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 how are you trading this things I've heard I've heard some pretty spectacular sayings I I have said this before and this may be what you're referring to and a lot of people think I'm just kind of being hyperbolic or trying to get attention whatever but I said it's the biggest trade in history hi this is Mike Maloney and I've got a special guest with me Brent Johnson from he's got the dollar milkshake theory and we've had a lot of people asking about this and I'm

probably one of the only guys in the precious metal sector that absolutely agrees with everything that Brent Johnson has to say so Brent how are you I'm good thank you for having me I've been looking forward to talking to you so this this should be fun yeah you and I are on the same side on this thing now I came to these conclusions because I just believed that we're going to have a big deflation but the dollar milkshake theory goes right along with everything I was saying as far it's for people in

the United States for the dollar to go up in purchasing power abroad which you're talking about exchange rates changing right that's deflationary for all the products that we import right that's right that's right and it should you know the a lot of people talk about how we need a weak currency to get out of this but you know strong currency can help you get out of it as well strong currency is better for the middle class than a weak uhrin see for our viewers that that aren't familiar with

you can you tell us what the dollar milkshake theory is and how you came up with sure so my name is Brent Johnson I have a wealth management firm called Santiago capital in San Francisco and as part of my wealth management practice I do a lot of macro work so I'm not just somebody who goes out and buys you know a 60/40 portfolio of US stocks and bonds and I've always had a very keen interest in the big global macro picture I'm a huge believer in gold I think gold should be in everybody's portfolio and

to be honest it was a lot of my work in gold that led me to the dollar milkshake Theory you know I was like many other people after the global financial crisis in 2008 and I felt that gold was going to do very well and it did for the first couple years you know qe1 was very good for for gold qe2 and three were not very good for gold and while we were going through q2 qe2 and qe3 and you know it's kind of the 2012 to 2014 timeframe I was thinking to myself you know they're printing all this currency the dollar

should be losing value and gold should be going through the roof and it wasn't now you can make a lot of arguments of why it wasn't and or why it was or why it wasn't but the bottom line is it wasn't doing what I thought it was supposed to be doing and so I felt like I had missed something and so I kind of did a really big deep dive back on my whole thesis for owning gold in the first place and what I figured out was that the gold pieces still made a lot of sense but that it might not pay off in

dollar terms as soon as it would pay off in other currencies and the reason is because the dollar for many reasons as many flaws as it has is better or more preferable or just going to be the current the global reserve currency longer than these other currencies are so I I understand all the flaws of the dollar I understand all the reasons that people don't like the dollar I always ask them to find me another currency does that doesn't have those same flaws and and and and it's hard to find another fiat

currency that doesn't have those same flaws and so on a relative basis to the other fiat currencies I think the dollars gonna rise significantly and I think as we get further into what I think is going to be a currency crisis I think people from around the world for a number of reasons which we can talk about if you want will choose to put their capital into the US and the US dollar as a relative safe haven know again not because the dollar is great but just because it's better than the

other choices and I think when that happens it'll push the dollar higher it'll push US dollar asset prices higher it'll be deflationary for the rest of the world and you know it'll eventually I think that we will have a spiking dollar which will then it will either crash or it will be devalued or it will some you know global you know conference they'll come together and devalue the dollar and maybe introduce a new system but I think before we get to this you know period where the dollar falls we go

through this big spike first and that's the milk shake theory essentially that the rest of the the US and the rest of world is going to print all this liquidity but the US is going to suck it up yeah I believe absolutely the same thing and we have better markets and we've got better interest rates we don't have negative interest rates and all those things beyond so your theory revolves around all of the international debt that's denominated in u.s. dollars correct that's correct and so a lot of

times especially in the gold world people will say look at all that debt that's horrible for the dollar and in the long term they're absolutely right it is bad in the long term but in the short term until there is a new system that everybody agrees to go to the debt is actually demand for the underlying currency and there's more dollar demand around the world in the form of debt than any other currency and it's not just the u.s. dollar debt within the United States there's you know trillions

