‘Financial World War 3’: What Comes After U.S. Treasury Dump? | Willem Middelkoop
Summary
Monetary Reset: Willem Middelkoop discusses the concept of a monetary reset occurring every 90 years, suggesting that the current US dollar-centered financial system is nearing its end, potentially leading to significant global economic changes.
Commodities and Gold: Middelkoop emphasizes the rising importance of commodities, particularly gold and silver, as central banks increase their gold reserves, signaling a shift away from reliance on the US dollar and treasuries.
Geopolitical Tensions: The podcast highlights the growing geopolitical conflicts, particularly between the West and BRICS nations, which are increasingly using commodities as economic weapons, potentially leading to a financial world war.
US Debt and Dollar Decline: The discussion covers the US's escalating debt levels and the dollar's decline, with foreign countries reducing their holdings of US treasuries and turning to gold, indicating a loss of confidence in the dollar.
Investment Opportunities: Middelkoop suggests that the current economic environment presents significant opportunities in commodities, especially in gold, silver, and other critical minerals, as these sectors are poised for long-term growth due to geopolitical and economic shifts.
Inflation and Interest Rates: The conversation touches on the potential for rising inflation and interest rates, with central banks possibly resuming bond purchases, leading to further currency debasement and a flight to hard assets.
Mining Sector Potential: The podcast discusses the mining sector's potential, driven by shortages in metals and increased demand for exploration and development of new mines, which could lead to higher commodity prices.
Strategic Asset Allocation: Middelkoop advises a diversified asset allocation including cash, precious metals, real estate, and equities, with a modern twist of incorporating Bitcoin as a liquid form of money.
Transcript
We have a monetary reset every 90 years. Uh we had the start of this US dollar centered empire let's say 1944. Uh that's that's 82 years ago. This empire feels cornered and the only way out is a military conflict. Silver for shortages are guaranteed. It could send silver prices in the hundreds of dollars over the next 5 to 10 years. Our guest today is Willa Middle. He's the founder of the Commodity Discovery Fund and the author of the big reset war on gold and the financial endgame. We'll be talking about his views on what is going on in the world right now. What is happening with geopolitics? Why are we seeing so many conflicts happening? Why is gold at all-time highs? Why are stocks at all-time highs despite the economy showing signs of cracking? um potentially a sovereign debt crisis in a lot of developing and developed countries. A lot of things are coming together according to what William has been predicting for years and he's written about these themes in his big reset book which I encourage people to check out link down below. Thank you for coming on the show. Good to see you. Great to be back David. There's so much to cover. Yeah, we're at a resource conference but the resource sector is dependent on so many things happening in the world and that's what really our conversation is about. the macro forces driving this unprecedented level in gold and some other commodities we've seen today. The big reset which is a book you've written touched on a lot of things that are happening right now. What is happening now that most coincides with what you've been predicting in your book? I wrote the big reset in 2013. That was my first um well international book in English on these topics. But in Dutch I have been writing about this since 2003 to 2004. And always my thesis was always that one day we would reach the end of this monetary experiment, you know, fiat money only uh no longer connected to gold. And somewhere down the line we would have this huge crisis when people would start doubting central banks would start doubting that treasuries are the safest investments and and we also would reach the end of the US empire because if you study monetary history I I've done that quite a bit. Um regimes and empires they come and go on average. Um we have a monetary reset every 90 years. uh we had the start of this US dollar centered empire let's say 1944 uh that's that's 82 years ago so we're in for a period of change um I was also influenced by reading the book uh the fourth turning by Neil how also saying that every 80 years you have this big exchange and I came to the conclusion myself in the early 2000s because I was a real estate investor and I had so many mortgages in the late 1990s I needed to hatch myself because I was expecting these problems down the road. I was way too early. I sold my real estate way too early. I sold most of my real estate in the early 2000s and then started to invest in gold and silver. first the physical part and later in the equities and then I discovered the junior mining space and I found out that you have these small companies making big gold discoveries big silver discoveries big uranium discoveries and that intrigued me as a value investor and that's why I pivoted from being a real estate investor first being turning into a gold investor and now being a discovery investor and I I I I built this funds commodity discovery funds around 2007208 there uh the the worst decision of my life because we started at the top of the last cycle and now finally everything is starting to break out. Everybody wants to be in gold. So I think we're reaching our f finest hour now this monetary reset theory. What signs would point to this path towards a monetary reset right now? If you take a look at just the markets, the S&P has been breaching new all-time highs. The NASDAQ has had a great run since 2008. Uh the stock market has made a lot of people who are long very rich. The commodities have made people very rich. If you're long gold, you're making a lot of money. Bitcoin has made a lot of people very rich if they were long. It just doesn't seem like the financial system is breaking. If you just look at the markets, you should look at the core of this financial system. What's the core? This financial system was introduced in Breton Woods by the US in 1944. They proposed a dollar system, dollar centered system, not a goldbased system anymore. Kanes had another idea. Um he was proposing a UK backed plan to um to start with a new financial system around a new um um world currency. The banker uh kes lost UK lost US won and US started to promote the dollar and the US treasuries as the core of this financial system. So if you want to study the stress in this financial system, you should study what's happening with the dollar, what's happening with the treasuries. And in each and every crisis in the last decades, uh people were fleeing towards the dollar, were fleeing towards treasuries when there was a lots of uncertainty. In April this year when we had the markets going down fast, it was the very first time that investors weren't fleeing towards bonds and to the dollar. Actually, the dollar is down 13% since the start of uh the Trump administration. Um and and so it's it's not so strange to see gold moving up very strongly since early this year, especially since March, April, because gold seems to be the last man standing while we see the first cracks in this dollar-based financial system. Let's talk about debt in the dollar system. Okay. The Russians were making a mockery of the US debt situation. I'll play a video. It's been circulating on X. Crypto. And they were saying, "Look at the 35 trillion dollars of debt and now the US wants to issue stable coins to, in their words, devalue this debt." Are they right? Does that make any sense to you? Um, they made my mistake. It's not 35 trillion depth. It's just 37 already. It shows it shows how fast the depths go up. And when you understand people, we always see us as such a powerful and and and wealthy country. But look where the wealth came from. There's 37,000 billion of US depths. And how did the US use that depth? Did they build great roads, great cities, great bridges, great uh high net highspeed rail works, great airports? No. Compared to China, it's a misery. If you drive over this highway, the I70 here, it's full of potholes and it's it's a disaster. You should come to Canada with them. Okay, but I understand your point. But this was the the the country who owns the world reserve currency could could spend overspend and have huge deficits year on year. And the US has used this money to fight wars. spent so much of this money fighting wars they couldn't couldn't win. But these wars were necessary from a US perspective to stay in power to to to stay the world's hajima. And now with China and the British countries opposing the US, opposing the West, I'm afraid the US will find itself cornered financially and they might seek a military conflict out of this. Why do you think the DXY is down 13% year to date? Why was there a dollar selloff? In the past, in the first Trump administration, when there were tariffs, the dollar rose. I see I think that many institutional and even sovereign investors see the signs. They see the cracks. Look what central bankers do. Central banks were selling gold up to 2007, 2008. They were net sellers. What happened in 2008? the collapse of Leman, the great financial crisis. This was a crisis on Wall Street. This was a crisis about the the American financial system and American real estate. It spread worldwide. But from that moment on, look at the stats. So the central bank started to add to their gold reserves. They became net buyers. And in the last 3 years, you know the numbers. They've been buying over 1,000 tons a year. So it shows central bankers who are in the business of money printing. What do they do? They buy gold. So they're doing the same like the Goldbergs here. Only the Goldbergs started 20 years ago or 15 years ago. But central banks now don't listen to what they say. Just watch what they do. You you've been in the business a long time. You've studied history. What is different now versus let's say 10 years ago. Remember post 2011 when the gold price fell from its highs and then from 2012 to 20 uh 2019 basically there was this flat gold price people gave up on gold indust the ind industry went through a hard time it Warren Buffett said it's you know it's it's not a productive asset why is there this resurgence right now this renaissance it all started with a collapse of Leman that's what my my previous answer that's when central for bankers started to stop selling gold, started to add into the gold reserve. But the big change arrived around um 2013 2014 when we had this regime change in Ukraine. And then um it became quite obvious for countries like Russia and China that you couldn't trust the US. US was clearly behind the regime change in Ukraine. US had been preparing for a military conflict in Ukraine. uh for at least the last 10 to 15 years. So Russia started to sell all its treasuries. Then uh China stopped buying treasuries