‘Something Fishy’ At Fort Knox: Giustra on The US Audit & Hidden Gold Flows
Summary
Physical Gold: Strong preference for holding physical over paper gold, citing market structure risks and potential redemption limits in ETFs.
Gold Outlook: Recent crash framed as a leverage purge, not a thesis change; long-term bull case supported by central bank buying and currency debasement.
Copper Miners: Bullish on copper due to structural deficits, long project lead times, and accelerating demand from electrification and grid upgrades.
Critical Minerals: U.S. Project Vault and EU-U.S. coordination seen as catch-up to China’s dominance across mining and processing, likely supporting prices.
State Capitalism: Governments increasingly financing and stockpiling strategic resources, shifting price dynamics away from purely free-market behavior.
Junior Miners: Despite sharp drawdowns, the cycle is viewed as early with limited institutional participation; discipline and avoiding leverage emphasized.
Digital Currencies: CBDCs and stablecoins discussed as policy tools (and surveillance risks), with stablecoins potentially creating new demand for U.S. Treasuries.
Companies Mentioned: Glencore and an Orion consortium referenced in Congo copper/cobalt context; no specific stock recommendations were pitched.
Transcript
Welcome back. I'm Jeremy Saffron. [music] If you look at the screen today, well, you see gold back near $5,000 on the spot side US. You also see silver up about 11%. And if you look at the headlines, they're about government stockpiles. But let's be honest here about the carnage that we just witnessed. Last week's the metal complex didn't just see a correction, it was a liquidity event. We watched a 20% drop in gold, not to mention silver's haircut, and that wiped out months of gains for the junior miners in about 48 hours. Now, this selloff triggered by CME margin hikes and shifting Fed expectations introduced record- setting volatility, and it was a stress test of the entire paper market. And now, just as the dust settles, the White House has stepped in. Yesterday, the administration launched Project Vault. and according to the White House is a $12 billion initiative backed by the Export Import Bank to finance the stockpiling of critical minerals. Now, the timing is notable and the announcement raises legitimate questions about whether governments are becoming active participants in these markets, potentially changing how prices behave. And it's not just Washington. Just this morning, the European Union signaled that it wants a formal critical minerals partnership with the US to counter China, even discussing joint stockpiling and price support mechanisms. That's according to Bloomberg. So this is no longer theory. The West is now openly talking about coordinated industrial policy in metals because China already does it. All right, we got lots to get in today. Joining me to dissect the plumbing of that flash crash, uh the reality for the miners and and what's being called state capitalism and the shift is Frank Gustra, no stranger to this show, of course, and CEO of the Fiora Group. Uh great to see you, Frank. Thanks for making the time. >> Yeah, thanks for having me on. Uh we got quite a few things to get into and I know that we're in a little bit bit of a different time zone here. So I want to talk about before we get into debt that that last week's crash. I mean we saw margin hikes, massive volume. Was was this simply just leverage getting purged, you know, margin calls, CTA just deleveraging rather than any fundamental change in the long-term thesis to gold? >> There was no fundamental change in the long-term thesis. This was a uh an overdue event in my opinion. I've been saying to my [snorts] friends for quite some time that I can't believe that both gold first and then silver following went straight up without a correction. I mean that was a parabolic move especially with silver and that you know anybody that believes that that can m sustain itself without a correction >> you know it hasn't been in the market long enough. I've been doing this for over 40 years so it didn't it didn't surprise me at all. Secondly, I think that um uh it was in my opinion uh it happened on a Friday and I you know they raised the margin requirements um Asia was closed so there was no support. It was a Friday afternoon and they they you know the LBMA and whoever else you know the ComX whoever whoever short has short positions on silver especially um I'm sure participated in that downward um takedown in my opinion it was a takedown so you know I I to me it was a non-event a lot of people were panicking I had a lot of my friends calling me oh my god is this it is it over going guys it's the nothing has changed changed in the supply and demand dynamics uh for both both gold and silver that the fundamentals still remain intact. This was a correction that was long overdue and look it rebounded today quite nicely. Both both metals have rebounded quite nicely today. I I think it you'll see a consolidation in in this range and then eventually I think both gold and silver especially gold I'm more of an expert on gold than I am on silver but I think both will move in tandem. So basically kind of a vacuum move, you know, where the market just had no real bid underneath of it. A nice correction today. Obviously, you're seeing this happen. I I want to ask you about the the dis, you know, this this whole talk about the paper market, you know, that we've been hearing about. I mean, when we use those terms a lot, but we got to be precise. I mean, when people hear paper gold, where are we actually talking about it? Is it futures contracts? Is it unallocated accounts? Is it ETF options? I mean, where does the stress show up first when the system breaks? I I don't I think it's a combination of a whole lot of things plus leverage. Um and I think that obviously it for the past 40 almost 50 years um the paper market has controlled the gold price. Um players that normally don't take delivery, you