Larry Lepard: $4K Gold in Sight? Gold Smells Trouble Ahead
Summary
Market Outlook: Larry Lepard discusses the potential for a significant inflationary wave, driven by possible rate cuts and quantitative easing, suggesting gold is reacting to these anticipated economic changes.
Gold and Silver Insights: Lepard is bullish on silver, predicting prices could reach $60-$70 by year-end, driven by technical patterns and increased industrial demand, particularly from solar and battery sectors.
Bitcoin Perspective: While Lepard remains optimistic about gold and silver, he also sees Bitcoin as having significant upside potential, projecting it could reach $140,000 by year-end due to its volatility and growth potential.
Investment Strategy: Lepard emphasizes the importance of investing in gold and silver mining shares, noting that they are currently undervalued compared to the metals themselves, with significant potential for profit as metal prices rise.
Economic Indicators: The discussion highlights the impact of recent payroll data revisions and the Federal Reserve's potential policy shifts, which could influence market dynamics and investor sentiment.
Technical Analysis: Lepard uses technical analysis to predict future price movements, noting that gold and silver have broken key resistance levels, suggesting further upward momentum.
Sector Opportunities: The podcast highlights opportunities in silver mining stocks, which Lepard believes are poised for significant growth due to rising silver prices and increased institutional investment demand.
Long-term View: Lepard suggests that the current economic environment is setting the stage for a prolonged bull market in precious metals, driven by fiscal policies and global economic conditions.
Transcript
Trump's called for cutting rates 300 basis points. And I I think that's what gold is smelling. And my sense is if they take rates down like that and then maybe even engage in some QE or real control, boy oh boy, look at the next wave. It's not going to stop at 9%. We've got a big inflationary wave coming. So that's the continued thesis and that's why we're only in the second or third inning here. [Music] Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. >> Greetings to our wealthy on show. My name is Trey Reich and we're here today with Larry Leard. Larry the legend as some call him. uh the managing partner of Equity Management Associates. Uh I think his track record and presence in the gold and bitcoin world are well known to our viewers. So we'll skip on to the fact that we probably couldn't be talking on a more exciting day. The uh uh Fed just or excuse me the BLS just released its payrolls estimate for August. Uh the estimate had been 75,000 came in at 22. I think everybody's focused on the revisions of the prior two months which were down a stunning 258,000. If you dig behind today's numbers, we will notice that June was actually re-revised from 147 to the prior 14. Now we're -12. So we officially have the first negative payroll print since 2020, which obviously puts the Fed in a bit of a conundrum for their upcoming meeting. And on this news, gold is not touching 3,500. We're now touching 3600. And silver is 4130. Uh Bitcoin's 113,000. So in Larry and Mai's world, there really haven't been too many days which have more to talk about than this morning. And so I'm going to start things out by asking Larry, are you most excited at this point uh in the cycle about gold, silver, or Bitcoin? What's what are you most excited about? >> First of all, nice to be with you, Troy, and I really enjoy talking to you, enjoy your show. As you know, we've been we've been friends for decades. Um, so that's a tough call in in the following. It kind of depends on what your time frame is, right? I mean, if you want to look at what's really moving right now, what I'm pretty excited about is silver, right? I mean, so silver at $41 is a big big deal. I mean, taking out $35 was a big deal. I mean, this is a this is a decadesl long, you know, kind of cup and handle or cup and saucer uh saucer and handle sort of pattern. And technicians and others will tell you that when you break out of one of these things, you got a long way to run. And um so I I guess if you ask me just you know in the next few months where we're going I mean I am way bowled up on silver you know I think we're going to 50 60 70 you know this year. I mean certainly 50 or 60 this year. So so that's the kind of the most notable and exciting thing that's happening. Um obviously I'm I'm bowled up on gold and Bitcoin too. I mean they're both going to move. Um, you know, there's there's been a pattern. I had a chart that I've shown some people on it in other pods about how gold and silver kind of tend to smell monetary debasement a little earlier sometimes than Bitcoin does and they move first and then of course Bitcoin suddenly starts to move and it moves f farther or faster and so you know it's a little more volatile a little more subject to you know kind of other things going on risk assets and stuff. So um so I mean in the long run I'm incredibly bold up on all of them. Probably more I think you know when I wrote the book I'm probably most bowled up on Bitcoin to be honest with you. I mean it's it's very volatile with big draw downs but I also think there's a lot of upside. So u but but you know if you're looking at kind of the balance of this year I mean I I think we closed the year and silver at you know I don't know 60 or 70 which is you know up I mean a lot from here. It's like 78%. I mean, gold, you know, 4,000, it's up another 20, 30% from here. And maybe Bitcoin 140, which is up another 20% from here. So, um, so you can see of the three of those, you know, I think silver's got the most excitement. And then I know we're going to get into this, you know, let's talk about the mining shares, right? So, that's just the metal, you know? So, if you're a silver miner and you know you've been making money at $36 or $38 silver and you've got x amount of profit, well, guess what happens when you know and your costs go up with inflation every year. That that's happening. We all know that. Guess what happens when you take silver to 50? You know, your profit just went up. I mean, multiples of where it was before. And so, so that's coming. And these silver miners were cheap until recently. I mean, they have run a bit, but you know, if people a lot of people have asked me, how am I too late? You know, I mean, where are we in this whole thing? and I'm like, "No, we're in the second or third inning of this share bull market in my opinion." So, so there's a lot of I think there's a lot of upside and I'm I'm very bowled up on what's going on in the in the gold and silver shares, right? >> So, let's break down some of the uh targets you just mentioned. So, uh and and I I don't mean to press you on this. It's just that we get into these >> areas where we're at prices that aren't, you know, new ranges for the past couple years. Everybody wants to know what's driving it and am I missing it? Is it too late to get involved? So, if we take silver, >> uh I think I've probably read a million pages on the slingshot effect of silver once it breaks 39. I I skip all of that. We're all aware of it. >> And now we're at 4130. How do you come up with 60 as a target for your end? Are you just looking at technicals or is that just a conversational comment? you know, it's I mean, look, it's a finger up in the wind. Um, you know, as you know, I and I don't know. I mean, I could be dead ass wrong. I mean, I don't think it's going to be lower than 45 and it could be 70. I mean, I guess it's probably based on technical analysis and it's been suppressed for a very, very long time. And all the factors that all those of us in this trade have known for many, many years, I think are becoming more, you know, you're seeing this shift so that everyone else is beginning to understand those factors. And what are a few of them? Well, one, the solar growth in China is just enormous. Chinese solar panels are now taking 30% of world production, and that's going to grow to 50 or 60% of world production. You've also got these new solid state batteries that are being developed for EVs. Um, not fully commercial yet, but going to be, we think, in the next few years. And and, uh, they they absorb an enormous amount of silver. And then, as you know, what Andy Sheckchman and all the others have shown us, we've been running these huge supply deficits. We've been, you know, we got grandma melting down her tea set to sell it to the local local coin dealer and um you know, it's just there's a there's been a a chronic shortage of the stuff and and it's a small piece of the price of many of the things that it goes into. So, if the I mean, there's silver in your iPhone, not a lot, but there is some. And if the, you know, if that silver price goes up, you know, they could pass it along easily because it's a $1,200 phone. So, so the point is that there just a lot of things that are finally kind of coming together. And I think, you know, guessing this, the 60 is a guess. Let me just say that. I don't know, right? But it's kind of finger-win technical analysis. And typically, when you do break through a support level, you tend to zoom pretty hard. And I think if you look carefully at a chart, you can see some flags and stuff. I mean, it's it's kind of like gold, you know. um u gold kind of you know squirted up nicely from the 2678 area to 3500 and built a really long bull flag at 3500 was kind of stuck there for the last few months many months and uh you know now it's broken out of that and so you know typical technical analysis says flags fly at half mass well all right so if it was a 27 and it went to 35 I mean you know that's 800 bucks so add 800 bucks on to 35 and you're at four you know $4,000 3. I mean, I don't know if we'll get there, but I'm pretty comfortable we'll get to 4,000. Uh, and interestingly, I mean, it's this the other thing it's really know I really notice a big change. And I mean, what's go and what's driving all this trade? I mean, as we know, what's driving all this is is a broad broad knowledge of the sovereign debt crisis that we're in and how they're trapped and they can't get out. That's what's driving it. And and so what are the indic what are the evidence that everyone's getting it? Goldman Sachs, biggest bank in New York, says, you know, investment says, "We see gold at 4,000, maybe at 5,000 if the Fed loses credibility." Well, okay, that's pretty damn mainstream. And I got to tell you, a year or two ago, gold was at 2,600 and everyone's looking at the stocks and saying, "Yeah, but it's going back to 2,000, so the stocks are, you know, fairly valued." And I was like, "No, it's not. It's going to 3,000 or 4,000." And of course, turns out I was right. they were wrong and there's so there's a catchup and the stocks and we can if you like we can show the chart but the stocks have really lagged you know the metal and and we're in the process of of closing that gap >> as part of our gold interview series this month Trey Reich will be hosting a gold investing webinar on Wednesday September 17th send your questions for Trey about gold or gold's miners to info@wealthon.com and Wealthon together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. So, so backing up over a couple things you just said, >> uh, Goldman Sachs has been positive, but it was JP Morgan this week >> who introduced the first uh $4,025 estimate for second quarter of >> 26 and then by the end of the year they're at 4250. So, the the fours are coming as I like to say. But uh I I have always made the comment that I believe in technical analysis when it supports my case. And for folks who want to look at a technical just textbook example, you mentioned gold consolidating sideways. >> If you look at how it interacted with the 100 day moving average in the last two weeks, >> it's almost inconceivable that it would be that strong. It's just completely bounced, >> you know, off that moving average above everything. we're in uncharted ground. So >> yeah, now we're we're we're we're clearly in it. And >> anyone who believes in technical analysis is buying gold with, you know, both pockets. But going back to my original question on silver before we move on to gold, >> um, you know, you mentioned the supply demand and I think all of that's very important and solar demand and we've read about the fiveyear or so deficit and all that type of stuff. But the truth is that at retail uh coin premiums etc. silver's actually been very soft in the last sort of 3 to six months and premiums on coins are actually into slight deficit. So what I'm leading on to this is you will agree with me because I think it's important for viewers to recognize. You can read all you want about the supply demand picture in silver. What has it going through 41 is investment demand and we're starting to see it at an institutional level. And I think that's very important. It's fine to talk about solar demand. It's all important. It's a great floor, >> but silver makes its big moves. If it's going to 60, it's not going to be because we sell a couple more, you know, solar installations in China or the, you know, deficit at the LBMA goes down another 10 tons. It's because institutions and global wealth are starting to look at silver as a store of capital. Do you agree with that? >> I I totally agree with that. I think it's an excellent point, Trey. I would also point out that what makes this thing move so hard and so fast is just how small it is. Okay. We mine 800 million ounces of silver a year. And you know, at $40 an ounce, I mean, it's just not a lot of money. I mean, you know, in a in a multi- in a $900 trillion dollar asset market, you know, 800 million times 40, I mean, what is that? 3.2 trillion. I mean, it's just it's it's it's just a small I'm not even sure I have that right. Let me do let me do my math there. 