Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
After a sluggish January for precious metals, gold and silver markets saw a rally during the first day of February trading, only to see it reverse here today on the 2nd day of the month, after a strong U.S. jobs report, to continue the lackluster performance we’ve seen in early 2024.
On Thursday, gold gained $15 to settle at $2,064 per ounce. As of this Friday recording, the monetary metal has given back all of Thursday’s gain and then some and currently checks in at $2,045 but is still up a slight 0.8% for the week.
Turning to silver, the white metal held critical support at the $22 level during last month’s slump. With today’s mini selloff it is now down 0.8% this week to bring spot prices to $22.81 an ounce.
Platinum is heading for a weekly loss of 2.1% to trade at $907. And finally, palladium is posting a 1.5% decline since last Friday’s close to come in at $980 per ounce.
Metals and equity markets had turned down on Wednesday following the Federal Reserve's interest rate decision.
Fed policymakers left rates unchanged as expected. They also confirmed that they are no longer considering further tightening.
They did disappoint doves looking for immediate rate cuts, however. Chairman Jerome Powell cast doubt on the possibility of easing in March.
But there is no doubt that the central bank’s next policy move will be to lower rates. It’s just a question of when they start cutting and how many times they do so.
Of course, in an election year, any moves on the monetary policy front will carry political implications. A group of Senate Democrats led by Banking Committee Chair Sherrod Brown and Massachusetts ultra-liberal Elizabeth Warren are openly pressuring the Fed to ease. They penned a letter this week to Jay Powell pleading on behalf of Americans who are struggling to afford housing.
Reading between the lines, though, they plainly want stimulus because they think it will help the re-election chances of Joe Biden and other Democrat incumbents. Polls show Biden is in deep trouble with voters due to chaos at the southern border and general dissatisfaction with Bidenomics.
Even though the stock market is hitting records, millions of working-class and middle-class Americans feel left behind. Biden administration mouthpieces cite rosy unemployment statistics and GDP numbers as evidence that Americans should feel fine and happy about the economy.
But official government economic data isn’t translating into actual improving standards of living. A big reason why is that food, housing, healthcare, and other consumer costs continue to increase at an elevated rate versus incomes.
Although the inflation rate as reported in the Consumer Price Index has come down in recent months, it is still running above the Fed’s target. The CPI itself is a flawed measure of inflation. Households know when they aren’t coming out ahead at the end of the month regardless of what government statistics say.
As for the “better than expected” GDP readings that supposedly indicate a soft landing rather than a recession, there’s something fishy going on there, too.
The leading economic indicators are actually turning down. Businesses are pulling back from capital investment. The Philly Fed Manufacturing Index has been negative for 18 out of the past 20 months.
What then is propping up GDP? Well, the answer is massive injections of deficit spending by the federal government.
It doesn’t matter whether it’s productive or sustainable. All that matters as far as GDP number crunchers are concerned is that trillions of dollars are being pumped into the economy by Uncle Sam.
But voters don’t seem too impressed by what they’re getting for all the new debt they are being saddled with.
The political divisions in the country are only growing deeper. The current Constitutional showdown between the state of Texas and the Biden administration over border security is prompting calls by some for Texas to declare its own independence.
Some pundits are also warning of a new Civil War if the 2024 election ends in turmoil. There likely won’t be any outcome that results in the announced loser conceding defeat and his supporters accepting it.
If presumptive Republican nominee Donald Trump wins enough electoral votes to become President, Democrats will insist that he is not the legitimate winner because he shouldn’t have been allowed to run. Rioting and social unrest in the streets of Democrat-controlled cities will likely follow.
If Biden manages to eke out an apparent victory, it’s difficult to imagine Trump conceding defeat under any circumstance. His die-hard supporters will see it as another rigged election.
They are already pointing to unprecedented efforts underway to rig the election. Some states have moved to remove Trump’s name from their ballots. And partisan prosecutors are dragging him through endless legal proceedings with the aim of getting convictions before the election.
There’s a chance the election may not take place with Donald Trump available as an option for voters, even if he is chosen as the Republican nominee. Some partisans eying Biden’s bleak poll numbers have openly stated they want to see Trump dead or imprisoned before the election.
Rising political instability in the United States is a threat investors are largely overlooking at the moment. Bulls see the stock market rising regardless of who wins the election. But they haven’t thought much about what could happen if there is no free and fair election and no peaceful transition of power.
The risk is that confidence in the financial system and the U.S. dollar itself could plummet. If the states of America are no longer, in fact, united, then creditors may balk at continuing to lend to a central government that is already more than $34 trillion in debt.
Foreign countries that currently hold large quantities of fiat Federal Reserve notes may ramp up efforts already underway to diversify their reserves into other currencies and into gold.
Main Street investors as well may suddenly wake up to the need to own gold. Of course, by the time a currency crisis makes headlines in the mainstream media, physical bullion will likely be much pricier and harder to come by than it is today.
Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast.
And just another reminder about our newly launched Wednesday podcast, dubbed the Money Metals Midweek Memo. Join Mike Maharrey for that each week and get some extra commentary and analysis on metals, markets, and money. Just go to MoneyMetals.com or find that on whatever podcast platform you prefer.
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.
