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Dramatic Supply/Demand Imbalance Developing in Silver
Deflation v. Inflation: Money Metals' Exclusive Interview with Gerald Celente
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Welcome to this week's Market Wrap Podcast, I'm Mike Gleason.
Coming up later in the podcast is another fantastic interview with Gerald Celente. A forecaster with an uncanny record, Celente is always popular with our listeners. Be sure to tune in to that, but first the market update.
This week we're getting some indications in the market action that precious metals are trying to come back to life. Both gold and silver are showing very slight gains for the week, with volatility picking up a little in silver. Gold is up less than 0.5% since last Friday's close and currently trades at $1,292 per ounce. Silver comes in at $19.35, up almost 1% for the week.
Other metals of interest are performing better once again. Palladium shows a gain of about 2% on the week to trade at $818 an ounce, while platinum has picked up nearly 2.5% to post a $1,468 tick as of this Friday recording. Turning to a metal that is often viewed as a barometer of economic activity, copper is on course to close above $3 per pound for the second straight week. Copper prices are up about 2% this week to trade near 9-week highs.
And as a reminder, Money Metals Exchange now offers two types of copper bullion products. For those who would like to add this important industrial metal to their precious metals holdings, we have 1-ounce pure copper rounds as well as copper pennies minted in 1982 and earlier. At the moment copper pennies are the most cost-effective way to accumulate copper for barter and inflation protection.
Getting back to what's happening in the markets, it was announced on Wednesday that the London Silver Market Fix will shut down. The London silver fixing has been used as a benchmark price for over 100 years. But with 24-hour spot market quotes now available as metals are traded around the world, the London fix became somewhat outmoded. In theory, it's no longer necessary. However, the question going forward is whether the absence of this traditional benchmark price will make it easier for gold and silver spot prices to be manipulated.
Also on Wednesday, the Silver Institute released its annual World Silver Survey and reported that worldwide demand for physical silver soared 13% in 2013. A massive 76% increase in retail investment for silver bars and coins helped fuel the overall increase in silver demand to a record 1.1 billion ounces. Meanwhile, net supply fell, resulting in an annual silver deficit of 113.3 million ounces – the biggest deficit since 2008, according to the Silver Institute.
The silver market's imbalances are unsustainable. Either demand must fall or supplies must expand or both. The only thing that will encourage more silver production and less consumption is higher prices.
Despite the bullish supply/demand fundamentals of silver, the metal of late has been written off by some as dead money. Over the past year, silver prices have churned sideways. Price volatility in silver futures recently dropped to multi-year lows as both the bulls and bears have seemingly lost interest. But it is precisely these types of set-ups that present bulls with excellent buying opportunities.
You're usually better off buying physical precious metals products when futures markets are quiet than when they are ruled by either euphoric buying or panic selling. In either scenario, shortages and longer lead times can emerge and premiums can become elevated.
Premiums for most silver bullion products remain relatively low. As always, you pay a little extra for most government-minted products, especially Silver Eagles. You can currently get the most silver for your money with privately minted bullion rounds and bars. Regardless of which type of bullion product or which metal you choose, you can expect no delays at this time from Money Metals' usual quick fulfillment.
Unfortunately, some dealers will routinely subject customers to protracted delays on order fulfillment even during normal market conditions. It's not unheard of in our industry for customers to be forced to wait months before getting their product. Certain types of dealers actually build these unreasonable delays into their business models.
But that's not how Money Metals Exchange operates. When you place your order with us, you can expect to receive your product only several days after your payment clears. In the rare situations when an order gets delayed, you will be notified and given a new estimate. You'll always know where your order stands and be able to track it all the way to your signature upon receipt.
And now without further delay, let's get right to our exclusive interview with this week's featured guest.
It is my sincere privilege to be joined now by Gerald Celente, publisher and editor of the renowned Trends Journal. Mr. Celente is a frequent and highly sought-after guest on news programs throughout the world and has been predicting the biggest and most important trends before they happen for more than 30 years now, and it's a real honor to get a chance to speak to him today. Mr. Celente, welcome back and thank you very much for joining us again.
Thanks for having me, Mike.