and started selling treasuries around 2014 2015. Now most of the foreign countries started uh stopped buying US treasuries. So it kickstarted a new revolution in which the let's say independent countries the the non-western countries started to align themselves within the BRICS alliance and started to understand that they need to join forces to be able to withstand American aggression because America has been successful in creating regime chains in dozens of countries since at least the last 50 years. I wrote quite a bit about that. And now these all these countries u aligned within this BRICS alliance if you count it that's four or five billion people. And the west if you add it up it's just 1.5 billion people. The total numbers of the bricks uh GDP it it's it's larger than the western GDP. So they feel powerful. They have most of the commodities. And now it gets interesting from a commodity investor point of view um that um we have this um well deglobalization and suddenly these commodities are becoming a weapon and the west has decided that we need to decouple from China. We need to build our own mines but we're totally dependent on China for all of these metals. You know many of these specialty metals 80 to 90% comes from China. So we have uh let's say a proxy war, financial economic war. You might even call it a financial economic world war III in which commodities play a huge part and especially of course gold because gold is also this monetary asset. But this this fight and we see this every day in our business. This fight is also on on copper. It's also on uranium. It's on all the specialty metals and and and this creates a perfect storm for commodity investor because you have the debasement of currencies, you have higher inflation, you have the geopolitical tensions where commodities are a weapon now and then you have the shortages because we don't make enough new discoveries. Yes. When you say financial world war II, what does that mean? The western alliance which had been together since the end of the second world war is in a open conflict with let's say the rest of the world. It's the west against the rest now. I've been talking about that for the last two to three years. And this is a war which is which is not being fought with um uh weapons financial military weapons. So it's not a kinetic kinetic war. It's a war which being fought with financial weapons in which we use sanctions and tariffs and and and the east is using uh export um limits for certain metals. So um there's a wonderful book um written 10 years ago about the title is treasuries war and it explains how the US uh department of treasury understood 20 years ago that they could use financial weapons they could use the dollar they could use swift the banking system kick kick countries out of the banking system and use that as a weapon and US has been very successful in making the dollar turning the dollar into a a a a weapon and I think uh the the the British countries are starting to weaponize gold and are starting to weaponize commodities. How do you weaponize gold? I understand weaponizing the dollar, you can just block people from swift, but what what what does gold mean? If you buy gold, it's the anti-doll trade. Yes. So if you want to harm the dollar, you stop buying treasuries. Okay. You start buying gold. Yeah. And Russia and China, they understand very well that the US was able for decades to keep the gold price under control. And when you start to accumulate masses amount, massive amounts of physical gold and silver, you can break the paper gold and silver trading system. Well, this supports this chart here. uh foreign central banks hold more gold than treasuries for the first time since 1996. Amazing charts by Tai Kosa of Crescat. Yeah. And it shows that what what I'm explaining here, you can you can show it in the chart. It's happening. But this also shows it we're in the first innings of this. Yeah. The lines are just crossing. It's like a golden cross. I think in the next 5 to 10 years, you'll see this play out in in a much larger fashion. The bricks uh countries met in uh China a few weeks ago. China hosted the world's largest Shanghai corporation organization summit. 20 20 nations convened. The West was not invited, of course. This was a response to the tariffs imposed by the Trump administration. What do you think they're planning, especially behind closed doors? There were many instances when Modi was having a car ride with Putin, for example, and the media was not allowed. Well, France at a certain stage, I think that was at the previous uh bricks uh conference, uh France asked if they could be present. They were declined entry. Um after this conference which you just mentioned, we had an emergency meeting by BRICS countries where Brazil asked to have an online meeting with their BRICS counterparts to discuss the tariffs because also Brazil is feeling those 50% tariffs. uh India is feeling them and I think uh Trump made a huge geopolitical mistake by um moving India away as a friend of the US moving them towards China Russia and Modi has been pictured with Putin and Ci so even India the mood in India is very anti anti-American now and and the the US is almost in despair Yeah. And that's why they are creating these drastic well measures like the terrorists, but they they are playing with fire because they're sending their friends over to the enemy side and and even in Europe and we've been aligned with the US uh so strongly especially after the second world war even in Europe people are start to break away and say let's talk with the bricks. But what's happening is uh countries that may have been friendly with the US, even if they traded with Russia, they're being penalized. India, for example, you brought up India, 50% tariffs because they bought Russian oil. Yeah. But US can they can't keep punishing their friends because they do business with China or Russia because you won't you won't end up or you will end up with no friends. Well, this is like the bully on on on high school who is who is once feared but ends up very lonely and and depressed. What is Trump's endgame with dealing with China, do you think? That's the big question. I don't know. But if you look at the remarks of his sector of defense speaker Hexad, they're all preparing for a military conflict in somewhere around 2007 2008. That could be started. You mean 2027? Sorry, 2027, 2028. Okay. That could start around the Taiwan situation. Um, but as I said in in the opening remarks, I'm a bit afraid that this empire feels cornered and the only way out is a military conflict. And then you you can always say, yeah, um, sorry guys. Uh, it's the enemy's fault that that it all collapsed. There was a big military parade after the Shanghai Corporation Organization summit. Uh you saw that on TV. Of course, parades, anyone can put up a parade. But the question is, should the west actually be concerned about the development of the militaries in the east? Oh, they are. And look what happened in Israel's conflict with Iran, which I see as a proxy conflict between the West and the East. And look how Iran reacted. They send a barrage of uh very modern weapons in including these uh uh hyper hypers speed. Hypersonic that's that's that's the word and it made uh Israel stop the war within days while they had proclaimed this could take weeks or even months. Yeah. and and and it shows that um the west now reached a point that they they they understand that they are not the ruler of the world anymore. They're not world's policemen anymore. Yeah. We have um we have a total new situation in which the balance of power is changing and and a conflict in the South China Sea in in Asia will be very hard for the US to win. Look at all the war games that have been um have been have been exercised and what have leaked out of them and it's very hard for the US to win such a war when we have a bifurcation of the world like you were talking about what happens to the monetary system. What happens when the dollar is no longer the global reserve currency? It it's so dangerous. Um, I ended in the big reset with my epilogue and I said we could have two ways towards a a a a monetary reset when we stay friends with Asia. I wrote this in 2013, so it was still maybe possible that we could have a joint effort to move the system to another phase. But my other option was that there would be a military conflict and now we're in the military conflict phase or we're grown towards that. And I think we moved away from having this peace dividends to getting war bills now. And when you don't have the peace dividends like we had in the '9s and the 2000s which helped the economy uh in a very positive way, now you have the war bills, that's not very predict productive money spent. So it increases the debasement of currencies because we need more money to pay for all the new weapons and all the systems we need to build. So, it's a drag on the economy and I think it will make the decline of the current fiat money system even faster. And what what do people do? What what does the smart money do when they understand that the debasement of currency will only continue? they start to move towards real assets and that can be gold, that can be real estate, that can be listed stocks. Listed stocks can't be printed by the government. Listed stocks have become a a a safe haven in the Weimar during the Weimaru years in Germany. Uh listed stocks became a safe haven in Zimbabwe, in Venezuela. So, it explains why stocks keep going up. It's a it's almost a flight out of out of paper money. It's a flight out of bonds. Interesting. So, yeah, that's why the bond market hasn't done so well this year. But take a look at what uh Scott Bent of the Treasury uh the US said, Treasury Secretary. He said, "The stable coins represent a revolution in digital finance." This is in response to the Genius Act passing this year. The dollar now has an internet native payment rail that is fast, frictionless, and free of middlemen. This groundbreaking technology will buttress the dollar status as the global reserve currency, expand access to the dollar economy for billions across the globe. They're really betting on the expansion of the stable coins to propel the dollar to the next phase. So, this is the counter to what we're talking about, but it it shows the US has to find new ways to find new buyers for the treasuries because the foreign countries aren't buying the treasuries anymore. So who's the new buyer of the treasuries is Tedar? Tedar is the company who is um um who owns the largest stable coin. They were banned from the US because they never well fully complied with all the rules and laws. But now it's changing and now Tedar has team up with Ker Fitzgerald. you know, Kand Fitzgerald, Kandel is now part of this administration uh solving uh these problems and creating new stable coins and and they hope they can build these stable coin markets into a massive market. So there needs to be a massive demand for for US treasuries. How do you feel overall just sidetracking about the administration being so involved in the crypto