Rich Checkan: Gold Nowhere Near Top, Use Price Dips to Buy
Summary
Gold and Silver Market Dynamics: Rich Checkan emphasizes that despite recent rapid price increases, there is no clear top in sight for gold and silver, suggesting continued bullish momentum.
Investment Strategy: Checkan advises investors to use any price dips as buying opportunities, highlighting the lack of fundamental indicators suggesting a downturn in the precious metals market.
Morgan Stanley's Portfolio Recommendation: The introduction of a 60-20-20 portfolio, with 20% allocated to gold, could significantly impact gold demand, potentially rivaling central bank holdings.
Central Bank Influence: Central banks have been major drivers of gold prices, purchasing around 1,000 metric tons annually, which has consistently pushed prices to new highs.
Market Sentiment and Trends: Western investors are beginning to increase their gold and silver holdings, transitioning from a predominantly central bank-driven market to one with more retail investor participation.
Economic Indicators: Factors such as low real interest rates, a weak US dollar, and geopolitical tensions continue to support the bullish case for precious metals.
Silver Market Specifics: Industrial demand and investor interest are driving silver prices, with the market experiencing logistical challenges due to metal being in the wrong locations.
Future Outlook: Checkan predicts a longer-than-usual bull market cycle due to central bank involvement and advises investors to watch for economic policy changes and potential market corrections as buying opportunities.
Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Rich Chucken, president and CEO at Asset Strategies International. Thank you so much for being here. Great to have you. >> Oh, great to be here always, Charlotte. And it's fun times, too. >> It is fun times and we've got so much to catch up on in the precious metals market. Where I thought we could begin is just with a a quick look at gold and silver prices right now. I know that you've been bullish on both metals, but the prices are moving so quickly. So, I wanted to ask you, I know you were thinking prices would go higher. Did you see it unfolding as quickly as it's been moving lately? >> To be honest, I I think uh you know, when we were down around $40 an ounce in silver and we were, you know, somewhere in the the mid to high 30,000s in gold. Somebody asked me um where who's going to get there first? Is silver going to get to $50 before gold gets to 4,000 or what? And and I really thought because of silver's volatility, silver would hit 50 before gold did. And they ended up doing it about the same time, but I think gold won. So, it got to 4,000 first. >> Yeah, it really was kind of a a bit of a race to the top there. And I also want to bring up a question. We were talking just before we turned the camera on. I was telling you, well, I don't know. I'm I'm starting to feel a little bit nervous. And I think people are looking at these price moves and they're thinking, okay, well, can they continue? Do they need to take a breather? So, I want to also get your take on that. >> Yeah. So, they can take a breather. There's no question about that. Um, almost kind of want them to. Um, but the reality is there's there's no top in sight, Charlotte. So, you'll recall we've been doing these interviews for a while now. I remember saying, you know, at $1,800, almost at all-time highs, gold is dirt cheap. Silver's cheaper. Then at $2,400, gold is at all-time highs now. Silver is nowhere near it. Gold's cheap. Silver's cheaper. Uh $3,000 beginning of this year. You know, gold's at all-time highs. Silver's not. It's Gold's cheap. Silver's cheaper. And every time somebody would come out and say, you know, I'm waiting for the pullback. I think it's overdone and all this other stuff. Uh the reality is nothing in the fundamentals suggested that it should go lower. Nothing in the fund fundamentals suggested it should not go much higher. Um and that's what we're getting. Um I I've got about I don't know seven, eight, nine different indicators I look at for the top in a in a bull market for gold. Um none of them are firing. I look at the price. Uh we're nowhere near where I think it should go. somewhere between $3,800 and $5700 on a conservative basis, two to three times previous highs. The duration is nowhere near 10 plus years you would expect from a commodities bull market. Uh interest rates um to to get people to to dissuade people from buying gold to to rather have them choose term deposits at a bank, you've got to get a better return than what 4 and a/4 minus 3% inflation. that's just not going to get people's heads turned. Um, so the real return is very low and people would rather put their money in precious metals here. You need high single to low double-digit interest rates. Uh, you need a strong and strengthening US dollar. We don't have that. The dollar is below 100 on the uh the legacy index and you know it's it's had a little bit of a a push here lately, but that only gets it to 98. Uh, you know, the dollar is weak and I think we're we're in for about a further weakening. Uh, you want to look at the gold silver ratio. It's got to get down to 35 to 50 to1, meaning it's going to take 35 to 50 ounces of silver to buy that ounce of gold. We're just breaking 80, which signals the bottom and the movement upward in gold and silver prices because investors now are finally investing. Um, you want to look at sentiment. We're starting to see headlines, right? They're in the Wall Street Journal. Financial Times, you've got Jamie Diamond out there calling for 15% allocations and others. I'm sure we'll get to that here in a second, but you know, so it's starting to get out there in the mainstream and people are talking about it, but my Uber driver is still not telling me how much money he made in in the gold and silver market. So, we're far from that. Um, we've got a a glimmer of hope with peace in the Middle East, but we still have a war raging in Ukraine. So, we still have geopolitical crisis. We still have all sorts of domestic unrest in the US and elsewhere. Um, so all these things, the Dow to gold ratio, you got to get that down to five, meaning it takes 5 ounces of gold to buy the Dow. We're at like 11 or 12 right now. So, you know, we've got a long way to go. You need three or four of those indicators to fire to suggest, okay, the clouds are gathering and maybe the rain's coming. Time to look for the exits. We don't even have one firing right now. Don't don't be nervous about a top. If it pulls back, it's a dip in a bull market. Embrace it. Buy more. Well, >> well, this is great context and I think it it really makes me feel better and