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Canada's economy is cracking (is gold the escape hatch?)
00:30:48
Are falling metals prices, Fed pressure, and Canada’s economic cracks setting up the next major move in gold and silver?
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A
If you cannot hold it, you don't own it.
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B
Central banks have been buying gold like crazy.
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Value your wealth in ounces versus depreciating currencies.
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B
Welcome to the Real Money Show. My name is Jeremy Wiseman. I'm joined here by Jerry Coraya. Right now the price of silver has dropped below $70 an ounce. Gold is trading near the $4,000 handle. And you would think that that's it for the bull market and precious metals. But today, Jerry, we've got three stories to discuss that tell a completely different tale. One is politically based. What do you do when there's political chaos? Another is the industrial demand side in the precious metals sector. And lastly, we want to talk a little bit of Fed talk. Hopefully our eyes won't glaze over. I think this time we'll be able to tell a good, good story on what's happening with the Federal Reserve. So let's, let's jump in. But first, how are you doing? How was the last couple of weeks for you?
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A
Last couple of weeks? Well, first of all, I'm doing very well. It's been very exciting to filter through all of noise and headlines. And that's exactly what I've been doing is filtering through. This is what we try to do here at Guild hall and with the Real Money show. Focus on, you know, the bigger picture, the macro story, which always has to come down to, for me at least is the currency story. Debauching of the currency. No, nothing is new under the sun with regards to these type, this type of loose Keynesian monetary policies of, of just stimulus, kicking the can down the road. And now we're trying to realize where did all that money go? So it's a fun, it's a fun thing of connecting the dots. And I gotta tell you, the fundamentals for precious metals keep me tuned in because those fundamentals, the common four that we have been discussing like a broken record for the past, since 2008 with the Real Money show and Guild Hall' going on to its 25th year. So congratulations to you in the family and to us. You know, we're here to help people to under understand and why it's necessary to convert out of fiat currency. But the fundamentals remain. Currency debate, debasement, which, which is, which is inflationary supply and demand concerns and economics 101. And then plus you have the geopolitical changes in landscaping and de dollarization. But, but these four fundamentals, we've added a few more fundamentals and it's causing a lot of excitement. This is no this is not just any pullback in metal. This is a launch, a setup for the next bull run that is ahead of us. It's right around the corner, guys.
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B
I think just to stay on, on the, the, the current action in the precious metals, I often get counterintuitively excited about them because every time I've seen them happen in the past, it's what's usually been followed by followed up with, is that the market takes off pretty quick. You get this kind of like last little bit of a washout. Although this feels like a retest, we had some really great gains through October, November, December and January. And we saw some all time highs in January. So, you know, it makes sense to consolidate. But that said, I remember 2008. Sorry, yeah, 2008 we had a big washout in the metals. And then within, within that time it was within three years it took from October 2008 and then all of a sudden 2010 it was really running. Right. Right. It was a long consolidation. 2020 market went from silver, went from 18 down to 11. That was a crazy washout. And what's interesting about those, by the way, is they, there's this zone where premiums are key within a certain dollar range. If it goes too far below on silver, premiums go up. So you're not getting a deal anymore. And if it goes too high, premiums go up again because this is all supply, demand based. But 2020, the market went from 18 down to 11. And then by August, and that was March and by August we'd hit $30 silver. Right. So we had doubled in value in silver. So. And there's been other examples along the way. Those are two big ones that I've, that I've experienced and I just, I get a little excited because I know, okay, this is going to be a washout. So let's move on to some of these stories to show why we think this is far from over and actually an exciting time to buy on the dip, get into the market for the first time if you haven't done so. So this week Doug Ford was on an American news network talking about Fortress North America. I don't know if you caught the clip personally. Full disclosure, I didn't watch it. I saw that he was there. I saw what he discussed, I saw the, the quotes and my first reaction.
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A
Did it have to do with beer or alcohol?
