Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Coming up we’ll hear from Gerald Celente of the Trends Journal. Gerald has some extremely interesting comments on the upcoming presidential election, the bizarre disconnect between some dismal economic reports and the roaring stock market, and the key level he’s looking for for gold to break through on its way to new all-time highs. Don’t miss our interview with the outspoken Gerald Celente coming up after this week’s market update.
This week the Federal Reserve released the talking points from its most recent meeting. The FOMC minutes showed policymakers divided about whether to pursue rate hikes and confused about why the official inflation rate remains below 2%.
On Tuesday, the Labor Department reported that consumer prices were flat for the month of July. A dip in gasoline prices contributed to the lowest monthly CPI reading since February. The stubbornly weak inflation readings and recently downgraded GDP growth expectations give the dovish wing of the Fed the cover they are looking for to hold off on hiking interest rates until December at least.
The Fed’s latest ruminations didn’t move stocks or precious metals markets very much. But for the week, gold shows a 0.6% gain through Friday morning to bring spot prices to $1,346 an ounce. Meanwhile, silver prices are off 1.7% to trade at $19.44.
This is the seventh straight week in which silver has traded both below and above $20 per ounce during the week. Seven weeks is usually about the extent of tight, sideways trading ranges. So investors should be ready for the silver market to make a decisive break one way or the other very soon. At some point the silver market will leave the $20 level behind for good.
Notwithstanding this morning’s slump in the silver price, it appears that some big speculators are still betting on an upside breakout. Silver exchange-traded funds saw some heavy inflows this week. On Wednesday, ETF buyers pushed the net assets of silver ETFs up by the equivalent of 53 tonnes.
Whether the ETFs actually acquired 53 tonnes of actual silver bars is hard to know. Most of these gold and silver ETFs are structured as open-end funds, meaning they can expand or contract their underlying net assets in response to demand on any given day. But since these instruments can’t add or remove physical gold from their inventories instantly with each buy and sell order, they use paper derivatives as substitutes – at least in the short term.
So far, it has worked out okay insofar as the largest of these exchange-traded products haven’t shown significant deviations from spot metals prices. But in chaotic market conditions, or a derivatives blow up, or a run on the bank type event in the physical market, the lack of 100% physical backing at all times could become a problem for holders of these ETFs. So buyer beware.
And Americans have a new reason to beware of an overreaching federal government. The Equal Employment Opportunity Commission recently announced that the words “Don’t Tread on Me” could be considered too insensitive for the workplace. The EEOC took up the case of a Postal employee who felt racially intimidated at the mere sight of a co-worker who wore a hat depicting the famous “Don’t Tread on Me” Gadsden flag which dates back to America’s founding.
Fox Business News Report
Stuart Varney: Going forward, it is possible that that flag, “Don't Tread on Me”, could be outlawed in the workplace.
Katie Hopkins: The EEOC said, we acknowledge that this message on this flag arose out of the Revolutionary War and was not racially tinted. However, they said it has been used since then to convey messages both nonracial in sentiment and racial in sentiment. The commission is made up of five commissioners. These are presidentially appointed. Four of the five right now were appointed by President Barack Obama. So this is a consideration for our next president.
This is another case of political correctness inside the Obama administration run amok. But more than that, we at Money Metals Exchange take the EEOC’s attack on this symbol of American liberty personally. Since our inception we have offered our exclusive “Don't Tread on Me” silver rounds featuring a coiled rattlesnake on the front and commemorating the Boston Tea Party on the reverse.
A new Tea Party movement in America rose up a few years ago in response to trillions of dollars in bailouts and other out of control Washington schemes. Tea Partiers created their own movement within the Republican Party as a direct challenge to establishment Republicans who habitually sign off on more spending and more debt.
It’s not surprising that government bureaucrats find the words “Don't Tread on Me” to be offensive. They think it’s their job to tread on us whenever they see fit!
