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Top Three Videos – September 15, 2023

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Bob Moriarty & Rafi Faber: How Will Gold Play a Role in a Divided World?

Vancouver Resource Investment Conference

Quick Summary Bullets:

Role of Gold as a Hedge and Preserver of Wealth

  • “It is important for people to be holding physical gold and silver potentially in their possession right now.”
  • Gold can potentially play a role in a divided world by serving as a hedge against inflation and preserving wealth.
  • Holding physical gold and silver can undermine the power of governments and big banks, as they are not able to censor or control these precious metals.
  • To survive the end game, it is important to have physical gold and silver coins in hand, as they will be the valuable assets that can be traded in the immediate aftermath.
  • The potential scenario for gold to play a role in a divided world is if the dollar collapses, leading to a bottom-up movement where people start trading gold and silver to rebuild local economies.
  • “No government wants to go to gold standard, the only time they’ll ever do it is when they’re forced into it by ordinary people who want to eat.”
  • “Central banks around the world have been accumulating gold at a record pace, which has sparked theories of a monetary system reset and a return to a gold standard.”
  • Central banks are accumulating gold because they know the total amount of debt in the world cannot be paid, and they’re trying to cover their assets.

Impacts of Going off the Gold Standard

  • Going off the gold standard in 1971 led to excessive government spending and we are now facing the consequences.
  • The removal of gold backing from the US dollar in 1971 had significant impacts on money, leading to bankrupt medical, financial, and political systems.
  • Nixon’s action in 1971 was not taking the dollar off gold, but rather admitting that the printing of money couldn’t be paid off anymore, leading to a shift towards market-determined exchange rates.
  •  The financial system is on the edge of a cliff, with a predicted crisis stage starting in 2005-2008, suggesting that the potential collapse of the system may occur before the widespread adoption of Central Bank digital currencies.
  • The hyperinflation of the dollar could have global implications, as the absence of a price matrix would make it difficult for any totalitarian system to allocate goods and services, potentially causing economic instability and social unrest.

Transcript Summary:

  • 00:00 Holding physical gold and silver is important in a divided world, as central banks invest in gold and corruption fueled by the Federal Reserve affects various sectors, but the solution to fixing inflation is not discussed.
    • The importance of holding physical gold and silver in the current divided world is discussed.
    • Having a reserve of gold would be valuable for individuals, families, corporations, cities, states, and nations, regardless of age or circumstances.
    • Central banks like Russia, China, and Iran are all investing in gold, making it the best reserve during financial crises, and it is important to hold physical gold and silver in hand for profit and security.
    • The world is becoming increasingly corrupted in various sectors, such as education, politics, medicine, and academia, due to the inflation machine fueled by the Federal Reserve and directed by Congress, which allows companies like Pfizer to profit from their medications by forcing Medicare and Medicaid to cover the costs, thus perpetuating the cycle of corruption, and the solution to fixing inflation is not mentioned.
  • 04:54 Holding physical gold and silver can undermine the corrupt financial system and lead to wealth redistribution, and in a true end game scenario, it is important to have physical gold and silver coins as ETFs will not be useful; the recent BRICS Summit strengthened the alliance but did not result in a gold-backed currency announcement, and while there is discussion about a potential gold standard in the future, it can be implemented by any country without agreement from others, and the speaker believes that the gold standard will not return as an agreement among central powers, but rather as a bottom-up process where currencies collapse and local communities trade gold and silver to rebuild their economies.
    • Holding physical gold and silver can undermine the corrupt financial system and lead to a redistribution of wealth.
    • To protect your family in a true end game scenario where the dollar collapses and there is panic and scarcity, it is important to have physical gold and silver coins, as ETFs will not be useful in such situations.
    • The recent BRICS Summit generated speculation about a potential gold-backed currency announcement, although it did not materialize, and instead, the BRICS alliance was strengthened by inviting six additional members.
    • We left the gold standard in 1971, which led to excessive government spending, and while there is discussion about a potential gold standard in the future, it can be implemented by any country without agreement from others.
    • China, the United States, and the first country that doubts it will become the richest country in the world due to everyone wanting to deal with them, but the significance of the BRICS meeting is that they will now control 80% of the world’s energy and over 55% of the GDP, marking a shift from the West’s debt-based system to the East’s resource-based system, although the idea of a gold-backed BRICS currency is considered nonsense.
    • No government wants to return to the gold standard as it would require dealing with reality and balancing their checkbooks, and the speaker believes that the gold standard will not return as an agreement among central powers, but rather as a bottom-up process where the dollar and other currencies collapse, leading to local communities trading gold and silver to rebuild their economies.
  • 11:32 The speaker expresses concern about the lack of respect for liberty in the US Administration and the potential dangers of China having superpower status, highlighting the impacts of removing gold backing from the US dollar in 1971 and the potential for a worldwide revolution leading to the adoption of a gold standard.
    • The speaker expresses concern about the lack of respect for liberty in the US Administration and the potential dangers of Xi Jinping and China having superpower status, stating that they do not want to be in a world where that is the case.
    • The removal of gold backing from the US dollar in 1971 had significant impacts on money, resulting in a bankrupt medical, financial, and political system, with accusations of bribery against the president and the potential return of a deceptive version of COVID-19 to reinstate Biden into office.
    • A worldwide revolution will occur when the system crashes and banks close, forcing governments to adopt a gold standard, as seen in the chaotic economic revolution in France from 1789 to 1796.
    • In 1971, Nixon admitted that the printing of money could no longer be paid off and allowed the market to determine the exchange rate, leading to a disconnect between the dollar and gold and the establishment of a Futures Market to stabilize the price.
  • 16:23 Central banks are accumulating gold at a record pace in preparation for a monetary system reset, as they know the world’s debt cannot be paid, but revaluing gold and stopping money printing may face backlash; people attacking FOMC participants could lead to panic, and central banks’ gold reserves are ineffective if trust in the bank is lacking.
    • Disconnecting from gold and returning to a gold standard is seen as a solution to the inflationary pyramid problem, with central banks around the world accumulating gold at a record pace, possibly in preparation for a monetary system reset.
