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. Chris Marcus, great to have you on Commodity Culture. I want to kick things off by discussing the silver market and some bold predictions. We've had a lot of price predictions for silver on this show recently. Had Michael Oliver on, he thinks we're going much higher than $300 within a year. He's pointed out that perhaps he wouldn't be surprised to see us go to even $1,000 an ounce. David Hunter on the show thinks we're going to $200 this cycle, followed by a global bust, and then in the early 2030s, we're headed to $1,000 an ounce. Talk to Johnny Kovacevic, he thinks we'll go to $200 eventually. What? What? What do you think of these predictions? Are these realistic price targets in your view? Is this even the right question to be asking as silver stackers? How do you see all of this?
Speaker 2Well, I like the way you phrased that, because I would suggest if you're buying silver because you think it's going to go to $1,000 and beyond, I'm not sure that that's the core inherent reason to be investing in silver. With that said, here's the thing. I'm curious your answer for this one, too. But when I think back in 2009, what really, I mean, I was on a trading floor living through the housing bubble collapse. I just come from business school and I'm like, okay, no one had mentioned anything. That's when I started learning about gold and silver. And at the heart of it, if there was one single issue, I mean, maybe there's two big ones, obviously the Fed, but the fact even bigger than that was that you see, I mean, the debt back then was probably like, oh, I'm going to go to the Fed. less than 10 trillion but you can see based on the way things were run that there's a good chance this is never going lower and of course what do we just crossed 40 trillion recently so it's like how does that shake out for the currency where right now it seems like they're just printing it to fund that gap you would think at some point hey maybe and as it turned out it was took longer and happened later than many of us thought myself included yet it's kind of like we're just starting to see that now and certainly something we can talk about we you could well say that maybe five years from now we'll look back on some of the things that have happened in these past two weeks as whoa was this when things really got out of control because we're seeing some severe warning signs in the bond market as many places but in particular in the u.s where yields are surging we just had scott best in double what is not qe but still is uh purchasing government bonds basically it sounds like they might be buying the entire long end of the curve if you'd like we can dig into why the government would not have previously shifted that long-end debt and essentially how people would refinance a mortgage i mean i guess you could say janet and scott did that to some degree but there's also a key reason why that didn't happen so you know if we're sitting here five or ten years from now and the treasury market i don't think it will default in fact i think there's one part that we know with a good deal of certainty maybe i got this wrong i often thought there was going to be like a lehman break point silver and gold say screw you to the futures and they jump higher and that could well happen yet i guess as as this has been unfolding especially in the past couple months there's a part of me that thinks like well there's also a good possibility that the next 20 years look awfully similar to the past 20 years where hey you know you have your lehman moment all right we'll ramp up the qe we saw it during covid we're seeing it now when they sign i mean trump's out there telling you his fingers are burning because the economy's so hot yet here for some reason the treasury secretary has to double the pace of of debt buybacks debt buybacks i mean that sounds a little silly inherently to begin with and now they got to ramp up the pace and you can say it's not qe you can say it's not yield curve control yet i don't think most people believe them anymore i i and in the end now we can like this or agree with it or not like it or feel however we want but what jesse what do you think is the most likely thing over the next 10 to 20 years that you know they say like hey well you know there's austrian that scott and besson and trump come out and say the austrian economists were right we're going to pull the plug let it deflate rebuild on gold and silver or they're going to do basically the same darn thing they've done since 2000 i mean we call 2007 that japan's been doing for decades of more qe and i think well on one hand you know you could say part of that is tragic maybe with a little more experience in life i don't i don't think it's going to be like life ends i i guess i used to think that i mean people are still going to figure out a way to live and as you think about it more will the economy be impacted sure yet you don't have to be the one holding the treasury debt or the currency where i mean it seems one way or another whether it's read i still and i will not can't will not cannot guarantee a gold revaluation yet i don't know i don't think it's going to be like life ends i guess i used to think that i mean people are still going to figure out a way to live and as you think about it more will the economy be impacted sure yet you don't have to be the one holding the treasury debt or the currency where i mean it seems one way or another whether it's read i still and i will not can't will not cannot guarantee a gold revaluation yet 25 years into my financial career we had a misguided uh decade of my youth on wall street and then gold and silver since 2009 still don't know what else you ultimately do beside a gold revaluation for the debt because as much as scott besin wants to sit there and talk about how this as trump calls it hot economy they're gonna just grow their way out of it well we're a year