Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Later in today’s program we’ll hear from the one and the only Gerald Celente of the Trends Journal. The top trends forecaster shares his thoughts on why protests in many nations throughout the globe are a driver in central banks continual printing of a massive amount of money. Gerald also weighs in on the coronavirus situation, the U.S. strike on Iran earlier this month, and why he believes gold may hit a new all-time high as soon as this year. So don’t miss another jam-packed and incredible interview with Gerald Celente, coming up after this week’s market update.
As the coronavirus continues to spread, global financial markets are showing the symptoms of investor unease.
Chinese and emerging markets stocks have taken a big hit over the past several days, as have commodities. Crude oil prices have dropped 13% over the past two weeks while copper has seen a 12% drop on concerns about the impact of the China virus on global demand.
Gold and silver, meanwhile, are faring much better as some investors seek out the precious metals for safe haven protection. For the week, gold prices are up 1.0% to trade at $1,589 an ounce. Spot silver currently checks in at $18.11 per ounce, down a slight 0.3% since last Friday’s close.
Turning to platinum, it is taking a 4.4% hit to the downside this week to trade at $966. And finally, palladium is cooling off a bit this week, dropping 5.8% to bring its price per ounce to $2,308.
Markets brushed off the Federal Reserve’s policy announcement on Wednesday. The Fed kept rates unchanged as expected. Chairman Jerome Powell reiterated the central bank’s policy of “symmetric” inflation targeting. That translates into allowing inflation rates to rise above the Fed’s 2% target for a sustained period to make up for recent periods where it ran below 2%.
Obviously, the central planners on the Federal Reserve Board remain unsatisfied with the level of price increases consumers face. Food and fuel are still too cheap, they say. Medical care and college tuitions are too affordable for too many people.
And it’s all because the dollar isn’t depreciating fast enough for the Fed’s arbitrary inflation target to be hit.
The U.S. Dollar Index is firming so far this year. And the threat of a global pandemic has policymakers concerned that consumers and businesses will hunker down and further depress price levels in dollar terms.
The mainstream media and political correctness police have other concerns as top priorities. No, it isn’t about the risk of Americans being infected from international travel into the U.S. It’s about the risk of Chinese people being stereotyped and subjected to “racism” and “sinophobia.”
Meanwhile, CNN alerted Americans to the alarming fact that President Donald Trump’s Coronavirus Task Force isn’t “diverse” enough. Badgering people about what they look like is apparently helpful in fighting the spread of a deadly disease. Thank goodness there are journalists willing to do such brave and heroic work!
And thank goodness the Fed stands ready during any potential national emergency to pump limitless amounts of cash into the repo market and banking system.
On Thursday, the Federal Reserve Bank of New York pumped another $83 billion in new liquidity into short-term lending markets. The move saved the banks from having to sort out their own illiquidity issues for another week.
Unfortunately for other industries – automakers in particular – the Fed can’t liquify the markets for palladium and rhodium by injecting fresh supplies of metals.
The markets for these critical metals used in catalytic converters remain beset by physical supply deficits. This in turn is causing unusual spikes in leasing rates and distortions in pricing mechanisms as bid/ask spreads widen.
According to Refnitiv GFMS, the palladium market will operate under a supply deficit of 883,000 ounces this year. Prices may have to rise even higher for the already pricey metal before supply and demand reach an equilibrium.
We would caution that it’s pretty late in the cycle to be a buyer of palladium here. The good news is that it’s still very early in the cycle for other metals, including lagging platinum and dirt-cheap silver.
Consider that in 2016, palladium began the year trading around $500/oz. Prices have since quintupled.
Silver bottomed at the very end of 2015 just below $14/oz. Prices advanced strongly that next year before falling back into a major trading range. Silver has managed to make only modest net progress.
A mere quadrupling from its late 2015 low would take silver over $50 – and that would likely just be the warm-up phase that finally establishes new all-time highs. Then the explosive phase could begin that sees new high after new high, week after week – just like we’ve seen in palladium over the past year.
