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Metals Markets Get Slammed, Flirt with 4 year Lows
Guy Christopher Speaks about Fear, Anti-Gold Propaganda
Don't want to listen? Read the podcast below!
Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Coming up later in today’s program we’ve got a fantastic interview with MoneyMetals.com columnist Guy Christopher. Guy shares some helpful tips on how to talk to your family and friends about the importance of gold and silver, and offers up some of his other wonderful insights as well. You won’t want to miss my interview with this excellent communicator who is gaining quite a following for his hard hitting and pithy commentary on our website. We’ll talk to Guy Christopher in just a few minutes.
Well, the precious metals markets got slammed down again this week on the heels of a buying spree in the dollar. Since the European Central Bank cut rates and telegraphed its intent to engage in asset purchases, foreign currency traders have rushed out of the euro and into the Greenback.
The U.S. Dollar Index climbed above the 84 level this week. That encouraged more technical selling among momentum players in the gold and silver futures markets.
Gold shed $28 through Thursday’s close to trade at $1,242 an ounce, and is slightly lower still this morning. Gold currently trades at $1,235 an ounce as of this Friday morning recording.
Silver tested investors’ nerves this week by probing the lower end of a trend channel that has been in place for two years. Spot silver prices spiked down to the $18.50s early on Thursday before finishing the day at $18.72 an ounce. Prices are currently coming in at $18.63, down 3.3% for the week.
The silver market sits precariously on the edge of an abyss on the charts. If silver breaches through $18.50 and closes below it on a weekly basis that could be a bearish development, at least in the near term. When silver breaks above or below support levels, it tends to spike. Another spike sell-off below the major trend channel would likely represent a final wash out of the remaining silver bulls who have believed for the past year that the final lows were in.
On the other hand, if silver once again finds heavy buying interest at these levels, it could stage a frantic rally that squeezes out the shorts.
Honestly, a lot will depend on what the U.S. Dollar Index does. It has been rallying on euro weakness, not on strengthening fundamentals in the U.S. economy. On Thursday, the government reported that first-time weekly jobless claims rose to a seasonally adjusted 315,000. That exceeded consensus expectations by more than 5,000. And it follows a nonfarm payrolls report showing that the U.S. economy created just 142,000 jobs in August, well below expectations of 225,000.
The dollar now looks quite overbought on an intermediate-term basis. Momentum oscillators are coming in with readings at multi-year extremes. Yet the dollar hasn’t managed to close above its high mark from last year near the 85 level. That could prove to be an important area of resistance.
Mixed signals are coming in from commodity markets. West Texas Intermediate Crude reversed strongly to the upside on Thursday in heavy trading volume. Crude oil prices have been in a downtrend since late June but may now be ready to rally. The dangerous geopolitical backdrop in Russia and the Middle East may have put a floor under oil prices in the low 90s per barrel. We’ll see if it also puts in a floor under gold and silver prices.
Another potential ray of sunshine in what may seem like an otherwise bleak looking picture for gold and silver right now is the refusal of the higher-risk mining shares to break down in a significant way. The HUI gold stocks index reversed to the upside on Thursday to finish in positive territory.
But palladium prices fell more than 7% this week after flirting with new multi-year highs in last week’s trading. The metal has still had quite a run this year – up 17%. At some point – perhaps soon – we can expect lagging gold, silver, and platinum prices to play catch-up.
We understand that the disappointing performance of the gold and silver markets has been frustrating for many investors. Us included. We are always willing to buy back any of the bullion products we sell. But when these pullbacks come, we strongly encourage our customers to take advantage of the bargain prices we are able to offer on our bullion products.
It’s a buyer’s market. Not only are spot prices down, but the premiums on most of the products we sell are as low as we’ve been able to offer in several years.
To take advantage of any of our great, late summer bargain opportunities, just give one of our specialists a call. Or visit our web site, MoneyMetals.com. Our month-long special offer of $25 off on any order of $1,000 or more plus free shipping if you buy at least $2,500 makes now a fantastic time to either add to, or start a position in, precious metals at these bargain prices.
And now, without further delay, let’s get right to this week’s feature interview.
Gleason: It is my privilege to bring in Guy Christopher now, one of our featured columnists on our MoneyMetals.com website. Guy is an investigative journalist and published author, but he's also a former stock broker and veteran of the 101st Airborne serving in the Vietnam War. All of this real world experience combined with his communication skills has helped provide our readers and customers with some really great insights. Since joining our team he's written some hard-hitting columns, even one or two that might have challenged you a bit.
Guy, welcome. It's great to have you on with us today.
Christopher: Mike, thank you for having me. It's very kind of you.
