Gold Strategy: Why You Must Store Metals Outside The Banking System | Marc Faber
Summary
Precious Metals: The guest strongly advocates accumulating physical gold (and silver/platinum) as a long-term store of value, adding on pullbacks and dollar-cost-averaging monthly.
Gold Miners vs. Physical: Mining equities appear inexpensive relative to broader markets, but he prefers physical custody and stresses secure, non-bank storage in multiple jurisdictions.
Energy Stocks: He sees energy as deeply under-owned in the S&P 500, offering attractive dividends and relative value, while acknowledging cyclical risks in a broad market bust.
AI Bubble Risks: Warns that the AI/semiconductor trade shows classic bubble symptoms—massive capex, public speculation, narrow breadth—and could see sharp reversals.
Private Credit Stress: Notes Blackstone redemption limits and broader shadow banking vulnerabilities as signs of tightening liquidity and potential systemic pressure.
Treasury Bonds: Suggests that cash and long Treasuries could be a tactical allocation over the next 6–12 months if recessionary dynamics deepen and risk assets fall.
Macro & Geopolitics: Highlights consumer stress from persistent inflation, rising inequality, and elevated geopolitical risks; favors real assets and prudent diversification to preserve purchasing power.
Transcript
Gold is trading [music] right around $4,500 an ounce today, finding support after a sharp 30-day pullback that has been a major test for precious metals investors. Now, while gold is rebounding this morning, the recent price action reminded the market that even hard assets do not move in a straight line. And my guest today says day-to-day volatility completely misses the larger structural shift. Dr. Mark Fabber has held physical gold for decades, not because he expects it to rise every day, but because he sees no other reliable store of value left in the global economy. So, today, we're going to ask him some critical questions. Is this gold correction over? What is driving the broader market volatility? And and how should investors position their capital as the 40-year boom in paper assets unwinds? Dr. Mark Fabber, publisher of the Gloom, Boom, and Doom Report, joining us now. Mark, welcome back to the show. Thanks for making the time. Well, thank you very much for having me and good day to all your viewers and listeners. >> I appreciate that. Uh, an interesting day, an interesting week as it is in the markets these days. I mean, this morning we saw gold moving back near $4,500 after that sharp 30-day pullback that has tested the patience of many precious metals investors. Now, you've been doing this a long time, and of course, you maintain you don't worry about the day-to-day price action, but but for the person watching who maybe hasn't been doing this a long time, and who bought near the recent highs and and is navigating that recent volatility, how do you evaluate this correction, is it a temporary liquidity squeeze? Is it broader than that? Well, this is a very good question because there are different views about liquidity in the world. >> Mhm. And uh I think in general the public or the investing crowd is in is believing that cash is trash and that you have to hedge your assets or your money with assets such as real estate and stocks and precious metals and other commodities. ities, energy and so forth and so on. And I think that we have been in a bull market for asset prices already for more than 40 years. In fact, actually since 1981 when interest rates peaked, uh asset prices have gone a up a lot because of money printing by all central banks around the world. and the general loss of purchasing power of paper money. That is correct. However, at the present time, it is possible that liquidity is somewhat tightening because uh in general people believe and economists will tell you liquidity drives markets. In other words, it drives up bitcoins and it drives up uh micron technology and whatever. But it is also possible or probably u likely that when asset markets decline that liquidity tightens. I mean we've seen now two major asset classes that have declined meaningfully in price in the last few years. And this is um commercial properties. Commercial properties. I just read uh of um a company they sold their property portfolio or holding in Seattle for half actually less than half of what they paid in 2018. And that has tightened liquidity for some people who were large holder of um real estate in a leveraged way. And then we have the decline in uh cryptocurrencies that has surprised many people because they were all betting on Bitcoin and everything going up and now these cryptos in some cases are down 70 80% from the big. So that has tightened liquidity for generation Z because the cryptos were bought like crazy by young people who didn't want to own any gold, silver, and platinum. They wanted something that moves more than the traditional safe assets such as precious metals. And that has tightened liquidity of young people. And more recently over the last say 18 months property residential property prices have gone down especially condo prices and a lot of not wealthy people but middle class people were long condos partly to have a second home in Miami or so but also partly as an investment. And so I think that liquidity is sort of tightening and it will be interesting to see today. As an example, the Dow is up strongly, but the six most active stocks are all down on the day because they're technology related. And uh the socks index is down about 3% whereas the Dow Jones is up strongly. So we have changes in the composition of assets that are meaningful. I like precious metals for the simple reason that I'm not so smart to choose the right thing at the right time every year or every half year. I like uh precious metals because I think that in the current environment, especially if I look at the Trump administration, I want to have something relatively safe and uh that is thriving and keep its value in an environment where the government will spend money like water. They're not going to reduce the deficit. The deficit will go up. And since the interest payments on the debt will therefore also go up, more money printing is only a question of time. Only a question of time. >> I want to stick on the metals front because it's interesting. I mean, it's an important kind of mechanism. People usually think liquidity tightens because central banks raise rates or shrink balance sheets. Um, you know, you're saying failing asset prices themselves tighten liquidity. Is that why you hold gold through volatility? Because a liquidity squeeze can hurt gold short term, but the the policy response to that squeeze is ultimately more monetary inflation. Actually, personally, I hope that gold falls another $500 to $1,000 an ounce because then I would increase my gold position again rather substantially. I have a substantial position already uh more than most people would have except the gold box like Eric Spr. He has a most of his assets are in gold or some other people I know they have most of their assets in gold. But most people that I know in the investment world uh say among fund managers uh most fund managers do not have more than 1% in gold and already a 5% involvement in gold is a lot. I know rich people in Switzerland, they have most of their assets in real estate, in some stock portfolio, in some bond portfolio, private equity, and gold maybe, you know, a few ounces which they inherited from their grandmother which bought them during World War II. >> Um, I guess we got to talk a little bit about this liquidity squeeze. I want to follow up on that because there's some some interesting news in the credit markets today that's right at the heart of this thesis mark. Uh Blackstone has just limited redemptions on flagship private credit fund BC Red for the first time ever after investors rushed to pull 10% of their shares. And concurrently the financial stability board is warning that a massive bank exposure to these shadow banks is kind of creating a dangerous circles of risk is what they're calling it. Is this Blackstone redemption freeze, you know, is this kind of getting closer to that crack in the private credit boom or is this just an isolated liquidity ma mismatch? I mean, where does this move with the thesis? >> In my view, private equity and private credit is a major disaster waiting to happen. And it's not just Blackstone that is kind of limiting redemptions. In Switzerland, we have a very big private equity firm uh Swiss property or whatever the name and uh they also limited redemptions and the stock has been cut more than half than more than in half. Also, Blackstone shares are cut more than in half. The market is telling you that private equity and private credit is in deep trouble. >> I got to ask you, I mean despite pockets of softer data, I guess the counter would be credit spreads remain relatively contained in the US consumer has shown a lot of resilience prolonged some would say. I mean are structural bears simply too early or is this consumer strength entirely an illusion built on credit card debt? because this morning it's crossing it's it's around $1.3 trillion according to the Fed this morning. >> An illusion. Yes, we have the illusion of wealth. But your question is actually very relevant because uh the markets are very strange. You have anomalies that are very unusual. Look, uh, consumer confidence in disease are at the record low while the stock market is at a record high. This has never happened before. Why is that? Because the econ we have two economies. The economy of the 1%, the rich people. And I'm not complaining. have also benefited from financial asset inflation. But uh 70% of Americans or 80% of Americans are the Americans that live a normal life kind of the median household and the lower household. There are very few assets and if they have assets they had to borrow money to buy these assets. these uh these people uh have essentially a problem of affordability. They can't afford to buy things they would like to buy but they can't because they don't have the money. >> And the super rich, they already have everything. Uh and so the economy is very mixed. The