gold news

 [Music] I'm Charlotte Mloud with investingnews.com and here today with me is John Rubino. He writes a newsletter on Substack that probably many viewers will be familiar with. Thank you so much for being here. Great to have you once again. Hey Charlotte, good to talk to you again. Really good to be catching up with you. And as we're saying before we turn the camera on, there's so much going on right now. I thought where we could start is with gold of course and maybe with a little bit of a broad question. I

was looking back to our previous interview which was all the way back in August of last year when gold was right about 2500. So so much has changed. I wondered if you could begin by helping us situate where you see gold in the current cycle after we've seen so much movement this year. Well, gold has had an epic run and it's been very quiet. I mean, it it took forever to get above $2,000 an ounce. And then it seems like it went above 3,000 in the blink of an eye. It just did it, you know, and uh um

nobody was really very excited about it as it was happening other than, you know, gold bugs like me who were watching it every day. But um because it happened on a stage where a lot of other intense things were happening because we had you know Nvidia and the other um AI chip stocks going through the roof and um Bitcoin going up to $100,000. And so a lot of even bigger things were happening while gold was doing its thing. Uh and but but now you know gold is one of the few things that hasn't really corrected hard. And I'm

going to jinx it. it'll probably uh drop back down to $2,000 an ounce if I start saying stuff like it's not correcting. But but so far it's held up pretty well above $3,000 an ounce. And um I I think that is true. The the fact that gold is holding up better than most other asset classes for um several reasons. One is the uh you know the BRICS country central banks continue to buy a lot of gold because they still have their um you know their frustrations with the dollar being used as a weapon and their

desire to get beyond the reach of the US authorities. So they're thinking ahead to the days when they they might set up a goldbacked trading currency for uh trade among themselves so they can just bypass the dollar and they've still been buying gold with that in mind. Um and then the other thing is the uh the Basel 3 implementation. There are new banking resol uh regulations being implemented around the world. uh and they raise gold from a tier three asset, which isn't a great thing to hold, to a tier one

asset, which is excellent for banks to have on their balance sheets. You know, it's a very useful asset. Uh it puts it uh being tier one now puts it in a class with Treasury bonds and US dollar cash. So banks around the world are probably buying gold in anticipation of uh of having it become a tier one asset on their books and then using it as a tier one asset. So that's a lot of demand out there and that is the a big part of the reason why gold has gone up um steadily and without a lot of price sensitivity.

You know, you would think when uh an asset goes from $2,000 to $3,000 that you would have massive resistance at $3,000 cuz humans like round numbers, big round numbers. And so, you know, a huge number of sell orders ought to be sitting at 3,000. But apparently not. You know, gold just broke right through that. So, and that's probably why it's because central banks and and large commercial banks are out there doing things with gold um in a non-pric sensitive way. they're just buying it

because they need to own it. Uh, and we'll see how long that goes. I think the um both of those factors, the bricks thing and the uh the Basel 3 implementation are going to go on for a while. Those aren't things that just end one day and it's over. So, I think gold still has the wind at its back, although it's going to correct, you know, and bull markets always have corrections, but it's got the uh the banking wind at its back, which is a good thing for it at least maintaining its current price

and maybe going higher from here. I think you hit on a really key issue or question that I have when it comes to gold. So, as you've outlined, it's got these really big underlying drivers that are helping propel and and support the price. We've also got all these more, I guess, newsy timely events that are happening right now like tariffs, trade war tensions, inflation, interest rate discussions. How much do you think that those types of elements are playing into gold price rise right now? Well,

actually, yeah, that that's a big deal for gold, too, because gold is someplace you hide out in chaotic times. And we are in chaotic times right now. So people who are worried about um you know the the tariffs and the trade war generally causing prices to spike causing you know in the inflation indexes to go way up and that to destabilize the financial system are probably buying gold too just so they can hide out and not uh not be affected by all of this stuff. So yeah, we we live in a chaotic world and um you know

