Speaker 1This is the Commodity Culture Podcast, where we interview prominent investors, fund managers, analysts, and company CEOs to give you an edge when it comes to investing in the commodity space. Lynette Zhang, great to have you on Commodity Culture. I want to start with recent price action in the gold and silver market because the despair is ringing throughout social media, and of course, with good reason, we are seeing silver down over 5% on the day, gold dropping fairly dramatically as well, I believe down around 2% as of the time of this recording. This is a continued downtrend that began since all-time highs late January, and of course, it seems like since the war in Iran started, that has only exacerbated the situation. A lot of people, stackers out there, particularly in the silver space, thinking of throwing in the towel. I wonder what your thoughts are. On this recent price action, buying opportunity or perhaps a time to be cautious?
Speaker 2First of all, what you are referring to are contract trading prices, not the price for the physical metal itself. And when you're referring to silver, I counted, and this is not an exhaustive list, but I counted 36 different global users of physical silver. I'm pretty sure they did not. Just evaporate. But what is happening? Well, interest rates are rising, right? And they're anticipating because there was such a hot CPI inflation read that came in that the Federal Reserve is going to have to raise the rates. And then why in the world would you want gold and silver that doesn't pay you any interest? Wouldn't you much rather have a piece of debt? Because they're going to pay you back in more pieces of debt? Something really interesting happened last week. And regarding this, because I do a live every Tuesday, and I'm used to hearing or getting the question, what's happening with gold and silver, when what people are really asking me is what's happening in the spot trading markets. And this last time, I got, well, actually last two times, I got absolutely zero questions on it. And even as spot gold dropped, I think. 50 or 60 bucks or whatever that was, whatever that number was. And I was surprised. And I said, wow, nobody's asked me about the price action in the spot or futures contracts on gold and silver. And my audience came back and said, that's because you've taught us so well that what you're looking at, everything has become a big trade. Have you noticed? Look it, I'm going to bet on whether or not. The Federal Reserve is going to raise rates or lower rates or whether the sky is going to be blue or green or whether a football team is going to win or lose, blah, blah, blah, blah, blah. Everything has become a big trade. So what I strongly suggest, and I'm happy to pull these up right now because we pulled them up yesterday to take a look. The truth underneath, if you look at the available silver and gold stocks for delivery at the COMEX, they are down. Somebody that understands what is happening is taking physical delivery of the metals, regardless of what the spot markets are doing. And we have all these conversations around the hyperscalers and the hyperscalers need an awful lot of silver and they're not price sensitive because they're borrowing a lot of money to buy it. And once you take on debt, boy, that opens up your pocketbook a lot. But I would encourage people to not believe Wall Street's lie. That is their job. And their job, they're just about picking up the difference, the arbitrage, whatever. And it's about the flow of funds. It is not about the valuation and the true fundamental value of an ounce of gold or an ounce of silver. It's where is the hot money flowing to right now? Let's everybody go to that trade. Let's everybody go to this trade. And it's all because so much of this garbage has been pushed into the system. So really, has the. Hey, did you see the headlines? The dollar is really strong against emerging markets. What does that really mean? It's relative, but has it gotten cheaper for you at the grocery store or the gas tanks or the insurance or any of the products that you need? You need to eat and live with on a day-to-day basis. So tell me, how strong is the dollar? Do you still believe the Wall Street lies?
Speaker 1That's how I feel. That's a great summary. And speaking of big players buying the dip, so to speak, China recently adding to its gold reserves at its highest rate since three years ago, its highest monthly purchase. I believe this marks the 23rd consecutive month of central bank gold buying by China. So that's a very interesting thing to note. It seems like they're taking advantage of these low prices. Is that how you read things?
Speaker 2A hundred percent. And who can manipulate the price better than bankers? I mean, look at these contracts. That's what you're watching. But it can be anywhere from 500 ounces of gold. And now we've got perpetual contracts in spot gold and spot silver, right? They call it democratization. I call it risk transfer. But it's also fiction. I call it fiction. And it does not reflect the true fundamental value of an ounce of gold or an ounce of silver or an ounce of gold. And so when I see these prices, it's on sale. It's a flipping bargain. Even at the peak last February, it's a bargain because governments need to suppress the price of sound money. Money that they cannot inflate away. And even with these dips, it still preserves your ability to purchase the same food stock and your ability to save your life and to purchase everything that you need. Gold expands that. It's the anchor. Silver is the fuse. Look at the data. It doesn't matter what happens on a day-to-day trading market. None of that matters in your life unless you are a trader, right? Which is not something. I advocate because. But it is a reality for a lot of younger people that are coming up in this world. And they were all given this promise. I mean, the American dream. Work hard. Go to school. Do this. You can buy a house. You can educate your children. You can go to college. You can retire. You can go on. And people around the world, the younger generation around the world is coming up to these promises and going, wait a minute. No. I can't. And so, if you can't see. Like, I grew up in the 60s, right? I was born in 54. There were so many opportunities that I could see for myself. But the younger generation coming up now, what are those opportunities that they see? Maybe gambling might get them to where they think they want to go because the traditional role that we were sold. That's not going to work anymore. So, that's what we're seeing. It's the gamification and the trading of everything. We're at the end. This is typical.
