David McAlvany: Gold Prices Need To Hit $3600 To Keep Pace With Government CPI Inflation Increase

David McAlvany: Gold Prices Need To Hit $3600 To Keep Pace With Government CPI Inflation Increase

hi everyone this is Jason B of Wall
Street for Main Street welcome back to
another Wall Street for Main Street
podcast interview today’s special guest
is a returning guest he’s actually done
his own show and podcast the mlan weekly
commentary for over 15 years he’s a
second generation money manager he’s a
CEO of the mvan Financial Group
including a bullon dealer that has been
run by his father initially since the
1970s he also has the vault.com app
which offers the ability for retail
investors to buy physical gold and
silver at very very low premium David
maaney thank you for joining me again
hey great to be back with you Jason so
David we’re recording this interview on
Tuesday April 23rd 2024 let me just go
through some of the key points here
about the markets right now the 10year
US Treasury yield has rallied a lot in
yield Spike spiked up to 4.6% from 4.2%
only about a month ago the dollar Index
has also rallied up to 105.7 although
it’s down a little bit in the last uh
week and the gold prices have corrected
a little bit but we’re up $250 an ounce
give or take to 2310 silver is also down
a little bit I want to get your thoughts
on the global macro situation first
where are we right now in your opinion
with like the US economy what central
banks are doing the the global economy
versus asset
prices you know starting with the US
economy it’s strong but if you said you
know looking at GDP growth and the the
quality of growth I think that’s what is
suspect because you’re dealing with a
tremendous amount of of government
spending specific speically deficit
spending to get us to sort of the robust
level that we have currently so you know
if you’re spending an extra trillion and
a half two trillion dollars that you
don’t have it’s still money that’s being
spent and you know so it it is it is
truly a form of economic activity um so
that you know you get credit for that in
the statistics uh but I think it it what
that overstates is um the real strength
of the consumer and you know with 70% of
our economy traditionally coming from
the consumer it really does matter how
strong the US consumer is and I think
there’s there are some uh
intriguing data points you know on both
sides if you look at retail sales it’s
pretty strong if you look at a number of
of of credit card companies discover
comes to mind um they’ve got their
delinquency rates now at levels that are
higher than they were in the worst of
the global financial crisis um sort of
you know third and fourth quarter of of
2008 uh we’re already past those those
levels uh for discover financial and so
you know I I think you can look and say
it’s not real clear if the US economy
can continue um at the same Pace it is
in other words you can’t just consider
it to be a strong economy and and and
immune to to pressures in fact some of
those pressures some of the cracks may
be emerging uh amongst amongst consumers
number one and you know most recently
last week’s um nfib survey of small
businesses U showed you our lowest level
since 2012 so your small business owner
is saying it’s not great yes we’re
concerned with inflation and you know
couple that with with the consumer
continuing to be under pressure um it’s
kind of point and CounterPoint in terms
of the strength of the economy I’d say
we’ve gone a long way and and have
maintain the levels we have with with
with funny
money so you’re saying then that the
budget deficits and the FED hasn’t
really drained the liquidity like
they’ve claimed so yeah the fed’s
official balance sheet is down but they
added what the btfp and these other
liquidity programs so it’s it’s kind of
like a shell game where in one hand
people are looking at oh the fed’s
official balance sheet is down by over a
trillion but on the other hand the banks
uh are getting tapping these liquidity
programs still like crazy and that’s
juicing asset prices exactly the budget
deficit at these levels is on par with
what we’ve seen during major world wars
so you know are we in a major world war
no um are we spending like we are yes so
what Gap are they trying to fill um
that’s that’s a good question the budget
deficit is is a big deal and
sustainability of our fiscal picture is
coming more into Focus for investors
which I think is one of the reasons why
you know gold has gained and is gaining
more attention in the investor community
and it’s it’s this notion that you know
a couple trillion this year a couple
trillion next year now with the interest
component on the national debt getting
to levels that you know rival any other
budget line item in fact last year’s
exceeded the defense budget uh at over a
trillion basically a trillion dollars in
interest payments uh people are
realizing the budget deficit matters the
total quantity of debt matters and if
interest rates don’t come down uh the
interest component is enough to to
really damage to our reputation so you
don’t think we can have a continued
environment where the dollar keeps
getting stronger interest rates like the
10e US Treasury stay relatively high and
gold keeps going higher you think then
that that combination of those things uh
spells um you know asset price
correction and other problems in the
roal
economy well there’s a couple things I
mean if you look at the dollar being
strong or getting stronger that creates
a tremendous amount of pressure for uh
other markets if you’re looking at carry
trade Dynamics
um you’ve got pressure which emerges
there if you’re looking at Emerging
Market debts Emerging Market currencies
pressure that would really damage the
global economy so a stronger dollar
might be good for us but it’s kind of
not good for anyone else and you know
very curious that with a higher rate
environment and a relatively strong
dollar um Gold’s put an all-time highs
again I think that goes to the question
of who’s buying and why um if last last
year it was the Chinese and central
banks you know sort of propping up the
gold market and and pushing it ahead um
this year I think we will see a
transition particularly in the second
half us investors finally paying
attention to to the gold market um not
on the basis of dollar strength or
weakness but on on the basis of you know
that big question fiscal
viability and I think the last time we
had kind of this scenario where interest
rates were raised this much or
relatively high in the US uh
strengthened dollar because Paul vulker
was fighting inflation and trying to
strengthen the dollar and interest rates
on a relative basis were high and a gold
rally like this was the 1970
stagflation yeah I think one of the
things that is is
forgotten you know we look at the FED
funds rate and yes it came off of a very
low level uh you know wasn’t that many
years ago that we had the 10year
treasury marked at 32 basis points and
you know today you mentioned it earlier
4.6% and and you know that is a big move
for the 10year FED funds even higher but
looking at the Taylor rule we should be
over 6% over six and a quarter percent
so on that basis You could argue that we
still have an incredibly accommodative
monetary policy and in fiscal condition
or sorry Financial conditions remain
very
loose so you don’t think then that what
the uh tenure if it goes to 5% I’ve been
seeing some experts predicting that
there’s a bond bear Market Market
long-term Bond bear Market not just last
three years but it’s going to go for a
very very long time that if the tenure
goes to what 5% that it’s not not going
to create what a even worse headwinds
for entities that are not what a large
corporation with a lot of assets or
government all the other entities the
consumer small business you don’t think
they’re going to get hammered from uh a
huge spike in the 10y Years treasury old
continuing I think this is where you
know the conversation on yield curve
control and monetization of debt here in
the United States you know movees Center
Stage because you know corporations
still have another two three years
before they hit maturity walls and have
a lot of debt that’s rolling over enough
that would be consequential for their
survival if you’re talking about you
know marginal borrowers in in in the
corporate landscape certainly they’re
being impacted even now uh but if you’re
talking about you know your your really
good credits and and and you know then I
think you’re you’re really talking about
two to three years before there’s much
of an impact from higher rates um where
the real impact is is in in government
bonds and you know that’s where um I
think it was Michael hartnet who
suggested that uh from Bank of America
that if we don’t see if we don’t see one
and a half perc decline in the FED funds
