Trump Considering Reappointment of Socialist Janet Yellen as Fed Chair

Friday, July 28, 2017
By Paul Martin

By: Mike Gleason, Money Metals Exchange
Friday, 28 July 2017

Frank Holmes: Silly Money Printing, Negative Real Interest Rates, & Restricted Supply Form a “Great Scenario for Gold”

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear from Frank Holmes, CEO of U.S. Global Investors. Frank reveals some very bullish fundamentals that he sees developing for the precious metals in the coming months and also shares some information on an exciting new gold fund. Don’t miss another great interview with The Mining Journal’s gold fund manager of the year for 2016, Frank Holmes, coming up after this week’s market update.

Well, as certain United States Senators were finding new ways to kneecap Obamacare repeal efforts this week, the Federal Reserve stood pat on interest rates.

Janet Yellen and company left their benchmark funds rate unchanged as expected on Wednesday. Fed officials have expressed frustration in recent months that their inflation target of 2% hasn’t officially been met. Consumer and producer prices have stayed relatively flat thanks in large part to low prices in key commodities such as copper and crude oil.

But this week oil prices surged 7% to just under $50 per barrel. Crude still needs to break out above the $55 level to make new highs for the year and establish an uptrend.

Copper prices are also on the move. The red metal surged nearly 6% this week to hit a fresh two-year high.

If the story of rising economic growth and more manufacturing jobs under Donald Trump’s leadership has legs, then copper could continue to climb. However, once the economic indicators start turning down and recession fears gin up, then the preferred metal for investors to hold will be gold.

Checking in with the gold market, spot prices currently come in at $1,268 an ounce, up 1.0% for the week. The yellow metal is now trading back above both its 50-day and 200-day moving averages.

Silver’s also posting a weekly advance of 1.0% and now trades at $16.75 an ounce. Palladium is up a healthy 4.2% to $885 while platinum is struggling once again, down 0.2% to trade at $937 an ounce.

Overall, the precious metals complex is improving as we head into the more favorable months of the year seasonally.

One potential headwind would be a relief rally in the U.S. dollar. The dollar may be due for a bit of a rebound near term after having fallen steadily for the past four months. Even so, the dollar and precious metals could benefit simultaneously from a flight to safety in the event of an equity market selloff.

The VIX volatility index for the stock market hit a record low this week, indicating extraordinary levels of complacency among investors. Fed chair Yellen has been careful not to rattle the markets. She’s given the Trump White House no reason to complain.

Of course, when Donald Trump was a candidate for president, he railed against Yellen. He accused her of keeping rates down for political reasons and blowing up a bubble in financial markets. But now that he is president, Trump favors Yellen’s easy money policies. According to new reports, Trump is even considering re-appointing the Big Government socialist as Fed chair.

It doesn’t matter whether the president is a Democrat or a Republican – support for stimulative monetary policy transcends party lines. That’s why Alan Greenspan, Ben Bernanke, and now possibly Janet Yellen got reappointed from one administration to another.

Republicans and Democrats may spar like pro wrestlers during campaigns. But when it comes to the really big issues like monetary policy and the size of government, their differences are virtually non-existent.

History shows that even when Republicans get control of Congress and the White House, government spending goes up just as much as when Democrats are in charge. That’s now in the process of proving itself out again. The GOP Senate is more likely to sign off on large increases in military spending than to repeal Obamacare or cut spending on domestic programs.

Maybe after failing to deliver on healthcare and fiscal restraint, Republicans will feel enough heat from voters to deliver at least something on tax cuts. The hope of tax cuts to come is helping to keep the stock market rally going. But tax cuts or not, investors would be wise to consider the long-term consequences of the unshakable bipartisan commitment to more spending and more debt. Rising debt levels will exert tremendous pressure on our already strained monetary system.

The Rest…HERE

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