‘A Desperate Scramble’: Mint CEO Reveals Jets Are Flying Silver to Cover Historic Squeeze in London
Summary
Precious Metals Market Dynamics: The podcast discusses a significant squeeze in the precious metals market, particularly in London, with gold prices holding firm above $4,200 and silver surging past $53, highlighting a backwardation scenario where spot prices exceed futures.
Global Metal Flows: There is a notable shift from massive inflows of metals to the US to a desperate outflow to London, driven by geopolitical factors and strategic partnerships, particularly involving China and BRICS nations.
Tariff and Trade Concerns: The discussion emphasizes the potential impact of US tariffs on silver, with companies wary of export and import taxes, which could exacerbate the squeeze and create arbitrage opportunities.
Market Volatility and Strategic Accumulation: Central banks and institutional investors are increasing their gold holdings, with recommendations for higher gold allocations in portfolios, as the market faces volatility and potential long-term price increases.
Supply Chain and Refining Bottlenecks: The podcast highlights critical bottlenecks in refining capacity, with significant backlogs and high lease rates affecting the supply chain, posing risks to industrial production.
Geopolitical and Economic Implications: The discussion touches on the strategic accumulation of metals by China and the potential for a bifurcated global market, with implications for trade routes and the pricing of precious metals.
Retail and Institutional Demand: There is a surge in retail demand alongside continued institutional buying, with reports of frenzied buying and supply shocks at the retail level, indicating a broader awakening to precious metals as a safe haven.
Transcript
[Music] Hey everyone, welcome back. I'm Jeremy Saffron. All right, let's turn to precious metals because as we're on air right now, spot gold is holding firm above $4,200 an ounce, just shy of the $4,300 mark and silver has surged past 53 all-time highs with spot prices still trading above futures in clear backwardation. Now, you might see today's weak economic data, the Philly survey, for instance, just came in at a shocking 12.8. 8 negative 12.8 and this is just thinking maybe it's another flight to safety. But the real story here, the one that our audience knows to look for is happening bes be behind the price ticker. It's happening in the vaults on airport runways and inside the refineries. It's a story of a physical market at its breaking point. Now, when we last spoke with our guest back in February, the story was massive. Unprecedented flows to gold uh with gold to New York over tariff fears. And then when we spoke again in August, the strains were clearly building. Now today, the story has done almost a complete 180. Now we're witnessing a desperate global scramble to cover a historic squeeze in metals in London. Now here to connect the dots is the man who has been at the front lines of this entire saga. Josh Far of course is a founder and CEO of Scottsdale Mint. He's not an analyst watching the screen. He's an operator actually moving the metal, which is why we wanted his take more than ever. Josh, welcome back to the show. It's great to have you. Yeah, thanks to be on again. >> Now, listen, uh I went back and reviewed our tape. We talked to you twice this past year. You've been ridiculously accurate with what's going on. And it makes sense. I mean, you run a you run a mint. Uh when we spoke in February, you described a a quote big sucking sound of physical metals coming from the US. And now you're reporting on planes flying silver out. I mean, connect the dots for us. How did we get from that massive inflow to this desperate outflow in just eight months? And is this both gold and silver? Is it just the silver squeeze we keep hearing about? >> So, it all started with gold, you know, probably a little before Christmas last year is when it started. Uh, and like you said, uh, uh, I I kind of broke it as I I was seeing what was happening. >> Uh, and then suddenly all the all the import records, the Comx records reflected what I was saying and seeing. And you know, at the time it really wasn't as much silver, but silver did pick up. And so we have a situation where people have they're re repatriating their their metal. Uh their their jurisdiction matters. And so a lot of a lot of that that metal flow has been going to China and BRICS nations over the last couple years. And then once Trump Trump kind of, you know, won the election, we noticed I I'm going to go with merchant banking uh started to move metal in advance. And then really we're we're we're truly in a mineral war uh since since then, a metal war that's taking place. So you're seeing uh strategic partnerships with Argentina. We bailed them out uh just just the last couple days. Why are we bailing them out? We need their minerals, their gold, their silver, their rare earth minerals. So we're in a battle of who controls the metal. And I would say that perhaps too much metal left London too fast. And that's where we're at today. And that's what we're seeing right now. Okay. So, I mean, you know, if these rep repatriations accelerate, doesn't that actually worsen the squeeze in London, like you just said, I mean, you can't drain the vaults and still expect liquidity. Does this become a, you know, self-feeding crisis? >> Uh, 100%. So, you've got you have a situation where London needs more silver. So, you know, I always like to say assets go where they're treated best. So, we saw early in the year there was a premium to bring metal into the United States. Now, we're seeing there's a premium uh to to bring metal back to the UK, but a lot of people aren't wanting to give up their silver in particular uh because we're waiting on a final ruling from the US government regarding potential tariffs. Now, tariffs can come in two forms, import and export. So, imagine you're a company who has the silver where you can make a nice arbitrage, you can ship it over to London, make good money, but what happens when you need to bring more metal back and it gets taxed? So this is this is where we're at. So they're offering a really juicy spread uh if if you want to take it over there. So we saw it about Thursday of last week metal started boarding airplanes and so that's not a cheap that's not a cheap thing. Silver's traditionally they get put on a boat, you know, let's just say four or five weeks before it it lands and is loaded up. But now with interest rates, you know, on on out of London on on material, we've seen it as high as over 100% annualized, it's it's well back down again, you know, down to about 10ish% at the moment. Uh but this is a traditional market where it's 1 to 2%. And so you've got you've got bankers and trading houses, they're all trying to make ARBs, but the question is is if you're you know risk management, uh do you do you let your metal leave for London? So this is this is uh definitely interesting times. >> Yeah. Yeah, I mean, you know, obviously it's on the US radar, too, as silver being drafted into that critical minerals list. Uh, we've already seen these steep tariff regimes kind of in place. I know you're waiting, but how real is the threat of restrictive tariffs on silver, especially refined bars or foreign imports and and how are you repositioning your arbitrage and and kind of sourcing accordingly? >> Yeah. So, that is a that is a problem that 2025 has brought every every company in in that that you know, we had never had these issues before. The reality is is Trump moves uh at the speed of a tweet. Uh he's every time you talk the the tariff risks are come, they go. We just don't know. Now I would say is if I'm a politician and I'm running the administration, you don't want to tax things that you need. So let's say PGMs for example, uh the platinum group metals, uh you need silver. More roughly 80ish% of our silver consumption in the US is imported. So those are those are things now where we could see in the future is export tariffs. So that that will probably come especially as things go on the critical mineral list. I think there are a lot of hidden hands all around the world who have been buying these assets uh including what I would say you know central bank through reported statistics and then we know for sure there is OTC buying going on over the counter uh that's not being reported both by the Chinese government other BRICS nations and perhaps even our own uh n uh US here. So, I I think we're we're definitely in there's a battle for, you know, who who who has the asset is going to win the energy race, the AI race, and the military race. >> Yeah. Yeah. It's just wild. And as you mentioned, it's uh it's going quick here, Josh. And of course, these demand pressures are certainly here, and we're seeing this weak economic data today fueling the, you know, putting more fuel to the fire, it seems. From from your vantage point, is this rally to over $4,200 gold and $53 silver just about the market pricing in the next Fed rate cut? Are you seeing evidence of something deeper here? I mean, you just mentioned some of these moves on the sovereign side being under reportported. It seems like it's the perfect storm. >> Uh, it sure is. I think anyone could look at the chart and say it looks overbought, but the reality is is people have underexposure to these this asset class. So, I think central bankers uh whether they're reporting it or not, they're buying it knowing that they need to raise their level. So, if they were at 0 to 1 2%, they these guys are wanting to double or triple uh how much gold they have on the balance sheets. And I think you just saw Meil Lynch just a few days ago the CIO uh sorry Morgan Stanley uh Morgan Stanley put out CIO put out and and said there's a new portfolio we're recommending a 60 2020 20% gold allocation. Most people don't even have a few percentage in gold. So I think people are misallocated to this asset class and people are going into it now. Everything's at at at alltime highs. So uh the stock market, do you feel comfortable there? roughly 30-ish% of the stock market are these AI companies. Is anyone really feeling comfortable that that business is really even genuine and true? So, I think we're facing a moment where capital doesn't know where to go. It doesn't want bonds. It doesn't want treasury bills. So, it's going to a trustless system which is which is uh gold for sure. >> Yeah. I I wanted to get into the retail demand obviously, but before we do that, I mean, you were talking a little bit about those bricks nations, especially China moving physical gold quietly without, you know, showing it in in their official reserve data. Bars seem to be leaving London and Switzerland, but they're not really reappearing in public reports. I mean, what's actually