Craig Hemke: Central Banks Able To Get “Trading Machines” To Pump Up Markets, For Now… by Mike Gleason, Money Metals Exchange
Don’t want to listen? Read the podcast below!
Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Later in the program, we’ll hear a tremendous interview with Craig Hemke of the TF Metals Report. Craig discusses why he believes the bullion banks are finding it harder and harder to suppress the price of gold and silver so far in 2016, provides some great analysis on some of the key price levels he’s watching for in the metals, and shares his outlook for the final four months of the year. So be sure to stick around for my conversation with Craig Hemke coming up after this week’s market update.
Precious metals markets surged Tuesday to open the holiday-shortened week. But they have given back some of those gains since Wednesday.
Gold currently trades at $1,334 an ounce to register a 0.4% loss on the week. Silver screamed above the $20 level on Tuesday only to fall back below it on Wednesday and is struggling a bit here today to close the week. Silver prices now come in at $19.44 per ounce, and, like gold, show a weekly decline of 0.4%. Platinum and palladium advanced about 2% each through Thursday’s close but are giving those gains back here today. For the week platinum is up slightly to trade at $1,074, while palladium is unchanged since last Friday’s close and comes in at $682.
Precious metals investors must contend with uncertainty surrounding the economy, the upcoming election, and the timing and direction of the Federal Reserve’s next policy move. The Fed meets September 20th and 21st to decide whether to keep stimulating the stock and bond markets. Propping up financial assets may not be the Fed’s stated purpose, but it has been the major effect of its ultra-low interest rate policies and bond-buying campaigns.
On Wednesday, the Federal Reserve released its latest Beige Book report. The Beige Book consists of economic data from each of the 12 Federal Reserve districts. It is used by Fed policymakers to gauge the health of the economy. Cynics might charge that the Beige Book offers Fed officials anecdotes to help them spin whatever broader narrative they want to push.
Lately, Fed officials are pushing the narrative of moderate economic growth and a tightening jobs market.
Fox Business Anchor: Labor conditions tight. You know that the Fed has a dual mandate. They’ve got monetary policy and, of course, the employment picture. That doesn’t seem to me like they can make the case for a raise right now.
Economic Analyst: Look, this Fed is confused. It does not know what it’s doing. It does not have a playbook. It’s so in confusion within each speech that they do. On one hand they say labor market conditions are tight, on the other hand they say the economy is modest.
Market Analyst:Think modestly is probably about the rule of the day here, which, to me, means that the Fed (hiking interest rates) is off the table prior to the election, but maybe on it for December.
If the economic picture really is as robust as the Fed paints it, then the central bank should be raising rates. But of course Janet Yellen and company don’t want to risk triggering a stock market meltdown before the election. Some polls now show Donald Trump running even with Hillary Clinton among likely voters. That’s making a lot of people in Washington nervous, including Fed officials.
So they have to come up with excuses for why they can’t raise rates just yet. The most convenient one is that the official inflation rate haven’t yet risen to their 2% objective. But by the time official inflation does hit 2% year over year, real-world inflation will likely be running significantly higher.
Right now the bigger problem in the economy – and one that is constantly being covered over with specious statistics – is the fact that millions of Americans remain out of work or stuck in low-paying jobs. Some 7 million men aged 24 to 54 have statistically disappeared from the workforce because they have been jobless for so long.
The Fed touts steady increases in job openings as evidence that businesses are looking to hire. But that doesn’t mean they are actually hiring. Job growth continues to lag behind as the workforce participation rate remains mired in the dumps.
The Fed also must contend with the fact that other major central banks around the world are intent on holding rates down and pursuing stimulus schemes. The European Central Bank on Thursday opted to leave its key interest rates unchanged near zero. The ECB recommitted to 80 billion euros a month in asset purchases, at least through March of next year.
The euro has actually shown some modest strength this year. A brief post-Brexit sell-off didn’t turn into a crash, and the euro has since crept back up versus the dollar. The U.S. dollar index is down modestly year to date, though its low point was reached back in May. For now the dollar remains range bound.
Even if we don’t get any major moves in the currency markets anytime soon, precious metals can still trend on their own momentum. National currencies only rise or fall versus other currencies. It’s a zero sum game. By contrast, physical metals can gain in terms of dollars regardless of whether the dollar is gaining versus other currencies. Over time, ALL fiat currencies tend to depreciate versus hard assets. In other words, gold and silver can be expected to rise in value in terms of every fiat currency.
Well now, for more on what’s ahead for the metals and markets as we get closer and closer to the big November election, let’s get right to this week’s exclusive interview.
Q&A with Craig Hemke
Mike Gleason: It is my privilege now to welcome in Craig Hemke of the TF Metals Report. Craig runs one of the most highly respected and well known blogs in the industry and has been covering the precious metals for close to a decade now and puts out some of the best analysis on banking schemes, the flaws of Keynesian economics and evidence of manipulation in the gold and silver markets.
Craig it’s great to have you back and thanks again for joining us today. Welcome.
Craig Hemke: Hey Mike, it’s always a pleasure. Thanks for the invite.
Mike Gleason: Well we’ve got some pretty good price action here over the last week or so in the metals, which was driven by that lackluster jobs report that came out last Friday. Now, I recall going back a couple of weeks and following your work there at TF Metals, you were looking for a sell off there at the end of August. And that’s exactly what happened. You believed we would get a bounce back immediately following that and sure enough that’s what we got. Kudos to you first off for your accurate calls there, but talk about the resiliency that we’ve seen in the gold and silver markets. And then share with us your thoughts on where we are technically here on the charts. Are we going to