But we have no intention of removing our “Don’t Tread on Me” silver rounds from our workplace. Nor will we remove them from our product inventory. They honor an important part of America’s revolutionary heritage. In 1775, Continental Colonel Christopher Gadsden incorporated a coiled rattlesnake with thirteen rattles (symbolizing the colonies) above the motto "Don't Tread on Me" on an early American flag.
“Don’t Tread on Me” silver rounds remain popular among our customers. In addition to their striking design and message, “Don’t Tread on Me” silver rounds offer .999 purity at a great value. They sell at a price point that is lower than Silver Eagles and other government-minted coins. And to date Money Metals customers have snatched up nearly 2 million of rounds, making it one of our very top selling products.
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 highly sought-after guest on these programs throughout the world and has been forecasting some of 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 with us today. Mr. Celente, welcome back and thank you so much for joining us again.
Gerald Celente: Well thank you, Mike.
Mike Gleason: I want to start out by asking you about this massive disconnect between what the economic data is telling us versus what the stock market is saying to the investment world. For instance, we have the lowest rate of expansion in the U.S. economy since the 1940s. China is slumping, as are many other major global economies… not to mention the economic issues over there in Europe. Yet the equities markets continue to make new highs nearly every week with the S&P and the DOW continuing upward into uncharted territories. So what's going on here? Are the economic numbers really better than what we're being told, or is the stock market being propped up?
Gerald Celente: The stock market's being propped up. We said this beginning with Quantitative Easing when it began, and we said that this is not a recovery. It's a cover-up. The numbers don’t lie. The liars lie, and the markets are lying. You look at the facts, and here are the facts. You had a stretch of merger and acquisition activity unparalleled in world history because they're borrowing money for nothing and they're buying up companies. Then you look at the other facts, and the facts are that stock buy-backs are at record highs. What was it, like the first 3 months of this year, you looked at about, what, $160 billion worth of stock buy-backs.
And all this has done is boosted the equity markets. Again, these are the facts, and I know that the people listening to your show want the facts. Ninety-five percent of the wealth created since 2009 in the United States went to that famous 1%. It's a fact, a fact worldwide. 62 people… everybody knows at least 62 people… imagine the 62 people that you know having more wealth than half the world's population combined.
All this has done is juiced the equity markets. You look at fact after fact, the numbers don’t lie. All this is doing, again, it's boosting up equity markets that should have failed a long time ago. The P/E ratios are out of line. Oh, how about this one? Hey, let's look at corporate earnings. Why not? How many quarters have they been down in a row? Again, it's gambling. It's Ponzi-nomics. It's not capitalism. They better start getting rid of that word, starting with Economics 101. This is not a capitalist society in the West. It's bankism. Nothing's changed from the days that Jesus Christ chased out the money changers out of the temple with a whip. It's just a different group of names, man, doing the same dirty deals, propping up the markets to enrich themselves.
Mike Gleason: When we had you on back in the spring, I asked you if we were going to see another interest rate increase from the Fed following the paltry 25 basis point hike they did, and you said they couldn’t raise them because the market couldn’t handle it. You said the banks simply can't operate without the continuance of low rates from the Fed, and just like you predicted, the Fed did nothing.
Hardly a week goes by without some Fed governor jawboning about plans to hike soon. What are you expecting now as we enter the final few months of the year, Gerald? Are they finally going to have to follow through and raise rates at least somewhat? And what about the possibility of a surprise? Maybe they follow Europe and Japan and go to negative interest rates or even helicopter money.
Gerald Celente: I think they'll go to helicopter money before they go to negative rates, because the negative rates aren't working at all. You look what's going on, the numbers coming out of negative rate countries like Japan. What do they have Abenomics now, since 2012 basically that it began, and you're looking at no growth coming out of Japan at all. Quite the opposite, in fact.