ecosystem? Trump is now I was reading the sixth or seventh largest holder of bitcoins in the world. Micro strategy is still number one and like you brought up Caner Fitzgerald. Yeah. You have a huge conflict of interest. Howard Lutnik uh is the father of Brandon Lutnik who was was taking over Caner Fitzgerald. No, there's a huge conflict of interest. But in every new administration, in every new major change of power in a country, you see the build of a new elite who benefits from the changes who have who have friends in the administration. But it it's done quite openly now in the US. But it has been like this with the deep state structures for years. Look at who who benefited of all these wars and regime change. The Boeings the the So it has always been a small group centered around an administration who could became very rich and wealthy by knowing what the administration would do, where the next war would be. And we have a new group now who's in power and they do it more openly. But it's it's it's it's not that big of a change. Some investors look at this as a leading indicator. They say, "Well, look at what the government's doing. We should copy them and go into the digital finance space." You should do. We run a commodity discovery fund, but we changed our perspectives. We can add Bitcoin now. We have some Bitcoin because we see where this ship is heading. And and another example, the CEO of Ted started following me on Twitter. So, you see these guys are moving to hard ass ets. They're moving into mining. Ted has done their first mining deals. pretty pretty big deals. So we need to study this because it is very important for our industry. What about the critical mineral sector? China for example has banned the export of certain critical minerals for example antimony which is used for ammunition and now the US needs to catch up like you said earlier. How do you feel about the critical mineral sector? It gets uh almost too much publicity because most of these metals are very small markets. But I understand why it's why it's on top of mind because these are sexy minerals and now they they come out like a geopolitical weapon. Um um but as an investor it's quite hard to uh monetize on this because these are very small markets. But to put this in a broader context in the first 15 years I've been in this business we never were contacted by the Dutch State Department. Now we have meetings with them every quarter because they want to understand the world of uh commodities and specialty metals. They ask our advice. They want to brainstorm with us how how even a small country like the Netherlands where doesn't have any commodities besides natural gas which we closed down actually but uh we don't have any metals or mining. Um but they want to understand now how even a country like uh our country the Netherlands can can start investing in in in the commodity space and I advise them well just build huge storage uh capacity in let's say Rotterdam harbor and store all these specialty metals and even copper and uranium you could even build an ETF around that and make money and these discussions we're having now with the official site and we were invited Ed to go on a official visit to Saudi Arabia in December with Dutch state officials to look for how we can help them to build a mining structure which the west could could could use and depend on. Well, some of the stories or the narratives I've heard from miners is that there's going to be a huge deficit in base metals precisely because of electrification or rearmament by the west. Uh the Europeans for example are trying to rearm their militaries. Anyway, there's a lot of reasons for buying base metals but not enough supply. Is that an argument you buy as an investor? We've been telling our investors for the last 15 years we would start to end an era of shortages. We saw this coming. That's why we spent the last 15 years looking worldwide for the last ounces available in the ground for undeveloped minds. That's the whole thesis around our fund. But the institutional money was never interested to invest in this because they always said we can just call China. China will produce uh enough metals and send it to us for for very reasonable price. That has changed now. Yes. So now we no longer can't depend on China from a western point of view. We feel pressure to start our own mining structure. But that's all too little too late. But it will help us as investors because this will send up prices for commodities in demand and the coming shortages. There are production deficits coming even in copper. We have production deficits in silver for years. But um production deficits are expected to be in copper next year. We'll have production deficits in uranium for years to come. So I think this new bull market for commodities won't take months like in 2016 or 2020. It will take years and the bull market in commodities might take decades to unfold like we had uh a bull market in real estate for decades or we had a bull market in in in in the Dow Jones for decades and and and the mood in in the world of commodities is has been so depressed because um values were going down for such a long time since 2008. People think a bull market is is a period when price go up five or six months in a row. No, no, that's not a bull market. So, in the commodity space, which of the commodities we discussed so far or maybe haven't discussed so far, do you see the most potential? We concentrate on the monetary metals, that's half of our half of our investments, gold and silver, yeah, platinum, palladium, but these are very small markets. Then, of course, copper, because copper is almost like a monetary metal as well. It's so important. I think China is is is storing copper and and um so copper is such an important battle. Then you have nickel and and lithium which is very important for the whole EV revolution and the batteries and then of course uranium and uranium is a big one because that's the only fuel for nuclear reactors. So, uh, well, in your book, um, you recommended an allocation of 25% cash, 25% precious metals, 25% real estate, and 25% equities. I know this was written a few years ago. Is that still your preferred allocation? I I changed it just a bit. I said for the 25% cash, you can buy Bitcoin as well. So, cash Bitcoin. Interesting how you put that in the same category. Yeah. Because that's the most liquid form of money. And people uh, especially the gold bugs. We had a gold bug dinner yesterday. still one of a few of the older guys they they don't want to hear about Bitcoin but Bitcoin is is is for me it's virtual gold I described it in the big reset as virtual gold in 2014 I think everybody start to seeing as it as digital virtual gold now and the great thing about Bitcoin is you can trade it 24/7 um you can move uh you you can travel over the world without taking all the weights of gold and silver. So I think it's a modern way of of um well um you have to be flexible with your own net worth uh for people who are who have some some more money they they should diversify and also a bit towards the digital assets I think going back to gold where are we in this bull cycle it's run up a lot very fast it's scared some investors here how fast it's moved all the people I talked to during this conference Um they asked the question when will the correction start has it topped out? Yes, that's that's the common question and I think people will will be surprised by the move to the upside. Well, we're in a very we're in a the late stage of this rise. We need a technical correction at some point, but I think the technical correction will bring us down somewhere north of $3,000, which is not a real um dangerous correction from a trend point of view. And I think then we just continue higher. But don't forget, we always look and talk about gold, but after gold started this huge rally, uh silver um started to move as well. This was a delayed reaction. This happens often with the metals. Copper is on the verge of a breakout. Uranium is on the verge of a breakout. So for us, this is not a bull market in gold. Is a bull market in commodities which just started in the very first innings and as said it could take years or even decades. Silver, you've called it the poor man's gold. Uh many people call it the poor man's gold. Where does silver fit in this monetary reset world? Silver is the most undervalued asset in all commodity space in in my book. Um silver hasn't made any new all-time highs. Silver traded $50 in 1980 in current money. That should be what is this $150 $170. Silver is used in the industry for 60 70%. Every year the industry takes a larger part of the silver production. World silver production is is going down. Yeah, shortages in silver are guaranteed. I don't know if it starts next year, next month or in 5 years, but silver shortages are guaranteed. Silver is a given good, which means when the price go up, demand rises. And once people understand that silver is getting in a shortage in in a physical shortage phase, the demand from investors will be huge and it could send silver up to $100 within a week. And I I expect silver prices in the hundreds of dollars over the next 5 to 10 years. Well, the the industries using silver wouldn't like that. Wouldn't they replace silver with something else? What what can you use? You can use copper. Um but you can't use copper for the solar panels. Uh you can use aluminium which the Chinese are doing for their power lines. But silver is a very special metal and it's such a small market. The total silver equity market all the market caps of all the silver silver companies combined is is less than 15 billion. The total world silver production is is is around 30 billion. So these are very small markets. Yeah. The state of war changes demand for commodities a lot. Let's I I'm your European like to get your perspective on what's happening in Europe. I mentioned earlier Germany wants to rearm. The chancellor wants Germany to have the world's not the world Europe's largest army. Um in Scandinavia they're beginning to recruit women now into the army. What is this trend? What's happening? Well, when we started in this business, nobody talked about battery metals. battery metals is is just um is only mentioned in the last let's say six seven eight years because people start to understand how much metals were needed for batteries and these were very specific metals like copper nickel graphite and lithium now people start to work uh talk about the war metals what are the war metals that's of course iron but copper you need copper you need very high-grade nickel we're involved in a high-grade nickel discovery in the We're involved in a copper discovery in the US. So I think these westernbased mining companies are making new discoveries here in the US or in the Nordics in Europe will will benefit greatly because uh the Trump administration will cut a lot of the red tape to start opening up and developing these mines. We see that happening already. Is this a long-term trend or is this just during the Trump administration because No, that's long term. This