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Weekly Market Wrap

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Crazy Markets, Mining Woes, Barter, and a Touch of Conspiracy!

David Smith & Guy Christopher Tell All in Encore Podcast

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

Well, it's been quite a year in the precious metals markets, and we've enjoyed covering them here with our listeners over these past 12 months.

2014 was the year of the bargain hunter – investors who had plenty of opportunities to accumulate metal at deeply discounted prices. And more of you than ever did exactly that through

Money Metals Exchange, and it continues to be a great honor to play a small role in the financial lives of our 35,000+ customers.

During this holiday week, we thought it was an appropriate time to listen back to some of the best recent interviews we aired on the Weekly Market Wrap Podcast – there are a couple segments that are more than worthy of an encore.

You'll hear from two of our popular guests today, Guy Christopher and David Smith. So, now, without further delay let's get right to our exclusive interviews.

Mike Gleason: Welcome back, Guy. It's great to have you on today and Happy Thanksgiving to you.

Guy Christopher: Thank you very much sir. Glad to be with you.

Mike Gleason:I'm going to bounce around a little bit here and discuss some of the important topics about what you've written over the last couple of months, which continues to be top-notch stuff by the way, so first let me say thank you very much for the contribution you're making to our site. Now in your most recent article, you wrote about the use of gold and silver as money, and I want to dig into that subject with you here because questions about that come up a lot with our customers. Now one example I've heard before from those who discredit the idea that gold and silver might ever become useful, let alone necessary and a possible currency replacement in a catastrophic scenario is Hurricane Katrina where items like bottled water and generators were in very high demand and you could buy almost anything with those items if you had them.

Now we would be the first to say that you really do need to have an adequate supply of essential items like a good supply of food and water and an alternative power source, etc, but in a long term situation is a society where the currency itself is breaking down, we need a stable currency to function. Is that where you see gold and more likely silver coming into play?

Guy Christopher: I think that's a perfect example. When Hurricane Katrina roared into the Gulf Coast, specifically New Orleans in 2005, a lot of folks don't know this, Mike, but the City of New Orleans, which was partially flooded, lost at least 19 branches of a particular bank. The bank was called Hibernia at the time. It is now Capital One. A lot of folks know the Capital One banking system. Nineteen banks under water for about three months. By the time these banks were finally cleaned out and opened up, it turned out that the safety deposit boxes in those banks were under water of course for that length of time, and everything in those safety deposit boxes was ruined.

That would be stock certificates. That would be cash. That would be anything of paper. Gold and silver would probably have been the right thing to have in there except in the case of those banks, many of them were opened without the owner's present, so the question of hard money as opposed to paper money as opposed to stock certificates I think is answered with that example. The banks were closed. If you had a favorite bank on the corner and you went down to try to do business there and you found that it was closed because it was under water or any reason, you were out of luck for a while. If you didn't have electricity, if you didn't have the computers, if you didn't have a way to draw some of your money, some of your wealth, a pocket full of silver would have done a lot of good.

Most of the folks, over 100,000 of the people in New Orleans left the city and never came back. What did they take with them? Did they take mountains of furniture and mountains of personal belongings? No. They got in their cars and they just started driving. A lot of them ended up in Houston, Texas. When they got to Houston, they had what they had on their backs and in their pockets. I would think that gold and silver would have been an easier thing to carry with them than would tons and tons of supplies that they might have been lucky enough to put away along the way, like bottles of water and stores of food and things like that.

It wouldn't have been any problem at all to take that gold and silver and change it into usable currency. Dollar bills I guess would be useful currency in Houston. It wouldn't have been any trouble to take that and restore some of their chances of survival after having escaped the city.

Mike Gleason: Natural disasters are one thing, but preparing for a financial disaster is simply an imperative, given the economic and monetary environment we live in today. And not only did we come very close to a total financial catastrophe recently, we also might see something worse than the collapse we nearly saw a few years ago based on the response to that near miss. Talk about that situation, because I don't think many Americans know the full story about that fateful weekend in September of 2008.

