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Metals Rise as Markets Grow Horrified about a “Trapped” Fed
Forecaster Gerald Celente speaks on geopolitical fireworks and market fears
Don't want to listen? Read the podcast below!
Welcome to this week's Market Wrap Podcast, I'm Mike Gleason.
Coming up we'll hear from Gerald Celente, one of the top trends forecasters in the world and Publisher of the Trends Journal. Gerald breaks down the latest in the emerging geopolitical conflict, the latest Fed decision on interest rates, why the metals markets are still so manipulated, and the role that gold and silver will play in the coming years. Don't miss my interview with Gerald Celente coming up after this week's market update.
Notwithstanding this morning's big rally in precious metals on another dismal jobs report, the metals markets keep fighting against deflationary headwinds. Dismal manufacturing numbers out of China continue to put downward pressure on commodity prices across the board. The bright spot has been the palladium market. Prices for palladium are moving up big for the fourth straight week, with the automotive metal gaining another 4.5% this week to trade at $696 an ounce as of this Friday morning recording. Palladium is now up a whopping 19% since Labor Day.
Platinum, however, has struggled mightily on continued fallout from the Volkswagen emissions scandal. Platinum prices currently come in at $907 an ounce, down 4.3% on the week.
Turning to gold and silver, the money metals have risen this morning – bouncing off the lower bounds of their trading ranges for the year. Thanks to today's rally gold is now down just 0.8% for the week to trade at $1,139 per ounce. Silver is essentially flat for the week based on this morning's advance and currently comes in at $15.11 an ounce.
Reversing their positions this morning after the release of government employment data, traders had unloaded some of their precious metals positions early in the week after it became clear that a government shutdown would be averted. Yes, just when it appeared that President Obama's spending agenda for the new fiscal year might be in jeopardy, top Republican leaders came to his rescue. Senate Majority Leader Mitch McConnell and outgoing Speaker of the House John Boehner cut a deal with Democrats to keep the government fully funded – at least until December 11.
Fiscal conservatives within the Republican Party who opposed this latest budget deal will be gearing up for another budget battle come December. In the meantime, they will also seek to replace Speaker Boehner with someone who is less of a big spender. Here is former Congressman Ron Paul weighing in on the matter.
Ron Paul: Are you feeling a lot better today and think the conservatives have won, and that government will now shrink now that we have Boehner out? Because you do know that Boehner was a pretty good friend of Nancy Pelosi's and they go along pretty well and they ever conspiring to keep the government going and not nickel out of Planned Parenthood. Of course, I think the real issues today is the fact the government is too big, there's too much spending, there's too much debt, the Federal Reserve runs roughshod over us.
Ron Paul is, of course, the father of the Audit the Fed movement. He helped generate a groundswell of public support for Federal Reserve transparency – turning an obscure issue that most members of Congress didn't care about into one they couldn't ignore. The Audit the Fed bill finally passed the House last year, but it has been hung up in the Senate so far this year. Federal Reserve chair Janet Yellen bitterly opposes the idea of an audit and has lined up several key allies in the Senate who will work to prevent the bill from passing with the supermajority support it will need.
The good news is that the public already knows more about the secret workings of the Federal Reserve than it did just a few years ago. Thanks to the internet, the alternative media, and groups like the Sound Money Defense League, the truth is getting out. The Founders' original idea of having sound money backed by hard assets is revolutionary again. Sound money advocates are making inroads nationally and locally.
But more must be done to educate the public. It's still a major challenge to overcome the Keynesian narratives pushed by the mainstream media and the textbooks used in public schools. The American Legislative Exchange Council is pushing model legislation that would require boards of education to include lessons on how precious metals served as a basis for sound money.
When currency lacks intrinsic value and can be created out of nothing, central bankers and the private banking institutions they support amass undue power. That's what Thomas Jefferson predicted would happen, and it is happening on a scale he probably wouldn't ever have imagined. The new money masters aim to keep precious metals sidelined as alternative currencies by preventing the prices of gold and silver from rising too high.
On Monday, Swiss authorities announced they would launch an investigation into the manipulation of precious metals markets by several large banks. In recent years, some of the world's largest banks have paid billions in fines for rigging interest rate and derivative markets. So it's about time someone finally got around to trying to shine some light on the shenanigans that take place in the paper gold and silver markets. Among the banks suspected of wrongdoing are UBS, HSBC, Barclays, and Morgan Stanley.