is long term because I think so you think the Europeans will be less dependent on the US for military support in the long term. Well, actually because of Trump, yeah, we see a bifurcation between Europe and the US. So, this makes the European countries even more convinced we need to build our own weapon systems because we don't see Trump as a reliable partner anymore. Here's an extreme view I've heard on my show. I think you may have even seen this interview, that YU will break up at some point. um especially since uh Brussels is imposing very harsh environmental regulations that's basically killing the German auto industry among other issues. I I don't know what you think about this issue. Well, I've been waiting for years when the German car manufacturers will start to revolt because Brussels decided by law that you can't build any well uh none car after 2035. Yes. And it always was quite clear to me that the western or the German car industry couldn't survive such such a dramatic change. And now they open they start to openly revolt and and they will say it will kill our industry. And if you know the number of people I think over 10% of the German people working in the car industry um but for me the question is and then we go back to the to to the to the reset and the worldwide uh changes um I see coming. Who will have the big crisis first? Will it be China? Will it be Russia? Will it be the EU? Will it be the US? But we're all moving towards crisis mode. Look what's happening in the UK. The UK is all alone now after Brexit. Brexit. The other European countries are not helping them in a financial way. Um, Japan is is on its own. That's a mess. Uh, I'll be traveling there next month, but from a monetary point of view, that's a mess. And I travel now to Japan because the yen is uh valued at such a low point. It gets interesting to go there as a tourist. But this is a very dramatic situation. The debasement of currency in Japan, U, Europe, US, it's a worldwide trend. And and soon we might reach the point that we see a new financial crisis, a sovereign financial crisis, a crisis around government bonds that countries are not able to finance themselves anymore. And that's if you listen to the Russian and Chinese experts, they just in a wait and see mode. They know they have time on their side because the West is starting to reach the point they can no longer kick the can down the road. Yeah. Tell us about these sovereign debt crisis uh science. Okay. I'll just tell you in school, for example, in business school, right, a long time ago, we were learning that these these scenarios were basically impossible. Well, that's why government bond yields are so low because it's factoring in risk-free. By definition, if it's risk- free, you cannot fail. No, because the story was the story line was these countries can always print more money, they can always sell their treasuries, they can always have their institutional investors buy their treasuries. But when you reach a point that investors demand a higher interest rate um to cover the risk they have on their treasury investments then things are starting to change. So the interest rates have been coming down since 1980 for over 40 years and that changed in 2022. Then we ended the downturn of global interest rates and then a new uptrend started. This up uptrend is only three years old and now we see interest rates picking up again in the EU. We see them picking up in Japan. We see them picking up in the US. Mortgage rates are 7% here in the US. You see the first signs of problems with car loan lenders, credit card lenders. But soon you might have a situation and the minister of finance of France pointed to the that France might need IMF help to support to help them support um with their financial budgets. So you I I'm always on the look for the first warning signs that things start to go wrong. It's not a crisis yet, but it could well be the next crisis and it could be very severe. So what happens when the sovereign crisis happens? Well, then they need to call the IMF and ask for help and then the IMF will start to use its balance sheet by create creating more SDR. You think there will be a failed Treasury auction? People will stop by. You only need one. You only need will need one to have some kind of financial panic to kick in. Yeah. Or sending rates much higher. What happens when rates in uh developed countries will start to rise to 7 8 or 9%. Well, the interest expenses go much higher. But what does that mean for the economy of let's well right now the US for example the interest expenses is over $1 trillion. It's already more than defense spending I heard. Yeah. But what what practically speaking does that have any impact on the economy? Well the US has a deficit of around 2 trillion 2,000 billion. Um they have to uh refinance over 9 trillion of treasuries this year. Um I think the main reason why Trump is has started to um impose tariffs is he need to balance his budget he understands he can't go on like this. So it's not done out of luxury it's it's done out of the situation you understand you might go broke if you continue. actually he has said that in in a few statements that the US might go broke. Musk has has warned for that as well. Um so it all points to well huge risks on a sovereign level and and that um the people in power understand this and start to act on it. What's going to happen to inflation in the US? What's going to happen to the Federal Reserve monetary policy? Let's talk about the US now. I read today Morgan Stanley revised their Fed forecast. They're expecting three rate cuts this year, not just two. They revised that, but we just got the highest inflation print this year, 2.9%. I understand why the Federal Reserve is hesitating to lower rates because of the inflation situation. But Trump, of course, pressured the Federal Reserve now so much and after May 26, he'll have uh we'll have a new president there. So, we know Trump will do everything to to pressure the Mr. Cook indeed. Yeah. So the signs are clear and and and to have an open war between the wise white house and the federal reserve is not helping the dollar is not helping trust uh to bring trust into the financial system. So it all points to all the stress in the system and and um you can expect central banks to step in again to start buying bonds again to avoid a sovereign crisis. But if banks, central banks start to buy sovereign bonds again, it that's a new round of QE. What happens is a further debasement of the value of the currency. I think interest rates might start to rise. Um, so so it's a very fluid situation. It's very dangerous situation. And 26 will become very interesting. What do you think the Fed's going to do? They will they will do what Trump wants. Um lower interest rates, but I I'm more interested what they will do on on when they will start to buy up treasuries in a big way. What happens when the Fed lowers interest rates in a rising inflation environment and a slowing economy environment? What happens to markets in that? Well, you could have lower interest rates on the front end, but you could have higher interest rates on the long end. in the long rates might might not come down that much. Um, and if that happens, the central banks need to buy lots of treasuries on the long end to bring rates down. But then you're reaching a new superinflationary situation. I don't like to use hyperinflation because that is very rare and almost never happens, but I call it superinflation. What superinflation is uh rates over 10% and inflation over 10%. We've seen that after the COVID uh crisis. We were around 10 to 15% for a short period. I think inflation comes in waves. We've had the first wave after co uh central banks worked hard to bring inflation back to 3% 2% we will not reach and I'm afraid we get a next leg up bringing inflation back up to maybe double digits again and that's why the flight out of paper assets into hard assets is starting to become a major trend now but maybe that's necessary to save the labor market there's already a lot of data showing that the labor market is cracking Governments are most scared for social chaos. Yeah. Social chaos comes after economic crisis and chaos. The Communist Party in China is just like the Trump administration in the US. Yes. They want to avoid that people are start to riot start rioting on the streets. Yes. So they will always use the printing press to solve the problems in the short term creating larger problems in the long term. I want to finish off in the mining sector. Clearly the mining sector as you know has done very well. GDX is up 90% year to date. What questions are you asking the mining executives in this environment today at this conference for example? how they see a solution to um stop having this era of shortages in in metals. So what are they doing to invest in new exploration in development of new mines and it it it's not enough. Look at the silver production, the gold production. Look at the gold reserves of over the last 10 years of the major producers. It's all coming down. So we finally reached that point on planet Earth after so many years that we no longer succeed in producing more of the metals we need. And the only problem the only way to solve that problem is much higher prices and way more support by governments to really kickstart exploration and building of new mines. And we haven't seen almost any of that. Mhm. The the capital rotation to the GDX this year. Where did that come from? Because we didn't see the stock market in other sectors collapse. Well, when gold breaks out over 2,000 has a strong run towards 3,000, over 3,000. Of course, the margins for producers are getting so much better. Yeah. And although um most American investors aren't investors in the gold miners, you can't ignore these profits but the I I look at valuation the price earnings ratio for Newman and Barrack is still 12 10 12 that's not expensive and look at the valuation of the mining industry. Nvidia one country is valued higher than all listed commodity companies worldwide the metal companies. So it it so although we had a nice jump, our fund is up almost 50% year to date. We see nice inflows, but it's just starting. You ain't seen nothing yet because there's so much money which will come out of the bond investors or the high valued high-tech um stock investors who will start to see the value in in in in these um undervalued commodity place. William, thank you very much. Where can we find uh your work? What are you working on these days? Um, I'm I'm I stay in the process of rewriting the big reset, but there's so many moving parts. I haven't decided not to to to end that work yet. Um, so I will continue working on that. I'll publish that on my Patreon account. People can find me on Twitter, of course, and at our website where you can also download the big reset for free. Okay, good. We'll put the links down below. So, make sure to follow William there. Thank you very much for your time. Thank you. I appreciate it. Thank you for watching. Don't forget to like and subscribe. Follow William down below.
