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. Mario and Neko, great to have you back on Commodity Culture. Silver has taken a step back to around $65, looking like it wanted to break $70 multiple trading days in a row. Took a step back. Some believe the silver price is, of course, being managed through paper shorting in the futures market. Do you think this could be part of what's happening now? Because people are pointing out that just when it's about to hit $70, it goes back down again. Is this price being managed in your view?
Speaker 2Yeah, I mean, there's always some shenanigans going on. In the paper markets, I think the day that silver actually broke through $71, actually, that was, people thought, oh, now we're going to break out. That was the day that Fed Chairman Walsh spoke at Jackson Hole, and he used the word hike like four or five times in the first minute. But he wasn't talking about monetary policy. He was talking about hiking in the mountains. There in Jackson Hole with Ben Bernanke and other central bankers. And I guess the algorithms are so sensitive to what these guys say that they hammered the price of silver and gold. And yeah, it's one of the reasons why gold and silver are so frustrating in the short term, because they have these futures markets. And I think they. They were created for this reason, to keep the public out of gold and silver, the actual physical gold and silver. And we have proof of that, Jesse. It was some communication between the State Department, the US Treasury, and bullion dealers in London in 1974, just before gold was made legal again on January 1st, 1975. The bullion dealers said, well, one way to get Americans to not get involved in buying a lot of physical gold is to create a futures market, a speculative, volatile, risky futures market that would trap the public in it, and that would make them scared. I think the silver futures. That had been going on already for a while, actually, funnily enough. But I think that's what it's about. But eventually, despite the frustration, all they're doing is delaying the inevitable. And I think the fact that we are around 65 is great, because it took 45 years to break that 50 level. And I know we went to 120 or 21 earlier. But I think there's a lot more to come. The more the paper traders or the bullion banks and central banks try to manipulate silver, the higher it's going to go. And it's going to surprise everyone. But again, I will emphasize that you need the physical silver. You're going to be. When what I think happens, happens, the futures market will probably be not a great place to be. And yeah, so we just have to be patient. That's the main thing with gold and silver.
Speaker 1Yeah, absolutely. And patience, a commodity that's not in big supply at this point in time with social media headlines hitting everybody every day, all sorts of charts getting posted. Silver's about to break out. I mean, we're working towards the long game here. And speaking of which, because you mentioned silver's previous all-time high hitting above $120 intraday at its peak earlier in the year. At that point, many people thought this is it. You know, the bullion banks and those managing the price have lost control. We are now going to see silver's true price revealed. Obviously, we've seen downsides since then. As you mentioned, it's all about putting things in perspective, because if you talk to people in the middle of last year, they're going to be like, oh, we're going to lose. Last year, that silver is going to be at $65, $70. Many people would have said that wasn't possible. So I think we have to put things into perspective. But now that we are here back in the $65 range, how close or how far away do you think we could be from true price discovery in the silver market? And what type of price would that look like?
Speaker 2Well, I mean, it definitely looks like they're trying to defend that 70 level, 70, 71. And I think the reason. The reason for that is that silver closed last year just above 71. And it had a great year last year. It was up almost 150%. People forget that. But yeah, I don't know what's going to trigger it. But yeah, something's going to happen. And silver is going to move like it's going to. I mean, we saw $10 days, I think, late last year. You know, the CFTC, the bullion banks, they tried everything to stop silver. They try to stop people from taking delivery. That's what they don't like, that you take delivery from COMEX. COMEX, just like that, Wikileaks communicated that from 1974, is not supposed to. They give you the option to take delivery, but they don't really like that you take delivery. And yeah, they. They had those shenanigans. Black Friday, the day after Thanksgiving, the market was closed for hours because they didn't want people taking delivery and the market was going too high. And yeah, so I think we're going to see some big updates. Yeah, there will be volatility, but it's going to be to the upside. And I think it could be very quick. Yes, it took 45 years to break 50. And then it took. It was only a matter of months that we went to 120. So now I think, as Michael Oliver says, we're in a new paradigm, a new region for silver, unknown. So I think it could be very quick. It's not going to take another 45 years to get to 120, maybe four or five days.
Speaker 1Now, you discussed recently the potential for silver to become a tier one asset. Talk us through what that means technically and how it could potentially impact the silver market.
