I’m Mike Gleason and welcome to this week’s Market Wrap Podcast.
Coming up we’ll hear a fascinating and informative interview Money Metals president Stefan Gleason gave for the Sustainable Money podcast. Stefan shares some of the history behind sound money, when and where the wheels came off our monetary system, some disturbing developments in the war on cash movement and also goes through some dos and don’t when it comes to purchasing gold and silver. You will not want to miss this fantastic interview, coming up after this week’s market update.
Gold and silver markets rallied early in the week before succumbing to some selling pressure as the U.S. Dollar Index rebounded off multi-week lows. Gold prices currently come in at $1,246 an ounce, unchanged on the week. Silver, meanwhile, shows a weekly gain of 2.4% to bring spot prices to $18.24 an ounce as of this Friday morning recording.
Gains in precious metals were tempered by the U.S. dollar’s gains against the euro after the British government formally began the process of withdrawing from the European Union. President Donald Trump had praised the Brexit movement while on the campaign trail last year. Trump positioned himself as an anti-globalist candidate who would put America first and not kowtow to international bodies such as NATO, the United Nations, and the EU.
EU bureaucrats are fuming over the decline and potential fall of their new world order. On Thursday, EU chief Jean-Claude Juncker delivered a bizarre speech in which he threatened to exact revenge on Donald Trump if he doesn’t change his tune on international governance. Junker suggested he might push for Ohio and Texas to exit the United States.
Globalists are becoming unhinged as their ultimate goal of a borderless, cashless one world economy gets push back. Abolishing paper currency notes and coins in economic transactions would force everyone into some form of electronic account that leaves them completely at the whim of bankers. If central banks impose negative interest rates on the economy, then all holders of digital cash could be automatically charged interest.
Federal Reserve officials have indicated that negative rates are a tool they could possibly deploy in the future. For the time being, they seem intent on raising their benchmark Fed funds rate two or three more times.
Thursday’s better than expected GDP report gives the Fed new impetus to raise rates. Gross domestic product for the fourth quarter was revised upward to 2.1%. That’s good news for the economy. The bad news is that as the first quarter of 2017 comes to an end, signs are pointing toward a significantly lower growth rate when the Q1 GDP number comes out.
The government would need to somehow engineer economic growth rates of more than 4% in order to grow federal revenues enough to prevent the current budget deficit from expanding. The Congressional Budget Office doesn’t foresee any big surge in federal revenues or cuts in spending commitments. The CBO now projects that the national debt will more than triple over the next 30 years to an unprecedented 150% of GDP. Over that same period, net interest costs are forecast to rise from 7% to 21% of total federal spending.
How much bond buying the Federal Reserve would have to do over the next 30 years to prevent the government from defaulting is an open question. But it would probably be enough to make its recent Quantitative Easing programs look like small potatoes by comparison.
We’ll know more about the Fed’s balance sheet if the Federal Reserve Transparency Act is finally signed into law. The so-called Audit the Fed bill made it through the House Committee on Oversight and Reform this week. Here’s some of what Congressman Thomas Massie of Kentucky said in support of auditing the Fed:
Rep. Massie: Over the past century the value of the dollar has declined by over 95%. During those hundred years the Federal Reserve, the organization established by us, the Congress, to manage congress' Article I section VIII authority to coin money and regulate the value thereof, has operated under a shroud of secrecy. My Bill HR24, the Federal Reserve Transparency Act, would put an end to that reign of secrecy. How can we know that the Fed is operating independently of big banks CEOs and Wall Street? Giving the revolving door of managers between the Fed, the Treasury and Wall Street, the opportunity for outside pressure and conflicts of interest abound at the Fed. Only a full audit can demonstrate that the Fed makes decisions independently of the political whims of the president and independently of the profit goals of commercial banks. An organization entrusted with daily decisions that affect the value of American's paychecks and the value of their retirement savings. An organization whose mission has morphed into facilitating the bailout of foreign banks, this is an organization that requires a full audit and full oversight of the elected body that created it.
The bill is likely to pass easily when it comes up for a full House vote. The Senate will be a much tougher hurdle to clear. Leftist Senator Chuck Schumer will almost certainly try to block Audit the Fed just like former Democrat leader Harry Reid did last time around.
Sound money advocates in the Senate led by Rand Paul will need to step up their game. A public push for Audit the Fed by the White House could boost its chances of passing. But it remains to be seen whether the Trump administration wants to put any political capital into this fight. Treasury Secretary Steven Mnuchin, for one, is a Wall Street beneficiary of the current monetary order and doesn’t seem keen on reforming it. But the bill just might stand a chance. We’ll just have to see where things go in the Senate.
Well now, without further delay, let’s get right to this week’s interview Money Metals president Stefan Gleason did with Alan James on Sustainable Money.
Well that will do it for this week. Be sure to 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.