‘Financial World War 3’: What Comes After U.S. Treasury Dump? | Willem Middelkoop
Summary
Transcript
We have a monetary reset every 90 years. Uh we had the start of this US dollar centered empire let's say 1944. Uh that's that's 82 years ago. This empire feels cornered and the only way out is a military conflict. Silver for shortages are guaranteed. It could send silver prices in the hundreds of dollars over the next 5 to 10 years. Our guest today is Willa Middle. He's the founder of the Commodity Discovery Fund and the author of the big reset war on gold and the financial endgame. We'll be talking about his views on what is going on in the world right now. What is happening with geopolitics? Why are we seeing so many conflicts happening? Why is gold at all-time highs? Why are stocks at all-time highs despite the economy showing signs of cracking? um potentially a sovereign debt crisis in a lot of developing and developed countries. A lot of things are coming together according to what William has been predicting for years and he's written about these themes in his big reset book which I encourage people to check out link down below. Thank you for coming on the show. Good to see you. Great to be back David. There's so much to cover. Yeah, we're at a resource conference but the resource sector is dependent on so many things happening in the world and that's what really our conversation is about. the macro forces driving this unprecedented level in gold and some other commodities we've seen today. The big reset which is a book you've written touched on a lot of things that are happening right now. What is happening now that most coincides with what you've been predicting in your book? I wrote the big reset in 2013. That was my first um well international book in English on these topics. But in Dutch I have been writing about this since 2003 to 2004. And always my thesis was always that one day we would reach the end of this monetary experiment, you know, fiat money only uh no longer connected to gold. And somewhere down the line we would have this huge crisis when people would start doubting central banks would start doubting that treasuries are the safest investments and and we also would reach the end of the US empire because if you study monetary history I I've done that quite a bit. Um regimes and empires they come and go on average. Um we have a monetary reset every 90 years. uh we had the start of this US dollar centered empire let's say 1944 uh that's that's 82 years ago so we're in for a period of change um I was also influenced by reading the book uh the fourth turning by Neil how also saying that every 80 years you have this big exchange and I came to the conclusion myself in the early 2000s because I was a real estate investor and I had so many mortgages in the late 1990s I needed to hatch myself because I was expecting these problems down the road. I was way too early. I sold my real estate way too early. I sold most of my real estate in the early 2000s and then started to invest in gold and silver. first the physical part and later in the equities and then I discovered the junior mining space and I found out that you have these small companies making big gold discoveries big silver discoveries big uranium discoveries and that intrigued me as a value investor and that's why I pivoted from being a real estate investor first being turning into a gold investor and now being a discovery investor and I I I I built this funds commodity discovery funds around 2007208 there uh the the worst decision of my life because we started at the top of the last cycle and now finally everything is starting to break out. Everybody wants to be in gold. So I think we're reaching our f finest hour now this monetary reset theory. What signs would point to this path towards a monetary reset right now? If you take a look at just the markets, the S&P has been breaching new all-time highs. The NASDAQ has had a great run since 2008. Uh the stock market has made a lot of people who are long very rich. The commodities have made people very rich. If you're long gold, you're making a lot of money. Bitcoin has made a lot of people very rich if they were long. It just doesn't seem like the financial system is breaking. If you just look at the markets, you should look at the core of this financial system. What's the core? This financial system was introduced in Breton Woods by the US in 1944. They proposed a dollar system, dollar centered system, not a goldbased system anymore. Kanes had another idea. Um he was proposing a UK backed plan to um to start with a new financial system around a new um um world currency. The banker uh kes lost UK lost US won and US started to promote the dollar and the US treasuries as the core of this financial system. So if you want to study the stress in this financial system, you should study what's happening with the dollar, what's happening with the treasuries. And in each and every crisis in the last decades, uh people were fleeing towards the dollar, were fleeing towards treasuries when there was a lots of uncertainty. In April this year when we had the markets going down fast, it was the very first time that investors weren't fleeing towards bonds and to the dollar. Actually, the dollar is down 13% since the start of uh the Trump administration. Um and and so it's it's not so strange to see gold moving up very strongly since early this year, especially since March, April, because gold seems to be the last man standing while we see the first cracks in this dollar-based financial system. Let's talk about debt in the dollar system. Okay. The Russians were making a mockery of the US debt situation. I'll play a video. It's been circulating on X. Crypto. And they were saying, "Look at the 35 trillion dollars of debt and now the US wants to issue stable coins to, in their words, devalue this debt." Are they right? Does that make any sense to you? Um, they made my mistake. It's not 35 trillion depth. It's just 37 already. It shows it shows how fast the depths go up. And when you understand people, we always see us as such a powerful and and and wealthy country. But look where the wealth came from. There's 37,000 billion of US depths. And how did the US use that depth? Did they build great roads, great cities, great bridges, great uh high net highspeed rail works, great airports? No. Compared to China, it's a misery. If you drive over this highway, the I70 here, it's full of potholes and it's it's a disaster. You should come to Canada with them. Okay, but I understand your point. But this was the the the country who owns the world reserve currency could could spend overspend and have huge deficits year on year. And the US has used this money to fight wars. spent so much of this money fighting wars they couldn't couldn't win. But these wars were necessary from a US perspective to stay in power to to to stay the world's hajima. And now with China and the British countries opposing the US, opposing the West, I'm afraid the US will find itself cornered financially and they might seek a military conflict out of this. Why do you think the DXY is down 13% year to date? Why was there a dollar selloff? In the past, in the first Trump administration, when there were tariffs, the dollar rose. I see I think that many institutional and even sovereign investors see the signs. They see the cracks. Look what central bankers do. Central banks were selling gold up to 2007, 2008. They were net sellers. What happened in 2008? the collapse of Leman, the great financial crisis. This was a crisis on Wall Street. This was a crisis about the the American financial system and American real estate. It spread worldwide. But from that moment on, look at the stats. So the central bank started to add to their gold reserves. They became net buyers. And in the last 3 years, you know the numbers. They've been buying over 1,000 tons a year. So it shows central bankers who are in the business of money printing. What do they do? They buy gold. So they're doing the same like the Goldbergs here. Only the Goldbergs started 20 years ago or 15 years ago. But central banks now don't listen to what they say. Just watch what they do. You you've been in the business a long time. You've studied history. What is different now versus let's say 10 years ago. Remember post 2011 when the gold price fell from its highs and then from 2012 to 20 uh 2019 basically there was this flat gold price people gave up on gold indust the ind industry went through a hard time it Warren Buffett said it's you know it's it's not a productive asset why is there this resurgence right now this renaissance it all started with a collapse of Leman that's what my my previous answer that's when central for bankers started to stop selling gold, started to add into the gold reserve. But the big change arrived around um 2013 2014 when we had this regime change in Ukraine. And then um it became quite obvious for countries like Russia and China that you couldn't trust the US. US was clearly behind the regime change in Ukraine. US had been preparing for a military conflict in Ukraine. uh for at least the last 10 to 15 years. So Russia started to sell all its treasuries. Then uh China stopped buying treasuries and started selling treasuries around 2014 2015. Now most of the foreign countries started uh stopped buying US treasuries. So it kickstarted a new revolution in which the let's say independent countries the the non-western countries started to align themselves within the BRICS alliance and started to understand that they need to join forces to be able to withstand American aggression because America has been successful in creating regime chains in dozens of countries since at least the last 50 years. I wrote quite a bit about that. And now these all these countries u aligned within this BRICS alliance if you count it that's four or five billion people. And the west if you add it up it's just 1.5 billion people. The total numbers of the bricks uh GDP it it's it's larger than the western GDP. So they feel powerful. They have most of the commodities. And now it gets interesting from a commodity investor point of view um that um we have this um well deglobalization and suddenly these commodities are becoming a weapon and the west has decided that we need to decouple from China. We need to build our own mines but we're totally dependent on China for all of these metals. You know many of these specialty metals 80 to 90% comes from China. So we have uh let's say a proxy war, financial economic war. You might even call it a financial economic world war III in which commodities play a huge part and especially