Dedollarization: The Truth About Venezuela

Summary

Andy Schectman joins Jay to examine how recent U.S. geopolitical actions are reshaping global capital flows and accelerating the …

Transcript

This is Jay Martin. >> Andy, good to have you back in the show. Looking forward to this. >> Always, Jay. Uh, top of my list, man. And I'm very excited to see you in person in a couple weeks as well. >> Right around the corner. I'm looking forward to it, man. VR January 25th, 26. Still tickets available. Vricdia.com. I think VIP is close to sold out. If it's not, grab one of the last few. But, uh, it's two days. It's a festival of learning in the mining and the metal space. Andy be joining me on stage a couple times. I'm very excited about this. But let's jump in today. Um, lots going on, lots to talk about. I want to start >> I want to start with your thoughts on um on some recent geopolitical shifts we've been watching. Obviously, the capture of the Venezuelan leader has led to a lot of people speculating about what might happen next, what they're planning next, how the US might respond to what's going on in Iran. For context, today is Tuesday, January 13th. I believe President Trump is being briefed on his options today. But my question for you to sort of before we jump in there, Andy, is how closely do you watch these events? Is it just out of personal curiosity or do you watch them with a sincerity about your investment portfolio and how do you process this? >> 100% man. And I think you have to because you know you go from a perspective of protecting your borders and protecting your sovereignty into perhaps going across that Rubicon and doing things that that have in many respects um created the bricks or at least the rallying cry that supports it and the dalorization that the United States and their hegemony perhaps from their perspective that we are the destabilizing force um not the force for uh good coming from a moral high ground that you could argue we've kind of trampled upon and I was listening to Gerald Cente about this the other night and again I think the key Jay is to listen and to and to if you never listen to other viewpoints if you never never broaden your mind in terms of listening to both sides of an argument you never um grow and and I like what Gerald had to say he said you know look Um uh can you only imagine now granted you know Maduro a narco kingpin maybe not in a dulyeleed president but you could say really kind of the same thing about Zinsky not being duly elected and he stopped he closed down the election or the the u the voting and election process during time of war. So, he's not the dulyeleed president or shouldn't be. And yet, can you imagine if Putin came in and took he and his wife and brought them back for whatever their reasons are or she did the same thing in in Taiwan. Oh my god, the outrage. And it was interesting, you know, he said, you know, look, listen to what George Washington said at at his farewell address that is stay out of foreign entanglements. And I don't like being the world's policeman. I think it's a problem. And when you start to go further than that and and and threaten countries like Mexico and threat in countries like Cuba and you know start bombing in Iran, start bomb bombing in Nigeria, you're bombing in Syria, you know, at what point does does this begin to have effects on the way that the world looks at the United States, uh the way that the world looks at the US Treasury market, the way that the world looks at the dollar. And I think we're crossing that line or already have to where it is something that I think is perhaps destabilizing. And you can say all you want about the fact that, you know, he was bringing drugs or supposedly bringing drugs into the country, but in essence, we went and we we kidnapped a sitting president. Right, wrong, or indifferent. Um and I think that's something that you know I think will have ramifications and all of these countries who are resourceri and maybe uh emerging nations underdeveloped in South America are starting to think very hard about you know their allegiance to the BRICS nations or their allegiance to the United States. Do they want to sell their oil or their commodities for yuan? Do they want to be part of the the belt road? Do they want to be part of the bricks? These are things that I think are are coming more into focus as we see United States flex its muscle. Um, and I don't think everyone across the globe agrees with it. >> Yeah. Okay. I want to I want to I'd love to understand your perspective actually on the whole Venezuelan uh issue then, you know, while we're here and just get your take because everybody's got one why this occurred. And yeah, some would say he was a naroterist. There's not a lot of evidence to support that or that it would really impact the American market. so much. But maybe, who knows? Others would say the Venezuelan people have been oppressed. Now, definitely Maduro is an incompetent leader and a cruel one, right? And protected his inner circle, elevated their status at the cost of the rest of his country for sure. Uh the US does business with lots of dictators, right? Saudi Arabia being a key uh partner, right? We don't have an issue there. So, it's hard to say that that would be the thing. Next, people point to the oil and there's a couple angles within the oil. So, I'd love to get your take on this. Maybe it's just control over what is probably the world's deepest oil reserves. Or maybe it's that just like Saddam Hussein did in 2000 and Gaddafi did in 2011, he started talking very seriously about non US dollar oil trade. Now, when you have the deepest oil reserves on the planet, foreseeably, you could actually fund ddollization in a way that nobody's been able to yet. And if that cat got out of the bag, that's not Australian iron ore selling in yuan. That's very different. And this could have been a very uh a much more influential development in the dolorization trend. And that was sort of what I was thinking. But what's your take, Andy? >> I think the exact same thing. You know, the push back to that would be that it was the Western oil companies that built the infrastructure and they went back on their deal after he took power. Okay, fine. But I I I look at that angle and I agree. And then I look at it from another angle and say, well, you know, that was coercion or with force. But how about what's going on in Nigeria who is a member of the bricks as a uh I guess an observation partner. They applied, they were they were admitted, but not fully not a full partner yet, but a bricks plus observation partner. And they're the largest producer of oil in Africa. Now, they came in in a cooperative manner supposedly with the the government from Nigeria to help bomb um ISIS who was who was persecuting the Christians. Now, they've been doing this for a long time. Is there something bigger there? And I would think there are in all of these policy decisions that there is a story and then there is a deeper reality. In both cases, you're looking at countries that are threatening to change or sell their oil in yuan and even worse than that over payment rails that are not uh compatible with the swift. Whether it be the sips, the crossber payment system or whether it be even the bridge technology, the former mbridge, which is now just called the bridge that is operational now and is being used albeit limitedly uh or in a limited basis. Um it is something that I think is probably much deeper than what the cover story is. And that's exactly right. I mean Saddam and and Gaddafi both threatened one one to pay for oil in I think it was the gold in dinar that they wanted to use and the other in in Euro. >> And uh I I think that there is probably some some real validity to that statement. And that, okay, that kind of adds up because, you know, although that was this was sold as regime change, you look at the bench like who's left in Venezuela and nothing's obviously changed. The new sitting president, Deli Rodriguez, has been around Venezuelan politics longer than Maduro. I mean, her brother was Chavez vice president. This is the family. They're very entrenched. And you know, her right hand or Maduro's right hand runs the police force. He runs the security detail, the collectivos, the little