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 this week's market wrap podcast, I'm Mike Gleason.
Well, voters went to the polls in droves on Tuesday to retain the status quo. The President will be the same. The Senate will continue to be controlled by Democrats. And the House of Representatives will continue to be controlled by Republicans.
Common sense suggests that nothing much in Washington will be changing. The election didn't change the formal balance of power. But it certainly shocked and demoralized Republicans – who thought for sure that Obama was a goner.
Obama instead walked away with a resounding endorsement from the voters after racking up $5.5 trillion in new debt and presiding over 4 years of economic calamity.
Going forward we should expect trillion dollar annual budget deficits as far as the eye can see... no reforms to overextended entitlement programs that are going bankrupt...and no solutions to our nation's fiscal or economic woes.
The Federal Reserve will continue to be the only game in town. And the Fed's only tool for managing the fiscal excesses produced by politicians is its electronic printing press. Now that the election is over, many Fed watchers expect Ben Bernanke and company may even announce a new round of Quantitative Easing!
Investors reacted to Obama's re-election by heading for the exits this week. The Dow Jones Industrial Average got slammed, breaking below the physiologically important level of 13,000.
With the biggest weekly decline in stocks in over 5 months as a back-drop, precious metals have actually shined. Gold has gained 3 and a half percent this week. Silver is up more than 5%. Gold currently is trading at $1,738, while silver is at $32.70 as we're recording this podcast on Friday morning.
We seem to be on track for the big November rally we at Money Metals Exchange have been anticipating – and telling our customers to expect.
With all the political and economic storm clouds on the horizon now coming into clearer focus, the smart money sees safety in precious metals, or real money – not in weakening Obama dollars.
Investors are rightfully in fear mode right now, and that bodes well for alternative safe haven assets, such as gold.
Investors fear higher taxes on dividends as a result of the big Democrat win on Election Day.
They worry that full implementation of Obamacare will crimp economic growth.
They bemoan both the so-called fiscal cliff AND what's likely to be done to avert it.
House Speaker John Boehner this week indicated he's willing to "raise revenue" – a euphemism for extracting more in taxes from the American people. In response, liberal New York Senator Chuck Schumer said he was "very heartened."
Folks, this is not the sort of feel-good bipartisanship that's going to boost the economy!
The more the government takes from the economy, the weaker it will get. And the weaker it gets, the more the Federal Reserve will be called on to "stimulate," which, of course, is French for debasing the currency.
In times like these, it's nice to be able to hold a solid gold or silver coin in the palm of your hand and know that it can't be debased.
I recently had the great pleasure of interviewing Roger Wiegand of Trader Tracks.
"Trader Rog," as he's known, gave us his valuable insights into what he expects is to come in both the financial and precious metals markets in the months and years ahead. I hope you enjoy the following interview.
This is Mike Gleason here at the Silver Summit in Spokane, Washington, and right now I've got the privilege of speaking with Roger Wiegand who is an acclaimed trader and market commentator who focuses on the precious metals and commodities and he was one of the first presenters at the Silver Summit and gave an excellent speech. I felt that his insights would be very interesting for our listeners given his extensive knowledge and experience and in economic markets. Mr. Wiegand, thank you for joining us.
Thank you. Good to be here.
One of the key takeaways I had from your speech yesterday was that we are in a very different environment today when it comes to investing. The ways of investing of yester-year are not really pertinent today. It's a different environment and people have to go at it differently. Just talk about the challenges in today's investment world which people face.
Because of the volatility, Mike, we've seen faster market markets, we've seen markets somewhat shifting and somewhat being manipulated. The bigger traders who have got high-speed computers have them programmed to make trades based upon technical decisions that really don't have anything to do necessarily with current events during that day or news, or whatever.
However, if the market shifts dramatically in one direction or the other, the computers jump in and they make all of the trades automatically. They are made so quickly that the average investor, whether they are small or medium sized, they can't possibly keep up with the market. It's just too fast for them.
