'Biggest Bubble in History' – Only GOLD Survives Coming Carnage: Alasdair Macleod
Summary
Precious Metals Insight: Alasdair Macleod emphasizes that the recent dip in gold and silver prices is a minor correction, suggesting that the long-term value of these metals remains strong due to the declining purchasing power of fiat currencies.
Investment Strategy: Macleod advises against trading in precious metals due to market volatility and instead recommends holding gold and silver as a hedge against fiat currency devaluation.
Mining Stocks Opportunity: Despite recent downturns, mining stocks, particularly those of major producers, are seen as undervalued and present a potential buying opportunity, given their leverage to rising metal prices.
Silver Market Dynamics: The podcast discusses silver shortages at the LBMA and the impact of high lease rates and backquidation, indicating a tight supply situation that could drive prices higher.
Credit Bubble Concerns: Macleod highlights the risks of the current credit bubble, noting the significant increase in margin debt and the potential for a market crash similar to historical precedents.
Geopolitical Tensions: The discussion covers the geopolitical landscape, including the US-China trade war and the potential for the US to lose its hegemonic status due to various international conflicts and economic pressures.
AI Market Speculation: While AI is seen as transformative, there is skepticism about whether current stock valuations are justified, drawing parallels to the dot-com bubble.
Global Economic Shifts: The podcast explores the shifting global economic power dynamics, with a focus on the potential decline of American influence and the rise of BRICS nations.
Transcript
Hello everybody and welcome into commodity culture where we break down commodities markets, sound money principles and geopolitics all with the goal of making you a better investor in the commodities sector. My name is Jesse Day and on this episode I'm thrilled to welcome Alistair Mloud to the program. A 40-year veteran of the finance industry, an expert in precious metals, and the author of the Mloud Finance Substack, Alistair thinks the recent draw down in gold and silver was nothing but a blip on the radar as the continued destruction of purchasing power in fiat currency terms and the rapidly growing credit bubble will send prices for both metals much higher up ahead. Alistair breaks down where he thinks we are in the credit cycle and when this monster bubble, one that he says is the biggest in history, will finally burst. We also dive into silver shortages at the LBMA, the death of American hegemony, and so much more. So strap yourselves in for my conversation with Alistair Mloud. Alistair Mloud, it is great to have you back on Commodity Culture. I want to kick things off of course with gold and silver markets facing a fairly steep correction over a couple of trading days. I believe it was last week Friday and this week Monday. We are starting to see somewhat of a recovery at the moment. But obviously a lot of stackers got spooked by this event. I think we saw such an incredible run in both metals that a short-term correction like this is only natural. So I wonder what your thoughts are. Is this a buy the dip moment? Should some more caution be warranted? Do you think we could see more downside to go from here? What are your thoughts? >> Well, I mean, whether we see more downside from here, only time will tell. Um, I mean, I I think I think stackers I mean, forget trading. You know, if you want to trade this market, you'll get killed. It's as simple as that. Because they're far cleverer people than you with big big deep pockets who will push things around and uh, you know, if they reckon you're in there, you know, they'll kill you. So really I think you've got to take um if you like a um a more sensible view as to actually why it is that you own gold or silver. Um and the only justification for that because they are at a premium price is because they are money. They are legal money. Uh they are final settlement without counterparty you know without um counterparty uh as opposed to credit which is what a fiat currency is. And um if you reckon that um the situation for fiat currencies is deteriorating then that's the reason to hold on to gold and you know whether it sort of goes up 5% falls 5% is completely immaterial. The thing that to bear in mind is that the value of gold is relatively constant over long periods of time. Um it is the value of fiat currency which alters and that has been declining very significantly uh particularly since 1971 when the Bretonwoods agreement was abandoned. So in dollar terms I mean you had $35 that was the official rate $35 to the ounce and we're now looking at nearly $4,000 well 4,150. I mean that tells you basically that um that tells you that uh a 1971 dollar um or rather the dollar today is is less than 1% in its value of the 1971 and that's what you got to keep bearing bearing in mind. Um it's not a situation that is going to change in favor of fiat currencies. That's for sure. uh politically it would be impossible for any government um in the G7 anyway to reverse the decline in their currencies. They've been um educated I think by um the macroeconomic establishment which you know which really started with John Maynard Kanes um to uh if you like use a weak currency to benefit the economy to stimulate the economy they're not going to change for that particularly when uh freed from the constraints of a gold standard that they can issue as much debt as they on and that's what they're doing. So you've got an accumulation of debt and that's where the crisis now is. What's going to happen to the value of that debt? The other side of that debt is the value of the currency. Debt equals credit. Credit is the currency and also loans underneath that which businesses have taken out, individuals have taken out, stock market speculators have taken out. Um it's the value of that credit which you've got to question. and you've got to keep your eye on that. So short answer to your your question is that stackers should maybe say well thank goodness we've got a sort of situation which means I can you know save a bit more out of useless credit and put it into real money. Let's hope this pause goes on for some time and then I can really sort myself out. I think that's the way to look at it. not to be spooked by uh what's going on if you like in in you know up 5% down 5% whatever. Yeah, I think that's a great take is the fundamentals are all still firmly in place as you mentioned. Uh a correction is only a natural trajectory of the markets. Things don't go up in a straight line. As gold and silver took a beating, many of the mining stocks of course experienced an even deeper draw down. They are also starting to recover. Many were pointing out that even after the recent rally, gold and silver miners still looked undervalued across the board, especially the big producers because they were essentially printing cash at these high gold and silver prices. Um, what are your thoughts here on the mining stocks? Do do you think we're we're in a situation where there's a big buying opportunity here? >> Well, yes, I would think it is. Now, in terms of timing, that's up to the individuals, but um basically uh mines are a are leveraged bet on um on the commodities that they produce. And uh if you see, um the value of gold expressed in fiat currencies rising, so long as energy prices don't rise more quickly, um that's going to be good for mines. I mean, you've got to look at the input cost side as well. And also bear in mind that most producing mines um they will be managed through this. So what that means is that they will extract lower grades while they are profitable rather than the higher grade. So the idea that you can translate immediately uh a higher gold price into higher profits um I think you got to temper it a little bit and just understand the reality of it. The other thing I would say is that u gold is hardly owned. um it's less than half a percent of all um portfolios if you like. Uh mines on the other hand I think are a bit more owned and um what I'm looking at is um this is a credit bubble obviously if you got a debt bubble which we have the other side of that is credit and more importantly this credit has been applied to uh inflating financial assets particularly stocks. Um now all credit bubbles come to an end. They pop and when they burst they usually burst quite spectacularly. 