know, they're just roll over their contracts and it's used as it also in my opinion been a mechanism to suppress the price of gold. M >> now what's changed is that the pricing of gold is now being set by those that take physical delivery and I'm talking mostly about Asian markets, China in particular. Um that is the way the gold price is going to be set from here on in. The paper players are losing their efficacy. um they're not having the same cut kind of impact that you would have normally seen in years past where you know they would destroy the you know gold rallied they destroyed that rally quite successfully and I think that that game is uh coming to an end. >> Yeah. Yeah. I mean the viewers at home I keep getting written to and what we're really asking is in in a crisis I mean is gold just a claim on a screen or is it the actual bar in the vault? Well, [laughter] in a crisis, you better own physical gold. Paper gold won't cut it. You know, I've been talking about a currency crisis, specifically a dollar crisis, but it I think it relates to all fiat currencies. We're coming to the end of the fiat, the time of fiat, and I think that um you're going to see uh a very big change in in in the way that gold and and other precious metals are going to be priced. Um so I'm I'm not sure what your question was. What was the question? >> Uh I think it's just about that physical. It seems physical is still king. >> Yeah. You know, listen, if to me, if you don't own physical gold, you don't own gold. It's really that simple because in a crisis, if you go to exchange your gold ETF for gold bullion, it's not going to be there. >> It's not there. And all by by the terms and conditions of the ETFs, they can pay you the cash value if you want to redeem, but they won't give you the physical gold. And most people don't know that. And you know to me that's you know cuz when a crisis does come um you know governments go um go to extremes to protect their currency >> and you know in terms of capital controls and currency controls etc. And so I think that if you don't have that your hands on the physical gold or it plays somewhere you don't really own gold. >> Yeah. Well said. And I guess what the White House is starting to notice too, we got to talk about this, you know, this announcement, this project vault, $12 billion in export import loans to secure supply. And it wasn't really just a press release this morning. I don't know if you saw this, but the market is moving. Uh this morning, Glen Core announced that potential transaction with USbacked Orion critical minerals consortium have been tied to Congo copper and cobalt, but $9 billion in implied value. We saw Robert Freedelland, you know, at the White House yesterday for that launch. When you see Robert, who has been screaming about this for decades, by the way, standing next to the president, is that a signal that the US has finally woken up or is the 12 billion still a drop in the bucket compared to what China has built? >> You know, it's interesting. I've known Robert for 40 years. I used to be his um primary banker back in the late ' 80s, early 90s. uh he was the first to text me that that that video this morning. So I saw it quite early and you know obviously very proud of himself sitting there in the the Oval Office with President Trump. >> But listen um two things. First of all 12 billion isn't a lot of money. It's it's a good start but it's not a lot of money when you think the amount of money that China has invested in critical minerals around the world for the past 25 years. The West, US and Europe are trying to play catch-up now. And that's why you're seeing all of this scramble to lock in deals with companies, with countries. Um, and they're playing catch-up. They have no choice. China controls the critical minerals market and has for a long time. They control not only the a lot of the mining, but they control the processing. And so the West has to play catch-up. They don't have any choice because now we have a a world that's been bifurcated into well two main camps and a lot of smaller camps. Um and it's a huge competition and you know the US with their tariff threats against China, China is playing its cards you know export restrictions on silver etc etc etc. So, you know, this is going to be um and the only solution because there is a shortage of these minerals, especially copper, which I quite like a lot. Uh there's a real shortage and the only thing that's going to fix that shortage is a higher price because as we all know in the mining business, it takes many years to find these deposits, develop them, and put them into production. Sometimes up to two decades. And you know, you can't just turn on the switch and have production. You know, I'm you know, I I I don't normally like exploration. I'm more of a development production guy, but you know, I you know, I like copper so much that I've, you know, I've got my own exploration play now that I quite like in in Colombia, copper giant. And you know, it's early days. It's got risk, but the prize is big. And you have to look at copper. And we're, you know, my organization is looking at a number of different copper opportunities. Uh, we like it a lot and I think that, you know, outside of gold, which is my favorite metal, copper's next. >> Interesting. Yeah. A lot of a lot of headlines and of course I'm sure Freeland is doing he's been preaching about this for a while. So, you know, seeing him at the White House, I'm sure you were the first one to text. I got to ask you, I mean, you know, this project vault, it looks a lot like Beijing's playbook. I mean has the US basically kind of conceded that the future of resources is state capitalism where the government picks winners and sets floors rather than free markets. >> Yeah, I think they may have reached that conclusion. I don't think they see they have much choice. They have to move quickly and you know the industry moves at a certain pace and if the government throws in capital as they're doing