gold news

 thank you I'm Charlotte McLeod with the investing News Network and here today with me is the luti grade editor and founder of independentspeculator.com thank you so much for being here online with me today always great to see you it's good to be back if it's like the Chinese curse I think a little bit interesting time so it's a good time to to get an update it is a really good time to get an update especially because our last conversation was at pdac back at the beginning of March and things have

really changed a lot since then basically right after we did that interview is when gold started on its big run upward and it spent a lot of time above 2000. we've seen it pull back in the last couple of weeks but just as we're getting started you always give us a very realistic view of what's going on so I thought you could contextualize what's happening with the cold price right now Oh short question big answer but I think this is important and it really you know stop pause think about this for

a moment I know that what the audience would like is for me to say here's why Gold's about to take off you know load up but it's time to go yeah yeah um but it's more complicated than that and uh first I should say that when we last spoke I was saying you know the the dollar had had a good run there was a reason to believe that the dollar would go down and at the time gold was still seemingly trading primarily off the dxy the dollar Index and that pretty much worked out and we went on to these highs and we stayed up

over two thousand dollars but that has become unraveled and you know there are days where gold trades like a Rorschach image to gold and sorry gold and the dxy completely and there's days where gold and the dollar are going up together and it's not because there's a new war or something it's something else there's days where it really seems like the tenure the U.S 10-year Benchmark rate is really what's driving gold and days they seem just so like all three will go up at once sometimes

so I'm I'm not helping your audience here I'm not clarifying anything here but maybe that's actually a good starting point you know whatever you think you know whatever you're sure explains everything this is a time to not be quite so arrogant about that you know take a step back take a deep breath at least in the near term I mean bigger picture yes all the money printing recession all that stuff but right now um the whole Market has gotten quite chaotic and I think you know I don't

want to go down the political rabbit hole but I think that has a fair amount immediately as you and I are speaking to do with the whole debt ceiling circus that's and that's an outlier type event I you know like most people I think he will be resolved one way or the other in the very near term but while that question mark is in the air there's times where we see news that normally would be bad for the markets like good news for Main Street bad news for Wall Street but there's encouraging news about the

debt ceiling at the same time so Wall Street goes up so I'm not sure exactly where you want to go but you asked what's going on and the the most important starting point there is what's going on is chaos and this is a time to be careful um into that chaos I have done some research and if you want we can go there next but there's a particular variable that you and I have heard our good friend Rick Roll and others in the business say for many years that real interest rates are not the only but the

most powerful the main driver for gold prices over the years and I have seen this before myself I have said it probably on your show before myself it's not just the conventional wisdom it's a relationship that's been measured in the past but I have to confess Charlotte that I haven't I haven't measured it recently until just now so this is a breaking news Inn gets the scoop here amongst the media networks I've just put out this research and I've looked at it and you know you know funny

thing happens when you look at you first you have to ask well real rates well which real rate you adjust the 10-year for inflation do you adjust the FED funds rate you know they're they're different and so long story short what I have found is actually that the the long-standing relationship between real rates and gold seems to have come unglued and not just today or in the current chaos but over the recent years and there was a a stronger case to be made back in the 70s and 80s in that big

gold cycle so I understand why my mentors taught me this and then you had this nuclear winter of you know the 90s and the odd odds and nothing changed but actually since then a lot seems to have changed and I I won't get too nerdy here but there's a free article on the website right now at independentspeculator.com questioning the conventional wisdom is it wrong and I'd like to be able to say okay so real rates are out here's the new variable follow this and you'll make a fortune unfortunately real life is is

not so simple we did find that over the Long Haul actually the nominal tenure Benchmark rate is more highly correlated with gold and since 71 to present it's now more correlated than any of the real rates we looked at and you know quite shockingly the the two-year also is is even more highly correlated but there's less time on that and if you think about it it kind of makes sense I mean how do you get real rates you take some other rate and you subtract inflation from it but there are Bond rates you know the interest rates

we get those moment to moment they're electronically tracked second to second we have information in almost real time on those rates but inflation's only updated once a month so you're subtracting the same number all month long until you get the new inflation number that means for all you know 29 out of 30 days it'll be the nominal rate that's wiggling what we are thinking of as real rates so I promise not to get too nerdy I do recommend the article for anybody interested but this fits with my opening

