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U.S. Treasury Secretary Pushes for Limitless Borrowing Authority
Will Congress Throw in the Towel on Fiscal Discipline?
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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 our special Thanksgiving week podcast, I'm Mike Gleason.
Precious metals investors have had much to be thankful for over the past several years. Gold has gone from $255 to as high as $1,900 in a little over a decade. Silver has shot up from just over $4 an ounce to as high as $49.
So how high can the price of gold ultimately go? How much could silver gain before the bull market is over?
We don't have specific numbers, and anyone who is honest will admit they don't know, either.
But the truth is this: there's no upper limit to how high precious metals prices could go in dollar terms.
If the U.S. dollar goes the way of the Zimbabwe dollar, then gold could ultimately get priced in the trillions. We're not saying that such a scenario is likely to play out here in the U.S. But our system of open-ended debt expansion and unlimited currency creation is fundamentally no different from Zimbabwe's. It's just a matter of degree as to how much restraint is exercised by politicians and central bankers.
Look, we've already heard the Federal Reserve announce it will engage in open-ended Quantitative Easing. That's French for unlimited currency creation of course.
And just recently, Treasury Secretary Timothy Geithner called for an end to the formality of members of Congress having to actually vote to raise the debt ceiling. Geithner wants an automatic, perpetually infinite credit limit for the U.S. Treasury!
Would you want to hold your cash over the course of the next four years in the form of Federal Reserve Notes that can and will be printed in unlimited quantities to cover the Obama Administration's deficit spending? Or would you rather hold your cash in the form of precious metals that exist in limited, finite quantities?
From the standpoint of wealth preservation, I think the answer is obvious.
And yet the public still hasn't moved into precious metals in a big way. Back in 1933, gold represented more than 25% of private wealth. As of today, gold represents a piddling 0.8% of private wealth. That's despite gold having increased in value for 12 consecutive years!
It's truly been a stealth bull market. Even as the metals have been climbing, investors have been piling into the bond market this whole time as well, swelling the assets of bond funds to record levels. A lot of investors figure that since the Fed has rigged the bond market to keep rates from rising, bonds are a "can't-lose" proposition.
But when the reality sets in that we are actually facing higher inflation rates and real losses on bonds that offer pathetically low yields, that's when we could see a public stampede into precious metals. Given the scarcity of available supplies, it would result in one heck of an explosive move upward in prices.
In the meantime, precious metals are breaking out seasonally, with the white metals – silver, platinum, and palladium – leading the way. Silver has added 3% so far during this Thanksgiving week and is currently at $33.40 as we're recording this podcast. Platinum is up 1.5%, and palladium is up nearly 4%. Gold sits right at $1,730 at present and has faced resistance just above this point at the $1,740 level for the past three weeks. Once that number is breached, we can look for gold to rise again towards $1,800 and test that key level once again. And if that level is cleared, look for it to potentially break to new all-time highs.
That's it for this week's podcast. On behalf of all of us here at Money Metals Exchange, this is Mike Gleason hoping you are having a fantastic Thanksgiving Weekend with your friends and family. Thank you for listening!
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.