By Clint Siegner

Precious metals prices fell sharply on renewed concerns the Federal Reserve will be raising interest rates sometime this fall. Friday’s jobs report painted a picture of healthy growth, fostering a new round of speculation that Janet Yellen and the FOMC will withdraw stimulus.

Investors have seen this a thousand times before. The reaction in gold and silver markets was almost as predictable as the sunrise. When markets continually respond to highly managed data from the Bureau of Labor Statistics – or some other bureaucracy – in a machine-like way, you have to assume it’s because most of the trading is actually done by high frequency trading machines (HFTs).

The algorithms calculated the Fed probably would not hike any time soon when employment missed expectations by a mile in early June. Precious metals rallied.

Gold and silver prices stumbled the following month when the same report showed much better than expected data. It was rally time again in late July when the GDP data turned out to be a big disappointment. Now there is “good news” on jobs and the machines responded by selling.

It’s been going on for years. Actual humans grow tired of the constant whipsaw around Fed policy expectations and some ask more fundamental questions. For instance, do we have free markets when what matters most is government data and how the central planners at the Federal Reserve might respond to it?

By Clint Siegner

Gold and silver prices charged higher during the first 6 months of the year. They fell into a rut over the summer, and then hit the skids last Tuesday. Lots of bullion investors are wondering what in the world happened. There are three primary factors driving this price correction.

The first is the strength in the U.S. dollar. The DXY index, which measures the dollar against other major world currencies, hit its highest levels since July. This surge, however, is not driven by safe-haven buying as it was immediately following Brexit. That sort of fear-driven buying would almost certainly be boosting precious metals as well. Rather, investors are looking forward to the Federal Reserve tightening monetary policy, which helps the dollar but hamstrings precious metals.

The gold bug’s old nemesis – the Fed – just keeps coming back. It seems nothing can kill the market’s expectations of higher interest rates. Despite years of meaningless threats to hike, slowing GDP growth, and other weak economic data, the consensus for a rate hike by year’s end is growing once again.

The second factor is related to the first. Longer-term interest rates are rising. The yield on 10-year Treasury bonds recently hit the highest levels since June. The bond markets largely ignored Fed jawboning in regards to higher rates during the late spring and summer, but now they are behaving as if a rate hike is a certainty. Rising real interest rates create headwinds for gold, which does not offer a yield.

The last factor is (or was) the extraordinarily high speculative interest in metals. Open interest in both gold and silver futures soared as metals ran higher and then peaked following Brexit. That speculative interest fell slightly as prices stalled during the summer, but less than expected. The markets entered October with lots of traders still willing to hold out for higher prices as long as prices weren’t breaking down.

Across the table from them sat the bullion banks, heavily short and pushing for prices to fall. The impasse broke when the stronger dollar and higher rates pushed metals below technical support. Weak-handed speculators ran for the exits.

The good news, if any, is that flushing weak hands and reducing open interest will put markets in a better position to bottom and start a new leg higher. Of course, much will depend on what happens in the dollar and in interest rates.

By Clint Siegner

It just doesn’t matter much whether Hillary Clinton or Donald Trump wins the election, at least in terms of gold and silver market fundamentals. That said, the contest itself is signaling something important precious metals investors should be watching intently.

This campaign is dragging whatever prestige is still associated with the Office of President into the mud. Few voters on either side bother to spend much time arguing the greatness of their candidate. When both Trump and Clinton carry more baggage than American Airlines, it’s easier to focus on their opponent’s shortcomings.

The victor in this epically polarized contest will garner only tepid support from a minority of Americans. He or she will be despised by most everyone else.

Washington DC is having a very bad decade. This year’s election is just part of a larger pattern that has big ramifications for the dollar and, therefore, precious metals; the devolution of confidence in our federal institutions.

Among the biggest losers are the two major party establishments. Evidence recently emerged that Democrat Party operatives have been hiring and training hooligans to incite violence at Trump campaign rallies. There are indications of widespread voter fraud. And the supporters of Bernie Sanders won’t soon forget how their party leadership cheated them during the primary.

On the Republican side, Trump won with more votes than have ever been cast for a candidate in the party’s primary. Yet he is getting almost zero advertising support from the RNC and public rebukes from many Republicans.

A Trump win looks like the worst outcome for House Speaker Paul Ryan and other top party leadership. They would have to contend with an angry and vindictive president-elect who already seems anxious to punish them.

