thank you [Music] I'm Charlotte McLeod with the investing News Network and here today with me is Larry Lepard investment manager and managing partner at EMA really good to be picking up with you here online our last conversation was all the way back last October when we were in New Orleans and hopefully we're gonna pick up on some of the themes that we touched on there a big focus of of that conversation was your thesis surrounding the economic debt Doom Loop and I think I think to put it lightly we haven't seen that


situation improve since then so no and I wondered if you could begin by situating us there and telling us how that's developed sure uh let's see from last October to present I mean probably the biggest thing that's happened is we had kind of a mini banking crisis in the United States everyone's familiar with that Silicon Valley Bank failed um and rather quickly and rather spectacularly I mean to me one of the most shocking things about that was the way that 42 billion dollars got sucked out of that


bank in one day I mean this is this is not the Bailey Savings and Loan right um the the next day they asked for 100 billion they didn't have it and so they were they were shut down so um what what that tells me is that you know contagion when it occurs can happen very quickly uh you know it kind of at scale and you know we're living in a world of insta Communications you know I'm talking to you across the across the continent on on a computer and uh you know everybody knows everything very


quickly uh so you know when when something happens it can you know contagion can spread and we'll come back to that a moment um I think that um you know that's to me what I uh a symptom what I call and have written about my quarterly letters which are available on my website uh I call this rivets popping which is to say that um you know the monetary system is being stressed like it's never been stressed before um you know it it it's kind of we've got these big swings going on about


um you know what is money and and how is the money managed and you know as far back as 2018 with the repo crisis and or 2019 with the recognizes 2018 with a pal pivot 2020 with covid um and so on and so forth we continue to kind of see um very radical moves on the part of the central banks you know we had zero interest rate policies for a long period of time they tried to stop it uh and that led to the taper tantrum then we um you know we had a repo blowout and that led to the to you know another uh


Return To Zero interest rate policies and then we had covet which was the kind of the mother of all Prince post 2008 and then of course the balance sheet went um fed balance she went up to you know to nine nine trillion dollars um you know they've since then been trying to taper as we all know Paul Jackson breaks as quickly as he possibly could because he was way late in fighting inflation calling it transitory when it obviously wasn't and um this new move of higher rates has really started


to cause monetary distress in a lot of areas with a lag and and um and we you know we didn't really know what areas would be impacted per first obviously we discovered in in March that one of them was the max um Banks were taking on long duration bonds at low interest rates uh when their funding costs went much higher they suddenly were deep underwater and in fact had negative equity and that's what led to you know the FED coming in with their most recent Band-Aid program which is you know by the by the pay with


ptfp on Bank term funding I call it by the effing paper um and uh uh and and so they um you know they've been trying to kind of uh address these rivets I can't recall I think when I saw you in New Orleans I think at that time the the British Pension funds that had their issue and they had they had reversed their policies and I think since then we've seen other signs of stress in in the the markets not in the equity Market but more in the bond markets I mean Bond markets have not been doing well and


that's because the inflation isn't transitory and bond investors are saying I need higher rates if you want me to hold these things and more recently probably the biggest thing I've noticed is that the U.S federal deficit has really been trending in the wrong direction it's now kind of looking like a print of around 2.2 trillion which Compares very unfavorably to the prior year of 1.3 trillion and I think it's on its way to two and a half three or four trillion all this building on kind of


the debt Loop and the debt Doom Loop and um you know I uh on another show I recently showed a chart that had that's on my Twitter feed anyone go see it it showed how how much of the duration that's in the U.S federal deficit or federal bond market is is short and what do I mean by that I mean that we financed a lot of our deficits with one year two year three-year notes uh and sometimes even quick you know shorter three months six month notes and um and those roll over obviously quickly and


then when you're a lot of the one year was coming due I think as I recall the number for the next year is six trillion dollars if you add to that the deficit of two trillion that means that the US federal government needs to sell eight trillion dollars of debt um you know before they start quantitative tightening and the quantitative tightening is is obviously reducing the debt as well by roughly about um uh 100 billion a month and so you know that what that means is that there's a lot of U.S debt for sale


and at some point the balance sheet of investors and the world and other central banks is going to be tapped out and interest rates will can only do one thing if there's more debt for sale there's less demand to buy it well then that means the price of the debt the interest rate will have to go up and so as a result of that then you know that feeds back into the U.S federal government deficit and another chart I often refer to as the chart of the U.S federal government debt expense interest


expense per year and if anyone that charts widely available on Twitter just Google it uh what you can see is that you know four or five years ago we were spending two or three hundred billion in interest at the U.S federal level and now it's 800 tracking towards 900 or a trillion and that's because the interest rates are going up so rapidly that the cost of financing our 32 trillion well more than 32 now since we just went through the debt limit and there's another interesting story in the whole debt limit you know


they they in theory they didn't really put a limit on it they just said we're going to keep it open There's No Limit right now it's going to be open for two years and then we'll address it and so I wholly expect that I think that they're going to address it in q1 of 2025 so that's almost a year and a half away now uh and it strikes me that you know by the time we get there but you know we'll have 36 trillion dollars of debt or some some number that's significantly larger


than what we've got right now and and this really is the problem Charlotte they just they just can't stop spending money and they they print money you know well more recently they haven't been but in general ultimately they end up printing money to to cover these these costs in these deficits so um and that's why to me the inflation is very intractable um and even the high interest rates aren't going to solve it arguably the higher interest rates could be making it worse because part of the debt issue or


the the inflate issue I should say is a supply driven piece and and the supply gets addressed by capacity expansion capacity expansion requires capex capex is more expensive when interest rates are higher so people are hesitant to make the capex investment of the cost of more so so we you know we've really kind of got ourselves into one hell of a mess and the FED is really pretty well trapped and um I think the implications for that are that you know one needs to hold sound money Assets in spite of the


fact that um until rather recently they weren't looking all that great um because of fed the fed's tightening campaign but but more recently you know gold is actually kind of hung in there and Bitcoin is actually the best performing asset last year to date in 2023 so two two sound money Alternatives have been doing okay um the part that that frustrates me and probably a lot of your listeners as well because I know you're in Canada is those of us who own the gold and silver stocks we're kind of asking ourselves what's


