals are suffering. We aren't sure the markets have it right when it comes to the dollar though. It seems to us that tariffs should drive price inflation. Either Americans pay a higher price for the imported goods, or replace them with more expensive domestic products. And the Chinese aren't likely to be buying as many dollars or treasuries if exports to the U.S. fall – to say nothing of their ability to wage and all-out currency war against the dollar. But so far, at least the dollar is getting stronger in foreign exchange markets. What are we missing?
Gerald Celente: Well, I think what people are missing is they're making too much of a deal of the trade war. It's every day. It's almost become stupidity with the business media. Every day they're going, “the market goes up because trade wars eased. The market’s down because trade fear is increased.” I mean, come on. What are they kidding? I mean, the world is bigger than that. Even what you saw car sales start slumping in China, the headlines blamed the trade wars. Does the average person give a damn about a trade war? They're buying what they're buying, they got what they got. If they don't have it, they don't spend it. If they have it, they spend it. They don't know what's going on behind the scenes and the details of a trade war. The media has dumbed down so much… it's every day. It's one excuse. And as far as the dollar going up, it's interest rates.
I mean, the United States is raising interest rates. You're looking at what, even with the United States raising interest rates, what are you looking at the overnight, the Fed funds rate? 1.75 to two? And what is it 1.5 in Canada and the U.K. Negative interest rates in Europe and the European Union. Negative in Denmark. Negative in Sweden. Negative in Japan. I mean, it's ridiculous. So what I'm saying, Mike is that the markets cannot take a rate increase. That's why the currencies are going down. And matter of fact, we just heard from the number two guy in China, Lee, saying that to think that the Chinese, he said, want to devalue our currency is ridiculous. He said we're not going to make up that much more trade on having our currency decline. Because by the same token, you look at China, what are they the largest importer of energy in the world? And now the Yuan is going down, and oil prices are going up. Oh, and what are oil prices based on? Petrodollars. So now as their currency declines, they got to input more energy. And it's based in dollars, as the dollar gets stronger, they don't want this to happen.
So to me it's a lot of misinformation out there. And again, I'm no Trump fan. I mean, I think the guy is ridiculous on a lot of stuff. But the media is so anti Trump that they'll keep using one play a day, and overlooking the bigger story.
Full Podcast here: https://goo.gl/9oqzzB
September 19 2018
Which Precious Metals Are Likely To Be Better Investments During The Next Market Crash?
The question on the minds of many investors, is which of the precious metals will be better investments during the next market crash? I should know because I receive this question in my email box quite often. So, I decided to test the price action of several metals and how each traded during a large market correction.
This article will focus on the top four precious metals, gold, silver, platinum, and palladium. Even though Rhodium and other metals are considered precious, the ones listed above take the lion’s share of the investment market. Furthermore, while platinum and palladium are purchased as investments, they have a much larger industrial component than gold or silver.
As I have mentioned many times, gold and silver disconnected from the broader markets when the Dow Jones Index fell 2,000 points in the first six weeks of 2016.
The two reasons I believe gold and silver jumped considerably as the markets sold off at the beginning of 2016 were:
- Gold and Silver were extremely oversold, and the Commercial hedgers’ short positions were at a low, thus very bullish
- Investors were extremely worried that the Dow Jones and markets were beginning a massive correction, so they moved into both gold and silver
To explain why investors were spooked in 2016, we need to look at the following chart:
Typically during a major correction, the market makes several attempts at a top. In 2007, there were three tops made before the market finally came down in 2008. Then in 2015, we had three more tops and two large corrections. The reason investors’ worry turned into fear at the beginning of 2016 was that the last top did not reach the previous 18,000 level.
Full Article: https://goo.gl/asrgNh
Trump’s Backdoor Power Play to Rein In the Fed
“Just run the presses – print money.”
That’s what President Donald Trump supposedly instructed his former chief economic adviser Gary Cohn to do in response to the budget deficit. The quote appears in Bob Woodward’s controversial book Fear: Trump in the White House.
Trump disputes many of the anecdotes Woodward assembled. But regardless of whether the President used those exact words, they do reflect an “easy money” philosophy that he has expressed many times before.
