A (3:40)

Okay, a couple things there. First, a bit of a departure for Anna Wong to be turning bullish. Right. I mean that's a pretty big pivot after a very long time on the economy.

C (3:48)

Yep.

A (3:49)

Okay.

C (3:52)

She hinted at it last week.

A (3:54)

Yeah, she did. I remember that you mentioned that. Okay. Second, I think we need to talk about the government shutdown, obviously. Here we go. Brace yourselves. Government shutdown threat threat deepens as Capitol Hill digs in. This obviously could happen late tomorrow night, I believe late Tuesday night. Basically it's up to Chuck Schumer at this point, I think to decide whether we're gonna have a government shutdown or not. But I think the important part about this, beyond the theater is that you just gave a great summary of all the economic data we're expecting and we will get none of it if there is a government shutdown.

D (4:26)

Yeah, so we, we have a, the Fed meeting is then what, the 29th. Right. So October 29th and between now and then I'm just scanning through the Bloomberg, you know, list of economic indicators you get. You know, I mean you have ISM this week. You've got jobless claims, you've got non farm payrolls and all that. You've got ism, you've got more jobless claims, obviously you get the University of Michigan garbage. But You've got cpi, ppi, you know, all coming in before this next Fed meeting and coming in early enough, you know, so like, you've got the CPI and PPI coming in next week. So it gives them plenty of time to receive that, actually digest it. If they're, if they're going to get it, which are important numbers that they're going to be looking for. They're really, you know, they're on edge about inflation, meaning they're, they're concerned that if they, they continue, the Fed continues to lower rates just to make sure that we don't spike the jobless claims, then you're gonna possibly fuel the fire of inflation. And so that's kind of, that's kind of a worry here. So what is happening? The dollar's dropping, you know, and gold is spiking. No surprise. Gold is sniffing out the absolute delusion of, of fiat currencies and, and the endless, the, the ridiculous amount of spending that we're getting out of governments and, and then we just expect more of it. They're going to come to an agreement, going to be more spending. And whether or not, whether or not we, we win the war against, you know, paying for illegal immigrants, health care or not, that's, that's, that's going to be up to Congress and the President. But we're going to spend money, there's no question about that. And too much of it.

A (6:23)

My brain automatically shuts off the minute that I see stories like this because A, I know they'll shut it down and B, I know they'll fix it. And I didn't even bother to dig into what the sticking points are at this point because it's just noise.

B (6:36)

Can I be contrarian for a bit?

D (6:38)

Yeah, do it.

B (6:39)

The Democrats right now are holding seven deuce and Trump's holding pocket aces and the Democrats are trying to talk about it. It's the literal, dumbest posturing ever, trying to push for health care for illegal aliens and whatever, et cetera, et cetera. In a situation where they're also spending all of their efforts on the courts to block Trump firing people in the government the instant the shutdown happens, those people whose jobs are gonzo literal, gone, it gives him carte blanche to fire all the people he wants to fire. The courts can't say boo because there's no money. And in fact, they can take extraordinary measures by firing people they want to fire in order to prolong and keep people they want to keep. And you give that power to the executive, they literally would be seating it. I don't know what the hell is going on in Schumer's brain. Because also remember the House, the House passed the continuing resolution. So the only mechanism for the Democrats is they quite literally have to filibuster. And if Trump is smart and he's no fool on this sort of stuff, this is his world. You're going to have pictures of Cory Booker reading stuff on the Senate floor in support of letting Trump fire all the people he wants to fire. I mean, there's no way they have such a weak hand this time. It's actually crazy. In fact, I'm sure the Republicans are literally licking their chops hoping that they're going to be this dumb. The only reason why they haven't come out and said that is frankly, because they don't want to be smug and it's not politically smart to do that. So they'd rather let the Democrats have the rope to hang themselves. But the result will be, you know, some continuing resolution which is business as usual, as James has said. And it's just stupid political theater. And it more or less continues to erode trust in governments. And what you're seeing with gold is central banks buying gold. I mean, James, you wrote about it this weekend. Excellent, by the way.

A (8:32)

I've got that, thank you.

B (8:34)

And you're seeing central banks buying gold but not the US Central bank. You're seeing other central banks. You're seeing the rest of the world looking at our political dysfunction and saying, okay, this is silly. We need to have real assets backing our stuff. We can't just let the dollar run amok. Now I'm not talking about de dollarization. I'm not going into the whole BRIC stuff. I'm not going down rabbit holes of conspiracy theories. But good old fashioned follow the money says that's why gold's going up from a central bank perspective. Meanwhile, individuals and corporations and funds are buying bitcoin as their hedge. Now the difference is central banks wield a bigger bat right now and there's still a bunch. There's no gold sellers, so gold's going to go up. There's no nobody selling gold en masse. And there's original distribution of bitcoin holders to sell bitcoin, which is why it's been stuck in a range. So anyone who zooms out and looks at what's happening and sees this as no macro trend, ignores the fact that there are a lot of holders who have 10,000% gains and life changing money when they see this stuff. You have to look at that. I mean we know it's not like we're guessing that's where the money is from now on the margin we can talk about what's setting prices but you do need to do that zoom out and that's why. So you know James, you should go through and talk about this.

D (9:50)