    • Central banks are accumulating gold because they know the world’s debt cannot be paid and they are trying to protect themselves.
    • Central bankers may be hesitant to revalue gold and stop printing money due to the potential backlash from their staff and the public.
    • People from different countries will try to attack the participants of the FOMC meeting, leading to panic.
    • Central banks buying and selling gold to strengthen their currency is ineffective if people don’t trust the bank, so the amount of gold they have doesn’t matter.
  • 20:50 There are debates about intentional destruction of Western societies, with some people in power potentially being psychopaths, and organizations like the World Economic Forum shaping global events, while the danger lies in the stupidity of people who have the potential to cause harm.
    • Is there an intentional destruction of Western societies economically, spiritually, and culturally, or are the powers that be simply ignorant or helpless?
    • Many people in positions of power, including Justin Trudeau, may be diagnosed as psychopaths and enjoy tormenting and controlling others, which is why real money is needed to measure success.
    • There is no conspiracy or central group trying to engineer a divided world, but there are organizations like the World Economic Forum that play a role in shaping global events.
    • There are warring factions of Warlords in charge of different territories, some of whom are evil like Fauci and Trudeau, while others, like Mao, are more indifferent and play with people’s lives, and the danger lies in the stupidity of people who have the potential to cause more harm.
  • 24:59 Central Bank digital currencies pose a threat to individual wealth and government overreach, while the potential collapse of totalitarian systems may lead to a reliance on gold and silver as a stable solution in a divided world.
    • Central Bank digital currencies pose a threat as governments freeze bank accounts and debank individuals, making it necessary for average citizens to be concerned and find ways to protect their wealth from government overreach.
    • OnlyFans, a site where attractive women can sell pictures and make money, is being targeted by the government and banks, despite their actions being legal, which highlights the moralistic judgment and control over certain industries, while the speaker also predicts a financial crisis.
    • The world is moving towards totalitarianism, but historically, such regimes have not lasted very long.
    • The collapse of the Soviet Union after 70 years was due to their ability to use dollar-denominated prices to allocate goods and services, but in a global context where the dollar is hyperinflating, totalitarian systems will struggle to sustain themselves without a price system, leading to a breakdown of the division of labor and a potential reliance on gold and silver.
    • CBDCs may be a tool for totalitarian control, but they are not a stable solution and will only add another layer of instability to the current monetary system, ultimately leading to a collapse and a return to gold and silver.
    • Most people consider gold to be a relic of the past or a shiny rock used for jewelry, so the speaker asks how we can educate children and society on the role of precious metals as money.
  • 32:44 People will turn to gold and silver as an alternative when they realize the decline of the US Empire, as gold is the basis of world trade and must be recognized as money to maintain its value and stability.
    • The rapid decline of the US Empire will lead people to turn to gold and silver as an alternative when they realize there is no other option.
    • The speaker discusses the potential collapse of the financial system, including the closing of banks, and the importance of educating people on sound money.
    • Gold is not just a shiny metal, but rather a valuable asset that people need to learn the importance of through the pain of not having it.
    • Gold is the basis of world trade and must be recognized as money in order to maintain its value and stability, allowing individuals to navigate volatility and remain invested in the game until the end.
    • Pay children in silver coins instead of cash so they can physically experience the weight and value of real money, encouraging them to save and invest for the future.
  • 37:23 The speaker emphasizes the importance of educating people about gold and discusses the interplay between the monetary system, banking system, and gold from an Austrian School of Economics perspective, while also offering trading advice and a biblical angle on money, with reassurance that we have overcome similar situations before.
    • The speaker discusses their books, the longevity of their organization, and the importance of educating people about gold, while also mentioning another person’s newsletter service.
    • The speaker discusses the interplay between the monetary system, banking system, and gold and silver, providing insights from an Austrian School of Economics perspective, while also offering trading advice and a biblical angle on money.
    • It is reassuring to know that we have experienced similar situations before and will overcome them again, as evidenced by the panelists’ discussion and their agreement to participate in future discussions.
    • I have been a fan of Bob and 321 Gold since my early 20s, and now I’m 40.