Speaker 1And, of course, increased capital controls also coming into play. Digital currencies being rolled out. You know, interestingly, you released a video on your channel about Russia rolling out the digital ruble. This happened September 1st. This isn't being mentioned by many people. They moved from pilot program to nationwide rollout recently, September 1st, as I mentioned. They're framing it, of course, as an effort to bypass sanctions and the U.S. dollar system. But it also allows direct state control through a fully visible transaction ledger. Should we be concerned here? Is this really just an effort to evade the U.S. dollar system? Or do you think the Russian government is seeing this as a tool of control over the currency?
Speaker 2I think we should see this as a complete tool of control, not just over the Russian country. Because right now. The public is saying, oh, this is optional. Except that the rails are being put in and those large corporations are required to build those rails. So now. And the reason why this is so significant, because it's happening here. It's happening all around the world. It's not just happening in Russia. That regardless of what's been happening with the supply chains and the breakdown and those being brought back, the financial supply chains have only been. They've only been getting integrated more. And people need to understand that this is how they do it. This is my ship of Theseus. And it asks a thought. It's a 2,000-year-old thought experiment. If you replace the plank of a ship one plank at a time, is it still the same ship? And by the way, how do they do that when we're all riding on the same ship? Well, I think that that piece on Russia. really shows us quite clearly how they're doing it. Because if you go to pay at the cash register, you're paying with that rail, even though you don't know it. And so now, invisibly, it's integrated into day-to-day life. And they can sell it like, well, this is going to be more efficient, and it's going to be safer, and it's going to be this, and it's going to be that. But once all of these rails are fully in place and integrated, can they not be modified and tweaked for that full surveillance? You know, you should always look. It's okay to look at, what am I gaining? There are a lot of good things that are coming out of all of this technology. And so there could be some really good gains. But you also have to look at, what am I giving up? We're only taught to look at what you're gaining, because they don't want you to understand what you're giving up. Because I believe that once you do understand what you're giving up, then you go to make sure that that does not impact you. And I'm holding up sound money outside of the banking system, because these rails mean everything passes through banks and governments and private corporations. And banks are private corporations. Central banks are private corporations. So who do you want dictating what you can and cannot do? Amazon or the Federal Reserve? And what's the difference between the two?
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Speaker 2Wow, that's a great question. But remember, they need to make it seamless. And so the way that they do it is they keep things looking as normal as possible. Remember, I was alive in 1965 when they took the silver out of the coinage here in the US. And what did they do? That new dime looks. Identical to the other one, except the new dimes have a thin layer of copper color and the silver dimes do not. Well, it's the same thing. And it goes back to what I'm talking about. If the payment rails underneath the system means that you're actually using the system without even being aware, then it's what, the lambs to the slaughter, isn't it? Because you don't even know that you're participating. I didn't know I was participating in this. I was young, but I used to listen to my parents and my aunts and uncles talk around the table on Friday nights when they play penny ante poker. And I never heard them talk about this. And I used to love listening to their conversations because they'd talk about the depression and they'd talk about World War II. They talked about a lot of really interesting things to me, but they didn't talk about the transition of the money. Even though my uncle Al had safes full of one ounce gold coins when it was illegal to hold more than five ounces. So I think that this is not just a European issue, though I did see Jensen Wong come out this morning and say that he's putting $2 billion into the infrastructure in Europe now. He's going to focus all of that circular money there. I mean, this scares the crap out of me because it is. There's a huge crisis that is waiting to happen. And what are they waiting for? Enough of the new rail payment rails, and then there'll be no reason to hold it together, would it? They need a big crisis to make the transition. But yeah, how do I think it's going to impact not just people in Europe, but I mean, it's happening here. It's happening in Canada. It's happening everywhere around the world. This is. This is why it is so critically important, the sound money movement, Citizens for Sound Money, to get redeemable gold back in the system again. If we fail to do that, I mean, you know, they don't like what you say, what you do. I mean, there's already a big move to self-censorship. Look what happened during COVID. I could say that word now, but if I had said that word in 2020 or 2021, I would have been out of business. Just like that. So they've already gotten us to self-censor. Now, this next step, people, you need to be aware that these rails are being built. They are not slowing down at any level. They are building them as quickly as they can, and then we'll get a big, huge crisis, and then we're stuck. So you better lay in your sound money now. Keep stacking. Don't believe the lies. Keep stacking. And get food, water, energy, security, barter ability, wealth preservation. Build that community around you and shelter so that if they say jump, and you have money and all of those surety and all of those other assets outside of the system, you can say no. If you don't do that, how can you say no? You'll have to feed your children. Let's
