Precious Metals Insight: Silver has reached a significant psychological barrier at $50 per ounce, a level not seen since 1980, though adjusted for inflation, this is not a true high.
Gold vs. Bitcoin: Gold has outperformed Bitcoin this year, with a 60% increase compared to Bitcoin's 20%, highlighting gold's continued strength in the market.
Gold-Silver Ratio: The gold-silver ratio has decreased from over 100:1 to around 79:1, indicating silver's recent outperformance and potential for further gains.
Geopolitical Impact: Global geopolitical tensions, including conflicts and sanctions, are driving increased investment in gold and silver as safe-haven assets.
Economic Concerns: Potential black swans, such as issues in private equity and the artificial intelligence sector, could trigger broader market disruptions.
Inflation Hedge: Investing in gold and silver is recommended as a hedge against inflation and currency devaluation, especially given current monetary policies.
Market Dynamics: The podcast discusses the structural changes in silver demand and supply, particularly its role as a byproduct of industrial metals like copper and zinc.
Investment Strategy: The importance of understanding economic theories, such as the Austrian business cycle, is emphasized for navigating market distortions and protecting investments.
Transcript
Hello and welcome to another episode of the Minor Issues podcast. I'm Mark Thornton at the Mises Institute. Well, our annual contest this year has really been exciting where we've looking at your predictions for how well Bitcoin is going to do relative to how the price of gold is doing. And Bitcoin is up over 20% this year so far. But gold is up 60% so far early in the week. Uh so so far gold is pretty far ahead of Bitcoin at this point in time. Uh I'm sure there's going to be more fireworks to come by the end of the year in the end of the contest. Well, this weekend the Misesus Institute is on the road in Delray Beach, Florida for its annual supporter summit. So, in lie of a full episode, I want to show you a recent uh show that I was on, the Liberty and Finance show um over the weekend. And uh they brought me on to talk about uh the pivotal level of silver prices at $50 per ounce. And it was hanging right there. As I went on the show, I talked about its the the real meaning of that $50 level. Uh we also went back and looked at uh my so-called prediction for the gold silver price uh ratio and how well that's been working out so far this year which has been uh really great and uh with more good things to come I think there and then uh they asked me about what's really going on in the economy uh what are the real uh black swans that we need to be um on the lookout for um by the end of this year. So we talked about that uh what could potentially do in the stock market and then uh they also uh asked me about the current war status in the global economy, new developments in that area. Uh so it's a great show. It's a great interview show. Um I highly recommend it on a regular basis. Um they have some really good guests on there. Um, and the audience seems to appreciate me and uh, Mises people in general. So, I encourage you to listen to this podcast episode of my interview with the Liberty and Finance Show and uh, thank you for listening uh, to this episode of the Minor Issues Podcast. I'll be back next week with another episode. >> Hey everyone, this is Elijah K. Johnson with Liberty and Finance. And back with us today is our good friend Dr. Mark Thornton from the Micus Institute. Uh Dr. Thornton, thank you so much for joining us today. >> It's great to be here today. >> Well, it's great to have you. Last time we had you on, my father Dunigan interviewed you about how we are on the road to hyperinflation. And we can see this across the board, especially in the last few years in metals prices as metals prices have doubled for both gold and silver, which is pretty shocking. And right now, as we're recording this, silver is above its 1980 high, above its 2011 high. It's above $50 an ounce, which is this incredible price barrier that has, you know, for 45 years the silver has has failed to uh rise above that that price. Your take on the significance of this and what does it mean maybe if we look again at what does it mean for the US dollar um that silver is rising so dramatically so fast? Well, it is an historical level, but it's basically a psychological barrier uh for most people or even not even most people really. But if you look at $50 back in 1980, you have to realize that those dollars have depreciated by 70 or 80%. And so $50 back then does not mean $50 today. It's much, much lower. And so really, it's a psychological barrier. There may be somebody out there who paid $50 a long time ago and they want to get out of silver right now. But it's really just that I don't expect this to become an impenetrable uh barrier to the pro progress of silver prices uh even really in the medium term. I think this is just a very a short stopping point. Um, and that we'll get through that price just given inflation over time and given that they're still printing and they're still borrowing and they're still spending in Washington DC. So we have expectations that long run silver prices are headed higher, maybe much higher and and so I really see this is just a psychological barrier. Traders are probably using it to take profits um and that kind of thing. But I I I suspect that in a couple of years we'll look back on that uh look back on this day and uh we might not even be able to see the price variation um that we've seen the last couple of days in the charts. Now there there's eventually going to be some big time pullbacks in this market. Um, as you said, silver's up 100%. It's up 20% this last 30 days. So, uh, it's going up very rapidly. And, you know, if you look at any market, you're going to see, you know, some noticeable pullbacks. Whether or not that occurs here, uh, is an open question. But, um, you know, you've got to expect that thing in any commodity market. No, when we're looking