Speaker 2Yeah, I mean, I interviewed Nomi Prins, and she's the one who has contacts with the powers that be, like BIS, IMF, central bankers. And that's what she's hearing. I mean, it's what's happened to gold. As part of the Basel III rules, it is a tier one asset. I don't mean to say that all banks are going to use that as a tier one asset. I don't think the U.S. banking system and the Federal Reserve have implemented it. But the fact that they're talking about silver is very constructive. So silver would be used as like a high quality asset to measure the equity health of banks. So basically, I mean, that's how it used to be, I guess. In our great grandparents' day, banks that had gold and silver were solvent. Banks that didn't weren't. And yeah, and I think it's going to come back. But I think a higher price will help silver a lot more to become like a reserve asset for banking institutions because it will become less cumbersome. I mean, can you imagine? Storing silver at $20 an ounce, you'd need so much silver. It's much easier if it's at $500 or $1,000. So yeah, I think that's going to be the future. A lot of people downplayed the possibility of silver coming back as money or currency. I don't because I think things are getting so crazy. I'd rather have someone pay me in silver than in crappy fiat currencies that are losing value so quickly. And eventually, people are going to wake up to that and realize, well, silver up until the 60s was used as money. Why can't we use it now? And I know 1960s is a long time ago, but I was born in 1964. So that was the year, the last year that U.S. silver coins were 90%.
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Speaker 2Yeah, I mean, I think it's because there's a few factors, I guess. I mean, I'm not really a specialist. I know that the silver in China has a bit of a premium, but I would say it's because the Chinese people are a lot more, the retail, they're a lot more into silver and gold. And in the U.S. retail, they're a lot more into silver and gold. And in the U.S. And in the U.S. And in the U.S. And in the U.S. Much more into trading, into the paper market, ETFs and stuff like that, and futures. So that's why there's a premium, I think. And I also think there's a lot of buying of physical silver outside the U.S. And they're also taking advantage of this premium. They're draining the silver from the rest and taking it east. And the fact that there's still a premium for over a year is quite significant, I think, because you'd expect by now with the arbitrage for it to equalize, but it hasn't. So it just goes to show that I think the bullion banks and the people trying to manage the rise of the price of silver are, well, they're going to have a tough time going forward. It's I think we're getting close.
Speaker 1Let's shift to the gold market, because I had Matthew Pipenberg on the show recently. I know you spoke to him on your show recently as well. He said, basically, the only way to get out of the debt trap for the U.S. government here is to either revalue gold, which he saw as a less realistic proposition that they would suddenly come out and say, gold is now $20,000. But he proposed they just get out of the way, stop this market manipulation, and allow gold to rise up to potentially $20,000, which he thinks is a very real possibility. And then they could use that gold value on the balance sheet to address the debt issue to some extent, because it would be $5 trillion plus in new capital on the balance sheet, assuming, of course, that all the gold is there. Rand Paul's so-called audit didn't exactly inspire confidence. What are your thoughts here? Do you think the U.S. is in a
Speaker 2desperate situation? We've seen recently a secretary of the Treasury Investment intervening in the yen. They're probably intervening in the Treasury market to try to keep long-term yields down. But I would say if the Treasury wants to have its balance sheet padded up by $5 trillion, it has to do the statutory revaluation. It's not just a market price, because in the books, the gold is valued at $42.22. So unless they change that price with the Federal Reserve, who have the certificates, yeah, a higher price of gold will help, but it won't help the Treasury. It will provide liquidity, and it will debase the dollar, because a higher price of gold, is a lower dollar. And it's the only way, probably, for every country in the world to debase their currency. They have to do against gold, which is a neutral asset. You can't devalue the dollar versus the yen, or the euro, or vice versa, because it's a zero-sum game. So I agree with Matthew Piepenberg. I'm not sure they. I think all they need to do is to revalue it to around where we are right now. And that would, I guess, provide about a trillion, but it would give gold a real boost. And then they could do it again next year, from $4,000 to wherever the market might be then. Because I think if they revalue the statutory price to $4,000, that means gold will never go below $4,000 again. And that would be massively bullish. Especially for the miners, but for gold itself, because that's been done before in the 70s. They revalued it from $35 to $38 in 1972, then revalued again in 73, from $38 to $42.22. And that was the last time. But gold was already almost at $80 the last time they revalued it, and it never went back to those levels again, ever again. So yeah, they could do. Layered revaluations. It won't solve the problem of the debt. And I don't think they want to solve the problem of the debt, because that would mean creating a Great Depression, reneging on unfunded liabilities and social security programs. So yeah, I think that's the only way out to devalue versus gold. And I think other countries, of course, occurs that would follow.
