Precious Metals: Strong bullish case for gold and especially silver, citing structural deficits, remonetization dynamics, and rising investor demand as core portfolio pillars.
Silver: Detailed thesis highlights industrial demand likely exceeding 100% of mine output, limited primary mines, and India’s 10:1 collateral policy as de facto remonetization supporting higher prices.
Portfolio Construction: Endorses a diversified approach akin to the Jacob Fugger framework (cash, gold, high-quality stocks, land), with emphasis on debt-free land and 24 months of cash reserves for resilience.
Macro Outlook: Late-cycle credit conditions with a binary expand-or-collapse dynamic; risks include a deflationary shock followed by currency crisis and inflation, with diminishing central bank intervention efficacy.
Credit Risk: First Brands’ DIP-loan plunge seen as a canary for broader counterparty/fraud risk; warns that even “super senior” financing can be impaired, potentially tightening credit and lifting yields.
De-dollarization: BRICS “unit” via mBridge and gold-linked basket plus Europe–U.S. tensions raise currency regime risks, supporting hard assets as hedges.
Market Risks: Notes rising layoffs and the surge in leveraged ETFs as complacency signals; urges caution on long-duration bonds amid inflation/default risks and preference for real assets.
Companies Mentioned: References BlackRock (BLK), Goldman Sachs (GS), Walmart (WMT), UPS (UPS), Amazon (AMZN), Intel (INTC), Nestlé (NSRGY), Ford (F), and SLV in context of broader market dynamics and liquidity mechanisms.
Transcript
Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. There will be a straw that breaks the camel's back at some point in the future. And we may have temporary deflation, but we know what the response is going to be is to try to do more of the same in the past, which will probably break into a a currency crisis and hyperinflation on the other side of that. That's my biggest concern. Hello everyone. Welcome to this episode of FinanceU. I'm your host Chris Martinson and today with me of course is Paul Ker of Kiker Wealth Management. Hey Paul. >> Hi Chris. Good morning. Happy happy Wednesday to you. >> Happy Wednesday. Well, we see the holiday you know decorations behind you there so we know what time of year it is. Um >> yes >> that's cheery. Let me start with something that's that's uh maybe not cheery per se, but I'm starting to get more calls and and experiences with people who are of all levels in the financial space, but I'm talking really sophisticated, deep run like, you know, big funds, you know, been managing money for decades kind of guys and gals. And the vibe is we don't know what's happening anymore. Like there there's a real level of concern starting to build up which is like well Trump and Bant tell me the economy is doing great the GDP numbers look okay the stock market's doing okay but people aren't buying it for some reason and they're concerned and this isn't just a few people at the tail edge of the contrarian community where I inhabit you know but this is like getting really center mass and including people at all rungs on this I'm getting very consistent feedback now this doesn't make sense what are you hearing >> no well said that that's one of the things that I I really enjoy about the the Peak community and the investors that we're meeting that have a love for the truth. They're hungry to know. They're ahead of the curve because they've recognized that we've had problems. They found you. You've educated people, but also have our clientele, you know, in the North Georgia area, just your average person, right? They don't really they're enjoying their families. They're enjoying their retirement. They're enjoy traveling. they're not, you know, really pursuing this information yet. But within the past 3 months or so, I've had more people consistently across the board that have shocked me. These same people that when we added gold to the portfolio in 2016 started pushing back. They're like, "Why why would you add that?" Right? That's an ancient relic. It doesn't pay dividends, you know? So, that's one of the reasons I'm good at arguing about why you should own it because I've been tested over time. Mhm. >> When we added silver, I got a lot of consternation back and forth from these same individuals. And luckily, we've had some instant gratification, you know, with it coming into the portfolio. But they're starting to wake up now and they don't know what to do. You know, the consistent theme that I'm hearing in these annual reviews over the past three months has been none of this makes sense to me. You know, what are our kids going to do? How do they and they don't know where to go? Like I'm starting to point. I'm like, hey, there's this guy by the name of Chris Martinson. He's got a great education. you know, watch these things. So, that's something that I have not seen in the past 27 years that people are actually coming over and they're sending referrals, their friends over to us because they're finally understanding why we do what we do in our investment portfolio. Before they like the results, you know, most of the time they understood the reasons where we underperform historically and that trust was built over time, but now they're finally starting to understand why we operate our strategies in the manner we do. But but fear is building within this subset of the community cuz I mean remember what it was like when you first started seeing kind of how things were unfolding. I don't know about you, but for me it was like fear all of a sudden. You know, what do I do? And then once that realization sets in and you subside, it's like, okay, we got to learn how to play the game by the rules that are forced upon us. And then, you know, you develop strategies and you learn how to to deal with this. So there's a I think more and more people are waking up right now than I have ever seen in 28 years now of doing this. Uh so and it's all been a flood within the past three months. >> Interesting. So, um I mean there's a lot of reasons you could have these sort of thoughts. Um AI obviously is disrupting and and so people don't know how's that pencil out. What what what do my kids do in a world where AI does all the jobs, right? And nobody's actually talking about what that realistically is, right? Um so that creates concern. But I think we also have to recognize where we are in this larger thing financially speaking which is called a credit cycle. Okay. Okay. And and they're well studied and you know there's um who was it? Klov or was it Rogoff? Oh, I've forgotten now has the book 5,000 Years of Debt. The cycle has happened over and over again, right? So, you know, you you you start getting the early part of the cycle, there's exciting opportunities, lots of credits being extended. You get to the later part of the cycle, it's starting to pick up a lot of steam. You get to the end of the cycle and people are loaning money for really dumb things, right? which turn out in many cases to be fraudulent or so spectacularly stupid as to be fraudulent adjacent. Right? So we've talked about this with first brands with Black Rockck itself having um been scammed out of 500 million by some Indian telecom scammer guy, right? I mean that's late credit cycle kind of behavior. Yeah. >> And this isn't this isn't just slight credit cycle stuff, Paul. This is total consumer credit owned and securitized. One of my favorite words, but clearly something happened there in the early '7s. And you know, we can talk about what that is again, but that was decoupling from the gold standard in my mind. And it's basically an uninterrupted exponential rise in credit, consumer credit. And I will draw attention to this one little wiggle right here. There's one little wiggle. Pretty dangerous moment right there. That was 2008 and 9. Um and uh but just look at this. Consumers are now on the hook for $5 trillion dollar. And and so it just the more you borrow, Paul, it just gets to a point where you can't just borrow more. And even if you did, what would you borrow it for? And so the credit cycle just runs out of steam. And that's a usual, ordinary, and normal thing. What's not usual and ordinary is that we have activist central banks now are like, "We can't let that end. what do we have to do to keep the credit cycle going? Do we have to lower rates to zero? I mean, whatever they have to do because that's the most important thing to them, but it creates a a very perilous situation where if they fail at it, if if for some reason the credit cycle stops, that's where you get this implosion. You get these economic implosions. And again, there's 5,000 years of history that says it's a very ordinary human cycle. >> Yes, it is. And it's something that for those that love history, you can't avoid seeing it uh throughout the the big picture of history, but too many people don't take the time to go back and actually learn from the wisdom of the past. And if they do learn from the wisdom of the past, I wish id have put my bubble cycle up here now. Um but uh so you know, they think it's different this time. And that's just the hubris that comes along with with the government papering this over and and people leave the fundamental imprudence aside because they feel like they're having to chase and keep up with those around them. So I mean just our psych psychology of human nature and our herd behavior drives us all in that direction. And there's there's few like like you and the others that are left in the end to be watchmen that are screaming for people to pay attention and be prudent and and protect themselves. But yeah, I mean this thing's going to come to an end. >> Well, it's it's we're coming to a a and again this is not the end end, but it is the >> it's the it's going to end the old regime's over. Okay. And >> things get awkward between regimes. You know, the king is dead. >> We don't know which son is going to get the power. One's really terrible, one's not so terrible. So that period in between reigns is called the interregnum. It's always like you don't know like should I flee the country, you know, cuz if if that prince gets in, I'm I'm done, right? Um or should I stay and double down because it might be you don't know, right? It creates a lot of uncertainty. Nobody's articulated what that next regime is going to be except we have these glimmers of it'll involve stable coins and digital tracking and surveillance, I guess, you know, but it's not really well articulated as to how that it's going to be awesome for anybody at this point or if it'll even work, right? Wouldn't it be great if we did a a test study? Hey, Minneapolis, here you go. Why don't you guys see if you can work this out for a while and we'll observe and see if it if it works. Nope. We might have to hot swap this ball like like changing both wings on a plane mid-flight. It's kind of might not be successful. >> It might not be successful. And another thing that just popped into my mind. So, let's say we go to full digital currency. Everything's trackable. Everything's controllable. They can lock you out of the system at at any time. >> Yep. So what what did our government do against Russia back in Trump's first term? They weaponized the Swift banking system against them. Biden, you know, carried that to a whole completely another level. So I if if our government is willing to weaponize the you know the swift banking system that they're in control of over another nuclear power do we think it's outside the realm of possibility if we have a completely digital currency that they're not going to weaponize it against the citizens that that that speak against their weakness their immorality and their corruption. So you know people are people are concerned about this. the people who are actually thinking through it are very concerned about the path that we're going on. >> Mhm. Well, and and they should be because um the economy isn't this well understood thing. It's it's a very dynamic complex system and those are easy to break. They can be pretty resilient for a while. Like my body likes to stay at 98.6, you know, but if you put enough bacteria in it, it'll suddenly say, "Oh no, I need to be at 105." And and it's it's that's not a good situation. So body is a complex system. The economy is a complex system. We have people saying, "Oh, don't worry. It'll just be fine." But we can all feel it. There's a chance it's not going to be fine. And I think it's it's a but it's just the ending of a credit cycle. This is ordinary. This is we can study these. We can understand them. So this is what a credit cycle looks like for the United States. We are now standing at over $104 trillion of debt in our system. So people talk about the 38 trillion of federal debt. that's in there. But there's corporate debt, household debt, and yada yada. And you can see clearly something happened in 1971ish. Like something took off. >> Nixon. Yeah. President Nixon >> and it's just been this smooth experience. And so, um, this is this I think if I could just Paul, if I could have people sit down, I'd say I need you to get cross-legged on a on a pillow on the floor and hold your fingers out and meditate. If you understand what's happening in this chart, you can understand what's about to happen next. 100%. Right. >> Right. >> And so, we're gonna take a quick break now, Paul, but when you come back, I I I'm going to show you everybody the chart that I think explains everything about what we're about to face. We'll be right back. Markets are facing heightened uncertainty, and thoughtful portfolio management has never been more important. If your current strategy relies solely on passive investing or diversification without active oversight, it may be time to consider a different approach. At Peak Financial Investing, we connect you with experienced wealth managers who actively manage portfolios using disciplined, research-driven strategies designed to adapt to evolving market conditions. Our focus is on helping clients navigate volatility with clarity and confidence. While no investment strategy can guarantee results or eliminate risk, we believe that preparation and active management can make a meaningful difference over time. Visit peakfinancialinvesting.com to schedule a complimentary consultation and explore whether our approach aligns with your goals. I'm Dr. Chris Martinson and I am proud to support Peak Financial Investing. This is not a guarantee of future performance, but a call to take your financial planning seriously. Again, that's peakfinancialinvesting.com. Investing, of course, involves risk, including the potential loss of principle. Past performance is not indicative of future results. Please consult with a qualified adviser before making investment decisions. All right, welcome back everybody. So, Paul, I I set it up like left a cliffhanger there. So, this is one way to look at this chart. This is just nominal dollars. The other way to look at this would be um it's percentage change from the year prior, which is hard to sort of visually interpret. And I already sort of said there's this little wiggle that's kind of weird here. That's the great financial crisis. Now, on this chart, it doesn't look that doesn't look that interesting. Here's that same chart, but expressed as percent change from a year ago. You're laughing already because I've circled the the the punch line, right? So we can draw a lot out of this chart but the first thing I want to draw is this blue circle which is the only time in the entire data series that credit creation dipped negative was there between 2008 and 9 into early 2010 that almost broke the entire western financial system. I mean broke it. We had Mvin King, the ex-checker or the chairman if you will in our language of of the Bank of England. You had um Hank Pollson exmoke Goldman Sachs T US Treasury Secretary both writing memoir saying people this was almost a lights out extinction level event and that almost broke the system. So the conclusion Paul is that we have a system of credit credit based money that either is expanding or collapsing. Those are its binary states. Mhm. >> Right. Which means it's not a terribly resilient system. And so maybe people are starting to go, "Oh, how are we going to borrow more and more money for what? $200,000 automobiles, $700,000 college experiences, million dollar trailer homes. Like that's the path we're on. That's the path that we're headed on. And I really wish that going back to that period of time that they had have just let the system reset because it would have been it would have been painful. But it would have been a lot less painful then than what it's going to be now if that's forced upon us. And one thing I want to remind investor, you know, the listeners out there, all debt, the most simplistic explanation of what debt is is pulling future income. You're borrowing your future ability. You're taking your present ability to pay. You're pulling forward that future income in today to make investments which are hopefully into productive enterprises. So, at some point, if you continue this game, your income and your ability to service that debt and pay that debt is gone, right? And that's kind of the problem we're running into right now. Incomes have not kept up with the asset price inflation that's taking place. That's the reason why what the average new home buyer is 40 at this point. >> Isn't that where it is? The age of the the median home buyer median home buyers around 40. you know, where's the ultimate endgame at this point? I mean, and you look at the you'll probably show this a little bit because you're on top of everything so good is just the misery that that's bringing uh to the average individual. That comes to the point that, you know, and I think the biggest slap in the face for most people is the increase in their property taxes and their insurance across the board. You know, that's really it doesn't make sense to them at this point. Why are we paying these premiums and I can't even I'm having to fight the insurance company to cover, you know, a an accident or a claim >> when I haven't had a claim for 20 years, but yet they don't want to, you know, cover it at this point. So, yeah, I mean, we're who knows how much longer they can, you know, pencil this together, but we're at the point where, you know, there will be a straw that breaks the camel's back at some point in the future. and we may have temporary deflation, but we know what the response is going to be is to try to do more of the same in the past, which will probably break into a a currency crisis and hyperinflation on the other side of that. That's my biggest concern. >> Well, it it that is that is the fork in the road that we're at right now is that we've kicked the can. We've achieved a lot of extra time. Did not use the time wisely to figure out how to sort of get ourselves, you know, down to a lower level of indebtedness. just use that opportunity to increase it. Weirdly enough, my complaint of the great financial crisis was, "Okay, too big to fail. Got it. Systemic, you know, total meltdown. Okay, you could maybe make a case, but then your job is to make sure we don't have too big to fail in the future." And they only got bigger. Your job was to make sure we have fewer derivatives. We have twice as many today as back then, right? So go ahead and rescue the system, but if you just make it even larger and more fragile, not sure you were um doing the right thing. So but let's let's turn this again. This is total debt in the United States only. Year-over-year change, percent change. And so when you see numbers over here, this is 2 and 1 half, 5, 7, 10, 12, and so on. That's 10%. You can see there were whole periods here. Remember in the 70s we had that ripping inflation. credit was increasing by 10, 12, 15, even 16, 17% right here. You probably remember these early 80s when you had 14% 10-year bonds. >> Mhm. >> You know, >> who wouldn't take that today? But, you know, but the point is is that um if I had GDP on here and a percent change from year over, it's actually declining this whole time. Basically, from about about here, fiveish, and it's coming all the way down, and now we're down here at about 2%. But let's imagine we even have 4% in uh GDP and I've drawn that roughly here with this mouse movement. It means that our credit has to or has been expanding faster than the GDP which is the income in this story for decades. That's our system. Always borrow more than you earn. Would you ever counsel a household to partake in that