Peak Prosperity - The Three Elements that Drive Gold Purchases

Episode Date: October 11, 2024

In this interview, Chris and David Russell discuss how global uncertainty is driving gold prices, with central banks and high-net-worth investors acting prudently, and a potential rise in fear-based investing looming.

Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. I think what they're saying publicly is, we've got to admit, we're going to look ridiculous if we don't say gold is going to go up, right? So publicly, we've got to admit it. We'll sanitize that message.

But when we're on the phone to our top clients, we're going to be reallocating heavily to a number of different things. One of them is probably going to be defense stocks, and one of them is going to be a defensive asset, and that's gold. 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, and welcome to this very special edition of Finance U. Today, we're going to be discussing gold, precious metals, all things within a context of what's going on in the world, big things going on. Goldman Sachs

raising their price target for gold. We've got China making some big moves, of course. What is the budget situation in the United States and its deficit spending? And then also an upcoming BRICS summit. So we'll be discussing all of these things and more with David Russell, CEO of GoldCorp. David, so good to see you again. As ever, Chris, it's great to be on with you. Really appreciate it. Yeah, that was really fun seeing you in New Hampshire. You came over for the summit, got to interact with some of our wild and crazy tribe.

Indeed, indeed. It was fantastic to see you guys in person. That was a brilliant weekend. The lineup was great. I actually got an opportunity to sit on one of the. That was a brilliant weekend. The lineup was great. I actually got an opportunity to sit on one of the panel discussions, which was fantastic. It was just,

on top of that, the weather was fantastic as well, which is nice going from Ireland where it is kind of perpetually raining here. So it was nice to get a bit of sunshine in New Hampshire. Yeah, yeah.

Well, that was a wonderful time. So as you saw, I mean, a lot of people very concerned about the future. We don't know. These seem to be, well, that was a wonderful time. So as you saw, I mean, a lot of people very concerned about the future. We don't know. These seem to be listen. Investing is always a matter of uncertainty. But these feel like particularly uncertain times. And at the time of this recording, what did we just see? We just saw some Iran-Israel action. So we got geopolitical things going on. Obviously, it's a very contentious, I would say almost bipolar

situation going on in the US for the presidential race, all of that. Just starting there, how do you factor in big events like this in your business? Well, ultimately, one of the main drivers of the price of gold is uncertainty. And we are at a point in time when there seems to be greater uncertainty than there has been for decades, probably since, I don't know whether it's the Cuban Missile Crisis or since the Second World War. But uncertainty is really, really, really peaking now because it's not just financial markets. It's geopolitical. It's domestic, as you say, with the left and the right moving much further apart in the US. Just everywhere you seem to look at the moment, there's just uncertainty cropping up.

In terms of factoring it into our business, when I was on last time, one of the things that I spoke about was the fact that the rally in the gold price at that stage, very, very much not a retail investor led rally and very much led by central banks. Now, that is still very much the case at the moment. However, what we're starting to see now is we're starting to see more of the kind of high net worth investors stepping into the market. And when we look at gold, it trades based on three things, really, and that's prudence, fear, and greed.

They tend not all to happen all at the same time, and very much what we've seen this rally being led by is prudence. That was from a central bank point of view. They tend not to act as much out of fear or greed, but they're early and they act from a prudent point of view. We saw that way back when sanctions against Russia started and they weaponized financial markets. You saw a lot of central banks around the world having a look at their reserves and starting to move more of them into gold. So factoring this into our business, we're seeing that we're moving from the prudence

amongst the kind of the institutional and central bank community. And we're starting to see it more in the kind of high net worth investors, those that tend to be a little bit more clued in with what's going on in financial markets, in geopolitics, very much your audience. We're seeing them now being prudent and looking long term, looking at their portfolios, seeing do they need to rebalance, see do they need to add a little bit more into precious metals. And then typically what tends to happen is we move from that prudence and maybe it's fear is where we go next. And particularly, as you allude to, with everything that's going on in the world, what's happened in the last 24 or 48 hours with Iran and Lebanon

and Israel, what's also going on in Russia, in Ukraine, we're starting to dial up the fear aspect. And that's when the cohort of those people who are investing in gold tends to get larger and larger. Well, it's actually one of the things I love working with GoldCorp, because you have vaults in a lot of different jurisdictions. And if I ever needed to, I could decide maybe I should not, I want to spread it a little bit or move it out of one jurisdiction if I decide I didn't want it there, I wanted it somewhere else. So that's actually a, I just got a call from a very high net worth person yesterday, and it was that question, which was, Chris, where would you store, where would you put it, right? Yeah.

And the only answer I had was, well, not in one basket, obviously, but clearly you want to figure out, yeah, geopolitically, there's jurisdictional risk now too that we can all assess differently, but it's part of people's decision matrix now. It is, and that's the key thing, one of the key things when it comes to investing in gold, when you're doing it from that kind of prudence point of view, when you're doing that to hedge against uncertainty, is you need mobility. And that's how the mobility of your gold, you need to be able to move it,

but also you need to be able to move as well. And a lot of our tangible assets that we own, which is primarily as property, it's not very mobile, it's not mobile at all. Whereas when you invest in precious metals, you have the ability to either move those precious metals vault to vault anywhere in the world, or else still access them regardless of where you are in the world. So maybe you decide you don't want to live in your state or in your country anymore, and you want to live somewhere else. Maybe you want to move to South America, Europe, Asia, Australia, wherever it is. You can do that and still access your gold.

You don't necessarily want it in one single jurisdiction because you have that jurisdictional concentration. And that's one of the things that you can hedge against by spreading that in different vaults if you want. Or maybe some people are just saying, I don't want to hold gold inside my country at this moment in time. I'd rather hold it externally. So you need that flexibility to add that mobility into your precious metals investments. Yeah. And remind everybody, where are those vaults for GoldCore right now? Where do you have those?