800 million. Enter third 40 times. Yeah, it's 3.2 billion. I'm sorry. I mean, that's that's that's that's a rounding error. >> It's a small hedge fund. >> Yeah. In in in most of the world. So, so if if big money decides they want to come after it, uh, you know, it's it's going to move it. There's just not enough out of it out there to to supply big money with it, you know. So, >> so, okay, now let's move on to gold because we sort of, uh, stepped into that. I I you know, >> and I may be wrong in that. That's the 10th. That actually I think it's 32 billion, not not three billion, but 30 32 is still a big number. >> So, now we're into a large hedge fund supposed. >> Yeah, exactly. A large hedge fund as opposed to a small one. Yeah. Right. >> So, uh, on the gold side, um, do you have any feel for where this could go in the >> short run? I mean, I think everybody understands you're here. H, how do we look forward? What do we >> I don't I mean, I, you know, higher um, but the path is is unclear. I mean, the technical analysis says we formed a bull flag at 3500. As I mentioned earlier, we, you know, flags fly at half mass. We should go up into the fours. um you know as you get further out a lot of people have asked me what's your ultimate goal you know ultimate target where do these things go and you know I mean there's a in my book actually there's a chart that was done that shows that you know to fully cover you know the monetary base with gold we'd have to have $90,000 ounce gold now you know you don't need full coverage to have >> when you say monetary base you mean globally or the US >> I I mean no I mean USM2 is against what the 261.5 million ounces that we own but you don't need full coverage to run a gold standard you can run it 20%. So, you know, that would imply, I don't know, $20,000 an ounce gold to, you know, to back the the dollar with gold. Um, what I, you know, I think what's very important for people to understand is it's all going to depend on the policy choices on a go forward basis. I mean, what do we do? I mean, what what makes this trade not work? And of course, I tell people this, they're thinking of getting my fund is if the government suddenly gets responsible and balance the budget. And of course they laugh hysterically because we know that so far there doesn't seem to be a lot of indication we're going in that direction. I mean, you know, Doge came along. We're going to save two trillion, 1 trillion, 300 billion. Oops. Maybe we'll save 100 if we're lucky, you know. And then suddenly, you know, the Freedom Caucus out there saying, you know, oh, we're going to balance the budget. We're going to make these people cut expenses. Well, everyone except for Rand Paul and and Thomas Massie caved. And you know the big beautiful bill is going to increase expenses by300 or $400 billion a year. Now that's offset by higher tariffs which is a good thing. But but the point is that the fiscal trajectory of the federal government's a mess as you know and as long as that continues and as long as the Fed is forced into the policy role of monetizing that which they are in right now and we just saw some more evidence of that last night. I mean the Senate has got a really neat trick going on. And what he's doing is he's selling short-term bills, 30, 60, 90day paper, and he's using some of those proceeds to buy the tenure. So, so really that's kind of it's sha I call it shadow yield curve control, right? Because he doesn't want the 10-year rate to go up because that, you know, that will hurt his his case for the the economy and so forth. So, you know, and it so we just don't know where we're going to go. We don't know what Trump's going to do. Um although we do know from his behavior with respect to the Federal Reserve, you know, and I I like to call the Federal Reserve, you know, the real housewives of the Fed these days, given all this what's going on with the attack on this governor and of course what she did was wrong. But um you know, we the Fed has clearly become a left-leaning political institution. >> Oh, no doubt about it. Absolutely no doubt about it. And uh >> because I don't even think that's up for debate. >> No, exactly. and Trump's got them on their heels and and furthermore, you know, okay, whether whether anything changed between now and May, May is not that far away. We're in September, you know, so count it. It's it's, you know, and we know with with high degree of certainty that in May Trump is going to have a majority of the Fed board and a dovish, very dovish Fed governor. I mean, Trump's called for cutting rates 300 basis points. And I I think that's what gold is smelling to be honest with you. I think the reason people might say, "Well, why now? Why gold?" And I think everybody's kind of looked at it and go, "Oh my god, I can see what's coming here." You know, he he hates the Fed. He wants to drop rates 300%. He doesn't care about the dollar. They say they do, but they really need a weaker dollar to battle Triffin's dilemma. We know that. And so, you know, the gold says, "Okay, I get it." You know, I mean, imagine, so it's May next year, new Fed chairman, they take rates down to 1%. Everybody goes out and refies their home on a heliloc and we get the next big wave of inflation, right? I mean, it's M2 growth. M2 growth right now, by the way, is running about 4.8%. Well above stated CPI. And my sense is if they take rates down like that and then maybe even engage in some QE or yield curve control, boy oh boy, look at the next wave. And we're going to, you know, it's not going to stop at 9%. We've got a big inflationary wave coming. So that's the continued thesis and that's why we're only in the second or third inning here. I mean, if we had responsible people in DC, then I'd look at this and go, "Okay, well, you know, this has gone pretty far pretty fast. Maybe we maybe we should take some profits." Right. >> Right. So, you mentioned a very important variable that I want viewers to focus on, which is M2 growth because, >> yeah, >> nobody's talking about it. I have maintained >> to anybody who will listen to me over the past three or four months, >> tariffs are not inherently inflationary. Now, that's such a reactionary comment. I don't we don't really need to debate. >> I'll unpack that. But go keep going. Yeah. >> But my point is that if tariffs increase the prices of certain goods and money supply remains constant, other prices have to go down because there's only so much money to go around. That sounds, you know, a little academic, but I believe and that's why we haven't had any CPI type inflation. However, the weak part of that argument is if M2 does start to go up, which it is now spiking, that argument becomes void and we can have inflation. So, >> and you mention it because the M2 is really the more important variable right here. >> Correct. And you're absolutely correct and that's the the classic monitorist Austrian argument that you can't have inflation without growing M2. However, it it's a little trickier than that. And let me say let me just add some nuance to it. Um you know in you know import costs and the cost the price of things that people buy as a result of tariffs are going up. Okay they are. I mean now you can say it's not traditional monetary inflation. That's right. But it's higher prices. And so that then finds its way into the CPI. And there's a certain amount of reflexivity in the CPI wherein somebody says, "Hey, I'm paying more for this. You know, Mr. employer, you got to pay me a higher wage, right?" And so, so it's not, you know, it's not so simple. So the the part of your argument that says, "Yes, if there's less money in the system, prices come down somewhere else. Fine. But first prices go up and some of that stuff you're buying." So So it's it's a mixed bag, but you're right. I mean, ultimately it all comes down to the long term on the M2 growth and and M2 will have to grow. And by the way, I mean, as as Lacy Hunt pointed out in a brilliant interview he did recently, you know, tariffs are attacks and tariffs are actually quite deflationary. And he had a very good comparison to, you know, Smoot Holly in the 30s where, you know, the tariffs are about the same level. They were, you know, 19% back then, they're 18% roughly now, according to the Yale study. Um, and that really slowed down the economy. I mean, big time because at the margin, you know, if something's more expensive, people aren't going to buy it. It's just supply and demand. And so if that starts to happen, that might the tariffs might be the thing that tip the economy over. And he's worried greatly about the potential for deflation. I I see that as an outside case and a possibility. I mean, let's face it, we're heavily indebted. And the natural and it's a credit bubble and the natural backside of a credit bubble is deflationary. I mean, just go study 1929 to 1935. Enormous deflation. What I think is different this time is that we've got this aggressive activist Fed and federal government that has said they're not going to allow deflation to occur. So that the response, the policy's response to when this bubble bursts is going to be to print so goddamn much money that your eyes are going to bleed. And of course that's the thesis of my book. So I, you know, I've got to talk my book, so to speak. But but I but I, you know, I think that's what's going to happen. Now there's some possibility that even in light of that they fail and we still get some deflation but um you know on a on a price level because the economy has slowed down and demand is lower but they'll be pushing as much as they can push on that string they'll be pushing money into the system just as they did in '08 you know to try and keep the system going and that will be ultimately inflationary perhaps with a lag um and in the '08 case it wasn't inflationary at the CPI level. It was more inflationary at the asset level and that's because they started paying interest on excess reserves. So, so it's a lot of a lot of complicated moving pieces here, but I think the big summarizing it all, I think the big picture is that in March of 2020 when COVID hit and we really changed all the rules, we literally printed money and sent it out in checks. We gave out PPP, etc. You know, we we entered what I call an inflationary decade. And as those of us who studied them and even lived through them because we were kids when it happened, but the 70s I remember well in an inflationary decade, you know, it continues and you can have waves of inflation. It doesn't really end until you solve the underlying problem. And I don't think we've solved the underlying problem. So yes, inflation hit a peak of nine. Now it's down to call it three. But I think we're going to get another wave up. That's my view. >> So I'll ask you uh the least relevant question because I Obviously neither of us know, but since the entire world is focused on September FOMC, what what do you expect? I assume >> I don't know. I >> pips I think 50's out of the question. And >> I'm with you. I mean, look, I think Paul's kind of a broken man. I mean, I think I think Trump has humiliated him. I think I think if I think I think he wishes he wishes that the data had come in so that he could have stayed a hard ass because he wants his reputation to be that he's vulkar. I think even he has to now concede that he's behind the curve and that the data is telling him he's got to cut. So my gut is he's gonna, you know, being the good bureaucrat that he is, he's going to try and play it up the center of the fairway. And if the market thinks 25, he'll give him 25. >> And we we're going to be looking at 25 a meeting for the rest of the year. That type of >> probably I mean I December is probably a little bit of a question mark, but I would guess that's he does that again, too. And he and he says, "Hey, I'm you know, look, I'm not caving to Trump. I'm just I'm being responsible here and the data tells me I can do this. Now, you know, I could build a lot of data which say, you know, there's no way you should be cutting, dude. I mean, my auto insurance, my home insurance, my food bill, my I mean, electricity, I had a great chart I put up on electricity on my Twitter feed a couple days ago. I mean, you know, because of all the AI demand for electricity, stuff's going up. I mean, you live in Massachusetts, you know, it's going up 11% a year. It's nuts. That's not three. So, uh, with you, one last thing with, uh, what you've said already. You mentioned the QE. So, we're sort of, uh, round QT down to zero. I actually don't even know the current number, but I think it's pretty close to zero. Is that >> Yeah, I think Yeah, I think. Yeah, it's like five. Well, it's it's the mortgages plus the five, so I think it's like 30. >> Okay. So when just generally how big do you think the Fed's balance sheet will need to get to encompass all of this? >> That's a great question. Well, I mean it depend. Tell me, you know, I don't know, Trey, and you don't either, but I mean, tell me what happens to the bond market. I mean, here's here's the disaster scenario for the Fed. Okay, people really begin to lose, you know, they don't keep it all under control. People begin to lose confidence in US bonds. I mean, you know, you've asked me what the best investment out there in the world today, well, it's obviously sound money. The worst investment in the world today are long duration bonds in my opinion. I mean, you're pretty guaranteed that you're going to get not going to get back the purchasing power that you put into them. And so if the market wakes up and realizes that and and the bond market really starts to sell off then, you know, and we saw in September of 23 that happened and um 12 Fed governors in two weeks came out and chirped about how well we're done raising rates because 5% seemed to be a a crit, you know, like a a threshold line above which they were worried about. And we're at 4.3 or four right now. It dropped a little this morning, but um you know, if the bond market really starts to sell off, rates start to really jack out, well then the Fed's going to have to go back to yield curve control. What does yield curve control? It means they will buy the bonds themselves. They are going to fix the yields at a certain level and print the money to do so, create the money to do so. And um you know, if if they do that, I mean, just let's get extreme. I mean now the 10-year tenor and 30-year tenor are smaller than the Treasury bills or the shorter notes, but if they do that, you know, they're basically going to have to they could have end up having to buy all of them. And so, you know, I mean, not all 37 trillion because some of them are short-term notes, but you know, all the tens and 20s and 30s could come to the Fed and say, "Hey, sold to you. Yeah, you're telling me I can only get 4% four and a half% in this thing when we've got raging inflation. I don't want to hold it anymore. I'm I'm selling it to you." So, you know, I don't know. Somebody could probably do the math. I'd love to know actually what are the what are the total outstanding 10 20 and 30-year bonds in the United States. Somebody chat GBT that tell me but but that all of that could come to the Fed and say you know we're not holding it here you can hold it. Um you know and and and the one thing as you know and part of the reason by the way why why Trump is pushing so hard on the Fed and why he wants this 300 basis point cut and bet does too and they need it is that interest rate interest expenses are eating them alive. you know, they got a $1.3 trillion interest cost in the federal government bed budget and most of that is in the short stuff and you know, if they're paying short rates of 4%, you know, I mean, if they could take that down to one, that would really help the whole budget picture. And so that's what they're trying to do. However, you know, and I said this in another podcast, I went and did the the research on I found this fascinating. The last term we time we had yield curve control was in the 40s and we had it because of World War II. So, we're fighting World War II. It's existential. We got to save the world. And in 1942, the Fed came out and said, "You know what? We're going to just basically buy all the bonds, short stuff at 38 of a point and and the long stuff at 2 and a half." And so, they would not let the bond market fail. And they printed the money to do it. And there was inflation during the war, but we were fighting a war and we had rationing and all that other good stuff. Well, you know, after the war, in 1947, there was a month where inflation was 18% year on year, year-over-year. And in 1951, there's another month when it was 21% year-over-year. And and why? Because they had pegged those rates at that low rate