Jaime Carrasco: Gold at US$7,000 is "Conservative," Plus Silver Outlook
Summary
Precious Metals Bull Case: The guest argues gold and silver remain in a structural bull market driven by central bank buying, long-end rate dynamics, and persistent silver supply deficits.
Silver Dynamics: Emphasis on silver’s 6+ years of production deficits, rising retail demand (e.g., Costco effect), backwardation, and a stretched gold-silver ratio as catalysts for further upside.
Monetary Reset: A financial system transition is highlighted, with gold positioned at the core of any future sound-money framework and silver following as “poor man’s gold.”
Regional Positioning: Bullish on the United States for supportive policy toward production and on Latin America (notably Argentina and Chile) for improved permitting, lower nationalization risk, and faster mine development.
Company Focus: Prefers producers with leverage to higher metals prices; specifically highlights First Majestic Silver (AG) as undervalued and Americas Gold and Silver (USAS) with its profitable Galena mine in Idaho.
Market Outlook: Pullbacks are viewed as opportunities; institutional allocations to the sector remain low versus historical norms, suggesting significant capital inflows ahead.
Risks and Signals: Notes ongoing paper price volatility and manipulation narratives, but points to backwardation and physical tightness as signs that physical demand may overpower paper markets.
Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Haime Carrasco. He is senior portfolio manager and senior financial adviser at Harborfront Wealth. Thank you so much for being here. Great to have you. >> Thank [clears throat] you for having me and what a fun week to be on I guess into the fire, shall we say. >> Yes, good to have you here. We're catching up on our last conversation from all the way back in September. So, a lot has changed for gold, silver, and the miners. I believe numbers to run through showing just how significant the changes should be. So, let's start there because I think there's a lot to go into. >> Mhm. Well, what hasn't, you know, look at Greenland, look at Venezuela. The geopolitics have completely appended themselves. The world continues to turn. And more importantly, you know, we went from uh $3,600 gold and uh during our last interview to a high of 5,200, I think it was over 5,000 in in a in a in an amazing run up. Silver has gone from $42 to $120. Now, correcting back to to 70 $72 right now. Is that 72? Yes. $72 right now. and um and more importantly the gold silver ratio you know um it's funny because when we did that interview in September um we had we hadn't gone through the 4400 correction uh that started on on December one right at the beginning of December when we touched 4,400 and then we pulled back and we were in between the prior correction at 3500 right so it's important to understand that bull markets are going to always ride a wall fear. And this is what we mean because as they go higher, they shake out the weak hands that don't know why they're in, but also strengthens the hands of those that are coming in. What do I mean by that? In the run up to to to 4,400 last December, we had already gone from 2% allocation in the sector by Western Wealth, I'm talking about pension plans, big money, to 4%. Well, by the time that correction was over, we shook out at least half of those people, leaving us at a 3%. I bet you that as soon as we started running up for 4,000, because we didn't go back down to 3,000 or wherever they were calling for, we started running up higher. Uh, a lot of those came in and this time around they're not being shaken out. I can see that in the fact that uh the three prior correction since we broke through 2000 in 2024. Every time the price of the commodity went down 1%, the producers were down 2%. This time, if you look at today, gold had a a 14% correction, but the producers themselves, my the portfolios that I manage are only down about 6%. That's an important signal because that's exactly what started to happen at the beginning of of09 as we start the run up from 09 to 2011 as money starts to filter back in into the sector. Now the money that's coming in now is strong money. They understand that first of all you know if you look at the quarter that's just being reported and by the way Beric had stellar earnings which is amazing because to me that is the pig with lipstick in the sector. you [snorts] know that that's a company that no matter how badly managed they are, they're so big that they're going to do well, but it signals that the producers I own, which have even better management, better leverage, better financial leverage, are going to do even better, um are are setting up for for a great quarterly earnings, but those earnings are being set at $4,100 gold and $71 silver. Now, silver itself, you know, yes, it's volatile and we could be sitting here in the 70s. I don't think so for this quarter, and we'll talk about that a little bit later. But 4,100, I don't think we're going to see in the gold market, you know, because gold is being bought by central banks, very strong hands. Institutions haven't come in yet, right? And and the fact that institutions haven't come in yet is important because you have to understand that when a pension plan around the world finally decide to hedge those bonds that are highly devaluing right now, which is the reason why I like gold interest rates, long-term rates, not the rate that's controlled by the Fed. So, let's separate the two. You know, I keep pointing out that gold hit $1,400 at the same time that long-term rates in Japan, in the UK, in the US were below zero, below 1% zero in Japan. We got down to 07 in the US, uh.5 in the UK. Now the UK is over 5%. Japan is over 3.8, getting close to four. And we have the US now at almost 490 getting close to five. Right. So, so the the pension plans that are sitting on that investment that is devaluing which is fairly big are not going to buy the equity market. They're going to buy gold. And when they decide to buy gold, they're going to be price agnostic. They're going to say, "I have a trillion dollars worth of of bonds in my portfolio. I got to park 5% 7% 8% of that in gold. just park it. They won't care about price. So, this party hasn't even started in my opinion. The the real issue is the fact that uh more and more people are noticing. You know what's driving silver in my opinion is not the the the the industrial demand, the electronic demand that's set that's there and that's living within the context of 6 years worth of production deficits. and deficits just to highlight it for people means that we're not producing as much as we need. You know, the demand was for 1.2 billion and we're only producing 900 million an 8:1 mining ratio, gold to silver, which is important because as I stated in our last interview, what's driving silver and what I think silver is going to be the goat is the fact that the world is waking up. You're seeing it at Costco and by the way, you're seeing it in Toronto right now as we speak. Before our interview, I called the Bullion dealer in Toronto, Toronto Gold Bullion that I always buy to get a a good gauge as to what's happening in Toronto, Canada's biggest city. Well, nobody's selling. Their demand for physical silver coins right now is going through the roof. Their calls that they're getting is to buy, not to sell. There's the little bit that was sold was quickly picked up and they're starting waiting list for the rest again. So anybody that says that there's there that the demand is weaning, it isn't. And that's important because it's not the industrial remand that's kicking in. It's the fact that 1 oz of silver and 1 oz of gold will achieve the same result in the in the loss of purchasing power protection, but right now again at 60 to1 cost, right? And so the demand is not being driven by central banks. The demand for gold is the demand for silver is the average Joe, the average person figuring out, hey, I have all this money sitting at the bank. I got to buy some physical silver because there is loss of purchasing power. I am noticing that when I go to Loblas here in in in Ontario, my bill is getting more expensive, right? Oil might be fuel might be down, but we're still filling up at a$125 even though we're supposed to be an energy powerhouse. Well, that bill that the the beef everything that people are buying is getting more expensive. So, people are realizing that the cost of purchasing power the that the purchasing power of the currency is losing and that's Canadian dollars where gold is over 7,000. The other thing is this is global. This is not regional. This is not Argentina losing its purchasing power or Chile in the 80s. It's happening around the world. And so anybody that thinks that that this move, this pull back down in in silver is going back to 50, I don't think so because 50 puts it back at at 100 to1 gold silver ratio, which is exactly very bullish. Hope it goes there, but I don't think it will. The other thing is we're back into backwardation. Backwards is an important context of the futures market because that means that the guys that are sitting on the musical chairs are not letting them go. They think the music's about to stop. >> [snorts] >> And I think that's even more precient today with JD Vance's uh announcements, which is funny. A guy that I never listened to that I'm about to post uh something that he posted on is Alex Jones. I think he's a little bit too out there, but you know what? He was talking about silver. And I fully agree with him in that if the US is going to is going to set up a basket uh um a res um um a reserve of critical metals. First of all, the most critical of all metals is silver. And people better understand that because the the the the demand supply balance of all metals is there. But not with silver. With silver we have physical deficits that have been running for over 6 years. So if you want to talk about something that is critical is the supply of silver because China is the is not selling them at as as a January and they are the biggest refiner and silver is a very important metal for for for the world. So, you know, when I look at at at at the fact that JD Vance is saying that they're going to set up also a floor price, that's important because people forget that while we were sitting on $1,500 gold, the Chinese were still subsidizing their gold industry at 3,500 bucks an ounce to keep producing silver to to keep producing gold because they understood the importance of gold within whatever changes to the monetary system are going to are going to take place. Gold is in the mix. silver follows because it's poor man's gold, right? And and I think that the disconnect between even at a 60 to1 gold silver ratio to an 8:1 mining ratio is important because that means that the it's the mining ratio that sets the price. So a return to balance needs to be had and