wrong with this picture you know gold is held in there pretty well and yet the stocks have really been kind of just just lagging and I and I I credit this really to the issue of the fact that um you know right now the U.S stock market is doing pretty well and the narrative is that we're going to have lower inflation and you don't need sound money and I think that narrative is going to be proven to be in error but you know it has right now um people are are not not too concerned and so as a result we're in one of those


periods where you know after a very big run up in the gold stocks and gold from 2018 to 2022 or 2021 I should say 20 Peak was in 2020. um you know we're in a correction and it's it's annoying and frustrating but um I don't think the fundamental trend has changed we are in my opinion we are in a strong bull market for gold and silver and gold and silver mining stocks and Bitcoin and Bitcoin related stocks so and this is all due in summary this is all really due to the government malfeasance I mean


um they they are in a situation where they just cannot stop printing money and so I think the market is saying they're going to have to go back to that not too far out all right I think you've given us so many different directions that we can go down here so let's try to sort out the difference we're gonna go let's let's go back to the banking crisis for just a moment because you mentioned that right at the beginning as this key event that happened between when we previously talked and also right


now and then you're also talking about the lack of concern among investors right now and to me you know we had this banking Crisis happen everyone was very worried about it for a while it was really in the headlines and this seems to happen a lot where these major events happen and then they fade away and we kind of forget about them so maybe we can talk a little bit about that because I know that in the back of their minds a lot of our audience at least is wondering okay this can't possibly be


the end and yet it seems to have fallen forget yeah I mean it's I have the same reaction and it's kind of amazing how you know in this in this um sound bite and media driven world like there's one thing that happens and then everyone moves out and something else is the new new narrative and the new story um you know look couple things one let me credit the authorities with doing a pretty good job of you know calming the herd down and preventing panic and putting in a policy that saved some of


the banks enforcing uh other Banks to take you know put to put deposits in in you know to shore them up I mean I'm not sure how many listeners know this but the FED basically went and leaned on the big American Banks and said you're going to make deposits in the First Republic to save it um you know and so they you know they're pretty good at you know they a problem pops up and it's whack-a-mole they'll whack it and solve it for a while and and everybody calm down and realize that


all right and they they said that if necessary they were probably prepared to back the um the bags that you know the deposits that were over 250 000 which is kind of the limit the United States would be protected and so you know everybody calmed down and life went on and and we're all good um it reminds me a lot of the period in 2007 where uh and N8 uh in the summer of 2007 a couple of the Barefoot bear Stearns hedge funds that were dealing with the cds's and the mortgages the United States blew up very quickly and a


lot of us said oh here we go this is the end of the housing bubble and we were right we were fundamentally right but that was August July August of 2007 right and then in March of 2008 there Assurance itself blew up and went you know was was kind of cratering and was forced to do a merger at two dollars a share which they subsequently revised but um and you know the the you know so these were underlying problems in a leveraged system that that had a fundamental flaw in it you know that led to the GFC well you recall you know it's


the summer of 2007 March of 2008 GFC occurred in September or October of 2008. so to me what we've got going on here or kind of early warning signals I don't know call them maybe Tremors uh in front of the big earthquake and I I feel like the earthquake is coming and the reason I feel very certain that it's coming is that we have an entire world built up on Leverage and based on zero percent interest rates for a very long period of time and as a result of that a lot of Mal investment got made a lot of


bad economic decisions got made and and and what we're just starting to see impact of those right we saw the impact of Silicon Valley their you know their background they bought the rock stuff we're seeing the impact of some of the commercial real estate they're major landlords and some big cities who literally walk away from buildings you know they had a 200 million dollar building they had a you know 120 million dollar mortgage on it whatever the number was suddenly they realized the


more the Billy's not even worse than the value of the mortgage here are the keys okay Lander you owned the building we're gone um and and you know and so you're seeing things happening that are problematic but you know they're isolated and and in the case of when the banking thing in March I thought it would continue and I have to say honestly I am somewhat surprised that everything's kind of calmed down but but it doesn't really I mean once you know he was interested because it hit all the normies and the


normies were you know I mean I had people who had no knowledge of Finance none zero and you know there was a back run or about a bankrupt there were big lions outside the bank it's in my town and so some of these very amounts of what the hell is going on I mean that you know this looks like a wonderful life right and so um but but once you know the the authorities kind of said everything's okay and everything appeared to be okay everybody calmed out and so you know once again I mean it it's each of these


crises have different things going on um and um and the people who run the system are pretty good at kind of calming people down and convincing them the system is sound and so you know as long as your your bank isn't going to go bankrupt and you know most people don't have deposits of over 250 000 in the bag as a practical matter and so they're kind of like okay fine applies to somebody else not me I'm good um where it's going to start to hit home in my view is as the inflation really


starts to eat away at the consumer and you know more and more people start to in a combination of either not be able to make the rent not be able to pay for the food not you know lose their job because their businesses slowed down um and we're seeing this I mean in in small ways but you're seeing it you know in in car sales you're seeing it in house sales you're seeing in other things and and you know there's a lag effect between the time when you know things change I mean the interest rates


went up as much as they did and and the impact is felt and so I I think you know I think the impact is being felt as we speak and it's going to become very notable I mean right now you know that the standard narrative is that you know the FED has an inflation problem and they're raising rates to fight inflation and that's fine I mean looking at the rearview mirror they definitely do have an inflation problem I think the FED is about to have an economy crumbling unemployment slash nobody has any wealth


everybody's hurting problem and at that point in time and inflation I do think is going to come down I mean first of all like all the inflation numbers are bogus anyway so I mean you know we're talking about something that they measure wrong and Etc et cetera and I believe inflation itself actually is persistent but I think I think they're going to figure out a way to get the stated inflation numbers down um even if they have to cook them so that you know the the next narrative will be oh my God you know XYZ companies


