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Investor Optimism toward Washington’s Problem-Solving Abilities Is Misplaced

Monday, March 13, 2017 12:47
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(Before It's News)

By Clint Siegner, "nofollow" href=
"https://www.moneymetals.com/news/2017/03/13/bullion-markets-misplaced-optimism-001027">
Money Metals Exchange

 

"https://www.moneymetals.com/uploads/content/bullion-markets-misplaced-optimism.jpg"
style="height:263px;width:500px" />

The bullion markets offer their own commentary about
conservatives’ state of mind since Donald Trump’s election. They
are optimistic for the first time in years. Just look at the sales
statistics from the U.S. Mint. Bullion. Coin sales have fallen
sharply as investors see less reason to seek safe haven in the form
of physical metal.

During Obama’s presidency, and during the campaign when it
looked as if Hillary might succeed him, conservatives and
libertarians aggressively bought American Eagle coins and other
bullion products. The mint set new sales records nearly every
year.

The mindset that drove the retail buying changed in November.
Consider the February sales figures. Sales of gold American Eagles
"http://www.coinnews.net/2017/02/28/gold-silver-jump-in-february-us-mint-bullion-coin-sales-slow/">
dropped 67.1% last month
versus the same month in 2016. Silver
American Eagle sales fell by 74.6%.

Now one month of data from the mint certainly cannot be used to
extrapolate longer term trends. Mint statistics often vary wildly
from one month to the next. But it is safe to say retail bullion
demand is down significantly, and the shift seems primarily driven
by optimism surrounding the Trump economy.

There is little else to put investors at ease. The European
Union remains in crisis. Geopolitical turmoil still dominates the
Middle East. Federal debt and deficits look certain to persist.

"https://www.moneymetals.com/uploads/content/silver-eagles-stack-money-metals.jpg"
style="float:right;height:267px;width:200px" />The rhetoric from
the Federal Reserve hasn’t changed in years. Officials there are
still telegraphing “gradual” rate hikes with the caveat that rates
will likely stay well below historical averages indefinitely.

But the U.S. retail market is only a small part of global
demand. And demand for the precious metals from financial market
participants as well as well as Asian buyers continues to be
relatively strong with prices rising sharply since December. But
the recent dip in demand among American retail buyers may represent
a final capitulation before the ferocious global bull market
resumes.

The rhetoric from the Federal Reserve hasn’t changed in years.
Officials there are still telegraphing “gradual” rate hikes with
the caveat that rates will likely stay well below historical
averages indefinitely.

The U.S. retail market is only a small part of global demand.
And demand for the precious metals from financial market
participants as well as well as Asian buyers continues to be
relatively strong with prices rising sharply since December. But
the recent dip in demand among American retail buyers may represent
a final capitulation before the ferocious global bull market
resumes.

Why? Because expectations surrounding Trump’s administration
represent an extraordinarily high bar. Investors will discover the
tectonic forces behind eruptions such as the 2008 financial crisis
are still at work. They are beyond the ability of any president to
control. Expectations will have to reset lower – perhaps a lot
lower.

That may begin happening soon. Congressional Republicans aren’t
fully jumping aboard when it comes to Trump’s reforms. They won’t
even pass the same Obamacare repeal legislation they approved
during the prior administration. Their actual commitment to ending
the federal government’s most recent entitlement program is laid
bare for all to see now that there is a president willing to
support the repeal.

"https://www.moneymetals.com/uploads/content/congressional-debt-ceiling.jpg"
style="float:right;height:178px;width:275px" />

Meanwhile, Trump’s tax cuts are on the back burner while
Congress decides on how to sell out the citizens who despise
Obamacare – most of whom voted for Trump. Mitch McConnell, Paul
Ryan and company will get around to disappointing the voters on tax
reform in due time.

The same clowns will almost certainly pass another hike in the
U.S. debt ceiling this month.

That issue made for good politics when Obama was president and
Democrats controlled the Senate. Practically no one in Washington
is genuinely interested in spending restraint.

The new Treasury Secretary – Goldman Sachs alum Steve Mnuchin –
has taken the exact same stance as his predecessors. He is
encouraging Congress to expand government borrowing capacity
without delay.

The bankers, defense contractors, pharmaceutical companies and
deep state insiders who have been calling the shots in Washington
DC didn’t pack up and leave when Trump moved into the White House.
Congress is still on their payroll.

It is only a matter of time before optimistic conservatives
figure out just how badly they have been betrayed by Republican
leadership.

In fairness, the country’s fiscal problems started way before
the current crop of Representatives and Senators arrived in
Washington. When the U.S. dollar’s last link to gold was severed in
1971, America veered down a one-way road toward national
bankruptcy. Dishonest money financed the largest welfare/warfare
state in world history.

No president will be able to dismantle it without the
cooperation of Congress. We wish Trump good luck, but we’ll believe
it when we see it.

 

"https://s3.amazonaws.com/ILB_MS_BUCKET/clint-author-20140512170107.jpg"
style="float:left;height:100px;width:100px" /> "font-size:11px">Clint Siegner is a Director at

"https://www.moneymetals.com">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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