we're not nowhere near there even at $100 silver yet because the real question here is not how high is silver going. Forget about that. If you're thinking about that, you're you're you're not asking the right question. The right question is how high does gold have to go to do what gold has done for 4,000 years within the monetary system? Because that is starting again being implemented again, and that's what's going to drive things, right? So, to me, what we're going through is another moni another correction. And keep in mind that next year is is Chinese New sorry, next week is Chinese New Year. So this we could be into this for another week or so. But after Chinese New Year set the bottom in 2014 for gold once we took off above 2000. It also set the bottom for silver last year once we took off and look where we are now. So are we going through the same mechanics? I think so because the world is interconnected. The the the communications are interconnected. The fact that that that people are buying silver where are they going to see this as a sale or a crisis? Again, how do the the Chinese write the word danger, opportunity, and crisis? Which of the two are they going to see? And by by anecdotal evidence, I'm seeing that here in Toronto, the fact that the price come down has come down, people are seeing it as an opportunity on the producers. You know, it's funny because I keep running some of the numbers on, you know, like Nico Eagle. I always talk about it. I always talk about First Majestic. first majestic at $27. When I run the matrix at $4,000, $4,500 gold and 70 to $80 silver, I still get a price way higher than 27. So, what that means to me that nobody owns them, it's like Warren Buffett back in 1998 when nobody wanted to buy value because everybody was chasing tech stocks. The same thing, you know, eventually the herd will come in. I rather own these things when nobody wants them and keep waiting for it. And I I I think that's the situation right now. They're great value companies. Financially, they're extremely strong. Again, you know, the earnings the the every quarter earnings as they come out were we're having higher and higher prices and that's normal in a bull market and I think that's where we're heading similar to 2009 has already begun and you know 2009 2010 doesn't stop to 2011 [snorts] and this time around I don't think it's going to stop because this time around we are rebuilding the monetary system. So I personally think and it's highly probable that gold will reach a level from which it will never clear come down again kind of like in 1933 where we got to from 7 to 35 didn't change again until 1975. So if history is wrong but I rather bet with history you know and that's what Ray Dalio and most of the bond guides are saying because how are we going to pay back these trillions like we're not talking about about 1 trillion just in government debts. We're looking at 350 trillion in in total debts. We're talking about quad trillion, thousands of trillions. That's the real problem. That's the leaking boat. That's the the water that's overwhelming the monetary system. And the lifeboat in that environment is gold and silver. >> A lot of great context there. And we've got a number of directions that I think we can go in. I want to talk a little bit more about this correction in gold and silver prices that we're seeing right now because I think a lot of people like you say are seeing it as an opportunity to accumulate more. But I'm also see people wondering is this the top? And so I wonder if you can put that into context in terms of where you see what you see coming. So you mentioned this financial reset. We've talked before about the massive credit bubble. So I think that would help people understand what's what's really going on right now. This is definitely not the talk and and for that I will use Sultan Pausner's work at Credit Swiss who before Credit Swiss went under he had done an amazing job because at the time the bricks the five countries that were setting up the bricks not all the countries that are joining them now uh we're talking about using gold in trade. So he he posed a very interesting question which was very logical. He said okay if these five countries were to start using gold settlement for their oil trade only oil um what should be the price of gold. So what is he asking? What he's asking is what do we know that we know that these countries trade x amount in oil on an annual basis up to about two before the Ukrainian war because that's when all of this started. They were using the petro dollar to trade that. So that was that that the volume of that trade was X paid in petro dollars. So if they're going to settle that trade now in using something gold backed by gold what he asked is what should be the value of the gold reserves to satisfy that trade. In essence instead of keeping US dollars in treasury to pay for that what should be the value of their gold reserves? And he figured out it was $7,000. Now, $7,000 just for oil, never mind gas, never mind everything else, and never mind the need for pension plans to hedge all of that debt that is devaluing itself because those retirees that are depending on that debt are going to need that cash flow. So, they need to hedge it sooner or later. So, 7,000 is a very conservative number. I personally think that for gold to achieve what it has to do, it needs another zero. And I think when it's all done and said and done, even I will be surprised by how high it goes because of the mechanics of how much debt there is out there, how much global trade there is today, and the fact that everything is is appending itself, right? The western monetary system with Trump's announcements over over Greenland, anybody that thinks that that's going to stay status quo better understand that that's over. we are setting up a brand new scenario and that's setting up in there. So gold at 47 4,800 we're close today still cheap in relation to the transition of things that are happening. The other thing that's really important is that everybody that has entered the trade and it's more and more than we had when I was entering the trade at 15 $1,500 gold is realizing that the price is manipulated. Oh my god, I've been telling that forever. right at 3:00 a.m. in the morning, they start smashing the price with paper contracts. That manipulation is coming to an end because people now are realizing, wait a minute, might as well take advantage of that. Might as well go in and and acquire if they're doing that now. Never mind analyzing why they're doing it, what's going on, right? And I think to some extent what is happening is this reset that is occurring and it's happening it it's happening around the world, right? I I I like to think in in in terms of chess games. So I like how things are setting up. And as soon as as soon as Trump grabbed Venezuela, I said to myself, because I had already mentioned at the beginning of last year that I thought that from a geopolitical perspective, Trump's internal needs to rebuild the US would align more with China than with Europe. Right? So when I saw them grab Venezuela, I thought to myself, okay, they must have a deal. Because of the fact that the the the Chinese ambassador went in to see Maduro for they met for an hour, 40 40 45 minutes later, the attack starts and none of the Chinese weapons worked. [laughter] Isn't that funny? So I think what what was said with Maduro was, "Hey, you know what? We're taking our stuff. It's a swap between Venezuela for the US and the Americas. Iran goes to China because all of a sudden all of that noise with Iran is seems to be dying down, right? Everything. And the noise with with with um uh the island guy Epstein all of a sudden it's getting louder and louder. It's funny the the people that I would never thought would bring it up in conversation over the last week have brought it up and they're saying, "Hey, what do you think about this?" Right? So, so, so all of this is as though we're having a complete reawareness as to what is what. And within that, all I care is gold and silver because at the end of the day, whatever's happening on the reshaping of the global economy, whatever shape it takes, all we are is watching this. I or you or anybody that's listening to have doesn't have much control over that unless Trump and JD Vance are listening to your interviews. We're just observers in this in this show. But I can assure you of one thing. whatever shape it takes, gold is once again in the middle of the mix because that's the one thing that they all trust, right? They don't want to use the dollar. And when and when and when President Trump talks about the the the the the dollar as the currency reserve and the Chinese talk about about the yuan currency reserve, well, first of all, since 1776, the dollar has taken how many reinumerations of something different? The question I asked, it has to be a sound money system, right? And that's definitely what's shaping up in terms of uh gold is in the mix. And because of that, gold has to continue climbing. >> [snorts] >> And anybody that's going to argue that, well, they better read a couple of history books when when money dies, the title of a great book about the Verma Republic, [snorts] as it has in the Verma Republic, Germany of the 30s, Latin America, Venezuela, Chile, Argentina, Zimbabwe, gold is always in the mix and and that's the number one form of money. >> I just want to go on a a small tangent. You mentioned Greenland a couple of times and the emphasis that the US is placing on critical minerals. So, how do you see that situation playing out? It's it's come up a couple of times in headlines. It seems to go in and out. So, what do you what do you see coming there? >> You know what? I think it's noise because of it. The Europeans had to send the their 24 soldiers out of Ukraine and into Greenland. All of a sudden, nobody's talking about Ukraine anymore. Isn't that interesting? What's going to happen with Sinci and all the money that we've thrown there, right? And how are the Europeans going to support it? I would be more concerned with whatever's going to happen in Canada and the referendum we're running right now in Alberta because that is a legal referendum is within our our our federal constitution for for pro we allowed Quebec to to have two referendums and maybe they're going to have a third. Why can we allow the the Alberta to have one? Right? It is part of our culture. To me, that is more important because because um because whatever happens in Canada, the US is our partner, right? They're our neighbor and no matter what happens, yeah, we want to go go and look at trade with Europe or trade with China. Well, first of all, we got to build the railroads that don't go north south, that go east west. You know, it's a lot of noise, but how practical are they in the execution of that of that environment? What's more concerning is the fact