Michael Rivero Discusses a Deep State Coup Attempt & How Hillary Might Sneak into the Election

Published here: http://goldsilverworlds.com/gold-silver-general/michael-rivero-discusses-a-deep-state-coup-attempt-how-hillary-might-sneak-into-the-election/?utm_source=rss&utm_medium=rss&utm_campaign=michael-rivero-discusses-a-deep-state-coup-attempt-how-hillary-might-sneak-into-the-election

Mike Gleason: It is my privilege now to welcome back 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 with us.

Michael, thanks for joining us again. How are you?

Michael Rivero: I’m doing fine, and thank you very much for having me on your show.

Mike Gleason: Yeah, it’s been quite a while since we last talked, and I’m super excited to have you back on and hear your thoughts on a number of topics here. Now, for starters, this is shaping up to be a tumultuous year, though you would never guess it by looking at financial markets. The coronavirus story is getting more dire by the day – I’ll ask you more about that in a moment. It’s also an election year. But despite the massive disruptions to the supply chain in and out of China, stocks are near all-time highs, still overshadowing safe haven assets like gold. What do you make of the apparent lack of concern by equity investors considering the geopolitical backdrop here, Michael?

Michael Rivero: Well, we know that the stock markets and equity markets are being propped up by the Federal Reserve money printing, and a lot of that has to do with the fact that Trump is running his 2020 campaign on the basis of the strong economy, which Obama tried to take credit for the other day, which provoked a bit of a backlash. Looking at the economy more at the grassroots, I’m not sure that we’re feeling the impact from the coronavirus just yet, although we’re hearing dire warnings about supply chain problems over in Great Britain. Jaguar/Land Rover are saying they’re going to run out of parts to build cars with in a matter of a few weeks because those parts are all made in China and regardless of how serious or not serious the actual virus is, people are taking it seriously and it is having an impact on China’s economy and sooner or later, that is going to have a negative effect on our economy.

Mike Gleason: How about the coronavirus, Michael? Obviously we’re having to take information from the Chinese government when it comes to the severity of all of this. Give us your thoughts on how big of an issue this may really be.

Michael Rivero: Well, the problem is we don’t really know because we don’t have any sources of information we can trust to be telling us the truth. I mean, there are extreme views on both directions… one side saying it’s no big deal and the other side saying this is a slate wiper. And part of the problem is that in the past, we have seen, like SARS was overblown in the media to sell vaccines. MERS was overblown in the media to sell vaccines. Back in 2009, the “When Pigs Fly” Flu was being oversold to push various vaccines and cures. And because we know that past history, a lot of people are looking at COVID-19 and saying, “Well, this is just more of the same thing.”

But as I mentioned before, companies are taking this seriously. They’re shutting their doors. Apple just announced they’re moving their production from China to Taiwan because of fears about the virus. And we are getting a lot of stories where a lot of people are being exposed. So far, interestingly enough, only ethnic Chinese are dying from it. Everybody else is basically the level of a small flu and a lot of people are starting to wonder if in fact this was something that was accidentally released from the Wuhan BSL Biological Lab, which is located very, very close to the fish market where they’re claiming the disease originated.

Mike Gleason: Yeah, when a ZeroHedge talked about that idea, I think they got banned from Twitter, so that’s obviously not the party line it sounds like. We’ll have to continue to follow that story. Very interesting.

Now, the year started out with some serious concerns over World War III breaking out after the U.S. assassinated and Iranian general, which prompted a military response from Iran causing gold to spike on safe haven buying, but that story lost steam quickly as calmer heads prevailed for the time being. Now, it’s hard to imagine that things are now hunky dory in the Middle East, but what say you here? Will we be talking about tensions with Iran and the U.S. again anytime soon?

Michael Rivero: Yes, I think that we will. It’s been no secret that the U.S. government wants to invade Iran. They want control of Iran’s oil, more importantly, what currency that oil is going to be sold for. They want to impose private central banking on Iran, which is one of the last holdouts to refuse western style private central banking, and as far as the calmer heads, you’re absolutely correct on that issue. We had Rohani the other day came on out and said that we were dangerously close to outright war because of that assassination and because the United States continues to blame Iran for an attack on a Saudi Arabia facility, even though the people on the ground are saying that it was actually carried out by ISIS.

And so, I think the United States is going to continue to provoke Iran any way that they can until Iran does something that can be basically claimed to be the initiating event, “Oh, look what the Iranians have done,” and we’re all supposed to forget about all the things the United States has done to Iran going all the way back to 1953 and the overthrow of Mohammad Mossadegh and the imposition of the Shah. And what happened in 1979 of course was the Iranian people basically took their country back and the United States has not forgiven them for that because the attitude is once you’re part of the American empire, you stay part of the American empire.