When silver and gold prices are making new records, perhaps the Fed will finally have the inflation it so desperately wishes for. Pushing inflation rates back down, though, won’t be so easy. Once the genie is out of the bottle, it can’t exactly be put back in.
Well now, without further delay, let’s get right to this week’s exclusive interview.
Mike Gleason: It is my privilege now to welcome back the one and the only Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is a frequent guest here on the Money Metals podcast and perhaps is the most well-known trends forecaster in the world and it's always great to have him on with us.
Gerald, thanks for the time again today. I guess we can still say happy new year. Welcome back to you.
Gerald Celente: Well thank you and thank you for your kind words.
Mike Gleason: Well, Gerald, here we are at the start of another year and a new decade also. At the start of the last decade in 2010 we were in the aftermath of the Financial Crisis that looked like the reckoning for all the debt, the expansion of government and the irresponsible, crooked behavior of folks on Wall Street wouldn't be too far away, the Tea Party movements and Occupy Wall Street were indications that people had just about enough. But here we are. The debt bubble is much larger, there have been exactly zero accountability or restraint on Wall Street, government is much bigger and more expensive than other and somehow most Americans have been lulled back to sleep. Stock prices are up. The president is talking about the greatest economy ever. Clearly the lessons of the last financial crisis don't seem to have stuck. What do you make of that and what are you expecting for the decade ahead given that people seem to have short attention spans and a high tolerance for nonsense? Can the powers that be keep the wheels on this sorry system for another decade?
Gerald Celente: Well I don't know if they can keep it on for another decade. As far as people not caring, they're not tuned into the real news. They're turned into the impeachment process. They don't have a clue what's going on around the world. And of course, now the Coronavirus. The Coronavirus, goodbye Rosie, queen of Corona's, right? Everywhere. People are freaking out about that. As far as keeping the game going and then people learning anything, you don't teach addicts anything and that's all Wall Street are, they're money junkies. They don't care about anything other than making money and an addict doesn't think, an addict doesn't feel. They're addicted. And what the Federal Reserve and the central banks are, they're the money junkies. They keep the addicts going. They're the dealers.
This is all it is, and everybody knows it's one big Ponzi scheme. You look at the six trillion dollars that the Federal Reserve and the Federal Bank of New York, the Reserve Bank of New York have dumped into the repo markets since September 17th of last year and then they're buying 60 billion dollars’ worth of bonds. I'm not going to call it Quantitative Easing. "My name is Powell and I'm the Fed Chair and all over we're buying back bonds, we're doing the same crap we did before. We're not going to call it Quantitative Easing and all you little presstitutes out there, all you little boys and girls in the mainstream media that get paid off by your Washington whore masters and your corporate pimps, don't you question me. I'm the Federal Reserve chairman. I sucked up and bowed down a long way to get where I am." That's what we're talking about.
Mike Gleason: Well switching gears a little bit, you mentioned this in your first answer there but the Coronavirus in China has certainly been a big story over the last week or so. It appeared that the markets were starting to get riled earlier this week on fears that it would have a big impact on the global economy but as we're talking here midweek equities have rebounded and those fears have dissipated for the most part. Now we've had some virus scares in the past, SARS for instance at the beginning of this century. Talk about this, Gerald. Is this much ado about nothing or will this turn into a major problem that really effects things economically? Give us your thoughts here.
Gerald Celente: Well again the Coronavirus is the mainstream media's headline news. “People are dying, cities in China shut down, tens of millions quarantined, the government's in crisis, foreigners are evacuating as the death toll rises, flights are being canceled.” You mentioned equity markets across the glove tanked Monday but they bounced back. While it's difficult to forecast how fast and wide the virus will grow to date, what, about 136 people have died in a nation of 1.4 billion people? I mean come on. And most of the victims were chronically ill before getting the virus. What do you have, about, I think it's like 1.5 million people die a year in car accidents globally? You look at the flu virus in America, what is it, about 60,000 people die of it each year.