economy of the super rich who own the yachts which will they will sell later on at a loss a colossal loss and uh the economy of ordinary people the the economy of ordinary people is in recession period that you can be sure of the purchasing power of ordinary people has gone down and they're spending in real terms they go to The supermarket they buy but they have to pay much more and they so they buy less and the companies what they the companies do because they also have rising cost they reduce the size of helpings so we have this shrink inflation [laughter] the the poor people like always get screwed period especially especially under the Trump administration we've been talking about official data a little bit and quite a bit here. But, you know, you bring up a good point here, Mark, because the official data still shows somewhat a a stable labor market, low layoffs and and even positive payroll growth. Are the government numbers lagging reality or are, you know, are they just measuring the topline economy while missing this household stress you're talking about? There are some subjects I cannot talk about uh with authority because I don't know we have in the field of economics the labor economies and they can tell you about the labor market in precisely and so forth but I can tell you my observation is that salaries have gone up far less than the cost of living >> and what the government is publishing that inflation is 2 3% or even 4%. Is nonsense. Nonsense. The cost of living of the typical household with say two children or even without children including rent, insurance policies for his car and for the house and whatn not and so forth. These cost of living are going up in my opinion based on the calculation of other economies by say 7 to 12% peranom depending on where you live. Look at the cost of energy. Look at the cost of your car insurance. Look at the cost of your house insurance and so forth. I can tell you the government publishes statistics that show that health care cost have gone down in the last 5 years and in reality look at your insurance premiums look at the [clears throat] doctor's bill when you go to the hospital and so forth. So I mean bring it back down to the house level liver here. If ordinary families are already in a recession they can't they can't look at gold near $4,500 an ounce and say I I can buy that. I mean, what do they actually do? Is is the answer smaller gold purchases? Is it silver? Is it cash discipline, debt reduction, or just avoiding speculation altogether? >> I mean, people are driven into speculation largely because their ordinary income is insufficient for them to survive. >> I mean, they can survive on a on a uh very small budget. But I tell you, ordinary people, especially the pensioners that get the rent from the government, the pension from the government, uh their pension from the government has gone up far less than the cost of living. This is the reality. And the government will not tell you about it because uh they don't want interest rates to go up significantly and they don't go want to adjust the cost of living allowances of the pensions. Say by what the true cost of living increases are. Say at the present time the pensions of the government go up by 3 4% peranom. in reality they should go up by say 7% peranom. >> I mean that speculation that you're talking about can also destroy the little capital they have left. So so what do you think is the line between trying to escape financial repression and you know taking reckless risk because the system has made patients feel impossible? >> Well [laughter] my answer is very simple. Ordinary people should save some money. M >> they have to lower the cost of living somewhat and then with their savings uh they shouldn't hold it in a in a bank at very low interest rates. They should actually buy precious metals every month of the year for the next 50 years. a little bit of gold every months and then they will have an average price that is very attractive in the long run. This is my view. But uh you know the gen the the generation Z they will tell you we're going to buy a year ago Tesla and Nvidia and now Micron technology and AMD and so forth and three years ago a AMF and GameStop and before that the cannabis stocks all stocks that went up like a rocket. And then they fell down by 98%. >> Yeah. Yeah. It's an interesting point. I mean, you know, Mark, that kind of connects direct to to energy because for ordinary households, energy is not a market abstraction. It's gasoline, heating, electricity, food, transport. You've talked about this. I mean, we saw Brent crude slide to around $95 today following headlines of a conditional ceasefire between Israel and Lebanon. However, I mean, the truce is already mared by ongoing clashes and negotiating uh for broader US peace deals are stalling. You've long warned that a temporary ceasefire is kind of an illusion that doesn't solve structural conflicts and Trafier is an interesting one today. Their chief economist is warning that oil is obviously at a critical juncture due to depleted buffer stocks. We don't need to get into what's happening necessarily with the war, but from a from a macro investor standpoint, how do they read this price action? Well, I don't know how other people read it, but my view is that if you look at energy stocks and you compare the energy sector in America to the S&P, >> energy nowadays as a percent of the S&P is at the lowest level in like 40 years. uh we were at about 35% of SNP in 1980 and I think about 20% or 25% in 2008 and now we're down to about 5% of the S&P. So if you talk about investing in value, >> I think energy stocks are relatively low. I can buy a portfolio of oil stocks and they would have a dividend yield of say 6% and are relatively low. Uh I don't think there's a huge risk. So I own some oil shares but I have a I have to admit that my stock portfolio is very diversified and globally. I mean I have stocks in Europe and I have mostly stocks in Asian economies because I'm a believer in Asia and also I'm a believer in Chinese uh long-term economic development. So, not gold, not not energy over gold here because both are kind of underowned real assets. Energy still has management risks, you know, that capex. What makes the risk worth taking now? Well, they're relatively low, but it's a good question you're asking because in a mad world, uh, what is relatively less mad, it it may be appearing attractive, but if the mad world collapses and we have a a major financial bust, uh, then also what is relatively low will go down. >> [laughter] >> So yeah, >> I mean whatever you whatever you consider at the end I think that in a major bust gold and silver and platinum will go down also but they will go down by maybe 30%. And many other things will go down to zero zero and many other things will go down 98%. Say all stocks related to the Trump family will go to zero. That is my prediction >> with a relatively high confidence. [laughter] >> Well, listen, this this brings us to the equity markets because that AI trade you're talking about, I mean, it had a little bit of a reality check today. Broadam uh Broadcom shares plummeted about 15% after an underwhelming outlook disappointing investors and that kind of triggered a sharp rotation out of chip makers into the broader market and and stragging the NASDAQ 100 down under 4 or over 1%. Now listen, you've noted that you know stocks, bonds, real estate, they all rode that 40-year boom driven by falling interest rates. Talk to me a little bit about this AI bubble. Uh, is this a healthy consolidation? How where are we here? >> [cough and clears throat] >> Well, I I've experienced so many bubbles and I always distinguish there small bubbles uh that when they burst do not cause significant economic damage, but big bubbles like the South Sea stock in uh 1720 in England when it burst it caused significant damage. or in the 19th century we didn't have central banks so the bubbles were large but um they were not uh as large as they are today uh but when they burst the railroad bubble burst >> Mhm. or one of them. I mean, they had many railroad cycles in the 19th century because railroad construction and canal construction were the big capital spending uh objects at the time. the the biggest railroad bubble burst in in um 1873 after the civil war and by 1895 95% of railroads were in receiverhip or bankrupt >> and the interesting thing about the AI bubble that I need to mention you know in America And elsewhere in the world, canals were a huge thing because they facilitated the transport of wheat, corn, soybeans in large quantities, on ships, on canals going from river to river. And the most successful canal that was ever built in America, the Eerie Canal, also went bust. And I just like to mention that in England and in Holland, the Dutch East India Company also went past eventually after having been a very successful enterprise. So I think the AI bubble and it is a bubble except I cannot tell you has the bubble burst yesterday or today. >> Mhm. >> Or will it burst in 6 months time you know and some stocks the market is a composition of many different stocks. So in CR you could have one stock going up vertically and pushing up the index and 499 stocks in the S&P not going up. The recent rise of the market this year I'm to say is very poor in the sense that 60 that 45% of stocks are below the 200 day moving average. There's only a handful of stocks that is making new highs. The new high list is very limited. >> What is the most common mistake investors kind of make in every bubble that you see? You've been through this quite a few times. I mean, is it valuation? Is it leverage? Is it the belief in a new era? Or is it just assuming that the central bank will always bail them out? >> A combination thereof. But I believe that uh the mood during a bubble is uh to get rich quick. Uh that people, you know, are caught in a mania. And there are books about the crowd mentality, how crowds behave. Because uh like I give you an example. You walk in winter time through a winter landscape and everything is covered with snow and ice and you come to a pond and there's nobody on the pond. You will be extremely careful