Gold news

 [Music] I'm Charlotte moud with investin news.com and here today with me is Chris Marcus founder of Arcadia economics and author of The Big silver short thank you so much for joining me great to have you hi Charlotte great to see you again as always been a little while we've caught up although fortunately uh some good times in the gold and silver markets and nice rally that we've seen over the past couple months which I'm sure we'll dig into today so thanks for having me and

great to be here with you gav of course I'm really excited to have you because it has been a while but I will say although it's been a while you were one of the first people who I thought of when I saw a silver go above $30 per ounce so I thought now is the time to definitely reach out and see your thoughts on what's going on so silver I think it it was hadn't been above 30 in about 11 years so my first question was going to be are were you surprised that it took so long oh yes and no I mean I remember

when we had the rally back in 2011 I didn't imagine that we would have a decade with silver sitting largely below $20 a month for most of that time then on the other hand when you see something continue on year after year gets a little tricky to say when you're finally going to break through that and turned turned out to be earlier this year and is somewhat interesting because unlike previous rallies I mean in 2011 for example we had the FED start QE2 back in October of 2010 or at least

that's when they announced they were going to begin moving that plan forward so there there was a clear driver and here in the middle of February we saw gold move first silver eventually start to move as well but a lot of that was based on will the FED do rate cuts um I think it was early March when they confirmed their Dot Plot that they were still expecting three more rate Cuts this year and for a couple times the market rallied on that yet that's all been pushed back and it's speculation of

even would there be another rate hike um and really quite a difference from the beginning of this year we entered where people the markets were pricing in six or seven cuts and now talks of one and maybe two if even that so it's been interesting that you would see gold start rallying then and then silver follow I wonder if there's some degree to which when you have forces like the US debt and the deficits and the fs balance sheet grow over time especially gold and silver where it's not always

linear so there was some degree that actually there's going to be some times where you you see things start to move one thing that I didn't see get talked about as much yet I'm not saying this was the main or entire driver of the rally yet it was around that time when the prices started moving that we saw the US uh talk about seizing the Frozen Russian assets Congress moving a plan through that give the White House the authority to do that and actually in the background here I saw something uh last

week this was from the Department of State saying that on their Twitter feed no l saying Congress has given us the power to seize Russian Assets in the US and we intend to use it so we've also seen what's happened with Russia and Ukraine in the past few years Russia at one point responding after the invasion with a temporary gold backing there's been a lot of talk about whether they might have some sort of partially or fully gold backed settlement mechanism and we can dig into there was

actually an interesting report that came out about that recently so I wonder if it was a culmination of a lot of these things that have been building for a while then obviously China has really been at the Forefront of buying gold and I was thinking about it the last couple of days where seeing silver move if I had to pick one primary reason I think there's so some degree to how I gold can get with silver just sitting there and sure enough we've seen like is is usually the case with silver

it is dormant for a long time but when it moves it moves quickly there we went from 22 to 32 like I think that's about 45% in the span of two months not entirely dissimilar from what we saw back in 2020 well where when silver was down below $12 uh shortly after after the pandemic started and then a couple months later was up at 29 so moves quickly when it does sometimes not in response to a specific reason although I tend to think after thinking about it over these past couple months that the combination of a

few of those reasons is what's Driven us to where we are now yeah I think you went in exactly the direction I was hoping you would with at that because I think a lot of people are looking at that $30 level which has been so important for so long and wondering okay so what exactly was it and it sounds like it's more of a a Confluence of things that we're allc going on maybe maybe starting to build I wonder if you could say more about the the China angle because it's something that I've been

seeing a little bit about but I definitely don't understand all the Dynamics going on there sure um well I mean the the short version China's been buying a lot of gold for a long time and now they really been ramping that up we also have the Central Bank gold buying and I saw recently that this year the private Imports B are up on the year so far 74% up to 543 tons of gold of course if you just look anecdotally at some of the stories coming out about China we saw pictures of the the mall where there

