Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Coming up the one and only Gerald Celente joins me as we discuss the relevance of still having guns, gold and a getaway plan. Gerald also tells us what he’s watching most closely on the geopolitical landscape that could have a major impact on the markets and possibly trigger the next economic crisis. Don’t miss another sensational interview with perhaps the most well-known trends forecaster in the world, Gerald Celente, coming up after this week’s market update.
Gold and silver markets are probing for support levels this week as prices trade modestly lower. As of this Friday recording gold checks in at $1,270 per ounce, down $10 or 0.8% on the week.
Gold prices hit a 6-month low on Thursday. While a bearish development in itself, neither the major gold mining indexes nor the silver market broke below their April lows. These non-confirmations give gold bulls hope that the more volatile mining stocks and the silver market are leading with relative strength – albeit not very impressive strength as of yet.
Silver is down 1.1% this week to trade at $16.43 an ounce. Platinum is lower by 1.8% to $876. And finally, palladium is the big loser posting a 3.9% loss on the week to bring spot prices to $955 per ounce.
As we’ve been saying for weeks, if not months now, metals markets are struggling to gain traction amidst U.S. dollar strength. The Dollar Index traded near an 11-month high earlier this week but currently sits little changed.
The U.S. currency sports a significant interest rate advantage over the euro and other major foreign currencies thanks to the Federal Reserve’s recent rate hikes. The U.S. under President Donald Trump also boasts robust GDP and employment numbers – at least as far as official statistics go.
But in spite of our superficially strong economy, the U.S. government’s long-term fiscal outlook looks bleaker than ever. Uncle Sam ran a deficit of $146.8 billion in the month of May alone – the biggest since 2009 – as federal spending grew 11% higher compared with a year earlier. So much for 2% inflation.
Government spending is out of control, and there’s plenty of blame to go around. The Trump administration has pushed through huge increases in military spending. On Monday, President Trump directed the Pentagon to create a new branch of the Armed Forces – a “Space Force” whose mission is sure to be as costly as it is ambitious.
In fairness, Trump has tried to shrink bureaucracy and pare back spending on some domestic programs. But Democrats will have none of it. On Wednesday, the closely divided Senate voted to kill a White House plan to cancel nearly $15 billion in unnecessary government spending from the recently passed $1.3 trillion spending bill. The proposed cut may not have been much more than a drop in the bucket of total federal spending, but two Big Government Republicans joined with Senate Democrats to keep that $15 billion “drop” in the bloated budget.
Also on this very busy week in political developments, President Trump announced his intention to merge the Department of Education with the Department of Labor. Democrats immediately vowed to oppose that bit of bureaucratic streamlining.
Democrats also opposed a massive $867 billion farm bill narrowly passed by the House of Representatives on Thursday. Because it didn’t spend enough on food stamps. So the Senate version of the farm bill will almost certainly have to include more giveaways in order to garner the needed votes.
Neither party’s leadership in Congress seems to care that the federal deficit for the current fiscal year is already close to $600 billion. Or that trillion dollar deficits are projected in the years ahead. Or that Social Security and Medicare are going broke in the next decade.
Expecting politicians to practice long-term fiscal responsibility is like expecting bank robbers to refrain from the temptation of grabbing piles of cash sitting in front of them in an unlocked vault. Members of Congress view deficit spending as essentially free money. The Treasury Department can always issue more debt, and the Federal Reserve can always issue more currency.
Of course, debt and currency expansion is not cost free. The costs to citizens are just less well understood than the costs of direct taxes. The costs get transferred throughout the economy in the form of inflation and weaker real growth.
The ultimate cost of unsustainable debt growth and unpayable entitlement obligations will be the biggest financial crisis since the Great Depression. When exactly it hits and how exactly it plays out are hard to predict.
It will probably look a lot different than the Great Depression, though. Back then, cash was king. That was before millions of retirees were entitled to Social Security and Medicare benefits, before the U.S. went fully off the gold standard, before the advent of the digital printing press.
In the next financial crisis, expect the value of cash to be trashed as the authorities furiously create it by the tens of trillions to avert bond defaults and bail out entitlement programs. In the next financial crisis, sound money in the form of gold and silver may be king.
Well now, without further delay, let’s get right to this week’s exclusive interview.
Mike Gleason: It is my privilege now to welcome in Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is perhaps the most well-known trends forecaster in the world, and it's always great to have him on with us. Gerald, thanks for taking the time again today, and welcome back.