So what's going to happen? There's no way out. The central banks have run out of juice, and the only thing, again, they're pumping up are these fake markets. Japan's exports, for example, they just dropped 14%. Then you can say, well, you know, that's because their Yen is strong and their products aren't competitive. Then I would say, okay, then if their Yen is strong, they should be buying more. Correct?
Well how about this? Their imports tumbled 24.7%. Same thing in China, exports down, imports down. This isn't boosting… and they have negative rates. Remember, they have negative rates in Japan. The other reason, Mike, they can't raise rates is because look what's going on now with the emerging markets. The MSCI Index is, boom, they're popping back up from their lows, because all this hot money's flowing back into them.
If the Fed raises rates, all of these emerging markets that borrowed this money when the quantitative easing and the dollar was really cheap, all that hot money that flew into there, countries and companies borrowing trillions, now they have to pay it back. They pay it back as the dollar value rises, as their currencies go down. What does that mean? More problems. So they can't pay the debt back, and they won't be able to pay it back, even worse, if there's such a thing, if their currencies continue to decline and the dollar gets stronger.
I believe if the Fed raises rates, it will be after the election. And even at that point, it will be only 25 basis points, and look what happened the last time they raised them, last December when they raised them 25 basis points. You woke up, Happy New Year, the DOW opened up the first 2 weeks the worst in its history. Then you saw on a global index, you're looking at about $6 trillion worth of equities are wiped out the first month of January. The Ponzi scheme cannot continue if they raise rates.
Mike Gleason: I want to shift to gold here because we've seen that this extremely low and/or negative real interest rate environment has been very bullish for the metals. We've got gold up over 25% so far this year, and silver is doing even better and is up about 40% year-to-date. All of the corrections in the metals have been very shallow as lots of money continues to flow into the sector, especially on the dips. Have the precious metals gotten a little ahead of themselves here maybe, or will we continue to see strength here in this sector?
Gerald Celente: I don’t think they’ve caught up to themselves. I think they have a lot more to go. Again, it's like what you said before about these FOMC people coming out, all these Fed cats coming out saying, "Well, you know, the economy is strong and it looks like we're going to be raising rates." They keep BS-ing that. Go back to May, they never stopped. Then, poof, they shot down the price of gold, and that’s what they're doing. That’s what all the central banks are doing. They're talking up strength. They're talking up probabilities of raising Fed rates to push down the price of gold, because once the price of gold breaks ...
Here's our forecast, by the way. We believe when gold breaks over $1,400, and I'm saying $1,400 strongly, $1,400 in terms of $1,480, $1,470, $1,460, that kind of range, we believe it's going to spike toward $2,000. The greatest fear that the central banks have is that people see that their digital currencies backed by nothing and printed on nothing are worth nothing. That’s why they're going to do everything they can to push down the price of gold, but at some point, it will be out of their power.
Mike Gleason: It does seem like the longer this goes on, the less control they do have over it. Obviously, we've seen a pretty big rise in the gold price this year, but you think that once it takes out some overhead resistance levels, it could be just off to the races and they could completely lose control. Is that what you're saying?
Gerald Celente: Yes, because this next crash that happens will be the worst crash in modern financial history because of all the reasons I began with, all of this cheap money pumping up equity markets, pumping up mergers and acquisition activity, and one I forgot, pumping again up the housing bubble worldwide. So when this bubble bursts, it's going to be one that we've never seen before.
Look, here's the numbers, for example. Take China, go back 20 years to 1996. What was China's total debt? About $500 billion. Now it's over $30 trillion. Look what's going on with Europe, with the ECB. What a bunch of slime with their negative interest rates and buying back not only government, but corporate bonds at the tune of, what, 80 billion Euros a month. Take a look what's going on with the Bank of England. What did they lower interest rates to? Oh, only 322-year lows and now buying corporate and government debt.
So this bubble, when it bursts, we're going to see gold prices hit through levels they’ve never hit through before. And remember, even when gold hit its high back in the autumn of 2011, it still didn’t reach the high it left back when it hit the high in 1980, when you adjust it for inflation.
