Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Well, the shift in the calendar has so far failed to produce any shift in the trend for precious metals markets. Gold and silver are extending their recent price declines here in the first few trading days of October and of the fourth quarter.
Surging long-term interest rates are weighing on bonds, stocks, real estate, and for now -- metals markets as well.
For the week, gold is dipping 1.0% to bring spot prices to $1,841 per ounce as of this Friday midday recording. The monetary metal has given back its gains from earlier in the year and is now essentially flat for 2023.
While disappointing to bulls, gold’s performance could have been a lot worse this year. Given the biggest surge in bond yields seen in decades plus a rising U.S. dollar exchange rate versus foreign currencies, gold would normally be expected to fare a lot worse than break even.
Silver, though, isn’t holding up as well. The selloff of the past few weeks has brought the white metal’s performance to a yearly loss of roughly 10%. Today’s rally notwithstanding, silver is suffering a 2.9% decline this week to trade at $21.74 an ounce, although things don’t look quite as bad as they did at this time yesterday.
These low prices are bringing bargain hunters into the bullion market. And silver is now looking deeply oversold on a technical basis with the prospect of seasonal strength potentially due to kick in.
Meanwhile, dysfunction in Washington, D.C. continues to raise the risk of national bankruptcy and the fall of the U.S. dollar as world reserve currency.
Congress just hastily passed a stopgap funding bill to avert a government shutdown. But the maneuver has thrown the House of Representatives into turmoil as a handful of fiscal conservatives, led by Matt Gaetz, ousted Speaker of the House Kevin McCarthy.
McCarthy had given in to Democrat spending demands in order to get their votes for the stopgap scheme. This past summer, McCarthy had given in to Democrat demands that America’s debt limit be removed in order to clear the path for unlimited deficit spending.
The passage of the stopgap funding scheme last weekend was the last straw for Congressman Gaetz, who expressed frustration that has been building for years over the failure of Congress to practice any semblance of fiscal restraint in the face of a ballooning national debt.
Matt Gaetz: We are $33 trillion in debt. We are facing $2.2 trillion annual deficits. We face a de-dollarization globally that will crush Americans, working class Americans and the rapid global de-dollarization of the economy. When you look at the BRICS system, Brazil, Russia, India, China, South Africa, they're moving away from the dollar. And just in August, they added six new countries, including G20 economies in the western hemisphere and gulf monarchies. Moreover, you saw U.S. News say that the number one economic trend of 2023 is de-dollarization, and if this country's going down and if we're losing the dollar, I'm going down fighting. And I don't care if that means fighting Republicans, Democrats, the Uni-party. I don't think voting against Kevin McCarthy is chaos. I think $33 trillion in debt is chaos. I think that facing a $2.2 trillion annual deficit is chaos. I think that not passing single-subject spending bills is chaos. I think the fact that we have been governed in this country since the mid-nineties by continuing resolution and omnibus is chaos.
Because of his stance, Matt Gaetz is apparently now a pariah on Capitol Hill -- perhaps the most hated man in Washington. Even some of his colleagues who share his fundamental concerns believe his actions were misguided. But many people outside the Beltway regard him as a hero for taking a stand and throwing a wrench into the bipartisan Big Government spending machine.
Kevin McCarthy accused Gaetz of attacking the institution of Congress based on a personal vendetta. But Congress has been beset by decades of institutional failures. And frustrations on both sides of the aisle are reaching a boiling point.
Amid the acrimonious debate leading up to last-ditch efforts to avert a government shutdown, a Democrat member of Congress decided to pull the fire alarm at the U.S. Capitol. That may be symbolic of just how bad things have gotten politically and financially in this country. Unfortunately, emergency responders will be unable to fix what politicians have broken.
The unprecedented toppling of a sitting House Speaker by members of his own party raises more questions than answers about what comes next.
There will likely be another high-stakes budget fight with a government shutdown in play. Perhaps another stopgap measure will kick the can down the road into 2024.
But the day could soon come when Washington won't be able to kick the can down the road any further. And de-dollarization won’t just be something foreign central banks pursue out of prudence. It will be something that individuals pursue out of necessity as the dollar’s devaluation forces them into alternative assets that can retain their purchasing power over time.
In other news, Money Metals Exchange has again teamed up with the Sound Money Defense League to help right-minded students pay for the ever-increasing expenses associated with higher education.
Our Sound Money Scholarship is the only known gold-backed scholarship of the modern era.
We have set aside 100 ounces of physical gold (currently worth more than $180,000) to reward outstanding students who display a thorough understanding of economics, monetary policy, and sound money.
The Sound Money Scholarship is open to high school seniors, undergraduate, and graduate students with an interest in economics, specifically the free-market tradition.
This year’s blue-ribbon panel of judges include economists at the American Institute for Economic Research and Heritage Foundation as well as Judge Andrew Napolitano, a best-selling author and former Fox News Analyst.
If you are a student who has a keen interest in sound money, or the parent or grandparent of one, then please visit moneymetals.com/scholarship for more information.
Well, that will do it for this week. Be sure to 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 wonderful 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.