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Weekly Market Wrap

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South Africa Political Disaster to Bolster Precious Metals

Guy Christopher: Tips for Discreetly Discussing Gold & Silver with Family and Friends

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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll continue our recent tribute to Guy Christopher, one of our most popular columnists at MoneyMetals.com who recently passed away. Throughout his time with us here at Money Metals, Guy would enlighten our listeners and readers as only he could, and we frequently had the privilege of discussing his insightful articles with him here on our weekly podcasts.

Today we’ll replay an interview with Guy where he shares some helpful tips on how to talk to your friends and family about the importance of gold and silver. More timeless wisdom from the late Guy Christopher, coming up after this week's market update.

Well, paper speculators continue to test the patience of physical holders of precious metals as we endure another week of lackluster market action.

Hedge funds are helping to depress gold prices by taking out record naked short positions in the futures market. At some point they will have to cover these positions, which will generate big buying volumes and possibly a big price rally. Odds favor at least something of a bounce in the near future off these deeply oversold levels.

Gold prices currently come in at $1,214 an ounce and is now essentially unchanged for the week. Silver trades 0.5% lower since last Friday’s close to sport a $15.39 handle. Platinum prices are flat for the week to trade at $836. And finally, palladium is off a slight 0.4% at $915 per ounce as of this Friday morning recording

Whether metals markets can stage more than just a technical bounce from these levels… whether they can actually put in a major bottom… will depend on the fundamentals. In the near term, it’s all about paper machinations and manipulations. In the long term, it’s all about physical supply and demand – the forces that should cause precious metals prices to trend higher over not just months but years.

On the demand side, it’s true that investor buying has been soft since President Donald Trump’s election in 2016. That likely won’t change until the politics change or the major uptrend in the stock market reverses. As you may have heard, there will be an election this fall. If Democrats sweep back into power in Congress, that would bode ill for the Trump economic growth agenda going forward and could send investors fleeing for safe-haven assets, including gold and silver.

Even if that doesn’t play out, supply destruction has the potential to pressure prices higher. Gold mining supply out of South Africa is plummeting, with production down 16% in the latest monthly report compared to last year. A variety of factors are crimping production, including low market prices and rising extraction costs.

Another negative factor for the industry is rising political risk. South Africa’s Marxist government is moving to impose stringent new rules on mining companies that are intended to redistribute wealth and promote “Black empowerment.” The government is stopping short of full nationalization – for now. But AngloGold Ashanti’s chairman said recently that he feared the government’s new Mining Charter could still kill the industry.

South Africa’s black majority government has embarked on what amounts to an ethnic cleansing campaign aimed at driving whites out of high-skilled jobs and kicking them off their land. As white farmers suffer horrific invasions by organized mobs that rape, torture, and murder the people who feed the country, South African President Cyril Ramaphosa vows to implement land expropriation without compensation.

Here is Ramaphosa in his own ominous words, followed by the words of militant land grab advocates at a recent town hall.

President Cyril Ramaphosa: The AMC will, through the parliamentary process, finalize a proposed amendment to the constitution that outlines more clearly the conditions under which expropriation of land without compensation can be effected. More explicit about expropriation of land without compensation.

Speaker at Town Hall Meeting: We must take our land either through policy or by force.

Speaker at Town Hall Meeting: Nothing stops us from taking the land by force. As a matter of fact, we are the majority here in South Africa.

Speaker at Town Hall Meeting: Us black people who are sick and tired of the white people...

Speaker at Town Hall Meeting: The white people that don't belong here in South Africa. White people are from Europe.

Speaker at Town Hall Meeting: Our patience is running out, and once that patience has run out, chairperson, we will have no alternative but to forcefully take this land back to us.

South Africa’s future now seems set – property rights will be trampled, human rights will be violated, and the non-racial constitutional democracy that Nelson Mandela had supposedly fought for will meet a Zimbabwe-style end. Unless the government changes course, economic collapse and hyperinflation will be the likely outcomes.