units that stamp out protests very violently. He runs the ports, that's the cash flow, like they're all still there, you know, and so if the end result was not anything close to regime change, but there was a threat and that threat was we're going to sell oil outside of US dollars. And the Americans wanted to publicly address that threat in the most symbolic way possible. for everybody else who's watching and everybody else who's left inside Venezuela to say just so you know try try me right this is what can happen to you too we don't want to change the regime we said we do we don't really want that we don't care so much right yes we want our interest back in the oil infrastructure 100% and that was lost on a lot of people you know when they were saying Venezuela stole our oil and people are like how what like but no it was the infrastructure right that's what was stolen and that is very real right that's the nationalization of a foreignowned company which is a big threat in the extraction business in general, but a huge loss for the American oil companies. >> Right. Right. That's exactly right. And and that's why, you know, there's duality in every in every story. That is true. But I think to your point, what you're hedging towards is, you know, to me, this was kind of a a shot across the bout to the bricks. And and that's exactly right. And, you know, um you're I think you're going to see more of this. Actually, I think you'll see much more of it. Then you got countries like Peru, the number three largest producer of of of silver in the world. I mean, excuse me, of yeah, of silver in the world. And and China came and built a deep water port there. I mean, are they thinking, geez, what's next? And uh you've got, of course, Mexico, who's number one producer of silver that Trump came out and openly threatened. Um, you know, Cuba has applied to the bricks. So, you have all of these threats that are on the face um on the cover talking about the way that they deal with with with drugs and the way that those drugs are finding their way into into the United States, but in reality, is it something much deeper than that? Is it, you know, they're starting to feel the pressure of countries wanting to break free from from the Western system and from accepting or paying for energy and commodities in US dollars? And and you look at what this new system is that they're doing and it is definitely sidest stepping settlement for energy not in dollars but in local currencies and using gold as a replacement for reserves held traditionally in treasuries. And when you start to get real serious about it and public about it, yeah, I think that's probably, you know, killing two birds with one stone type of thing that I think there is truth into what you're hedging at. And I completely and totally agree. In fact, that's kind of what I've been talking about for the last six years. >> Yeah. Yeah. And and you mentioned the deep water port in Peru. Peru being the third largest producer of silver. Obviously, China had invested tremendous amounts of money. I feel like the number keeps changing to get clarity on what exactly China had invested in Venezuela's oil economy, but it was a lot, right? And just to say that's sort of adjacent to what the Monroe doctrine was and why everybody's talking about it. You know, back when it was James Monroe's concept, it was Europe keeps descending into wars. Those wars keep spilling onto our shores in North America. That's got to end. Keep your battles in your backyard and we'll do the same. Right? And as this has evolved now, it's become a a bit of a different version of that, but it lines up, right? That's that's you know foreign influence in the western hemisphere via oil infrastructure in Venezuela. Now as you mentioned the first deep water port along the west coast of South America in Peru. Um and so you mentioned you could see more of this happening and the headline today obviously is Iran which steps far outside the bounds of any version of the Monroe or Donroe doctrine. We're not in the Western Hemisphere anymore. Um but do you think this is precedent? Right. we got a really quick win. If you're the American administration, you're like, "We got in, we got out. No fatalities, very little firefighting. This was as clean and um and successful of a military campaign as you could ever imagine." And that puts a bit of uh wind in your sales, right? You may be looking around the world and saying, "Where else should we do you think that's like a fair assessment, Andy, or what's your take? And do you have any thoughts on that are happening?" I think that's a fair assessment as well, flexing your muscle. >> But I think it gets to a point where you talk the Monroe Doctrine and so what are we doing in in the South China Sea? What are we doing in uh in the Straits of Hermuz or in the Gulf? What are we doing in everyone else's affairs? But, you know, you could argue the same thing about Iraq. We went there 22 years ago looking for weapons of mass destruction. Never found them, but we're still there occupying the country 22 years later. So, does that mean that we're going to do something similar with Iran? And of course, you're the choke point of the world's oil and they've already threatened to close the straits if if things, you know, if there's any retaliation. So, the point of it is is that is it really our place to be in any of these countries skirmishes with their people or not? And you know, what is the definition of an atrocity? And how bad is it? And is it our position alone to do this? And I think it's having it will have ramifications. Every every action has an equal and opposite reaction. We don't know what's going to come out of this deal in in Venezuela. But I would argue that yes, that's exactly what it is. And and again, what is Iran? Oh, that's right. They're in the bricks. I forgot about that. Right. And so you're dealing with countries. It seems to be that is it a coincidence or or is it something more than that? Uh that these individual events are, you know, very relevant in and of themselves. Maybe they are, but you look at all the countries that they are either threatening verbally or actually engaging in and it seems to be a common thread that they are all either full members of the bricks, partial members of the bricks or have expressed and applied to the bricks. You go back, you know, a few years ago and look at Argentina who had applied to the bricks, got their, you know, got a little twist of the arm there and all of a sudden Malay says, "Yeah, well, we're out." So I think that that the threat of the bricks and their ddollarization which is becoming real and and if it were a word I would say dreasurization because you're seeing that happen as well and this adds to it not only our fiscal irresponsibility being through the roof of massive massive indebtedness creating a trillion dollars in debt every hundred days. So, who wants to sell us their oil for a dollar that is being destroyed in terms of its purchasing power and then put the reserves in treasuries that hey, you know what? We don't like what you're doing, so we're going to take it from you and then we're going to give it to the country you're in a war against. Like uh Russia, we took their treasuries and largely gave that money in the form of weapons to the Ukraine. So, at some point, you cross a line that you don't come back from. And as the world reserve currency in the center of free trade really these actions that we are taking from a military standpoint I think will have ramifications globally in terms of countries willingness and desire to hold our dollar which seems to be more like a melting ice cube these days and certainly more uh maybe less willing to hold our treasuries with their reserves because of the threat that that possesses to sanctioning and confis and all these tariffs that are much of which are actually sanctions masquerading as tariffs. So yes, there is there's some look on one end you had the previous administration that just had no no muscle to it whatsoever and we ended up looking as a country like one that had lost its its its way. I used to say our actions are too stupid to be stupid. On the other hand, you could argue that what we're doing here it's better to you know peace through strength, but are