strategy? >> Absolutely not. I wouldn't uh uh you know a household businesses it makes sense for short bursts of period of time for for uh you know for opportunity growth to take advantage of it but that's still a risky situation because you can implode pretty quickly but for households absolutely not I mean there will be no retirement for the people who operate in that manner because they they they don't ever accumulate enough assets to to produce the income to cover the debt that is exponentially ly growing for themselves. It's unsustainable. >> Yeah. So, I mean, but everybody sort of partok in this in this system and it's kind of fun borrowing from the future spending today, but municipalities have done it, the federal government's obviously doing it on an ongoing basis. Households have done it and corporations have done it. Like you said, a corporation, if you have there's two types of debt you can take out. One's called self-liquidating and the other is nonselfquidating. Big words. self liquidating is I take out a loan because I'm going to double the uh seating in my restaurant which is doing really well. So because I take out that loan, I now have much more income and that income can self-liquidate its own borrowing. Non-selfquidating would be buying a $100,000 truck and and you drive to your accountant's job, right? Um you know, you could get there on a moped. It's like doesn't change how much you earn as a as an as an accountant or whatever the story is, right? There consumptive borrowing to take trips to, you know, buy more house than you possibly could need, etc. Those things are not selfquidating. Um, and and so that's that's the issue. So, this is coming to an end and we're seeing it first in Japan where we're watching their yields blow out on their long paper right now. So the 10 year 20 30 40s um year paper in Japan is blowing out and they have to do that or they have to let their currency completely take it in the shorts and and that's the fork in the road. Do we do we protect do we pro protect our bonds or our debts from not exploding and going up in yield down in price or do we protect our currency and that's and that's the thing I think that's what I'm reacting to. There's nobody in power, not Scott Bent, nobody at the Federal Reserve who's actively talking about this dynamic, which is you can't do this forever. You just can't, >> right? >> You can't borrow more than you earn forever. But we're trying. We are. And think about the aftermath of that short period of credit contraction. the lines that had been there in the past for the Federal Reserve and our government as far as, you know, not crossing. They push up to this threshold, they've blown through so many of those now that none of us are surprised by these, you know, ridiculous interventions that they're they're implementing and the amount of money, the fiscal irresponsibility. you know, Trump's like, you know, and to be fair, I was complaining about, you know, I felt like it was manipulative for the Biden administration to be so fiscally irresponsible going into the election, and now Trump's doing the same thing, right? Like he told us we were he was going to get it under control, but no, he's doing the exact opposite at this point. So the degradation that we see in the morality of society because of these behaviors and then the fraud that we're starting to see come up with First Brands, what Goldman's experienced and and then the complacency of investors that allows that to happen because when you're bailing the system out all the time, then then you're you're breeding a complacency within investors that that all they're caring about right now is how much money can I make and they don't care how. My advice would actually be system destroying. My advice to people is do not take on more debt at this part of the cycle. Start figuring out how to get out from under your debts as fast as possible. And that would make that orange line go down. But let me be clear again. This this dip below zero was almost a system level extinction event. That's at least the people in power thought. So, um I think it would have just resulted in a few ruined big banks and we would have carried on and we'd all be nobody would have even remembered. Um was a company called Croup ones, you know. Yeah. >> Um weird one for the history books like Lehman Brothers. But but this is this if you understand this chart for anybody listening then you understand that we have to keep credit expanding because that's the system we have. And if you get locked into that and that's the only way you understand the world and you're like, "Oh my gosh, either we have this dollar-based credit debt expansion system or we don't and and that's it." There are actually other options. So, I want to talk about um this Luke Groman interview I just did uh came out yesterday. Um so, anybody watching this day before yesterday, if you're watching this in a Thursday, but you you can see it this week. and he I asked him for his you know he thinks through the markets so deeply and is >> he does >> so much experience and he's really thoughtful and he's really humble which I love and um and I was like I'm expecting some of the fanciest answers ever. I'm like hey what do you do for a portfolio? He goes oh I use this portfolio by this guy named Jacob Fugger and no I'm not trying to sneak a an expletive in there. Turns out this guy is a 15th century German mercantalist, right? And the Jacob Fuger portfolio was 25 252 25 4 25s. And of course he lived at a time when you had both inflation and deflation that would sort of cycle back and forth. And we live in a permanent inflation cycle. So we don't quite know how to deal with it, but we could get to deflation. So what are those 25s? Cash, gold, highquality stocks, and land. They said, "Guess what? If you go into an inflationary environment, you're going to lose a couple soldiers in this story, but the other two are going to do really well. If you go into deflation, you're going to lose a couple of soldiers in this story, but the other two are going to do really well." Right? >> And I think that's that's the approach we have to take at this point. >> You have to have some diversification. And and look, for the people who think that this is going to be navigated perfectly, it's not going to happen. You're right. You're going to lose some soldiers in here. you have to sacrifice something um to come out this on the other side. And here's a classic example. I'm recommending that people build up to 24 months of their expenses in an emergency fund right now. Okay. The only push back I get to that is look, is that not going to lose to inflation? You have to sacrifice that soldier in the interim period so that you have the resiliency in in in the short term because what if we do have a pretty nasty recession at some point? What if you lose your job? What if we have deflation for a period of time before you get that inflationary crackup boom on the other side? You have to be willing to sacrifice something in the interim period to have that resiliency to get through. So, I mean that that's that that's a wise appro and a prudent approach from a long-term standpoint to understand you're not going to have all of your soldiers perfectly navigating and you're going to lose some. I I I like that concept. Well, this is why I think, you know, you have to be nimble, which is, you know, obviously the service you provide is is staying on top of this and figuring out because I don't think those are equally weighted tales, right? Deflation, inflation. I actually think the deflation tail is a little bit smaller and thinner than the inflation tail. But that's that's my personal stance. And I think though as circumstances change, you know, I may next week change that entirely to deflation being overweighted if we get into some big sort of a credit explosion implosion. So I think but you have to sort of understand where you are in the game and you got to be ready to sort of like dodge a little. That's that's been my plan. But of course, you know, you should make sure that the core, which to me is golden land. That's that's the core because that anchors that's on both tails, right? It makes sense both both places. You make sure that's squared away. And then the rest of it, you got to play the game, you know? >> Right. And to clarify, debt-free land really debtree land because if if you if you have if you've leveraged this land and you have deflation, you get that that outcome like the whole system collapses and you have deflation. Let's say AI does what it looks like and it'll inevitably do. >> Mhm. >> Incomes don't rise. The incomes don't rise enough to service that debt. You have deflation that collapses. If you have that land debtree, yeah, the price of it is going to go down. the market value is going to go down, but it's still going to be relative from a future standpoint if you're levered on that land. And just to pick a number, you got $600,000 loan on a million dollar piece of land and we have deflation because the system comes apart and that land is worth $400,000. How are you going to keep it? You're you're you're not right. If there's a bank that stands with that collateral on the other side, they're going to foreclose on that land like they did in 2008 or so that they can sweep that away from you. So, you know, I understand you can be shrewd and lever if we're going to get hyperinflation and use that that um uh asset price inflation against that land. That's shrewd. But you but if you're going to have it in the core part of your portfolio, it has to be unlevered, debt-free uh land. And yeah, it'll still do good if we have hyperinflation. Yeah, you're not going to be as shrewd as you were if you have it levered to the hilt, but you've got to have a prudent uh foundation. So, I think that's important for people in land to know because we're in this society where, hey, let's lever up, lever up, lever up, and buy as much as we can. That's fine. If you want to play that game, at least have some your core that's set aside that's debtfree and not collateralized against something else and ideally have it put into an entity that can protect it if you did have some type of uh catastrophic bankruptcy. But that's not a game the average person should play, especially right at or going into retirement. That's a young man's game. >> Yeah, exactly. So, um there is a second reason that orange line can go down. One is people pay down debts and and um andor don't take on new debts right along the way. There's another reason which is of course the debts can be found to be nonviable and they have to get written off the books. Um that'll collapse the stack of paper out there. So we already know there's a whole bunch of commercial mortgage back security paper that hasn't been written off the books yet. I don't know why, you know, but um non-performing loans we saw last was what 11.3%. Um, but we were just talking before we hit the record button, you know, you started to track and look into a little what's happening at the edges in this story with um, >> we'll call it crappy debt. >> Yes. Yes. And and and for the listeners out there, this is this is just amazing to me and I've been following this. So, I'm I'm going to take the time here to read you through the Zero Hedge article because they've done a good job just summarizing what's taking place with with First Brands. And it's it I believe this is ridiculously important. Ridiculously important because this is the canary in the coal mine as far as I'm concerned. Can you see my screen here, Chris? >> I sure can. Yep. >> Okay. So, the the title of the article that came out Thursday, December 9th. So, this is for premium zerohead subscribers. This is bad. Okay. And it is when you get through the article. First brands liquidation looms as DIP debtor. Okay. So, what is that? I I was familiar with it. debtor in possession loan collapses. Now, I had heard of debtor in possession loans, but I wasn't ridiculously familiar with what they are. So, I'm just going to go over here because Grock did a good good uh job summarizing it. Debtorin and possession loans, also known as DIP financing, refer to specialized loans provided to a company that has filed chapter 11 bankruptcy protection under the US bankruptcy code. So this type of financing allows the debtor, the bankrupt company, uh to remain in control of its assets and continue operating its business as a debtor in possession while undergoing reorganization rather than a trustee having to take over. Now, these are typically used to fund ongoing operations, pay employees, suppliers, and other essential expenses during the bankruptcy process. Now, this is the interesting part. The loans are considered superior in bankruptcy priority because they're granted superior priority status under the bankruptcy code, meaning they rank above other claims in the repayment hierarchy. So, specifically, this type of financing can be authorized as an administrative expense with priority over unsecured claims or even with uh with a a priming lean that subordinates pre-existing secured debt. That's getting a little complicated. Well, hold on, Paul. >> Wait, wait, wait, wait, wait, wait. So, if I if I loan a company money and I and I and I've done it because I'm taking a lower rate of interest because I have a senior secured loan, I'm top of the pile. Something goes bad, I get paid first. >> You're telling me that they can enter chapter bankruptcy and the court can say, "Oh, wait. We're going to put another loan on top of yours and subordinate you to that?" >> Absolutely. That's >> feels like the foul to me. >> It really does, does it not? Now the article will explain a little bit more here in a minute uh about how some of the credit market use utilizes this but their their justification is this ensures that you know DIP lenders are repaid before pre-bankruptcy debts including many secured ones administrative expenses and equity holders if the company's assets are liquidated or sold. So here's their rationale. It is to incentivize lenders to provide fresh capital to distressed companies as the elevated priority reduces the risk of non-payment and helps prevent the business from collapsing entirely during restructuring. So yeah, I mean you can have the highest secure debt >> and then somebody can come in and get a higher priority of payment once you jump in there. >> Okay. Well, all right. Okay. I'm following. So hopefully that lays lays the basis for everybody. So I love the way they put this article together. So in the annals of leverage loan lunacy, few spectacles uh rival the ongoing implosion of first brands group. Now for most listeners, this is probably completely off your radar, right? So that debt drenched auto parts Frankenstein. I love this. Stitched together by Malaysianborn serial acquirer Patrick James who turned a sleepy Ohio outfit into a $50 billion li liability leviathon before uh bailing amid whis whispers of billions siphoned into the ether. So they go through here and they talk about if you guys want to find it kind of the the backdrop to this. I've read all of that. Now this is pretty interesting. So now, as this house of wiper blades and fuel uh pumps failed through chapter 11 in a Houston courtroom filed September 28th after the failed refinancing exposed the black box of offbalance sheet shadow finance that ballooned its debt from a mere 6.1 billion on paper to a grotesque 10 to50 billion total abyss. >> 10 to 50. >> Okay. Yes. Total abyss. All right. >> Oh my god. >> Now the real gut punch is hitting the so-called rescue financers. Their vaulted debtor in possession loan. The supposed nuclear bunker bankruptcy priority is cratering below par. You'll like this Chris. Like a bad meme stock on a margin call. So, forget the 150 million in customer uh payments frozen in limbo because the blue chip buyers like Walmart can't tell if they're funding fraudulent invoices or legit Fram filters. Okay, so this is, you know, that's just the appetizer for this trade finance uh train wreck. >> So, what's the main course? First Brand First Brand's 1.1 billion DIP facility pumped in by an ad hoc group of masochistic lenders who thought they were first in the repayment uh uh buffet line is now hawkked at a pathetic 70 cents on the dollar down from par at inception plunging further as the bankruptcy drags into December. Okay, >> so there's a couple of, you know, tweets that came out. Never seen a DIP paper get white like this, >> but this is this is great. >> So great post by Zero Hedge. So the same idiots who did zero homework on the first brand's term loans did exactly zero homework on the first brand's DIP loans. Now the the reason I find this so important and so why it's so important to me is look at this. like they had no concern about jumping in there because because they they they've been complacent in the past. So this this was no slowly and then all at once. This was just all at once it cratered on the other side. So you know then they go to say that's not a dip that's a distress signal blaring from the bowels of a system where even the safest wartime financing is radioactive. I mean that's so what are the knock-on effects from this Chris? I mean how you know this is something very important if you're in that category that now all of a sudden you understand there's risk in an area where you never had it before. So you know basically >> well not only that but it speaks to the idea that the fraud was a lot more systemic and structural than anybody realized. Right. But you should be picking that up on due diligence when you're thinking of pumping a billion into a flailed, clearly fraudulent company. Uh, you'd think, >> absolutely, you would think. But quite frankly, I, you know, I've got to go do some research to see if this statement is true. So, take it with a grain of salt. But it's my opinion being in Wall Street, they're playing with other people's money, right? I mean, you know, maybe they have some skin in the game, but they're playing with other people's money. So according to Bloomberg reporting, it is clear that traders aren't just pricing in default risk on this super senior slush fund. They're screaming that first branch rot has metastasize so deep nobody knows if there's even a carcass left to carve up. So, it goes on down through here and says that, you know, hell, the entire uh street looks like it wandered into a p a ponzi parlor blindfolded, betting on opaque factoring deals that masks James alleged heist of hundreds of millions, if not billions, while the company burned 128 million in cash last October alone. So, how did we get here? And and this is kind of interesting just to show how this happened. So that going back to 2013, this James guy launched the Crown Group and rebranded it at First Brands in in 2020 and went on a PE. Okay, PE being private equity. I've been, you know, raising concerns about private equity for a while. A private equity fueled feeding frenzy gobbling Tricco wipers, Anco blades, Framm filters, Cardone Reand parts, Raybestus brakes. 24 brand strong, 26,000 employees, and a facade of stability propped by 900 million annual interest payments on a 5.5 billion term loan, plus 2.3 billion in hidden inventory lease scams. Now, by the summer of 25, a routine 6.2 billion refi imploded when lenders Yeah. finally demanded Oh, sorry, Chris. Go ahead. >> Sorry, I just got stuck because I'm a numbers guy. 900 million annual payments on 5 billion. >> Yes. >> What's that? 18%. Holy sha. >> Yeah. I mean, the complacency, right? >> 18%. Nobody can afford 18%. Certainly not a Okay, keep going. Sorry. >> No. So, 6.2 billion refi imploded because somebody demanded a quality of earnings peak behind the curtain. Cue the debt dump. Okay, first lean loans from near uh from near par. Okay, par for you listeners out there is 100 100 cents on the dollar dropped right to 36 cents on the dollar. Second leans to a laughable 10 cents on the dollar and the whole edus teetering on a $800 million liquidity ver buffer that evaporated. You'll like this, Chris. Evaporated like fiat in a hyperinflation fever dream. Whoever this author is, I know it's Tyler Dirt and I love it. So, enter bankruptcy, 1.1 billion DIP rescue, which is now worth 70 cents on the dollar >> and um you know, so and there's 106 million more trapped in segregated accounts as courts dissect the factoring fraud. 