many points among what you said that we can pick up on. Where I wanted to go first is you mentioned we're starting to see these headlines in more mainstream media about gold. And you had sent me some really interesting statistics related to Morgan Stanley's new recommendation, the 60 2020 portfolio, which of course 20% of that is gold. So you've crunched the numbers here on on the impact that could have. So I'm wondering if we can run through those because it's quite significant. >> Yeah. And and and I'll give you a little bit of a context too in terms of that compared to what the central banks have been doing for the past three and a half years. So the the bottom line is uh if you haven't heard, Morgan Stanley came out. They're they're not the major brokerage house, but they're a blue chip for sure. And you know, they get my attention when they have $4.8 trillion assets under management. Um, reality is probably not all of those portfolios are getting switched to 60 2020. Let's let's be honest. This is an imperfect world. Um, but let's say they did for a second. Let's assume everybody goes from 0 to 20% in gold and from 40 to 20% in bonds. Um, 20% of 4.8 trillion is $960 billion. Now, that would buy at $4,000 gold. We're a little above that, but $4,000 gold, that would buy you 240 million ounces of gold. Um, since a metric ton is uh a,000 kilos or 32,151 ounces of gold, uh, you're talking 7,465 metric tons of gold. That is a big ask. Okay. Um, but consider this. The US largest central bank holdings of gold in the world have 8,133. So you're you're basically, you know, going to going to rival the US central bank holdings. Um, but more importantly, look at what the central bank buying has done for the past three and a half years. Um, central banks on on pace for about a,000 metric tonses per year for three and a half years. That's 3,500 metric tonses. And that has been enough over the past three and a half years to consistently move the gold price up to new highs and new highs and new highs. Just with that buying cuz the investors until past month or so have not been in this market at all. Right. So, it's all central bank buying. We're talking Morgan Stanley would need more than double that. I think we're going higher. That's exactly what I was going to ask. You know, it sounds like it could have massive implications for the price and you pointed out, okay, it doesn't mean that Morgan Stanley is going to say, okay, everybody's doing this now, but I was going to ask you, do you think that other firms could start to to lean in that direction? >> I I do think so. Um, you know, uh, just recently Goldman Sachs came out, uh, and they revised their forecast upward. They think we're going to have $5,000 gold and $65 an ounce silver next year. um up from previous forecasts. Uh you've got Jamie Diamond, like I said, he's out there uh from Bridgewater. He's saying that everyone ought to have 15% allocation to gold. I I think it took one or two to come out and make those bold claims in a in the traditional markets. I mean, for us in the alternative space, I'm like, what took you so long? We've been saying this for decades. Um but you know, for them to come out and say it and now I think it's kind of like dominoes will start falling. They're not all going to go to 20%. Um, but I do think they're going to find some room in their portfolio for gold. And I think we've covered this before. Average holdings worldwide in gold typically are about 2%. I mean, it's tiny overall. Um, of right now, you know, prior to this surge in gold, we're we're looking at about a half of 1% penetration. If we just, you know, did three times what we're holding right now and moved back to the norm, I mean, that would be massive for the gold market, let alone moving to five or 10, 15% gold holdings. >> Well, and I'm curious about the flip side as well. I don't know if you've run the numbers on this or looked at this, but that 20% that Morgan Stanley is saying, okay, let's put that to gold, is coming out of bonds, and the bond market has already faced turmoil this year. So what are the potential effects there? >> Yeah. Well, obviously that that's how the world funds everything is through the bond market. So that's got to have an impact. I am not a a bond guru. I do not pretend to be one. I got to think it's going to hurt funding of industry of economies worldwide. Um I could see how that could easily lead to some sort of a a pullback or recession in traditional markets. There's no two ways about that. if if you pull the funding sources, um obviously we're going to do less commerce. >> Yeah. Yeah. I think that's definitely fair to say. And the other point I wanted to raise with you is what does this change tell us about how Morgan Stanley and maybe some of the other firms that you're mentioning are are looking at the economic landscape right now. I know that we've talked about this in the past before pretty frequently. You see problems that all tie back to debt. Are we seeing, do you think, a more mainstream wake up to this type of problem right now? >> Uh, I think we're seeing a mainstream wake up to the solution to the problem. I don't Here in the US, we we have a government shutdown. I think we're in day, I don't know, 15 or whatever it is. It's it's it should have never happened. Um, but again, we have politicians and and in the US, we're not the only ones, right? So, we're having the same problems in Europe and Asia where we're addicted to debt. Um, we like to spend more money than we take in in revenue. And there's only there's only two things that can happen at that point, Charlotte. Either you flat out default on your currency and your obligations. Um, and that's the end of that currency. That's really the death null for that economy, which is never going to happen, by the way, with the world's reserve currency. Um, or you do what I call death by a thousand cuts, right? you you do these little defaults all along the way where you expand the money supply. Um that's money not created out of any sort of uh you know uh entrepreneurial activity. It's just out of thin air there's more money in circulation and all that does is put upward pressure on prices of everything that has any sort of value cuz each dollar each euro each yen is just worth less. Right? So cup of coffee is going to be more college education, new home, new car, an ounce of gold, an ounce of silver. So I think the world is waking up to that the fact that to protect their portfolios, they need to get some hard assets, some commodities in there. Um I don't really see anybody addressing the problem, which is stop overspending. It's really not that difficult. Um they need to stop and you know, Congress needs to do that here in the