WEBVTT 00:00.000 --> 00:03.960 For the viewers, I would be looking for something that just comes out of left field. 00:04.260 --> 00:09.320 If you remember them announcing Lehman Brothers, nobody knew anything about it. 00:15.350 --> 00:20.550 Hi, this is Mike Maloney with Alan Hibbard once again. And Alan has prepared a presentation 00:21.070 --> 00:26.450 on what will happen to certain asset classes under the new government. Alan, what have you got 00:26.450 --> 00:31.170 for me? Hey, Mike, I've got a few things. Basically, I want to look at the short term 00:31.170 --> 00:35.410 of fact from the election, basically what happened with major asset classes in the week 00:35.410 --> 00:40.490 leading up to the election and the week since. And then I want to zoom out and look at the long term, 00:40.970 --> 00:44.470 especially in the gold market. And really, I want to ask the question, 00:44.730 --> 00:50.930 is the new presidential regime going to be good for gold or bad for gold or neutral? And I want 00:50.930 --> 00:56.010 to answer that question using data. So first, let's dive into the short term stuff. And then 00:56.010 --> 01:02.130 you've got a list of different assets that we're going to cover too, right? What are those assets? 01:02.830 --> 01:09.370 Yeah, we'll take a look at stocks, bonds, the dollar itself, oil, gold, silver and Bitcoin. 01:10.010 --> 01:17.790 Excellent. Okay. So first, I want to give you just a little bit of news, just a little tidbit 01:17.790 --> 01:23.630 here. Russia's gold reserves surpassed $200 billion for the first time, now almost a 01:23.630 --> 01:29.630 third of their total international assets. So nice chunk of gold for Russia. And of course, 01:29.710 --> 01:38.790 as the price of gold climbs, the dollar value here increases. So this is the trend for pretty much 01:38.790 --> 01:44.710 all of the world's central banks except for the West. Am I correct? Yeah, exactly. And China, 01:44.830 --> 01:49.110 of course, is the number one producer of gold and importer of gold. Their holdings have been 01:49.110 --> 01:54.930 going up pretty steadily. The US's holdings haven't changed. And I believe Canada is still at zero 01:54.930 --> 02:00.690 gold. So I don't know what's going to happen in the long term, but that's the trend we're seeing. 02:01.430 --> 02:06.670 Yeah. Okay. All right. Well, let's get into some of the charts. So first, I want to start with 02:06.670 --> 02:13.910 gold, silver and Brent crude oil. And this is basically the price of each of these assets 02:13.910 --> 02:18.010 in the week leading up to the election. And then this circle is election day. 02:18.010 --> 02:24.250 And then the week cents. And it's index to this point here. Yeah. Okay. That's what I was going 02:24.250 --> 02:33.050 to have you explain that is index to 100 at election day. Exactly. And so the scale here 02:33.050 --> 02:41.050 is basically the percentage change. Exactly. Yeah, we're going pretty much plus minus 5%. 02:42.650 --> 02:50.830 Yeah, exactly. Silver started around, you know, 105 on an index basis and slid down to 100 on 02:50.830 --> 02:56.990 election day. That was the index point there. And then kept sliding about another 5% or 6% 02:56.990 --> 03:02.150 afterwards. So it basically can, silver in particular, basically followed its trajectory 03:02.150 --> 03:06.770 without being disrupted. You'll see that in just a second that some of the other asset classes 03:06.770 --> 03:11.830 were disrupted. They were moving one way, and then they moved a different way. But golden silver 03:11.830 --> 03:18.950 kind of continued unabated on the path that they were on. Crude oil, you know, in contrast was 03:18.950 --> 03:23.110 rising, right? The price was going up. And then at election day, it started going down. So 03:23.770 --> 03:28.310 very interesting. I don't know if you have any thoughts on oil or the other assets. 03:29.630 --> 03:33.150 Yeah. One of the things that I want to mention is that 03:33.150 --> 03:38.990 golden silver were coming off of all time highs. And it was sort of time for them to take a rest 03:38.990 --> 03:46.530 and do a retracement. They had just been, you know, I had talked quite a while ago about the 03:47.830 --> 03:51.670 panhandle or cup and handle that had developed. And in the handle, there was a 03:52.350 --> 03:57.690 inverse head and shoulders pattern, a triple top that we were about to violate. And I said 03:57.690 --> 04:03.170 there would be a slingshot move. And that's exactly what we got, a slingshot move. But 04:03.170 --> 04:09.210 slingshot moves can't go on forever. So it was time for them to take a rest and a pullback. But 04:09.210 --> 04:14.590 I see a very bright future coming up for golden silver. And we'll talk about that later. 