Guy Christopher: It really is remarkable, Mike, that the date was the 14th of September, 2008. It was a Sunday night. The banking system was imploding. It was over-leveraged. The Federal government was holding non-stop meetings day and night that weekend to try to save some of these banks and they chose to let one called Lehman Brothers, which was a behemoth of a financial institution, they chose to let it go, and worked out a deal where they would just find the cash, print the cash to shore up the banking system. Of course many other banks failed in the following weeks. The problem we had, or the problem the United States government had and the problem the world had was too much debt, so how did they try to solve it? By issuing more debt and they've been issuing that debt to the tune of uncounted trillions of dollars now for the past six years.

Nobody knows how much money is in circulation. I know that governments have computers and statistical analysts and things like that, but I doubt seriously anybody knows how much paper money is floating around out there and so what we have is a problem that we cannot even identify. It's that bad. The debt is mounting. There's no end in sight to it and at some point that debt is going to bring the financial system down, and I mean the global financial system, and it may come down in domino form or it may come down all at once overnight. Who knows? The problem is we don't know how it's going to look because we've never in history had a situation like this before.

It's very dangerous and I wish more folks would pay attention to that danger. Unfortunately they don't hear about that danger day in and day out the way they hear about other news events or other social events, so it's not on their minds. It's very few, very few folks actually take the time to sit down and say to themselves what's going on in the world and how can I protect myself? How can I plan on surviving if in fact things don't go the way the governments tell us they're going? The governments are telling us that the economy is improving. Look at the stock market. The stock market is going up every day.

Now we know from several sources that the Central Banks are buying those stocks. The companies themselves are doing stock buy-backs. The stock market is being held aloft artificially. The value is not there. The value that is supposedly reflected in the very high numbers the stock market is showing, the value is not there. That is a mirage and that mirage one day, it's a bubble that's just going to pop. When it does, financial institutions around the country are going to fail. They're going to come down crashing. Banks are going to close. Disruptions are going to start occurring everywhere.

Transportation, power, and of course financial institutions. When those disruptions occur, lives begin to change, and we've already seen that in this country. Millions and millions of people are on some sort of government handout, some sort of welfare, whether it's food stamps or government assistance of some sort, those lives have been in effect ruined by what happened September 14th, 2008. I say to folks whenever I can, it's important that you sit down and think about what's going to happen if the worst happens, and why would you worry about that? Because history tells us we are at a point we have never been before and we need to be vigilant about surviving financially, spiritually, and in every other way.

Mike Gleason: One of the things we often talk to customers about is that precious metals is almost like a form of insurance. Gold and silver, we don't necessarily like it as much as we do because it's shiny and pretty, it's really a form of protection against the paper collapse or the financial collapse, the banking collapse that you just spoke about, having something that would be usable in one of those types of events. You're going to be darn glad you had it if you needed it versus not needing it and having it.

Guy Christopher: Sure. If you don't need it, that's great. You haven't lost any money. You can always turn around and sell it. Folks like Money Metals Exchange and other bullion dealers, they really are the bankers of the bullion industry and it's very easy to turn that metal into the cash that's used whenever you are, whether it's dollars, whether it's Euros, whether it's pesos or whatever it is you're using. It's very easy to turn that money back into the cash that you would need to get through everyday life. I would think that if we don't have it, we are at a great disadvantage.

Unfortunately as I said and as we all know, so few people are really paying attention to that and that's going to be a terrible, terrible thing for all of us to face when friends and relatives and folks we care about who have not paid attention are suddenly destitute just because they didn't pay a little bit of attention to some insurance of trying to ensure their wealth. They spent their lives building their wealth and they've spent their lives enjoying their wealth, but for some reason protecting that wealth seems to be a problem that they just don't understand.

Mike Gleason: So many people are very quick to get the homeowners insurance or the auto insurance, but they don't seem to have currency insurance so to speak. Everything we're talking about here today, Guy, falls into a category of subjects that the Wall Street and banking elite in this country would rather people just not hear. You examined this subject in one of your other recent articles where you uncovered the reasons why your local stockbroker hates gold. You used to play in that Wall Street world a number or years ago yourself, so you have a unique perspective on the matter, but give our listeners a few reasons metals are pooh-poohed or viewed with just outright disdain in the main stream financial industry.