They're comparing it now to the SARS outbreak in 2002. Severe Acute Respiratory Syndrome. It should be noted back then 800 people died of a world population of 6.281 billion. So, the numbers don't add up. The numbers are tiny. And again, could this get worse? Could it become the flu of the early 1900s? Maybe, I don't know, but right now it's not doing anything in real numbers. So, it seems to be only a temporary hit. Again, it could get worse. Look, when people complain about climate change I say, "Grow up. You're going to be dead before the climate changes. All the poison that they're putting in our food and our water and the air and viruses..." What do they have, Swine Flu virus in China? About 60-70% of a pig population wiped out. What's causing Swine Flu? Couldn't be the way they're raising these things, these big factories with all the chemicals and crap and antibiotics they pump into them.
Then I'm thinking, the Chinese, they eat a lot of pork, don't they? Oh, this is transmitted from animals to people. Could anything happen like that? I mean as I said, they're poisoning us a million different ways so who knows how far it's going to go but right now as I see it, it's overblown.
Mike Gleason: Certainly, tensions with Iran we're looking like a big story earlier this month, but things have quieted down a bit as it appears both sides stood down for the most part. Let's get your thoughts on the potential war drums there and the likelihood of continued strife in the Middle East and where you see things headed on that front, Gerald.
Gerald Celente: Well it's going to continue just, sort of, President Trump's peace plan, it allows the Israelis to keep stealing the Palestinian land. They call it "settlements." It's against international law so that's going to inflame that, as well. And you're also looking and again, we've been following this very closely with Iran, it's the Israeli/United States/Saudi triangle aimed at Iran. They don't want Iran to have any presence in the Middle East. Only America should be there. How many thousands of miles away are we? And they're neighbors over there. So, when you're looking at Iran just listen to what we heard this guy, Bryan Hook, who's the US special representative to Iraq. He said, talking about the fellow that is replacing Solemani who was assassinated by the United States, the Iranian general. His name is Ghaani. If says, "Ghaani follows the same path of killing Americans then he will meet the same fate. That isn't a new threat. President Trump has always said that he will always respond decisively to protect American interests. I think the Iranian regime understands how that they cannot attack America and get away with it," said Hook.
Iran attacking America, huh? Where are they attacking America? Oh, in Syria? Where America's illegally there? In a sovereign nation? Oh, wasn't Iran invited there by their president? "Yeah they were invited there by their president but I don't like that guy so we could be there," says America. Oh, America in Iraq? You mean the Shia Iraqi's are attacking the Americans who they've been trying to throw out of there since they illegally invaded in 2003 on a war based on lies? Oh, oh, those Americans? Oh and the American interest that Hook is talking about, what American interests can they be? It couldn't be Raytheon or ExxonMobil. Couldn't be Halliburton or United Technologies or Lockheed Martin. They're all war profiteers. They keep building this thing up and building hate.
Americans have learned to hate the Iranian's. Is it any different than Hitler teaching the people how to hate the Jews? But I want to keep going with this because they said that Solemani was an imminent threat. Those are quotes. We were writing about this in detail. They have not provided one shred of evidence. Then we found out that this thing was planned several months ago. Why would anybody believe one thing from Saddam Hussein having weapons of mass destruction to when I was a young guy the Vietnam War, the Gulf of Tonkin incident never happened, so all these other lies that they're making up.
So, in asking about tensions in the Middle East, this could be the beginning of World War 3. They're celebrating the Holocaust, it's 75 years ago, that's not ancient history. Nations destroyed, Germany, Italy, bombs away over Britain, France. What makes you think it's not going to happen again if we keep going to war? People better wake up to this. Hey, what about the Superbowl? I wonder who's going to win the game, you know?
Mike Gleason: Well when we spoke last in November I got your thoughts on the presidential election coming up this year. Looks like the inept Democrats are going to be having trouble beating Trump. We talked about how lousy their candidates seemed to be and what a waste of time this impeachment effort is. To us it doesn't look like much has changed since then but we are entering the primary season now and I suppose we should hear what you have to say about the race as it stands now and what, if any, wildcards you might see with the potential to shake things up. Obviously this story's going to be using up a lot of oxygen in the months ahead.