and they were printing the money just like, you know, printing the money in order to keep the rates there. So, so you know, can you imagine inflation in the United States of 17% or 20%. I mean, I don't think most people can, but actually I can. And that's that that would really be something, right? >> Yeah, I agree. the I think the inflection point the final inflection point for the dollar is it sounds simple to say this but I think the Fed's balance sheet's going much larger and eventually it's just going to hit a level where the dollar you know collapses I >> yeah I actually didn't answer your question but I think in my book and other places I've estimated the Fed balance sheet hit a peak of nine I think in COVID I think they've drawn it down to under seven I I remember seeing 6.6 six recently. Um I think on the next time up, what does it go to 14, 15, 20, 25? I don't know. It's big. Bigger. A lot bigger. >> Excellent. All right. So, uh backing up a little, we were talking a bit about gold stocks, and I think you have a chart you'd like to share with us of the >> Yeah. Hi, HUI index, which is >> sort of the granddaddy of in one way uh gold stock indices. It predates the GDX and the GDX. Yeah, >> it's sort of in the same realm as the uh XAU which has a lot of copper in it. So, HUI is sort of the uh gold bulls long-term view of of gold equities for those that are do not recognize it. And uh you know, gold stocks to do well, but I think you hold the view that uh they're still lagging. >> Yeah. Let me describe what you're looking at here. This is a chart of the Huey Goldbug stock index compared to the price of gold. And the price of gold is in gold, yellow, and the stock index is in blue. And it starts in early 2001. And so this chart shows you the bull market that occurred in in both gold and and and the right hand scale is the price of gold. The left hand scale is the price of Huey. So they're not, you know, apples and oranges, but directionally you get the picture. So, um, you can see in the last bull market that, you know, gold went up a lot and gold stocks went up even more, albeit with a big dip in '08. Um, and then you can see the the horrible bare market that we had, you know, from 10 to 15. And then what you can see is again, you know, the bull market in gold started in 2015 when gold was at 1,50 an ounce. We're now over 35. And this, by the way, this chart's a little out of date. You can see that gold is now over 3500, 3,600. And the QE actually is no longer where it is, right? It's up another couple. It's up closer to 500. But but the point I'm making is that there's a big gap and the the stocks represent a claim on future gold production. I mean, in a way, a gold company is a miniature sound money central bank. It can produce money, produce gold on a long-term time frame, a stream of gold coming in. And so the blue line should catch up and surpass the gold line if this bull market is anything like past bull markets. And you know this is this goes to I mean this was a much easier call to make in the beginning 2024 where we're pounding the table. These things are so criminally undervalued. You got to buy gold stocks. And of course you know we're up 130 140% from there. But my point is that there's still a long way to go before we get to the point where, you know, the the actual, you know, indices have outperformed the underlying metal. And um and so that's in my view that's that's coming. And that's why I say we're probably in the third inning of this, you know, gold stock bull. And and what the piece here that we really don't know, Tra, we just don't know where gold is going. I mean, you know, um, at the beginning of this all, these stocks were very undervalued at $2,000 gold, you know, and and then, you know, there's a lot of operating leverage in these companies. Their costs go up with the cost of inflation because they have fuel and labor. But, you know, the the price of the thing they sell is going up much, much quicker. And so, they're all just recording record margins, record profits. And, you know, I I don't think it's too late to get in. Um, you know, I will say though that, you know, and we're still accepting new money into our fund. But I will say there'll come a time probably a year or two from now where we will not accept new money into our fund because this I mean this was an obvious trade a year ago and we were balls deep in it. Um, it's still a pretty good trade, but you know, I mean I when when things are up 150% from where you bought them, they're not as cheap as where you bought them. And so I think it's going to go further. Um, but there'll come a time when they're fully valued and perhaps it'll even come a time when they're overvalued. I mean, you know, what happened is we went from, I'd say on average in our portfolio, things trading at four times EBID DA to now things may be trading at six times EBIDA because prices of the stocks have gone up, but the EBIDA's gone up too. And at the peak, you know, they'll probably trade at 10 or 15 or 20 times EIDA, very much like they did back here in 2011. And at that point, they'll be overvalued. But but we're not there yet. I think I think we've got a couple of years until we get there. So I'm I'm kind of looking forward to a couple of years of good performance in this category because we really just broken out in a lot of measures. >> So and backing up again on something you said in 2021 and 2022 the gold price you know was strong or advancing but the costs were going up much faster and so right >> that's something that's really changed here in the 2024. So in terms of gold equities, there's been lots of period where they haven't lots of periods where they haven't displayed that beta to bullion leverage that everybody looks for and I I may be getting my years wrong, but 22 23 was the last example of that. Now that gold has uh levitated the best way, >> we're going to be looking at really, really big increases in cash flows and margins, you know, over the next four, five, six quarters, even if gold doesn't go up anymore from here. >> Yeah, that's that's exactly right. I mean, and yes, you're right. I mean, what you can see here is that, you know, the price started to move and, you know, the stocks moved. I mean, it was really 24 the stock started moving, but it wasn't dramatic. And yes, throughout all this period, like gold was pretty flat. I mean, it wasn't a huge lag, but it's really more just kind of the magnitude of the move, you know, that that it I mean, this just really started to move and it took a while to kick in to the to the to the stocks themselves. So, this is a good leadin to your uh life in the next two weeks because I happen to know you're about to head west to Beaver Creek for a week where >> we have sort of the largest small gold investing conference for investors, you know, and then the following week we had the Denver gold show which is one of the two big in my opinion uh you know institutional investor conferences for gold stocks. the other being which is cleverly six months prior. So it's a big time and I think viewers should recognize there are going to be uh numerous announcements from gold companies over the next two weeks because they have a tendency to time some of their news releases to these two important conferences. So that will be uh interesting to watch. But as you head to Beaver Creek and Colorado Springs, what are you looking for? What do your what do your notes say? What? >> Yeah. Well, that's a great question. I want to get an update on all these companies. I mean, I talk to managements regularly, but it's always good to see them face to face. Um, and you're right, there are a ton of announcements. I mean, this morning, as an example, we just found New Gold is going to merge with Maritime, which is a completely logical and positive development. I we own both of them. Um, more Marathon than Newfound, but, you know, they're going to create a very strong producer um in in Newfoundland. Um, and and we will see more of that. I mean, we we you know, recently we saw Dundee take over Adriatic, which is Adriatic is a beautiful silver producer, just really starting to ramp up. And Dundee is one of my favorite names. I I just love that company. Love the stock. Think it's got a lot of upside. Um, you know, I mean, I think I've always said, Trey, the in my opinion, the sweet spot there, there are lots of places to be in the Gold Stock universe. And unless you know these things well, you know, you don't you should you should try and stay away from the what Rick Rule calls the penny dreadfuls and uh and stick with, you know, the big known producers, which don't have as much upside, but they don't blow up. Um, you know, and in that bucket, you've got AEM and Alamos and Kin Ross and, you know, Newmont Barrack. I mean I it's interesting Bareric has kind of really underperformed Pneumont and we just took a position in it in some of the call options on it the leap call options on it because I think the valuation gap between Numont and Beric is going to catch up barrack's going to catch up and we like Anglo and Kore and heck all those kind of big names but the sweet spot in my view in this area are what I call just below that tier where it's a real company with a real mind with real profits real growth that's got a much better chance of growing its production. There are three ways gold companies increase in value. They increase in value when the price of gold goes up. Duh. They get a bigger margin. They increase in value when they produce more gold. You know, they're they're they're making more of the stuff. And they increase in value when their multiple expands. And so the the top tier, the names I just listed, they don't grow a lot because, you know, when you got 5 million ounces of production, it's hard to grow 10%. Adding 500,000 a year is pretty tough, right? and you know they they uh so they're so the growth isn't necessarily there. They go up when the price of the metal goes up, don't get me wrong. And and by the way, they're big and safe and so most institutions own them. And so the multiples, you know, there are very few cheap names in that big category. As I said, I think Beric is cheap right now. I think it's about five or six times EVA dial. Um >> even though it's trading 40% above its 200 day moving average. >> Yes, exactly. Um, so, so the what I consider kind of the sweetest category or what I call just below those biggies, which they're big, they've got production, but they they're not so big, their market cap's not big enough, and they don't have so much production that they can't actually meaningfully grow production. Do you know what I mean? They can add capacity and grow. And also, sometimes because they're maybe in not as safest jurisdiction or they have a little bit of hair on them, they don't get a 12x, you know, evida multiple. They're selling at 4xe. But duh, right? And so the ones that I put in that bucket are, you know, like Aerys and B2 and Equinox and Dundee, Galliano, Orzone, Torx, K92. Um, you know, what I call kind of the emerging producers, emerging big producers. >> Do you own all of those? >> I own everything I'm listing. I own. Yeah. Everything I'm listing. >> How many How many stocks do you own in your fund? >> Oh gosh. Um, I'm kind of embarrassed to say this, but but but I'll tell you how we do it. We probably own 60 or 70, Trey. And let me just explain that. >> Seems like a high number for you. >> Well, it does, but let me explain. It's because of this asymmetry and the optionality in these things. Um, you know, big names, big weights will be two or 3%. We might own 50 bips of a drill story. And you might say, well, why even bother? Well, because as you and I both know, some of these drill stories do 10 and 20 baggers. So 50 bips becomes, you know, 5% or 10x becomes 5% of the portfolio level or 10% of the portfolio level. So it's worth owning the 50 bips >> and and it's a warning to viewers. It is not a good idea to try to pick one or two of these. >> Oh god, no. You got to own a ton of these. I mean, this this is all a probabilities game. And you got to know and you got to know what you're buying when you buy it. I mean, if you're going to own a drill story, you know, you want to own a banyan, as an example, you know, which was trading at $10 an ounce in the ground. now, you know, and I still own it. I like it. I think it's going to be worth a lot more, but you know, sorry viewers, you're a little too late because, you know, I was buying it at 1020 cents and it's at 680 now or 68 cents now, right? So, >> as I recall, they had a mud problem. Do I have that right? You're >> No, that's You're thinking Victoria. Victoria was That's her husband who ran Victoria, which they had a a failure on their Yeah. their stores their t their um you know their leech pad slipped and yeah it's horrible. Um but that's different issue but I mean the point is that you know each each company you want to know kind of the specifics of you know what they've got and how cheap it is and there were you know a year ago there were just cheap things laying around all over the place and we went and bought them. >> Are you more excited about Beaver Creek or uh Colorado Springs? Let's put it that >> Oh gosh. I mean both. I mean I, you know, you find good things at both of them. And this is, I mean, I will say this, Trey, this is one of those areas where being a stock picker really pays because there are, you know, gold mine's a really tough business. It really is. And there it Murphy's law applies everywhere. You know, costs more, takes longer, harder to do, and sometimes you catch a break, things come out much better than you thought. Grades are higher, you make more money. Um, and so it's all probabilities weighted and and so you've got to, you know, you've got to just weed through the the facts and kind of go, okay, is this a good bet or a bad bet? And there's some really good companies, but they're, you know, that are fully priced. And the the trick is to kind of try and find the ones that are that are better than the price is reflecting and and to buy them and and then hope everyone kind kind of comes to see that, oh, you're right. That is a lot better company than I thought. Um, but let me just keep kind of going because I know your your viewers are probably interested in names and stuff. I mean, so I'm all over. I mean, just given what we talked about earlier and the price of silver, man. Oh, man. I mean, these silver stocks, they should all I mean, you pick a silver stock, it should double the next couple years. If not, I mean, if you're only doubling in a silver stock, you're doing bad. >> That's one of the problems. There's not many silver stocks. >> Well, that's right. So, that just touch on that. There aren't that many pure plays. And even like a Pan-American silver is less than half silver today. Although Heck and Coral Coror's got a lot of gold, but Heck's a pretty pure play silver stock, although they've had trouble up in the Yukon with that with that money. >> Pan-American just bought Mag, so they're going to increase. >> Yeah, that helps. That's right. Pan-American adding Mag and >> and First Majestic, which is less than 50% silver, but they bought Gatos and that brings them back up into a good piece. And they'll get Jarrett Canyon fixed. In fact, there's a name that's