Gerald Celente: Thanks for having me on.
Mike Gleason: Well, Gerald, the potential for a trade war is the hot topic in the financial press these days. Around here, the question is what escalating concerns over trade might mean for the precious metals markets, and we would like to get your thoughts on that. But first, please give us your take on the President's trade policy in general. Some people think the U.S. has been a major beneficiary of trade. We've been able to import real goods and services in exchange for increasingly worthless dollars. Others hate what so-called globalization has done to U.S. manufacturing and think Trump is delivering a long overdue warning shot to nations who have taken advantage of the U.S. So, where do you stand on all this?
Gerald Celente: Well, we've been in the business since 1980. When NAFTA began, actually under Reagan began it trying to push through and Bush Sr., and they couldn't push through much, but Bill Clinton was the one that really brought us into NAFTA and China into the World Trade Organization. So, you just look at the numbers, and the numbers speak for themselves. Before we were in NAFTA, we had basically a neutral exchange in terms of merchandise trade deficit between Mexico and the United States. And now we have a $71 billion deficit. Who would do business like that? Would you do business with someone where you lose $71 billion a year? Then when you look at China ... and we lost by the way about 975,000 manufacturing jobs, and Clinton promised that we would gain 200,000. But I didn't have sex with that woman, Monica Lewinsky, and I smoked but I didn't inhale, so you know the guy's full of it from the beginning and to the end, and he's still a hero.
Then you look at China, what he did bringing them into the World Trade Organization. We lost about 3.5 million jobs, and we have a merchandise trade deficit with them of $375 billion a year. You can't blame Mexico or China or other countries on this. You have to, as we look at it, put the blame on the companies that went overseas to get their products made by cheap labor and then bring them back to the United States and sell them so they could gain greater profits. If you can't have an agreement with workers in your country to pay them a living wage, go to a slave labor country and get them made over there is basically what happened.
For example, 97% of the shoes and clothing that we wear are made overseas. When you go back to the 1990s, that wasn't true. It was being made over here. And then you look at the standard of living and the declines. The facts are all there. A matter of fact, we're right now, our standard of living of real personal income is below 1999 levels. Again, we don't blame anybody other than the ones that did it. China and all these other countries, Vietnam, they didn't have the technology. The Europeans and the Americans gave them the technology to do it. So, they sold us out.
So what Trump is doing with this, as we see it, this is typical Trump's Art of the Deal negotiation strategy that we point out in our Trend Alerts. You take North Korea, for example. He calls the guy Rocket Man, a moron, a maniac, and then after he meets with him, he's an honorable, great guy. The deal is done. He goes to the extremes. And that's what we believe he's doing with the tariff situation, because again, China's only buying about $130 billion worth of our goods. And they're selling us $375 billion. Are they going to kill the deal? Of course not. So, there's going to be a negotiation of this. Bottom line is, Mike, at this level, we don't see a trade war coming yet. It's not in the cards right now.
Mike Gleason: Now, when it comes to the gold and silver markets, the impact of trade policy will, we think, largely depend upon how that policy impacts the U.S. dollar. So far, the foreign exchange markets are reacting as if a potential trade war might be good for the dollar. It has been strengthening relative to other world currencies. Now, we're not so sure the markets have it right. The U.S. may run massive trade deficits on lots of products, but the one product that we export a ton of is the U.S. dollar. Anything that reduces this demand for the greenback overseas is liable to cause some problems, and the dollar is already under attack as the global reserve currency. What do you think? Will these escalating trade conflicts be good or bad for the dollar, and good or bad news for gold?
Gerald Celente: Well, the bad news for gold is the strength of the dollar. You're hearing more and more hawkish reviews coming out from Fed Chairman Powell saying that they're going to be raising interest rates more aggressively. The higher the value of the dollar, the lower the value of gold. Gold has an opportunity cost of holding it, so if interest rates go up strongly, gold goes down. The reason the dollar is strong is not so much because of what's going on with considering, what do we have, a $21 trillion trade deficit? Trump added the $1.5 trillion more to it this year. It's the other ones are so weak.
