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.
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