happening to that metal? Is it being recast, remelted? Is it it vaulted under different entities to avoid visibility? Any insight there? >> Well, I'd say the insight that we have from China is what they report. So, uh, they did they allow they're actually requiring or suggesting carefully, uh, that insurance companies start holding gold on their balance sheets. So, you're seeing you're seeing institutions in China hold. And then we've all seen the videos in China at these these malls where they're selling gold. It looks like the old Black Fridays that used to happen uh outside of a Best Buy. So, people are just rushing in and buying gold. Well, now it's happening also with silver. So you've got as the price goes higher, a lot of the population of the world is starting to look at silver more as a a precious metal and not just a commodity. So I think it's really attracting things and that's now I I think when I was on your show last, we were talking about how really the buying is at the institutional level. It's it in in in both both gold and silver. The retail has been selling. They've been getting rid of their metal and it's been going into the banker's hands. And I said if we have a situation where governments and banks and also um IND industrials and or uh retail step up and everyone's clamoring for the same time we're going to see explosive things and that's what we're seeing now. Retail I think I reported it on Monday. It woke up a little bit last week but I said clearly just this week I would say the retail buying now that's coming in and it's worldwide. We're seeing it from our wholesalers all over the world. Uh is they're just clamoring for the metal right now. >> Yeah, it's interesting. I mean, you you mentioned that institutional side and obviously world gold council central banks are still continuing their buying spree and they don't seem to be price sensitive. Talking about that retail side, I mean I I read that recent post that you said retail has awoken. Is this the force multiplier you were concerned about? I mean, what's what's different about the buyers we're seeing now? you know, everyone wants proof. So, if you said gold would be 4,000, you know, let's say even just a few years ago, you'd say you're you're a crazy guy. Uh now, when you say gold is going to go to 10,000, that sounds crazy. We're going to start to see banks are going to start lifting their projections. So, as they start going, you're going to see projections and and potentially triple triple digits for silver. This is a required element that's needed for for hybrid cars uh for electronics, for solar, for military functions, for computer chips. So if if if industry needs it and governments, we've talked about Russia, we've talked about Saudi Arabia, they might be buying physical silver as well and put it on their balance sheet. So now now you're in a situation where governments are stepping in on a monetary perspective. And now if the US truly puts silver on the critical mineralist, it's on the recommended for critical right now. >> Yeah. Yeah. >> That means it's going to start building stockpiles, which it had, you know, again, we had the the US had stockpiles running till just just after around 2000, it got rid of it for for military purposes. So if you suddenly have all these hands buying some things at at the exact same time, it's this is just simple supply demand. >> Yeah. Yeah. And I mean then I guess you could get into the mechanics of that demand because it's creating those unprecedented situations. I mean you broke the story that lit up the industry. You were reporting that those planes loaded with thousand ounce silver bars were being flown to the US or from the US to London. And in February you were talking about how difficult it was finding planes to fly gold in. I mean put it into perspective for us. How desperate does the situation have to be to fly silver across the Atlantic? >> Yeah. So, you know, silver is ex extremely competitive. So, really tight margins typically. So, you know, a bank, a trading house, they're trying to make pennies an ounce. So, to put something on an airplane, to give you an idea, an airplane, you can get around 300,000 ounces on on a standard flight out to, let's say, from New York to London, that's going to cost right right around $75,000 right now. So you can imagine that that arbitrage spread has to be big enough plus your finance cost and and everything that goes into it uh to make it worthwhile. So normally that's just going to go on a boat uh and it's going to cost you know a few a few cents. So we're we're in a situation where when they are scrambling jets to to do it you know that's that's uh that's you know pretty pretty interesting. That is the norm of how gold has always flown. And what we saw basically around Christmas time last year all the way through February is almost every single commercial flight that had what's called a highsecurity waiver. So these airlines, each airline will will have waivers for that they'll they'll be able to put on potentially uh uh many u you know three or more tons of gold on it, which I I'll let your people do the math. So, you know, when when every single commercial flight was taken, you know, with with gold, that was pretty that was pretty amazing. So, there's there's no doubt we're we're in a metal war. And that means securing it both above ground and also below ground. >> Yeah. And that desperation is what it looks like, creating a massive price difference of what traders of course call backradation. for our audience. I mean, because you understand this, break down why a physical bar in London is suddenly worth, according to some reports, up to $3 more than a futures contract for a bar in New York. I mean, what does that signal about the health of the physical market? >> It tells you that they're short. Uh they don't have enough over there. Uh for the same reason that, you know, we've seen some of these ARBs go to China in years past, too. So, suddenly metal is metal is moved over over to to where it's ever treated best. So they they will outbid. You know, we have a global pricing system between all the exchanges and the markets, but if someone wants it more, they're willing to go above. So they pay a premium. So here in the US, we call that an exchange for physical price. So while most of the paper trading you see that's not for the real metal, you want the real deal, you got to pay up for it. And that's exactly what we're seeing. >> Yeah. And I I got to ask you too about this topic. I mean, you know, it's obviously having a huge impact on borrowing costs. Back in February when we had you on, you told us lease rates hitting 10% was a big deal. Now we're hearing credible reports, including from the Japan Boolean Market Association, of of one month silver lease rates hitting uh 39.2%. I mean, Josh, is that a squeeze or is that a panic? >> Um, both. It's also a shakeout. It's a shakeout. It it it basically, you know, a lot of these companies, they floor plan their their whole operation with a bank. And so if if you're not really a cash buyer of these of these materials, let's say you're a refinery and so all that scrap comes in, you're paying cash to your customers right away and that starts to add up and it goes through the refining process which could take, you know, a month or more. Well, right now the the backlog in the United States is between two to four plus months for gold and silver. So you cannot finance that very quickly. So now some of these places where where the interest rates are going higher, they're just saying we can't even take the metal. So a lot of the industry right now is frozen. Now we have seen just this morning rates are really dialing back down again. So a lot of this can can fix itself in maybe a week. It could even be fixed by next week. Now that doesn't mean the chaos is over. That doesn't mean the price is going to go down. We're we're just in, you know, it's dayto day right now that that that things are shifting. >> Yeah. I was reading too and you were talking a little bit about how industrial users are facing financing costs as high as 85%. I mean, what are you hearing from your contacts? Are production lines for major industries at risk of shutting down because they can't simply get enough physical metal? >> Yeah, I would say some of them are at least on pause. So, they they're basically they're on pause. Now, a lot of lot of us in the industry, while you might have a lease facility somewhere, you know that you're you're more of a cash company. So meaning you've got the assets to keep your business going. So it just might mean that for some companies that they're not able to have that extra capacity to to to be able to do it until till you turn. I mean precious metals uh you know if you start if you start doing the math on it you know gold and silver is so high now every ounce uh you know I see these invoices uh both on what we're buying and what we're selling and just keeping it flowing. It it is some serious capital that's moving. So uh you know the bankers are doing very well right now. Let's say that. >> Yeah. I mean you know with with lease rates at these levels and the industrials getting squeezed out does this I mean expose kind of a fundamental flaw in the fractional reserve boolean banking system I mean is the core assumption that not everyone will demand physical delivery at once finally breaking down >> uh you could potentially say that yes I think and that's why assets are moving so you know possession is 9/10en of the law so you're seeing nation states are actually saying hey I want my metal out of that pool. So, you know, let's let's put it in my vaulting facility. Let's have it audited. Let's I want to put eyes on it. Uh so, that's what's happening. And and so if there if there were potentially some groups somewhere in the world that were like rehypothecating uh additional assets and I I don't know if that that that was taking that has been taking place, but let's just say it just even the threat of that is taking place. You know, that's what we're seeing. We're seeing, you know, jurisdictional risk. uh you know the UK is not part of the EU. The EU and and the UK are not really getting along with the Trump administration. So Trump's saying, "Hey, let's send the metal back to the US." So I I think, you know, no one wants to have boots on the ground with the kinetic war. You know, I I realize we, you know, we have a little peace in the Middle East at least for a moment here, but you know, what's going to happen with with Russia? What's going to happen with with uh with Ukraine situation? Uh no one wants all their assets in a place. And that that's not to mention that there's insurance risk in in these in these centers. The value of of metals are rising so much so much so much gold is there that that