Look what's going on in China. What do they have, a debt-to-GDP ratio approaching 300%? When I mention about China getting into the World Trade Organization, that happened by the way two weeks after 9/11 when no one was watching. Just to put this into perspective, I'm the same age as Trump. In all my life, I heard, "Those commies, those lousy rotten commies." They had us hiding under desks when I used to be in grade school, and then putting our hands up against the wall in case a nuclear bomb went off and we couldn't fit in the desks, like that was going to save our lives, because of them commies, those rotten commies. Then there was the Vietnam War, those stinking rotten commies. Before you know it, those dominoes are going to fall, and they're going to land on the shore of California. We got to kill them commies. But all of a sudden, we're doing business with the biggest Communist country the world has ever seen, China. So, the hypocrisy of all this is outrageous as I look at it.
Going back to the dollar, “those commies over there with their yuan and their petro-yuan and buying,” no, they're in so much problems over there that the dollar is gaining strength because the other ones are getting so weak. We just saw what happened with the ECB last week, the European Central Bank. Yeah, they're going to do away with their Quantitative Easing scheme by the end of this year, but you know, maybe we're not going to raise interest rates until the middle of next year. So, when you look at the U.S. interest rates compared to all the other ones ... Oh, and then China again. China didn't raise its interest rates at their last central bank meeting. So, you have all this pressure on these emerging markets, because they borrowed so much of their trillions of dollars in dollars when the dollar was cheap. Currencies are going down now to new lows and yearly lows, and they got to pay it back in dollars. So, the dollar gained strength not because of the greatness that's going on. Yeah, things are flying over here, but not blowing it away. It's because the other ones are in so much trouble.
Mike Gleason: Let's toggle over to politics now if we can. The other big story is the one we talked about last time you were on back in March. In fact, it has been driving the news since Trump's election, and that's the investigation into Trump colluding with Russia to win the election. The investigation has become a massive embarrassment for the FBI, the intelligence services, and the deep state at large. It looks like Americans are finally getting a glimpse of how business is done in Washington, DC. There's been a tremendous amount of demonization of Russia over the last couple of years. So, is this whole Russia collusion in the election just a bunch of bull, or are they really someone we need to be worried about?
Gerald Celente: As I said, you got to watch them commies (laughing). No, what has Russia done? There's not one shred of evidence. It's our conclusion. It's our assessment. What, your conclusion and assessment? Who you guys BS-ing? You're BS-ing everybody. Yeah, because you know, that Saddam Hussein, I told you, he has weapons of mass destruction and ties to Al-Qaeda. We don't have any proof, but we're going to make up any kind of BS we can to start a war. Oh yeah, I talked about the Vietnam War. The Gulf of Tonkin incident never happened.
It's our assessment. It's our belief. I want proof. Who could go into court and win a case without any proof? So it's more of the hatred. It's just the Democratic sham because they lost the election, and they're trying to blame the election loss on the Russians, rather than the people couldn't stand Hillary Clinton. You had less women voting for Hillary Clinton. 52% voted for her. It has nothing to do with men and women. It was white males that brought Trump in. Again, by facts, it's a lie. By the way, Trump had the same white male vote, as Romney did in 2012.
We had two candidates who were the most disliked in modern times, so it was more of disgust of the system and looking at Trump as an alternative, rather than they love Trump. And again, the big issue here is really the Russians did nothing. There is no proof, just as the story is out of the news of what happened in Salisbury, England with those Russians killing, or trying to kill, that British spy and his daughter with the deadliest poison man has ever known. Oh, by the way, they're still alive, fine, and we can't talk to them. So, who would believe anything from the lying CIA, FBI that keeps selling F-U?
Mike Gleason: Do you think there's a conspiracy among the deep state to take out Trump? I mean, we've heard how these FBI agents were referring to Hillary as President Clinton, several months before the election even took place. How real is the deep state threat against Trump's presidency, and what are you forecasting here as to how this might play out?
Gerald Celente: Well, I don't think it's going to make any difference at all in terms of Trump and collusion with the Russians. There's no proof. Nothing will happen with it. It's keeping the people stupid from the real news that's going on in the world. “Hey, did you hear about Stormy Daniels?” I mean, who cares? Again, it's taking the people's mind off the essential elements that are going on. “Hey, how about that slaughter going on in Yemen?” “What's a Yemen?” People don't have no clue. Really, we don't see any implications at all with this. It's more of a diversion. As for the deep state, there are sick people in government that want their agendas fulfilled. And so, whether it's lying us into wars before or going after somebody, it's the sick elements within the political system.
By the way, everyone listening, Google up the definition of politician. You'll see it says somebody who wants to run for office, blah blah blah, blah blah blah blah, a person who is professionally involved in politics, especially as a holder of or a candidate for an elected office. Then you read the definition below that, “a person who acts in a manipulative and devious way, typically to gain advancement within an organization.” That's who you're talking about, manipulative and devious, sick SOBs. They're running and ruining a country near you.
