Steve Forbes On The Presidential Race, Fed Recklessness, And Gold by Mike Gleason, Money Metals Exchange
Steve Forbes Pulls No Punches in Exclusive Interview with Money Metals Exchange
Steve Forbes interview with Money Metals Exchange – Transcript
Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
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Today we have a tremendous treat in store for our listeners as we welcome in none other than Steve Forbes. I had the honor of sitting down with Steve Forbes earlier this week and got his insights on the Presidential election, the importance of owning gold, and why he believes the time is now for American politicians and voters alike to bring back a gold-backed currency to help restore our out-of-control monetary system. So stick around for an interview you simply do not want to miss with Steve Forbes, the two-time Presidential candidate and CEO of a multi-media empire.
Once again the big news in the markets this week, unfortunately, was the Federal Reserve’s monthly policy decision. And of course market players and commentators tried to one-up the central bank by anticipating which specific words policymakers would or wouldn’t include in their statement. After the statement was released, markets gyrated as everyone rushed to try to capitalize on the Fed’s announcement.
The Fed decided to leave its benchmark funds rate unchanged for now. No rate hike was expected this month, but stock market bulls had hoped the Fed would also take a rate hike off the table for March and beyond. That didn’t happen. So, in the coming weeks, the financial media will obsess about when the Fed might raise next.
Former Dallas Fed president Richard Fisher admitted in a recent CNBC interview that the Fed had “front-loaded” a stock market rally with its Quantitative Easing program. Fisher expressed concern that investors became obsessed with the Fed and its stimulus instead of fundamental analysis. Now, he warns that the Fed “has no ammunition left.” If investors come to believe that the Fed will no longer support equities, then the stock market could see much lower levels.
However, it’s worth pointing out that former Fed chair Ben Bernanke would disagree with the notion that the Fed is out of ammunition. He indicated that the Fed could very well move to negative interest rates in order to fight a recession and stimulate markets. To be clear, negative interest rates mean that YOU pay THE BANK for holding your money, not the other way around!
In any event, one of the best performing assets since the Fed moved to hike short-term rates by a quarter point has been gold. Since the Fed’s December 16th hike, gold has risen by more than 5%. By contrast, the Dow Jones Industrials has fallen by 8%.
This week, gold is again showing strength versus the stock market. Gold prices rallied strongly into the Federal Open Market Committee announcement on Wednesday. The yellow metal gave back some of its gains on Thursday. As of this Friday morning recording, gold prices come in at $1,118 an ounce, good for a 1.8% weekly gain.
Platinum, which has fared poorly compared to gold in recent months, is faring better this week. Prices are up 5.0% in a wild week of trading for the industrial metal which now comes in at $875 an ounce. Sister metal palladium is advancing today but is little changed on the week and currently trades at $501.
Silver, meanwhile, shows a weekly advance of 1.6%, with prices now trading at $14.29 per ounce. Silver prices are up modestly so far this year. But there’s nothing modest about the extraordinary developments we’re seeing in the silver coin market. Demand for Silver Eagles appears headed for a record January after Silver Eagle sales set multiple records last year. Sales of Silver Eagles are normally strong in January. The release of coins with the new year minted on them always attract buyers. But this January, the U.S. Mint has been unable to keep up with demand, selling out of its weekly allotments and implementing rationing measures. Authorized purchases are also being limited on how many they can buy each week.
Curiously, general retail demand for Silver Eagles and any other form of physical silver is not high at the moment, begging the question of who is actually snapping up all of these Silver Eagles.
But one thing is for sure, the domestic supply and demand situation for physical silver has never been more out of whack as it has been in the past 9 months. The paper price-setting markets seem oblivious. But underneath the surface, the silver and gold futures exchanges are experiencing a supply crunch of their own. Registered gold inventories on the COMEX have fallen to their lowest level in more than 20 years.
There’s a decent chance that something will break in the futures markets this year. And if something like a physical default occurs, the lid on gold and silver prices could get blown clear off. In the meantime, long-term investors should remain focused on the fundamentals for physical gold and silver and not get deterred by paper market manipulators or intimidated by the Federal Reserve’s next action or inaction.