As precious metals markets continue to hunt for a seasonal bottom, monetary policy is emerging as a significant issue in the presidential election. This week, Donald Trump spoke in front of the Economic Club of New York where he addressed a question on interest rates. The Republican nominee took the opportunity to lay into the Federal Reserve and accuse it of playing politics.
Donald Trump: I believe the Fed is very political. It’s become very political, like many other groups in this country. Beyond anything I would have ever thought possible. So I think you’re going to have low interest rates until the end of the year. Maybe no increase at all. And the market will stay artificially high. Then we’re going to have to see what happens after that. I think they’re not doing the right job. I really believe if it was a political decision or the right decision, they’re going to go with the political decision every single time.
Trump has previously expressed support for auditing the Federal Reserve. He has even spoken favorably about the idea of returning to a gold standard. But Trump has also said that as a real estate investor, he favors low interest rates. And he surely knows that as president, he could face a debt funding crisis in the event of higher borrowing costs for the government.
Michael Mauboussin: Here’s what active managers can do
Unfortunately for deficit hawks, neither Donald Trump nor Hillary Clinton have any credible plans to balance the budget. Both candidates are pushing for more spending rather than less.
Unlike Clinton, Trump advocates cuts in corporate and personal income tax rates. The Trump tax plan assumes the economy will achieve much faster rates of economic growth than it has in recent years. If these growth assumptions prove to be overly optimistic, then federal budget deficits could widen in the years ahead regardless of who wins in November.
In fact, the deficit is already starting to widen. The latest projections from the Congressional Budget Office show that the annual budget shortfall for 2016 will rise to $590 billion. That’s $152 billion more than in 2015. The CBO’s projections paint a bleak fiscal picture heading into the 2020s as mounting entitlement obligations swell the national debt. Over the next decade, the government is forecast to run up another $9 trillion in unpaid bills.
But nobody in Congress or on the campaign trail seems too worried about the impending debt crisis. After all, the Federal Reserve can always step in and buy government bonds in unlimited quantities. But that merely transforms the crisis from one of solvency to one of confidence in the currency. The Fed may be able to create as many dollars as it wants, but at some point all those dollars will start to lose value more rapidly than Fed policymakers intend. Then they will really be in a bind.
And so will investors who haven’t sufficiently diversified themselves out of dollars and into hard assets.
Turning to this week’s market action in hard money, gold prices drifted lower and now check in at $1,309 per ounce, down 1.6% since last Friday’s close. Silver is also off by 1.6% on the week as of this Friday morning recording to trade at $18.81 an ounce.
Precious metals markets could get a boost next week after the Federal Reserve’s policy meeting on the 20th and 21st. As always, much will depend on how investors interpret the wording accompanying the rate decision.
In markets so heavily influenced by the words of a small group of central bankers, it’s hard for ordinary investors to find a silver bullet to conquer Fed-induced volatility. But silver is certainly one asset within a well diversified portfolio that can help mitigate the risks of monetary policy gone awry.
Physical silver just might serve as your silver bullet for killing horrifying threats such as inflation, geopolitical turmoil, and the coming debt crisis. You can even arm yourself with silver bullion in shape of actual silver bullets. Yes, Money Metals Exchange now offers one ounce and ten ounce silver replica bullets made of pure silver!
The manufacturer, Elemetal, is one of the largest refiners in the U.S. Their products are well regarded for quality and purity. Their one ounce silver bullets are made from .999 fine silver and are modeled after .45 caliber rounds. They come 20 to a box. Meanwhile, the new 10-oz silver bullets are modeled after a .50 caliber Browning Machine Gun round, which began wide scale military use during World War II.
Pure silver bullets make for a great conversation starter in your home or office. They also make for a memorable gift, or simply just another way to switch some of your paper dollars backed by nothing but confidence into something holding timeless, tangible, and intrinsic value.
Well now, without further delay, let’s get right to this week’s exclusive interview.
Mike Gleason: It is my privilege now to welcome Michael Rivero, founder and editor of WhatReallyHappened.com. Michael hosts a daily radio show and covers geopolitics, financial markets, and many other topics like few others can, and it’s always great to have him on. Michael, thanks so much for joining us today. How are things in Hawaii?