Trump Likes Low Rates, Loose Money
President Trump has described himself as a “low interest rate person.”
This past summer, Trump launched a very public attack on the Federal Reserve’s rate hiking campaign. He wants it to stop because it’s making the dollar “too strong” and threatening to undercut his tax cut fiscal stimulus.
There’s only so much dollar strength the U.S. economy and U.S. debt and equity markets can take. President Trump is keenly aware of the risks.
A Fed rate hike next week is a given at this point.
The Trump-versus-Fed feud will likely heat up again in December if the central bank raises its benchmark short-term rate at its scheduled policy meeting. Although a December hike is far from certain, Fed chair Jay Powell and company seem intent on raising interest rates again – and possibly a couple more times in 2019 if the markets don’t melt down before then.
Additional tightening will increasingly put the central bank on the wrong side of the President’s Twitter feed. If Donald J. Trump wants to put more than social media pressure on Fed officials, he can threaten to remove them.
Trump himself appointed Powell, a decision he now apparently regrets. It would be unprecedented for a president to fire a Fed chairman before his term is up... but not necessarily inconceivable. After all, President Trump has done a number of unprecedented things, as the anti-Trump media are wont to remind us.
Read more: https://www.moneymetals.com/news/2018/09/18/trumps-power-play-fed-001619
September 17 2018
A Reader Asks: Should I Sell Gold and Buy Bitcoin?
Although the fervor has diminished substantially since the crypto price smash earlier this year, we do still see a degree interest in bitcoin among precious metals investors.
Bitcoin and metals arguably share some appeal as an “honest” alternative and as a hedge against the fiat dollar and the insolvent U.S. government which backs it.
In light of the bitcoin price falling dramatically this year, one reader asked, “Is now a good time to swap gold for bitcoin?” Below is our response.
It may be bad form to answer a question with another question, but it seems like a good way to approach this subject. So we ask; are you in the mood to gamble? If you are, it might make sense to swap some metal for bitcoin.
Cryptocurrency can potentially generate bigger returns... in exchange for bigger risk. Since there is no tangible backing to bitcoin, it could conceivably go to zero – much like shares in a defunct “dot com” company.
The two assets are far from interchangeable and will serve different purposes in your portfolio. Bitcoin has often been called “digital gold,” but that comparison is dangerously wrong. Gold is a reliable store of value with a track record thousands of years long. Bitcoin’s price has collapsed from its all-time high of nearly $20,000 to $6,000.
This is a vital difference between gold and bitcoin: gold will always retain some intrinsic value, while the price of a digital token might go all the way to zero. That is not our prediction for bitcoin. It is, however, a possibility.
A technology, which is one way to think of bitcoin, must hold its value amongst a growing number of alternatives. If it cannot, it will be replaced. That happens, even to leaders. Remember Napster and CompuServe?
Continue Reading: https://goo.gl/EHsJYV
September 14 2018
Gold vs. Bitcoin
Since its introduction in 2009, bitcoin has taken the financial world by storm.
The enormous gains in bitcoin’s value are attracting attention around the world, both positive and negative. People ranging from everyday consumers to central bankers now have an eye on the digital currency.
Some remain skeptical. Several high-profile hacks in which tens or even hundreds of millions of dollars-worth of bitcoin were stolen from bitcoin exchanges have raised doubts that a purely digital asset can ever be secured. Others wonder if money without official government backing and no physical manifestation can really succeed.
On the other hand, many see bitcoin as the future of money – destined to end run banks and governments and the fiat currency systems they control.
What is Bitcoin?
Bitcoin is a peer-to-peer, decentralized, digital currency with more than 10 million holders as of this writing. The lure of decentralization, lower transaction fees, and pseudo-anonymity has fostered adoption around the world. And people are increasingly looking for alternatives as central banks around the world continue to abuse national currencies.
There is a particular concern regarding the U.S. Federal Reserve Bank’s perpetual devaluation of its Federal Reserve Notes – commonly known as dollars. Although it is no longer a true dollar, which was historically defined in terms of a certain amount of silver, today’s U.S. dollar is still the world’s reserve currency. And Fed officials recognize no limits in terms of how many dollars can be created.