If you look at what's happened since the '08 collapse, we've seen a tremendous amount of money printing, but unfortunately, all that's really happened given all these Keynesian policies is that the bankers and the Wall Street types seem to be getting richer, thanks to all the cheap money, but the basic wage earner, Gerald, has hardly seen any type of economic recovery in his life.
We've got asset prices going up, but so have the prices of basically everything (we buy), and if you don't own many assets, you're essentially getting screwed. Now that we've seen this type of monetary policy going on for the past five or six years, talk about what this has meant for the little guy and what's happening on Main Street.
College graduates can't buy houses. Millennials are frozen out of the market. I'm of the age where it used to be that our future was going to be better than our parents', and my parents were what they called the "Greatest Generation," so you never worried about your future. Now you look at the polls. They're looking at a futureless future.
You pointed it out. All this low interest rate and cheap money is only going to help the hedge funds, the private equity groups, and the vulture capitalists. It's a multi-national takeover, and it's worldwide. So few have so much, and so many have so little, and it's only getting worse.
Look at the real numbers. We don't have to speculate here. The gap between the rich and the poor in the United States is the widest of any of the industrialized nations, and it exceeds now the times of the Gilded Age back in the early 1900s. Those are facts.
The fact is, median household income is below 1999 levels. Those are facts, and one fact after another. College students, kids with only a high school education. Everybody's making less. Look at the jobs that are being created, mostly low-paying jobs. America has turned into Slave-landia, and so, too, has much of Western Europe with the exception of places like Germany and other stronger economic-based countries that still export a lot of products.
What you have in the United States is we're moving into a first, second, and third world nation, and the third world status continues to build. There's no way out of this, and here's the big lie, Mike: I'm sick of hearing this baloney about deflation. What a load of crap they keep spewing out on that one. What world are they living in? I'll tell you the world. It's a fraud so that they could keep interest rates at these record lows and enrich the already filthy rich. That's what it's about.
There used to be a thing called savings accounts when I was a young man. That's right. You put your money in the bank, and you got an interest that far exceeded inflation rate. Now, you can't put your money in the bank because what are you getting back? 0.04% a year? They keep selling this deflation myth so that they can keep the Ponzi scheme going because that's all this is. Look at the headlines. Read behind the news, and you won't find it, but if you look closely, you will.
Look what they're doing with Fannie and Freddie Mae. Now they're loosening up, and they're allowing banks to do what caused the last crash. They'll bundle these worthless loans, and now they're pushing for home buyers to put down less, and if your credit rating isn't that good, we'll look the other way.
They're already doing it. They're lying about inflation because you look at the latest producer price index numbers, and you can see inflation but once again, they lied.
Listen, I'm up here in the Hudson Valley in New York, Colonial Kingston. You know what happened this winter? Electric and gas bills went up 50% one month, 38% another month, 28% another month. They've doubled!
Have you been shopping for food lately? Hey, how about them oil prices? Going back up, aren't they? No. It's all in my mind. Listen, we don't put food and fuel into the core inflation index because that is too volatile, I tell you, and we can lie like crazy and make the people believe that we're not screwing them, so we won't put those numbers in there.
There is no deflation.
With that said, what types of steps should the common man be taking right now to protect himself? Should regular investors be looking to the stock markets since things have been ripping there, or should they be turning to gold and silver? What should they be doing?
All the markets are rigged. This isn't hyperbole. It's fact. The LIBOR rate is rigged, the interest rates. We know that. We know that the FOREX, trading 3.5 trillion a day on the currency market, we know they're rigged. We're not making this up. Even the government admits to it.
We've been writing about this and other people that know what's going on have been writing about it for years as well, about the stock markets being rigged, and now with this new book out, it's like a revelation. Yeah. No kidding. Again, to me, I don't give financial advice. I only do things that I know about or believe I do.
I've been buying gold since 1978. My first buy was at $187.50 an ounce, and I buy it, and I don't trade it. I hold it. A good friend of mine has the best strategy that I believe. He buys what he can afford each month of gold and silver, and when you look at what's going on … I said they're lying about this deflation myth so they can keep printing money and devaluing the currency. That's what they're doing, and by the way, it's not only the United States. It's the European Central Bank.