that Canada has no gold. We're making all these promises. We're just taxing taxing taxing. You know, at least Argentina had some gold um in in its affairs. Venezuela had some gold in its affair. We don't have anything. Well, how are we going to build the the railroads, the pipelines to get our our things to markets in Asia? [snorts] and you know environmentally and all of the other issues. Forget about going through BC because you know they're the most socialist uh province in the country and I don't think they're going to allow it. Then you got to go through the Arctic. You have the noise in the Arctic. So yeah, I I think a lot what is noise and what is real? What is capable? Right. At the end of the day, I I would be using, you know, somebody asked me about Taiwan. Is is China going to invade Taiwan? I wouldn't. If I was the Chinese and I was applying tonsu, I would just if the US is going to implode economically and the rest of the world is going to implode economically and all out of that China comes out strong, maybe Taiwan decides, hey, you know what, we might as well join up with China again because they're the leader of the of of the world. You know what? I think that what we have to depend on is a geopolitical world that is multipolar and and the world h the the the the geopolitical power has to be divided between China and the US going forward. But before that fully happens, the US has to rebuild itself. It has to uh do exactly what it did during the Hoover period when it completely isolates itself, becomes internal and and cleans up. Right? So, and I think that's what's happening. That's a setup that that that that we're setting up more when when you analyze the chess game as it's going forward, right? And what does that mean though for the average person? It means more and more inflation, more and more central bank printing to keep the old debt going as long as possible, which at the end of these cycles, all central banks can do so so so is lower interest rates to print money to buy up their long end of the curve. So, so interest rates don't escalate and support the markets. But again, it's no different than using a belt pump on a sinking ship. All you're doing is printing is is is pumping water out of the ship at the very same time that it continues to to fill up. But the lifeboats to me are the are gold and silver. So, anybody that's selling that that that is taking profits on uh on on gold and silver, in a way, I see it as taking profits on your seat in the lifeboat of the Titanic because you can make some money. but jumping back on the ship because what are you going to do now? You're sitting on fiat again, right? What happens is over the weekend um you know the Trump says okay we're shutting down and we're resetting we're resetting or the Chinese do it somebody does it right and so because of that I think right now it's more important to understand what you own why you own it and hold on to it. Yeah, I think that's getting very very key right now for investors. And maybe you can talk a little bit more about how you're positioning or how you're positioning for your clients because we were both just back from VR, the conference here in Vancouver and there's a lot of talk there from people about taking profits and I think it was mostly to do with mining stocks, although there's also people who were talking about selling physical silver as well. So, what would you say on that note? Well, I I think that's a personal decision because we've been going through this with a lot of clients, right? We we've seen an amazing run up and yeah, we we've we've suffered some downside right here, but nowhere near what we were at the beginning of last year, halfway through through last year. I don't think we'll ever see those levels again. However, we have a couple of clients that have uh you know, they was planning to rebuild to [snorts] build a um a um a new warehouse for his factory. So we took the money out on the way up and we move it to the side so that that's available. Another one wants to build a house. So we move some of the profits as well for that to make sure that we lock in some of that money. Right now we have others though that that the accounts are fairly big and and it's strictly um household living. You know the the their annual expenses. So you know on the way up we were analyzing and I kept saying well do you want me to pull 3 years worth of income at least and put them on the sidelines? this time around, you know, with the downside, they're realizing, okay, maybe I should have done that, but they're not freaking out. What we've decided, though, is as soon as the next rebound starts, we'll we'll pull out one month, two months, and just put it aside. These are retired people that are managing the the their full assets, right? Uh for younger people though, it's it's, you know, they're seeing the upside and they're seeing the opportunity and um and and managing positions. The other thing is asset allocation. I'm always all about allocation, right? I don't care about the price. I care about allocation. The fact that only 4% of wealth of western wealth is sitting in the sector, I think it's it's silly because that's where profitability is really kicking in. And I think that eventually we're going to get to the to the normal concentration of allocation during economic times like this. And what I'm talking about is that during the last 100 years, 1914, right around the first world war, economic problems, 1933, the depression forces Roosevelt to reset gold. 1949, Breton Woods after the Second World War. In 1980, institutions were holding over 20 to between 20 and 30% in the sector. They've gone from they're only sitting at 4%. Right? So, the money is still to come in. So, what's important to me though is if I have a client, older client that we set it at 30 and all of a sudden it's 45, well, just trim back and then we have the money. But zero is not an allocation, right? Or 4% is not an allocation. In my opinion, anybody with sizable money has to have if you have 10% you're just going to protect against the purchasing power loss of your investments. If you have 20%, you're also protecting. At 30, you have that extra amount that you can rebalance and take opportunities while still maintaining the the the the the protecting your overall savings from loss of purchasing power, which is the key because that's what people don't yet understand. What do I mean? It's not bell Canada. It's not your Telus investment. It's not your Brookfield investment. is your Brookfield investment priced in U in Canadian dollars that is the problem that it's the Canadian dollar that is devaluing and that's why gold in Canadian dollars is at 7,000 and so you know I always like to use the analogy of two brothers one that's in Germany in the 30s and the other one's living in New York right and he calls them and he says oh I you got to buy the the the the the market here in Germany because it's going through the roof well the guy does in New York but he sees a flat turn because he's measuring in in in in US dollars. The the German guy is seeing the stock market run, but he's not noticing that the the Deutsch mark is crashing, right? So that's why he's seeing the market increase because he's not seeing that the the the the Deutsch mark is crashing at a faster pace than the than the the the market is rising. That's why in in in in North America, you're seeing a flat to negative return because it's the currency effect. Well, in that environment, the one thing that saved everybody was gold on both sides of the ocean because gold was start the demand for gold because of the loss of purchasing power and the fact that back then people we lived in a in a in a gold back currency. Again, the lack of knowledge of gold is also a generational short circuit because anybody that younger than me never lived in a gold standard, right? So, they really don't understand gold as money. They think it's a pet rock or a piece of jewelry. It isn't. It's money. Oh, and and one last thing I wanted to mention about critical metals. >> You know, we can talk all we want about critical metals, but and the US has a lot of critical metals, but we have to start producing them, right? So, it's about production. It's about getting those mines up and running, right? And that's why I I love my American investments because I think that's one area where I'm going to be protected. They're not going to nationalize them, but they're definitely going to encourage the production of them. >> Yeah. Yeah. Great point. So you're you're looking at US critical minerals companies at the moment. >> No, I'm not buying critical minerals. I'm concentrating on silver because to me silver is the most critical of all. >> So so, so I'd rather concentrate on that because I'm going to get a a higher appreciation in price of the stocks and earnings and everything as it all settles. >> Yeah. Yeah. This is a theme that I've been hearing more about right now is the switch over to silver stocks. So are you looking up and down the chain in terms of size of silver companies? How how are you focusing? And of course every person is different. >> Well, again, you know what? I I look at my portfolio as a a clipper ship where the the the individual companies are more the uh sales within the ship, right? So my uh my royal sales or the main sales, the big ones are my acne eagle, my first majestic, Equinox and AA, right? The the the the the big boys that are going to carry the the the smaller sales or spiners, those are more the the the smaller producers that are just getting up, you know, some like Kuya um um uh so many uh America's Gold and Silver, right? There's there's many of them. Same thing on the gold side. So, so I try to keep an allocation between gold and silver producers. I also do [clears throat] have some bullion for people where we're parking. I see it as cash, right? To me, buying bullion is is uh no different than holding American dollars instead of Canadian dollars to hedge myself for the depreciation of currency itself in savings, right? But the speculation is in the companies and as I build portfolios within the portfolio is just uh a couple of developing companies and they're all producers. The exploration that's another game and I keep that outside of the portfolio and I do participate in those. But again uh I always use four quadrants um cost of production reserves on the ground which are key because those are the ones that people yet don't realize that the value of those and let's touch base on that in a second. uh geopolitical risk. Where are those assets? And I'm very comfortable with the bottom of the world. I love what's happening in Argentina. I love what's happening in Chile with the new government that they, you know, they they they had enough of the woke thing. But it means as well that with they've gone further right, which means that they're not going to be nationalizing my