Check it out here:
https://www.moneymetals.com/guides/bitcoin-vs-gold
August 21 2018
Spot Prices Are Falling, But Premiums Are on the Rise
Gold and silver premiums – the price dealers add to the melt value of an item to cover manufacturing and overhead – began climbing in the past two weeks.
Many clients see falling gold and silver spot prices as an opportunity to buy, but some are disappointed to find the premium for the item they want is suddenly higher, negating some of the price drop.
The challenge they face is that lots of other bargain hunters are trying to jump on the same opportunity.
Premiums are very sensitive to supply and demand in the retail market for finished coins, bars, and rounds, and the reasons are pretty straightforward.
First, when prices drop, retail bullion investors stop selling and start buying. That has a profound effect on the availability of resale, or secondary market, product inventory.
The large quantities coins, bars, and rounds coming back to market in the past year or two have driven premiums to the extraordinarily low levels we saw recently. Now, supply from the secondary market is drying up fast.
Second, there are only a few mints and refiners making coins, bars, and rounds. Like any manufacturer, they gear production to market demand. Scaling up takes a bit of time, and it isn’t something most will do without first developing some confidence that the higher demand will persist.
Continue reading: https://goo.gl/cRFcUF
August 20 2018
August 17 2018
For Sterling (Silver) Results, Repetition of the Basics Is Worth Its Weight in Gold
Whenever you encounter a "sticking point" in some activity – any activity in which you are engaged – it always helps if you "return to the basics."
Sure you may "know" what they are, but do you really follow them? Ask an expert in most any field of endeavor, and he/she will tell you the same thing.
The basics that lead to outsized results are still around and followed for a reason – because they work! Take the idea of building up a comfortable position in precious metals...
You've decided that you either want to start "stacking" – or adding more to your current holdings. You look at the charts and see that prices are falling, and others are fearful. You're not interested in "buying the bottom." You're looking to build a foundational position into that bottom.
From experience you know that "going against the crowd" and buying when metals are "on sale" has been working since at least 2002, when gold was under $300 an ounce and Silver was below $5 the ounce.
Even at today's prices, gold and silver are still up 400% and 300% respectively.
After reconfirming your understanding and belief that precious metals have remained as a store of value for thousands of years will continue to do so, you move closer to acting on that belief.
Revisit your tolerance for risk, the financial means available, your holding time outlook, and how much you're willing to pay per ounce.
Check out the article here:
August 16 2018
How Gold & Silver Will Trade During The Next Market Crash
While many investors believe the gold and silver price will crash during the next market meltdown, I see a much different outcome. Yes, it is true that the metals may sell off initially in the beginning, but I believe gold and silver will disconnect from the broader markets and move up much higher.
The reason I see the precious metals disconnecting from the broader markets during the next major correction is due to the much different setup today in the gold and silver market than it was in 2008.Precious metals investors forget just how overvalued the gold and silver prices were based on technical analysis. Of course, I am not talking about the true “Store of value” properties of the precious metals, but rather, how they trade in reference to the market in general.
As I have stated many times, the paper trading market determines the price of gold and silver, not the physical buyer. Thus, the paper market will continue to control the gold and silver prices until investors realize the dollar is just another worthless fiat currency.
In my newest video, How Will Gold & Silver Trade During The Next Market Crash, I use a few indicators to explain why I don’t see a huge crash in the gold and silver prices during the next major market correction:
In the video, I discuss how the broader markets are setting up for a significant correction lower while the precious metals are behaving more like a coiled spring. Although, in the initial stages of market meltdown, we could see a broad-based selloff across all markets. However, the technical analysis suggests that the gold and silver prices are much closer to a bottom than a top.
Furthermore, another indicator, the Gold Hedgers Chart also provides more evidence that gold is become oversold, rather than overbought:
The gold short hedge position is now back to almost the same level as it was at the beginning of 2016 when gold was trading below $1,100 an ounce. This chart shows that when the gold hedgers position moves back towards the zero line, then the gold price is forming a bottom.