US. Um, but you know, I think the president has a hand in it, too. Um, he could easily just not sign anything that's not balanced. So, I think that's got to happen. I don't see that wakeup call yet. I don't think the alarm started ringing. It should have. >> Oh, absolutely. I agree. So, we don't we don't see the problem yet, but people are coming around to the solution, which is gold, precious metals. And that's another point that I wanted to bring up with you. you touched on it earlier on, but the western investor when we had our last conversation in July, you were saying they're not they're not here yet. They're not buying, and that sounds like it's now changing. So, what are what are you seeing there? >> Yeah. So, I I'd say still we have a little wave. We don't have a title wave or or or a you know, a tsunami by any stretch of the imagination, but the Western investors getting back into this. And I know this as a dealer um because when you know, we buy and we sell. And for the past few years, we've been doing a lot more buying than we've been doing selling. The only selling we've really done has been, you know, to a handful of high- netw worth folks who are really unaffected by by the economy dayto day or by individuals who were looking for deals. And every time somebody sold, we said, "Hey, would you like to buy some metal a little cheaper than I could normally offer it?" So, those were the kind of sales we were doing. Now, we're having flatout sales. people are calling me up and saying, "Okay, I should have done this uh a long time ago. I I see the light. I'm ready. I'm jumping in the water with a big toe or something, you know." Um, so people are now buying metals. We're still seeing liquidations. I mean, gold's at all-time highs. Silver's at levels people haven't seen ever, and the last time we were even close was 2011 and 1980 before then. So, you do see some tired liquidation still here. Um, but for the most part, people are switching and that behavior is turning into a buying pattern. And albeit late, I still think it's not anywhere near too late. And good for them for for realizing it and getting in the game. >> You went in another direction that I was hoping to go, which was any other trends among your customers cuz also that last time we were speaking, you were talking about who who was liquidating and why they were doing that? You mentioned people maybe want to simplify their portfolio. they're getting older, they're going to pass it on, maybe they're paying off debt. Any any other trends that you would mention that we should be aware of? >> Nothing new, but I will tell you that it's still prevalent where we are having people sell cuz they need the money. So, that could be to take care of credit card debt, that could be to pay bills. Um, we still are seeing uh some of our uh elderly clients who are preparing their portfolios for their heirs. mean we're we're going to do a liquidation overnight here tonight uh for a client who passed away. Um and they have to sell in order to divvy up the assets in the trust for the errors and then most of them are going to turn right back around and buy in. Um I wish we could just hand it over to them in kind, but that's not allowed by this trust or something. So we're seeing some of that. Um but yeah, no new trends. The premiums though are starting to inch up. So that's not really an investor trend. That's how the market's responding to the investor trend of investors are starting to buy in a big way. Um so now that pressure on uh fabrication demand is going to uh you know show itself in terms of higher premiums. Um they're they're not anywhere near out of hand, but they're starting to inch up. >> Well, and I always like to ask you what products people should look for if they want to get the best deals. Usually you tell us, I think, to look for what has the lowest premium that and that's what you should focus on. Is that still the advice you'd give right now? >> I I still do. Um, you know, there there's a lot of talk right now about silver squeeze going on in London and the leasing rates are skyhigh right now to to to kind of um tamp that down a bit, if you will. Um, so you're going to see again premiums rise. I I I hate to pitch a product, Charlotte, but I'm I'm telling you, we we designed that Perth Mint program 30 years ago, uh for the the Perth Mint certificate program for the Perth Mint. Um we've had all sorts of silver squeezes in 30 years. Uh and never ever has that product been affected. It's 2 and a/4% above the spot price for gold, silver, and platinum. It's been that way for 30 years without, you know, a change. So, um, if premiums do get out of hand, uh, there's no question where you should turn. 100%, you know, uh, allocated metal or unallocated metal at Perth, but 100% unique metal to you with a very low premium compared to where what you'll find elsewhere. >> I think that's really good to know. And I do want to touch a little bit on what's going on with silver. I think we did a pretty good job covering factors driving gold at the moment, but there is that silver squeeze discussion right now in terms of what's going on in London. And I'm wondering if you can shed some light on the dynamics there. >> Uh, a little bit. Uh the bottom line is uh I think London got in trouble uh in terms of their uh warehouse stocks when they shipped a whole bunch of silver to the US ahead of the anticipated tariffs from President Trump, right? So they they said, "Okay, the the tariffs are coming. We cannot stop that train. Let's go ahead and move a bunch of metal to the US so it's already there pre-tariff and then we don't get hit with that, you know, whatever the tariffs might be." And that was wonderful and I'm sure it helped a little bit. But now the problem is they need metal in London and they don't have it there. You're actually starting to see reverse flows of metal uh going back to where it's needed. I I don't know that we're at a point where um you know the world is uh scrambling for ounces above ground. I know we had about 11 years of of over production uh and that was swallowed up in about a year or two of uh um deficit production. Uh but I still think there's enough above ground supplies to meet the demand. Uh but it is picking up and uh it's just I think it's more of a matter of it's in the wrong place at the moment. >> Right. Right. It's very tricky. So thank you for going into that. And just a little bit more on silver. This is a question that I've been grappling with as we see the price go higher and higher. Is what is what is driving silver to these levels? Is it these silver specific factors like this squeeze that's going on? Is it following gold? Is it the industrial side of silver? Anything