laying off this many people and ABC companies laying up this many people and you know no houses are getting sold no cars are getting sold and the economy is tanking um because of these higher interest rates and you know oh my God said what are you going to do about that and at that point in time the FED is going to have to reverse their policies they're going to have to say okay you know we're going to cut interest rates we're going to you know we're going to reverse quantitative tightening I mean and that


to me actually that's another potential area where the problems will surface I think the Bond Market is actually going to be the problem this time I mean there's way too much debt in the world there's not enough debt carrying capacity and I think the Bond Market is going to eventually you know cough up a hairball and say you know I you know yeah I get it U.S government you want to sell it much debt but we don't want to buy it and so you know we're not buying at those rates the rates have to be


significantly higher and boy in a leveraged economy like the one that we've got if interest rates go to six seven eight nine percent look out I mean it's gonna really that's gonna have a big economic impact and so I I think that will happen and at that point in time the FED is going to realize they've gone too far in this Direction I mean very much the way that they've missed the inflation and they went way too far I mean it was very obvious I mean obviously you know I understand why they


do what they did when covet hit I get it they had to do something um but they continued it for quite some time and when mortgage you know housing prices were ripping higher and you had remember back in 2021 and 20 you know like we had people standing in lines or bidding wars on housing and yet the Fed was buying all kinds of mortgage paper and adding more and more money into the system you know and they shouldn't have been doing that they went way too far that way and of course then the inflation surfaced and oh my God we got


an enormous inflation problem let's tighten up like crazy you know let's take rates up one of the fastest rates in history the only person who did Fast was Vulcan you know and so here we are we've gone from zero percent interest to five percent interest in a record short period of time and they've hinted that they may go even higher and they may they may feel like they have to right and and so that's fine but the problem is that's going to cause a different set of problems right and and they're


they're still fighting the last one and the last one will eventually be dissipating and the new one will be on the surface and then they'll reverse course and go the other way and you know they'll start putting money again and of course you know then we'll get the next wave of inflation right so so you've kind of got I like to say you've got these guys driving this clown car you know they're bouncing off these guard rails of extreme inflation or extreme deflation and they need to drive the car


down the middle of the road but they don't seem to be able to do that so it's it and the sad part is it it makes it very hard for all the rest of us because we're just trying to live our lives you know we're trying to we'd like to have some predictability you know we don't want to stand in line to buy houses we don't want to have massive inflation we just kind of wanted a stable price level and a stable economy and that's not what's being delivered because these


guys are are really you know very poor in my opinion at the way that they run this and some people say it's intentional and perhaps it is but leave that aside you know the fact of the matter is they're making extreme Loop they've made Extreme movements and in my opinion they're kind of quote unquote breaking the money you know the prices the money itself is supposed to be a stable thing and prices are supposed to be stable and we we you know we as anyone who lives in this world can attest you know


in the last three or four years prices have not been stable I mean they really have not it's been a it's been one hell of a mess and and frankly they're to Bro they're to blame and you know if you look at some of the charts on fed credibility it's a record lows and I think Frank I think it's going to be very hard for them to get this back under control and to me the measures of how much out of control it is are the price of gold the price of silver and the price of the Bitcoin why have the price of oil right


the energy you know I've come to view you know with some other people who were in this area very deep macro takers I really come to view energy as money I mean energy is the one thing we all need to run the world you've got to have energy and and it's money and so the price of energy needs to be stable to have a stable economy and the price of energy is not stable money is not stable when when you have it manipulated in the way that the Federal Reserve or the other central banks manipulated so


that's that's kind of the big picture right and I think that opens up the door for us to talk about detolorization and that theme which is another one that seems to yeah it's a great be waking up in the meeting yeah it's a great theme as you know there's been talk about this so we're having a brics currency and and uh and as you know the dollar is shrinking in terms of its share of trade and um look I I think that there's no doubt that um other countries and other currencies are going to play more and


more of a role and and I think the big one on this whole dedolarization theme I mean to me the the one that's really most notable is when the U.S decided when the when the war broke out you know the the rest and the Russian civilian grant that war broke out and the U.S decided to seize their assets that was an enormously short-sighted and stupid move on my in my opinion because what it more or less said is to the entire world is you know if you have dollar-based assets within the dollar-based Swift


system and you do something politically that the United States doesn't like they can just grab it you know they can be almost like thieves and gosh you know I mean okay fine so maybe you know it has a certain implication for Russia but I mean India sees that and China sees that Brazil sees that and the Saudis everyone else sees it goes huh maybe I don't want to hold dollars you know and so and it weakens the dollar it weakens you know and and what that implies of course that implies a weak dollar means more


inflation for people who you know in America or people are encountered you know who are basically dealing with the dollar dollar standard it makes everything if our dollar Falls in value relative to assets and things in the rest of the world our stuff costs more so we have more inflation and so so it's it's really an important thing and and you know the brics currency look I mean the the announcement of that I think is Meaningful um actually pulling that off and making it work I think it's going to be


difficult I think it's going to take time you know the Dollar's not going to go away anytime soon I mean the dollar is you know is widely understood recognized Etc but I think it's important as others have pointed out to to view to view currencies is really having two roles the you know there's there's the there's the exchange role I mean look you can be dealing in you can be in any other country and dealing in your own currency and if you deal with somebody who wants dollars you say fine


I'll convert my currency to Dollars I'll do that transaction I'll bring whatever I bought back then I'll go back to my currency I mean you know FX is a very is very open liquid and well the FX rates are very well known so so using a currency to do a transaction doesn't mean you necessarily endorse that currency it's just a tool you're using to make a transaction occur what really matters in my opinion is where are you going to store your money okay what what do you believe has soundness on a longer


term basis and it used to be that the dollar was very sound and people would store their money in the dollar and treasury Bonds were the you know the sound is form of Interest yielding Securities but I think what's really starting to happen is that people are coming to see that the US government is being very irresponsible and the dollar is losing its Reserve currency status and therefore you know it's not necessarily a smart thing to store your excess energy in the form of dollars that you know gold is an alternative


