Peak Prosperity - If This Happens, It’s Over!

Episode Date: December 26, 2024

Chris and David discuss gold and silver markets, central bank gold purchases, market liquidity, a “silent financial crisis,” inflation, geopolitical tensions, and predictions for future economic conditions, including potential interest rate changes and asset market volatility.

Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. None of this is happening in a vacuum. If we look against the backdrop that there is, there's the geopolitical tension, there is the devaluation, there's the BRICS, social unrest, there is the polarization of politics, particularly in the U.S. that we've seen. There is a lot of uncertainty here. Looking against that backdrop, we're not looking at these things in a vacuum. We're in a very precarious position at this moment in time. The following

is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content. Hello, everyone. Welcome to this edition of Finance U. We are going to be again talking about all things related to markets, macro, gold, gold and silver with David Russell of GoldCorp. David, so good to see you again. Thanks for having me back on, Chris. Always good to chat with you. Well, here we are. We're coming into the holiday season. Obviously, a lot of cheer and merriment going on. You just went to an L lbma dinner i understand i'm just i'm curious what from your perspective what's going on in the gold and silver markets right now sort of like wholesale retail what's the word on the street sure sure i suppose uh let's let's talk about it

from a kind of wholesale perspective anyway um we're seeing and you know you can look at the price and price tells the story um since the election, the prices, we've seen gold sell off. It's moved fairly much sideways. There's still, the beginning of this rally was very much a central bank-led rally. And if you go back to, it was primarily Asian central banks, Asian agencies that were buying gold. And throughout most of the beginning of the year that's the way that this was we saw an awful lot on the retail side a lot

of selling into that there were people taking opportunities of uh of higher prices as the year progressed it um we then started going down the food chain a bit more and we got more kind of high net worth individuals we got investment funds coming in. And now they're all, there's rationale behind why they're purchasing. And it's the same. It's that element of, it's that kind of element of financial insurance. It's for the Asian central banks,

it's that de-dollarization moving away from that dollar risk as well. We saw then pre-election, we saw a lot of high net worth individuals, particularly in the US, that were moving out of the US dollar because of fears. There was so much uncertainty

around the election to begin with. I think if you looked at the polls pre-election, it was looking like there was neck and neck. So there was a lot of uncertainty as to what the future would hold. As events transpired throughout the election then and there became a lot more certainty as to what the next administration would be we saw that a lot of that stress tension anxiety kind of went out of the market for that cohort of people but throughout all of that that and what I've described there, you'll note that I never

mentioned the retail investor once. The retail investor has been fairly absent. And I'm talking about the kind of the Western retail investor has been fairly absent from this rally to a greater degree. We've seen reductions in a lot of the transactions in the kind of coin and bar market in Europe in particular since over the last year or so. So we're seeing an absence of it. Not a total absence, but it hasn't captured the psyche of the retail investor to the same degree that it has captured the psyche of the institutional buyer, the central degree that it has captured the psyche of the institutional buyer the central bank buyer and the high net worth individual

but we're seeing sorry but we're seeing now since the election we're seeing a little bit of a cooling of that anxiety and i think that we're going to see that until we see what the next administration does when post-inauguration and we see see what the what the policies that they're attempting to implement are at that stage and how the market thinks they'll be. I'm just so out of step with all of that because, I mean, a the election in the United States, obviously not close at all, more of a mandate than than a squeaker, a little closer to the mandate side than squeaker side. But since then, right, we saw the lame duck administration, and I'd say Biden, but it's not really him, right? I don't know he has the mental faculties for any of this stuff, right? But whoever is pulling the levers in the White House decided to lob long-range missiles into Russia, has continued that on.

We've had the fall of Syria, which looks like an engineered thing. We have a color revolution in Georgia. We have the Supreme Court of Romania just sort of throwing democracy out the window, on and on. And then we have all this drone stuff going on all over the East Coast. It really feels to me like this lame duck administration is doing everything it can to sort of stir the pot and accomplish some last-minute things. Like, you know, this is the deadbeat dad shopping on Christmas Eve. Like, whatever you can do, just throw stuff in the basket, you know? That doesn't make me feel confident and like a de-escalation,

but clearly the markets think that's just noise that can be ignored, I guess. Yeah, I mean, the markets are just shrugging off absolutely everything at this moment in time um now you can look at it as the markets are shrugging off absolutely everything this moment in time and i know that uh that there was something that you were showing me you were showing me there before in relation to new all-time highs in stock markets we've got bitcoin going up we've had gold going up this year we've got property market everything going up right um and you can look at it through that lens and say, yeah, everything is going up. Or you can actually just flip that and say, the US dollar fiat currency is going down. And there is as much as possible an exodus

from fiat currency and moving into uh moving into stocks moving into crypto moving into metals i mean if you look at um the the yield on the on the s&p that the dividend yield on the s&p is ridiculously low ridiculously low that's where it was in 2000 yeah and you look at price earnings price earnings ratios is something like 24 or 25. It's huge. Yeah, it's huge. It doesn't warrant these valuations. So you've got to kind of look at it, you got to flip this thing on its head and not just

say, oh, well, okay, the market is shrugging everything off, everything is rosy. It's also okay, so let's get out of, there is that massive amount of uncertainty in the world. Let's get into some sort of, whether they're hard assets or digital assets, stocks, et cetera. But it doesn't, because the alternate to that is to say, oh yeah, we're as healthy an economy now as throughout all of the boom times. We're not.