kind of broken, but I think and and the market hasn't really realized the penalty they put on Keith isn't fair in my view. And so, I'm I mean, I'm still buying it here. We bought some call option leap call options on it the other day. Um but you know silver names I mean and and by the way a couple of these have run so I'm not sure I'd buy them here but I uh that one hasn't run so hard. Aino is one of our biggest positions. Well it's up 4x you know now I think if they deliver >> from when >> uh let me tell you just get a thing here. So AO is 424 and as recently as the beginning of this year it was 90 cents. >> Wow. >> Yeah. That was our that was our heaviest weighing going into the year. >> Um, yeah. So, but but and but and and by the way, it's not cheap anymore. It's not we haven't we sold some of it, not a lot of it. It's not crazy expensive either. It's now kind of market, you know, bull market perform. And in large part because they're going to really increase their production. I mean, they're at kind of a 2 and a half million ounce run rate. They're going to take it to six, which if they do that and the price of silver does what we think it's going to do, it's it's going to work fine. Um, >> and so I interrupted you. What are your other >> Oh, yeah. So, Discovery, um, you know, Endeavor, I think I mentioned First Majestic, um, you know, Silver Tiger, uh, we like a lot and own that. Um, you know, um, one that's kind of, I think, stumbled a lot management wise, but has a lot of operating leverage and and a high silver price will even make up for the management stumbles is Guanowato. Um, own a big piece of that. Um, Don Durant just kind of profiled that. And then, you know, if you really want to get into kind of the the sexy um, that's riskier. um you know, several of which probably won't work, but you know, the kinds of things that if they do work, they're, you know, five to 10x your money. You know, I I'll kind of give you the developer drill stories that we're in. Um and you can, you know, fuss around with those. Um and I'm, you know, full self-interest, I'm on the board of two of these, so uh you know, full disclosure. I mean, Cabal I think is a great story. It's going to work. Um, ghetto gold in Nevada is very undiscovered, very under misunderstood. Couple million ounce deposit. Um, some of it's refractory, but it's easy to make a concentrate ship it. Um, you know, it's sub $50 million market cap, I think, or it was until recently. And, you know, it should be multiples higher. Um, Less Gold is a drill story I'm on the board of down in Brazil. Uh, 10 kilometer Calera. We think it's got enormous potential, but it's going to take a couple years to unlock it. Um, Lhatan Gold is another one in um in Nevada. Again, you know, kind of sub$50 million market cap. Um, you know, million and a half ounces. She's taking it to a pea. I think the PA is going to show that there's a very economic mine and so it should be worth a lot more than it's trading at today. Um, Zodiac Gold is over in Liberia, which is actually quite a safe area. It's western Africa but part safe part of Africa and um you know they uh they have just an enormous land package 20 km by 20 kilometers and uh you know riddled with gold and and uh and iron ore and I think he's going to develop that in a very nice way and again that's like a $15 million market cap. Problem with that one all these other ones you can find a USDR. Zodiac hasn't even gotten to the point where you've got one of those American tickers. You know what I mean? If you want to buy it it's VC. So, you got to have your Canadian broker get it for you. Um, we like Free Gold as a drill story. We like Helioar as a development story. I like I80. A little bit longer term. It's going to take time to develop, but the guy running that, Richard Young, is just a killer. >> And that that >> one of my favorites. Incredible. >> He's a good guy, right? You know, right? >> Very serious. Yes. Very serious. Very. >> He is going to turn that into an extremely valuable company. But you got to be patient because I don't think there's a lot of you I mean the news flow is going to take a couple years to come. So we're in it. You know when it starts when it gets closer to really having one of those things going we'll pile into it. But right now we're just in it. >> I unfortunately warmed up to that in the low twos. Not quite. >> Where is it right now? I'm just trying to think. Um >> it's like 90 cents or something. >> Yeah. Okay. Yeah. Whatever. Buck 12. I got it. Yeah. >> So Oh, you're looking at Canadian. So >> yeah. Let me ask you one question because that was a great list and then we'll spend a couple minutes on Bitcoin. But I have a question for you because you know these companies so well. One of the things I've never understood Fresno operated you know one Kip Kipio one Cypio was that >> for all these years they have all this money they have all this clout and they own 50% of mag why didn't they buy the other 50% and why would they let Pan-American buy it? I just don't get that. >> I agree with you. It's kind it's kind of strange to me. I don't I don't fully understand that either. By the way, I didn't mention Fresno when I was going through the silver. It's one of our largest positions. I love that company, >> right? It's almost, you know, pneumont of silver. >> Yeah, it's kind of it's one of it's I think it's the largest silver producer in the world. Um it's a little bit familyowned >> silver company. Yeah, >> but why wouldn't that resource they could have bought it any time in the last dec, you know, honestly, I don't get it. I mean, as you know, they control it. I think Magg only owns like 40 some odd percent of the economics of Wipio. I mean, I don't know. I don't know. >> Kind of reminds me of uh you know, the whole thing with Ivanho, you know, with >> Boy Togoy where >> same idea. >> You have 50%. It's like you don't buy the other half because you don't have to. I mean, is that is that >> Yeah, same idea. Yeah. I I maybe that maybe that's it. I mean, I never owned MAG and I'll tell you why. Because I didn't know what they were going to do with their capital. You know, they were gonna I mean, they it didn't there wasn't really a growth story there. they weren't going to go start another mine. Um, and so, you know, they were going to and they gener obviously they get a lot of cash out of that mine. But what are they going to do with it? Um, I like the the companies with the most upside in my view have proven that they can develop mines like a Dun Dundee for example, Dundee Precious Metals and they take that capital and they either do a smart acquisition like Adriatic or they take the metal and use it to, you know, to develop other mines that are in their pipeline. You know, Aerys, same story. Aerys has got a pipeline of, you know, three or four good minds. You can just kind of see, you know, Equinox has kind of done the same thing. You can just kind of see how these are smart people who know how to pyramid and go up. I mean, another one that's actually done it very well, too. Um, we don't own it right now because it's just too expensive, is G mining. I mean, those people are killers. They did a fabulous, we owned it for a while. We wrote it. I mean, they've done a fabulous job. And by the way for viewers uh SCP resource finance our partners are one of the leading financiers of G mining a big is that right? Okay big success for >> there is no better management team by the way I mean you know I tell you what's going to happen gmin mining by the way is running out of resources in their in their flagship mine >> and they're going to have to come by Cabraw. I mean it just they whether they know it or not or yet yet or not it doesn't matter. I mean >> there are guys that are all over that. >> Yeah. What's that? nothing a footnote. I'm sure they're all over over >> Yeah, they they are. So, >> so let's uh let's segue just a bit. We have a few minute. So, Bitcoin uh it's 50 minutes into the uh conversation. We haven't even brought up what I know is >> topics in the world. >> Where are we in the Bitcoin cycle? And I know >> for investors to compare >> some people look at today's uh prices on the on the board >> and you look at Bitcoin and you look at some of these miners, you look at gold, how does Bitcoin play into the whole thing? >> Well, as I think I've discussed with you before and as I talked about in my book, I do think Bitcoin will outperform gold and I think at various points in time it will outperform the gold miners. Not all the time. And it does have one benefit against the go versus the gold miners and that is that there's really no management team and screw it up. I mean there are these core developers who sometimes sometimes act as though they might screw it up but for fortunately everybody votes on it. So I think the votes are never going to get put into place to screw it up. So in this in terms of the cycle Trey I mean there's traditionally there's been a four-year cycle and I think that might be getting a little bit elongated here. Um and my belief is that we're still in an upswing. There's some people who think we peaked at, you know, 120 something, 123, I think, is the high. I don't think that's right. I think we've still got another, you know, leg to this cycle. Um, and we're kind of consolidating right now. It's interesting to me that gold's moving first. I think, you know, my prediction for Bitcoin is we'll be at 140 at the end of the year. If you actually look at a Bitcoin chart, there's kind of a flag um right around the, you know, the 108 to 110 area. And if you project, you know, how it went up to that from where it went to there to the next move, it should go up another 30 or 40,000, put you at 140. Um, and you know, in this cycle, what's the top in this cycle? I don't know. Maybe it'll get nutty up there and we'll squirt up to 200, but then probably we'll correct 50%. I mean, you know, anybody investing in Bitcoin, the biggest risk I always tell people they're looking at Bitcoin is you have to understand what this is. You have to understand how volatile it is. You have to understand that it's had 50% plus draw downs. And so, you know, and what what'll be sad is we'll get to 150 or 200 even and some people finally say they'll give up and they say, "Oh, god damn it. I can't take it. I'm going to buy some Bitcoin at 200, you know, and just about then it'll go back down to 100 and then they'll say, "Oh, I bought at the top. I'm an idiot. I should never have done that." And they'll blow it out 100. That's the wrong move. I mean, buying it at 200 in a 5 to 10 year window is not a bad idea. Buying it at 200 in a one-year window might be a bad idea. And so, you know, I still feel like we're on the side of it where you can buy it today comfortably knowing that even the next draw down probably won't take you below where we are today. I think we're at 1012 right now. I feel pretty comfortable that we won't go below that on the next draw down because I think the next upswing and this is again looking at technical analysis and there's something called the power law model. I mean there those of us who are in the space we use about five or six different ways of triangulating in on the adoption of this thing and so you know and and it's all this is all just guesswork and based on past patterns but to me I feel like there's a pretty good chance we'll be 150 to 250 on this cycle and I think that'll probably occur between December and June of next year and that that at that point in time everybody will be going crazy. You'll hear Bitcoin everywhere. You know, your shoe shine guy will be telling you about Bitcoin. Everyone will be all the Bitcoin players will be levered. You'll have all these Bitcoin treasury companies going nuts, right? And then they'll be just about then everyone will be too far on one side of the boat and we'll get we'll get a serious correction, right? >> Put putting you on the spot given the volatility that you just mentioned. >> Do you look at Bitcoin as a store of value? >> I do in a long-term sense. in a very long-term sense. I think it depends on your time frame, Trey. I mean, those people, I mean, a lot of smart people, gold people, people who don't believe in Bitcoin say it can't be a store of value. It's too it's too volatile. I get that. That's an argument. It's not unrealistic. I mean, I, you know, it I mean, a similar question. I like to compare it to Amazon. Was Amazon a store of value as it was growing? Right? It was the leading online marketplace just kind of keep and you know, obviously now it is the leading online marketplace. It would be very hard to displace, right? It's it's you kind of got a monopoly position at the top there. And so it stored a lot of value. In fact, it grew 220,000% in value. So that's the value of a growing network, right? But along the way, you know, in '08, it went down 90%. And Bill Miller >> going to bring that up. There were three draw downs in >> there have been multiple draws of 50% plus 50, 60, and 94 was the first although that a year and a half. So it so so I guess probably the right way to to to classify Bitcoin is yes it's emerging to have store of value properties but right now it's kind of a growth stock you know it's kind of an emerging networkbased growth stock that's probably and so you know if if if in the old world you held bonds for safety and stocks for aggressive growth in the new world you hold gold for safety and Bitcoin for aggressive growth how's that as a comparison Perfect. So, uh, how do folks get in touch with you about, uh, your >> Yeah, so um, I have a website. Uh, the name of the business I run is called Equity Management Associates. The website is EMA2, the number two.com. There are free newsletters, macro newsletters on there quarterly. You can sign up if you go to the bottom of the site. You can just put your email in, you'll be on the list. We'll never spam you. Um, and that's just a quarterly macro overview and talk about what we're doing in the fund. I'm also very active on Twitter, as most people know. I'm a loudmouth talking about sound money. Um, and then, you know, we should mention, if you don't mind, that I I also wrote a book. Um, uh, which >> Well, >> how's the book doing? >> That's doing well. So, it's called The Big Print. It's available on Amazon. I mean, I don't never written a book before, Trey, and I don't know what to compare it to. Um, I just crossed 40,000 copies sold. Good for you. >> So, it's it's um yeah, I mean, it is good. It's a niche, right? It's a niche financial book. Um probably the thing I'm most most proud of or excited about. We all know who Robert Kiyosaki is. He wrote Rich Dad, Poor Dad. He This will blow your mind, by the way. He sold 50 million copies of that book. Isn't that something? I mean, it came out in 94. I know. I read it. It changed my life. It was a great book. He loves my book. He says, "Everybody's got to read this book." So, I that's a that's a nice endorsement, and I've been trying to use that. So, it's it's coming along. >> And uh for investors who are interested generally in all of this, but aren't quite ready to take the step to uh Equity Management Associates, we want to remind our viewers that anyone who's interested in having their portfolio uh reviewed for free uh should check in with us at wealthon.comfree. And for those who are interested in getting involved in precious metals and they aren't quite ready for Larry's uh stocks and Burkina Faso, please check in with us at uh hardassetsalliance.com uh where I think we have one of the most userfriendly ways to have our viewers participate in precious metals. So uh Larry, this has been great. I'm bold up on all of these different things and I look forward to talking with you in a couple of months about everything you learn out west. >> Be happy to do it, Trey. And I I look forward to that as well. Thank you very much for having me on. Thanks for the time. >> Thanks, Larry. Bye-bye. [Music]