1929 October um 1987 October October doesn't seem to be a very good month. I'm not saying that it's gonna this this October is going to be the the crash uh because you know we'll look back on it and see whether that's true or not. But um you know the the when when the bubble implodes um basically what people do is they will sell anything where they've got a profit in order to cover the things where they've got a loss. So that's the only caveat I would really have, I think, um, on investing in mines, but other than that, it's a it's you can regard it if you know what you're doing as a as a leveraged bet on the underlying commodity. In the case of gold mines, um, it could be a way of you catching up if you want to speculate a bit as to, you know, on the route to do it. But your core holding always must be the metal because that is the the one thing where there is no counterparty risk. >> The sponsor of today's episode is Arc Silver Gold Osmium. Owner Ian Everard is praised even by his competitors as one of the most honest and level-headed bullion dealers in the United States. They have some great prices. You can see some of them displayed right now on screen. can take advantage of these specials today by reaching out to Ian at 3072649441 or by email at ianarchcsggo.com. Make sure to tell them of course the commodity culture sent you. And now back to the interview. Absolutely. I think I have some friends ask me sometimes cuz they know I do this show, you know, what should I invest in? And I always say you need to have some physical gold and or silver before you even think about investing in any sort of stocks or anything like that. Usually I get a blank stare and the conversation ends at that point. Occasionally I get somebody who who kind of gets it. Um there's been a lot of talk recently of silver shortages at the LBMA, including that at one point they had zero inventory available on hand. Now, there's always a lot of hyperbole that surrounds this topic, so I'm hoping you can shine some light on it for us as it stands today. Um, what are you aware of when it comes to this the situation on silver inventories at the LBMA? >> Well, there's no doubt there's been a huge great squeeze. I mean uh you can see this in lease rates um you know and basically you know someone who's got an obligation to deliver physical metal tomorrow and if he hasn't got it he's going got to go and lease it from somewhere. Um so u you know the lease rates have shot up I mean typically they were sort of up to 30 40%. And there's some reports of them going up to 100% and more basically saying you know there's no more left to lease. Um and uh the other thing of course is that we see a backquidation which by definition is when the spot price is above the futures price. Um and people got very excited with that uh being over $3 at one stage which of course um would prompt um uh arbitrage. I mean, people with silver sitting in uh Comx warehouses would think, okay, we better we'll, you know, will will ship some of that over and make make on the arbitrage. So, there have been lots of stories about that. Now, how true they are or whatever, I honestly don't know. Um, I'm sure there's a bit of it, but probably it's probably exaggerated. What I would say is that the um backquidation um of spot over futures has actually declined now to around about a dollar. So it's come up way way down. It still indicates that there is um a shortage. In other words, the squeeze on those who are short because the problem is that the vast majority of the silver in the LBMA vaults is ETF silver. I look at the other thing which which um puts additional pressure on the system is of course people look at silver they see silver going up they probably think they've missed gold and therefore the silver is a cheap way in so uh they go run out and buy ETFs ETFs have to source the metal and I think it was last week we heard that a number of ETFs silver ETFs in um uh in India um you know suspended did uh um share creation because they couldn't source the silver. Uh and I think I think on that basis I mean really what we see is that silver is too cheap for these deteriorating monetary conditions. That is for for that is absolutely clear. It is therefore going higher. But the question is you have to ask yourself I mean as the price rises uh what are people going to do? Are they going to just take profits or are they going to say I'm going to hang on to my silver because um things are not looking so good for the fiat currencies for the dollar whatever whatever gold is going up um gold silver ratio currently 84 you know should be below that why should I sell sell my silver so I think it's a situation which actually uh particularly through the growth of ETFs um a rising price could lead to further demand and less supply because the supply always has been from weak holders uh um in in in the paper markets. So it's I think I think Jesse this is a fascinating situation. It's what they call a gifin good something which um reverses the normal supply and demand relationships on price. >> You mentioned ETFs there. I'm wondering your thoughts on the ETFs that vault physical metal. Uh people always try to make a distinction between the SLV and the PSLV which is a SPAT product. PSLV buys actual physical silver before they issue shares. So it's supposedly completely backed um by physical silver. But I was talking to a bullion dealer named Ian Everard on the show recently and he pointed out, do you really want to put your for example the PSLV stores their silver in the Royal Canadian Mint? So, do you really want your silver under the jurisdiction of the Canadian government? And I mean, the same goes for different governments all around the world. Switzerland used to be the most neutral place, right, where you could store your gold uh w without any worries. Well, now we're seeing Switzerland is no longer a neutral country. So, that's shifting. So ultimately in in the worst event imaginable, let's say a global hyperinflation, a bursting of the credit bubble, um perhaps a collapse of fiat currencies, are these governments going to potentially seize that metal? Are you going to be able to access it? I wonder what your thoughts are there. I I I think um what you have to do if when it comes to sto where you store your metal and um you know whether it's Canadian Royal Mint or whatever is to take a view on the property rights of that country you know how firm are they are they likely to be um overturned if you like now um I mean it's it's an interesting point I've had arguments with people about what happened in 1933 when um you you had the executive order and basically it wasn't a gold confiscation. You know, people say it was a gold confiscation. No, it wasn't. It was a forced um uh submission, if you like, of um your dollars for gold at that time at $20.67 to the ounce. So, you know, if you actually had had gold um and and it was the banks basically if you had it in the banks, the banks obeyed the government. they you know you lost it. Um on the other hand if you had it yourself then you just kept quiet but it was you know it was really when it goes in the system and if they turn around and do something like that then you're going to lose it. The difference today is that um you have I in America you know there is an official gold exchange uh rate at 42.22 22 to the ant. Now you have to ask yourself the question, would the Americans force the banks to exchange to take your gold and gold under the you know in their custody and all the rest of it and exchange it for $42.22 ounce when the market price is 4,100 or even more. I don't know the question the answer to that question. there may be a legal way in which they could do it. So what I would say is you don't store your gold in America and you don't store it in a vault owned by an American corporation and that can be in a vault abroad. So I'd say that I think the Royal Canadian mint I would be less worried about because uh Canada has some very strong property uh laws when it comes to property rights. I feel the same in the UK. Um the same is true in Switzerland. Um I think the other thing is that there is a big difference between banks who are regulated and they may well be I don't know the regulator through regulation if you like. There may be a bit of a danger there. But I think by far the biggest danger with ETFs is that actually um when you own shares or stock in an ETF is credit. You do not possess the metal. You do not have even have an entitlement to the metal. All you have is an obligation by the manager of the ETF to uh perform his duties on behalf of you as a shareholder. he's got the obligation and you've got the credit if you like the other side of that obligation. But then it gets more complicated because you don't have a direct relationship usually with um the manager of an ETF. The manager of the ETF sees as his shareholder either the DTCC or Euro Clear, you know, one of those big things. and then it's your clear or the DTCC which has the obligation to you. Now what this means is that in a financial meltdown when the DTCC or Euro Clear or something similar is um if you like in the middle of failing counterparties, they are perfectly entitled by law to take what you think is yours shares in an ETF and deploy it as collateral or even dispose of them bearing in mind that it's still got the obligation to you because it'll just say, "Oh, don't don't worry. Don't worry. We've got an obligation to provide it, but meanwhile, we're using them. Thank you very much." Are you going to be like like, "Do you like that?" No, I don't think you would. So, bear these things in mind. This is the difference between owning ETFs and actually owning the physical metal either in your possession or in the possession of um or being stored in a vault. Clearly your property in a jurisdiction with strong property rights. >> I want to talk about the credit crisis and the credit bubble we're in because we've had two automobile related companies collapse in the US. First Brands and Triricolor causing collateral damage to several financial institutions who are in business with them. In addition, two regional banks Zion Bank Corp and Western Alliance have come under pressure and seen their share prices plummet as they face loan issues involving fraud allegations. Are these symptoms of the credit crisis we are currently being faced with? And do you think we're going to see Jamie Diamond, I believe, said when you see one cockroach, you're going to see more of them. Um do do you think we're going to see more cockroaches emerge here? >> Yeah, I think we will. Uh I mean the fact of the matter is that there was an explosion of um borrowing debt in other words um when interest rates were suppressed at the time of COVID. Um you had businesses who uh