102 million of it non-factored cash the zombie desperately needs but can't touch. My question is when I look at that last week I'm watching yields start to creep up. You've got an inverse head and shoulders pattern on the 30-year. Now for the listeners that are out there and I can show that in the chart in a minute. An inverse head and shoulders pattern is a technical pattern where you develop a shoulder ahead on the bottom or a head and shoulders boing. a shoulder on the right hand side. And if you break out, okay, these have a 70 to 90% probability of of a reversal move. In other words, yields going down to starting to go up. Is this all about inflation or is this about uh counterparty risk, debt depayment, you know, repayment risk that's in there? So, if we have the concern about inflation with the Fed supposedly going to cut rates again today, right? But you've got this first brand's fraud, lack of ability to pay, and the complacency that is out there. Are we going to see yields go a lot higher because of of uh inflation fears, which is rightfully I mean, I'm terrified of what I see in the bond market. Why would you want to own a 20-year debt right now at 4 and a quarter% or 4.5%. Which is supposedly the safest that you're going to have if the if the Fed's going to let inflation run 6, 7% or higher. I mean, you're guaranteed a loss there, right? Uh, and then also at the same time, why would you carry 20 years worth of debt if on top of that, you've got to worry about default risk on that debt and the fraud that's within the system. So, you know, that's just going to hypercharge any rates that go higher if that's the case. Now, I don't know if that's the case. We'll know 6 months from now when we have the ability to see how all this unfolds. And maybe this is isolated, but there's too many big players that have been too consistent for this to be isolated. But I I guarantee you they're going through their books like crazy right now trying to look and see how high quality their collateral is and the ability of these companies that they've lended to to be able to pay >> at the top of a credit cycle. Paul, there's never just one cockroach. >> No. No. >> Never. >> First brand. >> Never just one cockroach. >> Yep. Oh my gosh. Look at this one cockroach in my kitchen. first brands, right? Like >> now and so you had these debtor in possession or DIP loans which there had to have been a secret group of people out there that understood. Now all of a sudden you jump in priority above some of your senior secured lenders inside of there. So I understand the purpose. Okay, the company's in bankruptcy. We got to keep them going. So let's get some capital in there. Let's carve this thing up. equity holders, you know, the least secured creditors are going to lose and and we have it made. Okay. So, they just got burnt really bad. Really bad. Now, we don't know how this pans out. Maybe it gets back to 100 cents on the dollar. But in this environment, are you willing to go jump in quickly without doing a whole bunch of due diligence to fund the next company that goes into bankruptcy? I wouldn't. Not at this point of the cycle. So, we don't know how this unfolds, but this is just continued rot. It's another breaking. It's not a creaking and popping like you've been talking about. This is a a a breaking, snapping, which would be along the lines of popping within the system right now. That increases the risk while the equity markets are just blazing along completely ignorant to what's actually taking place. And then you've got, and Finn Hendrick's got this great article here. Look what the average investor is doing at this point in and Finn Hendendrick. Oh, I'm sure we're completely safe, right? >> Yeah. >> So, this is the rise of leveraged ETFs. Okay. >> Investing with leverage and borrowing. Look at the growth of this. This goes I mean it's staying in there and all of a sudden, whack. You know, there's 20 what 40? Let's just say somewhere between 200 250 leveraged ETFs right now. they wouldn't be offering them if there wasn't a demand out there for investors. So this complacency that's occurring on top of the KB Kobes letter putting out US government recent layoffs 307,000 employees UPS 48,000 Amazon 30 Intel 24 Nestle 16 Ford 111 I'm jumping through here for the sake of time major layoffs are starting to occur and nobody seems to care because they fully believe right now that the Federal Reserve is going to be able to to print enough money to to where it doesn't matter. I I mean I mean I'm I had somebody tell me the other day, they're like, "You've been really bearish lately." And I don't feel more bearish than what I've been for quite some time. It's just that we're starting to really see these things pop, these dead bodies pop up to the surface and nobody seems to care. Nobody seems to care. And I'm I'm on red alert and everything in our portfolio. Now, I'm not acting until we have a reason to act. But but when there's this much weakness and you see those DIP loans go all of a sudden crack at once, I want to stay on top and be com completely diligent about everything because I think you're going to have to move fast when reality starts to set in for the average individual because it's very important to me that the average person I don't get so concerned somebody's really educated they're they're worried. Okay? I tell them we got to play the game by the rules that are forced upon us because we've been worried about these things for seven, eight years and so far it hasn't come to fruition. But when you got the average person who just hasn't really paid attention or care to pay attention to this, is really starting to scratch their head and say, "I'm worried." And they're starting to use fear terms, that's when you get a panic that sets in and people move really, really quickly. So, so I'm not so sure that, you know, my my biggest concern, like I said, is is we're going to have to move quickly if we start to see some weakness in these overall markets. And it looks like we could be topping here. I don't know if we are, but it looks like we could be >> because I think that downside is going to come a lot faster than anybody is prepared for. >> Well, I'm thinking we need a new indicator on the screen. Paul, it's like six cups of coffee means Paul's a little twitchy and you know, a little jumpy, right? Yes. >> You know, and when we get to 10 cups of coffee, sell, you know, um or whatever. We need we need some sort of indicator across the bottom there. No, I I I mean, but of course, you have to like we've gotten conditioned that things only go up, you know, and the Fed will always step in and they're just we're seeing the diminishing returns. And one of the areas I think Paul we saw you and I have cataloged this the diminishing returns was the ability of the paper slammers in the comics markets to do what they've done for decades right you can sort of detect when you're at the end of a regime they would slam silver and it would stay slammed for a couple hours and then it was a couple of minutes and then it's like a V recovery and and you watch the failing of that. So I I see the Fed the same way. They're going to keep trying to intervene, but the interventions are going to have to get massively larger and they're going to have smaller and smaller actual impacts until we finally admit that this isn't working anymore. >> So, Paul, we'll take a quick break. Um, we're going to come back. We have to talk about silver. Congrats to all the silver stackers out there. But, um, we'll be right back after this. Today's markets are more volatile than ever with ongoing economic and geopolitical uncertainty. Navigating such environments requires thoughtful, adaptive strategies, not a one-sizefits-all approach. At Peak Financial Investing, our registered investment advisory firm connects clients with experienced wealth managers who focus on active portfolio management. These professionals use evidence-based strategies designed to respond to changing conditions, not outdated formulas, but customized approaches grounded in research, discipline, and risk awareness. We believe in open, informed conversations, including discussing tools like precious metals and diversification as part of a broader financial strategy. Every investor's situation is unique, and our adviserss tailor their guidance accordingly. Visit peakfinanciallaniinvesting.com today to schedule your free consultation and explore how proactive management can support your financial goals. I'm Dr. Chris Martinson, proud to work with Peak Financial Investing and my support reflects my professional views. I encourage you to take control of your financial future by making informed decisions. Welcome back everybody. Hi ho silver. Paul, I've been a silver I won't say it's an investor. So, I have this conversation more and more with people because for a while there people say, "Well, what price did you buy silver at?" And it's not the way I think about it anymore. I don't buy silver. What I do is I exchange one form of money for a different form of money. And I'm just displaying a preference, right? So, if I said, Paul, onetime gift, either take this $10,000 in cash or this $10,000 in silver right now, you know, you're going to make a preference choice at that point, right? And when I put it that way, most people reach over for the silver stack, you know, and grab it um you know, under that hypothetical scenario. >> So, it's important to look at it that way for me. But check this out. Um this is today on looks like the 10th of December here. We had this um little mini cup and handle right here that happened from October through November, right? You know, I had so many people tell me that's it. It's over. Silver was overbought. It's done. It's never going up again. And then um it did this just explosive as they tend to do when they resolve out of cup and handles. Up it came and burst out. Um and so we're silver is now safely comfortably over 60. That's a big moment. >> That is a big moment. One thing that's interesting is you talked about I mean look there's been rumors that that they've been manipulating silver for quite some time and last week you showed that great after hours chart versus um versus what's happening during the day. Now people have to be you know when you first enter the world of technical analysis people think that it's a crystal ball that's going to tell you exactly what's going to happen and then they get delusion right the only thing that technical analysis does is it kind of tracks human behavior support levels certain patterns that are emotional patterns that take place it can increase your probability of success that's all we're looking for like earlier I talked about the head and shoulders bottoming power pattern is accurate 70 to 90% of the time. So that means 10 to 30% of the time it's going to fail. Now there's another >> Paul means that 70% of the time it works every time. >> 70% of the time it works every time. Well said. >> My favorite quote from anchor man. And the worst part is is if you're in technical analysis, it works seven times in a row and then you feel confident that it's going to work the next three times and people go all in and then it fails that 30% of the time they get their rear ends handed to them. >> Mhm. >> Now, this is end of day silver. So, it's not updated for today. This is yesterday's end of day. And this is this line at the top right here. This red line is a resistance line. Okay? So, silver makes its run. It fails, comes back and hits the 50-day moving average. That's an exponential moving average. It comes up and tries to p pass through, you know, what is that? 55. Let's say >> 55. They defended hard. Yeah. >> Yeah. 55. They defended hard and whack, it gets hit down. But all of a sudden, you're getting higher lows coming up here and that pressure is building and then it blows through that level and then it starts consolidating. So, you know, one, I was surprised they weren't able to smack it down here because typically these are patterns where it just gets crushed through and I was expecting, hey, maybe we get a chance to buy it here at the 200 day moving average. Maybe if they're successful at this point, which would have been a great buying opportunity, >> but it breaks through and then it starts consolidating. So, I explained to I was talking to a client, oh gosh, uh, Monday, Monday or Tuesday. I'm like, look, if it wasn't silver, I would tell you this is a bull flag and it's getting ready to blow through the top side. I said, but you know, I would expect it to come back because these patterns work really good with your general stocks, especially the really popular stocks, which I, you know, they want to go up, but in metals, I've seen it so many times. You get those lower probability outcomes, but then we break out of this bull flag. Now, that that's a pretty big deal from a long-term standpoint that you're starting to get these these um technical outcomes that are telling you that this is a consolidation phase for higher prices and then they're actually starting to come through. So, for if they are trying, they're not as successful as what they have been in the past to hold this price back. And that's a pretty big confirmation that hey, in spite of a pullback in the short run, look at it as a gift. non-investment advice. This is just conversation to speak. Um, you know, seek professional advice from that standpoint. But if we do get some pullbacks, it's probably going to be a gift for those long-term investors who really understand the fundamentals behind what's taking place right now. >> Well, the fundamentals, of course, is where where I sort of hang out. Um, because uh the fundamental story for silver is just extraordinary. And it's and it's it's a tale of two worlds, right? So the United States and London had controlled the price of silver for a long time, right? And we and we know how they did it. They had a very simple mechanism of action. So silver is your is your physical delivery market. And then New York is where they played the paper games, right? And they would put all these silver contracts out there called futures, but you also had options. You also had short interest on SLV, which is sort of like a wet lands that you could draw water from anytime you needed. And so they had this whole complicated thing and they kept silver's price suppressed for a very long time. Unfortunately, that's a lot of fun, but unfortunately there's this thing called the real world. And then people aren't incentivized to open new silver mines because the price is going nowhere for like a decade. It was 20 bucks, right? Um and that that was a long I got the scars from from that whole period because I was just watching it and I was ambivalent because on the one hand I hated it. On the other hand, I was like I'm getting silver cheap. So, >> you know, but then reality comes along and here's the reality, Paul. Um, silver, we don't there's actually not that many silver mines. 28% of our silver comes from what's called a primary silver mine. So, if somebody said, "Silver's 60 bucks. Let's go get more." Well, you know, they're going to have to go out and open a primary silver mine. And there aren't that many of them, and there aren't that many pure play silver deposits. 70% a little over 70% comes as a byproduct because you're mining lead or zinc or gold or copper. So, so if they said suddenly we need more silver 70% of that you you're basically saying well I guess we have to open a lead mine or a zinc mine or a copper mine and you just don't do that. Those take 20 years, 10, 20 years to open one, right? Cuz you find it, you have to bring the road in, you got to bring water, then you got to bring power, you might have to build your own power station depending on the situation. There's a lot of issues there, right? Um, so we have had a structural shortfall in silver because of this price suppression scheme, which again has a pro and a con depending on your point of view. Um but definitely we don't have new mine output coming on board and we won't for a while. So this is the first year 2025 where we're probably going to see industrial demand exceed 100% of mine output and next year if the trend holds we'll go to 104%. So where's that 4% coming from? Well, it's coming out of silverware, jewelry, grandma's tea set, old coins, and investors who are happen to be holding on to some. And then the next question is, well, what how high does the price have to go to begin drawing that from those people? And at first, not that high. People are like, you know, need money. They don't really bond with grandma's silverware, whatever the story. There's some that can be chased out relatively easy, but then you get into harder and harder hands. And I'm not going to say I'm the hardest of all hands, but I have a number for silver that's significantly higher than where it currently is if they said, "Chris, would you part with it?" Right. >> Right. Well, and I do, too. And I like to try to find an anchor to give me a justification for a price. Now, anything could change, but here's my anchor right now. Because when you shared that information, what, two weeks ago or so? I can't remember if you I'm pretty sure you shared it. I don't know. Maybe I did. I think you did that the Indian government has told the Indian banks that they can loan silver they they can use as collateral loan against their their silver at a 10:1 rat Yeah. 10 to1 ratio for gold that's $400 an ounce that they can loan against. That's what the government is telling the Indian banks that we're going to be just fine with you if you loan at that ratio on your silver even though it's 60. So, what am I going to do if I'm an Indian bank and I want to be as profitable as I can possibly be? I'm going to allocate as much capital as I reasonably can and still cover my cash flow responsibilities to silver at that point and lever it up. That's allowing those banks to an extent to print some money. So you know that's a that's a very important development from my point of view that takes place because that's essentially the Indian government incentivizing to bring silver within their country and what they're the largest populated country on the face of the earth at this point. That's a lot of capital that can go into silver from that standpoint >> with a huge tradition of saving in silver and gold obviously. Yes. Um I mean many millennia long tradition. It's goes stretches way back. Um, but I think it's even more important than that, Paul. I think it because this is the first sovereign level remonetization, even though they haven't turned silver directly into money, but allowing it to be used as collateral within their money system. That's an effective monetization. So allowing silver to become collateral, it is the first sovereign level remonetization of silver. I thought the demand from silver just for industrial versus investment was was a big player. Now we have a third axis right of demand which is oh this is now part of our financial system. >> It's really big and I know it's big because we're not talking about it in the western press at all. >> That's why I know how big it is. Right. >> Right. >> Can't ignore that hard enough. Oh, they're going to push crypto on you as hard as they possibly can while ignoring, you know, the the un unbelievable fundamentals, you know, and and again, look, I'll have some people upset at me over this, but just you got to go through the thought process, okay? So, what's the actual use value if it let's say the monetary value of crypto kind of goes to zero, right? Or let's say it goes to a dollar. Is it going to become a medium of exchange? I don't think, you know, the government's telling us anything that they're going to let Bitcoin become our actual currency at this point. Okay? The best that they're doing is promoting it as a as a digital version of gold. But think of all the uses that you have for silver, from industrial to electronics to jewelry to to all kinds of things that can be utilized from a long-term standpoint. And and they're not pushing that. And I don't know, you know, I don't want to be a conspiracy theorist about everything, but when you look at governments that are that are incentivizing the purchase of it within their country and and then you've got Wall Street promoting something else with the prices moving like this, it makes me wonder whether that's a you know, this lure, a fishing lure. Yeah. >> To to direct investors over here while they accumulated accumulate as much of it as they possibly can. >> Here's the thing. I really objected to this whole idea like, oh, we're going to move to crypto because maybe the dollar itself isn't working out. So instead of this, we'll do