answer to your question is chaos what we thought we knew May no longer be so at the moment it seems like nominal rates are are more powerful explanatory variable but we're still seeing plenty of times where the dxy the takeaway is be very careful of your assumptions right now now if you want me to make a bullish case it's not going to be Ironclad here's the data this proves that here's where we go um you know be more macro but but right now I I hate to say it you know people want to hear ra ra ra here's

why we have to buy bye bye but that's not my message today my message today is one of caution wow and this is exactly you know we don't bring you on to hear the rah-rah raw we bring you on to hear about what you should be doing right as always but you know it's it's what we come to expect and I think this is a great place to start this chaos in the market and throwing out things that you thought were true so just going back to your research which I do recommend everybody take a look at it helps to go

through it you've got all the charts laid out and that's helpful in in understanding some of the the nerdier things that you're going over here I think a question that I have is so what made you decide we need to take a look at this concept that we've heard about from so many people that is really well entrenched in the industry well I was doing a one of my weekly updates and I was looking at the markets and I was I was this is going to sound even scarier Charlotte but the truth is

you know as we've been saying we've heard from our our mentors in this business for so long that real rates are so important and and that was great news because real rates for a long time have been negatives they you know the fed nail the nominal rate to the floor and inflation was low and and then things went negative and they stayed there so so as long as real rates were negative we could shrug off you know whatever other news might happen or even a strong dollar or these other things

but just as of the last CPI and pce reports you know the the core rates have gone negative and that's what the FED says it's looking at and on a pce basis even the headline rates are negative so sorry are now positive they they were negative they just flipped a positive so this one thing that we were reassured for so long meant we didn't have to worry about gold suddenly you know that accepted signal says well it's time to worry about gold so I went to look at it and I I just I found a lot of noise I

chose trying to look at real rates you know they've gone positive so what's the correlation look like and really this year since real rates have been climbing guess what gold was climbing at the same time and until just the last couple weeks when you know gold went back you know pulled back from 2000 who had real rates and gold going up together so of course I have to say well what's that you know they're not supposed to do that they're not supposed to go up together they're

supposed to be opposite X on the chart so I started looking farther back and the noisier the real rates looked they they didn't seem to be inversely correlated so I pulled back and looked at the big picture the biggest relevant picture is August of 1971 to present because that's when uh gold was freed to trade on the open markets or you could look at it that way or that's when the dollar became a worthless abstraction um but anyway so and then I looked at it and and just by comp I was looking at

different real rates and then just by comparison you know what's the difference between the nominal rates and I started looking and the nominal charts look better or more explanatory in many cases so we started running the numbers and it turns out that yeah now it from for I don't know when the last time somebody really dug into this but I can tell you it was around 2004 in my case I'm embarrassed to admit it um but the number say something quite different in almost 20 years uh so so the single most explanatory

variable in that period we could find was actually the nominal 10-year Benchmark rate and what made me think about it was just well if real rates have gone positive we need to ask ourselves what does this mean from gold so the bad news is what we thought we knew May no longer be so the good news is while the real rates just went positive but the nominal rates are more explanatory well maybe that's a good thing because we still have negative rates on a nominal basis at least for CPI so that's a that's a helper there

all right well so and we're still learning and I have to ask you out this came out Midway through it's been online you can go find it have you had anybody prices went down yes but yeah so so we have had we've as we've been talking about this is a well-entrenched concept have you had anyone come forward with with thoughts on your new research anybody saying that makes sense it doesn't make sense what is the response been yeah I think frankly the response has been quite surprisingly uh muted I I expected some

fireworks or somebody to come storm back with here's my chart here's why you're wrong and I got nothing I've got a few people said yeah I've seen something similar uh or I've given up looking at rates or it's all about the dollar now um but you know the dollar Wrecking Ball but yeah I when I posted it online I did the research internally first and I thought there must be something wrong and I sought feedback couldn't get any any contradictions so I put it out to the to the twitterverse and