when you cross the pond and you will be afraid that they could break and you fall into the cold water. But if the village has a party and is ice skating on the pond and there 500 people ice skating on the pond >> without any thought you will cross the pond because other people are on it. But in reality, the ice is more likely to break when there are 500 people on it than if you're alone. >> Yeah. Yeah. >> You understand? >> The masses the mass psychology and there's a very good book on the subject by Gustav Leon is called the crowd lul. He was a Frenchman and he wrote the book in 1830 or say 1832 and it's a very interesting book that I recommend to your viewers and readers because it discusses also the manas that occurred like witchcraft. Suddenly people believed in witches or the crusades. Suddenly people believed that they could liberate Jerusalem from the Muslims and so forth. And so people have from time to time the alchemists. They thought they could discover gold, how to make gold. Their manas all the time. I saw it as a child in my school. One year they played with beads and another year with other games and so forth and then collectibles and stamps and so forth. Every year something different. It caught the attention of everyone and everybody was excited and then it then disappeared again. >> Yeah. Hey, how do you know disciplined investors kind of recognize that mood in real time? Is it when valuations no longer matters or when everyone starts to borrow to participate or when people kind of believe that the risk is not being in the trade? I mean the difficult part is that during every mania as you call it. I mean early skeptics look wrong for a long time as you know. So I mean how do you avoid being too early while still avoiding the final collapse? [laughter] >> Don't ask me. I've been early to all my life. [laughter] But I think that two things I mean I remember in the late 1990s and when people ask me about how successful has you have you been as an investor I say I made one major mistake in my life as an investor and this is I shorted the NASDAQ bubble in 19979 98 and it still doubled and I covered then at the end of 1999 uh at the wrong time but it [clears throat] still went up 30% between the end of 99 and March 21, 2000 30% the index in three months before it broke and it broke down then more than 70%. or Japan. I also shorted it in 1988 and it went up to the end of 1989 and then it broke down by more than 70%. So, uh I have now essentially given up being short, but I'm worried that this is the biggest mistake I'm making nowadays, not to be short the markets. >> Interesting. No, it's tough. I mean, leaving leaving money on the table in these markets are difficult, especially when you believe on what's happening, but you know, the the stocks keep flying up. So, I mean, you know, it does kind of bring an interesting point. The technology is real. Timing becomes the hard part. So, what tells you we're already in the dangerous phase rather than that still productive buildout kind of phase? Yes, actually is a good question because I think next report I want to write about the symptoms of a major bubble. >> First of all, you need uh excitement. Excitement about an industry, about the sector, about the commodity and that excitement exists at the present time about AI. Number two, you should uh deal with a capex boom, capital spending boom in that sector that then uh kind of attracts a lot of money and it isolates money. captures money that is then illquid and the AI boom in terms of size as a percent of the economy is not as large as the railroad boom of the 19th century but it is the biggest capital spending boom that we experienced since World War II is gigantic and it imob immobilizes capital. Number three, you need public participation. We have massive public participation in option trading, in futures trading, in day trading, in options and so forth. I mean the speculative atmosphere is gigantic and you need foreign capital flowing into the sector of I mean the object of the boom and that we didn't have in 2008 and we didn't have in 1999 2000 but now we have it we have huge foreign capital the whole world is speculating in Nvidia and MU I mean micron technology and up to recently in Tesla now this has cooled down but it attracts the capital the the US stock market is now something like 60% of the world's stock market capitalization it's a 70% of the MCI world index is huge huge. [laughter] >> You know, Mark, I mean, that psychology of bubbles is exactly why I kind of want to bring this back to gold. I mean, and in mania, investors are chasing assets because they want to get rich quickly. Gold is almost the opposite. I mean, it's not a promise of fast wealth. It's kind of a way to protect purchasing power. When the the promise is around, every everything else gets too aggressive. Uh, I guess you can see why the younger generation goes for that AI winner as opposed to looking at something as boring as gold. But, you know, central banks haven't been. And when we look over it, because the standard narrative here that they're simply ddollarizing is something our audience has heard a million times. I mean, we're kick. But there is a much more uncomfortable reality. I mean, many major central banks are sitting on massive unagnowledged marktomarket losses of their own bond portfolios. I guess the question is is when institutions that print the currency are technically insolvent by private market standards. I mean is there is there accumulation of physical gold less about geopolitical strategy and just a silent hedge against the collapse of their own balance sheets? You're raising a very important point because for a commodity that has performed as well as gold say when I started to work in 1970 gold was $35 an ounce >> and now it's um $4,500 what not. I mean it's performed well over the long term >> and it's performed very well over the last 12 months, 18 months and there's no excessive speculation. The inflows into ETFs have just recently picked up but then with the correction they've again [clears throat] sold. I mean considering the performance of gold, silver and platinum over the last 18 months, there has been remarkably little speculation. I go out to bars at night and people play pool and they they have people that are involved in sports betting and all sorts of investment schemes that are scams or dubious. I tell you, you hardly ever hear of anyone buying or selling gold. Hardly ever. They buy and they're all active in bitcoins and in Solana and whatn not. But gold and silver and platinum, it's a I tell you of all the people I know only maybe five are active in precious metals. interesting. >> I'm not particularly active because I just hold gold, period. I I don't sell gold. I've sold some of my gold shares because they had huge runups. And uh I'm I'm of two minds about gold shares. I think if you want to make money, you can make money a lot of money in gold shares if you buy them at the right time. the mining. You're talking about mining assets. >> Yeah. >> Yes. >> Yeah. >> Yes. But I I think the mining stocks are quite inexpensive relative to everything else. But I personally prefer physical under my mattress. Under my mattress. >> Any minors you're keeping an eye on? I got I got to ask you that. I mean I have a South African gold mines and I have Canadians. >> Yeah. >> And because I was a director of Ivanho, I have still a fairly large position in Ivanho >> is not one of my favorite stocks right now. And I have a plat I have a preference for platinum as a commodity because it's very cheap relative to gold and silver and silver is relatively cheap compared to gold. But wheat, corn, soybean is even lower relative to gold and everything else. And oil since you talked about energy or we talked about energy before oil is low compared to gold. I mean you can establish ratios 1 ounce of gold how many buildings does it buy? Or how many ounces of gold do you need to buy a building? I mean a house. And how many ounces of gold do you need to buy a bushel of wheat? And how many ounces of gold do you need to buy silver and so forth? And so you can establish what is relatively low compared to gold. And I can tell you what is relatively low compared to gold is your work is a labor cost. And what is relatively low compared to gold are food prices. I mean wheat, corn, soybeans, sugar and u Yes, that's and rubber. >> Yeah. Yeah. Yeah. It's an interesting one on the commodity side. >> I mean you listen for for for a serious investor kind of watching this looking to build out a defensive portfolio today. I mean you you brought you brought up some of those allocations but I mean what specific kind of percent of their liquid net worth should be allocated to physical precious metals and you know others in that portfolio. It it seems like it looks a lot different this year. I mean as a rule I would say uh and I mean it depends on the person because he may have large real estate assets and he may be diversified and so forth but I would suggest to hold about 25% of his assets in gold and some of my friends they own 80% of the money in gold. I think it's very courageous because uh one uh feature of gold is that it doesn't really yield. It doesn't provide you with a regular income. I have a bond portfolio as well >> and as you say in the last few years it hasn't been doing well but not as badly as say a 30-year bond. When you look at the 30-year bond, >> Mhm. >> its price from the peak in 2020 has almost been cut in half. But you had the dividend. I mean, you had the interest payments every year. So, the total return hasn't been that bad. And in the last two years, I just checked, the return hasn't been negative because >> the 30 years has gone down a little, but you got the 4% interest. >> You know, you're talking about T bills and the bond market's obviously very interesting right now. But you I got to bring up the counter because we've we frequently or I've heard you frequently kind of highlight the incompetence of these central planners, right? I mean, I guess the question is is if if if the very people holding gold right now and are kind of hoarding gold right now are the same central bankers who trapped us in this