at least 13 trillion and you know you can actually argue that it's much higher than thirteen trillion issued by entities outside the United States that owe us dollars so that's demand for dollars it's demand on an annual basis just to pay the service charges and then as they come due it's demand to pay off that principle and you know so that demand for dollars it's just kind of an ongoing and ever-present and it continues to grow larger all the policies and procedures and the bailouts

and the packages and the government this and the government that that have been put in place since 2008 nine all they've done is kick the problem down the road they haven't solved it and again just then since March all the bailouts and the proposals in the in the you know the stimulus they've just made the problem bigger even with the swap lines that we've extended to other countries it's just made the problem bigger it's increased the actual size of the demand for dollars and again if the whole world

were to decide in mass that we are going to leave the doll and we're all gonna go to gold or silver or euros or yen then the dollar would be in big trouble but when they do it just piecemeal a little bit one by one there's not enough firepower to kind of take on the overall system and the the system as it gets bigger just kind of reinforces itself and so that's why I say you they can push this down the road but they have no they have done nothing to solve it yeah you said that the dollar was the best one out of all of

those currencies Max Keiser used to say the dollar is the leper with the most fingers left I might have to steal that one that's a good but you're a big believer in gold too and absolute milkshake theory the dollar can be going up and falling against gold if other currencies are falling faster than the dollar correct that's correct and so I've been saying since 2016 or 17 that we will eventually get into a period where the dollar and gold are rising together and every of people tell you no

that's not possible they're total antithesis of each other well it is if you just compare those two but if you if you look at the full world of fiat currencies and other assets there's no reason that the dollar and gold can't rise together versus everything else now maybe gold outpaces the dollar maybe dollar outpaces gold a little bit but versus everything else I think those are two of the most important assets down over the next couple years I've been saying that the dollar and gold there

will come a time where they rise together not for the same reasons but I've been saying that for I don't know for more than five years and I just do you think that we are sort of nearing an endgame with all of the crises and stimulus and all this stuff that you're seeing happening you know Doug Casey once said things will happen very slowly until the day they don't and then they happen real fast you know that's a that's a very good way to say it I do think we're getting closer to it

interestingly I think it can actually take a few more years to play out and a lot of people I talked to say oh how is this not going to end in the next six to twelve months and I understand that that that that idea because I mean things are kind of crazy and they seem to be speeding up in it towards the crazy but things were pretty crazy in 2009 as well right and things were pretty crazy in 2011 and things were pretty crazy in 2014 and it's it's it's it's pretty miraculous that the central bankers and

the monetary monetary authorities can keep the plates spinning as long as they have yeah but you know from from Machiavellian perspective you kind of have to give him credit they've been able to do it again I don't like it I don't like these policies that they put in place but if I just step back and analyze it they've been able to keep the plates spinning and so I think maybe it's possible it lasts another couple years but you know you kind of have to be prepared for it to end next week as

well well the Federal Reserve seems to have this impression that the stock market is the economy and when the stock markets go up it fools the public into thinking the economy is right so they've got this mandate sort of making sure that the markets go up and as long as the markets go up that will also be one of the factors that attract foreign capital you know being exchanged for dollars pushing the dollar up to invest in the US markets because if other markets aren't doing as well if the place to be is the US stock market

then along with your that's part of this sort of coincides or feeds into the dollar milkshake theory there right yeah that's right and you know when I I've always throughout my whole career I've always worked with individuals I've never been on you know where I had clients where there were institutions and professional investors so I've always you know had to try to figure out some of these complex things that take place in the financial world but explain them in a way that you know an

individual that's a software designer or maybe they have a manufacturing business or maybe they have a trucking business they're very smart they're very successful but they're just not used to the lingo or the intricacies of you know somebody who works in finance day in and day out so I've always had to try to figure out analogies and ways to explain it in terms that they could understand and to tell a story in a way that it understands you kind of need to tell it in a linear fashion oh you know chapter

one chapter two chapter three but the reality is financial markets are very complex you know I I am under no illusion that I'm going to get this exactly correct and things are going to progress in the exact way that I've laid them out so I've talked about some things that will happen and I kind of see them as a progression but I'm not convinced they happen in the exact order that I lay them out in order to tell the story if that makes sense and so you whether the dollar goes higher first or

where their gold goes higher first or whether you know stocks pull back and then they go higher I don't know exactly how things are gonna play out I have a thesis and a groundwork and a framework from how I think the world's gonna develop over the next couple years and I've seen nothing to kind of dissuade me yet front from that from that thesis but I certainly don't have a crystal ball and I'm certainly not going to sit here and say I can predict exactly how this is going to go a lot of the reason that