The widespread fraud and misdealing aren’t just limited to Democratic and Republican Party headquarters. It permeates Washington DC, and the embarrassing details just keep coming:

• The FBI and Department of Justice are enforcing two sets of rules. One for Hillary Clinton and Wall Street and another for the rest of us.


• IRS officials have been caught punishing people and organizations that advocate conservative and constitutional ideologies.


• Our national intelligence services – the CIA and NSA are increasingly unaccountable. Edward Snowden and others have exposed their ambition for total surveillance and a willingness to ignore laws in order to achieve it.


• The Supreme Court routinely upholds unconstitutional expansions of the Federal government. Their tortured rationale for upholding the Affordable Care Act (Obamacare) being one great example.


• Congressional approval ratings have been in the dumpster for years. That hasn’t slowed the parade of scandals. And much of the legislation produced there remains wildly unpopular – bailing out crooked banks, perpetually hiking the debt ceiling, and always putting big money first.


• People are rapidly losing faith in the Federal Reserve. And why not? After spending a few trillion dollars, central bankers don’t have much to show for it other than Wall Street profits and some even bigger bubbles waiting to pop.

By Clint Siegner

Most of us consider this year’s presidential election as the wildest and most unpredictable we’ve ever seen, but you wouldn’t know it by looking at the markets. Gold and silver spent most of the past three weeks going nowhere fast. Between Oct. 6th and Oct. 27th silver traded within ten cents of $17.60/oz – an extraordinarily tight range. Precious metals generally thrive on uncertainty, but the markets have been unfazed and instead have appeared to be paralyzed.

It seems Wall Street may not have shared the trepidation many Americans at large have been feeling. That may be about to change.

On Friday, FBI director James Comey, of all people, broke metals prices out of the exceptionally tight cage confining them – although it was still a rather modest move. He announced his agency is re-opening its investigation into Hillary Clinton and her emails. Silver and gold both jumped on the news.

Financial commentator and author James Rickards thinks the markets have been pricing in a victory for Wall Street favorite Hillary Clinton. In an interview taped just before Comey’s announcement, Rickards said he expects Trump “will probably win.” If that happens he anticipates “the stock market will drop 10% overnight” and “gold will probably go up $100/oz.”

Based on the negative stock market reaction to Friday’s the FBI’s bombshell announcement, Rickards may be on to something.

Prior to Friday’s news, Hillary was favored to win, in more ways than one. She was leading in most projections of electoral votes (yes, we know there is good reason to question much of the polling). The mainstream press fervently supports her. And she has been Wall Street’s darling when it comes to campaign contributions. Goldman Sachs went so far as to issue a company directive forbidding employees from contributing to Trump’s campaign.

Wall Street insiders are used to getting what they want. However, like the British establishment prior to Brexit, they might get surprised.

By Clint Siegner

Inflation is the most pernicious of taxes levied by our government. Officials systematically devalue the Federal Reserve Note “dollar,” then levy capital gains taxes on assets when their dollar price rises.

The “gains” are largely illusory. Rising asset prices over time reflect the fact that the dollar buys less of everything. But the tax obligations triggered by this inflation are very real.

Bills calling for the elimination of capital gains taxes on money, i.e. precious metals, have recently been introduced in both Idaho and Arizona.

Money Metals Exchange president Stefan Gleason testified at the hearing and pointed out that “by taxing so-called gains on exchanging precious metals for devalued Federal Reserve Notes, we’re adding another tax on top of the inflation tax.”

Idaho State Representative Ron Nate adroitly observed, “Citizens aren’t allowed to declare capital losses when the dollars they hold lose value. So, it isn’t fair to tax capital gains when the gold and silver they own rises in value.”

The Idaho bill – HB206 – passed the House Committee on Revenue and Taxation last Thursday and is expected to come up for a vote on the house floor in the coming days.

Money Metals President Stefan Gleason testified before the Idaho House last week.

The Arizona House of Representatives passed its own version of the Idaho bill, HB2014, in mid-February, sending it on to the state Senate which is holding a hearing this Wednesday. Former Congressman Ron Paul is scheduled to testify.

Meanwhile, the Sound Money Defense League is helping Alabama, Tennessee, Virginia, and Maine eliminate sales taxes on gold and silver bullion.