now, it's going to move a lot quicker and so you know they're they're doing it because they have no choice. It's it's that simple. They have no choice. They have to do these kind of deals to catch up to China or not not catch up to China but to compete >> and have access to these minerals for all of the things that they need. Electrification of of of of the system of you know [laughter] clean energy defense you name it. The power the the electricity grid in the United States is in it's a disaster. It needs to be upgraded. Hasn't been upgraded upgraded in decades. So you have all of this need for copper as Freedom loves to tell you and um and there's a supply deficit. No one knows where this supply is going to come from to meet this demand. >> I got to ask you, I mean what's the endgame here? Does the shift towards national stockpiles basically mean globalization is officially over? I mean are we moving from just in time supply chains to just in case economic blocks? >> Yeah. Well, I think globalization is as dead as the dodo >> bird and uh you know that's not going to well certain parts of globalization supply chains are going to be very difficult to dismantle. Okay. As as much as certain players would like to see it dismantled it the world's too integrated to allow that to happen fully. But that said, I think the world is splitting up into camps and they're going to be both in in in the economic and geopolitical sense. And I think that that's just going to be the way it's going to be for the next number of years until we get some sort of new world order because the old one's dead. >> Yeah. Yeah. Well said. Uh the debt reality, I mean, let's get to that because if we zoom out, I mean, to the root cause, we're talking about buying minerals, but the US national debt just crossed 38.49 trillion. I mean, Frank, is is is it mathematically possible to fund these new strategic stockpiles and re-industrialization programs without massive debasement? I mean, are we effectively printing money to buy hard assets? >> Well, listen. Hey, if you were the US government, if I were the US government and I was had the printing machine, which I have access to because I have the global reserve currency, I'd be printing as much as possible this worthless money to buy real assets like minerals. So, you know, I'm not surprised they're doing it. But listen, we're all living in borrowed time. Literally on borrowed time because the debt is so high. You know, the CBO, Congressional Budget Office, predicted that by 2050, the the US deficit is going to be $150 trillion. I mean, that's insane. We'll never get there. I mean, things are going to implode long before that. And that's not accounting unfunded liabilities of another hundred trillion plus. So, um, we're living on borrowed time and there's going to be a debasement of currencies. That's the only way historically that we've seen a reset in the global monetary system is you start with a complete debasement of currencies. You destroy them and then you have to start from scratch. And every time that can hit throughout history that we've had paper currencies that were destroyed, what happened? We went back to using gold as a means of backing currency. So I see that coming. I don't know in what shape it's going to take. You know, there's many ways you can use gold as a back, not a a traditional backing as a currency. There are other ways of doing it, but gold is now being remonetized. It's and that's no longer French theory. >> Gold is now playing a central role in the global monetary system. That's just a fact. You're seeing all the central banks, they own more gold now than they own US dollars. And who would have predicted that 5 years ago? But it's a fact. It's happening. So, we're going to see a a a a change which will involve a lot of chaos, a lot of disruption, a dangerous time perhaps between countries, but out of that will rise eventually a new system, a new monetary system because this old one is dead. >> Yeah. Uh I want to ask you about because the Financial Times was reporting that she is trying to, you know, back the the the wand with gold. I want to get into that. But before we do, just on this because I was reading your um your latest piece, you were also talking about this fiscal event horizon. You know, interest payments now consume nearly 15% of the federal budget. If the Fed has to print to cover the interest, doesn't that make gold price irrelevant in dollar terms? I mean, are we simply measuring the collapse of the currency here? >> Well, keep in mind that, you know, we always make the mistake of looking at the gold price going up. >> Yeah. But what is happening and if you if you look at it across different currencies over the last let's say take over the last 10 years and use different currencies whereas the you know the yen the Turkish lera the Argentine peso it doesn't m gold is the constant so what's happening is that the currencies are devalued against the constant which is gold okay that's what's happening here >> and so when if you look at the US specifically I mean think about this year alone they're going going to roll over 25% of their outstanding debt has to roll over. That's over 10 trillion just in the next 12 months. Okay? You have to find buyers for those treasuries at a time where when countries around the world are disposing of their US dollars and replacing it with gold. So that's a bit of a challenge for for for the US right now for the Treasury. um they have I think they have some ideas of how to fix that, you know, and I think it comes in in two different two two different methods. One is not to allow China and Russia to buy Venezuelan oil with yuans, which they were doing. So that whole thing with Venezuela was really a shot across the bow. I think to anybody that wants to abandon the petro dollar although it's already losing its efficacy. 