New Sheriff in Town: Kevin Warsh’s Fed Crackdown & What It Means for Gold & Your Portfolio
Summary
Fed Policy Outlook: Guest likens Kevin Warsh to a Volcker-style chair, prioritizing inflation control with tighter policy and no forward guidance, implying near-term pressure on asset prices.
Gold: Bearish near term with a target around 3,500 before turning bullish again; expects generalist investors to re-enter when policy flips back to easing.
Energy Markets: Oil likely stays in the $80–$90 range due to structural supply constraints and damaged infrastructure, warning against a false sense of security after recent declines.
Natural Gas & LNG: Structural bull case supported by peaking US growth, Canadian LNG exports (Kitimat), and potential AI/data center energy demand over time.
Uranium/Nuclear: Long-term positive on nuclear and uranium miners, but expects a broad risk-off correction to hit them near term before better re-entry points.
Copper & Metals: Copper capped short term by rising rates and a stronger dollar, but retains a durable long-term demand story independent of AI hype.
AI Theme: Sees an AI bubble risk with data center projects facing water/energy constraints, implying disappointment and knock-on effects for equities and selective commodities timing.
Strategy & Risk: Emphasizes holding more cash, selective shorting/hedging, and staged buying on weakness in commodities; no specific public tickers were actively pitched.
Transcript
The thing to be concerned about with Warsh is that, you know, he's absolutely right that there's got to be some discipline enforced again, and that they got to get inflation back under control, but we're so far gone with 40 trillion in debt and everything. I mean, there's a limit to how much he can tighten before he breaks something. You've got a lot of garbage underneath the surface that's kind of been, you know, masked by these record highs in the stock market, record new corporate issuance and stuff like that. You know, with Warsh, he's, you know, does he listen to the bond vigilantes or the credit crisis? [music] Which does he follow? He's going to start out listening to the bond vigilantes. I mean, that was 110% clear yesterday. >> One of my key takeaways were were no forward guidance, which I don't know how people are going to feel about that. And the task force, I mean, that's a lofty goal for the end of the year, so far what I think. >> Well, it it it buys him some time. He doesn't have to get out and do too much right away. I mean, look, the way he talks and acts, if it was all up to him and he didn't have to satisfy anybody else, he'd have raised rates 50 basis points yesterday. >> How do you strategize when you see so much volatility and bumps in the road ahead? You know, especially on the commodity side, as we usually talk about that quite a bit here. Like, where are you looking at? Do you have a certain number that your bottom is that you feel comfortable buying back in again? >> I'll throw a number out as far as gold. I mean, my when gold peaked, I I had two downside targets, 4,400 and 3,500. We already broke 4,400, and I told people a week ago that if we rallied back up to that 4,400, to short it some more. Um, cuz I do think that with Warsh's game plan, gold will go down to 3,500, [music] which is a big breakout level of last year. If it does that, you're asking about price targets, it's probably going to be back up the truck time again. Because that'll mean that a lot of the um stocks are now down 40% or down 60 or 70. >> For disclosure purposes, our site does not make recommendations for purchases or sale of stocks, services, or products. Nothing on our site or this podcast should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This podcast is for entertainment purposes only. Chris, it's always great to have you on the show. Um we have a lot to cover since the last time we spoke. Um new sheriff in town. What are your thoughts and perspective on Warsh coming in and his um plans going forward? >> Well, Callie, if I can pat myself on the back a little bit, uh nobody predicted the type of chairman that we were going to have in Kevin M. Warsh as accurately I think as I did. Um you're looking at his background and and it really wasn't rocket science. So, people look at these things too politically. Uh and it was actually Scott Bessent, the Treasury Secretary, who um uh was the one who made this call. So, in a nutshell, Callie, and we can unpackage a lot of this. Uh I said weeks and weeks ago that what we were going to get in Kevin Warsh is a carbon copy of Paul Volcker in two acts. Act one, which he made abundantly clear yesterday, is that he believes and I what what surprised me I guess if anything yesterday is how often he came out with these thinly veiled slaps at Jerome Powell for getting us all into this mess. You know, he said things like inflation is a choice. You know, he wasn't like Jerome Powell blaming everybody and their dog and the fleas on the dog and the little green men from Mars and supply chains and the Russians and the Iranians for inflation, Worse put the blame where it belongs. I'm Jerome Powell and the Fed for printing all this damn money. That's why we've got high inflation. That's why it hasn't come down. And to him it's scandalous that the Fed has run double or better its supposed 2% target inflation rate for the last 5 years. So, that's the first thing he's going to come in and do like Paul Volcker did early on when he came in with inflation soaring and a dollar crashing and everything in the late 70s and and had to fix that. His second act, like Paul Volcker's had a second act and nobody remembers this. I'm continually reminding people. When Ronald Reagan reappointed Paul Volcker, Paul Volcker, I won't get into all of it today. I've said this many times before other other other places. Paul Volcker changed the natural order of things. He's the one that created securitization or laid the groundwork for securitization for the wealth effect, for the ability to increase credit and the money supply far greater than what Paul Volcker inherited, but to channel it is a first matter into asset prices. And you create this wealth from the asset prices, then it trickles down the wealth effect. People buy more stocks, they buy more stuff. Stock market goes up. It's this virtuous circle. All right? So, Paul Volcker should be remembered for what was much more lasting. And that was the transformation of the system after he first got the inflation genie back in a bottle. Worse is going to do the same thing. Again, he made 110% clear yesterday whatever he's got to do. He hopes he that nature will take its own course and he doesn't have to raise interest rates a lot, but he's going to do it if he has to because he he believes that the Fed has lost its credibility, which they have, and he's going to get inflation reigned in. Once it is going the right direction, meaningfully, and the economy likely slowing down just as a in the natural order of things, then he's got a lot of policy things he wants to unveil to have a better and what he calls it he's using the term himself practical monetarism going forward. To not have the Fed be so consuming a part of our discourse and what makes everything work. He even commented I want the Fed to be on page B12 of the financial section. The world should not be revolving around the Fed. So, we and we can unpackage all those things with his task forces and stuff like that. So, again, we're going to get two acts out of Kevin Warsh. The first one is not going to be very healthy for you and your investment portfolio if you're long much of anything for a while. >> For when he talked about the no forward-looking guidance, I imagine that will create a little bit of volatility short-term, but probably long-term is a fantastic thing [laughter] not for them not to comment on everything in the markets. Were you expecting the drop that we saw today? And like do you think that's going to carry on short-term, long-term, um in the broader markets, and then in commodities as well? >> Well, if everything was behaving for the most part, I mean precious metals are well off their highs. Copper was trying to make a new high, but it can't get much farther because it's going to get hurt if interest rates rise, the dollar rises, and economic worries come about. The only thing that hasn't behaved as it should with what Warsh's game plan is going to be and all else being equal is going to stock market. I mean, the stock market dropped in in the immediate aftermath of the Fed meeting yesterday. You know, we're recording this on Thursday, but today it rallied again. Well, why did it rally again? Well, the orange wonder saw that the stock market was not responding well to the Fed and said, "Oh, let's let's let's sign our sham memorandum of of today so that we have a reason to goose the markets and the markets rally and oil comes down on Thursday. So, that's why the stock market didn't go down further today, but that's still coming. Uh so, it's the only thing that hasn't uh responded as it should. I mean, gold and silver, to a great extent, have already anticipated what's coming with war and have discounted it. We we've we've seen most of the decline. I don't think we've seen all of it. We've seen most of it. Uh probably true for some other commodities and assets as well, but we're getting faked out right now by oil big time. The terrible false sense of security right now with energy. Uh even if this whole alleged peace is on the level. Um So, I I you know, I I I think that going forward, as I said a minute ago, Cali, you're not going to be want to be net long too awful much because as one of the consequences of war's game plan to get inflation back under control, that's going to include asset prices. >> What do you think is for like the economy, how much can it handle of a like a reigning in or a tightening before we see an unraveling? As like you said before we started recording, like some of the garbage underneath. >> I'll tell you what, when Jerome Powell belatedly, after he set all of these brush fires and then he turned into infernos, and then finally figured out he went too far and started raising interest rates, I was one of those saying that, you know, yeah, he can raise interest rates for a while, but at some point he's going to break something. I was wrong. He never really did. I mean, he raised the short-term rates uh you know, to 5% or thereabouts. Didn't break anything. And and I would have expected it would because you've still got a lot of trouble underneath the surface. You've got uh record delinquencies in a lot of subprime auto loans now, credit cards, uh consumers, you know, that K-shaped economy that some people talk about. The bottom of that K is getting bigger and poorer and having a harder time making ends meet. You know, the path for 60% of the population that was paycheck to paycheck to a great extent. And and those are the people who Kevin Warsh with some extent is trying to help. So, look, he's got a little bit of a fail-safe Cali to answer your question because not only did he make clear yesterday that he's going to keep monetary policy tighter. He wants to go in a direction of hiking rates if it's if if inflation doesn't start coming down soon again on its own. But at the same