Mike Gleason: Switching gears here a little bit, Michael, I wanted to ask you about deep state operations here in the U.S., because that has been a major theme of the Trump presidency to this point, the Russia-gate investigations and then the impeachment attempt over the Ukrainian situation. Was this all just a coup by the intelligence community, or is Trump overstating that? And if it was a coup, will these people pay the price… I’m talking about the likes of James Comey, Strzok, the so-called whistleblower and others? So, was this a deep state coup, and if it was, should these people go to jail and will they go to jail?

Michael Rivero: Well, it was an attempted coup, basically an attempt to oust Donald Trump, which began even before he took office. As soon as he won the election in 2016, you were hearing all this talk about, “Oh, he must be impeached.” We know from the text messages between Lisa Page and Peter Strzok that they were talking about an emergency plan to get rid of Trump. And if you really look at all that they’ve done since then, this Russia-gate situation, lying to the court, this bogus dossier that was cooked up by Christopher Steele. Yeah, it was an attempted coup d’etat. Should they go to jail? Yes. Will they go to jail? I seriously, seriously doubt it. We’re hearing rumblings that William Barr is launching some DOJ investigations, which is why all of a sudden, we’re hearing this huge cry that Barr should step down. In fact, the news was even saying he was considering stepping down. The Department of Justice spokesman has said that’s absolutely fake news. Barr has no intention of resigning at this time.

Mike Gleason: Now, we’re into the primary season. We should get your thoughts on the election. There’s plenty of contention in the Democratic party with the establishment there attempting to cheat Bernie Sanders and install a more favored candidate once again, we heard that same kind of story from four years ago, but what are your thoughts as to how the Democrat primary might play out? Do you expect Bernie to get the nomination or will Bloomberg surge here or are we headed for chaos and a brokered convention? Let’s get your thoughts there, Michael. How do you assess the field of challengers from the left?

Michael Rivero: Well, we know the Democratic core does not want Bernie Sanders to win the nomination because they don’t think the socialist president is going to be able to win against Donald Trump. They were pushing Joe Biden, but he’s kind of self-disrupting with all the wacky things that he’s saying there. Bloomberg is in third place in the polls right now, but he’s being accused of literally using his fortune to buy his way into the presidency and a lot of people aren’t comfortable with that. Buttigieg is facing an uphill battle against the more conservatives because of his being gay. So yes, I think we’re headed to a brokered convention, and I am still convinced that Hillary Clinton is trying to find some way she can insert herself back into the race.

Mike Gleason: We’ve heard some rumors about her maybe being on a ticket with Bloomberg. Do you give any credence to those rumors, and might that be something that actually lifts Bloomberg to the nomination?

Michael Rivero: Well, it certainly would be a very powerful combination. And the Bloomberg campaign will neither confirm or deny the rumors that came out from the judge report. Hillary Clinton issued a statement saying that she’s just standing on the sidelines and waving and will support whoever the nominee is, which is neither a confirmation or denial. So I think, yeah, it’s definitely something that Hillary is working to do. And if she can’t come out of the brokered convention as the nominee, she may agree to be Bloomberg’s vice president, at which point my advice to Bloomberg is to hire a professional food taster, wear your Kevlar and stay out of small airplanes.

Mike Gleason: Getting back to the economy here, where do you think you see things going economically? I mean, do you see it rolling over at some point or is it just going to keep chugging along here? Because in our view, a strong economy here in the U.S. is likely to guarantee at a Trump reelection. Do we have that about right? What do you think?

Michael Rivero: Yeah, absolutely. If the economy continues to look good, then Trump is going to be reelected. And so that means you have a lot of Democrats who are out there hoping the economy takes a major upset between now and November because if the economy does go downhill, yes, they’ll blame Donald Trump for it. I mean, this situation the other day where Obama came out trying to take credit for the economic boom, I mean, that’s nonsense. Even Obama, before he stepped out of the White House, admitted that his laws that he passed here were a failure, that they’d spent all this money and they’d lost four million jobs in the process.

I mean, Obama’s not going to run for office ever again. And so I think that this was sort of setting the stage for saying that Trump really isn’t to be given credit for the economic situation and that if it does go south, the Democratic talking point is going to be, “Well, we left the economy poised for this recovery and it was going to be really good and Trump went and wrecked it.” And I think that’s what they’re kind of hoping for. How actively they will try and derail the economy remains to be seen, but at this point, nothing is beyond possibility.

Mike Gleason: Sticking with the economic theme here… is this a new era of unending bull markets under a Federal Reserve that will never stop stimulating, or will they lose control at some point? And what are the ramifications of all this stimulus and money printing that keeps these markets propped up seemingly forever?