of course gold because gold is also this monetary asset. But this this fight and we see this every day in our business. This fight is also on on copper. It's also on uranium. It's on all the specialty metals and and and this creates a perfect storm for commodity investor because you have the debasement of currencies, you have higher inflation, you have the geopolitical tensions where commodities are a weapon now and then you have the shortages because we don't make enough new discoveries. Yes. When you say financial world war II, what does that mean? The western alliance which had been together since the end of the second world war is in a open conflict with let's say the rest of the world. It's the west against the rest now. I've been talking about that for the last two to three years. And this is a war which is which is not being fought with um uh weapons financial military weapons. So it's not a kinetic kinetic war. It's a war which being fought with financial weapons in which we use sanctions and tariffs and and and the east is using uh export um limits for certain metals. So um there's a wonderful book um written 10 years ago about the title is treasuries war and it explains how the US uh department of treasury understood 20 years ago that they could use financial weapons they could use the dollar they could use swift the banking system kick kick countries out of the banking system and use that as a weapon and US has been very successful in making the dollar turning the dollar into a a a a weapon and I think uh the the the British countries are starting to weaponize gold and are starting to weaponize commodities. How do you weaponize gold? I understand weaponizing the dollar, you can just block people from swift, but what what what does gold mean? If you buy gold, it's the anti-doll trade. Yes. So if you want to harm the dollar, you stop buying treasuries. Okay. You start buying gold. Yeah. And Russia and China, they understand very well that the US was able for decades to keep the gold price under control. And when you start to accumulate masses amount, massive amounts of physical gold and silver, you can break the paper gold and silver trading system. Well, this supports this chart here. uh foreign central banks hold more gold than treasuries for the first time since 1996. Amazing charts by Tai Kosa of Crescat. Yeah. And it shows that what what I'm explaining here, you can you can show it in the chart. It's happening. But this also shows it we're in the first innings of this. Yeah. The lines are just crossing. It's like a golden cross. I think in the next 5 to 10 years, you'll see this play out in in a much larger fashion. The bricks uh countries met in uh China a few weeks ago. China hosted the world's largest Shanghai corporation organization summit. 20 20 nations convened. The West was not invited, of course. This was a response to the tariffs imposed by the Trump administration. What do you think they're planning, especially behind closed doors? There were many instances when Modi was having a car ride with Putin, for example, and the media was not allowed. Well, France at a certain stage, I think that was at the previous uh bricks uh conference, uh France asked if they could be present. They were declined entry. Um after this conference which you just mentioned, we had an emergency meeting by BRICS countries where Brazil asked to have an online meeting with their BRICS counterparts to discuss the tariffs because also Brazil is feeling those 50% tariffs. uh India is feeling them and I think uh Trump made a huge geopolitical mistake by um moving India away as a friend of the US moving them towards China Russia and Modi has been pictured with Putin and Ci so even India the mood in India is very anti anti-American now and and the the US is almost in despair Yeah. And that's why they are creating these drastic well measures like the terrorists, but they they are playing with fire because they're sending their friends over to the enemy side and and even in Europe and we've been aligned with the US uh so strongly especially after the second world war even in Europe people are start to break away and say let's talk with the bricks. But what's happening is uh countries that may have been friendly with the US, even if they traded with Russia, they're being penalized. India, for example, you brought up India, 50% tariffs because they bought Russian oil. Yeah. But US can they can't keep punishing their friends because they do business with China or Russia because you won't you won't end up or you will end up with no friends. Well, this is like the bully on on on high school who is who is once feared but ends up very lonely and and depressed. What is Trump's endgame with dealing with China, do you think? That's the big question. I don't know. But if you look at the remarks of his sector of defense speaker Hexad, they're all preparing for a military conflict in somewhere around 2007 2008. That could be started. You mean 2027? Sorry, 2027, 2028. Okay. That could start around the Taiwan situation. Um, but as I said in in the opening remarks, I'm a bit afraid that this empire feels cornered and the only way out is a military conflict. And then you you can always say, yeah, um, sorry guys. Uh, it's the enemy's fault that that it all collapsed. There was a big military parade after the Shanghai Corporation Organization summit. Uh you saw that on TV. Of course, parades, anyone can put up a parade. But the question is, should the west actually be concerned about the development of the militaries in the east? Oh, they are. And look what happened in Israel's conflict with Iran, which I see as a proxy conflict between the West and the East. And look how Iran reacted. They send a barrage of uh very modern weapons in including these uh uh hyper hypers speed. Hypersonic that's that's that's the word and it made uh Israel stop the war within days while they had proclaimed this could take weeks or even months. Yeah. and and and it shows that um the west now reached a point that they they they understand that they are not the ruler of the world anymore. They're not world's policemen anymore. Yeah. We have um we have a total new situation in which the balance of power is changing and and a conflict in the South China Sea in in Asia will be very hard for the US to win. Look at all the war games that have been um have been have been exercised and what have leaked out of them and it's very hard for the US to win such a war when we have a bifurcation of the world like you were talking about what happens to the monetary system. What happens when the dollar is no longer the global reserve currency? It it's so dangerous. Um, I ended in the big reset with my epilogue and I said we could have two ways towards a a a a monetary reset when we stay friends with Asia. I wrote this in 2013, so it was still maybe possible that we could have a joint effort to move the system to another phase. But my other option was that there would be a military conflict and now we're in the military conflict phase or we're grown towards that. And I think we moved away from having this peace dividends to getting war bills now. And when you don't have the peace dividends like we had in the '9s and the 2000s which helped the economy uh in a very positive way, now you have the war bills, that's not very predict productive money spent. So it increases the debasement of currencies because we need more money to pay for all the new weapons and all the systems we need to build. So, it's a drag on the economy and I think it will make the decline of the current fiat money system even faster. And what what do people do? What what does the smart money do when they understand that the debasement of currency will only continue? they start to move towards real assets and that can be gold, that can be real estate, that can be listed stocks. Listed stocks can't be printed by the government. Listed stocks have become a a a safe haven in the Weimar during the Weimaru years in Germany. Uh listed stocks became a safe haven in Zimbabwe, in Venezuela. So, it explains why stocks keep going up. It's a it's almost a flight out of out of paper money. It's a flight out of bonds. Interesting. So, yeah, that's why the bond market hasn't done so well this year. But take a look at what uh Scott Bent of the Treasury uh the US said, Treasury Secretary. He said, "The stable coins represent a revolution in digital finance." This is in response to the Genius Act passing this year. The dollar now has an internet native payment rail that is fast, frictionless, and free of middlemen. This groundbreaking technology will buttress the dollar status as the global reserve currency, expand access to the dollar economy for billions across the globe. They're really betting on the expansion of the stable coins to propel the dollar to the next phase. So, this is the counter to what we're talking about, but it it shows the US has to find new ways to find new buyers for the treasuries because the foreign countries aren't buying the treasuries anymore. So who's the new buyer of the treasuries is Tedar? Tedar is the company who is um um who owns the largest stable coin. They were banned from the US because they never well fully complied with all the rules and laws. But now it's changing and now Tedar has team up with Ker Fitzgerald. you know, Kand Fitzgerald, Kandel is now part of this administration uh solving uh these problems and creating new stable coins and and they hope they can build these stable coin markets into a massive market. So there needs to be a massive demand for for US treasuries. How do you feel overall just sidetracking about the administration being so involved in the crypto ecosystem? Trump is now I was reading the sixth or seventh largest holder of bitcoins in the world. Micro strategy is still number one and like you brought up Caner Fitzgerald. Yeah. You have a huge conflict of interest. Howard Lutnik uh is the father of Brandon Lutnik who was was taking over Caner Fitzgerald. No, there's a huge conflict of interest. But in every new administration, in every new major change of power in a country, you see the build of a new elite who benefits from the changes who have who have friends in the administration. But it it's done quite openly now in the US. But it has been like this with the deep state structures for years. Look at who who benefited of all these wars and regime change. The Boeings the the So it has always been a small group centered around an administration who could became very rich and wealthy by knowing what the administration would do, where the next war would be. And we have a new group