The big banks may get fined, but to them it's just a cost of doing business. The grip of the institutional paper traders on precious metals markets won't ultimately be broken by regulatory bodies. It will be broken when the physical market that the banks can't control decouples from the paper market.
Individual investors can help tip the balance of power away from the paper manipulators. How? Simply by swapping financial assets for physical precious metals. A critical mass of physical investors could potentially bring down the paper market.
Well now, without further delay, let's get right to this week's exclusive interview.
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 thirty years now. And it's a real honor to have him on today, as it always is. Mr. Celente, welcome back and thank you very much for joining us again.
Gerald Celente: Well, thank you so much for having me on, Mike.
Mike Gleason: To start out here, Gerald, U.S.-Russian relations continue to deteriorate with conflict escalating in Syria most recently. Meanwhile the Chinese, along with the rest of the BRIC nations, are in serious trouble economically. Pundits are starting to worry about a recession here in the U.S. Talk about the recent developments here and what you're looking for in the coming months from a broad perspective given all of the global geopolitical and economic turmoil that's brewing out there.
Gerald Celente: Let's stop on Syria, just for a second. I'm looking at this as a relatively positive development, and I'll tell you why. Obama met with Putin for 90 minutes this past Monday at the UN, and from all reports coming out of Russia, particularly from Putin, it was a very constructive meeting. They said they agreed on a lot of things.
Here's the reality. The United States has not been able to make any headway in Syria. I really believe that Russia's involvement is also being pushed by the Europeans, because you see the wave of refugees fleeing out of Syria, and they can't take any more, they don't want to take any more in Europe. They're coming out of Syria, they're coming out of Libya, they're coming out of Afghanistan, they're coming out of Iraq, they're coming out of Yemen, and of course they're coming out of African nations that are also being destabilized or going into poverty. They can't take any more refugees in.
I believe that what we're hearing now is face-saving for the United States coming through the media, that this terrible failure ... you know the numbers, I'm not making this up. We the people spend $500 million to train a handful of so-called Syrian rebels, and now even that handful's collapsed, and they turned over the armaments that we gave them. I believe that all this screaming about Russia is a face-saving operation, and that the United States is actually working with them to bring a Syria solution. Overall, I think this is going to work out positive.
On the economic front, let's look at the real numbers here. You saw, for example, one day the Nikkei goes down 4%, up next day 2%, on the good news that industrial production's down 0.5%. How did this happen? Second month in a row. You look at the commodity prices. They're what, on average, 1999 levels? You're looking at currencies hitting new lows and going lower, and then you have the fear of United States raising interest rates, which means all those crashing currencies and all of those crashing commodities in those currency-rich nations and all that money they borrowed, they're going to have to pay it back with more money that they don't have. So there's a global meltdown.
The geopolitics, I have to tell you, to me, and I just came up with this, by the way, within hours, that I believe is going to be a Syria solution, and I think Syria's going to be out of the news, big-time, within a few weeks. It's just a guess, by analyzing the information. I wouldn't call this one of my solid-trend forecasts, but I would say the trend line is moving in that direction.
Mike Gleason: Closer to home here, not much of a surprise, but the Fed decided to stick with 0% interest rates in their most recent FOMC meeting. It appears the market is damned if they do, meaning if they raise rates it would be bad for asset prices, and also damned if they don't, because it would be a sign that the economy is too weak to even handle a slight interest rate increase.
Correct me if I'm wrong here, but that doesn't sound like a very healthy economy. How do you see it?
Gerald Celente: Mike... tell me any time in history that we had a zero interest rate policy. Who made this stuff up? They've not raised interest rates since 2006, and the zero interest rate policy's been in line since the end of 2008. Everybody now admits what we've been saying since they began doing it. It's a cover-up, it's not a recovery. The only people it's helped are the financial markets in terms of the hedge funds and the high frequency traders, merges and acquisitions and stock buybacks. End of story. They're in a trap. They don't know what to do.