Michael Rivero: Well, the problem is that ordinary investors are being shut out. They literally can’t afford a lot of these key stocks. That’s one aspect of it. The other one is that it’s increasing the amount of debt that the nation is in because the Federal Reserve isn’t giving this money away. They’re loaning it out at really low interest rates, yes, but still it’s a loan and has to be repaid somewhere down the road, and all this extra cash floating around of course devalues the individual dollar. So those of us who work for a living, we’ve got money in our pocket that we already traded our labor for and all of this money printing by the Federal Reserve is causing that money in our pocket to lose buying power day by day.

It’s almost like Lord Baltimore waved his wand and said, “Your money is now worth less than it was yesterday.” We’re already seeing signs of a recession about to start here. Japan’s slipping a recession. Apple’s earnings are way, way off and we’re seeing indicators that the iconic companies in the United States are in serious, serious trouble. Macy’s has just been downgraded to junk status by the rating agency. Their stock took a major fall today as well.

Mike Gleason: Talking more about inflation, you alluded to that a moment ago. The fed talks about wanting a 2% price inflation, and you have to think at some point, not only are they going to get that, but they’re probably going to see it go higher and they may lose control of it, which often happens throughout history. Talk about that if you would. Do you think we’re going to see an inflationary environment really take hold?

Michael Rivero: Well, we’re already in an inflationary environment. I mean, that’s what all this excess money printing is all about. They’re inflating the money supply, and of course, prices will rise to absorb the available surplus cash. When you have too much money chasing too few goods and services, yeah, the prices are going to go up. So, I think we’re actually on the doorstep of a recession right now, and I really have to question the mindset of the bankers over at the Federal Reserve where they want prices for ordinary Americans to start going up.

Mike Gleason: Yeah, it certainly seems pretty perverse to have the American consumer have less purchasing power with the dollars that they have in their pocket by 2% or whatever their arbitrary number is, every year. It’s quite amazing that this is now the prevailing economic and monetary thought of the day that our money is supposed to be worth less and less on an ongoing basis, and really inflation, it’s a tax on the wage earner. I mean, we’ve got obviously the elites just raking it in based on all the cheap money that they’re able to borrow and reinvest. But the average American is really getting squeezed, aren’t they?

Michael Rivero: They absolutely are. I mean, we’re seeing prices go up. Rents are going up. Right now, one in four renters are spending more of their paycheck on rent than on any other cost of living. So, as wages and salaries go down, prices go up, there’s going to be a point where it’s going to be a crossover and we’re finding more and more people are sort of living between the rock and the hard place. And we’re seeing a lot of retail vacancies. People don’t have money to go out and spend on things, so that’s why we’re seeing these iconic retailers who are going out of business now.

Mike Gleason: Is one of the reasons that you do see a recession coming also have to do with China? I mean, obviously that’s a very big economy at this point. We saw in, I believe it was August of 2015, when the Chinese stock market really showed some serious signs of stress, we nearly had the next global financial crisis. It was averted, but that’s a big economy, and if the coronavirus continues to hurt them, eventually the rest of the world going to feel that, right?

Michael Rivero: Absolutely. No question about it. And now we’re seeing the downside of globalism because the problem in any one country becomes a problem for the entire world. We saw that back in 2008 with the collapse of the mortgage-backed security fraud, which should have been confined to the United States banking system and instead it almost wrecked several banks over in Europe.

Mike Gleason: How about gold, Michael? We’ve seen it reach a seven year high recently. As we’re talking here on Wednesday afternoon, it’s back near where it was back in early January when bombs were flying in the Middle East and we’re now above $1,600 again. Any comments on what you’ve seen from gold, which continues to hold up quite well despite the fact that the dollar has done very well this year, at least up through the end of last week? Give us your thoughts on metals and what kind of year you think we’ll see in 2020.

Michael Rivero: Well, I’m not an expert on valuing the metals, but generally, at least have part of your portfolio in silver and in gold because it’s a great way of preserving your wealth. It’s always going to be there. It’s always going to hold its value. There’s never been such a thing as silver or gold crashing down to zero or being rated at junk status. It’s very stable. I can’t recommend enough having silver and gold in your portfolio.

Mike Gleason: Well, Michael, as we begin to wrap up, politics and the coronavirus are dominating the news in the U.S. Are there any other stories that you think people should be watching maybe that we haven’t touched on yet? Talk about anything else or other topics as we begin to close?

Michael Rivero: Well, while we’re all distracted with impeachment and politics and COVID-19, the fact is the wars in the Mid-East are still going on. People are still being killed. Vast sums of money are being spent dropping bombs on countries that have done absolutely nothing wrong to the United States of America other than be sitting over resources that are coveted by American corporations.

Mike Gleason: Well, we’ll leave it there. Always good to have you on, Michael. It’s great to have you back. Thanks for the time today and for your enlightening insights. It’s going to be quite an interesting year, and I look forward to having you on again before long to dissect it as it unfolds. Now, before we let you go, please tell people more about how they can get your commentary on a regular basis through the website and also your radio show.