And that will have huge implications for gold, silver, platinum, and palladium markets. South Africa is one of the world’s biggest suppliers of these precious metals. But it’s hard to run a mining business – or any business – inside a country that is actively pursuing Communist economic policies. If investors flee and mines shutter, then production will tank.

That would be a sad fate for a country that gave us the iconic Krugerrand. For over 50 years, the South African Krugerrand has been one of the best selling and most widely recognized gold coins in the world. The current Communist-inspired government at least seems to grasp the economic benefits of allowing these coins to be minted and sold despite their commemoration of 19th century Boer hero Paul Kruger.

The Krugerrand may one day be deemed politically incorrect by South African commissars and discontinued. But right now it is actually becoming more available to more investors at a more affordable price than ever before. That’s because for the first time, the South African Mint has released a bullion strike version of the 1-ounce silver Krugerrand – composed of .999 fine silver.

Silver Krugerrands share the iconic design features of gold Krugerrands. The coins’ face features the profile of Paul Kruger. He rose to prominence in the Second Boer War as South Africans of Dutch descent fought against British influence. Kruger went on to serve as president of the South African Republic from 1883 - 1902.

The coin's reverse depicts the Springbok antelope – a national symbol – bounding across a South African plain.

The silver Krugerrand is one of the most anticipated releases in recent years. The first batch of these brand new coins is now available for sale at Money Metals Exchange. The 2018 dated silver Krugerrands, being their first year of issue in a bullion form, are bound to move quickly.

And now, we’ll pay tribute to an American treasure, our late friend Guy Christopher, who during his time with us here on earth lived quite a life. He was a member of the 101st Airborne during the Vietnam War and later worked as a stock broker, investigative journalist, and published author. All of this real-world experience combined with his communication skills helped him provide our readers and customers with some really great insights over the years.

Thousands of readers enjoyed and often commented on his writings at MoneyMetals.com. Today we’ll replay a conversation I had with Guy on a very important topic: how to talk to your friends and family about the importance of owning gold and silver. So, sit back and listen to our my conversation with a wonderful man and a great communicator, the late Guy Christopher.

Guy Christopher

Mike Gleason: I want to talk to you about two of your recent articles in particular, the first one titled, "You and I Have No Right to Be Scared." In that piece, you give an illustration of just how bad things have been getting and how incredibly important it is to own precious metals given the current landscape; but even with all the events of the last 10 or 15 years, it can still be hard for people to overcome that first psychological hurdle.

I want to read an excerpt from your article and then get your comments. You wrote,

"Buying precious metals for the first time is a big move; I know. Now you worry if that's the right decision, that perhaps you don't yet know enough about precious metals. You've heard they make awful investments, while the Dow is hitting all-time highs. When the time comes to convert some cash into gold and silver, once again, you get scared. Except this time, you have no right to be scared. None at all. Neither do I."

Explain your thinking there.

Guy Christopher: I guess psychologically it might have to do with being inside of a crowd, it's easy to do things when the crowd is going along with you. My feeling when I was first buying gold and silver, which was about 10 years ago, I was all alone and I felt all alone and I couldn't go to friends and say, "Oh, look what I paid $800 for or $600 for." When I did, once or twice, I got strange looks and like, "Whoa! What are you wasting your money on that for?" So I had to rely on my own instincts that I was doing the right thing. There wasn't a big crowd of folks standing there with me and there wasn't a crowd of folks or a line of folks behind me if I decided I made a mistake and needed to turn around and sell it; there was nobody to sell it to.

That was the emphasis for writing that story. I felt that it was important to let folks know that when they have those feelings, they aren't alone today. The folks who had a right to be scared were the folks who were buying the stuff 10 to 15 years ago when there was no one else standing in the line.