were forced to stop trading and needed to finance themselves so they could resume trading once um COVID was done. Um and as well as governments. I mean you look at governments the government debt in the US doubled doubled between the end of 1919 2019 and and today I mean uh I think it was 23.6 six uh trillion um at the end of uh um 2019 which was literally just before the co thing started which I think was what 23rd of March or something 2020 and today we're looking at 47.3 47.4 trillion of government debt. So you've got all this debt and it was all taken out when interest rates were suppressed when the Fed was going in there doing QE and suppressing yields along the yield curve. So everyone's got all this unproductive debt and it's basically turned a large portion of uh the US economy into zombies and the US government itself if it you know if it couldn't rely on uh printing money as it were is also a zombie but you know so so I I really do think that there's a time factor here the longer that we have current interest rates even if they just stabilize them, the longer we have them stabilized, then what you're going to get is you're going to get businesses falling over. And I think the car loans thing is a is a classic case because that's just an elomeration of um debts, everything from good to doubtful to bad. Uh and the idea is it was the old syndication. you remember the property syndication uh uh business we had um in 2006 to 2008, you know, okay, um they're liar loans in there, but who cares? We can slice and dice this so that the top quality which will sell off to the pension funds will be AAA. It's the same sort of it's the same arithmetic if you like. you know, you just get a huge great portfolio of all these car loans and uh you can give them a rating which actually is is far higher than it really deserves. Um and uh you know I mean car loans I think also uh the main street as opposed to Wall Street is not doing at all well. I mean it really is not. So you're finding that people um you know they just cannot afford to pay these higher levels of interest, higher debt rates and all the you know higher interest rates. Um they're not you know they're losing their jobs, they're not getting the pay rises, whatever, whatever. I mean I don't care about job statistics. I mean they're all wrong anyway. But you can see the underlying economy is actually deteriorating and uh even though a lot of government statistics have been shut down because of you know the debt ceiling uh I really do think that um you know there are other indicators which show that the economy is just not not good and under those circumstances yeah you're going to see more failures. was quite simple. Eventually the big failure will be will be the US government. But that's reflected in a loss of purchasing power for the currency which is why you have gold and which is why when the Fed reduced interest rates um a month or two ago uh gold took off and if they reduce it again gold will take off again and if they reduce it again gold will take off again. I mean you know because what's the Fed doing? Doesn't care about inflation too much anymore. the priority is to try and keep the economy going, keep the job numbers up. >> Well, speaking of which, yeah, you you you wrote recently on X banks talking about risk in the shadow banking. In shadow banking, don't see the elephant in the room. Massive stock market leverage. This bubble will accelerate the decline once the credit bubble pops. Walk us through what you're seeing there when it comes to leverage in the stock market and how soon could we see this massively leveraged bubble pop? Your last question is the one which I'd like the answer to. But what really um catches my eye is the amount of margin debt which is reported by FINRA. And this basically is debt taken out with the banks you know through brokerage firms but it all comes from banks uh to finance stock positions. Now uh 10 15 years ago 10 12 years ago uh that figure was around about between 200 and 300 billion. The end of September it was 1.15 trillion. Now I know nowadays you think of trillion well you know there's so many trillions around who it doesn't really matter. Uh but bear in mind that we're talking about leverage financing. So that 1.15 trillion is probably financing positions at least three times that. So uh you know you can just sort of you know work out yourself how vulnerable uh the stock market is because the moment that leverage starts going the other way you know like the banks saying come on we're not going to lend anymore um to you know the stock situation then uh the bubble will pop. I don't know whether it'll pop, you know, it will be sort of if you like um well, not not nice in a nice way, but to see another October smash because we've had a few in the past. But I mean, you know, this this could go on more than you think is reasonable. Um and uh yesterday I had lunch in the city with some old friends and uh um one of them who's a a very very good technical analyst said I own nothing. I have absolutely nothing. The only thing I've got is gold. And he he said this whole thing I reckon is going to burst at the end of March. So there's one view not my view but I can't contradict it. But when it comes, bear in mind this is the biggest credit bubble recorded in history. Bigger than 1929, bigger than the roaring 20s leading up to the 1921 smash. 29 smash. Uh and bear in mind also that um 1929 you had the Smooth Holy Tariff Act and what have we got? We've got top of this huge huge huge great bubble and we've got President Trump running around um with his wonderful beautiful tariffs which you know the combination is likely to do the same sort of damage but I think on a greater scale. >> I want to get your thoughts on the broad market here because currently the narrative holding it up is that the AI revolution is underway. Jump on board or be left behind. However, so far, although AI has been a useful research tool, you can make cool graphics and videos with it. I haven't really seen, at least from my view, it uh reverberate into the broader economy. There's talks that it's going to replace a bunch of jobs. It's going to increase efficiency by a massive amount. But we're seeing a lot of companies spend so much money on AI, it's it's a it's a crazy race that's going on right now. And I think there's some concerns out there that the end result will not be as revolutionary as advertised. Um, is AI really going to change the world in your view or are AI related stocks pricing in a fantasy and thus destined to crash down to earth? >> I think it is changing the world. I mean, my youngest son uses it in his business. You know, I asked him, you know, did did he use it? He said, yeah, all the time. I mean, it basically it saves employing people from his point of view. or alternatively he can expand the business without having to take on new staff. So um I there is no doubt it's useful. Um I think uh I mean it's it's interesting because um you know I lived through the dotcom bubble um and uh that was a similar situation in many respects. Though I have to say that the dot companies were a lot more hot air than the AI companies. But nonetheless um when you get people chasing stocks on a momentum basis and you get fashions extreme fashions such as you know investing fashions such as dotcoms or sussy bubble or tulips or whatever then beware it's an indication that we are at you know coming towards the end of a credit bubble. Um so I that's the way I look at it. Now I think that uh in many senses these artificial intelligence um operations are better uh better founded if you like than than uh the dot uh uh companies at the time there's the speculation there but I mean if if you if you think back to before the dot uh uh uh bubble we didn't have emails we didn't have you know I mean everything is now online all the rest of it and the prediction that um the companies were making were absolutely right. It's just that you know the valuations just sort of got ran away before they could actually deliver. AI companies are delivering but whether they're delivering enough to justify uh the ratings of course is an open question. I think the key thing in all investment is you must keep an eye on the level of credit how that credit is being applied and ask yourself is it being applied at financial assets if it's being applied at financial assets so long as that is the case shares will go up or you know the broad indices will go up there will be fashions and all the rest of it within that context but you know there comes a time where it gets excessive and that of course is the difficult thing to uh actually assess you know is the credit which is being uh angled at um financial assets has this become excessive and is it is this a bubble which is going to burst that is the question you have to ask yourself but otherwise the value of stocks depends not so much I mean obviously it does depend on whether um you know an individual company is profitable or not profitable and what the prospects would But uh I think by far the greater influence is uh the amount of credit made available to investors to invest and particularly speculators. Hence uh you know the the the um margin uh situation um you know whereby that's gone up from you know sort of 250 billion to 1.15 trillion. I mean that is a very serious credit bubble. It really is. But again, you know, uh these stocks will probably continue to go up until that burst. But wait, burst is going to be not nice. Let's put it that way. Watch the credit. Credit is so important to understand. >> I'd love to get your thoughts on the trade war that is currently