I have accounted the table as hard as I have on the dollar is because I am such a big believer in gold and I'm not somebody who's saying the dollars gonna go higher because I want gold to go lower part of the reason I've been trying to explain why the dollar could go higher is so that the people who own gold are ready for it if it happens I don't want people to get knocked out of their gold positions because I think Gold's gonna save people long term but what I've been saying for a couple years

is if we get into a situation where the dollar spikes gold will probably get sold in the very short term to fund whatever liquidity needs they have and that's exactly what we saw in March in March we got into a liquidity squeeze though it was a panic for lack of a better word everybody needed dollars people in the US needed dollars and people and outside the US needed dollars so they sold everything they sold stocks they sold commodities they sold government bonds and they sold gold you know gold pulled back I think a hundred

or $150 in March the miners went down 50% in March now both gold and the miners have recovered faster than anything and now they're back near their highs but my point is again is that people may want to gold but they don't have to have gold but many people and organizations who operate on the world stage they have to have dollars they might not want dollars but they have to have them to operate and so if you get into a situation where you where you sell what you have to not what you want

to it's possible the gold gets old along with that and you know whether that happens again in the future I don't know I think the dollar is going to go a lot higher so I think there will be periods of time where the dollar or where the gold potentially sells off for short periods of time but I think when that happens it's going to be a buying opportunity because I do think at the end of all this gold is the last man standing and gold is probably the main asset that you want alone yeah you know you talked

about the Popo back and getting liquid people just needing to raise capital it happened in March silver took a much bigger hit than gold yeah yeah and then and then subsequently it's up 45 or 50 percent since I pull back so once market and once markets get real iqua fide it's gold silver the miners you know precious metals they are gonna be very attractive assets but in a fire sale that's what they're for and and this this is this is the other thing too is like part of the reason you buy gold

and silver is that if you get into a crisis you have something to use and you know what we were in a mini crisis in March and some people had to use their insurance policy right it it helped them bridge that gap now hopefully they've been able to get back in and buy some of it before you know went all the way up but again especially for people around the world gold has been doing for the last several years a lot of people in the US have said gold hasn't been working but I think Gold's done exactly

what it's supposed to do for the last you know five or ten years the crisis wasn't in the US yet so it didn't need to go up in dollar terms but you know for people in Venezuela who owned gold it did exactly what it was supposed to do for people in Russia who owned gold - did exactly what it's supposed to do people in Cyprus or Argentina it did exactly what it was supposed to do and eventually that will happen to the US and gold will do exactly what it's supposed to do in dollar terms as well I

just think that takes a little bit longer to happen in almost every currency on the planet right now the majority of the currencies gold is setting record highs absolutely the dollar is one of the few ways you can measure gold where it's not setting record highs but it's still if you look at where gold was in the year 2000 I look at what it's done this century simply because this is part of a bigger cycle of this you know stocks having their day in the Sun which really happened from 82 to the blow off top of

the Nasdaq in 10,000 and then gold and silver are in their cycle right now and we're in the mid cycle pull back the the mid cycle correction the same thing that happened from 1974 to 76 there was a huge correction in the middle of that secular bull market a cyclical pull back and I really believe that we're just in this giant version of of that but so you know how are you trading this thing's I've heard yeah I've heard some pretty spectacular sayings yeah yeah it's how you're