Well, we do have a number of vaults in the US the us in utah and texas but we also have them in europe and we have them in in ireland in the uk we've also got them in uh switzerland uh we also i have vaults in singapore and also utilize vaults in australia as well so um hey let's let's if i could let's turn now i think all roads lead to gold and silver uh and i've thought this for a while. I've been fairly unapologetic about this. When people ask me what's the right amount to hold in gold and silver in their portfolio, I say I can't answer that. It would be fiduciarily irresponsible of me because I am irresponsibly long both of these things. And that's all I'll say. But I'm not alone anymore. I thought this was big news. Love to get your take on this, which is September 30th. This was Monday of this week. We have Goldman Sachs coming out Monday, raising its gold price forecast to the gradual boost from lower global interest rates,

structurally higher central bank demand, which you mentioned, and gold's hedging benefits against geopolitical, financial, and recessionary risks. Interesting. How do you decode that? I mean, we're at what? At this moment in time, we're at, what,'re at 2680, I think, in the gold price. So they're not even saying, you know, that's not even 10% away from where it is here now. It's not an aggressive target. It's not an aggressive target. I'm just going to caveat

all of this by saying, I remember getting a comment, one of our YouTube videos, when we talked about, you know, should you buy gold gold or not and one of the comments was something akin to it's like asking your barber should i get a haircut you know i am in the business of selling precious metals um i don't do the hard sell we don't do the hard sell but what we do is we do prudent advice so when it comes to asking questions about where we think that the price is going um we look very clearly at what is going on in the world and the things that precious metals react to. And we say, given what we know historically about gold, is what's happening in the world now likely to increase the price or not? As we talked about, a huge amount of uncertainty at this moment in time. Theman sachs thing it's it's um i'm not even too sure the word i'm looking for

but it it it isn't it isn't it isn't particularly aggressive um but i think it's more a case of the writings on the wall they know that the gold price is going up okay um and the reasons that they are giving are very sanitized reasons um and overly sanitized reasons. It's this kind of just, oh, it's going to go up to 2,900 and because of this box ticked and this box ticked and this box ticked, you know,

the world's in a precarious situation here. Right? We've got wars on the continent of Europe as we speak that is escalating. We've got tension in the Middle East that we haven't seen at this level for decades, where there are bombs being fired at other nations. It started off with an attack on Israel, right? We have Israel now, all of their operations in the Gaza Strip, now into Lebanon. We've got Iran second time now that they have fired missiles at Israel this year.

This is the escalation. And we are seeing this escalation. And now we're seeing the response from Israel is that we are going to retaliate against i mean where does this end this just keeps on escalating it's like that that the sides are being goaded into war goaded into war and this is this is obvious from a distance so to say that well because of interest rates are um are coming down we think that the price of gold is going to go to two thousand nine hundred dollars next year come on seriously yeah well david you're you you worked inside the industry so i i know you can let put on your magic industry insider decoder ring what do you think they're actually saying when they call each other across the trading desks in their in their best clients what do you think that conversation sounds like well i i think what they're saying publicly is

less we've got to admit we're like we're going to look ridiculous if we don't if we don't say gold is going to go up right and so publicly we've got to admit it we'll sanitize that message but we're on when we're on the phone to our top clients we're gonna be reallocating heavily to a number of different things one of them is probably going to be defense stocks, and one of them is going to be a defensive asset, and that's gold. These guys are smart, right? That's an incredibly sanitized message for incredibly smart people. So you've got to look and see what's under. You've got to look and just determine there's something serious underneath that.

They know exactly what's under you've got to look and just determine there's something serious underneath that they know exactly what's going on they've got access to information that would probably blow our minds so they are keyed in and clued into exactly what is happening in washington exactly what is happening in israel what the channels and the back channel chat is between all of these nations they know exactly what's going on but they have to save they have to save face and at least present a present an argument that gold is going to go up from here and they give us these sanitized explanations well so i'm basically a fundamental guy at heart i just like to know where are the flows of gold what's the buying pressure because things go up in price when there's more buyers than sellers. So that I used to do this. Maybe it's

gotten clear in the last year. I gave up after a while. David was trying to figure out who has how much gold and where is it trying to detangle that. Right. You know, the LVMA will sort of tell you we've got some in this pile and the Bank of England says they've got a pile and New York says they have a pile and comics as they have a pile. but i can't go deeper and understand who owns it right it should be the simplest thing this bar has this number and here's the person or entity that owns it right now we've got this crazy story of hypothecation rehypothecation lending leasing flows does gld have this i gave up i could never quite figure out. So I went to the source and I would call refiners in Switzerland and say, what are you doing? And they're like, we're casting one kilo bars and they're going to China.

And that's as close as I could get to understanding things. It is. Well, yeah, there's a couple of things there. I mean, the idea that there's more buyers than sellers. This is a thing we used to talk about on the, you talk about around the trading desk when I was trading many years ago. And the reality is, not necessarily more buyers than sellers, but a greater volume of,

not of buyers, but a greater volume traded on one side. So we have got an asymmetric flow here. We've got an asymmetric buying situation where we've got some massive massive buyers in the east and they're hoovering up whatever they can get their hands on most of that is coming from the red from the west and as you say talking to the refiners you know they're refining the thousand and silver bars and they're finding the kilo bars and they're going east. But there's two sides to that transaction. The gold is going east and the dollars are coming back west.

And that's the reality of it. It's not just a one-sided trade. So we have to be cognizant of that because that has implications within itself. Well, Dave, this is actually, listen, I don't want to seem hyperbolic here, but this is an extraordinary moment of transition on the global landscape, going from a unipolar and some scrabbling to maybe become more multipolar with China wanting a seat at the table. But we're also, 1971 to now, we are what, you know, 54 years now, roughly past that moment where we decoupled from an anchor. And then it's just whatever you can print up.

And so I want to connect that idea to this where Goldman Sachs said recessionary risks. Now, why should a recession actually be positive for gold? Because normally you think a recession deflationary potentially, you know, 2008-9 was not positive for gold until it was, right? So you could see that, but it's because I think, well, because this is a chart of the U.S. deficit, federal deficit as a percent of GDP starting in 1948, all the way on the left, coming through 2023. And you are here because it's clocked off. It's backed off to only 6 point whatever percent now. But look at the trend here, right?

What do we see very clearly? Well, let me back up one here. I got to get my laser pointer up. Yeah. So it's just getting, I think we can spot the trend. Like if this was a chart and you're a trader, I think you're watching lower lows, right? Over time. And that lower low is actually the government's share of the economy getting larger and larger. It has to intervene more and more to keep everything going.