um I if when we spoke a year ago, I probably said some things about the Ukraine war being very de destabilizing because we're kind of blundering into World War II. Well, now that's less destabilizing. It's, you know, they're actually talking and maybe we get that settled pretty soon. But there's a lot of pressure on the US government to start bombing Iran now, you know, so we could start a different war um in a slightly different part of the world that that has its own um chances of

causing World War II. Uh and that's very destabilizing, too. So that's the kind of thing you buy gold for. you know, if the US is getting ready to bomb a major oil producing country, um, then you want as much as your of your portfolio as possible to be in very stable assets or places. And so gold fits that bill, too. So, yeah, it's got a lot of stuff going for it right now. Yeah. Yeah. great point about all this geopolitical instability where you might have one hot spot that's dying out only to have

something else pop up or multiple something else's pop up somewhere else. So yeah, very very difficult to keep track of all those things right now. I wondered if we could take a look at the US economy and the recession question. This was another topic that came up last time we talked and now we're seeing that really come up in in headlines. At least I'm seeing recession question. Is it going to be something that's worse than a recession? So curious to get your take on where we're at there. We were always

headed for a recession right about now because um during the pandemic, people build up a lot of excess savings. You know, the government said, "Well, you you don't have to you don't go to work, but you don't have to pay rent or your student loans, and we'll send you these STEMI checks." A lot of people ended up with more cash in the bank than they started with. Um, and in the ensuing few years, Americans spent a lot of that extra cash and that supported the economy. Now that's that's all gone now.

Now we're into negative territory by by the measure of excess savings. It used to be a trillion3 and now it's negative several hundred billion dollars. Um, and to make ends meet, a lot of people, a growing number of people are putting day-to-day life on plastic. So you're seeing credit card balances go up and the and and credit card defaults go up. So a growing number of people are carrying debts that charge them 25% a year, you know, which is that that'll bankrupt you in a very short time and

hence all the the growing defaults on credit card debt. So that's the kind of thing that normally would contribute to a slowdown that might turn into a recession. Meanwhile, you got housing where the the housing market in the US is basically frozen because home prices have gone up to the to a point where they're unaffordable for almost anybody. You know, the average American can't come close to buying the average American house. So, home sales are very low. You know, there's really no um

economic action being generated in residential real estate right now. And that is the kind of thing that contributes to a slowdown, maybe a recession. So, you got stuff like that going on. plus um trouble in commercial real estate, office buildings in particular because nobody wants to go back to work after working at home during the pandemic. Offices are empty. They're not generating the cash they used to c to and a lot of the paper related to those office buildings uh lives on the balance sheets of local and

regional banks. So we could have a banking crisis when a bunch of office buildings start going bankrupt or being sold for crazy low prices and that could easily, you know, if that happens with a few banks that spooks the depositors of all the other banks and and you get a kind of a runaway banking crisis. So add all that stuff up and and a recession is to be expected. But leaning against that is the fact that the the US government is running massive deficits right now. you know, crisis level deficits and that

is stimulative when the government borrows $2 trillion and and throws it out into the economy. U so that's part of why we aren't just in a really deep recession right now. But uh I still think there's a decent chance of even leaving the terrorist stuff aside that we would be drifting into a recession right now. And then you throw in a global trade war and something worse than a depression becomes or sorry worse than a recession becomes very possible. So we could have a slowdown in an

equities bare market that normally comes with a slowdown and and maybe have it not just bottom and start to get better again within a year. You know, it could be something that is much more serious like uh the great recession 2008 2009 but with much bigger numbers because we're more deeply in debt now than we were back then. So worse things could happen if we have an equities bare market and you know banking issues like we had back then. So uh I I think that um the way you respond to that obviously

is like we said with gold and silver but also maybe shorting. I think um you know if you watch the movie The Big Short um people in that movie saw an imbalance that was going to cause trouble for the economy. They bet against the system. Then they you know they shorted the banks and they shorted um a lot of real estate related debt and uh it didn't work out right away for them but they made life-changing money in the end. tonight. I think we're headed for another thing like that where there's a