they're facing, you know, aggregate uh insurance limits uh that are completely blown. >> I got to ask you, I mean, because you've been ahead of the curve on these supply chain issues. I mean, in February, you mentioned that two to three month refinery backlog. Now you're reporting four to six month backlog and highlighting that only two LBMA Comx accredited silver refineries in the US are Japanese owned. How critical is this refining bottleneck to the global supply chain and I guess the ability to respond to crisises like the one in London. >> Uh it it is big and I think you know even though they are they are in the US and they are Japanese owned. So thankfully Japan and the United States are very very integrated. I mean, you you've seen the deal with with Nippon Steel, you know, with with with the purchase of US steel. Essentially, the United States has a seat at the table. So, they're they're very much controlling it. And that's why I I'm looking at the entire metals industry is so critical, st so strategic to to the US government and and and frankly survival and thrival for where we're heading. uh you know what what what what's taking place with the negotiation of critical rare earth uh is is a place that you would say well how did we get here how did we get to this state so um it it you know we're not in globalism so people are not trading friendly anymore and and this is a situation where people are making you know pretty dramatic moves and you know my facility you know we talked about the tariff risk so we just were formally activated just two weeks ago as a foreign trade zone so my facility I'm able to bring in and fly fly uh metals in that may have tariff and it could be held you know w without tariffs. It could be manufactured shipped back out essentially as a as a free port. So every entity industry should be looking at their trade relationships uh looking at their partnerships and how to how to really just strengthen strengthen the backbone of of where we're headed uh in in the world. >> I got to ask you I mean I don't know if you have any insight on this but what does that backlog that we were talking about mean for miners? I mean, if a mining company produces a dory bar, but the refiner won't take it for 6 months. I mean, what happens? >> Uh, yeah. So, usually there's a bank in the middle. So, the banks are typically they're buying the metal, they'll buy maybe about, let's say, about 90% of what the basic assay is. So, if they know how much material is coming in, they'll do a prepayment and then they do a settlement. So the bank's just going to have to refactor that rate, you know, and and basically charge the mining company and then then if it's going to take a longer process, uh, but the bank's also making money. So then they have the right to they now own the metal. So as it's refined, then they're catching the vig as they deliver it into the exchanges as well or they sell it off to an industrial company such as myself. So that that movement in the middle is is very uh is very interesting and and I mentioned the term merchant banking. And so when nations maybe aren't trading uh between each other, a bank can step in and buy buy that material from let's say that particular Latin American country, it can be refined in another country and then shipped to another government or another nation. So I think merchant banking is going to make a huge resurgence in the metal space. >> That's interesting. I got to ask you, I mean it it seems like it's not just at a wholesale level. I mean we're seeing reports today uh this is from Bloomberg. We were just seeing that Japan's largest retailer, Tanaka, has completely suspended sales of small gold bars due to frenzied buying is what they call it. Uh, is this the kind of retail level supply shock you've been warning about? I mean, are you seeing similar strains in your own order books? >> Yeah, I had a large institutional customer that does have retail in another in another country. Um, they they called one of our traders yesterday and says, "What do you have readily available? We will take all of it." Now the reality is we can't do that. We have other customers to serve and we're continuously producing. But uh that's that's what's happening in the world there. There it is a supply shock and it is also a situation where there's so much has been sold you know as silver uh has gone you know into the 30s into the 40s and now 50s. So many customers sold out. Well that's starting to Wayne and now people are wanting to buy again. It's a it's a kind of a new class of buyers. So, you know, retail ready product, it takes time to move the material to to melt it, produce it, make it look pretty, package it, get it out the door, ensure it. Uh, so there there's no doubt that, you know, facilities like like mine are are are getting quite busy. >> Yeah. Let's talk about that last line of defense. I mean, the narrative of ComX is kind of flipped. In February, it was the world's fortress for gold. Now, it's being viewed as a potential source to kind of re relive relieve London, right? I mean, as someone who takes physical delivery, how should our audience interpret the registered versus eligible stockpiles according to the latest CME data? I mean, the total stocks are around 512 million ounces, but is that the real number to watch? Yes and no. So, that's that's the metal that's on the exchange. And then there's there's also quite a bit of metal in other vaults that are trading more more I call it over- thecounter, meaning it's it's it's short-term usage. So, as metal is coming, let's say from Mexico, it's coming from Peru, uh it's coming from from Europe, as that metal is coming in, it's it's really meant to be either sold at a slightly higher premium to a user, and if it can't be sold to a user, then it goes into the COMX. So, think of it like the Comx is like where it goes last in a normal market. So, when when the Comx needs more metal, like we've seen early in the year, they were soaking it all up. So I would say, you know, the Comx has quite a bit of silver from everything that I am seeing through myself and trade partners. There's quite a bit of metal here in the United States. So we feel very good about our supply lines at the moment uh that that things are are flowing and and and won't won't have an issue. Europe, however, is feeling much different. So that's that's where that's where it's at. So I think as we look at we look at you know the larger depositories in larger exchanges such as the comx such as the LBMA we kind of look at how much metal is out there that and and we should keep an eye on this on a weekly or a monthly basis to see where where is money metal flowing in and out of. >> I got to ask you on merchant banks because just going back to it because I find it interesting that that's I mean you you've been accurate since February so I'm going to clearly start watching these merchant banks. I mean, they're financing and redirecting refining capacity across borders. Isn't that effectively nationalizing the trade routes? I mean, in other words, China or a Brooks member can decide where the metal gets refined and who gets cut off just by controlling the merchant flow. How much leverage does that give them right now? >> Uh, it's big. I mean, and and really when I started seeing this form was when, you know, call it the West seized Russian assets, you know, when the Ukraine war broke out. So when they they not only seized assets, they seized they seized deposit in banks, they seized everything. So you know, I think what what the BRICS countries are literally doing with with gold is they're building vaults in in their in in these various nations and gold is being spread out across those vaults and they're going to provide a settlement layer. So why you may not trade with and trust China fully, but do you trust the gold? Do you trust the things that are back behind it? So they're literally creating a a a system to try to compete with the dollar. Now that doesn't mean it's going to be a currency in the same form that the dollar is, but think of it just more as a strengthening their trade bond between each nation. So when that's going on, you know, this is this is something that is is really driving, you know, where is the metal flowing and moving to. So that's that's definitely what what I'm watching. So I look at it like if we hit a kinetic war, Jeremy, >> are we allowed to trade with these nations? And so we're we're going to see to me a bifurcated trade, there's going to be two worlds. Think Axis and Allies. So you know, a situation where you might not be able to do trade with those industries. I mean, right now, I can I only know of one US company that can trade gold and silver in and out of mainland China right now. So imagine if that one goes away. Uh and there's and then there's a few other banks. So, right now, we're still trading as as well as we can, but let's read let's read uh the tea leaves here. Trump is trying to tell people to look elsewhere. And that's he's being he's doing that through tariffs. He's doing that through tariffs. So, now Hong Kong assets are now being viewed just like mainland China assets. So, they're now being tariff when they come to the United States. So, so Hong Kong is now shifting more to the BRICS nations than it is the United States. So, this is not going to end. And this is why this is kind of the grand thesis that I started to see early during COVID uh COVID shutdowns, the the printing of money, the dilution of of the US debt uh and then and then watching what what was happening with the US uh well not the US but the Ukraine Russia war uh which is really just a proxy. So, uh, you know, once you start seeing all this, you get a vision at the macro level and you just want to own the assets and position your company or your family's uh, wealth or whatever wherever you're at to to just be have the wind blow you in the right direction. >> Yeah. I wonder because if if bricks val vaults keep growing and western institutions can't freely trade or clear metal with them I mean that bifrocated global market you're talking about if the two systems can't cross trade I mean if metal can't flow back and forth then spot and future prices lose their anchor know I mean you've got one price for deliverable metal in Dubai or Shanghai and another for London and New York are we already seeing that split start to happen >> it's it's a challenge and this actually started this started with a tweet tweet from Trump in December. You can look it up. He hadn't even taken office yet. And he said, "You better not create a competitor to the US dollar and you better not back it." And he said that to the BRICS nations. And a lot of people that went every over everyone's head. Back it with what? So there is no doubt that a a situation is arising. And I'm not saying we're