Welcome to Money Metals Exchange's weekly market wrap podcast. Helping precious metals investors during these treacherous times. Now, here's this week's market wrap with commentary and analysis from the fastest growing precious metals dealer in America, Money Metals Exchange.
Welcome to Money Metals's first weekly podcast. I'm Mike Gleason.
Today is Friday, September 28th and this morning gold and silver are near seven month highs. Gold is hovering around $17.75 as we speak and silver is just below $35.00.
In today's market wrap, I want to talk to you about why silver may be your best defense against Ben Bernanke's assault on the purchasing power of your dollars.
Well, when you get right down to it, the Feds recently announced QE3 campaign is designed to punish those who save in dollars. Bernanke even admitted this fact at a recent press conference. The Fed's goal is simple: to induce more inflation in the economy in the months ahead. Precious metals, base metals, and other commodities stand to benefit and perhaps stocks as well.
Why do we at Money Metals Exchange believe investors should own a good amount of silver? Well, because during periods of inflationary up-trends, silver has and almost certainly will outperform other assets. Silver beats cash and bonds. These dollar denominated IOUs are big losers when inflation moves higher, and today's ultra-low yields won't even compensate you for the purchasing power losses resulting from current rates of inflation, let alone what we're about to see with this new Fed policy.
Now what about stocks? Well, the Dow Jones is certainly trading higher than it would be otherwise without the boost it's gotten from the Fed. Year to date, the Dow is up a respectable 10.5%, but silver has easily bested those gains up over 24% now for the year. Much bigger gains could be in store for silver as QE3, or QE to infinity as it's been dubbed, gets implemented month after month.
Let's look at recent history.
QE2 was announced back on November 03, 2010, and silver prices surged 96% in the six months that followed. Yes, silver can be volatile to the downside too, but those who have held on for the ride since the bull market began 10-plus years ago have been rewarded with stellar returns, nearly an eightfold gain. To put it bluntly, the silver bull has left the stock market in the dust. Yet top silver analysts, such as David Morgan believe the biggest gains in precious metals are still to come during a time when we experience a true currency crisis and possibly even a global panic out of the U.S. dollar.
As we've often said before, pay attention to and always keep in mind the fundamental picture – don't get shaken out of your core position by short-term volatility. Just continue to sock away and accumulate precious metals on a continual basis and keep doing that until you've got ample diversification and protection for all of your paper denominated assets.
As for this week's action, silver prices regained some positive momentum earlier this week. On Thursday, silver got within a few cents of making a fresh seven-month closing high, finishing at $34.69. Now with today being the last trading day of the quarter, we might see a dip due to some profit taking perhaps, but overall, Q3, thanks in large part to QE3, has been outstanding for the metals. With the massive infusion of liquidity into the system that's now been promised, look for prices to move higher as we move into these last few months of 2012.
For more analysis of this week's market action in silver as well as in gold, platinum, and palladium, be sure to read Money Metals's Monday Morning Precious Metal's Market Update; it's packed with some great information about the markets, and you will often hear about product specials reserved only for those who read these updates.
Now if you're not currently getting our free email newsletter, you can sign up by visiting our website at www.MoneyMetals.com.
One of the segments we'll occasionally be doing during these weekly podcasts as we cover common questions we get from customers and for that this week, I'm going to bring in co-director for Money Metals Exchange, Clint Signer.
Clint, our specialists often speak with callers who are struggling with the decision to buy precious metals, even though they know they need to do it to protect themselves because they don't know what they would do with their metal once they own it. Clint, how would you respond to someone wondering what they can do with their gold and silver once they acquire it?
Clint Siegner: The first thing we think people should do is, hang onto it. We are still early in this bull market, and there is the biggest upside or biggest profits still to be made ahead of us.
The second thing that people should understand is that the metal is very easy to convert back into currency when the time comes.
Thirdly, people should know that if worse comes to worse and we have a full-blown currency crisis, that they can use their metal to barter and trade with.
Let's look at those three things individually in more specific form. The first one you mentioned there is holding onto it and profiting. Obviously, we've got a ways to go in this bull market, and, as they say, the third phase is where most of the gains are made in bull markets.
Yes, the fundamentals that have driven metal's prices to where they are today, being much, much higher over the last 10 years are still in place, and in fact we think they're better than ever. Congress is still grappling with overwhelming debt and deficits. There doesn't appear to be any solution anywhere in sight there. Ben Bernanke and the Federal Reserve just came out with their latest iteration of Quantitative Easing, and the printing presses are running full steam here and around the world. It's a race to devalue currencies everywhere and that means an ongoing bull market in metals.
Right, and not just here in the states, as you mentioned, everywhere. The situation in Europe is well documented with all the problems that the Euro is facing, and who knows what ultimately happens there.
Let's talk about the second one now; it's converting your precious metals back into paper currency. How does somebody do that?
Money Metals Exchange only sells the popular bullion products, American Eagles, Kruggerands, Kangaroos, Silver American Eagles, and the like, and these are products that every dealer in the country is trading in huge quantities all day long and that means that they are always looking for inventory. When the time comes for you to sell, you're going to have your choice of the local coin shop or any of the roster of dealers across the country clamoring to buy the metal that you wish to sell. We hope that is going to be Money Metals. I think you'll find we offer some of the most competitive buy-back prices of any dealer, and we make it easy. If you want to sell, just give us a call, we'll lock your pricing, we'll send you a purchase order, and you ship us the metal, and we issue payment immediately after receipt.
It's certainly not something that somebody should be intimidated by, and, just to further the point, one thing that you hit on there is the fact that everything we're dealing in is common bullion items that are commonly bought and sold in large quantities by dealers throughout the country. That is not the situation with collectible coins, and one reason why we think people ought to avoid those is the resale market, and the liquidity in those products is nowhere near what it is per bullion, so that's definitely one advantage to owning bullion over those collectible coins or rare coins.
The third option you had mentioned there or the third thing that somebody would do with their precious metals is barter and trade. It's possible at some point in the future we might actually be spending our gold and silver.
I don't think people like to think about that. Everybody's certainly grown up and lived their whole life with "King Dollar," but the fact of the matter is that throughout history, every fiat currency has failed, and if we continue down the road that we're on now, the dollar too will fail. Gold and silver have always been the fallback, go-to, real money that people rely upon when the paper money fails.
Definitely. There's always gold and silver, and it's been money since really the beginning of time, just as you mentioned there. Well, great insights Clint. Thanks very much.
Stay tuned in future weeks as we address other popular topics to help customers make informed decisions about their investment in physical bullion. To get personalized answers to your specific questions, please give one of our knowledgeable specialists a call at 1-800-800-1865. Our people are the best in the business and will take all the time necessary to help you.
Thanks very much. Talk to you next time.
Thank you for joining us for this edition of the Money Metals Exchange Weekly Market Wrap. Be sure to come back next week, and don't forget to subscribe to our weekly podcast through iTunes. For answers to all of your questions, or to discretely and securely buy or sell gold or silver coins, bars, and rounds, call 1-800-800-1865. Our knowledgeable and no-pressure specialists are standing by between 7:00 a.m. and 5:30 p.m. mountain time, Monday through Friday. Visit us at www.MoneyMetals.com or call 1-800-800-1865.
About the Author:
Mike Gleason is a Director with Money Metals Exchange, a precious metals dealer recently named "Best in the USA" by an independent global ratings group. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.