was couple hundred thousand people rushing in at one point to buy gold I try to P those with a grain of salt I wasn't fair and don't know exactly how many people but we we see a lot of stories coming out like this uh Chinese people investing in gold beans um and really China encouraging their citizens to own gold there was a report that came out about two weeks ago suggesting that China is now advocating its citizens to get into silver um but yeah China been a big importer of gold obviously the central

banks that's played a big factor as well 2022 was a record year for Central Bank gold buying 2023 would have been although it fell slightly short of 2022 and then you have in the first quarter this year was a record in terms of the first quarter for Central Bank gold bank so I think people can see what gold and silver bugs and when I say people I mean I think we're seeing this on a national level where countries are now realizing well if I produce oil and I want to store the value in US treasuries like

has been the arrangement for so long they're seeing well with the debt continuing to sore deficits are getting bigger now we're getting that big interest expense on the debt I think it's to the point where now especially with what's happening with the bricks it's not just well that's a shame that that's happening but countries are are making arrangements to eliminate that from having an impact on them so that's been a big driver and then on the silver side I mean one other thing

that's been out there although this didn't change was as I know I've seen in some of your interviews we have the silver deficit that has now been reported five years in a row from Silver Institute I know a lot of people are wondering or sometimes I hear the word silver shortage I have not seen any direct evidence of an industrial silver bar shortage so I I want to make that clear because I know some of these terms get used interchangeably now with that said if the deficit numbers are accurate

as suggested certainly the possibility that we could head towards that path is becoming a a greater possibility so you see these conditions that I don't think we're at a shortage of silver yet but certainly have a tight Market that if this continues and silver Institute did forecast another large deficit for the years going the ne this year and the years going forward so the potential to get there and again this didn't just happen beginning in February so I wouldn't call that the main driver

but I think all these things add up and that's traditionally been the way that it happens in Gold but especially silver where they build up for a while and then at some point see the impact of that yeah I think I think that makes a lot of sense and you had mentioned the the silver squeeze and of course we I think we talked a number of times during the silver squeeze silver got a lot of mainstream interest at that time and of course then it peted off as we had those couple of years where the price wasn't

doing very much but now you know we're starting to hear about places like Costco selling gold but also I believe silver at least in some cases so to me that's looking like maybe kind of as you're describing a slow and steady wake up among the general population is that is that kind of what you're seeing do you have any thoughts to add on terms of those you know more mainstream places offering these medals I think it's a great point maybe I would say the beginning stages of a

more mainstream waking up to gold and silver although as you mentioned the Costco thing as as I've been thinking about that more and more is that going to change the market dynamics overnight no I don't think that's the case yet if someone is wondering what does it take to get to the point where silver is and gold are more of a mainstream thing I guess in a way almost like Bitcoin Bitcoin seemed to get some mainstream participation maybe a lot of that is people who are speculating that the

price goes higher more so than uh sound money Advocate prop uh position um and I think that the Costco is the the type of thing that facilitates that process and it also reminds me of something that zultan posar has mentioned where he said it's not an event this is a process that we're watching unfold and uh I don't think it's going to happen overnight but when you see we talked about some of the countries that are making arrangements to go outside of the dollar yet along the lines of Costco and other

development we're seeing here in the US is the states are passing legislation to try and protect themselves from the same things that gold bugs silver bugs bricks countries and others are have been mentioning as well they're they see the debt load they see how a lot of it gets monetized they see that with where things are going yeah and I'll I'll be the first to admit I was surprised that the FED has taken rates as high and for as long as they have yet I mean it it seems like a lot of groups are noticing what's

going on and and the FED at some point sure seems to me that they're going to be stepping in with QE with the amount of debt that continues to come out and groups like the states and others are seeing that some of the states eliminating the sales tax eliminating income tax on gold and silver gains um some have talked about using gold back currencies uh Texas and a few other states have set up depositories and some of them are even storing State reserves in gold and silver so I think we're seeing some of the

signs of a shift that's taking place and from all these different perspectives timing that when does that all unravel um that's a good question but it we could be seeing the first steps of that now I know there's is a you know natural reaction people are wondering does this mean silver is going to 50 or is some number beyond that or we're finally seeing the breakdown of how some of these things work let me let me put it this way I'll be careful how i' say this I don't know that there's enough to