Mike Gleason: Switching gears here a bit. I want to get your thoughts on the social unrest that we've been seeing here lately. Certainly, the last few years here in the U.S., and especially the last few months have been very emotionally charged. This past week we saw some disturbing images coming out of Milwaukee, the latest location to grab headlines in the growing and apparent war between minorities and police. What do you make of all of this and what are some of the repercussions of these kinds of events, because we have some very polarizing issues emerging here?
Gerald Celente: You said the word, polarizing issues. And I began by saying the polarizing wealth effect. Is that all of it? No, of course it's not, but that’s a big part of it. There’s no middle class, the middle class is shrinking out. When people lose everything and have nothing left to lose, they lose it. This is what we thought would have happened back when the markets crashed, when the panic of '08 hit, when we saw all those disturbances going on. What they’ve been doing is you don’t have bread lines anymore, so they keep shooting the people to keep them off the bread lines. Now, they're going to levels where they can't pop up at all.
Then you have huge drug issues on top of that. America is consuming, 80% of the world's opiates and we're only 5% of the world's population. Look at all the prescription drugs people are on. Again, you have no future. It’s a futureless future. Then you have a militarized society. The fish rots from the head down. Look at the wars America is waging overseas. Look at how we glorify militarization, and we have a militarized police. The whole system is rotting out at all the levels.
This may be the last time you ever have me on your show because I may say this word and it may offend people, morality. It doesn’t exist anymore. Look what's going on in this presidential election. I call it we're getting "Crumped" between Clinton and Trump; 320 million people, this is it? This is the best we can do? And it's a reflection of who America is and what it's become, as we see it, as trends forecasts, as political atheists. I'm an American. My blood is Italian; my heart's American. I launched Occupy Peace here from the most historic four corners in the United States at Kingston, New York, last September, and we own 3 of the most historic buildings in America. So when I say this, I say it because of my love of America and my heart breaking to see what's going on.
There's ways out of this, and Trump hits on some of them, but he goes off on a deep end on others. Of course, one of them is trade. They sold us out with NAFTA, and it keeps going on and on. There's other ways out, too. It was one of our Top Trends and you saw it with the Brexit. The people voted for it. It's direct democracy. Let the people vote for what they want. Now what can they do? How about Made in the U.K. with Pride? How about Made in America? How about a self-sustaining economy of 320 million people? Are we too stupid to make our own shirts, shoes, computers, and anything else?
There's ways out of it, but we have a corrupt political system and how much more proof do people need? They start wars based on lies and they steal all our money, in the names of "Too big to fail" and any other words that they can make up. So there's ways out, but not under the current system.
Mike Gleason: You touched on it there. The presidential election cycle is about to enter the home stretch here. It's certainly provided a lot of entertaining theater so far and the best entertainment may be yet to come. Of course, we're dealing with some really serious challenges as a country, and I don’t want to trivialize it, but give us your thoughts on Trump versus Hillary and what you're expecting to see there this fall.
Gerald Celente: Well the cover of our Trends Journal in the spring of 2015 was "Cowards, Liars, Freaks and Fools: Welcome to the Presidential Reality Show." That was two months before Trump got into the race. At that time, we picked Clinton. Then we went back and we picked Trump, and we picked Trump because of the issues, as what I talked about, it's the bottom line. Most people care about jobs. You look at the polls. They care about income. They care about the future. Trump was trumping Clinton on that, and Clinton has no ground to stand on on that, considering that Bill Clinton gave us NAFTA and these trade agreements. Trump was winning on that issue until he put his foot in his mouth a number of times and is destroying his own candidacy.
Running political elections is not rocket science. I began my career out of graduate school. I ran a mayoral campaign. I was the campaign coordinator, number-2 guy at graduate school. And Yonkers is a city like what, 300,000 people. I ran political campaigns in Westchester County. I was the assistant to the secretary of the New York State Senate and designed and instructed American Politics and Campaign Technology at St. John's University. Just to give you a little bit of my background. This isn't rocket science. You stick to the script. When you need to change the script, you change it. Trump can't do it.