Supporters of sound money are working hard to reestablish gold and silver as money according to state law and to make sure it is treated as such in the tax code. Trading one form of money for another should not trigger any tax. There is no sales tax when customers swap their precious metals for dollars, so switching dollars to bullion should also be tax exempt.

Oklahoma, Utah, Texas, Idaho, and nearly 20 other states already exempt precious metals from sales tax. Utah and Oklahoma have gone one step further, reaffirming the U.S. Constitution’s designation of gold and silver as legal tender. As such the metals are free from all state taxes – including capital gains.

By Clint Siegner

Investors are underestimating inflation risk. As a consequence, they are under-pricing inflation protecting assets including precious metals.

The Federal Reserve has given itself the objective of engineering an inflation rate of around 2%. However, there are many ways in which real-world inflation can potentially outpace the Fed’s 2% target.

Firstly, the Fed’s preferred inflation gauges are flawed. The so-called “core” rate of consumer price inflation strips out food and energy costs. The core Personal Consumption Expenditures (PCE) index has also been criticized for underweighting housing and medical costs.

The PCE number for March, which came out on May 1st, shows the Fed’s favored inflation gauge running at 1.6% year over year. That’s down slightly from the previous month’s reading of 1.8% (2.1% for the headline unadjusted PCE).

Since 2012, the core inflation rate has been running below the Fed’s 2% target. That has caused investors to grow complacent toward inflation risk. They seem to be operating under the assumption that 2% is a ceiling.

That is a dangerous assumption – not only because of food and energy inflation not being properly accounted for, but also because even the official “core” number could rise well above target for extended periods.

Fed Insiders Call for 4% Inflation Target

The 2% target itself isn’t set in stone. In fact, some current and former Fed governors would like to see the central bank pursue a more flexible inflation objective. Peterson Institute economist Olivier Blanchard argues the Fed ought to raise its target to 4% in order to make up for several years of below-2% inflation.

Former Federal Reserve chairman Ben Bernanke recently wrote a piece for The Brookings Institution in which he proposed ways to re-jigger the Fed’s inflation target. According to Bernanke, “in a changing world of imperfect credibility and incomplete information, private-sector inflation expectations are not so easy to manage.”

By Clint Siegner

Several U.S. states and the federal government are hopelessly insolvent. It’s something many bullion investors have known for years.

The real question is when this reality will pierce the mainstream illusion that deficits, and the crushing pile of debt which accompany them, don’t matter. That moment drew closer last week when ratings agencies downgraded Illinois state bonds to one notch above “junk” status.

S&P and Moody’s dropped the state’s creditworthiness rating to BB+/Baa3 – the lowest ever for a U.S. state. Illinois currently has $14.5 billion in unpaid bills and a government deadlocked over forming a new budget.

That stack of bills represents a whopping 40% of the state’s operating budget. At the heart of Illinois’ problems are massive union pension obligations for retired government bureaucrats.

Sluggish economic growth, below par returns driven by zero interest rates, and the extravagant promises made to retirees created a funding gap that likely cannot be bridged. But the state looks like it will have to die trying.

Government union bosses and their supporters got pension obligations converted into a constitutional mandate in 1970. They made it so that certain benefits can only be adjusted in one direction – higher. Article XIII, Section 5 reads:

Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

Adding that language was a neat trick, given the implicit mandate that the private taxpayers are permanently on the hook for these obligations – even as they enjoy no such guarantees in the face of their own impaired incomes and retirement benefits.

By Clint Siegner

It must have been painfully awkward for the Commodity Futures Trading Commission (CFTC).

Last year, Deutsche Bank settled a civil suit involving blatant market rigging and turned over reams of information, including chat logs and voice recordings. The trove contained plenty of damning evidence which had gone overlooked by the CFTC.

CFTC investigators supposedly spent 5 years searching for illegal market manipulation, but somehow, managed to find nothing.

The cheating became hard to ignore after Deutsche Bank turned over voice recordings and 350,000 pages of documents which revealed bank trading desks being run like the back office of a crooked casino.

Here is one of the chat log gems between David Liew (Trader B) and an accomplice at UBS, where they coordinate trades and joke about it with a play on the timeless Ghostbusters song:

UBS [Trader A]: and if u have stops…

UBS [Trader A]: oh boy

Deutsche Bank [Trader B]: HAHA

Deutsche Bank [Trader B]: who ya gonna call!