Yeah, no, I mean that's the lag. That's a good summary of, of most of it. The other thing is that we're hearing a lot of people on, on Twitter kind of confused why Bitcoin's not matching the, the expansion of the money supply. Remember it's on a 10 or 12 week delay, you know, a lag. So money supply goes up, then 10 or 12 weeks later Bitcoin follows it. It's been like this and you know, gold follows M2 a little bit closer. It's not quite as much of a lag but if you lag gold it's, it's even a closer approximation because it doesn't have the same volatility as bitcoin. But my argument in, in the newsletter, what I was trying to point out was that M2 is kind of a, it's kind of a flawed measure especially when you have things like refilling the, the treasury general account. You know, it's like you're taking hundreds and hundreds of billions of dollars out of the market to siphon away to put into a checking account for the government to, to spend. So it, it kind of gets a little bit noisy but, and every, if you've been listening to the show for a while and, and Dave and, and Mike, you guys know this. Scott, you already knew this but I, I prefer Michael Howell's definition of liquidity to, to follow what's really going on in the world because we're built on credit, we're built on leverage, we're built on debt. The entire world is. And it's a better measure than just the M2 supply. So, and he's done a lot of work on this from Cross Border Capital. And so if you look at that, Bitcoin's like right on target to what's been happening in, in the expansion of liquidity. And gold is way ahead of it. Gold is ahead of it because of what we just talked about, because of the relentless buying by central banks across the world. And it's not that they're actively avoiding Treasuries, they're actively avoiding holding on to anything in the US dollar based because they're recognizing that they need something in their own Treasuries. To protect against the relentless debasement of our currency. And even though our currency is debasing at a slower rate than Argentina or Venezuela or Egypt or whatever, it's still debasing. And if you're going to go and buy things like commodities like Mike talks about, you're going to need actual currency that holds up against that fiat promise, which is just. It's empty. There's nothing there except the promise to print more. And that's the issue here and the end of it. I believe that, like Dave is saying, it's not just individuals and enthusiasts who are buying bitcoin. It's institutions now. They're coming in slowly, but it's not across the board. We just saw. And there's another thing we should talk about, Scott, is vanguard, you know, capitulating. But we're just starting to see that you're getting some institutions that are recognized that bitcoin is real. It's not going away. It is digital gold for now, and it is a strong store of value, and it will be because of its true decentralized nature. And so as that continues, bitcoin will be the next chapter. And bitcoin will catch up and surpass gold because it's in the middle of adoption. And so that's a really important point of all of this. And so it's going to take some time, but bitcoin will be the ultimate store value, and central banks will be buying it. And if they are buying it now, they're likely doing it through mining. Which brings us to the hash rate, which just goes up relentlessly. So if you just pull back and look at the big picture, then you get the sense that there's something bigger going on here. It's not just about the economy. It's not about the government shutdown. It's about central banks recognizing that this fiat game is a shell game and, you know, or it's the big collective, you know, musical chairs, and you're going to be. They're going to be currencies. Pretty soon they're left standing.

A (14:03)

Yeah, I have a. I have a question in that regard. I agree with everything you just said. I think everybody is aware of the debasement and the dollar's problems. That's nothing new. Well, they're admitting it, I feel like. Yeah, I was going to say. So they're finally admitting it by buying gold. Or is there also the BRICS narrative, political motivation of some of that? But there's the one side is like, we don't want to hold the dollar because the poor savings vehicle and it's debasing the other side. We don't want to be relentlessly attached to whatever the United States government political whims are and would like to.

D (14:35)

That's true, that's true. Because you don't want to be holding U.S. treasuries and have them switch them off or seize them, take off the.

A (14:41)

Because a lot of this happened when we seized Russia's money in the, in the bank account. I think that was a, you know, when 500 billion magically disappeared. I think that was a huge catalyst for a lot of gold buying around the world, including in Russia.

D (14:53)

Yeah, that's what started it all. And here's a crazy thing though, is that. And Mike, you might have a closer approximation this, what I read this weekend is the IMF is estimated that 22% of all gold purchases are being reported, 78 are not. And so it's like backdoor buying into Swiss vaults that nobody knows about, you know, and that's. And it, it, it, that's one of the hard things to put your, your finger on. But you're, you're seeing it in the gold price like that's, it makes it obvious, you know. And so if you're wondering what's going on and why you're not hearing central banks announcing the buying, that they're buying bitcoin, look at gold's price. If they announce they're buying bitcoin, what do you think would happen to the price of bitcoin?

A (15:37)

Dave says that.

C (15:38)

Right?

A (15:38)

Yeah. Right. Never front run yourself.

D (15:40)

Yeah, you'd front run yourself. So what would they do instead? They'll mine it. Which goes to the hash rate. The hash rate just going up relentlessly. Why, why is it going up again? The price is not going up, but the hash rate keeps going up. It's, you know, it's a, it's a way to quietly accumulate bitcoin at a cost that. And slower. But it's a way to accumulate bitcoin that doesn't advertise it to the world.

A (16:06)

I also find it really interesting that both you and Mike decided to write about gold in the last two days. So obviously even outside and Michael Howell wrote about it. Yeah, it's.

D (16:16)

I mean, about it.

A (16:18)

Yeah. I don't know if 3800 was a magic level, but getting to that point of where I think a lot of people are viewing it as ridiculous, recognized, can't be ignored, impossible. But both of you, like I said, did choose to write about it this weekend. Mike, obviously here Gold could be setting records for bad reasons. And you have the more mainstream narratives. It's weaker dollar and risk of US shutdown. I think that gold is not pumping on the risk of US shutdown at this point now it's crazy.

C (16:47)

Well so here I like to point out that the top five performing commodities this year is platinum 80%, silver 60% gold 45% and then lean hogs. You don't really care about lean hawks but it's only 25. So gold's pulling up all this whole space and that's the key thing. I, I know people might be nauseated by me pointing out there's only four precious metals and they're all being led by beta and gold beta in the space they're all going up. Obviously all the elements are much more industrial, becoming more industrial every year. It's a real bad sign when gold beats everything. And then I tilt over. These are typically, historically gold is typically the lowest volatility and a risk off asset store value. Maybe not risk off but store value. Then I look over at the other side. You know the competitive competition in things like bitcoin and cryptocurrencies. There's unlimited supply and massive selling. When they're yelling risks. Now that's the key thing I'm worrying about this year. And this is happening in an environment where risk is on. I mean significant S and P 500 up 15% that's great. It's. And if we can keep volatility really low, the lowest in 5 years on 60 day basis and this is okay for cryptos and that to me is the thing that all my Spidey senses. A quote I love from you, Scott and I've learned are selling me that stick with gold. Obviously gold you don't want to be buying overweight buyer. As it gets towards 4,000, it's really overdone. Maybe you look for a dip around 3,500. But the end of this year is not going to make a lot of sense. If we keep appreciating The S&P 500 and volatility stays low with gold at these levels it would make a lot more sense. It's a little modest pickup in volatility. Maybe VIX gets to near 20. Bitcoin has a little backup to near a hundred thousand that would make gold lot make a lot more sense. That's why to me fourth quarter is awesome. And I'm one of the key indicators I'm using is copper. But copper's been going up for the wrong reasons for supply Disruptions in Indonesia. But again, it's just the key thing is when gold beats everything, you got to be worried. And I'm worried, very worried about.

