Chris Martenson Makes Bold Forecast, “This Is Actually Worrisome…”
from Money Metals Exchange Coming up we’ll hear a fantastic interview with Dr. Chris Martenson of PeakProsperity.com and The Crash Course. Chris gives us his take on why the Federal Reserve failed to follow through on claims they would finally raise interest rates, what they’re likely to do in the months ahead, and the effects all this is going to have on the markets, including gold and silver. Don’t miss another great interview with Chris Martenson coming up after this week’s market update. Well, after months of prepping the markets for a rate hike, Federal Reserve chair Janet Yellen couldn’t muster the will to actually do it. On Thursday, Ms. Yellen announced the Fed would leave the Federal funds rate unchanged near zero.
Janet Yellen: In light of the heightened uncertainties abroad and the slightly softer expected path for inflation, the committee judged it appropriate to wait for more evidence including some frugal improvement in the labor market to bolster its confidence that inflation will rise to 2% in the medium term.
That’s a lot of Fedspeak crammed into 22 seconds. Translating into plain English, the Fed didn’t raise rates because it’s downright scared about global market gyrations, the continually lousy job market, and even the slightest hint of deflation. Yes, the central bank wants to make absolutely sure the prices of your groceries, your utilities, your healthcare, and most everything else you need are going up. Flat price levels are bad, and declining price levels are absolutely intolerable within the Keynesian worldview of central bankers. A weaker dollar could go a long way toward jacking up consumer prices. On Thursday, the U.S. Dollar Index dropped 1% as the Fed stood pat on interest rates. The dollar’s retreat gave the precious metals markets a bit of a boost, though perhaps not as big of one as gold and silver bugs hoped for. Gold prices gained just over 1% on Thursday to finish at $1,132 an ounce. As of this Friday morning recording, gold is continuing its move higher and trades at $1,139 for a weekly gain of 2.7%. Turning to silver, prices cleared the $15.00 level on Thursday and currently come in at $15.22 an ounce. The white metal shows a 3.7% advance on the week. Also on the upswing are platinum, palladium, copper, and crude oil. Crude is up 5% this week to trade at around $47 a barrel. A report released Monday by the Energy Information Administration forecasts that domestic shale oil production will fall for the sixth straight month in October. Many shale projects that came online with oil at $80 or $100 a barrel simply aren’t economic with oil prices below $50. At least some of the conventional oil producers can make money with crude in the $40s. In the base metals and precious metals mining industry, hardly anyone can turn a profit with spot prices as depressed as they are. The longer copper stays below $3.00 a pound and silver below $20 an ounce, the more that mining capacity can be expected to shrink in the months ahead. Looking ahead to 2016, the Fed may well start getting the higher rates of inflation it wants. The bombed out commodities markets can’t keep falling in perpetuity. After all, lower prices serve as a signal for producers to produce less and consumers to consume more. At some point, rising demand and falling supply will force prices higher. Even Fed economists can understand basic supply and demand curves. We’re already seeing demand outstrip supply for most popular silver bullion products, forcing prices for coins to shoot higher in recent weeks. This has occurred even though silver spot prices set in the futures market have barely budged over the past couple months. We continue to monitor premiums and availability on 1,000-ounce bars as an indicator of real physical tightness. 1,000-ounce bars are used for delivery on futures exchanges. So far, there doesn’t seem to be a problem in obtaining these delivery bars. But as investors are lured into buying 1,000 ounce bars by the higher premiums and delivery delays we’re seeing on nearly every other size bullion product that could change. If 1,000-ounce bars start carrying sizeable premiums over spot, then the spot price itself will cease to have credibility. The paper silver price will increasingly be seen as phony. And that could spark a “run on the bank” in the futures markets, where physical inventories are sparse. Again, we’re not at that kind of inflection point just yet. But this could absolutely happen if spot prices aren’t allowed to rise to sustainable equilibrium levels. This fall should be a very interesting period in the metals markets, especially with a potential government shutdown looming. We’ll be briefing you on what you need to know about a government shutdown scenario in the coming week. Well now, without further delay, let’s get right this week’s exclusive interview. AUDIO MP3 INTERVIEW HERE>>> If you prefer to read the interview>>>