And so when you look at this, like what do you see? Like how does that strike you? I see it as problematic. And if we go back to a moment ago, when the Goldman thing and talking about the impact on the gold price, if, you know, from kind of a recessionary potential, let's call it. Let me start it like let me start it like this ultimately in a recession as you can see they're printing money right they're printing money to try and get out of recession okay so to put it in very

basic terms on one hand you've got gold. And gold is ultimately limited, and I've probably said this before on your channel, by the rate at which you can find it, mine it, and refine it. And that's quite small. And the gold stocks each year, above-ground gold stocks will increase between, say, 1.5% and 3%. It's small.

And it's measured, its price is measured in terms of fiat currency and fiat currency can be increased at the will of man ultimately which is infinite um has potentially infinite and every time that we um have seen challenges to major challenges to the financial system major challenges monetary system what happens is we get the printing press running and so therefore you get massive massive amounts of fiat currency printed so when you've got something that is limited by nature effectively and the value of it is is determined by something that is limited by the wit and will of man well you know that every time that they go to that printing press,

that you are actually going to see the value of gold increase. That's the kind of very basic answer to that question. But in terms of where we're going with the national debt and with the deficit as a percentage of GDP. That's an issue. I was actually listening to a video with an interview with Luke Groman within the last week or two, and it was very interesting. And he looked at, what was it? The US net interest expense is what he looked at. And the US net interest expense includes Social Security,

Medicare, Medicaid, Veterans Benefit, and net interest. Now, what you find is, and I think it was for the month of June, July, August, something like that, that that figure was 150% of tax receipts. 150%. Now, on average, it's about 95%. So, these are the things that you have to pay. These are all like, apart from the net interest, it's the future liabilities that are falling due for payment now. So, when you're in a situation where on average it's 95% and in particular months, depending upon the take, it's 150%. When you cannot pay, cannot afford to pay that, you're in significant trouble. When you can't afford to pay that with your receipts, you're in significant trouble. You are, so you've got your three things that make up

probably about 120% of receipts, which is entitlements, which are your Medicare, your veterans expenses, Medicare, defence, and your interest receipts. They make up 120,

or your interest payments, they make up 120% of your interest receipts. They make up 120, or your interest payments, they make up 120% of your interest receipts. And here's where I'm going with that. There's very little that you can do in terms of cost cutting on those. Because if you want to bring down the deficit from at 6% to 3%, you want to be cutting those by about 25 percent each you can't do anything with you can't really do anything with your which are interest expenses they're they're the baked in unless you continue to lower and keep interest rates lower but you would have to cut them by 25 percent right so let me just throw up this this chart um because i i

was wondering if we were going to end up here. This is for 2023. So you're talking 2024. Way worse. Right. So this is this is lagging. But what do we see here? We see these things, which is Social Security, Medicare, Medicaid, income security programs. And this is other these are mandatory. This is all mandatory. That's what you're talking about. Just the mandatory was 150 percent of of receipts right um and then there's an interest which i would also consider mandatory the only stuff that's discretionary is non-defense defense these little these little wiggles down here right uh but this and all of that that's all mandatory so yeah keep going sorry i just thought maybe a picture absolutely and if you if you if you think if you think um i always like to put these in personal terms because

i think it makes a little bit more um it makes it more relevant to people rather than using these big economic uh terms if you think about your income right and those things that you need to survive and have to keep the roof over your head, have to keep food on the table, all of these things. You've got your discretionary stuff, like you want to go buy a new TV or you want to go away on holidays. You want to buy yourself new clothes. They're all your kind of discretionary things. But your essentials, your essentials, if your income doesn't cover your essentials and you have to go out and borrow all the time for the difference. You're in trouble. That's not sustainable.

Yeah. That's not sustainable. Now, imagine then that, well, okay, that's I got my income. I've got my investments over here. I got my stocks in the stock market. Okay. And they've been going up for the last number of years

and they keep on going up. the last number of years and they keep on going up and if the federal reserve and the and the government um work their magic they're going to keep on going up as well which means that i can afford all those discretionary things so if the stock market continues to appreciate underpinned by the Federal Reserve, then you can actually stay on the straight and narrow. But if that doesn't, you're in big trouble. Yeah, yeah. And that was more true before.

So the Federal Reserve did this long enough and they compounded that, that now it's a wealth gap and the stock market is more of a to me it's more of a signaling mechanism that lets the average person know things are okay but who owns it is highly concentrated in a few hands so it has less of that wealth effect than it used to because the wealth is all over here absolutely absolutely so in terms of that uh deficit as a percentage of deficit as a percentage of GDP, I think that the government and the Federal Reserve are in a real problematic situation here

because they can't reduce it. Because what does reducing that require? It requires cost cutting and what happens when you when you start cutting costs you're actually going to create a recession okay now what happens if not worse if not worse what happens when you create a recession? Well, your tax receipts go down. So therefore, what happens? really saying with the Dakota ring is that recession is going to require the government and the Federal Reserve to print more. Exactly. A lot more. So we've got to avoid recession at all costs.

Because if that happens, it's the next step and the next step and the next step, and we're bouncing down the stairs. Yeah. Yeah. Now, here's the one thing that Goldman next step and the next step. And we're bouncing down the stairs. Yeah. Yeah. Now, now here's the one thing that Goldman Sachs didn't talk about. So let's go there is, is this, this comes from a really nice series by Brian Riedel. I think he put this up in February of this year. So it's a little dated, but the CBO congressional budget office doesn't, it only does this once or twice a year.

It does its update. So here's what they did under current law. The CBO is the Congressional Budget Office. They just take current law. Everything that we know is on the books. What happens? The darker maroon colors is history. Red is projections.

And so they're saying, ah, you know, we're going to have a deficit of one point, minimally 1.64 trillion in as high $2.579 out in 2034. So over the next 10 years, about $20 trillion of red ink. And by the way, as Brian points out in this next slide, David, this is the optimistic scenario. The more realistic scenario is, well, you know, they don't actually let the tax cuts expire on schedule. And Congress also, the CBO assumed that they cut discretionary spending to 5.1% of GDP. What if they didn't, right? Which we know they won't, right? Well, as much as you can know these things.