Look what's going on in China. Again, we all knew this, but now it's becoming official and that is, their housing market's starting to collapse. I read in The Financial Times that in just two years, China poured more cement in infrastructure and housing than the United States did in the entire 20th century. That's incomprehensible. That's how much they've overbuilt.
What are they doing? "We're not going to do anything. We're going to keep the shadow banking. We're going to start that." No, they're not. Now they're coming out and saying that they have to make loans more accessible. The same thing with the ECB.
I look at gold as a long-term play. I'll ask you this question, Mike, Let's suppose you lived in Ukraine. Would you like their currency? What if owned a couple of dozen gold coins and a few hundred silver ones? You think you could buy what you want and get what you want and get more than you want or more than you think you're going to get when you exchange that gold for a commodity?
That, to me, is what gold is about. And when we're talking about Russia, and we're talking about Ukraine … By the way, just take a trip around the world. Lovely times going on there in Thailand. Oh, yeah, the courts just said the person running the country, the prime minister, has to leave. How many riots are going on in Venezuela? Beautiful day in Argentina, what's going on down there?
Hey, another one in Brazil. Hey, how about all the street protesting? Portugal and Spain and Greece. Oh, I forgot Nigeria. Go to the Trends Journal. We wrote about Nigeria before this became an issue, just in the last issue. Go around Africa. Go around to Libya, go to Yemen. Go to Central Africa. Go around the world, and you will see one conflict after another.
That's what gold is for me. Gold is the ultimate safe haven. It's been around since they started writing about man. It's not going anywhere as I see it. I used to invest in real estate, and I still do, to an extent, and one of the things I've done over here in Colonial Kingston is I bought three pre-Revolutionary War stone buildings on the most historic corner in the U.S. The only place where there's a stone building on each corner that predates the revolution, and I did it more as my love of country and wanting to see a better future for this country and being that some of it started here, the revolution. The seeds of democracy were planted. I'd like to do some replanting.
I mention that also because, for example, on one building, in March of 2012, I got a 15-year locked in at 2.875%. What I'm saying is, if mortgage rates stay low, if you need a place to live, if you believe you can afford it, I also think that speaking for myself, real estate is also a good investment if you can afford it and if you need a place to live.
Mr. Celente, I want to thank you very much for joining us again and, before you go, please let folks know about how they can get their hands on the tremendous information you put out there at the Trends Research Institute, and give our listeners an idea of what they'll find in the latest edition of The Trends Journal.
The latest edition of The Trends Journal is one of my favorites because, Mike, what I'm also doing … People say to me, "You pick out the problems, how about some solutions?" One of the ones is I write about is occupypeace.us. This is only for Americans. If you want to start an Occupy Peace in your country, you do it.
As I mentioned, where I am in Colonial Kingston, whether it was George Washington's farewell address or any of the founding fathers from Jefferson to Franklin to Adams, you keep going up and down the list: "No foreign entanglements," so I'm starting an of Occupy Peace movement with the understanding of no foreign entanglements and to rebuild America. The money that we need to spend over here, not fighting foreign wars.
There's that kind of information. There's a great article by Dr. Paul Craig Roberts, the former Assistant Treasury Secretary of the United States. There's information on the new technological advances that we see…anything from food to energy. We try to cover as many different fields as possible and the trends that are shaping the future, and I can say with all honesty and belief, there's no magazine like it in the world, and it's 50 pages, whether you get it online. Of course, we suggest people consider buying the magazine edition.
Fifty pages, full color, no advertisements. You will read history before it happens, and as I said, when you go back to the winter editions, you go back to any of them, you will see that most of what we said is now making headlines. It's the only magazine that's beyond what Life magazine used to be and way ahead of Time. We also offer discount requests to people who can't afford the full price.
Excellent stuff as usually. Hopefully, we can have you again down the road. Thank you very much for joining us.
Oh, my pleasure. Thanks so much for having me, Mike.
That will do it for this week's Market Wrap Podcast. Again, we want to give special thanks to Gerald Celente for his fantastic insights. For more information, the website is simply trendsresearch.com.
Tune in next Friday for our next weekly Market Wrap Podcast. Until then, thanks for listening, and have a great weekend, everybody.