The person, actually, that you really have to look back at is Greenspan, creating this bubble after the 1987 crash. The Plunge Protection Plan. Who made this stuff up? You're calling it capitalism? The markets are supposed to rise and fall on their own merit, and it's supposed to be reflective of the conditions of the real economy, not speculators. And that bubble's been blowing up since. Now, they have one that we've never seen in the history of the world, part one or part two. Again, go back to those emerging markets. You saw that IMF study that came out that week. What is it, the borrowing has gone from 4 trillion to 18 trillion in 10 years or so? Going into emerging markets, debt levels, rather?
What we're looking at is that the bond market frenzy is about to explode, the stock markets can no longer sustain themselves without the cheap money, the paybacks are going ... the oil sector is in ruins in a lot of places around the world. So whether it's at home or around the world, no, there has been no cover-up. Here, here's a number for you. Median household income is where it is in 1989, in real dollars. Look at all the money we've lost.
Mike Gleason: What happens when all of this cheap money has to be paid back, or when the game stops and there's no longer loose monetary policy, allowing these players to borrow at low rates and reinvest in higher yielding assets? What happens when that finally does happen?
Gerald Celente: You have a crash. You have a global crash, which we think is going to happen before the end of the year. It's going to be a world of equity meltdown. And even though gold isn't doing, it's not shining, it's certainly not doing what iron or copper or a lot of these other metals are doing, because it's a metal all of its own. It shouldn't be lumped in with the other commodities.
Nobody pays me to say that. We have no advertisers. I'm saying what I believe. I don't give financial advice. I put my money where my mouth is. Gold is the ultimate safe haven, and it's going to remain like that. It's been like that since the written word was first written, and it's not going to go away because some speculators say it's going to go away. So all of this cheap money's going to come at a price, and the price is devaluating currencies.
Look, now let's pretend that ... we're going to change the name, your last name. We'll make it a Portuguese Brazilian name, and you're from Brazil, Pedro, and your Real just lost 40% in a year. You wish you had gold? If you're living in Turkey, if you're living in Indonesia, Malaysia, and you're watching your currency crash to new levels, you think you wish you had gold? So that's what we're talking about, but that's not making the news. The only reason the dollar's strong is because the other currencies are so weak.
Mike Gleason: Do you ever see Yellen and company raising rates there at the Fed? Of course they've been talking about that for months. Are we finally going to get an interest rate hike?
Gerald Celente: I think they're going to have an interest rate hike. They have to. And I think it's only going to go up about 25 basis points. Even if it went up 50, so what? Near zero, that's not a lot. But what it's going to do, it's going to rattle those emerging markets. That's why they can't do it. That's the big one, because they've got all that hot money. They have all these, not only mutual funds, it's a lot of them that have invested in these foreign countries. Now, with their commodity prices crashing and their currencies crashing, interest rates go up, the crash gets louder and spreads wider. They're in a trap.
Matter of fact, you mentioned that the Fed, the FOMC, the Federal Open Market Committee, said they were holding rates back in mid-September, and then just a week later, Janet Yellen at the University of Massachusetts couldn't even finish the sentence. She started coughing it out that they intend to raise rates. They took her off the stage and she ended her talk. I think she was really, I think literally, she was choking. That's what they're doing. They're choking. They don't know what to do. But they're going to have to raise them.
Mike Gleason: What do you make of the metals markets? We're seeing firsthand the massive disconnect between the physical markets and the paper markets. Demand for physical bullion is just overwhelming mints and refineries, while traders apparently can't sell gold and silver fast enough in the futures markets. What are your thoughts about how the metals markets are working?
Gerald Celente: Look at the reports coming out in the last few weeks. What a surprise. The Germans and the Swiss are looking into manipulation of the metals markets. It's not in the interest of any central bank to see gold and silver prices go up. None. Because then that shows the worthless value of their digital dollars, yuan, and yen, backed by nothing and printed on nothing.
We know they rigged the LIBOR rates, the interest rates. We know they rigged the Forex markets, the currency markets. That's not speculation. It's not conspiracy. They were charged, convicted of felonies. But of course, no head goes to jail, because hey, they're the white shoe boys on Wall Street. They're better than the rest of us, so they can commit the kinds of crimes they want at any level. Of course they're rigging the bullion markets. There's absolutely no doubt about it.