underway between China and the US. Perhaps a symptom of the greater economic conflict between BRICS nations and the collective west. The US US obviously hauled out its manufacturing base decades ago and instead turned to China to dramatically lower cost. It seems like that's uh coming back to bite them in a way. China talking about restricting rare earth exports, a key input into the military-industrial complex. As I mentioned at the top of the show, I believe that uh or I don't know if it was this show that I mentioned it. I've been doing so many interviews recently, but Trump putting that 100% tariff or threatening the 100% tariff on China, backing off after the market crashed briefly or corrected slightly. I guess I should say something like two 2.5% something like that, which these days is considered, oh my god, the the world is ending. Um, who holds the cards in this trade war in your view and how do you see it playing out? >> Yeah, I it's absolutely fascinating. I'm enjoying watching it. I mean, this is a struggle between the titans. It's Sununzu versus um the Art of the Deal. And uh I mean, you know, my money's on the Chinese personally. I mean, they've got the rare earths thing. I mean, and that that really did get um Trump backing off very very quickly. I mean, you know, you put it in terms the stocks, you know, the stocks fell or whatever. But the main thing was that without those rare earths, America is dead. It's it's as simple as that. And China has just gone, that's it. You play that game, right? Okay. You're not going to get any of our rare earth. Now, Trump is going to go into that meeting and uh um you know, I would love to be a fly on the wall because I could just see the Chinese sort of sitting there and saying, "Well, you know, what have you got to say?" And then when he says, "Well, you know, we'll we'll we'll suspend uh uh uh tariffs for another uh 90 days." Well, that's all very well, Mr. president, but do we trust you on your past performance? We find it rather hard to um assume that this will be carried through without being varied in some way against our interests, you know. I mean, I it's it's going to be fascinating. It really is. I mean, he made a huge huge mistake doing that. I mean, you know, this this is the American. It's typical American shooting from the hip, you know, and thinking everybody will sort of cout them. And the Chinese, you know, they've been around for millennia. They've seen all this stuff before. They've, you know, they still sort of worship um uh you know, their philosophers of old. So, you know, we're going back to the time of Greek, you know, Greek times. Just imagine if we were sort of, you know, thinking in terms of our original philosophies and still looking at, you know, saying, well, you know, we've been around since Confucious. What was it? Confucious was something like 500 um BC in our slightly earlier than that. Um, you know, I mean, it's just amazing. I went um on holiday to a Greek island. I think it was Zantos or somewhere um where we were picking up a boat and there in the street was a statue of Confucious uh which was donated by the Chinese government. You this is the this is their hero. You know in Britain we have uh we have Winston Churchill or Maggie Thatcher or something their hero is literally two and a half thousand years old. I mean you know and they don't change okay you know you get regimes changing but um their thinking is very much long long long long term and uh they've got a lot of wisdom in there and so it's this long-term wisdom against American brashness I think someone's going to get their comeuppance >> do you think that America is losing its status as the global hedgeimon because we're seeing very interesting developments on the geopolitical stage obvious Obviously, the US looking like they may actually start a hot war with Venezuela is one of the one that comes to mind at the moment. They've been destroying these ships and all crew members aboard claiming they were smuggling drugs. Many people pointing out that's kind of an extrajudicial murder because they haven't produced evidence and even if they had evidence, this should be, you know, there needs to be some kind of due process before you execute people. Um, there's that. There's the Russia Ukraine conflict. Now, Trump constantly flip-fpping. now he seems to be firmly on the side of Ukraine putting new sanctions on Russia saying they need to to agree to a ceasefire. Um and then of course the trade war we just discussed with China among many other uh kind of scraps that the US is getting itself involved in as it has throughout history. But perhaps the difference now is that it's no longer as powerful as it once was. And as you mentioned shooting from the hip doesn't work anymore. What is your assessment of all of all of these actions taken by the US administration? Is this a show of strength? Is this them trying to reassert their dominance over the world? How is this a a wounded animal lashing out at as it dies? What are your thoughts? >> Well, of all those I think I tend towards wounded animal. Um I mean on Ukraine um they want out of Ukraine. That's that's that's for sure. But the question is how do you get out of it? Um and uh really what he should do is he should uh do what he's inclined to do and that is force Silinski to go and talk to the Russians in order to stop the war. The idea that you have a um you know a ceasefire forget it because all that happens in a ceasefire is you find that NATO is in there rearming them very very quietly and um you know Putin's not going to put up with that. I mean the whole thing is it's actually a failed um geopolitical initiative by by America and just as they had to pull out of Afghanistan they want to pull out of the Ukraine that's for sure leave it to the Europeans is is a sort of story but it's a question quite of how you do that and I think actually that um in terms of relative uh strength of personality Putin is coming out of this considerably uh more um informed formed more strong um less variable if you like that's not quite the right word but um you know you got president flip-flop on the other side you know last person who comes in he agrees with what so I think actually that in in the Asian sphere um I think that there is greater danger uh emanating from the relationship between America and Israel Um it is clear to me and I think it's clear to a lot of informed advisers as well who I would listen to uh that uh the ultimate war in uh the Middle East is going to be um uh Israel plus America against Iran. I think that's the last throw of the dice as far as America is concerned. Um if they manage to take Iran, regime change, whatever, whatever, whatever, then that actually extends their influence to uh the southern end of uh all Russia and the eastern the western end of China. So they can then start irritating both those nations uh from that point. So I you know that I I would I would think is is the sort of strategic thinking uh which the deep state uh is considering as a justification for um uh intervening on behalf of Israel in a full-scale war which will turn out to be a full-scale war against Iran. We hope that doesn't happen because I think that would be a huge huge mistake for everybody and could lead to um nuclear conflict. I don't think from Russia or China or America necessarily, but um Israel I do not trust at all in this. I mean, after all, they're committing a genocide. I mean, let's face it, it's a genocide in Gaza. um they would be perfectly prepared to do the same sort of mass uh destruction of humanity in Iraq in Iran. Venezuela is um is interesting. I think that some deep thinkers in the deep state um are probably reassessing America's global position. Sensibly what America should do is it should confine its um empire if you like its sphere of influence to the Americas north and south. And I think that um that's really what's driving the Venezuela story. Venezuela is seen as a weak spot which um America can um destabilize and take if you like. I think that's that. The next one, I mean, they've also got Argentina because they've managed to get Argentina, you may remember, was actually offered to become a member of BRICS. Um, but then uh you know, Mille got in and you know, the story changed because they needed the finance to get through uh his his uh program of of of reform. Uh and that uh that backing basically came from America and the IMF. So they've got Venezuela, they've got um Argentina. Brazil I think is the next one. So I think that's probably the way in which uh America is going to go. But how long it will be before we actually see them more committed to that fall back position, we'll just have to wait and see. >> Great analysis, Alistair, on everything we discussed today as always. uh tell us about the Mloud Finance Substack, what it's all about and where people can find it. >> Yeah, well apart from geopolitics um really I have a mission to try and educate people about what their governments are doing to to uh what they think is money um fiat currencies uh which is so important to them. what's what's what it's going to do to their wealth um and why they should consider protecting them themselves from these um evolving situations as opposed to trying to continue to accumulate more wealth. I mean those time the times of accumulation basically are over. Um and uh really it's it's it's basic economics. It's uh credit and money. It's um politics, geopolitics in particular. Um all those factors, mloudfinance.com, you'll find it. >> Great. I'll put a link in the description below. Be sure to check it out. Alistair, thank you so much for coming on again and sharing your knowledge with the audience. >> That's my pleasure, Jesse. >> Thank you for joining us today. This episode is brought to you by Arc Silver Gold, Osmium. They have some great prices right now. They are up on the screen. All of this while supplies last. If you're interested, be sure to reach out to owner Ian Everard today at 307264-9441 or by email at ianarchcsggo.com and make sure to tell him that Commodity Culture sent you. And be sure to pick up your Commodity Culture merch. Represent the show in style with a hat, t-shirt, hoodie, or mug, all backed by a 100% quality guarantee. link is in the description below and I'll see you guys in the next episode. Commodity Culture is a series on commodities and natural resources. 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'Biggest Bubble in History' – Only GOLD Survives Coming Carnage: Alasdair Macleod