D (18:39)

I think, I think that destruction. Yeah, I think that one of the things you said, Mike, and I agree with a lot of what you say about gold. You and I have been on the same page with gold the whole, you know, since the beginning of the show. The thing that, that I want to hit on though, is that a lot of the selling out of bitcoin in particular is coming from. OGs have held this thing from a hundred dollars, a thousand dollars, you know, and it's up, they're up a hundred to a thousand X and they're, they're ringing the register and God bless them.

B (19:10)

Good job.

D (19:11)

Well done. You, you became a billionaire, you know, well done. You should ring the register and, and go live the lifestyle you want to live and, and diversify into other things maybe like gold. I mean, whatever you, you've, you've done it. So I don't blame them at all. But Dave, you probably have a better handle on this about, you know, that, that kind of selling. The other thing is we have had a bunch of noise in, in the bitcoin world in particular because we have these new treasury companies that are basically you, you know, you're, you're, you're read allocating from bitcoin into the treasury companies and there's a lag there too. And so that's producing a bit of a lag because these bitcoin companies then take that cash and they're going to turn around and buy bitcoin, but it's taking a while. So they're sitting on cash as they're doing this. And so that's producing a lag that we haven't seen before in M2. And I think that that's. That I couldn't get into it. My newsletter was already way past what you could distribute in a single letter. So. But that's also something that's going on that needs to be recognized. So maybe, Dave, I'll let you talk a little bit more about both those things that you probably see in liquidity.

B (20:22)

Side of it Bit. First and foremost, the narrative that bitcoin has competitors in crypto is asinine. No, but Mike just said it again. It has strictly limited supply and it is crypto. Other crypto assets are no more competitors to bitcoin. That, that, that popsicle stand equity competes with Nvidia. I mean, you know, you have to look at each asset in Terms of each asset, Bitcoin has graduated from, from being in this morass of crypto. You can buy it from ETFs, people can do it. And it is different. Now, it is true that there are a lot of people in the world who still hold that view. And that is a massively bullish thing because as people start looking into Bitcoin and learn that it is not the same as Ethereum, it is not the same as dog whiff hat, it is not the same as Fartcoin, then they go, oh, I understand this. I can actually commit real dollars to it. It is a ground war that's been taking place slowly but surely and we need to look at it that way. Now, if you say the same thing about the Galaxy Crypto Index ex Bitcoin, I start to agree with you in a sense. In the sense of as I was saying before the show, we were just chatting. There's a lot of bullshit in analysts who value crypto because they look at things and they say, oh, look at our tvl look at our this, look at that. None of it translates into value to holders. But that's a whole other different conversation as far as the zoom out and what's going on. I mean, look, as I said to Scott at one point, if five years ago you were having a conversation and I had these conversations. So this is not an if. So when you had conversations five years ago and you said, what would a relentless rise toward Bitcoin becoming digital gold look like? One of the things that would have to happen is at every major price level you would see distribution, you would see old holders having to rotate because you say to yourself, okay, there's only 19 million Bitcoin or whatever is lost. Maybe there'll be, you know, 18 and a half, whatever the number is, even, even if we find every Bitcoin and you're at the 21, how could Bitcoin become the underpinning of a financial system like gold is? In a world where so little of it is available, obviously old holders need to sell to new holders and those new holders are way, way less concentrated. Now, I want to repeat that because that's not something that's obvious to people. People go, oh, but Larry Fink and Michael Saylor owns so much. Of course it's concentrated. Get a grip, people. Larry Fink doesn't own. Well, he probably does own some personally Bitcoin because he thinks it's going to 500,000. But he, the BlackRock's own holdings of Bitcoin are on behalf of both institutional and retail investors. And those institutional investors have retail that roll up into that. So we're talking pension funds and pools of money on behalf of wide distributions. If you think of it this way, the base of a pyramid has to be wide. You can't get to the sky. You can't draw things that look like the new building and east side of Manhattan that just goes like this. You have to have this big base. And bitcoin is basing gold is owned by. There's just huge numbers of people, particularly in India and outside of the U.S. in the U.S. people have gold, but it is a huge base of supporters or holders. Bitcoin needs to get that big base. And that is what's happening right now. And people need to understand that. So that makes it very, very different. The other thing that's really interesting here is we're talking about gold being driven by central banks. We know that no central banks have moved toward bitcoin. We also know that the likely next chairman of the Federal Reserve is going to be someone who is positively disposed to bitcoin. We know that. I mean this is not like you don't have to guess. And when you talk about game theory, what does it take to get turn some of that central bank buying of gold in the central bank buying of bitcoin. Now is that going to happen in the next month? Absolutely. I shouldn't say not. But it's highly, highly, highly unlikely. But every time you look at these trends, anyone who's a bitcoiner, here's the difference between bitcoiners and morons like Peter Schiff. When gold goes up, bitcoiners say good, makes sense. We need, you know, people are debasing currencies. We want to see assets move into assets that will protect purchasing power, protect asset values. And so that's good. Bitcoin will follow. It raises the ceiling. Whereas the, you know, Peter Schiff says, oh look, you see, Albert, it's like, come on, you know, it's like it's the same narrative. The issue is this whole deal that prices are still set on the margin by risk takers and by speculation. But it is important to know. I'll give one, couple two stats that I want to give. That's really that I wanted to get to and I don't want to start doing screen shares. But we could if you want to. First, bitcoin volatility is forecast by bitco. Bitbo hasn't been this low since August of 23. Now, unlike stocks, this is really important from A from a robot relationship point of view, in the S and P, when you look at the vix, there is a massive correlation between volatility and downward movement. That is an inverse correlation of volatility. When you look at bitcoin, it is a positive correlation to volatility for a very strong reason. And obviously it's historical bitcoins. The biggest, sharpest moves have been up with corrections, and that's fine, but we haven't had that. And so understanding that forecasting volatility to go up doesn't matter. In fact, the last August 23rd price was $25,000 when last we saw volatility this low. So that's important. The second is last night there was a rally almost of the same size in Bitcoin and Ethereum, and there were more than double the shorts liquidated in Ethereum than in Bitcoin. Now, small numbers, but relevant because what you're seeing is less and less speculation on Bitcoin in either direction relative to the rest of crypto. That's sort of Mike's point in a way. But honestly, it also speaks to the fact that the game in Bitcoin isn't speculation, which means that any move that happens will catch people by surprise. So there's no fomo, there's no euphoria, there's no yelling in the bitcoin market. There's a lot of crying because people are saying, oh, I'm underperforming, I'm doing this, I'm doing that. But there's no yelling. Anyway, I'll stop there, but those are the points.

