Economist: Gold To $6,000 As Economy Implodes, Fed Loses Independence | Steve Hanke
Summary
Gold Market Outlook: Professor Steve Hanky predicts that the secular bull market in gold will continue, potentially peaking at $6,000 an ounce, driven by economic conditions and monetary policy.
Federal Reserve Policy: The Fed recently cut the Fed funds rate by 25 basis points, but this is unlikely to significantly impact mortgage rates or stimulate the housing market due to ongoing quantitative tightening.
Monetary Policy Strategy: Hanky emphasizes the importance of focusing on the money supply rather than interest rates, advocating for an end to quantitative tightening to stimulate economic growth.
Central Bank Activities: Recent actions by major central banks include rate cuts by the Bank of Canada and the US Fed, while the ECB, Bank of England, and Bank of Japan held rates steady, reflecting diverse monetary policy approaches globally.
Fed Independence Concerns: There are concerns about the Fed's independence, particularly if it becomes influenced by political figures, which could lead to faster money supply growth and higher inflation.
Investment in Gold: Monetary Metals offers a way to earn up to 4% yield on gold, paid in gold, providing an alternative investment strategy for those holding precious metals.
Market Implications: A potential loosening of monetary policy by the Fed could positively impact asset prices, although the stock market is currently considered overvalued and in a bubble.
Currency Outlook: The US dollar is expected to weaken, moving towards a fair value range of 120 to 140 against the euro, as central bank policies diverge globally.
Transcript
The key takeaway is that the gold secular bull market will continue and probably peak out at around 6,000 an ounce. Are you concerned, Professor Hanky, that suppose the Fed were to be uh governed by um mainly Trump loyalists and therefore strictly speaking they would have no independence. Then uh then the money supply would grow at faster than 6%. your golden growth rate of 6%. It is leading to higher inflation. This is what my friend asked me. Rate lowered. So, what's the game plan? Shall we refinance our homes and buy more crypto? All right, Professor Hanky. Shall we refinance our homes and buy more crypto? Now, now that the Fed has pivoted, Steve Hanky returns to the show. He is a professor of applied economics at Johns Hopkins University and a regular guest on our program. We'll be talking about central bank activity, what happened in the last week and a half, what's about to happen in the next quarter, what's going to happen to asset prices, what's going to happen to gold. We'll talk about all these themes. Professor Hanky, welcome back to the show. Good to see you. >> Good to see you, David. >> Let me just read to you in chronological order uh what the major central banks of the world did in the last week and a half. Major uh week for all central banks around the world. All the major central banks around the world. And uh importantly the Fed as you know in the US pivoted for the first time in uh many many many months. So the ECB 1st September 12th the European Central Bank held rates steady. Uh on Thursday the 17th the Bank of Canada cut rates by 25 basis points. On the 18th the US Federal Reserve cut rates by 25 basis points. On the 19th, the Bank of England held rates steady and uh the Bank of Norway on the same day cut rates by 25 basis points. And uh on the 19th, the Bank of Japan held rates steady uh although they're simultaneously announcing a selloff of $250, sorry, $250 billion worth of ETFs in their treasury. So, uh that's just a summary. Professor Hanky, uh, what is going on right now? There doesn't seem to be or maybe there is cohesion amongst the central banks to plan a global pivot or maybe they're just all reacting to individual domestic monetary policy needs. Um, I I'll just let you comment on your reaction to what happened to last week and a half. Yeah. >> David, did you in that laundry dish, did you get the UK in there? Yeah, the UK uh was on the uh yes, the the UK uh was on the 19th. They held rates steady at 4%. >> Okay, fine. So, let let's go through these. One one thing that's very important for important for people to latch on to is that the the central driver always is the the the US Fed. I mean the the the the dollar is the is the international currency. The US is you know by most measures still the biggest economy in the world and and the the US is a is is a major hegeimon and and imperial power. So so they tend to follow and use the same methodology as the Fed with with local variations. Let's put it that way. But let's start with uh shall we start with the US actually since since that's the >> okay so let's start with a big elephant in the room and that was the US Fed then if that if that in a way that the elephant is leading things uh >> yes >> and the Fed did cut the Fed funds rate that's the overnight borrowing rate uh the one that the Fed really controls by 25 basis points. And the interesting part of that is that under tremendous pressure by President Trump, uh the the Fed didn't blink. Basically, the the Fed did really what they wanted to do, I think, and and what the markets anticipated that they would do. There there was a about a 94% probability that they would reduce the Fed funds rate. If you look at the uh Fed funds futures market and the Chicago Merkantile Exchange, that's what the markets thought were going to happen. That's what did happen. And and going forward, by the way, the Chicago Merkantail Exchange, the Fed funds futures market doesn't think Trump's bullying will rattle the Fed going forward in Octo its October meeting or its December meeting. If you look at the probabilities for those, David, uh they're running as follows. A 25% basis cut 77% probability of that in the uh October meeting. And if you go to the December meeting, they think there'll be another 25 basis points cut. Uh and that probability is also, you know, 70%. So, so that that's that's the kind of story around the Fed. Now, the interesting part of this is, you know, people ask, well, what what's that going to do to mortgages? You know, is this going to stimulate things and so forth, >> right? >> And and the and the answer of that is no. It's not going to have much of an effect. And if you go back to September of 2024, the Fed actually reduced the Fed funds rate by 50 basis points a year ago. And in the next two months, the 10-year yield went up 50 basis points. And the 10-year bond is a thing that mortgage rates are really geared on. And and what happened to the mortgages? two months after the Fed funds rate went down 50 basis points a year ago, the the mortgages actually went up 75 basis points. So that so what what this tells you is that whatever the Fed is doing with the interest rates, I it it isn't dictating what's going to happen in the market. The market is something else. The Fed does control the Fed funds rate, granted, but they don't control the longer term yields and the 10-year or the mortgage rates. At least they don't control them directly. And and as you can see, a year ago, Fed funds went down quite a bit and the yields actually went up, not down. And why is that? because the market expects more inflation to be coming into the system if those rates go down. So, at any rate, what could the Fed do if they really wanted to stimulate the housing market by reducing the mortgage rates, specifically the the the uh mortgage back securities, they they could stop quantitative tightening >> because the quantitative tightening is it it's get is they're they're they're getting rid of those mg back securities. ities or letting them run off the balance sheet with quantitative tightening at the Fed. And and if they stop that, that that would tend to bolster the price of mortgage back securities and obviously low lower the mortgage rates. So I think that's what they should be doing and and and the the key there is quantitative tightening. Quantitative tightening is what they should be doing. not not fooling around with these interest rates and obsessing with those because the money supply is still growing at an anemic rate 4.8% I Hanky's golden growth rate a rate consistent with hitting a 2% inflation targets a little over 6%. So the the way the way to do that the way in short to loosen up monetary policy a little bit you should stop quantitative tightening. We we've talked about this before and and the lesson for your viewers is this obsession with the Fed funds rate is is a is a misguided obsession. Look at the money supply. What is going on with the money supply and what's affecting the money supply big time? And quantitative tightening is a factor that's influencing the rate of growth in the money supply and keeping it at a very anemic rate. In other words, the the the Fed actually has a tight monetary policy and they say they do quantitative tightening. The word tightening is even in that phrase, quantitative tightening. So, that's that's kind of the Fed thing that they they they they should start loosening monetary policy. >> Gold is now above $3,600 an ounce, an unprecedented level. Now, you've heard me talk a lot about how gold and silver are smart ways to grow your savings over time. 