Summary
Transcript
Hello everybody and welcome into commodity culture where we break down commodities markets, sound money principles and geopolitics all with the goal of making you a better investor in the commodities sector. My name is Jesse Day and on this episode I'm thrilled to welcome Alistair Mloud to the program. A 40-year veteran of the finance industry, an expert in precious metals, and the author of the Mloud Finance Substack, Alistair thinks the recent draw down in gold and silver was nothing but a blip on the radar as the continued destruction of purchasing power in fiat currency terms and the rapidly growing credit bubble will send prices for both metals much higher up ahead. Alistair breaks down where he thinks we are in the credit cycle and when this monster bubble, one that he says is the biggest in history, will finally burst. We also dive into silver shortages at the LBMA, the death of American hegemony, and so much more. So strap yourselves in for my conversation with Alistair Mloud. Alistair Mloud, it is great to have you back on Commodity Culture. I want to kick things off of course with gold and silver markets facing a fairly steep correction over a couple of trading days. I believe it was last week Friday and this week Monday. We are starting to see somewhat of a recovery at the moment. But obviously a lot of stackers got spooked by this event. I think we saw such an incredible run in both metals that a short-term correction like this is only natural. So I wonder what your thoughts are. Is this a buy the dip moment? Should some more caution be warranted? Do you think we could see more downside to go from here? What are your thoughts? >> Well, I mean, whether we see more downside from here, only time will tell. Um, I mean, I I think I think stackers I mean, forget trading. You know, if you want to trade this market, you'll get killed. It's as simple as that. Because they're far cleverer people than you with big big deep pockets who will push things around and uh, you know, if they reckon you're in there, you know, they'll kill you. So really I think you've got to take um if you like a um a more sensible view as to actually why it is that you own gold or silver. Um and the only justification for that because they are at a premium price is because they are money. They are legal money. Uh they are final settlement without counterparty you know without um counterparty uh as opposed to credit which is what a fiat currency is. And um if you reckon that um the situation for fiat currencies is deteriorating then that's the reason to hold on to gold and you know whether it sort of goes up 5% falls 5% is completely immaterial. The thing that to bear in mind is that the value of gold is relatively constant over long periods of time. Um it is the value of fiat currency which alters and that has been declining very significantly uh particularly since 1971 when the Bretonwoods agreement was abandoned. So in dollar terms I mean you had $35 that was the official rate $35 to the ounce and we're now looking at nearly $4,000 well 4,150. I mean that tells you basically that um that tells you that uh a 1971 dollar um or rather the dollar today is is less than 1% in its value of the 1971 and that's what you got to keep bearing bearing in mind. Um it's not a situation that is going to change in favor of fiat currencies. That's for sure. uh politically it would be impossible for any government um in the G7 anyway to reverse the decline in their currencies. They've been um educated I think by um the macroeconomic establishment which you know which really started with John Maynard Kanes um to uh if you like use a weak currency to benefit the economy to stimulate the economy they're not going to change for that particularly when uh freed from the constraints of a gold standard that they can issue as much debt as they on and that's what they're doing. So you've got an accumulation of debt and that's where the crisis now is. What's going to happen to the value of that debt? The other side of that debt is the value of the currency. Debt equals credit. Credit is the currency and also loans underneath that which businesses have taken out, individuals have taken out, stock market speculators have taken out. Um it's the value of that credit which you've got to question. and you've got to keep your eye on that. So short answer to your your question is that stackers should maybe say well thank goodness we've got a sort of situation which means I can you know save a bit more out of useless credit and put it into real money. Let's hope this pause goes on for some time and then I can really sort myself out. I think that's the way to look at it. not to be spooked by uh what's going on if you like in in you know up 5% down 5% whatever. Yeah, I think that's a great take is the fundamentals are all still firmly in place as you mentioned. Uh a correction is only a natural trajectory of the markets. Things don't go up in a straight line. As gold and silver took a beating, many of the mining stocks of course experienced an even deeper draw down. They are also starting to recover. Many were pointing out that even after the recent rally, gold and silver miners still looked undervalued across the board, especially the big producers because they were essentially printing cash at these high gold and silver prices. Um, what are your thoughts here on the mining stocks? Do do you think we're we're in a situation where there's a big buying opportunity here? >> Well, yes, I would think it is. Now, in terms of timing, that's up to the individuals, but um basically uh mines are a are leveraged bet on um on the commodities that they produce. And uh if you see, um the value of gold expressed in fiat currencies rising, so long as energy prices don't rise more quickly, um that's going to be good for mines. I mean, you've got to look at the input cost side as well. And also bear in mind that most producing mines um they will be managed through this. So what that means is that they will extract lower grades while they are profitable rather than the higher grade. So the idea that you can translate immediately uh a higher gold price into higher profits um I think you got to temper it a little bit and just understand the reality of it. The other thing I would say is that u gold is hardly owned. um it's less than half a percent of all um portfolios if you like. Uh mines on the other hand I think are a bit more owned and um what I'm looking at is um this is a credit bubble obviously if you got a debt bubble which we have the other side of that is credit and more importantly this credit has been applied to uh inflating financial assets particularly stocks. Um now all credit bubbles come to an end. They pop and when they burst they usually burst quite spectacularly. 1929 October um 1987 October October doesn't seem to be a very good month. I'm not saying that it's gonna this this October is going to be the the crash uh because you know we'll look back on it and see whether that's true or not. But um you know the the when when the bubble implodes um basically what people do is they will sell anything where they've got a profit in order to cover the things where they've got a loss. So that's the only caveat I would really have, I think, um, on investing in mines, but other than that, it's a it's you can regard it if you know what you're doing as a as a leveraged bet on the underlying commodity. In the case of gold mines, um, it could be a way of you catching up if you want to speculate a bit as to, you know, on the route to do it. But your core holding always must be the metal because that is the the one thing where there is no counterparty risk. >> The sponsor of today's episode is Arc Silver Gold Osmium. Owner Ian Everard is praised even by his competitors as one of the most honest and level-headed bullion dealers in the United States. They have some great prices. You can see some of them displayed right now on screen. can take advantage of these specials today by reaching out to Ian at 3072649441 or by email at ianarchcsggo.com. Make sure to tell them of course the commodity culture sent you. And now back to the interview. Absolutely. I think I have some friends ask me sometimes cuz they know I do this show, you know, what should I invest in? And I always say you need to have some physical gold and or silver before you even think about investing in any sort of stocks or anything like that. Usually I get a blank stare and the conversation ends at that point. Occasionally I get somebody who who kind of gets it. Um there's been a lot of talk recently of silver shortages at the LBMA, including that at one point they had zero inventory available on hand. Now, there's always a lot of hyperbole that surrounds