Gold Hit $4,000! Markets Are Detached from Reality | David Lin
Summary
Gold and Silver Surge: Gold futures have reached $4,000, and silver is nearing $50, reflecting a significant uptick in precious metals, though mainstream media coverage remains limited.
Market Sentiment: Despite improved sentiment among miners, capital flows into the sector remain subdued, with M&A activity just beginning to pick up, suggesting a potential middle stage of a broader market rally.
Economic Divergence: A divergence between economic fundamentals and capital market valuations is noted, reminiscent of 2020, with markets potentially in a bubble due to liquidity and hedging against economic slowdowns.
Liquidity and Monetary Policy: Increased liquidity from fiscal and monetary policies, including a growing M2 money supply, is contributing to asset price inflation across various sectors.
Tech Sector Influence: The tech sector, particularly AI, is significantly impacting market dynamics, with tech companies driving capital expenditures and potentially creating an "industrial bubble."
Future Market Themes: Anticipated themes include capital rotation as investors rebalance portfolios, potential shifts in the housing market with declining mortgage rates, and continued monitoring of geopolitical influences on safe-haven assets.
Investment Strategies: Investors are advised to watch for profit-taking and rebalancing activities towards the end of 2025, with potential opportunities in underperforming sectors like midcaps and small caps.
Transcript
Gold has touched 4,000 points on the futures contracts and the US government is still shut down. What does that mean? What is happening in the economy? What is happening in the financial markets? I've invited an absolute expert expert because he speaks with all the experts and I do want to hear his own opinion. It's David Lynn. He's the host of the David Lynn Report. Another phenomenal YouTube channel you should check out. He hosts phenomenal interviews. And uh you just heard him coughing in the background. I think I'm buttering up too much, maybe a little bit, but I'm really excited to have him on. Um, I was on his channel the other day and I'm really excited to have him on because I don't think we hear his opinion often enough. So, I'm really excited to hear his side of things. Before I switch over to David, hit that like and subscribe button. It helps us out tremendously and it's a free way to support our channel. David, it's a tremendous pleasure to have you on my show this time. It's good to see you again. >> How the tables have turned. Thank you. Thank you, Kai. Thanks for inviting me on your show. Let me just uh point out that um the only thing that I'm an expert at is interviewing other experts. So um I'm happy to be on your show. I'm happy to answer your questions, but um it's best to watch for real experts on the economy. It's best to watch Kai's show. Uh subscribe if you haven't or check out my show. I also do interviews. >> Yeah. No, absolutely, David. Really appreciate it though. But the the the good thing is we get to experience all these experts. We get to listen to all of them. We get to form our own opinion. So and that's what I'm after today, David. It's really your own opinion where where where do we stand and last time maybe that's a a good starting off point like we saw each other in Beaver Creek probably the world's biggest like mining investment conference it's solely geared towards investment in the mining space what what is your impression there because it was the first time I saw you there um as a media partner I believe in your own >> absolutely yeah I um last time I was there was a few years before that um this is and I've also attended other resource conferences uh earlier this year like the Vancouver resource investment conference this was the first time when I felt sentiment amongst the miners was that good. Um although the recurring theme from my interviews with miners is that uh capital still is not flowing into the sector as much as maybe people would anticipate that it would. And you know this better than I do. You have the orange index that tracks capital flows and financing activity. But it certainly seemed to me like while sentiment is better than it was maybe two years ago when the gold price and silver price was relatively muted back then. Um, it doesn't feel like investor activity has picked up just yet. It's starting to is what people have been asking, telling me. I've been asking people, hey, are you writing checks or people writing checks to you? Are you seeing M&A? Are you seeing um, you know, buyout deals being being made? Um, and the answer across the board is we're starting to see that, which is strange because gold hasn't just started to move. As you know, it's $4,000. It was 2000 not too long ago, less than a year ago, and the GDX index is up 120% year to date. So, the fact that valuations are where they are today, price movements have gone to where they have today, and financing activity is just starting to pick up now, it's I don't know what that indicates. One of a couple of it could be a couple of things. One, this isn't the end yet. The beginning of the rally has happened and this is still the middle innings. uh or two, people will usually FOMO in into the last stage of the rally. Uh that's more of a bearish take. Or perhaps three, uh there isn't going to be any capital to be spent on the mining sector even if the rally continues. Maybe there's more money to be made in crypto or AI or any other competing sector and it doesn't really matter where gold is. So that's a theme I'm exploring right now. Yeah, there there are interesting themes because it depends on what side of the table you're sitting on, of course, because moneywise maybe capital raised, we've already beaten the last three years at at the end of Q3. Meaning like we've already raised more money in 2025 than we've raised in 2022, 23 or 24 individually, right? So there's definitely an uptick, but but it's a really good point actually that you're raising. Are we raising enough that makes a difference? uh as as well um fomoing into the last stand in it sometimes feels like that right like that's maybe your second point it it feels like it because people are now starting to chase but you you made one interesting point David I made a mention is like we didn't see those M&A transactions I didn't hear any champagne bottles you know any corks pop in Beaver Creek >> Anglo merger and that was pretty much the bigger biggest one there and that those weren't even precious metals companies >> exactly precious metal summit >> exactly So that that's why like people are sitting on paper gains but nobody's really realized any gains. We haven't seen any big wins materialize per se. And then the third no capital to be spent. I think I'm going to debunk that one because we we are raising more money. >> So >> okay >> um we are seeing more money coming in at the end of Q3 as I said like we've already raised more. The next level next hurdle is really 2020 66.5 billion if I'm not mistaken that we need to sort of reach. And then of course next level is 2011 which was euphoric which was ultra frothy which was way over the top right. Um but I want to explore a little bit more the the macro behind it that that is pushing us to $4,000 and $48 on the silver on on silver as well. Maybe understand those dynamics a little bit from your point of view, David. Um what do you think is driving that? Is that really a fundamental change maybe in monetary policy? Is it just running to safe haven? really curious like what what has caused this uh scenario that we're in right now. >> Just on the FOMO buying, I have friends of mine who are not professional investors who have not been actively following active um capital markets recently telling me, "Hey, my friends have been buying silver at Costco. Costco has sold out of silver. Uh should I buy more silver?" And I don't I don't I don't