fully there yet, but you know, you see the road, you see the path of where we're headed. It's it is it is a it is it is definitely going to suggest and I think we're seeing it already where the clamping down of price points is changing. So if there's more buyers clamoring whether it was from one side or another side, it's affecting the global price. And so this is where I think we're starting to see more, you know, some people may call it free gold. It's it's more of a a free market price point. And so where should gold really be at this point? And that that's going to be something for us to watch in the coming years. I think people's minds will be blown uh of of where this could potentially be. >> Yeah. And of course, we got China, right? I mean, we're seeing Treasury Secretary Bessin trying to form a coalition to respond to China's new export controls on rare earths. You've called this the metal wars. I mean, how does China's role as both a massive consumer and a strategic accumulator of metals fit into this physical squeeze that we're seeing? you know, China did a wonderful job over the last decade or more of locking up a lot of the assets in Africa in particular. So, US has kind of been asleep at the wheel uh when it comes to a lot of these resources. So, it is playing I would say rapid catch-up though. I've been very impressed with uh the Trump administration uh as it as it relates to minerals that they they are moving. I think you're going to see a lot more in the coming weeks and months ahead uh about to make sure that they lock down those supply lines. So you and I I say the focus for the United States is going to be the Western Hemisphere. So North and South America is is I think really what the United States is making sure it locks down. >> It's interesting uh because some obviously would argue that China's facing its own economic headwinds, right? I mean I'm wondering if this massive buying might be a sign of internal weakness, a kind of an attempt to shore up confidence rather than external strength. Could the Shanghai Gold Exchange uh with its own physical stock piles act as a release valve for London if the price is right or is is China a one-way street for the physical market? >> Well, I guess you would have to ask them, do they care about London or not? >> Yeah. >> So, you know, I I also made a comment. It's kind of like if you you know, you watch the uh um some of the famous drug dealer uh drug cartel movies, you know, they always say, you know, you don't want to kill your customer. So right now I think in the world like London's being squeezed. So uh you don't want to kill London today. You might just want to squeeze them again. So you know I I I probably don't see a short-term endgame, but I think long term there's no doubt that that China is is trying to attempt uh to control the world's uh trade as it relates to to to metals. And I think you know uh had had a different president won uh I don't know if the US would have retained its its gold uh and and my my personal I realize it's not reported yet. My personal take is that it is uh uh that the uh reshoring its gold and perhaps uh because it does not want to lose status and I think we're all going to we're all going to find out just how important gold is to the financial system as we go forward. >> Well, you've been ahead of it, my friend. you've been ahead of this story and uh just on a personal note, I mean, you ever see anything like this before? I mean, if you're looking at the next 6 months, what what are the top two or three indicators you're kind of watching that'll tell you if this physical squeeze is getting worse? >> Well, well, I I appreciate that cuz sometimes, you know, I I've I've had a lot of these thesis for for quite a while. Uh, I would say I did corporate risk management in my 20s for for mining companies and so I I've seen the mining side and you know I'd say guys like Jim Sinclair who's who's now you know a few years ago he passed were were just icons in the precious metals industry and I used to fly around to meet with him to speak with him and you know a lot of those the old guard is gone and I kind of wish they were here to see what's taking place. So as I see the thesis at a macro level you see where everything's going and so price is now an indicator. So now I have people like, "Josh, you were right. Gold's at 4,000. Uh, you were right back when it was even a,000 or 2,000." And now they're like, "But it can't keep going." And I'm like, "You don't even want to know the number, you know, of of where we're probably headed." You you, we also have to realize governments are debasing their currency every single month. So that mean, you know, they're printing more and more and more. So people say it can't go higher. Uh well, I think the reality is we even heard from Elon Musk who said he found three extra money printers inside the US government that wasn't really covered. Now that means that there were departments in the US government that were issuing currency that was not reported. Well, was it a million dollars or was it a trillion dollars? We don't know. So this is this is a situation where people don't want to trust each other. They are now turning to a hard asset and this is exactly what's taking place in the world. So I think we watch the price uh and we just put it all I would say a lot of the nonsense in the world uh it feels also like a great diversion of what's coming there is going to be there is huge monetary pressure some might say we need a monetary reset and so I think as we just kind of watch and we storyboard we keep moving the chess pieces around of what could happen. >> Yeah. I got to ask you I mean what's that number? I don't know if you can tell me but I mean what do you think? How far is this going? No correction makes people a little jittery at this point. Well, I'm gonna I'll I'm I'm going to put my name attached to it because I don't really see a lot of people talking about it. So, I'm going to call it the Fair Sinclair ratio. And if if and and so a lot of people don't know the story, but in, you know, in the early '7s, Jim Sinclair was was one of the larger precious metals trader in the world. And he said, you know, gold was like 150. Hey, gold's going to go uh gold's going to go to to 900 by the end of the decade. It hit $8.8750. The very next day, he sold out and said, "Hey, it hit my number." Within $12.50, he was on the cover of Fortune magazine, dubbed Mr. Gold. He went away. Oh, by the way, he was hired by Vulker to liquidate the Hunt Brothers silver position, by the way. So, he was really, really well respected. 9/11 hits. He starts He sees the US government start to print money and spend money. Uh, gold is now in the 200s. He says gold's going to go to 1,650. And they said, "Jim, you're crazy." He was on CNBC and Bloomberg. Everyone said, "You're an idiot." He goes, "You guys forget my ratio. You take the foreign debt of the reserve currency of the nation. It stated gold holdings. And at what price does it need to be to balance?" So, it hit again in 2011. 10 years later, it hit it just past 1650. We got to about 1,800. So, if we take that same ratio, so I'm I'm in my mid-40s. It's hit it twice in my lifetime. If you take the foreign debt of the United States, not domestic debt, but foreign debt, it's a stated gold holdings, that number is over 30,000. >> Wow. >> We're going to see. >> We're going to see. Um well, I'm going to leave the audience with that one. We haven't had the 30,000 call, but I mean, obviously, we weren't expecting it to climb this quick, this fast as well. Um I got to ask you for for the people watching at home that haven't really touched the market. I mean, what's the single most important message for those investors watching today who's trying to protect their wealth through what you've called this explosive decade ahead? >> It it's going to be volatile. Um I it will be volatile both ways. And I would say for those that feel like you're you're missing out waiting for a pullback. It could come, it might not come. I I don't know either. So I I think that's a situation where people are establishing a position. uh they're getting in, they're they're looking at they're looking at their portfolios and reallocating. And I would say if the world is re reallocating its assets, you want to be on the earlier side. I still think if this is baseball, uh we're probably in the third fourth inning right now, uh I'd say my target is right around 2030. So it's another decade from when, you know, again, COVID lockdowns was the moment the US government started, you know, issuing insane uh money supply. So you know, it could could it have happened two years before or two years after? That's kind of the sweet spot. So, I think we got a long way to go. Uh, this is not an overnight. Don't be emotional about what's happening. It's more just use your gut. Uh, use your gut feelings and and we'll see what we'll see what happens. >> Hey, what what in what in your view if we hit that 30,000 would have to happen physically in supply, delivery, confidence for gold to to reach that level? >> Well, it's already hit it twice in my lifetime. Why couldn't it do it again? Uh, we did it before. Uh, and I would also say that's why I say this this this price isn't now. we we're not even in frenzy mode. I retail just started to pick up days ago, you know, whereas I I look back at uh you know, I was I was uh I was very young. I was in diapers in 19 1980. But if if we look at uh if we look at the 2011 peak, you know, that was speculative trading. It was insane. Uh you know, when we got up to to nearly $50 on silver and and gold gold 1,800. So it was very speculative driven at the end. We're have we haven't seen that yet. This is a it's been more this is more of a physical demand market. I call it the hidden hand. Institutions, governments are the ones buying uh and retail is just now awaking awakening here. So I think we got uh a number of years to go. So we we can totally see this uh get a lot more wild. This is almost this is like been the wakeup uh this is just the wakeup moment. >> Yeah. And for people that are looking at these gold prices here going, "Okay, I missed this $2,000. I can't buy it at two. It's at 43 now." Are they buying silver instead? >> You know, it depends on, you know, gold to silver ratios. I think I'm I'm a I'm a really big fan of both metals. My company has been involved. You know, oftent times uh gold gold typically um is is slow and steady in comparison. Silver's the wild the wild ride. It's more volatile both ways. So, I think it depends on your asset class, how much you're deploying. Usually the higher you go, you start to to to layer in a much larger ratio of gold. So it kind of just depends where you are in life, what your outlook is. Uh there's great opportunity with both of them. >> All right, physical market is waking up. I'm going to use that. From a rush to the US vaults, it seems like pretty desperate here. I mean, the physical market seems like it's in a little bit of turmoil. So I appreciate you coming on. Uh from the front lines of what you call the metal wars, Joshu, of course, Josh, the CEO of Scottsdale Mint joining us now. Great. Thank you. >> Appreciate it. We'll talk to you soon and come back and make sure you WhatsApp me. Something going on on the retail side. Give us the scoop. We'll have you back on. >> We'll do. >> Cheers, Josh. All right. The markets are rewriting the rules in real time, it seems. We'll keep tracking the story every step of the way. For Kitco News, I'm Jeremy Saffron. Hit subscribe and stay with us for real analysis, not noise. [Music] Heat up here. [Music]