Bitcoin is an alternative oil is an alternative perhaps other currencies are alternatives and so you know all of those things to me what really matters the most about the dollar is not how much it's used in trade because it could still be used a great deal it's a matter of do people trust it are people willing to store value in it because we're in a situation where we run twin deficits we run a deficit on a trade basis and we run a deficit on a government basis so that deficit needs to be funded with


debt and if nobody's going to buy that debt that's a problem that's a significant problem because it leads to higher interest rates and that has a whole series of implications in the economy so um in my opinion what will happen is you're going to see these other things emerge and you're going to see the dollar slide and I you know the dollar Index right now is 102. I could easily see it down into the 90s or 80s and you know America I mean one of the things that having the reserve currency has


allowed America to do is live beyond its means and have low inflation because we could export inflation to other countries and and I think that power is going to go away because I think the world is coming to see that the American fiscal situation is is not healthy and that we you know as I said it in the presentation I made recently at another place which is that you know America's starting to kind of behave more like a third world country where we are actually running large deficits and then


we're going to be forced to cover those deficits by printing dollars even though in this brief period of time we don't appear to be doing that um because you know Jay Paul is trying to be volcker I I think he's going to be his hand is going to be forced and I don't think it's going to be long I think within the next year probably a lot shorter his hand is going to be forced because we just can't continue to run these deficits and expect that the world is going to buy our debt given the


deficits that we're running and so for you when you look at the situation I know you're a big advocate for sound money which includes for you called Silver Bitcoin I'm going to start with a couple of questions on gold and silver I think that so for our audience you know when they hear about all these circumstances that are building they want to know okay so where are the prices going for gold and silver and then yeah exactly and then as you already were speaking about at the beginning they wonder you know gold of


course the price is it's down from where it was earlier this year but still very elevated they want to know my gold and silver stocks when are they yeah so any any comments yeah that was a great question but look I wish I knew too I mean it's been very very frustrating pretty good in those stocks but let me take the medals first I mean the metals in my view even though it doesn't feel like it they've actually held up pretty well I mean you know four or five years ago gold was at 1600 bucks you know and


it's now I guess it's a 1900 it was it's bumped up against 2050 a couple of times and you know it it's not is it gold is falling apart it's just not going up the way it went up when we had the big print you know it went up very sharply from the 15 16 level up to 2000 you know when when the big prints occurred in 2020 um you know and and you know with interest rates going up the way they're going up um typically what that would mean is that gold would go down you know the the


interest rates going up means the real interest rate is is getting less negative it's quite negative because inflation's high but the real interest rate's getting less negative and in general that means that gold goes down um and it hasn't I mean it's you know it's gone from 2050 to 1900 so they're down a touch it's a skosh it's still very close to an all-time high it's bumped up against it three times I believe I strongly believe that gold will take out 2100 and it will Rip to


three thousand when when the first hint of the next easing occurs and I think that that's not very far away so um and then of course silver is is gold on steroids as we all know and I think silver will go through 30 easily and on its way to 50 and then through 50. I mean it's amazing to me that silver is the one commodity in the world that's never beaten its all-time high um you know the last time I was at 50 was 2011 before that it was the hot Brothers in the 80s so um and I I think this time silver will


easily take out 50. so um when we get the next wave of inflation and the central banks pivot based on uh you know inflation I mean look there that's the other thing they're going to kind of Define what's acceptable inflation up you know it's been two percent it's been the target I mean you've seen them floating a few ideas like well maybe three is okay maybe four is okay and so I think we're going to get a little bit lower inflation and a lot more unemployment the economy's slowing down and they're


going to Pivot with elevated inflation and when they do gold and silver are going to take off like rockets and and go to much higher numbers and so so to me that's really the key to then affecting the stocks now the stocks are the golden silver mining stocks are very levered entities and it's they're very much driven by expectations of future gold prices and it and I it's interesting because I interface with a lot of people at Toronto who are in the gold and silver stock business and I


interface with their analysts and I look at a lot of the projections you know a lot of the major banks in Canada and other people around the world are kind of predicting gold prices two three four five years out will be sixteen hundred Seventeen hundred eighteen hundred I don't think there's any chance of that I think there's almost zero probability of that occurring but I think that's what the stocks are sniffing out the stocks are saying well okay you know the Asic the car Asic is the um the operating


cost of pulling outside of the ground right um and you know the Asics have crept up from 900 a thousand to kind of 1200 maybe as an average today some are higher higher that the 1300 and so it you know a 1900 gold you're making 700 an ounce okay to find the new ounces that's got to pay for the capex but you know that's not a bad margin to be honest with you I mean the industry's been in a lot worse shape and you know we all know the costs are creeping up so that Asic goes up every year because


there's inflation and really the gold stocks do well when the price of the metal is going up faster than the Asic is going up and right now the price of the metal is kind of flat and the Asic price is going up and that's what's really that margin compression is what's caused the gold stocks to be really Punk and and it's it's frustrating I mean I've never honestly I was talking to a couple of gold mining Executives yesterday really very well known guys who've been very successful and they


said Larry this is the worst I've ever seen it I mean this is almost worse than 2015. I gotta tell you 20 I've been in the trade since 08 I've been buying gold stocks 2015 was horrible I mean absolutely and and it kind of feels that way to to me now and I I've said this on other interviews I mean I I you know I feel like puking when I look at my gold stocks on the prices they're at my performance in my portfolio it's like I want to puke this is awful and I've only felt this way a couple of times in the


past I felt this way in 08 because the gold starts going about 50 you know in three months I felt this way in 2015 after the you know the bear Market that started in 2011 kind of bottomed in 2015 oh it's awful 2015 was just Dreadful and I felt this way in March of 2020 very briefly when the kova thing came and everything plunged including gold stocks and I had you know the exact same thing and and so you know if that's any indicator when you feel this bad um it just I don't even get much worse


and so um and these things are totally sold out completely sold out they're insanely cheap I mean I was researching a company yesterday company has 150 million of cash on its balance sheet now it's got some debt to a similar amount of debt but um market cap on the company is 69 million dollars I mean this makes no sense I mean you know I've got companies that trade it three times cash flow um I mean this is investors are treating these stocks as if gold will never go up again and um look goal you know gold stopped