big short out there waiting to happen and um just for fun, you know, people could consider having like 3 to 5% of their u their assets in put options on the S&P 500 or the NASDAQ or something like that just for that big um you know sharp Vbottom crash that could happen when some of these things start going wrong in a big way. and uh um or you have put options as protection for the stocks that you continue to own. You know, sometimes there it's it's a time to be short one way or another, either

for um you know, to roll the dice and try to make serious money or to uh protect yourself with insurance. This feels like one of those times, you know, when things are just chaotic enough that uh that you could have a a brutal bare market that comes out of nowhere and happens very fast and if you've got put options, you you know, you're glad you had those options at the time. Yeah, I like that you present that as the the just for fun option here. I think that's an interesting way to phrase it for

sure. So, we have all this mess in in the US and we've got debt piling up, etc. What do you make of the cleanup efforts that the Trump administration has begun? We have Elon Musk with Doge. I know that's faded from headlines or so it seems as other things are going on. How how successful have they been or do you think they could be in in this scenario? Well, they they can't almost by definition be very successful in cutting government spending because the vast majority of government spending is

social security, Medicare, the military budget and interest and can't do anything about interest except force interest rates way down which would have a whole separate set of u of um outcomes. But um it's it's very hard to cut entitlement programs once they're in place. And so I don't think Doge is going to succeed in you know and taking a a meat axe to social security or anything like that. But they what they are succeeding at and I think it's really um you know spectacular success

is they're identifying the u the grift that was going on. Basically what what we've been doing as a society, we have this political class that got a hold of the the spending levers and they basically set up a system that enriches them. For instance, the government um allocates a lot of money or creates it out of thin air, sends it to a um an entity like USAD, which then funds a bunch of NOS's, non-governmental agencies, uh or non-go non-governmental organizations, sorry. Um, and then those things go out and

hire a whole bunch of political operatives, pay them great money to um, you know, quote unquote do charitable works and things like that, but they, you know, they hand out maybe 10% of the money that's coming in to the actual beneficiaries of whatever charity we're talking about. And then the rest of it is overhead, which is synicures, basically simple, very good paying jobs for people from the political class. And that is happening everywhere with not just billions of dollars but hundreds of

billions of dollars and Doge is digging that up. You know, it's naming names and and to the extent that um they follow up and close down a a bunch of this corruption, then that that's an incredibly good thing. And you know, it'll save us some money. it it won't um prevent the gigantic currency crisis that is inevitable with all the debt we're taking on, but it'll u you know at the margins lower the deficit a little bit. It will go from $2.2 trillion to $1.9 trillion a year in in uh in deficit

spending. That won't save us, but it'll be something. And um to the extent that it gets rid of a lot of corruption, that could be a very big thing because, you know, you really want to clear out this whole class of people that do nothing. You know, the the uh the guys in the think tanks and the people in the NOS and the people in the uh the charities that like, you know, the Clinton Foundation or something like that, which basically does nothing uh except take in illicit deposits, which are really

bribes. You know, it goes on and on like that. uh if we close down those entities and we force this political class of quote unquote experts uh to go find real jobs, you know, that the world would be a better place if all of those guys were driving Ubers right now or or making coffee at u at u a coffee bar. Uh because those those things at least help people in the real world and what they're doing now helps nobody. It just enriches them. So sorry that was a diet tribe but um you know there there are

good things happening and they're surprisingly good in the sense that we didn't realize how big the corruption was and now we do know and that that is a huge deal and you know it could lead to positive changes in the future. Yeah, I think that was a a great answer. So the problem is massive and we can't solve the whole thing but it doesn't mean there can't still be good to come from this. I think that that really illustrates it. So, we've been talking a lot about what's going on in the US,

which makes sense because it's so central to everything that's going on now, but we spoke before about the growing crisis in the overall global financial system. So, I want to touch base on that. I know that's a huge topic, but it feels like that's something that's probably being accelerated toward right now. Is that is that your your feeling as well? How how are you thinking about that? be being accelerated to war. To war, just something that's accelerate. Yes. Oh, yeah. Yeah. Yeah.