Gerald Celente: Yeah well again the impeachment thing is going nowhere because to be convicted, two-thirds of the Senate has to convict him, and Republican's already have a majority in the Senate so they're not going to convict him. So, it's a waste of time. The wildcard is the Trump card. There's no wilder card. People need to understand this guy will do anything to win. He's already mentioned before him talking about how great the economy is doing at Davos and this is the best America's ever done. What is it… a 2.3 average (GDP) growth since he's been in? Around there. I mean, that's no growth. Nothing. So, he'll do anything to win and one of the things is we're going to see interest rates go lower between now and November. We may even have them to zero to negative. So, he's going to do what he can to pump up the economy and as we said in our top trends for 2020 it's going to be Trump by default. Default of the Democrats because they don't have anybody good to run against him.
Bernie Sanders isn't a guy that's going to win swing states. He's the front runner right now. And none of the others will, either. It's all the Electoral College and the swing states is going to go for Trump.
Mike Gleason: I can't let you go without getting your thoughts on the metals markets. Gold prices have perked up early in the year, although silver is still grinding sideways. But we think it will be tough to get a major move higher unless there is some kind of break an investor complacency. After all, I mean, why buy gold when stocks are ratcheting up higher nearly every day? It is possible, of course, to have both stocks and gold moving higher together. In fact, that's what happened last year but we don't sense that investors are broadly worried about rising prices and making inflation trades. Let's get your comments on gold and silver markets and tell our listeners if you think 2020 will be bullish or bearish for the metals, if you would?
Gerald Celente: I believe it is going to be very bullish. I think we have a potential of gold hitting $2,000 this year. All the central banks are lowering interest rates. They're going to keep doing it. And the cheaper the money gets; the more valuable gold becomes. Then of all the global tensions going on, we just mentioned a little bit of what was going on in Iran. How about what's going on in Lebanon and people taking to the streets continually. Look at Iraq, the people protesting. Over 500 have been killed by the security forces. People have no future. It's going on all around the world. Whether it's from Chile to Bolivia to Columbia to Peru, Venezuela, Algeria, South Africa, Zimbabwe, Mali. Protests, protests, protests and governments doing everything they can to keep the economies going by lowering interest rates, pumping in more cheap money.
As I mentioned what the Federal Reserve has already done and the Federal Reserve Bank of New York with the trillions that they're pumping in. So, it's going to only artificially prop up the markets. A wildcard event like a war in the Middle East and oil prices spiking, that will bring down the global economy and equity markets. So, I believe that gold is going to continue to be a very bullish year for it. It's the ultimate safe haven. Nothing comes close to it and silver follows.
Mike Gleason: Well great stuff once again, Gerald. We always appreciate the time. Thanks for your candor and for sharing your wonderful insights once again. As we always do before we let you go, let's have listeners hear about the Trends Journal and how they can follow your organization more closely and keep up with the latest trends, which I see you've been at for 40 years now, so congratulations.
Gerald Celente: Well thank you. Yeah they can go to TrendsJournal.com. The Trends Journal is the only magazine in the world that tells you what's going on, what's next and what it all means. The future is now and if you're going to stay tuned to the mainstream media, you're not going to see much of anything that's going to be beneficial for you. Again, we went from a quarterly to a monthly. Now we're a weekly because events are changing so rapidly and the trends that are developing are so powerful.
Mike Gleason: Yeah it's tremendous information. Highly recommend people get on board with The Trends Journal and follow Gerald and his team and the fantastic content they're putting out on a regular basis. As he says, history before it happens, and that's a great place to go to read that and really stay up on things.
Well thanks again, Gerald. We always enjoy the conversation. I can't wait to have you on again in the not so distant future as we discuss how things are going to shape up for investors this year. Take care and have a great weekend.
Gerald Celente: All right, thank you.
Mike Gleason: Well that will do for this week. Thanks again to Gerald Celente, publisher of the renowned Trends Journal. For more information, the website again is TrendsJournal.com, be sure to check that out.
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.