What is means is markets are faster, they are more volatile, they are somewhat more erratic. We are in an environment where credit is a big question internationally, not just in the United States, but specifically in Europe, with the Euro, the Euro End banks, the Central Bankers, and of course, politics is the overriding factor that we have to deal with in all of our trading.
You definitely mentioned that there is going to be a rush to hard assets here and during your speech you alluded to the fact that mining costs are going to continue to be driven up through rising oil prices and other factors. Talk about the implications that is going to have from a supply standpoint in mining and other commodities.
It makes it more difficult for the miners to build a mine because the cost of construction to put a mine together, get the permits, get it built, get it in operation, the time span is longer than it used to be. Typically now it can go anywhere from four to seven years with more of them trending toward the long side. It's not something that is done overnight.
We had one of our mining companies that's been around. The gentleman who runs the company is very smart. He's raised a lot of money in the business, a lot of experience. His particular operation went from a cost to build his mine of $93,000,000 to over $400,000,000 in a matter of only one year. A lot of that has to do with inflation, there's labor costs that have increased, there's a variety of machinery and equipment you've got to buy. Everything just takes more time and costs more money is what it comes down to.
Gold and silver exploration is getting tougher. It's getting more difficult to find what they call an elephant field or a big location where a miner can go and mine and stay in business there for 50 years or longer. That's what they prefer because they can advertise the investment over a longer period of time. Small, scattered mines without a senior miner in operation next door to them is a pretty tough go and those kinds of operations really have limited future in my estimation.
Obviously, if we are going to have rising costs when it comes to producing, we are going to have to see a lot higher precious metals prices to account for that and to draw out more investing in that space. I know that you are predicting higher metals prices. Is that one of the reasons why?
That's one of many reasons, that and you have pure inflation in play because in credit, all countries with their central banks are printing more bonds and paper in an effort to try to keep up and all it is doing is devaluing the value of those bonds and those currencies. Of course, the inverse of that would be your dollar is worth less, things cost more and we are going to have a lot of inflation and the inflation is going to increase dramatically, some say into hyperinflation. We kind of agree with that, but we are not sure of that yet.
In closing here, you've talked about the importance of people having personal possessions and precious metals and a good preparedness type of plan. Talk about some advice that you could give people who are trying to protect themselves against what might be coming down the pike here and what advice would you give them?
The first thing of course is you want to get out of as much debt as you can, not everybody can do it. The next thing is be conservative, cut back, live modestly, get your expenses down. We recommend people buy American and Canadian gold and silver coins for savings and hold them in your possession. Just as importantly, it's smart to stock on daily needs, whether that that be food, water, and a variety of things you have got to have to get through the day from the time you get up in the morning until you go to bed at night. That would be cosmetics, toiletries, things like that.
Credit card society in America is living on the edge in my opinion because if we had a bank holiday, a bank run, or we had some severe inflation, consumers could be in a bad position because they wouldn't be able to buy things they need.
We are in an ATM society in the U.S. and it's better to be in a position where you have got cash in your pocket, .provisions in your home, savings in silver and gold coins and then any extra money you can use it for investment.
Do you haveprice targets for gold and silver over the near and long term?
We do. In 2005, seven years ago, our gold projection was $2960.00. We still hold that for sure. We have got higher projections based upon new technical data which take gold up to a projection technically of $4450.00. We could go higher but until I get more data, I don't want to go any further than that.
Silver we were looking at seven years ago at $156.00 an ounce or alternative as an option $256.00 and it had to do with tech analysis and that. Some of our silver friends who are good analysts as well, are looking for silver as high as over $450.00 and gold as high as $8000.00. It is a little bit hard t measure the fear element in society but gold and silver and hard assets have proven their worth over many years and centuries.
Well, thank you very much, Mr. Wiegand, we really appreciate your time. Thank you for stopping by.
Thank you. Glad to be here.
This has been Mike Gleason with Money Metals Exchange. Thank you for joining us for this week's Market Wrap Podcast. Have a great weekend everybody.
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.