Um here here's the the short version of the the uh process that's been in place for a while. In 1971, we went off the last vestage of the gold standard. So, every major currency henceforth was a fiat currency existed. It existed and has value because the government says it does. That's what fiat means. It's kind of a government order. Um, and since that time, the big countries of the world have had unlimited credit cards. They've been able to spend as much money as they wanted to and just borrow it,

you know, and so that Europe's been doing it, the US has been doing it, Japan, China, everybody at at different speeds at different times has been taking on insane amounts of debt. And now we finally um saw the inflation that was inevitable. In 2022, we had double-digit inflation in the US. that spooked everybody, forced us to raise interest rates, and now all of our debts are actually charging us interest. And so the interest cost on the US government's debt and Germany's and Japan's uh is all soaring exponentially.

And you know, the US government now has to pay about a trillion5 per year in just interest. And that's basically the death spiral because when you when you have to borrow to cover the interest on your debt, which is where all the big governments of the world are now with the exception of Russia, um then you're in a death a death spiral because you uh you know, you borrow to cover your interest and that means the deficit is bigger next year and you have to borrow even more to cover even more interest on

the ever growing debt um until you go bankrupt. And that's the world's economy right now. You know, we're headed for bankruptcy at an accelerating rate. And the question is, how does that bankruptcy manifest? You know, we weren't we can't avoid it, but we can have different versions of it. You know, the 1930s style deflationary collapse or the Wear Germany hyperinflation, things like that. Has to be, you know, one of those two templates that we choose. Uh, and then we'll end with, you know, Jim

Rickard's version of a currency reset where, um, you know, we we see that this isn't working. We have another version of Bretton Woods where we get together and and we recreate the global financial system hopefully along um, sustainable lines. Um, but you know, and how that plays out really depends a lot on people who don't understand what they're doing under huge amounts of pressure making decisions, you know, so it's going to be chaotic unless a miracle happens and really smart people happen to be in

charge just as this thing really comes to a head and then understands that they need to get to a gold standard or something similar as quickly as possible. You know, you have people in the Trump administration who are kind of gold bugs. They they're talking about having government bonds that are backed by gold. And um one of the people, Judy Sheldon, uh who who Trump actually nominated um for a Fed governorship, she didn't get it, but um she seems to think that we should just go back to a gold

standard, you know. So it it's conceivable that the people around Trump um talk him in to um and I think the Treasury Secretary also said his uh his main asset is gold right now. So you know it's conceivable that the US government just announces on a Sunday night sometime just as inflation's really getting going and things are getting chaotic and and says well from now on we're in a gold standard. The dollar is just a name for one 10,000th of an ounce of gold. And uh we stand ready to exchange dollars for gold at uh

at the request of anybody who's a citizen. Something like that. And uh that would put us back on a sustainable monetary system, but it would cause chaos because everybody who trusted the government would be royally screwed by something like that. Their savings would have lost 2/3 or 3/4s of their value. So we'd have to put up with the civil unrest that flows from that. But that is by far the least painful option. Everything else is so much worse than a lot of angry savers who have to be

mllified in some way. Um, you know, the civil war is is one of the options if we don't get the monetary reset right. Well, I like that you present all the the different scenarios that we could have. And of course, a miracle is very rare, but you're right. It does seem like something that it could poss the the place the pieces are perhaps in place. So we'll see how that goes. I wanted to also make sure to ask you about the gold stocks. So last year a big theme for the gold stocks was the

disconnect between what they were doing and how the price of gold was performing and we're now we've entered earnings seasons and the high gold price should be being reflected in the results for the big miners. So any any takeaways that you would share from the initial results that we're starting to see? Well, yeah, gold stocks did not respond like they normally do when gold started to go up. You know, gold broke through $2,000 an ounce. And normally, based on history, you would think the gold stocks

would just rocket when something like that happened. They would they would be going up multiples of the percentage increase in gold. Didn't happen. Gold stocks just languished while gold continued to go up. And and part of the reason for that was that the cost of mining had gone up dramatically in the last few years. So yeah, the gold miners were making more for every ounce of gold that they sold, but they were also paying more to their um their employees and and for the gas and diesel fuel that