minds. And because of that, Argentina, Peru, Bolivia are going to follow through because whatever happens in Chile also happens in those countries. So I'm very comfortable with investing there, investing in the US. I'm less comfortable with Mexico and Mexico. I want to make sure that the companies that I do invest have their permits. So, I'm not investing in exploration place without permits in Mexico. I'm I'm more concerned about Canada. Like, I don't invest I have one play in British Columbia, but I'm more concerned about, you know, what's going to happen in British Columbia with with mining and taxes, right? So, you know, I like Quebec because Quebec is the one province that who encourages encourages its pension plans to invest in the Quebec economy. So by default, Quebec based companies have done way better, right? So again within that squadron uh when looking at exploration plays is um you know I love plays um when when they've already uncovered something but then they stopped working on it because we went through such such a trough. Uh one that I mentioned last time that we were just investing into just went public Algo Grande you know and they've just started releasing drill results but they had already discovered something there. So, is it going to get bigger? I I think it will. The the indications are there, especially since they only drilled it down to 250 m. See, it's it's funny because um and that came out of Minorum, which is a Mexican play that I did buy into because it was permitted, but it was permitted because that was three high-grade silver mines that had stopped mining in the 1880s. Sorry, in the 1908 or something like that, right around the time of the banking crisis of the late 1800s. Right. that sets the the the anyways um and and so it's been sitting there un unexplored but high-grade and now there you know minorum is having great results because there's no better place to uncover more ore than where there was already something and within within that portfolio uh this company comes out and they had already done some work and I had looked at it right there's one in Peru that's about to go public that uh is a a silver mine that very little work was done in it, but it was producing and now it's getting restarted. So, a lot of these mines that are getting restarted, those are still good to find. Um, a lot of the new place in Argentina I'm particularly liking because it's it's it's much quicker to get a mine build now and to get everything going, permits and all that. That process is accelerated. The bureaucracy is is is is really the problem. And and you know I I don't mind bureaucracy because I do believe in the environment but what we have right now is is what Montescu called the tyranny of the bureaucracy right where it takes 20 years to get a mine running. Now that's great for the producers but it has a massive social cost from a purchasing power cost and and much higher commodity prices. Anyways >> I think that gives a a good idea of what you're looking for when it comes to the gold and silver companies. And I wanted to touch just a little bit more on silver market dynamics because there's there's some interesting things going on right now. We were hearing about the high premiums in China today. I've been reading about a Chinese billionaire that's looking to short the market. So I wonder for people looking at silver more broadly. What would you pull out that we might be missing or should pay attention to? >> Backwardation. Backwardation is key, right? Because all that noise that you're hearing is all noise. It's funny coming into this takedown about two weeks prior, you're starting to hear all this noise on on on Twitter about uh silver and the first thing I was looking at is okay, click on the on the icon of the person that was posting that and five followers, 100 followers, right? So, you knew that it was most likely bots that were that were doing this. So, you knew it was coming. um on the on the price of silver the the key thing gold silver ratio because you know I think backwardation and gold silver ratio working hand in hand now because gold's still at 4,800 right so we're back over to a 60 to1 gold silver ratio right [snorts] and and that can can't last the the demand for phys never mind the fact that we already had 6 years of deficits now the demand is increasing that because people are buying physical silver around the world. The Costco effect hasn't stopped. People are still going to Costco buying a lot and they're running out very quickly. Right? So, I think that coming out of this price decline that we're going through, paper price decline, fiat decline, the one question I would ask anybody, if you're selling your silver, you're ending up with fiat again, devaluing fiat. So you're you're you're you're taking on a currency that is backed by your politician and your banker and around the world we're losing trust of those two institutions. This is about trust. Trust is we [snorts] so think about twice u um selling your physical silver right now and and and you know anecdotally people are buying more because they're realizing this price is is a pullback. The beauty of the companies is we have earnings that right now the companies are still trading at a ridiculous valuation in relation to where gold and silver are. You have reserves on the ground that you know um that Baitman billionaire that has been playing the silver market. Just the other day he said, "Oh, I I sold my miners to buy the SIGJ the index because it because of the counterparty risk of the of the miners." Well, that's a very ignorant statement because the counterparty risk is greater with the SIJ because you don't own the minds. You own a stake in the mind through a future contract in the SILJ, right? the best the least counterparty risk is the direct ownership in that in in that producer because whatever happens you're the register owner of those shares and by default every ounce that's in the ground of that company and those ounces are a gift. So if you thought gold at 40 4,800 was expensive, you know, gold at 7,000 again the floor that Pausner sets just for oil and the bricks, you know, those reserves on the ground are going to get very dear when we've run out of when this paper game when people realize that all they've been buying is a paper contract backed by the banker that was shorting that very same silver that he's buying the contract for. Right? So that is the game that they've been playing. Right? And so so direct ownership of silver is best if you hold it on your own, have it in a vault, and there's no better vault than the vault in the ground. >> Yeah. Yeah, I understand what you're saying there. And you know, when it comes to conversations about silver, there is always talk about market manipulation or suppression. And I'm starting to hear people saying that is that is coming to an end. What What are your thoughts on that? Do you think that's true? What's what's what's um why it's coming to an end is the awareness of people that it's been happening because that's only going to accelerate the exit of not the paper but of the physical, right? People are taking advantage of the fact, oh great, they're giving me a sale again, right? And so if that's happening around the world, the the the manipulation ends because you can't manipulate it without the inventories and let's see how many ounces of silver leave the ComX now. And March is the big delivery month, which is why usually after Chinese New Year's when you have that floor on the bottom and we start to run up again, you know, how many ounces are left when everybody takes it? So, are they going to, you know, if they want and and on top of that, if the US really wants to build a critical metal uh reserve, they're going to want to have silver in there as a reserve. Well, where are they going to get it from, right? The ComX is the only place and you got to start producing. And how many silver producers are there in appar apart from the ones I own? Like America's gold and silver. The Galena mine is making a lot of money. It's in Idaho. But how many more can you count? Maybe 10 on my fingers, right? So yeah, where's that? How are they going to fill up that that that reserve is what I want to know. Is are they going to get it from China? No. If they're going to buy it from Mexico, perhaps. But Mexico is going to want a premium, right? Or are they going to pull the Venezuela on Mexico next? I don't know. Right. Well, no matter what, everything's up for redefinition. And I think with Trump, the the old and even Carney said it, the new world order that's being born, right? The question is what world order is that going to be? Who cares? Gold is in the middle, right? And that's where I think Carney um having been a central banker who are the people that sold our gold are missing a little beat there in the cylinder. But I'm not surprised because, you know, that's normal socialist policies. Look at the results in Cuba and in Venezuela. You know, maybe Venezuela could use with a little bit of capitalism. Something that Killy learned a long time ago. >> Interest. Yeah. So, almost there, but not quite. Definitely. It seems like we are we're heading into a new order. Interesting times. I wonder I'll let you go in just a moment, but any final thoughts you would share with investors right now on what to watch in gold and silver? >> You know what? take advantage. All I can say is watch your allocation. If you're sitting with nothing, take advantage of this pullback that we're going through right now to get position. Get your allocation set up. We can help you if you want. That's that's you know, we have the right vehicles to get people quickly positioned, but it's about positioning. again, make sure you have a piece of the lifeboat in the monetary ship called the Titanic because this thing is sinking. The world as we knew it, the fiat system is over. Every government in the world is in two and except the Europeans because they need to continue printing money. But even Canada's talking about a new world order. Well, what that shape of the world order will require a brand new set of money, right? Um the fiat system is done. the shape of it. Who knows how the ship is going to look, but it definitely gold is going to be in the middle and silver will follow and the producers will tag along for the ride. It's like a slinky, right? >> Yeah, I think that's a good way to put it. Well, thank you so much for coming on to go over what's happening in gold and silver the markets. This was really great as always. >> Thank you very much. Thanks for having me and very very timely interview especially with today again. >> Yes. Yes. Absolutely. We'll we'll have to we'll have to have you back soon. For now, once again, I'm Charlotte Mloud with investingnews.com and this is Haime Carrasco with Harbor Wealth. >> Thank you for having me. >> Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.