that. The most honest thing you could do is you would have multiple types of currency out there. So imagine the Treasury directly issues Treasury notes that are backed at some percentage by gold. I could take those. You said, "Chris, I'm going to pay you for doing my roof. Would you like these semi- goldbacked Treasury notes or Federal Reserve note? Or would you like this collateralized silver or SNH green stamps?" if anybody's old enough to remember what those are. I mean, whatever. Like, multiple currency systems are good because they keep the other ones honest. You have to have competition. I I just object this whole idea. >> We're just Soviet level communists. Like, no, there's only one true authority. There's only one money. But people are figuring out, Paul, there isn't just one form of money. And that's why I think gold and silver are climbing so much because people have started to catch on like, oh, there is this other game out here that we could play. I don't have to just play this game. And that's of course the terrorizing part to the people are the keepers of the game. You they don't like people to have options in this story. >> No, they don't. And and and go back to look at the diversification within. What are the bricks doing with the unit that we have talked about? So for listeners that aren't familiar with the unit, um the bricks, Brazil, Russia, India, China, South Africa, all of the other countries that are involved associated this economic block at this point have been methodically working towards something as an alternative to having to deal with the dollar or be under the boot that all of a sudden is on their neck with the US government, you know, from a intervening and not accepting the rule of law and the standard that's been out there. So, the unit, which is a digital currency that they're they're proposing be developed. Supposedly, there were some extra steps that were taken last week. I'm not up to speed on that yet, but it's a digital currency. So, you've got all the benefits of of the digital. You've got all the risks associated that we talked about earlier, but their core statement is it's going to be linked to 40% backed by gold. So, so now you've got some fundamental value that's usable within that uh within that. and they're talking about other percentage being linked to the to the commodities associated with the countries that are that are using it or are sponsoring it than another 30% to the economic output from those countries. So, that's a viable alternative. On the other side, just like you stated, if I could buy a 30-year Treasury that 30 years from now I could exchange, you know, have be paid in gold uh versus fiat currency, I would be interested in allocating some money to a to a 30-year Treasury that could be exchanged by gold because now I know I have some inflation protection if things take place. I'd also have some default protection in case the government was default from that standpoint because I can take that gold in delivery versus getting paid back in fiat currency for 30 years of what the governments are doing right now and their inflationary bent. I would certainly take that, but I don't have any desire outside of a short-term trade um you know for short-term opportunity to own a 30-year Treasury at this point. >> Now, fascinating. I just had an interview with Vince Lansancy also coming out this week and he we talked specifically about this um uh uh about the unit and all that stuff and you know it's got this it's got the piping is something called Mbridge that's all been tested that that that works right so this is the piping that connects the systems and then the unit is the thing that flows through those pipes right so it's a basket of stuff 40% gold 60 other however they they structure that what caught me though is he said you know everybody talks about bricks Brazil Russia India China South Africa South Africa is not really a player. Um he said you know who the five countries are that are involved. Obviously it's India, Russia and China. The other two is Bulgaria and Hungary who are deep in on this. Now I understand why there's so much vituprative language about Victor Orban the the the prime minister of Hungary. Because listen, you know, you can disagree about refugee stuff. They'll sort of scold you and wag a finger. But when you threaten to exfil from the currency system, that's when the serious stuff gets started, right? >> Yeah. >> So, on that front, um I know we're we're we're coming to the end of our time, but we have to talk about this. It's that big a deal. This just came out. Unusual Wales, very high quality source. I trust them when they say something. It says quote European officials eye nuclear option of dumping US treasuries if Trump cuts Ukraine deal without allies per the Wall Street Journal. I was like you can't say that. You cannot say that. You don't even if you're going to threaten that. Some European officials went to the Wall Street Journal apparently and said and and did this. This is the trial balloons like hey you guys we want you to know how serious we are. I'm like that can't be right. It's being reported everywhere. Um, you know, >> it's it's actually a thing. So, Paul, this is the kind like I thought that one like the freezing of Russia's sovereign assets under Biden, right, in February of 22. Terrible idea. Look at everything that happened as a consequence of that, right? We're getting the unit. We're getting the fracturing, the dolorization, all this turmoil, gold spiking, all because of what was really an unthinkably stupid thing to do, which was to violate unilaterally violate a core contract, right? >> Yes. Yes. >> It just happened again. I don't This is going to have repercussions guaranteed. >> No doubt. I mean, that's that that's a uh that's a nuclear level threat. It really is. But let's think it through, Paul. So you're Europe. Well, we have 2.38 trillion in treasuries. We're going to start selling them. A, we're going to pre-announce it, so everybody's going to frontr run us. >> B, we're going to get increasingly worse returns, but we get dollars back when we sell them. What do you do with the dollars? >> That's a good question. >> Buy euros. >> But well, by euros. I mean, if I was them, I'd buy silver and gold if I was going to go from that standpoint. But are they going to make that wise a decision at this point from that standpoint? Are they going to go buy the unit with if it's up and running? Is that what they're going to do? That's a good question. Where are you going to deploy that size of capital? >> I don't think they've thought it through. >> No. No. >> I just don't. Um, but uh this is going to have huge repercussions if this gets wor I mean obviously somebody like Trump would be retaliative. I would imagine if they tried to do anything like that. he would just put he put the boot down on that real quick. So, I mean, Europe might wake up one day and find out they have 400% tariffs, right? And their industry is just shut down. Um, we might just say, "Oh, we're just pulling out of NATO and all these air bases and just like you're on your own. Have good luck." Right? At any rate, I would expect economic turmoil, financial turmoil. We already know the European banking system is creaky as all get out, right? We all know that they owe each other money through their target two imbalances. every country owes every other country, which is like, well, then how does country A pay back B if C owes A? It's a weird circle. Um, and uh and and they're already on their economic deathbed right now, at least in terms of Germany and and productive manufacturing and all that. So, the prediction's easy. They're going to have to print a lot of money >> and hope for the best. >> Yeah. And if I'm in Europe, >> I'm I'm also thinking about um Fuger's portfolio very carefully at this point. >> Yeah, that that's gonna when you have two behemoths, this with that type of threat, there's no way Trump's not going to retaliate. That's that was well thought through and your thought from that standpoint, there's no way he's not going to retaliate. And that's going to cause a lot of pain for a lot of investors and and citizens around if they start fighting from at that level and that low towards each other. That's like two family p, you know, two family members starting to slug it out for sure. Wow. You know, and and just their level of desire to keep that war going is what amazes me. I just don't understand. I don't either because all you have to do is is look at the maps and Russia continues to advance. Um they clearly have won the battle. Remember 19 20 levels of sanctions later they're supposed to be in tatters. Their economy is doing great. The ruble's doing great. And by the way, their war tactics have gotten extraordinarily good. And I the last thing I would want if I was a German battalion leader would be to take my soft train once a week, you know, or once a month or once a year recruits and put them into a field where they're up against these particular battleh hardened um Russian troops who are probably the most experienced in the world right now cuz it's on the job training as it were. Um it'll be a catastrophe if they do that. It really will. >> I mean and look maybe maybe I'm foolish in making this statement because they sure don't seem to think this way. you know, have a ceasefire, say, "Look, here's the line. We're done. Okay, Putin will take you at your word that you don't want to advance into Europe. So, here's the line. We're backing off, but we're going to prepare if you cross that line, then it's fullon war, right? Let's let's just end this thing. Get it over. I don't understand why they keep pushing and pushing and pushing instead of just settling for peace, drawing the line, admitting the fact that, hey, this thing's over. You've won this point. Let's let's draw a line and let's agree to to move forward and and for the benefit of all the citizens in the global environment too. >> Well, I think it was just on Zero Hedge yesterday or this morning they reported that the first official British soldier in Ukraine was killed. They said it was a training accident. Um we all know what that means. He got a little too close to the front line and it didn't go quite right. um and uh or something. But uh at any rate uh we are starting to I don't understand why but Europe does seem to go a little crazy every so often and they kind of have a history of this and and so they have their own reasons politically I assume for going to war and it's I don't know what but if they do that the riverbations and like there's just not a chance that this delicate global economy sort of hangs together at this point again deflation or inflation where are you on spectrum. I still wait more heavily for inflation than deflation because I have it in my heart of hearts. They're going to have to pull out the printing presses big time. And it has to be so but it has to be coordinated, right? Because if it's not coordinated, one country's printing but a nearby country isn't. We call that Austria, Germany, the hyperinflation of the Weimar period. So in the past when we've all hyperin like Japan prints, we print, Canada prints, Europe prints and and so it kind of like you know balances but if it we have if that we get that breaking we don't have that central bank coordination and Europe has to print like crazy and we're not quite there yet. That's where things get really chaotic uh very quickly. >> That's right. And that's what presents ridiculous opportunity for the investors who are ready to move and act upon it at the same time. I mean, it it really does. So, you know, I'm still of the belief that that that we have some deflationary event before we get to the worst part, but I'm not, you know, but but that that's my kind of expectation of where we're going to go. But at the same time, if we break straight out into inflation, I mean, I'm watching the commodities charts right now. I'm looking at a lot of your value stocks that have been been obliterated. There are a lot of opportunities out there that are going to do a better job of protecting your capital than what the generals have been keeping this market going here in the most recent period of time. So even if we break straight into that, you know, I'm not saying it's easy, okay? But from my standpoint, I've thought it through to the point that it's pretty easy to make those reallocations in the portfolio because now you you know what's going to happen. You know, at this point, we do have coordinated interest rate cuts across the board. If they all move into coordinated printing, it's going to start showing up because that big money is going to realize and we're seeing it creep into the commodity space. We're seeing it flood to an extent from price action into gold and silver. Uranium has been doing pretty good within the past year, but other commodities in general are starting to creep up. Now, that's an indication some people are moving that direction, but we don't see enough money flow to where at least the big connected individuals are flooding into that area. And I think if they're getting ready to start printing without allowing some deflationary impact in the short run, you're going to see that pace pick up. And maybe that's what we see over the next 6 months and we'll adapt accordingly. But I'm still concerned about, you know, recessionary risk. And that's one thing I want to show here at the end. And I know I'm taking this a little bit longer than we should. And, you know, and this is pretty important because when we go back to April, the poll state, and Charlie Bolo put this together, 66% chance of a recession. Well, that was incorrect at the time. Right now, the consensus is there's a 2% chance of a recession in spite of the layoffs we're getting. Now, maybe that's correct. I don't know. But There's not a lot of 2025 left, I guess, is the point. >> Oh, yeah. In 2025. Okay, good point. But I'm I'm saying Well, and you got to think people are looking forward to recession in 2025. Yeah, we're not going to have one here, but I think that's the general consensus that we're not going to have one next year either, and at least the market's behaving that way. So, >> I thought that was relatively important to to consider. >> Well, again, you know, we've talked about this as a tale of a tale of two worlds, right? And and so um Michigan consumer sentiment index uh just came out. It's never never in history been this depressed. So consumers right obviously for all the reasons we've talked about right some of them are being laid off or they know people who've been laid off. Job finding new jobs stupid hard especially for college graduates don't need them anymore. Got AI whatever the pressures are maybe you know small business bankruptcies d there's a lot of hard data that says not super awesome right now. Um so so you got that and you know against that backdrop we've also seen this is a long-term chart of corporate profits after tax as a percent of GDP and nor 6% is sort of been the wobble line right and it kind of makes sense if a corporation figures out how to earn 10 11% they get competed away somebody else jumps in and says that looks tasty I'll I'll take some of that and they get um so that's how it's been forever and ever I mean this chart goes back here I think it starts in the ' 50s that's the '60s7 7691, but then something again happened right around 2008. We had this huge explosion because of the whole great financial crisis, housing bubble. It plunged back down. You're right. We should have we should have done this. We didn't. The Fed started printing. They printed in 2008, 9, 10, 11, 15, 19. They just kept printing and printing, right? And so now people have got it locked in that kind of like, oh, the new normal is like 11% US corporate profits. um maybe or maybe not, right? And and so we have to consider that. But while the corporations have been raking it in because the you know Fed's been printing money and handing it out, it hasn't really made its way over to the consumers. And so that's the that's the prime tension. I think that's why so many people feel kind of not good about it. Why young people are starting to get a little cranky about the whole thing, why mom dami gets elected and all of that stuff. The people are doing Main Street's doing bad. Wall Street's doing great. And that's the problem. Nothing for Main Street, everything for Wall Street. And so, um, that's got obviously lots of repercussions that could manifest. >> And I believe that that's a tech that those corporate profits at that level are unsustainable because you've had a couple of things. Yes, you've got the Fed that's been uh rigging stacking it against the average consumer for the benefit of the corporations, but at the same time, some investors out there will remember GE. It's not been on the radar. Jack Welch basically financialized GE up until his retirement at the end. And they were the number one performing stock in the S&P 500. I think they were the number one uh performing in 1999 to 2000 going back to 1970. horrible performance on that stock since 2000 after Jack Welch built, but everybody watched what he did with the financialization of these corporations through buybacks and various other things. And then that was taught through a lot of your business schools and that's been implemented on top of all this government printing. And just like GE went from the number one performing stock to one of the worst on the other side because of that financialization, it hollowed out the company. I think we're seeing the same thing t happen with a lot of these major corporations because of these CEOs that are that are using like Munger said, "Show me the incentive and I'll show you the outcome." You know, they'll they're they're risking the future viability of the company instead of reinvesting into R&D to buy back their own stock to inflate artificially inflate profits for their own benefit. >> It's how it's been. That that has been the game. So, well, I think Paul, that brings us to the end of our our time here today. And so, if anybody wants to take advantage of Paul and his incredible team, please go to peakfinancialinvesting.com to get the process started. There's a simple form. You fill it out and within 48 business hours, somebody from Paul's team will get a hold of you and you'll schedule the first of three calls. The first call is just an introductory, make sure there seems like a fit. there is hey get into a plan and then if get through that there'll be a recommendation session all free no obligation um just to get you on the way and um Paul uh thank you for doing that really appreciate the service you provide people oh it's my honor it's my honor and you know our belief is especially by taking people through the plan I have to do that before I can even understand your situation enough to give you a recommendation and so that you understand your situation and I can tell you confidently I mean, I had a meeting recently with someone and we went through their plan. I stress tested them against, you know, all the way up to 7 and a half% inflation, even further than that. I said, "Hey, this is the level that you need to change." We didn't move to a recommendation meeting because how they were positioned. They could weather inflation up to 7 12%. They enjoyed lading treasuries themselves. They had a little bit of protection in there. And it was an honor to be able to just meet them. They were appreciative. you know, hey, you're one of the first people that's not trying to push your strategy on top of us, you know, but it wasn't appropriate. >> So, you can rest in comfort for those that are out there. If it's not appropriate for recommendation, I'm not. And you will see it because I will demonstrate it to you through the plan uh that we go through. >> Yep. And and so they just they said, "Thank you very much for helping us feel good, and they're going to continue to manage things the way they've been managing them, and and that was the right thing for them." And so, that's what you did. >> Yep. >> That's exactly right. Do the right things. everything else will take care of itself. >> Excellent. Well, thank you very much everybody. This is the end of this FinanceU. Uh we'll see you next week, I presume. And um hope you enjoyed this. Comments down below. Let us know if there are any topics you want to uh have us cover, but otherwise we'll just do what we do, which is cover it all. All right. Thanks, Paul. >> Thanks. Have a great weekend. Good to see you. You, too.