A (26:57)

Yeah, I can't hear the word yellen every time you guys say it. And I think of Janet. I just want to show we were talking about the fact that we need a catalyst to decide which direction price is going to go. We finally have one. Jim Cramer said, buy crypto with a picture of the debt clock, to be fair. Actually, this speaks to the point, though, Dave, because he should have said buy bitcoin if he was talking about a hedge against this and not buy crypto. Right. He also.

B (27:20)

I thought. I thought he came out and said, everyone in crypto is going to lose money.

A (27:24)

No, dude, it's this week, not last week. Keep up.

B (27:27)

He changed from week to week, I guess.

C (27:31)

So the one thing that I want to point out, I think it will be changing in Bitcoin is we went through this pretty significant maturation process, and my outlook was ETFs becoming broadly disseminated. And I'll have Trump flipping over, kicked in that potentially the peak of it being a baby. Now it's a mature assets in the space, you know, significant accumulation in ETFs and what's going to trigger them to buy more or to hit stops. And my thought is it, it just shows that now I think bitcoin shifted from going volatility, going up when it's making record highs to shifting over to very much the same asset as the S P500 cryptos. Now all the correlations are pointing out that you go check correlations historically from five years ago, they're all higher. Now I, I looked at 48 months because I like to look at four year cycles for the crypto space. And recently what happened with bitcoin, just look at 90 day volatility versus the S P500. Right now it's about Bitcoin's about 2.6 times. It bottomed at 1. The last time I got that low was 2020 and then we had that big rip. But it's rolling down versus the S&P 500 in terms of prices. To me that's that shift. I'm predicting a shift and I see in the data also if you look at volatility 60 day or 90 day Bitcoin volatility versus gold just recently it bought them at the lowest ever. Now you can easily go back 15 years on that and it's starting to recover. And to me this is part of that transitions. We're confirming this year that bitcoin is a risk on asset along with all the cryptos, they're all linked in, there's risk on assets and we're confirming that bitcoin's become gold is becoming more of a risk off asset. What's the next big trade? I'm very fearful gold's telling us that it's going to be what's happening in China, a little bit of deflation kicking in, a little bit of stock market problem where government has to buy their own stocks which Japan did for 30 years and China's doing now. And that's why everything in the next quarter is dependent. The US stock market has to stay up and gold's telling us your risks are it's going to go down. And that means the next trade might be Treasuries. It's all tilting that way. Signals are there. When just the bitcoin peaked in August, when the vix bottomed is not a good sign as we end the fourth now everything's everybody's on top of this trade. I know every hedge fund and planet knows Volatility is low. You got to trade something reverse and they're time decay is killing them. They're getting stopped out. The gam's hurting them. But you know, sometimes it's gradually and suddenly and to me those are the indications. And I'm very, very fearful. As much as I was in 2007 and 6 and much as I was in 1999, that. And that means if we do have the normal drawdown s P500 which stays down for, you know, 20%, it's really good for deflation, really good for interest rates going down, what Trump wants for the next election. But you should expect a 50% drawdown. Virtually all current cryptocurrencies, most notably bitcoin.

D (30:15)

Let me, let me address one thing here, Mike, because you say this a lot and we have to talk about this. If you pull up the holders of I, okay, the institutional buying of bitcoin through the ETFs, it's not there yet. I'm telling you there are. There are hedge funds, but you do not have broad based institutional buying institutions. Mike, you know this all too well having been a long time bond trader. Who are the institutions? They're not your citadels of the world. Those are the guys who are whipping around these things and hedging them out. Like these are massive hedge funds we're talking about. You're talking about Texas teachers, you're talking about CalPERS, you're talking about massive, massive pension funds and endowments that are in the multi billions to tens to 10 to 20, 30, 50, you know, you know, 10 to 20, 30, 40, $50 billion that they're sitting on. Okay. That they're the ones who need to be buying bitcoin and recognizing it as a separate institutional asset. They haven't done that yet. And the reason for that is not because they're just dumb. And actually one of my recent keynotes, I was up in Prague and I gave this keynote that was about institutional adoption. And the issue is they've got to go from research to asset class review, then do the due diligence. They've got committee vetting, they've got board approvals. They then they've got to have their policy documentation and then they've got ongoing risk management. This stuff takes months and years for them to do. This is not. And it's structured to do that to protect the underlying investors, the pension holders and the endowments from making massive mistakes. So that structure's there for a reason. But it takes so much time. And up until just now, every Single person in the institutional world, save for a few, have been highly skeptical of bitcoin as an, as a separate asset. They're starting to recognize it because you can't ignore it now that it's been sitting here over a hundred thousand dollars, a 2 trillion dollar asset in 15 years. And it is starting to solidify as something in, on Wall street that's different. And they're recognizing it, but they still have to do the research, they still have to understand it. And then they have to go through all those processes to even get it in front of a committee to start thinking about it as a separate asset. Aside from what you said at the first of this, which I still agree with, aside from it being a risk on asset. So once you start getting people to realize it's, it's a risk off asset, that's when it, that's when it starts being allocated to separately in the institutional world. It takes so much time. It hasn't happened yet. Okay, so what we're seeing is at the same time, we're seeing OGs dump their coins, you know, because they're just, I'm gonna go get my yachts, I'm gonna go get my, my, my citadels. I'm good. Yeah. At the same time, you don't have those institutions buying. What do you have? You've got bitcoin treasuries buying. And those guys are still, those have longtime believers that have figured out an arbitrage between capital markets and bitcoin. And so there, that's what's happening right now. You do not have broad based institutional buying.

A (33:44)

I know Mike's jumping in, but Mike, I wanted to just ask you, is there a world where, like, where we're. All right, because like I think everybody actually agrees, even Peter Schiff agrees. When you take bitcoin out of the equation, what's happening behind the scenes, right? Gold could go up. But you believe gold and treasuries will rise. Couldn't it be gold treasuries and bitcoin rise?