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Goes on to say they don't believe that money supply matters. It's like the Pope not believing in Jesus. We think that's a much bigger problem than this notion that they are dependent or they're not independent. Uh Chair Pal was late to raise rates. They need to come down here. There's no question about it. I wonder, Professor Hanky, suppose Trump gets his way and he implants certain Fed governors or maybe even the Fed chair by next year that is loyal to him and wants rates lower and perhaps even now recognizes the money supply as being important, whereas the current Fed doesn't. What will change? What happens when we have a Fed that once again realizes the importance of the money supply? What will they do differently? Well, they they they'd loosen up monetary policy and they they'd stop quantitative tightening and and and and by the way, that the significant part of that is the last part where you you know the the the by the the Fed not recognizing the money supply is like the Pope not recognizing Jesus Christ. So So that that is the key to the thing. Trump Trump is on this and I I think you know I I told you I I've had a couple meetings at the White House in the in the last month and I I did uh deliver a copy of Suki and Hanky's book making money work where where the the the the key front point is start looking at the money supply again. That's what drives the economy. So Trump Trump I don't know where he got the message maybe somebody whispered in his ear did the tweet but he he got the money supply thing right now exactly how they would implement and so forth gets into the weeds of that's that's another story but at least the money supply somebody has has whispered in Trump's ear that the money supply growth is is important. So that's that's a very that's a very critical thing actually that in that quote that's the most important part >> what happens to markets when the Fed starts loosening monetary policy like you said >> well what happens to markets and the and the economy I think that it's it's a positive not a negative because what they should be doing is targeting the money supply and trying to keep it growing at about 6% per year on a steady basis. And if they did that, the the economy would would be stabilized. Uh we we would hit pretty close to the 2% inflation target and uh that that would be the end of the story. Everything we'd get off this roller coaster that we've been on. That that's what would happen if if they did it right. If they did it right, things would be stable. And stability might not be everything, but everything is nothing without stability. >> Is that is that a Steve Hanky quote? >> Yes. >> Okay, we we'll write that down. This is This is what my friend asked me. Rate lowered. So, what's the game plan? Shall we refinance our homes and buy more crypto? All right, Professor Hanky. Do we refinance our homes and buy more crypto? Now, now that the Fed has pivoted, >> well, number one, buying crypto is is a spec highly speculative play. So, I'm I'm not going to who whoever wrote and asked the question can do whatever he wants to. If he wants to roll a dice on crypto, that's his business, not mine. So, uh and and and I don't exactly know what what kind of crypto you've got. Bitcoin, you've got stable coins, you've got you've got a whole plethora of things to do when you get into that space. But but you are getting into speculative asset space >> is what do you what do you make of the general sentiment from this from this somewhat facitious question? Uh the sentiment that risk assets will not start performing well because of a Fed pivot and because we're now in a Fed easing cycle. Well, that's that's that that that in general that's true. But again, it depends on what assets you're talking about. In other words, if if if you increase substantially the money supply, which by the way, if it's growing at 4.8 date and now and I think inching it up to around six that that's that's going in the right direction but it's not a substantive change like we had in 2020 2021 when things skyrocketed uh and and you know what happened to the asset prices following that skyrocketing of the increase in the money supply let's put it this way a a a slight loosening of the mon of the money supply is not going to be a negative on asset prices. It's going to be a positive. It's it is it's not it's not going to it's not going to slow them down or maybe prick the the the bubble that exists in the stock market. The stock market, for example, is is in a bubble, but but we don't know whether the bubble's going to pop or whether it's just going to slowly deflate. But it's it's very pricey. it's overhyped and and and it will come down eventually to more reasonable valuation levels, but we don't know when or exactly how that's going to occur. >> The notion that the Fed is cutting into a slowing economy as evidenced by even Jerome Pow is admitting now a weakening labor market. Some say that that may actually be perceived as negative for markets because uh you know if you're cutting into a slowing economy, you're cutting out of necessity and they may actually signal panic from the Federal Reserve as opposed to cutting into a growing economy which may be a boom for markets. What do you think? >> Well, that yeah, that that's that's you that's usually the case. and and and in fact, as I've been touting on with you on on this program, I do think a slowdown is baked in the cake because we've had this big contraction in the money supply since early 2022. I mean, the stock of the money now in the economy is is not not much higher than it was in April of 2022. So we've had four contractions like this historically in the United States since the Fed was founded in 1913 and all of them have led to recessions. One actually led to the Great Depression of course the contraction of 19. >> On the topic of Fed independence, I want to get your reaction to this Goldman Sachs report on what may happen to certain assets if the Fed does lose their independence. Goldman says gold could near $5,000 if the Fed loses their independence. So if the Fed's independence is damaged and an investor shifted just 1% of the privately owned US Treasury markets into gold, then the gold price could conceivably rise to $5,000 an ounce. The underlying assumption here is that a scenario where Fed independence is damaged will likely lead to higher inflation, lower stock and long data bond prices and an erosion of the dollar's reserve currency status. In contrast, gold is a store value that doesn't rely on institutional trust. This is from a major investment bank. How would you respond to this? Well, I uh number one, they they've gone through some assumptions, and with those assumptions, they've they've come up with a a target price of $5,000 an ounce. I I not not not using those assumptions, but a more standard kind of thinking, and that is what's going on with the growth and US disposable income. I think the this secular bull market and gold that we've been in, David, will maybe end up at $6,000 an ounce, not 5,000. But but that but my m mine is based on not not all these assumptions they've made about Fed independence and what's going on with the bond prices and dollar and all this other stuff. you just it's it's a much more straightforward methodology that's worked in the past and that is to look at what we anticipate the next peak will be in the gold price based on uh you know the the the last gold price peak was back in 200 and uh two you know over 25 year well almost 25 years ago. So, if we if you look at the gold market that we're in now, and it is in a secular bull, and and I've been bullish on it almost since day one, I I think a a