Deutsche Bank [Trader B]: STOP BUSTERS

Deutsche Bank [Trader B]: deh deh deh deh dehdehdeh deh deh deh deh dehdehdeh

Deutsche Bank [Trader B]: haha16

This and records of many other similarly incriminating exchanges left CFTC officials little choice but to reverse themselves and finally take some action. On June 2nd, the Commission announced a settlement with a single trader named David Liew.

By Clint Siegner

Federal Reserve Chairwoman Janet Yellen says she is planning more hikes in the Fed funds rate, but you wouldn’t know it by watching the markets. So far the response in foreign exchange, bonds, and equities isn’t what people expected.

Markets have always been notorious for behaving unpredictably.

But in an age when central bankers micromanage virtually all markets, the behavior could be the result of careful planning. Maybe the recent market action was only unpredictable for those of us outside of the FOMC conference room.

Officials hiked rates in December, March, and June. Despite that the U.S. dollar has fallen to its lowest levels in more than a year.

The DXY index peaked just above 103 in December and flopped to near 95 last week.

The bond markets also aren’t responding as expected to the recent hikes or the threat of more to come. 10-year Treasury yields bumped up immediately following the November election, but have been bouncing between 2.25% and 2.5% ever since. At the moment, the yield is near the low end of that range.

The same is true for stocks. Higher borrowing costs for consumers and businesses should be on the way. Couple that with the slew of poor economic data, including lackluster GDP growth, and you might wonder why in the world stock investors have been so enthusiastic.

There are some who wonder if the Fed has lost control of the markets. If that is true, it sure seems to be working in their favor.

Yellen and company are making headway toward “normalizing” rates and regaining some dry powder. And the dollar, which many officials feared had grown too strong, is falling. Stocks have surged to record highs, and interest rates for consumer loans – including mortgages remain exceptionally low. Serendipity.

The whole thing smells more than a little fishy. The trouble is it’s only a matter of time before the geniuses in charge at the Fed make a mistake and the bubbles they have been blowing explode with dire consequences – once again.

As Jim Rickards pointed out on last week’s Money Metals Podcast:

The Fed is blundering once again. They can’t seem to get anything right. That’s not really surprising when you have the wrong models, obsolete models, you’ll get the wrong policy every single time. But the economy’s weak. It’s getting weaker. We may be in a recession sooner than later. The market looks vulnerable and now the Fed wants to launch this major tightening program. I think it’s nonsense to think that won’t have some very bad effects.

Our skepticism ratcheted even higher last week when Janet Yellen announced she does not expect another financial crisis in our lifetime. She’s confident adequate controls are now in place and the lessons of the past have been learned.

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They haven’t. She and the rest of the central planners at the Fed don’t understand the leading role they played in creating the dot com bubble or the real estate bubble behind the 2008 financial crisis.

She isn’t particularly concerned about the surge in her organization’s balance sheet, metastasizing private sector debt, and the trillions added in government borrowing since the last crisis.

Yellen ought to sound more like Susana Mendoza – the Comptroller in the financially teetering state of Illinois. The state is grappling with insolvency and Mendoza is sounding the alarm.

Yellen, meanwhile, is feeling quite self-assured instead. It’s the sort of hubris we’ve seen before from Fed bankers – right before the wheels come off the economic cart.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

By Clint Siegner

Let’s start with this fact; fiat (paper) currencies die – often spectacularly. That is why precious metals may someday be needed for barter and trade. Anyone who thinks it is silly to worry about such a thing is putting blind faith in Federal Reserve Notes.

The U.S. dollar is having a great run, no question. It will soon be 50 years since Nixon closed the gold window, thereby converting the dollar to a purely fiat currency. Five decades is longer than most purely fiat currencies survive.

Humans carry a normalcy bias. That helps explain why so many assume the unbacked Federal Reserve Note, which has served so long as our currency, will continue to serve in the future.

If you test that assumption, it quickly gets hard to defend.

Point to the exponential growth in U.S. debt, the unrestrained government spending throughout both Republican and Democratic administrations, and the extraordinary monetary policies of the Fed (particularly in the past decade) and reasonable people should acknowledge that the reign of “king dollar” is unlikely to last forever.

Most people don’t know the first thing about the dark history of fiat currencies around the world. Governments use them to borrow and print without limits. Suffer no delusions – fiat currencies were invented for precisely that purpose. The gold in the treasury has never been sufficient for the wars, social programs, and graft which are the hallmarks of a growing government.