inflation style, does it worry you at all to be on the exact side of the trade as them? >> Look, as an investor and as a large asset holder, you know, I was fortunate in life. I wasn't particularly smart, but I was lucky and uh I worked hard and with a lot of discipline. I mean, I I'm 80 and I work every day because I don't mind working. I think it's better for me to work than to drink the whole day. >> Mhm. >> But uh my view is that everything is in danger zone. You know, when I grew up in the 50s, my grandmothers and grandparents said, "You have to save 10% of your income and put it on deposit with a bank." Well, that advice was a disastrous advice over time because of the depreciating currency, the loss of purchasing power of paper money. They should have said, "Mark, you stupid young boy, buy every day some stocks or buy every day some gold and so forth and don't put it with a bank on deposit." But interestingly nowadays if I look at the asset allocation of people the cash position of investors is at one of the lowest points in history >> and it tells me that maybe and the asset that nobody wants are treasury bonds long-term treasuries. M. >> So it tells me if we go into recession and the recessionary forces are much stronger than what people expect because if asset prices decline, it may affect consumption meaningfully. And if that happens, maybe cash and bonds is not such a stupid allocation for the next 6 months or one year. You understand? is not a long-term proposition. It's just a strategic opportunity. And I am cautious of increasing my stock position. I have a large portfolio of stocks in Thailand because the Thai stock market is one of the few stock markets that has gone down for the last 5 years. I have to ask you because I mean you know the journalist in me every investment thesis needs a falsifier and you know you've warned of a debt trap asset deflation currency debasement for a long time. I'm curious on the other side I mean is there any specific economic data points or maybe a structural shift in government policy that would prove to you that your hard asset thesis is wrong you know and that paper wealth has stabilized. Look, you mentioned before about my worries and so forth. I I think u it's not a prediction but I'm just saying >> we economists we have business cycle series Peter worked I mean wrote a book called business cycles and it's a thousand pages. It's very boring but very sorrow very sorrow. I mean he wrote also socialism and democracy and capitalism which is very entertaining book is also difficult to read but very good. Anyway we have business cycles and some are called the kondraatf the kusnets the jugler and the kitchen cycles and so forth. And historians uh have also war cycle theories >> and geopolitical analysts and they these war cycle theories argue for this and that to happen or according to the war cycles here I want to tell you >> the conditions for war have never been better uh than now post the first World War because the first world war occurred largely I'm not saying only because Germany overtook England as an industrial power they became the larger economy than Britain in 1910 because they had grown dramatically between 1870 and 1910 under Bismar and nowadays you know you have to superpower the US that was the absolute absolute superpower after the second world war. No question about it. [clears throat] But over the last 20 years, China has gone from insignificant to very significant. They produce more steel than the rest of the world combined. And they have 1.3 billion people. And their industrial production is much larger than the US. And also the car industry is now the largest car industry in the world. You know is a gigantic country in terms of economy and they went from 2% of world consumption of industrial commodities in 1970 from 2% to now around 50%. And that creates tensions between the superpower, the US up here and the arrogant west who still lives in the age of neo colonialism and the rising power of bricks countries including China, India, Indonesia, Brazil and so forth. And I tell you the conditions for war are perfect. And that's why I don't think that the peace treaty they will sign something because Trump he wants to win the midterm elections and so forth. And he basically made a huge mistake to get involved in something as complex as the Middle Eastern battlefields war theater. Uh but but he grossly overestimated himself. He thought he can go in in a week he solves the problem and so now he's stuck. He's stuck. And Netanyahu is not playing his game. You understand? Netanyahu Netanyahu I utterly dislike the character, but he's smart. Trump is dumb. There's an election coming up there too. Uh hey if those are the conditions I mean what assets actually survive that environment that war is it physical gold is it energy commodity defense linked equities >> low leverage liquidity >> I I think equities survive any war better than uh bonds. I mean you look at German industry, you look at the 10 largest companies in Germany in 1900, Bayer, BASF and so forth and later Mercedes. All of them they survived World War I and World War II and exist nowadays. As a stockholder, you still have something. If you invested in bank deposits, you have nothing. Nothing at all. three times nothing. >> Same in Russia and China. Uh so I think that in equities you you'll be better off. But the perfect uh asset in those conditions are holding uh gold coins. But I I want to point out one thing uh about go holding gold. You know, one of the leading philosophers of the 20th century was Wittenberg and he studied actually with with Russell Bertro Russell in at Oxford. And anyway, Witkinstein, his family was one of the most affluent families in Europe at the time. And uh they owned I think about 250 tons of gold in Switzerland in a vault. And when Hitler came to power they found out that the Vitkinstein they were Austrians but they had Jewish blood. So Hitler went to the family and said, "Okay, you want to stay in Austria, you want to keep your steel empire, you hand over the gold to us. You don't hand over the gold to us, we expropriate you of everything and send you to concentration camps or what not. [snorts] You're not You have to keep quiet about your gold holdings and hide it. But you can hide it in if you have a piece of land like Ted Turner in America, you can dig a hole somewhere and nobody will ever find it. >> Yeah, this is actually good because we can, you know, the story brings the whole interview back to the core issue, custody, sovereignty, and whether you truly control your wealth. I mean, for investors watching this to wrap up, what is the lesson on gold confiscation and custody? Is it enough to just own gold or does where and how you own it matter just as much? >> Yes, I I think this is a very crucial question in uh what way do you own gold? And I would store gold not in the US but overseas but even overseas. You see in Switzerland we have a trend towards socialism. the socialists uh essentially run the city of Zurich. If they come one day with a initiative and say well we have to expropriate the gold from people because they made unusual large fortunes and so forth. Who knows? But I would say this relates to all of your assets. First of all, you can't take your assets to heaven or hell. That is something you have to consider. And as a capitalist is always difficult to in my view more difficult to distribute your wealths than to earn it. And uh the other question is about gold. There are companies like uh from crayarts. They they arrange the storage of gold outside of the banking system and you can take the gold out in Singapore or I think Australia and Switzerland and Dubai and so they have depositors uh in different countries but outside the banking system or I think that say in Thailand with all its disadvantages the property rights are very well established. I mean, if you have a house, the certificate is watertight. It's unlikely that the government will take it away. But with real estate, the government can impose very high taxes. >> That is, you know, I am, as people know, I'm so anti-government. [laughter] I'm worried about the people that are in government nowadays are not people who worked and they regarded as sort of a duty to be then looking after government affairs. They are professionals that went to socialist universities and they all are Marxists >> and dangerous dangerous for the prosperity of an economy. You you know in the 19th century in America. Why did people travel to America from Europe, immigrate? The reason was there were opportunities for ordinary people to make money. Uh jobs were better in America despite of all the robber baron saga and nonsense that people talk about. the American entrepreneurs, the rubber barons to build the railroads and the refrigeration cars and the machines and the trains and canals and so forth. Yeah, they made money, but they allowed the cost of living of people to go down. The price level in 1900 was lower than in 1800 >> because they didn't have central bankers. And most importantly in America in the 19th century there were hardly any economists and strategists that were spreading lies. >> A little bit different than now. Hey doctor, >> a little bit. >> Well, listen, it all comes down to trust. And Mark, that's that's the final point I want to leave viewers with. Although, we'll have you back on the program. Uh I ran out of time, but we're going to have you back on the program uh because I could talk to you about that side for quite a while. Dr. Mark Farber is joining us, of course, publisher of Gloom, Boom, and Doom Report. We appreciate your time, your perspective. Uh thanks for joining us. Thanks for making the time, Mark. >> It is my pleasure, and I wish all your viewers and listeners uh good fortune. But I truly believe that the way you hold assets going forward is going to be very important. >> Mhm. No, I 100% agree. And of course, we'll continue to watch the headlines coming from the terminal. There's always so many every week. Uh but the S&P today, I mean, interesting to watch. All right, Mark. I appreciate this. Thank you so much for your time. >> Well, thank you for your time. Bye-bye. Always good to hear from Mark and thank you for watching Kick News. Let us know in the comments, is this gold pullback a buying opportunity for you, a warning that liquidity is tightening across markets. And of course, if you found this interview useful, please subscribe right here to Kicko News. Hit the notification bell. We're almost at a million subscribers and it's viewers like you that keep us here for conversations on gold, stocks, equities, macro, the Fed, and of course, the forces driving precious [music] metals. I'm Jeremy Savin. For all of us here at Kiko News, thanks for watching. Heat. Heat. Heat. Heat. [music]