There's so much uncertainty in the world at this moment in time. You could throw a dart at a world map and you're going to hit someplace that there's tension and escalating tension as well. Are you tired of feeling run down, maybe low energy? You know you've got some pounds you'd like to lose. Maybe you've got brain fog or something like that. Listen, we think we have the answer to all of that, and it begins with your food. If you're like me, you were shocked to hear testimony recently that unraveled and unearthed and exposed the idea that our food has been made addictive by addiction specialist scientists,

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happening. Robert Barnes to help us understand that as well. Many, many other guests to both define what the problem is and what we can do about it. And we want to make it as simple as possible. Here's an example. Tortillas. Hey, maybe you're even on keto, and these are carb-wise. So these have low amounts of carbs. See that? Carb-wise. Yeah, these are carb-wise, so keto-friendly. I want to note you notes on me. See how fresh these look? Yeah? You see any mold in there? Any bacteria, any yeast, any sign of anything, any organism in there? These things expired in June and it is now November. So what are they putting in our food that even black mold won't eat it? I don't know, but I've decided that if it's not good enough for black mold, it's no longer good enough for me.

Once you start down that path, you realize that we have got sugar and preservatives and salt and seed oils, all of the chemicals that are unnecessary. And the fact that the food pyramid is absolutely wrong. So if you like effective information that leads to effective action, this webinar is for you. It's going to be the usual thing that my team and I will put on. It'll be organized, digestible, easily understandable, and most importantly, it's going to be actionable in ways that you will understand what to do. And I've designed it so that you would easily be able to send this to anybody that you love or care about, say, can we talk about this,

and have it as a starting point for conversation. But what we really want, we want you to be healthy. Because, well, who doesn't want to be healthy? Health is the number one form of personal capital that you can have, of course. But given everything that's going on in the world, being healthy and vigorous and active are going to be dominant strategies and things you're really going to want to be carrying in. So folks, it's time to get prepared on all levels. It begins here. It starts at home. It begins with our eating. And let's just make sure that we're not eating stuff

that even black mold won't touch. With that, thank you very much for listening. And we'll get back to our regular programming now. Well, let's go to the big news for this week at the time of this recording. Well, you know, the Fed rate cut today is virtually set in stone. At the time of this recording, there will be an announcement, probably another quarter point. That's the guess. I doubt it's going to be different than that. But ripping up its 2025 rate script means, well, maybe fewer of those rate cuts than people had been expecting. And, of course, the first thing that happens on this news is stocks went higher. They would have gone higher if the opposite news had come out.

It just feels like the stock market is super well abundantly supplied with liquidity, which Charlie Bilello put out on November 10th. He said, hey, here's the case for the Fed rate cuts. Let's make the case. Stocks, all-time highs. Home prices, all-time highs. Bitcoin, all-time highs, which went even all-time higher after November 10th to now. National debt, all-time high. And we could talk about that continuing resolution and what a boondoggle that is.

Just throw the dollar under the bus is, I guess, what it's looking at. Core inflation high. And of course, that's going to lead to Fed rate cuts. I mean, it's, David, 58 record highs of the year and the Fed's cutting. What's the, pretend you're a Fed official for a minute how do you sell this yeah to the average person that's that's that's that's tough i mean like you know there there is nothing in what you said there that if you if you didn't reveal the you know the the twist at the end that they're cutting rates there's nothing there to suggest that uh what we need at this moment in time is more rate cuts so there's it has to be a rationale there has to be a rationale behind it.

I don't know how you actually spin the story, but there's one or two explanations. One of the things that you can say is, well, we've got $36 trillion in debt, but that's going to start, you know, that's repricing. Unless we try and do something to try and bring down the yield curve, we're going to be repricing a lot of that at higher rates um so you know and and what does that do to the what's up to the federal budget what does that do to the national debt going forward and we're already at basically a trillion dollars uh a year in servicing the servicing the national debt that's a trillion

dollars of taxpayer money and like we remember i think we discussed last time effectively receipts are about five trillion so 20 of that of of actual tax receipts is spent on interest for which you don't get anything um that's a huge figure but if we have uh if we lose control of the yield curve and it goes higher and it's very difficult for them to even now keep control of the yield curve those are going to reprice at much higher rates so they're caught between a rock and a hard place because at the same time you've got this theme of de-dollarization you've had nearly $500 billion in foreign-held treasury sold down over the last year or so. So you've got to maintain a decent rate on your treasuries in order to attract foreign buyers. So you're caught between this rock and a hard place with respect to what you do with rates.

That's an interesting—so you mentioned $500 billion over the last year of foreign selling. I just read that in the last reported month, both China and Japan, kind of record amounts, like big numbers, right, $30, $40, $50 billion in a month of sold-down stuff, which led to the T. Rowe Price head of fixed income saying he thinks that we might see 6% rates on the 10-year by the end of 2025 if that continues. And it was a structural fundamental argument he made, right? Rising deficits, out of control. You know, government doesn't seem to know how to fix that.