give financial advice to my friends, but that's what's happening right now. Kai uh silver at $50 near 50 well it's a 47th today as we're speaking on the 7th of October nearing $50 which is is a historic all-time high and it's a an especially important number for me because I've been um doing interviews in the in the space and touching on commodities for quite some time and for the longest time that I can remember my career people have been talking about the fabled $50 silver mark. When is it ever going to come back? Will it ever come back? because for the longest time, gold has been hitting new all-time highs while silver legged. And I just want to point out that we're finally here and it's not even making mainstream news. So, back to your point um about the macro behind what's going on right now. Well, first of all, I think what we're seeing is an improvement or an injection of liquidity from um from from fiscal policy as well as to a certain extent monetary policy with Fed rates coming down and the M2 money supply continuing to grow. Let me just share my screen here. This isn't talked about enough. We're not seeing an explosion of uh the M2 money supply, but it is still growing. This is at a nominal level. Uh M2 money supply in the US is at an all-time high. If you were to take a look at it from an annual percentage change from a year ago, um it is climbing at almost 5% 4.7%. So the pace of growth has been steadily increasing since 2023 when it was contracting and now it's increasing at the fastest level um since since basically uh the early 2010s um and it's normalizing. So that's happening. At the same time, um Trump is the tariffs are an interesting story. While they have contributed to a slowdown in trade, uh Trump's overall policies have been more pro business. I think what's happening is all asset classes are kind of kind of rallying. If you take a look at bonds, uh the 10-year yield, let me just flip over my screen here. The US 10year has uh been steadily declining year to date. So, uh, bonds are seeing, um, that's a wait, that's not the, uh, US 10 year. There we go. Bonds have been seeing a bit of a bid, uh, this year. The stock market, as you know, is reaching new all-time highs. Bitcoin has reached new all-time highs. Gold and silver, copper has climbed, um, higher in recent months. And so, I think that this this is kind of reminiscent of 2021 when a rising tide is lifting all boats. And I think that rising tide may be due to the fact that uh people are hedging against an economic slowdown by going into markets. I know that may be sounding counterintuitive, but that's probably one of the theories I've heard that I agree with the most. Um if you take a look at headlines from mainstream news regarding um regarding um global economic growth, the World Economic Forum is uh is writing about uh potential risk to growth. Uh we're looking at uh you mentioned the government shutdown, so we're not getting government numbers, but independent sources, so private estimates of job growth have been weak. And so for example, the Carl Group today um announced that it proprietary data show drop growth of just 17,000 which would be even less than the 22,000 gain in August that the BLS reported. If it is indeed true that data is reflecting lower job growth and slower um slower economic growth overall, then what we're seeing is a total divergence between uh the underlying economy and the capital markets, which is reminiscent of 2020 when we had the pandemic as you remember and capital markets surging to new all-time highs. So to sum up, I think uh a few a few interesting things to note. One, we have ongoing wars that are pushing up maybe people to safe haven assets like treasuries, like gold. We have we have uh a decline in the trust of the dollar which has potentially led to the decline the DXY year to date. I'm not talking about the u uh the the small rally we've had in the last week and a half. And then like I mentioned there's this divergence between real economic growth and what's happening on what's happening with capital markets. And that's something that I am struggling to understand myself. It's a theme that I've been struggling to understand for years and I've been asking that to my guests is why we have a divergence of of of economic activity and at the same time capital market valuations. When it happened in 2020, the Fed announced unlimited quantitative easing. And so, it was easy to understand that liquidity injection lifted all boats. Right now, we're not seeing QE. We're seeing a reduction of QT, but we're not seeing QE, at least not to the same extent. The money supply, like I mentioned, has been going up, but it isn't exploding to the same extent as 2020. So, um, the most logical, rational answer that I could come up with is that we're currently in a market bubble. That's not to say that bubbles cannot expand more. It's just that if you look at the fundamentals of the economy, pair that with valuations, pair that with the fact that even Jeff Bezos himself has admitted that AI is a quote unquote industrial bubble right now. Uh it could still provide. By the way, just because something is in a in a bubble, it doesn't mean it can't provide a boom to the economy. I read the other day that uh AI sectors and companies have contributed more to capex than most of the other S&P in the prior four quarters. Uh if you take a look at one more thing, I'm going to show you one more thing before I close off this answer here. Um the search interest for AI bubble has sort of declined um over the last couple of months. It's peaked around the summertime in 2025 and then people are writing there's literally an article on CNBC saying the bubble in the search for bubbles has popped >> and and that to me signals that um there's probably more of a rally ahead if people are no longer interested in exploring the theme of the markets being in a bubble. The contrarian in me would say this is the end of the rally. But logically speaking, a don't fight the Fed. The Fed's cutting rates and uh and b if interest in the bull market is resuming, it probably is going to signal more FOMO buying into 2026. >> That's a fantastic overview, David. That's uh you know, it touches on a lot of points that I want to, you know, maybe follow up on with you as well. Just the AI bubble. I want to extend that. It feels like we have an everything bubble almost. If you were to throw in gold, silver, Bitcoin, um would some some would even argue that the US dollar, the Dixie is overvalued still. Bond yields based on the Fed interest rate uh direction might be overvalued per se. The yields might be too high. Um where do you draw the line here? Like would you say that's just just an AIdriven bubble or is it really just across all assets? Because you touched on liquidity. Is liquidity the driver of the everything bubble here? um tech companies is now 44% of the S&P 500 I think and AI like I mentioned is driving most of the spending within the S&P 500. Uh the tech companies are not just spending money on their own products on R&D. They're spending money on AI infrastructure. Microsoft has just reached a multi-billion dollar deal to uh revive um a decommissioned nuclear plant. So, not only are AI companies or tech companies investing in tech, they're investing in vertically integrating energy production. They're spending money across all sectors. I really think that tech is lifting the capital markets. And as soon as that music stops, as soon as capex stops, we're going to see a slowdown in capex activity overall and slightly and slightly slower perhaps investment into the S&P 500, which again is now dominated by tech. The S&P might as well just be NASDAQ 2.0. So there is an aspect of liquidity like I mentioned, but to your point, yes, tech is lifting the boat. Is tech in a bubble? That's a bigger debate. I'm in a camp that no, a bubble is something that has no intrinsic value and the valuations are completely out of