Gold Strategy: Why You Must Store Metals Outside The Banking System | Marc Faber
Summary
Transcript
Gold is trading [music] right around $4,500 an ounce today, finding support after a sharp 30-day pullback that has been a major test for precious metals investors. Now, while gold is rebounding this morning, the recent price action reminded the market that even hard assets do not move in a straight line. And my guest today says day-to-day volatility completely misses the larger structural shift. Dr. Mark Fabber has held physical gold for decades, not because he expects it to rise every day, but because he sees no other reliable store of value left in the global economy. So, today, we're going to ask him some critical questions. Is this gold correction over? What is driving the broader market volatility? And and how should investors position their capital as the 40-year boom in paper assets unwinds? Dr. Mark Fabber, publisher of the Gloom, Boom, and Doom Report, joining us now. Mark, welcome back to the show. Thanks for making the time. Well, thank you very much for having me and good day to all your viewers and listeners. >> I appreciate that. Uh, an interesting day, an interesting week as it is in the markets these days. I mean, this morning we saw gold moving back near $4,500 after that sharp 30-day pullback that has tested the patience of many precious metals investors. Now, you've been doing this a long time, and of course, you maintain you don't worry about the day-to-day price action, but but for the person watching who maybe hasn't been doing this a long time, and who bought near the recent highs and and is navigating that recent volatility, how do you evaluate this correction, is it a temporary liquidity squeeze? Is it broader than that? Well, this is a very good question because there are different views about liquidity in the world. >> Mhm. And uh I think in general the public or the investing crowd is in is believing that cash is trash and that you have to hedge your assets or your money with assets such as real estate and stocks and precious metals and other commodities. ities, energy and so forth and so on. And I think that we have been in a bull market for asset prices already for more than 40 years. In fact, actually since 1981 when interest rates peaked, uh asset prices have gone a up a lot because of money printing by all central banks around the world. and the general loss of purchasing power of paper money. That is correct. However, at the present time, it is possible that liquidity is somewhat tightening because uh in general people believe and economists will tell you liquidity drives markets. In other words, it drives up bitcoins and it drives up uh micron technology and whatever. But it is also possible or probably u likely that when asset markets decline that liquidity tightens. I mean we've seen now two major asset classes that have declined meaningfully in price in the last few years. And this is um commercial properties. Commercial properties. I just read uh of um a company they sold their property portfolio or holding in Seattle for half actually less than half of what they paid in 2018. And that has tightened liquidity for some people who were large holder of um real estate in a leveraged way. And then we have the decline in uh cryptocurrencies that has surprised many people because they were all betting on Bitcoin and everything going up and now these cryptos in some cases are down 70 80% from the big. So that has tightened liquidity for generation Z because the cryptos were bought like crazy by young people who didn't want to own any gold, silver, and platinum. They wanted something that moves more than the traditional safe assets such as precious metals. And that has tightened liquidity of young people. And more recently over the last say 18 months property residential property prices have gone down especially condo prices and a lot of not wealthy people but middle class people were long condos partly to have a second home in Miami or so but also partly as an investment. And so I think that liquidity is sort of tightening and it will be interesting to see today. As an example, the Dow is up strongly, but the six most active stocks are all down on the day because they're technology related. And uh the socks index is down about 3% whereas the Dow Jones is up strongly. So we have changes in the composition of assets that are meaningful. I like precious metals for the simple reason that I'm not so smart to choose the right thing at the right time every year or every half year. I like uh precious metals because I think that in the current environment, especially if I look at the Trump administration, I want to have something relatively safe and uh that is thriving and keep its value in an environment where the government will spend money like water. They're not going to reduce the deficit. The deficit will go up. And since the interest payments on the debt will therefore also go up, more money printing is only a question of time. Only a question of time. >> I want to stick on the metals front because it's interesting. I mean, it's an important kind of mechanism. People usually think liquidity tightens because central banks raise rates or shrink balance sheets. Um, you know, you're saying failing asset prices themselves tighten liquidity. Is that why you hold gold through volatility? Because a liquidity squeeze can hurt gold short term, but the the policy response to that squeeze is ultimately more monetary inflation. Actually, personally, I hope that gold falls another $500 to $1,000 an ounce because then I would increase my gold position again rather substantially. I have a substantial position already uh more than most people would have except the gold box like Eric Spr. He has a most of his assets are in gold or some other people I know they have most of their assets in gold. But most people that I know in the investment world uh say among fund managers uh most fund managers do not have more than 1% in gold and already a 5% involvement in gold is a lot. I know rich people in Switzerland, they have most of their assets in real estate, in some stock portfolio, in some bond portfolio, private equity, and gold maybe, you know, a few ounces which they inherited from their grandmother which bought them during World War II. >> Um, I guess we got to talk a little bit about this liquidity squeeze. I want to follow up on that because there's some some interesting news in the credit markets today that's right at the heart of this thesis mark. Uh Blackstone has just limited redemptions on flagship private credit fund BC Red for the first time ever after investors rushed to pull 10% of their shares. And concurrently the financial stability board is warning that a massive bank exposure to these shadow banks is kind of creating a dangerous circles of risk is what they're calling it. Is this Blackstone redemption freeze, you know, is this kind of getting closer to that crack in the private credit boom or is this just an isolated liquidity ma mismatch? I mean, where does this move with the thesis? >> In my view, private equity and private credit is a major disaster waiting to happen. And it's not just Blackstone that is kind of limiting redemptions. In Switzerland, we have a very big private equity firm uh Swiss property or whatever the name and uh they also limited redemptions and the stock has been cut more than half than more than in half. Also, Blackstone shares are cut more than in half. The market is telling you that private equity and private credit is in deep trouble. >> I got to ask you, I mean despite pockets of softer data, I guess the counter would be credit spreads remain relatively contained in the US consumer has shown a lot of resilience prolonged some would say. I mean are structural bears simply too early or is this consumer strength entirely an illusion built on credit card debt? because this morning it's crossing it's it's around $1.3 trillion according to the Fed this morning. >> An illusion. Yes, we have the illusion of wealth. But your question is actually very relevant because uh the markets are very strange. You have anomalies that are very unusual. Look, uh, consumer confidence in disease are at the record low while the stock market is at a record high. This has never happened before. Why is that? Because the econ we have two economies. The economy of the 1%, the rich people. And I'm not complaining. have also benefited from financial asset inflation. But uh 70% of Americans or 80% of Americans are the Americans that live a normal life kind of the median household and the lower household. There are very few assets and if they have assets they had to borrow money to buy these assets. these uh these people uh have essentially a problem of affordability. They can't afford to buy things they would like to buy but they can't because they don't have the money. >> And the super rich, they already have everything. Uh and so the economy is very mixed. The economy of the super rich who own the yachts which will they will sell later on at a loss a colossal loss and uh the economy of ordinary people the the economy of ordinary people is in recession period that you can be sure of the purchasing power of ordinary people has gone down and they're spending in real terms they go to The supermarket they buy but they have to pay much more and they so they buy less and the companies what they the companies do because they also have rising cost they reduce the size of helpings so we have this shrink inflation [laughter] the the poor people like always get screwed period especially