Welcome to this week’s Market Wrap Podcast, I’m MIKE GLEASON.
Coming up we’ll hear a highly spirited interview with renowned trends forecaster GERALD CELENTE. Gerald doesn’t pull any punches when talking about how the average American has missed out on the Fed’s stimulus, what he thinks of each of the presidential candidates, and central bank rigging of the gold market. Be sure to stick around for my exclusive interview with GERALD CELENTE of the Trends Journal, I can promise you won’t be disappointed.
Well, the gold market continues to be drawn like a magnet to the $1,200 level. More on that in a moment…
But first, this week brought more troubling news on the geopolitical front. The humanitarian crisis in Syria and North Africa intensified. Fighting in Eastern Ukraine resumed as hopes for a lasting ceasefire faded. And the financial crisis in Greece worsens day by day as an eventual default and a breakup of the euro appear more and more likely.
But in Washington, D.C. -- it was a bipartisan love-fest. Literally. On Tuesday, House speaker John Boehner planted a kiss on the cheek of Democrat leader Nancy Pelosi. A photo of the awkward incident made the rounds on social media.
Yes, Republicans and Democrats were kissing, hugging, patting each other on the back, congratulating themselves and receiving congratulations from the media. All for putting together a so-called Medicare “doc fix” signed by President Obama in a Rose Garden ceremony.
Speaker Boehner hailed the legislation as “entitlement reform.” But the Doc Fix does nothing to change the unsustainable nature of federal entitlement programs. Any legislation that did make meaningful reforms would encounter enormous resistance, not broad bipartisan support. The Doc Fix is popular because what it’s mostly about is committing to more spending. The law provides for $214 billion in reimbursements to Medicare doctors. And, at the insistence of Democrats, it also expands Obamacare programs for low-income people.
The culture of spending in Congress is institutionally ingrained. It doesn’t occur to most legislators that an important part of their job is to eliminate unnecessary government programs. Most members of Congress don’t even think about such things. John Boehner doesn’t, as he revealed in an interview back in 2011.
NBC’s Brian Williams: Name a program right now that we could do without?
Speaker Boehner: I don’t think I have one off the top of my head.
John Stossel: He’s the Speaker of the House, I would think he would have it off the top of his head.
Boehner, Pelosi, and Obama call their latest spending package a “doc fix.” But there’s no “debt fix” in sight. In spite of a nominal economic recovery since the Great Recession officially ended in 2009, government debt is still at crisis levels.
The debt still represents nearly 100% of nominal GDP. It’s projected by the Congressional Budget Office to get worse in the years ahead. And it’s projected by economists with a more pessimistic outlook to get much worse in the years ahead.
As debt servicing costs eat into economic growth, weak economic numbers will in turn spur more stimulus spending and more currency creation from the Federal Reserve.
It’s difficult to imagine a scenario in which government debt growth continues on its upward trajectory without creating a currency crisis. Other countries that have seen national debt surge past 100% of GDP have either defaulted on their debt or entered into hyperinflation.
At the very least, King Dollar could get dethroned as world reserve currency. De-dollarization is already taking place through bi-lateral trade agreements. It’s likely to accelerate as other currencies, including gold, play a larger role in international trade.
Even as the Russian economy reels from the effect of sanctions, Russia is reasserting its regional dominance and its independence from the West. This month Russia announced a new 30-ton purchase of gold to bolster its reserves. The Russian central bank has more than tripled its gold hoard since 2005 to become the world’s fifth largest holder of bullion.
The People’s Bank of China has also massively expanded its gold holdings in recent years. Although precise numbers from secretive Chinese officials are hard to come by, it is believed that China now possesses the world’s second biggest gold hoard.
As for the action in the gold market this week, prices continue to flirt with the $1,200 level. For the fifth week in a row, gold prices have traded both above and below $1,200 an ounce. Gold started out above $1,200, then broke lower mid-week before rallying Thursday to close at $1,195, but is selling off today along with the broader commodities complex. As of this Friday morning recording, gold is down to $1,177, a decline of 2.4% now on the week.