Larry Lepard: $4K Gold in Sight? Gold Smells Trouble Ahead
Summary
Transcript
Trump's called for cutting rates 300 basis points. And I I think that's what gold is smelling. And my sense is if they take rates down like that and then maybe even engage in some QE or real control, boy oh boy, look at the next wave. It's not going to stop at 9%. We've got a big inflationary wave coming. So that's the continued thesis and that's why we're only in the second or third inning here. [Music] Throughout September, we're shining the spotlight on gold with a lineup of expert conversations, sharp market analysis, and practical investment guidance. To dive deeper, make sure to grab our complimentary gold investing report using the link in the description below. >> Greetings to our wealthy on show. My name is Trey Reich and we're here today with Larry Leard. Larry the legend as some call him. uh the managing partner of Equity Management Associates. Uh I think his track record and presence in the gold and bitcoin world are well known to our viewers. So we'll skip on to the fact that we probably couldn't be talking on a more exciting day. The uh uh Fed just or excuse me the BLS just released its payrolls estimate for August. Uh the estimate had been 75,000 came in at 22. I think everybody's focused on the revisions of the prior two months which were down a stunning 258,000. If you dig behind today's numbers, we will notice that June was actually re-revised from 147 to the prior 14. Now we're -12. So we officially have the first negative payroll print since 2020, which obviously puts the Fed in a bit of a conundrum for their upcoming meeting. And on this news, gold is not touching 3,500. We're now touching 3600. And silver is 4130. Uh Bitcoin's 113,000. So in Larry and Mai's world, there really haven't been too many days which have more to talk about than this morning. And so I'm going to start things out by asking Larry, are you most excited at this point uh in the cycle about gold, silver, or Bitcoin? What's what are you most excited about? >> First of all, nice to be with you, Troy, and I really enjoy talking to you, enjoy your show. As you know, we've been we've been friends for decades. Um, so that's a tough call in in the following. It kind of depends on what your time frame is, right? I mean, if you want to look at what's really moving right now, what I'm pretty excited about is silver, right? I mean, so silver at $41 is a big big deal. I mean, taking out $35 was a big deal. I mean, this is a this is a decadesl long, you know, kind of cup and handle or cup and saucer uh saucer and handle sort of pattern. And technicians and others will tell you that when you break out of one of these things, you got a long way to run. And um so I I guess if you ask me just you know in the next few months where we're going I mean I am way bowled up on silver you know I think we're going to 50 60 70 you know this year. I mean certainly 50 or 60 this year. So so that's the kind of the most notable and exciting thing that's happening. Um obviously I'm I'm bowled up on gold and Bitcoin too. I mean they're both going to move. Um, you know, there's there's been a pattern. I had a chart that I've shown some people on it in other pods about how gold and silver kind of tend to smell monetary debasement a little earlier sometimes than Bitcoin does and they move first and then of course Bitcoin suddenly starts to move and it moves f farther or faster and so you know it's a little more volatile a little more subject to you know kind of other things going on risk assets and stuff. So um so I mean in the long run I'm incredibly bold up on all of them. Probably more I think you know when I wrote the book I'm probably most bowled up on Bitcoin to be honest with you. I mean it's it's very volatile with big draw downs but I also think there's a lot of upside. So u but but you know if you're looking at kind of the balance of this year I mean I I think we closed the year and silver at you know I don't know 60 or 70 which is you know up I mean a lot from here. It's like 78%. I mean, gold, you know, 4,000, it's up another 20, 30% from here. And maybe Bitcoin 140, which is up another 20% from here. So, um, so you can see of the three of those, you know, I think silver's got the most excitement. And then I know we're going to get into this, you know, let's talk about the mining shares, right? So, that's just the metal, you know? So, if you're a silver miner and you know you've been making money at $36 or $38 silver and you've got x amount of profit, well, guess what happens when you know and your costs go up with inflation every year. That that's happening. We all know that. Guess what happens when you take silver to 50? You know, your profit just went up. I mean, multiples of where it was before. And so, so that's coming. And these silver miners were cheap until recently. I mean, they have run a bit, but you know, if people a lot of people have asked me, how am I too late? You know, I mean, where are we in this whole thing? and I'm like, "No, we're in the second or third inning of this share bull market in my opinion." So, so there's a lot of I think there's a lot of upside and I'm I'm very bowled up on what's going on in the in the gold and silver shares, right? >> So, let's break down some of the uh targets you just mentioned. So, uh and and I I don't mean to press you on this. It's just that we get into these >> areas where we're at prices that aren't, you know, new ranges for the past couple years. Everybody wants to know what's driving it and am I missing it? Is it too late to get involved? So, if we take silver, >> uh I think I've probably read a million pages on the slingshot effect of silver once it breaks 39. I I skip all of that. We're all aware of it. >> And now we're at 4130. How do you come up with 60 as a target for your end? Are you just looking at technicals or is that just a conversational comment? you know, it's I mean, look, it's a finger up in the wind. Um, you know, as you know, I and I don't know. I mean, I could be dead ass wrong. I mean, I don't think it's going to be lower than 45 and it could be 70. I mean, I guess it's probably based on technical analysis and it's been suppressed for a very, very long time. And all the factors that all those of us in this trade have known for many, many years, I think are becoming more, you know, you're seeing this shift so that everyone else is beginning to understand those factors. And what are a few of them? Well, one, the solar growth in China is just enormous. Chinese solar panels are now taking 30% of world production, and that's going to grow to 50 or 60% of world production. You've also got these new solid state batteries that are being developed for EVs. Um, not fully commercial yet, but going to be, we think, in the next few years. And and, uh, they they absorb an enormous amount of silver. And then, as you know, what Andy Sheckchman and all the others have shown us, we've been running these huge supply deficits. We've been, you know, we got grandma melting down her tea set to sell it to the local local coin dealer and um you know, it's just there's a there's been a a chronic shortage of the stuff and and it's a small piece of the price of many of the things that it goes into. So, if the I mean, there's silver in your iPhone, not a lot, but there is some. And if the, you know, if that silver price goes up, you know, they could pass it along easily because it's a $1,200 phone. So, so the point is that there just a lot of things that are finally kind of coming together. And I think, you know, guessing this, the 60 is a guess. Let me just say that. I don't know, right? But it's kind of finger-win technical analysis. And typically, when you do break through a support level, you tend to zoom pretty hard. And I think if you look carefully at a chart, you can see some flags and stuff. I mean, it's it's kind of like gold, you know. um u gold kind of you know squirted up nicely from the 2678 area to 3500 and built a really long bull flag at 3500 was kind of stuck there for the last few months many months and uh you know now it's broken out of that and so you know typical technical analysis says flags fly at half mass well all right so if it was a 27 and it went to 35 I mean you know that's 800 bucks so add 800 bucks on to 35 and you're at four you know $4,000 3. I mean, I don't know if we'll get there, but I'm pretty comfortable we'll get to 4,000. Uh, and interestingly, I mean, it's this the other thing it's really know I really notice a big change. And I mean, what's go and what's driving all this trade? I mean, as we know, what's driving all this is is a broad broad knowledge of the sovereign debt crisis that we're in and how they're trapped and they can't get out. That's what's driving it. And and so what are the indic what are the evidence that everyone's getting it? Goldman Sachs, biggest bank in New York, says, you know, investment says, "We see gold at 4,000, maybe at 5,000 if the Fed loses credibility." Well, okay, that's pretty damn mainstream. And I got to tell you, a year or two ago, gold was at 2,600 and everyone's looking at the stocks and saying, "Yeah, but it's going back to 2,000, so the stocks are, you know, fairly valued." And I was like, "No, it's not. It's going to 3,000 or 4,000." And of course, turns out I was right. they were wrong and there's so there's a catchup and the stocks and we can if you like we can show the chart but the stocks have really lagged you know the metal and and we're in the process of of closing that gap >> as part of our gold interview series this month Trey Reich will be hosting a gold investing webinar on Wednesday September 17th send your questions for Trey about gold or gold's miners to info@wealthon.com and Wealthon together with SCP Resource Finance will be hosting a global silver conference this October in Toronto. Eric Sprat will be delivering the keynote and it promises to be a landmark gathering for silver investors. You can find out more in the details in the description below. So, so backing up over a couple things you just said, >> uh, Goldman Sachs has been positive, but it was JP Morgan this week >> who introduced the first uh $4,025 estimate for second quarter of >> 26 and then by the end of the year they're at 4250. So, the the fours are coming as I like to say. But uh I I have always made the comment that I believe in technical analysis when it supports my case. And for folks who want to look at a technical just textbook example, you mentioned gold consolidating sideways. >> If you look at how it interacted with the 100 day moving average in the last two weeks, >> it's almost inconceivable that it would be that strong. It's just completely bounced, >> you know, off that moving average above everything. we're in uncharted ground. So >> yeah, now we're we're we're we're clearly in it. And >> anyone who believes in technical analysis is buying gold with, you know, both pockets. But going back to my original question on silver before we move on to gold, >> um, you know, you mentioned the supply demand and I think all of that's very important and solar demand and we've read about the fiveyear or so deficit and all that type of stuff. But the truth is that at retail uh coin premiums etc. silver's actually been very soft in the last sort of 3 to six months and premiums on coins are actually into slight deficit. So what I'm leading on to this is you will agree with me because I think it's important for viewers to recognize. You can read all you want about the supply demand picture in silver. What has it going through 41 is investment demand and we're starting to see it at an institutional level. And I think that's very important. It's fine to talk about solar demand. It's all important. It's a great floor, >> but silver makes its big moves. If it's going to 60, it's not going to be because we sell a couple more, you know, solar installations in China or the, you know, deficit at the LBMA goes down another 10 tons. It's because institutions and global wealth are starting to look at silver as a store of capital. Do you agree with that? >> I I totally agree with that. I think it's an excellent point, Trey. I would also point out that what makes this thing move so hard and so fast is just how small it is. Okay. We mine 800 million ounces of silver a year. And you know, at $40 an ounce, I mean, it's just not a lot of money. I mean, you know, in a in a multi- in a $900 trillion dollar asset market, you know, 800 million times 40, I mean, what is that? 3.2 trillion. I mean, it's just it's it's it's just a small I'm not even sure I have that right. Let me do let me do my math there. 