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Weekly Market Wrap

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Higher Taxes and No Cuts? Fed Money Printing Coming!

Metals End November Higher and Eye Fiscal Cliff

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Announcer:

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.

Mike Gleason:

Welcome to this week's market wrap podcast, I'm Mike Gleason.

Well, it's been quite a month for some of the precious metals. I'll tell you more about that later. But first, as the month of November comes to an end, let's assess the looming fiscal cliff that's closing in.

Amidst all the brinksmanship and political posturing, it's becoming painfully clear why Americans don't trust politicians – even the ones they voted for. Several prominent Republicans have come out and said they're willing to violate their pledge not to raise taxes.

[TV CLIP]

That final voice you heard there was that of Lindsey Graham, the senior Senator from South Carolina.

So there you have hit. These weaselly Congresspeople will say one thing to get elected and do something else when they're feeling the heat from their colleagues or the national media.

At the same time, it appears the White House is backing away from any discussion of spending cuts, despite more than a trillion dollars in over spending each year.

Perhaps it's unrealistic to expect our elected representatives to always vote the way we want them to vote – or never to compromise.

Senator Rand Paul of Kentucky has suggested that Republicans compromise with Democrats who want to slow the rate of growth in defense spending. That's the only area of the budget other than entitlements that is big enough to produce a meaningful reduction in the deficit.

Giving government more revenues only gives government a bigger base on which to leverage more spending and an excuse to forestall making necessary reforms in unsustainable programs. More revenue won't solve any of our nation's structural problems and may even make them worse.

Here's the bottom line: Until the weasels in Washington rein in their spending and live within their means, the dollar will remain vulnerable.

They may be able to run trillion dollar deficits in perpetuity, thanks to backstopping measures from the Federal Reserve. But they can't force the rest of the world to continue accepting dollars.

And they can't prevent the globally traded precious metals markets from rendering a judgment on the soundness of the dollar... by shooting up in value relative to dollars.

For the month of November in the precious metals markets, prices are higher. I suggested back in October we had what would likely prove to be a favorable time to accumulate ahead of an expected seasonal rally in November.

Palladium has shined brightest, mainly on concerns about supply shortfalls coming primarily from large producer South Africa, where ongoing labor strife has slowed production at many of the country's mines. The catalytic metal gained 12.2% for the month through Thursday's close, its biggest monthly advance in two years. Currently palladium is just under $700 an ounce. Its sister metal platinum added 2.5% and trades at about $1,620 at present.

Meanwhile, silver is up 6.1% for the month heading into the final trading day of November. It continues to hold above the $34 an ounce level. And finally gold gained less than 1% for the month, shrinking the gold-silver ratio to just a hair over 50 to 1. Spot gold is at $1,725 an ounce as we're recording this podcast on Friday morning.

Gold's performance was admittedly disappointing. An unusually volatile day on Wednesday saw gold nearly test support at $1,700 before recovering. Silver's relative strength, though, is encouraging. Silver is nearing the $35 level, where it found resistance in September and early October. If silver can break through $35 in the next few days, gold should follow suit and make a run at new yearly highs.

Of course, the fiscal cliff drama in Washington could roil the stock market and potentially precious metals prices as well. We could see volatility in either direction, depending what does or doesn't happen between now and the end of the year. Investors seem to be eager for any kind of resolution that prevents tax Armageddon from being triggered in 2013.

In any event, there will be no resolution to the currency crisis that's in the making. Dollars and dollar-denominated debt instruments will continue to be dangerous places to be through the next four years of Obama deficits.

At a time when the federal government's total unfunded liabilities exceed $100 trillion, you can't trust the dollar to hold its value anymore than you can trust most politicians to keep their word. That's why the case remains strong for investors to continue accumulating honest money – gold and silver.

Well, that will wrap it up for this week's podcast. Thanks for listening.

This has been Mike Gleason with Money Metals Exchange reminding you that we are fully committed to getting you the most metal for your depreciating dollar – with speed, with privacy, and with top-notch service.

Have a great weekend everybody.

Announcer:

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.

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