Well, now it's a very different sea of red ink. It just goes worse and worse and worse and worse. And it's a $25 trillion bump. So we're at $35 trillion. 35 this brings us to 60 trillion in debt by 2034 right printing printing printing printing and as you just said it's kind of maybe the federal reserve feels trapped that they can't allow a deflationary thing to take hold because it just makes everything worse so they're gonna have to continue on the path they're on this is the path but how do if you if we were going to explain to like a high school student like how we're being responsible

and you got the federal reserve to explain what the plan is to get off of this is what would they say are you going to be are you going to be able to believe anything that they say? I mean, it's, you know, every time we see... Trust problems is an issue. Yeah, every time we see Central Bank, every time Jerome Powell stands up, you know, and Bernanke before him and, you know, Greenspan before him and all the ones in between and before that.

I remember sitting on the trading desk and you'd see Greenspan there and he'd talk and he'd be whatever committee he was talking to and we'd sit there and we'd listen and you'd kind of look at each other when he was finished and you'd go, what do you think he said? And there'd be six guys around the desk and they'd each get a different interpretation of what he actually meant by that. And then you'd talk to the brokers and they'd have a slightly different understanding

of what went on. And then you'd wait and the market would react, either more often than not in a totally different way than you expected it to react. Because everybody had a different idea of exactly what was going to happen now um based on what on what they'd said so it's very it's they they do speak in tongues right yeah very much speak in tongues uh and sometimes it's as much to confuse the market or to or to ensure that they don't say anything that could give any sort of indication of particular direction for the market.

I've been trying to think of an analogy for central bankers and central bankers speak over the last while. And this may or may not work or may or may not hit. But I see it as two adults sitting in the front of a car and they've got uh they've got got two kids in the back uh three kids in the back one's really young doesn't understand anything it's a child under the age of three the other ones may be six seven eight years old uh and the other is a teenager and they're and they're driving along and up ahead they see maybe it's a maybe it's a roadblock with armed people standing at it and that they don't recognize aren't in any particular uniforms and as they're getting closer to it you know

when the kids pipes up and goes oh look dad what, dad, what's that? And you go, oh, not to worry. That's just the local police. We're going to pull over here. Now, the other adult in the car understands that that isn't the local police and there's a lot of danger here. The youngest child in the backseat doesn't understand anything. So they're fine. And the middle child is curious. Oh, is that what that is,

that's the local police, fantastic. And the older teenager understands and is particularly nervous because he knows that that's not the local police and this is not a good situation. And the way I like to think of it is the person driving the car in that situation is the central banker, trying not to panic the market and the car with the five people in it is the market the person sitting beside him who understands but is still keeping his mouth shut as to what's going on is the banker in the situation the older teenager are those investors in the in the world who can see through what is being said they're probably peak prosperity subscribers have can see through what is being said the younger child is the one that we know it's a lot of the population that will panic

um significantly if they really understood what was going on here and are happy to believe whatever they're being told and then you've got a large part of the population who is the young child that doesn't understand the situation anyway so it doesn't really matter and that's kind of that's and i don't know if that lands but that's the way and and yeah so when i when i hear central when i hear central bankers talking that's kind of the lens through which i i they want to make sure that they are not panicking anybody else in the car, right? Even though the situation is dangerous. And there are those that are experienced enough, mature enough, have seen things like this before,

know what the real local police should look like, that don't believe that this situation is how it is being told. And some of them know that well they're probably doing the right thing because even though we're going into a dangerous situation the last thing we want is absolutely everybody in the car panicking because that's going to make these things even worse so we have jerome powell in the driver's seat and we got goldman sachs in the front adult passenger seat going, 2,900 per ounce? Exactly. When I think anybody, this is for if you have eyes to see, ears to hear, look at this.

This chart alone, this one right here, I think, any reasonably prudent teenager in the back seat who's cotton-donched and just look at this. This is it. We don't need millions more charts. You just look at this and you say, oh i see what what's going to happen here they're just going to keep printing and printing and they don't have a plan for how to get off of this particular trajectory they don't have one they don't really have a choice they don't really have a choice because the you know the the fiscal discipline is what most people will say has to happen. We've got to cut costs.

But what's that going to do? That's going to drive you into recession. What's that going to do? It's going to lower the tax take. Yeah. So what can you do? You can print more money and you can continue to chase it. Yeah.

We print, then we print, then we print, then we print. Yeah, but it has to be against what, though? Where's that huge, giant economic, you know, what's the big driver of next economic growth? I understand there's all this excitement about data centers and AI and it's going to do a lot of things for us. And there's a port strike because they don't want to get automated. Dave, I know there's a lot of people excited about the whole AI, how this is going to transform everything, and it will. But I'm looking at it going, well, it puts a lot of people out of work is what it does.

And then what's the economy? Because the economy is you and I and everybody else exchanging with each other. And if there's a whole group of people who are just producing and people who no longer have jobs, I don't understand where the exchange happens. Everything sort of gets very weird. I don't understand the landscape. And I'm not sure anybody does. Where's the next economic growth come from?

Can I have a look and say, where's the economic growth actually come from over the last decade or two? And I talked about this on the panel discussion in New Hampshire with your community. If we look at GDP and GDP on average, annualised over the last number of decades, say about 6%. All right. And even over the last couple of decades. Now, if we look at real GDP, so GDP minus inflation. Now, when we look at the inflation figures that we have been fed over the last couple of decades that squeezes that right down now if we look at and when I say real GDP

a real inflation what I mean is when we look at the lived inflation lived inflation and if you look at things like shadow stats that if you calculated inflation based on how they used to calculate it, you'd find that it is north of 10%, 10 or 12%. Now, if you look then, tell me what is real GDP when factoring in those inflation rates? It's effectively negative. Right. With the variable being more debt. Right. So people have more credit card debt, more borrowing, more mortgage debt, more everything debt. Right. So the United States just crossed a hundred trillion dollars of total credit market debt. This isn't even the unfunded liabilities, Medicare, Medicaid, Social Security, none of that.

That's just liabilities. But I mean, debt, just straight debt. It's astonishing. Right. One thing there, and I'll just take the opportunity to just interject it we should factor that out too shouldn't we from gdp because a borrowed gdp is not the same as an organic gdp it's they're different yeah right but what i was going to factor in is that it was the other thing you might remember that i that i about, just to put a little bit of context on those numbers, 100 trillion. All right. We said one million seconds is in 12 days time.