800 million. Enter third 40 times. Yeah, it's 3.2 billion. I'm sorry. I mean, that's that's that's that's a rounding error. >> It's a small hedge fund. >> Yeah. In in in most of the world. So, so if if big money decides they want to come after it, uh, you know, it's it's going to move it. There's just not enough out of it out there to to supply big money with it, you know. So, >> so, okay, now let's move on to gold because we sort of, uh, stepped into that. I I you know, >> and I may be wrong in that. That's the 10th. That actually I think it's 32 billion, not not three billion, but 30 32 is still a big number. >> So, now we're into a large hedge fund supposed. >> Yeah, exactly. A large hedge fund as opposed to a small one. Yeah. Right. >> So, uh, on the gold side, um, do you have any feel for where this could go in the >> short run? I mean, I think everybody understands you're here. H, how do we look forward? What do we >> I don't I mean, I, you know, higher um, but the path is is unclear. I mean, the technical analysis says we formed a bull flag at 3500. As I mentioned earlier, we, you know, flags fly at half mass. We should go up into the fours. um you know as you get further out a lot of people have asked me what's your ultimate goal you know ultimate target where do these things go and you know I mean there's a in my book actually there's a chart that was done that shows that you know to fully cover you know the monetary base with gold we'd have to have $90,000 ounce gold now you know you don't need full coverage to have >> when you say monetary base you mean globally or the US >> I I mean no I mean USM2 is against what the 261.5 million ounces that we own but you don't need full coverage to run a gold standard you can run it 20%. So, you know, that would imply, I don't know, $20,000 an ounce gold to, you know, to back the the dollar with gold. Um, what I, you know, I think what's very important for people to understand is it's all going to depend on the policy choices on a go forward basis. I mean, what do we do? I mean, what what makes this trade not work? And of course, I tell people this, they're thinking of getting my fund is if the government suddenly gets responsible and balance the budget. And of course they laugh hysterically because we know that so far there doesn't seem to be a lot of indication we're going in that direction. I mean, you know, Doge came along. We're going to save two trillion, 1 trillion, 300 billion. Oops. Maybe we'll save 100 if we're lucky, you know. And then suddenly, you know, the Freedom Caucus out there saying, you know, oh, we're going to balance the budget. We're going to make these people cut expenses. Well, everyone except for Rand Paul and and Thomas Massie caved. And you know the big beautiful bill is going to increase expenses by300 or $400 billion a year. Now that's offset by higher tariffs which is a good thing. But but the point is that the fiscal trajectory of the federal government's a mess as you know and as long as that continues and as long as the Fed is forced into the policy role of monetizing that which they are in right now and we just saw some more evidence of that last night. I mean the Senate has got a really neat trick going on. And what he's doing is he's selling short-term bills, 30, 60, 90day paper, and he's using some of those proceeds to buy the tenure. So, so really that's kind of it's sha I call it shadow yield curve control, right? Because he doesn't want the 10-year rate to go up because that, you know, that will hurt his his case for the the economy and so forth. So, you know, and it so we just don't know where we're going to go. We don't know what Trump's going to do. Um although we do know from his behavior with respect to the Federal Reserve, you know, and I I like to call the Federal Reserve, you know, the real housewives of the Fed these days, given all this what's going on with the attack on this governor and of course what she did was wrong. But um you know, we the Fed has clearly become a left-leaning political institution. >> Oh, no doubt about it. Absolutely no doubt about it. And uh >> because I don't even think that's up for debate. >> No, exactly. and Trump's got them on their heels and and furthermore, you know, okay, whether whether anything changed between now and May, May is not that far away. We're in September, you know, so count it. It's it's, you know, and we know with with high degree of certainty that in May Trump is going to have a majority of the Fed board and a dovish, very dovish Fed governor. I mean, Trump's called for cutting rates 300 basis points. And I I think that's what gold is smelling to be honest with you. I think the reason people might say, "Well, why now? Why gold?" And I think everybody's kind of looked at it and go, "Oh my god, I can see what's coming here." You know, he he hates the Fed. He wants to drop rates 300%. He doesn't care about the dollar. They say they do, but they really need a weaker dollar to battle Triffin's dilemma. We know that. And so, you know, the gold says, "Okay, I get it." You know, I mean, imagine, so it's May next year, new Fed chairman, they take rates down to 1%. Everybody goes out and refies their home on a heliloc and we get the next big wave of inflation, right? I mean, it's M2 growth. M2 growth right now, by the way, is running about 4.8%. Well above stated CPI. And my sense is if they take rates down like that and then maybe even engage in some QE or yield curve control, boy oh boy, look at the next wave. And we're going to, you know, it's not going to stop at 9%. We've got a big inflationary wave coming. So that's the continued thesis and that's why we're only in the second or third inning here. I mean, if we had responsible people in DC, then I'd look at this and go, "Okay, well, you know, this has gone pretty far pretty fast. Maybe we maybe we should take some profits." Right. >> Right. So, you mentioned a very important variable that I want viewers to focus on, which is M2 growth because, >> yeah, >> nobody's talking about it. I have maintained >> to anybody who will listen to me over the past three or four months, >> tariffs are not inherently inflationary. Now, that's such a reactionary comment. I don't we don't really need to debate. >> I'll unpack that. But go keep going. Yeah. >> But my point is that if tariffs increase the prices of certain goods and money supply remains constant, other prices have to go down because there's only so much money to go around. That sounds, you know, a little academic, but I believe and that's why we haven't had any CPI type inflation. However, the weak part of that argument is if M2 does start to go up, which it is now spiking, that argument becomes void and we can have inflation. So, >> and you mention it because the M2 is really the more important variable right here. >> Correct. And you're absolutely correct and that's the the classic monitorist Austrian argument that you can't have inflation without growing M2. However, it it's a little trickier than that. And let me say let me just add some nuance to it. Um you know in you know import costs and the cost the price of things that people buy as a result of tariffs are going up. Okay they are. I mean now you can say it's not traditional monetary inflation. That's right. But it's higher prices. And so that then finds its way into the CPI. And there's a certain amount of reflexivity in the CPI wherein somebody says, "Hey, I'm paying more for this. You know, Mr. employer, you got to pay me a higher wage, right?" And so, so it's not, you know, it's not so simple. So the the part of your argument that says, "Yes, if there's less money in the system, prices come down somewhere else. Fine. But first prices go up and some of that stuff you're buying." So So it's it's a mixed bag, but you're right. I mean, ultimately it all comes down to the long term on the M2 growth and and M2 will have to grow. And by the way, I mean, as as Lacy Hunt pointed out in a brilliant interview he did recently, you know, tariffs are attacks and tariffs are actually quite deflationary. And he had a very good comparison to, you know, Smoot Holly in the 30s where, you know, the tariffs are about the same level. They were, you know, 19% back then, they're 18% roughly now, according to the Yale study. Um, and that really slowed down the economy. I mean, big time because at the margin, you know, if something's more expensive, people aren't going to buy it. It's just supply and demand. And so if that starts to happen, that might the tariffs might be the thing that tip the economy over. And he's worried greatly about the potential for deflation. I I see that as an outside case and a possibility. I mean, let's face it, we're heavily indebted. And the natural and it's a credit bubble and the natural backside of a credit bubble is deflationary. I mean, just go study 1929 to 1935. Enormous deflation. What I think is different this time is that we've got this aggressive activist Fed and federal government that has said they're not going to allow deflation to occur. So that the response, the policy's response to when this bubble bursts is going to be to print so goddamn much money that your eyes are going to bleed. And of course that's the thesis of my book. So I, you know, I've got to talk my book, so to speak. But but I but I, you know, I think that's what's going to happen. Now there's some possibility that even in light of that they fail and we still get some deflation but um you know on a on a price level because the economy has slowed down and demand is lower but they'll be pushing as much as they can push on that string they'll be pushing money into the system just as they did in '08 you know to try and keep the system going and that will be ultimately inflationary perhaps with a lag um and in the '08 case it wasn't inflationary at the CPI level. It was more inflationary at the asset level and that's because they started paying interest on excess reserves. So, so it's a lot of a lot of complicated moving pieces here, but I think the big summarizing it all, I think the big picture is that in March of 2020 when COVID hit and we really changed all the rules, we literally printed money and sent it out in checks. We gave out PPP, etc. You know, we we entered what I call an inflationary decade. And as those of us who studied them and even lived through them because we were kids when it happened, but the 70s I remember well in an inflationary decade, you know, it continues and you can have waves of inflation. It doesn't really end until you solve the underlying problem. And I don't think we've solved the underlying problem. So yes, inflation hit a peak of nine. Now it's down to call it three. But I think we're going to get another wave up. That's my view. >> So I'll ask you uh the least relevant question because I Obviously neither of us know, but since the entire world is focused on September FOMC, what what do you expect? I assume >> I don't know. I >> pips I think 50's out of the question. And >> I'm with you. I mean, look, I think Paul's kind of a broken man. I mean, I think I think Trump has humiliated him. I think I think if I think I think he wishes he wishes that the data had come in so that he could have stayed a hard ass because he wants his reputation to be that he's vulkar. I think even he has to now concede that he's behind the curve and that the data is telling him he's got to cut. So my gut is he's gonna, you know, being the good bureaucrat that he is, he's going to try and play it up the center of the fairway. And if the market thinks 25, he'll give him 25. >> And we we're going to be looking at 25 a meeting for the rest of the year. That type of >> probably I mean I December is probably a little bit of a question mark, but I would guess that's he does that again, too. And he and he says, "Hey, I'm you know, look, I'm not caving to Trump. I'm just I'm being responsible here and the data tells me I can do this. Now, you know, I could build a lot of data which say, you know, there's no way you should be cutting, dude. I mean, my auto insurance, my home insurance, my food bill, my I mean, electricity, I had a great chart I put up on electricity on my Twitter feed a couple days ago. I mean, you know, because of all the AI demand for electricity, stuff's going up. I mean, you live in Massachusetts, you know, it's going up 11% a year. It's nuts. That's not three. So, uh, with you, one last thing with, uh, what you've said already. You mentioned the QE. So, we're sort of, uh, round QT down to zero. I actually don't even know the current number, but I think it's pretty close to zero. Is that >> Yeah, I think Yeah, I think. Yeah, it's like five. Well, it's it's the mortgages plus the five, so I think it's like 30. >> Okay. So when just generally how big do you think the Fed's balance sheet will need to get to encompass all of this? >> That's a great question. Well, I mean it depend. Tell me, you know, I don't know, Trey, and you don't either, but I mean, tell me what happens to the bond market. I mean, here's here's the disaster scenario for the Fed. Okay, people really begin to lose, you know, they don't keep it all under control. People begin to lose confidence in US bonds. I mean, you know, you've asked me what the best investment out there in the world today, well, it's obviously sound money. The worst investment in the world today are long duration bonds in my opinion. I mean, you're pretty guaranteed that you're going to get not going to get back the purchasing power that you put into them. And so if the market wakes up and realizes that and and the bond market really starts to sell off then, you know, and we saw in September of 23 that happened and um 12 Fed governors in two weeks came out and chirped about how well we're done raising rates because 5% seemed to be a a crit, you know, like a a threshold line above which they were worried about. And we're at 4.3 or four right now. It dropped a little this morning, but um you know, if the bond market really starts to sell off, rates start to really jack out, well then the Fed's going to have to go back to yield curve control. What does yield curve control? It means they will buy the bonds themselves. They are going to fix the yields at a certain level and print the money to do so, create the money to do so. And um you know, if if they do that, I mean, just let's get extreme. I mean now the 10-year tenor and 30-year tenor are smaller than the Treasury bills or the shorter notes, but if they do that, you know, they're basically going to have to they could have end up having to buy all of them. And so, you know, I mean, not all 37 trillion because some of them are short-term notes, but you know, all the tens and 20s and 30s could come to the Fed and say, "Hey, sold to you. Yeah, you're telling me I can only get 4% four and a half% in this thing when we've got raging inflation. I don't want to hold it anymore. I'm I'm selling it to you." So, you know, I don't know. Somebody could probably do the math. I'd love to know actually what are the what are the total outstanding 10 20 and 30-year bonds in the United States. Somebody chat GBT that tell me but but that all of that could come to the Fed and say you know we're not holding it here you can hold it. Um you know and and and the one thing as you know and part of the reason by the way why why Trump is pushing so hard on the Fed and why he wants this 300 basis point cut and bet does too and they need it is that interest rate interest expenses are eating them alive. you know, they got a $1.3 trillion interest cost in the federal government bed budget and most of that is in the short stuff and you know, if they're paying short rates of 4%, you know, I mean, if they could take that down to one, that would really help the whole budget picture. And so that's what they're trying to do. However, you know, and I said this in another podcast, I went and did the the research on I found this fascinating. The last term we time we had yield curve control was in the 40s and we had it because of World War II. So, we're fighting World War II. It's existential. We got to save the world. And in 1942, the Fed came out and said, "You know what? We're going to just basically buy all the bonds, short stuff at 38 of a point and and the long stuff at 2 and a half." And so, they would not let the bond market fail. And they printed the money to do it. And there was inflation during the war, but we were fighting a war and we had rationing and all that other good stuff. Well, you know, after the war, in 1947, there was a month where inflation was 18% year on year, year-over-year. And in 1951, there's another month when it was 21% year-over-year. And and why? Because they had pegged those rates at that low rate and they were printing the money just like, you know, printing the money in order to keep the rates there. So, so you know, can you imagine inflation in the United States of 17% or 20%. I mean, I don't think most people can, but actually I can. And that's that that would really be something, right? >> Yeah, I agree. the I think the inflection point the final inflection point for the dollar is it sounds simple to say this but I think the Fed's balance sheet's going much larger and eventually it's just going to hit a level where the dollar you know collapses I >> yeah I actually didn't answer your question but I think in my