Maximizing Profits in Turbulent Times: Rick Rule On Preparing Your Investments for the Recession

Expat Money

Quick Summary Bullets:

Global Economic Trends and Impacts

  • “Complacency itself should be the author of fear, as 40 years of declining interest rates, globalization, and peace are coming to an end, causing people to lose trust in governments and turn to gold.”
  • Similar processes of increasing material living standards are occurring in other countries like India, Indonesia, and Bolivia, highlighting the global improvement in the lives of the poorest of the poor over the past 40 years.
  • “Increased demand for all kinds of the material building blocks of humankind to the betterment by the way of all.” – Rick Rule emphasizes the positive impact of addressing the lack of access to electricity on the overall improvement of society.
  • “Our species has spent 4.8 trillion dollars in 40 years on Alternative Energy and we’ve reduced the market share of fossil fuels from 82 percent all the way down to 81 percent. Fossil fuel demand will be with us for a very long time.”
  • The net present value of unfunded entitlements at the federal level in the US exceeds $100 trillion, posing a significant challenge for the government to settle this debt without inflating away the value of those liabilities.
  • “We’ve weaponized the US dollar and also because at a very large level like China. They understand that there are holding costs in U.S treasuries.” – Rick Rule on the reasons why countries like China and Russia are stockpiling massive amounts of gold.

Importance and Benefits of Gold Ownership

  • “I am suggesting that they’d be silly at this point in time not to have two and a half or three percent” of their net worth in gold, emphasizing the importance of including precious metals in investment portfolios.
  • “The primary function of gold is to act as a medium of exchange and a store of value, making it a classic definition of money.”
  • “Most people don’t own physical gold, but they need to regard it as insurance.” – Rick Rule emphasizes the importance of owning physical gold as a form of financial protection in turbulent times.
  • Owning gold can be a profitable investment during turbulent times due to negative real interest rates, debt, deficits, and counterfeiting, which can increase demand for precious metals and potentially quadruple their market share.
  • “The beautiful thing about gold is you don’t have to trust anybody. The receipt of payment in gold isn’t a promise to pay, it’s payment.”
  • “Gold helps me sleep nights and stay calm.”