this topic, so I'm hoping you can shine some light on it for us as it stands today. Um, what are you aware of when it comes to this the situation on silver inventories at the LBMA? >> Well, there's no doubt there's been a huge great squeeze. I mean uh you can see this in lease rates um you know and basically you know someone who's got an obligation to deliver physical metal tomorrow and if he hasn't got it he's going got to go and lease it from somewhere. Um so u you know the lease rates have shot up I mean typically they were sort of up to 30 40%. And there's some reports of them going up to 100% and more basically saying you know there's no more left to lease. Um and uh the other thing of course is that we see a backquidation which by definition is when the spot price is above the futures price. Um and people got very excited with that uh being over $3 at one stage which of course um would prompt um uh arbitrage. I mean, people with silver sitting in uh Comx warehouses would think, okay, we better we'll, you know, will will ship some of that over and make make on the arbitrage. So, there have been lots of stories about that. Now, how true they are or whatever, I honestly don't know. Um, I'm sure there's a bit of it, but probably it's probably exaggerated. What I would say is that the um backquidation um of spot over futures has actually declined now to around about a dollar. So it's come up way way down. It still indicates that there is um a shortage. In other words, the squeeze on those who are short because the problem is that the vast majority of the silver in the LBMA vaults is ETF silver. I look at the other thing which which um puts additional pressure on the system is of course people look at silver they see silver going up they probably think they've missed gold and therefore the silver is a cheap way in so uh they go run out and buy ETFs ETFs have to source the metal and I think it was last week we heard that a number of ETFs silver ETFs in um uh in India um you know suspended did uh um share creation because they couldn't source the silver. Uh and I think I think on that basis I mean really what we see is that silver is too cheap for these deteriorating monetary conditions. That is for for that is absolutely clear. It is therefore going higher. But the question is you have to ask yourself I mean as the price rises uh what are people going to do? Are they going to just take profits or are they going to say I'm going to hang on to my silver because um things are not looking so good for the fiat currencies for the dollar whatever whatever gold is going up um gold silver ratio currently 84 you know should be below that why should I sell sell my silver so I think it's a situation which actually uh particularly through the growth of ETFs um a rising price could lead to further demand and less supply because the supply always has been from weak holders uh um in in in the paper markets. So it's I think I think Jesse this is a fascinating situation. It's what they call a gifin good something which um reverses the normal supply and demand relationships on price. >> You mentioned ETFs there. I'm wondering your thoughts on the ETFs that vault physical metal. Uh people always try to make a distinction between the SLV and the PSLV which is a SPAT product. PSLV buys actual physical silver before they issue shares. So it's supposedly completely backed um by physical silver. But I was talking to a bullion dealer named Ian Everard on the show recently and he pointed out, do you really want to put your for example the PSLV stores their silver in the Royal Canadian Mint? So, do you really want your silver under the jurisdiction of the Canadian government? And I mean, the same goes for different governments all around the world. Switzerland used to be the most neutral place, right, where you could store your gold uh w without any worries. Well, now we're seeing Switzerland is no longer a neutral country. So, that's shifting. So ultimately in in the worst event imaginable, let's say a global hyperinflation, a bursting of the credit bubble, um perhaps a collapse of fiat currencies, are these governments going to potentially seize that metal? Are you going to be able to access it? I wonder what your thoughts are there. I I I think um what you have to do if when it comes to sto where you store your metal and um you know whether it's Canadian Royal Mint or whatever is to take a view on the property rights of that country you know how firm are they are they likely to be um overturned if you like now um I mean it's it's an interesting point I've had arguments with people about what happened in 1933 when um you you had the executive order and basically it wasn't a gold confiscation. You know, people say it was a gold confiscation. No, it wasn't. It was a forced um uh submission, if you like, of um your dollars for gold at that time at $20.67 to the ounce. So, you know, if you actually had had gold um and and it was the banks basically if you had it in the banks, the banks obeyed the government. they you know you lost it. Um on the other hand if you had it yourself then you just kept quiet but it was you know it was really when it goes in the system and if they turn around and do something like that then you're going to lose it. The difference today is that um you have I in America you know there is an official gold exchange uh rate at 42.22 22 to the ant. Now you have to ask yourself the question, would the Americans force the banks to exchange to take your gold and gold under the you know in their custody and all the rest of it and exchange it for $42.22 ounce when the market price is 4,100 or even more. I don't know the question the answer to that question. there may be a legal way in which they could do it. So what I would say is you don't store your gold in America and you don't store it in a vault owned by an American corporation and that can be in a vault abroad. So I'd say that I think the Royal Canadian mint I would be less worried about because uh Canada has some very strong property uh laws when it comes to property rights. I feel the same in the UK. Um the same is true in Switzerland. Um I think the other thing is that there is a big difference between banks who are regulated and they may well be I don't know the regulator through regulation if you like. There may be a bit of a danger there. But I think by far the biggest danger with ETFs is that actually um when you own shares or stock in an ETF is credit. You do not possess the metal. You do not have even have an entitlement to the metal. All you have is an obligation by the manager of the ETF to uh perform his duties on behalf of you as a shareholder. he's got the obligation and you've got the credit if you like the other side of that obligation. But then it gets more complicated because you don't have a direct relationship usually with um the manager of an ETF. The manager of the ETF sees as his shareholder either the DTCC or Euro Clear, you know, one of those big things. and then it's your clear or the DTCC which has the obligation to you. Now what this means is that in a financial meltdown when the DTCC or Euro Clear or something similar is um if you like in the middle of failing counterparties, they are perfectly entitled by law to take what you think is yours shares in an ETF and deploy it as collateral or even dispose of them bearing in mind that it's still got the obligation to you because it'll just say, "Oh, don't don't worry. Don't worry. We've got an obligation to provide it, but meanwhile, we're using them. Thank you very much." Are you going to be like like, "Do you like that?" No, I don't think you would. So, bear these things in mind. This is the difference between owning ETFs and actually owning the physical metal either in your possession or in the possession of um or being stored in a vault. Clearly your property in a jurisdiction with strong property rights. >> I want to talk about the credit crisis and the credit bubble we're in because we've had two automobile related companies collapse in the US. First Brands and Triricolor causing collateral damage to several financial institutions who are in business with them. In addition, two regional banks Zion Bank Corp and Western Alliance have come under pressure and seen their share prices plummet as they face loan issues involving fraud allegations. Are these symptoms of the credit crisis we are currently being faced with? And do you think we're going to see Jamie Diamond, I believe, said when you see one cockroach, you're going to see more of them. Um do do you think we're going to see more cockroaches emerge here? >> Yeah, I think we will. Uh I mean the fact of the matter is that there was an explosion of um borrowing debt in other words um when interest rates were suppressed at the time of COVID. Um you had businesses who uh were forced to stop trading and needed to finance themselves so they could resume trading once um COVID was done. Um and as well as governments. I mean you look at governments the government debt in the US doubled doubled between the end of 1919 2019 and and today I mean uh I think it was 23.6 six uh trillion um at the end of uh um 2019 which was literally just before the co thing started which I think was what 23rd of March or something 2020 and today we're looking at 47.3 47.4 trillion of government debt. So you've got all this debt and it was all taken out when interest rates were suppressed when the Fed was going in there doing QE and suppressing yields along the yield curve. So everyone's got all this unproductive debt and it's basically turned a large portion of uh the US economy into zombies and the