especially under the Trump administration we've been talking about official data a little bit and quite a bit here. But, you know, you bring up a good point here, Mark, because the official data still shows somewhat a a stable labor market, low layoffs and and even positive payroll growth. Are the government numbers lagging reality or are, you know, are they just measuring the topline economy while missing this household stress you're talking about? There are some subjects I cannot talk about uh with authority because I don't know we have in the field of economics the labor economies and they can tell you about the labor market in precisely and so forth but I can tell you my observation is that salaries have gone up far less than the cost of living >> and what the government is publishing that inflation is 2 3% or even 4%. Is nonsense. Nonsense. The cost of living of the typical household with say two children or even without children including rent, insurance policies for his car and for the house and whatn not and so forth. These cost of living are going up in my opinion based on the calculation of other economies by say 7 to 12% peranom depending on where you live. Look at the cost of energy. Look at the cost of your car insurance. Look at the cost of your house insurance and so forth. I can tell you the government publishes statistics that show that health care cost have gone down in the last 5 years and in reality look at your insurance premiums look at the [clears throat] doctor's bill when you go to the hospital and so forth. So I mean bring it back down to the house level liver here. If ordinary families are already in a recession they can't they can't look at gold near $4,500 an ounce and say I I can buy that. I mean, what do they actually do? Is is the answer smaller gold purchases? Is it silver? Is it cash discipline, debt reduction, or just avoiding speculation altogether? >> I mean, people are driven into speculation largely because their ordinary income is insufficient for them to survive. >> I mean, they can survive on a on a uh very small budget. But I tell you, ordinary people, especially the pensioners that get the rent from the government, the pension from the government, uh their pension from the government has gone up far less than the cost of living. This is the reality. And the government will not tell you about it because uh they don't want interest rates to go up significantly and they don't go want to adjust the cost of living allowances of the pensions. Say by what the true cost of living increases are. Say at the present time the pensions of the government go up by 3 4% peranom. in reality they should go up by say 7% peranom. >> I mean that speculation that you're talking about can also destroy the little capital they have left. So so what do you think is the line between trying to escape financial repression and you know taking reckless risk because the system has made patients feel impossible? >> Well [laughter] my answer is very simple. Ordinary people should save some money. M >> they have to lower the cost of living somewhat and then with their savings uh they shouldn't hold it in a in a bank at very low interest rates. They should actually buy precious metals every month of the year for the next 50 years. a little bit of gold every months and then they will have an average price that is very attractive in the long run. This is my view. But uh you know the gen the the generation Z they will tell you we're going to buy a year ago Tesla and Nvidia and now Micron technology and AMD and so forth and three years ago a AMF and GameStop and before that the cannabis stocks all stocks that went up like a rocket. And then they fell down by 98%. >> Yeah. Yeah. It's an interesting point. I mean, you know, Mark, that kind of connects direct to to energy because for ordinary households, energy is not a market abstraction. It's gasoline, heating, electricity, food, transport. You've talked about this. I mean, we saw Brent crude slide to around $95 today following headlines of a conditional ceasefire between Israel and Lebanon. However, I mean, the truce is already mared by ongoing clashes and negotiating uh for broader US peace deals are stalling. You've long warned that a temporary ceasefire is kind of an illusion that doesn't solve structural conflicts and Trafier is an interesting one today. Their chief economist is warning that oil is obviously at a critical juncture due to depleted buffer stocks. We don't need to get into what's happening necessarily with the war, but from a from a macro investor standpoint, how do they read this price action? Well, I don't know how other people read it, but my view is that if you look at energy stocks and you compare the energy sector in America to the S&P, >> energy nowadays as a percent of the S&P is at the lowest level in like 40 years. uh we were at about 35% of SNP in 1980 and I think about 20% or 25% in 2008 and now we're down to about 5% of the S&P. So if you talk about investing in value, >> I think energy stocks are relatively low. I can buy a portfolio of oil stocks and they would have a dividend yield of say 6% and are relatively low. Uh I don't think there's a huge risk. So I own some oil shares but I have a I have to admit that my stock portfolio is very diversified and globally. I mean I have stocks in Europe and I have mostly stocks in Asian economies because I'm a believer in Asia and also I'm a believer in Chinese uh long-term economic development. So, not gold, not not energy over gold here because both are kind of underowned real assets. Energy still has management risks, you know, that capex. What makes the risk worth taking now? Well, they're relatively low, but it's a good question you're asking because in a mad world, uh, what is relatively less mad, it it may be appearing attractive, but if the mad world collapses and we have a a major financial bust, uh, then also what is relatively low will go down. >> [laughter] >> So yeah, >> I mean whatever you whatever you consider at the end I think that in a major bust gold and silver and platinum will go down also but they will go down by maybe 30%. And many other things will go down to zero zero and many other things will go down 98%. Say all stocks related to the Trump family will go to zero. That is my prediction >> with a relatively high confidence. [laughter] >> Well, listen, this this brings us to the equity markets because that AI trade you're talking about, I mean, it had a little bit of a reality check today. Broadam uh Broadcom shares plummeted about 15% after an underwhelming outlook disappointing investors and that kind of triggered a sharp rotation out of chip makers into the broader market and and stragging the NASDAQ 100 down under 4 or over 1%. Now listen, you've noted that you know stocks, bonds, real estate, they all rode that 40-year boom driven by falling interest rates. Talk to me a little bit about this AI bubble. Uh, is this a healthy consolidation? How where are we here? >> [cough and clears throat] >> Well, I I've experienced so many bubbles and I always distinguish there small bubbles uh that when they burst do not cause significant economic damage, but big bubbles like the South Sea stock in uh 1720 in England when it burst it caused significant damage. or in the 19th century we didn't have central banks so the bubbles were large but um they were not uh as large as they are today uh but when they burst the railroad bubble burst >> Mhm. or one of them. I mean, they had many railroad cycles in the 19th century because railroad construction and canal construction were the big capital spending uh objects at the time. the the biggest railroad bubble burst in in um 1873 after the civil war and by 1895 95% of railroads were in receiverhip or bankrupt >> and the interesting thing about the AI bubble that I need to mention you know in America And elsewhere in the world, canals were a huge thing because they facilitated the transport of wheat, corn, soybeans in large quantities, on ships, on canals going from river to river. And the most successful canal that was ever built in America, the Eerie Canal, also went bust. And I just like to mention that in England and in Holland, the Dutch East India Company also went past eventually after having been a very successful enterprise. So I think the AI bubble and it is a bubble except I cannot tell you has the bubble burst yesterday or today. >> Mhm. >> Or will it burst in 6 months time you know and some stocks the market is a composition of many different stocks. So in CR you could have one stock going up vertically and pushing up the index and 499 stocks in the S&P not going up. The recent rise of the market this year I'm to say is very poor in the sense that 60 that 45% of stocks are below the 200 day moving average. There's only a handful of stocks that is making new highs. The new high list is very limited. >> What is the most common mistake investors kind of make in every bubble that you see? You've been through this quite a few times. I mean, is it valuation? Is it leverage? Is it the belief in a new era? Or is it just assuming that the central bank will always bail them out? >> A combination thereof. But I believe that uh the mood during a bubble is uh to get rich quick. Uh that people, you know, are caught in a mania. And there are books about the crowd mentality, how crowds behave. Because uh like I give you an example. You walk in winter time through a winter landscape and everything is covered with snow and ice and you come to a pond and there's nobody on the pond. You will be extremely careful when you cross the pond and you will be afraid that they could break and you fall into the cold water. But if the village has a party and is ice skating on the pond and there 500 people ice skating on the pond >> without any thought you will cross the pond because other people are on it. But in reality, the ice is more likely to break when there are 500 people on it than if you're alone. >> Yeah. Yeah. >> You understand? >> The masses the mass psychology and there's a very good book on the subject by Gustav Leon is called the crowd lul. He was a Frenchman and he wrote the book in 1830 or say 1832 and it's a very