going up when Powell started tightening things and and you know it it it is and as long as he's tightening things and as long as he's saying inflation is going to come under control and as long as he's saying you don't need the protection of gold there's a certain part of the population that believes him now I don't happen to be part of that population I think I think he's wrong and I think the Market's going to show them that he's wrong but for now that's


kind of what people are thinking so to me I mean they say bull markets trying to throw off all Riders well anybody who can ride the gold and silver stock bull market that we're in right now my hats are often because I got to tell you I'm a professional at this and it's hard as I mean it really sucks right now what's going on having said that I also know and because I've done this before and I've been through a few of these Cycles before that I really strongly suspected in two or three years I'm


going to be saying thank God we hung on and and even thank God I mean there's some things I'm buying I sell some of the more expensive stuff to buy some of the cheaper stuff you know it's like Jesus thank God I made that buy you know it's up 5x from where I bought it I mean I think that's in our future but you know my future I mean you know that's two years from now maybe you know three I mean to get to 5x I mean um but I can tell you they're so beat up right now that if the FED were to come


out tomorrow and say you know what we're done raising interest rates that's it we're not going any higher we're just going to stay flat for a while my portfolio would probably double I mean it you know it just just a just a neutral just a pause because what they've done is they've skipped but said they're still going higher and so people you have to remember you know the people listening to this or tend to be you know self-educating and are different than the average people average person


believes what the Federal Reserve says I mean they really do and so you know the average you know Investment Bank parrots what the Federal Reserve says and so you know and I've got banks in Toronto telling me Gold's gonna be 1700 in three years well of course it's going to be 17 three years you're right the gold stocks don't look so great but I think you know I I honestly think in in three years Gold's gonna be thirty five hundred dollars and if that's the case these


companies are going to be just throwing off cash like you read about so you know it all kind of depends upon your perspective and who you believe if you believe Jay Powell you believe their narrative okay you know and and so and and like a lot of things in life Charlotte you can look at this and think all right this really sucks my stocks are down or you can look at it and think oh my God they are giving me an opportunity to buy really high quality companies at really cheap prices huh I've you know I have some assets over in


the stock market that happened to be in my opinion stock markets are very overvalued right now are quite vulnerable maybe I should sell some of those assets which are expensive and I should use the proceeds to buy some of these gold stocks which are insanely cheap do you know what I mean and so so you know there's an opportunity here right I mean it you know it what I've got sucks it sucks that you know what I've got is down but in turn that's also you know Mr Market is giving me giving


me an opportunity and that's and that's what you know that's what Buffett has always said that's how he made all his money which was he said you know you want to be you want to be bold when others are fearful and in Gold stock land right now everybody's fearful and depressed and you want to be you know you want to be cautious when everyone else is all bled up and you know you look at the U.S stock market right now and Nvidia and all the AI Trend and you know those gauges of you know fear agree


I mean it's like extreme greed I mean everyone's just like oh my God I got to get in on AI right and and my opinion is that's going to end very badly that's going to end that's going to end very badly those people chase it are they are not going to be rewarded for doing that I mean that pattern repeats itself over and over again and in turn if you take the time to understand the good gold stocks and you buy the really good ones when they're this cheap you know you're


gonna you're gonna make sure serious money you know as as it becomes clear that the Federal Reserve really can't stop printing money and that's that's the underlying thing you have to understand the structure of the macro economy you have to understand the structure of um the debt situation that we've got and and when you do you come to the conclusion that you know that their choice their choice is between letting the economy collapse and printing money and you know admittedly they printed too


much fine they're tightening up fine they're not at the economy collapsing part but we're starting to see what I call rivets popping Silicon Valley Bank you know um written you know with their problems and there'll be more there'll be more rivets popping and then you know eventually the rivets are going to get louder the inflation issue is going to get less loud the rivets popping is going to get more loud and they're going to change their policies they're going to start to print money again and this


that we're in is going to take off I mean that's this is this this you know that the the advantage of being older as an investor is it's kind of like you've seen this movie before and and I you know I've kind of I've seen this movie before and I don't I don't like it I don't like being in the position I'm in right now where my stuff's not working very well but I but I'm not a day trader I'm not I'm not buying and selling every day and I'm not investing for the next


week you know I try to put large sums of money in trends that I think are very sustainable and I think the trend towards inflation is quite sustainable and therefore I think the area those of us who are in The Sound money Camp are going to be pretty well rewarded when the next wave up comes through which you know I expect to start within a few months to kind of worst case a year I think you know I I don't see how this lasts much longer um you know if you consider the 08 example you know bear starts fails in


March the crisis was in September in those six months so you know um let's say in Silicon Valley Bank filled in March you know maybe today things happen faster because the internet being more developed who knows um you know I I would I would expect that the trouble will show up sometime you know this all if not if not sooner so uh and and that you know that'll shove that'll shove all this stuff up enormously uh so it's it's very difficult though I mean let's not let's not kid ourselves


it is it's extremely difficult to be mentally tough through this stuff um but I I think I think you have to know which own I think you have to know why you own it I think you have to ask yourself what you believe I mean let me ask let me answer one other question I think it's important um somebody asked me another podcast so how could you be wrong what you know what's the alternative side you know you know what's what's the what's the counter argument to your argument the counter


argument to my argument and people will laugh when they hear this because they'll realize I think like me they'll think the odds of this are quite low but um the counter argument is that the um the U.S federal government suddenly gets responsible right and says you know you're laughing right said incense all right we're going to means test Social Security we're gonna we're gonna cap you know uh Medicare um we're gonna um you know reduce Medicare and Social Security benefits uh we're gonna reduce


our military presence in the world and take our military spending down we're gonna you know we're gonna increase taxes and we're going to balance this budget okay we're gonna suddenly US federal government is going to run with a balanced budget in a responsible manner okay um now as you might be aware try to do that would be political suicide you know because right and and that's why I think the odds of that are quite slim but but if that were to occur the thesis what I'm talking about would be less likely