So that'll be 12 days in a year, not even two weeks. That's one million seconds. One billion seconds is in 31 years one trillion seconds is in 31 688 years so a hundred trillion seconds is in 3.1 million years. Yeah. Yeah. Yes. 31,000 with another three zeros on it. Yeah.

Another two zeros. Yeah. Yeah, two zeros. Yeah. 31 million years, huh? I mean, 310,000 years. Yeah. 3.1 one million years i don't know it's it's it's getting too big we can't even handle it chris yeah thank god we don't work with

numbers no these are insane numbers they're just insane and and and and we're just sort of shrugging officially like we just carry on and by the the way, no dog in this fight, neither candidate is talking about these issues on the campaign trail here in the United States in this presidential cycle. Like we're not going to talk about that. Right. A lot of other issues, some of them very important, but we're not talking about what to me, David, this is the most central issue, because if your economy gets ruined and you ruin your currency, all the other things we're talking about and caring about become ancillary issues. Because when your currency system breaks, we call this Venezuela, we call this Zimbabwe. It's a socially destructive thing, right? Yeah. It does. And those numbers that we're talking about and the growth in the national debt as well, there has been an enormous privilege that the U.S. has had over the last number of decades which uh as the reserve currency they've actually been able to finance that deficit um that is looks like it's going to

become more difficult in the decades to come as we have de-dollarization and we're starting to see it you know we've got the there's a lot of rumors i don't know whether anything kind of crystal is going to happen or concrete is going to happen on the 22nd of october with the the bricks um conference but there's a lot of talk now about the bricks coming out with a gold-backed currency. They are doing more trade amongst themselves without the utilization of the dollar. They are doing more trade amongst themselves where they're net settling in gold. So there is a reduction in the amount of dollars

being used in trade amongst non-US countries. So the appetite for the dollar internationally is down. Over the last 10 years, there's been $300-400 billion in reduction in treasury holdings externally. You've seen Russia, who would have been big enough holders, basically go 99.5 percent reduction in the amount of U.S. Treasury holdings that they have as part of their reserves. So it's going to become increasingly more difficult to fund that through the issuance of treasuries that are going to be bought and held as as reserves on the on the balance sheets. Which sterilizes it. Right. So so so without that sterilization, that just becomes money in the system. Yeah. And that money in the system is just extra currency units,

which is where we get inflation and, you know, case for gold. Absolutely. But how are you going to fund that deficit with a decreasing appetite for your debt? That's the challenge that they have. And it's going to put it on a spell sheet. Yeah. But at what stage does that then further devalue the US dollar, particularly if there is alternate gold-backed

currencies to be held as reserves? I think this last month is the first time that the euro was the second reserve currency, basically, globally. It's now being replaced by gold so gold is on the march up that ladder and it's now in second place behind the u.s dollar and it's closing it's going to continue to close that gap it's a big gap at the moment but it's going to continue but you and i've talked about this gold really to me like i've been tracking it and following it for decades right so in 2022 when we weaponized the, maybe that was the proximal trigger. We also had it becoming a tier one asset under the Basel Accord. So maybe that's a trigger.

Maybe it's both of these things. But all my charts that I trusted for gold, Dave, just broke in 2022, right? So that was comparing the price of gold to the inverted rate, real rate of interest broke. It was like lockstep for decades and then just boing. And looking at the price of gold in GLD's tonnage breaks in 2022. It's just bizarre things that, so something really changed in 2022. So some of this is long-term pressures, but I just wanted to alert people that something changed. pressures but i just wanted to alert people that something changed and a little conspiratorially

but i'm watching my press is silent on this the whole time 2022 23 they're just starting to notice gold a little bit here and i attribute that to maybe the big players feel comfortably positioned so now they can start telling people there's's an element, there probably is an element to that, but the reality is for most people, for most men in the street, if you go, you know, shout from your rooftops, the central banks are buying gold.

They're going to go, yeah, so what? But you shout from the rooftops, your neighbor's buying gold and your other neighbor's buying gold. They'll go, oh, I need to do something here. This is an interesting story. But you tell me what central banks around the world are doing.

Most people don't care what the central bank in their own country is doing. So because it's not a retail led rally and it's very much, as I said, it's prudence, it's greed and it's fear. Right. Prudence, it's greed, and it's fear. Right? Prudence does not sell newspapers. Greed and fear does. Yeah. So when it starts moving into people are buying it for greed and buying it because of fear, it'll be all over the place.

Well, we're not there on the retail side because still people don't talk to me about gold. Not the cabbies, not in stores, not at parties. Just in fact, when we mentioned like while we were at the summit together in September 14th, I think on the 13th, gold hit an all time new high, broke through twenty six hundred. Right. And you and I, we remarked to each other like that was the quietest all time new high ever. My phone isn't blowing up. Nobody's leaving comments at my site. I'm not reading about it. I'm like, you know. Yeah. And the reason is because people don't, a large part of the population don't understand why that is significant at this moment in time. Now, if it was a case of war broke out in the Middle East,

you know, it was a hot war broke out there, their troops were getting closer and closer to that. But if it was something very obvious, and on the back of that, we're seeing gold is now at a new all-time high. Okay, that's something that I can understand. Okay, but the the weaponizing financial markets by you know of the swift system in 2022 upon the you know that about russia invading ukraine that's what's driving the gold price that doesn't necessarily mean much to

a lot of people and have much implications that a lot of people understand so when this starts to become the you know that the jp morgan story about the shoeshine boy or the the cab driver yeah uh buying buying stocks that's when you know that it's moved into either greed or fear that was very much uh that was very much that was very much agreed. And that's probably when you're at the very kind of top of the market, when there's no one left to buy. Because everybody's a buyer, or everybody has bought. Okay, well, who's left? Well, I want to put on my prognosticating shoes.