20% of the world's oil is now traded in non-dollar terms mostly you want. Okay. So so that's that's a big problem. Yeah. It's wild watching it too. I mean this latest news just kind of seeing where Russia is going to be with with India now confirming that they're going to try and stop buying Russian uh oil too. I mean if you're >> corre correction correction Jeremy >> India did not say that. >> President Trump said that India they simply can't they imported one and a half million barrels of oil a day from Russia. >> Crazy. >> Okay. There's no way they can replace that with Venezuelan oil because that production is not there and it's going to take years and years and years and tens of billions of dollars of investment to get the Venezuelan oil industry up back up to a production rate that can make that supply. So Trump can say a lot. He says a lot of things. >> Yeah, of course. >> And but India was very careful in their response. They talked about yes, we're coming to an arrangement but they did not talk about the oil. >> Mhm. oil is going to be interesting. >> They will find and trust me, they will find ways around it. >> They have no choice but to import Russian oil. It's right next door. They need it. There's nowhere else to get that kind of oil. And um you know, I just don't see things changing in the way that the headlines will suggest. >> Yeah. I mean, Europe is also, you know, a big buyer of that Russian oil, too. So, [laughter] um well, if if governments are stockpiling minerals, I guess the next question is obvious. Who's stockpiling gold? I want to kind of look at the global flows here because the official numbers are a bit confusing. We just pulled that new data from the World Gold Council. We'll show it on the screen. Uh Frank, look at this. Poland reported buying 102 tons. China reported adding only 27 tons. Now, officially reported central bank purchases show China added very little relative to its peers, but many ar you know, obviously argue China accumulates through other channels. But how should investors interpret that gap? Is the official reporting incomplete? I mean, it looks like countries are buying into this market. >> Yeah. You know what? The the China thing has been so uh misleading for so many years. China owns a lot more gold, >> a lot more than the 2,300 tons that they've officially reported. And you just have to look at the physical gold flows coming from the west going to the east over the last 25 years to understand that there's no way that they only have 2,300 tons. And even Goldman Sachs came out uh number of months ago to suggest it could be up to 10 times higher than that. Um I've been saying that for years and years and years that there's no way that they're reporting what they're buying and it's probably stuffed into different institutions within the Chinese system, but it's there and they're going to use it and you will probably find out how much they really have when they want you to know. While they're still accumulating, they're not going to tell you. Yeah. >> Um, so and countries like Poland have been very clear about how much gold they want to buy. They've been very transparent saying that they have a target of how much gold they want to buy and they're not finished yet. Countries like Saudi Arabia are buying it covertly. Um, they don't report, they haven't reported since 2015, but you see the physical flows going there. They're buying it. They're just not reporting it. And so it leads you to a conclusion that why Does someone accumulate an asset quietly and covertly sometimes for what purpose? They're because they don't want the world to know that they're in the market accumulating. I started my life as a trader on a trading desk. And the one of the first lessons you learn when you're accumulating a position, you don't show your hand because someone's going to frontr run you. So, you know, I I believe that there's a lot more gold being bought than is being reported. And could that lead you to >> and even by the way even even even even the world gold council acknowledges that there's the reported >> official reported purchases and the flows which they have to guess where it's where it's which pockets it's going into. >> Yeah. Yeah. And when you see an article like the Financial Times is writing about she Jingping coming out saying we want to be you know a a reserve currency what uh what are your thoughts behind this? Why why wouldn't he want to, you know, that for his country? You know, what they what they want most is to create a a sanctionsfree trade channel that is protected from US dollar sanctions. >> And so that's why they've been slowly selling all of their treasuries, you know, slowly, but they're consistently selling their treasuries uh and replacing it with gold. And I think it's my belief that the gold will play a role in giving the yuan the kind of credibility that it needs to be a reserve currency. And it's not going to happen overnight. This is going to take a number of years to get. But you know, China plays the long game. >> Now they have they have 5 year, 10 year, 20, 50 year plans. And so they're they're going down their path. But in essence, it's all about creating a global financial system that sits outside the US dollar. And they've done that with a number of institutions that mirror exactly what the West created. You know, institutions that compete with the World Bank, institution swap arrangements that compete with the IMF. Um, they have all sorts of systems in place created with a number of other countries, mostly the brick countries to sit entirely outside the US dollar system. >> Mhm. So yes, he I'm sure G has a plan and the plan is to make the yuan a reserve currency over time and I think gold's going to play a role in that. >> Yeah. I I mean just on the math I mean the US has over 8,000 tolerance. China reports and we just talked about that you know through their official channels about 2,200. I bring it up because you know if Beijing is serious about being the reserve currency credibility, don't they need far more metal than what they have? >> Yes. But I believe they have it. That's what I've been saying all along. And no, they're