Not really putting a lot of stock in DOGE, the Vivek and Elon endeavor really getting far, plus foreigners walking away, 6%, 10 years. That would be not what the Fed has in order a year, I would bet, right? Absolutely not. You think, you know, you game that through with respect to what that does to the economy. 6% is, you know, what level of rates can the economy effectively tolerate? 6% is serious implications. There is, you know, I'm kind of, I think what we're looking at here is what I kind of call it's like the silent financial crisis. It's like it's not being talked about. There are, if we take, for example, if we take U.S. real GDP, you know, U.S. real GDP at the moment is about 3.1%. Okay.

That's based on our inflation rate of about three three percent let's call it um now we all know you know what it's like when you go out to go do your shopping uh even when you're paying your bills does the inflation rate feel like it's three percent no no nowhere near it and not only that there's this there's something i think that's really important to for people to understand is that that three percent that is quoted that's an average rate not everybody experiences that three percent there are those that experience inflation rates that are significantly higher and what i mean by that is if you are if you are lower income um and you look at the because we're talking about the the core cpi excluding food and energy if you're a lower income a much higher percentage of your um your discretionary spending

effectively goes on um on food and energy right i mean take away your fixed costs so what you're left with your variable your variable spending let's call it a much higher percentage of that goes on food and energy than if you were a higher in a higher income bracket if you're in a middle income it's slightly less of a percentage if you're in a high income it's a tiny amount so if you're dealing with um uh an inflation rate um you know food and energy inflation rate being significantly higher this the the lower income bracket you are the bigger the impact that that actually has on you so inflation is not something it's an average number it's not something that is implied across the board. But notwithstanding that, if you look at the idea of real GDP, which is the nominal minus the inflation rate,

and you're saying, even yourself, and you don't fall into the lower income bracket, you are experiencing an inflation rate that's significantly higher than that 3%. And a lot of people would say it's probably closer to something like seven seven percent eight percent something like that or even higher if you actually take that as being the real lived inflation rate what does that actually mean for gdp real gdp it's significantly lower than what we are being told that it is so first of all we're being told that the inflation rate is lower than it actually is and we're being told that the inflation rate is slower than it actually is. And we're being told that GDP is an awful lot higher than it actually is. So effectively, what is happening is that there's this veil being put over these economic numbers. And it's including this silent financial crash that is going on. We're seeing a movement into asset classes,

stocks, properties, gold, and so on. And it is being sold as, isn't everything wonderful? The stock market is going up. And one of the things that there's an interesting statistic, which is it is the household exposure to basically to stocks. It's hit an all time high of, I think, 38.8 percent. So 38.8 percent of household investment is now in stock markets, which is at a high. So what we're finding is not only are people moving into these financial assets, driving the market higher, but there's a greater exposure to them now across the board as well. So we are more vulnerable to any sort of a correction that might happen in those as well. That's kind of a scary couple of things to be dealing with at this moment in time, particularly when none of this is happening in a vacuum. If we look against the backdrop that there is, there's the geopolitical tension,

there's the devaluation, there's the BRICS, there has a degree of social unrest, there is the polarization of politics, particularly in the US that we've seen. There is a lot of uncertainty here. So looking against that backdrop, we're not looking at these things in a vacuum. We're in a very precarious position at this moment in time. Now, is it possible, David, that the Fed is actually fighting a battle in the line of

you're saying about the silent crisis that's sort of under there, right? So there's some data I can pull up right away, right? We know that there are unrealized market-to-market losses on bank balance sheets because they're holding a bunch of 1% 10-year paper when it's trading at 4 plus right now. So that's a loss if they had to sell it, right? We also know that the commercial mortgage-backed market is failing like crazy right now with levels of, I guess they're in default and also failure to pay. So they're delinquent. The D&D on that is now at a level that surpasses, on commercial mortgage-backed security, CMVS paper, surpasses the great financial crisis of 2009. That's just sitting there. Nobody talks about it, but these are big losses. Obviously, the Fed

would like to lower rates to kind of cure a little bit both of those issues, right? Yeah. I mean, this is why I call it the silent financial crisis. People don't talk about it, because you do know exactly what the panic that would ensue if people were talking about if they were being honest about it so to a degree we're being treated like we're being treated like children that uh can't can't handle the truth you know i used the analogy um a couple of episodes ago when i was chatting to you about the you know the the two adults and the two children driving along in the car coming up to a checkpoint, you know, and the analogy was that the oldest one in the front knows exactly what's going on. And when asked by the younger one in the back, what's going on? Oh, nothing. This is OK. This is perfectly normal. The person sitting in the passenger seat understands that this is a lie,

but it's a lie to protect the two children in the background. The child in the back of the seat goes, oh, OK, this is fine. Everything's normal here. And then the youngest one is too young to understand. They have no, and the analogy is they have no financial knowledge of markets. They just accept everything that is being said. Those that do understand that and understand that what's being given as an explanation is not the truth and will act accordingly and will prepare for what's coming. That's why, you know, we've got to be very cognizant of this silent financial crisis, because if we don't, if we continue to believe everything that we are being told,

we're going to find ourselves in a very precarious situation when this unfolds. Well, to that end, this is a chart from Charlie Bilello. It's Truflation, which is a real time U.S. inflation gauge. They measure it differently. I think they just use prices, actual prices. And, you know, the BLS adjusts and massages and does all kinds of stuff. There's a really sustained and sharp rise starting in mid-September of this year, where you can see inflation was sort of moderating a bit, but now it's back up. They're saying it's a 3% rate. Again, this is an average rate.