time, don't forget that last December Powell pretty much removed all of the limits to the Fed's open market operations. So, John Williams, uh president of the New York Fed, who's the guy that, you know, at the central bank that has a checkbook, basically. Uh he has no limit on how much he can shore up repo markets, how many Treasury bills he can buy or anything. So, for a while, even though you've got some credit issues in in the main street economy underneath the surface, Warsh can dispense certain measures of his harsh medicine to try and bring inflation down without necessarily blowing anything up. That risk is always there. And make no mistake about it. Um you know, and and uh you know who Ray Dalio is. I don't know if you've heard him say this recently, but he's been very um wise in some of his comments about the stock market bubble, for example. You know, anybody with half a brain knows that we have an historic stock market bubble. The valuations are as dopey as they were in 2000 or before that and, you know, or 2007 before that in 1999 and, you know, other different times that you go all the way back to 1929. But, Dalio has pointed out the question is what triggers the need for liquidity? Cuz if everybody is still buying and has no compunction to sell to sell or is scared into selling, the bubble is there and it keeps getting bigger. But, what's the trigger? All right? And a couple of things that are looming right now for the first time in a long for a long time, the supply of stocks is growing because of all these IPOs. So, in a lot of cases you're seeing stuff get sold. A lot of people don't know why Bitcoin got creamed so much recently. People selling Bitcoin to buy SpaceX. Next, OpenAI or or Anthropic or the these other big IPOs coming out. So, the market's going to start feeding on itself and requiring selling to buy new stuff. But, I I also think, Kelly, that the other thing that you really got to be braced for is that when the stock market finally does come to grips that holy cow, this new guy is serious. He really is going to bring inflation down even if it means raising rates. I mean, and I said, you may remember this, that even at the beginning of the year when I was talking about what might lie ahead for 2026, I said, "Nobody has on their bingo card the possibility of rate hikes in 2026." Well, now everybody does, including at the Fed. And the market is still not priced for that. That's the problem. And whatever it takes, whether it's the actual rate hike with threats of more to come or just everybody gets up on the wrong side of the bed tomorrow morning and says, "Holy cow, this guy's really going Maybe I better get out of here while the getting's good." You know, and if some a little bit of selling starts, it's going to feed on itself. So, look, I I don't think Warsh is out to you know, do in the markets or anything like that. But, as he made very clear, he he the the Fed's credibility has become shot on inflation on Jerome Powell. Powell wanted to try and talk us all to death and talk inflation at death and talk the markets and the world to death through forward guidance and all this stuff. Not that Powell started forward guidance, but you know, Worse says, "And I like it. I I I I really do." His approach, he says, "Enough of this." You know, you don't need to talk everybody to death. If there's something to say, say it. I thought it was pretty cool yesterday, in fact. I don't know if you watched the press conference, Callie, but he was asked whether he intends to um have a press conference after every meeting. He wouldn't answer. And of all the times in his first press conference yesterday, when Powell used to always go for an hour, he he had 45 minutes, boom, out the door. Bye. You know? And so so this is a guy who I think, properly so, wants to get some of the I don't know. I heard commentators commentators put it like the the forward statements and the forward guidance and whatnot was like training wheels for markets. We shouldn't need training wheels. You know, if you need to change policy, change policy. I'm old enough to have started in this business when Paul Volcker was the Fed chairman. You didn't have all of these tortured analyses over every syllable in a Fed statement. You didn't have these big meetings and whatnot. You had you saw two-sentence press release from the Federal Reserve whenever he felt like putting it out. You know? The Federal Reserve the Federal Open Market Committee today decided to raise the discount rate by this, the federal funds rate like this. If you don't like it, go to hell, have a nice day. Worse does want to rein in some of the silliness and the fluff, and I God bless him. I'm all for that. >> I want to switch to the bond and treasury markets, like we were talking before. Japan hanging on by a thread, we've been watching that for the last year. What do you think the impacts of all this is going to be as we've just laid out some uh bumpy road, I guess, for the short term. quick >> Well, you know, it was it's been about a year since the bond market unwinding in Japan started to get a little bit more acute than people were comfortable with. And I was at a meeting in New York with some people, and one of the uh other old-timers in the newsletter industry, Jay Taylor, and I kind of just thought of, you know, just spontaneously started almost a round table seminar over the Fed and debt and all this kind of stuff. You know, the jig is up globally. There is so much debt. And this was the major mistake that was made even most recently with COVID, let alone if you want to go back to 2008. Debts were never allowed to unwind naturally. Risk was removed. Everybody got 0% interest if you were anybody. It made all kinds of bad decision-making uh possible and so forth because of this financial repression of all of these central banks putting their thumb on the scale and not letting the markets work, not letting things unwind as they should. And so now incrementally for last 18 years now since 2008, debts have gotten worse. They've gotten far larger. Credit quality in many respects is as bad or worse as it was in 2008-9. And now the volume of debt is so big with with sovereign governments demanding ever more money for financing and refinancing, and the two trillion a year being added to the US debt, you know, etc., that okay, doesn't mean everything is going to we're we're not going back to the Stone Age, but it does mean that governments and everybody are going to have to pay up. Higher rates if you want to borrow money. And and see, this is where people I think some people who got a little a too spoiled by the Fed keeping rates low, lowering interest What is stupid thing for the Fed to have lowered interest rates again the end of last year because it made everything worse now. But, don't forget that when the Fed lowers short-term rates, it's a signal to the market that they don't care about inflation. They don't care about the debt. They don't care about the value of the currency. When that happens, what do long-term interest rates do? They go up. And a major signal yesterday in the immediate aftermath of the Fed meeting that tells you what Warsh's game plan is, and it's not rocket science. If he threatens to raise short-term rates, or he does raise short-term rates, guess what happens to long-term rates? They're going to come down. They They Yesterday, the two-year Treasury was up almost 20 basis points in one day. Astounding move for one day. 10, 20, and 30-year Treasuries hardly moved. So, you had a significant flattening of the yield curve. And you know, a lot of people aren't going to like it for different reasons. Wall Street won't like it. But, he made also very clear yesterday that he needs to restore trust in the Fed on the part of Joe Sixpack and Sally Soccermom who listen to Jerome Powell get up every meeting and say He always had the same canned opening every press conference. My colleagues and I in the Federal Open Market Committee are are painstakingly working to make things good for the benefit of the American people and following our dual mandate. And you hear that, what planet do you live on? You're not doing anything for the American people with letting inflation run double your target or worse at times. That's the Fed's credibility. And And Warsh, in part, wants the average American to be able to go back to a four or five percent mortgage at least from the current six and a half or six and three quarters. He doesn't want the average American having a grocery bills go up five or 10% a year. And you do that by being tough on inflation and if you need to, you raise short-term rates because that will bring costs, it will bring mortgage rates, it will bring bring borrowing costs down as a consequence. Stop pushing them up. >> I know here in Canada in like Vancouver used to be a hot market for real estate. Our real estate is not doing well. I know there's very similar stories in the US and some of the bigger cities as well and just across the board. Like if if rates are raised, people are guessing like three times this year or twice even this year, that we see that 2008 similarities again. >> I don't think we're we're threatened with that quite yet. Much is well for public consumption. War is just going to be tough on inflation, raise the federal funds rate if they need to, etc. And he knows very well that that probably will mean that a lot of people who've got a lot of paper gains recently on Wall Street are going to lose some of them. Okay? He's got to look at the debt situation because in the end his job is not to make people chasing AI stocks happy. His job is to make sure that there is still a liquid and viable market for the US dollar and for US debt. And Jerome Powell has harmed that. It's the reason why the Fed lowered rate going back last the fourth quarter of last year in the fourth quarter of 2024. You know, I think the total is 200 basis points or close to that, 257, whatever it was. And yet long-term interest rates are just as high as they were when the Fed lowered the federal funds rate. Why? Because Jerome Powell was too soft on inflation, too scared of the markets. Okay? And again, if you're a central bank and you're not showing that you're willing to to defend, at least somewhat, the value of the currency, okay? You're going to get punished by the bond vigilantes. So, I I think that if he raises short-term rates, the people who are going to be happy are consumers. Because you'll have lower borrowing costs for certain things. You'll have lower mortgage rates again. You mentioned real estate, you know, and and real estate's got bigger problems than just interest rates. There's overbuilding in some areas and there's gluts in some areas. And you're right, I mean, here in Florida, there's not a major market that's not down between 10 and 20%. from the peak a couple of years ago as far as the market prices. Um so, look, a lot of these things and this is what Warsh is, you know, I would want to have this job right now because he's finally you got a guy again who and and one of the one of the little graphics I sent you, I love using this. We talked about the Fed. You know, people who are old baseball fans remember the Murderers' Row that the Yankees had years ago, century ago. Their lineup was called