America is no exception. Nixon slammed the gold window shut because nations – France in particular – saw the U.S. spending beyond its means and devaluing the dollar. So our trading partners began swapping dollars for bullion. In order to stop the hemorrhaging of U.S. gold reserves, Nixon reneged on the commitment to redeem Federal Reserve Notes in gold.

Honest money in the form of gold, or currency redeemable in gold, imposes restraints that no expansionist government can abide – ours included.

The chart showing the growth of our national debt since Nixon broke the last remaining tie between the dollar and gold is hard to refute.

Whether or not the federal government can be trusted to make good on its commitments over time is a serious question.

It would be silly not to prepare for a collapse in confidence, and, by extension, a collapse in the dollar. And nobody should wait. Currency crises through history catch most people by surprise, then it is too late to prepare.

Governments are like the Ernest Hemingway character:

“How did you go bankrupt?”

“Two ways. Gradually, then suddenly.”

History is full of nations and currencies rolling slowly downhill for awhile, then plummeting over the cliff.

You can show naysayers a picture of the recent hyperinflation in Venezuela:

Venezuelans who entered 2016 with all of their savings in bolivars probably didn’t know it, but they were in serious trouble. Within weeks they would be searching for scarce food with nothing to exchange but devalued banknotes – slips of paper which merchants suddenly loathed.

The above chart is based on “official” data from the Venezuelan central bank. The reality is even worse.

Grocers can’t keep enough food on the shelves because suppliers don’t want bolivars. Instead, much of the food is bought and sold in black and grey markets where people offer something more compelling in exchange.

Once lost, it is extraordinarily hard to restore confidence.

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The Venezuelan government, and their bolivar, are struggling to maintain any sort of legitimacy. Total collapse is all but assured.

Granted, the USA is not Venezuela. Our dollar is the world’s reserve currency and the U.S. is much larger and wealthier than that South American nation. But much of the difference boils down to scale and timing. Venezuela is simply ahead of the U.S. on the same road to national bankruptcy.

Absent a course correction, there is little reason to think we won’t arrive at the same destination – hyperinflation and disorder.

It is possible America can make reforms before it is too late. But even those who are optimistic about President Trump enacting change for the better, must admit it is very unlikely that he will ever get Congress to cooperate. And it is that august body which is responsible for spending and debt.

Federal debt and entitlement obligations have kept growing, regardless of which party is in control.

If the U.S. returns to honest money and limited government BEFORE a crisis, it may be the first nation in history to do so. Anybody who doesn’t like those odds would be wise to hold some gold and silver for a handful of good reasons. Having something to barter with is certainly one of them.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

 

By Clint Siegner

Physical demand for bullion rounds, coins, and bars remains somewhat soft in the U.S. This year’s run higher in prices as well as rising geopolitical tensions has whet the appetites of some investors, but it has not yet triggered broad participation.

With strong gains both this year and last, metals prices have been responding to a host of issues – from unrestrained federal borrowing to the prospect of nuclear exchange. But they haven’t moved up as much as many expect.

After advancing dramatically in the prior decade, gold and silver have not responded as strongly to the explosive money creation and debt of the last few years as stocks have. And while predictions of crisis have been plentiful, the “Big One” hasn’t yet materialized.

Some honest money investors have even been drawn to Bitcoin and other cryptocurrencies. This is, in part, because of the tremendous run-up in prices in recent months (notwithstanding last week’s crash), and because cryptocurrencies might prove beyond the reach of Wall Street and central bankers to control.

Unfortunately, many investors will be sitting on the sidelines until precious metals are proven outperformers again, and in doing so, they will miss a big move up in prices. While we expect to see much higher gold and silver prices, the catalysts for that aren’t anything to root for. Serious geopolitical strife, a major correction in stock prices, or the U.S. dollar in free fall all mean hardship and pain.

Change is inevitable, and the U.S. economic expansion is getting long in the tooth. Even artificial markets must ultimately yield to actual physics.

The good news for investors with a contrarian bent is that buy premiums on bullion products are the lowest they have been in a decade – and inventory is plentiful. Down the road the opposite may be true, i.e. high premiums and shortages of the physical gold and silver in minted form.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

By Clint Siegner

Fear and greed drive the precious metals markets, but there hasn’t been much of either pushing gold and silver prices lately. Investors have grown tired of worrying about geopolitical events, ever increasing federal debt ceilings and ever inflating equity bubbles.