suggest that we're seeing a run on gold and silver and something similar to what happened when the London Gold poool collapsed back in 1968 so to be clear I'm not saying that that's happening now yet if you think something like that is eventually going to happen in a similar fashion a lot of what we're seeing now are the signs that you would imagine when something like that is beginning so again to be clear we did this got enough information to know that that's where we're headed but

certainly looks a lot different than what we've seen at any point since I've been following the medals do you think you could maybe go into what some of those signs are just so people know exactly what they're looking at here well I guess a big one to me is that you know we've seen this cycle of normally the price goes up funds are in there buying banks are shorting and then it goes up for a while and then the price comes down and that the banks short gold and silver and the price just

continue to rise in the face of that is certainly one of the signs seeing central banks turn to gold at a at a rate unlike we've ever seen before seeing what's happening out of China um India has been importing a lot of silver although I think a lot of that is more for industrial as they're starting to ramp up some of their solar initiatives but um yeah the the way that it's trated in the face almost not almost directly in the face of what the FED is doing th those are certainly some things that

are different from what we've we've seen before yeah I think it's it's good to go over that because I'm so used to when I'm talking about silver to you know ask about the FED inflation interest rates Etc what's going on with gold and as you have been explaining silver and gold as well are kind of moving without the things that you would normally see them move with so yeah if there was anything you would add on that one things that are important to watch right now yeah well I'll tell you what the one

thing that I would keep an eye on and that I mentioned earlier is that there's a reporter named Pepe Escobar who had article out about two weeks ago about the plans for the bricks to move forward with a settlement currency that I had read about before because I have uh someone who watches my show who contacted me had mentioned a white paper about something called the unit which he felt was the plan that they were trying to implement as part of their move away from dollar and treasury infrastructure so i' had heard about

this for a couple of months and was reading and learning about it and it was interesting when Escobar's report came out because he said this is now being reviewed by the bricks Business Council and is now officially on the docket with the potential to be adapted as early as 2025 and to see because we've heard rumors we've heard a lot of comments from Sergey glv who is the economic and integration minister of the E the Eurasian economic Union and he's talked a lot about gold but he is in his

previous comments it's been more well this is what we think should happen but Russia Central Bank has been pushing back against this so at least now pepy Escobar is reporting that it's on the bricks Business Council they're they're reviewing it he did have a quote from glev in there who commented specifically on the unit as it's called and his views on it and how he feels it could work and uh again the interesting part is that it calls for a 40% backing of gold and a 60% backing of brics nation's currencies

and when you add into that that the bricks Nations currently account for over 50% of the global oil exports makes it a little different uh of a situation because especially if you have that tie to energy and this is how the energy is being paid for if that should manifest to be clear this is a report I don't have not seen any reason to doubt the accuracy of his report and by all means it's not not a done deal it's something that's being considered but something like that in the midst of

all the other things that are happening that we've been talking about eventually they add up and that's probably the type of thing that's factoring in why you see gold soaring above 2,000 and silver getting through 30 bucks yeah I think I think as you can kind of begin to see there's so many factors that are all at Play and I wanted to ask about another one that you started to mention a little bit which is you know the industrial side of silver demand and in particular solar I think

there are some pretty impressive projections out there for solar demand for the future and people seem to have differing ideas about how much the industrial side of silver ends up impacting the price so just wanted to get your your take on Silver demand for silver well yeah the solar demand has been incredible everyone keep keeps expecting that we're going to hit the peak and then it's going to slow down has not been the case so far last year was a big year I know there's a lot of dispute over how much uh silver is

actually going into the photo panels uh I think silver Institute had about 240 million ounces last year for whatever it's worth the people that seem to not like those numbers think that they're even larger um I mentioned earlier and I saw report a week ago about India and they're really trying to ramp up their solar now us uh saw a report showing that they're planning to double their capacity in 2024 so not slowing down the US and China was about 50% ahead of their 2023 pace through January of April of this

year so there's a lot of silver going into solar that has not slowed down yet um and I guess the other thing I'd like to add on to that is uh and I can send you the link if you want to post it in the show notes Oxford economics did a study on a forecast for the solver industrial demand over the next 10 years Again by all means does anyone know exactly what's going to happen over the next 10 years so factor that in as you will but in uh either of case they came back and said they're expecting a