not. They're still per they're still acquiring it. So, who knows what their number is and what their ultimate goal is. But if they're still buying it and they're not reporting what they truly have, there's a reason for it. That's just logical. >> Yeah. We hear, you know, from the from the mints. We've had, you know, a couple of people on the show that have said that the governments and the sovereigns have been going in as the hidden hand, working with the banks, accumulating this metal and not necessarily reporting it itself. I mean, could that be happening here? Could Could China have more than 8,000 tons? >> Yeah, they they could easily. Like I said, Goldman Sachs suggested it could be up to 20,000 tons. >> Yeah. Yeah. Exactly. >> Who knows? Well, I I don't know. I don't have the answer, but I know it's more than 2,300. >> Yeah. It's wild to watch. Uh, okay. Okay. Well, I want to pivot to the endgame that you've written about because you use the word Aelion, you know, to describe that that central bank digital currencies, the CBDC's as we've talked about and everyone seems kind of distracted by the volatility and gold and this project vault. But, uh, do you worry that pol policy makers will kind of say, you know, the market is is too wild. We need a digital dollar to stabilize it. >> Well, I again, I don't know about the dollar per se. Uh I know a number of other countries and I can't remember there's like 126 countries experimenting with central bank digital currencies uh preparing for that eventuality. I think eventually that's where the whole world is heading to digital currencies. Um, the US has another plan that I've talked about a lot recently, which is to to create a bigger environment for stable coins because all stable coins have to be backed by something liquid like US treasuries. So if you create more stable coins and there are more and they're used more around the world for settlements, payments, creating a financial products etc. It creates demand for US treasuries at a time when we're losing the petro dollar status. So I think that that is more of a um what the what the US is focused on right now is to to have the stable coin be the new gimmick, >> right? that's stabilizes, you know, the the the treasury market because the treasury market has to sell to somebody and it's a new pocket. It's in a virgin pocket now they've established. So I think that that is their current um goal right now is to focus on stable currencies and making them universal and applicable in in countries because that that helps their cause. >> Yeah. So, so basically, you know, a backdoor policy to create synthetic foreign demand for US debt using crypto rails to to fund the deficit. >> That's right. That to me I you have to ask yourself if you look at this logically and I said earlier about the amount of debt that has to roll over this year to find new buyers. Um, >> and that's going to and and when the deficit is growing at $2 trillion a year and that's not going to change. it's only going to increase uh cuz interest costs are starting to bite. You know, we were dealing with zero interest rates a number of years ago. That's no longer the case. And that's why I think one of the reasons that Trump is so dead set on getting the rates down to 1%. Cuz it's bankrupting the US. Interest payments are over $1 trillion. And as the deficit grows by$2 trillion dollars a year or more, those interest payments become more and more, you know, and pretty soon you all the taxes you're going to collect are going to go to pay interest. >> Yeah. >> So you need to find new buyers for these treasuries. And you know, we've I think everybody's come to the conclusion that Congress, whether it's Democrats or Republicans, have zero interest in cutting costs. Neither side. I know they do it for different re different reasons, but it's always about spending more and more and more. Even President Trump now wants to increase the defense budget from a trillion to one and a half trillion. Well, that money's got to come from somewhere, you know, and it's not coming from tariffs. Tariffs, the tariff revenues are tiny compared to what's needed to to finance the government. So, I think I think we're heading towards a a very big problem. And you know, I think that the the policy makers at this stage are trying to figure out the best way to mitigate, you know, the disaster that's is going to fall upon everybody within a number I think within four, five, six years, we're going to have a serious serious problem. >> You know, it's interesting when you say that. I mean, stable coins, if they become the settlement layer for trade and payments, I mean, doesn't that actually extend dollar's dominance, right? I mean, could they could they possibly succeed here? Well, they could if if as I I've said it, you know, yes, if they're very successful and it's uh becomes universally stable coins become universally accepted as a new financial system for payments, settlements, financial products, etc. then yeah perhaps but they got to really really succeed. >> Yeah. Yeah. And what does that mean for surveillance? I mean you know we've seen even in Canada you bank accounts being stopped. I mean when when you start to talk about these digital programs CBDC especially our audience they get a little bit worried about state surveillance. >> Yeah. Well you should be worried. [laughter] >> Yeah. >> I don't think it's a I personally I don't think it's a good thing. I think the more surveillance means the more control. And if they get if we evolve into a digital currency world which is controlled by central banks then every action you take every dollar you spend can be monitored and they will use the excuse of fine-tuning the economy to either reward you or penalize you for certain expenditures or limit your your they can do at a press of a button. they can cut you off, punish you, do whatever. I think that's a bad thing for society. I think it's, you know, any type of government control is always going to end up hurting