trading this and what you call it well are you talking just on gold here are you talking on everything creating the dollar milkshake theory yeah okay so I I have said this before and this may be what you're referring to and a lot of people think I'm just kind of being hyperbolic or trying to get attention whatever but I said it's the biggest trade in history and I am kind of joking around a little bit but I also mean it and so what I mean by that is if you look at all the dollar debt in the world

you know it is the biggest financial position in the world if you take on debt if you borrow something the idea is that you're going to pay that back at a lower price Sunday whatever you're buying is going to go up versus your borrowings and it makes it easier to pay off so a lot of people around the world us and non-us have borrowed all this money in dollars and they've established the biggest dollar short position for lack of a better word and when you short something you're borrowing it and then

you have to pay it back later and the idea is that you whatever you buy goes up and it's easier to pay back well you know all this debt has been taken out over the last 10 to 20 years but the prices of which they paid they have not gone up in value the economy has you know stalled and is starting to fall and at and in foreign currency terms the dollar is getting stronger so they thought they were going to borrow in dollars and pay it off in the future when the dollar went down in value but instead the dollar went up in value so

not only do they owe what they borrowed but it's gotten more expensive for them so they have this short position they have to get out underneath and so I think that there's going to be a short squeeze on the dollar and I think that's going to push the dollar to higher than many people think possible so the way I'm trading it I'm keeping cash on the sidelines I was long US equities because I thought you actually go up we were hedged at the beginning of the year and we did really well through the

downturn we got aggressive at the bottom and bought the the bottom in March but I got a little too cute and I hedged everything again in May and so you know I've lost money over the last month even though the market has continued higher and that that's kind of frustrating but what I think is going to happen is I think over the next couple years most assets outside the United States are going to come under extreme pressure so we are we have a number of short positions meaning we're betting that

prices around the world are going to fall foreign currencies are going to fall foreign stock markets are going to fall emerging market bonds I mean some some international market bonds will fall as those governments are not able to meet their demands and then so that's what we're doing on the short side on the long side we've got short term fixed income US fixed income bees who think on a regular relative basis us fix in time we'll do better than the emerging market and international and then we do have

exposure to US stocks again they're hedged right now because I think they'll probably be another pullback before we run to all-time highs but I think in the next couple years US stocks will go to their all-time high and I think valuations will become even more extreme than they are now not because things are good but because things are bad and people are fleeing to us large blue chip equities as a relative store value and I think that happens because I think people will start to sell foreign bonds

and they may even start to sell US Treasuries at some point and when the when when assets start to flow out of the fixed income markets which are much bigger than the equity markets it's gotta flow somewhere you know individuals like you or I Mike we can just sit in cash and go to the sidelines and not worry about it but big institutions though you know the mutual fund managers the endowments the the hedge funds the pension funds they can't just sell everything and go to cash their mandate is to invest it somewhere

and I think when that happens US equities will be one of the places they go to so I think we'll kind of have this big spectacular blow off top and US equities over the next couple years and then it will all reverse then I think US equities will go down and foreign equities and emerging markets will start to rise out of it so that's kind of a big broad paintbrush but that's largely how I say these things playing out and I think over the over the next couple years gold and silver will do very well and then I

think when the US dollar starts to fall we have done very well though yeah this century when I'm you know measure them against the Nasdaq the Dow the S&P Bonds the number one asset that you know with the exception of a few crypto currencies the number one asset this century has been gold and silver and it's been by a long shot I mean go to stock charts and generate a per performance chart that's uh you know comparing different asset classes from the year 2000 to today the markets are

up like a hundred percent but gold is up five hundred percent absolutely there's really there's really no good reason not to own gold if you're a long-term investor if you're a short-term trader I can understand Gold's had a big run up here in the last six to nine months maybe we're going to get some short-term weakness but if you're actually creating a portfolio that's got a three five ten year time horizon and you want a portion of it in something that's kind of you

know anti fragile for lack of a better word they can survive in all different types of environments there's really no reason not to have some gold in there and and I think again I think I think Gold's go into $5,000 it's funny because I come on and I tell everybody that I think Gold's go into $5,000 I tell everybody they should own it in their portfolio but if I say that it's not going to happen in the next two or three days then people think that I'm a gold bear and I'm really not I just

acknowledge that it's possible the gold goes down from time to time again I think I own gold I think everybody should own gold I think Gold's go into $5,000 you know just be prepared if it doesn't happen tomorrow yeah so you think that this is because it's one of the biggest trades ever this this financial event that you're talking about do you think this is the last great opportunity for a huge trade and I've somebody said maybe you called it or somebody else called it trading