at uh precious metals, I mean, as you mentioned, it is a psychological barrier, not even a real high, right? It's a nominal high, but compared to the dollars in 1980, you know, the dollar, as you mentioned, has lost, you know, 70 to 90 or so% of its value. Um so when it comes to and if you look at what gold has done right it's more than it's about five times its 1980 price at the moment but silver is still just about at that price. So I think it is it people should reflect on that and say well actually at the moment silver is probably still pretty cheap comparatively. That's right. And uh I think that is true and I think that there is a question mark um in this marketplace as to what hap what happened between 1980 and 2011 and the present. Um you know Michael Oliver is described it as a big mistake. And so I'm trying to piece together some of the fundamental uh structural reasons why that was the case. And I think there are some uh noticeable uh possibilities here. Of course, much of the silver demand in 1980 was due to uh photography and x-rays and that kind of thing. And uh of course we know that technology displaced the use of silver in what was its main application. Uh and so there was a downdraft in the demand for silver for many many years. And of course we did have much lower CPI rates there for uh quite a bit. um interest rates and inflation rates uh collapsed in 1981 and we saw a very multi-dead long process of lower CPI and lower in price inflation and lower interest rates over a very long period of time. So that's definitely contributing to the fundamental structural reasons. And then of course uh there's been a big increase in the price level for industrial metals um across the board. So things like lead and zinc and copper and so forth. And uh as I've pointed out here in the past uh and I want to develop that a little bit more and and on my own p uh minor issues podcast uh that silver is mined and and found and produced much as a byproduct of these industrial metals. And so people will go in and set up a copper mine or a zinc mine or a lead mine and the main product that they get out is copper, zinc and lead, but they also get out silver. So, uh, as those industrial metals expanded after 1980, uh, and the price of those metals rose and they're much higher now, um, today, uh, those industries as a group expanded and so the supply of silver from those industries also expanded from their historical levels. And so, you know, it's reasons like that that I want to try to eventually completely explain why silver has not kept up with um with the other metals with uh in and in particular gold. Of course, gold and silver move in tandem but not perfectly so. And there has been this divergence in trends where gold has done much better than silver. And of course as we all know the reason gold has done so much better uh in recent times is because central banks around the world have been adding to their gold reserves. And so there's been a big increase in the demand for gold that has not bled over into the demand for silver because silver is just, you know, it doesn't seem that way for us minor league uh stackers. Um that doesn't seem to hold that much volume, but if you're buying a billion dollars worth of silver, uh it takes up a lot more space than a billion dollars worth of gold. So there's a lot of fundamental structural reasons and I see um you know in terms of the momentum of price I see that reversing itself um in the future. >> Now when we first had you on the gold silver ratio was over 100 to1 and in subsequent episodes we've we've uh seen the gold silver ratio fall to the 80s you know mid 80s to one. Um right now as we speak it's really testing that $80 level. It's just under sorry 80 to1 level. It's just under 80 to1 or about 79 to1 um right now. your take on this as we see silver outperforming you say in the last few years gold has outperformed um but at the moment it seems like uh you know over the last couple months as the ratio has fallen uh silver has outperformed and often in bull markets we do see silver kind of play catch-up. Do you think that's what we're seeing right now? >> Well, yes. uh there's there's no doubt that uh individuals and small investors are catching on and so they're going out there and industrial users are adding to their have been adding to their inventories. Um, you know, I I guess I first contemplated uh the that type of gold silver ratio exchange when it was at 104 and then by the time I ran through the numbers and we talked about it on air, it was 100 to1. It's since fallen to 80 to one. That means if you traded 1 ounce of gold for 33 um ounces of or excuse me 100 ounces of silver uh with the ratio falling to 80 I if the price of gold hadn't gone up at all. That means you would have earned a 33% profit on that trade. And of course, because you're just trading metals, you're not putting any new money forward. And if you look at the profits on the silver that you would have received um versus the price of gold and the given that the price of gold has also gone up, that you're basically making about 50% on that trade. and and uh and so it was a profitable trade and um I expect um that the gold silver ratio is going to fall even more. I mean and I think a lot of people in the marketplace are expecting the ratio to decline and so uh with a standard investment um horizon time horizon of a few years uh I think that it wouldn't be um outrageous for the uh gold silver price ratio to fall to something like 50 and then of course if you took my hyperinflation uh scenario seriously or if it actually happened, then we would probably expect the gold silver ratio uh to fall below 20. Um and you would start to see people actually using silver in day-to-day transactions. And so there would be a greatly enhanced uh demand for uh silver. Now, of course, we don't want that to happen. Uh we don't want hyperinflation. and it's the most destructive thing that government can do to society outside of war. And so we we definitely don't want that to happen, but that's probably what