Murderers' Row. You had Lazzeri, you had Babe Ruth, you had Lou Gehrig and stuff like that. Well, the Federal Reserve, especially since Paul Volcker, has had a Murderers' Row of Fed chairs who one after the other murdered the the the value and viability of the US dollar. The only consolation being is that everybody else, more often than not, was doing a worse. So, the US dollar is still the cleanest shirt in the in the hamper. Okay? Um but, you know, Warsh is here now to see if he can fix that. And and and he he's stepping in with 40 trillion in debt already. He's stepping in with the credit crisis that's been papered over and duct-taped over and everything else. So, I'm not saying that he's going to succeed with everything he wants to do. Even even near term, maybe bring inflation down. I don't know. Cuz everybody does know that if all of a sudden you did have a crisis, um what is the Fed going to do? Raise rates more? To to knock inflation down? No, if we had a credit crisis again, that's going to drag inflation back down, and they will inflate again. They will lower interest rates. But I think he's got some room between here and there. >> I want to talk a little bit about um what's going on in the energy space. Obviously, well, maybe there's a peace deal, or maybe there's not. We'll get that answer today, but the impacts obviously, I don't know. I think we'd mostly agree that the market has not factored that in as more than just a shock, and has not factored in the long-term effects of this. Do you want to give your thoughts on where we're headed with energy prices? And I'm I'm assuming you're probably very pro-uranium right now. >> Well, I'm pro-uranium long-term. I I will regrettably put uranium and uranium stocks in the same boat as everything else. I mean, if we're if we've got a Fed and other central I mean, the you know, ECB raised rates, the Bank of Japan raised rates, not dramatically, but their economies are worse than ours, and they're raising rates. So, so worse will follow. So, that's going to be a dampener on all commodities and commodity stocks, you know, all else being equal. Um long-term, I like it. But the thing that bothers me right now, Callie, is that you've got people really whistling past the graveyard where the crude oil price is concerned. We're down almost 30 bucks today off of the high on hot air, basically. Um I am not a a primary energy market analyst. I don't know all the nuts and bolts, but what I do know to do is to follow the people who are smarter than me when it comes to energy, and understand what the long-term consequences are. I mean, you know, The Economist magazine, you know, one of the major global flagship economic and you know, political magazines out there. Uh their front cover the new issue talks about how we are not going back to 50 or 60 dollars a barrel. Uh it's going to be a long time before we see that because there's so much supply, so much uh infrastructure has been damaged. The smartest guy can tell you or any of our listeners to to pay attention to is Jeff Currie. Uh Jeff once upon a time was the leading commodity analyst at Goldman Sachs. Uh he has moved out from Goldman Sachs with another firm. He is he is one of the smartest guys on this planet when it comes to understanding the actual nuts and bolts >> [snorts] >> of supplies, of storage, of infrastructure, all these things and he is adamant even right this minute after you've had everybody selling or shorting oil again because the orange wonder finally came to his senses, said, "Okay, we're going to we're going to end the war." And even yesterday in France, I don't know if you saw this, >> No. >> comes out and admits after telling everybody, "Oh, even here in the US, we got more oil than God, you know, we can outlast Iran and stuff." How do you do How do you go from that to coming out saying yesterday that well, I I really had to end this war because we were on the edge of a global depression and we were 4 weeks away from an empty tanks. Really? You just figured that out, huh? You know, Google Jeff Currie, look him up on Twitter. He just resurrected his own Twitter uh presence or X, I don't I still call it Twitter. Um and listen to what he's saying and pay attention and this is not political opinion, it's not, you know, a a verdict on the war, it's a verdict on physics and it's a verdict on math. Okay? And we are going to uh stay at 80 to 90 dollar oil. I mean, we're oversold right now cuz everybody had to lurch out of oil or short oil and lurch back into stocks again. But look, long-term we're in a lot of trouble. And I want to add something else, Callie, because this is important to also tell you where the Fed is going. All right? The Fed dramatically raised its inflation forecasts uh for the balance of this year, well over 3% even on core, and into next year. And this is after having the benefit of seeing the oil price come back down into the 70s. Because don't forget, before this war, inflation was already recovering. Now it's just recovering faster, but structurally, this is what Jerome Powell did. Okay? Import prices in the US, did I don't know if you saw this news, two months in a row, up one night 1.9%. Two months in a row. That's not annualized. That's one month. If you annualize it, it's like 25, 26%. Okay? Why? Because we still import all kinds of consumer goods, and China, even at the beginning of the war, let alone other countries countries that we import stuff from, they're feeling this oil shock and energy shock a lot worse than we have been in the US and and for that matter, Canada as well. They're already raising their prices to compensate for this. So the inflation genie is is out of the bottle and raging. Again, um I didn't send you this graphic today, but a lot of people overlay the inflation of the 2020s with the 1970s. It's scary. Okay? And now we're back on the second upswing like we had in the late 70s, which was the worst surge of all of them. And that's what war has got to try and put back in a bottle. So, this this is not good. >> It's in It's a bumpy future for like for anyone that's not maybe in their portfolio not in the energy space and oil and gas. I remember we talked in like March 2025 and you were big on natural gas and some of the oil and gas some of the smaller ones in North America. Um like what what would you say to people that haven't like have they missed the boat on that one where uh No. >> No. I I I think look oil and and oil stocks have been a nice trade recently with the higher prices. We traded in and out, made some profits, traded in and stayed again. So, right now a couple of our positions for in our newsletter are a little bit underwater with this more abrupt sell-off in oil, but I'm not losing a second sleep over it because structurally and here again I'll say the same thing about energy that I did about inflation. I'm going to go structurally inflation was already rising again thanks to Jerome Powell before the Iran war started, made everything that much worse. Likewise, the story for energy going forward, oil and natural gas both, was already structurally bullish. Um it's got a little bit confused now. Okay? But, we're seeing a peaking of production growth in the US. We're seeing a lot of I I I guess strictures on production in other countries. Canada finally is starting to export meaningful amounts of natural gas uh through Kitimat. Now, the second one getting ready to come online. Uh if it hasn't already, the second train. Um and I again I think long-term because of and again, you know my new fangs theme. All of these commodities, whether it's natural gas, oil, uranium, copper, gold, silver, all of them have variations of the same story. Not enough supply going forward to meet rising demand. And here again, even for natural gas, to look at it specifically, now its story long term is even better if you believe that 20% of the data centers are going to be built, the AI centers that have been promised. They don't need to be They all need energy. They all need water. They all need copper. They all need whatever, you know? And so, I'm still very bullish long term on a lot of these commodities. I'm steadfastly so. I'm just telling people again, and you get my stuff, you know, we cut way back on our allocations to all of this stuff late last year and into January of this year. And I'm glad we did because we preserved a lot of profits. But I still have a lot of companies on my list, as you know, that I love for the long term. It's going to be a bumpy ride for them for a while. So, a lot of them are going to get worse before they get better. They all aside from their own accomplishments as a company that will help them buck the trend. I mean, there's There's a few of the even the precious metal stocks on my list that are still near their 52-week highs. But the norm for most of them right now is they're they're half off what they were in January or February. >> Is this the time that you're looking at going shopping again in that energy and commodity space? Or are you still >> sure. >> Yeah, for sure. >> For sure. But again, what I what I tell people do, Kelly, is I'm very big on risk management [snorts] and overall asset allocation, okay? Um I love gold. I'm a gold bug more than most gold bugs are. But but as a practical matter, I know I have sense enough to know when to step out of the way from time to time when I know the market's going to go away. You know, another chart that I sent you, and I've made this point repeatedly, and this is where gold bugs and silver bugs particularly have have just been treading water for so many years. The last before this recent one in recent months, the last major time you had in the markets for precious metals, where precious metals stocks were on fire and just going nuts, they peaked in 2011. Okay? If you never sold at the peak in 2011, it took you until last summer, 14 years later, for and I use GDX as an example. I mean, individual ones would vary, obviously, but just generally speaking, using GDX as a measure, it took you until last summer to get back to where you were. You rode it all the way down from 2011 until last summer and you were even. Finally, after last summer, it went up a bit and now now the gain above where you would have broke even, 2/3 of that is gone, if you didn't sell in January, February. Okay? So, I'm all about risk management and and, you know, my typical MO with a lot of stocks has been if we had something into late last year, early this year, you where you're three, four, five times higher, sell half of it or 2/3 of it, keep your original investment, maybe even a little bit more, give or take, on the table, and reduce your overall exposure to the precious metal. You don't want to ride things up and ride them all the way back down. Not with the whole portfolio, at least, or not even a major part of your portfolio. So, I actually told people again recently, for the first time in a while, I wish I did this in January, when I was advocating profit taking, I told people to buy the ETF called dust again as a trade, because especially with war snow, I think go I don't believe gold and silver bottomed. And so, if you want to hold a basket, a really good individual precious metal story with a future for the future, which I advocate, I'm even adding another new one next