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, the banks in Cyprus finally reopened Thursday after being closed for nearly two weeks. As calm was restored, the euro firmed and the S&P 500 etched a new record high. The banking system is now sound, no one's deposits are at risk, inflation will never be a problem, and all the world's financial problems have been solved!
No, it's not April Fool's Day quite yet, but a great many investors are being fooled into believing an overly optimistic narrative. In a previous podcast, I talked about the remarkable and rarely seen extremes in investor sentiment, and for now they are still persisting. In the upcoming April edition of our flagship Independent Living newsletter, Seth Van Brocklin goes into more detail about the current situation in precious metals. I highly recommend you read that article in full.
But in short, he presents a number of indicators that show that the precious metals sector has reached the sort of technical conditions that mark major bottoms. By that I mean low points like we saw in late 2008 and at the very onset of the major bull market in 2001. They proved to be spectacularly profitable entry points for traders as well as long-term investors.
At the moment, precious metals are struggling to gain traction. The Cyprus banking crisis did virtually nothing to shake investors' optimism toward financial markets and their complacency toward threats to their wealth. Cyprus in itself shouldn't have much impact on the global financial system – or even much impact on the euro or the European markets. The tiny island country represents less than 0.3% of Europe's economy.
What should be rattling the markets however is the precedent set by the so-called bailout. How can anyone trust that their deposits in any bank in Europe will be safe from a European Union "bailout" that garnishes 10% – or even up to 40% of their balance?
Global investor and hard assets champion Jim Rogers certainly isn't trusting his wealth to the banking system.
And what about the U.S. financial system? Its banks are on just as shaky ground as Europe's. And U.S. government debt represents as high, or higher a percentage of GDP as most European governments.
Maybe the U.S. will be more averse to outright seizing assets from bank accounts. But it is not more averse to producing inflation! In fact, the U.S. monetary system under the Federal Reserve is less constrained and has proven more willing to create massive quantities of currency out of thin air than the more austere European Central Bank.
The Quantitative Easing's and the zero-percent negative real interest rates are ultimately inflationary. When investors stop being fooled into thinking the Fed is actually creating prosperity, we don't know. But reality always has a way of reasserting itself.
Looking ahead to April, precious metals tend to show seasonal strength during the month and into early May. Seasonal patterns aren't always reliable and certainly haven't been so since last fall – but we have a confluence of other indicators suggesting gold and silver are due to rally in the very near future.
Gold currently trades just below $1,600 an ounce. It's traded range-bound between $1,560 and $1,620 since bottoming in late February. As for silver, it has also remained range-bound since late February, though it now trades at the low-end of the range at about $28 and a half as of this broadcast on Friday morning.
Several of our low-premium silver bullion products, mainly 1-ounce rounds and 10 and 100-ounce bars allow you to own silver for less than $30 per ounce at the moment. These favorable prices for accumulation may not last long and definitely won't last forever.
As for the 90% silver coinage the premiums remain elevated but – at least at the moment – we have a reasonable amount readily available to sell after nabbing a good bit of inventory from a source who had been sitting on it for a while – but finally decided to sell. So purchasing other silver bullion products other than the 90% coins might make more sense at the moment because lower premiums can be had. But with prices for the white metal remaining this low for this long, we expect the tightness in the 90% coin market to persist, and premiums – despite being quite high already – may still actually rise further unless the spot silver price gets well above $30 an ounce.
Well, that will do it for this week's market wrap podcast, thanks for listening. This has been Mike Gleason with Money Metals Exchange reminding you that we remain fully committed to getting you the most value for your depreciating dollar... with speed, with accuracy, and with top notch service. Have a great holiday 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.