would happen uh if we got into that uh hyperinflation stage where the government was just printing money to pay for its operations, to roll over the debt, um so on and so forth. and um and people um found themselves not able to hold money. I mean, if you held money, it would just completely evaporate in your hands. And so, people would want to be dumping their money. They would want to be spending uh their money and uh the value of money would depreciate extremely rapidly. I mean a standard hyperinflation is where uh the consumer price index is going up by more than 50% per month. And so you obviously don't want to hold uh money under those circumstances. And so eventually people would transition over to um you know wages paid in silver and um day-to-day transactions in silver. And so obviously the demand for silver would increase, the price of silver would increase relative to gold, which isn't good for day-to-day transactions. And so you would see um an extremely low uh gold silver ratio, probably um definitely less than 20 uh or maybe even less. Now, focusing on some of the drivers of precious metals right now. Last time we had you on, you were talking a lot about the uh really the geopolitical uh drivers and one of the things I would did want to uh talk with you about is I guess the geopolitical conflicts around the world. Obviously, we're seeing um a sort of uh it seems like a sort of positive uh peace deal with respect to the Israel conflict and then we're also seeing maybe some escalation in Venezuela uh by the US. Your perspective on the current geopolitical situation and how that is impacting precious metal prices. Well, I I try to stay optimistic about this question above all else, but uh and you know, I applaud the idea that at least um the people on the West Bank are getting food and water and so forth. Um and that a peace deal of some sort looks like it's being engineered and is forthcoming. And so we all have to um applaud that um that action that deescalation um in the Middle East which is of course um the hot a hotbed for international conflict. Uh but the US is still in uh in military conflict around the world. We have sanctions all over the place uh particularly against Russia. But you know uh President Trump has been using these tariffs uh as a punitive sanction-like tool um on a regular basis. And so sanctions are out there. Um you know and uh and we and even the trade war um is a very uh disconcerting part of this militarization of foreign policy. Um and the tariffs are a big part of that. I mean slapping tariffs on these other countries that's obviously not taken as a positive that's taken as a negative. And we've been doing that to uh just about everybody around the world. Our neighbors in Mexico and Canada, our friends uh in Europe, um India that um you know we've been trying to uh get along with for quite some time and to keep them out of the uh communist China and the and Russia, keeping them out of th those orbits. And what we're ended up doing is bringing them uh closer into the Chinese and Russian orbits of political influence. And um and so in total, we're definitely um escalating uh war measures across the globe really. uh we have a declining number of friendly relations and an escalating number of hostile relations with other countries. And so it's a very dark time actually out there. And that's one reason why, of course, people are investing in gold and gold and silver. Um because it's the ultimate protective uh device. It's the ultimate personal fire extinguisher device. uh to have on hand uh to take care of the contingencies. Now, what President Trump has been doing in Venezuela um of course the Venezuela is very very uh bad off. They have a Marxist communist uh socialist dictator in charge down there. It's it's an awful situation for the local people. Uh but of course the President Trump has used the military to blow up a couple of uh small boats charged um sort of with drug trafficking uh violations, but everybody knows basically that they're making preparatory uh steps down in Venezuela in the northern tier of South America uh for military type actions. And you know, our oil companies are interested in taking advantage of the situation of the oil reserves of Venezuela, but really the whole region. Um, the oil reserves on land and the oil uh reserves and discoveries out in the water. And so I'm not sure what's going to happen down there, but the moves that we've been making so far are um you know, steps towards war. And I I don't see this as part of that grander military issue. It seems like it's more of something that a politician would do to bolster their chances in in an upcoming election where, you know, you you fire some weapons and some bombs and you have maybe a u a takeover of a third world dictator uh as a way to bolster your political chances in an upcoming election really um rather than as part of an affront to uh the Russians and the Chinese and and the Iranians and uh so forth. So, um not sure exactly what to make of that, but again, it's an escalation uh a destabilization of the international accord. >> And last time also we had you on, you were talking about uh possible black swans that could really shock the market. And it's interesting because a lot of this the a black swan by definition right is unpredictable right um but a lot of these things are predictable and we do see as you mentioned just the continued escalation of geopolitical conflicts around the world and and we're seeing um really concerning developments with respect to the economy. What are some other things that could maybe shock the mainstream but that you're looking at right now that could be really disastrous for uh the economy? >> Well, it really is hard to predict because when the Fed pumps money in and they buy up government debt and they expand the money supply and they lower interest rates, they really set off a cascade of negative effects throughout the economy. overinvestment, male investment, uh overend indebtedness. And and so that's the general phenomenon. And so it's