week, right next door to the most recent one that I recommended added to my recommended list. Um I love them. It doesn't mean I don't think the price will soften in the near term in this correction, but I'll mitigate that by hedging it having a little bit of this ETF, which if gold stocks go down, it's going to give you a nice pop higher. >> What are you thinking for like thoughts short-term long-term on uranium and nuclear? Because again, this energy prices is just showing you know, how much things can become a giant mess so quickly. I mean, this is only a few months and >> Even nuclear energy, Callie, was a good long-term actionable bullish setup before everybody was swearing about building AI centers. Okay? Because of just the incremental need for more energy, better and cleaner energy, the re-embracing of nuclear power because of new technologies and so forth. Um I'm going to throw cold water on it a little bit in a couple of ways. It doesn't change again, doesn't change my long-term view any more than my long-term view is any different on natural gas, gold, copper, or anything. Okay? Number one, always remember, and I'm not saying this is going to happen, but in 2008, I don't care what you owned, it went down when everybody had to rush for liquidity. The only thing that didn't go down was the US dollar for the most part. Cuz everybody was scrambling for dollars, scrambling for liquidity, unwinding everything else good, bad, or indifferent. Okay? That, I believe, a version of it is ahead of us in a coming months. So, be mindful, and I I lump uranium stocks and copper stocks in the same thing as precious metal stocks. I've got a truckload of them on my recommended list, but as part of an overall portfolio, it's a modest allocation, and I remind people of that regularly. Cuz we don't want It's one thing to have one stock in your portfolio go down 50% if it's a good story for the future, you're not going to lose sleep over that. You let a whole damn portfolio go down 50%. Now you got a problem because now it's got to go up 100% till you get for you to get even again. You know, going back to that GDX example. So, be mindful that everything is susceptible. I I told people weeks ago to get rid of what we had left in uranium stock ETFs because I've seen going lower. It It It's everything corrects here one of these days sooner rather than later. We'll get back into them later. I'm looking at adding a couple other individual uranium names. I've still got a handful of uranium names for the long term on my list. But again, this is not a vote against uranium and nuclear energy. It's It's a recognition that everything is going to come down to one extent or another. The other thing, and this is why I think the stock market is vulnerable to Cali. A lot of the AI promises and plans will never see the light of day for a lot of reasons. You've got uprisings in state and local governments and communities all around the country when you realize that an AI center, for example, or a new chip factory is going to double the water consumption of an entire city with one plant. There's a monstrous I mean, I I I've seen a few things recently that are kind of half funny but also make you think. It's like all these people are worrying about global warming and so forth. All of a sudden when we're building data centers, they don't care about global warming anymore. Because of the money that's involved in this. And And because, if you want to be a conspiracy theorist about it, part of the use of AI centers is going to be more and more surveillance And more and more data gathering of people. Um I don't think a lot of them are going to make it because in many respects we were talking again, you know, part of the bullish outlook for a lot of commodities is that they're needed for data centers. Well, if I can make a bullish case for copper without the added demand that AI puts on it, then I love copper. I would not be as happy about copper long-term if I thought it was dependent too much on the building of data centers because I think there's going to be a lot of disappointed people, a lot of disappointed investors, a lot of disappointed you name it. And like a lot of the AI spending and even recording of some revenue and earnings among companies, you've got the circular motion where company A puts gives company B a contract, they give company C a contract, that comes back to company A. They're all logging this as, you know, something good. And nothing's happening except a bunch of promises. >> For that AI bubble, I think we talked about that before, probably 6 months ago. Um again, like are you making shopping lists on like each, I guess, financial crisis of when to buy these dips? Like how do you strategize when you see so much volatility and bumps in the road ahead, you know, especially on the commodity side as we usually talk about that quite a bit here. Like where are you looking at? Do you have a certain number that your bottom is that you feel comfortable buying back in again or >> It's hard to say. You know, for stocks you've got to look at a case-by-case basis. I'll give you I'll give you an example. Just right before I got on with you, I recommended I can't mention the name yet. But I recommended stock if if anybody's listening or remember the national investors will know who I'm talking about. I recommended stock in a bread and butter construction company just about a year ago. They just gone public. We got in at five bucks, sold most of it around 30. All right? Not into at all because they announced a merger with a completely unrelated company that's involved in AI technology, robotics, drones, surveillance and stuff like that. The market has not reacted well to the merger news. The merger not being consummated yet. So as the stock was breaking support on the way down I told people, all right, let's sell it. This is getting too confusing. It's it's Nobody likes this. We've made a lot of money. Let's get out of it. All of a sudden the stock is almost down to where it was when it started last year. And the company reached out to me and you know, basically they wanted to retell me the story. And so look, I there's lots of times in my life in my career that something hit my price targets, the story change or whatnot. I say, okay, sell it. I'll look at it again six months down the road, six years down the road if it makes sense. And it's more on circumstances, Kelly, than it is on the share price. But you know, that that's kind of one-off story that's got its own attributes that I like. Um I'll throw a number out as far as gold. I mean, my when gold peaked I I had two downside targets, 4,400 and 3,500. We already broke 4,400 and I told people a week ago that if we rallied back up to that 4,400 to short it some more. Um but I do think that with Warsh's game plan, gold will go down to 3,500 which is a big breakout level of last year. If it does that you're asking about price targets it's probably going to be back up the truck time again. Because that will mean that a lot of the stocks are now down 40% or down 60 or 70 by that time. And I and I all those being equal, uh I think it'd be great because don't forget that for as long as wars can get away with being tough on inflation, trying to rein it in, remove from investors' minds the idea that the Fed's going to be an easy mark, you know, we're going to just print, print, print until the cows come home. That has got generalist investors now away from gold. You got to ask yourself as an investor and and especially in precious metals and precious metals investors and all the precious metals gurus by and large look at markets and make predictions based on what they think is going to happen. Doesn't matter what you think. If you're the 1% of investors out there that's already a gold bug, you don't matter to price movement. You already bought what you're going to buy or you're hanging on to what you bought hoping it's going to make money someday. You got to ask yourself, what's going to cause the other 99% of investors out there who aren't gold bugs, but if the story is right, they'll come back for a while once in a while, like we saw for a spell last year and then into early this year. What they want to see is whatever the price bottom is. They want to see Kevin Warsh say, "Okay, I did my best to bring inflation down. Can't do it anymore. Or I brought inflation down, now the economy is weakening, now we're going to lower rates. And we're going to increase the money supply, etc." Uh better still, and I always use the example of 2008 to 2011, gold tripled in under 3 years because the Fed was printing money, but the economy stunk because of the hangover from 2008. I think the same pattern's going to come again. And so that's what you want to watch for is just as much a technical level for like 3,500 on gold to stick with that example, are the circumstances changing to all of a sudden make people other than gold bugs say, "Okay, now Warsh is inflating again cuz he has to. Now it's time to buy gold." >> Key key takeaways that you want investors or following to remember and then obviously where can they reach out to you, Chris? >> As far as takeaways, and I had a conversation with a long-term friend and a subscriber of mine yesterday on this and he was bemoaning the fact that he was only getting I think 2 and 1/2% in his credit union account with a big slug of money. I said, "Hey, 6 months or a year from now after we have a bear market everybody that was in the S&P 500 index fund is down 20 or 30% that 2% is going to look pretty good." So, the takeaways are don't think that you can't have a big slug of cash right now until we all of this sorts itself out. I mean, that's that's a lot better than losing 20 or 40 or 50% by getting too uh you know, involved in that's whether it's AI stocks, gold stocks, any kind of thing. Um be mindful of of that that you need to you know, maintain control. And and also I think you need to watch this progression of things with the Fed. And of course, I'll be continuing to write about it, talk about it as you well know, Callie. But I think that these are very tradable, actionable things that Kevin Warsh is doing. I mean, he just gave you if you if if you throw away your your preconceived notions bull or bear chicken. Okay, cuz sometimes it's good to be a chicken and do nothing. He just gave you a really nice roadmap for what he intends to do and there will be logical consequences of these things in the markets. And this is going to be interesting to watch as it plays out. But again, um don't be afraid to be heavy in cash right now if you're if you're going to stay on top of it uh also you want to be shorting the markets a little bit, I believe. Um again, not a disproportion amount where if you're wrong and the melt-up continues, you're going to get killed either. I mean, that's just bad as overstaying your welcome in in gold stocks. Uh you use small bites and you look at probabilities and and you got to you got to do it without any preconceived notions. And that's hard for a lot of people. Uh the best one to follow me on basically is X uh and it's at NAD Investor. So, just abbreviated national. So, at NAT Investor is uh on X. I'm probably as active on that as I am on LinkedIn. But just plug in my name on LinkedIn, you'll find me.