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B
No.
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A
Pretty much everything talks about, no.
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B
But I did make some comments on X about that.
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A
Okay.
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B
You know, I don't think the major winemakers in California are Republican Right, that's, that's number one. So I don't know who you're hurting on that one. Right. And I'm, and I'm pretty sure all bourbon drinkers are not Republicans either. I'm pretty sure that it's one of these things that is on both sides.
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A
So.
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B
No, but I was, I was looking at that and I was thinking, you know, when, when your opponents are using your own premise, they're, they've lost. Right. When they're basically, in this case, what conservatives have been talking about is, let's work together. How can we help you be a big success?
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A
Yes.
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B
Right. You want to build your industry, how can we help you? What can we, what do you need? Right, what can we, like, do you need water? We got water. You need lumber? We got lumber. You need gold? We got gold. Like what? Potash? And what do you need? Let's all go together. So. But the thing is, is ultimately the fact that they're using these lines, but there's actually nothing behind them. They're still not negotiating.
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A
No.
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B
Right. They still haven't gotten to the table. They're still holding retaliatory, you know, holding back the alcohol, as you mentioned. It's not actually doing anything. It's just talk. But the Overton window is moving. They are now moving towards what the conservatives are saying. And by the way, I, I told my sister this the other day, Jerry, and we're going to get to the gold and why, why this is important,
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A
all these to gold.
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B
But I said, I, I'm actually like, I'm not some crazed leftist or crazed right wing, whatever extreme. I said, I'm, I'm actually like a liberal from 1995.
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That's a. Yeah.
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Which was just kind of like extremist
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for today, which is now a right,
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right wing crazy whatever it is. But look, the thing is, is that they backed off on retaliatory tariffs. They haven't made a deal. And whether or not they're either not good at negotiating or the worst case, they're trying to engineer another crisis that they can blame so that they can lead towards another vote and say it's all his fault, it's all Trump's fault that we couldn't get a deal done. Right. Like, are they trying to engineer another crisis? But he. Either way, the fact is, is that they're not trying to make deals. And it's only getting worse for, for Canadians. They've either made it worse by shooting us in the, shooting us in the foot with retaliatory Tariffs or they're subsidizing, using our money to subsidize. And what's happening? Well, these companies are either folding or they're going to to the US Anyway. And so you're stuck with policies that you can't effect. This is why you need to hold physical gold and silver. This is where it comes in. There's no counterparty risk. You are outside the system. It's undigitized. They can't touch it. And ultimately these are bad policies that lead to, lo and behold, the dollars tanking in Canada. And what's the number one thing that gold and silver do is hedge against a devaluing currency. So as a Canadian, I think it's just very important to hold actual real money, physical gold and silver to hedge against bad policy insanity. And the fact that you can't affect those, those policies either.
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A
It's an absolute insanity when we are the only GSG7 nation now in a recession, the only G7 nation who has not been able to come to the table to discuss these tariffs, retaliatory tariffs, because all of the roads lead to, you know, the discussion of fentanyl, unfortunately here in Canada and why this has not been dealt with from the grassroots all the way to the top. The money is being followed and tracked, but gold and people are looking for an escape hatch because they cannot change the policies. They can't, you know, do anything to change the income tax or the corporate taxes here in Canada. So they're leaving, unfortunately, the industrious. And over the last three years, our industrious, industrious clients, our entrepreneurs, have decided to leave rightfully so you have that right to do so. But as investors, if we, if our fight is here in Canada, which we are my, you know, and we're going to be here, we are in Canada. But the main idea would be to follow what countries have done with their money over the last few years. It was years of sanctions. Why have we seen central banks replacing U S Treasuries? This comes from a report from the European Central bank last week that gold, physical gold ownership is, has replaced U S Treasuries as the number one reserve asset amounting to up to 36, 000 tons, which is the amount that was in the, in the reserves under Bretton Woods. We're all leading there. But this is the main idea. When you have countries experiencing sanctions, we have re. We have been had accounts frozen. Money is just digital. The reason why countries need these reserves is because it provides that hedge, that escape hatch, escape out of fiat currencies out of digital banking systems. And it's.