‘A Desperate Scramble’: Mint CEO Reveals Jets Are Flying Silver to Cover Historic Squeeze in London
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[Music] Hey everyone, welcome back. I'm Jeremy Saffron. All right, let's turn to precious metals because as we're on air right now, spot gold is holding firm above $4,200 an ounce, just shy of the $4,300 mark and silver has surged past 53 all-time highs with spot prices still trading above futures in clear backwardation. Now, you might see today's weak economic data, the Philly survey, for instance, just came in at a shocking 12.8. 8 negative 12.8 and this is just thinking maybe it's another flight to safety. But the real story here, the one that our audience knows to look for is happening bes be behind the price ticker. It's happening in the vaults on airport runways and inside the refineries. It's a story of a physical market at its breaking point. Now, when we last spoke with our guest back in February, the story was massive. Unprecedented flows to gold uh with gold to New York over tariff fears. And then when we spoke again in August, the strains were clearly building. Now today, the story has done almost a complete 180. Now we're witnessing a desperate global scramble to cover a historic squeeze in metals in London. Now here to connect the dots is the man who has been at the front lines of this entire saga. Josh Far of course is a founder and CEO of Scottsdale Mint. He's not an analyst watching the screen. He's an operator actually moving the metal, which is why we wanted his take more than ever. Josh, welcome back to the show. It's great to have you. Yeah, thanks to be on again. >> Now, listen, uh I went back and reviewed our tape. We talked to you twice this past year. You've been ridiculously accurate with what's going on. And it makes sense. I mean, you run a you run a mint. Uh when we spoke in February, you described a a quote big sucking sound of physical metals coming from the US. And now you're reporting on planes flying silver out. I mean, connect the dots for us. How did we get from that massive inflow to this desperate outflow in just eight months? And is this both gold and silver? Is it just the silver squeeze we keep hearing about? >> So, it all started with gold, you know, probably a little before Christmas last year is when it started. Uh, and like you said, uh, uh, I I kind of broke it as I I was seeing what was happening. >> Uh, and then suddenly all the all the import records, the Comx records reflected what I was saying and seeing. And you know, at the time it really wasn't as much silver, but silver did pick up. And so we have a situation where people have they're re repatriating their their metal. Uh their their jurisdiction matters. And so a lot of a lot of that that metal flow has been going to China and BRICS nations over the last couple years. And then once Trump Trump kind of, you know, won the election, we noticed I I'm going to go with merchant banking uh started to move metal in advance. And then really we're we're we're truly in a mineral war uh since since then, a metal war that's taking place. So you're seeing uh strategic partnerships with Argentina. We bailed them out uh just just the last couple days. Why are we bailing them out? We need their minerals, their gold, their silver, their rare earth minerals. So we're in a battle of who controls the metal. And I would say that perhaps too much metal left London too fast. And that's where we're at today. And that's what we're seeing right now. Okay. So, I mean, you know, if these rep repatriations accelerate, doesn't that actually worsen the squeeze in London, like you just said, I mean, you can't drain the vaults and still expect liquidity. Does this become a, you know, self-feeding crisis? >> Uh, 100%. So, you've got you have a situation where London needs more silver. So, you know, I always like to say assets go where they're treated best. So, we saw early in the year there was a premium to bring metal into the United States. Now, we're seeing there's a premium uh to to bring metal back to the UK, but a lot of people aren't wanting to give up their silver in particular uh because we're waiting on a final ruling from the US government regarding potential tariffs. Now, tariffs can come in two forms, import and export. So, imagine you're a company who has the silver where you can make a nice arbitrage, you can ship it over to London, make good money, but what happens when you need to bring more metal back and it gets taxed? So this is this is where we're at. So they're offering a really juicy spread uh if if you want to take it over there. So we saw it about Thursday of last week metal started boarding airplanes and so that's not a cheap that's not a cheap thing. Silver's traditionally they get put on a boat, you know, let's just say four or five weeks before it it lands and is loaded up. But now with interest rates, you know, on on out of London on on material, we've seen it as high as over 100% annualized, it's it's well back down again, you know, down to about 10ish% at the moment. Uh but this is a traditional market where it's 1 to 2%. And so you've got you've got bankers and trading houses, they're all trying to make ARBs, but the question is is if you're you know risk management, uh do you do you let your metal leave for London? So this is this is uh definitely interesting times. >> Yeah. Yeah, I mean, you know, obviously it's on the US radar, too, as silver being drafted into that critical minerals list. Uh, we've already seen these steep tariff regimes kind of in place. I know you're waiting, but how real is the threat of restrictive tariffs on silver, especially refined bars or foreign imports and and how are you repositioning your arbitrage and and kind of sourcing accordingly? >> Yeah. So, that is a that is a problem that 2025 has brought every every company in in that that you know, we had never had these issues before. The reality is is Trump moves uh at the speed of a tweet. Uh he's every time you talk the the tariff risks are come, they go. We just don't know. Now I would say is if I'm a politician and I'm running the administration, you don't want to tax things that you need. So let's say PGMs for example, uh the platinum group metals, uh you need silver. More roughly 80ish% of our silver consumption in the US is imported. So those are those are things now where we could see in the future is export tariffs. So that that will probably come especially as things go on the critical mineral list. I think there are a lot of hidden hands all around the world who have been buying these assets uh including what I would say you know central bank through reported statistics and then we know for sure there is OTC buying going on over the counter uh that's not being reported both by the Chinese government other BRICS nations and perhaps even our own uh n uh US here. So, I I think we're we're definitely in there's a battle for, you know, who who who has the asset is going to win the energy race, the AI race, and the military race. >> Yeah. Yeah. It's just wild. And as you mentioned, it's uh it's going quick here, Josh. And of course, these demand pressures are certainly here, and we're seeing this weak economic data today fueling the, you know, putting more fuel to the fire, it seems. From from your vantage point, is this rally to over $4,200 gold and $53 silver just about the market pricing in the next Fed rate cut? Are you seeing evidence of something deeper here? I mean, you just mentioned some of these moves on the sovereign side being under reportported. It seems like it's the perfect storm. >> Uh, it sure is. I think anyone could look at the chart and say it looks overbought, but the reality is is people have underexposure to these this asset class. So, I think central bankers uh whether they're reporting it or not, they're buying it knowing that they need to raise their level. So, if they were at 0 to 1 2%, they these guys are wanting to double or triple uh how much gold they have on the balance sheets. And I think you just saw Meil Lynch just a few days ago the CIO uh sorry Morgan Stanley uh Morgan Stanley put out CIO put out and and said there's a new portfolio we're recommending a 60 2020 20% gold allocation. Most people don't even have a few percentage in gold. So I think people are misallocated to this asset class and people are going into it now. Everything's at at at alltime highs. So uh the stock market, do you feel comfortable there? roughly 30-ish% of the stock market are these AI companies. Is anyone really feeling comfortable that that business is really even genuine and true? So, I think we're facing a moment where capital doesn't know where to go. It doesn't want bonds. It doesn't want treasury bills. So, it's going to a trustless system which is which is uh gold for sure. >> Yeah. I I wanted to get into the retail demand obviously, but before we do that, I mean, you were talking a little bit about those bricks nations, especially China moving physical gold quietly without, you know, showing it in in their official reserve data. Bars seem to be leaving London and Switzerland, but they're not really reappearing in public reports. I mean, what's actually happening to that metal? Is it being recast, remelted? Is it it vaulted under different entities to avoid visibility? Any insight there? >> Well, I'd say the insight that we have from China is what they report. So, uh, they did they allow they're actually requiring or suggesting carefully, uh, that insurance companies start holding gold on their balance sheets. So, you're seeing you're seeing institutions in China hold. And then we've all seen the videos in China at these these malls where they're selling gold. It looks like the old Black Fridays that used to happen uh outside of a Best Buy. So, people are just rushing in and buying gold. Well, now it's happening also with silver. So you've got as the price goes higher, a lot of the population of the world is starting to look at silver more as a a precious