else you would add on what is moving silver at the moment? >> Well, well, there there's definitely an uptick in industrial consumption of silver. There's no question about that. That is having an impact whether it be for solar cells or what have you. So, so more interest in silver from an industrial standpoint. Um, as I mentioned, you know, now that the investor, uh, the Western investor, but all in retail investors are getting into this market, they buy gold, they see gold at $4,000, and they said, "hm, that's a lot of money for 1 ounce. Maybe I should pick up some silver here." So, we see a lot of that substitution buying going on. Uh, in both cases, that's putting additional pressure on a market that's already a bit strained again for having metal in the wrong place. So, I think all of that kind of comes together and creates a little bit of a panic, if you will. Um, and it's definitely creating a big run on silver. The big the biggest issue with silver, though, is, you know, what I've always said, you know, gold starts a trend up. Uh, silver will eventually, once gold establishes, it will follow and then it will outpace it to the upside. Gold will turn the corner to a bull market or to a bare market. It'll it'll establish the trend. and silver will follow and then eventually outpace after lagging behind. And it's really because of, you know, gold is your leader. Um, silver is a follower, but it's a much smaller capitalized market. So, when you start seeing the same dollars going into the gold market as they are into the silver market, the impact is bigger in the silver market, uh, from a percentage standpoint. Uh so it's it's kind of like throwing a rock into a puddle or a pond. Uh the the ripple is going to be, you know, uh basically uh bigger uh impact in the puddle than it would be in the pond. And that's what we're seeing with gold and silver right now. >> Well, I'm glad you mentioned that because I think this is part of why maybe people are looking at the market and wondering, all right, is this over? Because they hear about how gold goes first, then silver follows, and then it outperforms. and we're seeing it silver at these historic levels and people think all right well it seems like it's it's performing quite well. So I guess the question is essentially where would you place us in the the precious metal cycle? >> I I think you know it's a weird cycle because this wasn't all investor driven right so this was central bank driven for three and a half years up to this point. Uh so I normally we're looking at about a 10-year cycle for precious metals. I think this one's going to be longer. I think we're somewhere in that uh cycle of about halfway, maybe a little bit more. Um but I think the investors are getting in in this later and they will take it much further from here. Uh what we haven't had really in previous bull markets is the central bank participation because of the ddollarization, the hedging for inflation and all the reasons that central banks have been buying. Um that was just like a nice head start if you will in the bull market. I think it really gets going now from an investor standpoint. So I think we've got plenty of room. Um you know we've talked in the past, I'm not a technician, but you look at that 45 year silver cup and handle formation. Um, and you know, if you analyze the boundaries, silver from here should go to 90 to $100 once we break out. And we broke out earlier this year. I think that's where it's going. Silver. Um, gold at the end of the bull market, you expect to be 35 to 50 times the silver price, right? Um, so if gold or silver goes to 100, gold goes to 5,000 at 50. uh if silver goes to you know 100 um at 35 gold goes to 3500 I don't think that's I mean that's a foregone conclusion we're past that at this point I think the numbers are much higher I think the central banks gave us a head start >> okay I think that helps me understand a lot better because people are so familiar with this is how things play out but if you mentioned it's a little bit weird this time then that that helps me understand all right so we've we've situated ourselves quite well I think in terms of gold and silver and you mentioned at the beginning of the conversation those factors that will tell you when we're starting to get to the end we're not seeing any of those right now what I want to ask you before I let you go what are the key factors that you are watching right now for for gold and silver maybe to not that we necessarily need a next leg higher right at the moment but what are what are you looking for >> uh I would like to see a little bit of a pullback to be honest with you um I I think all markets need that um that pause that refreshes, if you will. They've got to come back. You've got to uh back fill uh from lower levels uh from a a technical standpoint. So, that's got to happen. I'm not sure exactly where it's going to happen. It doesn't seem like it's going to happen right now. The trend is your friend. And every week I get asked, you know, where's gold going next week? Is it going higher or lower? Um and it's been straight higher for a long time just because the trend is so strong right now. Um, I think you want to kind of keep an eye on the dollar. Uh, I think you want to keep an eye on the situation in the US with uh funding the federal budget and see if anybody's light bulbs are going off in terms of fiscal responsibility. Um, if if it is, then okay, then maybe we'll get a shortterm pause. But Charlotte, to be honest with you, we just had, you know, a major event this past weekend where we had the peace talks uh you know in Israel with in Hamas with Israel and Hamas and uh it didn't make an impact on the markets whatsoever. You you would expect that that would be strong enough news to see a pullback and a pause in both gold and silver. They kept going higher. Um so I don't I don't think we're going to have any sort of rational behavior in the markets here in the short term. Um, if it happens though, again, embrace it. Take that opportunity to buy well because I don't see this as the finish line by any stretch of the imagination. >> Well, I think those are perfect words to wrap up on. Thank you so much for coming on today to go over what's happening in the gold and silver markets. This is great. >> Yeah, no problem. Always happy to to to get on on the air with you and discuss what we're seeing, whether we we get it right or not. I think we've been right for a while here. So, >> yeah. Yeah, I think you have. So, we'll have you back again soon. For now, once again, I'm Charlotte Mloud with investingnews.com and this is Rich Check-in with Asset Strategies International. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.