you know and and um they they could theoretically um maybe put us on a more sustainable path having said that I think we're beyond the point of no return because the debt's so large even if it did that um you know this the burden of the existing debt is just bearing down on them and I don't see how I don't see how they can continue without additional monetization of that debt I just don't see it mathematically but but that that's the that's the case that's the bear case on my thesis that the


government gets much more responsible and you know most people hear that and they laugh they say well that's not going to happen I say I agree that's why that's one position of the way I'm positioned but but it you know it's it's not impossible I mean a lot anything can happen right so right so you're right when you do mention that people will probably start laughing all the time which you know should probably inform how they themselves and position so this is all really good information I also I did


want to make sure to bring up Bitcoin with you which you I think you mentioned a little bit earlier and you know I think you're a little bit of a rare well maybe not totally rare but I know that among people who are interested in Gold they are definitely not always interested in or a fan of Bitcoin so I was wondering if we could come at it from that perspective a little bit yeah yeah try to help you on that because and I look I understand you have to remember I was in Gold long before Bitcoin


existed I've been asking gold since well before 2000 and I I dedicated myself to gold in 2008 when the when the GFC happened and they printed all that money I said okay I get it you know they're going to inflate the out of this currency I need to be in gold and silver a Bitcoin was embedded in 2008 I didn't know about that um and so you know I am first and foremost the golden silverbug and gold and silver have been money for 5 000 years and and you know their Incorruptible money and I call them


analog sound money because you can touch them feel them you know they're useful for jewelry etc etc um so Bitcoin and and I understand the animosity that a lot of gold people have for Bitcoin because they've been carrying the sound money flag for years and years and years Here Comes This technological development that it's gonna it's gonna mess they think it's gonna mess them up but it's not they can actually coexist quite well and they they play different roles um and and and then in turn there are a


lot of other things around Bitcoin that that sent them off the set they're all these coins they're all these fake cryptos there's you know there's Sam backman free there's all the people yelling and hyping and pumping the I get it I totally get it and so if you're a sound money old school gold person you'd have a natural inclination to say all crypto is okay I get that but let me make a point that I think people should try to understand you know and and should listen to if


they are a gold bug and they're skeptical of crypto or skeptical of Bitcoin I should say and that is this Bitcoin is actually a technological innovation okay it's something that never ever existed until it existed and what why what is that technological innovation Bitcoin creates quote-unquote digital scarcity if you think about anything digital you know a CD a movie a a computer file you know a Word document whatever and anything digital could be copied a million times right there's


nothing scarce about anything digital but a blockchain with a proof of work algorithm with an immutable nature to it and you know all the other things the having and the difficulty adjustment a lot of technical things the guys who invented Bitcoin the people the anonymous people and I think it was a team I don't think Satoshi is one person I think they're a bunch of people and they realize that if they became public that wouldn't help the cause so they just put it out there and said here's


this thing we invented see what you think of it um I think the Bitcoin blockchain the Bitcoin innovation created in my opinion the first really strong set of protocols which allowed for digital scarcity and this this is a big deal I mean this is like you know I mean the printing I mean when it came along nobody nobody a lot of people realize that's a really big deal just the same way that a printing press suddenly did what somebody could do by hand or a car did what else did or you know a telephone did what a telegraph did or a


telegraph did what you know Pony Express did I mean you've actually got to wait the protocol digitally scarce and truly probably digitally scarce and and until bit came out coin came along he never had that it just didn't exist and so so as a result um you could create you know something that that people could own and and work to get through mining of Bitcoin that um you know which involved energy by the way I mean again all money goes back to energy and and you you could have a token you know a a marker a ledger that


said I own one Bitcoin very similar to the way you know I I people say well it's not tangible you can't touch it that's correct but really you know money is just a ledger money is what people agree you know it I mean back in the caveman days right people were sitting there and they were thinking to themselves you know um I mean they didn't even have gold was the money yet right um but they their markings on walls of caves and and it was clear that they were keeping score you know like okay I


killed three bison how many did you kill you know you killed one bicycle you know what you owe me two bison and and so you know money is social obligation right it says I can use my money and you'll give me something to give me food you'll give me gasoline you know whatever it might be you give me labor I mean it's it's it's a way for people to exchange value amongst themselves and and and so you know it it so happens that gold became the soundest form of money because it was scarce and it was you know tangible


and you could you could trade it you knew what it was but also even before gold people were just keeping score I mean if you know we could say I you know I cook three meals for you now you owe me three meals back and that didn't involve any gold or any money it was just a score keeping mechanism and and that's what Bitcoin is Bitcoin is a digital entry that says I've got one of these things things you don't I'll exchange it for you but you got to decide you know we'll sign a price what


do I get in exchange for it so so really money is you have to accept that money is a ledger it doesn't need to be physical you don't need to touch it it doesn't need to be a physical tangible thing and then you need to accept that this Ledger is truly defensible and immutable and scarce right because we all know that if you know if money is seashells or money is sand well there's zillions of those and that it doesn't have any value I mean the other reason gold works so well is money is there's


not a lot of around right so you know it was hard to mine and and therefore we knew that if you'd mind it you spent the energy to mind it that was proof of work so so gold was the best money and then Bitcoin comes along and it would really in my opinion it really does represent a form of quote unquote digital goal depending upon the adoption okay if we all didn't agree it was digital gold it wouldn't be digital gold and so as I've said in the past there are two things that can destroy Bitcoin one it


technically doesn't work anymore I.E the system breaks and it's worked for 14 years you've got these core develop helpers running it you know there haven't been any breaches of security it totally works so I'm quite convinced that the technical risk is quite low the other would be if people collectively decide ah you know we don't care about this we're not going to use it there's no there's no you know you say it has value but I don't think it has value I'm


not going to use it fine okay and that's your right but the point is is and I used to be about Capital this before I got into this investing in sound money the point is dogs are eating the food and what do I mean by that I mean people are using it and every year more people use it and you look around the number of addresses the number of transactions the number of use cases you know I mean in Nigeria 20 or 30 percent of the people use it because the money there sucks and this is how they actually exchange value