Speaker 1And what would such a rise in the gold price, let's say they either revalued it to $20,000 at some point or allowed the price to rise naturally when we eventually got to close to that $10,000, $20,000 price tag. Would that have a negative effect on the dollar over the long run, or even in the short term? Or because there is really no alternative to the dollar for global trade and as the world's reserve currency, do you think the dollar would still potentially be able to hold up in that situation? I don't know. I don't think so. I don't think so. I don't think so. Well, the dollar
Speaker 2will hold up versus other currencies because the other currencies are still a derivative of the dollar. If you go back, if you do the regression theory analysis of fiat currencies, you have to go back to 1944. So the dollar will hold up versus the euro or the yuan or the pound and every other currency. What it's going to do is it's going to hold up versus the euro or the pound and every other currency. What it's going to do, the revaluation would do is make every fiat currency, the dollar included, weaker versus real goods because ultimately gold is the best measure of value. And if you devalue your currency versus gold massively, it means, yeah, people know that it's not worth as much. So yeah, the affordability crisis would get us into a situation where the dollar would hold up versus the euro or the pound get much worse. But I think politicians and central bankers would rather keep the system going and keep people at work than have deflationary collapse. And they can always send some checks to people from the revaluation. Let's say they revalued to 10,000, which would mean they would get like, I think, 2.5 trillion or something. They could send a trillion to the public, to the people who earn less than 100,000 households that earn less than 100,000, just like during COVID. But of course, yeah, it will all be temporary. It's madness. And that's why, yeah, even if they don't do that, they're going to have to keep things going somehow. I think revaluing to 20,000 would be too drastic. I think, as I said, 4,000, and maybe next year, if we were at 7,000 gold, they could do it to 7,000, and so on and so forth.
Speaker 1Well, yeah, what you mentioned is a real problem with democracy in that these people are serving terms, and their goal is to just keep it all afloat. And, you know, let's be honest here, extract as much wealth as they can for themselves and their circle of insiders, before they get out of office. A lot of these people couldn't care less what happens when they're no longer in office. They'll go on to some cushy job. but some think tank getting paid a high salary, and they'll no longer be accountable for anything that happened under their watch. So I think that's one of the downsides of the way that the political system is set up in the West. Now, let's look at the scenario where everything falls apart, because the US recently surpassed $40 trillion in national debt. You mentioned the off balance sheet liabilities like Social Security, that continues to expand. And meanwhile, the yield on treasuries continues to rise, especially in Japan. I mean, Japan's yields are just getting to historic levels at this point. But we'll focus on the US for now. Besant, of course, announcing a doubling of treasury buybacks, potentially even more to get the long end of the curve under control. The situation looks dire. What's the result if they can't get this under control, and it all collapses? Because obviously, you can keep kicking the can down the road. There has to come a point where the game ends, though, right?
Speaker 2Well, I think if it all collapses, and by that, I guess, would be a bad recession, the AI and tech sector crash. I think they'll try to print more. They'll throw the kitchen sink at it. And I think it will fail miserably. I don't know exactly what will happen. But yeah, it could be the trigger for a recession. Or it might not succeed. Everything, they could print, and it doesn't help. And gold and the miners might go down, but they will go down a lot less than the tech sector and other assets that have gone up so much over the period since the early 80s. So yeah, in relative terms, it's not going to happen. So even we might lose out, let's say, the gold price might fall 30%. But if the stock market in general falls 90%, then you've done really well. So yeah, that's the other thing that could happen. If they succeed, though, in printing and getting the market back up, then it's also going to be gold and silver and hard assets are going to go through the roof. Just trigger the currency collapse or crack up boom or hyperinflation, because then people are going to realize this inflationary money printing thing is not temporary. This is going to have to keep going on forever. And they're going to realize we don't want this currency. Right now, people still think that the fiat currencies, the dollar, the euro, the renminbi, and the pound are still stable. But I think that's the way I see it. It's difficult to say exactly what. But no matter what happens, I think having some gold and silver outside the system is wise.
Speaker 1I completely agree with you. You've mentioned the miners a couple times here. I would love to get your thoughts there. A lot of people I've been talking to on the show have been pointing out that despite the recent rally, a lot of these names are still undervalued, including the majors, the big names like Barrick, Newmont, Technico, Eagle, the big royalty and streamers like Wheaton. They have all appreciated considerably over the last few years. However, compared to the price of gold and silver where they're at right now, many say they're very undervalued. I'm wondering what you think about the miners right here and if you're still seeing opportunity in them and potentially which areas of the mining sector you're looking at right now.
