Federal Reserve Plays Dishonest Mind Games

Markets Rally on Fed Reversal -- Employment Numbers Stink

Mike Gleason Mike Gleason
New Radio Release
July 12th, 2013 Comments

Also listen and subscribe on:


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 premature to break out the champagne and celebrate a new bull market, but this week gold and silver staged a significant rally. Precious metals prices surged on Wednesday after Federal Reserve Chairman Ben Bernanke released a statement vowing more monetary stimulus. Specifically, Bernanke said the Fed would pursue "highly accommodative monetary policy for the foreseeable future."

Markets have been jerked around every which way this year by the release of Fed statements. One week, investors react worriedly to hints that the Fed could soon taper its bond buying program; the next week, everyone stops worrying – and learns to love the Fed.

Of course, we predicted a few weeks ago that the Fed would quickly abandon its talk about withdrawing stimulus. But we think investors would be better served by paying attention to the economic fundamentals that will ultimately dictate what the Fed does. The Fed pursues a dual mandate of maintaining price stability and promoting full employment. Bernanke interprets that to mean an inflation rate of 2% and an unemployment rate below 6.5%.

Of course, the official inflation and employment statistics are somewhat of a farce. The reality is that barely half of all working-age Americans have full-time jobs. But even the official numbers aren't painting that rosy a picture. A report from the Labor Department this week showed that claims for unemployment benefits jumped more than expected.

Right now, the Fed is more concerned about employment and the threat of rising long-term interest rates than the threat of inflation. The fact that precious metals prices have taken a big hit this year has helped to put inflation concerns on the back burner and given Federal Reserve officials plenty of leeway to pursue more stimulus.

Eventually, of course, all the new currency creation from the ongoing Quantitative Easing campaigns will bring down the value of the greenback. Gold and silver still serve as the ultimate anti-dollar. The U.S. Dollar Index fell 1.4% on Thursday, giving a boost to the metals in dollar terms.

Gold and silver are both heading for one of their biggest weekly gains of the year. Gold entered Friday trading up about 5% for the week, while silver had gained close to 6%. As of this recording on Friday morning, gold has fallen back a few dollars and currently trades at $1,279 an ounce. Silver managed to close slightly above the $20 level on Thursday, although it has dropped below that key number this morning. A weekly close decisively above $20 would be a bullish development. As of now, silver trades at $19.90 an ounce.

Turning to the platinum group metals, palladium climbed back above $700 this week and back into positive territory for the year. The palladium spot price is currently $719. Palladium's pricier counterpart, platinum, trades at $1,407 per ounce after gaining close to $80 on the week, and currently has $128 premium to gold.

Platinum has maintained a small premium versus gold for most of the year, after having traded at a discount for almost all of 2012, and the gap between platinum and the yellow metal has been widening a bit as of late. Even as platinum and gold compete for the title of which metal is the most precious, the metal with the most potential upside from here is the one that's the cheapest.

That metal is, of course, silver. We saw a slight outperformance by silver this week. Once a precious metals rally with legs gets established, we should start seeing some significant outperformance in silver.

Silver is the most popular metal with Money Metals Exchange customers. In fact, we sell almost twice as much silver as gold when measured in dollars. The severe market gyrations recently have given our customers an opportunity to obtain silver bullion at fantastically low prices, and a great many have taken advantage of it.

Product availability and lead times have stabilized since the extreme market conditions this Spring led to shortages in some bullion products, but we are still quoting minor delays on many of the silver products we offer. We continue to encourage investors to favor low-premium silver rounds over American Eagles and pre-1965 90% silver coins, because the premiums on these U.S. coins are still rather elevated.

Our Specialists will be happy to discuss other options – from bullion bars to coins minted by foreign governments, including Australia's unique 1-kilo silver coin.

And speaking of products from Down Under, our friends at the Perth Mint have offered us discounted prices on their most popular items, and we want to pass those savings on to you. During the month of July the silver kilo coins are just $1.79 over the spot price per ounce. For those wanting gold, the beautiful 1-ounce Kangaroo is only $49 over spot. And if you're looking to diversify with another precious metal, the Australian Platinum Platypus 1-ounce coins are just $64 over spot. And those fantastically low premiums apply whether you're buying just one of these beautiful bullion coins or hundreds. Make a purchase of $10,000 or more in these discounted Perth Mint coins, and your entire order ships free as well!

Just give us a call at 1-800-800-1865 to inquire about pricing or to place an order with one of our no-pressure and knowledgeable Specialists... or you can visit our website 24 hours a day, 7 days a week to place an order through our secure shopping cart.

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 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.

Mike Gleason

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.