now who's in power and they do it more openly. But it's it's it's it's not that big of a change. Some investors look at this as a leading indicator. They say, "Well, look at what the government's doing. We should copy them and go into the digital finance space." You should do. We run a commodity discovery fund, but we changed our perspectives. We can add Bitcoin now. We have some Bitcoin because we see where this ship is heading. And and another example, the CEO of Ted started following me on Twitter. So, you see these guys are moving to hard ass ets. They're moving into mining. Ted has done their first mining deals. pretty pretty big deals. So we need to study this because it is very important for our industry. What about the critical mineral sector? China for example has banned the export of certain critical minerals for example antimony which is used for ammunition and now the US needs to catch up like you said earlier. How do you feel about the critical mineral sector? It gets uh almost too much publicity because most of these metals are very small markets. But I understand why it's why it's on top of mind because these are sexy minerals and now they they come out like a geopolitical weapon. Um um but as an investor it's quite hard to uh monetize on this because these are very small markets. But to put this in a broader context in the first 15 years I've been in this business we never were contacted by the Dutch State Department. Now we have meetings with them every quarter because they want to understand the world of uh commodities and specialty metals. They ask our advice. They want to brainstorm with us how how even a small country like the Netherlands where doesn't have any commodities besides natural gas which we closed down actually but uh we don't have any metals or mining. Um but they want to understand now how even a country like uh our country the Netherlands can can start investing in in in the commodity space and I advise them well just build huge storage uh capacity in let's say Rotterdam harbor and store all these specialty metals and even copper and uranium you could even build an ETF around that and make money and these discussions we're having now with the official site and we were invited Ed to go on a official visit to Saudi Arabia in December with Dutch state officials to look for how we can help them to build a mining structure which the west could could could use and depend on. Well, some of the stories or the narratives I've heard from miners is that there's going to be a huge deficit in base metals precisely because of electrification or rearmament by the west. Uh the Europeans for example are trying to rearm their militaries. Anyway, there's a lot of reasons for buying base metals but not enough supply. Is that an argument you buy as an investor? We've been telling our investors for the last 15 years we would start to end an era of shortages. We saw this coming. That's why we spent the last 15 years looking worldwide for the last ounces available in the ground for undeveloped minds. That's the whole thesis around our fund. But the institutional money was never interested to invest in this because they always said we can just call China. China will produce uh enough metals and send it to us for for very reasonable price. That has changed now. Yes. So now we no longer can't depend on China from a western point of view. We feel pressure to start our own mining structure. But that's all too little too late. But it will help us as investors because this will send up prices for commodities in demand and the coming shortages. There are production deficits coming even in copper. We have production deficits in silver for years. But um production deficits are expected to be in copper next year. We'll have production deficits in uranium for years to come. So I think this new bull market for commodities won't take months like in 2016 or 2020. It will take years and the bull market in commodities might take decades to unfold like we had uh a bull market in real estate for decades or we had a bull market in in in in the Dow Jones for decades and and and the mood in in the world of commodities is has been so depressed because um values were going down for such a long time since 2008. People think a bull market is is a period when price go up five or six months in a row. No, no, that's not a bull market. So, in the commodity space, which of the commodities we discussed so far or maybe haven't discussed so far, do you see the most potential? We concentrate on the monetary metals, that's half of our half of our investments, gold and silver, yeah, platinum, palladium, but these are very small markets. Then, of course, copper, because copper is almost like a monetary metal as well. It's so important. I think China is is is storing copper and and um so copper is such an important battle. Then you have nickel and and lithium which is very important for the whole EV revolution and the batteries and then of course uranium and uranium is a big one because that's the only fuel for nuclear reactors. So, uh, well, in your book, um, you recommended an allocation of 25% cash, 25% precious metals, 25% real estate, and 25% equities. I know this was written a few years ago. Is that still your preferred allocation? I I changed it just a bit. I said for the 25% cash, you can buy Bitcoin as well. So, cash Bitcoin. Interesting how you put that in the same category. Yeah. Because that's the most liquid form of money. And people uh, especially the gold bugs. We had a gold bug dinner yesterday. still one of a few of the older guys they they don't want to hear about Bitcoin but Bitcoin is is is for me it's virtual gold I described it in the big reset as virtual gold in 2014 I think everybody start to seeing as it as digital virtual gold now and the great thing about Bitcoin is you can trade it 24/7 um you can move uh you you can travel over the world without taking all the weights of gold and silver. So I think it's a modern way of of um well um you have to be flexible with your own net worth uh for people who are who have some some more money they they should diversify and also a bit towards the digital assets I think going back to gold where are we in this bull cycle it's run up a lot very fast it's scared some investors here how fast it's moved all the people I talked to during this conference Um they asked the question when will the correction start has it topped out? Yes, that's that's the common question and I think people will will be surprised by the move to the upside. Well, we're in a very we're in a the late stage of this rise. We need a technical correction at some point, but I think the technical correction will bring us down somewhere north of $3,000, which is not a real um dangerous correction from a trend point of view. And I think then we just continue higher. But don't forget, we always look and talk about gold, but after gold started this huge rally, uh silver um started to move as well. This was a delayed reaction. This happens often with the metals. Copper is on the verge of a breakout. Uranium is on the verge of a breakout. So for us, this is not a bull market in gold. Is a bull market in commodities which just started in the very first innings and as said it could take years or even decades. Silver, you've called it the poor man's gold. Uh many people call it the poor man's gold. Where does silver fit in this monetary reset world? Silver is the most undervalued asset in all commodity space in in my book. Um silver hasn't made any new all-time highs. Silver traded $50 in 1980 in current money. That should be what is this $150 $170. Silver is used in the industry for 60 70%. Every year the industry takes a larger part of the silver production. World silver production is is going down. Yeah, shortages in silver are guaranteed. I don't know if it starts next year, next month or in 5 years, but silver shortages are guaranteed. Silver is a given good, which means when the price go up, demand rises. And once people understand that silver is getting in a shortage in in a physical shortage phase, the demand from investors will be huge and it could send silver up to $100 within a week. And I I expect silver prices in the hundreds of dollars over the next 5 to 10 years. Well, the the industries using silver wouldn't like that. Wouldn't they replace silver with something else? What what can you use? You can use copper. Um but you can't use copper for the solar panels. Uh you can use aluminium which the Chinese are doing for their power lines. But silver is a very special metal and it's such a small market. The total silver equity market all the market caps of all the silver silver companies combined is is less than 15 billion. The total world silver production is is is around 30 billion. So these are very small markets. Yeah. The state of war changes demand for commodities a lot. Let's I I'm your European like to get your perspective on what's happening in Europe. I mentioned earlier Germany wants to rearm. The chancellor wants Germany to have the world's not the world Europe's largest army. Um in Scandinavia they're beginning to recruit women now into the army. What is this trend? What's happening? Well, when we started in this business, nobody talked about battery metals. battery metals is is just um is only mentioned in the last let's say six seven eight years because people start to understand how much metals were needed for batteries and these were very specific metals like copper nickel graphite and lithium now people start to work uh talk about the war metals what are the war metals that's of course iron but copper you need copper you need very high-grade nickel we're involved in a high-grade nickel discovery in the We're involved in a copper discovery in the US. So I think these westernbased mining companies are making new discoveries here in the US or in the Nordics in Europe will will benefit greatly because uh the Trump administration will cut a lot of the red tape to start opening up and developing these mines. We see that happening already. Is this a long-term trend or is this just during the Trump administration because No, that's long term. This is long term because I think so you think the Europeans will be less dependent on the US for military support in the long term. Well, actually because of Trump, yeah, we see a bifurcation between Europe and the US. So, this makes the European countries even more convinced we need to build our own weapon systems because we don't see Trump as a reliable partner anymore. Here's an extreme view I've heard on my show. I think you may have even seen this interview, that YU