Meanwhile, greedy trend traders continue piling in to hot markets.

With the exception of palladium, metals prices have been stagnant for most of the year. For the time being, gold and silver are looking pretty boring relative to the hefty gains in stock prices and the explosive rise in Bitcoin.

Goldbugs are still waiting for a catalyst to shift investor attention back to the metals markets. Let’s take a look at some of the possible near-term drivers for gold and silver…

The equity markets remain overdue for a significant correction, and that would definitely stir some safe-haven demand. Yes, we have been expecting a correction in stocks for some time and prices are still moving higher.

There is, of course, no telling when the next bear market in stocks will arrive. But price-to-earnings valuations have only moved higher into nosebleed territory and shares are truly priced for perfection. A good-sized hiccup could have investors heading for the exit.

Bitcoin prices may also correct, diverting some of that capital instead into gold and silver. Cryptocurrencies are an entirely different kettle of fish when it comes to valuation. If Bitcoin can deliver on its promise to revolutionize payments and finance, today’s prices will ultimately look cheap.

However, no one should expect Bitcoin to continue moving higher in a straight line, with price corrections measured only in days or hours. There are a couple of developments right now with the potential to derail the extraordinary bull run in Bitcoin – at least temporarily.

A number of major cryptocurrency exchanges have grown reliant on a token called “Tether.” The Tether token is supposed to be backed 1 to 1 with U.S. dollars held by the company behind the Tether. Traders swap Bitcoin and other coins into Tether, assuming it is akin to cash. However, there are serious questions about whether or not the backing exists.

If confidence is lost in the nearly $1 billion of Tether tokens floating around exchanges, much of which has been used to make leveraged purchases of Bitcoin, it could be a disaster rivaling the collapse of Mt. Gox.

Bitcoin is also getting a boost in anticipation of institutional money pouring into the markets. The CME Group (COMEX) will launch Bitcoin futures trading later this month and lots of people expect the influx of capital to be very good news for the price. Our perspective is a bit different given that the nearly unlimited supply of paper futures contracts has undermined precious metals prices.

We think Bitcoiners should be wary of the participation of establishment institutions, such as JPMorgan Chase, which are likely to heavily short Bitcoin. These banks have a record of defeating limited supply by selling paper contracts in unlimited quantity and profiting as prices fall. People should also understand that many of the institutions who will be playing in Bitcoin futures are not fans of Bitcoin.

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There are also a couple other developments of particular interest for metals investors in the coming weeks. Tensions with North Korea and Iran are still escalating. And Michael Flynn, President Donald Trump’s former National Security Advisor, has taken a plea deal. The President’s many enemies in Washington DC are hoping Flynn will testify to some impeachable offense.

Should these players finally hang something serious on the President, we can definitely expect some turmoil in conventional markets.

It is quiet in the metals markets now, but there are plenty of ways for this quiet to be broken at any time.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

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By Clint Siegner

Metals investors may have missed it given the gloomy sentiment that plagued markets for much of 2017, but gold just finished its best year since 2011.

Perhaps in a year like the one just passed, 13% gains are simply not inspiring. U.S. stocks finished about 25% higher for the year, and crypto-currencies including Bitcoin left all other asset classes in the dust. Bitcoin gained roughly 1,400%.

Die hard gold bugs enter 2018 waiting for crypto-bugs and stock bulls to see the value of precious metals. Fortunately, precious metals have served reliably both as an inflation hedge and as a safe haven for most of recorded history. It looks less and less probable investors will get through another 12 months while ignoring both inflation and market risk simultaneously.

While other markets were finishing 2017 strong, the U.S. dollar ended the year with a whimper. The dollar fell 10%, its worst performance in more than a decade.

That weakness has yet to manifest itself as price inflation in consumer goods and services. It has instead shown up in asset prices.

Consumers have yet to feel their dollars getting weaker, which may explain much about why a traditional inflation hedge like gold isn’t getting a lot of attention. That may change in the months ahead, particularly if President Donald Trump can add his debt-financed infrastructure spending program to the tax cuts recently passed. Both initiatives represent fiscal stimulus for Main Street, and a shift from Wall Street oriented monetary policy including Quantitative Easing.

Fiscal stimulus programs should contribute to more weakness in the dollar, as deficits and borrowing increase. Yes, the Republican-led Congress could insist on spending reductions elsewhere to compensate for tax reduction and infrastructure spending, but only the most naive would consider that a genuine likelihood.

