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Washington Braces for Investigations; GOP May Be Forced to Give Back Two Senate Seats
JP Morgan Trader Pleads Guilty to Federal Crimes Involving Gold & Silver Manipulation
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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Coming up we’ll hear a fascinating and informative interview Money Metals president Stefan Gleason gave recently 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’ts when it comes to purchasing gold and silver. You will not want to miss this revealing interview, coming up after this week’s market update.
Following Tuesday’s mixed election outcome, markets responded with mixed outcomes as well.
Stocks got a big lift Wednesday as investors seemed content with Republicans keeping the Senate but losing the House. Precious metals markets, meanwhile, softened. Selling hit gold and silver on Thursday as the Federal Reserve issued a fairly hawkish policy statement, and that softening in the precious metals has continued here today on Friday.
The Federal Reserve is now widely expected to raise its benchmark interest rate next month. And assuming financial markets don’t fall apart in the new year, it could go two to four more times in 2019.
That obviously poses risks to all markets, including stocks, bonds, and metals. However, gold has been relatively resilient throughout this long, drawn out process. Gold trades today at more than $150 above where it bottomed in late 2015.
As of this Friday recording, gold prices come in at $1,210 an ounce, down 1.9% now for the week. Silver looks lower by 4.3% since last Friday’s close to trade at $14.15. Platinum is off 2.2% at $859. And finally, palladium shows a slight weekly loss of 0.4% to trade very close to an all-time high at $1,117 per ounce.
Many precious metals investors want to know how the new Democrat-controlled House of Representatives will affect markets. It certainly could pose some new threats to the President’s agenda and to wealth holders. Expect to see major attacks and investigations directed at the Donald Trump White House, and possibly even Articles of Impeachment. However, the Republican-controlled Senate will be able to thwart any House-passed legislation it doesn’t like – and will have a free hand to confirm a slew of judicial appointments.
Those hoping for a new day in American politics where bipartisan compromise is possible may find that both Republicans and Democrats end up agreeing to some kind of infrastructure bill. Those hoping for a new day where fiscal responsibility returns to Washington will be disappointed. Deficit spending rose steadily under Republican control of Congress. It will rise steadily under Democrat control.
Three quarters of the projected increase in federal outlays comes from so-called “mandatory” spending. That’s code for programs nobody in Congress is willing to touch – namely, Social Security and Medicare.
Just about everyone outside of Congress who has studied the problem of unsustainable entitlement spending growth – from non-partisan economists to former Federal Reserve chairmen – agrees that something must be done now to avert a future crisis. The problem is that just about everyone inside Congress would rather kick the can down the road.
Republicans know that the moment they begin talking about any changes to Social Security or Medicare, Democrats will demagogue the issue to try to scare seniors. And Democrats who are already thinking ahead to the next election have no incentive to attach their names to a bipartisan bill that puts entitlements on a more sustainable path. That would mean giving up their ability to bash Republicans on the campaign trail.
So in short, no major bipartisan solutions to the deficits or the looming insolvency of Medicare and Social Security are likely to come out of the next Congress. Fiscal conservatives can only realistically hope to make progress at the administrative level. President Trump has asked the heads of government agencies to cut 5% or more from their budgets.
Trump should be able to get future cabinet and judicial appointees through the Republican-controlled Senate. The GOP majority there may not be as big as he had hoped, though.
A pair of Senate races remain up in the air. The apparent winner of Florida on election day was Republican Rick Scott. He has since seen his tiny margin of victory get even tinier as additional votes get tallied. It could be weeks before a recount confirms or denies Scott’s win.
Peculiarities in Arizona’s voting process left a backlog of hundreds of thousands of uncounted ballots. Republican Martha McSally was in the lead Tuesday, but now her Democrat opponent may have a slight edge. Legal challenges to this messy process are likely forthcoming.
President Trump as well as legal analysts have long complained that Democrats benefit from illegal voting, manipulation, mishandling, and other irregularities. Democrats insist voter fraud isn’t a major problem. But even if it’s rare nationwide, it becomes a major problem in races that get decided by a small handful of questionable votes.
Some jurisdictions now openly encourage illegal immigrants and other non-U.S. citizens to vote in local elections. Many polling stations don’t even require would-be voters to prove their identity or their place of residence. It would be naïve to assume we always have free and fair elections.
Anyone who pays attention to the shenanigans in gold and silver futures trading knows that we don’t always have free and fair markets, either. This week a JP Morgan trader pleaded guilty to federal charges of manipulating gold and silver markets. For years, he had been getting away with spoofing and other price rigging schemes, allegedly conspiring with senior traders and managers at the firm.
Perhaps the Justice Department under new acting Attorney General Matthew Whitaker will be more aggressive in going after big bank fraudsters who harm gold and silver investors. We certainly hope so.
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.
Mike Gleason: You’ve just heard the first half of Stefan’s informative interview, we hope you enjoyed it. We’ll play the conclusion of his conversation with Alan James during a future podcast.
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.