Getting Ready For Anything
Summary
Transcript
Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. There will be a straw that breaks the camel's back at some point in the future. And we may have temporary deflation, but we know what the response is going to be is to try to do more of the same in the past, which will probably break into a a currency crisis and hyperinflation on the other side of that. That's my biggest concern. Hello everyone. Welcome to this episode of FinanceU. I'm your host Chris Martinson and today with me of course is Paul Ker of Kiker Wealth Management. Hey Paul. >> Hi Chris. Good morning. Happy happy Wednesday to you. >> Happy Wednesday. Well, we see the holiday you know decorations behind you there so we know what time of year it is. Um >> yes >> that's cheery. Let me start with something that's that's uh maybe not cheery per se, but I'm starting to get more calls and and experiences with people who are of all levels in the financial space, but I'm talking really sophisticated, deep run like, you know, big funds, you know, been managing money for decades kind of guys and gals. And the vibe is we don't know what's happening anymore. Like there there's a real level of concern starting to build up which is like well Trump and Bant tell me the economy is doing great the GDP numbers look okay the stock market's doing okay but people aren't buying it for some reason and they're concerned and this isn't just a few people at the tail edge of the contrarian community where I inhabit you know but this is like getting really center mass and including people at all rungs on this I'm getting very consistent feedback now this doesn't make sense what are you hearing >> no well said that that's one of the things that I I really enjoy about the the Peak community and the investors that we're meeting that have a love for the truth. They're hungry to know. They're ahead of the curve because they've recognized that we've had problems. They found you. You've educated people, but also have our clientele, you know, in the North Georgia area, just your average person, right? They don't really they're enjoying their families. They're enjoying their retirement. They're enjoy traveling. they're not, you know, really pursuing this information yet. But within the past 3 months or so, I've had more people consistently across the board that have shocked me. These same people that when we added gold to the portfolio in 2016 started pushing back. They're like, "Why why would you add that?" Right? That's an ancient relic. It doesn't pay dividends, you know? So, that's one of the reasons I'm good at arguing about why you should own it because I've been tested over time. Mhm. >> When we added silver, I got a lot of consternation back and forth from these same individuals. And luckily, we've had some instant gratification, you know, with it coming into the portfolio. But they're starting to wake up now and they don't know what to do. You know, the consistent theme that I'm hearing in these annual reviews over the past three months has been none of this makes sense to me. You know, what are our kids going to do? How do they and they don't know where to go? Like I'm starting to point. I'm like, hey, there's this guy by the name of Chris Martinson. He's got a great education. you know, watch these things. So, that's something that I have not seen in the past 27 years that people are actually coming over and they're sending referrals, their friends over to us because they're finally understanding why we do what we do in our investment portfolio. Before they like the results, you know, most of the time they understood the reasons where we underperform historically and that trust was built over time, but now they're finally starting to understand why we operate our strategies in the manner we do. But but fear is building within this subset of the community cuz I mean remember what it was like when you first started seeing kind of how things were unfolding. I don't know about you, but for me it was like fear all of a sudden. You know, what do I do? And then once that realization sets in and you subside, it's like, okay, we got to learn how to play the game by the rules that are forced upon us. And then, you know, you develop strategies and you learn how to to deal with this. So there's a I think more and more people are waking up right now than I have ever seen in 28 years now of doing this. Uh so and it's all been a flood within the past three months. >> Interesting. So, um I mean there's a lot of reasons you could have these sort of thoughts. Um AI obviously is disrupting and and so people don't know how's that pencil out. What what what do my kids do in a world where AI does all the jobs, right? And nobody's actually talking about what that realistically is, right? Um so that creates concern. But I think we also have to recognize where we are in this larger thing financially speaking which is called a credit cycle. Okay. Okay. And and they're well studied and you know there's um who was it? Klov or was it Rogoff? Oh, I've forgotten now has the book 5,000 Years of Debt. The cycle has happened over and over again, right? So, you know, you you you start getting the early part of the cycle, there's exciting opportunities, lots of credits being extended. You get to the later part of the cycle, it's starting to pick up a lot of steam. You get to the end of the cycle and people are loaning money for really dumb things, right? which turn out in many cases to be fraudulent or so spectacularly stupid as to be fraudulent adjacent. Right? So we've talked about this with first brands with Black Rockck itself having um been scammed out of 500 million by some Indian telecom scammer guy, right? I mean that's late credit cycle kind of behavior. Yeah. >> And this isn't this isn't just slight credit cycle stuff, Paul. This is total consumer credit owned and securitized. One of my favorite words, but clearly something happened there in the early '7s. And you know, we can talk about what that is again, but that was decoupling from the gold standard in my mind. And it's basically an uninterrupted exponential rise in credit, consumer credit. And I will draw attention to this one little wiggle right here. There's one little wiggle. Pretty dangerous moment right there. That was 2008 and 9. Um and uh but just look at this. Consumers are now on the hook for $5 trillion dollar. And and so it just the more you borrow, Paul, it just gets to a point where you can't just borrow more. And even if you did, what would you borrow it for? And so the credit cycle just runs out of steam. And that's a usual, ordinary, and normal thing. What's not usual and ordinary is that we have activist central banks now are like, "We can't let that end. what do we have to do to keep the credit cycle going? Do we have to lower rates to zero? I mean, whatever they have to do because that's the most important thing to them, but it creates a a very perilous situation where if they fail at it, if if for some reason the credit cycle stops, that's where you get this implosion. You get these economic implosions. And again, there's 5,000 years of history that says it's a very ordinary human cycle. >> Yes, it is. And it's something that for those that love history, you can't avoid seeing it uh throughout the the big picture of history, but too many people don't take the time to go back and actually learn from the wisdom of the past. And if they do learn from the wisdom of the past, I wish id have put my bubble cycle up here now. Um but uh so you know, they think it's different this time. And that's just the hubris that comes along with with the government papering this over and and people leave the fundamental imprudence aside because they feel like they're having to chase and keep up with those around them. So I mean just our psych psychology of human nature and our herd behavior drives us all in that direction. And there's there's few like like you and the others that are left in the end to be watchmen that are screaming for people to pay attention and be prudent and and protect themselves. But yeah, I mean this thing's going to come to an end. >> Well, it's it's we're coming to a a and again this is not the end end, but it is the >> it's the it's going to end the old regime's over. Okay. And >> things get awkward between regimes. You know, the king is dead. >> We don't know which son is going to get the power. One's really terrible, one's not so terrible. So that period in between reigns is called the interregnum. It's always like you don't know like should I flee the country, you know, cuz if if that prince gets in, I'm I'm done, right? Um or should I stay and double down because it might be you don't know, right? It creates a lot of uncertainty. Nobody's articulated what that next regime is going to be except we have these glimmers of it'll involve stable coins and digital tracking and surveillance, I guess, you know, but it's not really well articulated as to how that it's going to be awesome for anybody at this point or if it'll even work, right? Wouldn't it be great if we did a a test study? Hey, Minneapolis, here you go. Why don't you guys see if you can work this out for a while and we'll observe and see if it if it works. Nope. We might have to hot swap this ball like like changing both wings on a plane mid-flight. It's kind of might not be successful. >> It might not be successful. And another thing that just popped into my mind. So, let's say we go to full digital currency. Everything's trackable. Everything's controllable. They can lock you out of the system at at any time. >> Yep. So what what did our government do against Russia back in Trump's first term? They weaponized the Swift banking system against them. Biden, you know, carried that to a whole completely another level. So I if if our government is willing to weaponize the you know the swift banking system that they're in control of over another nuclear power do we think it's outside the realm of possibility if we have a completely digital currency that they're not going to weaponize it against the citizens that that that speak against their weakness their immorality and their corruption. So you know people are people are concerned about this. the people who are actually thinking through it are very concerned about the path that we're going on. >> Mhm. Well, and and they should be because um the economy isn't this well understood thing. It's it's a very dynamic complex system and those are easy to break. They can be pretty resilient for a while. Like my body likes to stay at 98.6, you know, but if you put enough bacteria in it, it'll suddenly say, "Oh no, I need to be at 105." And and it's it's that's not a good situation. So body is a complex system. The economy is a complex system. We have people saying, "Oh, don't worry. It'll just be fine." But we can all feel it. There's a chance it's not going to be fine. And I think it's it's a but it's just the ending of a credit cycle. This is ordinary. This is we can study these. We can understand them. So this is what a credit cycle looks like for the United States. We are now standing at over $104 trillion of debt in our system. So people talk about the 38 trillion of federal debt. that's in there. But there's corporate debt, household debt, and yada yada. And you can see clearly something happened in 1971ish. Like something took off. >> Nixon. Yeah. President Nixon >> and it's just been this smooth experience. And so, um, this is this I think if I could just Paul, if I could have people sit down, I'd say I need you to get cross-legged on a on a pillow on the floor and hold your fingers out and meditate. If you understand what's happening in this chart, you can understand what's about to happen next. 100%. Right. >> Right. >> And so, we're gonna take a quick break now, Paul, but when you come back, I I I'm going to show you everybody the chart that I think explains everything about what we're about to face. We'll be right back. Markets are facing heightened uncertainty, and thoughtful portfolio management has never been more important. If your current strategy relies solely on passive investing or diversification without active oversight, it may be time to consider a different approach. At Peak Financial Investing, we connect you with experienced wealth managers who actively manage portfolios using disciplined, research-driven strategies designed to adapt to evolving market conditions. Our focus is on helping clients navigate volatility with clarity and confidence. While no investment strategy can guarantee results or eliminate risk, we believe that preparation and active management can make a meaningful difference over time. Visit peakfinancialinvesting.com to schedule a complimentary consultation and explore whether our approach aligns with your goals. I'm Dr. Chris Martinson and I am proud to support Peak Financial Investing. This is not a guarantee of future performance, but a call to take your financial planning seriously. Again, that's peakfinancialinvesting.com. Investing, of course, involves risk, including the potential loss of principle. Past performance is not indicative of future results. Please consult with a qualified adviser before making investment decisions. All right, welcome back everybody. So, Paul, I I set it up like left a cliffhanger there. So, this is one way to look at this chart. This is just nominal dollars. The other way to look at this would be um it's percentage change from the year prior, which is hard to sort of visually interpret. And I already sort of said there's this little wiggle that's kind of weird here. That's the great financial crisis. Now, on this chart, it doesn't look that doesn't look that interesting. Here's that same chart, but expressed as percent change from a year ago. You're laughing already because I've circled the the the punch line, right? So we can draw a lot out of this chart but the first thing I want to draw is this blue circle which is the only time in the entire data series that credit creation dipped negative was there between 2008 and 9 into early 2010 that almost broke the entire western financial system. I mean broke it. We had Mvin King, the ex-checker or the chairman if you will in our language of of the Bank of England. You had um Hank Pollson exmoke Goldman Sachs T US Treasury Secretary both writing memoir saying people this was almost a lights out extinction level event and that almost broke the system. So the conclusion Paul is that we have a system of credit credit based money that either is expanding or collapsing. Those are its binary states. Mhm. >> Right. Which means it's not a terribly resilient system. And so maybe people are starting to go, "Oh, how are we going to borrow more and more money for what? $200,000 automobiles, $700,000 college experiences, million dollar trailer homes. Like that's the path we're on. That's the path that we're headed on. And I really wish that going back to that period of time that they had have just let the system reset because it would have been it would have been painful. But it would have been a lot less painful then than what it's going to be now if that's forced upon us. And one thing I want to remind investor, you know, the listeners out there, all debt, the most simplistic explanation of what debt is is pulling future income. You're borrowing your future ability. You're taking your present ability to pay. You're pulling forward that future income in today to make investments which are hopefully into productive enterprises. So, at some point, if you continue this game, your income and your ability to service that debt and pay that debt is gone, right? And that's kind of the problem we're running into right now. Incomes have not kept up with the asset price inflation that's taking place. That's the reason why what the average new home buyer is 40 at this point. >> Isn't that where it is? The age of the the median home buyer median home buyers around 40. you know, where's the ultimate endgame at this point? I mean, and you look at the you'll probably show this a little bit because you're on top of everything so good is just the misery that that's bringing uh to the average individual. That comes to the point that, you know, and I think the biggest slap in the face for most people is the increase in their property taxes and their insurance across the board. You know, that's really it doesn't make sense to them at this point. Why are we paying these premiums and I can't even I'm having to fight the insurance company to cover, you know, a an accident or a claim >> when I haven't had a claim for 20 years, but yet they don't want to, you know, cover it at this point. So, yeah, I mean, we're who knows how much longer they can, you know, pencil this together, but we're at the point where, you know, there will be a straw that breaks the camel's back at some point in the future. and we may have temporary deflation, but we know what the response is going to be is to try to do more of the same in the past, which will probably break into a a currency crisis and hyperinflation on the other side of that. That's my biggest concern. >> Well, it it that is that is the fork in the road that we're at right now is that we've kicked the can. We've achieved a lot of extra time. Did not use the time wisely to figure out how to sort of get ourselves, you know, down to a lower level of indebtedness. just use that opportunity to increase it. Weirdly enough, my complaint of the great financial crisis was, "Okay, too big to fail. Got it. Systemic, you know, total meltdown. Okay, you could maybe make a case, but then your job is to make sure we don't have too big to fail in the future." And they only got bigger. Your job was to make sure we have fewer derivatives. We have twice as many today as back then, right? So go ahead and rescue the system, but if you just make it even larger and more fragile, not sure you were um doing the right thing. So but let's let's turn this again. This is total debt in the United States only. Year-over-year change, percent change. And so when you see numbers over here, this is 2 and 1 half, 5, 7, 10, 12, and so on. That's 10%. You can see there were whole periods here. Remember in the 70s we had that ripping inflation. credit was increasing by 10, 12, 15, even 16, 17% right here. You probably remember these early 80s when you had 14% 10-year bonds. >> Mhm. >> You know, >> who wouldn't take that today? But, you know, but the point is is that um if I had GDP on here and a percent change from year over, it's actually declining this whole time. Basically, from about about here, fiveish, and it's coming all the way down, and now we're down here at about 2%. But let's imagine we even have 4% in uh GDP and I've drawn that roughly here with this mouse movement. It means that our credit has to or has been expanding faster than the GDP which is the income in this story for decades. That's our system. Always borrow more than you earn. Would you ever counsel a household to partake in that strategy? >> Absolutely not. I wouldn't uh uh you know a household businesses it makes sense for short bursts of period of time for for uh you know for opportunity growth to take advantage of it but that's still a risky situation because you can implode pretty quickly but for households absolutely not I mean there will be no retirement for the people who operate in that manner because they they they don't ever accumulate enough assets to to produce the income to cover the debt that is exponentially ly growing for themselves. It's unsustainable. >> Yeah. So, I mean, but everybody sort of partok in this in this system and it's kind of fun borrowing from the future spending today, but municipalities have done it, the federal government's obviously doing it on an ongoing basis. Households have done it and corporations have done it. Like you said, a corporation, if you have there's two types of debt you can take out. One's called self-liquidating and the other is nonselfquidating. Big words. self liquidating is I take out a loan because I'm going to double the uh seating in my restaurant which is doing really well. So because I take out that loan, I