Speaker 1speculate on the crisis side of this, because using a crisis as an opportunity to reset the system or to push through certain legislation that would otherwise have been untenable politically, I'm thinking post 9-11 with the Patriot Act and all of those things, the hollowing out of government institutions replaced by private institutions. This goes back to coups around the world, the Chicago school style of economics, where disciples of that particular school would go around to South American countries and take advantage of coups that occurred there and put in new economic shock reforms, all of this. In today's landscape, do you think that the crisis could come in the form of AIs wiped your bank account, hackers wiped your bank account, some sort of financial attack? What's your theories? And obviously, we can only speculate here on what kind of crisis the powers that be could use to push us into this new digital system.
Speaker 2I'm pretty sure, I mean, we'll find out, and it's something I certainly cannot guarantee, but I'm pretty sure there is a ginormous financial crisis that is looming. But we are already experiencing a crisis of confidence. I mean, those numbers and with the CPI print, you know, and even with the, okay, I'm saying the CPI print, the inflation print, but what is your, what is your lived experience? Is it only 3.7%? Because I'm thinking it probably isn't. I'm thinking that it's much higher than that, and it is compounding. So, you know, on some levels, we're already seeing crisis around hunger and food, which is typically the biggest issue for people as we go through these transitions. We've got the crisis of confidence, you know, so yes, I do think it'll be a giant, I mean, look at the AI bubble and all of this circular financing. I'm going to borrow money. I'm going to lend it to you. You're going to buy my products. That makes me look like I have better income on my books. But if everything is based on borrowed money, I mean, look at what's happened. Hyperscalers used to fund everything from cashflow. Now they're cashflow negative. Now they're funding it from debt. And they're competing with governments for that debt and interest rates are going up higher. That means that it's costs more to finance all that debt, let alone the debt that the people in the public have to pay to take four easy payments to feed their families. Yeah, it'll be there. I think they're in some ways we're already inside of a financial crisis for a good chunk of the economy. That's that K shape down at the bottom. I'd say they're already there. And I can also say this. I've done so many studies on what happens to people during these transitions. And let's face it, if you are already at the very bottom and you're starving, I'm not sure how much lower you can go. It's the middle class that typically has the greatest shift because those at the top of the K, they have the gold. I was just looking at the ultra rarities chart. These are coins. These are slabbed pre 33 coins that are multiple millions of dollars for one ounce of gold. And that chart's going through the roof. Right. So what does that tell you? Tells you smart money is protecting their wealth. So those at the top, they'll be OK. Those at the bottom can't be much worse off. It's all of us in the middle that take the brunt of it. And yeah, I think, you know, what could happen with a rogue AI agent? Could it wipe out everything or just block you? What I've been trying to get people to see and understand is that when we were on a sound money system, look, I held the asset myself. I held it. No intermediary, no permission. I held it and I could utilize that asset whenever I wanted to. Then we started shifting into a permission based system. Well, permission based system. I mean, have you ever tried to use your credit card and it's been declined or have you been debanked or or any of that? These payment rails, you need permission to access them. And as long as nothing's going on, everything seems normal. You can use it as you will. And no problem. What do I have a problem for? I can use all of it. But what happens in a crisis and what happens when the law is passed? When the lender says no in all of this circular financing. Circular financing is dangerous because it is a chain of defaults, also known as a doom loop. And I've also been working on a whole series of doom loops because it goes through the intermediaries. Those are the ones that are going to say yay or nay on more debt, right? That's it. Print more money. Well, print more fiat money because it's not sound money. It's designed to transfer wealth. And, you know, I don't know exactly when it's going to become absolutely apparent to everybody, but it's pretty apparent to me right now.