Investment Strategies and Advice

  • Capital-intensive cyclical businesses, such as the gold and oil industries, can experience dramatic price fluctuations due to small imbalances between supply and demand, highlighting the inherent leverage in these sectors.
  • Understanding the difference between “inevitable” and “eminent” can help investors become more patient and comfortable with long-term investment strategies, even if they take several years to play out.
  • “The upside associated with natural resource stocks in a natural resource bull market is so explosive…the quantum increases that you see in the share prices in these circumstances is incredible.”
  • “The ideal holding period is forever when you sell you run the chance of transferring a smart investment to a dumb one.” – Warren Buffett
  • “Almost every piece of real estate I ever sold was a mistake…the power of compounding is jokingly the eighth wonder of the world.”

Transcript Summary:

  • 00:00 Investors are realizing the lack of investment in natural resources, leading to supply shortages in industrial materials, and are turning to gold and natural resources due to a lack of trust in governments, while the urbanization of China and increasing living standards worldwide have driven up prices for commodities and precious metals.
    • Rick Rule has been involved in the finance industry for 49 years, specializing in natural resource investing and international investments.
    • There is a growing realization that there has been a lack of investment in natural resource-based businesses for the past 40 years, leading to a need for new mines and a lengthy permitting process.
    • Investors are realizing that due to normal growth in human activity, there will be supply shortages in industrial materials within five years, and the increasing lack of trust in governments and each other is leading to a growing interest in gold and natural resources.
    • The speaker reflects on their lack of experience during the previous bull market and suggests that many people may feel uncertain about how to approach the current market.
    • The urbanization of China and the increasing material living standards of the poorest of the poor worldwide have driven up prices for industrial commodities and precious metals, and this trend is likely to continue in other countries such as India, Indonesia, and Bolivia.
    • In the future, the increasing demand for material building blocks due to the improved access to electricity will benefit humanity.
  • 08:39 Investing in extractive commodities can be profitable during a bull market, despite appearing expensive to conventional investors, and understanding political risk is crucial for active investors.
    • Underinvestment in extractive commodities and the increasing internationalization of trade led to a bull market, with dramatic price increases in gold and oil, highlighting the inherent leverage and cyclical nature of capital-intensive businesses.
    • A doubling of the price of platinum does not affect the finished price of a car due to the high utility of the product, and while manufacturers may eventually substitute other materials for copper if its price triples, those who invested in copper beforehand will benefit greatly during the transition period.
    • Resource industries often appear expensive to conventional investors due to low earnings caused by depressed materials prices, but in reality, they can be cheap and profitable when commodity prices rise, demonstrating the market’s tendency to send misleading signals.
    • Investing in technology businesses requires deep knowledge and understanding, and while it is not discouraged, it is important for successful technology investors to analyze their success and determine if they are truly competitive in the sector.
    • Understanding and tolerating political risk is crucial for active investors, with the speaker highlighting personal experiences in California, Chile, and Congo as examples.
    • The border crossing between Uganda and the Congo is difficult, but with the right information and currency, it can be done informally, as tariff collection in Congo is personal and informal.
  • 19:58 Despite a potential recession, investments in natural resources are necessary to maintain supplies and prevent shortages, as the global oil industry is currently underinvesting in productive capacity.
    • Recession may lead to shortages in a range of industrial materials, but if demand remains steady, prices may not change.
    • Investments in natural resources are insufficient to maintain supplies, and the delay in investing has led to attractive pricing and potential government interference through theft or regulation.
    • Copper and fossil fuel demand will continue to be significant for many years despite efforts to explore alternative energy sources.
    • Peak oil demand is predicted to occur around 2065, but due to the belief in transitioning away from fossil fuels by 2030, the global oil industry is currently underinvesting in productive capacity, leading to a potential decrease in production while demand continues to rise.
    • The speaker assumes that there will be a recession within the next five years and believes that a recession will only delay, not eliminate, the supply shortage thesis.
  • 26:43 Timing doesn’t matter in investments, diversify your portfolio with natural resource stocks and precious metals, and consider having 2.5-3% to 20% of your assets in these assets to defend against potential economic downturns.
    • Timing doesn’t matter in investments, and understanding the difference between inevitable and imminent allows for patience and comfort in the long-term outcome, even if a recession doesn’t happen for several years.
    • Investing in natural resource stocks and precious metals is important for portfolio diversification and maximizing profits, as their upside potential in a bull market is significant and their market share should be at least market weighted.
    • Americans should consider having at least 2.5-3% of their savings and investment assets in precious metals and natural resources, and solvent investors should have as much as 20% of their portfolio in these assets to defend against the potential diminution of their living standards in the current economy.
    • Gold is considered a valuable asset that serves as a medium of exchange and a store of value, making it distinct from other commodities.
    • Silver is a unique and volatile precious metal with less utility as a store of value or medium of exchange compared to gold, but it is favored by speculators and has a high demand for various purposes.
    • The speaker emphasizes the importance of considering the industrial and utility aspects of silver, platinum, and palladium in order to accurately assess their future demand, and also mentions the significance of timing in investing in these commodities.