Guy Christopher: That was fun to write. I actually went to some old stock broker friends and told them I was writing an article about the stockbroker attitudes towards gold and even though they did not want to be named of course, they were pretty open with me. Number one, the biggest problem they had with it is they don't make any recurring commissions on it. Once you buy gold, that's pretty much the end of it. Gold is private wealth. Gold is not listed on an exchange anywhere. You don't have to worry about annual statements. You don't have to worry about CEOs going to jail either. You don't have to worry about gold being perp-walked across the street for television cameras.

Gold is not the type of thing that they're used to selling because it doesn't pay annual commissions. A lot of folks don't understand that even profits that you make from a stock account, when they are reinvested in some contracts, those profits are subject to new commissions and so if you make 10% on your money and that 10% amounts to $10,000, six percent of $10,000 is 600 bucks, which comes off the top, goes into the stock brokers pocket and you get the other $9,400 put back into your stock account. With gold, they can't do that. The other reason that they hate gold is because gold represents independence. Gold represents something that the United States government has tried to drum out of the American psyche for eight decades now ever since FDR went to war against gold owners back in 1933.

The government doesn't want you having wealth. The government prefers you having debt. And in order to make you comfortable with that, the government has been on a very long campaign to convince you that debt is wealth. A lot of Americans, too many Americans have bought into that idea that it's a simple equation. I can spend money with a credit card. I can write a check. What do I need with real wealth to spend? A credit card is really a derivative. You're actually borrowing money into existence whenever you swipe that credit card. You are borrowing money into existence just as a bank loans money into existence when it writes a loan to somebody.

That money doesn't come off the shelf in a back room somewhere. It's instantly created out of thin air. That debt is now in the hundreds of trillions, if not thousands of trillions circulating around the world, and it's an unsustainable system because at some point, someone is going to want to get paid. Someone is going to want wealth for that debt and there isn't enough wealth to cover that wealth, so that brings us right back to the terrible, terrible catastrophe that is looming. I can't say it's coming tomorrow or next week or next year, but it's coming. It's coming one day to this country and it's coming one day to the globe because the debt is unsustainable.

I've been reading for the last couple of days very interesting articles about France. This morning, just today, one of the major political parties in France is now clamoring to have French gold brought back to France from New York, London, Ottawa, places where French gold has been stored. We have a very serious question in Switzerland about gold, which you folks have been writing about. I notice David Smith may have written something about it very recently. The Swiss are actually having an election, a referendum to decide whether or not to force their central bank to return to some sort of semi-gold standard by holding gold and building up their gold reserves.

This is the same thing we've seen in Germany. It's very close to what Venezuela did a few years ago when they demanded that over 100 tons of gold be returned to Venezuela. Folks around the world are starting to pay some attention to this. Unfortunately it's not mainstream news in the United States. It's mainstream news in Europe. It's mainstream news in Asia, but it's not mainstream news in the United States.

Mike Gleason: It's really an issue of national security and I think that's why a lot of these countries are recognizing the dangers in having the gold held outside of their control. We're seeing a tremendous amount of gold from the US stockpiles leave and go to Asia. In another article you wrote titled, "Warning: Three Million People Covet Your Gold", you paint a very interesting picture of how prevalent gold is in China and I want to read and excerpt from that column and then get your comments. You wrote:

"Gold watchers today make two important comparisons. China is known to be buying gold while the US is strongly suspected to be selling its gold, and the US is widely thought to have much less than it claims while China is fully believed to have much more than it admits.

China now seems weary of the paper money it invented over a thousand years ago. Yes, gold goes where it is best loved and most appreciated. That means China has backed up the truck. If you worry who might every buy your gold and silver, talk to the folks with thousands of years more experience with failed governments and failed currencies than we Americans have. Be assured that nearly half of the world's population, over there billion customers happily stand in line to buy your gold and silver with their unwanted dollars. But don't necessarily expect to get those precious metals back! "

What do they know that we don't and what should the average American be thinking about here?