peak in this secular bull will probably come in around 6,000. >> Can you can you outline? Yes. So, so, so it's it's a little higher than uh than the scenario painted by Goldman, but it's it's based on a completely different methodology. I mean, they they have a string of assumptions, and if they plug those assumptions in, they they get 5,000. >> So, just to clarify, are you talking about $6,000 this year, next year, or just sometime during this cycle? at no at the end of the cycle. >> What would mark the end of this cycle? Um, Professor Hanky, what what would >> $6,000 an ounce? >> Okay, fair enough. Okay. All right. Moving on. Um, are you are you What happens what what what does $6,000 an ounce mean for the US dollar in inflation? Well, again, get th this this gets out in the weeds on all kinds of assumptions you have to make and and so forth. I think the key thing is we're talking about the gold market for God's sakes. And where is gold? It is the is the gold market in a bull market? Yes, it is. Will a will will a bull continue? Yes, it will. Where where will it probably end up peeking out at? 6,000 >> now. What what more do you want for God's sakes? >> You you you want to get out and and you know, ask me, you know, how's this going to affect the way I tie my shoes and so forth and so on? >> Well, I'll tell you why I asked. Because a couple years ago, uh when I first started covering the gold market, people were saying, "Well, if $5,000 gold is a reality, that means all sorts of apocalyptic scenarios. That means, you know, world war. That means the dollar's collapsed. That means the stock market's collapsed. That means inflation's gone out of control. So on and so forth. These are some of the scenarios from a few years ago. And >> but but that that that that's that's leading into the kind of analysis that was behind the Goldman report. >> So you don't think that we need like major economic shock for gold now to spike up to 6,000? That's not that's not what you're saying. >> No. No. That's not that's not that's not behind my thinking. My thinking is look what's happening to >> uh the growth in US disposable per capita income >> and and and look what's happened historically to it and how it's related to gold and and and go go back to the last bull run that that ended up peaking out in 2022 and then go forward from that to this bull market. Again, the these are these are uh you know back of the envelope kind of calculation, shall we put it that way, but they they don't get into all these complexities about what what exogenously might happen, what what's going to interfere, the independence of the Fed, the World War, this thing, that thing. If those things happen, then gold would go to $5,000 an ounce. That's the way the Goldman thinking is going. My thinking which which by the way ends up at kind of roughly the same ballpark in terms of a price. It's mine's a little bit higher. Mine mine's based on kind of endogenously in income growing on a per capita basis given that increase what's going to happen. So again the question is is are we in a bull market? Yes. Will the bull market continue? Yes. Is is this the start of a bull a bull market? No. It's kind kind of middle of the bull market. And and and then the question is which I usually don't do by the way these kind of target prices as you know is as somebody who's trading >> all you have to know is a direction of the market not not what some end point is going to be but my my general thinking is I I'm comfortable with this thing and until it gets you know up towards $6,000 an ounce. >> Fair enough. Now let's talk about the Fed independence itself. Are you concerned, Professor Hanky, that suppose the Fed were to be uh governed by um mainly Trump loyalists and therefore strictly speaking they would have no independence, then uh then the money supply would grow at faster than 6%, your golden growth rate of 6%. This lead to higher inflation. If you change the composition of the personnel and the board of governors and the federal open market committee and and and those have, shall we say, a different view than the consensus now, you're going to get a different policy. I mean, it's a simple game. If you change a bunch of bunch of people on the Federal Open Market Committee to and they have views that are much different than the current members of the committee, you you'll get a monetary policy that's different. And and by the way, the I the idea that the Fed is in independent is is kind of a a joke anyway. It's it's never it's never really been independent. Uh but but but at any rate, we're we're talking about the personalities that are going to be on the governing side of the Fed. And obviously, it it doesn't take a rocket scientist to figure out if you if you change the views of those uh people that uh are on the Federal Open Market Committee and the monetary policy is going to change. So this really is a pivotal time for uh central bank monetary policy, not just in terms of the fact that they've started pivoting, but the fact that we perhaps may have a regime change at the Fed itself in terms of what policy to pursue. >> And so that gets a little bit back into your starting question. You had a bunch of these central banks we were going to go through, what what they did and what what I thought about it. So let let's let's go through those. So >> so so >> so it it's it it's dynamic things are happening right now that people have to pay attention to and and one thing that's happening is that the economy not only the US economy but the world economy is slowing down. So that that's one that's that's one piece of background. inflation has has slowed down and it's kind of stabilized now the official rates and now we're talking about changing the interest rate stance not not necessar which is which is one indicator of monetary policy but but not the key one the key one is the money supply which we'll talk about so how should we start you want to go through what which one >> uh well we don't have too much time professor but I'd like to just go over the highlights of each of the central banks starting with back home where I am in Canada. Uh this is an interesting statement uh where sentence from their statement from the Bank of Canada statement rather the federal government's recent decision to remove most retaliatory tariffs on imported goods from the US will mean less upward pressure on the prices of these goods going forward. So they're directly citing the removal of retaliatory tariffs as one of the reasons for why they're lowering rates. I'm wondering why or not why but I'm wondering if we're in a period where trade policy no >> I don't think it's I don't think it's a good reason the retaliatory tariffs don't have any much to do with the overall inflation rate they have a lot to do with relative prices of different goods and services that are >> we we don't know if the Bank of Canada believes in the money supply either maybe >> but but look look at what they're doing the the Hank's golden growth rate for Canada uh consistent with hitting their inflation target is a range of 1 to 3%. So my golden growth rate is 6.2% to 8.2 and they're currently growing at 4.9. So they they have room to loosen up actually >> because what what's happening? They're they're their inflation is is within the target zone of 1 to 3%. It's 1.7%. So actually they're they're doing a you know pretty pretty well basically their money supply is growing a little lower than the an end of Hanky's golden growth rate 6.2 they're growing at 4.9. So, so I I give them a pass. Basically, >> the the Bank of Japan >> I don't give them I don't give them a pass on the reason that they didn't do anything, but I give them a pass on what they're doing. >> Well, maybe they're just following the Fed with no other major reason. >> They They probably are. >> Yeah. Uh okay. Well, let's take a look at another central bank. So the Bank of Japan is one of the uh one of the countries that did not cut rates. They left rates and changed. Um this this happened uh however there they're there the Japanese stock market sold off this week as the Bank of Japan unveiled plans to start selling as $250 billion KF exchange traded funds. An unwinding that the governor uh of the Bank of Japan UA said would take a century. Okay. Interesting. I I first of all does it why why are they doing this and also does the US have similar mechanisms >> for monetary policy in other words selling >> assets? Yeah. Well, yeah, the US has plenty