Michael Rivero: Well, the website is called WhatReallyHappened.com and the radio show is on the Republic Broadcasting Network Monday through Friday from 3:00 PM to 6:00 PM Central U.S. time. And you can go to RepublicBroadcasting.org and listen to the radio show there or there are various other online places. There’s also a podcast on YouTube. Please tune on in and feel free to call into the show and share your comments.

Mike Gleason: I consider Michael to be quite the authority on a range of topics as you just heard, one of the most well-read individuals that I and definitely recommend people check out his program.

Thanks so much. Truly great stuff, Michael. It was great having you back, as I mentioned. All the best to you. I wish you good health, sir, and I hope you have a great weekend as well.

Michael Rivero: Thank you very much. Same to you and I look forward to being on your program again.

Mike Gleason: Well, that will do it for this week. Thanks again to Michael Rivero, founder and editor of WhatReallyHappened.com.

 

 

Mike Gleason is a Director with Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.

 

 

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Getting on Board the Silver Express!

Published here: http://goldsilverworlds.com/gold-silver-price-news/getting-on-board-the-silver-express/?utm_source=rss&utm_medium=rss&utm_campaign=getting-on-board-the-silver-express

Over the last half year or so, a number of analysts, well-heeled individuals, and mega-hedge fund managers have been taking a shine to silver. So far the “restless metal” hasn’t been letting on that it’s noticed.

It’s understandable why someone who either has not yet begun to commit funds to building a physical silver position – or who has not completed his or her ownership program – might think it best to wait and see if the price starts rising, thus validating the silver bulls’ call. But this kind of strategy could end up being a big financial mistake on several counts.

And worse yet, Mr. Market could decide to whisk away today’s prices – and the relative availability of investment grade silver – to the point that you’ll never even take a position at all.

To get a sense of how you might feel as you watch, and watch, and watch while silver makes its long overdue, third, and almost certainly largest levitation toward the ultimate high since the start of its rise in 2001, please examine the palladium chart below.

10 Year Monthly Palladium (Courtesy barcharts.com)

After spending 5 years in a $300 price range, palladium decided in December 2016 to put in a long-term bottom around the time that gold and silver were doing something similar.

Then, again like gold and silver at the time, it rallied, moving to a several years’ high around $850… but kept on going. Gold and silver faded away for the next 18 months, putting in a double bottom in late 2018.

By the way, during this entire time, David Morgan, provided guidance for his subscribers – be they holders of The Morgan Report Premium, Mastermind, or Insiders’ Memberships – in how to profitably trade these multiple hundred-dollar swings via futures, options, stocks, or physical palladium rounds and bullion itself.

Given David Morgan’s expertise in these areas, look to him being able to effectively help current and new subscribers alike do the same thing with the coming explosive upside run in silver and gold.

In January 2018, palladium seemed to build out a major top around $1,150 – almost exactly where it had done so twenty years before! Just about everyone (me included) watched with trepidation as that level once again turned back prices and the metal declined by over $300.

What happened next will be something chartists ponder for a long time to come. Within a matter of months, palladium proceeded to easily punch through that old $1,150 “top”… and to this day, almost 18 months later – continues to rise, seldom pausing, to, at this writing over $2,550… more than twice as high as it had ever traded before!

Daily $Palladium (Courtesy Stockcharts.com)

Now look at the nearby daily palladium chart. Do you think it would have been easy to “take a profit” – just about anywhere along the way?

On the other side of the coin, how many people who sold out around $1,000 ever got back on to experience any of this relentless additional $1,450 “profit launch”? More than likely, very, very few.

Silver’s Supply-Demand Metrics look to be building the same fundamental – and technical picture as palladium.

For several years, analysts warned of a coming shortage and price spike for palladium.

With silver coming off its fourth consecutive year of lower production in most of the big mining camps and robust Chindian, Eurozone, and now North American demand, silver’s building mirror image behavior to that of palladium looks more and more likely.

The top 10 silver producing countries are Peru, Bolivia, Australia, Argentina, Mexico, Chile, Poland, China, Russia and Guatemala. And get this… in nine of these countries, silver production has been falling for the past 4 consecutive years!

Rounding out the picture are these salient demand factors.

• Supply from scrap sources is at a 20-year low.
• Silver fabrication (manufacturing) demand is just below record levels.
• Solar panels’ silver demand has risen for 7 straight years (2013-2019).
• Primary silver producer grams/ton yield has fallen by 50% in the last decade.

And the demand clincher? About 75% of the world’s annual new silver supply comes from base metals’ production – copper, lead, and zinc. When, not if, investment demand spikes in competition with industrial needs, there’s going to be a problem…

Dr. Peter Megaw, perhaps the person who has discovered more high-grade silver deposits than anyone else on the planet, puts it this way:

When the price of silver moves, you can’t ratchet up the production from the world’s largest gold, copper and lead-zinc mines to pick up more silver. The only place you have to take up the slack on the supply side is [the small number of] primary silver mines.