now have much more income and that income can self-liquidate its own borrowing. Non-selfquidating would be buying a $100,000 truck and and you drive to your accountant's job, right? Um you know, you could get there on a moped. It's like doesn't change how much you earn as a as an as an accountant or whatever the story is, right? There consumptive borrowing to take trips to, you know, buy more house than you possibly could need, etc. Those things are not selfquidating. Um, and and so that's that's the issue. So, this is coming to an end and we're seeing it first in Japan where we're watching their yields blow out on their long paper right now. So the 10 year 20 30 40s um year paper in Japan is blowing out and they have to do that or they have to let their currency completely take it in the shorts and and that's the fork in the road. Do we do we protect do we pro protect our bonds or our debts from not exploding and going up in yield down in price or do we protect our currency and that's and that's the thing I think that's what I'm reacting to. There's nobody in power, not Scott Bent, nobody at the Federal Reserve who's actively talking about this dynamic, which is you can't do this forever. You just can't, >> right? >> You can't borrow more than you earn forever. But we're trying. We are. And think about the aftermath of that short period of credit contraction. the lines that had been there in the past for the Federal Reserve and our government as far as, you know, not crossing. They push up to this threshold, they've blown through so many of those now that none of us are surprised by these, you know, ridiculous interventions that they're they're implementing and the amount of money, the fiscal irresponsibility. you know, Trump's like, you know, and to be fair, I was complaining about, you know, I felt like it was manipulative for the Biden administration to be so fiscally irresponsible going into the election, and now Trump's doing the same thing, right? Like he told us we were he was going to get it under control, but no, he's doing the exact opposite at this point. So the degradation that we see in the morality of society because of these behaviors and then the fraud that we're starting to see come up with First Brands, what Goldman's experienced and and then the complacency of investors that allows that to happen because when you're bailing the system out all the time, then then you're you're breeding a complacency within investors that that all they're caring about right now is how much money can I make and they don't care how. My advice would actually be system destroying. My advice to people is do not take on more debt at this part of the cycle. Start figuring out how to get out from under your debts as fast as possible. And that would make that orange line go down. But let me be clear again. This this dip below zero was almost a system level extinction event. That's at least the people in power thought. So, um I think it would have just resulted in a few ruined big banks and we would have carried on and we'd all be nobody would have even remembered. Um was a company called Croup ones, you know. Yeah. >> Um weird one for the history books like Lehman Brothers. But but this is this if you understand this chart for anybody listening then you understand that we have to keep credit expanding because that's the system we have. And if you get locked into that and that's the only way you understand the world and you're like, "Oh my gosh, either we have this dollar-based credit debt expansion system or we don't and and that's it." There are actually other options. So, I want to talk about um this Luke Groman interview I just did uh came out yesterday. Um so, anybody watching this day before yesterday, if you're watching this in a Thursday, but you you can see it this week. and he I asked him for his you know he thinks through the markets so deeply and is >> he does >> so much experience and he's really thoughtful and he's really humble which I love and um and I was like I'm expecting some of the fanciest answers ever. I'm like hey what do you do for a portfolio? He goes oh I use this portfolio by this guy named Jacob Fugger and no I'm not trying to sneak a an expletive in there. Turns out this guy is a 15th century German mercantalist, right? And the Jacob Fuger portfolio was 25 252 25 4 25s. And of course he lived at a time when you had both inflation and deflation that would sort of cycle back and forth. And we live in a permanent inflation cycle. So we don't quite know how to deal with it, but we could get to deflation. So what are those 25s? Cash, gold, highquality stocks, and land. They said, "Guess what? If you go into an inflationary environment, you're going to lose a couple soldiers in this story, but the other two are going to do really well. If you go into deflation, you're going to lose a couple of soldiers in this story, but the other two are going to do really well." Right? >> And I think that's that's the approach we have to take at this point. >> You have to have some diversification. And and look, for the people who think that this is going to be navigated perfectly, it's not going to happen. You're right. You're going to lose some soldiers in here. you have to sacrifice something um to come out this on the other side. And here's a classic example. I'm recommending that people build up to 24 months of their expenses in an emergency fund right now. Okay. The only push back I get to that is look, is that not going to lose to inflation? You have to sacrifice that soldier in the interim period so that you have the resiliency in in in the short term because what if we do have a pretty nasty recession at some point? What if you lose your job? What if we have deflation for a period of time before you get that inflationary crackup boom on the other side? You have to be willing to sacrifice something in the interim period to have that resiliency to get through. So, I mean that that's that that's a wise appro and a prudent approach from a long-term standpoint to understand you're not going to have all of your soldiers perfectly navigating and you're going to lose some. I I I like that concept. Well, this is why I think, you know, you have to be nimble, which is, you know, obviously the service you provide is is staying on top of this and figuring out because I don't think those are equally weighted tales, right? Deflation, inflation. I actually think the deflation tail is a little bit smaller and thinner than the inflation tail. But that's that's my personal stance. And I think though as circumstances change, you know, I may next week change that entirely to deflation being overweighted if we get into some big sort of a credit explosion implosion. So I think but you have to sort of understand where you are in the game and you got to be ready to sort of like dodge a little. That's that's been my plan. But of course, you know, you should make sure that the core, which to me is golden land. That's that's the core because that anchors that's on both tails, right? It makes sense both both places. You make sure that's squared away. And then the rest of it, you got to play the game, you know? >> Right. And to clarify, debt-free land really debtree land because if if you if you have if you've leveraged this land and you have deflation, you get that that outcome like the whole system collapses and you have deflation. Let's say AI does what it looks like and it'll inevitably do. >> Mhm. >> Incomes don't rise. The incomes don't rise enough to service that debt. You have deflation that collapses. If you have that land debtree, yeah, the price of it is going to go down. the market value is going to go down, but it's still going to be relative from a future standpoint if you're levered on that land. And just to pick a number, you got $600,000 loan on a million dollar piece of land and we have deflation because the system comes apart and that land is worth $400,000. How are you going to keep it? You're you're you're not right. If there's a bank that stands with that collateral on the other side, they're going to foreclose on that land like they did in 2008 or so that they can sweep that away from you. So, you know, I understand you can be shrewd and lever if we're going to get hyperinflation and use that that um uh asset price inflation against that land. That's shrewd. But you but if you're going to have it in the core part of your portfolio, it has to be unlevered, debt-free uh land. And yeah, it'll still do good if we have hyperinflation. Yeah, you're not going to be as shrewd as you were if you have it levered to the hilt, but you've got to have a prudent uh foundation. So, I think that's important for people in land to know because we're in this society where, hey, let's lever up, lever up, lever up, and buy as much as we can. That's fine. If you want to play that game, at least have some your core that's set aside that's debtfree and not collateralized against something else and ideally have it put into an entity that can protect it if you did have some type of uh catastrophic bankruptcy. But that's not a game the average person should play, especially right at or going into retirement. That's a young man's game. >> Yeah, exactly. So, um there is a second reason that orange line can go down. One is people pay down debts and and um andor don't take on new debts right along the way. There's another reason which is of course the debts can be found to be nonviable and they have to get written off the books. Um that'll collapse the stack of paper out there. So we already know there's a whole bunch of commercial mortgage back security paper that hasn't been written off the books yet. I don't know why, you know, but um non-performing loans we saw last was what 11.3%. Um, but we were just talking before we hit the record button, you know, you started to track and look into a little what's happening at the edges in this story with um, >> we'll call it crappy debt. >> Yes. Yes. And and and for the listeners out there, this is this is just amazing to me and I've been following this. So, I'm I'm going to take the time here to read you through the Zero Hedge article because they've done a good job just summarizing what's taking place with with First Brands. And it's it I believe this is ridiculously important. Ridiculously important because this is the canary in the coal mine as far as I'm concerned. Can you see my screen here, Chris? >> I sure can. Yep. >> Okay. So, the the title of the article that came out Thursday, December 9th. So, this is for premium zerohead subscribers. This is bad. Okay. And it is when you get through the article. First brands liquidation looms as DIP debtor. Okay. So, what is that? I I was familiar with it. debtor in possession loan collapses. Now, I had heard of debtor in possession loans, but I wasn't ridiculously familiar with what they are. So, I'm just going to go over here because Grock did a good good uh job summarizing it. Debtorin and possession loans, also known as DIP financing, refer to specialized loans provided to a company that has filed chapter 11 bankruptcy protection under the US bankruptcy code. So this type of financing allows the debtor, the bankrupt company, uh to remain in control of its assets and continue operating its business as a debtor in possession while undergoing reorganization rather than a trustee having to take over. Now, these are typically used to fund ongoing operations, pay employees, suppliers, and other essential expenses during the bankruptcy process. Now, this is the interesting part. The loans are considered superior in bankruptcy priority because they're granted superior priority status under the bankruptcy code, meaning they rank above other claims in the repayment hierarchy. So, specifically, this type of financing can be authorized as an administrative expense with priority over unsecured claims or even with uh with a a priming lean that subordinates pre-existing secured debt. That's getting a little complicated. Well, hold on, Paul. >> Wait, wait, wait, wait, wait, wait. So, if I if I loan a company money and I and I and I've done it because I'm taking a lower rate of interest because I have a senior secured loan, I'm top of the pile. Something goes bad, I get paid first. >> You're telling me that they can enter chapter bankruptcy and the court can say, "Oh, wait. We're going to put another loan on top of yours and subordinate you to that?" >> Absolutely. That's >> feels like the foul to me. >> It really does, does it not? Now the article will explain a little bit more here in a minute uh about how some of the credit market use utilizes this but their their justification is this ensures that you know DIP lenders are repaid before pre-bankruptcy debts including many secured ones administrative expenses and equity holders if the company's assets are liquidated or sold. So here's their rationale. It is to incentivize lenders to provide fresh capital to distressed companies as the elevated priority reduces the risk of non-payment and helps prevent the business from collapsing entirely during restructuring. So yeah, I mean you can have the highest secure debt >> and then somebody can come in and get a higher priority of payment once you jump in there. >> Okay. Well, all right. Okay. I'm following. So hopefully that lays lays the basis for everybody. So I love the way they put this article together. So in the annals of leverage loan lunacy, few spectacles uh rival the ongoing implosion of first brands group. Now for most listeners, this is probably completely off your radar, right? So that debt drenched auto parts Frankenstein. I love this. Stitched together by Malaysianborn serial acquirer Patrick James who turned a sleepy Ohio outfit into a $50 billion li liability leviathon before uh bailing amid whis whispers of billions siphoned into the ether. So they go through here and they talk about if you guys want to find it kind of the the backdrop to this. I've read all of that. Now this is pretty interesting. So now, as this house of wiper blades and fuel uh pumps failed through chapter 11 in a Houston courtroom filed September 28th after the failed refinancing exposed the black box of offbalance sheet shadow finance that ballooned its debt from a mere 6.1 billion on paper to a grotesque 10 to50 billion total abyss. >> 10 to 50. >> Okay. Yes. Total abyss. All right. >> Oh my god. >> Now the real gut punch is hitting the so-called rescue financers. Their vaulted debtor in possession loan. The supposed nuclear bunker bankruptcy priority is cratering below par. You'll like this Chris. Like a bad meme stock on a margin call. So, forget the 150 million in customer uh payments frozen in limbo because the blue chip buyers like Walmart can't tell if they're funding fraudulent invoices or legit Fram filters. Okay, so this is, you know, that's just the appetizer for this trade finance uh train wreck. >> So, what's the main course? First Brand First Brand's 1.1 billion DIP facility pumped in by an ad hoc group of masochistic lenders who thought they were first in the repayment uh uh buffet line is now hawkked at a pathetic 70 cents on the dollar down from par at inception plunging further as the bankruptcy drags into December. Okay, >> so there's a couple of, you know, tweets that came out. Never seen a DIP paper get white like this, >> but this is this is great. >> So great post by Zero Hedge. So the same idiots who did zero homework on the first brand's term loans did exactly zero homework on the first brand's DIP loans. Now the the reason I find this so important and so why it's so important to me is look at this. like they had no concern about jumping in there because because they they they've been complacent in the past. So this this was no slowly and then all at once. This was just all at once it cratered on the other side. So you know then they go to say that's not a dip that's a distress signal blaring from the bowels of a system where even the safest wartime financing is radioactive. I mean that's so what are the knock-on effects from this Chris? I mean how you know this is something very important if you're in that category that now all of a sudden you understand there's risk in an area where you never had it before. So you know basically >> well not only that but it speaks to the idea that the fraud was a lot more systemic and structural than anybody realized. Right. But you should be picking that up on due diligence when you're thinking of pumping a billion into a flailed, clearly fraudulent company. Uh, you'd think, >> absolutely, you would think. But quite frankly, I, you know, I've got to go do some research to see if this statement is true. So, take it with a grain of salt. But it's my opinion being in Wall Street, they're playing with other people's money, right? I mean, you know, maybe they have some skin in the game, but they're playing with other people's money. So according to Bloomberg reporting, it is clear that traders aren't just pricing in default risk on this super senior slush fund. They're screaming that first branch rot has metastasize so deep nobody knows if there's even a carcass left to carve up. So, it goes on down through here and says that, you know, hell, the entire uh street looks like it wandered into a p a ponzi parlor blindfolded, betting on opaque factoring deals that masks James alleged heist of hundreds of millions, if not billions, while the company burned 128 million in cash last October alone. So, how did we get here? And and this is kind of interesting just to show how this happened. So that going back to 2013, this James guy launched the Crown Group and rebranded it at First Brands in in 2020 and went on a PE. Okay, PE being private equity. I've been, you know, raising concerns about private equity for a while. A private equity fueled feeding frenzy gobbling Tricco wipers, Anco blades, Framm filters, Cardone Reand parts, Raybestus brakes. 24 brand strong, 26,000 employees, and a facade of stability propped by 900 million annual interest payments on a 5.5 billion term loan, plus 2.3 billion in hidden inventory lease scams. Now, by the summer of 25, a routine 6.2 billion refi imploded when lenders Yeah. finally demanded Oh, sorry, Chris. Go ahead. >> Sorry, I just got stuck because I'm a numbers guy. 900 million annual payments on 5 billion. >> Yes. >> What's that? 18%. Holy sha. >> Yeah. I mean, the complacency, right? >> 18%. Nobody can afford 18%. Certainly not a Okay, keep going. Sorry. >> No. So, 6.2 billion refi imploded because somebody demanded a quality of earnings peak behind the curtain. Cue the debt dump. Okay, first lean loans from near uh from near par. Okay, par for you listeners out there is 100 100 cents on the dollar dropped right to 36 cents on the dollar. Second leans to a laughable 10 cents on the dollar and the whole edus teetering on a $800 million liquidity ver buffer that evaporated. You'll like this, Chris. Evaporated like fiat in a hyperinflation fever dream. Whoever this author is, I know it's Tyler Dirt and I love it. So, enter bankruptcy, 1.1 billion DIP rescue, which is now worth 70 cents on the dollar >> and um you know, so and there's 106 million more trapped in segregated accounts as courts dissect the factoring fraud. 