every central bank has a mechanism. They have assets on their balance sheet and they can sell them if they want to. They can shrink their balance sheets. They they could they could do literally quantitative tightening if they wanted to. That's what the US is doing. It's it's it's it's it's letting the assets on on the balance sheet run off, mature and run off. >> We we know they own a lot of um uh treasuries and um of different maturities. Do they own actual stocks and ETFs like the Bank of Japan does? >> Uh no, I I there there might there might be some very small >> Okay. holdings, but not in general. Not not not equities. No, the the Swiss National Bank owns a lot of equities, for example, but the the US Fed does not at present. They have mortgage back securities and treasuries. That's those are the those are the big the big items on the balance sheet for the U. US Fed. Now, the Bank of Japan, the problem is the Bank of Japan is is just lost. They they don't know what they're doing and they haven't known what they're doing since about 1990. The the money supply is growing only 1% per year. Hanky's golden growth rate, a rate consistent with hitting the 2% inflation target, 6% a year. So they're they're they're just out of it basically. >> So So let's let's give them an F. We we gave we we gave Canada a pass. Canada passed and and Japan flunked. Let's go to the next. I >> All right. I I don't believe you've rated the Fed yet, but well, maybe we'll get to that later. Um this the >> the Bank of England uh also kept rates unchanged. I I just want to read what they did and then I'll ask my question. Uh the Bank of England voted to keep rates unchanged on hold on Thursday as a weighs up sticky UK inflation with an uncertain growth outlook in jobs market. Okay, so the monetary policy committee voted 7 to2 to keep rates steady at 4%. Two members of the um MPS in favor to reduce the separate benchmark bank rate by 25 basis points. Uh the September decision to hold rates was widely expected. Professor, let me just say this. Uh the first sentence, they voted to keep rates unchanged because of a sticky inflation situation with uncertain growth outlook. That sounds exactly like what's going on with the US. POW even admitted that the growth outlook for the jobs market is relatively uncertain. I'm paraphrasing here. Except I I I'm presuming Starmer isn't pressuring the Bank of England to lower rates like Trump is. So maybe maybe the Bank of England is doing what the Fed should be doing except without political pressure. Maybe. I'll let you comment. Well, they they have a a little bit of a problem because in fact the they they've lo lower lowered the growth rate considerably. Uh again, they're not looking at the money supply unfortunately in with the Bank of England. But the the growth rate is down at year-over-year 3.7% and and again Hankey's golden growth rate one consistent with a 2% is about 5.7%. So so the growth rate the money supply is anemic but their problem is again they haven't unwind the all the inflation in the system. the systems the inflation rate is 3.7%. Now that's almost double the inflation target. So they they have a little bit of a dilemma. The the problem with these things, they've gotten really out of whack because of the roller coaster. Everybody gooseed the money supply when the pandemic hit in 2000, early 2000. Everybody got a lot of inflation re as a result of that. Then they start contracting the money supply to pull down inflation and and that money supply contraction's still in the picture. Things have the roller coaster up and down up and down up and down and and what they need to have David is is a steady growth in the money supply >> at at h roughly Hanky's golden growth rate. So they they they all these central banks are just offkilter now in in the sense that they still are squeezing the money supply. And the reason they're squeezing the money supply is that the inflation rate hasn't really come down to their targets yet in in in all cases. So So they they they have a problem. >> All right, final question before we go. I think we've covered all the major central banks. Um, well, the ECB, uh, we didn't talk about, but we can skip that for today. >> How about the ECB? They're they're >> all right. >> They they have inflation really at the target at 2.1%. Their target is two. So, they're at their target and the money supply to get at the target. They've they've squeezed the money supply down to a growth rate of 3.3% year-over-year when it should be about 6% if it was in a steady state hitting their inflation target of 2%. >> Yeah, it's uh they kept rates and changed. So I I I I I I think they uh have again that the transition to normal running operation is underway at all these central banks. The only one we really have as a complete outlier is Japan. >> How does that make sense that if the ECB's uh inflation rate is the closest to their 2% target that they're the ones keeping rates in change? Shouldn't they be lowering rates? >> Well, the the the re the reason for that is that they they they they have they have squeezed actually more than anyone else. >> Excuse me. You're talking about the ECB. >> Yeah. If the ECB's inflation rate, like you said, is is is the closest to target, why aren't they lowering rates? Is that counterintuitive? >> No. Because what what the inflation rate today is based on what was going on with the money supply a year or two ago. What was going on with the money supply at the ECB a a a year a year ago it it was uh you know we we were down at almost no growth in the money supply precisely in in June of 2024. It had started increasing but it was only 2.4% the growth rate in money supply and 6% is the rate consistent with hitting the inflation target of 2%. So I'm not surprised the inflation has come down because we had actually if we go back to this uh if we go back to June of 2023 >> it was only growing at.9% the money supply year-over-year. So that's why the inflation has come down. It's again this is the trick you you the money supply is the key determinant of the inflation rate but what money supply? It's the money supply changes that were going on a long time ago in the past and they only feed through with a long and variable lag into today's inflation numbers. So so that's why all all of this is very tricky to even discuss. Final question before I go. Uh I know you're on a time limit today, professor. What happens to the dollar now that we've got somewhat of a divergence of central bank policies around the world? >> Dollar is going to keep keep weakening and and get into my the the key the key dollar price is a dollar euro rate and and I think the fair value is 120 to 140 and and we're at about uh let's just look. look around 11718. I haven't I haven't actually looked today. Uh today as we speak uh it is 1.175 just just ex about exactly where I thought it was. So it's still it's still strong. It it's on the strong end of things. David, it's it's stronger than 120, which which is which is my which is my strong end for the fair value range of 120 to 140. So I think that the dollar will slip into the fair value range. It will it will go from 117 to weaken to 120 and and further into that range. >> I've heard 130 is the weakest number, but yeah. So people agree with you there. 140. >> Okay. >> My my r my r my fair value range for the dollar euro is 120 to 140. >> It's at 117 now. Very very strong but weakening. It's been weakening now for what 6 or nine months. >> Yes. All right. Well, thank you very much, professor. Uh we'll leave it here and we'll catch up again in a couple weeks. Where can we find you and uh read your work in the meantime? Uh, you can follow me on X, Steve_Hanky. And and the the key the key takeaway is that the gold secular bull market will continue and probably peak out at around 6,000 an ounce. >> Okay. Well, that's um good news for people who have missed the boat on gold. Perhaps according to Professor Hanky's estimates, you're not too late. All right. Thank you very much, Professor. >> I think it I think it's a great deal if you're on the boat already. You know, balance it. If if you're either on the boat or missed it and getting on, it's a good it's a good it's a good number to know about. >> Yeah. Well, yeah. And if you've just gotten off, then perhaps consider getting back on. Thank you very much, professor. Uh we'll speak again soon. Good chatting with you as always. >> Okay. Thank you, David. Have a good weekend. >> Yeah, you as well.