August 07 2018
The U.S. Government To Fork Out A Half Trillion To Service Its Debt In 2018
The U.S. Government is going to surpass another significant milestone this year. According to the recently released data from the TreasuryDirect.gov, the government will fork out a stunning half trillion dollars just to service its debt in 2018. Unfortunately, as U.S. interest rates rise, along with ever-expanding public debt, the cost to service the debt will continue to increase.
In just the first nine months of the year, the U.S. interest expense has increased by an additional $40 billion. Last year, the U.S. Government paid only $375 billion to service its debt from October to June, but this year it has jumped to $415 billion:
Now, if we consider that the U.S. Treasury paid $83 billion in interest expense for the three remaining months last year, and add it to the current total, it would equal $498 billion. However, the U.S. interest expense is up over 10% already. So, if we assume that the interest expense for July-Sept will also be up 10%, then the estimated total debt service for fiscal 2018 will reach $506-$510 billion.
Continue Reading:
August 06 2018
Will Unapproved Opinions Be Censored Off the Internet?
"False opinions are like false money, struck first of all by guilty men and thereafter circulated by honest people who perpetuate the crime without knowing what they are doing."- Joseph de Maistre
You wouldn’t be reading this if you didn’t value alternative points of view. After all, you could easily click your mouse right now to CNBC, CNN, or the New York Times for conventional news and opinion.
The fact that you have the slightest ability to bypass big media’s biased filters makes them and their ideological allies furious.
Some members of Congress who clearly don’t like the spirit of the First Amendment are working with internet gatekeepers at Google, Facebook, Twitter, and Apple (now a trillion-dollar corporation) to try to prevent you from accessing information they haven’t approved.
Silicon Valley executives recently appeared before Congress, where several representatives called for big tech to implement more aggressive restrictions on “hate speech” and “conspiracy theories.”
Shortly thereafter one of their main targets, alternative media personality Alex Jones, had his Facebook account suspended, multiple videos removed from YouTube, and podcasts deleted from streaming services.
Has Jones made some controversial claims over the years? Sure.
But he has also hosted top-notch experts on his program who are willing to speak inconvenient truths about our monetary system, about market manipulation, about the globalist agenda.
Among his guests have been Gerald Celente and Jim Rickards (both of whom have appeared multiple times on the Money Metals podcast), former Congressman Ron Paul, and even Donald Trump (early in his presidential run).
August 03 2018
Trump’s Fed Feud; Indexing Capital Gains Taxes to Inflation?
Well now, without further delay, let’s get right to this week’s exclusive interview.
Mike Gleason: It is my privilege now to welcome in Samuel Pelaez, CIO and Portfolio Manager at Galileo Global Equity Advisors, a Canadian subsidiary of U.S. Global Investors. Sam manages Galileo's Growth and Income fund as well as the Technology and Blockchain fund and also follows the natural resource and gold mining space quite closely. And it's a real pleasure to have him on with us today.
Sam, thanks so much for the time and welcome.
Samuel Pelaez: Thanks, Mike. It's a great pleasure to join you. I think this is the first time.
Mike Gleason: Yeah, absolutely. Excited to get a chance to talk to you finally. You've been talking about commodities being way undervalued. You published a chart back in the spring showing the value of the S&P GSCI Index of commodities companies relative to the broader S&P 500 Index. The ratio is near all-time lows. Since that chart was published in April not a great deal has changed, so talk about where we're at here in commodities now and give us your thoughts on what the value proposition looks like today because they certainly have been laggards compared to the broader markets.
Samuel Pelaez: Yeah, absolutely. That's my favorite all-time chart I think. I'm a big proponent of commodities and natural resource investing. Keep in mind, that chart goes over 60 years or so of markets. We've had cycles like this three times or this will be the third time. Twice in the past we’ve seen that sort of extreme rating where commodities are so undervalued relative to the broader market as measured by the S&P 500.