Jaime Carrasco: Gold at US$7,000 is "Conservative," Plus Silver Outlook
Summary
Transcript
I'm Charlotte Mloud with investingnews.com and here today with me is Haime Carrasco. He is senior portfolio manager and senior financial adviser at Harborfront Wealth. Thank you so much for being here. Great to have you. >> Thank [clears throat] you for having me and what a fun week to be on I guess into the fire, shall we say. >> Yes, good to have you here. We're catching up on our last conversation from all the way back in September. So, a lot has changed for gold, silver, and the miners. I believe numbers to run through showing just how significant the changes should be. So, let's start there because I think there's a lot to go into. >> Mhm. Well, what hasn't, you know, look at Greenland, look at Venezuela. The geopolitics have completely appended themselves. The world continues to turn. And more importantly, you know, we went from uh $3,600 gold and uh during our last interview to a high of 5,200, I think it was over 5,000 in in a in a in an amazing run up. Silver has gone from $42 to $120. Now, correcting back to to 70 $72 right now. Is that 72? Yes. $72 right now. and um and more importantly the gold silver ratio you know um it's funny because when we did that interview in September um we had we hadn't gone through the 4400 correction uh that started on on December one right at the beginning of December when we touched 4,400 and then we pulled back and we were in between the prior correction at 3500 right so it's important to understand that bull markets are going to always ride a wall fear. And this is what we mean because as they go higher, they shake out the weak hands that don't know why they're in, but also strengthens the hands of those that are coming in. What do I mean by that? In the run up to to to 4,400 last December, we had already gone from 2% allocation in the sector by Western Wealth, I'm talking about pension plans, big money, to 4%. Well, by the time that correction was over, we shook out at least half of those people, leaving us at a 3%. I bet you that as soon as we started running up for 4,000, because we didn't go back down to 3,000 or wherever they were calling for, we started running up higher. Uh, a lot of those came in and this time around they're not being shaken out. I can see that in the fact that uh the three prior correction since we broke through 2000 in 2024. Every time the price of the commodity went down 1%, the producers were down 2%. This time, if you look at today, gold had a a 14% correction, but the producers themselves, my the portfolios that I manage are only down about 6%. That's an important signal because that's exactly what started to happen at the beginning of of09 as we start the run up from 09 to 2011 as money starts to filter back in into the sector. Now the money that's coming in now is strong money. They understand that first of all you know if you look at the quarter that's just being reported and by the way Beric had stellar earnings which is amazing because to me that is the pig with lipstick in the sector. you [snorts] know that that's a company that no matter how badly managed they are, they're so big that they're going to do well, but it signals that the producers I own, which have even better management, better leverage, better financial leverage, are going to do even better, um are are setting up for for a great quarterly earnings, but those earnings are being set at $4,100 gold and $71 silver. Now, silver itself, you know, yes, it's volatile and we could be sitting here in the 70s. I don't think so for this quarter, and we'll talk about that a little bit later. But 4,100, I don't think we're going to see in the gold market, you know, because gold is being bought by central banks, very strong hands. Institutions haven't come in yet, right? And and the fact that institutions haven't come in yet is important because you have to understand that when a pension plan around the world finally decide to hedge those bonds that are highly devaluing right now, which is the reason why I like gold interest rates, long-term rates, not the rate that's controlled by the Fed. So, let's separate the two. You know, I keep pointing out that gold hit $1,400 at the same time that long-term rates in Japan, in the UK, in the US were below zero, below 1% zero in Japan. We got down to 07 in the US, uh.5 in the UK. Now the UK is over 5%. Japan is over 3.8, getting close to four. And we have the US now at almost 490 getting close to five. Right. So, so the the pension plans that are sitting on that investment that is devaluing which is fairly big are not going to buy the equity market. They're going to buy gold. And when they decide to buy gold, they're going to be price agnostic. They're going to say, "I have a trillion dollars worth of of bonds in my portfolio. I got to park 5% 7% 8% of that in gold. just park it. They won't care about price. So, this party hasn't even started in my opinion. The the real issue is the fact that uh more and more people are noticing. You know what's driving silver in my opinion is not the the the the industrial demand, the electronic demand that's set that's there and that's living within the context of 6 years worth of production deficits. and deficits just to highlight it for people means that we're not producing as much as we need. You know, the demand was for 1.2 billion and we're only producing 900 million an 8:1 mining ratio, gold to silver, which is important because as I stated in our last interview, what's driving silver and what I think silver is going to be the goat is the fact that the world is waking up. You're seeing it at Costco and by the way, you're seeing it in Toronto right now as we speak. Before our interview, I called the Bullion dealer in Toronto, Toronto Gold Bullion that I always buy to get a a good gauge as to what's happening in Toronto, Canada's biggest city. Well, nobody's selling. Their demand for physical silver coins right now is going through the roof. Their calls that they're getting is to buy, not to sell. There's the little bit that was sold was quickly picked up and they're starting waiting list for the rest again. So anybody that says that there's there that the demand is weaning, it isn't. And that's important because it's not the industrial remand that's kicking in. It's the fact that 1 oz of silver and 1 oz of gold will achieve the same result in the in the loss of purchasing power protection, but right now again at 60 to1 cost, right? And so the demand is not being driven by central banks. The demand for gold is the demand for silver is the average Joe, the average person figuring out, hey, I have all this money sitting at the bank. I got to buy some physical silver because there is loss of purchasing power. I am noticing that when I go to Loblas here in in in Ontario, my bill is getting more expensive, right? Oil might be fuel might be down, but we're still filling up at a$125 even though we're supposed to be an energy powerhouse. Well, that bill that the the beef everything that people are buying is getting more expensive. So, people are realizing that the cost of purchasing power the that the purchasing power of the currency is losing and that's Canadian dollars where gold is over 7,000. The other thing is this is global. This is not regional. This is not Argentina losing its purchasing power or Chile in the 80s. It's happening around the world. And so anybody that thinks that that this move, this pull back down in in silver is going back to 50, I don't think so because 50 puts it back at at 100 to1 gold silver ratio, which is exactly very bullish. Hope it goes there, but I don't think it will. The other thing is we're back into backwardation. Backwards is an important context of the futures market because that means that the guys that are sitting on the musical chairs are not letting them go. They think the music's about to stop. >> [snorts] >> And I think that's even more precient today with JD Vance's uh announcements, which is funny. A guy that I never listened to that I'm about to post uh something that he posted on is Alex Jones. I think he's a little bit too out there, but you know what? He was talking about silver. And I fully agree with him in that if the US is going to is going to set up a basket uh um a res um um a reserve of critical metals. First of all, the most critical of all metals is silver. And people better understand that because the the the the demand supply balance of all metals is there. But not with silver. With silver we have physical deficits that have been running for over 6 years. So if you want to talk about something that is critical is the supply of silver because China is the is not selling them at as as a January and they are the biggest refiner and silver is a very important metal for for for the world. So, you know, when I look at at at at the fact that JD Vance is saying that they're going to set up also a floor price, that's important because people forget that while we were sitting on $1,500 gold, the Chinese were still subsidizing their gold industry at 3,500 bucks an ounce to keep producing silver to to keep producing gold because they understood the importance of gold within whatever changes to the monetary system are going to are going to take place. Gold is in the mix. silver follows because it's poor man's gold, right? And and I think that the disconnect between even at a 60 to1 gold silver ratio to an 8:1 mining ratio is important because that means that the it's the mining ratio that sets the price. So a return to balance needs to be had and we're not nowhere near there even at $100 silver yet because the real question here is not how high is silver going. Forget about that. If you're thinking about that, you're you're you're not asking the right question. The right question is how high does gold have to go to do what gold has done for 4,000 years within the monetary system? Because that is starting again being implemented again, and that's what's going to drive things, right? So, to me, what we're going through is another moni another correction. And keep in mind that next year is is Chinese New sorry, next week is Chinese New Year. So this we could be into this for another week or so. But after Chinese New Year set the bottom in 2014 for gold once we took off above 2000. It also set the bottom for silver last year once we took off and look where we are now. So are we going through the same mechanics? I think so because the world is interconnected. The the the communications are interconnected. The fact that that that people are buying silver where are