rate um by the end of the year we’ll be
looking at interest payments of $1.6
trillion so that that’s pretty
significant that’s not the same kind of
effect that you’d see in in in the
corporate bond market uh because again
the maturity wall is farther out we’re
hitting the wall here in the US right
now 14 trillion to roll over between
this year and next year in government
debt um and so we’re coming off of one
and a half 2% rates and it’s getting
marked up to five you know most of
that’s not being financed longer term we
had an abysmal uh Bond offering last
week the 10 year only 38% of it was
taken by the market uh and and your
primary dealers basically got stuck with
the rest um so so they’re being forced
to finance things at the short short end
of the curve you know at rates that are
again five 5.3 5.4 I mean this is that’s
stuff that impacts our budget
considerably um because the interest
component again we were a trillion last
year and a trillion six this year haret
right
I don’t know how you reduce rates by 150
basis points unless it’s in response to
you know a stock market
meltdown yeah I don’t know what type of
excuse it can give because uh what the
front end of the curve is saying that
the FED can’t lower interest rates also
the CPI readings have come in a little
bit hotter than the FED wanted so
they’re giving that as excuse why they
can’t cut I mean the um the FED dot
plots were predicting what eight rate
Cuts or something six to eight rate cuts
at one point early in this year now
we’re down to maybe one or two
yeah and it was funny listening to poell
at his his most recent meeting um this
goes back a few weeks you know is kind
of hemming and haul about we will be
data dependent uh but but the fact that
we’ve had January and February CPI come
numbers come out hot it’s not enough
data to make a decision then March comes
out um to your point three in a row of
of higher than expected CPI prints and
you know now now the question is if
they’re data dependent they should be
considering an increase in rates and you
know so they they set themselves up for
a bit of a credibility check or
credibility crisis if they don’t do what
they said they were going to do they
just communicate to the market the data
doesn’t matter they’ve got other
agendas do you think that the FED is
trapped based on the spending that uh DC
is doing both political parties the
White House Congress and then now
interest payments on the debt which are
at least a trillion and then the Bank of
America analyst I think he says 1.6
trillion by the by December of this year
so he’s estimating that it could get up
to 1.6 trillion in interest payments by
December of this year that’s right
absolutely they’re trapped you know they
need rates to go lower and yet they
haven’t put the inflation Genie back in
the bottle so what do you what do you do
um that that’s being on the horns of a
dilemma well I mean at this point no one
in Congress that’s in a major political
position uh Power position actually
wants to cut spending I mean there’s
people here in DC that are talking about
spending even
more classic during a an election year
and we’ve got more elections globally
this year than is typical uh so it’s not
just our fiscal picture which is
strained but it’s it’s other governments
around the world who you know incumbents
don’t mind spending and don’t mind you
know tapping pork barrel to to to make
sure that their constituents are happy
coming into whatever the election time
cycle is yeah I have the budget deficits
I the the fiscal 2025 budget projections
that the Biden White House released in
the last six weeks I think are
absolutely ridiculous with the
assumptions they’re projecting only a
1.8 trillion budget deficit but they’re
also magically assuming that a trillion
dollars of tax receipts comes in they’re
claiming that another 10 trillion of
debt won’t be added I think for another
decade I mean the the assumptions in
there are just absolutely
ridiculous well the revenue side they
will get an improvement from capital
gains you know last year they definitely
took a hit from significant Decline and
equities from 2022 so what we saw for
2023 Revenue was down by about 10% if
you add that back and and then are
generous on the revenue assumptions I
think you get to five and a half
trillion um but again you back of the
napkin math
1.6 in in in interest payments with 5 a
half in Revenue um you’re you’re coming
up on 30% that that’s that’s a little
scary and I think that’s what again we
come back to what is the gold market
telling us in an environment where
typically you could expect gold to be
$300 to $400 lower given the strength of
the dollar and higher rates what the
Market’s telling you is is that there’s
people figuring out the FED is
trapped well also I think it’s a supply
demand issue in treasuries DAV and you
were highlighting this with the primary
dealers getting stuff with more
treasuries the normal buyers of
treasuries whether that was China Japan
Germany the the our trade partners that
ran the largest trade surpluses and then
recycled for and exchange reserves
they’re just not net buying I mean it
looks like Japan’s probably going to be
selling us treasuries to defend their
own
currency and this gets to your point
about there being a longer term bond bar
Market if if there’s over Supply you can
resolve that with you know adequate
compensation you can improve the demand
picture if you pay people more but that
implies that interest rates are going
higher and that is a bit of a problem
for the government it’s it’s it’s great
for the the owner of that debt it
improves their financial position but
it’s it’s uh it’s it’s tough on
government I want to ask you about
fiscal dominance because I know you’ve
been covering Yi curve control Financial
repression japanification you’ve been
going through these white papers from
the IMF uh reading the books for Carmen
Reinhardt and Ken rogoff for over a
decade now your interview with Carmen
Reinhardt from 2015 on the maania weekly
commentary was absolutely superb I’ve
listened to it I think three or four
times because uh you know she was
basically just predicting with the math
what was going to play out now years
later is fiscal dominance any different
than any of the stuff that you’ve been
discussing like y curve control
Financial repression japanification that
you’ve been talking about for years or
the white papers that these PhD
economists and policy advisers have been
talking
about no it’s it it’s just it is the
environment in which um your financial
repression is the policy Choice uh so so
we we can expect that losses will be
assigned and that that was
reinhardt’s conclusion was basically
we’re in a position now where we’re
going to have to choose the winners and
losers and from a policy perspective we
have to Corral investors and once we’ve
gathered them in then we start assigning
the losses you you you choose who it’s
going to be is it going to be the
commercial Banks is it going to be the
Savers the households who’s it going to
be and you know so I I do think fiscal
dominance makes um Financial
repression just and it’s a given it’s a
given to be able to direct credit flows
is a part of that uh to maintain higher
levels of inflation than even the stated
official statistics that is is a classic
way of of alleviating the pressure of
debt and that is what we
see so for listeners out there Financial
repression right now would be the not
just the US would be all these
governments um potentially discussing
either cutting interest rates or not
raising interest rates that much more
they’re going to let inflation run hot
and what they’re going to try to inflate
inflate away the debt in real terms so I
think that’s what we’re starting to see
now not just with the US necessarily but
I just sent you that chart that the Wall
Street Journal published and it looks
like a lot of these governments are in
kind of rate cutting Yi curve control
mode where they want inflation to run
hot they want the real inflation rate
above the yields on their government
bonds that’s exactly right I mean we
coming out of covid Are Not Alone
there’s a lot of governments
who were spending just to sort of save
the world and so now we’re dealing with
with that sort of debt hangover way too
much debt
and no real way to Jin up enough
economic activity to to compensate for
it so what do you
do this is almost textbook yep run
inflation hot and allow the households
to to Bear the brunt of that most people
don’t understand Financial repression
but if you should be compensated five
and you’re comp compensated 2% instead
uh the difference there acrs the
benefits acre uh to someone else you’re
paying the price uh for their bad
policies and I keep on coming back to
gold gold is is that signature it is
that signal within the markets that
enough people are beginning to get it
and that if they don’t want to be