04:15.250 --> 04:20.390 Yeah, me too. I agree. So I don't think the election really affected them, to be honest. 04:21.310 --> 04:26.530 Moving along here, we have stocks, bonds, we have the 10-year treasury, and we have the 04:26.530 --> 04:34.590 dollar. So the S&P, you can see kind of was steady going into the election, but the day before, 04:35.070 --> 04:40.170 compared to the day of, compared to the day after, it got a nice boost. So right here around 04:40.170 --> 04:45.870 election day, plus or minus one day, the S&P had a nice boost and then sort of leveled off. 04:45.870 --> 04:51.470 Didn't really do anything notable after that. So I wouldn't read too much into this. 04:51.470 --> 04:57.770 And then with the 10-year treasury yield, we probably could have inverted this chart, 04:57.970 --> 05:01.270 but that's okay. So it's kind of up and down and up and down all over the place. 05:03.530 --> 05:07.890 The net result here is that yields are increasing in this two-week span. 05:09.350 --> 05:14.510 I guess we can talk about it more as we go. But obviously, what the Fed is doing with 05:14.510 --> 05:20.370 interest rates is going to affect this a lot. And the credit rating of the U.S. government is 05:20.370 --> 05:25.070 going to be a major factor here. And the dollar is up a little bit, 05:25.130 --> 05:30.470 which is usually negative for gold. Gold fell over this same time period that the dollar rose. 05:32.230 --> 05:35.790 Yeah, exactly. So you could see here the dollar fell. Pardon? 05:36.570 --> 05:42.170 But not by much. Yes, not by much. The DXY, so this is comparing it to a basket of other currencies. 05:42.790 --> 05:46.530 Exactly. So the dollar fell a tiny bit. This has got to be less than 1%, 05:46.530 --> 05:53.470 but then it bounced and rebounded maybe 2%, something like that. So this is one of those assets that 05:53.470 --> 05:57.970 was on a certain trajectory. And then after election day, it sort of bounced and went the other 05:57.970 --> 06:02.470 direction. So the dollar is strengthening relative to a basket of global currencies. 06:02.790 --> 06:07.710 And that makes sense. And Trump and his administration are calling for tariffs and 06:07.710 --> 06:14.690 strengthening of the U.S. dollar and so forth. Yeah. I'm not a big fan of tariffs when you 06:17.010 --> 06:24.870 limit. International trade reduces the risk of war, regardless of how much you may dislike 06:25.490 --> 06:30.330 your opponent. If you're doing business with him and your economy relies on him, 06:30.610 --> 06:37.170 you're less likely to get into a fight. Yes, exactly. Yeah, not to mention that tariffs 06:37.170 --> 06:42.630 are really a short-term solution to a long-term problem, which is basically like 06:42.630 --> 06:48.890 competitiveness in a global landscape. So yeah. So anyways, maybe we can do tariffs in a separate 06:48.890 --> 06:54.450 video. So I want to put all those assets on one chart just in case anybody wants to see them all 06:54.450 --> 06:59.990 together. It might look a little busy, but this is sort of a comparison of all of them. And I do 06:59.990 --> 07:04.910 want to add Bitcoin as promised. So Bitcoin is the orange line. And you can see that after 07:04.910 --> 07:09.390 election day, it took off like a rocket. It is actually off the chart here, the way I have 07:09.390 --> 07:15.690 it scaled. So I want to rescale it just a little bit. And you can see just how dramatic this rise 07:15.690 --> 07:21.470 in the price of Bitcoin has been in just one week. So at one point intraday, it was up 30% 07:22.250 --> 07:27.850 from the price of the election in maybe five or six days, something like that. So 07:27.850 --> 07:35.510 pretty remarkable, Mike. Any thoughts on this? Well, we did a video several weeks ago, 07:36.290 --> 07:45.590 Gold, Farmland and Bitcoin. And I think that those are cryptos and precious metals are part of the 07:45.590 --> 07:53.450 places to be. But I absolutely, absolutely believe that the economy is too warped and too out of 07:53.450 --> 07:58.750 balance. And those pressures that build up when it's out of balance, that's like an energy 07:58.750 --> 08:07.070 potential. And that we are headed for some sort of crisis. I thought it would happen before the 08:07.070 --> 08:17.570 election, but is it going to happen between now and inauguration day? There are things that 08:17.570 --> 08:23.490 are suggesting yes. But for the viewers, I would be looking for something that just comes 08:23.490 --> 08:31.310 out of left field. If you remember them announcing Lehman Brothers, nobody knew anything about it. 08:31.410 --> 08:35.510 It's just that, you know, here's the secretary of the Treasury and the chairman of the Federal 08:35.510 --> 08:45.650 Reserve. And then they're on TV on a Monday morning announcing the biggest failure in history. 