New Sheriff in Town: Kevin Warsh’s Fed Crackdown & What It Means for Gold & Your Portfolio
Summary
Transcript
The thing to be concerned about with Warsh is that, you know, he's absolutely right that there's got to be some discipline enforced again, and that they got to get inflation back under control, but we're so far gone with 40 trillion in debt and everything. I mean, there's a limit to how much he can tighten before he breaks something. You've got a lot of garbage underneath the surface that's kind of been, you know, masked by these record highs in the stock market, record new corporate issuance and stuff like that. You know, with Warsh, he's, you know, does he listen to the bond vigilantes or the credit crisis? [music] Which does he follow? He's going to start out listening to the bond vigilantes. I mean, that was 110% clear yesterday. >> One of my key takeaways were were no forward guidance, which I don't know how people are going to feel about that. And the task force, I mean, that's a lofty goal for the end of the year, so far what I think. >> Well, it it it buys him some time. He doesn't have to get out and do too much right away. I mean, look, the way he talks and acts, if it was all up to him and he didn't have to satisfy anybody else, he'd have raised rates 50 basis points yesterday. >> How do you strategize when you see so much volatility and bumps in the road ahead? You know, especially on the commodity side, as we usually talk about that quite a bit here. Like, where are you looking at? Do you have a certain number that your bottom is that you feel comfortable buying back in again? >> I'll throw a number out as far as gold. I mean, my when gold peaked, I I had two downside targets, 4,400 and 3,500. We already broke 4,400, and I told people a week ago that if we rallied back up to that 4,400, to short it some more. Um, cuz I do think that with Warsh's game plan, gold will go down to 3,500, [music] which is a big breakout level of last year. If it does that, you're asking about price targets, it's probably going to be back up the truck time again. Because that'll mean that a lot of the um stocks are now down 40% or down 60 or 70. >> For disclosure purposes, our site does not make recommendations for purchases or sale of stocks, services, or products. Nothing on our site or this podcast should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This podcast is for entertainment purposes only. Chris, it's always great to have you on the show. Um we have a lot to cover since the last time we spoke. Um new sheriff in town. What are your thoughts and perspective on Warsh coming in and his um plans going forward? >> Well, Callie, if I can pat myself on the back a little bit, uh nobody predicted the type of chairman that we were going to have in Kevin M. Warsh as accurately I think as I did. Um you're looking at his background and and it really wasn't rocket science. So, people look at these things too politically. Uh and it was actually Scott Bessent, the Treasury Secretary, who um uh was the one who made this call. So, in a nutshell, Callie, and we can unpackage a lot of this. Uh I said weeks and weeks ago that what we were going to get in Kevin Warsh is a carbon copy of Paul Volcker in two acts. Act one, which he made abundantly clear yesterday, is that he believes and I what what surprised me I guess if anything yesterday is how often he came out with these thinly veiled slaps at Jerome Powell for getting us all into this mess. You know, he said things like inflation is a choice. You know, he wasn't like Jerome Powell blaming everybody and their dog and the fleas on the dog and the little green men from Mars and supply chains and the Russians and the Iranians for inflation, Worse put the blame where it belongs. I'm Jerome Powell and the Fed for printing all this damn money. That's why we've got high inflation. That's why it hasn't come down. And to him it's scandalous that the Fed has run double or better its supposed 2% target inflation rate for the last 5 years. So, that's the first thing he's going to come in and do like Paul Volcker did early on when he came in with inflation soaring and a dollar crashing and everything in the late 70s and and had to fix that. His second act, like Paul Volcker's had a second act and nobody remembers this. I'm continually reminding people. When Ronald Reagan reappointed Paul Volcker, Paul Volcker, I won't get into all of it today. I've said this many times before other other other places. Paul Volcker changed the natural order of things. He's the one that created securitization or laid the groundwork for securitization for the wealth effect, for the ability to increase credit and the money supply far greater than what Paul Volcker inherited, but to channel it is a first matter into asset prices. And you create this wealth from the asset prices, then it trickles down the wealth effect. People buy more stocks, they buy more stuff. Stock market goes up. It's this virtuous circle. All right? So, Paul Volcker should be remembered for what was much more lasting. And that was the transformation of the system after he first got the inflation genie back in a bottle. Worse is going to do the same thing. Again, he made 110% clear yesterday whatever he's got to do. He hopes he that nature will take its own course and he doesn't have to raise interest rates a lot, but he's going to do it if he has to because he he believes that the Fed has lost its credibility, which they have, and he's going to get inflation reigned in. Once it is going the right direction, meaningfully, and the economy likely slowing down just as a in the natural order of things, then he's got a lot of policy things he wants to unveil to have a better and what he calls it he's using the term himself practical monetarism going forward. To not have the Fed be so consuming a part of our discourse and what makes everything work. He even commented I want the Fed to be on page B12 of the financial section. The world should not be revolving around the Fed. So, we and we can unpackage all those things with his task forces and stuff like that. So, again, we're going to get two acts out of Kevin Warsh. The first one is not going to be very healthy for you and your investment portfolio if you're long much of anything for a while. >> For when he talked about the no forward-looking guidance, I imagine that will create a little bit of volatility short-term, but probably long-term is a fantastic thing [laughter] not for them not to comment on everything in the markets. Were you expecting the drop that we saw today? And like do you think that's going to carry on short-term, long-term, um in the broader markets, and then in commodities as well? >> Well, if everything was behaving for the most part, I mean precious metals are well off their highs. Copper was trying to make a new high, but it can't get much farther because it's going to get hurt if interest rates rise, the dollar rises, and economic worries come about. The only thing that hasn't behaved as it should with what Warsh's game plan is going to be and all else being equal is going to stock market. I mean, the stock market dropped in in the immediate aftermath of the Fed meeting yesterday. You know, we're recording this on Thursday, but today it rallied again. Well, why did it rally again? Well, the orange wonder saw that the stock market was not responding well to the Fed and said, "Oh, let's let's let's sign our sham memorandum of of today so that we have a reason to goose the markets and the markets rally and oil comes down on Thursday. So, that's why the stock market didn't go down further today, but that's still coming. Uh so, it's the only thing that hasn't uh responded as it should. I mean, gold and silver, to a great extent, have already anticipated what's coming with war and have discounted it. We we've we've seen most of the decline. I don't think we've seen all of it. We've seen most of it. Uh probably true for some other commodities and assets as well, but we're getting faked out right now by oil big time. The terrible false sense of security right now with energy. Uh even if this whole alleged peace is on the level. Um So, I I you know, I I I think that going forward, as I said a minute ago, Cali, you're not going to be want to be net long too awful much because as one of the consequences of war's game plan to get inflation back under control, that's going to include asset prices. >> What do you think is for like the economy, how much can it handle of a like a reigning in or a tightening before we see an unraveling? As like you said before we started recording, like some of the garbage underneath. >> I'll tell you what, when Jerome Powell belatedly, after he set all of these brush fires and then he turned into infernos, and then finally figured out he went too far and started raising interest rates, I was one of those saying that, you know, yeah, he can raise interest rates for a while, but at some point he's going to break something. I was wrong. He never really did. I mean, he raised the short-term rates uh you know, to 5% or thereabouts. Didn't break anything. And and I would have expected it would because you've still got a lot of trouble underneath the surface. You've got uh record delinquencies in a lot of subprime auto loans now, credit cards, uh consumers, you know, that K-shaped economy that some people talk about. The bottom of that K is getting bigger and poorer and having a harder time making ends meet. You know, the path for 60% of the population that was paycheck to paycheck to a great extent. And and those are the people who Kevin Warsh with some extent is trying to help. So, look, he's got a little bit of a fail-safe Cali to answer your question because not only did he make clear yesterday that he's going to keep monetary policy tighter. He wants to go in a direction of hiking rates if it's if if inflation doesn't start coming down soon again on its own. But at the same time, don't forget that last December Powell pretty much removed all of the limits to the Fed's open market operations. So, John Williams, uh president of the New York Fed, who's the guy that, you know, at the central bank that has a checkbook, basically. Uh he has no limit on how much he can shore up repo markets, how many Treasury bills he can buy or anything. So, for a while, even though you've got some credit issues in in the main street economy underneath the surface, Warsh can dispense certain measures of his harsh medicine to try and bring inflation down without necessarily blowing anything up. That risk is always there. And make no mistake about it. Um you know, and and uh you know who Ray Dalio is. I don't know if you've heard him say this recently, but he's been very um wise in some of his comments about the stock market bubble, for example. You know, anybody with half a brain knows that we have an historic stock market bubble. The valuations are as dopey as they were in 2000 or before that