And don’t forget the rising “hidden” costs you’ll pay, the longer you wait. Higher prices, and demand outstripping supply, both increase the premium (charge above spot).

In the case of American Silver Eagles, seigniorage – what it costs the U.S. Mint to produce a coin – has already risen by 50% in the last decade, so you can be sure this seldom-considered price factor will continue rising too.

Jeff Clark, one of the best-informed and most articulate analysts in the space, calls the current silver price “A bottle rocket awaiting liftoff.”

He says: “Supply and demand in the silver market are going in different directions. I cannot find a period in modern history where (they) were more out of balance than now. With the setup currently in place, the wick that leads to silver’s rise sits precariously by a roaring fire.”

So, don’t let yourself fall into the trap of waiting until the writing is on the wall – and on the charts – to purchase the silver you want.

It would be wise to ask yourself right now, whether you’d like to participate as an owner in silver’s oncoming multi-year run up into record territory, or instead (try to) be content sitting back and watching the charts print out a bigger and bigger profit stream, just like palladium has been doing for almost three years!

 

 

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com. For the past 15 years, he has investigated precious metals’ mines and exploration sites in Argentina, Chile, Mexico, Bolivia, China, Canada, and the U.S. He shares his resource sector findings with readers, the media, and North American investment conference attendees.

 

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THIS Is What a Run on the Bank for Precious Metals Looks Like…

Published here: http://goldsilverworlds.com/physical-market/this-is-what-a-run-on-the-bank-for-precious-metals-looks-like/?utm_source=rss&utm_medium=rss&utm_campaign=this-is-what-a-run-on-the-bank-for-precious-metals-looks-like

The explosive price action seen in palladium recently is indicative of a physical shortage.

Put simply, available inventories are failing to keep up with demand (largely from the automotive industry).

Palladium Price Chart

According to Refnitiv GFMS, the palladium market will be under-supplied by 883,000 ounces this year.

Stresses on the physical market are showing up in spiking lease rates, illiquidity, widening bid/ask spreads, and disconnections between quoted spot prices and actual physical prices. Most importantly, the deficit in palladium supply is manifesting in the form of rising prices.

Palladium hit a record, briefly touching the $2,500 level last month. And despite selling off a little in recent days, Bank of America Securities analysts see the metal’s chronic supply deficit pushing prices up to $3,500 an ounce before the bull market ends.

The point of this article, however, isn’t to promote palladium as a great buy at these lofty levels. Chasing an uptrend this late into its potential blowoff phase is risky.

When metals markets top, they don’t merely level off. They tend to reverse violently.

That said, the opportunity palladium presents for metals investors is that it charts a similar path forward for platinum and silver (and to a lesser extent gold, which shouldn’t be expected to move as dramatically).

Platinum should benefit from substitution
in auto catalysts now using palladium.

Since 2016, when palladium began the year trading around $500/oz, prices have quintupled.

Silver bottomed in 2016 just below $14/oz. Prices advanced strongly that year before falling back into a major trading range.

A quadrupling would take silver over $50 – and that would likely just be the warm-up phase that finally establishes new all-time highs. Then the explosive phase will begin that sees new high after new high, week after week – just like we’ve seen in palladium over the past year.

As yet, there isn’t much evidence that is happening. But the longer a price gap of more than $1,000 between the two catalytic metals persists, the more motivated automakers will be to embark on redesigns of existing equipment to accommodate much cheaper platinum.

Money Metals sells numerous low-premium
platinum coins and bars.

Major automakers such as BMW are investing heavily in hydrogen-electric fuel cell technology as a way of meeting zero-emissions goals. Once too expensive to be practical, costs for fuel cell powertrains are expected to become competitive with conventional powertrains over the next few years.

The upshot for platinum is that it is used in the hundreds of small cells that make up a fuel cell stack. If fuel cell vehicles catch on, demand for platinum could go into overdrive.

In the meantime, the ongoing run on the physical palladium bank will be something to behold. It’s exactly what many gold and silver bugs who have been calling out paper manipulation and price suppression schemes have been predicting.

Although the markets for gold and silver remain relatively quiet now, they could soon become energized by palladium and the larger exposure of futures markets that produce multiples more contracts for physical metal than can ever be delivered.

Precious metals analyst Craig Hemke wrote recently, “Understand that palladium, just like gold and silver, is overseen by the bullion banks, which are responsible for physical delivery in London… The Banks manage a fractional reserve system of just in time physical delivery. As gold and silver investors, we await the day when a ‘run’ on these bullion banks exposes the lack of physical metal behind this system. The current price action in palladium suggests the possibility that this ‘run’ may have already begun.”