08:46.270 --> 08:57.270 And if something happens, it'll either have to do politically or economically, 08:57.610 --> 09:05.570 like Lehman Brothers, but it'll be coming out of left field. And so very suddenly, 09:07.330 --> 09:15.090 the rush to safe haven assets will change from just a trickle to a flood is my feeling. 09:15.890 --> 09:21.830 Okay, let's move on. I agree with you. Yeah, perfect timing. I do want to actually zoom out here 09:21.830 --> 09:26.930 because we're focusing on price movements for just a week or two. And it's interesting to think 09:26.930 --> 09:31.730 about an entire presidential administration four years, or even longer, of course, as we 09:31.730 --> 09:36.710 say for retirement in the long term, we're thinking in terms of decades. So let's zoom out 09:36.710 --> 09:42.410 a little bit. And I want to look at basically the two major bull markets that we've had in gold. 09:42.410 --> 09:48.810 And I've shown this chart before. Basically, you can see a red box around the gold bull market of 09:48.810 --> 09:55.230 the 1970s, and then a red box around the gold bull market that we've really been in since roughly 09:55.230 --> 10:01.250 the year 2000, maybe 2001, depending where you start it. And what those two bull markets have in 10:01.250 --> 10:07.130 common is that we had negative real interest rates for the majority of those two bull markets. 10:07.130 --> 10:15.170 Yeah. So, and for anyone who's unsure about what that means, a real interest rate is basically the 10:15.170 --> 10:20.930 Fed funds rate minus the CPI. So basically, take the Fed funds rate and subtract the rate of inflation. 10:21.750 --> 10:27.570 And when inflation is greater than the Fed funds rate, we have a negative real rate. And 10:27.570 --> 10:33.230 that's what I've colored in red here. And basically, my argument is that the bull market 10:33.230 --> 10:38.250 in gold is going to continue regardless of who is president and regardless of their policies, 10:38.830 --> 10:44.250 as long as we have negative real rates. It just seems like such a reliable indicator. Is that 10:44.250 --> 10:50.470 kind of your sense as well, Mike? Absolutely. We know the Fed's playbook. I do believe that there 10:50.470 --> 10:55.770 is something else around the corner. And the longer it takes to happen, the worse it will 10:55.770 --> 11:01.450 be because the greater the warping of the economy and the pressures that are building up. 11:01.450 --> 11:08.130 And so the Fed's playbook is drop interest rates to zero, create a whole bunch of currency. The 11:08.130 --> 11:14.850 currency then creates inflation. And because the rates are being artificially held too low to try 11:14.850 --> 11:20.570 and pump the economy back into bubbles, because that's what they've done for this entire century. 11:20.890 --> 11:27.810 All of those negative rates are the are an attempt to pump bubbles. It started with the 11:27.810 --> 11:37.690 NASDAQ crashing in the year 2000. And they do this this negative real rate causes bubbles to inflate 11:37.690 --> 11:42.910 and then the bubbles pop. And so they go they double down on the negative real rates. I mean, 11:42.950 --> 11:54.590 you can see that after 2010, the residual from what was happening with the the global financial 11:54.590 --> 12:01.910 crisis, pumping to get the world economy going again, cause that first thing. And then 12:02.510 --> 12:10.970 with COVID, the negative real rates there are just insane. And so we know the Fed's playbook, 12:11.310 --> 12:18.570 they've been doing it now for more than 20 years. And as soon as a bubble starts to pop, 12:19.070 --> 12:26.350 they're going to try to reflate that bubble. And it just keeps the economy warped and causes 12:26.350 --> 12:34.530 these booms and crashes to become much worse and more distorted. The booms have been limited 12:34.530 --> 12:44.790 to the places where currency creation goes to first. They create a boom in the stock market 12:44.790 --> 12:53.530 or a boom in real estate. With low interest rates, it's a boom in real estate. With currency 12:53.530 --> 12:58.970 creation, it's a boom in the stock market. It's wherever that currency goes first. If the banks 12:58.970 --> 13:04.990 are loaning the currency into existence, that's usually for real estate and for margin loans. 