we taking it too far? And that's the question that, you know, look, I I I it keeps popping into my head. It just seems like we're taking some of this too far. And, you know, you look at a country like China or a country like China, and do you see them doing this, engaging in this all up and down now, they have their own problems, right? And they have their own human rights problems, but you don't see them going country to country throughout the world doing this. And I think that's an issue. Um, I think it's a big issue. It's one that's being noticed and and I think it has adverse effects because that moral high ground that we stood on after World War II has been completely and totally trampled on and disregarded and we are now a a a country that the world doesn't really I think look at the same way and all of these actions will have some form of consequence. Uh, and I think you'll begin to see that maybe manifest more so through not only more countries wanting to join bricks, but a continued desire to shed treasuries, shed dollars, trade in local currencies over platforms that don't allow the swift access to it, uh, and accumulating commodities instead of treasuries, which not only are outperforming said treasuries, but are no one else's, uh, liability. In other words, no counterparty risk. At the same time, >> uh, you used a term there. You said dreasurization. And I wrote it down. I I haven't heard anybody use that, but >> Well, I said if it were a word. That's why I said if it were a word, dreization. But that's really what they're doing. They're selling treasuries and buying gold. >> 100%. It's such a brilliant term. And and >> you know what a what a great way to think about ddollarization because that's really the threat, right? is the dregeriz treasuriz treasurization of the central bank's reserves. We're going to talk about this on stage if you see I like this >> totally >> you know and and you yourself and Luke Groman and Grant Williams were three of the people that I heard being very vocal when the US confiscated Russia's US dollar reserve and you were talking about the ripple effect. You're like we'll look back on this moment the same way we look back as when we took the dollar off the gold standard. That's how this will be perceived in the history books. It'll be that watershed moment where everything changed. And sure enough, the consecutive 24 months, we saw central banks begin to divest and think very differently. Divest from US dollars and treasuries and think very differently about what a safe asset class was. And they returned to gold in trends we hadn't seen in over 50 years. And in that sense, that confiscation seemed like such a shortsighted um uh activity. It was like what you know what do you think would happen here right and I think about this you know this this capture of Maduro in the same sort of threat it's like will this be perceived the same way I mean it's very different right it's it's more of um what did you say it's more of a threat than like a like a sort of I don't know uh cowardly sanction right it was very bold and maybe too far as you said right but it sends a sends a very powerful message and one that isn't like you should run from the dollars, but if you try, here's what's going to happen, right? Very different take on the same problem, I guess, is what I'm trying to communicate here, not very eloquently. Um, any any take on that? And then I want to pivot to some comments you made about China, Andy. >> No, I mean, I I think you said it the right way. I mean, it's there there is a line that you cross, whether it be, you know, uh, sanctioning other countries. the the world reserve currency shouldn't should be, you know, um they they shouldn't they the world reserve it's not up to the world reserve currency to be judge, jury, and executioner as it pertains to what other countries do. That should be for world opinion. but to to confiscate treasuries, to freeze assets, to kick folks out of Swift when we are not walking on that moral high ground any longer when we do things that the world questions like invade Iraq under false pretenses and we're still there or all of the other things that we do that the world looks at the United States crossey about >> it just it just you you reach a point and then you look at the fiscal irresponsibility how the dollar is is is continually losing value and how the Treasury has been unstable and and the indebtedness. I mean, there's no we we bring in Doge and they they discover two two bill$2 trillion in savings and they can only agree on a couple hundred billion which amounts to 38 hours worth of spending by the US government. So, we are not doing what we should be doing if we want to maintain that position of of you know moral character and what's good for the goose ain't for the gander. And that's I think the biggest issue that I think the world is dealing with. But you know it takes a certain amount of hubris and coordination and sophistication and and in a in a group effort to push back against the west. You notice you know they're not doing this to China. Uh and they're doing it arguably by proxy through you know with Russia but they are doing it to nations that are emerging that are trying to align with countries that are more cooperative. And even if you look at the name of the Shanghai Cooperation Organization, they're cooperative. If you look at the bricks, it is volunteer. It's not you're not beholden to any set of rules. It's a volunteered you're kind of volunteering to be part of of something that is a cooperative in nature. And I think the world is pushing back against that. And if we really wanted to to improve that image, we would be far more cooperative than we would yielding a stick. Maybe the carrot would be a better way of doing it. And I think uh that is kind of there in lies the problem is that we're continuing to push forward with the stick and uh we aren't exhibiting the proper characteristics of a country that has that that moral vision. In fact, it's just what's good for the United States interest that seems to be the main focus, not what is right and what is just. >> Interesting. Now I want to ask you because you you quoted Washington stay out of foreign for foreign entanglements, right? And it triggered a memory of uh is it Elizabeth Powell is do we have a republic or a monarchy, right? When Benjamin Franklin walked out of the house 1787 and he said a republic if you can keep it, right? Meaning it's going to be hard, right? It's going to be hard to hold on to this because that's the way power evolves everywhere all the time. And that's what precedes us, right? And eventually that's probably where we'll end up. But, you know, is America close to that Rome moment, the transition from the republic to the empire, the president to the emperor, where we're going to invade Venezuela, capture the president, and we're going to brief the oil executives, but not Congress, right? We're going to go there first, right? What's your what's your take on this? >> Yeah, 100%. Look at all these wars that we've been in, and none of them have gone through congressional approval. Look at all of the executive orders that have been written under all the admin last several administrations without congressional approval approval. You look at Rome, they they expanded their military throughout all the world. And in order to pay for them, they had to start to debase the currency. How did they do that? They trimmed the coins. And this is why coins have ridges on them now because you can't trim something that has ridges on it. And ultimately ended up taking gold out of the coins and replacing it with whatever copper, whatever the hell they did. But the point of it is is you grow to a point where you you expand too far, you're broke, and you start to to cheat. And you cheat by inflation as all uh as every single um you know, ruling class has done throughout all of time chosen inflation over austerity. But when you expand too far, you're too far in debt and you're you're making all of these decisions based upon expansion of of power. um one that maybe doesn't have the the will of the people. It gets much worse. Yeah, I think you could draw a a very distinct line or correlation between what happened to Rome and where we are not only from the