hard to pick what's going to be the black swan. What's going to be the first thing to crater that's going to bring everything else down? So, you know, what's the what's the section of the stock market that's going to collapse and bring all stocks down with it? Is it going to be artificial intelligence? Uh that seems to be in a runaway boom. Uh it's really it really is hard to tell what is going to break first. Uh one thing that I have my eye on is um is the private equity uh section of investments because private equity uh just by definition means it's been taken off of the market. uh we don't have day-to-day market determined prices for those assets and so there's a lot of lack of information. There's a lack of transparency there. We have investors who have been taking stakes in companies uh that aren't traded and so we don't really know what the valuations of those are and even the the investors themselves and they have a hard time getting out of those investments. So, we don't know when there's going to be a run for the exits and whether or not private equity is going to be that source. But private equity, private equity uh is a prime candidate. you know, if those companies start to falter and not be able to pay make their bond payments, and that's part of the whole private equity thing is you buy a company, you take it off the market, uh you fill it full of debt, uh and then you sell it to somebody for a big profit, right? And so not being able to pay that debt, if private equity firms, not the the people that put together the deals, but the deals themselves, if they start to falter, that could cascade uh and we could, you know, trace that all back to the Fed's easy money policy. So that's something I'm very very uh concerned about is you know the situation with private equity type arrangements in the marketplace. Um that's really uh something that uh is easy to keep away from investors attention precisely because it is uh private equity and so private equity and uh and of course artificial in intelligence and everything uh that has to do with that you know the great data centers that they're building uh there there's classic signs there of the Austrian business cycle theory where they're trying to build out this brand new industry and this high- techch industry and they're putting strains everywhere on the system, including our very own electrical prices. They're driving up the price of electricity in states across the union. Wherever they're building, they're anticipating using massive amounts of electricity. And that's going to drive up the price of electricity because of the regulated nature of that marketplace and the fact that energy sources to make electricity, you know, all of our investments have taken place in things like solar and wind and stuff. And that that's really not great sources of electricity for a data center which needs that power 247 365. And so, you know, we I'm just investigating right now um several of these possible black swans and but and and the the one thing that we can follow follow the trail is the Fed increasing the money supply and gendering new investments and then what happens as a result of these new investments and when are they going to break? It is so interesting how just the manipulation of the currency supply can create all these distortions right when people are not u when you don't have a stable currency or when you don't have this I a place to put your funds um and know that they're going to be you know worth the same 10 20 years down the road. it really leads to a lot of um malinvestment, a lot of speculation out there and it's just a completely I guess distorted economy which then as you mentioned even in some areas like private equity we really don't know the truth behind right now and there could be a lot of surprises coming soon. >> Yeah. Like to a power bill in your mail mailbox in the in the future. So you know it those kind of surprises are actually very traceable um if you understand economic theory and the Austrian theory of the business cycle and what the Fed is actually doing to our economy. Now eventually it all comes together in the you know the CP lie and you know just general increases in prices. we get the general increases in prices, but the people who first get the money, they're making all the wealth. They're making all the profits. They're seeing stock prices skyrocket to the moon. So the first feeders of the Fed's, you know, grand giveaway, um, they have the tremendous benefits, but the average person, middle class out there in America, they end up paying the higher prices of goods and services. And I see, you know, one of the few ways uh to protect yourself against that is to invest in inflation hedges, um, you know, such as gold and silver. >> Certainly. And if our viewers are interested in learning more, we'll put a link in the description of this video to your Minor Issues podcast. Uh, did you have any last thoughts for our viewers? Yeah. Well, I have some exciting, you know, uh things for the uh minor issues podcast and it's MI. I mean, I talk a lot about precious metals and various things to do with those sectors, but I talk about all sorts of things. Uh and it's different every week and the reason it's called minor issues is because I try to deal with issues that are not dealt with um in the mainstream media. So, these are things that um I try to uh present in about less than 10 minutes uh of things that just simply aren't addressed. They're considered by the mainstream press to be minor issues, but I think they're uh some of the most uh important uh learning tools uh that uh that uh you know you can get in a 10-minute podcast. It comes out on Saturday morning. Fantastic. And I know you gave me a little uh hint of what tomorrow's episode is going to be. So, that should be quite interesting. I'll I'll definitely put a link to it when it's available in uh the description of this video. And I encourage everyone to check it out. So, really appreciate your time today, Dr. Thornton. You have a good day and God bless. Thank you.