the average person >> and that's just the way that history is and history has proven that, you know, you can't give governments too much power. >> It's interesting. I I can't stop thinking about Fort Knox in this a little bit because you know the the claim of 8,000 tons and and you know haven't seen a full public audit in decades as you know but I mean if gold custody is now the whole game Frank I mean doesn't America have some the same credibility pro problem it accuses others of >> this has baffled me this has baffled me and I'll tell you what's baffled and yes the last audit was 1953 I think last time they audited Fort Knox 1953 >> and you have to ask yourself especially Especially when Trump first became president, there was a lot of hype and excitement that he wanted Fort Knox audited. Elon Musk wanted Fort Knox audited. They were marching down there. There were a few few senators saying the same thing, everything. And then it went crickets. And you have to ask yourself why. It's not of It's not rocket science to do an audit. it wouldn't you know you have to ask yourself why don't they want to do an audit and I can think there's many possible reasons but there's a reason which is probably not a good reason why they don't want an audit uh maybe it's pledge that gold is pledged maybe it's not some of it's not there it's been lent out um who knows or the opposite that they're trying to accumulate maybe maybe they're accumulating gold maybe they seen the writing on the wall and don't want to get into this whole how much gold do we have uh debate until they've accumulated enough gold. You we know that last year there was a huge inflow of physical gold for about four or five months. Yeah. >> Last year coming from the UK. Now there were excuses for that. They were trying to get ahead of the tariffs etc. But you don't know. You don't who bought it? Where did it go? Is it the banks? Is it institutions? Was it the government? We don't know. So, I don't know the answer and I'm not going to speculate, but I'm puzzled why they won't do it. And at the same time that all the policy makers and government officials are promoting Bitcoin and they don't talk about gold, they talk about Bitcoin and they're getting the public hype. the mainstream media, you know, the billionaires, the the government, you know, Trump's family, everybody's hyping Bitcoin as a store of value and they won't audit Fortnox. I mean, it's all weird and I I don't know what what it all means, but there's something fishy going on. And I guess one day we'll find out what it was. >> Yeah. Because I mean, you know, the the simple thing to do, a credibility move at least, would just be to prove transparently that the gold is actually there. I mean, if if if gold truly didn't matter in a fiat system, Washington would would welcome transparency, right? I mean, is I guess my question is, is it more realistic, Reed, that the US wants gold to stay in the background quietly as a kind of a backs stop while they run the system on dollars and treasuries? >> Yeah, it could be. It could be. You know, downplay gold, which by the way is what they've been doing for 40 years. you know, downplaying gold as a barbaric relic. You know, doesn't really, you know, central bank >> chiefs saying that it's they don't understand what gold is and all these stupid things. They of course they know what what gold is and what role it plays. But to underplay it because I don't think 8,000 tons is enough to back the US dollar in any meaningful way. I mean, not even close. I mean, for for gold to give a backing to the US dollar with the amount of currency that's out at the moment, the money supply, it would have to be a lot higher, like a lot higher. So maybe they're just downplaying it because they have no choice. You know, they don't have enough gold to, you know, if they suggested that gold really did play a role, then they would have to answer the question, well, do we have enough? >> Yeah. Well said. Uh, okay. I've left you here, 33 minutes. I got to ask you briefly on the miners because obviously we saw juniors saw that draw down 30 40% last week. We saw a couple of others kind of maintain. We're seeing a bit of a a bump today. Um talk to me about it. I mean we know how volatile the mining market is but you know gold can be 5,000 miners can still destroy dilution you know shareholder value. Do you see new discipline emerging? I mean what's h what happened there? Well, I I the discipline that listen, I've been through many uh mining cycles. You know, I got into this business back in 1978, so I've seen quite a few cycles of where you've had bull markets and bare markets in the mining stocks, especially the juniors. Um so, you know, this this you know, the flash crash on Friday. >> Yeah. >> Yeah. I took everything down with it. But you know what? Now they have to climb back up. >> Yeah. Yeah. I don't I if anybody panicked on Friday and sold their positions, it was probably a really dumb move because gold will consolidate and it will eventually head higher. Uh it might head higher sooner than we think. >> Uh so I think that you know you have to have the experience of having been around a long time to know when not to panic. You know just go you know this is this the demand supply dynamics have not changed. This was this was a paper crash played by many different players for different reasons. And and by the way, there was a lot of speculation and leverage that drove mostly silver up to incredible heights that got unwound very quickly. And you know, one of the lessons you learn is you don't play this stuff with debt. >> You don't leverage this stuff. >> You buy gold because you want to own it. It's paid for. It's your store of wealth and it's a percentage of your portfolio. Period. Yeah, >> the stocks is another that's a whole other thing. I I've been in the mining finance business forever and you know I I think that we're still early days in in the mining cycle bull market. I think most >> Americans are don't don't a don't own