the the you know is is President Trump and the presidents before him. Are they acting more like a monarchy uh or are they acting like a you know a democratic republic where things are voted on and and approved by majority? No. It seems like every rule that comes down these days is an executive order rather than something that is discussed the way it was supposed to be. And uh you know, look, we're broke, right? We we have a $ 38 trillion debt. A trillion seconds ago was 31,688 years ago. But we have 200 trillion in unfunded liabilities in Medicare and Medicaid and Social Security. You have tax rates that are going higher. And you look around, I mean, I left Minnesota 5 years ago because of the crap that's going on there today that was going on there then. You look at all this stuff that is happening, the fraud, the the the irresponsible spending and questionable decisionm. Yeah, I don't think we really are. Uh we're closer to a monarchy than we are to a republic, it seems. And massively divided, which is something that's even more concerning. Uh the division in this country is is is unbelievable. And uh and I and this is a bad I don't even want to go here, but I just wanted to to explain the divisiveness. You know, on one hand, you had people mocking Charlie Kirk being murdered, which was the worst thing I've ever seen. And then on the other hand that what happened in my old home state of Minnesota with this lady who drove floored her car went at an agent. Now could he have shot at the tire? Sure. But the point of it is is that now you have the same people that mocked Charlie Kirk being shot saying well you know this was a political observer. A political observer. Huh? Someone who's just sitting there and and not listening to orders by a federal authority. And you get the mayor of Minnesota get up and say, "Get the f out of our state." Which just fermentss this this stuff. All of this stuff and the stuff that we saw in the previous administration, the the lawlessness, the lack of immigration control, the uh the the in the belief of election integrity uh fraud, or the the belief of a two-tier justice system, all of this stuff, whether right, wrong, or different, the world is looking and said, "What the hell's going on in that country?" That is not the country that they once were. And yet they're the ones imposing all the rules and they're broke and they want to continue to borrow at a rate that is off the charts, but the world is no longer accepting their treasuries. So who's buying the bonds? Are we supposed to believe it's the Cayman Islands like they want us to believe? Are we supposed to believe it's London? So you have two of the most broke countries in the world, the United Kingdom, the United States, buying each other's debt. That makes a lot of sense. So all of this stuff I think is coming to its logical conclusion and and that is that we've gone very very far away from our fundamentals that that this country was founded upon not only politically but also monetarily and fundamentally in terms of you know everything our our our culture uh has been whitewashed and now we're I believe starting to pay the price for it. So, yes, I think and I hate to say this because I I I thank God every day, Jay, I was born in the United States. I do. And I would vote for President Trump again. And I honest to God, I'm a patriot. And um but I I have a hard time in a world where I I come from nothing but meritocracy, hard work. I outwork people. And I literally come from nothing. Miles Franklin. My dad's middle name is Miles and his friend Franklin, middle name, who lent us $60,000 in 1989 to start an off a gold company in an office the size of a closet before the internet. I am the American dream. I thank God every day for it. But I look at the way the world is now versus the country that I grew up in, and I don't recognize it. >> And and that's why I left Minnesota, a place I said I would never leave. I was so proud to be a motan. and loved it, you know, and now I look at it, I'm like, what the hell has happened? But I think that's the way the world looks at this country uh in large in large part like the same way I look at my my home state of Minnesota and just shake my head like what the hell's happened. >> And I think that's a problem when you try and and pretend that you have a higher moral character and go around the world implementing your will. >> Um I think it's a problem. uh you know anyways I think that's part and parcel with what is happening in the ddollarization and the dreasurization and and the accumulation of commodities over paper promises from a country like ours. Oh man, that was awesome, Andy. And and you know, when you're sharing a few of your thoughts about like where we might be in the cycle of American empire and and it looks like things are going a certain way and I I you know, I've obviously spent a lot of time thinking about that myself and then asking the question, but how could I be wrong, you know? And if you look at like the the British Empire uh during the end of the uh 18th century, right? Rough time for the British Empire. They had just finished massive wars with Napoleon, spent way too much money, were insolvent and bankrupt as a country. Simultaneously fought and lost their American colonies, massive chunk of their economy, right? Massive trade that just evaporated. When you invest in a war and lose, it's just a loss. And in that case they lost a massively productive region. Um and the inflation that was triggered in the UK in response to that was tremendous. By the year 1800 inflation that hit 30% in London. You know we lost it about 9% inflation a couple years ago. Can you imagine 30%. The British East India Company was bankrupt but they owed the money to the UK government. They were deemed too big to fail. All this stuff is like incredibly familiar, right? Any outsider looking at the British Empire in the year 1800 would have said the writing's on the wall. You're done, right? You're out of money. You're losing territory. Nobody respects respects you. You're in your sunset years on the way down. And the history books tell us that actually the greatest years of the British Empire were still ahead of them, right? They were still moving towards and you know, interesting controversial story that took them out of it. It was mainly the opium trade in China. And this was a new market, new product that allowed them the ability to bring a lot of silver back into the the the the British um uh empire through the Indian colonies and the poppy production and all this stuff, right? But anyways, the point is I find myself asking like what could that thing be though because it's so you can never know, you know? And that that was such a pivot and in real time you would have never seen it coming, but it did happen and and it's hard to like but it's fun to think about, you know what I mean? And I found myself wondering because to your point about like consolidation of power, you know, the IRS, the CIA, the FBI, all kind of report to the administration now in a way they haven't before over the weekend. Subpoenas were served to the Fed, to Jerome Powell. This is new. And I'd love to know your take on that actually, Andy. That's a new development that is maybe just the consolidation of more power under one seat. H how do you see it? Is that a threat? Is it as obvious as it seems or what's going on? >> I think it became obvious months ago when there was a vacated spot. The gal that the first first vacated spot, the gal on the on the Fed board who was trading inappropriately >> who filled it. H the guy that is the architect of the Marilago Accord, Steven Mirren. And so you get his he's Trump's adviser. He's good buddy. Draws up the Marila Lago accord which is really very similar to my thesis that Trump what he's trying to do is to massively devalue the dollar. Let gold go to the moon to devalue the dollar to back the back end of the Treasury market to bring back manufacturing. And it all hinges on the Genius Act which goes into effect January 1st which will create synthetic demand for the front end of the treasury. Push rates down and take all of the proceeds of that accumulated interest and buy more gold. push the price up. Look at Tether. They already have 14 billion. But I would argue that there is