they going to see this as a sale or a crisis? Again, how do the the Chinese write the word danger, opportunity, and crisis? Which of the two are they going to see? And by by anecdotal evidence, I'm seeing that here in Toronto, the fact that the price come down has come down, people are seeing it as an opportunity on the producers. You know, it's funny because I keep running some of the numbers on, you know, like Nico Eagle. I always talk about it. I always talk about First Majestic. first majestic at $27. When I run the matrix at $4,000, $4,500 gold and 70 to $80 silver, I still get a price way higher than 27. So, what that means to me that nobody owns them, it's like Warren Buffett back in 1998 when nobody wanted to buy value because everybody was chasing tech stocks. The same thing, you know, eventually the herd will come in. I rather own these things when nobody wants them and keep waiting for it. And I I I think that's the situation right now. They're great value companies. Financially, they're extremely strong. Again, you know, the earnings the the every quarter earnings as they come out were we're having higher and higher prices and that's normal in a bull market and I think that's where we're heading similar to 2009 has already begun and you know 2009 2010 doesn't stop to 2011 [snorts] and this time around I don't think it's going to stop because this time around we are rebuilding the monetary system. So I personally think and it's highly probable that gold will reach a level from which it will never clear come down again kind of like in 1933 where we got to from 7 to 35 didn't change again until 1975. So if history is wrong but I rather bet with history you know and that's what Ray Dalio and most of the bond guides are saying because how are we going to pay back these trillions like we're not talking about about 1 trillion just in government debts. We're looking at 350 trillion in in total debts. We're talking about quad trillion, thousands of trillions. That's the real problem. That's the leaking boat. That's the the water that's overwhelming the monetary system. And the lifeboat in that environment is gold and silver. >> A lot of great context there. And we've got a number of directions that I think we can go in. I want to talk a little bit more about this correction in gold and silver prices that we're seeing right now because I think a lot of people like you say are seeing it as an opportunity to accumulate more. But I'm also see people wondering is this the top? And so I wonder if you can put that into context in terms of where you see what you see coming. So you mentioned this financial reset. We've talked before about the massive credit bubble. So I think that would help people understand what's what's really going on right now. This is definitely not the talk and and for that I will use Sultan Pausner's work at Credit Swiss who before Credit Swiss went under he had done an amazing job because at the time the bricks the five countries that were setting up the bricks not all the countries that are joining them now uh we're talking about using gold in trade. So he he posed a very interesting question which was very logical. He said okay if these five countries were to start using gold settlement for their oil trade only oil um what should be the price of gold. So what is he asking? What he's asking is what do we know that we know that these countries trade x amount in oil on an annual basis up to about two before the Ukrainian war because that's when all of this started. They were using the petro dollar to trade that. So that was that that the volume of that trade was X paid in petro dollars. So if they're going to settle that trade now in using something gold backed by gold what he asked is what should be the value of the gold reserves to satisfy that trade. In essence instead of keeping US dollars in treasury to pay for that what should be the value of their gold reserves? And he figured out it was $7,000. Now, $7,000 just for oil, never mind gas, never mind everything else, and never mind the need for pension plans to hedge all of that debt that is devaluing itself because those retirees that are depending on that debt are going to need that cash flow. So, they need to hedge it sooner or later. So, 7,000 is a very conservative number. I personally think that for gold to achieve what it has to do, it needs another zero. And I think when it's all done and said and done, even I will be surprised by how high it goes because of the mechanics of how much debt there is out there, how much global trade there is today, and the fact that everything is is appending itself, right? The western monetary system with Trump's announcements over over Greenland, anybody that thinks that that's going to stay status quo better understand that that's over. we are setting up a brand new scenario and that's setting up in there. So gold at 47 4,800 we're close today still cheap in relation to the transition of things that are happening. The other thing that's really important is that everybody that has entered the trade and it's more and more than we had when I was entering the trade at 15 $1,500 gold is realizing that the price is manipulated. Oh my god, I've been telling that forever. right at 3:00 a.m. in the morning, they start smashing the price with paper contracts. That manipulation is coming to an end because people now are realizing, wait a minute, might as well take advantage of that. Might as well go in and and acquire if they're doing that now. Never mind analyzing why they're doing it, what's going on, right? And I think to some extent what is happening is this reset that is occurring and it's happening it it's happening around the world, right? I I I like to think in in in terms of chess games. So I like how things are setting up. And as soon as as soon as Trump grabbed Venezuela, I said to myself, because I had already mentioned at the beginning of last year that I thought that from a geopolitical perspective, Trump's internal needs to rebuild the US would align more with China than with Europe. Right? So when I saw them grab Venezuela, I thought to myself, okay, they must have a deal. Because of the fact that the the the Chinese ambassador went in to see Maduro for they met for an hour, 40 40 45 minutes later, the attack starts and none of the Chinese weapons worked. [laughter] Isn't that funny? So I think what what was said with Maduro was, "Hey, you know what? We're taking our stuff. It's a swap between Venezuela for the US and the Americas. Iran goes to China because all of a sudden all of that noise with Iran is seems to be dying down, right? Everything. And the noise with with with um uh the island guy Epstein all of a sudden it's getting louder and louder. It's funny the the people that I would never thought would bring it up in conversation over the last week have brought it up and they're saying, "Hey, what do you think about this?" Right? So, so, so all of this is as though we're having a complete reawareness as to what is what. And within that, all I care is gold and silver because at the end of the day, whatever's happening on the reshaping of the global economy, whatever shape it takes, all we are is watching this. I or you or anybody that's listening to have doesn't have much control over that unless Trump and JD Vance are listening to your interviews. We're just observers in this in this show. But I can assure you of one thing. whatever shape it takes, gold is once again in the middle of the mix because that's the one thing that they all trust, right? They don't want to use the dollar. And when and when and when President Trump talks about the the the the the dollar as the currency reserve and the Chinese talk about about the yuan currency reserve, well, first of all, since 1776, the dollar has taken how many reinumerations of something different? The question I asked, it has to be a sound money system, right? And that's definitely what's shaping up in terms of uh gold is in the mix. And because of that, gold has to continue climbing. >> [snorts] >> And anybody that's going to argue that, well, they better read a couple of history books when when money dies, the title of a great book about the Verma Republic, [snorts] as it has in the Verma Republic, Germany of the 30s, Latin America, Venezuela, Chile, Argentina, Zimbabwe, gold is always in the mix and and that's the number one form of money. >> I just want to go on a a small tangent. You mentioned Greenland a couple of times and the emphasis that the US is placing on critical minerals. So, how do you see that situation playing out? It's it's come up a couple of times in headlines. It seems to go in and out. So, what do you what do you see coming there? >> You know what? I think it's noise because of it. The Europeans had to send the their 24 soldiers out of Ukraine and into Greenland. All of a sudden, nobody's talking about Ukraine anymore. Isn't that interesting? What's going to happen with Sinci and all the money that we've thrown there, right? And how are the Europeans going to support it? I would be more concerned with whatever's going to happen in Canada and the referendum we're running right now in Alberta because that is a legal referendum is within our our our federal constitution for for pro we allowed Quebec to to have two referendums and maybe they're going to have a third. Why can we allow the the Alberta to have one? Right? It is part of our culture. To me, that is more important because because um because whatever happens in Canada, the US is our partner, right? They're our neighbor and no matter what happens, yeah, we want to go go and look at trade with Europe or trade with China. Well, first of all, we got to build the railroads that don't go north south, that go east west. You know, it's a lot of noise, but how practical are they in the execution of that of that environment? What's more concerning is the fact that Canada has no gold. We're making all these promises. We're just taxing taxing taxing. You know, at least Argentina had some gold um in in its affairs. Venezuela had some gold in its affair. We don't have anything. Well, how are we going to build the the railroads, the pipelines to get our our things to markets in Asia? [snorts] and you know environmentally and all of the other issues. Forget about going through BC because you know they're the most socialist uh province in the country and I don't think they're going to allow it. Then you got to go through the Arctic. You have the noise in the Arctic. So yeah, I I think a lot what is noise and what is real? What is capable? Right. At the end of the day, I I