This is across prices. And so this is clearly heading in the wrong direction. So again, if the Fed at a minimum, even though they won't say this out loud, but they're going to say, listen, households, we're going to kind of have to throw you under the bus here because there's another monster we're fighting. And like the child in the backseat and your analogy, they're not telling us what it is because they don't want to or don't want us to worry our pretty little heads. It's like the drone thing, right?

Like we have no idea what they are, where they're coming from, but don't worry. They're not a threat, right? You can't put those two statements together and have it make sense you know so yeah david make it make sense well it's difficult to and this is this is you know this is and again i think i talked about it before i always my analogies the the kobayashi maru you know the the star trek analogy where no matter what you cannot win um effectively okay let's the only you've got a 36 trillion in uh debt right that's the on balance sheet debt at this moment then you get the the unfunded liability so you can add another probably 100 trillion to that

uh there's two ways you there's yeah exactly. There's two ways that you can deal with this problem, all right? Is one, you can cut spending, right? Two, you can inflate away the debt. So now let's talk about the cutting of spending. You take in about $5 trillion in interest rates each year. And then of that, you've got... On the spending side, you could look at, say, the interest on the national debt,

Social Security, Medicaid, Medicare, Medicaid, military spending. That effectively is about four and a half plus trillion in spending. OK, now, if they're the they're the things, they're the big things, they're the largest four or five, six things on the spending side if you look to cut those which has been one of the things that has been talked about by trump and and by musk uh effectively what you do is very quickly you will actually plunge the economy into recession all right uh and you'll also massively impact receipts so the cutting of spending is extremely difficult uh you cut spend one of the ways you cut spending is the the u.s government is the largest employer right uh now you try and cut employment what you're going to find is that okay well revenues they get cut and secondly you're making an awful lot of people

unemployed and you are going to plunge the economy into a recession very quickly and potentially a depression so the one thing that you're actually trying to do um is is pushed further down the line so that's option one option two is you inflate away the debt. OK, now to inflate away the debt. What do you need? You need inflation. OK, so how do you how do you how do you achieve inflation? Well, you keep rates low as possible as you can realistically for as long as you possibly can. You don't want anybody to actually understand that this is what you're doing. You don't want people to understand the true nature of inflation, because what happens if you understand the true nature of inflation, that it's not 3%, it's 7%, or 10%, or 15%, is that you've got wage inflation. So if everybody realizes that inflation is 10% or 15%, what

happens? There's wage pressure. Because otherwise, all you're doing is you're making everybody, you're making everybody poorer, you're increasing the wealth gap, all these things that are bad for society. But if you start to get that increased wage inflation, what does that do? It becomes a self-fulfilling prophecy. It drives inflation higher. And what does that do? It becomes a self-fulfilling prophecy. It drives inflation higher. And what does that do? It drives further wage inflation before you know it, you've lost control. So the only way, the way that you have to attempt to manage this is to allow inflation to drift higher, report that it is not as high as it actually is. And then you have the ability to inflate away the debt.

Now that, as people get more used to the kind of 3% narrative, maybe they get used to a 4% and a 5% over time. And this is how you're going to be allowed to inflate away that debt. Eventually, eventually, and we're probably we're seeing this now people are realizing um that the value of the dollar in their pocket is being absolutely eroded so what is it they do in a situation like that well they move into other asset classes and what do you see when moving to other class of classes well you see all-time highs in um stock markets but you see all-time highs in stock markets when you've got a pe ratio of 25. so you go you see all-time high in gold you see all-time highs in in bitcoin you see all-time

highs in property markets why because there are people that are effectively getting out of the out of fiat currency because the dollar in their pocket is being eroded and they're trying to put it to work as best that they can. And that's why at the same time you are seeing an increased allocation to stocks in household portfolios. So the option two looks like the way that the Fed is going at this moment in time. It's an awful lot easier for them. And the tools are there for them without having to go down the kind of politically unpalatable option of cutting spending. Nobody likes cutting spending because that's the austerity plan, and they hate that. So instead, they spread the pain out with this thing called inflation, which you mentioned. It's a tax, and it's a highly regressive tax, obviously hitting you harder the lower down the socioeconomic path. So all this fancy talk about equity, equality, we care about people, you know, that the Federal Reserve somehow represents,

you know, caring about humans. They don't care. They're there to protect some other interests. But when you were talking, David, I got so I just pulled it up. So I had to search a bit and I found it. And this is for 2023, 2024. This deficit number is actually one point eight three trillion. That's one thousand three hundred ninety three billion, which is one point three nine three trillion. But to your point, this is all the stuff flowing in on this side receipts. And is all the stuff flowing out on the other side over here? Social Security. Can you touch that health which is medicare medicaid health spending can can you touch that

no income security no national defense No. National defense? You could. You could. It has implications. Net interest, which very cutely has doubled from this chart to the one that comes up the next year. You can't not pay your interest. I've heard people say this, David, but please just put a bullet in that for us, right? So people are like, oh, we'll just not pay some holders of our debt off.