subject to that Financial market
corralling and loss assignment then you
have to opt out and it’s the best
financial asset if you want to express
your opt
out and we’ve seen this over the last uh
18 to 24 months because the gold price
in other currencies was actually at or
near all-time high before the US dollar
gold price just broke out over the last
couple of months I mean wasn’t the gold
price in with the Euro the Japanese Yen
uh many other Asian currencies it was
already at near an all-time high long
before this rally in the US dollar gold
price that’s that’s right that’s right
and you know I’ve had the question asked
a number of times in the last few weeks
you know Gold’s at all-time highs do you
think it’s too high in US dollar terms
and in my response each time
is consider that it’s just a measure of
confidence in the currency itself and
you’re really talking about a reflection
of of the the the currency’s viability
and in in in policy strength um monetary
policy strength so it wasn’t that many
decades ago that the Japanese Yen uh was
a lot stronger than it is today we’re
currently 3 for your lows um but imagine
back 50 years ago and and now you’re
talking about gold priced in Yen and
it’s it’s only five digits you know
you’re closer closer to 10,000 Yen per
ounce and now we’re almost at
400,000 Yen per ounce is that a
commentary on the gold price or is that
a commentary on kind of the ridiculous
nature and and the discrediting of boj
policy the bank of Japan policy and so
when someone asks in US dollar terms if
23 $2,400 Gold is is too expensive to
buy it’s really a question of how low
can the dollar go or how long does
confidence remain in the US currency
such that we’re still thinking about
gold in stable currency terms if we’re
talking about a destabilized currency
there’s no limit to the
price exactly and also the gold price in
US Dollars it’s underperformed the
Consumer Price Index for years I mean if
we’re going to inflation adjust the gold
price into the Consumer Price Index to
keep up I mean it has to go above 2500
and stay there it’s probably closer to
3,000 with all the extra monetary
inflation that’s been created the last
three or so years yeah the previous peak
of 850 um adjusted for inflation using
the CPI which is a modest measure of
inflation would put you somewhere
between 36 and 3,800 an ounce before
we’re taking out the old all-time highs
adjusted for
inflation yeah I don’t hear any of the
experts on regular business television
talk about that that’s very uncomfort
uncomfortable to bring up how the gold
price has not even kept pace with the
Consumer Price Index because that’s
argument right there is we need to see
higher gold prices because it’s not
keeping Pace with the Consumer Price
Index I I think one of the
misconceptions about gold is that it’s a
very good inflation hedge and in real
time it’s really not but what it does do
is eventually catch up so in fits and
spurts that that’s That’s What It
ultimately does is reflects um you know
the devaluation of a currency if you’re
looking at it on a on a you know one
month time frame even a one or two year
time frame you know there’s going to be
periods of time where it’s lagging or
leading and so it’s currently lagging I
would argue that that sets up for you
know kind of a ratchet in price as it
does ultimately catch up and just
reflects reality
do you see a strong demand continuing
for gold and silver outside the United
States and what do you think would
change the demand of Americans and
Canadians because I’m seeing the
Articles now and it looks like that a
lot of Americans are starting to sell
their gold jewelry and coins and bars
they’re starting to sell it upon shops
and then a lot of these bullion dealers
David I I know um you have the vaulted
app which offers lower premiums for
retail investors to buy physical gold
and silver take some delivery but I’ve
just read the complaints online about a
lot of people with online bullion
dealers I won’t name specific names but
there was people charging like insane
premiums for American silver eagles do
you think that that’s going to have to
be worked through with the bullan
dealers are going to have to earn back
their reputation for not gouging on
premiums for sure I mean the the
premiums look there’s been such a mass
liquidation of product that there are
virtually no premiums on any product
today if you’re paying premiums you’re
you’re getting hosed you’re being taken
advantage of pure and simple so you know
when when I can Buy Maple Leafs for the
same price in the wholesale Market as I
can bars you know that that tells me
something I can get any product any
quantity of product without paying a
premium today because we have had
Western investors dumping into this
Market you know looking and saying okay
all-time highs I’ve been waiting for
this for 10 years or 20 years I’m out
and and I think they’re misreading the
whole backdrop and that that’s where if
if the question is do we continue to see
Dem demand increase do we continue to
see the gold price improve you know who
are the buyers you have the non price
sensitive
buyers which is great they they don’t
they’re not buying for economic reasons
necessarily um that would be your
central banks they’re diversifying away
from the dollar it is it is a statement
as a protest
vote against us hemony and and and and
against being subject to us monetary
policy so there’s an insulation factor
that they would like from the status quo
and from the system that’s sort of you
know run the show from from 1944 Breton
Woods agreement forward and so that
protest vote I think continues uh at a
strong Pace then you’ve got as as we
talked about offline you know Japanese
consumers stepping into the market with
a new set of reasons you know we are
sitting at 34e lows in Japanese Yen and
we are days way from the bank of Japan
being forced to intervene to prop up the
currency if they don’t you know we
already broke strong support at 152 and
like a hot knife through butter we went
to 153 then 154 and and it continues to
remain Under Pressure if you’re a
Japanese consumer you look at that and
certainly want to safeguard your
resources the the demand Dynamics there
are are good and and and as you pointed
out to me earlier there’s some tax
incentives in Japan for investors to be
considering it and and and that’s
changed just since the first of the year
this year and last year the Chinese
consumer is faced with rotten prospects
in the real estate market the third year
of declines
in the Shanghai and shins in stock
markets and you know a limitation in
their ability to trade in
cryptocurrencies so when you want
another option or when you want to
preserve value uh gold looks very
attractive and and the JP the Chinese
market rather the Chinese uh currency
Market is is also very weak doesn’t
appear to be as weak as as the Japanese
Market because they’ve pegged to the US
dollar but that Peg can break and and is
being sort of threatened within the
market to break trying to control the
band as much as they can uh they clearly
have well believe they have sufficient
currency reserves to defend the currency
um but again if you’re in China you
might look at this as a fairly fragile
setup and think that gold represents a
pretty reasonable op out so you’ve got
non-price sensitive buyers you’ve got
Regional players in Asia who look at
sort of destabilized currency regimes as
a justification to have a little bit of
insurance in the wings and we have not
even begun to attract the Western
investor back into the gold market the
Western Speculator if you’re looking at
Co reports certainly we’ve had an
increase in open interest and there
there is uh you know an initial foray
into the gold market and above that 2100
mark on the on the US dollar gold price
uh things have gotten heavy and hot
pretty quick um but but again we’re
talking about one slice we’re talking
about one small piece of the overall
Western Gold Buyer last year what was it
78 billion in liquidations from GLD and
I and in this year again I think close
to a 5% uh dumping of gold in in in your
GLD and and and IU you know the ETF
proxies so 16% in liquidations of total
assets last year and another 5% this
year we’re running from the market when
we should be running to the market um
but I think our perspective is skewed by
you know chasing the latest and greatest
we are in love with AI we are in love
with Nvidia we’re in love with a MAG 7
what you just can’t argue with what’s
working so I think one of the things
that will flip the switch for the
Western investor is the same thing
that’s flip the switch for the Chinese
investor if your other options all of a
sudden aren’t as attractive then what do
you do and frankly in a rising interest
rate environment do you want to opt out
of stocks and go into
bonds I’m not sure that that’s the