gold or silver and haven't even looked at the mining sector. So this this bull market is still early. You haven't seen the type of euphoria that I've seen in the past bull markets when all the institutions are just begging to invest. You got the retail players, everybody's talking about it, everybody wants to own a mining stock. We're not we're not even close to that. Hasn't even started. >> I was going to ask you because I I remember you and I think it was Pierre Lassand were had that oped, right, talking about um you know, financial institutions, but also pension funds and what have you coming into the market and actually buying those assets. Have you seen anything like that? I mean, has that even that hasn't even really begun? >> Not the pension not the pension funds. I they they have, as far as I've seen, they haven't really come into this market yet. >> I mean, they may own Newmont or Bareric, but you know, they're they're not there like they used to be in the past, like Ontario Teachers and Case and all these uh in past markets, they were they were players. They're not there yet. >> Yeah. I I asked this to a couple of people over at V-Rick last week. uh Randy Smallwood included because obviously he runs a uh a royalty company and offers financing to these companies, but he's he's competing with state capital now in this whole state capitalism thing. I mean, you get a little worried when when you know governments are coming in and buying mines. >> No, it it doesn't worry me. I just think that you know when governments buy anything, [snorts] it's bound to be a disaster eventually because they don't really know what they're doing in this sector. This is a very very tricky business, the mining business. And when you know, government's just throwing money, you know, some of it's going to be wasted. A lot of it's going to be wasted. >> All right. Uh quick rapid fire to you. If uh we're talking, what is the one asset class that you would not touch right now? >> Bitcoin. >> Yeah, I knew that hasn't changed. I knew it hasn't changed. >> No. No. And listen and and listen and this for your viewers because I know there are a lot of Bitcoin fans out there and I'm on Twitter X a lot these days >> making fun not of Bitcoin because I have nothing against Bitcoin. Okay. But I just the Bitcoin maximus that make these crazy predictions about where Bitcoin is going tomorrow, next month, 5 years from now. these silly silly prices and they're preying on the greed and FOMO of unsophisticated investors and it's like it's a parade of these people on there and I just love love poke poking fun at them because you know they're running out of buyers. Bitcoin is running out of buyers. They're running out of reasons why people should buy. they come up with, you know, Bitcoin has been Bitcoin's purpose has changed so many times over the last 10 years and and the reasons why people should buy Bitcoin have changed and evolved. We've talked about a government Bitcoin reserve. Then now you had the the whole ETF hype. Then you have the Treasury companies, Bitcoin Treasury companies. Now there's over a hundred of them. They're all they're all underwater now. Yeah, >> and there's going to be a great unraveling of Bitcoin when this all it's starting to unravel now. Michael Sailor strategy is below cost as of this morning. His cost is about 76,000 something. He's and it's going lower and there's going to be an unwinding of a lot of these treasury companies and Bitcoin is going to go in my opinion, okay, I may be wrong, but in my opinion, it's going a lot lower and when it does at some point it might be a buy, but not at these prices. Yeah, this is good. I didn't have it in in here, but I mean, you've been in this long enough and and you could maybe take the opportunity just for the younger population that hasn't even ever heard of leverage and margin calls and it feels like a lot of people were doing that with Bitcoin. I mean, how dangerous is that? >> It's dangerous. I used to run an investment back bank back in the 80s and 90s called York Securities and I I was a CEO until 1996. So, you know, we used to have a lot of clients all over the place that played margin accounts, and I learned very quickly how dangerous that is because, you know, the margin works great on the way up, but it just will destroy you on the way down. And the banks and brokers when when a margin position is uh starting to break, they'll sell they'll sell you out automatically. They don't care how much you money you lose. you will lose all your equity and then they'll come after you for more if you're still if you're still in the red. It's it's you know it I've I've never I think when I was in my 20s I traded margin accounts. I I haven't since I think that's a dumb way unless you're a really sophisticated institution that knows how to use debt intelligently. Okay. At at a time, you know, there are times where it might work, but people that buy with debt on especially asset classes that are volatile like Bitcoin >> or junior mining stocks for I don't buy junior mining stocks with debt. >> Don't buy Bitcoin with debt. It's really simple. You know, volatile assets. >> Yeah. You should just the amount of money that you have that you're willing to lose. Okay, fine. put it in and you know take your chances but that that is horrible you know and this is what what again what happened last week with the especially with the silver players. >> Yeah. Yeah. Well said. Uh okay back to that. I mean you talked about jurisdiction. I was going to ask you outside of North America. Where do you trust to build the mind? But I think you you kind of answered it here. You're liking Colombia and you're liking copper. >> Yeah. No, listen. I like lots of places and there are places I won't go. Yeah. >> Um but um you know, Colombia's great, you know, uh Peru, great. We're also in Argentina. >> Um British Columbia, you know, we we found a new way to do business in British Columbia with with mining opportunities, and that's to work with