Guy Christopher: That example I think hits the nail on the head, not because I wrote it, but because it's actually very, very telling. China, Vietnam, the Mideast, those nations have thousands of years of history that the United States of America does not have. We have 230 some odd years of history. They have thousands of years, 2300 years of history, ten times as much as we do, and their histories are constant revolutions, constant changes of government, constant changes of borders, changes of flags, changes of leadership, and along the way, those folks have dealt with a lot of blown up currencies, whether they were paper currencies or whether they were something else, those folks woke up one day year after year, decade after decade discovering their money was no good unless that money was gold, silver, or copper, and they have that memory in their DNA.

They are born knowing gold and silver is money. Quoting J.P. Morgan back in 1904, I think it was, "gold is money and nothing else." Those folks overseas know this stuff. Americans do not. Americans may have known it in the 1800s, the early 1900s, but that's been drummed out of Americans over the past century. The idea of real wealth to hold onto has been drummed out of American psyches, and the reason for that is because the government prefers you be in debt. That's why they issue you money that is clearly debt. That's why they don't want you using gold and silver. The folks overseas understand this. The governments overseas understand this, especially China.

China is very cagy. Those people are not dumb. They're not buying every ounce of gold they can find for just the heck of it. They understand that it is money to at least three billion people, and they understand that it is power, and they understand that governments around the world understand gold even if their people do not understand it. The Chinese, the Middle Eastern countries, many of these countries are our enemies unfortunately. They're not very friendly to us and we're not very friendly with them and while they are amassing all of this gold and other natural resources, oil, timber, what else you can name, there's plenty of things that China is buying, everything from seaports to agricultural property.

China is a very big player in Africa where they are developing gold mines. They're developing agricultural properties. They understand that real wealth is not paper money. They understand that true wealth is physical stuff that you can use, that you can use to live off of, that you can trade, and unfortunately Americans don't understand that for the most part. I would say 1%, 2% or Americans have even held a gold coin in their hands, much less owned one. The idea of gold and silver is very foreign to us. However, I have seen a lot of evidence lately that that is changing. It's slow. It's going to take a while to change, but it is changing.

More and more folks I think are paying some attention to the problems of the United States debt. They're paying attention to the loss of the United States prestige around the world. One of the problems I think we see is that our enemies and our friends don't have the respect for us that they used to have. Our enemies are not afraid of us as they used to be or as they should be, and our friends are abandoning us in great numbers. Every time one of them signs a deal with China, that cuts the United States' petro dollar out of the equation. Without the world using dollars for international commerce, the United States government is out of business.

The United States government loses all credibility if the dollar loses credibility. That is at play right now, and as you mentioned a minute ago, it's probably one of the greatest dangers to this country that we face right now.

Mike Gleason: I couldn't agree more. Certainly our position as the world's reserve currency is aiding us quite a bit in keeping this whole system afloat longer than many would have expected, but it definitely does have an end in sight I would say. Now it's worth noting that with the holidays now in full tilt, our listeners will probably have a few more opportunities for family interactions and one of the topics that Guy has covered in the past is how to talk to your friends and family about gold and silver so everyone ought to check out that article at MoneyMetals.com, but since we have you here with us Guy, can you give our podcast listeners a couple of pointers on how to broach the subject with loved ones and what kinds of things should they expect when doing so?

Guy Christopher: My Christmas shopping is done because I got my hands on a very small order of quite a few silver rounds and some gold that I intend to use as Christmas presents. I don't think there's a better sales pitch for gold and silver than to let someone use a gold or silver coin in his hand, to look at it, to feel the heft of it, to see the gleam of a gold or silver coin, and so I regularly have for years given gold and silver coins to relatives or friends for Christmas presents, and when I do of course, they say "thank you very much, this is very nice", and I say I want you to look at it and think about it because you might want to think about buying some of those, a couple of rolls of this or that, for yourself. That sometimes opens up the conversation.