US government itself if it you know if it couldn't rely on uh printing money as it were is also a zombie but you know so so I I really do think that there's a time factor here the longer that we have current interest rates even if they just stabilize them, the longer we have them stabilized, then what you're going to get is you're going to get businesses falling over. And I think the car loans thing is a is a classic case because that's just an elomeration of um debts, everything from good to doubtful to bad. Uh and the idea is it was the old syndication. you remember the property syndication uh uh business we had um in 2006 to 2008, you know, okay, um they're liar loans in there, but who cares? We can slice and dice this so that the top quality which will sell off to the pension funds will be AAA. It's the same sort of it's the same arithmetic if you like. you know, you just get a huge great portfolio of all these car loans and uh you can give them a rating which actually is is far higher than it really deserves. Um and uh you know I mean car loans I think also uh the main street as opposed to Wall Street is not doing at all well. I mean it really is not. So you're finding that people um you know they just cannot afford to pay these higher levels of interest, higher debt rates and all the you know higher interest rates. Um they're not you know they're losing their jobs, they're not getting the pay rises, whatever, whatever. I mean I don't care about job statistics. I mean they're all wrong anyway. But you can see the underlying economy is actually deteriorating and uh even though a lot of government statistics have been shut down because of you know the debt ceiling uh I really do think that um you know there are other indicators which show that the economy is just not not good and under those circumstances yeah you're going to see more failures. was quite simple. Eventually the big failure will be will be the US government. But that's reflected in a loss of purchasing power for the currency which is why you have gold and which is why when the Fed reduced interest rates um a month or two ago uh gold took off and if they reduce it again gold will take off again and if they reduce it again gold will take off again. I mean you know because what's the Fed doing? Doesn't care about inflation too much anymore. the priority is to try and keep the economy going, keep the job numbers up. >> Well, speaking of which, yeah, you you you wrote recently on X banks talking about risk in the shadow banking. In shadow banking, don't see the elephant in the room. Massive stock market leverage. This bubble will accelerate the decline once the credit bubble pops. Walk us through what you're seeing there when it comes to leverage in the stock market and how soon could we see this massively leveraged bubble pop? Your last question is the one which I'd like the answer to. But what really um catches my eye is the amount of margin debt which is reported by FINRA. And this basically is debt taken out with the banks you know through brokerage firms but it all comes from banks uh to finance stock positions. Now uh 10 15 years ago 10 12 years ago uh that figure was around about between 200 and 300 billion. The end of September it was 1.15 trillion. Now I know nowadays you think of trillion well you know there's so many trillions around who it doesn't really matter. Uh but bear in mind that we're talking about leverage financing. So that 1.15 trillion is probably financing positions at least three times that. So uh you know you can just sort of you know work out yourself how vulnerable uh the stock market is because the moment that leverage starts going the other way you know like the banks saying come on we're not going to lend anymore um to you know the stock situation then uh the bubble will pop. I don't know whether it'll pop, you know, it will be sort of if you like um well, not not nice in a nice way, but to see another October smash because we've had a few in the past. But I mean, you know, this this could go on more than you think is reasonable. Um and uh yesterday I had lunch in the city with some old friends and uh um one of them who's a a very very good technical analyst said I own nothing. I have absolutely nothing. The only thing I've got is gold. And he he said this whole thing I reckon is going to burst at the end of March. So there's one view not my view but I can't contradict it. But when it comes, bear in mind this is the biggest credit bubble recorded in history. Bigger than 1929, bigger than the roaring 20s leading up to the 1921 smash. 29 smash. Uh and bear in mind also that um 1929 you had the Smooth Holy Tariff Act and what have we got? We've got top of this huge huge huge great bubble and we've got President Trump running around um with his wonderful beautiful tariffs which you know the combination is likely to do the same sort of damage but I think on a greater scale. >> I want to get your thoughts on the broad market here because currently the narrative holding it up is that the AI revolution is underway. Jump on board or be left behind. However, so far, although AI has been a useful research tool, you can make cool graphics and videos with it. I haven't really seen, at least from my view, it uh reverberate into the broader economy. There's talks that it's going to replace a bunch of jobs. It's going to increase efficiency by a massive amount. But we're seeing a lot of companies spend so much money on AI, it's it's a it's a crazy race that's going on right now. And I think there's some concerns out there that the end result will not be as revolutionary as advertised. Um, is AI really going to change the world in your view or are AI related stocks pricing in a fantasy and thus destined to crash down to earth? >> I think it is changing the world. I mean, my youngest son uses it in his business. You know, I asked him, you know, did did he use it? He said, yeah, all the time. I mean, it basically it saves employing people from his point of view. or alternatively he can expand the business without having to take on new staff. So um I there is no doubt it's useful. Um I think uh I mean it's it's interesting because um you know I lived through the dotcom bubble um and uh that was a similar situation in many respects. Though I have to say that the dot companies were a lot more hot air than the AI companies. But nonetheless um when you get people chasing stocks on a momentum basis and you get fashions extreme fashions such as you know investing fashions such as dotcoms or sussy bubble or tulips or whatever then beware it's an indication that we are at you know coming towards the end of a credit bubble. Um so I that's the way I look at it. Now I think that uh in many senses these artificial intelligence um operations are better uh better founded if you like than than uh the dot uh uh companies at the time there's the speculation there but I mean if if you if you think back to before the dot uh uh uh bubble we didn't have emails we didn't have you know I mean everything is now online all the rest of it and the prediction that um the companies were making were absolutely right. It's just that you know the valuations just sort of got ran away before they could actually deliver. AI companies are delivering but whether they're delivering enough to justify uh the ratings of course is an open question. I think the key thing in all investment is you must keep an eye on the level of credit how that credit is being applied and ask yourself is it being applied at financial assets if it's being applied at financial assets so long as that is the case shares will go up or you know the broad indices will go up there will be fashions and all the rest of it within that context but you know there comes a time where it gets excessive and that of course is the difficult thing to uh actually assess you know is the credit which is being uh angled at um financial assets has this become excessive and is it is this a bubble which is going to burst that is the question you have to ask yourself but otherwise the value of stocks depends not so much I mean obviously it does depend on whether um you know an individual company is profitable or not profitable and what the prospects would But uh I think by far the greater influence is uh the amount of credit made available to investors to invest and particularly speculators. Hence uh you know the the the um margin uh situation um you know whereby that's gone up from you know sort of 250 billion to 1.15 trillion. I mean that is a very serious credit bubble. It really is. But again, you know, uh these stocks will probably continue to go up until that burst. But wait, burst is going to be not nice. Let's put it that way. Watch the credit. Credit is so important to understand. >> I'd love to get your thoughts on the trade war that is currently underway between China and the US. Perhaps a symptom of the greater economic conflict between BRICS nations and the collective west. The US US obviously hauled out its manufacturing base decades ago and instead turned to China to dramatically lower cost. It seems like that's uh coming back to bite them in a way. China talking about restricting rare earth exports, a key input into the military-industrial complex. As I mentioned at the top of the show, I believe that uh or I don't know if it was this show that I mentioned it. I've been doing so many interviews recently, but Trump putting that 100% tariff or threatening the 100% tariff on China, backing off after the market crashed briefly or corrected slightly. I guess I should say something like two 2.5% something like that, which these days is considered, oh