no I mean Goldman Sachs said gold will go to the moon and they said 5,000 bucks at first if the market believes that the Federal Reserve has lost independence. There is no independence there. I mean when you're pressuring the the Federal Reserve chairman to lower rates. That's what got us into this problem to begin with. It is the suppression of interest rates that has created all of the distortions that has trapped the Fed. And if they come in and try and do this to buy the debt, to push rates down, again, all you're doing is creating more and more and more inflation. That K-shaped economy, the Cantalon effect, where the wealthy get wealthier and the poor get poorer. The wealthy get wealthier because not only are they closest to the money, they can buy more assets. Their assets go up. The poor get poor because they don't have the ability to buy assets and cost of living goes higher and higher and higher. That's where we are going at the same time. If we don't do that and we and again there they said they're going to stop quantitative tightening and go back to buying 40 billion a month which is a form of quantitative easing. Call it what you want. They have resolved themselves I think to in essence massively devaluing the dollar. But that's the pressure that is being put on Powell. And if he goes well then they'll put in another bobo that will listen to President Trump and massively devalue the dollar through low interest rates. But if that doesn't work, bring in the Genius Act, which says anytime money moves, starting January 1st of next year, if not sooner, anytime dollars move, they'll be on a blockchain network. You'll get rid of checks. You'll never write a check again. Get rid of wires. You'll never do that again. It's like Venmo. It's like zel. But when that money moves, it has to be attached to a stable coin. That stable coin will move. The backing of that stable coin, which is one to one to the dollar, is primarily US treasuries. The interest is not transferable. So what is that going to do? That's going to create first of all the buying of these stable coins which is backed by treasuries push rates lower synthetically. They're going to push rates down any way they can and they take the proceeds of those which if I owe you money and I send you something via stable coin neither of us can take the interest that is attached to that stable coin backed by treasuries. What are they doing? Buying gold devalues the dollar pushes gold up higher and that's when Judy comes in. And if she's right, and Trump does back the back end of the bond market to gold at a much higher price in 30 years, we owe that amount to gold. We owe a million dollars on a bond that's a million dollars, we owe it a million dollars in gold. Zero coupon, no interest. You bring back manufacturing at a zero upfront borrowing cost into a massively devalued dollar and you pay gold a million dollars worth. Well, who knows what it will be back, you know, in in 20 or 30 years. James Rickards is saying they want to push it to 24,000. Do they? Will it? I mean, maybe. Who knows? All I'm simply saying is that's how you devalue the dollar. And this is what Triffin's dilemma says. And that's why the knucklehead Jared Bernstein, one of the silliest guys I've ever seen in my life, try to explain how treasuries are created. He did write a report called Dethrown King Dollar, which said we can't be the reserve currency anymore because it's hollowed out our manufacturing. Triffin's dilemma says the world needs more dollars than we can provide through trade alone. So, they sell their currency and buy ours. Naturally, over time, ours gets higher, theirs gets lower, so manufacturing goes to where it's cheapest. Well, Vice President Vance recently said the same thing. It's as if they are purposely trying to massively devalue the dollar by their actions. And so, I think really the moral of the story is through all of this, if you save in dollars, you're destined to go broke. And I mean that. And you can measure any asset that you own. Measure it in gold terms over the last 25 years and you will see that in gold every asset you own from your automobiles to your jewelry to your to your um to your home is is deflating. It's going down in price ma massively. Anything you measure in currency in dollars, Canadian dollars, it's going way up. It's and so you know and I and you can do that really easily. It's very easy to test. Do it in your house or with a house. Uh in in 2000, gold was four uh 450 bucks and the average house in the US was 250,000. It's about 500 ounces of gold. So you could have taken out a mortgage or left the gold under your mattress earning nothing but dust. Today the average price of a house is 500 grand. It's doubled. Great investment. Your house doubled. But what's gold? That 500 ounces of gold is worth $2.5 million. It buys you five houses. So the dollar is dying and gold is not. and and that's how you measure the value of your currency, not against a basket of currencies that by Triffin's dilemma says they're all devaluing against yours. It's a flawed measuring stick. The point of it is through all of this is I think they understand what they are doing. I don't know how the geopolitical thing pushes into it and are the tariffs really are they just trying to get people to move away from dollars? The only way that this works is if Judy is right and they do back the back end of the bond market with gold. Now you have real demand for gold or for our treasury cuz it's redeemable in gold maybe. I don't know. But I don't know. It's a very interesting time. And just like the Romans, who knows when that last chapter is written. Just like the British Empire, all of the world reserve currencies, none of them really lasted past a hundred year years. And here we are well past our expiry date. And uh I don't know. I just think that it's hit or miss. And I'm hoping I'm trying to be optimistic. I am. But and maybe there is reason to be, but you know, you look at what Ray Dallio said that that 60% of the United States has a literacy rate under the sixth grade. >> We're broke. Uh we're uneducated. We don't make anything. And we have, you know, 200 trillion in debt. And that's not a bright future for our children. So things have to change one way or the other. >> Yeah. What a pickle. It's funny because honestly, Andy, like I find myself very bullish on the American economy and it's a tough thing to articulate, but um given the choice of where we'll spend our life, like that's still at the top of the list, you know? It just is. And >> I agree with you. It's still the best country in the world, but we've gone astray >> and something needs to be done. And that is my entire thesis, Jay, is that Trump sees this and the nobility of what he's trying to do is bring back manufacturing for our children and our grandchildren. And I could go into this 20minute diet tribe. And that's kind of what I'm going to talk about at your show. >> But that is what I think he is doing. And the pro it's like the Shaw Shank redemption. Andy Drain had to crawl through two miles of crap to get to the other side. And there is reason to be optimistic, but there is no way we get from A to B without paying the bar tab. And there and and there are consequences whether it be geopolitically or monetarily or fiscally that we have to deal with. And I think he understands this. He can't articulate it. I don't think people would get it and and he would get crowded out of his aspirations. But I do think the only way to bring back manufacturing is to massively devalue the dollar and bring back all this gold that the whole world thought was tariffs. No, it's not. It's reassuring. The amount of gold and silver coming into this country, Jay, that I've been screaming about since the beginning of the year is off the charts. December, 65 million ounces of silver were delivered into uh yeah, 65 million ounces and almost 4 million ounces of gold. And here we are just the first week into first 10 days into January, which isn't even delivery month. And we've already seen about 40 million ounces of silver delivered into ComX. you know, you're talking a 100 million plus ounces delivered in the last 40 days. Of course, they made silver a critical mineral, but the same thing is happening with gold. I think that