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You are a macro ecnomist with over 20+ years of experience. You hold a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003. You are a founding partner of Cleveland Research Company, where he worked from 2006-14.... |
Q: Do you think we are now close to a point where the West's manipulation of gold, among other markets, begins to fail as physical overpowers their leveraged financial tools as it relates to gold specifically? Yes, I do. If so, do you think prices are more likely to return to equilibrium gradually, or would you expect ... |
A: I think it could go either way. I think the key takeaway is that based on what China has done, what Russia has done, yuan oil, yuan gold based on the flows that we have highlighted in recent weeks, the reversal of flows, gold outperforming real rates, gold outperforming, treasuries in terms of downside, volatility, ... |
Q: A lot of US gold and gold mining investors have been suffering the last ten years. Everyone has seemingly been getting rich, while US. Gold investors are waiting for that imminent price explosion that doesn't ever seem to get here. What are your thoughts about timing, conviction on the price of gold and miners one, ... |
A: Yes, I think we're all going to get paid for patience, particularly as it relates to gold bullion and certain miners. I don't know about all of them broadly, but certain miners. And the question, of course, is when. Again, it's a function of rates. It's a function of energy. Interest never sleeps, and depletion rat... |
Q: You talk about the recapitalization of gold as a potential outcome of US. Fiscal turmoil. Can you provide a rough back of the envelope math to the three revaluation scenarios? |
A: One, gold revalued to shore up a dollar balance sheet. Two, gold revalued to equal value of dollar priced commodity flows. And three, if gold were reweighted in wealth management portfolios from negligible percent to adequate percentage. Gold revalued to shore up the US. Dollar balance sheet. There'd be a 3x to 20... |
Q: How do you see inflation impacting housing prices? Is it supportive, unsupportive, or both? Feels like prices have to come down due to affordability, yet they are also an inflation hedge. Any thoughts? |
A: I think it's going to be like some other asset classes where it's probably negative for a bit and then positive. It depends on what happens with real rates. And ultimately real rates have to get very negative. But if they get really positive for a second first, in other words, if asset prices crash, if bond yields s... |
Q: I understand the issues with fiscal dominance. I understand the issues surrounding the relative international investment positions of countries like Japan and Germany. I also can see your logic regarding the BRICS countries settling trade differentials in gold. However, in the words of Edward Murrow, anyone who isn'... |
A: Given the framework and the context that you laid out that we've talked about a lot, I think the big gears for the next several months in particular, are the dollar and oil. If they don't get the dollar and oil down a lot soon, I think you're going to get into a very vicious cycle of dollar up rates up, risk off, do... |
Q: Something is breaking, we just don't know when. As Dan Oliver pointed out about the wave crashing, I wonder, is this the crest that breaks the bank? My question is, why can't we hide with part of our currency in Swiss francs? |
A: I don't save in the Swiss francs just because here in the US. I'd rather be gold and Bitcoin. They're more volatile. I understand that, but I wouldn't disagree in terms of if you want to hold a foreign currency, I think Swiss franc. If it's not dollars, I think Swiss franc is probably your next best alternative in ... |
Q: You've repeatedly stated your overweight gold and gold miners. Are all of your gold in physical custody? What about Gold ETFs? Any potential problems? |
A: I own gold in physical format, gold bullion. That is my primary exposure. It is custody at a non bank custodian in the region. In terms of there are vaulting services in various big cities where you can store that are not affiliated with a bank. If you look those up, you can find out about those. That's where I have... |
Q: If you had the opportunity to hold mutual funds of oil or gold equities hedged in Swiss francs, would you choose to do so? If not, why? |
A: For me, it's a personal choice, understanding that what we're seeing should squeeze the dollar higher, number one, even as everything else kind of comes unhinged. But then, number two, I live in the US, spend in the US. So for me it's dollars. If I lived in Switzerland, I probably would store a good portion or in Eu... |
Q: We just made you president. Congrats. You have a compliant Congress, Fed, and electorate. What three steps would you take in the next four years to revitalize the world's largest em emerging market fly over America? |
A: I would implement industrial policy and the Defense Production Act to pay for trades education along with wage subsidies for young people. So basically what I mean by that is you get a free education and every welder comes out making $350,000 a year thanks to the US government, auto workers, machinists, et cetera, p... |
Q: Given your view on long duration sovereign debt and real terms, could you clarify your position on Tips with long dated real yields at around positive 2%? |
A: If all you can own are Tips, if you can own gold, then I guess that that's fine. And there's probably certain retirement accounts or 401K choices where maybe that's the case, depending on your employer. I would rather own gold bullion as a long duration asset, along with commodities, et cetera. The reality is the US... |