greatest greatest uh step to
let me also add for China there’s rumors
of a sizable yuon devaluation soon in um
in Under 12 months for a number of
different reasons whether that’s bank
bailouts I mean a lot of their banking
system the collateral is High real
estate prices so their banks are
definitely hurting right now and like
you said the Chinese retail investor
also Institutional Investor I’ve been
reading the interviews from the
financial times New York Times
interviewing them they’ve just lost
faith in Chinese real estate in Chinese
stocks well with all the capital
controls in China David they don’t have
a lot of investment options and the main
one right now is gold and
silver yeah and in terms of the
devaluation if they can pull it off on a
controlled basis if they can manage a
decline makes all the sense in the world
and and and I could see that as as being
a priority from a policy perspective
they’ll have to control it they’ll have
to manage it and and that’s the question
is if they start to devalue can they
actually control it the the the reason
they would want to is because they’re
having to shift away from from economic
growth tied to real estate development
which at one point was up to 40% of GDP
and they’re having to shift Focus back
to um you know sort of their pre-re
estate winner which is just manufacture
and distribute to the world so that the
sort of the Mercantile mercantilist
model of growth they’re back at it and
flooding the market with product X Y and
Z and they’re not helped by being pegged
to the US dollar as long as the US
dollar is strong their currency is
strong relative to other Asian
currencies and other places that they
would export to and that puts them at a
at a disadvantage with their only source
of of economic growth so yes absolutely
devaluation controlled managed has to be
in the cards the question is if they can
pull that off and and and maintain
control of it well these Emerging Market
currency devaluations and I’m not saying
China is a real Emerging Market I mean
like they’re a large economy now
although their consumer has a lot less
Pur purchasing power than the average
American and that’s all adjusted what
with purchasing power parody but you
mentioned Neo mercantilism I mean Neo
mercantilism a lot of these economies
that were doing that these things blew
up on currency Wars trade Wars
protectionism I mean Trump is
threatening I don’t know if he’s going
to win the election or not a will be
allowed to run we’ll see what happens
looks like he it’s a mess in the courts
but I mean if he does win the election
he’s promised that he’s going to hip the
tariffs on Chinese manufacturing the
goods and even Chinese companies that
set up in Mexico even further and what
I’ve heard from some Chinese
manufacturing sources is that they’re
discussing devaluing the currency as
kind of to try to offset those tarff so
they’re planning these things out ahead
of time but then we’re back into what
the policy mistakes of the 20s and 30s
again with protectionism currency Wars
trade Wars tariffs those types of
things yeah I mean the the bid
Administration is not that much
different certainly if if Trump were to
win there would be all kinds of products
that made a blacklist um but even this
week aluminum and steel are are on the
list for an increase in tariffs from the
current 7 and a qu% to over
22% and that is being discussed as we
speak um so Biden would would do the
same maybe he’d moderate that a little
bit if he could keep 10% you know 10%
for the big guy we could we could ease
some of the pain for the Chinese I
suppose uh but you time time will tell
you’re right this is a fraught
situation and you you know if the way
you’re going to grow is by undermining
the competition this is not the
globalization and the success that we
saw tied to globalization where
everyone’s economic slice is getting
bigger as the whole pie grows it’s it’s
the opposite and that’s where trade Wars
come in into place and protectionism
comes into place the economic pie
shrinks but you want to maintain the old
size of your slice and you’re willing to
do that at the expense of your trade
Partners no longer Partners um or your
trade competitors
and that’s that’s a that’s an
environment where trade Wars can turn to
hot Wars it sounds like both political
parties here in the US kind of are with
polling are interested in doing that
because they’re kind of promising that
oh if we put protectionism tariffs on
Chinese Goods we can we can bring back
more American jobs into factories here
at higher wages even though the cost um
of the goods and stuff like that for the
consumer is going to go up you know and
if you look at just the feverish growth
in Mexico you can already see that
that’s been in place for a couple years
now friend Shoring if it’s not on
Shoring at least it’s friend Shoring and
you know other than you know last week’s
kind of debacle with the with the
Mexican peso um they’ve been doing very
well and their economic activity has
been very impressive and our trade with
them has
been record-breaking U all all time you
in terms of of of the the quantity of of
goods moving across the border we’re
doing more business with him than we
have ever
and you know so at a minimum friend
Shoring um if not on Shoring but you
don’t think that China will start buying
more treasuries again do you no need to
no no want no desire to that’s no I I
think that uh that ship is
sailed yeah I mean they’re buying I’ve
just seen some of the charts they’re
buying a insane amount of copper they’ve
been stockpiling it at way above the
amounts that they normally Buy in just
the last 3 or four months so people are
wondering why they’re doing that some of
the macro experts on like Financial
Twitter and I’m thinking like they’re
buying all this copper and other
Commodities oil with strategic petroleum
reserves they’re deciding to buy these
Commodities instead of
treasuries right and maybe that’s just
buying ahead because again they want to
Manu manufacture more stuff um but you
know if you ask me do I want to own
treasury bills or gold I’d say gold do
want to own treasury bills or have an
exposure to oil I’d say oil you know
there’s there is a you know but that’s
me thinking in economic terms and I
think we we sometimes forget they don’t
have to make that decision some of the
decisions that they make are
non-economic and definitely political
definitely geopolitical so that’s one of
the reasons why I think buying of
treasuries that era is over and anything
else makes sense not not as an
expression of I’m buying hard assets for
the potential of upside which we might
calculate um but instead just as a as
anywhere but we’re not going to support
our
enemies they could also just uh build
another new warehouse and just fill it
to the brim with copper and if the
copper gets rusted it can be recycled if
they misallocate and build what bad
buildings they can scrap the copper so
the copper is not going to go to zero
but I mean if the US keeps what running
these budget deficits devaluing the
dollar the real terms the value of those
treasury bills I mean nominally they
could pay P out what a a higher yield
but in real terms it could be valued at
lower and lower and lower whereas the
copper will will still have value long
term it’s not going to go to zero well
remember they never bought the t- bills
because they thought it was a good
investment they bought the T bills
because it employed more people and and
the the dollar recycling was important
to them because it kept the game going
we continued to buy their goods they
bought our treasuries it was kind of a
nice scratch your back you scratch mine
um but it wasn’t because they had a love
affair with you know Janet Yellen or any
of her predecessors um or or think that
our T bills somehow are are you know the
greatest things in slic bread it was it
was pragmatic it was political well also
uh Gordon T long he’s talked about this
for years he described it as vendor
financing so that’s where like the
manufacturer gives the consumer or their
like um counterparty some extra credit
to go and buy their
goods that’s a great point I like
that so do you think then that we’re
going to see what more of what kmen
Reinhard hard describe globally
Financial repression yield curve control
stag flate tax lie or are they actually
going to allow what asset prices to go
to go down and deflation do you think
that any of that will be allowed or are
we in like an environment where they
can’t allow any of
that well I don’t know how they avoid
asset deflation I mean that the at this
point if they allow asset deflation
they’ve got a whole another set of
issues I mean this this is where you
find it’s not just the fed that’s
trapped it’s every Central Bank that
that is trapped and you know as much as
they can resort to yield curve control