C (34:04)

So just point out, James, you and Dave all said the same things I said five years ago. I agreed you to completely. What's changed now is we're proving that this space. First of all, I have to ask you the question, what one of those institutions owns and buys gold? Very few. It's a single asset. Very little bit hold holding on gold in the planet. It's one single asset. They buy indexes, they track. Right?

D (34:27)

And so.

C (34:28)

But they. Let me finish my point. Hold on.

D (34:31)

When they allocate, when they allocate to gold, Mike. They allocate to it as a separate asset. Okay, that's it. That's a key point of what you just said.

B (34:39)

Go ahead.

C (34:40)

Okay, so my point is the vowel, the correlation between the Bloomberg Galaxy crypto index and The S P500 or Bitcoin SB500 is about the highest ever. Yet this asset trades with two to three times the volatility. And I've heard this from a money manager I was, when Chris Waller was speaking in, in Miami. I met a prominent wealth manager in Miami. He says he's not in cryptos. I'm like, why? Because, well, I get less risk in my equities and I get the same performance. Why would I stretch out? And this was a person who managed billions of dollars for people so, well, maybe millions. I just, that's my point is we're.

D (35:14)

At that phrase stretch out. He see the mentality is still, it's out on the risk curve.

C (35:20)

So it's out in risk curve, but it's also pointing out the price. They all look at past performance as indicative of future. You know, just look at their, their, their value of risk and their correlations and everything. And everything I point to is much higher volatility than beta, higher risk. And right now we're getting kind of similar performance. It just, that's my point is right now and I part I and me a hundred thousand Bitcoin mark that, that marked that point where yeah, it was a great run. Now find others, find what's the next big trade. And it was, it was a great trade. And that's why I'm looking at it longer than again we have the S P515 this year. Just imagine a year when it's down 15. That's what I think they're more thinking about a normal drawdown. If any type of crypto allocation, normal drawdown in beta. They all know they're going to get much worse on the way down or they can expect more up on the way up and less on the way down. I mean, come on, it's not logical for allocating money.

A (36:13)

I think it's just the way that the lens that it's viewed through, if you view it as a long term investment like most bitcoiners do, then it being a good trade isn't irrelevant. And if you viewed it as a trade and you're a hedge fund, then certainly worth considering.

D (36:29)

I'm not talking about all the cryptos, Mike, I'm talking about bitcoin.

C (36:31)

But that's again, that's so they're going to put Bitcoin in their gold bucket then?

D (36:36)

Is that what you're saying it's going to be? It's going to be. Well, or, or they're, they're going to have bitcoin and gold as, as separate asset. Yeah. In, in the same type of risk off bucket. Exactly.

C (36:47)

So bitcoin is not a risk off, it's a risk on asset. If you expect that to change, fine. But all the correlations, everything very much a risk asset.

D (36:55)

We, we agree. It has been, it has been a risk on asset in every single instance except for one, which is the Silicon Valley bank meltdown.

C (37:04)

Yeah.

D (37:05)

And it was a risk off asset. Now I'm not like we, we don't know what's going to happen. We don't know if we're gonna have a black swan, another, you know, catastrophic financial event in this nation. Likely. If you're, if you're, you know, paying attention what the hell they're doing in Washington. However, you know, if and when we, the, the broad base of investors do understand that that's, that's when you, you start getting it to be allocated small. It's not going to happen overnight. You're going to have some managers go, this is kind of, I think this is risk off. And then the more and more managers who start to understand that, and that's exactly what Scott just said, it's a change of understanding in the lens that you're viewing it through and you know, it doesn't matter. Bitcoin's not going to change according to what people view it as. It's not going to change. It's going to continue to be what it is and it's going to continue to, you know, to organically expand that reach. Not because you have one person comes out and says, oh, I'm going to buy Bitcoin. But what happens when you do have a CalPERS that comes out and says we're allocating Bitcoin because we believe it's a long term strategic asset to protect against the debasement of the dollar. That's a big deal. And that will happen in the future at some point.

C (38:22)

I don't know when. I completely respect your view of the future. But to predict the future as a fact is kind of things like that.

D (38:29)

I don't, I'm not saying it's a fact.

C (38:31)

I believe it will happen.

D (38:33)

Oh, I believe it will happen.

C (38:34)

Okay, that's good. So that's that again, that will go in their gold bucket. Right. If they Add bitcoin, which I've been saying that forever. You can't hold Goldie mouth some bitcoin in that space. But at some point it gets too extreme. That's my point. At the beginning of the year they've been kind of thrown off the horse a little bit. Still sticking with this year being potential of more of a risk ass, a risk off year. Haven't been right there yet. But gold keeps outperforming. Even though we're going up, there's something going wrong here. The gold backs up 10, 20% or it gets legitimized by the end year by the stock market drop in which means then we start getting the cryptos to lead the way.

D (39:09)

Okay, but we have to talk about, we can't just end it. You know, January 1st that we had a, we had a major tectonic, tectonic shift in policy when, when Trump was elected you had a, you had an administration that was nothing but antagonistic to the whole space.

C (39:29)

The Trump administration one is one of.

D (39:31)

Those choke point 2.0 was real.

C (39:35)

Remember Trump administration one did the same thing. Just like they're pushing back on some of the renewables. They're pushing, they push back huge on to end cryptos too. And Trump won. They flipped those. I give him credit for the flip.

B (39:47)

Okay, well stop. You can, you can make it a pin. We can talk about what's opinion, we can talk about what's fact. Jay Clayton didn't want his personal legacy and Trump didn't give a crap about crypto as a very, very different scenario. So Jay Clayton did a few things such as the XRP case on his way out the door and a few other things. But there was no systematic policy to crucify crypto. Trust me, I'm the one of the three of us who actually ran a crypto company and talk with the regulators both before and after to say that it wasn't a significant escalation in the, in the, in the anti crypto army in the war, you know, after Trump won to what we had under Biden was literally banks being told they couldn't bank. You couldn't even bank. You couldn't even do a crypto startup in America. The SEC basically saying if you so much as think about a token or talk about it having one, if you're a US company, we're going to lock you up or try to, we're going to bankrupt you. We're going to use our lawyers even if we can't win.