whack. You could argue that valuations are expensive. AMD, for example, this week went up, I think, uh, 30 or 40% on the news, uh, that, um, it was, no, let me just get the number right so I'm not misquoting myself here. It went up double digits overnight after it announced a partnership with Open AI. It went from $170 to $212 a share. Um, certainly expensive, isn't in the bubble. These companies are generating real cash flow, Kai. Uh, and they're all cash flow positive. So, well, maybe with the exception of maybe Tesla, but I I think that it's not a bubble in the sense that we've seen tech bubbles in 2000. We've seen the Tula bubble in the 1700s or late 1600s. Uh we've seen a housing bubble when people are buying buying four or five homes on leverage and they're barely making any money money. This isn't that case. This is just hype driving investment into the sector, driving capital expenditure from the sector, driving valuations higher. It's expensive, but to Jeff Bezos's point, it's an industrial bubble that may be the boom for everything else in the economy. That's number one. The other the second point that I kind of agree with comes from a guest Ed Yard Denny, president of Yard Denny Research. Um he mentioned that uh the rich are propping up the economy. So while the labor market is faltering, while jobs growth is slow, Jerome Powell called it a low hiring, low firing situation. So people aren't getting laid off or fired on mass. So unemployment isn't spiking, but at the same time, job hiring is very, very slow. And so in that kind of an environment uh what we're seeing is anemic growth but at the same time stable growth. It's not collapsing. The economy isn't falling out of the sky. Um we have to remember that capital markets like I mentioned in the beginning don't always reflect uh what's going on in the economy. So while the economy is growing slowly, it's very much possible that the wealthy are still spending money that's driving up those stocks in the discretionary sectors. Um in tech for example, as soon as we have a big fall in the stock market, as soon as we have a big correction that lasts, I'm talking about a prolonged bare market, that may actually be the trigger to a recession, not the other way around. I really think that if housing collapses, not not doesn't even have to collapse, it just has to correct. If housing corrects, if the capital markets correct, if the stock market and Bitcoin and crypto markets correct, what we could see is the wealth effect take action and people will spend. The wealthy will spend less because they are less wealthy on paper. that would induce even less demand, less spending, and that may be the slowdown, the trigger needed to actually take the economy into recession. Until we get that, I actually don't think that the economy is going to slow down into negative growth ter territory contraction. I had this discussion with a friend of mine a while ago and the discussion is I'm happy to get your thoughts on this Kai is that we're living in an economy where unless we get a macro shock either on the demand side which may be triggered by a collapse of stock markets like I just mentioned or a supply side shock which may be a freezing of shipping from tariffs or perhaps China or other countries blocking the shipping of critical minerals which they've which they've done. They banned the uh export of several critical minerals as retaliation against Trump's tariffs. Unless we get a huge macro shock in supply, we probably won't get some sort of economic contraction. There needs to be a shock to the system to have negative growth. The normal business cycle that we were taught in school is really just higher growth and slower growth. It's not necessarily higher growth and then negative growth. um that isn't going to happen anymore, I don't think. No, I tend to agree and you know we're always I'm based in Europe so to to a degree I look jealously over to the US because they're absolutely at the forefront of AI innovation like like there's the memes going around X today actually as we talk it's a where's a fun line talking about certain rules and AI like we have no AI industry to speak about in in Europe like we got the best rules about for AI and the regulation but we have no AI industry and infrastructure or anything that we could actually control. So I'm a bit jealous when I look at the the US when it comes to that sort of innovative aspect. >> I'm a little concerned just on that note. I'm a little concerned about Germany's economy. Germany was technically in a recession as you know and the auto industry in Germany is in big trouble. Just to name one example, Mercedes net profits fell by 50% in the last fiscal year. um with continued pressure from Brussels to um to make EVs that aren't selling well, which is why a lot of German companies are switching back from their EV only mandate by 2030. They're now you remember how Audi and a bunch of other companies were announcing an EV only fleet and now they're rolling back on that. Yeah. Because nobody wants them right now. Um the infrastructure isn't there for a host of other reasons. I'm I'm a little concerned about that. The auto industry in Germany employs 10% of the population, I think, roughly. um if I'm not misquing it, I think it's roughly 10% of the German population is a is is is involved with the auto sector and Germany, as you know, is Europe's largest economy. If you if Germany starts to really slow down, um that's going to impact the rest of European growth to a certain extent% 100%. And to look at the mess in France as well, politically at least, uh that's a complete disaster as well. So, it's it's not looking rosy. Um ju just just coming back to the economy real quick though. Uh >> I was thinking like I'm I'm sort of thinking about a question how to to make how to make it make sense from from my head to into the microphone here. Is where we're seeing in gold and silver right now. Is that the last leg? Are we the last maybe sector or asset class is the right term that will that is on its liquidity leg up right now that it's just a natural we just had to wait till it was our turn. Is that part of the the the flood of liquidity that we've seen over recent years? Is it now gold's turn to to sort of move up? Um what do you make behind that? Like sort of as an extension of what we discussed this is all the liquidity, all the M2 money supply, all the free money that was pumped into the economies globally now finally arriving in gold or is there more to it? Is it not just the the free money, the liquidity that's pumping prices here? >> Yeah. Um that's a good question. I don't know if this is a result of the liquidity pumped into the system in 2020. I don't think it is because that saw a rally in itself and then when the Fed started raising rates in 2022, everything fell including gold. Um, a lot of this, like I mentioned earlier, could be due to the Fed and is a function of looser monetary policy. Not just now, but the markets are pricing a loose in monetary policy once the Fed loses independence or more of their independence when Jerome Powell steps out of the office next year. Potentially, by the way, Powell is still probably going to be one of the governors. Um, which could be a thorn to um to Trump's side. But I I I think well, we all think we all know that whoever is going to replace Pal is going to be more proTrump and more pro- lower interest rates. I think that's probably partly what the markets are pricing it right now. To your question about whether or not gold is the last thing to have rallied. Well, it I mean factually it is. Bitcoin rallied last year. It went up more than 100% in 2024 to $100,000. It's only gone up 25% since it since November 2024 when it reached 100k. I say only because uh compared to everything else, it's it's it's still it's a relatively slower horse in the race. Gold's up 40%, 50%, silver's silver's at 50 bucks. And so Bitcoin's already aheads rally. The