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B
Or bad policy.
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A
Or bad policy. So when we see gold and silver moving down, it is very important to know it's not physical. When you see the statistics that gold year over year is being acquired and accumulated en masse from India, China, Poland, Poland.
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B
Poland, Georgia in May bought 10, $100
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A
million worth in the US was that the country Georgia?
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B
The country Georgia and China accumulated again in May a massive amount. So let's, let's move on to the, to the next, the next topic. So the next topic we wanted to discuss today is, is bringing in more of the industrial side. So you see silver coming down, but does that mean demand for silver has disappeared? Absolutely not. Here's one example of a story I wanted to discuss which is US Energy. One of they right now have 100 gigawatts of power through nuclear and they want to bring it up to 400 gigawatts of nuclear. So if you're going to run your AI data centers and anything else that comes beyond that, as you know, we're, they're just getting started maybe in terms
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of manufacturing, another Manhattan Project, maybe.
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I don't, I hope not. But they want to, they want to increase that. Of course, if you're going to build a major nuclear facility, there's 56, 000 ounces of silver that's going to be used in that, which is close to 2 tons that gets locked up in that facility forever. Right. Maybe not completely forever, but for a very, very long time. And while that doesn't necessarily compete with the type of, type of industry use that might be going into electric cars or the electric batteries themselves, it's just one example of a growth industry for silver and that's just in the United States. What if Germany decides that they want to go back to nuclear? Right. What if, what if the Iran situation is resolved? Iran is in control by its people and they decide that they want nuclear facilities for energy and they say, America, we're happy to open our borders, you help build it. I'm sure America would love that. And, but how many ounces of silver would be used around the world to create nuclear energy, safe nuclear energy? And there's micro, there's. I don't. Are they called micro sites, Smaller sites? Right, right. So this is just one example of where silver is going to be used. It's going to be locked up for a very long time and it's just another one of those growth industries.
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A
Absolutely, absolutely. It's a lot of Things going on surrounding energy and a decoupling away from just oil and the petrodollar, it's linked. When you have the collateral of petro being removed or the dependency on just petrol, if you can create other forms and use, actually use proven forms of energy and diversify away from just oil, you reduce your dependency, you naturally reduce inflation on oil. The central bank will be freed from fighting inflation and they can go ahead and get back to what they do best and kick the can down or print, which is what they have to do. But remember the deal that was done last year in December with Japan when they signed that 500 billion dollar nuclear deal with the U.S. they were investing in nuclear. So the trends are already moving very fast, very rapidly and it does have to do with energy and national security at national security.
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B
Because if you're going to build these things, where are you going to get the silver from?
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A
Where are you going to get.
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B
That's where they put silver on the critical mineral list. Now you've got to, now you have to secure a line of, of product coming into the country, but you also have to secure the refining capacity which is also quite small in the United States. There's backups. I mean I've heard that people are still waiting for product that they bought in, in, in January, which is terrible. That is not any of our clients by the way. They did not wait, but some competitors, they, they waited and, but you need that physical product and you need the refining capacity which they're also building. And I could only imagine how much silver goes into the, into building of a refinery itself. Right, right. And the technology that goes into that, goes into that. You need silver to silver silver to refine silver and then, and then as well, maybe, just maybe that's just the tip of the iceberg because they've also put forth the Silver act. And if the Silver act is something that even gets close to being put through and I think Besant said that they can work towards it even though it's not been passed, it's just been put forth. But what the Silver act is about is putting exchanges in every time zone across America. And that would also mean having refining capacity across all those time zones. So you could start to see this industry could be breaking, world breaking out in a big, big way. So it's not just nuclear, but also all the different industries that, that it could be involved in. And if you're the type of person that, you know, invests in the picks and axes and shovels of it all this is a Great place to consider having physical silver because you know it's going to be used monetary industrially. Not to mention what happens when gold goes to 8,000.