Rich Checkan: Gold Nowhere Near Top, Use Price Dips to Buy
Summary
Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Rich Chucken, president and CEO at Asset Strategies International. Thank you so much for being here. Great to have you. >> Oh, great to be here always, Charlotte. And it's fun times, too. >> It is fun times and we've got so much to catch up on in the precious metals market. Where I thought we could begin is just with a a quick look at gold and silver prices right now. I know that you've been bullish on both metals, but the prices are moving so quickly. So, I wanted to ask you, I know you were thinking prices would go higher. Did you see it unfolding as quickly as it's been moving lately? >> To be honest, I I think uh you know, when we were down around $40 an ounce in silver and we were, you know, somewhere in the the mid to high 30,000s in gold. Somebody asked me um where who's going to get there first? Is silver going to get to $50 before gold gets to 4,000 or what? And and I really thought because of silver's volatility, silver would hit 50 before gold did. And they ended up doing it about the same time, but I think gold won. So, it got to 4,000 first. >> Yeah, it really was kind of a a bit of a race to the top there. And I also want to bring up a question. We were talking just before we turned the camera on. I was telling you, well, I don't know. I'm I'm starting to feel a little bit nervous. And I think people are looking at these price moves and they're thinking, okay, well, can they continue? Do they need to take a breather? So, I want to also get your take on that. >> Yeah. So, they can take a breather. There's no question about that. Um, almost kind of want them to. Um, but the reality is there's there's no top in sight, Charlotte. So, you'll recall we've been doing these interviews for a while now. I remember saying, you know, at $1,800, almost at all-time highs, gold is dirt cheap. Silver's cheaper. Then at $2,400, gold is at all-time highs now. Silver is nowhere near it. Gold's cheap. Silver's cheaper. Uh $3,000 beginning of this year. You know, gold's at all-time highs. Silver's not. It's Gold's cheap. Silver's cheaper. And every time somebody would come out and say, you know, I'm waiting for the pullback. I think it's overdone and all this other stuff. Uh the reality is nothing in the fundamentals suggested that it should go lower. Nothing in the fund fundamentals suggested it should not go much higher. Um and that's what we're getting. Um I I've got about I don't know seven, eight, nine different indicators I look at for the top in a in a bull market for gold. Um none of them are firing. I look at the price. Uh we're nowhere near where I think it should go. somewhere between $3,800 and $5700 on a conservative basis, two to three times previous highs. The duration is nowhere near 10 plus years you would expect from a commodities bull market. Uh interest rates um to to get people to to dissuade people from buying gold to to rather have them choose term deposits at a bank, you've got to get a better return than what 4 and a/4 minus 3% inflation. that's just not going to get people's heads turned. Um, so the real return is very low and people would rather put their money in precious metals here. You need high single to low double-digit interest rates. Uh, you need a strong and strengthening US dollar. We don't have that. The dollar is below 100 on the uh the legacy index and you know it's it's had a little bit of a a push here lately, but that only gets it to 98. Uh, you know, the dollar is weak and I think we're we're in for about a further weakening. Uh, you want to look at the gold silver ratio. It's got to get down to 35 to 50 to1, meaning it's going to take 35 to 50 ounces of silver to buy that ounce of gold. We're just breaking 80, which signals the bottom and the movement upward in gold and silver prices because investors now are finally investing. Um, you want to look at sentiment. We're starting to see headlines, right? They're in the Wall Street Journal. Financial Times, you've got Jamie Diamond out there calling for 15% allocations and others. I'm sure we'll get to that here in a second, but you know, so it's starting to get out there in the mainstream and people are talking about it, but my Uber driver is still not telling me how much money he made in in the gold and silver market. So, we're far from that. Um, we've got a a glimmer of hope with peace in the Middle East, but we still have a war raging in Ukraine. So, we still have geopolitical crisis. We still have all sorts of domestic unrest in the US and elsewhere. Um, so all these things, the Dow to gold ratio, you got to get that down to five, meaning it takes 5 ounces of gold to buy the Dow. We're at like 11 or 12 right now. So, you know, we've got a long way to go. You need three or four of those indicators to fire to suggest, okay, the clouds are gathering and maybe the rain's coming. Time to look for the exits. We don't even have one firing right now. Don't don't be nervous about a top. If it pulls back, it's a dip in a bull market. Embrace it. Buy more. Well, >> well, this is great context and I think it it really makes me feel better and many points among what you said that we can pick up on. Where I wanted to go first is you mentioned we're starting to see these headlines in more mainstream media about gold. And you had sent me some really interesting statistics related to Morgan Stanley's new recommendation, the 60 2020 portfolio, which of course 20% of that is gold. So you've crunched the numbers here on on the impact that could have. So I'm wondering if we can run through those because it's quite significant. >> Yeah. And and and I'll give you a little bit of a context too in terms of that compared to what the central banks have been doing for the past three and a half years. So the the bottom line is uh if you haven't heard, Morgan Stanley came out. They're they're not the major brokerage house, but they're a blue chip for sure. And you know, they get my attention when they have $4.8 trillion assets under management. Um, reality is probably not all of those portfolios are getting switched to 60 2020. Let's let's be honest. This is an imperfect world. Um, but let's say they did for a second. Let's assume everybody goes from 0 to 20% in gold and from 40 to 20% in bonds. Um, 