Economist: Gold To $6,000 As Economy Implodes, Fed Loses Independence | Steve Hanke
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The key takeaway is that the gold secular bull market will continue and probably peak out at around 6,000 an ounce. Are you concerned, Professor Hanky, that suppose the Fed were to be uh governed by um mainly Trump loyalists and therefore strictly speaking they would have no independence. Then uh then the money supply would grow at faster than 6%. your golden growth rate of 6%. It is leading to higher inflation. This is what my friend asked me. Rate lowered. So, what's the game plan? Shall we refinance our homes and buy more crypto? All right, Professor Hanky. Shall we refinance our homes and buy more crypto? Now, now that the Fed has pivoted, Steve Hanky returns to the show. He is a professor of applied economics at Johns Hopkins University and a regular guest on our program. We'll be talking about central bank activity, what happened in the last week and a half, what's about to happen in the next quarter, what's going to happen to asset prices, what's going to happen to gold. We'll talk about all these themes. Professor Hanky, welcome back to the show. Good to see you. >> Good to see you, David. >> Let me just read to you in chronological order uh what the major central banks of the world did in the last week and a half. Major uh week for all central banks around the world. All the major central banks around the world. And uh importantly the Fed as you know in the US pivoted for the first time in uh many many many months. So the ECB 1st September 12th the European Central Bank held rates steady. Uh on Thursday the 17th the Bank of Canada cut rates by 25 basis points. On the 18th the US Federal Reserve cut rates by 25 basis points. On the 19th, the Bank of England held rates steady and uh the Bank of Norway on the same day cut rates by 25 basis points. And uh on the 19th, the Bank of Japan held rates steady uh although they're simultaneously announcing a selloff of $250, sorry, $250 billion worth of ETFs in their treasury. So, uh that's just a summary. Professor Hanky, uh, what is going on right now? There doesn't seem to be or maybe there is cohesion amongst the central banks to plan a global pivot or maybe they're just all reacting to individual domestic monetary policy needs. Um, I I'll just let you comment on your reaction to what happened to last week and a half. Yeah. >> David, did you in that laundry dish, did you get the UK in there? Yeah, the UK uh was on the uh yes, the the UK uh was on the 19th. They held rates steady at 4%. >> Okay, fine. So, let let's go through these. One one thing that's very important for important for people to latch on to is that the the central driver always is the the the US Fed. I mean the the the the dollar is the is the international currency. The US is you know by most measures still the biggest economy in the world and and the the US is a is is a major hegeimon and and imperial power. So so they tend to follow and use the same methodology as the Fed with with local variations. Let's put it that way. But let's start with uh shall we start with the US actually since since that's the >> okay so let's start with a big elephant in the room and that was the US Fed then if that if that in a way that the elephant is leading things uh >> yes >> and the Fed did cut the Fed funds rate that's the overnight borrowing rate uh the one that the Fed really controls by 25 basis points. And the interesting part of that is that under tremendous pressure by President Trump, uh the the Fed didn't blink. Basically, the the Fed did really what they wanted to do, I think, and and what the markets anticipated that they would do. There there was a about a 94% probability that they would reduce the Fed funds rate. If you look at the uh Fed funds futures market and the Chicago Merkantile Exchange, that's what the markets thought were going to happen. That's what did happen. And and going forward, by the way, the Chicago Merkantail Exchange, the Fed funds futures market doesn't think Trump's bullying will rattle the Fed going forward in Octo its October meeting or its December meeting. If you look at the probabilities for those, David, uh they're running as follows. A 25% basis cut 77% probability of that in the uh October meeting. And if you go to the December meeting, they think there'll be another 25 basis points cut. Uh and that probability is also, you know, 70%. So, so that that's that's the kind of story around the Fed. Now, the interesting part of this is, you know, people ask, well, what what's that going to do to mortgages? You know, is this going to stimulate things and so forth, >> right? >> And and the and the answer of that is no. It's not going to have much of an effect. And if you go back to September of 2024, the Fed actually reduced the Fed funds rate by 50 basis points a year ago. And in the next two months, the 10-year yield went up 50 basis points. And the 10-year bond is a thing that mortgage rates are really geared on. And and what happened to the mortgages? two months after the Fed funds rate went down 50 basis points a year ago, the the mortgages actually went up 75 basis points. So that so what what this tells you is that whatever the Fed is doing with the interest rates, I it it isn't dictating what's going to happen in the market. The market is something else. The Fed does control the Fed funds rate, granted, but they don't control the longer term yields and the 10-year or the mortgage rates. At least they don't control them directly. And and as you can see, a year ago, Fed funds went down quite a bit and the yields actually went up, not down. And why is that? because the market expects more inflation to be coming into the system if those rates go down. So, at any rate, what could the Fed do if they really wanted to stimulate the housing market by reducing the mortgage rates, specifically the the the uh mortgage back securities, they they could stop quantitative tightening >> because the quantitative tightening is it it's get is they're they're they're getting rid of those mg back securities. ities or letting them run off the balance sheet with quantitative tightening at the Fed. And and if they stop that, that that would tend to bolster the price of mortgage back securities and obviously low lower the mortgage rates. So I think that's what they should be doing and and and the the key there is quantitative tightening. Quantitative tightening is what they should be doing. not not fooling around with these interest rates and obsessing with those because the money supply is still growing at an anemic rate 4.8% I Hanky's golden growth rate a rate consistent with hitting a 2% inflation targets a little over 6%. So the the way the way to do that the way in short to loosen up monetary policy a little bit you should stop quantitative tightening. We we've talked about this before and and the lesson for your viewers is this obsession with the Fed funds rate is is a is a misguided obsession. Look at the money supply. What is going on with the money supply and what's affecting the money supply big time? And quantitative tightening is a factor that's influencing the rate of growth in the money supply and keeping it at a very anemic rate. In other words, the the the Fed actually has a tight monetary policy and they say they do quantitative tightening. The word tightening is even in that phrase, quantitative tightening. So, that's that's kind of the Fed thing that they they they they should start loosening monetary policy. >> Gold is now above $3,600 an ounce, an unprecedented level. Now, you've heard me talk a lot about how gold and silver are smart ways to grow your savings over time. 