It's like giving someone a puppy. Even if they really want a puppy or they don't, but it's a heck of a surprise when you show up with a puppy and say I'm giving you this dog for a gift, folks just have to be conditioned. They don't have the education. They don't have the history to understand that gold and silver is really important and so it takes a little bit of prodding, a little bit of education to get folks to talk about these things sometimes. It takes a little bit of patience to work with those folks who you care about so that they too might one day see the wisdom, the beauty of precious metals and what those precious metals can do for you.

Mike Gleason: Guy, great stuff. Thanks so much for your insights. Certainly keep up the good work and definitely want to do this with you again real soon.

Guy Christopher: I have enjoyed working with you folks at the Money Metals Exchange a lot and I look forward to working with you a lot more and I think you're a good group of folks.

Guy has been a tremendous addition to the MoneyMetals.com website and I urge our listeners to check out some of the columns he's written for us over the past year. He offers some fantastic insights that all metals investors need to read.

Moving on, regular Money Metals contribution David Smith of The Morgan Report is another guest we've been privileged to work with over the last couple of years.

David has a unique ability of providing both micro and macro level information on the precious metals and mining industries and he's our go-to source on all things mining. Early last month, David shared some of his knowledge with our listeners about the state of the miners and how these low prices set in the futures markets is impacting their businesses, as well as the broader silver market moving forward.

So here it is...

Mike: It is my privilege now to be joined by David Smith, senior analyst at The Morgan Report and regular contributor to MoneyMetals.com. David, how are you today? Good to have you back.

David: I'm good Mike, how are you?

Mike: Real good. First off David, before we get to broader topics I wanted to get your take on what's happening here in the precious metals markets. We've obviously taken out some pretty major support levels. So what do you see from here from a technical basis after the damage that's been inflicted on the charts over the last week in particular?

David: Well, you're right. Some support for gold and silver that was expected to hold was taken out. There are some levels of support below that, but sentiment seems to be the big driver now. Most of the newsletters that are out there writing are negative, so that's putting downward pressure on. But what I find is really interesting is the volume of sales that people buying silver, American Silver Eagles and Canadian Maple Leafs; the volumes are just amazing. They're also seeing a pretty heavy volume in Europe as well too, not to the mention the gold bullion coins. Kind of counter intuitive but it's kind of interesting that people realize value when they see it I guess.

Mike: One of the largest wholesalers in our business is just not taking orders for Silver Eagles and Silver Maples right now. It's really astounding. There's going to be some real fireworks happening potentially. One of the main reasons I wanted to have you on this week is because you're an expert on the mining sector and have dedicated much of your life to following that industry. We've got some real issues brewing here from a supply standpoint.

For instance, just last month one of the largest silver producers, First Majestic, announced that they would hold back a big portion of their third quarter production because spot silver prices are simply too low to make it worth their while to sell it. Their CEO Keith Neumeyer claims their cost of production is in the $15 to $16 an ounce range, but I've also seen other miners report higher all in production costs that are closer to $20.

What's going to happen here? Will the mining companies follow the lead of First Majestic? Will they just stop production given these prices? Will they go out of business? What's going to happen here with supply given these ridiculously low prices that are really just a result of all the paper market selling?

David: I think all of the above. It depends on the financial status of the particular company. You mentioned First Majestic, they withheld over 900,000 ounces from the market and they may withhold more. Not every company can withhold some of their production, because a lot of them are just trading dollars right not if that. A couple of other companies have done this a couple times before on a short term basis to get a better price and sometimes they've been able to sell for two or three dollars higher a few months down the line or a few weeks.

I think it would be very positive if some other companies took First Majestic's lead and it wouldn't surprise me if they did, because as you mentioned now just about all of them are selling at or below cost. Even some of the others that have kind of secondary silver supply coming from primary base metal production. I think in terms of the supply over the short term for people that want to buy silver the effect isn't going to be too great.

What I'm concerned about is the intermediate to longer term with both silver and gold and especially gold, because I think that they are causing some systemic issues within the industry. Because as you probably know an awful lot of gold supply that comes in that is purchased as projects by the big gold miners; this comes from exploration companies from small companies that go out and take the risk and explore properties and drill a lot of holes and prove up a resource. Because the big companies they don't do too much of that.