metal and not just a commodity. So I think it's really attracting things and that's now I I think when I was on your show last, we were talking about how really the buying is at the institutional level. It's it in in in both both gold and silver. The retail has been selling. They've been getting rid of their metal and it's been going into the banker's hands. And I said if we have a situation where governments and banks and also um IND industrials and or uh retail step up and everyone's clamoring for the same time we're going to see explosive things and that's what we're seeing now. Retail I think I reported it on Monday. It woke up a little bit last week but I said clearly just this week I would say the retail buying now that's coming in and it's worldwide. We're seeing it from our wholesalers all over the world. Uh is they're just clamoring for the metal right now. >> Yeah, it's interesting. I mean, you you mentioned that institutional side and obviously world gold council central banks are still continuing their buying spree and they don't seem to be price sensitive. Talking about that retail side, I mean I I read that recent post that you said retail has awoken. Is this the force multiplier you were concerned about? I mean, what's what's different about the buyers we're seeing now? you know, everyone wants proof. So, if you said gold would be 4,000, you know, let's say even just a few years ago, you'd say you're you're a crazy guy. Uh now, when you say gold is going to go to 10,000, that sounds crazy. We're going to start to see banks are going to start lifting their projections. So, as they start going, you're going to see projections and and potentially triple triple digits for silver. This is a required element that's needed for for hybrid cars uh for electronics, for solar, for military functions, for computer chips. So if if if industry needs it and governments, we've talked about Russia, we've talked about Saudi Arabia, they might be buying physical silver as well and put it on their balance sheet. So now now you're in a situation where governments are stepping in on a monetary perspective. And now if the US truly puts silver on the critical mineralist, it's on the recommended for critical right now. >> Yeah. Yeah. >> That means it's going to start building stockpiles, which it had, you know, again, we had the the US had stockpiles running till just just after around 2000, it got rid of it for for military purposes. So if you suddenly have all these hands buying some things at at the exact same time, it's this is just simple supply demand. >> Yeah. Yeah. And I mean then I guess you could get into the mechanics of that demand because it's creating those unprecedented situations. I mean you broke the story that lit up the industry. You were reporting that those planes loaded with thousand ounce silver bars were being flown to the US or from the US to London. And in February you were talking about how difficult it was finding planes to fly gold in. I mean put it into perspective for us. How desperate does the situation have to be to fly silver across the Atlantic? >> Yeah. So, you know, silver is ex extremely competitive. So, really tight margins typically. So, you know, a bank, a trading house, they're trying to make pennies an ounce. So, to put something on an airplane, to give you an idea, an airplane, you can get around 300,000 ounces on on a standard flight out to, let's say, from New York to London, that's going to cost right right around $75,000 right now. So you can imagine that that arbitrage spread has to be big enough plus your finance cost and and everything that goes into it uh to make it worthwhile. So normally that's just going to go on a boat uh and it's going to cost you know a few a few cents. So we're we're in a situation where when they are scrambling jets to to do it you know that's that's uh that's you know pretty pretty interesting. That is the norm of how gold has always flown. And what we saw basically around Christmas time last year all the way through February is almost every single commercial flight that had what's called a highsecurity waiver. So these airlines, each airline will will have waivers for that they'll they'll be able to put on potentially uh uh many u you know three or more tons of gold on it, which I I'll let your people do the math. So, you know, when when every single commercial flight was taken, you know, with with gold, that was pretty that was pretty amazing. So, there's there's no doubt we're we're in a metal war. And that means securing it both above ground and also below ground. >> Yeah. And that desperation is what it looks like, creating a massive price difference of what traders of course call backradation. for our audience. I mean, because you understand this, break down why a physical bar in London is suddenly worth, according to some reports, up to $3 more than a futures contract for a bar in New York. I mean, what does that signal about the health of the physical market? >> It tells you that they're short. Uh they don't have enough over there. Uh for the same reason that, you know, we've seen some of these ARBs go to China in years past, too. So, suddenly metal is metal is moved over over to to where it's ever treated best. So they they will outbid. You know, we have a global pricing system between all the exchanges and the markets, but if someone wants it more, they're willing to go above. So they pay a premium. So here in the US, we call that an exchange for physical price. So while most of the paper trading you see that's not for the real metal, you want the real deal, you got to pay up for it. And that's exactly what we're seeing. >> Yeah. And I I got to ask you too about this topic. I mean, you know, it's obviously having a huge impact on borrowing costs. Back in February when we had you on, you told us lease rates hitting 10% was a big deal. Now we're hearing credible reports, including from the Japan Boolean Market Association, of of one month silver lease rates hitting uh 39.2%. I mean, Josh, is that a squeeze or is that a panic? >> Um, both. It's also a shakeout. It's a shakeout. It it it basically, you know, a lot of these companies, they floor plan their their whole operation with a bank. And so if if you're not really a cash buyer of these of these materials, let's say you're a refinery and so all that scrap comes in, you're paying cash to your customers right away and that starts to add up and it goes through the refining process which could take, you know, a month or more. Well, right now the the backlog in the United States is between two to four plus months for gold and silver. So you cannot finance that very quickly. So now some of these places where where the interest rates are going higher, they're just saying we can't even take the metal. So a lot of the industry right now is frozen. Now we have seen just this morning rates are really dialing back down again. So a lot of this can can fix itself in maybe a week. It could even be fixed by next week. Now that doesn't mean the chaos is over. That doesn't mean the price is going to go down. We're we're just in, you know, it's dayto day right now that that that things are shifting. >> Yeah. I was reading too and you were talking a little bit about how industrial users are facing financing costs as high as 85%. I mean, what are you hearing from your contacts? Are production lines for major industries at risk of shutting down because they can't simply get enough physical metal? >> Yeah, I would say some of them are at least on pause. So, they they're basically they're on pause. Now, a lot of lot of us in the industry, while you might have a lease facility somewhere, you know that you're you're more of a cash company. So meaning you've got the assets to keep your business going. So it just might mean that for some companies that they're not able to have that extra capacity to to to be able to do it until till you turn. I mean precious metals uh you know if you start if you start doing the math on it you know gold and silver is so high now every ounce uh you know I see these invoices uh both on what we're buying and what we're selling and just keeping it flowing. It it is some serious capital that's moving. So uh you know the bankers are doing very well right now. Let's say that. >> Yeah. I mean you know with with lease rates at these levels and the industrials getting squeezed out does this I mean expose kind of a fundamental flaw in the fractional reserve boolean banking system I mean is the core assumption that not everyone will demand physical delivery at once finally breaking down >> uh you could potentially say that yes I think and that's why assets are moving so you know possession is 9/10en of the law so you're seeing nation states are actually saying hey I want my metal out of that pool. So, you know, let's let's put it in my vaulting facility. Let's have it audited. Let's I want to put eyes on it. Uh so, that's what's happening. And and so if there if there were potentially some groups somewhere in the world that were like rehypothecating uh additional assets and I I don't know if that that that was taking that has been taking place, but let's just say it just even the threat of that is taking place. You know, that's what we're seeing. We're seeing, you know, jurisdictional risk. uh you know the UK is not part of the EU. The EU and and the UK are not really getting along with the Trump administration. So Trump's saying, "Hey, let's send the metal back to the US." So I I think, you know, no one wants to have boots on the ground with the kinetic war. You know, I I realize we, you know, we have a little peace in the Middle East at least for a moment here, but you know, what's going to happen with with Russia? What's going to happen with with uh with Ukraine situation? Uh no one wants all their assets in a place. And that that's not to mention that there's insurance risk in in these in these centers. The value of of metals are rising so much so much so much gold is there that that they're facing, you know, aggregate uh insurance limits uh that are completely blown. >> I got to ask you, I mean, because you've been ahead of the curve on these supply chain issues. I mean, in February, you mentioned that two to three month refinery backlog. Now you're reporting four to six month backlog and highlighting that only two LBMA Comx accredited silver refineries in the US are Japanese owned. How critical is this refining bottleneck to the global supply chain and I guess the ability to respond to crisises like the one in London. >> Uh it it is big and I think you know even though they are they are in the US and they are Japanese owned. So thankfully Japan and the United States are very very integrated. I mean, you you've seen the deal with with Nippon Steel, you know, with with with the purchase of US