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Goes on to say they don't believe that money supply matters. It's like the Pope not believing in Jesus. We think that's a much bigger problem than this notion that they are dependent or they're not independent. Uh Chair Pal was late to raise rates. They need to come down here. There's no question about it. I wonder, Professor Hanky, suppose Trump gets his way and he implants certain Fed governors or maybe even the Fed chair by next year that is loyal to him and wants rates lower and perhaps even now recognizes the money supply as being important, whereas the current Fed doesn't. What will change? What happens when we have a Fed that once again realizes the importance of the money supply? What will they do differently? Well, they they they'd loosen up monetary policy and they they'd stop quantitative tightening and and and and by the way, that the significant part of that is the last part where you you know the the the by the the Fed not recognizing the money supply is like the Pope not recognizing Jesus Christ. So So that that is the key to the thing. Trump Trump is on this and I I think you know I I told you I I've had a couple meetings at the White House in the in the last month and I I did uh deliver a copy of Suki and Hanky's book making money work where where the the the the key front point is start looking at the money supply again. That's what drives the economy. So Trump Trump I don't know where he got the message maybe somebody whispered in his ear did the tweet but he he got the money supply thing right now exactly how they would implement and so forth gets into the weeds of that's that's another story but at least the money supply somebody has has whispered in Trump's ear that the money supply growth is is important. So that's that's a very that's a very critical thing actually that in that quote that's the most important part >> what happens to markets when the Fed starts loosening monetary policy like you said >> well what happens to markets and the and the economy I think that it's it's a positive not a negative because what they should be doing is targeting the money supply and trying to keep it growing at about 6% per year on a steady basis. And if they did that, the the economy would would be stabilized. Uh we we would hit pretty close to the 2% inflation target and uh that that would be the end of the story. Everything we'd get off this roller coaster that we've been on. That that's what would happen if if they did it right. If they did it right, things would be stable. And stability might not be everything, but everything is nothing without stability. >> Is that is that a Steve Hanky quote? >> Yes. >> Okay, we we'll write that down. This is This is what my friend asked me. Rate lowered. So, what's the game plan? Shall we refinance our homes and buy more crypto? All right, Professor Hanky. Do we refinance our homes and buy more crypto? Now, now that the Fed has pivoted, >> well, number one, buying crypto is is a spec highly speculative play. So, I'm I'm not going to who whoever wrote and asked the question can do whatever he wants to. If he wants to roll a dice on crypto, that's his business, not mine. So, uh and and and I don't exactly know what what kind of crypto you've got. Bitcoin, you've got stable coins, you've got you've got a whole plethora of things to do when you get into that space. But but you are getting into speculative asset space >> is what do you what do you make of the general sentiment from this from this somewhat facitious question? Uh the sentiment that risk assets will not start performing well because of a Fed pivot and because we're now in a Fed easing cycle. Well, that's that's that that that in general that's true. But again, it depends on what assets you're talking about. In other words, if if if you increase substantially the money supply, which by the way, if it's growing at 4.8 date and now and I think inching it up to around six that that's that's going in the right direction but it's not a substantive change like we had in 2020 2021 when things skyrocketed uh and and you know what happened to the asset prices following that skyrocketing of the increase in the money supply let's put it this way a a a slight loosening of the mon of the money supply is not going to be a negative on asset prices. It's going to be a positive. It's it is it's not it's not going to it's not going to slow them down or maybe prick the the the bubble that exists in the stock market. The stock market, for example, is is in a bubble, but but we don't know whether the bubble's going to pop or whether it's just going to slowly deflate. But it's it's very pricey. it's overhyped and and and it will come down eventually to more reasonable valuation levels, but we don't know when or exactly how that's going to occur. >> The notion that the Fed is cutting into a slowing economy as evidenced by even Jerome Pow is admitting now a weakening labor market. Some say that that may actually be perceived as negative for markets because uh you know if you're cutting into a slowing economy, you're cutting out of necessity and they may actually signal panic from the Federal Reserve as opposed to cutting into a growing economy which may be a boom for markets. What do you think? >> Well, that yeah, that that's that's you that's usually the case. and and and in fact, as I've been touting on with you on on this program, I do think a slowdown is baked in the cake because we've had this big contraction in the money supply since early 2022. I mean, the stock of the money now in the economy is is not not much higher than it was in April of 2022. So we've had four contractions like this historically in the United States since the Fed was founded in 1913 and all of them have led to recessions. One actually led to the Great Depression of course the contraction of 19. >> On the topic of Fed independence, I want to get your reaction to this Goldman Sachs report on what may happen to certain assets if the Fed does lose their independence. Goldman says gold could near $5,000 if the Fed loses their independence. So if the Fed's independence is damaged and an investor shifted just 1% of the privately owned US Treasury markets into gold, then the gold price could conceivably rise to $5,000 an ounce. The underlying assumption here is that a scenario where Fed independence is damaged will likely lead to higher inflation, lower stock and long data bond prices and an erosion of the dollar's reserve currency status. In contrast, gold is a store value that doesn't rely on institutional trust. This is from a major investment bank. How would you respond to this? Well, I uh number one, they they've gone through some assumptions, and with those assumptions, they've they've come up with a a target price of $5,000 an ounce. I I not not not using those assumptions, but a more standard kind of thinking, and that is what's going on with the growth and US disposable income. I think the this secular bull market and gold that we've been in, David, will maybe end up at $6,000 an ounce, not 5,000. But but that but my m mine is based on not not all these assumptions they've made about Fed independence and what's going on with the bond prices and dollar and all this other stuff. you just it's it's a much more straightforward methodology that's worked in the past and that is to look at what we anticipate the next peak will be in the gold price based on uh you know the the the last gold price peak was back in 200 and uh two you know over 25 year well almost 25 years ago. So, if we if you look at the gold market that we're in now, and it is in a secular bull, and and I've been bullish on it almost since day one, I I think a a peak in this secular bull will probably come in around 6,000. >> Can you can you outline? Yes. So, so, so it's it's a little higher than uh than the scenario painted by Goldman, but it's it's based on a completely different methodology. I mean, they they have a string of assumptions, and if they plug those assumptions in, they they get 5,000. >> So, just to clarify, are you talking about $6,000 this year, next year, or just sometime during this cycle? at no at the end of the cycle. >> What would mark the end of this cycle? Um, Professor Hanky, what what would >> $6,000 an ounce? >> Okay, fair enough. Okay. All right. Moving on. Um, are you are you What happens what what what does $6,000 an ounce mean for the US dollar in inflation? Well, again, get th this this