Mike Gleason: Certainly, the world has changed a tremendous amount since then and we've got governments that are just spending money like nobody's business here and the dollars continue to get devalued. Precious metals are just an extremely important part of a person's personal financial strategy, is it not? That's certainly one of the main reasons I think you're in the camp that they were in here…you've got so many reasons out there to own it. Like you said, there's no reason to be scared, given everything that we've got, it's a scary proposition to not own any precious metals, right?

Guy Christopher: Well that’s right. The world was not as scary 15 years ago as it is today. Fifteen years ago we didn't know of all the horrors and manipulations that we are going through today. The government, the political structure, trillions and trillions of dollars in debt that we didn't have to deal with back then, but there were indications and it was those indications that helped those folks who bought gold and silver early on. It was their instincts that the indications were pointing to bad things coming and then guess what; bad things did come.

Today, we have every piece of knowledge in front of us that says hey, you have everything you need to make a decision right now. You know what direction the country seems to be headed in, you know what societal changes are being made and you also know that the US dollar is a lot weaker because it's been printed into an infinity, that the US dollar is so much weaker now that history and mathematics tells us the dollar is not going to survive.

Once you have all that information in front of you, you should have a pretty good basis for making an informed decision as to what to do with your money.

Mike Gleason: How did you come up with the idea through this column? Was it based on a real experience you had, perhaps or what was the driving force?

Guy Christopher: Yes. I'm happy to tell that story. I was out on a meeting that ran late one night and as I was leaving in the meeting, two ladies, married, children, approached me and said, "We heard you say something gold and silver. We’d like to take you to lunch." And I said to them, "How about I take you to a coin convention." We had one coming up in the area about a week later. Now coin conventions, the name is coin convention but obviously there's a lot of bullion being sold at coin conventions.

I met these gals at the show that following weekend and walked them through the show. It's an interesting thing to walk into a hotel ballroom with $50 million on a table in gold and silver. We spent about an hour meeting people and looking at the displays and I was explaining this is a roll of this and this is a bag of that. They'd never really noticed 90% silver, they didn't know what a bag of 90% silver was. They'd probably never seen a Silver Eagle or a Gold Eagle for that matter.

We sat and talked and they kind of looked at each other and I'd said, well, perhaps these gals aren't ready and I mentioned to them, "Why don't we go get a cup of coffee?" We went to the coffee shop and we sat there and we talked for a moment and they said, "Well, we're kind of scared about this, this is a lot of money to be forking over for this stuff."

That's when I said to them just off the cuff, "You have don't have a right to be scared. The guys who were making these shows 15 years ago when there was nobody else in the show, when they were the only customers in the room, those are the people who had a right to be scared."

They looked at each other and I said (to myself), “well I don't know if I've lost them or not.” I got up and refreshed my coffee and came back and I said them, "Well I guess, ladies, I'm going to stick around," and they said, "No, we're ready to go. We're ready to buy now."

Over the next hour and a half, with my help, they spent $15,000 buying for the first time in their lives gold, silver, 90% bags and stuff like that. I never forgot that story. The two ladies have become very good friends of mine, their families and I are very good friends today and they are still buying gold and silver; I hear from them all the time.

Mike Gleason: That leads me to my next question here and then we're going to move on to the one of the other columns you penned for us, one titled, "What to Expect When Telling Friends About Gold and Silver." You've mentioned a success story there but we often run into a lot of opposition and I don't know if it's my imagination here, but it seems like most people are programmed to turn their nose up at gold and silver as either risky or wacky or somehow a stupid thing to own. Why is that, do you think?

Guy Christopher: It's simply because Americans have been conditioned to see money, gold and silver, credit cards, dollar bills in a way that is unhealthy, financially and monetarily. For the last eighty years, the government has been pretty successful in drumming gold and silver out of the American psyche. They replaced it quite easily, I think too easily, they replaced the constitutional money, gold and silver, they replaced it with credit cards, they replaced it with debt.

They convinced Americans that debt is money rather than gold and silver. They had the schools who helped them, of course. The government fund schools and so schools do what the governments tell them. They had Hollywood on their side and of course they had the media on their side. And so for decades, Americans have been hearing that it's good to be in debt. If you watch television, one of the ads I see constantly is let's go get a credit check, let's get a free credit check.