my god, the the world is ending. Um, who holds the cards in this trade war in your view and how do you see it playing out? >> Yeah, I it's absolutely fascinating. I'm enjoying watching it. I mean, this is a struggle between the titans. It's Sununzu versus um the Art of the Deal. And uh I mean, you know, my money's on the Chinese personally. I mean, they've got the rare earths thing. I mean, and that that really did get um Trump backing off very very quickly. I mean, you know, you put it in terms the stocks, you know, the stocks fell or whatever. But the main thing was that without those rare earths, America is dead. It's it's as simple as that. And China has just gone, that's it. You play that game, right? Okay. You're not going to get any of our rare earth. Now, Trump is going to go into that meeting and uh um you know, I would love to be a fly on the wall because I could just see the Chinese sort of sitting there and saying, "Well, you know, what have you got to say?" And then when he says, "Well, you know, we'll we'll we'll suspend uh uh uh tariffs for another uh 90 days." Well, that's all very well, Mr. president, but do we trust you on your past performance? We find it rather hard to um assume that this will be carried through without being varied in some way against our interests, you know. I mean, I it's it's going to be fascinating. It really is. I mean, he made a huge huge mistake doing that. I mean, you know, this this is the American. It's typical American shooting from the hip, you know, and thinking everybody will sort of cout them. And the Chinese, you know, they've been around for millennia. They've seen all this stuff before. They've, you know, they still sort of worship um uh you know, their philosophers of old. So, you know, we're going back to the time of Greek, you know, Greek times. Just imagine if we were sort of, you know, thinking in terms of our original philosophies and still looking at, you know, saying, well, you know, we've been around since Confucious. What was it? Confucious was something like 500 um BC in our slightly earlier than that. Um, you know, I mean, it's just amazing. I went um on holiday to a Greek island. I think it was Zantos or somewhere um where we were picking up a boat and there in the street was a statue of Confucious uh which was donated by the Chinese government. You this is the this is their hero. You know in Britain we have uh we have Winston Churchill or Maggie Thatcher or something their hero is literally two and a half thousand years old. I mean you know and they don't change okay you know you get regimes changing but um their thinking is very much long long long long term and uh they've got a lot of wisdom in there and so it's this long-term wisdom against American brashness I think someone's going to get their comeuppance >> do you think that America is losing its status as the global hedgeimon because we're seeing very interesting developments on the geopolitical stage obvious Obviously, the US looking like they may actually start a hot war with Venezuela is one of the one that comes to mind at the moment. They've been destroying these ships and all crew members aboard claiming they were smuggling drugs. Many people pointing out that's kind of an extrajudicial murder because they haven't produced evidence and even if they had evidence, this should be, you know, there needs to be some kind of due process before you execute people. Um, there's that. There's the Russia Ukraine conflict. Now, Trump constantly flip-fpping. now he seems to be firmly on the side of Ukraine putting new sanctions on Russia saying they need to to agree to a ceasefire. Um and then of course the trade war we just discussed with China among many other uh kind of scraps that the US is getting itself involved in as it has throughout history. But perhaps the difference now is that it's no longer as powerful as it once was. And as you mentioned shooting from the hip doesn't work anymore. What is your assessment of all of all of these actions taken by the US administration? Is this a show of strength? Is this them trying to reassert their dominance over the world? How is this a a wounded animal lashing out at as it dies? What are your thoughts? >> Well, of all those I think I tend towards wounded animal. Um I mean on Ukraine um they want out of Ukraine. That's that's that's for sure. But the question is how do you get out of it? Um and uh really what he should do is he should uh do what he's inclined to do and that is force Silinski to go and talk to the Russians in order to stop the war. The idea that you have a um you know a ceasefire forget it because all that happens in a ceasefire is you find that NATO is in there rearming them very very quietly and um you know Putin's not going to put up with that. I mean the whole thing is it's actually a failed um geopolitical initiative by by America and just as they had to pull out of Afghanistan they want to pull out of the Ukraine that's for sure leave it to the Europeans is is a sort of story but it's a question quite of how you do that and I think actually that um in terms of relative uh strength of personality Putin is coming out of this considerably uh more um informed formed more strong um less variable if you like that's not quite the right word but um you know you got president flip-flop on the other side you know last person who comes in he agrees with what so I think actually that in in the Asian sphere um I think that there is greater danger uh emanating from the relationship between America and Israel Um it is clear to me and I think it's clear to a lot of informed advisers as well who I would listen to uh that uh the ultimate war in uh the Middle East is going to be um uh Israel plus America against Iran. I think that's the last throw of the dice as far as America is concerned. Um if they manage to take Iran, regime change, whatever, whatever, whatever, then that actually extends their influence to uh the southern end of uh all Russia and the eastern the western end of China. So they can then start irritating both those nations uh from that point. So I you know that I I would I would think is is the sort of strategic thinking uh which the deep state uh is considering as a justification for um uh intervening on behalf of Israel in a full-scale war which will turn out to be a full-scale war against Iran. We hope that doesn't happen because I think that would be a huge huge mistake for everybody and could lead to um nuclear conflict. I don't think from Russia or China or America necessarily, but um Israel I do not trust at all in this. I mean, after all, they're committing a genocide. I mean, let's face it, it's a genocide in Gaza. um they would be perfectly prepared to do the same sort of mass uh destruction of humanity in Iraq in Iran. Venezuela is um is interesting. I think that some deep thinkers in the deep state um are probably reassessing America's global position. Sensibly what America should do is it should confine its um empire if you like its sphere of influence to the Americas north and south. And I think that um that's really what's driving the Venezuela story. Venezuela is seen as a weak spot which um America can um destabilize and take if you like. I think that's that. The next one, I mean, they've also got Argentina because they've managed to get Argentina, you may remember, was actually offered to become a member of BRICS. Um, but then uh you know, Mille got in and you know, the story changed because they needed the finance to get through uh his his uh program of of of reform. Uh and that uh that backing basically came from America and the IMF. So they've got Venezuela, they've got um Argentina. Brazil I think is the next one. So I think that's probably the way in which uh America is going to go. But how long it will be before we actually see them more committed to that fall back position, we'll just have to wait and see. >> Great analysis, Alistair, on everything we discussed today as always. uh tell us about the Mloud Finance Substack, what it's all about and where people can find it. >> Yeah, well apart from geopolitics um really I have a mission to try and educate people about what their governments are doing to to uh what they think is money um fiat currencies uh which is so important to them. what's what's what it's going to do to their wealth um and why they should consider protecting them themselves from these um evolving situations as opposed to trying to continue to accumulate more wealth. I mean those time the times of accumulation basically are over. Um and uh really it's it's it's basic economics. It's uh credit and money. It's um politics, geopolitics in particular. Um all those factors, mloudfinance.com, you'll find it. >> Great. I'll put a link in the description below. Be sure to check it out. Alistair, thank you so much for coming on again and sharing your knowledge with the audience. >> That's my pleasure, Jesse. >> Thank you for joining us today. This episode is brought to you by Arc Silver Gold, Osmium. They have some great prices right now. They are up on the screen. All of this while supplies last. If you're interested, be sure to reach out to owner Ian Everard today at 307264-9441 or by email at ianarchcsggo.com and make sure to tell him that Commodity Culture sent you. And be sure to pick up your Commodity Culture merch. Represent the show in style with a hat, t-shirt, hoodie, or mug, all backed by a 100% quality guarantee. link is in the description below and I'll see you guys in the next episode. Commodity Culture is a series on commodities and natural resources. 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