stock market has been rallying ever since 2023. And the rally doesn't stop. Stock market, the S&P is only up 12% this year. So it it feels like everything else has already hit its momentum and now it's just chugging along and consolidating and gold is just now catching up. So I think you've made a very good observation there. To what extent will it continue? Um I think once it hits 4,000 which we've which we've seen today there's going to be some selling pressure. There's going to be some resistance around this level. Um, if it sustains above 4,000 for a few more days, I think that's the start of more FOMO buying now. Mainstream news is going to start talking about it more. Silver hitting $50. Um, it just kind of stealthily went up there. Hey, like you're not seeing MSNBC or CNBC or, you know, Fox Business talking about silver on the front page. Um, but but but like my like the retail crowd knows about the silver sold out at Costco. Apparently, according to my my friend, uh there's more film buying. It it just and the pace of the growth is something we have to be keep in mind. If this happened over the course of the last two years, which it hasn't, then you could say, well, maybe we're at the end the last inning, but it just started this summer. >> Let me just pull up my screen. Let me just make a note of how fast it's climbed just so people understand the scale of what we're talking about here. Silver on a year-to-day basis, let me just show my screen here, has climbed from $29 to 47 $48. That's 66%. Most of that growth started happening this summer. From July 11th to now, it climbed 30%. Okay? Over the last year, if you take a look at from 20 from 2022 all the way to 2020, beginning of 2025, it's gone up 20%. Um, from 2022, from 2020 to 2024, it's basically flat. That's that's a flat line. It really started moving up. It moved 62% in less than one in exactly one year from July 2024 to October 2025. And that was a steady growth. The parabolic move started happening this summer. So, people haven't even had time to digest what happened yet. Now that it's reached $50 or is about to hit $50, you're going to see a lot of titles and headlines on YouTube and wherever else. Silver at $50, historic high. Who's squeezing silver? And then the retail crowd's going to be aware of it. And then we're going to see more squeezing potentially up to 55 or $60 and then perhaps some consolidation at that level. But right now, the the general public isn't even aware of it yet. We haven't had time to digest what happened. So give it a few more months. Kai, >> no. really good point which brings me sort of almost to the last question is bit bit of an outlook like what do you think the themes will be for the last quarter maybe going into the first quarter of 2026 here David that you will be discussing a lot uh on on your channel that you'll be looking forward to you touched on the Fed uh but maybe Jerome Powell vacating his chair at some point so I'm curious I'm not trying to put words in your mouth but I'm curious what you think is going to be hot topic of debate here >> I am curious to see how capital will rotate uh given valuations in the tech sector in in commodities. Um I think 20 the end of 2026 will be inle will be in an inflection point for certain markets. It's a time when investors are going to start taking profits and balancing their books. I'm not talk I'm not calling for a big crash but I'm saying uh several funds that have a mandate a certain mandate to to have a certain waiting and let's say commodities or gold or silver or mining stocks or the tech stocks. Keep in mind that institutional investors, several of them have a certain waiting. So now they're probably overweight gold or silver if they have any. They're probably overweight certain sectors within the tech space and so they have to start taking profits, rotating it into something else. Uh that might be midcaps and small caps. The Russell 2000 has still underperformed the S&P 500 over the one year, last one year, over the last five years. Uh so watch for that space. Defense stocks have already taken off. This is in news. It's over the last month. Uh Loy Martin's up double digits. Um drone companies. Um Kronos, I don't know if you heard of that. KRO S Kronos Worldwide. KRO. Um wait a minute, that's not uh the right stock here. Let me pull that up for you. Let's start with Lohe Martin. That is not the right ticker. My apologies. Loy Martin Corporation steady climb in August. Um, uh, defense stocks are starting to tick up. So, 2026, the end of, sorry, into 2026, the end of 2025 is going to be a theme for capital rotation. I'm curious to see how the mark housing market is going to um fare given that mortgage rates are coming down. Finally, 2025. I spoke with um I spoke with the Red Fin CEO Glenn Kelman and he said that 2025 especially the summer has been the best buyers market in 10 years. So the housing market has been weak and soft. Uh I suspect some more h some more activity may pick up towards the end of the year u into the into into spring as rates come down even more. People typically don't leave their homes to go buy other homes shop in the winter time. it's cold. Um, so, uh, there's a seasonality aspect, but I think into into the spring of 2026 is probably when we'll start to see a shift in housing demand. So, yeah, to sum up, I think a shift in capital and a rotation of capital is to be expected into the spring. >> Fantastic, David. Really, really appreciate you having having you on my show this time around. Very last question I need to ask you on camera. Who's your favorite >> besides you? who's my favorite guest. >> I'm not even blushing because I know it's not true. So, >> no, that's not I like having you on. I've had you on several times. I always see you in person, though. Um, no, I I I I enjoy having you on. You you you bring a very balanced view to the mining sector. You're not a pumper, which I appreciate. and you have your own stats um that you follow for the for for for capital markets for for um for finance financing activity which um really sets the tone for how the sector is doing. So no, I appreciate that side about you. I like economists. I don't have one particular favorite. Um I like economists just because I um I have an econ and finance background and I just like you today I I'm always trying to understand um the macro drivers behind how capital markets are performing and right now like I said that's kind of a mystery to a lot of people but um I like economists um I like academics um who who bring on a more theoretical approach um practition practitioners of the markets hedge fund managers I a lot. Um I just like to ask how successful managers are managing their money and getting their rationale. I you know fund managers and academics have very different approaches to analyzing markets. So um uh it's good to bring on both camps but um yeah I would say fund managers and economists are two two of my favorite types of guests. >> Fantastic. David, you should be a politician. Great great answer. Um really really appreciate it. Thank you so much for coming on and where where can our audience follow you, find you in case they don't know who you are yet. >> Oh, sure. David Lynn Report on YouTube. So, just look up the David Lin Report. You can even see my interview with Kai Hoffman. Recently, we're talking about gold in the mining sector. So, um check it out on YouTube primarily. I'm also on X at David Lin_TV and other social media, but um primarily you'll find my work on YouTube. >> Fantastic. David, thank you so much for joining us. Can't wait to see you again. Probably latest in Vancouver. I'll see you in January at the Vancouver Resource Investment Conference. Looking forward to catching up there. Really appreciate your time. Thanks so much for coming on. And everybody else, thanks so much for tuning in. As you can tell, I'm on the road. I'm traveling. I'm in Munich right now. And I have to admit, I forgot my black t-shirt. So, you get the fancy kai today. Um, let me know if I should keep, you know, maybe wear a jacket and a dress shirt more often instead of the black t-shirt that I usually sport. So, um, really appreciate you watching. Really curious what your thoughts are. And if you haven't done so, follow David. Go check out his YouTube channel. We'll definitely link to it down below, of course, as well. And we'll maybe we'll David will try out the new collaboration feature here on YouTube as well. See if that makes sense. I have yet to try. So, really appreciate you coming on. And everybody else, thanks so much for tuning in. Don't forget to hit the like and subscribe button. And uh take care out there. [Music]