Look, here, I'll give you an example. If you go back a few months ago, the Japanese markets were closed. The Shanghai market, 9 o'clock in the morning, they usually trade about, I think about 13 to 16 tons of gold. All of a sudden, 33 tons were shorted within 2 minutes, and that brought gold down to where the level it is now, where 33 tons were traded that day. Within 2 minutes, most of the trades went through. They're rigging it in front of our eyes. It was right there for everybody to watch. This is Shanghai market.
Mike Gleason: You touched on it there a moment ago, but gold is maybe struggling in dollar terms, but it's doing quite well in these other currencies, and obviously they're seeking refuge in that, as their currencies are continuing to devalue. I know you can't give financial advice, but what do you have to say to investors here in the US who may be lulled into thinking that gold and silver are never going to go up, but they're also concerned and want to be ready for what they see coming?
Gerald Celente: Again, if they're concerned about what's coming on, how could you not want to have gold, and why would you want to have any of these paper (currencies)... look at the Fed's balance sheet. Where'd it go, from $500 billion ... they added 3.5 trillion on to it, in a couple of years. Look at the debt of the United States that nobody talks about. Look at the debt to GDP ratios in China and Japan. Italy. Look around the world.
To me, again, the motto of the Trends Journal, "think for yourself." Why would you not want to hold gold? By the way, I believe in silver as well, but I'm more bullish on gold because silver's still used in production purposes. However, having said that, when the currencies are devalued, as you're going to keep seeing more and more of, gold and silver are going to be worth more.
Here's what I always say. Plan for the worst. If the worst doesn't happen, you've lost nothing. If you don't plan for the worst and the worst happens, you lose everything, or a lot of things. For example, let us suppose that there's some kind of geopolitical event that we'll call a terror strike, false flag or real. Remember what happened when 9/11 went down? Wall Street was closed for a week. I had money in CDs that I wanted to get out. I couldn't get them out. CDs, they told me, are traded on Wall Street. That's when you used to have this thing called interest rates. You could make money with CDs. It's like ancient history.
Anyway, if you don't have it in your pocket, you don't own it. They could call a bank holiday at any time. You just saw it in Greece. Couple years ago, we saw it in Cyprus. If there's an economic meltdown, what's holding up the Shanghai market other than it being rigged every day? You look at the end of the day in the Shanghai market, and you see it shooting back up in the last hour. The "National Team" they call it, comes in and tries to resurrect it.
You look what's going on with the volatility in the markets continually, whether it's in currencies, commodities, or equities. You see the volatility in front of you. This is not a calm time, and there's nothing to look back on or coming ahead that says the fundamentals of the economy are sound. There's nothing there. Retail sales are soft. Job creation? Yeah, they're creating jobs that pay nothing. Student debt is bigger than credit card debt. Why? Why would people think it's going to get better, when the data qualitatively and quantitatively adds up to more of the same but worse?
Mike Gleason: Mr. Celente, I want to thank you very much for joining us. It's always great to talk to you. Before we let you go, we definitely want you to tell folks about the tremendous information you put out, both online and with your extremely high quality and extensive Trends Journal Magazine. I understand the fall copy of that will be coming out before long. And also, any other information that's going on there at the Trends Research Institute that people should know about?
Gerald Celente: Well, we just had a great conference here. Dr. Paul Craig Roberts was here, among others, and he never travels anywhere. So we have conferences. We're going to have another one coming up in December. You can go to our webpage, TrendsResearch.com. Sign up now, before it's too late. We'll be releasing the top trends of 2016, plus more. Also, the Trends Journal, which is the quarterly. We just sent out the Trends monthly yesterday, and we also have Trends this Week. We send out a hot trend each week, mostly on markets and geopolitics, and each weekday night, we do Trends in the News broadcasts. Every Monday through Friday.
So it's really the only place where you're going to see history before it happens, and I encourage everyone to consider signing up. If you don't like it, there's that 30-day money back guarantee. So it costs you nothing to learn.
Mike Gleason: It's great stuff, as always. Definitely urge people to check that out. Mr. Celente, thanks so much again, and look forward to talking to you again down the road. Have a great weekend.
Gerald Celente: Thank you so much, Mike. It was great being on with you. All the best.
Mike Gleason: That will do it for this week. Our sincere thanks again to Gerald Celente for his fantastic insights. For more information, the website again is TrendsResearch.com.
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.