Q: If the total amount of US debt is pushing the economy to the point where it's crowding out other investments, if the foreign buyers are beginning to be sellers, and if there are not enough replacement buyers, that leaves the Fed itself, either through QE or through open market purchases. Branding stabilizing the ord... |
A: What I'm asking really is what it means. As the interest burden mounts on debt that exceeds over GDP, at what point does it become a house of cards and who pushes it over? Because if we are in need of funding, we satisfy that need by buying our own debt. What's really happening, what we're really talking about is de... |
Q: On or near September 17, there was a large and sudden spike in the two year treasury yield, perhaps best summarized by Nothing Special Finance, as this occurred during pre market trading on a day following Quad Witching and with japanese markets closed for a holiday. It appears there may have been a liquidity transi... |
A: It's a good question. I saw it. I watched it. I saw it described and explained away as nothing or an accident or a fat finger or a data feed error. And I was inclined to believe that until I saw treasury markets that week be very sloppy all week. And so maybe it wasn't nothing. What was it? I don't know. But the tak... |
Q: What percentage of interest stimmies are going to foreign countries? Isn't this a difference when compared to government handouts during COVID Yes, it is a difference. |
A: Around 25% of US treasuries outstanding are held by foreigners. It's also a political question. 5% interest on short term Treasuries. If China's 800 and whatever $50 billion in holdings were all in short term Treasuries, they're getting 5%. That's $40 to $45 billion we're handing to China. By way of comparison, that... |
Q: Could you expand on your Bitcoin enthusiasm a bit more specifically? What do you like about it as an asset? Unlike gold, the physical properties are not there, and mass acceptance as a medium exchange store of value does not seem anywhere on the horizon. For me, Bitcoin is a function of market liquidity and will ris... |
A: So from the end first, yeah, I think it's a great liquidity metric. It's very sensitive to that, as it's shown. And I do think that liquidity is going to have to come for reasons we've discussed. For me, the proof of work dynamic. The energy that has to be expended both to mine the Bitcoin and then to keep the netwo... |
Q: What is the best way to hold cash? |
A: Money market funds. Seems to have everyone in them. Makes me nervous. Feels like a lesser of two evils type of choice. No, I think money market funds are fine. They're holding government debt, you're going to get paid and they've got higher yield, generally speaking. So I've got a whole lot when I have overweight ... |
Q: what extent will using or holding foreign currencies act as a successful buffer or hedge against a dollar sovereign debt crisis, central bank digital currency mandates and currency devaluation if possible. Can you speak about the Canadian dollar, aussie dollar and Singapore dollar in this regard? |
A: In my opinion, given the structure of the system as it is today, I would rather own dollars, gold and a little bit of bitcoin dollars should get squeezed higher along with gold and bitcoin once the liquidity comes. Bitcoin, I think needs to be scaled appropriately for every investor individually depending on its vol... |
Q: You often talk about the US being able to inflate the way out of the debt problem. My math suggests it's not really true, given so much of the budget is in real terms, and even as you inflate your way out, the debt spiral of rates takes hold. Don't see that much value of even devaluing the debt balances by 50%. You... |
A: If you do one year of 40% inflation and you yield curve control at three, you're going to decrease the debt to GDP by 40 minus 337 percent. So that's where this has to go. There's a lot of gnashing of teeth and dragging of feet and hoping it's not true and praying for an energy miracle, energy productivity miracle. ... |
Q: What if to fight all the inflation and issue and as part of a central bank digital currency rollout, us. Treasury decides to demonetize any $100 bill, would it not instantly bring in productivity that helps them? |
A: I had to look up how many hundred dollars bills are outstanding. According to the Fed's website, there are 18.5 billion $100 notes outstanding. So if I'm carrying my zeros right, 18 and a half billion times ten is 185 times another ten is $1.85 trillion in $100 notes outstanding. That if you demonetized forced peopl... |
Q: As fiscal dominance plays out in the US. And the Fed restarts QE and yield curve control, what happens next? Would financial repression take over and the high inflation versus yields resolve the debt issue over time? Or would a default and restructuring the debt be the most likely outcome? |
A: You can't default on the debt. It's the collateral. Underpinning everything else, they default on the debt as a restructuring. It's Armageddon. You just can't do it. So they're going to have to make it money, good collateral. They basically have to fully reserve the debt. What that means is they have to print the mo... |
Q: I agree that gold's presence in a portfolio is a must, but one thing the US and its allies can't afford at this point is for investors to question the value of the dollar versus tangible assets. To what extent do you think the US will try to postpone, suppress and even block its citizens to act upon the inevitable ... |
A: I think the US has been doing this for 40 years already. When you see sell your gold at we buy gold stands, gold is useless. Empty out your drawers. Hey GLD, get rid of that physical gold bullion in your portfolio. It's heavy, it's inconvenient, it's hard to buy, and instead sell it and buy GLD, it's a low fee and i... |
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