Gold Hit $4,000! Markets Are Detached from Reality | David Lin
Summary
Transcript
Gold has touched 4,000 points on the futures contracts and the US government is still shut down. What does that mean? What is happening in the economy? What is happening in the financial markets? I've invited an absolute expert expert because he speaks with all the experts and I do want to hear his own opinion. It's David Lynn. He's the host of the David Lynn Report. Another phenomenal YouTube channel you should check out. He hosts phenomenal interviews. And uh you just heard him coughing in the background. I think I'm buttering up too much, maybe a little bit, but I'm really excited to have him on. Um, I was on his channel the other day and I'm really excited to have him on because I don't think we hear his opinion often enough. So, I'm really excited to hear his side of things. Before I switch over to David, hit that like and subscribe button. It helps us out tremendously and it's a free way to support our channel. David, it's a tremendous pleasure to have you on my show this time. It's good to see you again. >> How the tables have turned. Thank you. Thank you, Kai. Thanks for inviting me on your show. Let me just uh point out that um the only thing that I'm an expert at is interviewing other experts. So um I'm happy to be on your show. I'm happy to answer your questions, but um it's best to watch for real experts on the economy. It's best to watch Kai's show. Uh subscribe if you haven't or check out my show. I also do interviews. >> Yeah. No, absolutely, David. Really appreciate it though. But the the the good thing is we get to experience all these experts. We get to listen to all of them. We get to form our own opinion. So and that's what I'm after today, David. It's really your own opinion where where where do we stand and last time maybe that's a a good starting off point like we saw each other in Beaver Creek probably the world's biggest like mining investment conference it's solely geared towards investment in the mining space what what is your impression there because it was the first time I saw you there um as a media partner I believe in your own >> absolutely yeah I um last time I was there was a few years before that um this is and I've also attended other resource conferences uh earlier this year like the Vancouver resource investment conference this was the first time when I felt sentiment amongst the miners was that good. Um although the recurring theme from my interviews with miners is that uh capital still is not flowing into the sector as much as maybe people would anticipate that it would. And you know this better than I do. You have the orange index that tracks capital flows and financing activity. But it certainly seemed to me like while sentiment is better than it was maybe two years ago when the gold price and silver price was relatively muted back then. Um, it doesn't feel like investor activity has picked up just yet. It's starting to is what people have been asking, telling me. I've been asking people, hey, are you writing checks or people writing checks to you? Are you seeing M&A? Are you seeing um, you know, buyout deals being being made? Um, and the answer across the board is we're starting to see that, which is strange because gold hasn't just started to move. As you know, it's $4,000. It was 2000 not too long ago, less than a year ago, and the GDX index is up 120% year to date. So, the fact that valuations are where they are today, price movements have gone to where they have today, and financing activity is just starting to pick up now, it's I don't know what that indicates. One of a couple of it could be a couple of things. One, this isn't the end yet. The beginning of the rally has happened and this is still the middle innings. uh or two, people will usually FOMO in into the last stage of the rally. Uh that's more of a bearish take. Or perhaps three, uh there isn't going to be any capital to be spent on the mining sector even if the rally continues. Maybe there's more money to be made in crypto or AI or any other competing sector and it doesn't really matter where gold is. So that's a theme I'm exploring right now. Yeah, there there are interesting themes because it depends on what side of the table you're sitting on, of course, because moneywise maybe capital raised, we've already beaten the last three years at at the end of Q3. Meaning like we've already raised more money in 2025 than we've raised in 2022, 23 or 24 individually, right? So there's definitely an uptick, but but it's a really good point actually that you're raising. Are we raising enough that makes a difference? uh as as well um fomoing into the last stand in it sometimes feels like that right like that's maybe your second point it it feels like it because people are now starting to chase but you you made one interesting point David I made a mention is like we didn't see those M&A transactions I didn't hear any champagne bottles you know any corks pop in Beaver Creek >> Anglo merger and that was pretty much the bigger biggest one there and that those weren't even precious metals companies >> exactly precious metal summit >> exactly So that that's why like people are sitting on paper gains but nobody's really realized any gains. We haven't seen any big wins materialize per se. And then the third no capital to be spent. I think I'm going to debunk that one because we we are raising more money. >> So >> okay >> um we are seeing more money coming in at the end of Q3 as I said like we've already raised more. The next level next hurdle is really 2020 66.5 billion if I'm not mistaken that we need to sort of reach. And then of course next level is 2011 which was euphoric which was ultra frothy which was way over the top right. Um but I want to explore a little bit more the the macro behind it that that is pushing us to $4,000 and $48 on the silver on on silver as well. Maybe understand those dynamics a little bit from your point of view, David. Um what do you think is driving that? Is that really a fundamental change maybe in monetary policy? Is it just running to safe haven? really curious like what what has caused this uh scenario that we're in right now. >> Just on the FOMO buying, I have friends of mine who are not professional investors who have not been actively following active um capital markets recently telling me, "Hey, my friends have been buying silver at Costco. Costco has sold out of silver. Uh should I buy more silver?" And I don't I don't I don't give financial advice to my friends, but that's what's happening right now. Kai uh silver at $50 near 50 well it's a 47th today as we're speaking on the 7th of October nearing $50 which is is a historic all-time high and it's a an especially important number for me because I've been um doing interviews in the in the space and touching on commodities for quite some time and for the longest time that I can remember my career people have been talking about the fabled $50 silver mark. When is it ever going to come back? Will it ever come back? because for the longest time, gold has been hitting new all-time highs while silver legged. And I just want to point out that we're finally here and it's not even making mainstream