without you know triggering a major
inflation in the 1970s you know it was
debt monetization that added to sort of
the inflationary
fuel today they’d say oh no we can
sterilize those things and it’s no big
deal I don’t I don’t think I even know
what that means you know that’s that’s
had a conversation wasn’t that the claim
so you let me let me just ask you since
you’ve been covering this for 15 years I
mean wasn’t that the claims with the QE
programs that oh it’s just reserves for
the banks right oh it’s just reserves
all the Q programs there were people
saying it’s not inflationary that the
stock market wasn’t juice home prices
weren’t juice it’s not really inflation
we just increased reserves for the banks
that was the argument for your
right well I think they were making the
case that it’s not going to be directly
inflationary to the consumer and they
never really considered the impact of
asset prices inflation the the reality
is if you increase liquidity in the
system any way anywhere you’re going to
create an environment where asset price
inflation is is virtually guaranteed and
out of that asset price inflation comes
a whole variety of of of unintended
consequences you know I mean clearly
you’ve got social and political Discord
and and far more partisan politics you
have sort of the the classic Marxist
halves and have knots those who have
assets are quite happy with that because
their net worth goes through the roof
and those who have not are are set to
suffer now the question is do do wages
in any way keep people happy maybe uh I
mean we’re increasing wages a little bit
we’ve seen we’ve seen a a decent step up
in in wages frankly not enough to keep
up with inflation um but I I think the
asset price
inflation uh has already gotten to
levels that are are they’re not
justifiable they’re they’re not they’re
not
sustainable housing affordability worst
ever in the US um you know there’s a
variety of factors that hit that or or
that impact that the bond market you
know we we got we got to zero and in
real terms negative rates we’ve played
with negative nominal yields in other
countries what did it get us not a whole
lot I mean so so there’s I I just don’t
know that they have
um I don’t know they have a lot of
latitude to Goose the system from from
the standpoint of asset price inflation
with there being any real benefit to
them at this point I think if they were
to do that you you could you could stir
a variety of re revolutions around the
world and and it would and would be very
sort of Labor
based we’ve also had really since the
pandemic started a lot of the monetary
inflation and the budget deficits with
the transfer payments the stimi checks
the supply chain disruptions that
monetary inflation’s finally started to
hit the consumer to where a lot of
people are waking up and noticing and
it’s affecting voters and polling
now and that’s probably the key
difference between asset price inflation
where you’ve got money that kind of
swirls around the financial markets and
boosts asset values encourages leverage
speculators to just kind of go Hog Wild
with any particular asset it inspires a
a whole Spade of creativity whether it’s
nfts or cryptos I mean anything is on
the table in when you’ve when you’ve got
really really loose monetary conditions
and tons of of of you know assets
flowing flowing here and there in the
financial
markets and I remember I remember
changes well with the changes postco you
know you’ve got money that’s not
floating in the financial markets it’s
floating in the economy so Consumer
Price inflation takes off after major
fiscal stimulus and I think the danger
is that Wall Street has lost its its um
it’s lost its importance and Washington
DC is very keen on getting control back
from the moneyed elite the the the
powerful power Brokers in DC recognize
that that Wall Street needs to die a
little and and and that what needs to be
resurrected in its place is Beltway
power and so again if if you’re going to
if you’re going to inflate it’s it’s
going to be you know buying votes it’s
going to be you know new promises and I
don’t know that they have connected the
dots between fiscal stimulus and and
direct Consumer Price inflation uh but
that line is much clearer and and it and
it impacts households immediately and
obviously you know it impacts you know
lower income households even more um so
they could be just shooting themselves
in the foot with that but I’m not sure
they understand the tight connection
between fiscal stimulus and and Consumer
Price inflation oh I agree there’s still
a lot of PhD economists here in the DC
Metro area that think that stack
infation doesn’t exist I’m serious there
Janet Yellen even she’s a labor
Economist she believes inherently and
she will deny reality that stagflation
exists that there cannot be what high
inflation and low growth and high
unemployment she just does not believe
it I mean but her her comments though
and she’s a DC po policy wonk and she
just keeps getting promoted more and
more higher paying jobs and new pensions
that uh when she goes to Academia or
goes and works at a hedge fund I mean
her predictions she said in what 2015 or
2016 when she took over fedman she said
inflation was too low yeah I think I
know what she was smoking in the 60s and
7s well she also said only a couple
years later 2018 or 2019 there wouldn’t
be another financial crisis In Our
Lifetime right no the the econometric
models don’t factor in a lot of reality
um and that’s that’s one of the things
that is is heartening because I think on
the other side of this there’s going to
be a reappraisal of how we look at
economics and and I think I think
there’s there’s clearly room for
improvement
so on your money management business and
your portfolio strategies are they are
they mostly towards inflation and
commodities dividend growth or are you
looking at deflation hedges too yeah so
if we’ve finished a period of time where
Financial assets benefit from Easy Money
policies and very low interest rates so
no
inflation low rates uh I I think the
transition as a part of our thesis
transition is to a totally different
investment backdrop where inflation
stays with us maybe it’s 3% maybe it’s
4% maybe it’s not double digits now
again it depends on how you count
inflation and obviously there’s ways
even Larry Summers is suggesting current
inflation is closer to eight or n% than
the current rate but you know whatever
your number is higher rates of inflation
and higher interest rates going forward
definitely take the wind out of the
sales for financial assets and I think
they do put wind in the sales for your
hard assets so are we interested in
infrastructure yes are we INF in
interested in in uh Global natural
resources yes are we interested in
Precious Metals precious metals mining
companies yes we have a a category a
segment that is for specialty real
estate but for the last two and a half
to three years we’ve had it below 2 and
a half% of the total value of our
accounts um real estate is after even
though it’s a hard asset it’s very
leveraged and thus subject to the whims
of of you know Finance costs and and so
as goes the cost of capital so goes a
real estate portfolio we’ll be very
interested in allocating to real estate
at some point that’s kind of a one of
our four segments which is really skinny
today but you know if you can stub your
toe on it we’re interested in it and so
we manage portfolios of you know 50
different equities and are looking for
best management um best balance sheets
best
geographies and feel like we’ve got a a
great confirmation as as we come into
2024 that it is is a great place to be
so for the precious metal side you have
Brokers that help with like uh ratio
trading right gold to Silver ratio or
gold to platinum ratio whichever metal
you think is cheap so you can earn more
ounces longterm you also have the lowest
cost premiums what with your Vault adop
too yeah just a little bit of History
you know we started 52 53 years ago
1972 and had sort of a first mover
advantage in the bullion Market uh found
a tax loophole that allowed us to be
selling bullion uh when when no one else
could and my dad helped with a couple of
other gentlemen in the industry to get
gold legalized January 1st
1975 fast forward to the 80 we’re the
first company to put physical precious
metals into IAS we’ve done that for
thousands of people and um continue to
do that about five years ago we started
the vaulted program vaulted either at
the app store or vault.com it is our way
of of of expressing our deepest desire
for sound money if you’re looking for a
savings alternative you want a lowcost
way to own large format gold and silver
bars thousand ounz silver bars with
HSBC and kilo bars with Royal Canadian
Mint you can do that and it’s allocated
it’s
deliverable and you know we we’ve
compressed the costs you know going to