Gleason: I want to talk to you about two of your recent articles in particular, the first one titled, "You and I Have No Right to Be Scared." In that piece, you give an illustration of just how bad things have been getting and how incredibly important it is to own precious metals given the current landscape; but even with all the events of the last 10 or 15 years, it can still be hard for people to overcome that first psychological hurdle.
I want to read an excerpt from your article and then get your comments. You wrote,
"Buying precious metals for the first time is a big move; I know. Now you worry if that's the right decision, that perhaps you don't yet know enough about precious metals. You've heard they make awful investments, while the Dow is hitting all-time highs. When the time comes to convert some cash into gold and silver, once again, you get scared. Except this time, you have no right to be scared. None at all. Neither do I."
Explain your thinking there.
Christopher: I guess psychologically it might have to do with being inside of a crowd, it's easy to do things when the crowd is going along with you. My feeling when I was first buying gold and silver, which was about 10 years ago, I was all alone and I felt all alone and I couldn't go to friends and say, "Oh, look what I paid $800 for or $600 for." When I did, once or twice, I got strange looks and like, "Whoa! What are you wasting your money on that for?" So I had to rely on my own instincts that I was doing the right thing. There wasn't a big crowd of folks standing there with me and there wasn't a crowd of folks or a line of folks behind me if I decided I made a mistake and needed to turn around and sell it; there was nobody to sell it to.
That was the emphasis for writing that story. I felt that it was important to let folks know that when they have those feelings, they aren't alone today. The folks who had a right to be scared were the folks who were buying the stuff 10 to 15 years ago when there was no one else standing in the line.
Gleason: Certainly, the world has changed a tremendous amount since then and we've got governments that are just spending money like nobody's business here and the dollars continue to get devalued. Precious metals are just an extremely important part of a person's personal financial strategy, is it not? That's certainly one of the main reasons I think you're in the camp that they were in here…you've got so many reasons out there to own it. Like you said, there's no reason to be scared, given everything that we've got, it's a scary proposition to not own any precious metals, right?
Christopher: Well that’s right. The world was not as scary 15 years ago as it is today. Fifteen years ago we didn't know of all the horrors and manipulations that we are going through today. The government, the political structure, trillions and trillions of dollars in debt that we didn't have to deal with back then, but there were indications and it was those indications that helped those folks who bought gold and silver early on. It was their instincts that the indications were pointing to bad things coming and then guess what; bad things did come.
Today, we have every piece of knowledge in front of us that says hey, you have everything you need to make a decision right now. You know what direction the country seems to be headed in, you know what societal changes are being made and you also know that the US dollar is a lot weaker because it's been printed into an infinity, that the US dollar is so much weaker now that history and mathematics tells us the dollar is not going to survive.
Once you have all that information in front of you, you should have a pretty good basis for making an informed decision as to what to do with your money.
Gleason: How did you come up with the idea through this column? Was it based on a real experience you had, perhaps or what was the driving force?
Christopher: Yes. I'm happy to tell that story. I was out on a meeting that ran late one night and as I was leaving in the meeting, two ladies, married, children, approached me and said, "We heard you say something gold and silver. We’d like to take you to lunch." And I said to them, "How about I take you to a coin convention." We had one coming up in the area about a week later. Now coin conventions, the name is coin convention but obviously there's a lot of bullion being sold at coin conventions.
I met these gals at the show that following weekend and walked them through the show. It's an interesting thing to walk into a hotel ballroom with $50 million on a table in gold and silver. We spent about an hour meeting people and looking at the displays and I was explaining this is a roll of this and this is a bag of that. They'd never really noticed 90% silver, they didn't know what a bag of 90% silver was. They'd probably never seen a Silver Eagle or a Gold Eagle for that matter.
We sat and talked and they kind of looked at each other and I'd said, well, perhaps these gals aren't ready and I mentioned to them, "Why don't we go get a cup of coffee?" We went to the coffee shop and we sat there and we talked for a moment and they said, "Well, we're kind of scared about this, this is a lot of money to be forking over for this stuff."
That's when I said to them just off the cuff, "You have don't have a right to be scared. The guys who were making these shows 15 years ago when there was nobody else in the show, when they were the only customers in the room, those are the people who had a right to be scared."
They looked at each other and I said (to myself), “well I don't know if I've lost them or not.” I got up and refreshed my coffee and came back and I said them, "Well I guess, ladies, I'm going to stick around," and they said, "No, we're ready to go. We're ready to buy now."
Over the next hour and a half, with my help, they spent $15,000 buying for the first time in their lives gold, silver, 90% bags and stuff like that. I never forgot that story. The two ladies have become very good friends of mine, their families and I are very good friends today and they are still buying gold and silver; I hear from them all the time.