What that suggests is that we may be at a juncture here that provides an opportunity to invest in resources that we haven't had for over 20 years. Last time this happened was coincidental with the NASDAQ 1990-2000 boom. That was the time when the commodities were as undervalued relative to the broader market. And what happened since was obviously the big industrialization of China commodities did very well for a decade up until 2008 and even a little bit further than that.
https://www.moneymetals.com/podcasts/2018/08/03/bull-market-natural-resources-001588
August 01 2018
Top Gold Miners Production Declined 15% While Costs Escalate
Even though the gold price increased in 2018, the top gold miners production declined while costs continue to escalate. Output at three of the top gold miners in the world fell in the first half of 2018 compared to the same period last year. With rising costs due to higher energy prices, on top of decreasing production, the top gold miners free cash flow declined precipitously in 2018.
While many analysts focus on the company’s profits or net income, I like to pay attention to its free cash flow. Free cash flow is nothing more than subtracting capital expenditures from the company’s cash from operations. Because the gold mining industry is very capital intensive, the company’s free cash flow is a better indicator of financial health rather than the net income.
As mentioned, all of the top three gold miners suffered production declines in the first half (1H) of 2018 versus the same period last year. The biggest loser was Barrick, whose production declined over 20% by falling to 2.1 million oz in 1H 2018 compared to 2.7 Moz in the previous year. Goldcorp’s production fell 10%, while Newmont’s output dropped by nearly 9%:
Altogether, the top three gold mining companies’ production fell 15% or approximately 1 Moz in the first six months of 2018 versus last year. Even though Goldcorp isn’t the third largest gold miner in the world, the company has already posted its second-quarter results. AngloGold is the third largest gold miner, but it won’t publish its financial statements until August 20th. Also, Kinross is likely ranked number four ahead of Goldcorp, but the company posts its production figures in “gold equivalent ounces.” If a company has to publish its gold or silver production in “equivalent ounces,” then the analysis is a bit flawed in my opinion.
Regardless, these top three gold miners all experienced declines in production which impacted their financial balance sheets. To get a better idea of the true cost of production and the health of the gold mining industry, I have come up with an “Adjusted Earnings Breakeven” price as well as a “Free Cash Flow” breakeven price.
July 31 2018
GOP Congressman Investigates Undisclosed Gold Market Intervention by China and the Exchange Stabilization Fund
Washington, DC (July 31, 2018) – A member of the U.S. House Financial Services Committee is calling out the Federal Reserve and the U.S. Treasury for dodging questions about their activities involving America’s gold reserves.
In a letter dated July 27, Representative Alex Mooney (R-WV) wrote to Jerome Powell, Chairman of the Federal Reserve, and Steven Mnuchin, Secretary of the U.S. Treasury, after receiving perfunctory responses to his April 24th letter, noting “a few questions were either not addressed at all or not fully addressed.”
In particular, the Fed and Treasury would not articulate any U.S. policy toward gold and refused to comment on historical U.S. State Department documents pointing to a U.S. policy of “driving gold out of the world financial system in favor of the Federal Reserve Note or Special Drawing Rights issued by the International Monetary Fund.”
In his follow-up letter, Rep. Mooney provided evidence of involvement by the Exchange Stabilization Fund in the gold market and called attention to “the recent correlation of the gold price with the price of the Chinese yuan and the valuation of the IMF’s Special Drawing Rights.”
Check out the full press release.
July 27 2018
Ed Steer: When JP Morgan Decides to Stop Shorting Silver, Prices Will Shock You
Well now, without further delay, let’s get right to this week’s exclusive interview.
Mike Gleason: It is my privilege now to welcome in Ed Steer of Ed Steer's Gold and Silver Digest. Ed has covered the precious metals markets for going on two decades now, having written for Casey Research prior to his latest project, and is also a director at GATA, the Gold Anti-Trust Action Committee, where he and his colleagues work to expose the manipulation in the gold and silver markets.
Ed, it's a pleasure to have you back on, and thanks for the time today.
Ed Steer: And thanks for having me on.
Mike Gleason: Well, Ed, let's start off by getting your assessment on the gold and silver markets here. Prices fell below some key technical support levels recently but have found some support and have rallied slightly in the past few days, and I should note we're talking here during after-hours trading on Wednesday. But these are trying times for metals investors, Ed, so what are you expecting from the markets in the months ahead?
Ed Steer: Well, there's no question these are trying time, especially this last take down since the middle of June. Everybody knows that the precious metals have been basically in the dumpster for the last five or six or eight or ten years, and this final kick in the pants, the down side, has just demoralized everyone.