will break up at some point. um especially since uh Brussels is imposing very harsh environmental regulations that's basically killing the German auto industry among other issues. I I don't know what you think about this issue. Well, I've been waiting for years when the German car manufacturers will start to revolt because Brussels decided by law that you can't build any well uh none car after 2035. Yes. And it always was quite clear to me that the western or the German car industry couldn't survive such such a dramatic change. And now they open they start to openly revolt and and they will say it will kill our industry. And if you know the number of people I think over 10% of the German people working in the car industry um but for me the question is and then we go back to the to to the to the reset and the worldwide uh changes um I see coming. Who will have the big crisis first? Will it be China? Will it be Russia? Will it be the EU? Will it be the US? But we're all moving towards crisis mode. Look what's happening in the UK. The UK is all alone now after Brexit. Brexit. The other European countries are not helping them in a financial way. Um, Japan is is on its own. That's a mess. Uh, I'll be traveling there next month, but from a monetary point of view, that's a mess. And I travel now to Japan because the yen is uh valued at such a low point. It gets interesting to go there as a tourist. But this is a very dramatic situation. The debasement of currency in Japan, U, Europe, US, it's a worldwide trend. And and soon we might reach the point that we see a new financial crisis, a sovereign financial crisis, a crisis around government bonds that countries are not able to finance themselves anymore. And that's if you listen to the Russian and Chinese experts, they just in a wait and see mode. They know they have time on their side because the West is starting to reach the point they can no longer kick the can down the road. Yeah. Tell us about these sovereign debt crisis uh science. Okay. I'll just tell you in school, for example, in business school, right, a long time ago, we were learning that these these scenarios were basically impossible. Well, that's why government bond yields are so low because it's factoring in risk-free. By definition, if it's risk- free, you cannot fail. No, because the story was the story line was these countries can always print more money, they can always sell their treasuries, they can always have their institutional investors buy their treasuries. But when you reach a point that investors demand a higher interest rate um to cover the risk they have on their treasury investments then things are starting to change. So the interest rates have been coming down since 1980 for over 40 years and that changed in 2022. Then we ended the downturn of global interest rates and then a new uptrend started. This up uptrend is only three years old and now we see interest rates picking up again in the EU. We see them picking up in Japan. We see them picking up in the US. Mortgage rates are 7% here in the US. You see the first signs of problems with car loan lenders, credit card lenders. But soon you might have a situation and the minister of finance of France pointed to the that France might need IMF help to support to help them support um with their financial budgets. So you I I'm always on the look for the first warning signs that things start to go wrong. It's not a crisis yet, but it could well be the next crisis and it could be very severe. So what happens when the sovereign crisis happens? Well, then they need to call the IMF and ask for help and then the IMF will start to use its balance sheet by create creating more SDR. You think there will be a failed Treasury auction? People will stop by. You only need one. You only need will need one to have some kind of financial panic to kick in. Yeah. Or sending rates much higher. What happens when rates in uh developed countries will start to rise to 7 8 or 9%. Well, the interest expenses go much higher. But what does that mean for the economy of let's well right now the US for example the interest expenses is over $1 trillion. It's already more than defense spending I heard. Yeah. But what what practically speaking does that have any impact on the economy? Well the US has a deficit of around 2 trillion 2,000 billion. Um they have to uh refinance over 9 trillion of treasuries this year. Um I think the main reason why Trump is has started to um impose tariffs is he need to balance his budget he understands he can't go on like this. So it's not done out of luxury it's it's done out of the situation you understand you might go broke if you continue. actually he has said that in in a few statements that the US might go broke. Musk has has warned for that as well. Um so it all points to well huge risks on a sovereign level and and that um the people in power understand this and start to act on it. What's going to happen to inflation in the US? What's going to happen to the Federal Reserve monetary policy? Let's talk about the US now. I read today Morgan Stanley revised their Fed forecast. They're expecting three rate cuts this year, not just two. They revised that, but we just got the highest inflation print this year, 2.9%. I understand why the Federal Reserve is hesitating to lower rates because of the inflation situation. But Trump, of course, pressured the Federal Reserve now so much and after May 26, he'll have uh we'll have a new president there. So, we know Trump will do everything to to pressure the Mr. Cook indeed. Yeah. So the signs are clear and and and to have an open war between the wise white house and the federal reserve is not helping the dollar is not helping trust uh to bring trust into the financial system. So it all points to all the stress in the system and and um you can expect central banks to step in again to start buying bonds again to avoid a sovereign crisis. But if banks, central banks start to buy sovereign bonds again, it that's a new round of QE. What happens is a further debasement of the value of the currency. I think interest rates might start to rise. Um, so so it's a very fluid situation. It's very dangerous situation. And 26 will become very interesting. What do you think the Fed's going to do? They will they will do what Trump wants. Um lower interest rates, but I I'm more interested what they will do on on when they will start to buy up treasuries in a big way. What happens when the Fed lowers interest rates in a rising inflation environment and a slowing economy environment? What happens to markets in that? Well, you could have lower interest rates on the front end, but you could have higher interest rates on the long end. in the long rates might might not come down that much. Um, and if that happens, the central banks need to buy lots of treasuries on the long end to bring rates down. But then you're reaching a new superinflationary situation. I don't like to use hyperinflation because that is very rare and almost never happens, but I call it superinflation. What superinflation is uh rates over 10% and inflation over 10%. We've seen that after the COVID uh crisis. We were around 10 to 15% for a short period. I think inflation comes in waves. We've had the first wave after co uh central banks worked hard to bring inflation back to 3% 2% we will not reach and I'm afraid we get a next leg up bringing inflation back up to maybe double digits again and that's why the flight out of paper assets into hard assets is starting to become a major trend now but maybe that's necessary to save the labor market there's already a lot of data showing that the labor market is cracking Governments are most scared for social chaos. Yeah. Social chaos comes after economic crisis and chaos. The Communist Party in China is just like the Trump administration in the US. Yes. They want to avoid that people are start to riot start rioting on the streets. Yes. So they will always use the printing press to solve the problems in the short term creating larger problems in the long term. I want to finish off in the mining sector. Clearly the mining sector as you know has done very well. GDX is up 90% year to date. What questions are you asking the mining executives in this environment today at this conference for example? how they see a solution to um stop having this era of shortages in in metals. So what are they doing to invest in new exploration in development of new mines and it it it's not enough. Look at the silver production, the gold production. Look at the gold reserves of over the last 10 years of the major producers. It's all coming down. So we finally reached that point on planet Earth after so many years that we no longer succeed in producing more of the metals we need. And the only problem the only way to solve that problem is much higher prices and way more support by governments to really kickstart exploration and building of new mines. And we haven't seen almost any of that. Mhm. The the capital rotation to the GDX this year. Where did that come from? Because we didn't see the stock market in other sectors collapse. Well, when gold breaks out over 2,000 has a strong run towards 3,000, over 3,000. Of course, the margins for producers are getting so much better. Yeah. And although um most American investors aren't investors in the gold miners, you can't ignore these profits but the I I look at valuation the price earnings ratio for Newman and Barrack is still 12 10 12 that's not expensive and look at the valuation of the mining industry. Nvidia one country is valued higher than all listed commodity companies worldwide the metal companies. So it it so although we had a nice jump, our fund is up almost 50% year to date. We see nice inflows, but it's just starting. You ain't seen nothing yet because there's so much money which will come out of the bond investors or the high valued high-tech um stock investors who will start to see the value in in in in these um undervalued commodity place. William, thank you very much. Where can we find uh your work? What are you working on these days? Um, I'm I'm I stay in the process of rewriting the big reset, but there's so many moving parts. I haven't decided not to to to end that work yet. Um, so I will continue working on that. I'll publish that on my Patreon account. People can find me on Twitter, of course, and at our website where you can also download the big reset for free. Okay, good. We'll put the links down below. So, make sure to follow William there. Thank you very much for your time. Thank you. I appreciate it. Thank you for watching. Don't forget to like and subscribe. Follow William down below.