Even as gold has traded range-bound over the past five weeks, silver prices have trended lower. Silver is down another 3.9% this week to trade at $15.67. Despite the recent weakness, silver prices are, for now, still holding above their lows for the year. They are also near a zone of support going back to last fall, when silver put in a spike bottom.
If silver can find some support here and rally off of this week’s lows, we can expect gold to break out of its trading range to the upside. Next week’s price action could be pivotal.
And now, without further delay, let’s get right to this week’s exclusive interview… one that is sure to leave you both informed and highly entertained.
MIKE GLEASON: It is my privilege now to be joined by GERALD CELENTE, publisher 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 have him on today. Mr. Celente, welcome back and thank you for joining us again.
GERALD CELENTE: Thanks for having me on, Mike.
MIKE GLEASON: It's been nearly a year since we had you on last time, which has been far too long by the way, so that means we've got a lot to cover with you. To start off, by all accounts, if you look at the economic data, the lagging workforce, participation rate, the sluggish wage increases, and so on, this is a bit of a phony recovery. Now it appears we may be at a tipping point with some key economies starting to roll over. The QE programs have mainly just filled the pockets of the Wall Street and banking elite and haven't really done a thing for the guy on Main Street… so after all the stimulus and market interventions, do you think we are in for another correction or possibly even an epic collapse? Talk about that.
GERALD CELENTE: When you talk about the quantitative easing, it depends on what country, it has it's different name. Over in China, they call it whatever they want and put no name on it, it's Abenomics over there in Japan, I guess you could call it Draghi-nomics over in the European Union. All they're doing is pumping in cheap dough and look at what the results are. Same thing in the United States with QE2 and zero interest rate policy. It's worked, just as you said, it's inflated the equity markets to new levels. Since the United States started doing it and of course they ended it October, late October of 2014, the DOW went from basically 8,000 to 18,000.
Look over there in China, the Shanghai Index sitting at 7 year highs, 15 year highs over there in Japan as the economy stink. It's total disconnect. All it's doing is enriching gamblers, and as you mentioned, when you look at the hard data, whether it's real wages, which by the way medium household income in the United States is below 1999 levels. The gap between the rich and the poor according to the Pew Research Center is worse than it was during the Guilded Age over 100 years ago in the United States. 80 to 85 people in the world have more money than half the world's population, 3.5 billion people. Nobody's ever seen anything like this and then you can see how the game is being played.
I got a deal for you Mike, I haven't been on in a year, I missed being on with you, I'll tell you what we're going to do over here. I got some bonds I want to sell, we'll call them Swiss bonds and you know the Swiss, you could trust us. You buy my 10 year bond and because Mike I like you so much, when you cash them in in 10 years, you're going to get less. We're going to use a “white shoe boy” name on it, we'll call it a “negative yield” and you're looking at 5.3 trillion dollars’ worth of negative yield bonds that have been dumped into the system over there in Europe in no time at all.
You want to keep your money in my bank? I'm going to charge you interest rates. You're going to charge me interest rates? Yeah, that's right, it's going to cost you money to keep your money in my bank, meanwhile, we keep all of these cheap dough going and this way we can lend it to the kind gamblers. The M&A activity, look at it, one day a week ago, $100 billion in merger and acquisition activity, they're borrowing the money for nothing. Same thing with the stock buy backs, borrow the money for nothing, buy back the stock, we drive up the price, we become rich. That's all it's been.
Meanwhile, when you're looking at the real numbers as I said, across the board, name the nation, for the average person life is a lot worse financially than it was several years ago.
MIKE GLEASON: The massive issues with Greece and the EU and with the overall future of the euro have taken a lot of the global focus off of the US and our problems with all our loose money policies and lethargic economy. How do you see that situation in Europe playing out and also do you think our own issues will come more into focus at some point and if they do what do you see happening with the dollar and the US stock market and so on.