um and I put it out there as as you know it's a question mark the name of the article is you know conventional wisdom might be wrong not this is wrong you know right and I had I invited people tell me why I'm wrong show me what I'm missing here and you know I don't know I don't know how many I have 24 000 followers and and not one yet has been able to step forward and say why you're wrong so we'll see um I I think it'd be very interesting if somebody could show me what I've missed

but for now the numbers are what they are and and by the way we threw the book at it we looked at Libor we looked at you know fed funds two months one year ten year we looked at everything I mean 30 years kind of silly but um and you know and the numbers that we found said that over the longer term now the nominal rate is more highly correlated um than the than the real rates pick your real rate all right so so we'll put it out to our YouTube audience as well see if anybody comes forward with thoughts

speaking of factors that are important for gold I think we need to touch on the Fed so recently we got the latest minutes which seemed to show that the officials are a little bit divided on what may happen in June we also got recently the latest pce price index data the FED looks at other points as well so I'm hoping you can help us unpack what we might see from the FED at the June meeting that's coming up pretty quickly well I will answer your question since you asked so nicely but I should always

remind the audience that I'm I'm not a professional Economist which might be a good thing uh but you know I'm a due diligence guy yeah I'm the guy that Doug Casey hired for all those years to go kick rocks and help improve stories but people want to know what I think and I do have to make my own call so I do think about these things but I just I like to remind people I'm not the guru that pretends to know what the FED will do or to tell you what they must do that's that's just not me

um the the pce number I mean that's not a shocker to me I've been saying inflation is going to be sticky you know higher for longer not not rates but the inflation was going to be higher for longer I've been calling for stagflation as you know so this fits with my view but the mainstream has been expecting it to go down um so you know I understand why the market rate uh the market odds on a rate hike for June are now I think up over 60 percent whereas they had been as low as fifteen

percent just a couple weeks ago so there's been you know sort of Team Soft Landing news out there that says oh yeah things aren't so bad uh that said I think we also have plenty of data says yes things really are bad I mean the yield curve itself is absolutely insane there's there's like 200 basis points between the one month and and the tenure and okay granted the nearest term is highly influenced by this whole debt ceiling circus but even without that the the massive inversion

of the curve that has never happened without a recession and it's and people say oh well it you know it it takes time well yeah but it started inverting two years ago and we did have those two quarters of negative GDP and we do have all this news of layoffs and we do have the the leading economic indicators a whole set of them the Lei that we talk about the leading economic index no that's down for the 13th month in a row and I could go on and on I think the audience doesn't need me to rehash all

the bad news we're all well aware of it bad news sells right if it bleeds it leads uh sorry no offense to any professional journalist here um but you know and the the the one leg in stool that they keep hanging everything on is oh but look how strong the labor market is and the consumer is what the those are the most lagging indicators and everybody knows that everybody even the mainstream guys and gals they'll say that's a lagging indicator but it's so strong and they just keep you know like

it they just dismissed the whole reason why they shouldn't dismiss it it makes no sense but that's what's happening and I understand that you know you look at the revised GDP numbers doesn't look so bad it's easy I can see where and when you look at the stock market you know it you can you can see where people say well logo you're you've been uh the little boy who cries wolf which is really undignified for a lobo you keep saying there's gonna be a recession and it doesn't show up

uh I'm not so sure I think we have a masked recession I think the the labor hoarding post coven has masked weakness I mean it basically apart from the labor market and thereby the consumer spending which has its other red lights I'm getting distracted from myself but like the credit card charges and all that stuff like the the consumer is not as healthy as people want to believe um and by the way retail sales were a number in my favor on this this last batch so I don't think I'm the little boy who

cried wolf we will know whether I'm right or wrong very soon because I'm not just saying someday or this is my big macro Theory I'm saying this here I'm saying we're actually already in a recession and that will become undeniable before the end of this year so in the next quarter or two I'll either be right or flat out wrong Charlotte I think I'll be right I don't think any of the data that we've seen since then including you know a hot pce number contradicts that in any way

that's a conventional assumption that oh if inflation is up then that must mean the economy is moving that's what causes inflation in a hot economy right that is not true uh that's Zimbabwe right you know there are other things that can cause inflation besides a hot economy so I'm sticking to my guns here and for anybody who's been pulling his hair out or her air out waiting for you know the the Great Pumpkin to arrive uh you know I'm not going to be like this all the time I'm not coming back every year like