Michael Rivero: Well, at the moment, they’re a little bit wet. We got a lot of heavy rain over us and possible thunder showers, but other than that, it’s another beautiful day in paradise, or at least that’s what all the tourist agencies keep telling all the tourists.
Mike Gleason: Well, the political theater is dominating the landscape right now, and you’re my go-to guy in this stuff, so I’m glad we’re able to have you on this week. Just a few days ago, as America remembered the events of 9/11 on the 15th anniversary, Hillary Clinton stole the headlines with what they were originally calling some sort of medical episode. And as a result, the grumblings about her poor health have been kicked into overdrive, and now we’ve gotten the news outlets who were once telling us that her supposed poor health were nothing but a vast right wing conspiracy are now admitting themselves that there is something very troubling going on with her medically.
But before we get into the potential scenarios and how this will affect the presidential race, first off, what is your take on the state of Hillary’s health after what has been a series of data points now that something may in fact be seriously wrong with her?
Michael Rivero: Well we know from some of the DNC e-mails that were leaked yesterday that the inner circle has been talking about her inability to even climb up a podium going back to last year, so we know there’s an issue. Apparently, some of her inner circle have been leaking out, anonymously, because they don’t want to end up dead in Fort Marcy Park, that she is at stage three Parkinson’s.
We know that what happened on 9/11, there’s already a cover up involved because they first came out and said she had pneumonia, then she’s out there two hours later walking around waving at everybody. There’s growing suspicion that Hillary is using a body double, and the fact that she has a body double has been confirmed. The body double’s name is Teresa Barnwell, and apparently, she has been working with the Hillary campaign going all the way back to 2009. So when you think you’re seeing Hillary from a distance, it may not really be Hillary.
Then, of course, somebody pointed out that nobody comes down with pneumonia and recovers in just a few hours or just a few days. So Bill Clinton is already out there saying, “No, it’s not pneumonia. It’s only the flu, and she’s over it and everything’s just fine.” Supposedly, she’s back out on the campaign trail today, but all the corporate media coverage of her getting back on the campaign trail is illustrated with photos from months ago. Again, the long shot of Hillary getting on the airplane, it could be the body double.
So there’s a legitimate question there, and all Hillary can do is put out letters from her doctor saying, “She’s fine, she’s fine, she’s fine.” Meanwhile, Donald Trump has actually released his medical records, his detailed medical records. He takes medication for high cholesterol, and he’s a little overweight, which we already knew watching him there, and for a guy his age, he’s in really, really good shape. And you don’t even really need a doctor’s report to know that, because you see him just bounding across that stage and out there in the audience and he’s just full of energy.
And then you see Hillary, who’s constantly being helped and held up by her enablers and her supporters. So there really is an issue there, and the corporate media is thrashing around. They’re trying to preserve what’s left of their credibility. Believe it or not, The Washington Post actually ran an article yesterday suggesting that Hillary was actually healthy, but she had been poisoned by either Donald Trump or Vladimir Putin. That’s how desperate they are to try and avoid admitting that they missed what could be one of the biggest stories of this entire election season.
Mike Gleason: Interesting. Do you believe that the DNC is working behind the scenes right now and having conversations about a potential replacement for Hillary? And if so, do you think the runner up in the Democratic primaries, Bernie Sanders, has any chance there?
Michael Rivero: Well, under the DNC rules, Bernie Sanders would become the nominee if Hillary has to drop out for medical reasons. But the word I’m hearing is that the DNC, fearing repercussions from Bernie Sanders, they’re going to keep him isolated, and there’s talk about putting Joe Biden in as the nominee because he’s a very good debater, and the DNC is very concerned about the upcoming debates.
In fact, going back to The Washington Post, they had an article in there earlier today saying that Hillary Clinton may decline to participate in the debates because of her health issues, and that may avoid the revelation that she’s not really able to think on her feet, as opposed to memorizing and reading teleprompters. But it’s certainly, in terms of public perception, not going to create an image of somebody who really is medically qualified to be in the White House.
Even if you look at her defenders, the portrait they’re painting of Hillary Clinton, Huma Abedin in some of the DNC e-mails is saying Hillary gets confused a lot. She has to have her hand held metaphorically when talking to foreign leaders. James Comey, when he was giving Hillary that get out of jail free card for those title 18 violations, came on out and said, “She’s reckless, she’s careless, she’s negligent.” And even Hillary herself at one point when she was trying to explain away her statement that James Comey had affirmed that she’d been truthful with the Congress and the public said, “I get these brain short circuits.”