and, you know, or 2007 before that in 1999 and, you know, other different times that you go all the way back to 1929. But, Dalio has pointed out the question is what triggers the need for liquidity? Cuz if everybody is still buying and has no compunction to sell to sell or is scared into selling, the bubble is there and it keeps getting bigger. But, what's the trigger? All right? And a couple of things that are looming right now for the first time in a long for a long time, the supply of stocks is growing because of all these IPOs. So, in a lot of cases you're seeing stuff get sold. A lot of people don't know why Bitcoin got creamed so much recently. People selling Bitcoin to buy SpaceX. Next, OpenAI or or Anthropic or the these other big IPOs coming out. So, the market's going to start feeding on itself and requiring selling to buy new stuff. But, I I also think, Kelly, that the other thing that you really got to be braced for is that when the stock market finally does come to grips that holy cow, this new guy is serious. He really is going to bring inflation down even if it means raising rates. I mean, and I said, you may remember this, that even at the beginning of the year when I was talking about what might lie ahead for 2026, I said, "Nobody has on their bingo card the possibility of rate hikes in 2026." Well, now everybody does, including at the Fed. And the market is still not priced for that. That's the problem. And whatever it takes, whether it's the actual rate hike with threats of more to come or just everybody gets up on the wrong side of the bed tomorrow morning and says, "Holy cow, this guy's really going Maybe I better get out of here while the getting's good." You know, and if some a little bit of selling starts, it's going to feed on itself. So, look, I I don't think Warsh is out to you know, do in the markets or anything like that. But, as he made very clear, he he the the Fed's credibility has become shot on inflation on Jerome Powell. Powell wanted to try and talk us all to death and talk inflation at death and talk the markets and the world to death through forward guidance and all this stuff. Not that Powell started forward guidance, but you know, Worse says, "And I like it. I I I I really do." His approach, he says, "Enough of this." You know, you don't need to talk everybody to death. If there's something to say, say it. I thought it was pretty cool yesterday, in fact. I don't know if you watched the press conference, Callie, but he was asked whether he intends to um have a press conference after every meeting. He wouldn't answer. And of all the times in his first press conference yesterday, when Powell used to always go for an hour, he he had 45 minutes, boom, out the door. Bye. You know? And so so this is a guy who I think, properly so, wants to get some of the I don't know. I heard commentators commentators put it like the the forward statements and the forward guidance and whatnot was like training wheels for markets. We shouldn't need training wheels. You know, if you need to change policy, change policy. I'm old enough to have started in this business when Paul Volcker was the Fed chairman. You didn't have all of these tortured analyses over every syllable in a Fed statement. You didn't have these big meetings and whatnot. You had you saw two-sentence press release from the Federal Reserve whenever he felt like putting it out. You know? The Federal Reserve the Federal Open Market Committee today decided to raise the discount rate by this, the federal funds rate like this. If you don't like it, go to hell, have a nice day. Worse does want to rein in some of the silliness and the fluff, and I God bless him. I'm all for that. >> I want to switch to the bond and treasury markets, like we were talking before. Japan hanging on by a thread, we've been watching that for the last year. What do you think the impacts of all this is going to be as we've just laid out some uh bumpy road, I guess, for the short term. quick >> Well, you know, it was it's been about a year since the bond market unwinding in Japan started to get a little bit more acute than people were comfortable with. And I was at a meeting in New York with some people, and one of the uh other old-timers in the newsletter industry, Jay Taylor, and I kind of just thought of, you know, just spontaneously started almost a round table seminar over the Fed and debt and all this kind of stuff. You know, the jig is up globally. There is so much debt. And this was the major mistake that was made even most recently with COVID, let alone if you want to go back to 2008. Debts were never allowed to unwind naturally. Risk was removed. Everybody got 0% interest if you were anybody. It made all kinds of bad decision-making uh possible and so forth because of this financial repression of all of these central banks putting their thumb on the scale and not letting the markets work, not letting things unwind as they should. And so now incrementally for last 18 years now since 2008, debts have gotten worse. They've gotten far larger. Credit quality in many respects is as bad or worse as it was in 2008-9. And now the volume of debt is so big with with sovereign governments demanding ever more money for financing and refinancing, and the two trillion a year being added to the US debt, you know, etc., that okay, doesn't mean everything is going to we're we're not going back to the Stone Age, but it does mean that governments and everybody are going to have to pay up. Higher rates if you want to borrow money. And and see, this is where people I think some people who got a little a too spoiled by the Fed keeping rates low, lowering interest What is stupid thing for the Fed to have lowered interest rates again the end of last year because it made everything worse now. But, don't forget that when the Fed lowers short-term rates, it's a signal to the market that they don't care about inflation. They don't care about the debt. They don't care about the value of the currency. When that happens, what do long-term interest rates do? They go up. And a major signal yesterday in the immediate aftermath of the Fed meeting that tells you what Warsh's game plan is, and it's not rocket science. If he threatens to raise short-term rates, or he does raise short-term rates, guess what happens to long-term rates? They're going to come down. They They Yesterday, the two-year Treasury was up almost 20 basis points in one day. Astounding move for one day. 10, 20, and 30-year Treasuries hardly moved. So, you had a significant flattening of the yield curve. And you know, a lot of people aren't going to like it for different reasons. Wall Street won't like it. But, he made also very clear yesterday that he needs to restore trust in the Fed on the part of Joe Sixpack and Sally Soccermom who listen to Jerome Powell get up every meeting and say He always had the same canned opening every press conference. My colleagues and I in the Federal Open Market Committee are are painstakingly working to make things good for the benefit of the American people and following our dual mandate. And you hear that, what planet do you live on? You're not doing anything for the American people with letting inflation run double your target or worse at times. That's the Fed's credibility. And And Warsh, in part, wants the average American to be able to go back to a four or five percent mortgage at least from the current six and a half or six and three quarters. He doesn't want the average American having a grocery bills go up five or 10% a year. And you do that by being tough on inflation and if you need to, you raise short-term rates because that will bring costs, it will bring mortgage rates, it will bring bring borrowing costs down as a consequence. Stop pushing them up. >> I know here in Canada in like Vancouver used to be a hot market for real estate. Our real estate is not doing well. I know there's very similar stories in the US and some of the bigger cities as well and just across the board. Like if if rates are raised, people are guessing like three times this year or twice even this year, that we see that 2008 similarities again. >> I don't think we're we're threatened with that quite yet. Much is well for public consumption. War is just going to be tough on inflation, raise the federal funds rate if they need to, etc. And he knows very well that that probably will mean that a lot of people who've got a lot of paper gains recently on Wall Street are going to lose some of them. Okay? He's got to look at the debt situation because in the end his job is not to make people chasing AI stocks happy. His job is to make sure that there is still a liquid and viable market for the US dollar and for US debt. And Jerome Powell has harmed that. It's the reason why the Fed lowered rate going back last the fourth quarter of last year in the fourth quarter of 2024. You know, I think the total is 200 basis points or close to that, 257, whatever it was. And yet long-term interest rates are just as high as they were when the Fed lowered the federal funds rate. Why? Because Jerome Powell was too soft on inflation, too scared of the markets. Okay? And again, if you're a central bank and you're not showing that you're willing to to defend, at least somewhat, the value of the currency, okay? You're going to get punished by the bond vigilantes. So, I I think that if he raises short-term rates, the people who are going to be happy are consumers. Because you'll have lower borrowing costs for certain things. You'll have lower mortgage rates again. You mentioned real estate, you know, and and real estate's got bigger problems than just interest rates. There's overbuilding in some areas and there's gluts in some areas. And you're right, I mean, here in Florida, there's not a major market that's not down between 10 and 20%. from the peak a couple of years ago as far as the market prices. Um so, look, a lot of these things and this is what Warsh is, you know, I would want to have this job right now because he's finally you got a guy again who and and one of the one of the little graphics I sent you, I love using this. We talked about the Fed. You know, people who are old baseball fans remember the Murderers' Row that the Yankees had years ago, century ago. Their lineup was called Murderers' Row. You had Lazzeri, you had Babe Ruth, you had Lou Gehrig and stuff like that. Well, the Federal Reserve, especially since Paul Volcker, has had a Murderers' Row of Fed chairs who one after the other murdered the the the value and viability of the US dollar. The only consolation being is that everybody else, more often than not, was doing a worse. So, the US dollar is still the cleanest shirt in the in the hamper. Okay? Um but, you know, Warsh is here now to see if he can fix that. And and and he he's stepping in with 40 trillion in debt already. He's stepping in with the credit crisis that's been papered over and duct-taped over and everything else. So, I'm