Linus to the pumpkin patch I I have uncharacteristically if not made a flat out prediction I've made a call for this year and I will admit that I'm wrong if I'm not shown right in the months ahead well and definitely will be we will find out quite soon and when it comes to recession we do also have even the FED has conceded maybe we will see a mild recession this year what I thought was a little bit interesting about that is that they seem to blame it on the banking crisis versus any of the other

issues that we've been talking about for so long so maybe we can also talk a little bit about the banking crisis which is another topic that kind of erupted right after that last conversation we had what are your thoughts on that I I would appreciate again The level-headed View on whether we've seen the last and that well yeah I know there's some people out there saying oh well just wait there's more Banks about to go boom um that could happen you know when you go from zero to five percent interest

rates almost overnight by the Central Bank standards things do break so you know I didn't know that that would be the particular thing that broke first in the U.S but it's in no way surprising that it did and I can see the case for for more paint however my own expectation would probably be not more Banks it'll be something else because don't forget it wasn't just that they you know stepped in for these particular Banks or or Janet Yellen Corral Jamie dimon and crew to step up

for with 30 million uh or billion um but it's it was really I think the FED when they when they uh stepped forward with I forget the name of this particular program but they stepped forward to take this debt that was underwater that the banks held his assets that because of the higher rates these Bonds were underwater and the FEDS stepped forward to uh land back at par to honor that at par or to lick you know to provide liquidity at par for these underwater bonds that was the issue that took Silicon Valley Bank down and

threatened these others and so and and that wasn't just one Bank specific this was Countrywide so this was a really big deal you know they keep saying oh it's not a crisis it's just a idiosyncratic a few Banks and just for safety you know but what they did was a crisis level response that was blanket for the whole country and it's and you know it would it was so big you know hundreds of billions of dollars that It reversed the QT they were doing for a long time and has mitigated that now

and it's still being drawn on that's still ongoing you know billions and billions of dollars as you and I speak uh being provided in liquidity to Banks via this facility now this was a big deal so when you have the fed backstopping the banks you know lender Last Resorts which which ironically was actually one of the original things it was supposedly intended to do you know with that happening I'm less worried about Banks but yeah I st I think the the same starting point of you you cannot increase

interest rates at such a record pace and it's a world of difference people will talk about well volcker increase rates from 15 to 20 percent right and it helped you know cured inflation well from 5 to 20 is a 33 increase from zero to five it's it's not just five percent it's like mathematically infinite the increase almost I mean it is a much bigger shock and on top of that you had more normal rates before you know uh volcker stepped in with the sledgehammer and here we had like absurdly low rates for such a long

time I mean the the era of free money and and you'll see even mainstream Talking Heads will talk about oh the error free money is over and it's it's almost like they don't believe themselves they say that but everything's fine I I don't think everything you cannot have an end of an arrow without pain Charlotte so without going too long all I'm saying is you know I I didn't know it was going to be that that liquidity issue with the banks and I don't know what the next shoe to drop is

but everything I think I know about economics and everything that I've studied about history tells me that never mind the June meeting what the FED has already done has broken some things will break more things and there will be more pain so so what happens next I guess I never answered your question about the June meeting she stuck my feet to the fire I think they probably will pause so they might they're trying to Brand it as the skip now right that's the latest buzzword it's not a real pause it's not you know

we're gonna we're done here we're not done we're not done oh we still got more work to do but if we just skip this meeting and then might raise more later then it's not a pause you know we're still raising rates just not this time right I think that's the messaging we're getting and you need some Hawks to come out and talk about yeah we got to race rates and then you need some other people to come out and say well maybe not and test the water see how that goes I I think this is what in reading the

tea leaves here I think this is what we're getting by signal is is that they don't want to say pause because they don't want the markets to go crazy and and you know reverse their work their work throwing people out of work is their work but anyway um so that would be my my base case right now unless some things come out much harder like if the labor reports non-farm pain rules we get one more of those before the FED meeting if that comes out super hot then yeah I think they probably will go one more time but