with one another they're using the lightning Network to do it so so the point is adoption is growing I mean more and more people are using it so so what you what have you got you've got a digital system which has true scarcity and immutability which is now becoming easier to use with the lightning Network and you've got more people using it so and it's easy to send I mean the lightning Network you can send you know large amounts of value for less than a penny Okay I mean the on-chain transactions cost more but


um but that's what the lightning layer was invented for and and and you're you've got more and more people adopting it and we're in a digital world I mean I could send you a billion dollars of Bitcoin if I had it and you would have it in 10 minutes I mean if I were to try and send you a billion dollars worth of gold I'd have to get 10 brakes trucks you know on a bunch of armed guards so so the point is you know it's instant settlement it's final settlement and in it and it and it represents a


form of money that we've never known before so it really is a technical a legitimate technical Innovation all the other by the way ethereum Dogecoin oh that's all crap that all has some guy at the top who pre-mined it kept a lot for himself and wants you to buy his so that he can get rich off of you Bitcoin there's no CEO of Bitcoin there's no management team of Bitcoin there's some core developers who collectively you know monitor the system and keep it make sure it keeps running


in the correct way but but there really is nothing you know there's nothing that can quote unquote change the 21 million cap I mean you'd have to have a large consensus of the people to do that and nobody who owns it would ever vote to change it because it makes no sense it would dilute their value and so so here you have a form of money that is digital easy to move around Totally Secure you can you know you can secure it with 12 words and as I say it really is digital gold and and you've also got you know so


you so you got two things going on both of these both these things are going to go up in value as we discussed earlier money is being printed by governments and they cannot stop I mean they just can't because of the way the politics works if they stop they lose their jobs and so they have to continue to provide benefits that they can't really afford and the way they do that is by printing money okay and that printing money dilutes the value of all the money held by everybody else we all know that so


that's the base case all right that's going to drive the price of gold up price of silver up price oil up the price of Commodities up all prices up it's also going to drive up the price of Bitcoin but the thing that's going to make Bitcoin go up even faster than gold and this is why Paul Tudor Jones calls it the fastest horse in the monetary debasement race is that there's an adoption curve going out at the same time right so right now maybe 10 of the world knows about and owns some Bitcoin


probably while the world lasts but I mean 10 of the western world knows about and owns some Bitcoin well guess what as more and more people come to know about it and think you know this thing is outperforming gold and it has outperformed gold since 2008 you know both on a on an irr basis and on a sharp ratio which is an adjusted risk basis they're going to say you know what I should have some of this too you know and and my view is they're both going to go up I mean Gold's going to go up you


know the next couple years Gold's got to go up 2X and Bitcoin is going to go up 6X or 8X I mean it's it and the reason for that is just that this adoption curve drives you know the Bitcoin I mean there'll be more and more people in the younger Generations like it better than gold you know I mean My Generation they own a lot of gold and they want to hold their going I get it I totally get it and I mean look what's the negative of Bitcoin the volatility of course I mean gold doesn't Gold's never going down to


70 percent a year ever in Fiat terms I mean a big down year for gold is maybe 20 and Bitcoins have repeated Cycles where it's gone down 70 percent but the reason that occurs is we're still in that very early days adoption period where it's not widely distributed and you get you know you get crazy excitement and it goes on a big run to 68 000 and it gets way overvalued and then you know you get people dumping it and say oh my God you know that's that's crazy it went so far so fast it went


from 5000 to 68 now that's nuts it's a bubble and they sell it and it crashes back down to 15 but you know but the 15 was higher than the last cycle where the low is four and the cycle before that the low was a thousand cycle before that the low was 300. and so with each of these Cycles the highs are higher and the lows are higher and so you know and that's because there's more and more adoption it's more and more widely spread and so I can fully see where you know not that far out Bitcoin which is


now at 30 000 roughly will be at a hundred you know and probably gold will be at 3 500 at that point in time and so what I try to convince people in my gold fund to do and older people and mostly because my client base is quite old is to to have a little bit of both you know fight have eighty percent ninety percent gold but if you're not in Bitcoin you're missing kind of uh the asset which although volatile has a chance to be one of the highest performing assets out there and so I I say I also say to


people you know the only wrong allocation to bitcoin is zero because I sincerely believe Bitcoin is going to go up 10x 100x over the next you know 15 years and it you know even if you only took one percent of your net worth and put it in Bitcoin if it went up 100x you know that's that's doubling your net worth and you know and that's and if it goes down if you lose one percent and it goes to zero which a lot of people think it might or some people think it might yeah fine you still got the other 99 in


gold or whatever else you own so so the point is you've got this extremely asymmetric asset and and you're you're also betting on a technical Innovation that has never existed before and so you know this is I mean you you know you wanna you wanna not own a share in the automobile companies you want to not I mean it reminds you the other things it reminds me of the internet so much it's network based right I mean I I recall very clearly because I was an investor in it in the early days of the internet


there are a lot of people ah who really needs this I remember I was an early investor in the PCS I mean my first boss in 1981. we had a PC see and it was we were using it for word processing it replaced in IBM's electric which is a typewriter the best typewriter of the day he's like yeah this thing's nice but you know the selectric works pretty well and why the hell do we need it I mean I was like I was like dude do you realize all the they're gonna be able to do on this thing I mean you know they're gonna


they're gonna put a spreadsheet I mean it's like and right and look at I mean now imagine living today without a PC right you know I mean you couldn't right I mean imagine you know imagine I mean I remember when we didn't have the internet do you know what I mean and and we were doing fedexes and uh you you wanted information you had to FedEx it to somebody or we had fax machines right that was how you exchanged information well that's all gone and and so this is just the next technical development in


in money and thankfully because there's a fixed supply of them it's actually a really sound money it's it's a sound and deflationary there will only be 21 million Bitcoin you know they're they're you know there's 400 billion dollars of Fiat wealth in this world and you know there's 12 trillion of gold and there's half a billion of of Bitcoin you know now I'm not suggesting all that money is going to go into gold or Bitcoin but I am suggesting that if the governments don't act responsibly and we


all know that they're not likely to act responsibly given the way they set up that more and more of people's savings will be put into these two areas that will protect them from this you know terrible inflation that we're all suffering from I mean I just I went to the grocery store yesterday and I I was I I play this game with myself a lot of time to go to the grocery thing I wonder how much this basket of goods is going to cost right I fill it up as you know and I get meat and the normal stuff and