would be using, you know, somebody asked me about Taiwan. Is is China going to invade Taiwan? I wouldn't. If I was the Chinese and I was applying tonsu, I would just if the US is going to implode economically and the rest of the world is going to implode economically and all out of that China comes out strong, maybe Taiwan decides, hey, you know what, we might as well join up with China again because they're the leader of the of of the world. You know what? I think that what we have to depend on is a geopolitical world that is multipolar and and the world h the the the the geopolitical power has to be divided between China and the US going forward. But before that fully happens, the US has to rebuild itself. It has to uh do exactly what it did during the Hoover period when it completely isolates itself, becomes internal and and cleans up. Right? So, and I think that's what's happening. That's a setup that that that that we're setting up more when when you analyze the chess game as it's going forward, right? And what does that mean though for the average person? It means more and more inflation, more and more central bank printing to keep the old debt going as long as possible, which at the end of these cycles, all central banks can do so so so is lower interest rates to print money to buy up their long end of the curve. So, so interest rates don't escalate and support the markets. But again, it's no different than using a belt pump on a sinking ship. All you're doing is printing is is is pumping water out of the ship at the very same time that it continues to to fill up. But the lifeboats to me are the are gold and silver. So, anybody that's selling that that that is taking profits on uh on on gold and silver, in a way, I see it as taking profits on your seat in the lifeboat of the Titanic because you can make some money. but jumping back on the ship because what are you going to do now? You're sitting on fiat again, right? What happens is over the weekend um you know the Trump says okay we're shutting down and we're resetting we're resetting or the Chinese do it somebody does it right and so because of that I think right now it's more important to understand what you own why you own it and hold on to it. Yeah, I think that's getting very very key right now for investors. And maybe you can talk a little bit more about how you're positioning or how you're positioning for your clients because we were both just back from VR, the conference here in Vancouver and there's a lot of talk there from people about taking profits and I think it was mostly to do with mining stocks, although there's also people who were talking about selling physical silver as well. So, what would you say on that note? Well, I I think that's a personal decision because we've been going through this with a lot of clients, right? We we've seen an amazing run up and yeah, we we've we've suffered some downside right here, but nowhere near what we were at the beginning of last year, halfway through through last year. I don't think we'll ever see those levels again. However, we have a couple of clients that have uh you know, they was planning to rebuild to [snorts] build a um a um a new warehouse for his factory. So we took the money out on the way up and we move it to the side so that that's available. Another one wants to build a house. So we move some of the profits as well for that to make sure that we lock in some of that money. Right now we have others though that that the accounts are fairly big and and it's strictly um household living. You know the the their annual expenses. So you know on the way up we were analyzing and I kept saying well do you want me to pull 3 years worth of income at least and put them on the sidelines? this time around, you know, with the downside, they're realizing, okay, maybe I should have done that, but they're not freaking out. What we've decided, though, is as soon as the next rebound starts, we'll we'll pull out one month, two months, and just put it aside. These are retired people that are managing the the their full assets, right? Uh for younger people though, it's it's, you know, they're seeing the upside and they're seeing the opportunity and um and and managing positions. The other thing is asset allocation. I'm always all about allocation, right? I don't care about the price. I care about allocation. The fact that only 4% of wealth of western wealth is sitting in the sector, I think it's it's silly because that's where profitability is really kicking in. And I think that eventually we're going to get to the to the normal concentration of allocation during economic times like this. And what I'm talking about is that during the last 100 years, 1914, right around the first world war, economic problems, 1933, the depression forces Roosevelt to reset gold. 1949, Breton Woods after the Second World War. In 1980, institutions were holding over 20 to between 20 and 30% in the sector. They've gone from they're only sitting at 4%. Right? So, the money is still to come in. So, what's important to me though is if I have a client, older client that we set it at 30 and all of a sudden it's 45, well, just trim back and then we have the money. But zero is not an allocation, right? Or 4% is not an allocation. In my opinion, anybody with sizable money has to have if you have 10% you're just going to protect against the purchasing power loss of your investments. If you have 20%, you're also protecting. At 30, you have that extra amount that you can rebalance and take opportunities while still maintaining the the the the the protecting your overall savings from loss of purchasing power, which is the key because that's what people don't yet understand. What do I mean? It's not bell Canada. It's not your Telus investment. It's not your Brookfield investment. is your Brookfield investment priced in U in Canadian dollars that is the problem that it's the Canadian dollar that is devaluing and that's why gold in Canadian dollars is at 7,000 and so you know I always like to use the analogy of two brothers one that's in Germany in the 30s and the other one's living in New York right and he calls them and he says oh I you got to buy the the the the the market here in Germany because it's going through the roof well the guy does in New York but he sees a flat turn because he's measuring in in in in US dollars. The the German guy is seeing the stock market run, but he's not noticing that the the Deutsch mark is crashing, right? So that's why he's seeing the market increase because he's not seeing that the the the the Deutsch mark is crashing at a faster pace than the than the the the market is rising. That's why in in in in North America, you're seeing a flat to negative return because it's the currency effect. Well, in that environment, the one thing that saved everybody was gold on both sides of the ocean because gold was start the demand for gold because of the loss of purchasing power and the fact that back then people we lived in a in a in a gold back currency. Again, the lack of knowledge of gold is also a generational short circuit because anybody that younger than me never lived in a gold standard, right? So, they really don't understand gold as money. They think it's a pet rock or a piece of jewelry. It isn't. It's money. Oh, and and one last thing I wanted to mention about critical metals. >> You know, we can talk all we want about critical metals, but and the US has a lot of critical metals, but we have to start producing them, right? So, it's about production. It's about getting those mines up and running, right? And that's why I I love my American investments because I think that's one area where I'm going to be protected. They're not going to nationalize them, but they're definitely going to encourage the production of them. >> Yeah. Yeah. Great point. So you're you're looking at US critical minerals companies at the moment. >> No, I'm not buying critical minerals. I'm concentrating on silver because to me silver is the most critical of all. >> So so, so I'd rather concentrate on that because I'm going to get a a higher appreciation in price of the stocks and earnings and everything as it all settles. >> Yeah. Yeah. This is a theme that I've been hearing more about right now is the switch over to silver stocks. So are you looking up and down the chain in terms of size of silver companies? How how are you focusing? And of course every person is different. >> Well, again, you know what? I I look at my portfolio as a a clipper ship where the the the individual companies are more the uh sales within the ship, right? So my uh my royal sales or the main sales, the big ones are my acne eagle, my first majestic, Equinox and AA, right? The the the the the big boys that are going to carry the the the smaller sales or spiners, those are more the the the smaller producers that are just getting up, you know, some like Kuya um um uh so many uh America's Gold and Silver, right? There's there's many of them. Same thing on the gold side. So, so I try to keep an allocation between gold and silver producers. I also do [clears throat] have some bullion for people where we're parking. I see it as cash, right? To me, buying bullion is is uh no different than holding American dollars instead of Canadian dollars to hedge myself for the depreciation of currency itself in savings, right? But the speculation is in the companies and as I build portfolios within the portfolio is just uh a couple of developing companies and they're all producers. The exploration that's another game and I keep that outside of the portfolio and I do participate in those. But again uh I always use four quadrants um cost of production reserves on the ground which are key because those are the ones that people yet don't realize that the value of those and let's touch base on that in a second. uh geopolitical risk. Where are those assets? And I'm very comfortable with the bottom of the world. I love what's happening in Argentina. I love what's happening in Chile with the new government that they, you know, they they they had enough of the woke thing. But it means as well that with they've gone further right, which means that they're not going to be nationalizing my minds. And because of that, Argentina, Peru, Bolivia are going to follow through because whatever happens in Chile also happens in those countries. So I'm very comfortable with investing there, investing in the US. I'm less comfortable with Mexico and Mexico. I want to make sure that the companies that I do invest have their permits. So, I'm not investing in exploration place without permits in Mexico. I'm