So we believe that Trump should have been beating Clinton, and their campaign is not over yet. We believe that the debates are going to really be the turning key of this whole election, and they’ll be the most watched events probably of any TV event in history. So we're going to wait until that happens, but the election was Trump's to win or lose, again, based on the numbers. Go back to 1992. There was a campaign slogan they used to have in Clinton campaign offices around the country, "It's the economy, stupid." And that’s all it is. These other issues, the wedge issues, they're side issues. It's the economy, stupid.
Mike Gleason: Well as we begin to close here, tell our listeners what other developments you're watching for in the months ahead. Your firm's stock and trade is in identifying trends before everyone else becomes aware of them and helping your subscribers position themselves to take advantage. What are you expecting to see? What are you expecting to see in this coming 6 to 12 months? What will the headlines be looking like that people aren't talking about yet?
Gerald Celente: Well two of the big ones, we still believe there's an imminent market crash to happen. Then we're also concerned about terrorism and war. People keep talking about terrorism, but nobody wants to talk about the cause and effect. So let's say a foreign country came into the United States and hated our president and said they didn’t trust him with the nuclear button, and they invaded our country and killed everybody that you loved and destroyed the place. You think you'd want to get even with the people that did it?
So now, let's take a trip to Iraq and Afghanistan. How about Libya and Syria? Look what's going on with Yemen, the United States supplying all the weaponry, $20 billion last year under Obama, the Nobel Peace Prize winner. They should call that thing a piece of crap, the Nobel Piece of Crap. Twenty billion dollars' worth of armaments to bomb the innocent people of Yemen given to the Saudis and America is part of the coalition.
We believe there's going to be something that’s going to take the people's mind off the economy, because when all else fails, they take you to war. We keep hearing the war drums beating louder, whether they're against Russia or China, and they're growing louder in the Middle East. So those are the 2 things we're looking at, a market panic like we've never seen before and something, either a terrorist attack, false flag or real, that gets the people's minds off the money.
And I say that… go back to 2001. America was in a severe recession. People forgot that. George Bush's popularity rating was going below 50% and he had only been in office for several months. All of a sudden 9/11, poof, shot right back up and what did they do? Began lowering interest rates to 46-year lows. Juiced up the economy with a false infusion of cheap dough. That’s the kind of things we're looking at.
On the technological end, boy, look for advances in robotization, virtual reality, and artificial intelligence. We're really going into a new age and we don’t think in this level it's going to be a dot-com bust. We think it's going to be real and there's going to be a lot of profit opportunities in it.
Mike Gleason: Well Mr. Celente, thank you so much for joining us again. I always love having you on and appreciate your candid insights as usual. Now before we let you go, as we always ask you to do, please let folks know how they can get their hands on the tremendous information you put out, both online and with the Trends Journal magazine as well as anything else that’s going on there at the Trends Research Institute that you want to mention.
Gerald Celente: We have the Trends Journal. We do a nightly broadcast, weekday broadcast, Trends in the News. We put out Trend Alerts each week and next week, our Trends Monthly. So it's the only place we believe where you're going to be able to read history before it happens. And we know people are having difficulties, so we have a discount request page, but even at that, the Trends Journal is only $99.00 a year for the digital edition. And it's at TrendsResearch.com.
Mike Gleason: Well excellent stuff. Once again, have a great weekend, and I hope we can catch up with you again real soon. Appreciate your time, Mr. Celente.
Gerald Celente: Thank you. And thanks so much for having me on.
Mike Gleason: That will do it for this week. Our sincere thanks again to Gerald Celente, publisher of the renowned Trends Journal. For more information, the website again is TrendsResearch.com. Be sure to check that out.
And check back here 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.
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.