GERALD CELENTE: Well of course everybody's eyes is on Greek debt right now and what they're going to do with it. You remember Greece accounts for 2% of the Euro Group's GDP, but of course the issue is bigger than that because then it's going to inflame the other to get rid of the Euro. So let's go back to Greece. The Syriza Party came in and now they're doing what they said they wouldn't do like most politicians do. They call it flip flopping, adults call it lies. Now what they're doing is they're going into the cities around Greece and telling them, we want all your cash. We got to pay off the pensions and our other wages and then we need about 12 billion dollars in a couple of weeks to pay off some more of our IMF debt. Where are they going to get the money? Will they default? I don't know but to me at this point, it doesn't look like they will because what I think they are going to do is that they'll sell out the people.
When you're looking around Europe, you have elections coming up in the UK, in the middle of May and the UKIP party and the Scottish Party are taking votes away from the Conservatives and the Labour Party. You have Le Pen's party over there in France and she's pulling away also from the major parties. You have the Northern League and the 5 Star movement in Italy, they're taking votes away from the major parties. However, having said all that, Podemos in Spain, Podemos party came out of nowhere a year ago and now they’re a threat. I don't think they're going to be enough to change the course because they're not focused and many of them say that they don't want to jump out of the Euro Zone or the Euro Group rather and that's what the people are looking for. I think they're going to sell out like they may sell out in Greece.
There's absolutely no blow back here in the United States, very little. You're seeing Obama pushing the Trans Pacific Partnership and the liberals are letting it go and the conservatives who call themselves conservatives and blow out the baloney that for “we the people”, are selling out the country and that's where the trend is going.
The only way it's going to stop is if the people stand up and I don't see that happening right now. As for the financial panic in the US, we got it wrong. We called the panic of ‘08, even took the domain name out in 2007 and we are right on the money, year after year and then we said in March of 2014 we'd see a great unraveling of the US economy and we predicted that back in the middle of 2013 because we said that the Fed would be forced to raise interest rates, that the zero interest rate policy is anathema to any kind of economy and at some point they're going to raise them. We thought it would happen in March of last year. We were wrong. They didn't raise them because what's going to happen when they raise them, you can see how the markets go into cardiac arrest. So when they say that higher interest rates are going to be bad for gold because it's going to make the dollar strong, no. The higher interest rates are going to stop the Ponzi Scheme from happening because then it's going to cost money to borrow to gamble.
So go back again, I mentioned that in October of 2014 when Fed finally announced they were going to end their tapering officially and the markets went into cardiac arrest. Three days later another member of the “Central Bank Gang”, Abenomics over there in Japan, announced that they were doubling down on their Abenomics with more quantitative easing, and poof -- markets shot up. New year begins, 2015 starts with volatility of major proportions around the globe and the equity markets until Draghi comes out and he announces the European brand of quantitative easing, more cheap money, 1.6 trillion Euros. From here to, if we need anymore, we'll tap more in eternity. What does it do? Juices the markets.
What I'm saying is, coming back to the states, the Ponzi Scheme ends when the market rates go up. And by the way, having said that, if it's a 25 basis points, it's not going to make much of a difference. But if we start seeing - like a 30 year mortgage for example, you're looking in the 3s, when that hits around 5 that's when you're going to start seeing the housing markets dive and you're going to start seeing the repercussions hit the rest of the markets worldwide but it has to go up to some extent but as long as they keep pumping in the monetary methadone for the money junkies, you're going to continue to see what it looks like now, the average person loses, and the big guy wins.
MIKE GLEASON: In the soon-to-be-released spring edition of the Trends Journal you're going to be discussing the upcoming 2016 presidential election. What do you have to say to the voter who maybe of the belief that a more conservative minded president would be able to turn things around? Do you think any man or woman in the White House can really stop this massive, out of control government and broken monetary system that we have, that, at the end of the day, appears to be controlled by the Fed. Basically are we going to see any deviation in Washington from the status quo come next November?