they are reshoring commodities in an effort to um manufacture to bring back manufacturing. You need silver for manufacturing. You need silver for AI. You need gold to back the treasury in order to get anyone to want to take our treasury. And I think they will marry it with blockchain technology, stable coins. They will do this to pro to provide immutability, to provide um uh transparency and and to have something behind it besides the promise of a country that's gone astray. So I agree with you. I would rather live in the United States than anywhere, but it's going to be rocky. This is the fourth turning. We are there. So what is what is the first, you know, when we get through all of this? Yeah, there is reason to be optimistic, but we need to get through this first. And I honest to God, I believe he is doing this. His administration and he are doing this and it's going to be very confusing until it becomes obvious. But I see that being his plan and that's what I'm going to talk about at your show. >> And you know what? One of the best things about the United States is that the sovereignty of the states provides you with a lot of options. You were in Minnesota, you've moved to Florida and experienced a culturally different place, politically different place as a consequence inside the federal borders. But, you know, novel in very many ways. Um, we have a community of mining and metals investors at uh the commodityuniversity.com. And anybody who's looking to build a competitive advantage as a mining or metals investor, I encourage you to check it out. We have course drops every month, monthly mastermind sessions, and daily WhatsApp groups where we talk about what we're buying and why. And I like to give them a couple questions here. And they knew you were coming on, Andy. They're big fans of yours. >> Thank you. And you mentioned silver. So I want to get into some of their questions about the silver market. And let's start here based on what you're seeing from a purchase standpoint. You know, what is the primary driver of silver today? Is it still sort of equal parts monetary and industrial or are you seeing one take over and begin to be the main driver of silver price? I >> I think it's it's much bigger than I think it's it's at the highest level. I mean, you know, the US government has classified it a critical mineral. The European Union did at the end of 23. China said in November they're going to pri prioritize their silver for domestic needs. And then a month later in response or two months later in response to us saying it's critical. Well, we're going to limit exports. You have the LBMA, which according to David Jensen, which is someone that I think you should have on your show, he's fantastic, who says there's two billion ounces of contracts that are outstanding that are deliverable contracts against 140 million ounce float. And he questions even that amount. In other words, those 140 million ounces have obligations of 2 billion ounces that they're backing. What could possibly go wrong? You're seeing every single month for the past 15 months since Trump won the election. I'm not kidding. every month. Millions and millions and millions and millions of ounces every month. Billions and billions and billions of dollars. And really, what more do you need to know other than who the hell's doing this? Who is bringing in billions upon billions? And at that level, when you're talking that kind of money, these people don't do things just for the hell of it. They know where things are going. They are friends of or are the folks that make the rules or write the playbook. And when you see a market where eight Western banks, one or two in Canada, four or five in the US, and one or two or three in in Europe, have controlled the largest short position on COMX of any commodity ever traded in the history of the market. Over a thousand commodities. That's now breaking. It's breaking because these commodities all have delivery, these contracts have delivery features. And no one ever did less than 1%. Nobody did. and and it was a market to hedge or to speculate. We use it. If I have 3 million ounces in my warehouse, I'll sell three mill million ounces on paper. So, I'm market neutral with my my inventory. But what it has turned into is something far more than that. And it has given the ability of the West to suppress gold and silver. Now, I would argue silver because of the military-industrial complex, the amount of silver that is needed in high-tech weapons. go to silver wars.com and and and read what they say about all of the military uses of silver and then look at gold and it's a term called Gibson's paradox that speaks to the inverse relationship between real interest rates and gold. So the west wants to suppress interest rates they got to step on gold. No one ever stood for delivery but it started in the global south. It started in 2020 where all of a sudden we start to see huge deliveries and repatriation of gold and silver by central banks and by very large purchasers. It's now accelerating. And when you have just like Bernie Maidoff, everyone was happy with the monthly checks they were getting until people said, you know what, I need my principal back. That's what's happening on the LBMA. That's what's happening on COMX. You're seeing far more deliveries than there are bars or far more delivery requests than there are bars to handle it. Far more paper contracts than there are bars standing behind it. That is what is fundamentally different. And I think that's all you need to know is who the hell is standing for delivery for billions and billions and billions and billions and billions in silver. The US government just put a national, you know, a national strategic national security policy floor underneath the price of silver. The public has just begun to wake up, but really hardly at all. They're just beginning to. Not the people watching this who have been, this has been common knowledge forever. So, this isn't being driven by the retail public. This is being driven by the most well-funded and far more important the most well-informed traders on the planet. And they see something very clearly that is allowing them to spend hundreds and hundreds of billions of dollars to bring all this stuff in. um they don't do it for the hell of it. >> Now, what was your I'm sure you've commented on this a ton, but right before the holidays, we saw this uh 10% rush, 10% drop in the silver price. What was your perspective on that event, Andy? >> Well, I think it was what's called shaking the bushes. So, going back to who's standing for delivery, these people do not use margin at all. These are at the at the low end of it, it would be Tesla and Samsung and Sony. And Samsung supposedly just went to to Mexico and open up a mine that had been shut to buy all their Dorian concentrate. As a side note, China's been doing that for two years. I've talked to Sean Kungun and talked about this forever. Dolly Varden, he said, "Yeah, China's coming and buying Dorian concentrate right from the miners have been for the last two years, paying double what the West will and shipping it back and refining it there." So the big players who are standing for delivery, they don't give a crap about margin. And and that's the text textbook for the CME group, the ComX. Whenever there's too many longs that are threatening the shorts, they raise margins. But you know, I went to lunch with one of the owners of a professional baseball team two weeks ago and he lives not too far from me in Florida in a neighborhood that I've never seen anything like it. And Mark Wahlberg is his neighbor, just moved in and Alicia Keys down the street. These houses are 50 million bucks. You think they use mortgages or do they come in and pay cash? If rates on mortgages go way up, is it going to affect that neighborhood? No. But it will affect everyone else's neighborhood. So, let's look at what they did on on the 20 on Christmas day, you needed $21,000 in your account in your in your margin account to control one 5,000 ounce silver contract. And say silver was 60 bucks, then $300,000. 