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Jonathan Mergott: Gold & Silver – What Happened After the FOMC

Tom welcomes back Jonathan Mergott to the show, and in this interview, Tom takes several listener-submitted questions.

Jonathan discusses the recent Fed statements and where rates might head in the future based on what happened in 2012.

He explains how you can watch the miners as a leading indicator for gold. In the past, the miners have also signaled some warning signs that could be useful for repositioning.

Manipulation matters, particularly if you’re a day trader, but they can’t suppress the price over the long term. The late-night raids on gold and silver are highly unusual and difficult to explain by anything other than manipulation.

He discusses the Basel III banking rule changes and how some of them are voluntary. Additional regulations are coming into effect under Basel IV in a couple of years. These are all gradual changes to rules and will have minimal impact on banks’ day-to-day operations or metal prices.

With everyone on the inflation side of the trade, a contrarian argument would be to expect some deflation. Jonathan doesn’t expect inflation to take off right away since many market forces affect it.

This era of investors is driven mainly by the “Fear of Missing Out” and ideas like finding ten baggers. Instead, investors need to listen to what the market is telling them and learn to manage risk, and it’s also important to highlight what can go wrong with trades.

Jonathan discusses why a new gold standard seems unlikely, primarily because of the massive benefits a debt-based system conveys to those in power.

The WallStreetSilver movement has successfully pulled metal off the market and has brought some attention to space. However, it may have scared some weaker investors. He makes some comparisons between palladium and silver.

Jonathan cautions that if you buy something and the price immediately starts tanking, you should consider getting out. Also, you don’t want to be overly focused on just one market sector or one particular stock.

Markets generally rhyme, but they’re rarely identical. Instead, charts tend to reflect human nature and our emotions of fear and greed.

Time Stamp References:
0:00 – Introduction
0:53 – FOMC Meeting
2:39 – Watch the Miners
12:07 – Manipulation
15:30 – Basel III
17:48 – The Inflation Debate
20:52 – Optimism, FOMO, & Risk
31:30 – Cashflow or Appreciation
36:29 – Suppression of Equities?
38:22 – Central Banks & Gold
39:47 – Gold Standard?
45:27 – Silver Squeeze Hype?
48:11 – Echo Chambers & Risk
52:17 – Questioning Trades
55:30 – Past Market Insights
58:07 – Cup and Handles
1:00:11 – Miners & Metal Pricing
1:03:00 – Silver & Market Highs
1:05:17 – Palladium & Silver
1:10:47 – Wrap Up

Talking Points From This Episode

  • Expectations for Fed Policy and rates.
  • Using the miners as a leading indicator for gold.
  • Taking a contrary position on inflation.
  • Listener questions and general investment advice.

Guest Links:

Jonathan Mergott is Precious Metals Analyst, President and Portfolio Manager of the Meta C. Mergott Foundation. Jonathan lives in the New York/New Jersey area with 11 years of experience in the market and stock analysis, risk management, investment management, investor relations, and financial analysis.

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