What I think it is, in the technical support lines or whatever they are, is based on technical analysis, and what's going on basically is what Ted Butler has pointed out, is that this is JP Morgan and the commercial traders taking the managed money traders on another financial ride for fun profit and price management purposes.
When this is pretty much done to the down side, and it appears that we're done now, Mike, it really looks like the low is in or if not very close to it. Once that is done there is nothing left but blue sky and hopefully that JP Morgan Chase, which has been the big short seller of last resort, they don't step into the next rally and we’re going to be away to the races in pretty short order.
Mike Gleason: We aren't too sure why speculators are still willing to enter the gold and silver futures markets given the evidence that they are likely to be cheated. We know that bullion banks, like JP Morgan, have a nice set of tools for fleecing clients and controlling prices, chat rooms for coordinating attacks, high frequency trading set-ups designed to front run trades, the ability to sell essentially unlimited quantities of paper silver to sop up any amount of demand. What we don't see is serious effort to provide honest alternatives. It seems like there would be good demand for an exchange that does a better job of guaranteeing fair treatment. Miners, who are harmed the most by any price suppression that may exist, have legitimate hedging needs and it seems like they would be thrilled to have an alternative, but we aren't aware of any serious movement towards creating something better. Are you and why have we been stuck with such a flawed and fraudulent system of price discovery for the metals for so long?
Ed Steer: When JP Morgan Decides to Stop Shorting Silver, Prices Will Shock You
Well now, without further delay, let’s get right to this week’s exclusive interview.
Mike Gleason: It is my privilege now to welcome in Ed Steer of Ed Steer's Gold and Silver Digest. Ed has covered the precious metals markets for going on two decades now, having written for Casey Research prior to his latest project, and is also a director at GATA, the Gold Anti-Trust Action Committee, where he and his colleagues work to expose the manipulation in the gold and silver markets.
Ed, it's a pleasure to have you back on, and thanks for the time today.
Ed Steer: And thanks for having me on.
Mike Gleason: Well, Ed, let's start off by getting your assessment on the gold and silver markets here. Prices fell below some key technical support levels recently but have found some support and have rallied slightly in the past few days, and I should note we're talking here during after-hours trading on Wednesday. But these are trying times for metals investors, Ed, so what are you expecting from the markets in the months ahead?
Ed Steer: Well, there's no question these are trying time, especially this last take down since the middle of June. Everybody knows that the precious metals have been basically in the dumpster for the last five or six or eight or ten years, and this final kick in the pants, the down side, has just demoralized everyone.
What I think it is, in the technical support lines or whatever they are, is based on technical analysis, and what's going on basically is what Ted Butler has pointed out, is that this is JP Morgan and the commercial traders taking the managed money traders on another financial ride for fun profit and price management purposes.
When this is pretty much done to the down side, and it appears that we're done now, Mike, it really looks like the low is in or if not very close to it. Once that is done there is nothing left but blue sky and hopefully that JP Morgan Chase, which has been the big short seller of last resort, they don't step into the next rally and we’re going to be away to the races in pretty short order.
Mike Gleason: We aren't too sure why speculators are still willing to enter the gold and silver futures markets given the evidence that they are likely to be cheated. We know that bullion banks, like JP Morgan, have a nice set of tools for fleecing clients and controlling prices, chat rooms for coordinating attacks, high frequency trading set-ups designed to front run trades, the ability to sell essentially unlimited quantities of paper silver to sop up any amount of demand. What we don't see is serious effort to provide honest alternatives. It seems like there would be good demand for an exchange that does a better job of guaranteeing fair treatment. Miners, who are harmed the most by any price suppression that may exist, have legitimate hedging needs and it seems like they would be thrilled to have an alternative, but we aren't aware of any serious movement towards creating something better. Are you and why have we been stuck with such a flawed and fraudulent system of price discovery for the metals for so long?
July 26 2018
Silver Threads among the Gold: What the Tea Leaves Seem to Be Telling Us
The ongoing July silver (and gold) slam has a 2008 feel about it. Important data point elements are different, but there's an air of panic on the part of physical precious metals' owners.