If the dollar loses another 10% in the year ahead, metals ought to be significant beneficiaries – even if most aren’t paying attention to that possibility.

The recent strength in precious metals may be signaling that price inflation is on the way.

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The Federal Reserve has been raising the Fed funds rate for more than two years, thus far with very little impact on bond yields and interest rates on consumer loans. When dealing with markets as centrally planned as ours are, anything is possible … in the short term.

Yet, in our view, the most likely alternative to inflation as a driving force in markets over the coming months is asset deflation. If investors aren’t talking about rip roaring asset markets at this time next year, they may be talking about bubbles popping instead. There are certainly a number of bubbly markets, and a near total disregard for risk. That is a potent combination.

Either way, don’t expect the metals markets to go unnoticed in 2018.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

By Clint Siegner

Gold and silver premiums have been following the demand for physical metal lower in recent months. As investor selling ticked up, popular bullion products poured back into dealer inventories. The result has been some of the lowest premiums we’ve seen in a decade for items like gold and silver American Eagles.

The “premium” is the amount over the market price for gold or silver commanded by a specific bullion product. It will include the dealer’s profit, but also incorporates the wholesale premiums and/or fabrication costs the dealer must pay to acquire the inventory.

Premiums are the best indicator of demand in the bullion markets.

Secondary market products – items that are being resold rather than sold for the first time as brand new – are just about always the best option for investors, provided they can be purchased at a discount. Unfortunately, that hasn’t been very often in recent years.

For most of the past decade, bullion investors have been less inclined to sell. Instead, mints and refiners had trouble keeping up with demand at times.

Buying resale may mean the lot of coins a buyer orders will be dated with one or more prior years. A batch of silver rounds could include more than one design. But as long as the product is in uncirculated condition and the designs are well-recognized and marketable, the resale value will be the same as for a new version of the same item purchased today and sold a year or two down the road.

The cost of manufacturing puts a floor on the pricing mints and refiners can offer. This is not the case in the secondary market, where manufacturing costs have already been borne by someone else. Buyers who aren’t insistent about getting brand new product can now get coins, rounds, and bars at a discount.

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Metal prices bottomed in mid December, which discouraged some selling. Now prices are moving higher. Initially, this may drive another round of selling, leading to extra supplies of secondary market products. However, optimism about where metals prices are headed also appears to be on the rise.

Buyers might as well save money on premiums, while they can. There are some signals that the opportunity may not last too much longer.

Supplies of some secondary market items, such as silver American Eagles, can vanish at a moment’s notice. Buying demand has turned higher and these discounted items are always the first to go. If that trend continues over the next few weeks, look for premiums to rise from today’s extraordinarily low levels.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

By Clint Siegner

Those wanting a glimpse into the future of our federal government’s finances should have a gander at Illinois. The state recently “resolved” a high-profile battle over its budget. Taxpayers were clubbed with a 32% hike in income taxes in an effort to shore up massive underfunding in public employee pensions, among other deficiencies.

But, predictably, it isn’t working. People are leaving the state in droves.

In fact, Illinois now leads the nation in population collapse. Statistics show people leaving the state at the rate of 1 every 4.3 minutes and the state dropped from 5th place to 6th in terms of overall population.

Turns out that people with options aren’t planning to stand there and take the epic tax increase.

Illinois officials’ hands are tied. Decades ago, public employee unions successfully lobbied for an amendment to the state constitution which prevents cuts to pensions. The taxpayers are hostages.

Illinois officials are instead considering one final gambit, one well-tried by many insolvent governments through history. They will address the problem of too much debt by borrowing even more money. Specifically the plan under review calls for selling $107 billion in debt in the largest ever municipal bond offering.

Worse, the state would use the borrowed funds to invest in financial markets. The state would purchase stocks and other securities near their all-time highs.

The Illinois credit rating has suffered in recent years, so borrowing costs will be higher. That means the state will need to take on even greater levels of risk to generate returns. What could go wrong?

Illinois is demonstrating a universal truth which certainly still applies at the national level. Governments do not voluntarily shrink. They grow until they can no longer be sustained. Then they get desperate – just before the default.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

By Clint Siegner

U.S. equities got a free ride on the Trump train after his election, even as Federal Reserve officials hiked interest rates. That ride may have ended last week.