If you happen to own physical palladium, you’re in the driver’s seat. You can sell anytime to a dealer like Money Metals or hold out for a desperate buyer who may be willing to pay a sizeable premium over spot just to get his hands on some ounces of the scarce metal.

When there is a run on the bank for silver, we expect many types of coins and other bullion products to command unusually large premiums over spot.

The most susceptible to large premium spikes are no-longer minted historic coins such as pre-1965 90% silver dimes, quarters, and half-dollars.

The good news is that they and most other silver bullion products can currently be had at very low premiums over spot prices. You’d be wise to stock up while fantastic bargains can still be had…then hang on tight for the ride ahead.

 

 

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

 

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Axel Merk: Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You

Published here: http://goldsilverworlds.com/economy/axel-merk-fed-to-stimulate-in-any-crisis-dont-let-short-term-events-bother-you/?utm_source=rss&utm_medium=rss&utm_campaign=axel-merk-fed-to-stimulate-in-any-crisis-dont-let-short-term-events-bother-you

Mike Gleason: It is my privilege now to welcome in Axel Merk President and Chief Investment Officer of Merk Investments and author of the book Sustainable Wealth. Axel is a well-known market commentator and money manager and is a highly sought-after guest at financial conferences and on news outlets throughout the world and it’s always great to have him on with us here on the Money Metals Podcast.

Axel, it’s a pleasure to have you back and thanks for joining us again. Welcome.

Axel Merk: Good to be with you.

Mike Gleason: Well, I’d like to start by getting your take on the coronavirus since that has been dominating headlines in recent days. There is an awful lot of speculation about how markets might be impacted. Some people think it is a tempest in a teapot, others think the apocalypse is upon us. Everyone has to rely on data coming out of China, which is always a dodgy proposition, but what are your thoughts about the virus and what it could mean for financial markets in the weeks and months ahead?

Axel Merk: Well, you’re in luck, I got my crystal ball here so I’ll tell you exactly how it’s going to play out. I mean basically none of us have a clue. More importantly, people are afraid of the unknown. We don’t know many, many of the parameters. What we do know is that historically we kind of get used to these things and in particular we get used to crises. And so whichever way this plays out, we’ll probably find a way of dealing with it. Now at the same time, it doesn’t mean it can’t be quite disruptive. And so that said, just like many others, every day I punch into my little spreadsheet, the new known cases and infections and whatnot and I try to look at a consistent source. And so I’m trying to look at is there a change in the rate of change that impacts something.

And then if I kind of look at something more on a micro level, the U.S. economy is a much more closed one. And so we haven’t seen us consumer spending change. We do know that the various governments take this very, very seriously, which should impact the distribution as well as the spreading of the virus. And so overall, I am more in the camp that says, well, yeah, this is a shock. If it’s a most severe shock, it’s going to have an impact, but if it’s not a more severe shock, we’ll get through this and so I’m more on the glass half full camp, but that doesn’t mean that I’m convinced on that. That is just my best-case scenario.

Mike Gleason: The old saying goes, when the U.S. sneezes, the rest of the world gets a cold. I guess you could say the same thing about China based on how large that economy’s gotten over the last several years. If we go back to August 2015 we had major shockwaves in the Chinese stock markets and that nearly started a global financial crisis there, that was averted. But nonetheless, China’s impact there had some major ramifications for the rest of the world financial markets. Talk about how that may affect things here. Are we starting to see any implications there that the Chinese economy is really starting to feel this?

Axel Merk: Well, we do know that until the coronavirus was known, we had tailwinds coming in with that phase one trade deal, things were turning around. Indeed, if you look at the global manufacturing industries that are taken before the news of the virus, they were all positive. Now we also know that the Chinese government has a very strong hand and so they can isolate a town if they want to. Now we do know that they were slow to react in the beginning, but if you’re not in a free society, you can impose things that you couldn’t impose in other countries. So in many ways, I do think they will be able to get a handle on it. Now will that necessarily be pleasant for everybody? I don’t know. Will that impact the economy in parts? Yeah, quite likely.

And so, in the short term it’s going to be a shock. Now markets obviously are a discounting mechanism on what’s going to happen in the future and so it’s in that context that I think that they’ll figure out a way forward. I don’t see a revolution coming from this. I don’t see that the system in China is going to change completely and so it is a disruption. I’m very closely monitoring some of the big manufacturers there to see what they can do. And ultimately it’s probably the same thing as with any crisis. If you’re a big business you probably find a way to deal with it and if you’re a small business you might be out of luck. Now obviously that can impact economic growth and yes, if they sneeze the rest of the world could have a cold. And a fear not, an interest rate cut can probably cure this virus as well. That’s cynical by the way. Just as a side note, in case you didn’t get that.