What these companies a lot of them going out of business, or basically having enough money to keep their quarterly filings but no drill holes, this is going to impact the ability of the big gold companies to replenish their supply. Don't forget their mines are a wasting asset, their digging gold out of the ground, and each quarter there's that much less gold in their project.

I think if we look at what's happened over the last ten years with all of the high prices; we had gold from $300 to actually below $300 to $1,900, and there was only one major gold deposit discovered and the few intermediate sized ones. The biggest one that was discovered was nationalized by the country where it was discovered.

If all movement can only bring about a fairly small amount of new discovery, you have to wonder what the situation we have now is going to do where the money is tight for exploration. And where the few remaining of any companies that are around are not going to be able to fill the pipeline of the majors when they need to replenish their supplies.

Mike: You alluded to sentiment earlier there. You're talking to the people in the mining industry. What are hearing? What are they telling you right now given what they're seeing in this paper market?

David: I think all of them are tightening up their expenditures and some of them are closing unproductive mine shafts, and adits. Others are cutting overhead, that's the responsible thing to do in any kind of environment. The big majors are selling off a lot of their assets, some of them are pretty good assets. Others are just not going to keep exploring them. You can't just turn around and wrap these things back up when the price goes up.

Right now with the sentiment being really negative and a lot of it has to do with people that have been disheartened because the price has dropped to where it is now. But as you alluded to a lot of this is paper selling, it isn't that the demand isn't there, because the demand in many cases is higher than it's been in the last couple of years. China and India continue to purchase large amounts of gold, both above and below the radar.

It's really the paper market that's the tail wagging the dog on this thing. That's the thing where people deferring buying physical, they think they can spot the bottom, but oftentimes this like pouring liquid down a beaker and it comes up the other side just as fast. I don't know if that's what will happen, but it wouldn't surprise me if it did. When you get down into the area like this now, people that want to add more or that haven't take a position, I mean it's certainly a price that makes a lot of sense to consider buying physical at this point.

Mike: How long do you think this supply/demand imbalance can continue before we get some sort of a pop and see higher prices to dry out the additional exploration and more supply, more scrap, what have you. How much longer do you think this can go on before we have to see something like that?

David: I think when the price turns around there's going to be, not just the investors are going to doubt that those prices are going to hold up, but the actual producers themselves and the explorers. Just because silver goes up to $18 or $20 that doesn't mean everybody is going to break out the champagne and start mapping out these big exploration projects. They want to see the price hold for a considerable time, so they'll be a lag. No matter what happens to price, it will take a while for the investors and the producers and explorers to believe that this is real and it will be sustained.

Mike: Switching gears here a little bit, you've said before that the fear trade is what got you into gold and silver, but the love trade is what can make an investor rich. Explain your philosophy there, because you say that gold and silver can also be "good news metals" as well; talk about that.

David: It's true, and Frank Holmes was probably the first one to popularize what you just mentioned about the fear and the love trade. Of course a lot of trade has to do with buying jewelry for your relatives and creating a dowry for your wife, especially in India, not your wife but I mean your daughter who's going to get married at some point. The beauty of having gold jewelry and being able to give it as gifts and have it yourself; there's a tremendous amount of demand for that and not just in Asia, but also here as well.

When the price gets down like this it really is appealing to people and you can see the volume go way up in the jewelry stores. Even if you're not buying jewelry, if you're buying an American Silver Eagle, or if you're buying a Canadian Gold Maple Leaf, or a Gold Buffalo, American Gold Buffalo, these are beautiful, beautiful coins. They are pleasing to look at, to hold in your hand, and to have as a store value. They do both of those things. They're not just something like you buy a fancy TV set or something. They're actually true money in addition to having value for their beauty.

Mike: You're colleague David Morgan has often quipped that markets can be irrational for a lot longer than you can stay solvent. I guess that's speaking more specifically to those that are trading with leverage and in the futures market and so forth. Markets do act irrationally for a lot longer. You can reach these extreme oversold levels, just like we could reach an extremely overbought level on the other end of this that investors will be reaping the benefits of. Explain that, talk about that mindset, sort of give a little bit of advice I guess to folks who are feeling a little bit worn out right now.