even with pce right now I think they're still probably likely to do a skip and and then my guess would be there would be enough weakness after that that the skip turns into the pause like they say they're going to skip it's a way of easing into it without sending the markets going um so then that's right now the next shoe to drop I don't know what it is but I think there will be and I do think the FED pivots before the end of the year not because they've beaten inflation not because

everything's cooled off and they don't need rates to be so high but because they've broken something else and even Powell has said that if systemic risk comes up that is a reason for them to Pivot so that's not the sort of thing I can say here's what it is and here's the date it's arriving Charlotte but there if if these were if we were talking black swans there's so many of the bloody things swarming around that I think we should be anything but surprised when one comes in for a

landing and I think that happens probably in the next few months I'll be surprised if it's actually towards the end of this year I think it happens over the course of the summer okay so I think we can know at this point the short term is looking hazy and chaotic long term looks a little bit more clear and I know that for you in the long term not a little bit more because I think the the mid to longer term is very clear I think the FED is stuck between a rock and a hard place we've said that for a

long time this is this is crunch time this is happening now they have no good choices they know it and I think anybody even in mainstream media who's honest you'll hear them talking about how what a tough job the FED has right this this is happening now you know this is my Mantra forget about inevitable forget about even imminent I want happening this this is happening now this is crunch time now this is why I'm willing to put this for it so you know I I hate it you have these Talking Heads from

these funds they come well you know maybe we should be a little cautious about risk you know they're not helping me with a little bit cautious make a call or don't so I've made a call here Charlotte okay appreciate that clarification and I always like it when no it's good I always like it when we can get something solid out for you and I know that gold and silver are in your right now basket what I want to talk about so we know that we're going there we're going there for

gold and silver I think maybe when investors look at their portfolios of gold and silver stocks especially on the junior end they might feel like this is not really happening right now so I wanted to check in with you on that and see what we can tell people who are having that feeling and wondering okay when are my stocks actually going to move especially because gold price is actually still quite historically high as silver prices doing all right so what are your thoughts yeah I'm I'm definitely feeling this

interestingly enough not so much from from my clients but from the social media from the twitterverse out there definitely getting a lot of pushback on this uh people are impatient and you know Rick is just so quotable I I do listen to other people but Rick is so quotable you know like he likes to say you know if if your investment time Horizon doesn't exceed a long weekend maybe resource speculation isn't for you right you know he says these things uh and I don't want to be quite so

so clever about it but I do think that is you know the basic idea is right I mean Mr Market doesn't care what you were I think it doesn't care what we want um it doesn't care how desperate we are how impatient we are impatience any kind of emotionality over logic is a risk to any Speculator you have to have discipline and if your basis for speculation hasn't changed then the price action or inaction is at best one data point right you know if if maybe you missed something and the

price is telling you that you've missed something that is worth paying attention to I'm not saying ignore price but if you do pay attention to it you look at it again you ask others you ask people who disagree with you show me why I'm wrong and your case is still there which is the case for me in gold and silver right now silver maybe lags a little because of its industrial side but it's still a monetary metal and gold and silver are in my shopping basket right now and if um you know I look at it again in my my

basis for speculation hasn't changed then I have to set aside that price and however angsty it makes me feel and I'm not saying I'm a robot and I don't feel these things I do you know it's annoying um but I don't let that make my decision and you know I I don't want to come across as condescending or or insulting but you know you kind of have to Buck up on these things if you can't handle the heat you really shouldn't be a Speculator you know maybe just buy a

gold ETF or something and ride the metal itself and don't worry about the stocks but if you do that you know maybe you'll sleep better maybe that's better for you but if you want to make money you you will be leaving a lot of money on the table because the leverage that the stocks offer to the underlying Commodities is legendary I do I you know unless the entire world has changed when we didn't look Charlotte you know um I I do think that we will see payday and I just think it doesn't make sense to be