I thought you know maybe this is 120. I hope it wasn't that much I hope maybe this is 120 maybe it's 120 if it made it's 130. I went there I'd say no it was a hundred and eighty dollars I mean right and and I I'm guessing I'm guessing a lot of people listening to this are having the exact same experience and it's like holy this money is just not buying as much anymore you know I mean it's just not and so you've got to ask yourself all right how do I protect myself from that how do you


know and so the answer is you get the soundest money out there you know and and the sound is money is silver and gold and Bitcoin and and look for for periods of time because they're volatile for periods of time it doesn't feel right it's going the wrong way you know if you bought it at 68 and went to 15 you feel like but what you've got to think to yourself is no I've got a longer term perspective on this I mean the guy one of the guys Bill Miller who owns both Bitcoin and owned Amazon he


owned Amazon right from the beginning he made he made billions of dollars on Amazon but you see he points out it four or five times in the period of holding Amazon his the stock had gone out 60 or 70 percent right so you know he he'd sit there and he'd have I've got 100 million dollars of Amazon well you know a year later you had 30 million dollars of Amazon you didn't sell it and that's my point if you if you've got a good ass that you know is going to Trend up over time


then you got to live with the volatility because you know and believe in your thesis about what's right so um you know I would just say to people you know make sure you have your savings in things the government cannot print because I think I think everyone is going to be shocked by I mean we've we've already been shocked to be honest with you I can't believe the price of everything today and sadly I don't think that's reversing anytime soon because I don't think these governments are going


to get responsible I think they're going to run this thing right into the ditch and and you know therefore you know I mean it'll be good for Real Estate too by the way I mean you know you can't print real estate but the negative on real estate is the taxes and they you know these property taxes are eating eating people alive you know at least in the U.S I don't know if it's as bad again so anyway that's that's kind of like that's my Spiel and I'm stickable that


um hey when's it gonna happen a lot of people ask me that I don't know I think I think we might have complete Fiat failure by as early as 2030 which is seven years away it could happen even earlier but this goes let me tie this back into what I said when we first started speaking um when it happens it can happen pretty quickly the Silicon Valley Bank was perfectly healthy on March 1st there were some rumors that they had some trouble in their long bonds and a few people did the analysis and and then one


of the big Silicon Valley venture guys looked at it and said huh this thing's not so good and then he said I already emailed all his portfolio companies and said if you've got your money at Silicon Valley back I think we should pull it out and and like a week later it was dead it was kind of like they all included this is bad it's dead okay I'm not suggesting that it'll happen the exact same way here but you know um the Soviet Union the Soviet Union fell Balaji did a great uh people should Google it and listen to


the Balaji podcast on this you know the Soviet Union was a big powerful scary thing until one day it wasn't it just you know and they were lying about the numbers the parallels between the Soviet Union and our Fiat monetary system were actually quite strong and then then one day it just kind of fell apart and you know I could see and I'm not suggesting I'm not trying to be a fear-monger and I'm not suggesting people panic but I but I could see a scenario where you know one day everybody kind of wakes up


and something has occurred and suddenly goals at three thousand or four thousand there's not much for sale and you know the US Something's Happened with the US government and you know the bond market is selling off hard and interest rates are going up very fast and then you know kind of the way somebody screams fire in a crowd theater everyone's like holy you know this currency is collapsing you know these I mean I I gotta you know God I gotta defend myself I gotta get out of these dollars I gotta


sell these bonds I gotta you know I gotta get into something that and and meanwhile the price of gold is going up really quick the price of Bitcoin is going up really quick the price of real estate is going up really quick and you know there's there's kind of a herd mentality in the self-preservation mentality that suggests that people will really just start piling into this and you know this is how this is how it happened in Weimar Germany this is how it happened in Venezuela this is how


it's kind of happening a little bit today in Argentina and and turkey I mean it you know currency failure you know it starts with inflation it moves into high inflation and then eventually people come to realize they can never stop the high inflation and it moves into oh my god get me out of this and and right and and so and in a digital age where the word spreads quickly just as a Silicon Valley Bank thing one day the Silicon Valley Bank was fine a week later it was bankrupt you know a similar


thing could kind of occur in the monetary system so you know if if that's the case and that's a possibility even if it's a low probability possibility you definitely want to have some sound money in case that's what happens right now that's kind of how I see it so yeah I think you've laid out really well what could be coming but in addition to that how people can protect themselves and make sure that they don't you know get get caught up in this and get hurt so I think this is really good but thank


you so much for for coming on to explain it well happy to do it I suggest people that if they want to learn more about this stuff you go to my website it's free um it's called get ema2 Edward Mark Alpha the number two.com and we put out our quarterly letters in there where we write about all this in detail there's some papers in there on bitcoin and other things and um and I'm you know I'm on Twitter as Lawrence Lepard my DMs are open and um you know we're just trying to educate


the world to what we think is kind of an incipient monetary you know storm that's coming I mean it could be a modest storm it could be a catastrophe I don't know what it's going to be but but it's definitely a storm I mean when you pay 170 for groceries that used to pay 100 for something's wrong and so I think people need to start thinking through the issues surrounding this storm and trying to understand that you know the best way to protect themselves is to be in in sound money with their savings


anyway that and and and that this will I think you know help help them make it through a transition that if you're not prepared for you know I mean the stories and these were these high inflations have occurred I mean there's stories of people who had enough money that they should have been able to live out for the rest of their life and it ended up being enough to buy a loaf of bread you know what I mean because the money just got very diluted and and that's that's the risk that we all face sadly as a


result of the way the governments have behave you know and it's not a guaranteed risk but it's not a zero probability risk either right thank you