Yeah, do that with your car payments or with your house and see what happens. That kind of breaks the whole thing. Like, if that happens, David, I'll be calling everybody up like saying, you know, bullets, beans, and, you know, in a prayer book. Trust is gone from the system. Yeah, it's all done. Okay, so so now we're down now we're mucking around in this last you know veterans benefits i guess education transportation and then some other stuff that's where they're going to have to fight around and rummage around for any cuts i would think look how small they are in comparison to the other ones you could be you could be fighting around in

there all day long you aren't going to get the state the savings that you need yeah and those are dog fights down there too right that that isn't just like people shrug and go oh yeah let's just cut education right there'll be good education people you don't need saying no don't do that you don't need half the teachers that's you know how how how does that wash you know yeah so that's tricky so this is the only thing the fed can actually target is how does that wash? You know, it doesn't. So that's tricky. So this is the only thing the Fed can actually target is net interest, and they're going to try and do this

by dragging down the interest costs as we roll over all of our debt. So it rolls over, hopefully, at a new lower rate, which ends up lowering the interest payments. Like our credit card just had a new you know new interest rate new api okay yeah and but you're trying to you're you're um you're trying to influence as well because you know you don't roll everything over in the three month um you're trying to you're trying to influence the whole yield curve all the way out uh yeah by just influencing the short end of the

curve so it's a difficult job. Well, it is. I mean, if you have $36 trillion, you probably have, I'm just going to make a number up, about $10 trillion of that's kind of long paper, of which only some of that will roll in the next cycle at this new lower rate. Yeah.

Right? Yeah, exactly. Exactly. So it takes time. It's a long period of time, and you need to be able to affect the yield curve all the way out because you've got a you've got a maturity profile on that and it's not all it's not all three-month paper it's not all one year two-year paper it's you know it's two five ten you go on

all the way out the all the way at the curve out to the 30 year yeah oh yeah so but again back to the t-row price fixed income guy like if if, like if that long paper goes out to 6%, that's a problem. Now, so as you were talking, David, I was thinking, you know, the last time I studied it, it's been a couple of years, so this could be old information. But I was looking at, I'm interested what happens when a currency system collapses, right? So I studied Zimbabwe, but Venezuela was our live, you know know current sort of exemplar yeah and of course they had this punishing inflation you saw the confetti the the you know paper currency literally wafting up the street not even worth picking up destroyed their productive enterprises um of course the wealthy people who are your most productive in v picked up and left. They brought their factories to other countries, Costa Rica.

They went other places. But as that was happening, you would think, wow, this must be miserable. The stock market went up 600,000% over that time that I studied. That sounds great. Unfortunately, inflation went up 2 million%. So you actually lost. Yeah. went up to million percent so you actually lost yeah yeah and it's it's we have a we have an uncanny knack of uh uh looking at the same time same thing sometimes before these uh before these

conversations because i was actually just looking at at venezuela and that you know there was going to be the question which was which is the best performing stock market in 2021 you know to which the answer is venezuela and you go okay right so if we look at i always like to take uh to unwrap these things as you look at them at the extremes and so you say why is the u.s stock markets why are they performing so well because obviously they're performing so well because the economy is doing so well and you go right okay well let's let's let's put that into the grinder and analyze it you say well what was the best performing stock market in the pick whatever it was 2021 venezuela you know right wow it went up by what a couple hundred thousand

percent well that really must have meant that their economy was doing really well in that case but obviously that's not the truth um inflation through the absolute roof there um and the interesting thing actually and i looked at this at um i had to i haven't had a chance to double check this but it's it seems right given the given your confetti comment there uh i think gold in uh venezuelan bolivars went up by something like 90 million percent but that that's literally this stuff is worthless you know yeah yeah it's like say what's the price of what's the price of gold in toilet paper yeah yeah it used toilet paper yeah it's infinite yeah are we measuring by sheets or by rolls

well so so but i i like this as an idea. So the idea is that instead of trying to say, you know, is the S&P worth 24 times earnings? The question might be to ask, is big money deciding it would rather hold something other than the dollars in its portfolios and it would like to hold stuff, right? Like stocks or, but we've seen this huge move into bitcoin and that's taking the headlines off of this but i have to confess bitcoin and the meme coin universe to me is actually a one of the best liquidity gauges i have i don't have access to like the deep plumbing data so i have to be here on the outside and so i've noticed david that that when the fed at all that includes all the world central banks, are busy dumping currency or somehow liquefying or making things easier, there's lots of ways to look at

this, we see things. And so, yes, the S&P has been ticking up, but it's almost tick for tick with the German DAX. And Germany is just sucking wind at this point in time. I mean, layoffs and losing their energy-intensive industries, capital-D depression for certain industry types, it's a problem, right? And they have high energy costs, and it's a tricky thing. Yet their stock market ticked for tick yesterday, 8 o'clock, all the indices,

Japan's, United States, Europe's, Germany, all ticked up at 8 o'clock for no good reason, right? So that tells me we have a well liquefied system the computers suddenly see a bolus of liquidity they do something i see a lot of of um the let's call it the digital currency space or they're not even currencies the digital asset space and and perhaps the exemplar for that which charlie billello pointed out this morning is that the market cap of a new meme coin called Fartcoin hit a billion dollars today. People are just buying in on this.