Silver’s $50 Moment | Mark Thornton
Summary
Transcript
Hello and welcome to another episode of the Minor Issues podcast. I'm Mark Thornton at the Mises Institute. Well, our annual contest this year has really been exciting where we've looking at your predictions for how well Bitcoin is going to do relative to how the price of gold is doing. And Bitcoin is up over 20% this year so far. But gold is up 60% so far early in the week. Uh so so far gold is pretty far ahead of Bitcoin at this point in time. Uh I'm sure there's going to be more fireworks to come by the end of the year in the end of the contest. Well, this weekend the Misesus Institute is on the road in Delray Beach, Florida for its annual supporter summit. So, in lie of a full episode, I want to show you a recent uh show that I was on, the Liberty and Finance show um over the weekend. And uh they brought me on to talk about uh the pivotal level of silver prices at $50 per ounce. And it was hanging right there. As I went on the show, I talked about its the the real meaning of that $50 level. Uh we also went back and looked at uh my so-called prediction for the gold silver price uh ratio and how well that's been working out so far this year which has been uh really great and uh with more good things to come I think there and then uh they asked me about what's really going on in the economy uh what are the real uh black swans that we need to be um on the lookout for um by the end of this year. So we talked about that uh what could potentially do in the stock market and then uh they also uh asked me about the current war status in the global economy, new developments in that area. Uh so it's a great show. It's a great interview show. Um I highly recommend it on a regular basis. Um they have some really good guests on there. Um, and the audience seems to appreciate me and uh, Mises people in general. So, I encourage you to listen to this podcast episode of my interview with the Liberty and Finance Show and uh, thank you for listening uh, to this episode of the Minor Issues Podcast. I'll be back next week with another episode. >> Hey everyone, this is Elijah K. Johnson with Liberty and Finance. And back with us today is our good friend Dr. Mark Thornton from the Micus Institute. Uh Dr. Thornton, thank you so much for joining us today. >> It's great to be here today. >> Well, it's great to have you. Last time we had you on, my father Dunigan interviewed you about how we are on the road to hyperinflation. And we can see this across the board, especially in the last few years in metals prices as metals prices have doubled for both gold and silver, which is pretty shocking. And right now, as we're recording this, silver is above its 1980 high, above its 2011 high. It's above $50 an ounce, which is this incredible price barrier that has, you know, for 45 years the silver has has failed to uh rise above that that price. Your take on the significance of this and what does it mean maybe if we look again at what does it mean for the US dollar um that silver is rising so dramatically so fast? Well, it is an historical level, but it's basically a psychological barrier uh for most people or even not even most people really. But if you look at $50 back in 1980, you have to realize that those dollars have depreciated by 70 or 80%. And so $50 back then does not mean $50 today. It's much, much lower. And so really, it's a psychological barrier. There may be somebody out there who paid $50 a long time ago and they want to get out of silver right now. But it's really just that I don't expect this to become an impenetrable uh barrier to the pro progress of silver prices uh even really in the medium term. I think this is just a very a short stopping point. Um, and that we'll get through that price just given inflation over time and given that they're still printing and they're still borrowing and they're still spending in Washington DC. So we have expectations that long run silver prices are headed higher, maybe much higher and and so I really see this is just a psychological barrier. Traders are probably using it to take profits um and that kind of thing. But I I I suspect that in a couple of years we'll look back on that uh look back on this day and uh we might not even be able to see the price variation um that we've seen the last couple of days in the charts. Now there there's eventually going to be some big time pullbacks in this market. Um, as you said, silver's up 100%. It's up 20% this last 30 days. So, uh, it's going up very rapidly. And, you know, if you look at any market, you're going to see, you know, some noticeable pullbacks. Whether or not that occurs here, uh, is an open question. But, um, you know, you've got to expect that thing in any commodity market. No, when we're looking at uh precious metals, I mean, as you mentioned, it is a psychological barrier, not even a real high, right? It's a nominal high, but compared to the dollars in 1980, you know, the dollar, as you mentioned, has lost, you know, 70 to 90 or so% of its value. Um so when it comes to and if you look at what gold has done right it's more than it's about five times its 1980 price at the moment but silver is still just about at that price. So I think it is it people should reflect on that and say well actually at the moment silver is probably still pretty cheap comparatively. That's right. And uh I think that is true and I think that there is a question mark um in this marketplace as to what hap what happened between 1980 and 2011 and the present. Um you know Michael Oliver is described it as a big mistake. And so I'm trying to piece together some of the fundamental uh structural reasons why that was the case. And I think there are some uh noticeable uh possibilities