not saying that he's going to succeed with everything he wants to do. Even even near term, maybe bring inflation down. I don't know. Cuz everybody does know that if all of a sudden you did have a crisis, um what is the Fed going to do? Raise rates more? To to knock inflation down? No, if we had a credit crisis again, that's going to drag inflation back down, and they will inflate again. They will lower interest rates. But I think he's got some room between here and there. >> I want to talk a little bit about um what's going on in the energy space. Obviously, well, maybe there's a peace deal, or maybe there's not. We'll get that answer today, but the impacts obviously, I don't know. I think we'd mostly agree that the market has not factored that in as more than just a shock, and has not factored in the long-term effects of this. Do you want to give your thoughts on where we're headed with energy prices? And I'm I'm assuming you're probably very pro-uranium right now. >> Well, I'm pro-uranium long-term. I I will regrettably put uranium and uranium stocks in the same boat as everything else. I mean, if we're if we've got a Fed and other central I mean, the you know, ECB raised rates, the Bank of Japan raised rates, not dramatically, but their economies are worse than ours, and they're raising rates. So, so worse will follow. So, that's going to be a dampener on all commodities and commodity stocks, you know, all else being equal. Um long-term, I like it. But the thing that bothers me right now, Callie, is that you've got people really whistling past the graveyard where the crude oil price is concerned. We're down almost 30 bucks today off of the high on hot air, basically. Um I am not a a primary energy market analyst. I don't know all the nuts and bolts, but what I do know to do is to follow the people who are smarter than me when it comes to energy, and understand what the long-term consequences are. I mean, you know, The Economist magazine, you know, one of the major global flagship economic and you know, political magazines out there. Uh their front cover the new issue talks about how we are not going back to 50 or 60 dollars a barrel. Uh it's going to be a long time before we see that because there's so much supply, so much uh infrastructure has been damaged. The smartest guy can tell you or any of our listeners to to pay attention to is Jeff Currie. Uh Jeff once upon a time was the leading commodity analyst at Goldman Sachs. Uh he has moved out from Goldman Sachs with another firm. He is he is one of the smartest guys on this planet when it comes to understanding the actual nuts and bolts >> [snorts] >> of supplies, of storage, of infrastructure, all these things and he is adamant even right this minute after you've had everybody selling or shorting oil again because the orange wonder finally came to his senses, said, "Okay, we're going to we're going to end the war." And even yesterday in France, I don't know if you saw this, >> No. >> comes out and admits after telling everybody, "Oh, even here in the US, we got more oil than God, you know, we can outlast Iran and stuff." How do you do How do you go from that to coming out saying yesterday that well, I I really had to end this war because we were on the edge of a global depression and we were 4 weeks away from an empty tanks. Really? You just figured that out, huh? You know, Google Jeff Currie, look him up on Twitter. He just resurrected his own Twitter uh presence or X, I don't I still call it Twitter. Um and listen to what he's saying and pay attention and this is not political opinion, it's not, you know, a a verdict on the war, it's a verdict on physics and it's a verdict on math. Okay? And we are going to uh stay at 80 to 90 dollar oil. I mean, we're oversold right now cuz everybody had to lurch out of oil or short oil and lurch back into stocks again. But look, long-term we're in a lot of trouble. And I want to add something else, Callie, because this is important to also tell you where the Fed is going. All right? The Fed dramatically raised its inflation forecasts uh for the balance of this year, well over 3% even on core, and into next year. And this is after having the benefit of seeing the oil price come back down into the 70s. Because don't forget, before this war, inflation was already recovering. Now it's just recovering faster, but structurally, this is what Jerome Powell did. Okay? Import prices in the US, did I don't know if you saw this news, two months in a row, up one night 1.9%. Two months in a row. That's not annualized. That's one month. If you annualize it, it's like 25, 26%. Okay? Why? Because we still import all kinds of consumer goods, and China, even at the beginning of the war, let alone other countries countries that we import stuff from, they're feeling this oil shock and energy shock a lot worse than we have been in the US and and for that matter, Canada as well. They're already raising their prices to compensate for this. So the inflation genie is is out of the bottle and raging. Again, um I didn't send you this graphic today, but a lot of people overlay the inflation of the 2020s with the 1970s. It's scary. Okay? And now we're back on the second upswing like we had in the late 70s, which was the worst surge of all of them. And that's what war has got to try and put back in a bottle. So, this this is not good. >> It's in It's a bumpy future for like for anyone that's not maybe in their portfolio not in the energy space and oil and gas. I remember we talked in like March 2025 and you were big on natural gas and some of the oil and gas some of the smaller ones in North America. Um like what what would you say to people that haven't like have they missed the boat on that one where uh No. >> No. I I I think look oil and and oil stocks have been a nice trade recently with the higher prices. We traded in and out, made some profits, traded in and stayed again. So, right now a couple of our positions for in our newsletter are a little bit underwater with this more abrupt sell-off in oil, but I'm not losing a second sleep over it because structurally and here again I'll say the same thing about energy that I did about inflation. I'm going to go structurally inflation was already rising again thanks to Jerome Powell before the Iran war started, made everything that much worse. Likewise, the story for energy going forward, oil and natural gas both, was already structurally bullish. Um it's got a little bit confused now. Okay? But, we're seeing a peaking of production growth in the US. We're seeing a lot of I I I guess strictures on production in other countries. Canada finally is starting to export meaningful amounts of natural gas uh through Kitimat. Now, the second one getting ready to come online. Uh if it hasn't already, the second train. Um and I again I think long-term because of and again, you know my new fangs theme. All of these commodities, whether it's natural gas, oil, uranium, copper, gold, silver, all of them have variations of the same story. Not enough supply going forward to meet rising demand. And here again, even for natural gas, to look at it specifically, now its story long term is even better if you believe that 20% of the data centers are going to be built, the AI centers that have been promised. They don't need to be They all need energy. They all need water. They all need copper. They all need whatever, you know? And so, I'm still very bullish long term on a lot of these commodities. I'm steadfastly so. I'm just telling people again, and you get my stuff, you know, we cut way back on our allocations to all of this stuff late last year and into January of this year. And I'm glad we did because we preserved a lot of profits. But I still have a lot of companies on my list, as you know, that I love for the long term. It's going to be a bumpy ride for them for a while. So, a lot of them are going to get worse before they get better. They all aside from their own accomplishments as a company that will help them buck the trend. I mean, there's There's a few of the even the precious metal stocks on my list that are still near their 52-week highs. But the norm for most of them right now is they're they're half off what they were in January or February. >> Is this the time that you're looking at going shopping again in that energy and commodity space? Or are you still >> sure. >> Yeah, for sure. >> For sure. But again, what I what I tell people do, Kelly, is I'm very big on risk management [snorts] and overall asset allocation, okay? Um I love gold. I'm a gold bug more than most gold bugs are. But but as a practical matter, I know I have sense enough to know when to step out of the way from time to time when I know the market's going to go away. You know, another chart that I sent you, and I've made this point repeatedly, and this is where gold bugs and silver bugs particularly have have just been treading water for so many years. The last before this recent one in recent months, the last major time you had in the markets for precious metals, where precious metals stocks were on fire and just going nuts, they peaked in 2011. Okay? If you never sold at the peak in 2011, it took you until last summer, 14 years later, for and I use GDX as an example. I mean, individual ones would vary, obviously, but just generally speaking, using GDX as a measure, it took you until last summer to get back to where you were. You rode it all the way down from 2011 until last summer and you were even. Finally, after last summer, it went up a bit and now now the gain above where you would have broke even, 2/3 of that is gone, if you didn't sell in January, February. Okay? So, I'm all about risk management and and, you know, my typical MO with a lot of stocks has been if we had something into late last year, early this year, you where you're three, four, five times higher, sell half of it or 2/3 of it, keep your original investment, maybe even a little bit more, give or take, on the table, and reduce your overall exposure to the precious metal. You don't want to ride things up and ride them all the way back down. Not with the whole portfolio, at least, or not even a major part of your portfolio. So, I actually told people again recently, for the first time in a while, I wish I did this in January, when I was advocating profit taking, I told people to buy the ETF called dust again as a trade, because especially with war snow, I think go I don't believe gold and silver bottomed. And so, if you want to hold a basket, a really good individual precious metal story with a future for the future, which I advocate, I'm even adding another new one next week, right next door to the most recent one that I recommended added to my recommended list. Um I love them. It doesn't mean I don't think the price will soften in the near term in this correction, but I'll mitigate that by hedging it having a little bit of this ETF, which if gold stocks go down, it's going to give you a nice pop