by Mike Gleason, Money Metals:

Michael Pento: THIS ONE THING Will Tell Us When the Bubble Economy Is Bursting…

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

Coming up Michael Pento joins me for a tremendous interview on a range of topics. Michael goes through his checklist of data points and the events that, once taken place, will fuel the next big rally in precious metals. He also talks about the key warning sign that we can be looking for that will indicate when the economic bubble to end all bubbles is about to burst. So don’t miss another fantastic interview with Michael Pento of Pento Portfolio Strategies, coming up after this week’s market update.

Gold and silver markets are once again getting overshadowed by wild price moves in lesser known metals – in particular, palladium and rhodium. Both are used mainly in emissions control devices for automobiles. And both are in extremely short supply.

A liquidity crunch over the past few days has driven an explosive spike in rhodium to nearly $10,000 per ounce. That’s nearly $4,000 higher than where it started the year and ten times higher than where it traded just a few years ago.

The rhodium, palladium, and platinum markets are heavily dependent on South African mines for supply. But recurring power outages and other dysfunctions in the country are crimping mining output.

Palladium prices shot up to $2,500 an ounce mid week in volatile trading and currently come in at $2,425 – up 5.2% since last Friday’s close and up nearly 25% so far in the early going of 2020.

As palladium continues to set records, so does its rising premium over its sister metal platinum. Palladium now sells for nearly 2.4 times the price of platinum. The opportunity for it to narrow in favor of platinum appears good given that one can often be substituted for the other in catalytic converters. When that starts to happen in a big way is another question.

But the trade has become so lopsided that a powerful squeeze on the platinum market could be triggered at any time. As of this Friday, platinum trades at $1,011 per ounce and shows a weekly decline of 1.5%.

Gold is up now by 1.0% for week to trade at $1,574. And finally, silver is unchanged for the week at $18.11 as of this Friday morning recording.

So can gold and silver investors look forward to a massive price spike in the near future like the one playing out in palladium and rhodium? Very likely, their day will come.

As central bankers continue to monetize ever-growing sums of debt and pursue negative real interest rates, the value of paper currency will go down versus hard money.

It’s a point reiterated this week by billionaire asset manager Ray Dalio. In an interview with CNBC from Davos, Dalio declared that cash is not where he wants to be.

Ray Dalio: What do you jump into when you jump off the train? And the issue is you can’t jump into cash. Cash is trash, because they’re going to print money. What do you do? You get out.

CNBC Interviewer #1: So what do you do?

Ray Dalio: So what you have to do is you have to have a well diversified portfolio. I think that you have to have a certain amount of gold in your portfolio, or you have to have something that’s hard. I know I’m going to come out of here (and everyone will be) like “Ray Dalio’s wild on gold.”

CNBC Interviewer #2: I’m going to say “cash is trash” is your headline.

Ray Dalio: But cash is trash.

There is no doubt that cash will depreciate over time. What is less certain is which assets Federal Reserve notes will depreciate against the most.

In recent years, the stock market has fared well while most commodities have not. However, even as food and energy costs have been held down, healthcare, education, insurance, housing, and other costs of living continue to move relentlessly higher.

We can only imagine what things would be like for consumers if crude oil and grain prices were going parabolic like palladium is. Since palladium only represents a small portion of the total cost of an automobile, most consumers feel no direct impact.

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