here. Of course, much of the silver demand in 1980 was due to uh photography and x-rays and that kind of thing. And uh of course we know that technology displaced the use of silver in what was its main application. Uh and so there was a downdraft in the demand for silver for many many years. And of course we did have much lower CPI rates there for uh quite a bit. um interest rates and inflation rates uh collapsed in 1981 and we saw a very multi-dead long process of lower CPI and lower in price inflation and lower interest rates over a very long period of time. So that's definitely contributing to the fundamental structural reasons. And then of course uh there's been a big increase in the price level for industrial metals um across the board. So things like lead and zinc and copper and so forth. And uh as I've pointed out here in the past uh and I want to develop that a little bit more and and on my own p uh minor issues podcast uh that silver is mined and and found and produced much as a byproduct of these industrial metals. And so people will go in and set up a copper mine or a zinc mine or a lead mine and the main product that they get out is copper, zinc and lead, but they also get out silver. So, uh, as those industrial metals expanded after 1980, uh, and the price of those metals rose and they're much higher now, um, today, uh, those industries as a group expanded and so the supply of silver from those industries also expanded from their historical levels. And so, you know, it's reasons like that that I want to try to eventually completely explain why silver has not kept up with um with the other metals with uh in and in particular gold. Of course, gold and silver move in tandem but not perfectly so. And there has been this divergence in trends where gold has done much better than silver. And of course as we all know the reason gold has done so much better uh in recent times is because central banks around the world have been adding to their gold reserves. And so there's been a big increase in the demand for gold that has not bled over into the demand for silver because silver is just, you know, it doesn't seem that way for us minor league uh stackers. Um that doesn't seem to hold that much volume, but if you're buying a billion dollars worth of silver, uh it takes up a lot more space than a billion dollars worth of gold. So there's a lot of fundamental structural reasons and I see um you know in terms of the momentum of price I see that reversing itself um in the future. >> Now when we first had you on the gold silver ratio was over 100 to1 and in subsequent episodes we've we've uh seen the gold silver ratio fall to the 80s you know mid 80s to one. Um right now as we speak it's really testing that $80 level. It's just under sorry 80 to1 level. It's just under 80 to1 or about 79 to1 um right now. your take on this as we see silver outperforming you say in the last few years gold has outperformed um but at the moment it seems like uh you know over the last couple months as the ratio has fallen uh silver has outperformed and often in bull markets we do see silver kind of play catch-up. Do you think that's what we're seeing right now? >> Well, yes. uh there's there's no doubt that uh individuals and small investors are catching on and so they're going out there and industrial users are adding to their have been adding to their inventories. Um, you know, I I guess I first contemplated uh the that type of gold silver ratio exchange when it was at 104 and then by the time I ran through the numbers and we talked about it on air, it was 100 to1. It's since fallen to 80 to one. That means if you traded 1 ounce of gold for 33 um ounces of or excuse me 100 ounces of silver uh with the ratio falling to 80 I if the price of gold hadn't gone up at all. That means you would have earned a 33% profit on that trade. And of course, because you're just trading metals, you're not putting any new money forward. And if you look at the profits on the silver that you would have received um versus the price of gold and the given that the price of gold has also gone up, that you're basically making about 50% on that trade. and and uh and so it was a profitable trade and um I expect um that the gold silver ratio is going to fall even more. I mean and I think a lot of people in the marketplace are expecting the ratio to decline and so uh with a standard investment um horizon time horizon of a few years uh I think that it wouldn't be um outrageous for the uh gold silver price ratio to fall to something like 50 and then of course if you took my hyperinflation uh scenario seriously or if it actually happened, then we would probably expect the gold silver ratio uh to fall below 20. Um and you would start to see people actually using silver in day-to-day transactions. And so there would be a greatly enhanced uh demand for uh silver. Now, of course, we don't want that to happen. Uh we don't want hyperinflation. and it's the most destructive thing that government can do to society outside of war. And so we we definitely don't want that to happen, but that's probably what would happen uh if we got into that uh hyperinflation stage where the government was just printing money to pay for its operations, to roll over the debt, um so on and so forth. and um and people um found themselves not able to hold money. I mean, if you held money, it would just completely evaporate in your hands. And so, people would want to be dumping their money. They would want to be spending uh their money and uh the value of money would depreciate extremely rapidly. I mean a standard hyperinflation is where uh the consumer price index is going up by more than 50% per month. And so you obviously don't want to hold uh money under those