102 million of it non-factored cash the zombie desperately needs but can't touch. My question is when I look at that last week I'm watching yields start to creep up. You've got an inverse head and shoulders pattern on the 30-year. Now for the listeners that are out there and I can show that in the chart in a minute. An inverse head and shoulders pattern is a technical pattern where you develop a shoulder ahead on the bottom or a head and shoulders boing. a shoulder on the right hand side. And if you break out, okay, these have a 70 to 90% probability of of a reversal move. In other words, yields going down to starting to go up. Is this all about inflation or is this about uh counterparty risk, debt depayment, you know, repayment risk that's in there? So, if we have the concern about inflation with the Fed supposedly going to cut rates again today, right? But you've got this first brand's fraud, lack of ability to pay, and the complacency that is out there. Are we going to see yields go a lot higher because of of uh inflation fears, which is rightfully I mean, I'm terrified of what I see in the bond market. Why would you want to own a 20-year debt right now at 4 and a quarter% or 4.5%. Which is supposedly the safest that you're going to have if the if the Fed's going to let inflation run 6, 7% or higher. I mean, you're guaranteed a loss there, right? Uh, and then also at the same time, why would you carry 20 years worth of debt if on top of that, you've got to worry about default risk on that debt and the fraud that's within the system. So, you know, that's just going to hypercharge any rates that go higher if that's the case. Now, I don't know if that's the case. We'll know 6 months from now when we have the ability to see how all this unfolds. And maybe this is isolated, but there's too many big players that have been too consistent for this to be isolated. But I I guarantee you they're going through their books like crazy right now trying to look and see how high quality their collateral is and the ability of these companies that they've lended to to be able to pay >> at the top of a credit cycle. Paul, there's never just one cockroach. >> No. No. >> Never. >> First brand. >> Never just one cockroach. >> Yep. Oh my gosh. Look at this one cockroach in my kitchen. first brands, right? Like >> now and so you had these debtor in possession or DIP loans which there had to have been a secret group of people out there that understood. Now all of a sudden you jump in priority above some of your senior secured lenders inside of there. So I understand the purpose. Okay, the company's in bankruptcy. We got to keep them going. So let's get some capital in there. Let's carve this thing up. equity holders, you know, the least secured creditors are going to lose and and we have it made. Okay. So, they just got burnt really bad. Really bad. Now, we don't know how this pans out. Maybe it gets back to 100 cents on the dollar. But in this environment, are you willing to go jump in quickly without doing a whole bunch of due diligence to fund the next company that goes into bankruptcy? I wouldn't. Not at this point of the cycle. So, we don't know how this unfolds, but this is just continued rot. It's another breaking. It's not a creaking and popping like you've been talking about. This is a a a breaking, snapping, which would be along the lines of popping within the system right now. That increases the risk while the equity markets are just blazing along completely ignorant to what's actually taking place. And then you've got, and Finn Hendrick's got this great article here. Look what the average investor is doing at this point in and Finn Hendendrick. Oh, I'm sure we're completely safe, right? >> Yeah. >> So, this is the rise of leveraged ETFs. Okay. >> Investing with leverage and borrowing. Look at the growth of this. This goes I mean it's staying in there and all of a sudden, whack. You know, there's 20 what 40? Let's just say somewhere between 200 250 leveraged ETFs right now. they wouldn't be offering them if there wasn't a demand out there for investors. So this complacency that's occurring on top of the KB Kobes letter putting out US government recent layoffs 307,000 employees UPS 48,000 Amazon 30 Intel 24 Nestle 16 Ford 111 I'm jumping through here for the sake of time major layoffs are starting to occur and nobody seems to care because they fully believe right now that the Federal Reserve is going to be able to to print enough money to to where it doesn't matter. I I mean I mean I'm I had somebody tell me the other day, they're like, "You've been really bearish lately." And I don't feel more bearish than what I've been for quite some time. It's just that we're starting to really see these things pop, these dead bodies pop up to the surface and nobody seems to care. Nobody seems to care. And I'm I'm on red alert and everything in our portfolio. Now, I'm not acting until we have a reason to act. But but when there's this much weakness and you see those DIP loans go all of a sudden crack at once, I want to stay on top and be com completely diligent about everything because I think you're going to have to move fast when reality starts to set in for the average individual because it's very important to me that the average person I don't get so concerned somebody's really educated they're they're worried. Okay? I tell them we got to play the game by the rules that are forced upon us because we've been worried about these things for seven, eight years and so far it hasn't come to fruition. But when you got the average person who just hasn't really paid attention or care to pay attention to this, is really starting to scratch their head and say, "I'm worried." And they're starting to use fear terms, that's when you get a panic that sets in and people move really, really quickly. So, so I'm not so sure that, you know, my my biggest concern, like I said, is is we're going to have to move quickly if we start to see some weakness in these overall markets. And it looks like we could be topping here. I don't know if we are, but it looks like we could be >> because I think that downside is going to come a lot faster than anybody is prepared for. >> Well, I'm thinking we need a new indicator on the screen. Paul, it's like six cups of coffee means Paul's a little twitchy and you know, a little jumpy, right? Yes. >> You know, and when we get to 10 cups of coffee, sell, you know, um or whatever. We need we need some sort of indicator across the bottom there. No, I I I mean, but of course, you have to like we've gotten conditioned that things only go up, you know, and the Fed will always step in and they're just we're seeing the diminishing returns. And one of the areas I think Paul we saw you and I have cataloged this the diminishing returns was the ability of the paper slammers in the comics markets to do what they've done for decades right you can sort of detect when you're at the end of a regime they would slam silver and it would stay slammed for a couple hours and then it was a couple of minutes and then it's like a V recovery and and you watch the failing of that. So I I see the Fed the same way. They're going to keep trying to intervene, but the interventions are going to have to get massively larger and they're going to have smaller and smaller actual impacts until we finally admit that this isn't working anymore. >> So, Paul, we'll take a quick break. Um, we're going to come back. We have to talk about silver. Congrats to all the silver stackers out there. But, um, we'll be right back after this. Today's markets are more volatile than ever with ongoing economic and geopolitical uncertainty. Navigating such environments requires thoughtful, adaptive strategies, not a one-sizefits-all approach. At Peak Financial Investing, our registered investment advisory firm connects clients with experienced wealth managers who focus on active portfolio management. These professionals use evidence-based strategies designed to respond to changing conditions, not outdated formulas, but customized approaches grounded in research, discipline, and risk awareness. We believe in open, informed conversations, including discussing tools like precious metals and diversification as part of a broader financial strategy. Every investor's situation is unique, and our adviserss tailor their guidance accordingly. Visit peakfinanciallaniinvesting.com today to schedule your free consultation and explore how proactive management can support your financial goals. I'm Dr. Chris Martinson, proud to work with Peak Financial Investing and my support reflects my professional views. I encourage you to take control of your financial future by making informed decisions. Welcome back everybody. Hi ho silver. Paul, I've been a silver I won't say it's an investor. So, I have this conversation more and more with people because for a while there people say, "Well, what price did you buy silver at?" And it's not the way I think about it anymore. I don't buy silver. What I do is I exchange one form of money for a different form of money. And I'm just displaying a preference, right? So, if I said, Paul, onetime gift, either take this $10,000 in cash or this $10,000 in silver right now, you know, you're going to make a preference choice at that point, right? And when I put it that way, most people reach over for the silver stack, you know, and grab it um you know, under that hypothetical scenario. >> So, it's important to look at it that way for me. But check this out. Um this is today on looks like the 10th of December here. We had this um little mini cup and handle right here that happened from October through November, right? You know, I had so many people tell me that's it. It's over. Silver was overbought. It's done. It's never going up again. And then um it did this just explosive as they tend to do when they resolve out of cup and handles. Up it came and burst out. Um and so we're silver is now safely comfortably over 60. That's a big moment. >> That is a big moment. One thing that's interesting is you talked about I mean look there's been rumors that that they've been manipulating silver for quite some time and last week you showed that great after hours chart versus um versus what's happening during the day. Now people have to be you know when you first enter the world of technical analysis people think that it's a crystal ball that's going to tell you exactly what's going to happen and then they get delusion right the only thing that technical analysis does is it kind of tracks human behavior support levels certain patterns that are emotional patterns that take place it can increase your probability of success that's all we're looking for like earlier I talked about the head and shoulders bottoming power pattern is accurate 70 to 90% of the time. So that means 10 to 30% of the time it's going to fail. Now there's another >> Paul means that 70% of the time it works every time. >> 70% of the time it works every time. Well said. >> My favorite quote from anchor man. And the worst part is is if you're in technical analysis, it works seven times in a row and then you feel confident that it's going to work the next three times and people go all in and then it fails that 30% of the time they get their rear ends handed to them. >> Mhm. >> Now, this is end of day silver. So, it's not updated for today. This is yesterday's end of day. And this is this line at the top right here. This red line is a resistance line. Okay? So, silver makes its run. It fails, comes back and hits the 50-day moving average. That's an exponential moving average. It comes up and tries to p pass through, you know, what is that? 55. Let's say >> 55. They defended hard. Yeah. >> Yeah. 55. They defended hard and whack, it gets hit down. But all of a sudden, you're getting higher lows coming up here and that pressure is building and then it blows through that level and then it starts consolidating. So, you know, one, I was surprised they weren't able to smack it down here because typically these are patterns where it just gets crushed through and I was expecting, hey, maybe we get a chance to buy it here at the 200 day moving average. Maybe if they're successful at this point, which would have been a great buying opportunity, >> but it breaks through and then it starts consolidating. So, I explained to I was talking to a client, oh gosh, uh, Monday, Monday or Tuesday. I'm like, look, if it wasn't silver, I would tell you this is a bull flag and it's getting ready to blow through the top side. I said, but you know, I would expect it to come back because these patterns work really good with your general stocks, especially the really popular stocks, which I, you know, they want to go up, but in metals, I've seen it so many times. You get those lower probability outcomes, but then we break out of this bull flag. Now, that that's a pretty big deal from a long-term standpoint that you're starting to get these these um technical outcomes that are telling you that this is a consolidation phase for higher prices and then they're actually starting to come through. So, for if they are trying, they're not as successful as what they have been in the past to hold this price back. And that's a pretty big confirmation that hey, in spite of a pullback in the short run, look at it as a gift. non-investment advice. This is just conversation to speak. Um, you know, seek professional advice from that standpoint. But if we do get some pullbacks, it's probably going to be a gift for those long-term investors who really understand the fundamentals behind what's taking place right now. >> Well, the fundamentals, of course, is where where I sort of hang out. Um, because uh the fundamental story for silver is just extraordinary. And it's and it's it's a tale of two worlds, right? So the United States and London had controlled the price of silver for a long time, right? And we and we know how they did it. They had a very simple mechanism of action. So silver is your is your physical delivery market. And then New York is where they played the paper games, right? And they would put all these silver contracts out there called futures, but you also had options. You also had short interest on SLV, which is sort of like a wet lands that you could draw water from anytime you needed. And so they had this whole complicated thing and they kept silver's price suppressed for a very long time. Unfortunately, that's a lot of fun, but unfortunately there's this thing called the real world. And then people aren't incentivized to open new silver mines because the price is going nowhere for like a decade. It was 20 bucks, right? Um and that that was a long I got the scars from from that whole period because I was just watching it and I was ambivalent because on the one hand I hated it. On the other hand, I was like I'm getting silver cheap. So, >> you know, but then reality comes along and here's the reality, Paul. Um, silver, we don't there's actually not that many silver mines. 28% of our silver comes from what's called a primary silver mine. So, if somebody said, "Silver's 60 bucks. Let's go get more." Well, you know, they're going to have to go out and open a primary silver mine. And there aren't that many of them, and there aren't that many pure play silver deposits. 70% a little over 70% comes as a byproduct because you're mining lead or zinc or gold or copper. So, so if they said suddenly we need more silver 70% of that you you're basically saying well I guess we have to open a lead mine or a zinc mine or a copper mine and you just don't do that. Those take 20 years, 10, 20 years to open one, right? Cuz you find it, you have to bring the road in, you got to bring water, then you got to bring power, you might have to build your own power station depending on the situation. There's a lot of issues there, right? Um, so we have had a structural shortfall in silver because of this price suppression scheme, which again has a pro and a con depending on your point of view. Um but definitely we don't have new mine output coming on board and we won't for a while. So this is the first year 2025 where we're probably going to see industrial demand exceed 100% of mine output and next year if the trend holds we'll go to 104%. So where's that 4% coming from? Well, it's coming out of silverware, jewelry, grandma's tea set, old coins, and investors who are happen to be holding on to some. And then the next question is, well, what how high does the price have to go to begin drawing that from those people? And at first, not that high. People are like, you know, need money. They don't really bond with grandma's silverware, whatever the story. There's some that can be chased out relatively easy, but then you get into harder and harder hands. And I'm not going to say I'm the hardest of all hands, but I have a number for silver that's significantly higher than where it currently is if they said, "Chris, would you part with it?" Right. >> Right. Well, and I do, too. And I like to try to find an anchor to give me a justification for a price. Now, anything could change, but here's my anchor right now. Because when you shared that information, what, two weeks ago or so? I can't remember if you I'm pretty sure you shared it. I don't know. Maybe I did. I think you did that the Indian government has told the Indian banks that they can loan silver they they can use as collateral loan against their their silver at a 10:1 rat Yeah. 10 to1 ratio for gold that's $400 an ounce that they can loan against. That's what the government is telling the Indian banks that we're going to be just fine with you if you loan at that ratio on your silver even though it's 60. So, what am I going to do if I'm an Indian bank and I want to be as profitable as I can possibly be? I'm going to allocate as much capital as I reasonably can and still cover my cash flow responsibilities to silver at that point and lever it up. That's allowing those banks to an extent to print some money. So you know that's a that's a very important development from my point of view that takes place because that's essentially the Indian government incentivizing to bring silver within their country and what they're the largest populated country on the face of the earth at this point. That's a lot of capital that can go into silver from that standpoint >> with a huge tradition of saving in silver and gold obviously. Yes. Um I mean many millennia long tradition. It's goes stretches way back. Um, but I think it's even more important than that, Paul. I think it because this is the first sovereign level remonetization, even though they haven't turned silver directly into money, but allowing it to be used as collateral within their money system. That's an effective monetization. So allowing silver to become collateral, it is the first sovereign level remonetization of silver. I thought the demand from silver just for industrial versus investment was was a big player. Now we have a third axis right of demand which is oh this is now part of our financial system. >> It's really big and I know it's big because we're not talking about it in the western press at all. >> That's why I know how big it is. Right. >> Right. >> Can't ignore that hard enough. Oh, they're going to push crypto on you as hard as they possibly can while ignoring, you know, the the un unbelievable fundamentals, you know, and and again, look, I'll have some people upset at me over this, but just you got to go through the thought process, okay? So, what's the actual use value if it let's say the monetary value of crypto kind of goes to zero, right? Or let's say it goes to a dollar. Is it going to become a medium of exchange? I don't think, you know, the government's telling us anything that they're going to let Bitcoin become our actual currency at this point. Okay? The best that they're doing is promoting it as a as a digital version of gold. But think of all the uses that you have for silver, from industrial to electronics to jewelry to to all kinds of things that can be utilized from a long-term standpoint. And and they're not pushing that. And I don't know, you know, I don't want to be a conspiracy theorist about everything, but when you look at governments that are that are incentivizing the purchase of it within their country and and then you've got Wall Street promoting something else with the prices moving like this, it makes me wonder whether that's a you know, this lure, a fishing lure. Yeah. >> To to direct investors over here while they accumulated accumulate as much of it as they possibly can. >> Here's the thing. I really objected to this whole idea like, oh, we're going to move to crypto because maybe the dollar itself isn't working out. So instead of this, we'll do that. The most honest thing you could do is you would have multiple types of currency out there. So imagine the Treasury directly issues Treasury notes that are backed at some percentage by gold. I could take those. You said, "Chris, I'm going to pay you for doing my roof. Would you like these semi- goldbacked Treasury notes or Federal Reserve note? Or would you like this collateralized