13:05.310 --> 13:11.990 If it's the Federal Reserve creating currency through QE, that's just going directly into the 13:11.990 --> 13:20.570 stock markets. And so we know the playbook. If anything happens in the economy, this thing will 13:20.570 --> 13:30.870 turn red again. That's my analysis. So it's going to look very much like the 70s, where it's red, 13:31.010 --> 13:38.750 gray, red, gray, red, gray, but mostly red. But even more so than the 70s, like it already 13:38.750 --> 13:46.110 does look. And until they get things really under control, and they're not, they're out of control, 13:48.090 --> 13:53.090 this will persist, meaning the bull market in precious metals will persist. 13:54.030 --> 13:59.690 Yeah. My thoughts as well. And you mentioned two things, cutting rates and just running the 13:59.690 --> 14:04.410 currency printer, like creating inflation. So I actually want to zoom in on those two things 14:04.410 --> 14:11.850 so we can see the trends. So the Fed funds rate was up here at 5.3%, between five and a 14:11.850 --> 14:17.910 quarter and five and a half. And then we got that 50 basis point cut in the second half of September. 14:18.430 --> 14:24.430 And then just last week, we got another quarter point cut, which almost went overlooked. I didn't 14:24.430 --> 14:29.230 see a whole lot reported on this. It was two days after the election, we got another 14:29.230 --> 14:36.510 quarter point cut. And the expectation in the markets from hearing comments from the Fed 14:37.050 --> 14:42.150 is that we're going to get another five quarter point cuts in the next year. 14:42.410 --> 14:46.150 So that's the expectation, obviously that could change. There's nothing guaranteed about that. 14:46.590 --> 14:50.670 But the expectation is to basically lower interest rates by at least another full percent, 14:51.570 --> 14:55.470 roughly a year from now. So this is exactly what we're talking about, cutting rates 14:55.470 --> 15:03.090 and then creating inflation. So I don't know, do you think the Fed sees a recession on the horizon? 15:03.250 --> 15:06.210 Or what do you think they're seeing in order to be cutting rates right now? 15:07.150 --> 15:10.190 Well, they're seeing something in the economy that we are not. 15:15.790 --> 15:22.950 Also, I do want to say that people think that the stock market rising was solely due to 15:23.690 --> 15:32.350 the election results. But it's the election results plus this little boosting, this tweaking 15:32.790 --> 15:40.010 that they gave it. And yes, this last rate cut sort of just like slipped in under the rug. 15:40.590 --> 15:45.370 Nobody really noticed it. And so except the stock markets. 15:46.290 --> 15:52.530 Yeah, exactly. And there is a greater than 50% chance that we get another rate cut 15:52.530 --> 15:58.650 in December. So next month, markets are expecting I think maybe a 60 or 65% chance that we get another 15:58.650 --> 16:04.650 cut in December. So this is the direction we're moving. We're cutting rates. So negative real 16:04.650 --> 16:11.930 rates, that's bullish for gold. And with the CPI, I'm expecting the CPI to start increasing. 16:12.390 --> 16:16.950 So folks who have been paying attention might remember that the CPI for the most part has 16:16.950 --> 16:28.130 been declining for about two years. So it peaked in June of 2022 at 9% year over year and has been 16:28.130 --> 16:37.790 falling for the most part since then. If you recall, the target is that they only want to 16:37.790 --> 16:46.530 steal 2% from you per year. And we are currently at a theft of 2.6%. So they still haven't reached 16:46.530 --> 16:54.770 their target. Yet they're cutting rates. Yeah. I mean, the whole thing's a scam, right? So there's 16:54.770 --> 16:59.770 a lot I could say about it, but it doesn't make sense. Even if you buy their logic, which is 16:59.770 --> 17:04.110 nonsense to begin with, even according to their logic, they're not doing what they're supposed 17:04.110 --> 17:09.610 to be doing. So it doesn't really make sense at all. It's obviously theft. We know that. 17:10.030 --> 17:15.510 So yeah. So why do I think that inflation is going to turn around and start increasing? 