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Metals on Sale as Other Markets Get Frothy
Stocks, Bonds, Currencies, and Retail Goods Overvalued?
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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 this week's market wrap podcast, I'm Mike Gleason.
Well, as holiday shoppers descend into stores in search of door-busting deals on gadgets and trinkets, where does true value lie? From an investor's perspective, it's not in any of this year's most popular gifts, which unfortunately start depreciating the moment they are unboxed.
Nor does true value lie in the currency that retail products are priced in.
The U.S. dollar hasn't been redeemable in anything with intrinsic value since 1971, when President Richard Nixon revoked gold convertibility. Dollars that are backed by nothing can now be created in unlimited quantities. And the Federal Reserve proves that point 85 billion ways every month through a Quantitative Easing program that may never end.
True value can't be found in the dollar-denominated bond market.
Of course, it's not really a market anymore now that the Federal Reserve owns a monopolistic position of at least $3.5 trillion in Treasuries and mortgage-backed securities. The Fed may be able to provide artificial support to bond prices, but at the end of the day, bonds and other interest-bearing instruments are only as good as the currency in which interest payments are received.
The greater the currency and inflation and credit risks, the higher the interest rate needs to be in order to compensate investors for taking on those risks. If you believe the U.S. government's insurmountable debt load and the Federal Reserve's unprecedented easy-money policies pose even moderate levels of risk, then U.S. government bonds with yields of less than 4% aren't good value.
What about the stock market? Well, true value can't be found there, either. Not at these stratospheric levels, anyway.
Stocks are priced for perfection and are poised to disappoint those who buy into the market now – at least if the history is any guide. Buying stocks when they sell for rich premiums over earnings against a backdrop of uber-bullish sentiment among the public has never been a good strategy in the past.
So where can true value be found? Well, right now, some of the best and only bargains exist in the beaten-down metals sector.
Precious metals are selling at deeply discounted prices compared to where they were two years ago. Today's prices for gold, silver, platinum, and palladium are even more compelling when compared to various asset classes that have gotten over-inflated by frenzied speculation. Tech stocks, junk bonds, fine art, Internet crypto-currencies backed by nothing – you name it, it's probably a lot more expensive than it was two years ago.
Rotating asset bubbles are symptomatic of a secular inflation. We've seen them in housing and commodities and equities in recent years. Stocks peaked in 2007 and crashed into March 2009. At that time, conventional wisdom was we'd be in a secular bear market for years to come and contrarian bulls were predicting only a bear market rally. But the Dow and S&P 500 quickly got re-inflated to new highs all over again.
Let's look at what's happened to gold and silver recently. They saw a cyclical peak in 2011. And now people are saying that it's all over for precious metals.
But as long as we remain in a secular inflation, it's very unlikely that we've seen a secular high akin to the 1980 top, which held for more than a quarter century. At some point in the near future, the metals can be expected to storm back to new record highs. The Federal Reserve's expansionary monetary policies virtually guarantee it.
According to Michael Pento, author of The Coming Bond Market Collapse and a recent guest on our weekly market wrap podcast, Fed policymakers are stuck between a rock and a hard place. They have no practical way out of Quantitative Easing. And they won't stop inflating. Here's how Pento explained the situation in a recent interview on KWN.
They're trapped, they're trying to get out of QE but the exit door is blocked by soaring treasury yields, plummeting equity prices, another real estate crisis, skyrocketing US sovereign debt service payments, massive currency disruptions, and a deflationary depression; that's what lies on the other side of year after year after year of money printing, credit creation, counterfeiting, and interest rate manipulation. There is no exit. There is no easy exit and that's why they're delaying the tapering.
And finally, wrapping up this week's market action, we saw light volumes that are typical for a holiday week. Gold prices were little changed heading into Friday's open. A little bit of a rally so far this morning on the last trading day of the month has gold at $1,252 per ounce. Silver currently trades at $20.03 and, like gold, is headed for a very slight weekly advance assuming we don't give back this morning's gains later in the day.
Physical precious metals are truly on sale during this holiday season. We at Money Metals Exchange are happy to help you accumulate coins, rounds, and bars at these bargain prices – and as always, without the big “collectible” or numismatic markups over melt value.
And we've lined up a couple of Black Friday specials of our own to tell you about. First, the popular Canadian Maple Silver Leaf coins are only $2.39 over spot as long as you buy at least one roll, or just 25 ounces.
Thanks to this limited-time premium reduction, the beautiful 1-oz Maples are now nearly $2 cheaper than the Silver Eagles, where premiums continue to rise as a result of supply tightness stemming from a premature production cutoff by the U.S. Mint. Apparently, the Mint needs weeks rather than just a couple of days to retool and prepare for the production of its new 2014 coins, making this an opportune time to diversify into Maple Leafs. Again – this weekend only – you can pick up Silver Maple Leafs for just $2.39 over spot for any order of 25 or more.
Additionally if you're looking for a great holiday gift you can pick up our new “Decline and Fall of the Roman Empire” book safe for just $24.99. Secure valuables in this clever safe disguised as a book, which blends in perfectly in any library.
To place an order for these items or anything else we carry, just give us a call today at 1-800-800-1865 or visit www.MoneyMetals.com where you can place an order 24 hours a day, 365 days a year.
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 Thanksgiving 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.