Chris Martenson: Underpriced Silver Is The “Rip Van Winkle” Metal by Mike Gleason, Money Metals Exchange
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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Coming up we’ll hear a fantastic interview with Dr. Chris Martenson of PeakProsperity.com, author of the Crash Course and now his wonderful new book Prosper. Chris will give us his amazing insights on a range of topics, including the real reasons behind the recent and surprising stock market rally, what to expect in the precious metals markets in the weeks and months ahead and the steps you can take to protect yourself in the face of ever-growing domestic and global chaos. You simply do not want to miss a must-hear interview with Chris Martenson coming up after this week’s market update.
Markets took a back seat to politics this week, as Republicans formally made Donald Trump their nominee for president. Trump aimed to unite the party by putting a conservative with legislative and governing experience on the ticket in Mike Pence.
Outside of his home state of Indiana, however, Governor Pence is not very well known to voters. While many Republicans cheered the pick, the mainstream media seized upon some of Pence’s past statements and policy positions. Pence’s views on issues like trade agreements, Muslim immigration, and the Iraq war seem to contradict Trump’s.
But on the issues of monetary policy in general and sound money in particular, Mike Pence could prove to be a strong asset. While in Congress, he helped lead efforts to reform the Federal Reserve. In 2010, he delivered a speech on the House floor championing an end to the Fed’s so-called “dual mandate.”
Mike Pence: After years of runaway spending, borrowing in stimulus, it’s clear and the American people know it, we can’t borrow and spend and bail our way back to a growing economy. Unfortunately, judging from the latest round of Quantitative Easing known as QE2, the Federal Reserve hasn’t gotten the message. Printing money is no substitute for sound fiscal policy. This week, I introduced legislation to end the dual mandate of the Fed. It is time once again to demand that the Federal Reserve focus exclusively on price stability and protecting the dollar. We can’t print money as a pathway to prosperity. I urge my colleagues to join me in ending the dual mandate of the Fed.
The dual mandate gives Fed officials cover to pursue Quantitative Easings and other interventionist schemes in the name of promoting “full employment.” Other central banks around the world have no such dual mandate. If the Fed stuck to only the single mandate of promoting price stability, then it wouldn’t be orchestrating bank bailouts or trying to boost the stock market or prevent economic cycles from running their course. The Fed would just be concerned with maintaining the value of the dollar. At least in theory.
In practice, even the mandate of “price stability” has been used by Fed officials as an excuse to roll out inflationary stimulus programs. Fed chair Janet Yellen’s idea of price stability isn’t 0% inflation. Her avowed target rate is an annual increase in prices of 2%. Maybe some future Fed boss will decide that 5% inflation represents “price stability.” Any inflation target is entirely arbitrary, as is the gimmicked CPI basket that’s used to calculate the official inflation rate.
The way to achieve real-world price stability is to define the Federal Reserve Note, commonly referred to today as the dollar, in terms of a basket of real economic goods. In actuality, the dollar was to be defined as a specific quantity of silver, and the U.S. Constitution set up gold and silver as America’s money. The price movements of gold and silver over time are a reflection of the Federal Reserve dollar’s steadily declining purchasing power. Sometimes precious metals markets overshoot and undershoot in wild swings up and down. But if you smooth out the noise and just look at average gold and silver prices in each decade, it’s clear that they continue to maintain their purchasing power across the decades as sound money should.
Well, turning to this week’s price action in precious metals markets, gold drifted lower for the second straight week through Wednesday. Prices bounced Thursday, but as of this Friday morning gold is headed for a weekly decline of 1.1% to bring the gold quote to $1,324 an ounce.
Spot silver checks in at $19.73, down 2.7% this week. On a technical basis, silver could fall a bit further in the days ahead before it hits major trend line support. There’s no guarantee, of course, that it will.
Palladium, meanwhile, remains white hot. Palladium is up another 5.4% this week to $686 per ounce. Its sister metal platinum is also holding up well when compared to the money metals, gold and silver. Platinum is unchanged since last Friday’s close and trades at $1,094 as of this Friday morning recording. Platinum bulls are betting the rare metal will play catch up to gold, which currently commands a $230 premium over platinum. That premium has narrowed over the past month. It could be on a path to narrow back to parity – and eventually revert back to a historically normal gold discount versus platinum. Right now, it’s platinum that trades at a discount. That makes platinum a value opportunity for precious metals investors who want to diversify outside of gold and silver.
The good news is that platinum is now within reach of investors with small budgets. In addition to one-ounce coins and bars, Money Metals Exchange offers tenth-ounce bars and even single gram bars. You can also buy one-gram bars minted out of palladium or gold.
Though it’s generally more cost effective to buy full-ounce products when they fit your budget, fractional sizes can give you added convenience and flexibility for barter, trade, and gift giving.
Well now, without further delay, let’s get right to this week’s exclusive interview.
Chris Martenson: Underpriced Silver Is The “Rip Van Winkle” Metal
Mike Gleason: It is my privilege now to be joined by Dr. Chris Martenson of PeakProsperity.com and author of the book, Prosper: How to Prepare for the Future and Create a World Worth Inheriting.
Chris is a commentator on a range of important topics such as global economics, financial markets, governmental policy, precious metals, and the importance of preparedness, among other things. It’s great, as always, to have him with us. Chris, welcome back, and thanks for joining us again.
Chris Martenson: Mike, it’s a real pleasure to be here with you and your listeners.
Mike Gleason: Well it’s been a number of months since we’ve had you on last, far too long by the way, and there has been a ton of things going on in the financial world of late. I’ll get right to it here. For starters, what did you make of the Brexit decision last month? Is this potentially the beginning of some meaningful opposition to the ongoing drive for a world government? Or was this just a one-off event?
Chris Martenson: No, this was not a one-off event, this was a continuation of a pattern that we’ve been