So the sum total of all of this is it’s not painting a picture of a Hillary Clinton who is in command of her mental faculties, and that is really the issue. Now, if it were just something where she needed a cane or so forth and her mind wasn’t affected, I don’t think anybody would make an issue. We all remember that Franklin Roosevelt being in a wheelchair did not affect his ability to make decisions, which is what a president’s job is. Same thing with John F. Kennedy. His back injury and his Addison’s Disease, it didn’t affect his ability to make choices. In the case of Hillary Clinton, we’re talking about handing the keys to the nuclear weapons to somebody who’s on the verge of succumbing to dementia, and that is absolutely a terrifying idea.
Mike Gleason: If it were to become clear that Donald is likely going to be the next president, what do you think the market’s reaction will be? You have to think the big banks out there want to keep the status quo and power and are probably going to be pretty worried about what the wild card that is Donald Trump would mean.
Michael Rivero: Well, Donald Trump is a wild card not just for Wall Street. I think Wall Street is just going to sit back and they’re going to try and help Hillary, but there really isn’t much they can do. They can’t crash the market ahead of the elections and say Donald Trump had anything to do with it, so they’re hamstrung in that area.
The real question is, how desperate is the establishment to maintain the status quo? Are they willing to dump Hillary? Are they willing to put Biden in there? Are they willing to actually have an assassination of Donald Trump, which would put Biden into the White House, and the status quo would continue, at the risk of a possible armed revolution in this country? And I would not like to see that happen, but anybody who’s planning events for the next few months who isn’t acknowledging that distinct possibility, then their plans are going to be very flawed.
Mike Gleason: Switching gears here a bit, I saw a great cartoon the other day, and I believe you’ve seen it too, where it’s an illustration of the never ending circle where the Fed threatens to hike rates and the markets tank, then they talk or decide to delay the hike, the markets recover, and then they threaten the hike again, the markets tank again, and around and around we go. The cycle just keeps repeating.
Now the Fed meets again next week, and I’m sure the markets will show some volatility between now and then as economic pundits try to determine what they’re going to do, not only with interest rates, but also what they’re going to say. Will the tone and their statements be hawkish? Talk about this ridiculousness for a moment, Michael, and how crazy it is that all that seems to matter in the markets these days is the latest jawboning by some Fed governor. It’s basically gotten out of control how the rhetoric is the driver in the markets.
Michael Rivero: Well, that’s by intention, because again, going back to Bill Clinton’s term in office, they established the President’s Special Working Group on the markets, which is colloquially known as the “Plunge Protection Team,” who went in and basically manipulated the stock market to keep those numbers high so that they could be used as a political banner. Now if you or I were doing what the Plunge Protection Team is doing, they would all be in jail.
Bill Clinton’s whole argument, and every president since then, is the economy is doing great… look at how high the stock market is, and of course, anybody who’s on the inside of the Fed who knows when these decisions for rate hikes are coming, they’re in a position to profit immensely, either by going long or short selling just ahead of these announcements. And we know there’s a huge amount of insider trading problems going on inside Congress. Some of the Democratic emails that were released yesterday from Guccifer 2 show the DNC seems to be engaging in insider trading as well and taking advantage of that.
Now the Federal Reserve is in a little bit of a corner because the larger agenda is to try and draw the world back to using the U.S. dollar for global trade and banking, the Bretton Woods deal that they hammered out at the end of World War Two. But more and more countries are turning away from the dollar. They’re turning toward the ruble and the yuan.
The Federal Reserve is now stuck. They’re in a bit of a corner. If they raise rates to make the dollar attractively internationally, they risk crashing the stock market and the U.S. economy. If they keep the rates low so that Wall Street can go on rigging the market and making it look good as a political banner, then that accelerates the decline of demand of the dollar internationally. So they’ve gotten themselves into a real corner here, and I don’t think there’s any way they can get out.