news. So, back to your point um about the macro behind what's going on right now. Well, first of all, I think what we're seeing is an improvement or an injection of liquidity from um from from fiscal policy as well as to a certain extent monetary policy with Fed rates coming down and the M2 money supply continuing to grow. Let me just share my screen here. This isn't talked about enough. We're not seeing an explosion of uh the M2 money supply, but it is still growing. This is at a nominal level. Uh M2 money supply in the US is at an all-time high. If you were to take a look at it from an annual percentage change from a year ago, um it is climbing at almost 5% 4.7%. So the pace of growth has been steadily increasing since 2023 when it was contracting and now it's increasing at the fastest level um since since basically uh the early 2010s um and it's normalizing. So that's happening. At the same time, um Trump is the tariffs are an interesting story. While they have contributed to a slowdown in trade, uh Trump's overall policies have been more pro business. I think what's happening is all asset classes are kind of kind of rallying. If you take a look at bonds, uh the 10-year yield, let me just flip over my screen here. The US 10year has uh been steadily declining year to date. So, uh, bonds are seeing, um, that's a wait, that's not the, uh, US 10 year. There we go. Bonds have been seeing a bit of a bid, uh, this year. The stock market, as you know, is reaching new all-time highs. Bitcoin has reached new all-time highs. Gold and silver, copper has climbed, um, higher in recent months. And so, I think that this this is kind of reminiscent of 2021 when a rising tide is lifting all boats. And I think that rising tide may be due to the fact that uh people are hedging against an economic slowdown by going into markets. I know that may be sounding counterintuitive, but that's probably one of the theories I've heard that I agree with the most. Um if you take a look at headlines from mainstream news regarding um regarding um global economic growth, the World Economic Forum is uh is writing about uh potential risk to growth. Uh we're looking at uh you mentioned the government shutdown, so we're not getting government numbers, but independent sources, so private estimates of job growth have been weak. And so for example, the Carl Group today um announced that it proprietary data show drop growth of just 17,000 which would be even less than the 22,000 gain in August that the BLS reported. If it is indeed true that data is reflecting lower job growth and slower um slower economic growth overall, then what we're seeing is a total divergence between uh the underlying economy and the capital markets, which is reminiscent of 2020 when we had the pandemic as you remember and capital markets surging to new all-time highs. So to sum up, I think uh a few a few interesting things to note. One, we have ongoing wars that are pushing up maybe people to safe haven assets like treasuries, like gold. We have we have uh a decline in the trust of the dollar which has potentially led to the decline the DXY year to date. I'm not talking about the u uh the the small rally we've had in the last week and a half. And then like I mentioned there's this divergence between real economic growth and what's happening on what's happening with capital markets. And that's something that I am struggling to understand myself. It's a theme that I've been struggling to understand for years and I've been asking that to my guests is why we have a divergence of of of economic activity and at the same time capital market valuations. When it happened in 2020, the Fed announced unlimited quantitative easing. And so, it was easy to understand that liquidity injection lifted all boats. Right now, we're not seeing QE. We're seeing a reduction of QT, but we're not seeing QE, at least not to the same extent. The money supply, like I mentioned, has been going up, but it isn't exploding to the same extent as 2020. So, um, the most logical, rational answer that I could come up with is that we're currently in a market bubble. That's not to say that bubbles cannot expand more. It's just that if you look at the fundamentals of the economy, pair that with valuations, pair that with the fact that even Jeff Bezos himself has admitted that AI is a quote unquote industrial bubble right now. Uh it could still provide. By the way, just because something is in a in a bubble, it doesn't mean it can't provide a boom to the economy. I read the other day that uh AI sectors and companies have contributed more to capex than most of the other S&P in the prior four quarters. Uh if you take a look at one more thing, I'm going to show you one more thing before I close off this answer here. Um the search interest for AI bubble has sort of declined um over the last couple of months. It's peaked around the summertime in 2025 and then people are writing there's literally an article on CNBC saying the bubble in the search for bubbles has popped >> and and that to me signals that um there's probably more of a rally ahead if people are no longer interested in exploring the theme of the markets being in a bubble. The contrarian in me would say this is the end of the rally. But logically speaking, a don't fight the Fed. The Fed's cutting rates and uh and b if interest in the bull market is resuming, it probably is going to signal more FOMO buying into 2026. >> That's a fantastic overview, David. That's uh you know, it touches on a lot of points that I want to, you know, maybe follow up on with you as well. Just the AI bubble. I want to extend that. It feels like we have an everything bubble almost. If you were to throw in gold, silver, Bitcoin, um would some some would even argue that the US dollar, the Dixie is overvalued still. Bond yields based on the Fed interest rate uh direction might be overvalued per se. The yields might be too high. Um where do you draw the line here? Like would you say that's just just an AIdriven bubble or is it really just across all assets? Because you touched on liquidity. Is liquidity the driver of the everything bubble here? um tech companies is now 44% of the S&P 500 I think and AI like I mentioned is driving most of the spending within the S&P 500. Uh the tech companies are not just spending money on their own products on R&D. They're spending money on AI infrastructure. Microsoft has just reached a multi-billion dollar deal to uh revive um a decommissioned nuclear plant. So, not only are AI companies or tech companies investing in tech, they're investing in vertically integrating energy production. They're spending money across all sectors. I really think that tech is lifting the capital markets. And as soon as that music stops, as soon as capex stops, we're going to see a slowdown in capex activity overall and slightly and slightly slower perhaps investment into the S&P 500, which again is now dominated by tech. The S&P might as well just be NASDAQ 2.0. So there is an aspect of liquidity like I mentioned, but to your point, yes, tech is lifting the boat. Is tech in a bubble? That's a bigger debate. I'm in a camp that no, a bubble is something that has no intrinsic value and the valuations are completely out of whack. You could argue that valuations are expensive. AMD, for example, this week went up, I think, uh, 30 or 40% on the news, uh, that, um, it was, no, let me just get the number right so I'm not misquoting myself here. It went up double digits overnight after it announced a partnership with Open AI. It went from $170 to $212 a share. Um, certainly expensive, isn't in the bubble. These companies are generating real cash flow, Kai. Uh, and they're all cash flow positive. So, well, maybe with the exception of maybe Tesla, but I I think that it's not a bubble in the sense that we've seen tech bubbles in 2000. We've seen the Tula bubble in the 1700s or late 1600s. Uh we've seen a housing bubble when people are buying buying