Now, you can look at this lots of ways. It's a cute name. Obviously, it's all dudes, you know, investing. However you want to look at this. But I back up, David. I see liquidity. I see just a system that is just a wash in liquidity right now which fits with the idea that the fed at all they don't want this

austerity plan they want this inflation plan and here's a canary that's sort of saying maybe that's a correct way to look at it what do you think? Yeah, this is, you say there we are, fart coin. And it's, you know, it's a load of dudes. It sounds like it's a load of 16-year-old, 14-year-old boys, to be honest. We are awash. We're awash liquidity. And this is what it is. This is what it is demonstrating.

That's why we're seeing, we've got liquid markets and we are seeing people that do not want to be in fiat currency that's the that's the reality of it for me that's what we're seeing we're seeing that we're just seeing that that migration out of fiat currency and into into liquid assets in the in the most part um and then there's you know fart coin and there was a hot to a coin and there was my god i don't know what else um i i you know i i i'm gonna be you know i'll be long gone but the history books are gonna you know probably look back at this point in time and uh and deride us um but yeah that's that's that's what i think is underpinning all of this is it's just

uh get out of fiat currency because you just don't know how close that we are to an event financial geopolitical whatever that is going to make your currency whatever that may be worthless in a very short space of time we We've learned lessons before, and we want to make sure that we protect ourselves going forward. Let's talk about my favorite subject, gold, for a bit. Just yesterday, Zero Hedge reported that China secretly bought up a massive amount of gold, 10x more than officially reported. They reported buying 5 tons, but actually took 55 tons, which is 11x the way I do math, off of the London OTC market. So that's a big number for one month. Did this come across your transom at all?

No, no, but it doesn't surprise me, is the reality. What I mean by it doesn't surprise me is it doesn't surprise me that China under-report figures that, you know, had massive implications for us, you know, we probably would do. But we're bound by stricter rules, it would appear, than the Chinese. They're continuing to add to their gold holdings. They have added significantly to their gold holdings over the last number of years. We are unsure as to the full extent of that because it's not just the central bank and the PBOC. It is government-type agencies as well

that are purchasing on their behalf. We don't know the true extent of what it is that they have purchased. We've talked previously on your channel about the de-dollarization, about the rise of the BRICS, about their appetite in that regard, their appetite to create a currency for trading primarily amongst themselves, amongst the BRICS countries, which is, you know, I suppose it's because it has involved China and it has involved

Russia that we look at, you know, it's been looked on with a high degree of suspicion. But the reality is, and take away the gold-backed element of it, this is what the euro did. When the countries came together and effectively said, we prefer to actually, we do a lot of trade between ourselves, let's create a currency to make this all easier and let's try and harmonize um a lot of our economic uh rules activities uh in order to um facilitate that uh so it's not unprecedented um but there is a lot of talk about how they will they are very diverse in culturally uh very diverse countries from a legal perspective so there'd be an awful lot of uh implications ramifications and planning going into how do we actually how do we how do we create a stable common currency unit and the natural

solution to that is one that is backed by precious metals and in a large degree by gold. That's what the suspicions have been. That is what a lot of the talk has been around this. And then we see, you know, eastern central banks and we see Russia and we see them all accumulating gold. So it really lends weight to that idea that they are going to be introducing their BRICS currency unit and it will be heavily backed by precious metals.

And they've had the opportunity, let's say, to under-report exactly how much they're purchasing. So now that we see that, it lends even more strength to that suspicion. Yeah, and I put secretly around it because it might've been secret from me, but the people inside those vaults knew exactly what was happening.

And that went up the official, that did not escape official notice. Now, speaking of which, I am such a contrarian, David. Whatever the FDA tells me now, I just do the opposite, right? Eat red dye number three and yellow 10 and processed foods. I'm like, no thanks, right? Off the reservation on that. I've been seeing a lot lately that I consider to be not just nudges, but pushes by what I call the official narrative machine to get into Bitcoin, right? We've heard strategic reserve asset across multiple countries. And I

think Microsoft shareholders just actually voted against having that as a strategic asset in their treasury, but you can feel the push. And then just last week, we had this surprising result come out where IBM, you know, Big Splash, no, Google, Big Splash says, says hey we've got this new quantum chip called willow it solves stuff that was formerly unsolvable and of course the entire premise for bitcoin is that it has this currently unbreakable encryption that gives makes your keys stay private david i'm no expert in this area i don't know a lot but it seems to me that if you're going to call something a strategic reserve asset maybe it shouldn't potentially go poof. You can put gold in a vault and you can open it up a million years later and it's still

there. It's still there. It's still gold. Yeah. And the technology you need to move it about, it will still be the same. Yes. Shouldn't they have to account for that, just at least with lip service to say, here's why we're not worried about that?