silver or SNH green stamps?" if anybody's old enough to remember what those are. I mean, whatever. Like, multiple currency systems are good because they keep the other ones honest. You have to have competition. I I just object this whole idea. >> We're just Soviet level communists. Like, no, there's only one true authority. There's only one money. But people are figuring out, Paul, there isn't just one form of money. And that's why I think gold and silver are climbing so much because people have started to catch on like, oh, there is this other game out here that we could play. I don't have to just play this game. And that's of course the terrorizing part to the people are the keepers of the game. You they don't like people to have options in this story. >> No, they don't. And and and go back to look at the diversification within. What are the bricks doing with the unit that we have talked about? So for listeners that aren't familiar with the unit, um the bricks, Brazil, Russia, India, China, South Africa, all of the other countries that are involved associated this economic block at this point have been methodically working towards something as an alternative to having to deal with the dollar or be under the boot that all of a sudden is on their neck with the US government, you know, from a intervening and not accepting the rule of law and the standard that's been out there. So, the unit, which is a digital currency that they're they're proposing be developed. Supposedly, there were some extra steps that were taken last week. I'm not up to speed on that yet, but it's a digital currency. So, you've got all the benefits of of the digital. You've got all the risks associated that we talked about earlier, but their core statement is it's going to be linked to 40% backed by gold. So, so now you've got some fundamental value that's usable within that uh within that. and they're talking about other percentage being linked to the to the commodities associated with the countries that are that are using it or are sponsoring it than another 30% to the economic output from those countries. So, that's a viable alternative. On the other side, just like you stated, if I could buy a 30-year Treasury that 30 years from now I could exchange, you know, have be paid in gold uh versus fiat currency, I would be interested in allocating some money to a to a 30-year Treasury that could be exchanged by gold because now I know I have some inflation protection if things take place. I'd also have some default protection in case the government was default from that standpoint because I can take that gold in delivery versus getting paid back in fiat currency for 30 years of what the governments are doing right now and their inflationary bent. I would certainly take that, but I don't have any desire outside of a short-term trade um you know for short-term opportunity to own a 30-year Treasury at this point. >> Now, fascinating. I just had an interview with Vince Lansancy also coming out this week and he we talked specifically about this um uh uh about the unit and all that stuff and you know it's got this it's got the piping is something called Mbridge that's all been tested that that that works right so this is the piping that connects the systems and then the unit is the thing that flows through those pipes right so it's a basket of stuff 40% gold 60 other however they they structure that what caught me though is he said you know everybody talks about bricks Brazil Russia India China South Africa South Africa is not really a player. Um he said you know who the five countries are that are involved. Obviously it's India, Russia and China. The other two is Bulgaria and Hungary who are deep in on this. Now I understand why there's so much vituprative language about Victor Orban the the the prime minister of Hungary. Because listen, you know, you can disagree about refugee stuff. They'll sort of scold you and wag a finger. But when you threaten to exfil from the currency system, that's when the serious stuff gets started, right? >> Yeah. >> So, on that front, um I know we're we're we're coming to the end of our time, but we have to talk about this. It's that big a deal. This just came out. Unusual Wales, very high quality source. I trust them when they say something. It says quote European officials eye nuclear option of dumping US treasuries if Trump cuts Ukraine deal without allies per the Wall Street Journal. I was like you can't say that. You cannot say that. You don't even if you're going to threaten that. Some European officials went to the Wall Street Journal apparently and said and and did this. This is the trial balloons like hey you guys we want you to know how serious we are. I'm like that can't be right. It's being reported everywhere. Um, you know, >> it's it's actually a thing. So, Paul, this is the kind like I thought that one like the freezing of Russia's sovereign assets under Biden, right, in February of 22. Terrible idea. Look at everything that happened as a consequence of that, right? We're getting the unit. We're getting the fracturing, the dolorization, all this turmoil, gold spiking, all because of what was really an unthinkably stupid thing to do, which was to violate unilaterally violate a core contract, right? >> Yes. Yes. >> It just happened again. I don't This is going to have repercussions guaranteed. >> No doubt. I mean, that's that that's a uh that's a nuclear level threat. It really is. But let's think it through, Paul. So you're Europe. Well, we have 2.38 trillion in treasuries. We're going to start selling them. A, we're going to pre-announce it, so everybody's going to frontr run us. >> B, we're going to get increasingly worse returns, but we get dollars back when we sell them. What do you do with the dollars? >> That's a good question. >> Buy euros. >> But well, by euros. I mean, if I was them, I'd buy silver and gold if I was going to go from that standpoint. But are they going to make that wise a decision at this point from that standpoint? Are they going to go buy the unit with if it's up and running? Is that what they're going to do? That's a good question. Where are you going to deploy that size of capital? >> I don't think they've thought it through. >> No. No. >> I just don't. Um, but uh this is going to have huge repercussions if this gets wor I mean obviously somebody like Trump would be retaliative. I would imagine if they tried to do anything like that. he would just put he put the boot down on that real quick. So, I mean, Europe might wake up one day and find out they have 400% tariffs, right? And their industry is just shut down. Um, we might just say, "Oh, we're just pulling out of NATO and all these air bases and just like you're on your own. Have good luck." Right? At any rate, I would expect economic turmoil, financial turmoil. We already know the European banking system is creaky as all get out, right? We all know that they owe each other money through their target two imbalances. every country owes every other country, which is like, well, then how does country A pay back B if C owes A? It's a weird circle. Um, and uh and and they're already on their economic deathbed right now, at least in terms of Germany and and productive manufacturing and all that. So, the prediction's easy. They're going to have to print a lot of money >> and hope for the best. >> Yeah. And if I'm in Europe, >> I'm I'm also thinking about um Fuger's portfolio very carefully at this point. >> Yeah, that that's gonna when you have two behemoths, this with that type of threat, there's no way Trump's not going to retaliate. That's that was well thought through and your thought from that standpoint, there's no way he's not going to retaliate. And that's going to cause a lot of pain for a lot of investors and and citizens around if they start fighting from at that level and that low towards each other. That's like two family p, you know, two family members starting to slug it out for sure. Wow. You know, and and just their level of desire to keep that war going is what amazes me. I just don't understand. I don't either because all you have to do is is look at the maps and Russia continues to advance. Um they clearly have won the battle. Remember 19 20 levels of sanctions later they're supposed to be in tatters. Their economy is doing great. The ruble's doing great. And by the way, their war tactics have gotten extraordinarily good. And I the last thing I would want if I was a German battalion leader would be to take my soft train once a week, you know, or once a month or once a year recruits and put them into a field where they're up against these particular battleh hardened um Russian troops who are probably the most experienced in the world right now cuz it's on the job training as it were. Um it'll be a catastrophe if they do that. It really will. >> I mean and look maybe maybe I'm foolish in making this statement because they sure don't seem to think this way. you know, have a ceasefire, say, "Look, here's the line. We're done. Okay, Putin will take you at your word that you don't want to advance into Europe. So, here's the line. We're backing off, but we're going to prepare if you cross that line, then it's fullon war, right? Let's let's just end this thing. Get it over. I don't understand why they keep pushing and pushing and pushing instead of just settling for peace, drawing the line, admitting the fact that, hey, this thing's over. You've won this point. Let's let's draw a line and let's agree to to move forward and and for the benefit of all the citizens in the global environment too. >> Well, I think it was just on Zero Hedge yesterday or this morning they reported that the first official British soldier in Ukraine was killed. They said it was a training accident. Um we all know what that means. He got a little too close to the front line and it didn't go quite right. um and uh or something. But uh at any rate uh we are starting to I don't understand why but Europe does seem to go a little crazy every so often and they kind of have a history of this and and so they have their own reasons politically I assume for going to war and it's I don't know what but if they do that the riverbations and like there's just not a chance that this delicate global economy sort of hangs together at this point again deflation or inflation where are you on spectrum. I still wait more heavily for inflation than deflation because I have it in my heart of hearts. They're going to have to pull out the printing presses big time. And it has to be so but it has to be coordinated, right? Because if it's not coordinated, one country's printing but a nearby country isn't. We call that Austria, Germany, the hyperinflation of the Weimar period. So in the past when we've all hyperin like Japan prints, we print, Canada prints, Europe prints and and so it kind of like you know balances but if it we have if that we get that breaking we don't have that central bank coordination and Europe has to print like crazy and we're not quite there yet. That's where things get really chaotic uh very quickly. >> That's right. And that's what presents ridiculous opportunity for the investors who are ready to move and act upon it at the same time. I mean, it it really does. So, you know, I'm still of the belief that that that we have some deflationary event before we get to the worst part, but I'm not, you know, but but that that's my kind of expectation of where we're going to go. But at the same time, if we break straight out into inflation, I mean, I'm watching the commodities charts right now. I'm looking at a lot of your value stocks that have been been obliterated. There are a lot of opportunities out there that are going to do a better job of protecting your capital than what the generals have been keeping this market going here in the most recent period of time. So even if we break straight into that, you know, I'm not saying it's easy, okay? But from my standpoint, I've thought it through to the point that it's pretty easy to make those reallocations in the portfolio because now you you know what's going to happen. You know, at this point, we do have coordinated interest rate cuts across the board. If they all move into coordinated printing, it's going to start showing up because that big money is going to realize and we're seeing it creep into the commodity space. We're seeing it flood to an extent from price action into gold and silver. Uranium has been doing pretty good within the past year, but other commodities in general are starting to creep up. Now, that's an indication some people are moving that direction, but we don't see enough money flow to where at least the big connected individuals are flooding into that area. And I think if they're getting ready to start printing without allowing some deflationary impact in the short run, you're going to see that pace pick up. And maybe that's what we see over the next 6 months and we'll adapt accordingly. But I'm still concerned about, you know, recessionary risk. And that's one thing I want to show here at the end. And I know I'm taking this a little bit longer than we should. And, you know, and this is pretty important because when we go back to April, the poll state, and Charlie Bolo put this together, 66% chance of a recession. Well, that was incorrect at the time. Right now, the consensus is there's a 2% chance of a recession in spite of the layoffs we're getting. Now, maybe that's correct. I don't know. But There's not a lot of 2025 left, I guess, is the point. >> Oh, yeah. In 2025. Okay, good point. But I'm I'm saying Well, and you got to think people are looking forward to recession in 2025. Yeah, we're not going to have one here, but I think that's the general consensus that we're not going to have one next year either, and at least the market's behaving that way. So, >> I thought that was relatively important to to consider. >> Well, again, you know, we've talked about this as a tale of a tale of two worlds, right? And and so um Michigan consumer sentiment index uh just came out. It's never never in history been this depressed. So consumers right obviously for all the reasons we've talked about right some of them are being laid off or they know people who've been laid off. Job finding new jobs stupid hard especially for college graduates don't need them anymore. Got AI whatever the pressures are maybe you know small business bankruptcies d there's a lot of hard data that says not super awesome right now. Um so so you got that and you know against that backdrop we've also seen this is a long-term chart of corporate profits after tax as a percent of GDP and nor 6% is sort of been the wobble line right and it kind of makes sense if a corporation figures out how to earn 10 11% they get competed away somebody else jumps in and says that looks tasty I'll I'll take some of that and they get um so that's how it's been forever and ever I mean this chart goes back here I think it starts in the ' 50s that's the '60s7 7691, but then something again happened right around 2008. We had this huge explosion because of the whole great financial crisis, housing bubble. It plunged back down. You're right. We should have we should have done this. We didn't. The Fed started printing. They printed in 2008, 9, 10, 11, 15, 19. They just kept printing and printing, right? And so now people have got it locked in that kind of like, oh, the new normal is like 11% US corporate profits. um maybe or maybe not, right? And and so we have to consider that. But while the corporations have been raking it in because the you know Fed's been printing money and handing it out, it hasn't really made its way over to the consumers. And so that's the that's the prime tension. I think that's why so many people feel kind of not good about it. Why young people are starting to get a little cranky about the whole thing, why mom dami gets elected and all of that stuff. The people are doing Main Street's doing bad. Wall Street's doing great. And that's the problem. Nothing for Main Street, everything for Wall Street. And so, um, that's got obviously lots of repercussions that could manifest. >> And I believe that that's a tech that those corporate profits at that level are unsustainable because you've had a couple of things. Yes, you've got the Fed that's been uh rigging stacking it against the average consumer for the benefit of the corporations, but at the same time, some investors out there will remember GE. It's not been on the radar. Jack Welch basically financialized GE up until his retirement at the end. And they were the number one performing stock in the S&P 500. I think they were the number one uh performing in 1999 to 2000 going back to 1970. horrible performance on that stock since 2000 after Jack Welch built, but everybody watched what he did with the financialization of these corporations through buybacks and various other things. And then that was taught through a lot of your business schools and that's been implemented on top of all this government printing. And just like GE went from the number one performing stock to one of the worst on the other side because of that financialization, it hollowed out the company. I think we're seeing the same thing t happen with a lot of these major corporations because of these CEOs that are that are using like Munger said, "Show me the incentive and I'll show you the outcome." You know, they'll they're they're risking the future viability of the company instead of reinvesting into R&D to buy back their own stock to inflate artificially inflate profits for their own benefit. >> It's how it's been. That that has been the game. So, well, I think Paul, that brings us to the end of our our time here today. And so, if anybody wants to take advantage of Paul and his incredible team, please go to peakfinancialinvesting.com to get the process started. There's a simple form. You fill it out and within 48 business hours, somebody from Paul's team will get a hold of you and you'll schedule the first of three calls. The first call is just an introductory, make sure there seems like a fit. there is hey get into a plan and then if get through that there'll be a recommendation session all free no obligation um just to get you on the way and um Paul uh thank you for doing that really appreciate the service you provide people oh it's my honor it's my honor and you know our belief is especially by taking people through the plan I have to do that before I can even understand your situation enough to give you a recommendation and so that you understand your situation and I can tell you confidently I mean, I had a meeting recently with someone and we went through their plan. I stress tested them against, you know, all the way up to 7 and a half% inflation, even further than that. I said, "Hey, this is the level that you need to change." We didn't move to a recommendation meeting because how they were positioned. They could weather inflation up to 7 12%. They enjoyed lading treasuries themselves. They had a little bit of protection in there. And it was an honor to be able to just meet them. They were appreciative. you know, hey, you're one of the first people that's not trying to push your strategy on top of us, you know, but it wasn't appropriate. >> So, you can rest in comfort for those that are out there. If it's not appropriate for recommendation, I'm not. And you will see it because I will demonstrate it to you through the plan uh that we go through. >> Yep. And and so they just they said, "Thank you very much for helping us feel good, and they're going to continue to manage things the way they've been managing them, and and that was the right thing for them." And so, that's what you did. >> Yep. >> That's exactly right. Do the right things. everything else will take care of itself. >> Excellent. Well, thank you very much everybody. This is the end of this FinanceU. Uh we'll see you next week, I presume. And um hope you enjoyed this. Comments down below. Let us know if there are any topics you want to uh have us cover, but otherwise we'll just do what we do, which is cover it all. All right. Thanks, Paul. >> Thanks. Have a great weekend. Good to see you. You, too.