C (40:52)

That was silly.

B (40:53)

Bankruptcy. Yeah.

D (40:55)

Just to accident that Dave, just accident that when, when we were raising our fund in 2023 under, under the Biden administration, we were almost every single wire was held up, canceled, refused, you know, for, because they were sending it to, to a company even though it was, it was, you know, we're, we were established in Delaware, we're in a Nevada company. Like it doesn't matter. They just refused to send it because we had Bitcoin, their name. Then as soon as Trump won. We've had one wire refused since then. 1. And it came, it was coming out of Canada. So, you know, like that's it. So it, the crypto, the anti crypto.

B (41:37)

Go back to your, go back to your point. It was very real. And anyone who doesn't understand that is literally missing the boat. And yes, James and I are angry about it because frankly, my entire life got upended by Elizabeth Warren and her goons doing something which set. Could have set the US Back decades in financial innovation and did set us back. And now we're trying to catch up. So understand that tectonic shift is real. Anyway, James, you were saying a tectonic shift happened.

A (42:07)

James, in the spirit of that, I want you to lead into this because obviously, I mean, you can view this as the last domino falling in a top signal if you're bearish, but you can view this as the floodgates finally opening in capitulation if you're bullish. But talking about all the anti crypto army and the negative things that we experienced over the past years, this might be the biggest signal we've had.

D (42:30)

So let me. Let's hold on to that for a second. I'm going to come to it. Leave it up for a second, please, Scott. But my whole point of all this is talking about crypto versus gold since January 1st. You're missing a major piece of that because bitcoin had a major massive run up in November to catch up and it kind of outran itself. You know, it, it got ahead of itself because of that, because of enthusiasm and it had to come back. And it came back at the beginning of the year. And so. But the, the problem is it had been held down. My. If you think that there are no gold investors that have reallocated it to Bitcoin, then you're not paying attention. There are.

C (43:14)

I don't know who you're speaking to because I've said the opposite for five years.

D (43:17)

Okay, well then, okay then, then you agree with, then you agree with that.

C (43:21)

That's gonna quote, I've used years ago Is you can't hold gold anymore without bitcoin in this space. That's probably help Excellent.

D (43:28)

And sky program.

C (43:29)

So let's point out one key thing I. You criticize everything I say, both of you about bitcoin to go. The bitcoin to go ratio right now at 29.6 was first traded in 2021. Since that time, bitcoin volatility and the performance of bitcoin has been poor versus gold. Okay, so then can't use this year. Can't use 2020. I'm pointing out that my spidey sense is seeing asset that's matured and it's underperforming the basic asset on the planet. Not it's a bad side.

B (43:56)

Can I, can I make a simple point? So let's, let's get this. Let's talk about two different scenarios. Scenario one, Bitcoin gold ratio bounces around these current levels and goes 25, 35. 25 to 30, 35 and stays there for five years. That is eighth scenario. That is your scenario. Basically it stays in line with it. It's fine. My. I will just a simple chart. In 1980, gold's percentage of M2 was 40, 40.9%. In 2025, at today's price it's 23%. Roughly speaking, gold. And there are a lot of gold investors who believe this. If you believe that what's going on with the fiat world will get worse than it was in 1980 and most people do remember that was the height of Volcker. We saw inflation. But at the end of the day our debt to GDP was 30%, not 130%. If you go to the G7, the numbers are even more extreme. So understanding that gold in my opinion will hit 5,000, maybe close to 6,000. In fact that would be totally normal, completely reasonable. And if that happens, Bitcoin will move along with it. Relatively speaking, that's scenario one. Scenario two, Bitcoin starts to gain adoption in excess of gold. That is it starts taking eating into gold. And so the bitcoin gold ratio moves higher. Well then what happens to the price of bitcoin? The only scenario, the only scenario, which is the Bitcoin 10,000 scenario, your scenario is Bitcoin fails. Bitcoin is not seen as an asset like gold. It moves from 25 down to 10 or 5 or something and basically becomes irrelevant. From an institutional perspective. That's literally the bet that some of your statements would make. I actually don't think you really believe that. So I just wanted to be Clear that if you are long term bullish on gold like I am and think gold is going to move to over 5,000 or 5,500 an ounce this cycle, if you call it this business cycle, this political cycle, then to think that bitcoin is going to fall is crazy. Unless you think that bitcoin has. That bitcoin gold ratio is either irrelevant. Bitcoin is more like stocks, which is what you say, or the other. Now, I don't want to put words in your mouth, so I'd love to hear your reaction to that.

C (46:17)

Yay. So let's not do that. Let's focus on different views and respect our views.

B (46:22)

I fully expect, I fully expect. I am trying to give you respect. I'm trying to say. Okay, I'd like to understand what you're saying within the context of.

C (46:29)

So I don't think bitcoin will fail unless there's some kind of technological thing. I think it's due for significant backup correction, like the whole space. And let's point out facts of past performance. There's only been two down years in stock market since bitcoin was launched and there's only one Bitcoin in 2009. Now there's. Sorry, don't piss you off. Now there's millions of similar type products. There's only four cryptocurrencies, that's for precious metals that time there's still only four. My point is it's a highly volatile risk asset. And when we have a backup in stock market, that whole space with alts as some people call them, will go down a lot more. Bitcoin will probably go down less, but they're all going to go down a lot and much more than beta. And I think that's what's happening with institutions. They get that, they understand that. And if to, to tell them that all this PAT performance they see is not gonna happen anymore, that when the stock market goes down, bitcoin is going to go up. My good luck. That's my point is we're overdue for that. And it's just a wonderful situation right now so far this year. The point is if you look at the performance, it's poor. And my indications are I don't expect it to fail. I still, the technology is awesome. Look what's happened with crypto dollars. The whole rest of the world's like, oh my gosh, how am I going to keep up with these stable coins, Coins and crypto dollars. We have to do CBDCS because it's organically going to space. The bottom line is these are risk on assets. There's millions of them. And when we do have a risk off Perry, which will last for a while, they're going to go down the most because they went up the most. Bitcoin's one of them.

A (47:57)

Gotta talk about Vanguard.

B (48:00)

Can I give my quick, quick thing on Vanguard?