GERALD CELENTE: The word conservative has been deluded as much as liberal has. They don't exist anymore. Conservatives call themselves conservatives while they take our money and they are always willing to go fight wars and support the military industrial cyber complex to levels far beyond what Dwight D. Eisenhower warned when he said the military industrial complex was going to take over the world. The people who call themselves conservatives are always willing to do big deals for the big guys. They’re not conservatives, they're phonies as much as the phony liberals who would scream and yell if Bush was President and he was sending bombs, reconnaissance and intelligence to bomb Yemen and help the Saudis do it, to keep the war going in Iraq and Afghanistan and to bomb Syria. They are all a bunch of hypocrites.
What we're putting on and we're going to be announcing it, actually you mentioned the Trends Monthly, which is coming out in just a couple of days, we're launching the Presidential Reality Show, that's all this is. It's show business for ugly people. It's a freak show. This little Marco Rubio, you know, my father, mother, Cuban refugees, big deal! We're a country of refugees. You know what these people are? They are the same people you couldn't stand in high school and college that wanted to be class president and head of the student council. They're overly ambitious, they're insincere, the brown-nosers and the suck-ups. They'll do anything.
Look at Hillary Clinton, getting on a van to go to Iowa and call the van Scooby of the Scooby Doo. What am I? Six years old? Who are you talking to? I'm a champion of the everyday people, she says, everyday Americans. Hey sweetie pie, I don't need a champion. I'm an American, I'm my own champion.
Rand Paul, the little liar. If I get elected, I'm cutting back that defense budget, well… I'm going to add 150 billion to it. If I get elected their won't be any foreign aid, well, except for Israel. One back track after another.
Ted Cruz, where does he announce his presidency? At Liberty University, an evangelical college or school. You know why he's doing it because the first caucus is Iowa and most of the people that vote there are, that’s right, evangelical Christians. Hey, Teddy, you ever hear the separation of Church and state? This is America, you were born in Canada, I forgot.
One after another and then we are going to have a race. It will end up between Jeb Bush and Hillary Clinton? A two party system? How about a two family controlled royalty system? No, unless we have a new party in there, this country is just going to keep going down. Look at the midterm elections. They had an election over there in Russia and you know what Mike 76% of the people stayed home. Oh wait, that wasn't Russia, that was America. That's right. 74 to 76 percent of the people stayed home rather than go out to vote for the Bloods and the Crips, the murderers and the thieves. They steal our money in names of bailing out too big to fails and their buddies with tax breaks, loan guarantees and other special interest perks and they murder people around the world in the name of bringing freedom and democracy.
Look what's going on off the Italian and Greek coasts as we speak, people fleeing those countries like Libya and other destabilized nations like Syria and Iraq. And what are they doing? They're blaming them smugglers for bringing in those people that are drowning off the coast in record numbers and not one of the presstitutes are blaming the people that caused the situation for these people that want to flee their war-torn nations, like Libya that our pullet surprise president Obama and Hillary Clinton, Samantha Powers, and Susan Rice started to overthrow Qaddafi, the place is in complete turmoil. It was the richest nation in Africa, the people there were better off than anybody else and now they want to get out of there.
You have over two million refugees, four million out of Syria, Iraq war torn to get rid of Saddam Hussein who did not have weapons of mass destruction and ties to Al Qaeda and what are they doing now, they're blaming the smugglers. What are all these presidential candidates doing, not a peep from them about the cause or effect.
MIKE GLEASON: Switching gears here in a moment. You've been quite outspoken about the manipulation that's been going on in all markets but especially the precious metals. Who's doing the most manipulation and you think they can hold prices down forever? Also what do you have to say to the gold and silver investor who may be wondering if his decision to move some money out of paper and into tangible and real money will ever pay off?