Yeah. I mean, the reality of it is this is still, if you compare it to gold, this is still very new technology. It's sexy technology. It's hit the headlines. It has performed extremely well. It is still not very widely held. It is not as widely held as precious metals or precious metals related assets are. In terms of a market capitalization, it is growing. It has done very well over the last couple of months. It's done very well since the Trump administration has been elected in. It's supported as well by Elon Musk,k who's a very uh big supporter of um of of of of bitcoin um and other coins um but in terms of you know it's not too long ago that we saw

bitcoin fall from 65 68 000 all the way all the way back down to the teens very quickly. That's not the type of volatility that you want in a reserve asset. It's just not. It would be precarious. I mean, there was an interview that I was listening to there with Michael Taylor of MicroStrategies

and he was suggesting that what the US should do is sell all of their all of their gold and buy bitcoin with it um it's what he called his evil genius strategy um this is this is ridiculous this is nonsense this is nonsense stuff on so many levels it's actually i don't know i have it here i'll actually read i'll read you i'll read you what the the the final part of um of what he called his evil genius strategy after he kind of explained it, which was effectively sell your gold and buy Bitcoin.

He goes, what I've described here replaces every currency in the world with the dollar, which the US controls. And it siphons off hundreds of trillions of dollars of 20th century capital assets and half of the capital in the rest of the world. And most 75% of the capital of our enemies gets siphoned into Bitcoin and the beneficiary is the US government. And after that, every US company,

because we're the ones who own and run it. Now, I put a little note on that scribble down there. company because we're the ones who own and run it. Now, I put a little note on that scribble down there. I said, Michael, I think you said the quiet part out loud there, because that's part of the reason that we have found ourselves in a situation where the East has been buying up so much gold, and there's been this talk of de-dollarization, is because when financial markets were weaponized after the invasion of Ukraine, there were a lot of countries that looked at those actions and said, I could be next.

We could be next. We want to reduce our exposure to the dollar. We want to reduce our exposure to the U.S. economy as well. What he's talking about there has serious geopolitical implications. It falls at the first hurdle for me, based purely on those comments. That is not to say that Bitcoin should not make up part of a portfolio. It's not to say it should make up part of most people's portfolios. Does it have a role in there? Yeah. It's performed well, but as we all know, you know, past performance is no guide to future returns. It has been extremely volatile.

So if you've got the appetite, you've got the risk appetite for that type of volatility, go for your life. But as with anything, you know, our gold core, we sell gold. But we don't advise anybody, you should put absolutely everything that you have into gold. And you can say, well, why is Michael Saylor saying it? Well, MicroStrategy is the fourth largest holder of Bitcoin. They hold something like 439,000 Bitcoins. So should we be taking advice from the guy who's the fourth largest holder on Bitcoin

as to what everybody else should be doing, what the US government should be doing? Who benefits most out of that? Well, he does. So it's kind of biased. It's kind of biased advice. You know, as I said, like we said, we sell gold. We sell silver.

We talk about it. We try and talk about it in a balanced way. When we recommend it to people as part of their investment portfolio, we don't, as I said, tell people that they should put 100% in. This is a surefire bet. Stick it in. You're going to make millions out of it.

No, it has a role in a portfolio. It provides that element of financial insurance. It provides that hedge against uncertainty. It provides that hedge against inflation. So it has a role. It should not be all of your portfolio. There's the old Wall Street saying, put 10% of your money into gold

and hope it doesn't work because that means that the rest of your portfolio is performing because it is that kind of contrarian asset. It has such a low correlation to other asset classes that it performs well in those situations. So, you know advising advising an individual to sell everything that they have and put it into bitcoin is uh is bad advice advising the u.s government that they should sell their gold and put it all into bitcoin well i'll let you decide as to how good an advice that is. Ultimately, though, as I said, we sell gold and silver.

We do comment on the markets. But, you know, listening to commentary from, or judging a gold dealer on their comments about the markets is about as useful as judging your mechanic based on whether he knows what the fastest lap in the Indy 500 was. It's irrelevant. Is he a good mechanic? That's the important part here. So, you know, choosing somebody who is going to advise you based on how to buy Bitcoin, on how to buy, how to invest, how to buy gold, how to buy silver. You know, you've got to look at their ability to actually do what they say,

rather than purely just advise you on whatever outcome that there is. Because I could sit here all day long and say, gold's going to $10,000. Everybody's got to load up. And people, my credibility ultimately would be affected by that. But at the same time, you're just talking your own book here. Well, and speaking on that front, this is one of my prime objections. I believe in power structures in the world. I believe that there are, we live in a hierarchical society. There are powerful, powerful people who've been in those positions for many, many generations, and they know how to play the game. So to slip into Michael Saylor's world, all of a sudden, what we're going to have is because a new technology comes along, we are going to completely upend the winners and losers that have been established carefully over millennia.

And I'm looking at a chart right now that says 1.94% of the total addresses of Bitcoin currently hold 92.73% of Bitcoin. It's just this tiny little handful. So those are going to be the new winners, right? Many of them wear baseball caps backwards and, you know, live loud lives in Puerto Rico. Those are your new royalty and ruling class. And everybody else is just going to say, I guess we lost. They're the new winners. I don't buy that narrative, but I'd like to see how that plays out. You know, it doesn't make sense to me because that's not how the new winners. I don't buy that narrative, but I'd like to see how that plays out. You know, it doesn't make sense to me because that's not how the world works. It's not how the world works.