and a half in baby and they're the only thing they're growing is the face of the debt buybacks and i would say it's mathematically impossible that you could grow your way out of it same as it's actually i'm quite confident mathematically impossible that even if elon musk had cut government spending and waste i mean right now gdp 25 of it is government spending so even if you cut fraudulent spending that would so what do i think is ultimately going to happen i think people would be wise to accept that in the next decade two decades probably the next five or ten decades prices of things are going to go up not just going to be i think gold and silver will certainly be included within within that i think everything will go up and we can get our feathers ruffled when they send powell out or i guess it as we were talking about before it's wild somehow jackson hole like kicked in it's like oh wow we got a new guy here and boy is here and we're going to have to wait and see if we can get a treat to listen to goodness i mean he gives me like a benjamin from wayne's world vibe but i don't know i don't know if i like him better or worse than mumbles just yet so but i mean what's he gonna do we had this oh silver is down 35 bucks uh 35 percent a day a couple months ago it's because morris the hawk is coming in and i see which uh let me see if i can pull up it looks like the fed futures pricing actually pricing and pricing is going to be currently an interest rate hike so uh what are we at 350 to 375 now so i guess september they're saying a two-thirds chance that we get a hike um okay yeah here current rate 350 to 375 so you know those those change kind of quickly and we'll see maybe maybe we do get a hike but if they hike a quarter point okay let's say you hike a quarter point and then best in i was gonna say if he comes out and says well we're gonna triple it now you don't need them to triple you just said they're doubling it i mean i think that's i think you could technically define that as some it's like back in my option trading days you can like buy a call but if you do offsetting or other option positions against it you're effectively net at synthetic yield curve control it sounds like so all right i'm just gonna hike a quarter point here's the other problem though that they're going to face even even before that could conceivably happen i'm gonna get another screen share here because jesse as i know you've been looking at and we've been talking about not going ideally well in the bond market and here let's go back six months let's do the year here's right when uh the trump administration decided to save us from the nuclear program that they themselves said was obliterated last summer and there's your bond yield at 394 has been rising steadily yet what's really interesting is that i mean two weeks ago you have best and take the untrad it's untraditional at best let's say and then on top of it where is the 28th so there's going into jackson hole you're about 468 470 so between best and buying bonds and whatever you want to make out of uh i guess the wall street is calling it the hawkish jackson hole speech okay well either case you have yields rising again uh In the face of the U.S. government at a time where you've already even since Scott Besson said, well, we need to double the pace. Now yields have gone higher. Jesse, I believe you have you interviewed Luke Grohman before?
Speaker 1Yes, I interviewed him about a month ago, I think.
Speaker 2So, you know, Luke, I'm a big fan. And he mentioned in one of his interviews, this was about a week ago. And he was saying that the reason they acted that the bond crisis is happening now. And that was a week, two weeks ago. And now we have yields even higher. So. I guess a long answer, but hopefully that gives an overview of what's happening now, why this is. You know, you know how it is, like for years, we would say, like, able one day, watch out, the Fed's going to be in a corner that that's really going to pile up. And it's for a long time. It was one day gold and silver is going to rise. Well, that happened. I think it's going to happen again. So. To your original question here, what would it take? I mean, if you have something like that where I would imagine over enough time, silver probably will be past a thousand bucks. I don't know if that's I think for that to happen in the next year, you need either another overt shortage. And we'll talk about there's some signs that the last one still was never resolved. Or if you have. If you have what's happening in the bond market, I mean, if we're. If we're really at the point where this becomes a finally we see the true crisis in the U.S. bond market, then I guess I don't have any idea what the silver price is after that. With that said, even in this normal environment, though, given that silver was added as a strategic mineral. I think the idea that even outside of a shortage or a bond crisis without within the next five to 10 years. This is not based or don't. This isn't like a. Target, but just when I think about what is my gut feel, tell me. And based on what we just saw, where it soared past 100. And that the main indications of why that happened, which were the elevated spreads in China and India, where we had reports shortages, we saw the metal go to different places. So, I mean, I think there's enough there that you're probably going to see a higher silver price. I wonder if. You know, on the gold side, maybe for gold and silver. We don't see something dissimilar from what we saw over the last 25 years where gold was 250 bucks at the turn of the century. Now it's back nearing 5000. And, you know, but in crisis, in currency crisis or in a true U.S. government debt bond crisis, which. You know, it's difficult to time that, but I guess in those scenarios, then maybe you can start talking about the four digits. But like. A little ways to go first, but we're in it now. We are you're living in it.