gets out in the weeds on all kinds of assumptions you have to make and and so forth. I think the key thing is we're talking about the gold market for God's sakes. And where is gold? It is the is the gold market in a bull market? Yes, it is. Will a will will a bull continue? Yes, it will. Where where will it probably end up peeking out at? 6,000 >> now. What what more do you want for God's sakes? >> You you you want to get out and and you know, ask me, you know, how's this going to affect the way I tie my shoes and so forth and so on? >> Well, I'll tell you why I asked. Because a couple years ago, uh when I first started covering the gold market, people were saying, "Well, if $5,000 gold is a reality, that means all sorts of apocalyptic scenarios. That means, you know, world war. That means the dollar's collapsed. That means the stock market's collapsed. That means inflation's gone out of control. So on and so forth. These are some of the scenarios from a few years ago. And >> but but that that that that's that's leading into the kind of analysis that was behind the Goldman report. >> So you don't think that we need like major economic shock for gold now to spike up to 6,000? That's not that's not what you're saying. >> No. No. That's not that's not that's not behind my thinking. My thinking is look what's happening to >> uh the growth in US disposable per capita income >> and and and look what's happened historically to it and how it's related to gold and and and go go back to the last bull run that that ended up peaking out in 2022 and then go forward from that to this bull market. Again, the these are these are uh you know back of the envelope kind of calculation, shall we put it that way, but they they don't get into all these complexities about what what exogenously might happen, what what's going to interfere, the independence of the Fed, the World War, this thing, that thing. If those things happen, then gold would go to $5,000 an ounce. That's the way the Goldman thinking is going. My thinking which which by the way ends up at kind of roughly the same ballpark in terms of a price. It's mine's a little bit higher. Mine mine's based on kind of endogenously in income growing on a per capita basis given that increase what's going to happen. So again the question is is are we in a bull market? Yes. Will the bull market continue? Yes. Is is this the start of a bull a bull market? No. It's kind kind of middle of the bull market. And and and then the question is which I usually don't do by the way these kind of target prices as you know is as somebody who's trading >> all you have to know is a direction of the market not not what some end point is going to be but my my general thinking is I I'm comfortable with this thing and until it gets you know up towards $6,000 an ounce. >> Fair enough. Now let's talk about the Fed independence itself. Are you concerned, Professor Hanky, that suppose the Fed were to be uh governed by um mainly Trump loyalists and therefore strictly speaking they would have no independence, then uh then the money supply would grow at faster than 6%, your golden growth rate of 6%. This lead to higher inflation. If you change the composition of the personnel and the board of governors and the federal open market committee and and and those have, shall we say, a different view than the consensus now, you're going to get a different policy. I mean, it's a simple game. If you change a bunch of bunch of people on the Federal Open Market Committee to and they have views that are much different than the current members of the committee, you you'll get a monetary policy that's different. And and by the way, the I the idea that the Fed is in independent is is kind of a a joke anyway. It's it's never it's never really been independent. Uh but but but at any rate, we're we're talking about the personalities that are going to be on the governing side of the Fed. And obviously, it it doesn't take a rocket scientist to figure out if you if you change the views of those uh people that uh are on the Federal Open Market Committee and the monetary policy is going to change. So this really is a pivotal time for uh central bank monetary policy, not just in terms of the fact that they've started pivoting, but the fact that we perhaps may have a regime change at the Fed itself in terms of what policy to pursue. >> And so that gets a little bit back into your starting question. You had a bunch of these central banks we were going to go through, what what they did and what what I thought about it. So let let's let's go through those. So >> so so >> so it it's it it's dynamic things are happening right now that people have to pay attention to and and one thing that's happening is that the economy not only the US economy but the world economy is slowing down. So that that's one that's that's one piece of background. inflation has has slowed down and it's kind of stabilized now the official rates and now we're talking about changing the interest rate stance not not necessar which is which is one indicator of monetary policy but but not the key one the key one is the money supply which we'll talk about so how should we start you want to go through what which one >> uh well we don't have too much time professor but I'd like to just go over the highlights of each of the central banks starting with back home where I am in Canada. Uh this is an interesting statement uh where sentence from their statement from the Bank of Canada statement rather the federal government's recent decision to remove most retaliatory tariffs on imported goods from the US will mean less upward pressure on the prices of these goods going forward. So they're directly citing the removal of retaliatory tariffs as one of the reasons for why they're lowering rates. I'm wondering why or not why but I'm wondering if we're in a period where trade policy no >> I don't think it's I don't think it's a good reason the retaliatory tariffs don't have any much to do with the overall inflation rate they have a lot to do with relative prices of different goods and services that are >> we we don't know if the Bank of Canada believes in the money supply either maybe >> but but look look at what they're doing the the Hank's golden growth rate for Canada uh consistent with hitting their inflation target is a range of 1 to 3%. So my golden growth rate is 6.2% to 8.2 and they're currently growing at 4.9. So they they have room to loosen up actually >> because what what's happening? They're they're their inflation is is within the target zone of 1 to 3%. It's 1.7%. So actually they're they're doing a you know pretty pretty well basically their money supply is growing a little lower than the an end of Hanky's golden growth rate 6.2 they're growing at 4.9. So, so I I give them a pass. Basically, >> the the Bank of Japan >> I don't give them I don't give them a pass on the reason that they didn't do anything, but I give them a pass on what they're doing. >> Well, maybe they're just following the Fed with no other major reason. >> They They probably are. >> Yeah. Uh okay. Well, let's take a look at another central bank. So the Bank of Japan is one of the uh one of the countries that did not cut rates. They left rates and changed. Um this this happened uh however there they're there the Japanese stock market sold off this week as the Bank of Japan unveiled plans to start selling as $250 billion KF exchange traded funds. An unwinding that the governor uh of the Bank of Japan UA said would take a century. Okay. Interesting. I I first of all does it why why are they doing this and also does the US have similar mechanisms >> for monetary policy in other words selling >> assets? Yeah. Well, yeah, the US has plenty every central bank has a mechanism. They have assets on their balance sheet and they can sell them if they want to. They can shrink their balance sheets. They they could they could do literally quantitative tightening if they wanted to. That's what the US is doing. It's it's it's it's it's letting the assets on on the balance sheet run off, mature and run off. >> We we know they own a