D (48:03)

Yep.

B (48:04)

So Vanguard is not nearly as big of a deal in the short term as the crypto sphere believes because Vanguard's brokerage arm is a really, really, really small percentage of its total aum. Most of its AUM are in their market leading retail mutual index funds, total market S and P, et cetera. So the brokerage product is not that big of a deal. But what this means is a very big deal in the long term. Narrative war. And the narrative is everything when it comes to adoption. So what, why did this happen? This happened. A very simple reason. Because Vanguard's not stupid and their clients have been beating the crap out of them saying why don't you have it? And it becomes it. Companies don't like it when their clients tell them to do something over and over again and eventually throw in the towel. And so what you're seeing is demand from humans that are clients in the United States that forced a corporation's hand. It's a sea change in thought. That sea change in thought is narrative based. It's not going to mean you're gonna have a price explosion because Vanguard's gonna put billion dollars or $10 billion or $70 billion. That's irrelevant.

D (49:21)

Yeah, this is a great example of what I was saying before, of the institutional mindset and career risk. You know, the problem is if you, if you're, if you're a portfolio manager and you want to allocate to something like this, you've had career risk all the way up until this point and now it's turning. And so that's the big deal that it's turning. And this is the point of that Dave is making. I agree. That it no longer become, becomes career risk for you to be adding this to your portfolios. That's what Vanguard is signaling. Why are they signaling it? Because of what exactly what Dave said. Their, their, their clients have been hammering them about it and guess what? When they, when they put out the statement, they, that they think it's not appropriate, that it's not appropriate for Vang cards, for Vanguard's philosophy on investing and blah blah, blah. Well, that since that moment they put out that press release and that statement Bitcoin ibit is up 150. 50%. Yeah. 150% that they. That they missed out on. And they know it. And it's. It's absolutely abysmal. They did that. They refused to just allow their own in their own clients access to this. And they know that. Why would they do that? And people say, yeah, but you could just change. There's friction in changing. You know what that's like when you've got to transfer assets from one brokerage to another brokerage and then you're out of the market. Whatever it is, you know, a normal person doesn't want to deal with that. They're like, ah, I just, all right, fine, I can't buy Ibit. And they miss out 150% in gains. So that $10,000 could be $25,000. But sorry, sorry, we messed up. My bad. That's what they're saying. And they've capitulated. That's a big deal.

A (51:08)

This is. You guys might remember, we actually got Boycott Vanguard trending and had changed their logo to this when it happened. And they. I think they really saw a meaningful difference in their bottom line or at least a hell of a lot of bad PR and pushback. I think it's also worth noting that in that time, their ex CEO who was there forever, was replaced by the guy who built by Ibit at BlackRock.

D (51:30)

That's right.

A (51:30)

I'm not saying that one man can make a change, but you got the guy who literally, like put Together Ibit for BlackRock and went through that entire process. Process is now the CEO of Vanguard and was obviously more likely to eventually make this change. Veto it.

D (51:43)

At least not veto it. Like they're.

A (51:45)

I view this as plumbing. Once again, I view this as plumbing. It's access to a lot of people. If they want it, my guess is that they will. But, you know, we'll see. I mean, Mike, when you see something like this, these are. Is this tailwinds? Is this headwinds? I mean, how do you view it? Because in my mind, we're still opening the door to more people who couldn't even buy it yet who wanted to.

C (52:06)

So it reminds, like everything reminds me of about five, six years ago. I was in London talking to one of my colleagues in the British. Some authorities said no one can buy cryptos. I'm like, that's a classic buy sign. And everybody hated him there. You know, everybody's yelling. It was a classic buy sign. It was a great asset. It was under appreciated. It was, you know, boom. Now it's the Exact opposite. If they're selling, there's so much yelling. It's like you have to be careful. And I just look for alternatives. Gold, unfortunately it's not. It's. I hate the fact it's still beating everything. And it is, it's telling you that we're near the end game of this massive pump. In these, you know, 21 million numbers on the screen, there is 300 billion that is. Has a basis. That's basically crypto dollars. The rest of them are just numbers on the screen. I'm sorry, commodity person. I see unlimited supply. I see no basis. I get worried now. I was really on the way up. I get the mind, the final diminishing supply and increasing demand, adoption bitcoin. But sometimes you get to a peak. Now you just see everything is so completely dependent on that u. S Stock market going up. Everything, particularly cryptos. And that to me is what I'm really concerned about.

D (53:12)

Well, maybe what you just said. What you just said is exactly how I feel. When there's unlimited supply and no limit on basis, then that's what you need something that gives you protection against that. And that's why, that's why I believe in bitcoin. That's. I mean it's exactly what you just said. And it's not because there's no.

C (53:30)

Bitcoin doesn't have a basis, gold does. Gold is the basis. Gold is basis for bitcoin. Everything, every number on the screen. Every number on the screen. And commodities have always been able to trade a futures versus basis. Except for cryptos. Crypto dollars have a basis. Bitcoin is. You have to have the full faith in that one asset. Great get. It was bullshit quite a while. Just at these levels, it's just too expensive in my view.

B (53:53)