46% growth in industrial silver demand over the next decade so if we're already in a deficit Charlotte I know you talked to Mining Company Executives maybe some money coming back into the silver Equity side now but it it's not matching what you would have expected maybe from $30 silver $2,400 gold I mean there's some coming back in but certainly on the junior side it's not not an avalanche so you have the deficit you have the forecasted growth which at least is in line with what we've seen the past couple years

plus you're not getting a lot of new investment into new projects advancing Junior projects and as I know you're aware and probably a lot of your listeners that you don't get I mean even if the silver price goes to 50 or 100 tomorrow it's still going to take a while for silver to start coming from some of these projects so if those Oxford economic stit numbers are uh anywhere near accurate um you're gonna have a lot of sord demand going forward as well right and I did want to touch on

Supply a little bit with you as well because yeah I think I think people are hopefully aware that miners can't just ramp up as soon as they seen see the price going up and the other aspect for silver that I always find really interesting to remember is that it's really so much of it is a byproduct of other metals production and of course A lot of it is gold so you're thinking if the gold price is high as well maybe people want to increase gold production and therefore silver but maybe you could

talk a little bit about the company's ability to actually increase Supply during high price times well that's a really good point because like you said about 75% of silver is coming from copper lead zinc and gold mines about 20 to 25% coming from Silver companies and if if you take it if you assume the deficit is about 200 million ounces that's a big gap to make up because uh I think even first Majestic is about 9 million ounces of Sil not silver equivalent not including their gold but if they're one of the larger

silver companies they're producing 9 million ounces it's not like there's you know four or five companies that are doing 60 or 70 million ounces a year that you know maybe they they put some more order in through the processor and turn out an extra 20 or 25 each I mean a lot of these companies are producing less than 10 million ounces of silver per year so with that said I mean there has been a fair amount retail silver selling uh more I wouldn't say necessarily overwhelming to buying but

there's been people starting to sell silver back to dealers and there has been about three billion ounces of silver purchased by retail since 2008 so there is silver and private hand some of that will come back onto the market but for the beginning stage product project I mean five 10 15 years from when you first go out permitting and then drilling to when you actually have the silver so yes there's there's quite a lag there um if the silver price goes up is a copper miner going to change what

they do I don't think that's too likely so it's weird where the price is a little low which seems to put us in a a mismatch yet even if the price shoots up there there's still let's say a scenario in which that still doesn't resolve the issue that's not guaranteed that we have that scenario but it's certainly a possibility with the way things are lined up now right and kind of going back to prices we started off by talking about how did we get to this point and I think

what a lot of people of course want to know now is where does silver go from here so we've also been talking about how it's hard to make predictions and make promises especially when it comes to Silver but what are you seeing heading into 2024 and and perhaps Beyond gee well that's an interesting spot for silver right now because uh they was waiting to see what happens when we got to 30 and silly has been been uh an exciting week and two days since that's happened because it didn't

just get to 30 almost broke through to 32 the day that it broke through 30 I hear a lot of people wondering is $50 next and I guess the way I see it there's there's parts of these past couple months that have reminded me a bit of 2011 just where there's there's some days where it feels like it's almost day after day the price is going up a so I don't know that I would say that we're imminently headed towards 50 does the possibility of something like that happened similar to 2011 where a lot of

the banks were caught short and got squeezed so you do have an environment where that becomes possible perhaps the one thing I would caution people against is that could it go back below 30 absolutely and I think it's really encaging that it is above 30 and I think as we're recording it's above 32 right now but keep in mind that we've seen a lot of volatility silver moved a $150 a couple times in the past two or three weeks which you know is bigger size move on Silver so I know that's not not much of the