  • 35:15 Owning the best companies in the resource sector, understanding the time value of money, and investing in ETFs or individual stocks can lead to profitable investments in real estate and extractive industries, particularly in the uranium sector.
    • In turbulent times, Warren Buffett’s quotes emphasize the importance of patience in the market and the benefits of compounding in resource companies during a bull market.
    • Investors should focus on owning the best companies in the resource sector to generate beta and take advantage of share price gains and generous dividends, while also considering investments in real estate and other sectors that can obviate the time value of money through economic rent or dividends.
    • Investing in the best companies and focusing on market beta, as well as understanding the time value of money and increasing returns on capital employed, can lead to profitable investments in real estate and extractive industries.
    • Selling real estate can often be a mistake due to the power of compounding, as demonstrated by Grant Cardone who has never sold a piece of real estate since his first purchase, and it can be more beneficial to invest in ETFs rather than individual stocks, according to Chris McIntosh.
    • Investing in ETFs can be a good option for investors who don’t have the time or expertise to analyze individual companies, but for those who are knowledgeable and willing to put in the effort, owning individual stocks may be more efficient and profitable, particularly in the uranium sector.
    • Consider owning either Camaco or a combination of Camaco and Kazakum Prom, along with the Sprott physical uranium Trust, to participate in 85% of the beta in the uranium space with no work and enjoy a good dividend, or alternatively, if you want broader exposure to uranium juniors, consider investing in the uranium ETF.
  • 45:47 Physical gold is a valuable asset to consider during turbulent times, as it provides security and liquidity, while U.S. dollar denominated debt and the U.S 10-year treasury are unattractive investments due to inflation and declining savings value.
    • Physical gold should be regarded as insurance and a form of liquidity, especially in turbulent times, as it provides a sense of security and is a valuable asset class to consider amidst the volatility of fiat denominated debt markets.
    • Inflation has not been accurately measured as the core CPI inflation rate in the United States does not include food or fuel, and the cost of government tax is a larger component of household expenses than shelter, energy, food, and transportation combined, resulting in a decline in the value of savings by about seven percent per annum, making U.S dollar denominated debt and the U.S 10-year treasury unattractive investments.
    • Having liquidity in the form of U.S. dollars is important for taking advantage of potential opportunities during a liquidity squeeze, but it comes at a cost, so it’s necessary to consider asset classes and factors like inflation, credit quality, and quantitative easing.
  • 50:18 Owning gold is a bulletproof investment due to factors like negative real interest rates and increased demand, while countries like China and Russia are stockpiling gold as a form of self-defense against the US dollar.
    • The creation of unbacked currency and the excessive debt and deficits at the federal level in the US pose a significant risk, as the net present value of unfunded entitlements exceeds $100 trillion and the government’s ability to settle this debt without inflating away the value is unlikely.
    • Owning gold is influenced by negative real interest rates, inflation, counterfeiting, and the market share of precious metals, and if these factors increase demand for gold from one half of one percent to two percent, there will be a quadrupling in demand, making it a bulletproof investment.
    • Some groups, like China and Russia, are stockpiling gold because they have been forced to due to the weaponization of the US dollar and the negative rate of return on US treasuries, with Russia even seizing $300 billion worth of US treasuries.
    • Chinese, Iranians, and Russians are turning to gold as a form of self-defense against the US dollar, as they don’t trust each other or the US, and gold doesn’t require trust as it is payment in itself.
    • China owned trillions of dollars of US Treasury bonds for 40 years as they needed an underpriced Yuan to sell goods in the US, and despite not fully trusting the US, they saw US dollar denominated assets as the most liquid and accessible option, but as US interest rates decreased and inflation increased, they had to decrease the value of their holdings.
    • China has been using their foreign exchange surpluses to finance their urbanization and access to markets and raw materials, and while the US has tried to punish them in world markets, China will likely transition out of US treasuries into higher quality assets like natural resources in an orderly manner to continue selling manufactured goods into the US market.
  • 59:38 Gold is a secure investment during economic turbulence, mining and resource stocks are undervalued and act as inflation hedges, and investing in high quality companies with purchasing power is key; Rick Rule is starting a new bank for expats offering multiple currency accounts and loans against precious metals.
    • Gold is seen as a form of insurance and liquidity during times of economic turbulence, and despite the holding cost, it provides a sense of security and the ability to take advantage of opportunities.
    • Mining and resource stocks are a good investment as they act as inflation hedges, have undervalued prices compared to other asset classes, and benefit from demographics.
    • Pay more attention to the investment thesis rather than the inflation thesis, and consider investing in gold, real estate with fixed rate financing, or high quality industrial companies with pricing power as inflation hedges.
    • Berkshire Hathaway earned high returns by owning high quality companies with purchasing power, and while natural resource-based businesses can serve as an inflation hedge, it is important to consider the efficiency of the individual company rather than just the potential benefits.
    • Rick Rule is starting a new bank for expats in the United States that offers accounts in multiple currencies, money market or CDs, and loans against physical precious metals.
    • Earn high interest on your checking account, invest in rental real estate through your IRA, and join a community bank with a nationwide focus for foreign investing, expatriation, precious metals, and contrarian investing.