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Speaker 2I think that's a reasonable way of phrasing it. And you can say that's already happening now. I've checked these before. And this site does indeed appear to be accurate. And if you back out the math here, well, 6550 in COMEX, you're at 7316 in Shanghai. That's an 821 premium. This had well did when silver got up. It went up to 121 in the COMEX. I think the peak in Shanghai backed out to 138. So it widened out quite a bit. Then it's been around $8 for the most part has been the average. This began last really the day after Christmas last year and silver was soaring through the 70s. That's when it sparked up. And actually, I will go while we're talking. I'll find the chart of that because, Jesse, you may have heard debate over this. There's some people. There's some people in the silver space who are saying that the gap between New York and Shanghai, that that's just the VAT. Although, fortunately enough, if I can find my chart, which I just did, that we can show that that's not quite the case because once I get this up here. So now hopefully you can see. Yeah, I see it. Silver premiums. So if we do this by price over the last three years. Here you can see how that really spiked up right at the end of 2025 after Christmas. This is what it normally looks like. Here's been Jesse. You probably remember in 2024 when the premium was about $3 over for a couple of months in the summer. And that was unusual. In fact, I remember talking to one of the guys from First Majestic back then saying, hey, that's a bit of a big spread. Do you think someone's going to arb that? Because that's more than it takes to get your boat over there. And that was when he told me that China smelters were already going and reaching out directly to Latin American silver producers. So that was already happening. That was about two years ago. And then last year. Now we had the spread widen out well past that $3 level has been up to eight sat there. That's a this is this is never. Happened before. It's not supposed to happen. There's there's an arbitrage on the board. And that's that. What are we now? We're recording September 1st today. So that's that that's now been sitting there for over eight months. So I get it. The price of silver has come down from 121 and it's about 65 is today. Yet there's still an anomaly. That is not a normal. Just like when the metals go into backwardation. Now, sometimes it ends up being a problem. Sometimes it calms down and gets resolved. But that's not normal. And perhaps the only thing more unusual than the fact that it happened is that it's been sitting there for eight months. And actually, Jesse, as we notice, see, the India had a large spread to that collapse, although they've had a bunch of changes in their policy. They also were really slow on some licenses at one point, which had started to create. Now, they had an overt shortage last year, which then led to London's shortage, which led to metal coming from China and back from the Comex over to London to address their shortage, which led to the conditions in China that led to that spread, which led to the price hitting 121. So when India is what they did this year, when they had they weren't whatever reason, their customs agency hadn't granted the licenses for the importers to bring the metal in. So some of it was sitting there and they were worried they might get to another shortage. It got close. Then the government acted. It's it's all quite theatrical in its own right. Yet then they had some tax changes that they reversed. And with all of that said, let me get the screen share up there so that people can see that now the India premium has spiked back higher as well. Come down to just a few bucks. And in fact, it's even higher in India than it is. It is in China. You can see that there. Ten eighty nine is the premium. I also talked with David Stein of Kuya Silver. This was the week between Christmas and New Year's, because as that spread was breaking out, he was contacted by I think it was three groups total. But I know there was at least one in China and one in India, both solar panel manufacturers that were calling David Stein of a smaller silver producer. Now, Jesse, I don't know if you know of Kuya. I think it's a good company. It's not it's not the largest silver producer. It's not like they called first Majestic. So I am thinking, hmm, they found Kuya. How many did they call before that? And they were trying to buy lock in an agreement to buy his silver production at an eight to ten dollar premium.
Speaker 1Interesting. So, you
Speaker 2know, now things have changed a bit. I wouldn't call this situation quite as extreme as evidenced by the price. Yet this is also has not been normalized. I won't dig into the Chinese inventories, but they had been quite low in what you I would say correctly said the industrial center. That's where the majority of the industrial usage takes place. So, you know, obviously things can happen on the Comex, too. But, yes, I think that's realistic to say there were clear indications that this was a physically driven phenomena that happened that drove the price up to 121. And in fact, I'll go a step further because we basically sat here and waited for 45 years for the price to finally break fifty dollars. It did. And then in the two months after it doubled and more from there. And I remember as it was happening, once we're getting into the 80s, once we're getting in the 90s, once we're cracking. You remember, it's pretty wild how it all happened so quickly. And I remember thinking, gee, are we headed towards a point where someone in the industrial center, hey, you know, they don't want to sit there with their plan idol. They need the silver. Hey, it says 80 on the Comex, but you tell me you'll give it to me for 85. Fine. You know, I don't want to shut down my factory. Then I went from thinking, is that what we're headed to versus is that's what is that what is actually happening? As we're watching it go through 85, go through 90. Yeah, of course, speculation piles in, although. I didn't really see the evidence of which those are some of the pieces. Made this seem a lot more like it was physically driven, not that there isn't, not that it's always one or the other, but this was not the same thing as what happened in 2011. And the only thing perhaps more shocking than what happened a couple of months ago is that we're sitting here eight months later. With the spread still above eight bucks in China and ten bucks in India.