Mike Gleason: Yes, got it. We last spoke in September, since then, Boris Johnson managed to win a crucial vote on Brexit and he is leading the UK out of the EU. After being stalled for years, the Brexiteers finally prevailed there. Those who are opposed to Brexit argued it would be a disaster for the UK economy. Anti-EU people thought Brexit might represent the dam breaking, that it would be the beginning of the end of the EU as other nations would follow suit. Now that Brexit is officially underway, I’d like to get your thoughts on what Brexit will mean and have you seen any meaningful impact on markets thus far? Give us your take their Axel, as I know you follow events in Europe quite closely.

Axel Merk: Well sure, it depends again I think on your perspective on your horizon. As we speak there are some stories out how MiFID, that’s a wonderful acronym for regulation on Europe is going to get revised. It’s, amongst others, how the UK can trade financial instruments that are really EU instruments and so they could get shut out from a market. And so there’s a short term concern about that. In the long run, again, if you are big business in the UK, you will have set up subsidiaries in the EU and you’re probably going to be doing just fine. On a small scale, yes, there are a whole bunch of obstacles to be overcome. And so we have to see how it goes.

The one thing we know with the Johnson government is, not so unlike some other governments closer to home, is they love spending money. I mean Johnson has promised just about every social program there is in the book. And so the question is what will be the side effects, what will be the ripple effect? But by all means, those sort of things are economic stimuli. So we’ll get the tailwinds from that. The question is are we going to be concerned about inflation? But apparently we are told that inflation is dead and we never ever going to have a problem with inflation again. So I guess we shouldn’t worry about that.

Mike Gleason: I do want to get into inflation here in a minute. But another topic we discussed when we last spoke was about your outlook for the U.S. economy and how it was a bit of a mixed bag, but positive signals outweighed the negative and you were expecting the expansion to continue for a while yet. Has anything changed since September in your view, Axel? Summarize your current outlook if you would?

Axel Merk: Well before the virus, I would have said that unlike what most people are arguing, is be aware of a potentially overheating economy. Let’s think about it. We have a near record low unemployment and we have an accommodative monetary policy. And we have wages, well they’re not exploding, but they have been at a reasonable high level. President Trump has been touting how the less skilled workers are now having much higher wage gains than the top 1%. Well those are signs of a potentially overheating economy. And we’re pushing the accelerator as we go. So, we are quote unquote bailed out potentially from headwinds like a coronavirus. But if we keep this going and keep staying in this mode, at some point nobody knows when that will be, we will have an issue.

And so, we do have an election coming up in case somebody doesn’t know this in the U.S. later this year. And so it’s in the president’s interest not to escalate trade tensions. That’s why the phase one trade deal has been sealed now and that’s why there is a ceasefire, so to speak, with France, there was a threat of imposing sanction on France. And so there is an incentive here to keep things going and unless we have an outside shock, like the coronavirus that’s going to derail everything, my base case scenario continues to be that this economy is going to be doing actually reasonably strong. And if indeed we do have more of a fallout from the virus, and the yield curve inverts and stays inverted, then we may even get another interest rate cut as this year’s progressing.

Mike Gleason: I’d like to get your outlook for precious metals in particular. In 2019, metals performed fairly well with gold up about 18% and silver up about 15%, but the equity markets did outperform. To us it appears the Fed is working hard to keep stock prices inflated. Wall Street has been the major beneficiary of monetary policy. That has given stocks quite a leg up on metals, which are definitely a favored asset among the central planners, as we know. What is your take on the performance of metals versus the equity markets? Are stocks likely to continue outperforming and what is the scenario where the metals can start moving ahead there?

Axel Merk: Well last year just about every asset class did well. And if you’re just there in equities, the gold miners actually did particularly well last year because finally some of the leverage that people want in that space is coming to fruition. Now that said, if my scenario unfolds, keep in mind the Fed is all but promised not to raise rates, even if inflation does tick up. And so I would guess we’re going to have quite a volatile environment. Usually when you have indicators that should signal the Fed to do something, well they don’t, they wait. Because they have to look at incoming date on all that fun stuff.

And then the kind of the proof is going to be in the pudding. Will they actually do the right thing? Do they do what they say that’s necessary? And right now, it’s completely priced out that they would actually tighten, especially with the virus that’s obviously a scenario that’s not on the table. But, but, but if we do have a scenario that inflation or pressures creep up, the initial reaction might be, okay, the Fed has to be tougher now, and then they won’t be. And so in that sort of environment, it’s going to be volatile.

But what we do see is that one of the reasons why people have diversified to precious metals, is precisely for that point. In every bear market since the early ’70s, gold has done very well with the one key exception when Volcker raised real interest rates to quite a high level. That’s when gold couldn’t compete. But it’s for that diversification purpose, I think that people look at gold as a diversifier. And gold miners, similarly. Gold miners are obviously extremely volatile. And people want to have their cake and eat it, right. In an environment where quote unquote everything has been going up, they don’t want to diversify to cash because they’d have to sell things and possibly pay taxes. And so instead they’re rather like to add something volatile like precious metals to get them diversification. I’m not suggesting that this is what everybody should be doing, but that’s what we see people doing.