I'm more concerned about Canada. Like, I don't invest I have one play in British Columbia, but I'm more concerned about, you know, what's going to happen in British Columbia with with mining and taxes, right? So, you know, I like Quebec because Quebec is the one province that who encourages encourages its pension plans to invest in the Quebec economy. So by default, Quebec based companies have done way better, right? So again within that squadron uh when looking at exploration plays is um you know I love plays um when when they've already uncovered something but then they stopped working on it because we went through such such a trough. Uh one that I mentioned last time that we were just investing into just went public Algo Grande you know and they've just started releasing drill results but they had already discovered something there. So, is it going to get bigger? I I think it will. The the indications are there, especially since they only drilled it down to 250 m. See, it's it's funny because um and that came out of Minorum, which is a Mexican play that I did buy into because it was permitted, but it was permitted because that was three high-grade silver mines that had stopped mining in the 1880s. Sorry, in the 1908 or something like that, right around the time of the banking crisis of the late 1800s. Right. that sets the the the anyways um and and so it's been sitting there un unexplored but high-grade and now there you know minorum is having great results because there's no better place to uncover more ore than where there was already something and within within that portfolio uh this company comes out and they had already done some work and I had looked at it right there's one in Peru that's about to go public that uh is a a silver mine that very little work was done in it, but it was producing and now it's getting restarted. So, a lot of these mines that are getting restarted, those are still good to find. Um, a lot of the new place in Argentina I'm particularly liking because it's it's it's much quicker to get a mine build now and to get everything going, permits and all that. That process is accelerated. The bureaucracy is is is is really the problem. And and you know I I don't mind bureaucracy because I do believe in the environment but what we have right now is is what Montescu called the tyranny of the bureaucracy right where it takes 20 years to get a mine running. Now that's great for the producers but it has a massive social cost from a purchasing power cost and and much higher commodity prices. Anyways >> I think that gives a a good idea of what you're looking for when it comes to the gold and silver companies. And I wanted to touch just a little bit more on silver market dynamics because there's there's some interesting things going on right now. We were hearing about the high premiums in China today. I've been reading about a Chinese billionaire that's looking to short the market. So I wonder for people looking at silver more broadly. What would you pull out that we might be missing or should pay attention to? >> Backwardation. Backwardation is key, right? Because all that noise that you're hearing is all noise. It's funny coming into this takedown about two weeks prior, you're starting to hear all this noise on on on Twitter about uh silver and the first thing I was looking at is okay, click on the on the icon of the person that was posting that and five followers, 100 followers, right? So, you knew that it was most likely bots that were that were doing this. So, you knew it was coming. um on the on the price of silver the the key thing gold silver ratio because you know I think backwardation and gold silver ratio working hand in hand now because gold's still at 4,800 right so we're back over to a 60 to1 gold silver ratio right [snorts] and and that can can't last the the demand for phys never mind the fact that we already had 6 years of deficits now the demand is increasing that because people are buying physical silver around the world. The Costco effect hasn't stopped. People are still going to Costco buying a lot and they're running out very quickly. Right? So, I think that coming out of this price decline that we're going through, paper price decline, fiat decline, the one question I would ask anybody, if you're selling your silver, you're ending up with fiat again, devaluing fiat. So you're you're you're you're taking on a currency that is backed by your politician and your banker and around the world we're losing trust of those two institutions. This is about trust. Trust is we [snorts] so think about twice u um selling your physical silver right now and and and you know anecdotally people are buying more because they're realizing this price is is a pullback. The beauty of the companies is we have earnings that right now the companies are still trading at a ridiculous valuation in relation to where gold and silver are. You have reserves on the ground that you know um that Baitman billionaire that has been playing the silver market. Just the other day he said, "Oh, I I sold my miners to buy the SIGJ the index because it because of the counterparty risk of the of the miners." Well, that's a very ignorant statement because the counterparty risk is greater with the SIJ because you don't own the minds. You own a stake in the mind through a future contract in the SILJ, right? the best the least counterparty risk is the direct ownership in that in in that producer because whatever happens you're the register owner of those shares and by default every ounce that's in the ground of that company and those ounces are a gift. So if you thought gold at 40 4,800 was expensive, you know, gold at 7,000 again the floor that Pausner sets just for oil and the bricks, you know, those reserves on the ground are going to get very dear when we've run out of when this paper game when people realize that all they've been buying is a paper contract backed by the banker that was shorting that very same silver that he's buying the contract for. Right? So that is the game that they've been playing. Right? And so so direct ownership of silver is best if you hold it on your own, have it in a vault, and there's no better vault than the vault in the ground. >> Yeah. Yeah, I understand what you're saying there. And you know, when it comes to conversations about silver, there is always talk about market manipulation or suppression. And I'm starting to hear people saying that is that is coming to an end. What What are your thoughts on that? Do you think that's true? What's what's what's um why it's coming to an end is the awareness of people that it's been happening because that's only going to accelerate the exit of not the paper but of the physical, right? People are taking advantage of the fact, oh great, they're giving me a sale again, right? And so if that's happening around the world, the the the manipulation ends because you can't manipulate it without the inventories and let's see how many ounces of silver leave the ComX now. And March is the big delivery month, which is why usually after Chinese New Year's when you have that floor on the bottom and we start to run up again, you know, how many ounces are left when everybody takes it? So, are they going to, you know, if they want and and on top of that, if the US really wants to build a critical metal uh reserve, they're going to want to have silver in there as a reserve. Well, where are they going to get it from, right? The ComX is the only place and you got to start producing. And how many silver producers are there in appar apart from the ones I own? Like America's gold and silver. The Galena mine is making a lot of money. It's in Idaho. But how many more can you count? Maybe 10 on my fingers, right? So yeah, where's that? How are they going to fill up that that that reserve is what I want to know. Is are they going to get it from China? No. If they're going to buy it from Mexico, perhaps. But Mexico is going to want a premium, right? Or are they going to pull the Venezuela on Mexico next? I don't know. Right. Well, no matter what, everything's up for redefinition. And I think with Trump, the the old and even Carney said it, the new world order that's being born, right? The question is what world order is that going to be? Who cares? Gold is in the middle, right? And that's where I think Carney um having been a central banker who are the people that sold our gold are missing a little beat there in the cylinder. But I'm not surprised because, you know, that's normal socialist policies. Look at the results in Cuba and in Venezuela. You know, maybe Venezuela could use with a little bit of capitalism. Something that Killy learned a long time ago. >> Interest. Yeah. So, almost there, but not quite. Definitely. It seems like we are we're heading into a new order. Interesting times. I wonder I'll let you go in just a moment, but any final thoughts you would share with investors right now on what to watch in gold and silver? >> You know what? take advantage. All I can say is watch your allocation. If you're sitting with nothing, take advantage of this pullback that we're going through right now to get position. Get your allocation set up. We can help you if you want. That's that's you know, we have the right vehicles to get people quickly positioned, but it's about positioning. again, make sure you have a piece of the lifeboat in the monetary ship called the Titanic because this thing is sinking. The world as we knew it, the fiat system is over. Every government in the world is in two and except the Europeans because they need to continue printing money. But even Canada's talking about a new world order. Well, what that shape of the world order will require a brand new set of money, right? Um the fiat system is done. the shape of it. Who knows how the ship is going to look, but it definitely gold is going to be in the middle and silver will follow and the producers will tag along for the ride. It's like a slinky, right? >> Yeah, I think that's a good way to put it. Well, thank you so much for coming on to go over what's happening in gold and silver the markets. This was really great as always. >> Thank you very much. Thanks for having me and very very timely interview especially with today again. >> Yes. Yes. Absolutely. We'll we'll have to we'll have to have you back soon. For now, once again, I'm Charlotte Mloud with investingnews.com and this is Haime Carrasco with Harbor Wealth. >> Thank you for having me. >> Thank you for watching. If you like this video, make sure you hit the like button and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below.