Mike Gleason: The Shanghai Gold Exchange has been up and running for several months now, and there’s a thought among the gold community that the existence of that exchange – where physical metal is much more important than the paper-based exchange in the west, primarily in New York and London – that it’s making it tougher and tougher for the bullion banks and the manipulators to take down the price.
We have had a bit of a correction in the metals here over the last couple of months or so, which you would expect after the fantastic start to the year for gold and silver, but they’ve been quite resilient. To this point, the correction has been rather shallow and the metals are still holding above some key resistance levels. They haven’t been able to slam it like they have been in years past. Do you think there’s something there, and might this be the dawning of a new era, and possibly the beginning of the end to the success of the manipulators? Any thoughts there?
Michael Rivero: Yes. I think we’re starting to see that, and of course, they’re going to fight this thing down to the bitter end. We know that the London gold fix is still playing this game of blending the physical prices with the paper contracts, and then declaring that’s the price of gold. But people are definitely turning away from their paper contracts. There have been huge scandals involving gold coming out of the U.S. or gold that should be there and isn’t even there.
A couple years ago, I did a couple episodes of History Channel’s America’s Book of Secrets, and one of the most important episodes we did was called “The Gold Conspiracy.” And we were talking about how all of these countries that have put their gold bullion for safe keeping in the New York Federal Reserve are now having trouble getting it back.
We were talking about how Germany discovered gold bars that bore the hallmarks, both of the New York Federal Reserve and Fort Knox, and discovered they had tungsten cores. So somebody’s been playing fast and loose with other people’s gold and it’s making people very, very nervous.
Now in terms of the German situation, their private central bank is more loyal to the private central bank system than it is to the people of Germany where they operate. And as a result, lobbied the German government to stop asking for their physical gold back, saying, “We know it’s there. There’s a paper record.”
But it’s becoming more and more obvious that the New York Federal Reserve, JP Morgan, the Bank of France, the Bank of England, have been accepting gold for safe deposit and then leasing it or selling it out the back door for other profitable operations and now they can’t get it back. So they’re stuck, as well. We’re going to see a gold run at some point where everybody is going to come in and say, “I want the physical delivery now.”
Up until recently, these issuers of the paper contracts have encouraged people to stay with the paper by paying them premiums. In other words, “Yes, you can have your gold now, but if you’ll renew the gold contract, it’s going to be the same value, and we’ll give you 10 or 15% vigorish to stay with the paper.” But at some point, that’s going to have to crash, when people realize that all of these brokerages have been running the gold paper trade as a fractional reserve system, meaning they have issued far more paper than they have gold to cover.
In fact, the last number I heard for the United States is the paper gold commodities is leveraged something like 100 to one. Any other commodity that would be a cause for a crisis and a shutdown of the entire system, but what it basically means is for every one single ounce of real, physical gold in the system, there are paper contracts for 100 ounces. And that is absolutely unsustainable over the long run.
Mike Gleason: Yeah, and it’s been hundreds to one at certain points here not too long ago, and eventually the game is going to be up. The west is going to run out of physical metal, which means they would have a much harder time achieving their price suppression goals, and perhaps that’s already underway and the reason why we haven’t seen much in the way of price smashes this year.
Well, as we begin to close here, Michael, any closing thoughts? Anything new on the European refugee crisis? Any key events that you see unfolding between now and the important November election or anything else that you’re focused on that we didn’t get to?
Michael Rivero: Well, I think at this point, looking at what is happening over in the European Union or the European dis-union, it’s beginning to look like this grand plan coming out of George Soros and his group to establish a one world government and a new world order. It’s in serious, serious, serious trouble. They had a lot of flawed assumptions going in on this, and there’s a big push back against it.
This refugee crisis in Europe has triggered a backlash of nationalism. Donald Trump is riding that here in the United States, “Make America Great.” And as an indicator of how the New World Order globalists are posted, they’re out there saying that the phrase “Make America Great” is racist, and no, it isn’t. America is our country, and we want it to be great.
Generation after generation of Americans worked their lives to make the United States great, and this idea that we should just allow it to decay into third world ruin in the name of political correctness, that’s not going down very well with most people.
Mike Gleason: We’ll leave it there. Thanks once again, Michael, for your candid comments and your no pulled punches approach. That’s why we love to have you on. Now before we let you go, as we always do, please tell folks how they can hear your daily radio show, and then also mention the website.