the source we’ve cut out the wholesale
middleman so fees are are are really
compressed and you’ve you’ve got kind of
the best of all worlds serial numbered
bars um you know that are deliverable
and you know some great providers so
vaed is kind of our 21st century
iteration um we’ve been kind of an
industry leader from the industry’s
Inception
to you know the ways that we’ve we’ve
thought that it needs to grow and change
um we’d like to introduce by the end of
the year um a way for those savings to
be Deployable for anything cup of coffee
at Starbucks and so the functionality
bringing gold and silver back in as
essentially a means of exchange can be
done in the modern era um given given
technology and and and given the way
that that um you you can own bars uh in
a stored location either either in
London or in
Canada okay so is that similar to what a
it’s a digital gold or silver receipt
and then if you were going to go buy a
coffee or a food at like a restaurant or
Starbucks or something like that it
would sell a gram of uh gold or an ounce
or two of silver something like that and
would all be done digitally and then the
metal would just be subtracted but then
the receipts are digital with like your
phone well I’m not sure I’m comfortable
with with uh the word receipt um you
have actual physical Metals if if you
can swipe your debit card and spend your
ounces um you know there’s a translation
that happens as as you instantly convert
from gold to dollars for the for the you
know purpose of the transaction
and you know we we have that
functionality that capability now we’ve
not rolled it out because we’ve got some
other features within our vaulted
program which are even more compelling
um from from a from a from a tech
standpoint so you know th this will be
the best program I think it is the best
program but we continue to improve it as
as we go along and are prioritizing um
you know a particular structure with
within within the vaulted program uh
that gives it some advantages over over
any other bullion um you know purchase
possible on the market today that’s very
cool I mean the the reason I brought up
receipts is because you know the the um
b metalic or Tri metallic where you had
gold silver copper um that the those St
metal standards with certificates and or
receipts I mean those work very very
well until the government started
cheating and debasing the currency or
the the bank the bullan dealer started
doing fractional Reserve Banking and
cheating but the systems were actually
very convenient for the customer because
you could go and exchange the metal or
it could use paper so I mean now with
the digital and the technology we could
do it
digitally yeah and and the beauty of of
being able to save in any dollar amount
like our our vault plan somebody wants
to save a hundred bucks from every
paycheck they can do that and it
automatically dollar cost averages into
either a gold position or a silver
position or a combination of the two
however you want to split it up
you can buy and sell in any dollar
amount down to the penny and it gives it
that transact ability you know in the
olden days you had a $1 gold coin a two
and a half a five a 10 a $20 gold piece
and you know you could make change if
you needed to in in in silver silver
dollars uh that is I think we can do
even better with this digital uh version
again it’s a digital platform with
actual physical
uh allocated Metals backing it very cool
well I will I wish you the best of luck
on that I I hope it works out I I was
I’ve been advocating for years that we
see some type of digital where someone
makes this work with physical gold and
silver backing
it well we continue to try to serve the
community as best we can and I think
this is a tremendous period of time to
be allocating to physical Metals you
know silver is is the standout value of
the two uh at an 85 to one ratio today
um it makes a tremendous amount of sense
uh being able to bring it into the
economy and engage in you know a
currency system that is that is
suffering from mismanagement to be able
to engage when you want to and on the
terms that you choose to me that is what
my dad set in motion 53 years ago the
value of individual autonomy and and
strengthening um the reserves of of of
of an individual person and family um to
be able to navigate challenging Waters
and challenging times you just got to
have the right tools nothing nothing is
too hard to um engage with and and you
know find success in if if you’ve got
sufficient reserves we’ve got some
challenges ahead um but I think with
with adequate reserves will be in a
decent place now I know you also look at
the ratios too you mentioned that
Silvers uh very weak against gold the
gold to Silver ratio I mean I’m looking
at platinum and plaum prices from a
contrarian standpoint I mean the
Platinum price is way below the gold
price now is that historically
normal it’s not normal I think you know
the the concern in the marketplace is
what happens to the internal combustion
engine in the age of electric vehicles
and are we past the need for catalytic
converters that’s roughly 50% of demand
for platinum and plaum and you know so
if we’re if we’re moving into a new era
of EVS then the question of how relevant
are those other white Metals it’s a
reasonable question now I do think that
the hype around EV and the transition
towards electrification has been
overdone so if you paint with a broad
brush stroke you could say for sure
Jason 10 years from now I don’t know
that you want to own platinum or padium
in the next 10 years you’re going to
have I think you know revenge of the
markets as people realize you know
number one we don’t have all the access
that we need to infinite amounts of of
copper lithium Cobalt anything else that
you would need for moving towards
electrification and you know the
constraints there on the supply side
don’t match the political
will so what does that mean it it means
probably that platinum and plaum are too
cheap and you’ve probably got within
that 10year window a couple of Trades
that are going to be very profitable um
they’ve been discounted
to sort of that category of irrelevant
and and I and I think it doesn’t match a
market delivery time frame for the the
the electric vehicle and the
electrification the the green agenda if
you will I’m and I’m reading uh research
reports the last six months from
investment banks that there’s going to
be platinum and plaum shortages in the
next couple years a lot of it’s supply
side based so even if the demand is
lower than expected I mean there’s
supply side problems the majority of the
world Supply is from Russia and Zimbabwe
and I think the London Metal Exchange
just said they’re not going to buy any
Russian Metals so I think that includes
the Platinum Group metal so I I don’t
know where the supply is going to come
from if they’re not going to buy Russian
platinum and
padium it’s fascinating to me you kind
of know how thin a market is based on
its bitas spread and if you wanted to
step into the market today and buy a
million dollars worth of Palladium um
your your bit ask spread is between five
and 10% I mean it is so thin there is so
little product available I could make
you know I would I would probably have
to go to the London Market to get a
sizable amount of Palladium today and
platinum’s not that much different
there’s just not a lot of it out there
and it’s one of the reasons why the big
three Auto when they buy when their
purchasing managers buy they buy years
worth of Supply before they need it so I
think that’s one of the things as you
see sort of you know these these
indications of stress and strain whether
it’s it’s you know rivan trading at you
know 90% off of its IPO pricing or you
know number of the EV companies which
have already gone bankrupt Tesla will
see how they come out this week you
there’s there’s reason to believe
that they can’t um they can’t make this
transition as as as fast as they can as
fast as they were anticipating when when
the big three Auto are shutting down
plants you know that are that are making
the the Ford truck the electric Ford
truck I guess what I’m getting at is is
they’re going to have to reconsider
themselves in terms of their own
business plan A lot of them in the
boardroom bought the hype they bought
the hype of this Green Revolution and
the consumer’s not interested not not
today which means they’re going to have
to go back to the drawing boards in
terms of their production of of of Ice
uh internal combustion engines and they
are probably going to be big purchasers
of one or the other of those metals or
both uh because they’ve they’ve let
their supplies dwindle and the price is
reflective of that or they just do what
Toyota did Toyota held pretty much
steadfast and they didn’t invest
overinvestment I think it’s brilliant I
think they were very