Speaker 1Well, I think given everything you've outlined and most of the viewers of the show already agree that silver at this point in time is looking tremendously undervalued. But what about the miners? Because this is another sector that perhaps it's been doing quite well as of late. One could say the miners are in a bullish trend. It hasn't really been outpacing the metal. It's much the story with gold. It hasn't really been. Providing that massive leverage on the silver price as of yet. But even at silver prices today, 65 bucks, if you get into 70 plus, these companies are essentially producing incredible free cash flow. What are your thoughts on the silver miners here? Small group of of assets because there's very few pure play silver mines out there. You know, most of them are byproduct, which makes silver supply very difficult to bring online in to to kind of touch on your your discussion of a shortage. Earlier, how are you feeling about the silver mining sector right now? Do you think these are attractive valuations as we sit here today?
Speaker 2Well, I was smiling here because you said the silver stocks were rallying and they were until about an hour after the Jackson Hole speech last week. And then quite another fascinating reaction. The market deciding is gold and silver up or down a lot. Let's answer yes multiple times for both. And either case has been a little bit rough since then. Let me answer your question like this, though. I will preface I am not a mining stock analyst, although from the fact that I've done a show when we talk to a lot of miners and mining stock analyst newsletters, I'm fortunate to have a handful of mining stock nerds in my network. And also, as we talked about when you were on my show about a month ago and taught class, I might add goodness, that was an impressive performance. You talked with Rick Rule. Who was talking about how relative to the current bullion levels, the miners were cheaper at $100 bullion than they were at 50. OK, if you want to say Rick's talking his book because he runs that shop fine. But I mean, if Tommy Costas saying the same, a lot of other people I trust, I'm not trying to convince anyone. But just that's the that that's the conclusion I've come to. And I think what gets missed. Missed is that as silver will stick with silver for the moment. But this applies to gold as silver came from 121 down to 60. I think that's gotten lost track of because, Jesse, if you ask your average silver investor, is silver up over 100 percent in the past year or so, or is it down almost 50 percent in the past eight months? And, you know, to most people, it's down 50 percent. You know, we're in a terrible bear market. Life is as unfair as it ever was. Only Bitcoin is ever going to go up. Gold's going to go up. But all of us silver investors, God doesn't like us and all that. And I also remember, again, back in my Wall Street days, I was an option trader, which was helpful training because, again, I find most people they like, is it buy or sell good or bad, which is relevant. Yet I think it's harder for most. And I see this all the time on Wall Street in particular, in an investing world, measuring the extent. And it's funny. I remember back. It was sometime around Christmas where, like, silver goes from 65 to 70. I got my little spreadsheet. I'm plugging shit in there like, wow. And then, like, it would keep going up five bucks or so a day. And, like, I remember there was one day where it hit the point where it's like, well, it's 95 now. I guess that's good. But, like, lost. It's lost scale. Like, I guess my whatever my paper number is is more than yesterday. And but I think especially on the way down, like, people are feeling like, hey, silver has gotten clobbered. So sell silver, sell mining stocks. Yet I don't think people are getting if, by all means, I'm not saying to take my opinion, do your own math or talk with someone who can do a discounted cash flow model. But if you look at production levels with the current pricing of gold. And silver, I think you would find at these levels and based on the projections the market's putting in that the mining stocks would be considered cheap. Or another way you could phrase that. And I mean, actually, both are probably true. On Wall Street, you know, when they're projecting, how are we valuing these miners? You know, they probably have like three thousand dollar gold two or three years out from now or silver back at 30 or 40 dollars. So. If you're of the school of thought that silver is going to go back to 30 bucks, then, you know, you probably don't want to buy silver mining stocks right now. We can talk about some of the reasons why I think it's getting pretty difficult. And think about it. We had gold was over five thousand bucks. Silver is up at ninety six when this war broke out, which I'm amazed we haven't had more collateral damage yet. But I mean, in the end, we now have as a result. The Trump. Administration are trying to get a 50 percent increase in the U.S. military budget, which has to already be the largest thing in financial history as it is. I get it. You know, your yields are rising, oil is rising. So people are trained to think deflation. Unfortunately, they're not trained most on Wall Street and not trained to think the two steps ahead with what is the Fed and the Treasury going to do? And we got a taste of that with Bessent buying the bond. So this is one of the most inflationary things in history at the time. When the governments are more indebted yet, because, oh, well, yields are up. We must sell gold. OK, that's fine. But if you're thinking a couple of steps ahead. Again, I you know, it's just like when you're playing poker, just because you have pocket aces, you're not going to win every hand. So similar, I am very