circumstances. And so eventually people would transition over to um you know wages paid in silver and um day-to-day transactions in silver. And so obviously the demand for silver would increase, the price of silver would increase relative to gold, which isn't good for day-to-day transactions. And so you would see um an extremely low uh gold silver ratio, probably um definitely less than 20 uh or maybe even less. Now, focusing on some of the drivers of precious metals right now. Last time we had you on, you were talking a lot about the uh really the geopolitical uh drivers and one of the things I would did want to uh talk with you about is I guess the geopolitical conflicts around the world. Obviously, we're seeing um a sort of uh it seems like a sort of positive uh peace deal with respect to the Israel conflict and then we're also seeing maybe some escalation in Venezuela uh by the US. Your perspective on the current geopolitical situation and how that is impacting precious metal prices. Well, I I try to stay optimistic about this question above all else, but uh and you know, I applaud the idea that at least um the people on the West Bank are getting food and water and so forth. Um and that a peace deal of some sort looks like it's being engineered and is forthcoming. And so we all have to um applaud that um that action that deescalation um in the Middle East which is of course um the hot a hotbed for international conflict. Uh but the US is still in uh in military conflict around the world. We have sanctions all over the place uh particularly against Russia. But you know uh President Trump has been using these tariffs uh as a punitive sanction-like tool um on a regular basis. And so sanctions are out there. Um you know and uh and we and even the trade war um is a very uh disconcerting part of this militarization of foreign policy. Um and the tariffs are a big part of that. I mean slapping tariffs on these other countries that's obviously not taken as a positive that's taken as a negative. And we've been doing that to uh just about everybody around the world. Our neighbors in Mexico and Canada, our friends uh in Europe, um India that um you know we've been trying to uh get along with for quite some time and to keep them out of the uh communist China and the and Russia, keeping them out of th those orbits. And what we're ended up doing is bringing them uh closer into the Chinese and Russian orbits of political influence. And um and so in total, we're definitely um escalating uh war measures across the globe really. uh we have a declining number of friendly relations and an escalating number of hostile relations with other countries. And so it's a very dark time actually out there. And that's one reason why, of course, people are investing in gold and gold and silver. Um because it's the ultimate protective uh device. It's the ultimate personal fire extinguisher device. uh to have on hand uh to take care of the contingencies. Now, what President Trump has been doing in Venezuela um of course the Venezuela is very very uh bad off. They have a Marxist communist uh socialist dictator in charge down there. It's it's an awful situation for the local people. Uh but of course the President Trump has used the military to blow up a couple of uh small boats charged um sort of with drug trafficking uh violations, but everybody knows basically that they're making preparatory uh steps down in Venezuela in the northern tier of South America uh for military type actions. And you know, our oil companies are interested in taking advantage of the situation of the oil reserves of Venezuela, but really the whole region. Um, the oil reserves on land and the oil uh reserves and discoveries out in the water. And so I'm not sure what's going to happen down there, but the moves that we've been making so far are um you know, steps towards war. And I I don't see this as part of that grander military issue. It seems like it's more of something that a politician would do to bolster their chances in in an upcoming election where, you know, you you fire some weapons and some bombs and you have maybe a u a takeover of a third world dictator uh as a way to bolster your political chances in an upcoming election really um rather than as part of an affront to uh the Russians and the Chinese and and the Iranians and uh so forth. So, um not sure exactly what to make of that, but again, it's an escalation uh a destabilization of the international accord. >> And last time also we had you on, you were talking about uh possible black swans that could really shock the market. And it's interesting because a lot of this the a black swan by definition right is unpredictable right um but a lot of these things are predictable and we do see as you mentioned just the continued escalation of geopolitical conflicts around the world and and we're seeing um really concerning developments with respect to the economy. What are some other things that could maybe shock the mainstream but that you're looking at right now that could be really disastrous for uh the economy? >> Well, it really is hard to predict because when the Fed pumps money in and they buy up government debt and they expand the money supply and they lower interest rates, they really set off a cascade of negative effects throughout the economy. overinvestment, male investment, uh overend indebtedness. And and so that's the general phenomenon. And so it's hard to pick what's going to be the black swan. What's going to be the first thing to crater that's going to bring everything else down? So, you know, what's the what's the section of the stock market that's going to collapse and bring all stocks down with it? Is it going to be artificial intelligence? Uh that seems to be