book and other places I've estimated the Fed balance sheet hit a peak of nine I think in COVID I think they've drawn it down to under seven I I remember seeing 6.6 six recently. Um I think on the next time up, what does it go to 14, 15, 20, 25? I don't know. It's big. Bigger. A lot bigger. >> Excellent. All right. So, uh backing up a little, we were talking a bit about gold stocks, and I think you have a chart you'd like to share with us of the >> Yeah. Hi, HUI index, which is >> sort of the granddaddy of in one way uh gold stock indices. It predates the GDX and the GDX. Yeah, >> it's sort of in the same realm as the uh XAU which has a lot of copper in it. So, HUI is sort of the uh gold bulls long-term view of of gold equities for those that are do not recognize it. And uh you know, gold stocks to do well, but I think you hold the view that uh they're still lagging. >> Yeah. Let me describe what you're looking at here. This is a chart of the Huey Goldbug stock index compared to the price of gold. And the price of gold is in gold, yellow, and the stock index is in blue. And it starts in early 2001. And so this chart shows you the bull market that occurred in in both gold and and and the right hand scale is the price of gold. The left hand scale is the price of Huey. So they're not, you know, apples and oranges, but directionally you get the picture. So, um, you can see in the last bull market that, you know, gold went up a lot and gold stocks went up even more, albeit with a big dip in '08. Um, and then you can see the the horrible bare market that we had, you know, from 10 to 15. And then what you can see is again, you know, the bull market in gold started in 2015 when gold was at 1,50 an ounce. We're now over 35. And this, by the way, this chart's a little out of date. You can see that gold is now over 3500, 3,600. And the QE actually is no longer where it is, right? It's up another couple. It's up closer to 500. But but the point I'm making is that there's a big gap and the the stocks represent a claim on future gold production. I mean, in a way, a gold company is a miniature sound money central bank. It can produce money, produce gold on a long-term time frame, a stream of gold coming in. And so the blue line should catch up and surpass the gold line if this bull market is anything like past bull markets. And you know this is this goes to I mean this was a much easier call to make in the beginning 2024 where we're pounding the table. These things are so criminally undervalued. You got to buy gold stocks. And of course you know we're up 130 140% from there. But my point is that there's still a long way to go before we get to the point where, you know, the the actual, you know, indices have outperformed the underlying metal. And um and so that's in my view that's that's coming. And that's why I say we're probably in the third inning of this, you know, gold stock bull. And and what the piece here that we really don't know, Tra, we just don't know where gold is going. I mean, you know, um, at the beginning of this all, these stocks were very undervalued at $2,000 gold, you know, and and then, you know, there's a lot of operating leverage in these companies. Their costs go up with the cost of inflation because they have fuel and labor. But, you know, the the price of the thing they sell is going up much, much quicker. And so, they're all just recording record margins, record profits. And, you know, I I don't think it's too late to get in. Um, you know, I will say though that, you know, and we're still accepting new money into our fund. But I will say there'll come a time probably a year or two from now where we will not accept new money into our fund because this I mean this was an obvious trade a year ago and we were balls deep in it. Um, it's still a pretty good trade, but you know, I mean I when when things are up 150% from where you bought them, they're not as cheap as where you bought them. And so I think it's going to go further. Um, but there'll come a time when they're fully valued and perhaps it'll even come a time when they're overvalued. I mean, you know, what happened is we went from, I'd say on average in our portfolio, things trading at four times EBID DA to now things may be trading at six times EBIDA because prices of the stocks have gone up, but the EBIDA's gone up too. And at the peak, you know, they'll probably trade at 10 or 15 or 20 times EIDA, very much like they did back here in 2011. And at that point, they'll be overvalued. But but we're not there yet. I think I think we've got a couple of years until we get there. So I'm I'm kind of looking forward to a couple of years of good performance in this category because we really just broken out in a lot of measures. >> So and backing up again on something you said in 2021 and 2022 the gold price you know was strong or advancing but the costs were going up much faster and so right >> that's something that's really changed here in the 2024. So in terms of gold equities, there's been lots of period where they haven't lots of periods where they haven't displayed that beta to bullion leverage that everybody looks for and I I may be getting my years wrong, but 22 23 was the last example of that. Now that gold has uh levitated the best way, >> we're going to be looking at really, really big increases in cash flows and margins, you know, over the next four, five, six quarters, even if gold doesn't go up anymore from here. >> Yeah, that's that's exactly right. I mean, and yes, you're right. I mean, what you can see here is that, you know, the price started to move and, you know, the stocks moved. I mean, it was really 24 the stock started moving, but it wasn't dramatic. And yes, throughout all this period, like gold was pretty flat. I mean, it wasn't a huge lag, but it's really more just kind of the magnitude of the move, you know, that that it I mean, this just really started to move and it took a while to kick in to the to the to the stocks themselves. So, this is a good leadin to your uh life in the next two weeks because I happen to know you're about to head west to Beaver Creek for a week where >> we have sort of the largest small gold investing conference for investors, you know, and then the following week we had the Denver gold show which is one of the two big in my opinion uh you know institutional investor conferences for gold stocks. the other being which is cleverly six months prior. So it's a big time and I think viewers should recognize there are going to be uh numerous announcements from gold companies over the next two weeks because they have a tendency to time some of their news releases to these two important conferences. So that will be uh interesting to watch. But as you head to Beaver Creek and Colorado Springs, what are you looking for? What do your what do your notes say? What? >> Yeah. Well, that's a great question. I want to get an update on all these companies. I mean, I talk to managements regularly, but it's always good to see them face to face. Um, and you're right, there are a ton of announcements. I mean, this morning, as an example, we just found New Gold is going to merge with Maritime, which is a completely logical and positive development. I we own both of them. Um, more Marathon than Newfound, but, you know, they're going to create a very strong producer um in in Newfoundland. Um, and and we will see more of that. I mean, we we you know, recently we saw Dundee take over Adriatic, which is Adriatic is a beautiful silver producer, just really starting to ramp up. And Dundee is one of my favorite names. I I just love that company. Love the stock. Think it's got a lot of upside. Um, you know, I mean, I think I've always said, Trey, the in my opinion, the sweet spot there, there are lots of places to be in the Gold Stock universe. And unless you know these things well, you know, you don't you should you should try and stay away from the what Rick Rule calls the penny dreadfuls and uh and stick with, you know, the big known producers, which don't have as much upside, but they don't blow up. Um, you know, and in that bucket, you've got AEM and Alamos and Kin Ross and, you know, Newmont Barrack. I mean I it's interesting Bareric has kind of really underperformed Pneumont and we just took a position in it in some of the call options on it the leap call options on it because I think the valuation gap between Numont and Beric is going to catch up barrack's going to catch up and we like Anglo and Kore and heck all those kind of big names but the sweet spot in my view in this area are what I call just below that tier where it's a real company with a real mind with real profits real growth that's got a much better chance of growing its production. There are three ways gold companies increase in value. They increase in value when the price of gold goes up. Duh. They get a bigger margin. They increase in value when they produce more gold. You know, they're they're they're making more of the stuff. And they increase in value when their multiple expands. And so the the top tier, the names I just listed, they don't grow a lot because, you know, when you got 5 million ounces of production, it's hard to grow 10%. Adding 500,000 a year is pretty tough, right? and you know they they uh so they're so the growth isn't necessarily there. They go up when the price of the metal goes up, don't get me wrong. And and by the way, they're big and safe and so most institutions own them. And so the multiples, you know, there are very few cheap names in that big category. As I said, I think Beric is cheap right now. I think it's about five or six times EVA dial. Um >> even though it's trading 40% above its 200 day moving average. >> Yes, exactly. Um, so, so the what I consider kind of the sweetest category or what I call just below those biggies, which they're big, they've got production, but they they're not so big, their market cap's not big enough, and they don't have so much production that they can't actually meaningfully grow production. Do you know what I mean? They can add capacity and grow. And also, sometimes because they're maybe in not as safest jurisdiction or they have a little bit of hair on them, they don't get a 12x, you know, evida multiple. They're selling at 4xe. But duh, right? And so the ones that I put in that bucket are, you know, like Aerys and B2 and Equinox and Dundee, Galliano, Orzone, Torx, K92. Um, you know, what I call kind of the emerging producers, emerging big producers. >> Do you own all of those? >> I own everything I'm listing. I own. Yeah. Everything I'm listing. >> How many How many stocks do you own in your fund? >> Oh gosh. Um, I'm kind of embarrassed to say this, but but but I'll tell you how we do it. We probably own 60 or 70, Trey. And let me just explain that. >> Seems like a high number for you. >> Well, it does, but let me explain. It's because of this asymmetry and the optionality in these things. Um, you know, big names, big weights will be two or 3%. We might own 50 bips of a drill story. And you might say, well, why even bother? Well, because as you and I both know, some of these drill stories do 10 and 20 baggers. So 50 bips becomes, you know, 5% or 10x becomes 5% of the portfolio level or 10% of the portfolio level. So it's worth owning the 50 bips >> and and it's a warning to viewers. It is not a good idea to try to pick one or two of these. >> Oh god, no. You got to own a ton of these. I mean, this this is all a probabilities game. And you got to know and you got to know what you're buying when you buy it. I mean, if you're going to own a drill story, you know, you want to own a banyan, as an example, you know, which was trading at $10 an ounce in the ground. now, you know, and I still own it. I like it. I think it's going to be worth a lot more, but you know, sorry viewers, you're a little too late because, you know, I was buying it at 1020 cents and it's at 680 now or 68 cents now, right? So, >> as I recall, they had a mud problem. Do I have that right? You're >> No, that's You're thinking Victoria. Victoria was That's her husband who ran Victoria, which they had a a failure on their Yeah. their stores their t their um you know their leech pad slipped and yeah it's horrible. Um but that's different issue but I mean the point is that you know each each company you want to know kind of the specifics of you know what they've got and how cheap it is and there were you know a year ago there were just cheap things laying around all over the place and we went and bought them. >> Are you more excited about Beaver Creek or uh Colorado Springs? Let's put it that >> Oh gosh. I mean both. I mean I, you know, you find good things at both of them. And this is, I mean, I will say this, Trey, this is one of those areas where being a stock picker really pays because there are, you know, gold mine's a really tough business. It really is. And there it Murphy's law applies everywhere. You know, costs more, takes longer, harder to do, and sometimes you catch a break, things come out much better than you thought. Grades are higher, you make more money. Um, and so it's all probabilities weighted and and so you've got to, you know, you've got to just weed through the the facts and kind of go, okay, is this a good bet or a bad bet? And there's some really good companies, but they're, you know, that are fully priced. And the the trick is to kind of try and find the ones that are that are better than the price is reflecting and and to buy them and and then hope everyone kind kind of comes to see that, oh, you're right. That is a lot better company than I thought. Um, but let me just keep kind of going because I know your your viewers are probably interested in names and stuff. I mean, so I'm all over. I mean, just given what we talked about earlier and the price of silver, man. Oh, man. I mean, these silver stocks, they should all I mean, you pick a silver stock, it should double the next couple years. If not, I mean, if you're only doubling in a silver stock, you're doing bad. >> That's one of the problems. There's not many silver stocks. >> Well, that's right. So, that just touch on that. There aren't that many pure plays. And even like a Pan-American silver is less than half silver today. Although Heck and Coral Coror's got a lot of gold, but Heck's a pretty pure play silver stock, although they've had trouble up in the Yukon with that with that money. >> Pan-American just bought Mag, so they're going to increase. >> Yeah, that helps. That's right. Pan-American adding Mag and >> and First Majestic, which is less than 50% silver, but they bought Gatos and that brings them back up into a good piece. And they'll get Jarrett Canyon fixed. In fact, there's a name that's kind of broken, but I think and and the market hasn't really realized the penalty they put on Keith isn't fair in my view. And so, I'm I mean, I'm still buying it here. We bought some call option leap call options on it the other day. Um but you know silver names I mean and and by the way a couple of these have run so I'm not sure I'd buy them here but I uh that one hasn't run so hard. Aino is one of our biggest positions. Well it's up 4x you know now I think if they deliver >> from when >> uh let me tell you just get a thing here. So AO is 424 and as recently as the beginning of this year it was 90 cents. >> Wow. >> Yeah. That