Speaker 2Yeah, they're still undervalued versus gold. And of course, versus the rest. I think if you look at the market, even more, I think if you look at the Philadelphia gold and silver index ratio to the gold price, we're way below where it used to be even during the bear market in gold from the early 80s to early 2000s. So yeah, heavily undervalued in terms of, I mean, the miners, I look at them as more speculative, but I think the way the world's changing, the mining producers, the big producers, they'll become the liquidity providers of the future system, the gold money. In terms of what I'm looking at, I mean, I don't know if you know, I was invited to join the board of a royalty company at the beginning of the year. So I think royalties are interesting. Yeah, it's called Chancery Royalty. It was still private. And I think they're interesting because you don't have the problem of managing the mines. You just have a, you put a certain amount of money into a project and you receive a certain percentage in gold or in dividends every year from that company. So I think royalties are interesting, but also just any gold and silver miners, I think it could be a little bit like the dot-com bubble. You buy anything with dot-com, you're going to do well. And of course, there's the junior explorers. They're very risky. I'd say like one out of 10 might succeed or even less. But if you buy 20 of them and one of them is like a hundred bagger, you do well. So it's that kind of sector. Of course, the Barracks, Newmonts, the First Majestics in silver, those are good companies and they're paying dividends as well. Their cash flow is huge. And I think the general public is still not awake to it. And there's very little investable percentage of investable assets in the precious metal sector, mainly because the stock market and tech is still quite elevated. But I suspect that if we see a big correction in the general stock market, we could see people say, well, let's put a little bit into the mining sector and a little bit of like trillions and trillions in the general stock market would be like, yeah. There's that analogy about Niagara Falls, putting the Niagara Falls through a hose. So that's how I see it.
Speaker 1I loved your comment there that it still hasn't really caught on with the general public because we live in an echo chamber where me and you were talking to people about gold and silver all day. We're talking about it all day. We're following that community on X. So to us, it feels like, wow, it's a mania. Everybody's in on it. But if you were to go into any financial institution and talk to a financial advisor and ask them, what do they think about putting your money into gold miners? They'd probably laugh and try to usher you into an S&P index fund. I mean, it is completely off the radar of the vast majority of people. So I think we're still very early. That's that's a great point. I want to talk about war. You released a very interesting video on your channel called If World War Three Breaks Out, What Happens to Your Money? And as we sit here today, these wars continue to expand. We're seeing Iran striking U.S. bases. We're seeing allegedly killing soldiers, depending on which sides spin, you believe, in the media. The U.S. apparently striking a wedding ceremony in Iran, killing at least four, wounding over 50 other innocent civilians. I think at least one child was killed. Now, again, you're getting different media spins on that. One side saying it's actually Iran that shot a missile and it misfired. The point is that the conflict isn't winding down anytime soon. I mean, massively heating up major strikes going back and forth, particularly by Russia on Kiev recently. And Zelensky threatening that, you know, it's not safe to fly in Russian airspace anymore. I mean, this is getting really crazy. Of course, you still have Israel and Lebanon. I mean, the list just goes on. We certainly could be on the verge of a World War Three scenario here. Could you walk us through the potential financial and economic dangers ahead? Yeah, in that video
Speaker 2I did about a possibility of a World War Three, I went back in history and looked at 1914 when, at the time, the Great War, they called it, before the Second World War, kicked off in Europe. And things don't really repeat perfectly. But what happened was that when the war broke out, Now, yeah, the financial markets froze. London was the center of world finance. And it ran really well under a gold standard. It ran through, the gold really never changed hands. It was bill of exchanges. But once a war breaks out, everything becomes uncertain. And people want their money. And at the time, it was gold or cash. paper promises or more gold and and they had to shut the stock market till the next year early uh 1915 even the u.s stock market was closed uh new york was closed even though the the u.s was didn't join the war right away of course so um as i said it's not gonna if we do have uh something happen in europe and it seems to me and uh i i'm like switzerland i try to be neutral i only observe it seems to me that the european leadership the people in charge of the eu and the uk they've got a death wish they they keep provoking russia and i think they've been very patient the russians but were they to strike targets uh in western europe i think uh yes the markets are going to be yeah they they could change the way they do it but i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work and i think it's going to be a lot of work
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