Severe economic damage coming, this is the next critical point for the Fed – Axel Merk (Pt 1/2)

Kitco NEWS

Quick Summary Bullets:

Importance of Diversification and Asset Allocation

  • “When we retire, we want to have enough money and retain and maybe even increase the purchasing power of our savings.”
  • The price of gold tends to be very sensitive when the economy slows down because of the reaction at the Federal Reserve, making it a valuable asset for diversification in uncertain times.
  • “If you’re not confused, you’re not paying attention.” – Axel Merk emphasizes the importance of staying informed and forming one’s own opinion in a complex economic landscape.
  • “The goal for most investors is not to beat the S&P 500, but to retain personal power and save for retirement.”
  • “The markets are there to frustrate investors and they succeed that very well over time.” – Axel Merk highlights the frustrating nature of the markets and emphasizes the need for patience when it comes to investing.
  • Investor allocations to Gold are at the highest in over a decade, indicating a strong interest in the precious metal as a safe-haven asset.

Federal Reserve’s Control and Actions

  • “The Federal Reserve is going to do nothing…it doesn’t really matter what we say. It matters what the Federal Reserve does because they control the Bazooka.”
  • The Fed should consider completely revisiting their communication strategy to avoid market speculation and confusion.
  • “We could actually try to forecast what those metrics are and figure out where the market should be where interest rate should be rather than being zoomed in on a speech by the FED share that would create less volatility in the market and much more clarity which would be better asset allocation.”
  • “I’d like to remind people that don’t think Charlie of the FED is. They control the Bazooka and you may want to pay attention to those that control the Bazooka don’t fight.”

Market Volatility and Uncertainty

  • “The more you intervene on these markets, the more dislocations you create.” – Axel Merk highlights the potential negative consequences of government intervention in energy markets, leading to market distortions and dislocations.
  • Volatility will be a hallmark of the markets due to uncertainty surrounding the Fed’s actions and their implications.
  • “More severe damage will be caused to economic growth than the market is pricing in.”
  • “I think we’re going to get a more severe recession because they’ll be quote unquote higher for longer and cause more damage along the way.”

Transcript Summary:

  • 00:00 The Federal Reserve is facing challenges with rising inflation and uncertainty about their next moves, which could have severe economic consequences and make a soft landing scenario unlikely.
    • Inflation rose in August, posing a challenge for the Fed’s fight against inflation and prompting speculation about Jerome Powell’s next moves and their impact on the economy, markets, and gold.
    • Consumer Price Index increased by 3.7% year over year, with core inflation excluding food and energy up 4.3%, leading to a decline in real average hourly earnings and highlighting the lack of strategy from the Federal Reserve.
    • The Federal Reserve is hesitant to raise interest rates despite potential inflation and a volatile economy, hoping that things will eventually stabilize, including high energy prices.
    • The Federal Reserve’s actions are more important than economic forecasts, as they control the market and will only make changes if something drastic occurs.
    • The Federal Reserve is unsure of their actions and may cut rates but still maintain a restrictive policy, which could lead to severe economic damage and make a soft landing scenario unlikely.
  • 05:56 The Fed may signal a forthcoming rate cut in their next meeting to avoid market speculation, but the potential severe economic damage from higher inflation, weakness in certain areas of the economy, and tightening policies could lead to more rate cuts next year.
    • The Fed is expected to hold steady in their next meeting, but there may be a change in language signaling a forthcoming rate cut, as they should revisit their communication strategy to avoid market speculation.
    • In a world with a rules-based Fed, interest rates would be set based on inflation and employment, leading to less market volatility and more clarity, but at the next meeting, Powell’s goal will likely be to say nothing.
    • The speaker suggests that the Federal Reserve may focus more on real interest rates and if they do, the market will likely anticipate more rate cuts for next year.
    • The speaker highlights the potential severe economic damage coming due to higher inflation, weakness in certain areas of the economy, increasing headwinds for banks, challenges in Europe and China, and the cumulative effect of tightening policies.
  • 09:57 The Federal Reserve’s approach to policy setting and communication is crucial, as raising interest rates won’t help with inflation caused by high energy prices, and increasing subsidies for energy are causing market dislocations and higher costs, leading to less economic growth and higher inflation.
    • The Federal Reserve’s approach to policy setting and communication with the market is more important than the specific actions they take, and it is crucial for them to pay attention to those who have control over the economy.
    • Raising interest rates will not help bring down inflation caused by high energy prices, and the best solution is for high energy prices to reduce demand.
    • Increasing subsidies for energy, particularly in Germany and the US, are causing market dislocations and will result in lower output and higher energy costs.
    • Higher inflation and less economic growth are counter to the goals of policy makers, and the Federal Reserve is not well equipped to handle supply shocks, as seen with the inflation that has occurred.
  • 13:39 The Fed’s unclear strategy to maintain inflation at two percent is causing market volatility and uncertainty, while consumer spending will have a more severe impact on economic growth than currently predicted, despite Goldman Sachs’ optimistic forecast.
    • The Fed’s goal is to maintain inflation at two percent, but without a clear strategy, it is difficult to predict how they will achieve this, leading to increased market volatility and uncertainty.
    • Consumer spending will cause more severe damage to economic growth than the market is currently pricing, despite Goldman Sachs’ confidence in the US economy avoiding a recession.
    • Goldman Sachs predicts a soft landing for the economy, with inflation being brought down and job growth leading to rising wages, allowing consumers to keep spending and driving economic growth.
    • Goldman Sachs’ forecast is ill-guided as there is underlying weakness in job growth and it is important to consider the risks and uncertainties in making investment decisions.
  • 17:31 The economy is showing signs of weakness, with companies reassigning employees instead of laying them off and small banks facing challenges, leading to a predicted recession next year and making gold a good asset allocation option.
    • The tech sector is recovering but there are signs of weakness in the economy, with companies reassigning employees instead of laying them off, and the tightening of mortgage rates will impact home prices and the job market.
    • Small banks are facing challenges in managing interest rate risk and commercial real estate, which will hinder their ability to provide credit to small businesses, posing a significant headwind to credit.
    • The speaker predicts a recession starting next year, which could have a significant impact on the economy and potentially influence the outcome of the election.
    • Gold tends to perform well in scenarios where the economy slows down, making it a good asset allocation option, especially if equities are expensive or if there is a negative scenario.
  • 22:00 The Fed is predicted to cut rates in response to a predicted recession in 2024, but conflicting information and fear of repeating past economic troubles may lead to hesitation.
    • Recession is predicted to occur in the middle of 2024, leading to the Federal Reserve cutting rates, and despite being an apolitical organization, the Fed will likely use the excuse of inflation coming down to justify the rate cuts.
    • Real rates are increasing and will continue to be restrictive, leading to a pronounced economic slowdown and the possibility of a recession by the end of the year, although there is conflicting information from different sources.
    • The speaker believes that the Federal Reserve will be hesitant to cut interest rates this year due to fear of repeating the economic troubles of the 1970s, but does not rule out the possibility of rate cuts next year.
    • The speaker believes that the optimistic outlook for the economy this year is unlikely, and instead suggests that a rate cut would not be an effective solution.
  • 25:56 The Federal Reserve’s lack of a rules-based approach and hesitation to raise interest rates may lead to severe economic damage in the coming months, so investors should consider their risk tolerance and allocate investments accordingly, with the speaker personally favoring gold due to its potential value decrease.
    • The Federal Reserve’s lack of a rules-based approach and hesitation to raise interest rates may lead to a more severe recession and economic damage in the coming months.
    • Investors should consider the risk they can afford to take and allocate their investments accordingly, as the speaker personally has a higher allocation to gold due to being able to afford the potential decrease in value.
    • The price of gold has been historically volatile, making it difficult for smaller mining companies to access funding, while established producers have less leverage to the price of gold, creating a challenging environment, but cash is currently an underappreciated asset with a return.
  • 29:18 Gold miners have potential for growth due to rate cuts, while the price of gold may increase, but investors should be patient and cautious as the market is still uncertain and interest rates are not aligned with investors.
    • Equity markets may not be at the bottom of the cycle yet, and there are still excesses in the AI craze and options trading that need to be resolved before a market recovery can occur.
    • Gold miners have the potential to perform well due to their quick response to rate cuts, while the price of gold is expected to increase when rates come down, although the volatility may be less than anticipated.
    • The speaker predicts that there will be small, historical moves in interest rates and that the perception of rate cuts by the Federal Reserve is more important than the actual cuts themselves.
    • If the market goes too high, the price of gold will increase, but during a severe recession, the price may not immediately reflect the downturn, so investors need to be patient and take things one step at a time.
    • Gold prices may reach an all-time high of 2100, but the speaker is cautious because the Federal Reserve has not made a pivot yet, and they buy gold for long-term diversification benefits and because interest rates are not aligned with investors, although there may be volatility and a correction, the speaker believes we are not at the end of the bull market in gold.
    • Investor interest in gold is increasing, with JP Morgan reporting the highest investor allocations to gold in over a decade, and the speaker will discuss a gold-backed brics currency and the Biden administration’s proposal for mining companies to pay royalties on gold and copper.

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