four or five homes on leverage and they're barely making any money money. This isn't that case. This is just hype driving investment into the sector, driving capital expenditure from the sector, driving valuations higher. It's expensive, but to Jeff Bezos's point, it's an industrial bubble that may be the boom for everything else in the economy. That's number one. The other the second point that I kind of agree with comes from a guest Ed Yard Denny, president of Yard Denny Research. Um he mentioned that uh the rich are propping up the economy. So while the labor market is faltering, while jobs growth is slow, Jerome Powell called it a low hiring, low firing situation. So people aren't getting laid off or fired on mass. So unemployment isn't spiking, but at the same time, job hiring is very, very slow. And so in that kind of an environment uh what we're seeing is anemic growth but at the same time stable growth. It's not collapsing. The economy isn't falling out of the sky. Um we have to remember that capital markets like I mentioned in the beginning don't always reflect uh what's going on in the economy. So while the economy is growing slowly, it's very much possible that the wealthy are still spending money that's driving up those stocks in the discretionary sectors. Um in tech for example, as soon as we have a big fall in the stock market, as soon as we have a big correction that lasts, I'm talking about a prolonged bare market, that may actually be the trigger to a recession, not the other way around. I really think that if housing collapses, not not doesn't even have to collapse, it just has to correct. If housing corrects, if the capital markets correct, if the stock market and Bitcoin and crypto markets correct, what we could see is the wealth effect take action and people will spend. The wealthy will spend less because they are less wealthy on paper. that would induce even less demand, less spending, and that may be the slowdown, the trigger needed to actually take the economy into recession. Until we get that, I actually don't think that the economy is going to slow down into negative growth ter territory contraction. I had this discussion with a friend of mine a while ago and the discussion is I'm happy to get your thoughts on this Kai is that we're living in an economy where unless we get a macro shock either on the demand side which may be triggered by a collapse of stock markets like I just mentioned or a supply side shock which may be a freezing of shipping from tariffs or perhaps China or other countries blocking the shipping of critical minerals which they've which they've done. They banned the uh export of several critical minerals as retaliation against Trump's tariffs. Unless we get a huge macro shock in supply, we probably won't get some sort of economic contraction. There needs to be a shock to the system to have negative growth. The normal business cycle that we were taught in school is really just higher growth and slower growth. It's not necessarily higher growth and then negative growth. um that isn't going to happen anymore, I don't think. No, I tend to agree and you know we're always I'm based in Europe so to to a degree I look jealously over to the US because they're absolutely at the forefront of AI innovation like like there's the memes going around X today actually as we talk it's a where's a fun line talking about certain rules and AI like we have no AI industry to speak about in in Europe like we got the best rules about for AI and the regulation but we have no AI industry and infrastructure or anything that we could actually control. So I'm a bit jealous when I look at the the US when it comes to that sort of innovative aspect. >> I'm a little concerned just on that note. I'm a little concerned about Germany's economy. Germany was technically in a recession as you know and the auto industry in Germany is in big trouble. Just to name one example, Mercedes net profits fell by 50% in the last fiscal year. um with continued pressure from Brussels to um to make EVs that aren't selling well, which is why a lot of German companies are switching back from their EV only mandate by 2030. They're now you remember how Audi and a bunch of other companies were announcing an EV only fleet and now they're rolling back on that. Yeah. Because nobody wants them right now. Um the infrastructure isn't there for a host of other reasons. I'm I'm a little concerned about that. The auto industry in Germany employs 10% of the population, I think, roughly. um if I'm not misquing it, I think it's roughly 10% of the German population is a is is is involved with the auto sector and Germany, as you know, is Europe's largest economy. If you if Germany starts to really slow down, um that's going to impact the rest of European growth to a certain extent% 100%. And to look at the mess in France as well, politically at least, uh that's a complete disaster as well. So, it's it's not looking rosy. Um ju just just coming back to the economy real quick though. Uh >> I was thinking like I'm I'm sort of thinking about a question how to to make how to make it make sense from from my head to into the microphone here. Is where we're seeing in gold and silver right now. Is that the last leg? Are we the last maybe sector or asset class is the right term that will that is on its liquidity leg up right now that it's just a natural we just had to wait till it was our turn. Is that part of the the the flood of liquidity that we've seen over recent years? Is it now gold's turn to to sort of move up? Um what do you make behind that? Like sort of as an extension of what we discussed this is all the liquidity, all the M2 money supply, all the free money that was pumped into the economies globally now finally arriving in gold or is there more to it? Is it not just the the free money, the liquidity that's pumping prices here? >> Yeah. Um that's a good question. I don't know if this is a result of the liquidity pumped into the system in 2020. I don't think it is because that saw a rally in itself and then when the Fed started raising rates in 2022, everything fell including gold. Um, a lot of this, like I mentioned earlier, could be due to the Fed and is a function of looser monetary policy. Not just now, but the markets are pricing a loose in monetary policy once the Fed loses independence or more of their independence when Jerome Powell steps out of the office next year. Potentially, by the way, Powell is still probably going to be one of the governors. Um, which could be a thorn to um to Trump's side. But I I I think well, we all think we all know that whoever is going to replace Pal is going to be more proTrump and more pro- lower interest rates. I think that's probably partly what the markets are pricing it right now. To your question about whether or not gold is the last thing to have rallied. Well, it I mean factually it is. Bitcoin rallied last year. It went up more than 100% in 2024 to $100,000. It's only gone up 25% since it since November 2024 when it reached 100k. I say only because uh compared to everything else, it's it's it's still it's a relatively slower horse in the race. Gold's up 40%, 50%, silver's silver's at 50 bucks. And so Bitcoin's already aheads rally. The stock market has been rallying ever since 2023. And the rally doesn't stop. Stock market, the S&P is only up 12% this year. So it it feels like everything else has already hit its momentum and now it's just chugging along and consolidating and gold is just now catching up. So I think you've made a very good observation there. To what extent will it continue? Um I think once it hits 4,000 which we've which we've seen today there's going to be some selling pressure. There's going to be some resistance around this level. Um, if it sustains above 4,000 for a few more days, I think that's the start of more FOMO buying now. Mainstream news is going to start talking about it more. Silver hitting $50. Um, it just kind of