it took to run their big equipment and everything. And and so their profits weren't really rising along with gold. But finally, just lately, gold went up enough to basically swamp the increase in gold mining costs. And now you're seeing the gold miners report some really nice widening widening of their margins and uh and more cash flow. Uh for instance, just within the last few days, New Pneumont and Agnico Eagle, which are uh the two of the three biggest gold miners reported blowout earnings, just um you know, really um

nice increases in their earnings per share and big increases in free cash flow. And so both of them are now able to do shareholder friendly things like raise their dividends and buy back stock on the open market or make strategic investments in other companies or acquisitions or whatever. And so that's starting to get people excited. So those stocks are starting to have nice runs. You know, they're uh I think Agnical Eagle is up maybe 60% in the last year and and um Pneumont 50% or so. you know,

not spectacular, but still nice positive runs that they that we've been waiting for for a long time. Uh, and if gold stays where it is, the next set of earnings uh for Q2 will will also be great. And then you'll have a pattern. It won't be just, you know, one quarter of good numbers. It'll be a trend. And uh the um generalist investors who look at trends and buy momentum will start zeroing in on the gold miners and they might be almost the only industry 6 months from now that are putting up

really good sequential and year-over-year numbers. So you might see a lot of generalist money start pouring back into precious metals. And you know the mining the miners seem big but they're not in the aggregate. There just is not that much market cap in the gold mining sector. So that if generalist money, which is vastly bigger than what's in gold miners right now, starts moving in that direction, it won't take much. Won't take a big percentage of investable capital out there in the

world flowing into the gold miners to just send them through the roof. So they they could be one of the success stories of the next year or so as they generate more and more cash, buy back more and more of their stock and and generalists catch on to this and start jumping in. So that's the um the best case scenario, you know, that's the the fun scenario for the gold mining stocks and you know, it's completely reasonable because they are putting up numbers that in normal times would get people excited. So

here's hoping. Yeah, I was definitely going to ask you about that generalist in interest and when we might see it return. So that gives a good idea of how how that could flow into the space. Curious to to know, I know every person is different, but where you're seeing the most potential for for gold stocks right now. It sounds like maybe if if generalists are going to come in and go first to the miners that maybe the miners at the top end are the best place still to be right now. But what are your

thoughts? Yeah, the big ones will attract the early generalist money because those are the names that um financial adviserss know when when their clients come and say, "I need gold stocks." You know, they'll they'll buy you some new mod or some eagle or something. Uh so money goes there first, but um the the big guys have so much free cash now that they're going to start acquiring smaller gold miners. And so the uh the acquisition activity will be probably in the u the sector of the

junior mining space and the developer space where there's growth. You know if a small minor has um a a potential worldclass deposit and it's starting to mine it right now then a big minor will come in and swoop them up for a nice premium. And that is happening now as we speak. I just posted something today on that um on Substack and uh you know it doesn't take a lot of that kind of acquisition out there. You know, three or four of them where it's at 70% of the average price in the last two weeks for

the stock that's being acquired. Uh stuff like that gets people excited in a hurry. And uh so then the money spreads out throughout the the mining sector. But you know that's over time. I think the u the big guys will go up and then the uh the real pure takeover candidates, you know, the tier one assets um or the the smaller miners who are producing profitably right now and can be kind of bolded on to a big minor in a way that moves the needle. There's a lot of them out there. So, I I think

that's the the intellectual challenge is to find the ones that get uh that get bought out first, you know, and uh that that's not easy. But uh the the people who are there waiting for this to happen will make a lot of money. Yeah, definitely. That's that's the hard part there. So that's what's going on with gold stocks right now. I think that gives a good idea of your thoughts. So we had that frustration with the gold stocks last year and where I still think we have frustration is now over in

silver. So curious to get your thoughts on what's going on with silver. I know we've got the gold silver ratio at a very elevated level right now and people are wondering okay so when when is going to be silver's time to move what what are your thoughts? Well silver is a great story because it's an industrial metal that's already in deficit. The world silver mines don't produce enough silver to satisfy the uh the missile makers and the solar panel companies and the all the other people who the myriad

people who use silver. Uh so there should be upward price pressure on silver um as the u the deficit continues and maybe turns into a shortage just from the industrial side. But silver is also a monetary metal, right? And and it trades like you said in a in a range with gold where maybe from a gold ratio of 30, which is that's how many silver ounces it takes to buy a gold ounce up to 80 or 90 or something like that, you And the the higher that number goes, the cheaper silver is relative to gold. And