Mike Gleason: Switching gears here a bit, you've talked in the past about the importance of having “guns, gold, and a getaway plan,” as you like to say. Is that advice still valid today amidst a seemingly strong economy and massive complacency among the American people who believe things are just hunky-dory? Talk about your mantra here and how relevant or irrelevant it is today.
Gerald Celente: It's still very relevant. We're talking about the markets. Again, we send out the Trend Alerts. The markets are overvalued and overleveraged. The only thing that's kept them going since the Great Recession is something that you didn't teach in economics 101 or in graduate school in economics, and that's the quantitative easing and zero, negative, and low interest rate policy. So, now they're running out of tools. Then with Trump's tax cuts, they've allowed massive repatriation of overseas money. And by the way, that's propping the dollar up as well too, because of the trillions of dollars that were in other currencies overseas that American companies are bringing back.
And what are they doing with that money, with the tax cuts and the bringing the money back? The facts are there, record levels of stock buybacks and merger and acquisition activity for this time of the year, this shortened time of the year. At some point, this is going to run out. Again, the debt levels are unsustainable worldwide. So yes, we believe that gold is still the ultimate safe haven asset. I say with the facts that are, I don't push it because I have it. I've been investing in gold since 1978. I wish gold prices were over $2,000 an ounce. I'd love that. But I see where it's going. I've been on your show saying this for, what, a couple of years now, that gold had to break over $1,475 to gain strength, and it has been unable to do that. We said that the downside of gold is around $1,200.
So, we call it the way we see it, but again, we're also saying it's the ultimate safe haven asset, particularly in a time of geopolitical and socioeconomic unrest. As I said, you talk about Stormy Daniels and all this stupid junk. Look what's going on in the Middle East. Look what's going on in Syria. Look what's going on with the refugee and migrant crisis. Look what's going on in Israel. Look what's going on in Iran. So, we look at these issues and say there are flashpoints. If there's a flashpoint in the Middle East, oil prices ... again, all things are connected. It's our global economic system talking about the emerging markets. Not only did they borrow all that money in dollars, what's oil based on? Dollars. How do you buy it? Dollars. Your currency is declining, and you need oil, and oil prices now are around $75 a barrel for crude. What happens if they go to $100? That's the kind of thing we're looking at, and that's why we say gold is still the ultimate safe haven asset.
Mike Gleason: Well, Gerald, as we begin to close, is there anything else you're focusing on here as we head into the summer? Anything you're keeping an eye on that we maybe haven't discussed that you think need to be on people's radars?
Gerald Celente: Yes, and it's part of what I have been talking about. Watch what's going on in the emerging markets very closely. And again, it's not what you like, what you want, what you wish for. It's what is. Don't call it good or bad, right or wrong. Just look at what's going on. And tune out of the stupid U.S. news. It is totally worthless. Anybody that's watching the major networks, you're wasting your time. Go to the other media, such as yours, such as ours, and others, that are giving you the facts and the information. And stay tuned closely to the Middle East, particularly what's going on in Yemen, what's going on in Iran and Israel and Syria, because if there's an explosion over there and oil prices spike, kiss the markets goodbye and hold on to your guns, gold, and a getaway plan.
Mike Gleason: Well put. Well, we'll leave it there. Wonderful stuff as always, and thanks so much for taking the time again today. Now before we let you go, please tell listeners how they can get their hands on the wonderful Trends Journal and the other great information that you put out there on a regular basis at the Trends Research Institute through the various mediums that you have, so people can get history before it happens, like you like to say.
Gerald Celente: Yeah, simply go to TrendsResearch.com or Trends Journal, and sign up. Again, we have the Trends Journal, it used to be a quarterly, now it's a monthly. We do Trend Alerts each week or more, and we have Trends in the News broadcasts and Friday Trends Specials. So, it is the only place where you will read history before it happens. Money back guaranteed, and it's only $99 a year.
Mike Gleason: Well, thanks again, Mr. Celente. We always love having you on. I hope you enjoy your summer there, and hope we can catch up before long. Have a great weekend.
Gerald Celente: Thank you, Mike, and thank you for all that you do.
Mike Gleason: Well, 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 is TrendsResearch.com, be sure to check that out.
That will do it for this week. Be sure to check back next week for our next Friday for our next weekly 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.