GERALD CELENTE: I began buying gold in 1978. My first buy was $187.50 an ounce and I've been buying it since. So when you average it out after all those years, even when I bought it up when it was probably about $1,700, I'm way ahead of the game and I don't trade gold, I buy it. Gold is my golden years. The markets are being manipulated, we know that. We know for example that they rig the Forex market, $5.3 trillion a day in currency trades. It's not a conspiracy theory, it's a fact. We know that they rigged the LIBOR rates, the interest rates, hundreds of trillions of dollars’ worth over the years rigged. We see all of these so called investigations into the manipulation of the gold markets and the silver markets and they never go anywhere.
It is not in the interest of the central banks that are printing digital money not worth the paper it's not printed on to have gold prices go up because if gold prices go up the levels of the Ponzi scheme is shown for the reality. They would do everything they can to keep it down, the price of gold and silver. As I said, I don't give financial advice, not permitted to, I'm a trend forecaster. My forecast for precious metals is that, when the Ponzi scheme is finally shown for what it is and can no longer go on, for this round, you're going to see gold prices and silver prices spike and gold going well over $2,000 an ounce.
Again, it doesn't necessarily have to be a financial issue that makes it happen. I quickly mentioned what's going on in Yemen and how the Saudis waged that war and to show how disgusting it's become in America and what a bunch of traitors we have running our country. They permitted the ambassador of Saudi Arabia, at the end of March, to announce from Washington DC that Saudi Arabia was launching a war against Yemen, what's the matter, you can't do it from your home country? Riyadh was not good for you? You had to come to Washington? The real Washington will be turning in his grave which will never happen.
Anyway, having said that, the Yemenis have vowed to retaliate against the Saudis for doing this. There were over 4 million Yemenis living in Saudi Arabia. They're threatening to bring down the monarchy and they're threatening to attack the oil fields of Saudi Arabia. It's not making the American news. It's not making the western news. You have to read Fars(news) or Aljazeera or others to find it.
What I'm saying is, it could be that kind of outside geopolitical flash point, a terror strike, real or false flag that's going to unravel the markets as well as a financial crisis. It could be either/or, or both. That's why we look geopolitically, we don't look just economically. Because the politics of the world, not the real world is propping up these phony currencies and pushing down the price of gold.
MIKE GLEASON: Well Mr. Celente, great stuff. Really enjoyed having you on. I want to thank you for taking time out of your busy schedule to visit with us. Now before we let you go, please let folks know how they can get their hands on the tremendous information you put out there, both online and with your extremely high quality and extensive Trends Journal magazine and any other information about things going on there at the Trends Research Institute that people should know about.
GERALD CELENTE: Yes Mike. TrendsResearch.com is our site. As you mentioned, we have the Trends Journal which is a quarterly publication, it comes both print and digital. High quality print that you won't find anywhere else. Over 50 pages, and of course we do a Trends Monthly digital and we do “Trends in the News” each weekday night, the real news to keep you on top of the news and ahead of the trends, history before it happens.
And we have conferences over here in Colonial Kingston, New York and we are at the most historic four corners in the United States, the only place which has a pre-Revolutionary War stone building on each corner and we're having one here in June, June 6th and we are going to teach how to forecast trends and have some special guest speakers coming in including Nomi Prins, who wrote that wonderful book among her other wonderful books, All the President's Bankers and there's still some room left and we hold that meeting in the 1774 Academy. It's a perfectly restored building and has history like nothing else in this country, some of the most important people in this country, who really fought for our Constitution, Bill of Rights went to school there as well.
That's some of what we're doing and you could find out more by going to TrendsResearch.com.
MIKE GLEASON: Excellent stuff as always. Really appreciate the time. That would do it for this week. Our sincere thanks again to GERALD CELENTE for his fantastic insights.
For more information again, the website is Trendsresearch.com. Tune in next Friday for 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.
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.