Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Well, some extraordinary market volatility again played out this week. Across the Atlantic, 143 million Russians learned the hard way the dangers of holding wealth in fiat currency.
On Monday, Russia’s careening ruble fell nearly 20%, triggering a full-blown currency crisis. Fears of a currency collapse and runaway inflation sent Russians clearing store shelves of clothes, toasters, anything tangible.
The panic out of the ruble is eerily reminiscent of 1920s Weimar Germany, which is often cited as a textbook case of hyperinflation. And as we all know from our history textbooks, Germany’s economic ruin led to the rise of a national socialist dictator. And ultimately to the second World War.
The situation in Russia right now is becoming increasingly dangerous from a geopolitical standpoint. Russian leader Vladimir Putin continues to enjoy overwhelming public support. He’s successfully pinned blame for the ruble’s fall on the U.S. and its allies, which recently imposed economic sanctions on Russia. Anti-American sentiment is rising in Russia, which still possesses one of the world’s largest nuclear arsenals.
For now, Moscow is desperately trying to halt the ruble’s slide. A set of interventions including a huge interest rate hike by the Russian central bank lifted the currency on Wednesday.
Over the past few weeks, gold and silver prices have surged in terms of rubles even as they have languished in terms of dollars. The dollar is currently perceived as strong, but it is still a fiat currency that is destined to lose value over time. And it could well enter a crisis of its own down the road. Fiat currencies typically end badly as a result of mismanagement by politicians and central bankers.
On Wednesday, Federal Reserve chairwoman Janet Yellen said that the Fed remains on course to begin raising interest rates next year. Barring a shift in the economic data, the Fed seems poised to raise rates by summer. Yellen brushed off Russia’s currency crisis and the deflationary implications of falling oil prices. Even though the Fed’s preferred inflation indicator is running below its stated 2% target, most Fed officials think inflation will pick up slightly over the next year.
Gold and silver prices fell hard early in the week heading into the Fed’s announcement. But they stabilized on Wednesday and Thursday as the Federal Reserve’s outlook for the economy sparked a huge rebound in the stock market. For the week, gold shows a loss of 2.1% and now trades at $1,197 per ounce. Silver is off more than three times gold’s decline. The white metal is down 6.7% on the week to $15.94 an ounce.
Turning to the platinum group metals palladium is at $798, showing a week-over-week decline of 2.3%. Meanwhile platinum is essentially at parity with gold now, coming in at $1,198 as of this Friday morning recording.
As for the longer term, it’s difficult to see how the metals will stay at today’s low prices with government debt scheduled to grow ever larger – with few in Congress willing to confront the problem. Last week, Congress passed a secretly drafted $1.1 trillion spending bill, a bill most weren’t even able to read before voting on it.
In response to the passing of this new bill, former Texas Congressman Ron Paul lamented about how these types of massive spending increases have become somewhat of an annual occurrence each year around Christmas. And he urged those on Capitol Hill to instead focus their energies on a bill forcing the Federal Reserve to disclose its dealings to the American people.
The Audit the Fed bill passed the House overwhelmingly in September. But Senate Majority Leader Harry Reid refused to allow a vote in the Upper Chamber. With the Senate set to change hands early next year, the bill has a good chance of finally becoming law.
In the event that it does, you can bet Federal Reserve officials will be less than enthusiastic in complying with a full and transparent audit. They insist they’re an independent agency and that it’s really none of our business to know what institutions they’ve bailed out, what assets they’ve bought, what swaps they’ve engaged in with other central banks, or what quantity of gold they’ve leased out.
At this point, the Fed may well be more powerful than Congress. Baron Rothschild once said, “Give me control over a nation’s money supply, and I care not who makes its laws.”
The central banking cabal is not likely to cede any actual power back to Congress, even if it is forced to give the appearance of doing so. These people are masters at manipulating mass psychology.
Some say Bitcoin is the antidote to central bankers. But, this year, the digital crypto-currency has fallen just as hard as the Russian ruble. Now, for those who hold Bitcoins and would like to convert them into the solidity of physical precious metals, the MoneyMetals.com website now offers the ability for customers to make payment using Bitcoin.
Customers choosing the “Bitcoin” tab at checkout will find Bitpay service enabled. Very soon Coinbase service will also be available. Simply select your preference and place your order. Afterwards you will be immediately prompted to log into your Bitpay or Coinbase account and complete the payment.
Before we close today, I want to take a moment to remind all of our listeners that our free shipping special ends in just a few days. Order $100 or more in precious metals, and we’ll ship and insure your order at no cost to you, but only if you do so by Christmas Eve.
So don’t miss the opportunity to pick up some discounted gold and silver, perhaps the best gift you could give yourself this holiday season. Again, it’s free shipping and insurance on any order of $100 or more between now and December 24th.
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 depreciating dollar… with speed, with accuracy and with top notch service. Have a great weekend everybody.
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.