stealthily went up there. Hey, like you're not seeing MSNBC or CNBC or, you know, Fox Business talking about silver on the front page. Um, but but but like my like the retail crowd knows about the silver sold out at Costco. Apparently, according to my my friend, uh there's more film buying. It it just and the pace of the growth is something we have to be keep in mind. If this happened over the course of the last two years, which it hasn't, then you could say, well, maybe we're at the end the last inning, but it just started this summer. >> Let me just pull up my screen. Let me just make a note of how fast it's climbed just so people understand the scale of what we're talking about here. Silver on a year-to-day basis, let me just show my screen here, has climbed from $29 to 47 $48. That's 66%. Most of that growth started happening this summer. From July 11th to now, it climbed 30%. Okay? Over the last year, if you take a look at from 20 from 2022 all the way to 2020, beginning of 2025, it's gone up 20%. Um, from 2022, from 2020 to 2024, it's basically flat. That's that's a flat line. It really started moving up. It moved 62% in less than one in exactly one year from July 2024 to October 2025. And that was a steady growth. The parabolic move started happening this summer. So, people haven't even had time to digest what happened yet. Now that it's reached $50 or is about to hit $50, you're going to see a lot of titles and headlines on YouTube and wherever else. Silver at $50, historic high. Who's squeezing silver? And then the retail crowd's going to be aware of it. And then we're going to see more squeezing potentially up to 55 or $60 and then perhaps some consolidation at that level. But right now, the the general public isn't even aware of it yet. We haven't had time to digest what happened. So give it a few more months. Kai, >> no. really good point which brings me sort of almost to the last question is bit bit of an outlook like what do you think the themes will be for the last quarter maybe going into the first quarter of 2026 here David that you will be discussing a lot uh on on your channel that you'll be looking forward to you touched on the Fed uh but maybe Jerome Powell vacating his chair at some point so I'm curious I'm not trying to put words in your mouth but I'm curious what you think is going to be hot topic of debate here >> I am curious to see how capital will rotate uh given valuations in the tech sector in in commodities. Um I think 20 the end of 2026 will be inle will be in an inflection point for certain markets. It's a time when investors are going to start taking profits and balancing their books. I'm not talk I'm not calling for a big crash but I'm saying uh several funds that have a mandate a certain mandate to to have a certain waiting and let's say commodities or gold or silver or mining stocks or the tech stocks. Keep in mind that institutional investors, several of them have a certain waiting. So now they're probably overweight gold or silver if they have any. They're probably overweight certain sectors within the tech space and so they have to start taking profits, rotating it into something else. Uh that might be midcaps and small caps. The Russell 2000 has still underperformed the S&P 500 over the one year, last one year, over the last five years. Uh so watch for that space. Defense stocks have already taken off. This is in news. It's over the last month. Uh Loy Martin's up double digits. Um drone companies. Um Kronos, I don't know if you heard of that. KRO S Kronos Worldwide. KRO. Um wait a minute, that's not uh the right stock here. Let me pull that up for you. Let's start with Lohe Martin. That is not the right ticker. My apologies. Loy Martin Corporation steady climb in August. Um, uh, defense stocks are starting to tick up. So, 2026, the end of, sorry, into 2026, the end of 2025 is going to be a theme for capital rotation. I'm curious to see how the mark housing market is going to um fare given that mortgage rates are coming down. Finally, 2025. I spoke with um I spoke with the Red Fin CEO Glenn Kelman and he said that 2025 especially the summer has been the best buyers market in 10 years. So the housing market has been weak and soft. Uh I suspect some more h some more activity may pick up towards the end of the year u into the into into spring as rates come down even more. People typically don't leave their homes to go buy other homes shop in the winter time. it's cold. Um, so, uh, there's a seasonality aspect, but I think into into the spring of 2026 is probably when we'll start to see a shift in housing demand. So, yeah, to sum up, I think a shift in capital and a rotation of capital is to be expected into the spring. >> Fantastic, David. Really, really appreciate you having having you on my show this time around. Very last question I need to ask you on camera. Who's your favorite >> besides you? who's my favorite guest. >> I'm not even blushing because I know it's not true. So, >> no, that's not I like having you on. I've had you on several times. I always see you in person, though. Um, no, I I I I enjoy having you on. You you you bring a very balanced view to the mining sector. You're not a pumper, which I appreciate. and you have your own stats um that you follow for the for for for capital markets for for um for finance financing activity which um really sets the tone for how the sector is doing. So no, I appreciate that side about you. I like economists. I don't have one particular favorite. Um I like economists just because I um I have an econ and finance background and I just like you today I I'm always trying to understand um the macro drivers behind how capital markets are performing and right now like I said that's kind of a mystery to a lot of people but um I like economists um I like academics um who who bring on a more theoretical approach um practition practitioners of the markets hedge fund managers I a lot. Um I just like to ask how successful managers are managing their money and getting their rationale. I you know fund managers and academics have very different approaches to analyzing markets. So um uh it's good to bring on both camps but um yeah I would say fund managers and economists are two two of my favorite types of guests. >> Fantastic. David, you should be a politician. Great great answer. Um really really appreciate it. Thank you so much for coming on and where where can our audience follow you, find you in case they don't know who you are yet. >> Oh, sure. David Lynn Report on YouTube. So, just look up the David Lin Report. You can even see my interview with Kai Hoffman. Recently, we're talking about gold in the mining sector. So, um check it out on YouTube primarily. I'm also on X at David Lin_TV and other social media, but um primarily you'll find my work on YouTube. >> Fantastic. David, thank you so much for joining us. Can't wait to see you again. Probably latest in Vancouver. I'll see you in January at the Vancouver Resource Investment Conference. Looking forward to catching up there. Really appreciate your time. Thanks so much for coming on. And everybody else, thanks so much for tuning in. As you can tell, I'm on the road. I'm traveling. I'm in Munich right now. And I have to admit, I forgot my black t-shirt. So, you get the fancy kai today. Um, let me know if I should keep, you know, maybe wear a jacket and a dress shirt more often instead of the black t-shirt that I usually sport. So, um, really appreciate you watching. Really curious what your thoughts are. And if you haven't done so, follow David. Go check out his YouTube channel. We'll definitely link to it down below, of course, as well. And we'll maybe we'll David will try out the new collaboration feature here on YouTube as well. See if that makes sense. I have yet to try. So, really appreciate you coming on. And everybody else, thanks so much for tuning in. Don't forget to hit the like and subscribe button. And uh take care out there. [Music]