20% of 4.8 trillion is $960 billion. Now, that would buy at $4,000 gold. We're a little above that, but $4,000 gold, that would buy you 240 million ounces of gold. Um, since a metric ton is uh a,000 kilos or 32,151 ounces of gold, uh, you're talking 7,465 metric tons of gold. That is a big ask. Okay. Um, but consider this. The US largest central bank holdings of gold in the world have 8,133. So you're you're basically, you know, going to going to rival the US central bank holdings. Um, but more importantly, look at what the central bank buying has done for the past three and a half years. Um, central banks on on pace for about a,000 metric tonses per year for three and a half years. That's 3,500 metric tonses. And that has been enough over the past three and a half years to consistently move the gold price up to new highs and new highs and new highs. Just with that buying cuz the investors until past month or so have not been in this market at all. Right. So, it's all central bank buying. We're talking Morgan Stanley would need more than double that. I think we're going higher. That's exactly what I was going to ask. You know, it sounds like it could have massive implications for the price and you pointed out, okay, it doesn't mean that Morgan Stanley is going to say, okay, everybody's doing this now, but I was going to ask you, do you think that other firms could start to to lean in that direction? >> I I do think so. Um, you know, uh, just recently Goldman Sachs came out, uh, and they revised their forecast upward. They think we're going to have $5,000 gold and $65 an ounce silver next year. um up from previous forecasts. Uh you've got Jamie Diamond, like I said, he's out there uh from Bridgewater. He's saying that everyone ought to have 15% allocation to gold. I I think it took one or two to come out and make those bold claims in a in the traditional markets. I mean, for us in the alternative space, I'm like, what took you so long? We've been saying this for decades. Um but you know, for them to come out and say it and now I think it's kind of like dominoes will start falling. They're not all going to go to 20%. Um, but I do think they're going to find some room in their portfolio for gold. And I think we've covered this before. Average holdings worldwide in gold typically are about 2%. I mean, it's tiny overall. Um, of right now, you know, prior to this surge in gold, we're we're looking at about a half of 1% penetration. If we just, you know, did three times what we're holding right now and moved back to the norm, I mean, that would be massive for the gold market, let alone moving to five or 10, 15% gold holdings. >> Well, and I'm curious about the flip side as well. I don't know if you've run the numbers on this or looked at this, but that 20% that Morgan Stanley is saying, okay, let's put that to gold, is coming out of bonds, and the bond market has already faced turmoil this year. So what are the potential effects there? >> Yeah. Well, obviously that that's how the world funds everything is through the bond market. So that's got to have an impact. I am not a a bond guru. I do not pretend to be one. I got to think it's going to hurt funding of industry of economies worldwide. Um I could see how that could easily lead to some sort of a a pullback or recession in traditional markets. There's no two ways about that. if if you pull the funding sources, um obviously we're going to do less commerce. >> Yeah. Yeah. I think that's definitely fair to say. And the other point I wanted to raise with you is what does this change tell us about how Morgan Stanley and maybe some of the other firms that you're mentioning are are looking at the economic landscape right now. I know that we've talked about this in the past before pretty frequently. You see problems that all tie back to debt. Are we seeing, do you think, a more mainstream wake up to this type of problem right now? >> Uh, I think we're seeing a mainstream wake up to the solution to the problem. I don't Here in the US, we we have a government shutdown. I think we're in day, I don't know, 15 or whatever it is. It's it's it should have never happened. Um, but again, we have politicians and and in the US, we're not the only ones, right? So, we're having the same problems in Europe and Asia where we're addicted to debt. Um, we like to spend more money than we take in in revenue. And there's only there's only two things that can happen at that point, Charlotte. Either you flat out default on your currency and your obligations. Um, and that's the end of that currency. That's really the death null for that economy, which is never going to happen, by the way, with the world's reserve currency. Um, or you do what I call death by a thousand cuts, right? you you do these little defaults all along the way where you expand the money supply. Um that's money not created out of any sort of uh you know uh entrepreneurial activity. It's just out of thin air there's more money in circulation and all that does is put upward pressure on prices of everything that has any sort of value cuz each dollar each euro each yen is just worth less. Right? So cup of coffee is going to be more college education, new home, new car, an ounce of gold, an ounce of silver. So I think the world is waking up to that the fact that to protect their portfolios, they need to get some hard assets, some commodities in there. Um I don't really see anybody addressing the problem, which is stop overspending. It's really not that difficult. Um they need to stop and you know, Congress needs to do that here in the US. Um, but you know, I think the president has a hand in it, too. Um, he could easily just not sign anything that's not balanced. So, I think that's got to happen. I don't see that wakeup call yet. I don't think the alarm started ringing. It should have. >> Oh, absolutely. I agree. So, we don't we don't see the problem yet, but people are coming around to the solution, which is gold, precious metals. And that's another point that I wanted to bring up with you. you touched on it earlier on, but the western investor when we had our last conversation in July, you were saying they're not they're not here yet. They're not buying, and that sounds like it's now changing. So, what are what are you seeing there? >> Yeah. So, I I'd say still we have a little wave. We