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  • Gold: $1,179.85 0.00 |
  • Silver: $16.85  0.00 |
  • Platinum: $933.70  0.00 |
  • Palladium: $747.05  0.00 |
  • Rhodium: $780.00  0.00 |
Weekly Market Wrap

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ECB Slashes Rates in Global Race to Debase Currencies

Money Metals Offers Discounts in Celebration of New Company Name

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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

This week it’s my pleasure to introduce our company’s new name – Money Metals Exchange.  While our name has changed, our core business philosophy and our mission have not.  The same top-notch, no-pressure customer service that helped our company gain a large legion of loyal customers is exactly what you’ll continue to find at Money Metals Exchange.  And we continue to have the exact same leadership team, including myself, Clint Siegner, and our president Stefan Gleason. 

Our new, even better name simply reflects the fact that we have grown over the years from a small-scale niche bullion service into a leading national precious metals dealer.  By re-branding ourselves as Money Metals Exchange and launching several new services, we expect to reach a wider audience of people who are looking for an honest, fair, and reliable place to buy or sell precious metals.

Gold and silver are the “money metals,” and our new company name and web address underscore our core mission of popularizing precious metals ownership in America.  So keep your eyes on our web site at www.MoneyMetals.com.  There, you can access our inventory of low-cost gold, silver, platinum, and palladium bullion products -- and that’s where you’ll be seeing even more services and benefits become available to our customers, readers, and listeners in the not-too-distant future.

In celebration of our name transformation, we have a special offer for you.  Order just $1,000 or more in precious metals in September, and we’ll give you a $25 credit.  Invest at least $2,500, and your order also ships free!

With that said, let’s get to this week’s market action.  Sellers overwhelmed buyers in the paper markets this week, with most of the damage inflicted on the day traders returned to their desks after the Labor Day holiday.  As of this Friday morning, gold looks lower by 1.7% for the week and currently trades at $1,266 an ounce.  Silver also suffered a sell-off, with prices dipping by 2.1% to bring the white metal down to $19.12 per ounce, near major support levels going back more than two years.

The precious metals markets are continuing to struggle against external headwinds.  One headwind holding back the gold and silver markets is the persistent perception that investing in the stock market is now a “can’t lose” proposition.  The Federal Reserve Board has helped create this perception through stimulus and ultra-low rates.  These “loose money” policies have encouraged a wave of corporate buybacks and a flood of demand for shares from margin accounts.

Investors today are even more confident in stocks than they were at the major tops in 2007 and 2000.  In fact, according to the latest U.S. Advisors’ Sentiment Report, the percentage of market commentators who are bearish is at the lowest level since March 1987.  By October of that year, the stock market crashed.

To be fair, sentiment extremes don’t always result in crashes and don’t always line up precisely with market tops.  But they are warning signs of potential excesses building up in equities.   

Another headwind for precious metals markets has been a strengthening dollar.  The U.S. Dollar Index now sits at a 14-month high as the euro breaks to the downside.  The story is that the European Central Bank will move to implement its own Quantitative Easing program while the Federal Reserve unwinds its. 

On Thursday, ECB chief Mario Draghi announced an interest rate cut on its benchmark refinancing rate.  The ECB refinancing rate was already near zero, but Draghi managed to lower it again by adding another decimal place.  Officially, rates in the Eurozone now stand at 0.05%.  

The ECB will also start buying asset-backed securities, though on a much smaller scale than the Federal Reserve’s asset purchase program.  With Europe’s moribund economies slipping again toward recession and price levels threatening to move into negative territory, the ECB appears intent on trying to revive inflation.  If it succeeds, that would be bullish for precious metals in euro terms.

It’s possible for precious metals to rise in dollar terms as well while the euro is falling.  But euro strength versus a weakening dollar is generally more conducive to higher metals prices.  We doubt the Fed would be willing to sit back and allow the dollar to appreciate considerably more against the euro.  Because after all, the Fed views dollar strength as bad for jobs, especially in manufacturing. 

In a global race to debase currencies, it’s impossible to predict which currencies will depreciate against which over time.  But all fiat currencies can, and almost certainly will, depreciate against gold and silver over time.  What will dollars or euros or yen or rubles be worth 20 years from now?  It won’t matter if you measure your wealth in terms of the “money metals.”  Gold and silver values may gyrate sharply in any given year, but over a period of decades, they have always maintained their purchasing power versus other real assets.  You can’t say that about any fiat currency.

Well before we sign off for this week we want to remind you again of our generous month-long promotion as we celebrate our name transformation to Money Metals Exchange.  As mentioned before make a purchase of $1,000 or more at some point during the month of September and get $25 off.  Order $2,500 or more and you will also get free shipping.   

Our always expanding product line-up has a few new additions over the last week.  First off, in gold, the Perth Mint’s Lunar Series 1-oz “Year of the Goat” coin is available while supplies last.  And in silver, we now have stock on the Canadian Birds of Prey series 1-oz Bald Eagle coin.  Both of these items have limited annual mintages and figure to only be available for a month or two.
Just visit www.MoneyMetals.com to view these items as well as all of our other products, up to the minute pricing, or to place an order.  And of course you can always call one of our Specialists at 1-800-800-1865 if you have questions or wish to place an order by phone.

Well that will do it for this week, thanks for listening.  This has been Mike Gleason with Money Metals reminding you we remain fully committed to getting you the most value for depreciating dollar…with speed, with accuracy and with top notch service.  Have a great weekend everybody.

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