realistic and I I hope they are rewarded
for it with market share I I think they
will be I think they will be um they
they’re pretty efficient at a lot of
stuff here and they didn’t cave to all
the pressure like a Ford and General
Motors um the electric vehicle companies
a lot of them could potentially be uh
bankrupt in the next 6 to 12 months
without
bailouts there’s there’s no doubt you
look at their balance sheets and their
current cash burn ratios and they’ve got
a date with
Destiny well um I I know the DC Metro
Area doesn’t like this because I get all
these emails and nasty comments from
Think Tank people and PhD economists
that are on that gravy train but I call
esgs solar wind electric vehicles
biofuels these things it’s the energy
spending grift and um it doesn’t help
consumers or businesses mostly it causes
higher electricity costs and shortages
the infrastructure for a lot of this
stuff’s bad and yet DC Metro area and uh
politician bureaucrats a lot of these
corrupt large corporations they want to
keep pushing it you it’s just I I I
applaud them for wanting to make the
world a better place if that’s in fact
what they’re after then their
aspirations are noble um I think what
they forgot is you know the timelines
and the logistics of making such
significant changes to infrastructure
and and and the stresses and strains
that we would have to put on
infrastructure to match ideals with
reality and so you know that’s what
we’re coming up against it was a JP
Morgan who who was quoted in the
financial times just this week saying
we’re going to have to shift our our
expectations a bit um fossil fuel’s not
going away and this is not just a a
multi-year process we’re not going to
hit our targets our aspirational Targets
in the 2030s in fact this may be several
Generations away not not even decades
but Generations away and you know that’s
that I think is is realistic I don’t I
don’t think you need to let go of
ideals um but but it’s very important to
have a a serious time frame for when for
when that can be done and you can’t just
say We’ll tax people more and and speed
up the time frame there are limits I
mean you you look at South America as an
example Chile I’m thinking
of your your state-run companies down
there cannot increase production of
copper sufficient to meet Global demand
and and we’re talking about a major
ratchet in terms of demand for copper to
move towards the kind of electrification
ideals that the globe
has even that North America has and
that’s that’s an issue if you don’t have
the supply how do you get it done it
it’s just it’s a very practical
consideration uh and and that’s the
reality is is some of your largest Minds
and there’s no will in the US to change
I mean You’ you’ve got Rio with
resolution copper that project which you
know has been on ice for a long time
well we could be producing a massive
amount of copper from resolution in the
us and we’re not why because our our
ideals don’t match the
realities to meet them and and so you’re
going to have to have a compromise from
the EPA you’re going to have to have a
compromise from the folks in the Beltway
who hold up up their ideals but aren’t
willing to look at what it takes to do
that you know the same thing with
lithium you’ve you’ve got the jar mine
over in Eastern Europe and we’re all
four digging and and and Mining and and
getting the resources that we need to
make our world prettier and decarbonized
but you go to that community and you
know what their response is not in my
backyard and and in fact that is my
backyard that’s where my kids play and
you’re talking about turning it into a
monster mine no no we’re not interested
we don’t care about the billions of
dollars flowing we care about the
quality of life and we care about where
we live so you save the world at someone
else’s aesthetic expense and health
expense right so again you’re just
dealing with ideals and the reality of
what it takes to get there and it’s like
the right hand was not talking to the
left hand when when everything was
mapped out for for the Paris Accord and
things like that well it’s also the same
thing with nuclear energy nuclear power
because you have people that complaining
or shut down their businesses or
threaten to move factories out of the
country if electricity costs go up
enormously I mean some small businesses
in Europe their electricity bill went up
$1,000 doll a month I mean the average
small business that’s a huge hit to the
top to the bottom line right there but
then they say they don’t want nuclear
power anywhere near them which is like
the most efficient cheapest form of
electricity so they don’t want coal they
don’t want liquefy natural gas and they
don’t want nuclear power but then they
also don’t want their electricity bill
to go up $1,000 a month so I I mean you
can’t have
that is where the compromise will be
made though on nuclear you know whether
it’s thorium or
u308 that’s that’s that’s where the
green energy trend has to go if they
want to survive if they want to maintain
credibility and I don’t think the global
economy can run without cheap
electricity so we have to have cheap
especially for all these technology
stuff that’s playing I mean we need
cheap electricity we need the copper but
like you said all the copper Supply
whether it’s Chile Mexico Peru Panama
all those countries are either anti-
mining or their uh copper and silver
Supply is in a permanent downtrend the
last 5 to seven
years right and just when we have sort
of this Del globalization Trend people
focusing on maintaining their slice of
the pie you’ve got politicians who in
various geographies are moving towards
nationalization of of Natural Resources
So you you’re dealing with even greater
Supply constraints going going forward
Panama is a classic example
Cobra Panama responsible for 3% of 3 and
a qu% of the world’s copper Supply no
longer available no longer available why
because the Panamanian government
suspended the license and it’s done
maybe it comes back online maybe
something gets negotiated maybe a major
mining company comes in and and and
shifts the the balance of benefit in the
direction of the Panamanian government
but you’re talking about something that
represents 5% of GDP and they’re willing
to shut it down
I I don’t I don’t know that that trend
is going to end which you know when we
manage our hard asset portfolios this is
really critical to us the geographies
tier one geographies if you’re not
focused on that it’s it’s a Fool’s erand
because you may have high production
mines today that you have no right to
tomorrow so you know it it is quality
managers Hard Rock mining is is a is a
hard job you have to have quality
experience you have to have great
balance sheets you got to be in the
right geographies that takes a lot of
work to figure out and manage and I we
love doing it we got a phenomenal team
doing it um but it’s uh it’s something
you have to pay more and more attention
to as governments around the world say
gosh you’re making a lot of money I bet
I could make all of that money if I were
doing it myself little do they know how
complicated it is to actually get that
done you can have a PhD in in in geology
and still not be a good m
I mean and and that that’s it’s just
hard work and most government people in
the mining Finance area they do in the
mine Department there they do not have
phds in geology a lot of them were
nepotism they got a the cushy government
job there and got a sign
that that’s right well I I think I I if
the governments I mean I’ve heard this
before that the governments are going to
start nationalizing gold price hits uh
3,000 4,000 5,000 the governments are
going to nationalize the mine I mean I I
think the government governments they
are paying attention to the MS price
especially if it’s in what an emerging
market and a lot of their their economy
is based around Mining and oil and
natural gas I mean they will want to
renegotiate the royalty taxes I think
they’ve they’re looking that uh if they
nationalize or confiscate the mine the
cash flows are going to go to zero so I
think they will want to just renegotiate
a higher royalty tax that seems to be
what they want to do first yep I agree
yeah so that’s like it’s kind of I mean
the mining company’s not going to make
as much money but then they’re not going
to have the assets nationalized so I
mean if the government start trying to
run these things I mean the the cash
flows the business will
[Laughter]
collapse right no that’s that’s true you
know I think the margin story is largely
missed within within the precious metals
mining complex and um you know you can
see Quality Companies selling at a
discount to their net asset value even
while their margins are between 50 and
60% you know average all-in sustaining
costs at 14450 you’ve got companies that
are making 800 850 bucks per ounce