"Major trend lines" being broken to the downside; physical metals' buying (in the U.S. off significantly so far on the year; (some) long-term silver holders giving up the ghost and selling their metal below spot.
About the only thing we have yet to see – on a large scale – is "paper metal" being offered at a price well below what a customer would actually pay for the physical.
In late 2008, while silver was being quoted in the markets at $9.50/ounce, you simply could not find it in "real life" for much less than $12 the ounce.
How Might George Soros Approach This Situation?
In a recent interview for The New York Times Magazine, George Soros talked about his years' running the very successful Quantum Fund – which yielded investors an almost unheard of 40% annual rate of return.
He spoke of his "theory of reflexivity" – the idea that "peoples' biases and perceptions can move prices in directions that don't accord with the underlying reality."
He would "nibble" on an idea until investors' emotions became increasingly disconnected from what was really taking place – or what was almost certainly slated to be – once more balanced circumstances had come to pass. Then he would substantially add to his position.
Soros didn't always get it right, but when he did, he made a killing. His most famous bet was shorting the British pound... against the Bank of England.
Soros claimed his strength as an investor was in recognizing and acting on what he referred to as “far from equilibrium” moments.
Shanghai International Gold Exchange silver volume continues to rise sharply.
A Technical Take
As for near-term action, Hidden Pivot maven, Rick Ackerman wrote recently in his Rick's Picks column, that silver has the potential to make a large move either up or down, depending upon what the price does on the hourly and monthly charts.
July 24 2018
THE INDIAN INVESTOR: The Major Wild Card In The Silver Market
There’s a sleeping tiger in the silver market, and it isn’t the Chinese. While the Chinese continue to acquire a lot of gold, they aren’t that interested in silver However; it’s the Indian investor who is has been the dominant player in the silver market. Why?
According to an article published last year on LiveMint.com, “Silver is so ingrained in Indian tradition that the country’s currency, the rupee, is named after ‘Rup,’ the Sanskrit word for silver.” How interesting. I have been doing research in the silver market for over a decade, and I just found out from this article that India’s currency, the Rupee, is named after silver. It just goes to show, we learn something new every day.
Thus, it makes perfect sense that the Indians are the major player in the silver market as their silver imports have accounted for a significant portion of annual global mine supply. In a recent article by Louis at Smaulgld.com, he provided the following charts on Indians monthly and annual silver imports:
(Indian Monthly Silver Imports)
(Indian Annual Silver Imports)
As we can see, India imported a record 902 metric tons of silver in April since last year. Furthermore, as Louis states in his article quoted above:
Indian silver imports through April 2018 were 2,889 or an average of 722.5 tons. If this average holds throughout the year, India would import 8,667 tons of silver in 2018.
If India continues to import the same amount of silver as it has over the past four months for the remainder of the year, it will reach nearly 8,700 metric tons (mt) and surpass its previous record set in 2015 at 8,529 mt. Now, if India did import 8,700 mt of silver this year, it would account for 32% of total world mine supply.
July 23 2018
Gold & Silver Need THIS to Unfold before They Rally Sharply Higher...
Well now, for more on the unfolding trade war, the selloff in commodities and gold, and much more, let’s get right to this week’s exclusive interview.
Mike Gleason: It is my privilege now to welcome in Greg Weldon, CEO and president of Weldon Financial. Greg has over three decades of market research and trading experience, specializing in the metals and commodity markets, and his close connection with the metals led him to author a book back in 2006, titled Gold Trading Boot Camp, where he accurately predicted the implosion of the U.S. credit market and urged people to buy gold when it was only $550 an ounce.
He's a regular presenter at financial conferences throughout the country, and is a highly sought-after guest on many financial shows. And it's always great to have him on the Money Metals Podcast. Greg, good to talk to you again. Welcome back.
Greg Weldon: Thanks, Mike. My pleasure.