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A
Correct.
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B
How much more appealing silver becomes at 150, $200 an ounce because gold's trading at 8,000.
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A
See when you buy physical, you're buying the sure bet. You know it's tough to pick the right winner, which is the right one. Gold and silver. When you buy physical you're not dealing with an ETF or one of these ETPs or futures or options on futures, things that we don't do. These are just financials and this is a movement away from financials which have three through the central banking system created fractional reserve banking. There's always a fraction of your collateral in the bank that is left over and they use the entire, your, your entire balance sheet to finance things. And this is the way the system has been built against US savers. So when you're buying the physical, you're not only diversifying away but you're now making your portfolio if it is for your portfolio investing but you're now creating a relevant reserve because. Because gold and silver are going to be introduced very quickly and speedily acts these clarity acts, genius acts silver act Project Forge being globalized with the bis. This is all going to happen very quickly and this is the meshing of technology with resources, with the treasury all culminating together. And this has to happen because the again if we go back to monetary policy and to grow these things, there's no on switch for silver supply. There's six year structural deficits out of silver. There's not enough silver in supply to quell the demand. We need more and more silver for AI and Chachi bt and there is a, the forecast is right now there's a deficit of about 820 million ounces and of silver deficits since 2021. By 2030 it could be 1.5 billion in deficit.
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B
Is it possible then a lot of this, these type of engineered pullbacks or you know, whether it's, whether it's margin calls or it's engineered however you want to. You know it's a guessing game right now why the prices come down? Is it that people need liquidity? Is it that there's margin calls? Is it that you know they're taking profits and it kind of just becomes a self fulfilling prophecy on the way down. But does it help industry or those that need to supply industry with trying to get people to cough up the metal as well?
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A
Is that part of It, Well, I don't, I don't think many people are or entities and because silver is a critical mineral and a national security issue that they're allowed to sell the physical silver. It's a national security mineral that it needs to be accumulated and acquired at any cost at all times.
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B
Just like lithium would they do, would it at all costs? Meaning let's, let's call, get it off of the, off of retail.
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A
If you purchase your physical on margin, then you would be open to those margin call risks. And this is why the yields are spiking. It is costing more. It's when the yields are spiking that's flashing zero liquidity.
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B
Okay, hold on. We'll get to, we'll get to the, get into the yields first. But first let's talk about what we do at Guild hall wealth, which is we help clients to hold physical metals strategic strategically. We definitely believe in crawl, walk, run. If you've never acquired physical gold and silver, one of the best ways to do it is to just start small, get that one ounce of gold in your pocket, see what it's like to acquire it for the first time. We often find that a big part of the paradigm shift is that clients go from the concept of investing to asset ownership. And asset ownership has different types of costs involved. When you think about real estate, you think about land transfer, paying the, the agent the lawyer fees, you know, and then there's ongoing costs. There's a lot less ongoing costs with precious metals. But it's asset ownership. And as well, when you think about investing, there's your, you know, 10, 11 sectors, owning an asset is outside of that. Right? You know, even if real estate is one of those sectors, gold is, is the hedge against it all. It's the insurance policy. So at Guildhall we help people to own it. Maybe you've moved beyond holding some silver maples and some 1 ounce bars of gold, but you're thinking, okay, so should I have it in my TFSA or my LIRA account? What's the best way to go about it? And we, we talk with our clients, we figure out what, what they're going to need it for, what their timelines are and help them to, to guide them to, to the best strategy of holding precious metals. You know, some people will say, hey, I want to do all gold. And we might discuss it and say, yeah, you know, have you considered a little bit? Or sometimes they come in and they say, I want all silver. And you say, listen, you're, you're, it's A million dollars you might want to have focus on, on the gold, which is less volatile, as an example, easier to store those sorts of things. So we really help people strategically in the market. So give us a call and we can have a discussion and see what might be the best route for you. Let's talk about the yields, Jerry. So this is a story about what can trigger the market for gold to go much, much higher. Right now the story is basically the Fed is going to hold rates for longer.