90, you know, where it takes 90 ounces of silver to equal an ounce of gold is usually a screaming buy signal for silver because it means um it's at the top end of its range or or at the bottom end of end of its price range. So, it's very cheap and it's going to outperform gold going forward. So, all gold has to do is sit there, maintain its price, and silver should go up when it's at 90 or so. lately it was over a hundred. So that that is a a screaming buy for silver. Historically, you know, whenever

silver gets up to 1/100th of an ounce of gold or down to 1/100th of an ounce of gold, uh usually it gets bought up and uh gold or silver goes up in percentage terms much more than gold does. Usually that happens in a precious metals bare market. So, it's both of them going up, but silver going up more than gold. And I I think that's a completely believable scenario going forward because um you know silver is because it's in deficit we're using up the previously existing silver and that means there's just less

of it around for u somebody like the comx to satisfy futures contracts who show up and want to turn their contract into silver. Uh and so there's a real danger of of something happening on an exchange where the exchange just can't make good with physical metal uh for the demand from futures contract traders and they default you know and in other words they pay in cash instead of in silver and then everybody in the world se sees that and says oh we're out of silver you know and so then the panic buying starts

and I I think that's a very possible part of the silver story going forward. ward and I think that um you know $100 an ounce is uh it it'd be shocking if we didn't get there somewhere along the way and and it's possible that much higher prices could happen when the panic buying starts. So, we'll see. But I think, you know, if you're a stacker and you're trying to decide whether to buy silver coins or gold coins right now, I would say silver is the better buy relative to gold, although you

should probably be buying both if you're able to. Yeah, I think that's a very a very fair statement there. Okay, so we've gone through gold and silver, I think, pretty well. I'll let you go, but before I do, any any final thoughts that you would leave investors with? I know it's a very tricky time right now. Yeah. You know, a couple of things. One is um um you know, it's not just about investing because there there are so many things we should be doing with our lives that probably fall under the the

category of prepping, right? You know, if if the the world is going to get very chaotic, which it it is one way or another, uh we should be as self-sufficient as possible. So besides stocking up on gold and silver um to protect your finances, you you want to, you know, make sure you're indispensable at work and make sure you know as many people in your in your community as possible so you've got their back and they've got your back and um you know, learn how to grow some food. Make designate somebody in your family as the

family gardener and have them try to grow onethird of your grocery bill or something like that, you know. And um those are all things we should have been doing all along, but now it's more necessary than ever. Uh and the other thing is that um a a healthy psychological way of looking at all this gloom and doom is to think of it as an investment thesis because yeah, all this crazy stuff is happening out there, but if you play it right, it can make you rich, you know, and and that is so much healthier

um than just looking at the world and thinking, "Oh my god, everything's falling apart. This is terrible." and just wanting to curl up in a ball, you know, and whimper. But if you think of it as, okay, you know, $10,000 gold, I I will look forward to that, you know, and then so you can get through this stuff with a better attitude. And that's crucial, you know, your attitude in in um chaotic times is your your most important asset. And if it's positive, you're in better shape than otherwise.

Okay. I think those are really good reminders to end on. can't just focus on your your gold and silver, although that's part of it. Got all these other different elements to keep track of as well. So, thank you so much for coming on once again to go over your thoughts and and share all these ideas with us. Thanks, Charlotte. Enjoyed it. Of course. Once again, I'm Charlotte Mloud with investingnews.com and this is John Rapino. Thank you for watching. If you like this video, make sure you hit the

like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]