patient inpatient and if anything if uh the if we have capitulation because people are just so disgusted with the stocks you know Gold's up my stocks are down and people just decide to sell or the or the fair weather friends the momentum chases just get out anybody who bought when gold hit that nominal all-time high and then now they're disappointed because it's corrected I I think the disciplined Speculator will take shares off those weaker hands you know and especially if you if you get it if

you're with the program but you're late to it I think at times like this are a godsend when the actual value case is higher you know plus or minus two thousand dollars you know that's a terrific gold price and if the stocks are on sale because of sentiment Market sentiment that's absolutely an opportunity in my view Charlotte okay so so usually we hear it's not healthy to suppress our emotions maybe when it comes to speculating we can go ahead I said don't make decision based

on but that could be a long conversation I but but but no I actually just real quick emotions are data if you're nervous about something it's telling you something it's something not nailed down in your premise you know so I I don't think you should suppress or ignore emotions at all but you don't use an emotion to build a bridge you don't say oh I feel this being ought to be you know three-quarter inch steel right you you there are calculations there are measurements you know how

thick that being needs to be to build that bridge you know you know so you use your emotions to gather data tell you what's going on you use your intellect your reasoning capacity to decide what to do about it so we've gone through quite a bit to do with gold I just want to check in quickly and see we've talked about all these big factors is there anything that we didn't go over that you want investors to pay attention to when it comes to code well on my talk of chaos may have left

people keep feeling fuzzy about where we go from here so yeah let's let's be quite clear uh you know whatever variables you're looking at whatever you think might be you know driving gold today I think basically we set that aside we look at the macro and the macro I think is we're headed for recession that's very bullish for Safe Haven assets which includes gold and silver and if the US goes into recession and and the FED reverses before the ECB does that is also bearish dollar bullish

Alternatives that doesn't have to happen but if it does it gives us a good Tailwind so quite clearly gold and silver and then the only thing about silver is it's not that I'm not bullish on Silver but I just want people to understand that silver characteristically in a bull market lags gold anyway and then catches up at the end and all I'm saying is it may do that even more so this time because it has this stronger than ever industrial component on the flip side though the same Outlook

means that we really want to be cautious about anything to do with Industrial Metals or minerals so that includes oil like there was this big hope that China reopening was going to send Energy prices and commodities prices soaring didn't happen it helped oil more than anything else but it didn't really happen so if I'm right about a deepening Global recession and China is not going to save us excuse me that really tells us to be cautious about anything industrial I'll try to Wet My Whistle again

the universe is telling us we should wrap up all right this is a few few words as possible so the macro says no copper no lithium no matter how much demand we see going forward no oil I'm very bullish on oil because the ESG crowd is just starving that industry of capital even though we're not done with oil yet so you know even the most exciting ones but the strongest cases going forward not in front of the recession I want to see the recession do its worst or the worst be priced in when the recession denying

needs to go away before those Commodities really get whacked and that's when I'll be looking to buy as a contrarian as a bottom feeder I want to see capitulation in the broader markets because I think that will whack everything industrial with the one exception being of course uranium which is base load power unlike copper or oil you know uranium is having a great year and even even better we were talking about you know gold bugs maybe not being in capitulation yet but seeming close pulling their hair up I

think it's with uranium bugs they're there I'm hearing from uranium bugs left and right and I'm sick of this the metal is going up and my stocks keep going down and all that um you know I I see that as an opportunity to anybody with the guts to be a contrarian I'm not saying uranium stocks can't go down especially if there's a market crash or something stocks or stocks but that only lasted so long and I think g now the long-term contracts the underpin the higher prices are happening now it's we see it dragging spot prices higher even though the broader markets are weak in the energy sector is weak and I think I think that will translate to significant gains for Uranium bugs by the end of this year okay so if they can hold on we will get there and I think we can wrap up there I we've destroyed your voice and I think we can wrap it up and let you go but

thank you so much for coming on to go through everything I know I told you before we started the camera this one would be a lot about gold precious metals we'll come back a different time and we'll go into uranium a little bit more deeply because I know that everybody likes to hear about that from you but thank you again for for being here to tell us what's going on thank you Charlotte always a pleasure of course and once again I'm Charlotte McLeod with the investing News Network

and this is Tigre at the independentspeculator.com [Music]