Gleason: That leads me to my next question here and then we're going to move on to the one of the other columns you penned for us, one titled, "What to Expect When Telling Friends About Gold and Silver." You've mentioned a success story there but we often run into a lot of opposition and I don't know if it's my imagination here, but it seems like most people are programmed to turn their nose up at gold and silver as either risky or wacky or somehow a stupid thing to own. Why is that, do you think?
Christopher: It's simply because Americans have been conditioned to see money, gold and silver, credit cards, dollar bills in a way that is unhealthy, financially and monetarily. For the last eighty years, the government has been pretty successful in drumming gold and silver out of the American psyche. They replaced it quite easily, I think too easily, they replaced the constitutional money, gold and silver, they replaced it with credit cards, they replaced it with debt.
They convinced Americans that debt is money rather than gold and silver. They had the schools who helped them, of course. The government fund schools and so schools do what the governments tell them. They had Hollywood on their side and of course they had the media on their side. And so for decades, Americans have been hearing that it's good to be in debt. If you watch television, one of the ads I see constantly is let's go get a credit check, let's get a free credit check.
I don't see any ads from the government saying hey, you should be buying gold and silver. I supposed that if it’s that difficult to get folks to get interested in gold and silver that it shouldn't be a big surprise that you can talk to 100 people and only find two or three who are actually interested. After a while you're almost ready to give up.
I found a technique that I call the "kitchen table seminar". I invite folks who seem to be interested to my house or I get an invitation to their house, Sunday afternoon and I sit down at their kitchen table with them and I spread out gold and silver on the kitchen table. I found that once they get a one ounce Silver Eagle in their hand, they seem to have a better idea of just what it is we're talking about. There's something about a gold coin in your hand that it's kind of magical and it's certainly a lot easier to convince a close friend or a relative that they should take a hard look at gold and silver when you can show them that your money is where your mouth is.
Now obviously, you have to sit down with trusted folks, I don't invite strangers in, but I do find that my success rate is a little higher than average when I sit down with folks and show them, empty a bag of 90% silver on a table and folks perk up and they say, "That looks like the old change from the old days." Well it is the old change from the old days when they made it in silver and now this old change from the old days is worth a great deal of money, great deal of paper money.
That demonstration I found is a lot more effective and it's obviously more effective than just sitting and talking to someone over a cup of coffee.
Gleason: I think we can all relate to the struggles of trying to get the point across and if you’ve got your conviction then don't lose that and just continue to fight a good fight, I suppose. I really do believe like you do that it's incredibly important that people have some sort of protection against what may be coming and a collapse in paper that seem somewhat inevitable, so we certainly want to continue to share the gold and silver story with folks who have not heard it or don't seem to buy into it just yet.
Now you also point out the great hypocrisy that's taking place in government and among the central banks. Well on one hand, they're tirelessly trying to get the citizens to look down on precious metals; they're secretly dealing in gold behind the scenes. Explain what's happening there.
Christopher: We could start with Ben Bernanke who told Ron Paul a few years ago in Congressional hearings that Ron Paul asking, "Is gold money?" and he said, "No, it's an asset, but it's not money." That is the official line from the government but the truth is that governments know a darn well that gold is money. We know that because they hoard gold and they sell gold and they do it secretly and they won't tell us anything about it. It's been for quite a few years since we've had a proper audit of Fort Knox. 1953 was the last credible audit of Fort Knox and the reason we can't get any hard information on where the gold is and who owns it is because the government doesn't want us to know about it. The government prefers that we see the dollar bill as money. The dollar bill is debt. There's nothing backing it except full faith in credit and that full faith in credit right now is on the edge of the cliff as we all know.
So with that situation that the government won't tell us what's going in with our own gold and silver, that's America's gold, it's not Federal Reserve’s, with that situation it tells us that the government is in trouble. It tells us that the government is keeping secrets that they cannot possibly reveal because if they do reveal those secrets a lot of trouble is going to come their way. They're protecting themselves, not protecting the country.
Gleason: Definitely something people need to be very mindful of what’s happening on that front. Well Guy, great stuff. Thanks very much for your insights. I have to say that I personally have really enjoyed your writings and look forward to reading more, as well as having you discuss those with our audience here. So keep up the good work and hopefully we'll talk with you again soon.
Christopher: Mike, I appreciate the opportunity to share some of these thoughts with. Thanks for your invitation.
Gleason: Well that will do it for this week. Thanks again to Guy Christopher, Money Metals columnist. Check out his work at MoneyMetals.com and tune in next Friday for our next weekly Market Wrap Podcast. Until then, this has been Mike Gleason with Money Metals Exchange. Thanks for listening and have a great weekend everybody.