So I put out a post over the weekend about the math in why I believe Bitcoin is 90% undervalued. I can lead through it, but it's very simple if you think about gold's market cap. Gold's market cap, somewhere between 80 to 90% of gold's market cap is pure monetary value that has nothing to do with jewelry. There's nothing to do with industrial use. And you can get at that based on the gold silver ratio, the gold platinum ratio, comparing it to the other precious metals. And so you understand that gold has a massive monetary premium in its price. In fact, if you heard me saying it should go to 5,000, it's literally because of the monetary premium because of the explosion in global liquidity over the last 40 years, which really accelerated post decoupling the gold window. So basically 45 years since 1980. So if you understand that, then your quote, basis for gold is for an asset that should be half the price of platinum, give or take. Platinum is what, 1400? I don't have a look recently, but it's a hell of a lot less than 3,800. And so I need to understand that everyone who looks at it every time I hear the argument, but gold is something you can wear as jewelry. Sure you can, but it is, for the most part, most of its value is based on its monetary use, which has no basis in anything other than trust, belief, thought in something that you can understand that has worked for 5,000 years as governments have come and gone. And you look at the collapse of governments and the collapse of every empire, pretty much every empire that's ever collapsed. One of the first signals has been debasing their coinage. Whether it was the Roman Empire, whether it's the Spanish, whether, hell, the English, although they were smarter, they debased it so slowly they just kind of faded. They didn't go kaboom. So they were a little bit smarter. Right? Yeah. So congratulations. The pound lost, you know, 80% of its value and they lost most of their colonies. They have a commonwealth, yada, yada, yada. And now they have some more on running the country with the lowest approval rate in the history of the British, of the, of the British Prime Minister ship. So, okay, cool. But the truth is that every empire falls this way. So if you, and if you don't think. Because we know our current Treasury Secretary is a student of history, he knows this and understands that the only way out of the United States, the only way out, let me repeat that only way out is grow, baby, grow. That's it. They need to do everything they can to encourage us capital formation, production and consumption. Yeah, okay, we're going to consume. They're not going to stop it, but they are going to prioritize production, production, production. Grow, baby, grow. Which means they want to cut regulations, they want to tariff in their way to doing it. And we all know I've been very critical about the way they've done the tariffs. I'm not defending it, but that's what they want. Part of Grow Baby grow is let's get the cost of money back to where it was for 20 of the last 25 years and make it zero. Let's have the cost of money be at a flat inflation rate, which means you're going to see liquidity pumped up into this, this, this process because that's what they need. It's going to start when Powell is gone. It's going to start, you know, they're going to see a shadow Fed chair appointed before he's out. Powell will probably serve out his term. But you saw it in this last, in this last speech, you know, his last press conference. Basically he's been defanged. He doesn't have the power to do what he wants to do because it won't be sustained. And the most important thing about the Fed, the most important thing with Volcker was he basically said to the market, this is the red line. Do you doubt me? They couldn't wait him out. They couldn't wait him out. He had three years before anything was going to happen to him. And so you're not going to see that kind of hard line. But I actually, you know, we could talk about the macro side. I don't think it makes sense anyway because there's so much, much reason to believe that higher interest rates actually doesn't really help with inflation because it props up costs, owner's equivalent rent. It decreases investment in automation. You know, at a time when AI requires a shit ton of automation. I mean, look, OpenAI isn't going to make a dime for four years according to their own, their own data that they're telling people, they're telling investors it's very expensive and when the cost of money is high, it's hard to make those investments. Those are the investments that will literally cause production. Right, Investments in. There was a, I listened to a really good podcast this weekend actually I was listening to two or three. They all basically said the same thing, which is investments in AI is going to need, is going to be a big deal and is going to have massive changes in the way most businesses, jobs, professions are done. But in the short run it's going to cause more employment and more investment. Now if you understand that, then understanding that's why they're so hyperbolic about cutting rates. And a lot of the macro arguments just assume business as usual. They don't assume the economy's at an inflection point because of a new technology. And honestly there are people who believe that this is as big as the supply chain of the Internet or bigger, more like the introduction of the steam engine and, or the assembly line line. I mean these are all points in our history that made big changes and changed policies.

D (59:14)

I would argument that, I would argue that the, you know, Besson and Trump, keeping it to first principles, they want to Lower interest rates. They want to lower interest rates because they know that they can grow the.

A (59:27)

Economy.

D (59:29)

In nominal terms, number one. And number two, that will bring down the deficit because we're spending a trillion dollars a year on interest alone. 1.2. If you don't net out intergovernment payments. They know that they. So what, what does Trump want to do? He wants to say that he balanced the budget. And if he. And if you, if you raise productivity by 20% and you. And you decrease the, the amount that we're spending on, on interest by half, then you're getting pretty close to, you know, a balanced budget and a surplus. And first principles. That's what they want. They want to come out and say we did it, you know, and unfortunately for regular people out there, that means that they're gonna have to deal with inflation. And that's what I think that gold is sniffing out.

A (60:23)

I think bitcoin seems to be sniffing it out at the moment too. It's up 13,400. Just kidding, guys. It's just one hour move. It's not that exciting.

B (60:31)

Well, if you look at.

D (60:32)

From Friday, bitcoin's up, Bitcoin's up 4% and the S P is only up 30 basis points. So, you know, yeah, I will.

B (60:40)

Was down when the S P was up.

A (60:42)

So, you know, whatever, Dave, whatever.

D (60:44)

It's not a perfect correlation anymore.

A (60:46)

That's all I do want to say. As potential catalyst, it is worth noting and just because of the title here, that October tends to be an exceptional month for bitcoin. If you take a look with 1, 2, 3, 4, 5, the six last October's have been green. The lowest was 5%, two of them at 10 and the other is pretty like astronomical. And we tend to get a pretty good Q4, especially at this part in the cycle. I don't know if seasonality will matter, but a lot of people definitely looking for a very bullish Q4 and just as a final potential catalyst for the crypto market, obviously because we're going to get a hell of a lot of ETFs this month. When I had Kyle Samani on, he thought that we would have a Solana staking ETF potentially by October 1 or then he kind of revised to the first week of October. We don't even have Ethereum staking ETFs. Just making the point that things like this and Vanguard, there's still a lot of unlocks to people who may be looking to buy and haven't or haven't found a way. So I do think that it trades differently than other assets as a result of that growing pressure. But that's basically all we have for you guys today. Another incredible Macro Monday. The best hour of my week really is. They're mocking me in the comments the whole time about how I say nothing, by the way. And that's the best part about it. Why would I say anything when I have. You guys got nothing to add here, man. We got nothing to add.

D (62:05)

We'll talk ad nauseam.

A (62:07)

That's. That's what we're looking for. All right, everybody, thank you so much. We will be back next Monday. Of course, the next Macro Monday. And I'll be back with Andrew and Tillman tomorrow. Gentlemen, have a wonderful day. AI is reshaping the world. But right now it's stuck in the hands of just a few big players. But what if AI could run openly, verifiably and on chain? That's what zero G is building the world's first decentralized AI operating system open to everyone. Imagine a network where you don't just trade tokens. You train, store and run independent AI models at scale. No lock ins, no black boxes, no single point of failure. Just quick, cost effective, auditable AI that anyone can build. If you believe the future of AI should be a public good and not just another corporate monopoly, join us at 0g.AI that's the number 0 and the letter G.AI.