higher. >> What are you thinking for like thoughts short-term long-term on uranium and nuclear? Because again, this energy prices is just showing you know, how much things can become a giant mess so quickly. I mean, this is only a few months and >> Even nuclear energy, Callie, was a good long-term actionable bullish setup before everybody was swearing about building AI centers. Okay? Because of just the incremental need for more energy, better and cleaner energy, the re-embracing of nuclear power because of new technologies and so forth. Um I'm going to throw cold water on it a little bit in a couple of ways. It doesn't change again, doesn't change my long-term view any more than my long-term view is any different on natural gas, gold, copper, or anything. Okay? Number one, always remember, and I'm not saying this is going to happen, but in 2008, I don't care what you owned, it went down when everybody had to rush for liquidity. The only thing that didn't go down was the US dollar for the most part. Cuz everybody was scrambling for dollars, scrambling for liquidity, unwinding everything else good, bad, or indifferent. Okay? That, I believe, a version of it is ahead of us in a coming months. So, be mindful, and I I lump uranium stocks and copper stocks in the same thing as precious metal stocks. I've got a truckload of them on my recommended list, but as part of an overall portfolio, it's a modest allocation, and I remind people of that regularly. Cuz we don't want It's one thing to have one stock in your portfolio go down 50% if it's a good story for the future, you're not going to lose sleep over that. You let a whole damn portfolio go down 50%. Now you got a problem because now it's got to go up 100% till you get for you to get even again. You know, going back to that GDX example. So, be mindful that everything is susceptible. I I told people weeks ago to get rid of what we had left in uranium stock ETFs because I've seen going lower. It It It's everything corrects here one of these days sooner rather than later. We'll get back into them later. I'm looking at adding a couple other individual uranium names. I've still got a handful of uranium names for the long term on my list. But again, this is not a vote against uranium and nuclear energy. It's It's a recognition that everything is going to come down to one extent or another. The other thing, and this is why I think the stock market is vulnerable to Cali. A lot of the AI promises and plans will never see the light of day for a lot of reasons. You've got uprisings in state and local governments and communities all around the country when you realize that an AI center, for example, or a new chip factory is going to double the water consumption of an entire city with one plant. There's a monstrous I mean, I I I've seen a few things recently that are kind of half funny but also make you think. It's like all these people are worrying about global warming and so forth. All of a sudden when we're building data centers, they don't care about global warming anymore. Because of the money that's involved in this. And And because, if you want to be a conspiracy theorist about it, part of the use of AI centers is going to be more and more surveillance And more and more data gathering of people. Um I don't think a lot of them are going to make it because in many respects we were talking again, you know, part of the bullish outlook for a lot of commodities is that they're needed for data centers. Well, if I can make a bullish case for copper without the added demand that AI puts on it, then I love copper. I would not be as happy about copper long-term if I thought it was dependent too much on the building of data centers because I think there's going to be a lot of disappointed people, a lot of disappointed investors, a lot of disappointed you name it. And like a lot of the AI spending and even recording of some revenue and earnings among companies, you've got the circular motion where company A puts gives company B a contract, they give company C a contract, that comes back to company A. They're all logging this as, you know, something good. And nothing's happening except a bunch of promises. >> For that AI bubble, I think we talked about that before, probably 6 months ago. Um again, like are you making shopping lists on like each, I guess, financial crisis of when to buy these dips? Like how do you strategize when you see so much volatility and bumps in the road ahead, you know, especially on the commodity side as we usually talk about that quite a bit here. Like where are you looking at? Do you have a certain number that your bottom is that you feel comfortable buying back in again or >> It's hard to say. You know, for stocks you've got to look at a case-by-case basis. I'll give you I'll give you an example. Just right before I got on with you, I recommended I can't mention the name yet. But I recommended stock if if anybody's listening or remember the national investors will know who I'm talking about. I recommended stock in a bread and butter construction company just about a year ago. They just gone public. We got in at five bucks, sold most of it around 30. All right? Not into at all because they announced a merger with a completely unrelated company that's involved in AI technology, robotics, drones, surveillance and stuff like that. The market has not reacted well to the merger news. The merger not being consummated yet. So as the stock was breaking support on the way down I told people, all right, let's sell it. This is getting too confusing. It's it's Nobody likes this. We've made a lot of money. Let's get out of it. All of a sudden the stock is almost down to where it was when it started last year. And the company reached out to me and you know, basically they wanted to retell me the story. And so look, I there's lots of times in my life in my career that something hit my price targets, the story change or whatnot. I say, okay, sell it. I'll look at it again six months down the road, six years down the road if it makes sense. And it's more on circumstances, Kelly, than it is on the share price. But you know, that that's kind of one-off story that's got its own attributes that I like. Um I'll throw a number out as far as gold. I mean, my when gold peaked I I had two downside targets, 4,400 and 3,500. We already broke 4,400 and I told people a week ago that if we rallied back up to that 4,400 to short it some more. Um but I do think that with Warsh's game plan, gold will go down to 3,500 which is a big breakout level of last year. If it does that you're asking about price targets it's probably going to be back up the truck time again. Because that will mean that a lot of the stocks are now down 40% or down 60 or 70 by that time. And I and I all those being equal, uh I think it'd be great because don't forget that for as long as wars can get away with being tough on inflation, trying to rein it in, remove from investors' minds the idea that the Fed's going to be an easy mark, you know, we're going to just print, print, print until the cows come home. That has got generalist investors now away from gold. You got to ask yourself as an investor and and especially in precious metals and precious metals investors and all the precious metals gurus by and large look at markets and make predictions based on what they think is going to happen. Doesn't matter what you think. If you're the 1% of investors out there that's already a gold bug, you don't matter to price movement. You already bought what you're going to buy or you're hanging on to what you bought hoping it's going to make money someday. You got to ask yourself, what's going to cause the other 99% of investors out there who aren't gold bugs, but if the story is right, they'll come back for a while once in a while, like we saw for a spell last year and then into early this year. What they want to see is whatever the price bottom is. They want to see Kevin Warsh say, "Okay, I did my best to bring inflation down. Can't do it anymore. Or I brought inflation down, now the economy is weakening, now we're going to lower rates. And we're going to increase the money supply, etc." Uh better still, and I always use the example of 2008 to 2011, gold tripled in under 3 years because the Fed was printing money, but the economy stunk because of the hangover from 2008. I think the same pattern's going to come again. And so that's what you want to watch for is just as much a technical level for like 3,500 on gold to stick with that example, are the circumstances changing to all of a sudden make people other than gold bugs say, "Okay, now Warsh is inflating again cuz he has to. Now it's time to buy gold." >> Key key takeaways that you want investors or following to remember and then obviously where can they reach out to you, Chris? >> As far as takeaways, and I had a conversation with a long-term friend and a subscriber of mine yesterday on this and he was bemoaning the fact that he was only getting I think 2 and 1/2% in his credit union account with a big slug of money. I said, "Hey, 6 months or a year from now after we have a bear market everybody that was in the S&P 500 index fund is down 20 or 30% that 2% is going to look pretty good." So, the takeaways are don't think that you can't have a big slug of cash right now until we all of this sorts itself out. I mean, that's that's a lot better than losing 20 or 40 or 50% by getting too uh you know, involved in that's whether it's AI stocks, gold stocks, any kind of thing. Um be mindful of of that that you need to you know, maintain control. And and also I think you need to watch this progression of things with the Fed. And of course, I'll be continuing to write about it, talk about it as you well know, Callie. But I think that these are very tradable, actionable things that Kevin Warsh is doing. I mean, he just gave you if you if if you throw away your your preconceived notions bull or bear chicken. Okay, cuz sometimes it's good to be a chicken and do nothing. He just gave you a really nice roadmap for what he intends to do and there will be logical consequences of these things in the markets. And this is going to be interesting to watch as it plays out. But again, um don't be afraid to be heavy in cash right now if you're if you're going to stay on top of it uh also you want to be shorting the markets a little bit, I believe. Um again, not a disproportion amount where if you're wrong and the melt-up continues, you're going to get killed either. I mean, that's just bad as overstaying your welcome in in gold stocks. Uh you use small bites and you look at probabilities and and you got to you got to do it without any preconceived notions. And that's hard for a lot of people. Uh the best one to follow me on basically is X uh and it's at NAD Investor. So, just abbreviated national. So, at NAT Investor is uh on X. I'm probably as active on that as I am on LinkedIn. But just plug in my name on LinkedIn, you'll find me.