And there's a way in which you construct portfolios, either on a personal investment level or whether it's looking at the kind of reserve assets that you have as a nation and being over-concentrated on any one thing is a very dangerous situation. You know, the reality is that if, for whatever reason, somebody was actually to take that advice seriously, sell all gold and buy Bitcoin, yeah, you'd probably see the gold price fall initially,

which would probably mean that the eastern central banks would buy up all of the US gold. And there was this meme that's been going across the internet over the last year, which is kind of guys in suits on a tennis court and one's thrown chunks of dollar bills one way and the other's thrown chunks of dollar bills one way and that's the you know and the other is thrown gold bars the other way uh you know and it's it's it's it's the u.s economy throwing the

dollar bills one way and it's uh are throwing the yeah old bars you get it yeah so so so so the so the so the so the the east the east ends the east ends up with the gold bars and the West ends up with the dollars. So that's exactly what would happen in a situation is, OK, fair enough. The West will end up with a lot of Bitcoin and the East will end up with a lot of gold in that scenario. So, yeah, it's ridiculous advice. I think he even titled it his evil genius strategy. The evil genius plan is not normally revealed in a Bond movie until quite close to the end. He seems to be kind of setting it out at the beginning. where you use a rising asset price to justify floating more debt or equity

to buy more of the rising asset price so you can buy more of the rising asset so you can float more debt? What was the name for that? It was an Italian guy, I think. Yeah. The guy with the P? I don't know what that is. No, I mean, it ticks the boxes.

Because obviously it works great on the way up and works horribly on the way down. That's just that's the nature of that particular scheme we were just discussing. Yeah, indeed. Indeed. But nothing new under the sun. That's that's that's the world that we that's where that we find ourselves in, you know know. What's more important than substance is headlines. That's the reality of it. Nice, sexy headlines to talk about. Rather than actually doing the work, digging in, seeing what the implications of all these things would actually be.

I don't know whether you agree with this or not, but I mean, this is similar to the tariffs argument. You know, what's going to happen? We're going to whack 25% tariff on Canada, 60% tariff on China. You know, and that'll sort everything out.

Will it? Really? Who's going to pay for this? You know, that's going to be massively inflationary. It might, you know know ultimately the goal here is to encourage those companies to open up in the u.s and employ people over there okay but that would take an awful long time and do you have the skill uh do you have the skilled labor to be able to uh do those jobs in those in those industries uh yeah okay if you do you train them up great

but at what costs so the actual end up costs, the cost of the goods will be significantly higher than they were when you're making them in countries where the cost of labour was a lot lower. So these things have unintended consequences. On the surface, they sound great and they sound like quick fixes, but reality is no. Massive deportations, what could that be? Well, again, yeah, you can understand why there's political will to do that. But you're then reducing down the labor force, one implication of that.

So all of these things have potential uh negative and inflationary consequences but on the very surface of them sound like wonderful uh stories headlines sound bites um but we gotta dig you gotta dig in and and see what the real implications of these things would be so as we uh close this out and and we're coming into the holiday season i might not see you until the new year. As we look into 2025, is it going to be a year of, in your mind, inflation or deflation? Where are we headed? Well, I mean, you look at the charts that we've shown there, the trend is up. You know, as a former trader, I would be very much a trend follower. The trend is up.

And particularly when the trend is up and the fed is doing all it can't fuel that trend and that trend will that trend will sustain um i think 2025 is going to be a very interesting year i do think that we're probably going to see uh some more all-time highs in stock markets i definitely think we're going to see some more all-time highs in stock markets. I definitely think we're going to see some more all-time highs in gold. It's about time silver played catch-up. I think we're going to start to see some moves in silver. But we are going to see increased volatility. None of these things are happening in a vacuum.

We've got a world on fire in a lot of places. The geopolitical tension is through the roof. We've got hot wars on the continent of Europe. We've effectively got hot wars on the continent of Europe. We've got, we effectively got hot wars in the Middle East. We have this silent financial crisis that is going on.

The more people that understand that, the better. The more people that are watching your videos, the better to understand what is actually happening and what they can do to address it.

I think we are going to see 2025, particularly post-inauguration, I think there's going to be a little bit of a honeymoon period after the inauguration, where there are going to be a lot of talk about what policies are going to be coming in and how wonderful that these policies are going to be. But then when the rubber hits the road,

that's when we'll really understand what the situation that we're going to be in and facing for the next couple of years, because I think what you're going to find is that there's a lot of the things that are planned to right this ship aren't actually going to be as effective as they think that they are.

There's so many underlying issues there, particularly in relation to the budget deficits and the national debt, that when these things are happening that aren't happening in a vacuum, have serious implications long term and they won't be turned around in a short space of time indeed so it's going to be more of the same indeed well said so dave russon

thank you so much for your time today as always and uh we'll be back as soon as we can um probably sometime in the new year so we'll be checking those predictions out and i track with most of those so we'll see. All right. Well, listen, as always, really enjoyed it. Talk to you soon.