David: David Morgan has often said that these markets will either wear you out or scare you out. Silver has usually bigger percentage moves in both directions than gold. Of course, now we're seeing pretty good size moves in both of them. I think the thing for people to remember is that when markets are going down, especially when they're going down in a sustained manner like this, you're going to see, most of what you're going to see is negative reporting. When they're going up you're going to find all sorts of reasons why they're supposed to keep going up.

The only way to really come out really well in these things is to try to be a contrarian and when the market is really lopsided, when everybody's on one side of boat, then that's when you want to take the other side of the position. Especially if it fits into your financial circumstances and you're plan, and you're ability to handle risk in this sort of a thing. By the time just about everybody you talk to or read about is saying, "It's time to buy gold and silver," well a lot of that potential profit will be gone, because gold and silver will be much higher than where they are now.

Who knows if this is the bottom; prices could go lower. Nobody knows and the best in the business will tell you honestly that they didn't know they were buying at or near the bottom until sometime after. I find it really works well, whether it's buying mining stocks or the physical, to have people consider buying in tranches. If you were going to buy "X" amount at a certain price and you think it could fall further, buy half of that or one-third.

The thing is you're taking action regardless of the size of your purchase, as opposed to trying to wait and then think you can time it. Because once it really starts up either you won't believe that it's going up, or it will go up quite a ways, and you'll think well gee I could have bought it so much lower but I didn't. But if you've been buying in increments, whether it's a particular mining stock you've researched or the physical itself, you won't feel like the train left the station without you on board.

Because you're continually adding at better and better prices, in a logical, rational, calm manner and it really makes a whole difference in the perspective that a person has with market action when that's going on. Because the market could be really moving in a big direction one way or the other and frothy, and you can be quite calm, and that's what you want to try to achieve.

Mike: QE ended last week, which caused a big downdraft in the metals, and then coupling that with the GOP's big victory on election Tuesday is maybe a bit of a one-two punch against precious metals. Is there a perception now that there's going to be a newfound fiscal responsibility in Washington, an improved economy now that the Republicans controls both the House and Senate.

Is that going to be a drag on the metals going forward do you think? Is inflation no longer a concern at this point given the recent Fed announcement…a bit of a loaded question there, but what are thoughts on all that?

David: There may be a perception that things are really getting better, but you know the systemic problems have not even been addressed by either party. To think that there's going to be a sea-change because of what's going on, I think is overly optimistic if not downright naïve. Because we have about two years before the next Presidential election, we have a lot of legislators that are up for election in 2016 that weren't now. Their primary focus is to get reelected and to get themselves committee chairmanships and things like that. I would be surprised if we see anything major that really solves any kind of a problem coming up any time soon.

The issues of overleveraged banks and other entities, and the tremendous debt that we're carrying and the slowing economy globally, all of these things are going to be a drag on any kind of a big turnaround. When you look at the DOW having new record highs and how much of that money is actually coming from Fed stimulus money and from high frequency trading as opposed to individuals and large entities that are actually buying stock because they feel it represents value.

You can see that if you look at the metals right now, which is about as contrarian as you can get, to buy the DOW versus the metals it looks to me like a no brainer that you would want to be very, very careful buying the DOW and less careful buying the metals. Because you're getting real value that over a really short period to intermediate time I think you're going to be pretty happy you picked up some, rather than just trying to wait for the all clear to go.

Mike: I couldn't agree more. Things seem to be teetering and maybe we are on the brink of some sort of a collapse and so forth. Very well put indeed. We always appreciate your thoughts and words of advice at times like this.

David: It's been great to speak with you Mike and you have a great day.

Well that will do it for this week's broadcast. We certainly want to thank you for listening to our podcast over the last year, and we look forward to bringing more great content and interviews from the top people in the precious metals industry in 2015.

Until next time, this has been Mike Gleason with Money Metals Exchange, hoping everyone has a wonderful holiday season and a very Merry Christmas. Tune in next week for our first show of the New Year. Have a great weekend everybody.

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