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A
That is the story.
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B
Okay, is that, is that story well founded?
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A
No, I mean, they will. We're talking about the Federal Reserve. Their two job, their two mandates is to keep inflation down and employment up. And they've done a horrible job of doing this. To the point, do they get credit
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B
for the, for the recent jobs report?
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A
I don't even know.
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B
Maybe.
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I mean, it could probably.
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Did they do anything to create those jobs?
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A
I would say it's more of the Commerce Department and Department of the treasury and lowering taxes ultimately and you know, inspiring creativity. But what we're seeing with the bond yields are seeing that, that issue, once again, it's flaring up. The bond yields indicate that, number one, there is no liquidity in the market. Number two, it costs to service the debt. And we know the US is around 39 trillion, not to mention consumer debt, corporate debt. Every entity from the top down feels that stress. So when you see the bond yields flashing like they did in 2008, it's a big warning signal. And this indicates that the rates are too high. Why are they high? The Fed is trapped. They're keeping it high to posture and to, they're keeping rates, keeping the rates higher for longer to fight this inflation that they have they ever won a round in this fight? They've always been beat and beat up, beat up and battered. What have they done throughout the decades when it push comes to shove, when the Fed is trapped and they are totally trapped between, keep trying to look like they're fighting inflation by keeping rates higher, but it's hurting everything else. We've seen margin calls over the last five, you know, five months. We've even seen gold and silver margin private capital, you know, private capital not being able to take deliveries or withdraw money and redeem your own money out of an institution. Imagine that this is the issue with fractional reserve systems. But what this means is when the Fed has to decide whether it's to fight inflation or to control the system. And orderly, you know, orderly, you know, I guess a dismantling of, of the Problem, they will cut rates, they will say forget inflation, we need to cut rates, we need to stimulus. But this is more and more of the same thing. Kicking the can down the road, currency debauchery. But to offset, we're also seeing the offsets defending against what David Hunter said in order to fund the unfunded liabilities and losses on these banks balance sheets. Because there's a statistic that came out the US right now is spending 43% of all its personal and corporate income taxes. Everything is bringing in 40% of that is going towards paying the interest on all of the debt you're not growing.
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B
So you need interest rates to come down to, to like renegotiate all the debt, negotiate and lower those, lower those payments, lower the costs which, which would help you down the road. Right, right.
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A
Which Canadians won't see. We have the five year mortgages, the US has 30 to 50 year mortgages. But it's all about handling it and sustaining the credibility of the US dollar. It's the US dollar will weaken, people will begin to distrust the dollar more. But there are things that are moving in the right direction which keeps us very optimistic. When we look about these acts that were passed, the Clarity Act, Genius Act. If we look at the European Central bank report recently, the number one buyer of gold on the list out past surpassing India, China, Poland, the number one entity was Tether, Tether, the very crypto company that was that the U.S. treasury Department was very interested in it with the Genius act, making sure things are one to one, not a fraction. We're going back to one to one and this is going towards why we're very excited.
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B
It sounds, it sounds to me that, that the Federal Reserve or the US with the Federal Reserve needs to take a step back to take a step forward. That fighting inflation isn't going to help you if everything is being sacrificed like growth.
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A
Correct.
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B
You need to let inflation run a little bit. You need to lock in lower rates for the, for these loans, etc. The debt and then figure out how you're going to bring back validity or respect back to the dollar. Because everyone's flooding to gold which has become a massive reserve asset. Because people are saying well first of all it's backed by nothing. There's no trust. Are you going to weaponize it? You know, all of these things so neutral, you know, pick, you know, pick the item off the menu. But ultimately if they lower the rates, this, I think this is where you were getting.