21,000 controls 300,000. So, you get all these traders that say, you know, and maybe they're well healed. Maybe they have 10 million bucks and they say, "You know, look, man, we can get rich." Those prices go into the moon. Let's go deep into margin. We'll buy all these contracts cuz we only need 21,000 in a margin account. So, they do that. The next day, the CME Group says, "You now need $27,000 in your margin account. Raise it by 30%." So, all of those contracts, if if they didn't have the liquidity to put it in, they had to sell contracts to come up with the margin, which drives the price down further. Selling begets selling. the rise in margin and the selling begets more selling. Who comes in and scoops it all up on the cheap. Oh yeah, the big boys and girls that are standing for delivery for billions and billions and billions and billions and billions every month. They laugh. They laugh. If you think you can play in this sandbox, your checkbook's not as big as ours. You may drive a Ferrari and have three houses, but it ain't as big as ours. So, we're going to shake those bushes as much as we can. And anyone on margins got to cough it up or get out. And so, all of that drove the price down and look at it today. It's at an all-time high again today. It's just shaking the bushes. Didn't change anything fundamentally. And that's really what's different about the deliveries is that in in 2011 when they did this, they broke its neck and it never came back. It did not come back for for 20 years almost and or 15 years, right? But now whoever is standing for delivery looks at that as a gift because all it is is a a leverage event where it they delever the the the weak hands and they come in and scoop it up because what did not happen was a new all of a sudden a big rush of supply into the market. It's it's that didn't happen. Nothing fundamentally changed. But the the the traders that were on leverage, well, they got they got got they got had and they got shook from the bushes to to the delight of the big money who says, "Thank you very much for the $10 drop in the price of silver. Appreciate it." So, this would be the equivalent um as a bunch of home homeowners who have 20% equity in their homes and that's normal. They feel comfortable there. But overnight, the bank sends out a memo and says, "Actually, we're a little uncomfortable with the market. We need you to have 50% equity in your home. So, either come up with the cash >> by tomorrow, >> by tomorrow or sell the house." >> And then Black Rockck comes in and buys the whole neighborhood >> because most people can't come up with that cash. They have to hit the bid on the house. >> A bunch of supply hits the market, drop in price, and some savvy investor who saw this coming, was maybe instrumental in the orchestration of it, swoops in to buy that, buy that supply. 100% that is exactly what happened in my mind anyway. >> Interesting. Very interesting. Thank Thank you for that. And and you just referenced 2011. This is what happened and you know it broke the neck. Similar scenario Andy in 2011. I mean this is interesting. That's right when I got in the business. So what what was the scenario at that point in the silver market that you were referring to there? >> Oh the price got driven up to $50 and it was and and it was a very different time, right? We didn't see contracts standing for delivery. That didn't start happening till 2020. At that point, 1% of contracts were standing for delivery. And and the countries like China and Russia and India weren't um taking delivery off of the LBMA the way they are right now. And you didn't have the same environment. We still had, you know, that moral high ground. We still had dollar supremacy. We still had all of the stuff that that the United States was all about, right, in 2011. And so it it it was a situation that ended very abruptly and very quickly by raising margins. And but now you're dealing instead of sophisticated savvy investors, you're dealing with with nation states. In my mind, that's the real big difference is that you are h you have a whole world of of big money that does not want to hold their wealth in US treasuries anymore. I mean, imagine if you have a billion dollars. Where do you put your money throughout the last 30, 40 years? You put it in treasuries because that's the safest, most liquid place. You're not going to put it in the stock market, which has volatility. You're not going to put it into I mean, you might buy a bunch of real estate, sure, but that excess cash would go into into US treasuries and and that's where all that money went before. Um, and now that money that has left US treasuries is looking for a safe place to put it. Well, you have a tier one asset that has no counterparty risk that has doubled the performance of the 10-year Treasury over the last 25 years. And look at it the last few years. Last year, gold's up 40%, the Treasuryy's up four and a half. And they had just got done, you know, sanctioning Russia and confiscating theirs. This this last year, gold's up 80%. 10-year Treasury up four. That's 20 times. So, the point of it is there's no counterparty risk. It outperforms it. I I I think that is the difference is that you have countries that are saying we have enough money. You can't do that to us. You can do that to a hedge fund or some traders. Go for it. Try doing it to the people's bank of China or try doing it and and a sovereign hedge uh a sovereign base hedge fund that works on their behalf or try doing it to Saudi Arabia or to India. any of these big countries have pocketbooks and checkbooks and and intellect and coordination and motivation and sophistication that they didn't have or the desire to challenge the West. And this is the way to do it to challenge the West in a very um docile way, if you will. And you don't need to to to fire missiles and and bring your warships to the coast of New York to to threaten the US. you just need to create an event uh where you get one of these massive banks to failure to deliver. And I think that's what's happening also right now with the European banks cuz they're the ones supposedly on the hook. Now, that's Tom Luongo's theory. But if you look at a report that just came out of the Economic Times, they claim that JP Morgan has flip-flopped and has went long, has covered a 200 million ounce short position in silver, bought two 21 million ounces over the last 6 weeks of physical and largely they and the rest of the US banks, the big five are long, leaving one or two of the banks in your neck of the woods and a couple in Europe massively short. So as the price goes up, who is getting squeezed on this? This is very different deal than it was in 2011. This is about national sovereignty. And when you have the European Union, the United States and China effectively say that we are rushing to accumulate this stuff uh and classifying things as critical and openly using it like the bricks are as a settlement vehicle instead of treasuries. In other words, use gold to settle in balances in trade and in currency. That's part of the Embridge. That's part of what they're doing with the expansion of the Shanghai Metals Exchange. They're opening vaults all throughout the belt road. The first one was built in Hong Kong where if metal leaves, gold leaves China has to come out of Hong Kong. Well, the way they're doing it is they're trading their digital yuan over the sips or the embridge to a country like Saudi Arabia, getting their oil, and that digital yuan is now immediately convertible into gold off the Shanghai gold exchange in Hong Kong without converting to dollars. Guess where the second exchange is being built? Saudi Arabia. and they plan on doing multi-jurisdictional vaults all throughout the belt road creating a system where you trade in local currencies settle in balances in gold. Gold is being integrated into the monetary system globally and silver is flatout critical for a world that is advanced and I think they are prioritizing that now. And that is what's different is that now it's it's not as big of a secret to the people who were pulling the strings as it once was. And these countries are s are significant enough in in wealth and and in sophistication to challenge this this this hegemony that where no one stood for delivery and if you do you break the system and that's starting to happen right now. >> That's fascinating. C can I ask you Andy, and I know we're getting to the top of the hour here, but what what vulnerabilities