don't have a title wave or or or a you know, a tsunami by any stretch of the imagination, but the Western investors getting back into this. And I know this as a dealer um because when you know, we buy and we sell. And for the past few years, we've been doing a lot more buying than we've been doing selling. The only selling we've really done has been, you know, to a handful of high- netw worth folks who are really unaffected by by the economy dayto day or by individuals who were looking for deals. And every time somebody sold, we said, "Hey, would you like to buy some metal a little cheaper than I could normally offer it?" So, those were the kind of sales we were doing. Now, we're having flatout sales. people are calling me up and saying, "Okay, I should have done this uh a long time ago. I I see the light. I'm ready. I'm jumping in the water with a big toe or something, you know." Um, so people are now buying metals. We're still seeing liquidations. I mean, gold's at all-time highs. Silver's at levels people haven't seen ever, and the last time we were even close was 2011 and 1980 before then. So, you do see some tired liquidation still here. Um, but for the most part, people are switching and that behavior is turning into a buying pattern. And albeit late, I still think it's not anywhere near too late. And good for them for for realizing it and getting in the game. >> You went in another direction that I was hoping to go, which was any other trends among your customers cuz also that last time we were speaking, you were talking about who who was liquidating and why they were doing that? You mentioned people maybe want to simplify their portfolio. they're getting older, they're going to pass it on, maybe they're paying off debt. Any any other trends that you would mention that we should be aware of? >> Nothing new, but I will tell you that it's still prevalent where we are having people sell cuz they need the money. So, that could be to take care of credit card debt, that could be to pay bills. Um, we still are seeing uh some of our uh elderly clients who are preparing their portfolios for their heirs. mean we're we're going to do a liquidation overnight here tonight uh for a client who passed away. Um and they have to sell in order to divvy up the assets in the trust for the errors and then most of them are going to turn right back around and buy in. Um I wish we could just hand it over to them in kind, but that's not allowed by this trust or something. So we're seeing some of that. Um but yeah, no new trends. The premiums though are starting to inch up. So that's not really an investor trend. That's how the market's responding to the investor trend of investors are starting to buy in a big way. Um so now that pressure on uh fabrication demand is going to uh you know show itself in terms of higher premiums. Um they're they're not anywhere near out of hand, but they're starting to inch up. >> Well, and I always like to ask you what products people should look for if they want to get the best deals. Usually you tell us, I think, to look for what has the lowest premium that and that's what you should focus on. Is that still the advice you'd give right now? >> I I still do. Um, you know, there there's a lot of talk right now about silver squeeze going on in London and the leasing rates are skyhigh right now to to to kind of um tamp that down a bit, if you will. Um, so you're going to see again premiums rise. I I I hate to pitch a product, Charlotte, but I'm I'm telling you, we we designed that Perth Mint program 30 years ago, uh for the the Perth Mint certificate program for the Perth Mint. Um we've had all sorts of silver squeezes in 30 years. Uh and never ever has that product been affected. It's 2 and a/4% above the spot price for gold, silver, and platinum. It's been that way for 30 years without, you know, a change. So, um, if premiums do get out of hand, uh, there's no question where you should turn. 100%, you know, uh, allocated metal or unallocated metal at Perth, but 100% unique metal to you with a very low premium compared to where what you'll find elsewhere. >> I think that's really good to know. And I do want to touch a little bit on what's going on with silver. I think we did a pretty good job covering factors driving gold at the moment, but there is that silver squeeze discussion right now in terms of what's going on in London. And I'm wondering if you can shed some light on the dynamics there. >> Uh, a little bit. Uh the bottom line is uh I think London got in trouble uh in terms of their uh warehouse stocks when they shipped a whole bunch of silver to the US ahead of the anticipated tariffs from President Trump, right? So they they said, "Okay, the the tariffs are coming. We cannot stop that train. Let's go ahead and move a bunch of metal to the US so it's already there pre-tariff and then we don't get hit with that, you know, whatever the tariffs might be." And that was wonderful and I'm sure it helped a little bit. But now the problem is they need metal in London and they don't have it there. You're actually starting to see reverse flows of metal uh going back to where it's needed. I I don't know that we're at a point where um you know the world is uh scrambling for ounces above ground. I know we had about 11 years of of over production uh and that was swallowed up in about a year or two of uh um deficit production. Uh but I still think there's enough above ground supplies to meet the demand. Uh but it is picking up and uh it's just I think it's more of a matter of it's in the wrong place at the moment. >> Right. Right. It's very tricky. So thank you for going into that. And just a little bit more on silver. This is a question that I've been grappling with as we see the price go higher and higher. Is what is what is driving silver to these levels? Is it these silver specific factors like this squeeze that's going on? Is it following gold? Is it the industrial side of silver? Anything else you would add on what is moving silver at the moment? >> Well, well, there there's definitely an uptick in industrial consumption of silver. There's no question about that. That is having an impact whether it be for solar cells or what have you. So, so more interest in silver from an industrial standpoint. Um, as I mentioned, you know, now that the investor, uh, the Western