answer you were hoping for but I mean I think silver in the longterm everything that we've talked about is why it's still to me a good long-term bet in the short term I would expect you're going to see it pretty darn volatile and I mean is there a chance for $50 this year there are scenarios in which that could happen but I don't know that I would say that we're in a guarantee of that but certainly with some of the things that are building underneath the surface yeah it's

possible I think I think that was quite a fine answer I would be maybe a little bit worried if you gave me an exact date for $50 so so this this was perfectly good answer I was one of those things where people want an exact answer and uh obviously life would would Pro be a little easier if we it worked like that um I guess my background I was an option Trader so train to see things in the different probability buckets that they actually are and um hopefully at least that gives a few things to think about

so that someone at home can look at the different possib ities and scenarios that you see happening and then combine those together and and make any appropriate decisions I think so I think it's it's a good way to look at it and before before I let you go so we've gone over what's going on with the silver price a little bit of supply and demand it's always good to get your perspective I definitely always learned something new but I'll I'll put it back to you and see if you had any final thoughts that you

wanted to leave the audience with especially because I know you're you're very deeply entrenched in silver and and talking with a lot of people who also are sure well I have two that come to mind is that if you're investing in silver know why you're investing if someone is an active Trader of silver then by all means go out and trade it if you're investing in silver as insurance against a big debt load that looks like it can't get paid off and you're thinking that at some point the FED is

going to come back into the market then I would say to have fun and enjoy watching the price as it goes up but I get messages from people they're saying well Silver's down to 31 bucks is it going to hold 30 no one knows that for sure I'll I'll stay IEM and um if you're looking at something as a long-term investment and insurance again some of the money burdens that are out there enjoy what's happening but don't let because the price move up to bucks now I'm going to pile on something just

because I think it's about to explode I would so I would suggest to be careful about that and whatever the reasons are for any individual person uh perhaps now is a good time to review that that can change from time to time but keeping that in mind and not doing something just because we've hit a period of excitement obviously it would have been great if we had loaded up at $22 but now at $32 um hopefully some prudent guidance shall we say and guess just the last thing i' I'd love to

pass along before to wrap up I don't know if a lot of people have seen this but actually would you take a guest who put out a study about the impact of a gold standard on long-term price setting and I I'll give you a clue it's the the last group that you would expect to do something like this but you know who put out such a report earlier this year I don't know and I I'm such a bad guesser I know I'll get it wrong so please please tell us well the Philadelphia Federal Reserve no l

so which I maybe I'll put in the category somewhere along with Costco that just you're seeing the perception about the medals change as you well know for decades you know there were people who really like gold and silver sand money Advocates conservatives and were saying why it would be better with the gold or silver standard and that's fine yet to see the Federal Reserve publishing a study specifically does a gold standard maintain price stability in the long term best part is they came to the conclusion that it does

so um what they do with that maybe could could someone in Philadelphia pass that along to jome that would be nice but certainly uh a sign of Changing Times that even the Federal Reserve brand is studying the gold standards so who knows um I think that's it's possible and I think there's incentive even for the us at some point if they were inclined to do a reset and wipe out a large portion of the debt I want to be careful how I freeze that not to say guaranteeing a gold standard but does

that type of thing become possible some sort of revaluation I continue to hear a lot more speculation about that and certainly as the debts get bigger and the situation continues we've heard some European Central Bankers talk about that type of possibility with their revaluation accounts so we'll fight out in the next couple of years but that's where things are headed and it's nice to see both gold and silver finally reflecting some of that and uh we'll see where it goes next okay I think that's that's a nice

point to wrap up fun thank you so much for coming on to talk about silver and hope to have you back much sooner next time well I appreciate that Bo fun to catch up with you and appreciate all the interviews that you do I listen to a bunch of them and you have some great guests on there so again honored is always to be a part of your show and uh anytime I'll be here well well thank you very much and once again I'm Charlotte McLoud with investing news.com and this is Chris Marcus with Arcadia

economics thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below we'll see you next time