steel. Essentially, the United States has a seat at the table. So, they're they're very much controlling it. And that's why I I'm looking at the entire metals industry is so critical, st so strategic to to the US government and and and frankly survival and thrival for where we're heading. uh you know what what what what's taking place with the negotiation of critical rare earth uh is is a place that you would say well how did we get here how did we get to this state so um it it you know we're not in globalism so people are not trading friendly anymore and and this is a situation where people are making you know pretty dramatic moves and you know my facility you know we talked about the tariff risk so we just were formally activated just two weeks ago as a foreign trade zone so my facility I'm able to bring in and fly fly uh metals in that may have tariff and it could be held you know w without tariffs. It could be manufactured shipped back out essentially as a as a free port. So every entity industry should be looking at their trade relationships uh looking at their partnerships and how to how to really just strengthen strengthen the backbone of of where we're headed uh in in the world. >> I got to ask you I mean I don't know if you have any insight on this but what does that backlog that we were talking about mean for miners? I mean, if a mining company produces a dory bar, but the refiner won't take it for 6 months. I mean, what happens? >> Uh, yeah. So, usually there's a bank in the middle. So, the banks are typically they're buying the metal, they'll buy maybe about, let's say, about 90% of what the basic assay is. So, if they know how much material is coming in, they'll do a prepayment and then they do a settlement. So the bank's just going to have to refactor that rate, you know, and and basically charge the mining company and then then if it's going to take a longer process, uh, but the bank's also making money. So then they have the right to they now own the metal. So as it's refined, then they're catching the vig as they deliver it into the exchanges as well or they sell it off to an industrial company such as myself. So that that movement in the middle is is very uh is very interesting and and I mentioned the term merchant banking. And so when nations maybe aren't trading uh between each other, a bank can step in and buy buy that material from let's say that particular Latin American country, it can be refined in another country and then shipped to another government or another nation. So I think merchant banking is going to make a huge resurgence in the metal space. >> That's interesting. I got to ask you, I mean it it seems like it's not just at a wholesale level. I mean we're seeing reports today uh this is from Bloomberg. We were just seeing that Japan's largest retailer, Tanaka, has completely suspended sales of small gold bars due to frenzied buying is what they call it. Uh, is this the kind of retail level supply shock you've been warning about? I mean, are you seeing similar strains in your own order books? >> Yeah, I had a large institutional customer that does have retail in another in another country. Um, they they called one of our traders yesterday and says, "What do you have readily available? We will take all of it." Now the reality is we can't do that. We have other customers to serve and we're continuously producing. But uh that's that's what's happening in the world there. There it is a supply shock and it is also a situation where there's so much has been sold you know as silver uh has gone you know into the 30s into the 40s and now 50s. So many customers sold out. Well that's starting to Wayne and now people are wanting to buy again. It's a it's a kind of a new class of buyers. So, you know, retail ready product, it takes time to move the material to to melt it, produce it, make it look pretty, package it, get it out the door, ensure it. Uh, so there there's no doubt that, you know, facilities like like mine are are are getting quite busy. >> Yeah. Let's talk about that last line of defense. I mean, the narrative of ComX is kind of flipped. In February, it was the world's fortress for gold. Now, it's being viewed as a potential source to kind of re relive relieve London, right? I mean, as someone who takes physical delivery, how should our audience interpret the registered versus eligible stockpiles according to the latest CME data? I mean, the total stocks are around 512 million ounces, but is that the real number to watch? Yes and no. So, that's that's the metal that's on the exchange. And then there's there's also quite a bit of metal in other vaults that are trading more more I call it over- thecounter, meaning it's it's it's short-term usage. So, as metal is coming, let's say from Mexico, it's coming from Peru, uh it's coming from from Europe, as that metal is coming in, it's it's really meant to be either sold at a slightly higher premium to a user, and if it can't be sold to a user, then it goes into the COMX. So, think of it like the Comx is like where it goes last in a normal market. So, when when the Comx needs more metal, like we've seen early in the year, they were soaking it all up. So I would say, you know, the Comx has quite a bit of silver from everything that I am seeing through myself and trade partners. There's quite a bit of metal here in the United States. So we feel very good about our supply lines at the moment uh that that things are are flowing and and and won't won't have an issue. Europe, however, is feeling much different. So that's that's where that's where it's at. So I think as we look at we look at you know the larger depositories in larger exchanges such as the comx such as the LBMA we kind of look at how much metal is out there that and and we should keep an eye on this on a weekly or a monthly basis to see where where is money metal flowing in and out of. >> I got to ask you on merchant banks because just going back to it because I find it interesting that that's I mean you you've been accurate since February so I'm going to clearly start watching these merchant banks. I mean, they're financing and redirecting refining capacity across borders. Isn't that effectively nationalizing the trade routes? I mean, in other words, China or a Brooks member can decide where the metal gets refined and who gets cut off just by controlling the merchant flow. How much leverage does that give them right now? >> Uh, it's big. I mean, and and really when I started seeing this form was when, you know, call it the West seized Russian assets, you know, when the Ukraine war broke out. So when they they not only seized assets, they seized they seized deposit in banks, they seized everything. So you know, I think what what the BRICS countries are literally doing with with gold is they're building vaults in in their in in these various nations and gold is being spread out across those vaults and they're going to provide a settlement layer. So why you may not trade with and trust China fully, but do you trust the gold? Do you trust the things that are back behind it? So they're literally creating a a a system to try to compete with the dollar. Now that doesn't mean it's going to be a currency in the same form that the dollar is, but think of it just more as a strengthening their trade bond between each nation. So when that's going on, you know, this is this is something that is is really driving, you know, where is the metal flowing and moving to. So that's that's definitely what what I'm watching. So I look at it like if we hit a kinetic war, Jeremy, >> are we allowed to trade with these nations? And so we're we're going to see to me a bifurcated trade, there's going to be two worlds. Think Axis and Allies. So you know, a situation where you might not be able to do trade with those industries. I mean, right now, I can I only know of one US company that can trade gold and silver in and out of mainland China right now. So imagine if that one goes away. Uh and there's and then there's a few other banks. So, right now, we're still trading as as well as we can, but let's read let's read uh the tea leaves here. Trump is trying to tell people to look elsewhere. And that's he's being he's doing that through tariffs. He's doing that through tariffs. So, now Hong Kong assets are now being viewed just like mainland China assets. So, they're now being tariff when they come to the United States. So, so Hong Kong is now shifting more to the BRICS nations than it is the United States. So, this is not going to end. And this is why this is kind of the grand thesis that I started to see early during COVID uh COVID shutdowns, the the printing of money, the dilution of of the US debt uh and then and then watching what what was happening with the US uh well not the US but the Ukraine Russia war uh which is really just a proxy. So, uh, you know, once you start seeing all this, you get a vision at the macro level and you just want to own the assets and position your company or your family's uh, wealth or whatever wherever you're at to to just be have the wind blow you in the right direction. >> Yeah. I wonder because if if bricks val vaults keep growing and western institutions can't freely trade or clear metal with them I mean that bifrocated global market you're talking about if the two systems can't cross trade I mean if metal can't flow back and forth then spot and future prices lose their anchor know I mean you've got one price for deliverable metal in Dubai or Shanghai and another for London and New York are we already seeing that split start to happen >> it's it's a challenge and this actually started this started with a tweet tweet from Trump in December. You can look it up. He hadn't even taken office yet. And he said, "You better not create a competitor to the US dollar and you better not back it." And he said that to the BRICS nations. And a lot of people that went every over everyone's head. Back it with what? So there is no doubt that a a situation is arising. And I'm not saying we're fully there yet, but you know, you see the road, you see the path of where we're headed. It's it is it is a it is it is definitely going to suggest and I think we're seeing it already where the clamping down of price points is changing. So if there's more buyers clamoring whether it was from one side or another side, it's affecting the global price. And so this is where I think we're starting to see more, you know, some people may call it free gold. It's it's more of a a free market price point. And so where should gold really be at this point? And that that's going to be something for us to watch in the coming years. I think people's minds will be blown uh of of where this could potentially be. >> Yeah. And of course, we got China, right? I mean, we're seeing Treasury Secretary Bessin trying to form a coalition