investor, but all in retail investors are getting into this market, they buy gold, they see gold at $4,000, and they said, "hm, that's a lot of money for 1 ounce. Maybe I should pick up some silver here." So, we see a lot of that substitution buying going on. Uh, in both cases, that's putting additional pressure on a market that's already a bit strained again for having metal in the wrong place. So, I think all of that kind of comes together and creates a little bit of a panic, if you will. Um, and it's definitely creating a big run on silver. The big the biggest issue with silver, though, is, you know, what I've always said, you know, gold starts a trend up. Uh, silver will eventually, once gold establishes, it will follow and then it will outpace it to the upside. Gold will turn the corner to a bull market or to a bare market. It'll it'll establish the trend. and silver will follow and then eventually outpace after lagging behind. And it's really because of, you know, gold is your leader. Um, silver is a follower, but it's a much smaller capitalized market. So, when you start seeing the same dollars going into the gold market as they are into the silver market, the impact is bigger in the silver market, uh, from a percentage standpoint. Uh so it's it's kind of like throwing a rock into a puddle or a pond. Uh the the ripple is going to be, you know, uh basically uh bigger uh impact in the puddle than it would be in the pond. And that's what we're seeing with gold and silver right now. >> Well, I'm glad you mentioned that because I think this is part of why maybe people are looking at the market and wondering, all right, is this over? Because they hear about how gold goes first, then silver follows, and then it outperforms. and we're seeing it silver at these historic levels and people think all right well it seems like it's it's performing quite well. So I guess the question is essentially where would you place us in the the precious metal cycle? >> I I think you know it's a weird cycle because this wasn't all investor driven right so this was central bank driven for three and a half years up to this point. Uh so I normally we're looking at about a 10-year cycle for precious metals. I think this one's going to be longer. I think we're somewhere in that uh cycle of about halfway, maybe a little bit more. Um but I think the investors are getting in in this later and they will take it much further from here. Uh what we haven't had really in previous bull markets is the central bank participation because of the ddollarization, the hedging for inflation and all the reasons that central banks have been buying. Um that was just like a nice head start if you will in the bull market. I think it really gets going now from an investor standpoint. So I think we've got plenty of room. Um you know we've talked in the past, I'm not a technician, but you look at that 45 year silver cup and handle formation. Um, and you know, if you analyze the boundaries, silver from here should go to 90 to $100 once we break out. And we broke out earlier this year. I think that's where it's going. Silver. Um, gold at the end of the bull market, you expect to be 35 to 50 times the silver price, right? Um, so if gold or silver goes to 100, gold goes to 5,000 at 50. uh if silver goes to you know 100 um at 35 gold goes to 3500 I don't think that's I mean that's a foregone conclusion we're past that at this point I think the numbers are much higher I think the central banks gave us a head start >> okay I think that helps me understand a lot better because people are so familiar with this is how things play out but if you mentioned it's a little bit weird this time then that that helps me understand all right so we've we've situated ourselves quite well I think in terms of gold and silver and you mentioned at the beginning of the conversation those factors that will tell you when we're starting to get to the end we're not seeing any of those right now what I want to ask you before I let you go what are the key factors that you are watching right now for for gold and silver maybe to not that we necessarily need a next leg higher right at the moment but what are what are you looking for >> uh I would like to see a little bit of a pullback to be honest with you um I I think all markets need that um that pause that refreshes, if you will. They've got to come back. You've got to uh back fill uh from lower levels uh from a a technical standpoint. So, that's got to happen. I'm not sure exactly where it's going to happen. It doesn't seem like it's going to happen right now. The trend is your friend. And every week I get asked, you know, where's gold going next week? Is it going higher or lower? Um and it's been straight higher for a long time just because the trend is so strong right now. Um, I think you want to kind of keep an eye on the dollar. Uh, I think you want to keep an eye on the situation in the US with uh funding the federal budget and see if anybody's light bulbs are going off in terms of fiscal responsibility. Um, if if it is, then okay, then maybe we'll get a shortterm pause. But Charlotte, to be honest with you, we just had, you know, a major event this past weekend where we had the peace talks uh you know in Israel with in Hamas with Israel and Hamas and uh it didn't make an impact on the markets whatsoever. You you would expect that that would be strong enough news to see a pullback and a pause in both gold and silver. They kept going higher. Um so I don't I don't think we're going to have any sort of rational behavior in the markets here in the short term. Um, if it happens though, again, embrace it. Take that opportunity to buy well because I don't see this as the finish line by any stretch of the imagination. >> Well, I think those are perfect words to wrap up on. Thank you so much for coming on today to go over what's happening in the gold and silver markets. This is great. >> Yeah, no problem. Always happy to to to get on on the air with you and discuss what we're seeing, whether we we get it right or not. I think we've been right for a while here. So, >> yeah. Yeah, I think you have. So, we'll have you back again soon. For now, once again, I'm Charlotte Mloud with investingnews.com and this is Rich Check-in with Asset Strategies International. Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.