I don't see any ads from the government saying hey, you should be buying gold and silver. I supposed that if it’s that difficult to get folks to get interested in gold and silver that it shouldn't be a big surprise that you can talk to 100 people and only find two or three who are actually interested. After a while you're almost ready to give up.

I found a technique that I call the "kitchen table seminar". I invite folks who seem to be interested to my house or I get an invitation to their house, Sunday afternoon and I sit down at their kitchen table with them and I spread out gold and silver on the kitchen table. I found that once they get a one ounce Silver Eagle in their hand, they seem to have a better idea of just what it is we're talking about. There's something about a gold coin in your hand that it's kind of magical and it's certainly a lot easier to convince a close friend or a relative that they should take a hard look at gold and silver when you can show them that your money is where your mouth is.

Now obviously, you have to sit down with trusted folks, I don't invite strangers in, but I do find that my success rate is a little higher than average when I sit down with folks and show them, empty a bag of 90% silver on a table and folks perk up and they say, "That looks like the old change from the old days." Well it is the old change from the old days when they made it in silver and now this old change from the old days is worth a great deal of money, great deal of paper money.

That demonstration I found is a lot more effective and it's obviously more effective than just sitting and talking to someone over a cup of coffee.

Mike Gleason: I think we can all relate to the struggles of trying to get the point across and if you’ve got your conviction then don't lose that and just continue to fight a good fight, I suppose. I really do believe like you do that it's incredibly important that people have some sort of protection against what may be coming and a collapse in paper that seem somewhat inevitable, so we certainly want to continue to share the gold and silver story with folks who have not heard it or don't seem to buy into it just yet.

Now you also point out the great hypocrisy that's taking place in government and among the central banks. Well on one hand, they're tirelessly trying to get the citizens to look down on precious metals; they're secretly dealing in gold behind the scenes. Explain what's happening there.

Guy Christopher: We could start with Ben Bernanke who told Ron Paul a few years ago in Congressional hearings that Ron Paul asking, "Is gold money?" and he said, "No, it's an asset, but it's not money." That is the official line from the government but the truth is that governments know a darn well that gold is money. We know that because they hoard gold and they sell gold and they do it secretly and they won't tell us anything about it. It's been for quite a few years since we've had a proper audit of Fort Knox. 1953 was the last credible audit of Fort Knox and the reason we can't get any hard information on where the gold is and who owns it is because the government doesn't want us to know about it. The government prefers that we see the dollar bill as money. The dollar bill is debt. There's nothing backing it except full faith in credit and that full faith in credit right now is on the edge of the cliff as we all know.

So with that situation that the government won't tell us what's going in with our own gold and silver, that's America's gold, it's not Federal Reserve’s, with that situation it tells us that the government is in trouble. It tells us that the government is keeping secrets that they cannot possibly reveal because if they do reveal those secrets a lot of trouble is going to come their way. They're protecting themselves, not protecting the country.

Mike Gleason: Definitely something people need to be very mindful of what’s happening on that front. Well Guy, great stuff. Thanks very much for your insights. I have to say that I personally have really enjoyed your writings and look forward to reading more, as well as having you discuss those with our audience here. So keep up the good work and hopefully we'll talk with you again soon.

Guy Christopher: Mike, I appreciate the opportunity to share some of these thoughts with. Thanks for your invitation.

Well, I hope you enjoyed the replay of that interview with Guy Christopher as much as I did. It was always a joy to speak with Guy and he will be missed. After his passing a couple months back, we announced we are naming an academic scholarship award annually in memory of our late friend. The Guy Christopher People’s Choice award will be given to the student whose essay on sound money is the most popular of all our entries each year – a fitting tribute to Guy Christopher, who connected with our readers and customers in a remarkable way.

Well that will do it for this week. Please check back 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 everyone.

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