Mike Gleason: Well, Greg, we've been keeping a close eye on the dollar, as I know you have been as well. For metals investors, the rally in the dollar is providing some serious headwinds. When we last spoke in early May, the rally had begun. You weren't surprised, and thought it might run up to the vicinity of 96 on the DXY Index, and that's looking like a very good call. We're just a bit over 95 currently. But you thought the rally could fizzle out, and the dollar could be back on the slide somewhere in the second half of the year. So, what are your thoughts currently? Has anything changed your outlook for the greenback, Greg?
Greg Weldon: Yeah. I think the odds of the dollar continuing higher have expanded here, and I think it's a function of the Fed. I think we got information in the last week or so that is, frankly, pertinent, because if you kind of trace back to what we were talking about in May, we started to see signs of stagflation. We started to see signs of stress in the second derivatives of where the growth had been. A place like Germany, an export juggernaut. When you start to see some issues in places like the Czech Republic, Hungary, Poland, they provide semi-finished goods to Germany that finishes them and exports them. So, we had already kind of seen some cracks in the global macro dynamic globally.
And the question then was, "well, if inflation's going higher, will the Fed follow inflation even at the risk of potentially bringing the hammer down on the backend on the consumer who is extremely leveraged here, unprecedented borrowing.” Same thing as 2006 and 2007. You're borrowing against unrealized paper profits. In that case it was mortgages, in your home, the value, all right?
In this cases it's the stock market. Like the case in 2006 and '07, home prices will never go down, right? Well, we learned that's not true. And then the case here it seems like stock prices will never go down, right? Passive investment, just pile in, and you'll be rich, and here's the American dream in a nutshell, no problem. Well, we can call into question that, of course, and if the stock market declines and consumers are on the hook, you're going to be facing a very similar situation where the consumer's kind of upside down.
Having said all of that, the question really puts the focus on the Fed, and what the Fed just told us in their monetary report, which is the basis for which Chairman Powell is using as his testimony here on Capitol Hill, The Humphrey-Hawkins semiannual report to Congress. The Fed was very specific. I was really surprised at the language in this report. It's 71 pages. I went to every single page. It took me six hours yesterday doing this, but it was really worth it because the Fed say in this report, not only do we want to get to a level where we're at the neutral rate, the kind of natural rate, the neutral rate of Fed policy which we've been saying all along. They want to get to neutral, which is somewhere between two and two and a half based on where inflation is.
Well, the Fed just told us, "We don't want to just get to neutral, we want to get a slight bit above neutral, i.e. we actually want to get tight here." All right? And if inflation's moving higher and the Fed wants to get tight, meaning above the rate of inflation, they're behind the curve and they're going to have to move more quickly and this was kind of the tone of this monetary report.
And the sense was, they're admitting, "Hey! Inflation is now above our target for the first time, that doesn't mean we're slowing down.” So this is bothering commodity markets because it's lifting the dollar. The Fed is presumably going to be tighter, it's going to chase inflation, doesn't care about what the back end economic dynamic might be and that you throw in the trade dynamic, which is having a huge impact, i.e. look at the declining commodities. Look at the decline in China. Look at the decline in Canada in terms of some of the economic numbers, let alone the markets. Look at the pressure on emerging market currencies.
The other thing the Fed said in this report was the external risk is primarily seen in Argentina, Turkey, China, and emerging Asia. We run spreadsheets here where I have my own proprietary algorithms that I wrote back in the 1980's. I'm a math geek by heart, by history and we have algorithms that we use to track the ETF's out there, all of them. Well, I ran a full scan yesterday and the top 25 trends right now in the ETF world, including international ETFs, commodity ETFs, fixed income ETFs, all the sector ETFs in the U.S., 25 top trends, 24 were bearish and it was spread out among metals, commodities, China, and emerging Asia. All the things the Fed just cited as their risk factors.
So, my question then becomes, again, does the Fed pay attention? Is the Fed doing their normal puppeteering here where they're trying to be vocally tighter so they can use words to kind of ease some without actually having to totally shift policy and start cutting rates? I don't know, but I think right now, whereas maybe we might think that the dollar would soften when the Fed rhetoric softened, that's not happening because the Fed rhetoric is not softening. In fact, it's getting harder and this is becoming a problem. You see it in emerging markets, you see it in commodities, and you certainly see it in gold and silver.
You can read or listen to the entire podcast here.
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