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Speaker 2We'll think that this is future, but I think her name is Beamer or I don't know, but this just came out where the UK, the Bank of England is the very first G7 country to issue digital native debt. Okay. But then you had the government come out and say, well, we're probably going to postpone it because frankly, all the payment rails and this that we've done and that they've done, that's really going to do that. Anyway. So I really don't think a CBDC is going to make any difference. A rose by any other name smells as sweet. And you do need to understand that those payment rails, those rails of control of the entire system are being laid in right now and have been since, well, probably prior to 2009. 2009 is when they got serious about it and, you know, brought out, Bitcoin. Is that a coincidence? I don't think so. And I don't think it's a coincidence that it looks like this or that it was sold as digital gold or anything else. I will say something that is kind of amazing to me. And you might have some insight on this. I don't know. People that flew to Bitcoin because it was outside of the system and was private and all of these people, you know, they were like, well, I don't know. I don't know. They were like, oh, I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I still believe that. And that's kind of like, I kind of go, really? Because they built a whole ecosystem around Bitcoin and cryptocurrencies. Hasn't it kind of been taken over by Wall Street? Do you have any insight on that? Because when somebody, it seems to me like when somebody is married Bitcoin, they have married it, period. And nothing that happens seems to change their mind.
Speaker 1Yeah, well, I can give some insight as somebody who used to be very interested in Bitcoin. It was the first, one of the first assets I invested in, I think, physical silver was the first thing I bought. Next was Bitcoin. I self-custodied. I put it on a cold storage wallet. I did everything you're supposed to do. And there was recently a major hack of the cold storage wallet called Cold Storage Wallet. And I put it on a cold storage wallet. And I put it on a cold storage card. Now, Cold Card was touted by all of the Bitcoin experts as the most safe, secure cold storage wallet in the world. It was even air gapped, which means it never touched the internet. You would use a little micro SD to sign transactions and then connect it to the computer so that the cold card itself never touched the internet. So this was the ultimate insecurity, very complicated device to use and set up. And so very fortunately, I found out about this hack early. It was only by a couple of days ago that I found out about this hack. And I was like, by chance that I happened to be on X and people were posting about it. And it my model of cold card was affected. They were all getting drained, because many believe it was an inside job. There was a bug with the way that this particular cold storage wallet generated your seed phrase. Basically, this is a 12 to 24 word phrase that allows you to access your Bitcoin no matter what you don't actually need the device itself. You can destroy the device and you could enter your seed phrase into another device and access that Bitcoin on the internet. And so I thought, well, I'm going to do this. I'm going to do this. However, there was a bug in how it generated these seed phrases. It did so in a more predictable manner that it was supposed to be done. And hackers, many believe to be from the cold card company that that's the theory out there. Let this hack light let this bug lie dormant for five years. So people could buy these wallets and build up their Bitcoin in them. And then they suddenly started executing these hacks using AI to crack these seed phrases, because they were way weaker than they were supposed to be. This is a long spiel to say I no longer have a believer in Bitcoin, because the interesting part is, you think about the idea is you store your own Bitcoin and you remove counterparty risk. But nobody thought of the cold wallet manufacturers. Aren't they a counterparty you're trusting? How many other wallets have other bugs? We recently saw another hack through Ledger devices, which is another company that sells cold storage wallets sold through a re approved retailer approved by the company in Asia. Well, that company was opening the ledgers and inserting a little SIM chip, and then resealing everything. And that SIM chip was able to read your seed phrases, it was generated, and they drained hundreds of millions of dollars from these wallets. So I mean, you tell me is Bitcoin? Is it free of counterparty risk? Even if you self custody? No, it's not. So that's, that's my opinion there. And my personal experience, I've started unloading my position of Bitcoin because of that. And I'm no longer among the true believers.
Speaker 2in that thank you i'm glad i brought that up because i did an event a couple of weeks ago and um it was pretty interesting because there were definitely people there that you know are just married to this technology but i'm so glad you brought up counterparty because really what's been happening over time is that the public has been moved away further and further and further from actually owning any assets and this next leap into a completely surveilled economy i mean are we going to allow that to happen i mean sometimes i feel like don quixote you know jousting at windmills because this is so huge and no one person can't do it but it's so critical you know i'm so glad that we're able to do this and i'm so glad that we're able to do this and i'm so glad that we're able to do this and i'm so glad that we're able to do this
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