If commentators are correct and the blame for recent selling in the stock market falls on the burgeoning fear of rising interest rates, it looks like Fed tightening is finally having the effect many predicted when the cycle began.

Most currently expect the FOMC to continue with hikes at about the same pace set in 2017. They have gotten away with several hikes, but attempting several more will be harder for them.

The question is whether the Fed’s tolerance for pain is any higher under new chairman Jerome Powell. We’d wager that it won’t take much in the way of flagging stock prices and slowing growth to have them reversing course and punching the stimulus button.

No one should bet that last week’s rally in the dollar means the bottom is in. The next few years look downright terrifying for the greenback. Here are some factors to consider:

• Congressional Republicans embarrassed themselves last week by proving the lip service they pay toward fiscal conservatism is nothing but lies. The Republican leadership shepherded through $300 billion in additional spending. Furthermore, they once again completely suspended the limit on borrowing;


• The Treasury will be issuing staggering amounts of new debt to fund the Congressional spending spree. Last fall’s tax cut may be good news for taxpayers, but it will also magnify federal deficits. Net new debt in 2018 is expected to be $1.3 trillion – the highest since 2010!


• President Trump will soon begin the push for a trillion-dollar infrastructure program. That will almost certainly be paid for with additional borrowing.


• The creditworthiness of the U.S. is once again back in the news. Rating agency Moody’s raised the idea of a downgrade for U.S. debt last week.

There is a tsunami of new Treasury debt coming to market in the coming years. Absent Fed intervention with a new bond purchase program and/or renewed stimulus, market forces are going to drive much higher yields. A whole lot of bond investors are going to need serious inducement to buy up all of the trillions in new debt that’s coming – probably more than either the markets or the federal budget can bear.

That’s why people should look for the Fed to soon start putting downward pressure on rates, not upward. And don’t let anyone tell you last week’s rally in the dollar has any kind of future. You can expect several trillion more dollars to roll off the printing presses over the next few years.

Secret $1.8 Million Cryptocurrency Script

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

By Clint Siegner

Gold and silver have risen substantially off the price bottom put in just 2-½ years ago, but the gains have yet to attract much notice. Gold has gained roughly 28% and silver is up 20%.

Meanwhile, another metal has more than doubled since bottoming. This performance should have been more than enough to catch the attention of metals investors, if only they were watching. The metal is palladium and, for those who haven’t paid much attention, it is time for a brief update.

Palladium is one of the platinum group metals (PGMs) and it has a lot in common with its higher profile brother.

Like platinum, palladium is a lustrous, silver-white metal. It has many of the same applications. The largest application is in automobile catalytic converters, but there are also uses in jewelry, dentistry, surgical instruments, and electronics.

Palladium also shares platinum’s troubled supply chain.

The top producers are Russia and South Africa. The latter nation has fallen deeper into turmoil in recent months.

Mines there have dealt with unreliable electricity and labor strife for years. Operators are now at great risk of the having mine properties seized by government officials.

PGMs represent a good way for bullion investors to diversify and gain exposure to different market fundamentals.

Diversification can reduce the volatility in any investment and can produce better results – particularly in weaker markets. Just consider the relative outperformance of palladium versus gold and silver over the past 30 months.

Investing in palladium makes sense for investors who anticipate rising demand for cars and trucks which produce lower emissions globally. If the economies of China and India continue to develop rapidly, demand for the metal should keep rising. It will not take a lot of additional demand to completely outstrip supplies.

One wild card is the adoption of electric vehicles, which do not have catalytic converters and require very little of the metal. For now, these types of vehicles are more costly and have severe limitations in terms of range and power.

Palladium Bullion Options

The number of product options available to bullion investors has grown. The U.S. Mint produced a 1 oz palladium American Eagle for the first time in 2017.

Secret $1.8 Million Cryptocurrency Script

The small issuance of those coins sold out very quickly, but more are expected in 2018 and the number of coins minted will likely increase.

The Royal Canadian Mint has been producing a palladium Maple Leaf since 2005, though not consistently each year. Today, this is the best option for investors who want an official, government issue coin. They are almost always in stock and premiums are affordable.

Finally, investors can get palladium in bar form. Bars in assay packaging from Swiss refiners such as PAMP and Credit Suisse are comparably priced to the Maple Leaf. And there are more size options available – including 1-gram and 10-ounce.

Clint Siegner is a Director at 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 Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

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