to respond to China's new export controls on rare earths. You've called this the metal wars. I mean, how does China's role as both a massive consumer and a strategic accumulator of metals fit into this physical squeeze that we're seeing? you know, China did a wonderful job over the last decade or more of locking up a lot of the assets in Africa in particular. So, US has kind of been asleep at the wheel uh when it comes to a lot of these resources. So, it is playing I would say rapid catch-up though. I've been very impressed with uh the Trump administration uh as it as it relates to minerals that they they are moving. I think you're going to see a lot more in the coming weeks and months ahead uh about to make sure that they lock down those supply lines. So you and I I say the focus for the United States is going to be the Western Hemisphere. So North and South America is is I think really what the United States is making sure it locks down. >> It's interesting uh because some obviously would argue that China's facing its own economic headwinds, right? I mean I'm wondering if this massive buying might be a sign of internal weakness, a kind of an attempt to shore up confidence rather than external strength. Could the Shanghai Gold Exchange uh with its own physical stock piles act as a release valve for London if the price is right or is is China a one-way street for the physical market? >> Well, I guess you would have to ask them, do they care about London or not? >> Yeah. >> So, you know, I I also made a comment. It's kind of like if you you know, you watch the uh um some of the famous drug dealer uh drug cartel movies, you know, they always say, you know, you don't want to kill your customer. So right now I think in the world like London's being squeezed. So uh you don't want to kill London today. You might just want to squeeze them again. So you know I I I probably don't see a short-term endgame, but I think long term there's no doubt that that China is is trying to attempt uh to control the world's uh trade as it relates to to to metals. And I think you know uh had had a different president won uh I don't know if the US would have retained its its gold uh and and my my personal I realize it's not reported yet. My personal take is that it is uh uh that the uh reshoring its gold and perhaps uh because it does not want to lose status and I think we're all going to we're all going to find out just how important gold is to the financial system as we go forward. >> Well, you've been ahead of it, my friend. you've been ahead of this story and uh just on a personal note, I mean, you ever see anything like this before? I mean, if you're looking at the next 6 months, what what are the top two or three indicators you're kind of watching that'll tell you if this physical squeeze is getting worse? >> Well, well, I I appreciate that cuz sometimes, you know, I I've I've had a lot of these thesis for for quite a while. Uh, I would say I did corporate risk management in my 20s for for mining companies and so I I've seen the mining side and you know I'd say guys like Jim Sinclair who's who's now you know a few years ago he passed were were just icons in the precious metals industry and I used to fly around to meet with him to speak with him and you know a lot of those the old guard is gone and I kind of wish they were here to see what's taking place. So as I see the thesis at a macro level you see where everything's going and so price is now an indicator. So now I have people like, "Josh, you were right. Gold's at 4,000. Uh, you were right back when it was even a,000 or 2,000." And now they're like, "But it can't keep going." And I'm like, "You don't even want to know the number, you know, of of where we're probably headed." You you, we also have to realize governments are debasing their currency every single month. So that mean, you know, they're printing more and more and more. So people say it can't go higher. Uh well, I think the reality is we even heard from Elon Musk who said he found three extra money printers inside the US government that wasn't really covered. Now that means that there were departments in the US government that were issuing currency that was not reported. Well, was it a million dollars or was it a trillion dollars? We don't know. So this is this is a situation where people don't want to trust each other. They are now turning to a hard asset and this is exactly what's taking place in the world. So I think we watch the price uh and we just put it all I would say a lot of the nonsense in the world uh it feels also like a great diversion of what's coming there is going to be there is huge monetary pressure some might say we need a monetary reset and so I think as we just kind of watch and we storyboard we keep moving the chess pieces around of what could happen. >> Yeah. I got to ask you I mean what's that number? I don't know if you can tell me but I mean what do you think? How far is this going? No correction makes people a little jittery at this point. Well, I'm gonna I'll I'm I'm going to put my name attached to it because I don't really see a lot of people talking about it. So, I'm going to call it the Fair Sinclair ratio. And if if and and so a lot of people don't know the story, but in, you know, in the early '7s, Jim Sinclair was was one of the larger precious metals trader in the world. And he said, you know, gold was like 150. Hey, gold's going to go uh gold's going to go to to 900 by the end of the decade. It hit $8.8750. The very next day, he sold out and said, "Hey, it hit my number." Within $12.50, he was on the cover of Fortune magazine, dubbed Mr. Gold. He went away. Oh, by the way, he was hired by Vulker to liquidate the Hunt Brothers silver position, by the way. So, he was really, really well respected. 9/11 hits. He starts He sees the US government start to print money and spend money. Uh, gold is now in the 200s. He says gold's going to go to 1,650. And they said, "Jim, you're crazy." He was on CNBC and Bloomberg. Everyone said, "You're an idiot." He goes, "You guys forget my ratio. You take the foreign debt of the reserve currency of the nation. It stated gold holdings. And at what price does it need to be to balance?" So, it hit again in 2011. 10 years later, it hit it just past 1650. We got to about 1,800. So, if we take that same ratio, so I'm I'm in my mid-40s. It's hit it twice in my lifetime. If you take the foreign debt of the United States, not domestic debt, but foreign debt, it's a stated gold holdings, that number is over 30,000. >> Wow. >> We're going to see. >> We're going to see. Um well, I'm going to leave the audience with that one. We haven't had the 30,000 call, but I mean, obviously, we weren't expecting it to climb this quick, this fast as well. Um I got to ask you for for the people watching at home that haven't really touched the market. I mean, what's the single most important message for those investors watching today who's trying to protect their wealth through what you've called this explosive decade ahead? >> It it's going to be volatile. Um I it will be volatile both ways. And I would say for those that feel like you're you're missing out waiting for a pullback. It could come, it might not come. I I don't know either. So I I think that's a situation where people are establishing a position. uh they're getting in, they're they're looking at they're looking at their portfolios and reallocating. And I would say if the world is re reallocating its assets, you want to be on the earlier side. I still think if this is baseball, uh we're probably in the third fourth inning right now, uh I'd say my target is right around 2030. So it's another decade from when, you know, again, COVID lockdowns was the moment the US government started, you know, issuing insane uh money supply. So you know, it could could it have happened two years before or two years after? That's kind of the sweet spot. So, I think we got a long way to go. Uh, this is not an overnight. Don't be emotional about what's happening. It's more just use your gut. Uh, use your gut feelings and and we'll see what we'll see what happens. >> Hey, what what in what in your view if we hit that 30,000 would have to happen physically in supply, delivery, confidence for gold to to reach that level? >> Well, it's already hit it twice in my lifetime. Why couldn't it do it again? Uh, we did it before. Uh, and I would also say that's why I say this this this price isn't now. we we're not even in frenzy mode. I retail just started to pick up days ago, you know, whereas I I look back at uh you know, I was I was uh I was very young. I was in diapers in 19 1980. But if if we look at uh if we look at the 2011 peak, you know, that was speculative trading. It was insane. Uh you know, when we got up to to nearly $50 on silver and and gold gold 1,800. So it was very speculative driven at the end. We're have we haven't seen that yet. This is a it's been more this is more of a physical demand market. I call it the hidden hand. Institutions, governments are the ones buying uh and retail is just now awaking awakening here. So I think we got uh a number of years to go. So we we can totally see this uh get a lot more wild. This is almost this is like been the wakeup uh this is just the wakeup moment. >> Yeah. And for people that are looking at these gold prices here going, "Okay, I missed this $2,000. I can't buy it at two. It's at 43 now." Are they buying silver instead? >> You know, it depends on, you know, gold to silver ratios. I think I'm I'm a I'm a really big fan of both metals. My company has been involved. You know, oftent times uh gold gold typically um is is slow and steady in comparison. Silver's the wild the wild ride. It's more volatile both ways. So, I think it depends on your asset class, how much you're deploying. Usually the higher you go, you start to to to layer in a much larger ratio of gold. So it kind of just depends where you are in life, what your outlook is. Uh there's great opportunity with both of them. >> All right, physical market is waking up. I'm going to use that. From a rush to the US vaults, it seems like pretty desperate here. I mean, the physical market seems like it's in a little bit of turmoil. So I appreciate you coming on. Uh from the front lines of what you call the metal wars, Joshu, of course, Josh, the CEO of Scottsdale Mint joining us now. Great. Thank you. >> Appreciate it. We'll talk to you soon and come back and make sure you WhatsApp me. Something going on on the retail side. Give us the scoop. We'll have you back on. >> We'll do. >> Cheers, Josh. All right. The markets are rewriting the rules in real time, it seems. We'll keep tracking the story every step of the way. For Kitco News, I'm Jeremy Saffron. Hit subscribe and stay with us for real analysis, not noise. [Music] Heat up here. [Music]