Armageddon yeah well but there see the thing is is there's two sides to this trade I do think this is the biggest trade that we've seen in history I mean I just think it's massive and if we get it even a little bit right the potential to make money is incredible and I'm kind of I'm kind of an atheist when it comes to making money I don't care if I make it on gold silver bonds stocks III that my goal is to make that my job is to make a profit for my clients so that's my number one goal I

would like to do it in a fashion in which I like but if I have to do it in a fashion which I don't like well then so be it but but what but even though I think this is the biggest trade over the next two to three years and I think it is the biggest trade we've ever seen the trade after that's going to be just as big because that's going to be doing the exact opposite so if the dollar runs up - you know I've said it's gonna go back to its all-time highs in the 150s you know if it ends up being 140 or 160 or

137 you know I don't really care but once it has that big run-up it's gonna go the other way yeah and I think after after it's had that big run-up and after you've if you look at the chart of any short squeeze it always goes parabolic and it always goes higher than anybody think as possible but it doesn't last and as soon as it stops going it crashes and I think that's largely what's going to happen to the dollar I think we're gonna get into this tremendous short

squeeze it's gonna go higher than many people think possible but then it's gonna go the other way and I think the key and listen I don't know if I'm gonna get this right or not I'm gonna try to get it right is that if I can sell the dollars and the long dollar positions we have when we when we're in the middle of that or in towards the end of that big spike and then I can use those proceeds to go buy you know the distressed assets the non dollar distressed assets then when the dollar starts to fall then

those should start to rise so in many ways this is a setup for the next big trade but I just feel like the opportunity over the next two through two or three years it's big enough that it's worth taking a shot at now I don't think somebody should put a hundred percent of their portfolio into the long dollar trade but the asymmetry of some of the trades that we're doing are such that it makes sense to allocate if you have a percent of your portfolio let's say five or ten percent that you lose

use for more speculative plays then I think it's a great opportunity because I don't think a lot of people expect it to happen and when things don't happens that people don't expect to happen the payoff tends to be pretty good well I hope that it pushes gold down a little bit when the dollar rises because I like the opportunity to accumulated what I you know I still think that gold and silver are incredibly undervalued but I do think that when the dollar is running up toward those big highs that you're

talking about just like BEC when the stock market crashed back in 2008 the gold went down with it for the first couple of months then it turned around took off like a rocket and the markets kept on crash absolutely gold will crash a little bit as the dollar is rising but then it's gonna turn around and rise with the dollar as I continue just to accumulate gold because I think you're probably a lot smarter than me when it comes to trading you know you're more in informed you're watching the dollar and watching all of

these all the time to me it's a lot of work Josh yeah yeah no it is I just came to the conclusion back in like 2002 the gold was sort of a sure thing over the long run it is a long view and I've been happy just staying there and accumulating and yeah okay it's you know it's been wonderful talking with you I want to thank you for explaining all of this to our audience can you tell them tell them your website again and your church so if so my website is Santiago capital comm my emails Brent at Santiago

capital I'm pretty active on Twitter its Santiago a you fund calm or I'm just Santi I'll add Santiago a you fund you know you can email me you can call me I do get a lot of emails and a lot of calls I try to return them to everybody if I if I don't get back to you feel free to call me again or email me again again I'll do my best to respond but sometimes a few things do fall through the cracks but I'm always happy to talk I've been a fan of yours for a long time I've watched all your stuff I think you

do a great job I think everybody should own gold and silver and I think you know eventually everybody who has listened to what you're saying and used at least a portion of their portfolio to do that will be glad that they did thanks a lot and absolutely happy to come back any time okay we'll see you next time Thanks all right thanks