interesting book that I recommend to your viewers and readers because it discusses also the manas that occurred like witchcraft. Suddenly people believed in witches or the crusades. Suddenly people believed that they could liberate Jerusalem from the Muslims and so forth. And so people have from time to time the alchemists. They thought they could discover gold, how to make gold. Their manas all the time. I saw it as a child in my school. One year they played with beads and another year with other games and so forth and then collectibles and stamps and so forth. Every year something different. It caught the attention of everyone and everybody was excited and then it then disappeared again. >> Yeah. Hey, how do you know disciplined investors kind of recognize that mood in real time? Is it when valuations no longer matters or when everyone starts to borrow to participate or when people kind of believe that the risk is not being in the trade? I mean the difficult part is that during every mania as you call it. I mean early skeptics look wrong for a long time as you know. So I mean how do you avoid being too early while still avoiding the final collapse? [laughter] >> Don't ask me. I've been early to all my life. [laughter] But I think that two things I mean I remember in the late 1990s and when people ask me about how successful has you have you been as an investor I say I made one major mistake in my life as an investor and this is I shorted the NASDAQ bubble in 19979 98 and it still doubled and I covered then at the end of 1999 uh at the wrong time but it [clears throat] still went up 30% between the end of 99 and March 21, 2000 30% the index in three months before it broke and it broke down then more than 70%. or Japan. I also shorted it in 1988 and it went up to the end of 1989 and then it broke down by more than 70%. So, uh I have now essentially given up being short, but I'm worried that this is the biggest mistake I'm making nowadays, not to be short the markets. >> Interesting. No, it's tough. I mean, leaving leaving money on the table in these markets are difficult, especially when you believe on what's happening, but you know, the the stocks keep flying up. So, I mean, you know, it does kind of bring an interesting point. The technology is real. Timing becomes the hard part. So, what tells you we're already in the dangerous phase rather than that still productive buildout kind of phase? Yes, actually is a good question because I think next report I want to write about the symptoms of a major bubble. >> First of all, you need uh excitement. Excitement about an industry, about the sector, about the commodity and that excitement exists at the present time about AI. Number two, you should uh deal with a capex boom, capital spending boom in that sector that then uh kind of attracts a lot of money and it isolates money. captures money that is then illquid and the AI boom in terms of size as a percent of the economy is not as large as the railroad boom of the 19th century but it is the biggest capital spending boom that we experienced since World War II is gigantic and it imob immobilizes capital. Number three, you need public participation. We have massive public participation in option trading, in futures trading, in day trading, in options and so forth. I mean the speculative atmosphere is gigantic and you need foreign capital flowing into the sector of I mean the object of the boom and that we didn't have in 2008 and we didn't have in 1999 2000 but now we have it we have huge foreign capital the whole world is speculating in Nvidia and MU I mean micron technology and up to recently in Tesla now this has cooled down but it attracts the capital the the US stock market is now something like 60% of the world's stock market capitalization it's a 70% of the MCI world index is huge huge. [laughter] >> You know, Mark, I mean, that psychology of bubbles is exactly why I kind of want to bring this back to gold. I mean, and in mania, investors are chasing assets because they want to get rich quickly. Gold is almost the opposite. I mean, it's not a promise of fast wealth. It's kind of a way to protect purchasing power. When the the promise is around, every everything else gets too aggressive. Uh, I guess you can see why the younger generation goes for that AI winner as opposed to looking at something as boring as gold. But, you know, central banks haven't been. And when we look over it, because the standard narrative here that they're simply ddollarizing is something our audience has heard a million times. I mean, we're kick. But there is a much more uncomfortable reality. I mean, many major central banks are sitting on massive unagnowledged marktomarket losses of their own bond portfolios. I guess the question is is when institutions that print the currency are technically insolvent by private market standards. I mean is there is there accumulation of physical gold less about geopolitical strategy and just a silent hedge against the collapse of their own balance sheets? You're raising a very important point because for a commodity that has performed as well as gold say when I started to work in 1970 gold was $35 an ounce >> and now it's um $4,500 what not. I mean it's performed well over the long term >> and it's performed very well over the last 12 months, 18 months and there's no excessive speculation. The inflows into ETFs have just recently picked up but then with the correction they've again [clears throat] sold. I mean considering the performance of gold, silver and platinum over the last 18 months, there has been remarkably little speculation. I go out to bars at night and people play pool and they they have people that are involved in sports betting and all sorts of investment schemes that are scams or dubious. I tell you, you hardly ever hear of anyone buying or selling gold. Hardly ever. They buy and they're all active in bitcoins and in Solana and whatn not. But gold and silver and platinum, it's a I tell you of all the people I know only maybe five are active in precious metals. interesting. >> I'm not particularly active because I just hold gold, period. I I don't sell gold. I've sold some of my gold shares because they had huge runups. And uh I'm I'm of two minds about gold shares. I think if you want to make money, you can make money a lot of money in gold shares if you buy them at the right time. the mining. You're talking about mining assets. >> Yeah. >> Yes. >> Yeah. >> Yes. But I I think the mining stocks are quite inexpensive relative to everything else. But I personally prefer physical under my mattress. Under my mattress. >> Any minors you're keeping an eye on? I got I got to ask you that. I mean I have a South African gold mines and I have Canadians. >> Yeah. >> And because I was a director of Ivanho, I have still a fairly large position in Ivanho >> is not one of my favorite stocks right now. And I have a plat I have a preference for platinum as a commodity because it's very cheap relative to gold and silver and silver is relatively cheap compared to gold. But wheat, corn, soybean is even lower relative to gold and everything else. And oil since you talked about energy or we talked about energy before oil is low compared to gold. I mean you can establish ratios 1 ounce of gold how many buildings does it buy? Or how many ounces of gold do you need to buy a building? I mean a house. And how many ounces of gold do you need to buy a bushel of wheat? And how many ounces of gold do you need to buy silver and so forth? And so you can establish what is relatively low compared to gold. And I can tell you what is relatively low compared to gold is your work is a labor cost. And what is relatively low compared to gold are food prices. I mean wheat, corn, soybeans, sugar and u Yes, that's and rubber. >> Yeah. Yeah. Yeah. It's an interesting one on the commodity side. >> I mean you listen for for for a serious investor kind of watching this looking to build out a defensive portfolio today. I mean you you brought you brought up some of those allocations but I mean what specific kind of percent of their liquid net worth should be allocated to physical precious metals and you know others in that portfolio. It it seems like it looks a lot different this year. I mean as a rule I would say uh and I mean it depends on the person because he may have large real estate assets and he may be diversified and so forth but I would suggest to hold about 25% of his assets in gold and some of my friends they own 80% of the money in gold. I think it's very courageous because uh one uh feature of gold is that it doesn't really yield. It doesn't provide you with a regular income. I have a bond portfolio as well >> and as you say in the last few years it hasn't been doing well but not as badly as say a 30-year bond. When you look at the 30-year bond, >> Mhm. >> its price from the peak in 2020 has almost been cut in half. But you had the dividend. I mean, you had the interest payments every year. So, the total return hasn't been that bad. And in the last two years, I just checked, the return hasn't been negative because >> the 30 years has gone down a little, but you got the 4% interest. >> You know, you're talking about T bills and the bond market's obviously very interesting right now. But you I got to bring up the counter because we've we frequently or I've heard you frequently kind of highlight the incompetence of these central planners, right? I mean, I guess the question is is if if if the very people holding gold right now and are kind of hoarding gold right now are the same central bankers who trapped us in this inflation style, does it worry you at all to be on the exact side of the trade as them? >> Look, as an investor and as a large asset holder, you know, I was fortunate in life. I wasn't particularly smart, but I was lucky and uh I worked hard and with a lot of discipline. I mean, I I'm 80 and I work every day because I don't mind working. I think it's better for me to work than to drink the whole day. >> Mhm. >> But uh my view is that everything is in danger zone. You know, when I grew up in the 50s, my grandmothers and grandparents said, "You have to save 10% of your income and put it on deposit with a bank." Well, that