produced and you know that’s assuming
that gold prices stay where they’re at
um they’re making really good money and
the market is not recognizing it so oh
yeah I agree C ratio I think that closes
the Gap in terms of performance and and
I think you see the the mining space a
little bit more pep in the step as as we
close out the year well also we we
haven’t seen the free cash flow numbers
that you just said we’re not going to
see those to the Q2 earnings so the
Market’s going to want to see that it’s
going to be show me in June or July so
we’re not going to start to see those
numbers the free cash flow of the
earnings till the second quarter
earnings are announced and the
conference call so that’s when we’re
going to start to see that these
businesses the gold miners the oil
companies are minting free cash
flow you should be positioning before
that’s announced because it it’s a it’s
such a small space you’d be surprised
how fast they move with just a little
Capital sprinkled in
oh I agree I think Stanley Stanley
driller was way ahead I mean when he
started selling Nvidia and the
artificial intelligence stocks the large
cap tech stocks started buying what
kamod companies gold miners about six
weeks ago people are like what is he
doing he’s a talented Trader that’s
that’s he’s he’s good at what he’s done
for he’s been that way for a long time
well I think he’s the top performing
hedge fund manager over the last 30 or
40
years don’t take losses and occasionally
you get really big gains and your
returns look spectacular um there’s a
lot of years where he doesn’t have to
make any money he just has to avoid
losing it and then you get a couple of
big wins and your your your average
rates of return are are spectacular I
mean he’s he’s if you looked if you
looked at his performance you could
describe it as
lumpy uh but that’s all right it’s not
lumpy because he was losing gobs of
money um you know Dio’s getting better
at that better as time goes on really
refining his skills as a money loser um
risk parod is
a a dinosaur at this point uh but I you
know somebody like dren Miller who’s not
committed to one particular theme uh or
style uh his his talents I think will
continue to to to benefit he and his his
family office and he looks for Central
Bank liquidity flows he’s willing to
rotate out of other asset classes if I
remember correctly he was in in Nvidia
and artificial intelligence stocks 18 24
months ago so he was ahead of others and
now that he’s made profits on those he’s
cashing out and looking for uh cheap and
hated undervalued companies that can
grow
profits yeah beric’s not my favorite um
you’ve got geography problems I’d say
the majority of their minds are in tier
three and four um not not great
geographies but at a 38% discount to net
asset value and you know a company that
is expected you would expect given its
market cap to attract institutional
capital um you know he I think he could
have done better in terms of the quality
of company but I think he’s also
positioning for Capital flow like you
know a surfer gets in front of a wave
you anticipate where the wave is going
to be and then you ride it you know he
is no fool um I just would have chosen
probably a different set of companies
you can still maintain your liquidity
and and not not suffer from uh you know
rough
geographies well he’s a large Capital
manager even even though he’s a family
office I don’t think he’s a hedge fund
manager anymore but when you’re a really
big money manager like a Warren Buffett
or a draa Miller you can’t go buy some
of these Junior producers I mean I guess
maybe you could buy some mid-tier gold
miners but you can’t go and buy a lot of
these small cap companies I mean Buffett
has said that in the past he can’t go
buy a lot of these small caps anymore
and get 30 or 40% compound annual
returns
anymore now but he did have other
options um I I think I think what he
chose was you know for liquidity
purposes primarily um that’s you know no
knowing that he can move in and move out
that was a top priority um but again I
think he would have done well to refine
the search a little bit um for tier one
and tier two in terms of the
geographies well I’ve kept you for over
an hour today David I want to thank you
so much for your time please tell my
listeners more about the mlan weekly
commentary and the mlan Financial
Group Well a owned business for 50 plus
years we love hard assets and think of
ourselves as the One-Stop shop for hard
assets and then that covers kind of the
the king and queen of hard assets
physical gold and silver vaulted is sort
of our modern expression but we’ve been
doing the IRAs as I mentioned since 86
and and bullion since
72 um what what we do with the
commentary is unique been doing it for
almost 17 years now every week and
there’s a lot of helpful conversations
just trying to figure out what’s going
on in the world um so it is kind of an
expression of my
curiosity and um you know problems that
we’re trying to solve things that we
want to understand more deeply and if it
if it goes beyond resources that we have
immediate access to we’re happy to talk
to you know an
notarising uh European Central Bank or
you know Folks at the bank of England or
you know you mentioned kmen back in
2015 um she went on to be you know Chief
Economist at the IMF and World Bank um
you know we’re we’re interested in
figuring out the world we live in get as
much background on context so that we
can make wise decisions in in the
allocation process and you know more
than ever having an appropriately broad
context for making your decisions is
super important geopolitics clearly
one of the the most underestimated
important areas of study international
relations as as a part of that um you
know that usually is not looked at by a
Wall Street firm um not really
interested they’re they’re they’re
they’re doing good work but it’s just
too narrow frankly so I think broadening
perspective is what we’ve tried to do
with the commentary um you can go to
ml.com and go just about anywhere from
there looking at our heart asset Strat
strategies in in the financial markets
or our you know gold and silver
offerings um and certainly a whole list
of resources let me mention two more
that I think are vital I do the weekly
commentary that’s a podcast every Friday
Saturday actually we put out something
called heart asset insights five to
seven pages of really topnotch writing
on the heart asset space and then Doug
Nolan who’s been with us since
2017 um is not only manager of a short
fund that we run but he also has the
credit bubble bulletin which he
publishes every Saturday um absolutely
invaluable if if you’re interested in in
in markets and want a depth of
understanding hard asset insights the
maany weekly commentary the credit
bubble bulletin all these things are
free resources at ml.com please take
advantage of them and credit bubble
bulletin is one of the longest Financial
blogs I think it started in
2000 right he originally was writing
with and for Kurt rishab Basher and you
know sort of had his early training in
in the credit markets with with that
famed Economist and then has run a
variety of of hedge funds and mutual
funds um Through The Years and we’re
honored to have him on the team he plays
the role of not only sort of Chief risk
officer for our hard asset strategies
but he also is is the portfolio manager
for our tactical short which is an
amazing way to to hedge against Market
downside and um really talented guy
super thoughtful hardest working man I
think I’ve ever met

Jason Burack of Wall St for Main St interviewed returning guest, 2nd generation money manager, author, host of the McAlvany Weekly Commentary podcast for over 15 years and CEO fo McAlvany Financial https://mcalvany.com/, David McAlvany

Listen to the long running McAlvany Weekly Commentary here: https://mcalvany.com/commentary/
McAlvany Financial YouTube channel: https://www.youtube.com/user/McalvanyFinancial

During this 50+ minute interview, Jason asks David about the current state of the US and global economy as well as asset prices.

David talks about problems in the real economy with rising interest rates on the 10 year US Treasury yield, credit card debt, etc and how there’s a serious supply and demand issue with US Treasuries because of DC spending.

The normal buyers of US Treasuries for decades (China, Japan and Germany) are no longer net buyers. Many countries are buying gold tonnage instead.

David talks about why gold demand will start to increase again in the US in the near future and how there are serious supply problems for many commodities including copper, platinum, silver, etc.

The gold price in US Dollars is not keeping pace with increases in the government CPI. Gold prices would have to be at $3600/oz for gold to keep pace with CPI inflation.

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