17:15.510 --> 17:22.950 Well, basically the best predictor of inflation today is the M2 currency supply yesterday quote-unquote 17:22.950 --> 17:30.070 or 18 months or two years ago. And if we look at M2 from about 18 months ago, we see it bottomed 17:30.070 --> 17:39.130 out. So after the COVID rescue package, you might say, M2 started falling pretty substantially for 17:39.130 --> 17:46.530 a couple years. And that I think is the reason why inflation has been falling since June of 2022, 17:46.530 --> 17:54.750 as we just showed, from 9% down to 2.6%. However, for the last year and a half, the last 18 months 17:54.750 --> 18:00.430 or so, M2 has been rising year over year. So that's about the amount of time, roughly 18 months. 18:00.570 --> 18:05.730 That's about the amount of time it takes for that currency creation to show up in the CPI. 18:05.730 --> 18:12.190 So I'm expecting the CPI to start increasing possibly today, maybe the next print we get, 18:12.330 --> 18:20.690 next monthly print. So I'm going to modify Milton Friedman's famous quote then. 18:21.350 --> 18:27.670 Inflation is always and everywhere a monetary phenomenon with an 18 month lag. 18:30.950 --> 18:37.390 The monetary aspect came 18 months before we see the inflation on the average. 18:38.090 --> 18:43.030 At least in the CPI. I mean, it shows up in other assets, like the stock market and so forth, 18:43.110 --> 18:49.990 like almost immediately. So getting back to that chart we showed a minute ago of like, 18:50.070 --> 18:54.350 will the gold bull market continue? Well, that's dependent on negative real rates. 18:54.350 --> 18:59.050 I mean, the Fed funds rate is already coming down and I'm expecting inflation to go up. So 18:59.050 --> 19:04.570 I'm thinking the bull market and gold is going to continue regardless of what Trump or his team 19:04.570 --> 19:09.110 does kind of pretty much regardless of the policies. I think this bull market continues. 19:09.150 --> 19:13.650 There are just larger structural forces at play that are bigger than any one president. 19:14.530 --> 19:22.790 Yes. Okay. Most of this century, the bubble century, I call it, has been an emergency. 19:22.790 --> 19:28.430 It's one emergency after another emergency after another emergency. And that's what caused all 19:28.430 --> 19:37.250 that red for this century is the Federal Reserve's reaction to one emergency after another. And I 19:37.250 --> 19:45.490 do believe that that is going to continue. I believe that the things that Ben Bernanke 19:45.490 --> 19:53.810 set in motion with QE and interest rates and the way because the way that the Federal Reserve 19:53.810 --> 20:04.050 manipulates the economy is very different prior to 2008 and after 2008. Everything changed when 20:04.050 --> 20:14.190 once Ben Bernanke, so I believe Bernankeomics is storing more energy to cause an even greater crash 20:14.190 --> 20:22.390 than was stored before 2008 with the warping, you know, the real estate bubble that we had 20:22.390 --> 20:27.650 and mortgage backed securities and everything else. We've got a lot that is wrong with 20:27.650 --> 20:35.350 the economy right now. And it's interesting every time something breaks, all of these people that 20:35.350 --> 20:40.650 caused the warping say, the free market isn't working. We've got to do something. They manipulate 20:40.650 --> 20:45.770 it and they make it. They set us up for the next big crash. And they have done that. The 20:45.770 --> 20:51.490 reaction to COVID, you talked about currency creation. Well, each time they sort of have 20:51.490 --> 21:02.270 to double down on it. I mean, Powell did as much in the response to COVID as Ben Bernanke did 21:02.270 --> 21:10.970 over a period of years in QE1, QE2, and QE3. It was the same amount of the scale of currency 21:10.970 --> 21:18.710 creation compressed into just a few months. And so with the deficits that we're currently 21:18.710 --> 21:27.370 running the size of the national debt, everything else, this is going to the next great inflation 21:27.370 --> 21:38.830 of base currency is going to be on a scale that matches the size of the national debt and everything. 21:39.110 --> 21:43.530 So it's going to be something we've never seen before, just like the response to COVID 21:43.530 --> 21:50.130 was something we had never seen before, just like the response to the global financial crisis of 2008 21:50.130 --> 21:57.990 was something we have never seen before. So get prepared. That's my message. Absolutely. You said 21:57.990 --> 22:07.670 it better than I could. So I want to leave everybody with a meme here. How big is inflation 22:07.670 --> 22:08.970 really? Well, you told me.