advice was a disastrous advice over time because of the depreciating currency, the loss of purchasing power of paper money. They should have said, "Mark, you stupid young boy, buy every day some stocks or buy every day some gold and so forth and don't put it with a bank on deposit." But interestingly nowadays if I look at the asset allocation of people the cash position of investors is at one of the lowest points in history >> and it tells me that maybe and the asset that nobody wants are treasury bonds long-term treasuries. M. >> So it tells me if we go into recession and the recessionary forces are much stronger than what people expect because if asset prices decline, it may affect consumption meaningfully. And if that happens, maybe cash and bonds is not such a stupid allocation for the next 6 months or one year. You understand? is not a long-term proposition. It's just a strategic opportunity. And I am cautious of increasing my stock position. I have a large portfolio of stocks in Thailand because the Thai stock market is one of the few stock markets that has gone down for the last 5 years. I have to ask you because I mean you know the journalist in me every investment thesis needs a falsifier and you know you've warned of a debt trap asset deflation currency debasement for a long time. I'm curious on the other side I mean is there any specific economic data points or maybe a structural shift in government policy that would prove to you that your hard asset thesis is wrong you know and that paper wealth has stabilized. Look, you mentioned before about my worries and so forth. I I think u it's not a prediction but I'm just saying >> we economists we have business cycle series Peter worked I mean wrote a book called business cycles and it's a thousand pages. It's very boring but very sorrow very sorrow. I mean he wrote also socialism and democracy and capitalism which is very entertaining book is also difficult to read but very good. Anyway we have business cycles and some are called the kondraatf the kusnets the jugler and the kitchen cycles and so forth. And historians uh have also war cycle theories >> and geopolitical analysts and they these war cycle theories argue for this and that to happen or according to the war cycles here I want to tell you >> the conditions for war have never been better uh than now post the first World War because the first world war occurred largely I'm not saying only because Germany overtook England as an industrial power they became the larger economy than Britain in 1910 because they had grown dramatically between 1870 and 1910 under Bismar and nowadays you know you have to superpower the US that was the absolute absolute superpower after the second world war. No question about it. [clears throat] But over the last 20 years, China has gone from insignificant to very significant. They produce more steel than the rest of the world combined. And they have 1.3 billion people. And their industrial production is much larger than the US. And also the car industry is now the largest car industry in the world. You know is a gigantic country in terms of economy and they went from 2% of world consumption of industrial commodities in 1970 from 2% to now around 50%. And that creates tensions between the superpower, the US up here and the arrogant west who still lives in the age of neo colonialism and the rising power of bricks countries including China, India, Indonesia, Brazil and so forth. And I tell you the conditions for war are perfect. And that's why I don't think that the peace treaty they will sign something because Trump he wants to win the midterm elections and so forth. And he basically made a huge mistake to get involved in something as complex as the Middle Eastern battlefields war theater. Uh but but he grossly overestimated himself. He thought he can go in in a week he solves the problem and so now he's stuck. He's stuck. And Netanyahu is not playing his game. You understand? Netanyahu Netanyahu I utterly dislike the character, but he's smart. Trump is dumb. There's an election coming up there too. Uh hey if those are the conditions I mean what assets actually survive that environment that war is it physical gold is it energy commodity defense linked equities >> low leverage liquidity >> I I think equities survive any war better than uh bonds. I mean you look at German industry, you look at the 10 largest companies in Germany in 1900, Bayer, BASF and so forth and later Mercedes. All of them they survived World War I and World War II and exist nowadays. As a stockholder, you still have something. If you invested in bank deposits, you have nothing. Nothing at all. three times nothing. >> Same in Russia and China. Uh so I think that in equities you you'll be better off. But the perfect uh asset in those conditions are holding uh gold coins. But I I want to point out one thing uh about go holding gold. You know, one of the leading philosophers of the 20th century was Wittenberg and he studied actually with with Russell Bertro Russell in at Oxford. And anyway, Witkinstein, his family was one of the most affluent families in Europe at the time. And uh they owned I think about 250 tons of gold in Switzerland in a vault. And when Hitler came to power they found out that the Vitkinstein they were Austrians but they had Jewish blood. So Hitler went to the family and said, "Okay, you want to stay in Austria, you want to keep your steel empire, you hand over the gold to us. You don't hand over the gold to us, we expropriate you of everything and send you to concentration camps or what not. [snorts] You're not You have to keep quiet about your gold holdings and hide it. But you can hide it in if you have a piece of land like Ted Turner in America, you can dig a hole somewhere and nobody will ever find it. >> Yeah, this is actually good because we can, you know, the story brings the whole interview back to the core issue, custody, sovereignty, and whether you truly control your wealth. I mean, for investors watching this to wrap up, what is the lesson on gold confiscation and custody? Is it enough to just own gold or does where and how you own it matter just as much? >> Yes, I I think this is a very crucial question in uh what way do you own gold? And I would store gold not in the US but overseas but even overseas. You see in Switzerland we have a trend towards socialism. the socialists uh essentially run the city of Zurich. If they come one day with a initiative and say well we have to expropriate the gold from people because they made unusual large fortunes and so forth. Who knows? But I would say this relates to all of your assets. First of all, you can't take your assets to heaven or hell. That is something you have to consider. And as a capitalist is always difficult to in my view more difficult to distribute your wealths than to earn it. And uh the other question is about gold. There are companies like uh from crayarts. They they arrange the storage of gold outside of the banking system and you can take the gold out in Singapore or I think Australia and Switzerland and Dubai and so they have depositors uh in different countries but outside the banking system or I think that say in Thailand with all its disadvantages the property rights are very well established. I mean, if you have a house, the certificate is watertight. It's unlikely that the government will take it away. But with real estate, the government can impose very high taxes. >> That is, you know, I am, as people know, I'm so anti-government. [laughter] I'm worried about the people that are in government nowadays are not people who worked and they regarded as sort of a duty to be then looking after government affairs. They are professionals that went to socialist universities and they all are Marxists >> and dangerous dangerous for the prosperity of an economy. You you know in the 19th century in America. Why did people travel to America from Europe, immigrate? The reason was there were opportunities for ordinary people to make money. Uh jobs were better in America despite of all the robber baron saga and nonsense that people talk about. the American entrepreneurs, the rubber barons to build the railroads and the refrigeration cars and the machines and the trains and canals and so forth. Yeah, they made money, but they allowed the cost of living of people to go down. The price level in 1900 was lower than in 1800 >> because they didn't have central bankers. And most importantly in America in the 19th century there were hardly any economists and strategists that were spreading lies. >> A little bit different than now. Hey doctor, >> a little bit. >> Well, listen, it all comes down to trust. And Mark, that's that's the final point I want to leave viewers with. Although, we'll have you back on the program. Uh I ran out of time, but we're going to have you back on the program uh because I could talk to you about that side for quite a while. Dr. Mark Farber is joining us, of course, publisher of Gloom, Boom, and Doom Report. We appreciate your time, your perspective. Uh thanks for joining us. Thanks for making the time, Mark. >> It is my pleasure, and I wish all your viewers and listeners uh good fortune. But I truly believe that the way you hold assets going forward is going to be very important. >> Mhm. No, I 100% agree. And of course, we'll continue to watch the headlines coming from the terminal. There's always so many every week. Uh but the S&P today, I mean, interesting to watch. All right, Mark. I appreciate this. Thank you so much for your time. >> Well, thank you for your time. Bye-bye. Always good to hear from Mark and thank you for watching Kick News. Let us know in the comments, is this gold pullback a buying opportunity for you, a warning that liquidity is tightening across markets. And of course, if you found this interview useful, please subscribe right here to Kicko News. Hit the notification bell. We're almost at a million subscribers and it's viewers like you that keep us here for conversations on gold, stocks, equities, macro, the Fed, and of course, the forces driving precious [music] metals. I'm Jeremy Savin. For all of us here at Kiko News, thanks for watching. Heat. Heat. Heat. Heat. [music]