was our that was our heaviest weighing going into the year. >> Um, yeah. So, but but and but and and by the way, it's not cheap anymore. It's not we haven't we sold some of it, not a lot of it. It's not crazy expensive either. It's now kind of market, you know, bull market perform. And in large part because they're going to really increase their production. I mean, they're at kind of a 2 and a half million ounce run rate. They're going to take it to six, which if they do that and the price of silver does what we think it's going to do, it's it's going to work fine. Um, >> and so I interrupted you. What are your other >> Oh, yeah. So, Discovery, um, you know, Endeavor, I think I mentioned First Majestic, um, you know, Silver Tiger, uh, we like a lot and own that. Um, you know, um, one that's kind of, I think, stumbled a lot management wise, but has a lot of operating leverage and and a high silver price will even make up for the management stumbles is Guanowato. Um, own a big piece of that. Um, Don Durant just kind of profiled that. And then, you know, if you really want to get into kind of the the sexy um, that's riskier. um you know, several of which probably won't work, but you know, the kinds of things that if they do work, they're, you know, five to 10x your money. You know, I I'll kind of give you the developer drill stories that we're in. Um and you can, you know, fuss around with those. Um and I'm, you know, full self-interest, I'm on the board of two of these, so uh you know, full disclosure. I mean, Cabal I think is a great story. It's going to work. Um, ghetto gold in Nevada is very undiscovered, very under misunderstood. Couple million ounce deposit. Um, some of it's refractory, but it's easy to make a concentrate ship it. Um, you know, it's sub $50 million market cap, I think, or it was until recently. And, you know, it should be multiples higher. Um, Less Gold is a drill story I'm on the board of down in Brazil. Uh, 10 kilometer Calera. We think it's got enormous potential, but it's going to take a couple years to unlock it. Um, Lhatan Gold is another one in um in Nevada. Again, you know, kind of sub$50 million market cap. Um, you know, million and a half ounces. She's taking it to a pea. I think the PA is going to show that there's a very economic mine and so it should be worth a lot more than it's trading at today. Um, Zodiac Gold is over in Liberia, which is actually quite a safe area. It's western Africa but part safe part of Africa and um you know they uh they have just an enormous land package 20 km by 20 kilometers and uh you know riddled with gold and and uh and iron ore and I think he's going to develop that in a very nice way and again that's like a $15 million market cap. Problem with that one all these other ones you can find a USDR. Zodiac hasn't even gotten to the point where you've got one of those American tickers. You know what I mean? If you want to buy it it's VC. So, you got to have your Canadian broker get it for you. Um, we like Free Gold as a drill story. We like Helioar as a development story. I like I80. A little bit longer term. It's going to take time to develop, but the guy running that, Richard Young, is just a killer. >> And that that >> one of my favorites. Incredible. >> He's a good guy, right? You know, right? >> Very serious. Yes. Very serious. Very. >> He is going to turn that into an extremely valuable company. But you got to be patient because I don't think there's a lot of you I mean the news flow is going to take a couple years to come. So we're in it. You know when it starts when it gets closer to really having one of those things going we'll pile into it. But right now we're just in it. >> I unfortunately warmed up to that in the low twos. Not quite. >> Where is it right now? I'm just trying to think. Um >> it's like 90 cents or something. >> Yeah. Okay. Yeah. Whatever. Buck 12. I got it. Yeah. >> So Oh, you're looking at Canadian. So >> yeah. Let me ask you one question because that was a great list and then we'll spend a couple minutes on Bitcoin. But I have a question for you because you know these companies so well. One of the things I've never understood Fresno operated you know one Kip Kipio one Cypio was that >> for all these years they have all this money they have all this clout and they own 50% of mag why didn't they buy the other 50% and why would they let Pan-American buy it? I just don't get that. >> I agree with you. It's kind it's kind of strange to me. I don't I don't fully understand that either. By the way, I didn't mention Fresno when I was going through the silver. It's one of our largest positions. I love that company, >> right? It's almost, you know, pneumont of silver. >> Yeah, it's kind of it's one of it's I think it's the largest silver producer in the world. Um it's a little bit familyowned >> silver company. Yeah, >> but why wouldn't that resource they could have bought it any time in the last dec, you know, honestly, I don't get it. I mean, as you know, they control it. I think Magg only owns like 40 some odd percent of the economics of Wipio. I mean, I don't know. I don't know. >> Kind of reminds me of uh you know, the whole thing with Ivanho, you know, with >> Boy Togoy where >> same idea. >> You have 50%. It's like you don't buy the other half because you don't have to. I mean, is that is that >> Yeah, same idea. Yeah. I I maybe that maybe that's it. I mean, I never owned MAG and I'll tell you why. Because I didn't know what they were going to do with their capital. You know, they were gonna I mean, they it didn't there wasn't really a growth story there. they weren't going to go start another mine. Um, and so, you know, they were going to and they gener obviously they get a lot of cash out of that mine. But what are they going to do with it? Um, I like the the companies with the most upside in my view have proven that they can develop mines like a Dun Dundee for example, Dundee Precious Metals and they take that capital and they either do a smart acquisition like Adriatic or they take the metal and use it to, you know, to develop other mines that are in their pipeline. You know, Aerys, same story. Aerys has got a pipeline of, you know, three or four good minds. You can just kind of see, you know, Equinox has kind of done the same thing. You can just kind of see how these are smart people who know how to pyramid and go up. I mean, another one that's actually done it very well, too. Um, we don't own it right now because it's just too expensive, is G mining. I mean, those people are killers. They did a fabulous, we owned it for a while. We wrote it. I mean, they've done a fabulous job. And by the way for viewers uh SCP resource finance our partners are one of the leading financiers of G mining a big is that right? Okay big success for >> there is no better management team by the way I mean you know I tell you what's going to happen gmin mining by the way is running out of resources in their in their flagship mine >> and they're going to have to come by Cabraw. I mean it just they whether they know it or not or yet yet or not it doesn't matter. I mean >> there are guys that are all over that. >> Yeah. What's that? nothing a footnote. I'm sure they're all over over >> Yeah, they they are. So, >> so let's uh let's segue just a bit. We have a few minute. So, Bitcoin uh it's 50 minutes into the uh conversation. We haven't even brought up what I know is >> topics in the world. >> Where are we in the Bitcoin cycle? And I know >> for investors to compare >> some people look at today's uh prices on the on the board >> and you look at Bitcoin and you look at some of these miners, you look at gold, how does Bitcoin play into the whole thing? >> Well, as I think I've discussed with you before and as I talked about in my book, I do think Bitcoin will outperform gold and I think at various points in time it will outperform the gold miners. Not all the time. And it does have one benefit against the go versus the gold miners and that is that there's really no management team and screw it up. I mean there are these core developers who sometimes sometimes act as though they might screw it up but for fortunately everybody votes on it. So I think the votes are never going to get put into place to screw it up. So in this in terms of the cycle Trey I mean there's traditionally there's been a four-year cycle and I think that might be getting a little bit elongated here. Um and my belief is that we're still in an upswing. There's some people who think we peaked at, you know, 120 something, 123, I think, is the high. I don't think that's right. I think we've still got another, you know, leg to this cycle. Um, and we're kind of consolidating right now. It's interesting to me that gold's moving first. I think, you know, my prediction for Bitcoin is we'll be at 140 at the end of the year. If you actually look at a Bitcoin chart, there's kind of a flag um right around the, you know, the 108 to 110 area. And if you project, you know, how it went up to that from where it went to there to the next move, it should go up another 30 or 40,000, put you at 140. Um, and you know, in this cycle, what's the top in this cycle? I don't know. Maybe it'll get nutty up there and we'll squirt up to 200, but then probably we'll correct 50%. I mean, you know, anybody investing in Bitcoin, the biggest risk I always tell people they're looking at Bitcoin is you have to understand what this is. You have to understand how volatile it is. You have to understand that it's had 50% plus draw downs. And so, you know, and what what'll be sad is we'll get to 150 or 200 even and some people finally say they'll give up and they say, "Oh, god damn it. I can't take it. I'm going to buy some Bitcoin at 200, you know, and just about then it'll go back down to 100 and then they'll say, "Oh, I bought at the top. I'm an idiot. I should never have done that." And they'll blow it out 100. That's the wrong move. I mean, buying it at 200 in a 5 to 10 year window is not a bad idea. Buying it at 200 in a one-year window might be a bad idea. And so, you know, I still feel like we're on the side of it where you can buy it today comfortably knowing that even the next draw down probably won't take you below where we are today. I think we're at 1012 right now. I feel pretty comfortable that we won't go below that on the next draw down because I think the next upswing and this is again looking at technical analysis and there's something called the power law model. I mean there those of us who are in the space we use about five or six different ways of triangulating in on the adoption of this thing and so you know and and it's all this is all just guesswork and based on past patterns but to me I feel like there's a pretty good chance we'll be 150 to 250 on this cycle and I think that'll probably occur between December and June of next year and that that at that point in time everybody will be going crazy. You'll hear Bitcoin everywhere. You know, your shoe shine guy will be telling you about Bitcoin. Everyone will be all the Bitcoin players will be levered. You'll have all these Bitcoin treasury companies going nuts, right? And then they'll be just about then everyone will be too far on one side of the boat and we'll get we'll get a serious correction, right? >> Put putting you on the spot given the volatility that you just mentioned. >> Do you look at Bitcoin as a store of value? >> I do in a long-term sense. in a very long-term sense. I think it depends on your time frame, Trey. I mean, those people, I mean, a lot of smart people, gold people, people who don't believe in Bitcoin say it can't be a store of value. It's too it's too volatile. I get that. That's an argument. It's not unrealistic. I mean, I, you know, it I mean, a similar question. I like to compare it to Amazon. Was Amazon a store of value as it was growing? Right? It was the leading online marketplace just kind of keep and you know, obviously now it is the leading online marketplace. It would be very hard to displace, right? It's it's you kind of got a monopoly position at the top there. And so it stored a lot of value. In fact, it grew 220,000% in value. So that's the value of a growing network, right? But along the way, you know, in '08, it went down 90%. And Bill Miller >> going to bring that up. There were three draw downs in >> there have been multiple draws of 50% plus 50, 60, and 94 was the first although that a year and a half. So it so so I guess probably the right way to to to classify Bitcoin is yes it's emerging to have store of value properties but right now it's kind of a growth stock you know it's kind of an emerging networkbased growth stock that's probably and so you know if if if in the old world you held bonds for safety and stocks for aggressive growth in the new world you hold gold for safety and Bitcoin for aggressive growth how's that as a comparison Perfect. So, uh, how do folks get in touch with you about, uh, your >> Yeah, so um, I have a website. Uh, the name of the business I run is called Equity Management Associates. The website is EMA2, the number two.com. There are free newsletters, macro newsletters on there quarterly. You can sign up if you go to the bottom of the site. You can just put your email in, you'll be on the list. We'll never spam you. Um, and that's just a quarterly macro overview and talk about what we're doing in the fund. I'm also very active on Twitter, as most people know. I'm a loudmouth talking about sound money. Um, and then, you know, we should mention, if you don't mind, that I I also wrote a book. Um, uh, which >> Well, >> how's the book doing? >> That's doing well. So, it's called The Big Print. It's available on Amazon. I mean, I don't never written a book before, Trey, and I don't know what to compare it to. Um, I just crossed 40,000 copies sold. Good for you. >> So, it's it's um yeah, I mean, it is good. It's a niche, right? It's a niche financial book. Um probably the thing I'm most most proud of or excited about. We all know who Robert Kiyosaki is. He wrote Rich Dad, Poor Dad. He This will blow your mind, by the way. He sold 50 million copies of that book. Isn't that something? I mean, it came out in 94. I know. I read it. It changed my life. It was a great book. He loves my book. He says, "Everybody's got to read this book." So, I that's a that's a nice endorsement, and I've been trying to use that. So, it's it's coming along. >> And uh for investors who are interested generally in all of this, but aren't quite ready to take the step to uh Equity Management Associates, we want to remind our viewers that anyone who's interested in having their portfolio uh reviewed for free uh should check in with us at wealthon.comfree. And for those who are interested in getting involved in precious metals and they aren't quite ready for Larry's uh stocks and Burkina Faso, please check in with us at uh hardassetsalliance.com uh where I think we have one of the most userfriendly ways to have our viewers participate in precious metals. So uh Larry, this has been great. I'm bold up on all of these different things and I look forward to talking with you in a couple of months about everything you learn out west. >> Be happy to do it, Trey. And I I look forward to that as well. Thank you very much for having me on. Thanks for the time. >> Thanks, Larry. Bye-bye. [Music]