A lot of people sometimes, David, say, Chris, what are you, some futurist? I'm like, no, I'm a trend extrapolator. I believe in inertia a lot. Somebody drew a straight line on this. I would draw an exponential line, but this is just federal debt, right? We mentioned total debt's $100 trillion, but just looking at the federal component, right? It's now up $12 trillion since 2020. And of course, it took 220 years to get to that first 12 trillion. So if we're up 12 trillion in four years, then the next question people have to ask is, well, when do we go up 12 trillion in four months? And then do we go up, we'll go up 12 trillion in four weeks. And then when do we go up 12 trillion in four days? That's the trajectory we're on. So I'm

going to predict that this is going to keep going up faster and faster because we're on an exponential function. Nobody knows how to get off of, which we showed here. Right. That's what that is, too. And by the way, that doesn't include any recessions. That doesn't include any wars. Right. Those are those are extra.

Right. But that's it. Wars are wars are expensive. So if you project, if you project forward, you've got one of those that is projecting one of those graphs projecting forward saying, OK, if we are if we are as careful as we have been for the last two decades and we extrapolate that out and we maintain, you know, we maintain all the prudence that we actually have, which is none, right? This is what we project. And then we project, well, what is it if we aren't as, you know, fiscally disciplined and we aren't able to renew certain programs and X, Y, and Z happens? Well, then we're going to be an awful lot worse. But what happens if we find ourselves in a situation

where there's a significant war across the world or regionally, that's expensive. That's bloody expensive. Then you don't get even the option of cutting military costs, even if you considered it. It's gone. You're tripling, quadrupling, 10x-ing your spend. Your interest payments now are through the roof.

So your economy is probably on the slide. So your gap and your deficit there is just absolutely blowing out. And if we went back prior to the Russia-Ukraine war, we would have looked and said that the chances of a global war are fairly remote. Some might be a little bit more aggressive than that. But you roll forward only just over two and a bit years

and look at where we are. I mean, what's happened in the last two years? What's happened to this year alone? Or even since, you know, this time last year, October last year? The world has significantly changed. Significantly.

Well, it has. And sometimes these things have a life of their own. I'm very concerned. I was very upset as much as I can be because I can't control any of this. But to see Mark Rutte of, you know, former PM of Holland, right, come forward and become the new NATO general secretary in the first two things out of his mouth. First two things. One, Europe's been spending about 2% of GDP. We're going to have to dial that up. So just more expenditures just because, right? And, you know, Russia,

they got reasons. But then the second thing he said, Dave, is, and by the way, my position, he said, is I think every country should be allowed to decide for itself whether it wants its weapons to be used to reach deeper into Russia. So he's basically saying, what can I do to get World War Three underway? Right. And that's like I'm not saying that's 100 percent guarantee and he's just one guy and he's kind of a cretin, but. But it's not a zero chance anymore and people know that no um it it it definitely it definitely isn't you know it's as i say it's a dramatic it's a dramatically changed world where we're you know the next i don't know whether it's the next couple of weeks but the next year the next two years are significant we seem to be on a trajectory. And I don't know,

you wish that calmer heads would prevail, but I'm not too sure who the calmer heads are at the moment. Have we passed the point of being able to de-escalate these things? The tension in the Middle East seems to be going that way, and only that way. And

it's retaliation after retaliation after retaliation after retaliation. That only ends in one place. That there is a polarization in the US. These things aren't happening in isolation. There are things that are going on around the globe as well. Is there a way to, you know, the centre ground in the US seems to be fairly vacant at the moment. Is there a way to bring those two sides back closer together? There doesn't seem to be any kind of will or individuals that are looking to bridge that gap at this moment in time.

They seem to be kind of getting further and further apart. I'm only seeing this as a, you know, I'm only talking about this as an external advisor. I'm not suggesting that there should be, or I'm just saying you don't see that happening. And you don't see that happening in the Russia-Ukraine situation. You don't see that happening in the Middle East situation. So where do we get the, where are the camera heads that we need to prevail in these situations? Because nobody wants us to go down the route of a world war. When I say nobody, I'm sure there are those that will benefit from it, but no average individual like yourself or myself wants to see the world go down that road.

Dave, it's 95% of people don't want that. But there's about 5% who thrive in this sort of chaos. And unfortunately, they seem to have the reins. I don't know how this happened. And I don't I don't see many bright spots in the Western landscape. But the West has been under assault for a while now. You know, it's like a Western civilization dismantling project is underway you know and i know this because i open up the newspapers and i read and i consume way too much like news and i almost never read about africa it's like it's like it's not even i don't even know if it even exists anymore like did that continent sink into the ocean i don't know in south america like nobody cares right but watching what's happening in the u.s and across can Canada, Australia, New Zealand, Europe, it's astonishing

the number of, these are seismic sort of nudges we're getting, right? No borders. Like to not have a border is a pretty big deal, right? To be told you are the problem for saying, I think there's a problem with how fast we're bringing these people over and also the types of people we're bringing because we're not selecting carefully for skill sets and aptitudes and things like that. We're just bringing people in, you know, at a faster pace than even our housing can afford. So like watching Canada, their rent prices are exploding and they just keep bringing more people and you would think any responsible leadership that didn't despise its own people would go well let's let's make sure that our own people are cared for first and and then when if we have some um latitude left over let's let's think about how we want to approach that it's very thought it's not it's a if you have thoughtfulness your cast

is a racist or a something you know and it's like, I don't even know what's happening anymore. So, but if you were to, you know, if you were to look at what's going on, and kind of compare it to some sort of video game simulation, you know, you've got, you've got, you've got economic and social issues in countries, prior to you bringing in a large amount of external new population into that country, say for example. So if you're not sorting out the problems before that happens, when you add to that, you're going to one, those problems and two give yourself a whole new selection of problems on top of that and that's that's that's regardless of where these people are coming from that's regardless of the socio-economic status of people that are coming into the country if you haven't aren't able to deal with your existing population and manage that what

makes you think that if you dramatically increase that population that all of a sudden those problems are not going those problems are going to go away they're not they're going to get worse and you're going to get a whole load of new problems and that's that's to me that's the reality that's that's the black and white of it that's got nothing to do with any sort of xenophobia or racism. And that's just you haven't sorted out the problems you have at the moment. Lads, now they're going to get an awful lot worse and you're going to get a whole load of new ones. Yeah, that's that's that's that's the basic.