lot of um uh treasuries and um of different maturities. Do they own actual stocks and ETFs like the Bank of Japan does? >> Uh no, I I there there might there might be some very small >> Okay. holdings, but not in general. Not not not equities. No, the the Swiss National Bank owns a lot of equities, for example, but the the US Fed does not at present. They have mortgage back securities and treasuries. That's those are the those are the big the big items on the balance sheet for the U. US Fed. Now, the Bank of Japan, the problem is the Bank of Japan is is just lost. They they don't know what they're doing and they haven't known what they're doing since about 1990. The the money supply is growing only 1% per year. Hanky's golden growth rate, a rate consistent with hitting the 2% inflation target, 6% a year. So they're they're they're just out of it basically. >> So So let's let's give them an F. We we gave we we gave Canada a pass. Canada passed and and Japan flunked. Let's go to the next. I >> All right. I I don't believe you've rated the Fed yet, but well, maybe we'll get to that later. Um this the >> the Bank of England uh also kept rates unchanged. I I just want to read what they did and then I'll ask my question. Uh the Bank of England voted to keep rates unchanged on hold on Thursday as a weighs up sticky UK inflation with an uncertain growth outlook in jobs market. Okay, so the monetary policy committee voted 7 to2 to keep rates steady at 4%. Two members of the um MPS in favor to reduce the separate benchmark bank rate by 25 basis points. Uh the September decision to hold rates was widely expected. Professor, let me just say this. Uh the first sentence, they voted to keep rates unchanged because of a sticky inflation situation with uncertain growth outlook. That sounds exactly like what's going on with the US. POW even admitted that the growth outlook for the jobs market is relatively uncertain. I'm paraphrasing here. Except I I I'm presuming Starmer isn't pressuring the Bank of England to lower rates like Trump is. So maybe maybe the Bank of England is doing what the Fed should be doing except without political pressure. Maybe. I'll let you comment. Well, they they have a a little bit of a problem because in fact the they they've lo lower lowered the growth rate considerably. Uh again, they're not looking at the money supply unfortunately in with the Bank of England. But the the growth rate is down at year-over-year 3.7% and and again Hankey's golden growth rate one consistent with a 2% is about 5.7%. So so the growth rate the money supply is anemic but their problem is again they haven't unwind the all the inflation in the system. the systems the inflation rate is 3.7%. Now that's almost double the inflation target. So they they have a little bit of a dilemma. The the problem with these things, they've gotten really out of whack because of the roller coaster. Everybody gooseed the money supply when the pandemic hit in 2000, early 2000. Everybody got a lot of inflation re as a result of that. Then they start contracting the money supply to pull down inflation and and that money supply contraction's still in the picture. Things have the roller coaster up and down up and down up and down and and what they need to have David is is a steady growth in the money supply >> at at h roughly Hanky's golden growth rate. So they they they all these central banks are just offkilter now in in the sense that they still are squeezing the money supply. And the reason they're squeezing the money supply is that the inflation rate hasn't really come down to their targets yet in in in all cases. So So they they they have a problem. >> All right, final question before we go. I think we've covered all the major central banks. Um, well, the ECB, uh, we didn't talk about, but we can skip that for today. >> How about the ECB? They're they're >> all right. >> They they have inflation really at the target at 2.1%. Their target is two. So, they're at their target and the money supply to get at the target. They've they've squeezed the money supply down to a growth rate of 3.3% year-over-year when it should be about 6% if it was in a steady state hitting their inflation target of 2%. >> Yeah, it's uh they kept rates and changed. So I I I I I I think they uh have again that the transition to normal running operation is underway at all these central banks. The only one we really have as a complete outlier is Japan. >> How does that make sense that if the ECB's uh inflation rate is the closest to their 2% target that they're the ones keeping rates in change? Shouldn't they be lowering rates? >> Well, the the the re the reason for that is that they they they they have they have squeezed actually more than anyone else. >> Excuse me. You're talking about the ECB. >> Yeah. If the ECB's inflation rate, like you said, is is is the closest to target, why aren't they lowering rates? Is that counterintuitive? >> No. Because what what the inflation rate today is based on what was going on with the money supply a year or two ago. What was going on with the money supply at the ECB a a a year a year ago it it was uh you know we we were down at almost no growth in the money supply precisely in in June of 2024. It had started increasing but it was only 2.4% the growth rate in money supply and 6% is the rate consistent with hitting the inflation target of 2%. So I'm not surprised the inflation has come down because we had actually if we go back to this uh if we go back to June of 2023 >> it was only growing at.9% the money supply year-over-year. So that's why the inflation has come down. It's again this is the trick you you the money supply is the key determinant of the inflation rate but what money supply? It's the money supply changes that were going on a long time ago in the past and they only feed through with a long and variable lag into today's inflation numbers. So so that's why all all of this is very tricky to even discuss. Final question before I go. Uh I know you're on a time limit today, professor. What happens to the dollar now that we've got somewhat of a divergence of central bank policies around the world? >> Dollar is going to keep keep weakening and and get into my the the key the key dollar price is a dollar euro rate and and I think the fair value is 120 to 140 and and we're at about uh let's just look. look around 11718. I haven't I haven't actually looked today. Uh today as we speak uh it is 1.175 just just ex about exactly where I thought it was. So it's still it's still strong. It it's on the strong end of things. David, it's it's stronger than 120, which which is which is my which is my strong end for the fair value range of 120 to 140. So I think that the dollar will slip into the fair value range. It will it will go from 117 to weaken to 120 and and further into that range. >> I've heard 130 is the weakest number, but yeah. So people agree with you there. 140. >> Okay. >> My my r my r my fair value range for the dollar euro is 120 to 140. >> It's at 117 now. Very very strong but weakening. It's been weakening now for what 6 or nine months. >> Yes. All right. Well, thank you very much, professor. Uh we'll leave it here and we'll catch up again in a couple weeks. Where can we find you and uh read your work in the meantime? Uh, you can follow me on X, Steve_Hanky. And and the the key the key takeaway is that the gold secular bull market will continue and probably peak out at around 6,000 an ounce. >> Okay. Well, that's um good news for people who have missed the boat on gold. Perhaps according to Professor Hanky's estimates, you're not too late. All right. Thank you very much, Professor. >> I think it I think it's a great deal if you're on the boat already. You know, balance it. If if you're either on the boat or missed it and getting on, it's a good it's a good it's a good number to know about. >> Yeah. Well, yeah. And if you've just gotten off, then perhaps consider getting back on. Thank you very much, professor. Uh we'll speak again soon. Good chatting with you as always. >> Okay. Thank you, David. Have a good weekend. >> Yeah, you as well.