careful and don't look at things as this is 100 percent going to happen in the financial markets until it's happened. Then it's 100 percent. Yet. I'm not saying this to convince anyone what to do, but as I've looked and studied at this. I remember there was one day where it hit me like. We're especially if you think that gold and silver almost have to be higher five or 10 years from now. And then the way the miners are priced. Like, wow, if I if I make some good decisions here, this could this could be like one of those life changing things. If you need to have the ability to have some patience of time. And is it a sure thing? No, but at least in my own eternal opinion of how I'm positioning myself. That's that's again, not any sort of licensed financial advice, but after following this for a while, that's that's where I'm at personally on that. And adjusting things in the portfolio to match that. It's like you just it just seems like you have the possibility of such an ace. A metric return where. OK, maybe gold and silver. Good gold goes back to twenty five hundred silver goes back to twenty five bucks. So the mining stocks will go down yet. Silver goes back to 80 bucks in gold. goes back to 5500 or even if they stay where they are and these companies just keep producing they're going to make a lot of money let alone what happens if this does get out of control what what if we do have a ten thousand dollar gold price in 10 years i would say 10 years that's a pretty high probability event what if they do one day say hey we need the only way we can pay down debt without breaking the bond market is to do a revaluation so you set the gold price higher the fed does an accounting entry and the cash goes to the treasury you could pay it off or i'm guessing they probably would skip the paying it off and go wasting on something else but i mean it's not a guarantee but there's some probability and if you have gold mining stocks in that environment so hopefully that gives thoughts on the miners and i'm not trying to like get you someone like overexcited don't go do something risky but i mean i think if you're playing probabilities this is one of the better ones that i've seen in my 25 years or so
Speaker 1doing this yeah great thoughts and i love your um what you shared about time horizon as well and being patient i think not a lot enough people have that and i also think that to make a very decent return over the next several years in the minors you don't need to take those risky bets on the junior explorer that exactly
Speaker 2you don't you don't have to go that far down the risk spectrum you can you can get the the high upside potential with low risk that doesn't happen a lot and this is one of the times where i i think
Speaker 1you can do that absolutely well chris this has been a fantastic conversation tell us about arcadia economics and anywhere else you'd like to direct people online who'd like to follow your
Speaker 2work sure well i appreciate that um i do run arcadia economics for i guess i'm not sure if i'm started in 2012 was more active uh 2017 or 18 but used to be daily now cut back as you see i have these my beautiful keyboards that have joined me and doing a lot of fun musical stuff these days so we do the show weekly and that's arcadia economics on youtube you go to substack that's also posted at arcadia gold and silver daily if you'd like to hear some music you can find me on instagram or youtube arcadia jam band and um perhaps if i could leave people with one parting thought is that i used to see this as you know wow the the stuff's gonna hit the fan because i was very scared in 2008 i remember that very clearly especially being on a trading floor and then now you add in ai and people are worried hey is this thing gonna take my job and i i can understand why people are concerned with that said i i think especially with some of the tools that are out there you can position yourself so you don't have to be feeling like life is going to end for everyone because people are still going to eat they're still going to work and the more that you can separate yourself from what the government's doing and position your life whether you're trying to think of if you're worried about your job find one of these ai tools pick an industry learn some of these things find out how you can help the business owners in that industry save time or resources stuff that they don't have the time to figure out that that's been one of my favorite things of this year is learning more about that and seeing that i think we're in the golden age of specialization so for people who want to do that or have a particular passion that they want to teach or be involved with i think we will see a lot of things change um but i mean i don't think uh i think we got it wrong i was myself guilty as well in the silver community where i'm not going to be bumps along the road or things that aren't ideal but you know all right well i i don't worry about inflation anymore i know the price of stuff is going to go up and i position myself when i think about how am i running a business or what am i doing that that's factoring in that is how the human mind was designed to plan to reach a goal um so hopefully people can realize there's good things happening too and hopefully this interview was helpful in navigating some of them and thank you as always and i'll see you next time as always for having me jesse really nice to see you again
Speaker 1thank you for joining us today on commodity culture earn up to a four percent annual yield on your physical gold paid in gold ounces through monetary metals go to monetary-metals.com slash commodity to find out how to put your gold to work for you link is in the show notes below
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