And that's without any sort of nuance to where people are coming from, what age they're coming from, what the socioeconomic background of them is, what's their criminal past like, all of these things. Ignore all of that and just bring it down to the numbers. And it doesn't make sense. Add in all these other things that you haven't considered thinking about or talking about, or you have considered them but you're ignoring them, you're in for bigger problems indeed and you know my larger architecture under all this is that we're organisms and as organisms

energy is really important and if we have enough energy we can do all whatever we want with it right but your economic base is your energy and of course we've seen a lot of the the ideas of these people who are also in favor of just sort of like not dealing with problems and adding to them. They gave us this whole climate change, green energy thing. And they just really were very excited about green energy. And everywhere I looked, Dave, and I said, OK, this is fine. You know, Germany had its energy VN program, right? Big, big, big hundred, multi hundred billion dollar thing.

And they have some of the highest energy prices anywhere. And so eventually you'd think after a decade of that, you go, the promise was lower energy costs. And the reality is higher energy costs. When do those, when does that reality sort of like intrude into the conversation, get a seat at the table? Yeah. How do we, how do we reconcile that, Lance? What went wrong? If you're running a business, you sit down each year and you budget for the next year and you say, well,

what are we going to make next year? Well, we'll make 20% above what we did this year. Okay, why is that? What are the assumptions that you're making? What's the new things that you're doing? They're doing this, this, doing this this this and this okay we'll test those assumptions let's assume they're correct right okay uh what extra do we need in the budget in order to achieve those new initiatives that you're doing well we need an extra 10% on top of everything okay great

roll forward a year it didn't materialize what happened lads you sit down you analyze what happened what were the assumptions that were incorrect we've got to do this now for next year again lads what are our assumptions now and don't give me the same assumptions you gave last year because they were incorrect right so where's where do we actually reconcile what was expected with what actually happened and therefore learn from those things and become better at planning these things for the next decade. So we don't find ourselves in the same situation. And part of the problem is that the election cycles

and the political cycles are generally an awful lot shorter, so that those that are responsible for the original decisions are either the other party or the other politician or whoever else that we can blame and we can move on or, you know, there's some other excuse that, you know, well, we'll be different. It'll be different this time. We're better, we're smarter, we're stronger, we're faster, we're whatever.

And you get the same thing. Well, here's our 10-year protections. They never work. And, oh, well, OK, well, I'm only in office for the next four years, you know i'll get re-elected for another four years i never have to deal i never have to take responsibility for this stuff i just have to promise it and the bigger the promise well you know yeah it's just crazy yeah but but without any adults at the table um last chart for this conversation is this one which is again from b, from Brian Reitl saying that, well, current policy baseline. Again, this no wars, no recessions. Current policy baseline says that interest costs are going to go to two trillion dollars.

And again, you know, maybe maybe we're not the best at math on the fly, but 325 billion in 2018 to nearly you know 1.8 trillion uh what's that factor 500 500 almost 600 percent increase six-fold increase yeah unbelievable like again full stop like wow how come we're not like how do you how do you justify a full six-fold increase in your interest costs alone so the interest payment that you're making on your mortgage the interest payment that you're making on your car loan the interest payment that you're making on your credit card bill whatever it is this year right it's going to be six times that it's going to be six times that so tell me how you're going to pay for that that's what we're looking at here exactly so so i mean i look at all these things and this is why i'm irresponsibly long precious metals because it's not that i'm actually um i think prudently short that dynamic that we're looking at right there. You're prudently short everything else.

Yeah. Yeah. And where you started with this is, you know, all roads lead to gold and silver. I mean, that is the reality. Because if you realize that the Fed and the Treasury are boxed into a corner and they've got themselves into a situation where even if they do what they would have been able to do 20 or 30 years ago, and balance the

budget, if they were fiscally disciplined, it's now got so out of control, that if they attempt to be fiscally disciplined, they actually increase the problem that they're trying to avoid. So they have a choice of either being fiscally disciplined and making things worse or continuing to print money and see if they can continue to effectively kick this can down the road because it's getting it's going exponential it's going parabolic right it's going parabolic that's the that's the end game when we start to get to that situation they have i'm no central banker i'm you know i'm no economic genius

but in my mind they have no other tools in their toolkit so they're going to continue to print money and back to what i said when you've got something that is limited by nature being priced in something that is limited only by the width and the will of man well then the more that you print the higher that the price of that thing, is going to go when measured by that thing over there. And that's it. I mean, it's kind of that simple. That's why, you know, it's that hedge against uncertainty. It's that hedge against inflation

and inflation from the point of view of the increase in the money supply. So that's why you need to have that allocation to precious metals. Now, you look back and you see that over the last couple of decades, 20, 30, 40 years, and you see the growth in the national debt. And it was growing, but it still seemed to be kind of manageable. And then you get to that period where you start to see that parabolic spike. We're in that now in we're in that now we're in that now so an allocation to precious metals now is um is more important than it has

been for a long period of time despite the fact that it's at an all-time high because when something gets to an all-time high uh if it keeps on going up you've got all-time highs effectively every day um you know that the headlines the headlines of gold hitting an all-time high even though they are quiet as they are they're going to be silent fairly soon because it'll just be the same as yesterday goes at another all-time high today goes at another all-time high because if central bankers continue to do what they've always done and they don't give any evidence that they're not going to do that they're just going to try and print their way out of this because they've no choice but to do that well then it becomes a it becomes a mathematical decision at that stage

you have to keep some of your you have to keep some of your portfolio in precious metals and gold and in silver just to protect you, just to anchor you. Yeah, I agree. I don't know. We didn't talk about this yet, but very quickly. So a bunch of global fund managers are like, oh, it's just too restrictive, Dave. It's just too restrictive. But when I flip over to the global money supply, which is all the central banks, including China, which isn't even factored into this chart yet, because this is from a little while. I mean, that's as of 924. I'll guarantee you by 1024, this is going to be a very different looking chart because China just opened its monetary bazookas up but 7.3 trillion of new money year over year change just like you know even that isn't quite enough to keep all your fund managers feeling like it's frisky and frothy enough right um and so that's a oh my these are such huge numbers they really they really are i mean they

really are you just lose the the the ability to the ability to nearly reason with them and they get so big. But, you know, it's so restrictive. So they're saying that the money's, they're looking for even more printing. Is that what we're talking about? Yeah, never quite enough. We need more, more, more, more.