would you see in these Chinese-driven initiatives and the emergence of the new reg regional hedgeimonyy and the threat to the United States? Like, do you see any vulnerabilities? any reasons to think that the consensus China thesis might be wrong that this this dragon's going to continue to grow and acquire allies and trade routes through the belt and road investments and uh a larger percent of global trade uh in yuan or yuan adjacent currencies anything in there any fracture lines Andy that you see >> I mean look I'm not a a an expert on China but I see what they're doing and their expansion in the belt road which is the largest infrastructure project in human history. It's not perfect but they are doing things that are cooperative. We will come into your country which is underdeveloped and resourcerich and we will we will help bring you into you know into the current uh into the current century if you will from a standpoint of of building your your middle class building your infrastructure. We'll build roads and bridges and maritime channels. will we'll build we'll build mines and and oil refineries and we will help you you know industrialize your country and become wealthy and for it we want a little peace and we'll do it in a cooperative manner. Um I think it is better than going in and threatening countries with military action and you know it's not perfect but that's why I think these actions that are being made by the US uh are really detrimental to US hijgemony and and plays right into the hands of the countries that are now joining together. You know, one of the the big um one of the big things that that people who are very dollar bullish are missing is a comment that came out of the Russian minister Sergey Glaziov and he said a couple things. He said um you know and everyone says well the bricks isn't big enough and there's the milkshake theory and all this stuff. I get it. But he said, you know, we are opening up our bridge technology to everyone in the world with the exception of the European Union, Great Britain, and the United States. So, in other words, you're talking the entire Beltroad initiative it is being integrated into right now where countries will trade back and forth with one another, building their own monetary ecosystems using their own local currencies, settling in balances in gold in a series of multi-jurisdictional vaults. And I was listening to the guy that developed Bricks Pay. Bricks Pay is is a B2B. So Brics Bridge is central bank to central bank. Bricks bridge is like you're B2B or or consumer to business and you you live in Brazil and you want to go to China. You have an app and it just bangs seamlessly. Bang bang bang you buy stuff. Um and that is right now he said we're in China right now negotiating to roll that into the belt road initiative. So you take the belt road, you take all of these countries that are going to stop or have alternatives to dollar settlement um and the ability to build their own ecosystem uh and the ability to join with what amounts to 90% of human population. It's something that should seriously be taken very seriously. And I think the problem is that many people you see the Chinese think in terms of decades we think in terms of seconds and that is the instant gratification that that this world has in the west has has instantly became where if your investments don't go triple digit in a year they suck and and you know I want it now and that's not fast enough and everything is about immediacy and and you know they they don't have the patience to be able to to deal with the little by little and and and therefore they dismiss it. They poo poo it. And and right underneath our our noses, they are building a very formidable infrastructure where they already control the majority of all the natural resources, the majority of the manufacturing, the majority of all of the refining u and and growing into what amounts to if you add in the belt road initiative, if you add in the Shanghai Cooperation Organization and the Eurasian Economic Union, 90% of human population which is now going to have access to this new settlement system both from a central bank to central bank and from B2B. Little by little, it chips away not only at the settlement status of the dollar, but more so at the reserve status of the dollar. As all of these countries do not want to hold treasuries anymore because of the risk of sanctions, because of the military risk, because of the the irresponsibility. Why would you want to sell your oil to a country where the dollar is being wickedly devalued through fiscal irresponsibility? And the metrics that they use to tell you how much inflation and how much money creation are completely fazy, right? They they don't even publish M3 anymore and they said it was archaic, but that's the broadest measure of the money supply. And the CP lie should there it was the CPI should be called the CP lie. John Williams of Shadow Stats would say it's 11% not three. So all of these things that we are doing on top of the way we're going around the world doing all this stuff I think only reinforces the likelihood that that they're not going to hit a roadblock. Look, they're not perfect, but I think and everyone says who will tr trust China? It's not about who will trust China. Everything that they are doing is based upon transparency, based upon gold, based upon using your own currency over a network that isn't going to be interfered with by the swifts. So, I would say there's a 60 70% chance that there isn't something that derails them. But is it fast enough for the people who analyze this stuff to agree with it or do we just get blindsided by it someday? I don't know. I guess that's the question cuz we get no no credible newsworthy anything from the mainstream. It's it's people like me who sit and either too stupid to say it or have the courage to say it because I believe it. We'll see what happens. I've been doing that for 5 years and a lot of it's come true. I'm not happy about that either. It's frightening. I got three kids and but they're growing up in a world where the dollar is not really looked upon or or is this country looked upon the way it once was? Hopefully we get our act in order or else things will change and that's just the way the world works. >> Man, if you don't like geopolitics and macro today, you're never going to like it, right? It doesn't get >> Well, you know the Chinese curse. May you live in interesting times. And these are interesting, brother. I mean, they are any way you look at it. Yeah, 100%. Look, Andy, it's always a pleasure chatting with you. Thanks for making the time. Um, check out Miles Franklin for all your precious metals needs. It's a good time to be stacking silver, buying gold. If you don't have any, it's never the wrong day to start. I appreciate your time and I'm looking forward to getting you back on stage at VR joining us in Vancouver. It's going to be a crazy show this year. I think we're on pace to have around 8,000 investors. We'll have to wait and see. six stages. It's going to be bonkers. It's the Super Bowl of metals and mining investment. Love to see you there. vrdia.com for tickets. And Andy, thanks again. >> Yeah, I can't wait. Jane, by the way, just as an aside, your ability to ask challenging questions and take things that that I or your guests say and immediately come back with something intuitive. And I've been doing a lot of these for six years. You're you are at the very very top of your game. And there are very few people like you. So, not only thank you for having me and challenging me, but thank you for allowing me to come to one of the only two conferences I will go to. And believe me, if I didn't really think it was amazing, which I do, I wouldn't fly from southern Florida to Vancouver, which is one hell of a long day, but it's worth it. And I tell everyone there are two conferences I go to. Rick Rules here in Bokeh, which is 10-minute drive, and yours, and which is a 10-hour day. But, uh, any way you look at it, uh, thank you for having me. I look forward to seeing you and look forward to seeing you in person at V-Rick in, uh, couple of weeks. So, uh, look forward to picking up where we left off, >> dude. I appreciate that. Thanks so much, Andy. Yeah, man. Means a lot, man. All right.