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A
Yes.
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B
If you lower the rates, the, the obvious reaction to that is inflation. And when you lower the rates, gold is going to take off.
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A
It's the currency debasement. The last, this is it. This is the key takeaway for why precious metals are going to spike. And this is the reason why. My call in the very short period of time, short term, three, six months, I, I'm calling 260, 270 US dollars per ounce. That's in my opinion pretty conservative just factoring in just monetary policy. For the last three rate cut cycles in the U.S. going back 25 years, silver has averaged 413% right after the rate cut cycle. It happens immediately, especially this time around. If it's an emergency rate cut, I expect an explosion in, in this market because gold and silver simply are just inversely correlated to the US dollar. And if you're cutting rates and if you're cutting interest, you're cutting interest on the US dollar.
- [27:13]
B
Do you think though that part of sort of a golden parachute? Because I'm thinking it to you say, oh, you're going to drop rates, it means you're going to like let inflation run. It means you're going to let the dollar completely tank. But there is a golden parachute there which is you could do something to mitigate it by saying yeah, you know, but we're also going to launch this gold backed treasury at the same time and bring validity back to the dollar and maybe not going back to a standard, a gold standard proper, but trying to tie some sort of connection back to it which would definitely mitigate this idea of you're going to lower rates and then the dollar is going to fall forever. Either scenario, gold wins.
- [27:54]
A
I think either way gold wins. But this is not just your regular kicking the can down the road scenario that we've seen over and over again. It's not, it's a different playbook, it's, it's involving gold. Petrodollar is being decoupled. We're moving in a different direction on the 250th Quinn, you know, quincentennial of the United States, independence of, you know, from 1776. This is all in line with the book Good as Gold by Judy Shelton. You know, she's back into the fray. She was on a squawk box two weeks ago. And this is where the roads lead. All roads lead to supporting the US Dollar. It's not about just US dollar strength and keeping the US dollar, world's reserve currency. So it's about fairness, mercantilism and credibility
- [28:43]
B
in the U.S. it also seems like, like lowering interest rates. If that were to happen, whether it's an emergency or they plan it, that it would be a way for gold to rocket higher under that type of narrative. But what you're actually really doing is just revaluing it. That's right, you're letting it revalue. Because in those moments gold tends to really play catch up. And silver could play some crazy catch up. And a lot of, a lot of major banks are forecasting for these things and a lot of analysts are forecasting these things. You know, you've got is it bank of America that's still calling for like 6,000 this year and potentially 300 silver. You've got Michael Oliver calling for 2 to 300. Matthew Pipenberg from Matterhorn Asset Management calling for up to 300. In this bull run, I don't know if that's going to happen. This, I don't fully agree with you there, Jerry, but you know, eventually it's going to get there. Eventually we're in triple digit silver. It becomes a new reality and we go from there.
- [29:40]
A
Succeeding times.
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B
Speaking of getting there, we've arrived at the end. If you want to get involved in the physical gold and silver market, please give us a call. We'll walk you through how to hold physical gold and silver direct or in a depository account for ease of liquidity or even as part of your registered account where it's fully allocated, segregated, you have ease of liquidity and you even have access to go and personally audit your holdings. Because if you can't hold it, you don't own it.
- [30:07]
A
You don't own it.
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B
Thank you, Jerry. And thank you everyone for joining us here on the Real Money Show. Catch the Real Money show here on Rebel News Saturdays at 1:00pm if you've missed an episode, you can also catch the Real Money show on our YouTube channel at Guildhall wealth or follow us on social media Spotify and follow us on Twitter as well. The number again, 1-8778-silver. The website guildhallwealth.com. learn how to have physical gold and silver in your portfolio. And we look forward to speaking with you soon.