Mike Gleason: Obviously with Volcker, raising the interest rates were a little bit more tenable considering the major difference in the debt that we had back then versus now. You’d have to think that those sorts of interest rate hikes would be totally off the table, at least to that degree nowadays.

Well, I’ll ask you to pull out your crystal ball here again, Axel, and I wanted to talk more about inflation. You’ve alluded to that in a couple of your previous answers. A lot of us have been waiting for inflation to really take off, but it continues to be muted or at least it is if you look at the official, albeit flawed, government-reported inflation figures. So will 2020 be the year that inflation finally kicks into overdrive or will it be more of what we’ve seen?

Axel Merk: I suppose it’s a process. But what, again, we do know is that we’ve been pulling people from the sidelines to join the labor market. We know just mathematically there has to be a limit to that. And we have numerous charts that we look at and we think we’re not there yet, but odds are pretty high we’ll get there this year. Unless again, we get quote unquote bailed out by a slowdown induced by a supply shock like the coronavirus, or we should be getting there. And if we do get there as you pointed out, right, we can’t do the Volcker thing, or I don’t think we should necessarily go quite as far. But we have a lot of debt out there in the corporate world. That’s very low to kind of at the near the junk level or in junk territory and everybody says, “Hey, the Fed can’t raise rates.” And so you cannot apply the tools of yesteryear to fix those sorts of things.

And the Fed says if we do have a problem with inflation, they know how to fix it. I don’t think inflation is ever a good thing if you do get inflation that spills over from the labor market… one of the reasons people don’t think we’ll get it is because we have all this global competition with a global labor force. And so yes, with that it’s been delayed. It’s been substantially delayed and maybe it will continue to be delayed. To me, investing is not so much having a crystal ball to know exactly what’s going to happen tomorrow. It’s about the risks of what might happen and then cross checking with one’s portfolio, if one has taken those risks into account. Can I afford to ignore certain risks? And to me as we progress in this, it’s ever more difficult to ignore the risks that yes, inflation might eventually be an issue that we should be concerned about.

Mike Gleason: Well, as we begin to close here, Axel, as we usually like to do, give us any final thoughts you may have for us today on some topics or events that maybe we haven’t talked about yet or perhaps give us a sense of what it is that you’re going to be watching most closely that you believe will impact financial markets moving forward.

Axel Merk: Well the one thing I guess to keep in mind is how short our memory is. Remember World War III was supposed to break out at the beginning of the year. Nobody talks about that strike in Iran anymore. And so similarly, we have so much news happening, we’ll be concerned and wrapped up with the election. And eventually I wouldn’t be surprised if the coronavirus is an issue for China, but in the U.S. our focus is going to be different. And then suddenly we’re going to be concerned about yet another shock. And it really depends, if one is a short term trader, by all means focus on that.

And you mentioned gold before. Do you hold gold because of the government deficits? Do you hold it for diversification purposes? Do you hold it because of a potential fall out of the virus? Keep in mind why one invests in a certain way and then stick to that. Obviously reassess on whether the ingredients were reasonable, but it makes no sense to switch from being a long-term investor in something and then being derailed by short-term phenomenon. Either one, as a short-term trader or a long-term investor, or focus is on technical analysis and fundamental analysis, but being swayed by the daily news flow is going to derail any good investment strategy. I guess that’s the only food for thought I have here.

Mike Gleason: Yeah, that’s very well put. If you’re going to be a long-term investor, be a long-term investor. If you’re going to be a day trader or a short term investor, then by all means do that. But yeah, don’t go back and forth. That’s actually great advice.

Well, thanks Axel. We appreciate the time as always and I enjoyed the conversation. Once again, before we let you go, please tell folks a little bit more about you and your firm and your services and then also how they can follow you more closely, please.

Axel Merk: Sure. MerkInvestments.com is our website, kind of the portal way to get to what we do. Follow me on Twitter, I’m quite prolific there musing about what’s happening and putting out food for thought. We do publish research reports. We do have several investment products including a physical gold and a gold mining product. We can’t talk specifically about our products here, but visit our website and take it from there and look at all of the wonderful things that we do there.

Mike Gleason: Excellent. Well thanks again Axel. I hope you have a good weekend and I look forward to catching up with you down the road here in 2020 and thanks for the time. Take care.

Axel Merk: My pleasure.

Mike Gleason: Well that will do it for this week. Thanks again to Axel Merk, President and Chief Investment Officer for Merk Investments and manager of the Merk Funds. For more information, be sure to check out MerkInvestments.com.

 

Mike Gleason is a Director with Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.

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