They're very unhappy. If you ask the junkie, you know, do you want more or are you all right with what you have? Yeah. What's the answer? Yeah. You know, but the other comparison points would be October of 08, April of 01, which, of course, they were correct that things were getting a little dicey then. So they have a sense that things are dicey, but money supply is absolutely anything but dicey at this point in time.

That's quite a lot. It's quite a big increase. Yeah. You know, this might have been too restrictive back here, I guess, by their standards. That would make sense. But this, and that's 2022. They weren't really even, they weren't really complaining too loudly then. Look at this. No.

Yeah. Nope. But now, anyway, just says that there's something out there and we can all feel it of course and and this is something that i encounter a lot uh in my daily thing where i just ask people from all walks of life but you know i have a sample bias at my site but i ask everybody cab drivers i was just at this rescue the rally thing whoever's there whoever i talk to people in restaurants and i just say um what's your sense of the future and back to your point of this uncertainty from all different directions they're just like feels like something's about to

happen it's just a sense that people have that's something not good is coming yeah it's it's you know it's an anxiety that that people feel when you've got an uncertain future. And because we have a huge degree of uncertainty at the moment, people can't, people are, you know, people are happy when they can project from where they are and say, well, my today is like this and my next year is going to be filled with an awful lot of similar todays. And I don't mind today. It's all, it's all, it's all well and good. So I know my future is kind of relatively certain and i can make plans for that but you factor in all of this uncertainty now and we've got this geopolitical tension we've got um and like you know nearly have to stop saying geopolitical tension because it's actually it's overspilled

from being geopolitical tension you know we've got we've got hot wars going on. When you've got that, that loss of that loss of society in certain countries, the loss of the human toll that it has taken, the impact that that has globally, the impact that that's having on um migration the impact that's happening having um on inflation on financial markets it's now we've got this uncertainty that's in the future which means that i'm finding it an awful lot more difficult to plan the future because i can't see the future looking like my today's. And when that happens, you start to get

an awful lot more anxiety in society. You get anxiety on an individual level, and it's not a comfortable place for a lot of people to be. They feel effectively threatened. So, you know, they start acting and living from a position of stress, activating their stress responses. They can't tell what's going to happen to their job in the future. They can't tell what's going to happen to their portfolio and their finances in their future. I don't want to make it sound like all roads, no matter what I say, lead back to gold. But there is that element of certainty in your portfolio when you actually add gold to it and that does help you to plan for the future

gold isn't always going to have the same price but it'll always have a price it's it's it's nobody else's it's nobody else's liability you're not depending upon somebody else to perform their job in order for it to hold its value. So these are all some of the kind of key benefits of gold from a, let's call it a portfolio anxiety reduction perspective, allow you to better plan for the future. At least I'll always have my gold coins. At least I'll always have my gold bars squirreled away somewhere. You know, it's Rick Rule. I had him on the channel once and he said investing in gold allows me to take more risk with the rest of my portfolio because I always have that.

It's the bedrock upon which I build my portfolio. He's an incredibly successful individual. You know, so I do tend to listen to him when he speaks. But that's what we're having. We're seeing that increase in uncertainty, which is an increase in anxiety and it's an increase in anxiety around the personal finances as well. And what is it that I can do for my future? You talk an awful lot about what people can do for their future in a lot of different aspects of their lives. This is only one small aspect that we're talking about here from a financial perspective. Yeah, and I love what Rick Rule says.

Also, you mentioned Luke Groman, very good people. One of my faves lately was, I just love him to death, Grant Williams, just such a class act. And he said in a tweet recently, he said, no matter, I've been going on about gold for quite a while. He said, and let me just be very clear no matter, I've been going on about gold for quite a while. He said, and let me just be very clear, however much gold you currently have, you do not have enough. And that's about as direct as Grant ever gets. He's very soft spoken, British accent refined.

He's very careful. Right. And that was just like, boom, straight over the transom. I can't steal that line because it's back to the comment about, you know, it's like your barber saying you need a haircut, you know, so. Yeah. Well, Dave, thanks so much for your time. For everybody else, I want to just let you know that GoldCore is a company. We have an affiliate relationship with them. I believe in them a lot. We research our companies very carefully. If you come to peakprosperity.com,

you can see GoldCore, read about it here, click through. We've got a special deal for people who come through this angle, but do not let anything prevent you from getting your gold and silver base wherever you get it from, however you get it. Everybody, I can be clear about this, everybody should have some allocation into that. In your hot little hands, just do it, right? Beyond that, for people who have more, you got to think about more difficult things like where and how much and all of that. And those are different conversations, but at a starting point, I'm pretty clear about this. i think i can say this without getting in trouble with the authorities everybody should have an allocation absolutely totally totally totally agree with that um and you have the link you have the link there and if people want to contact us uh have a little bit of

a strategy session strategy call with us and we talk you through what's going to be suitable for you in your situation your part of the world goals, what it is that you're trying to achieve. That's what we're there for. Excellent. And I don't know anybody who knows more about that. So yes, please, if you're of interest at all, give a call. And what I love, your team, your company, the reason we partner is it's no pressure. It's very low key. It's just doing what's right for the people, finding out. And sometimes the answer is it's not a good fit, but if it is, you'll work it out. And I trust you to do that.

Thank you. We try to build our reputation on that basis. It's easy to make a quick buck by not serving the customer well in the precious metals market. We're 21 years in business. We've seen the good times and we've seen the bad times. We've seen the bull markets and precious metals as well as the bear markets and precious metals. And it's the fact that clients come back to us again and again and again. They store with us and they store with us as well for a long period of time because we do what we say that we do.

And that's the basis upon which we built our brand. And long may that continue. And I really appreciate the relationship that we have with Peak Prosperity, with you and your team, Chris, and with your community as well. Excellent. Well, likewise, it's mutual. So for everybody else, thanks for listening. And I hope you got something from this. Leave your comments down below. Let us know if there's any other topics you'd like us to cover. Boy, we romped on some big geopolitical and macro kind

of data, but I think you have to start at the top, work your way down in times like these. So with that, Dave, thanks so much for your time today. Really appreciate it. Thanks, Chris. Always a pleasure.