in a runaway boom. Uh it's really it really is hard to tell what is going to break first. Uh one thing that I have my eye on is um is the private equity uh section of investments because private equity uh just by definition means it's been taken off of the market. uh we don't have day-to-day market determined prices for those assets and so there's a lot of lack of information. There's a lack of transparency there. We have investors who have been taking stakes in companies uh that aren't traded and so we don't really know what the valuations of those are and even the the investors themselves and they have a hard time getting out of those investments. So, we don't know when there's going to be a run for the exits and whether or not private equity is going to be that source. But private equity, private equity uh is a prime candidate. you know, if those companies start to falter and not be able to pay make their bond payments, and that's part of the whole private equity thing is you buy a company, you take it off the market, uh you fill it full of debt, uh and then you sell it to somebody for a big profit, right? And so not being able to pay that debt, if private equity firms, not the the people that put together the deals, but the deals themselves, if they start to falter, that could cascade uh and we could, you know, trace that all back to the Fed's easy money policy. So that's something I'm very very uh concerned about is you know the situation with private equity type arrangements in the marketplace. Um that's really uh something that uh is easy to keep away from investors attention precisely because it is uh private equity and so private equity and uh and of course artificial in intelligence and everything uh that has to do with that you know the great data centers that they're building uh there there's classic signs there of the Austrian business cycle theory where they're trying to build out this brand new industry and this high- techch industry and they're putting strains everywhere on the system, including our very own electrical prices. They're driving up the price of electricity in states across the union. Wherever they're building, they're anticipating using massive amounts of electricity. And that's going to drive up the price of electricity because of the regulated nature of that marketplace and the fact that energy sources to make electricity, you know, all of our investments have taken place in things like solar and wind and stuff. And that that's really not great sources of electricity for a data center which needs that power 247 365. And so, you know, we I'm just investigating right now um several of these possible black swans and but and and the the one thing that we can follow follow the trail is the Fed increasing the money supply and gendering new investments and then what happens as a result of these new investments and when are they going to break? It is so interesting how just the manipulation of the currency supply can create all these distortions right when people are not u when you don't have a stable currency or when you don't have this I a place to put your funds um and know that they're going to be you know worth the same 10 20 years down the road. it really leads to a lot of um malinvestment, a lot of speculation out there and it's just a completely I guess distorted economy which then as you mentioned even in some areas like private equity we really don't know the truth behind right now and there could be a lot of surprises coming soon. >> Yeah. Like to a power bill in your mail mailbox in the in the future. So you know it those kind of surprises are actually very traceable um if you understand economic theory and the Austrian theory of the business cycle and what the Fed is actually doing to our economy. Now eventually it all comes together in the you know the CP lie and you know just general increases in prices. we get the general increases in prices, but the people who first get the money, they're making all the wealth. They're making all the profits. They're seeing stock prices skyrocket to the moon. So the first feeders of the Fed's, you know, grand giveaway, um, they have the tremendous benefits, but the average person, middle class out there in America, they end up paying the higher prices of goods and services. And I see, you know, one of the few ways uh to protect yourself against that is to invest in inflation hedges, um, you know, such as gold and silver. >> Certainly. And if our viewers are interested in learning more, we'll put a link in the description of this video to your Minor Issues podcast. Uh, did you have any last thoughts for our viewers? Yeah. Well, I have some exciting, you know, uh things for the uh minor issues podcast and it's MI. I mean, I talk a lot about precious metals and various things to do with those sectors, but I talk about all sorts of things. Uh and it's different every week and the reason it's called minor issues is because I try to deal with issues that are not dealt with um in the mainstream media. So, these are things that um I try to uh present in about less than 10 minutes uh of things that just simply aren't addressed. They're considered by the mainstream press to be minor issues, but I think they're uh some of the most uh important uh learning tools uh that uh that uh you know you can get in a 10-minute podcast. It comes out on Saturday morning. Fantastic. And I know you gave me a little uh hint of what tomorrow's episode is going to be. So, that should be quite interesting. I'll I'll definitely put a link to it when it's available in uh the description of this video. And I encourage everyone to check it out. So, really appreciate your time today, Dr. Thornton. You have a good day and God bless. Thank you.