First Nations groups, and we're the first to do it. And we just decided it's better to bring them in as partners rather than to have to fight them um you know, when you're trying to get permitted. So, we've done that a couple of times here in BC. Uh, and we'll continue to do that. I think it's it's a great model. Um, you know, collaborate instead of instead of fighting it. And so, yeah. So, BC and Ontario, uh, you know, we're happy there. I don't have anything in the US at the moment. Not cuz I don't want to, I just don't have anything. >> Yeah. Um but but you know there there are lots of there are countries I you know I just won't go to and I remain nameless but I just won't go there. >> Not not this Congo deal that we're seeing uh today. Um okay. Well then I mean if you could only own one metal for the next decade is it still gold? >> Yeah because listen gold gold is unique. It is money. Okay. None of the other metals are money. You know, silver used to be money. >> Yeah. >> But gold is money. And um I believe that we're going to see a great implosion in the value of fiat currencies as measured by gold. Um and that's just the writing's on the wall, the debt, the money printing. It's just we're going down a path of predition right now that cannot be reversed. There's no way to stop the this train. So, so I believe gold plays a central role in everybody's portfolio. And I don't say put all your money in gold, but it's certainly 10 20% of your portfolio should be in gold. Mine is more, but you know, that's cuz I, you know, I I have high confidence in what what's happening in the world. >> Um, but so gold is my favorite. Copper is next. I really believe that copper is going to have an incredible run because it is needed badly by everyone and there's a huge competition for it right now and there's not enough of it and it takes years to find these new deposits. You have to find these mega deposits like we're looking for we're looking at in Colombia know if we're successful and it's you know it's exploration so it's risky but we think we're on to something where it could be a multi- billion ton deposit and you know that's the kind that you know the US's of the world and the China of the world they all need access to those deposits so yeah gold and copper for me >> interesting on that copper development I'm going to get written on these comments what what was the name of that company I should know >> copper giant >> copper It it's listen it's it it you know we're at 1.1 billion tons now. I suspect we're going to be a lot higher in the next 12 months in terms of tonnage. I think we we found a geological model that is very very rare and the only ones that exist are uh uh uh Los Blanos Rio Blanco um and uh Cuchikamada in Peru and Chile. And these are district plays. These are mineralized deposits that took 10 million years of mineral fluids flowing through it to create the deposits. 10 million years. That's extremely rare. We only know three other ones and they're the ones in Peru and Chile. And they suggest that these are district plays or clusters. So now we're not only drilling the deposit, but we're looking at also the region and 120,000 hectares to see if there are other potential deposits there. Now again, I'm going to be very careful here. I own 19.9% of the company. So I'm talking my book here. >> Yeah. >> It's exploration, so it's risky. Okay. So those are the caveats. >> But >> you know, if you're going to take risk, >> I like Aubrey. Yeah. >> All right. Interesting. Uh Okay. Well, then just finally here before I let you go, just on a personal side, Frank, I mean, you've seen this, you've been in this industry a long time. You've seen these these cycles. I mean, did this one surprise you? The run up so fast to 5,000 and and and you know, do you feel validated? You've been talking about this a long time. >> Yeah, I have been talking about it's 25 years to be exact. Um about the gold, you know, I started buying gold when I was 250, 300 an ounce. >> Um it yeah, it it did surprise me that it ran basically from 1900 to 5,000 without taking a breath. You know, it had a few dips, but not you know, they were one day dips and then it would go right back up. It very much surprised me. Um, but it's not it's not the kind of parabolic move that you see at the end of a cycle. I've seen those before. I saw it in 1980. I saw it again in in 2011. Um, where you have this parabolic move that just goes straight up because everybody wants it. Um, most investors are not have no exposure to gold. It's still a very small percentage of most portfolios. it. They either don't believe it or they think it's too late. They missed it. Whatever the reasons are, they're not in the game yet. But, you know, it I think they're still climbing that wall of worry. And and at some point, uh you'll see when when the broad market comes in both into physical the physical metals and the stocks. You haven't seen that at all yet. >> Yeah. >> I I think Freriedeland put out a piece the other day where he mentioned me. It was on Twitter. He was basically doing an interview. He was talking about the years when we knew each other back 30 years ago, 35 years ago. And when we saw a real bull market in mining stocks, you haven't seen it this time around. It's not here yet. When you see a real bull market in mining stocks, you'll know it. It is insane. And we, you know, that's still to come. >> That's good. A lot of people will be excited to hear that. Not the parabolic move you see at the end of a cycle. Uh, we'll leave it there. Thanks for making the time for us today, Frank. I I appreciate it and uh best of luck. >> Nice to talk to you. >> Thanks, Frank. That's Frank Stra, CEO of the Fior Group. Uh we appreciate the insights. Now, listen, governments are buying, the debt is compounding, and the volatility is raising real questions about market structure. [music] For the latest data, keep it locked here. I'm Jeremy Saffron. We'll see you next time. Heat. Heat. >> [music]
‘Something Fishy’ At Fort Knox: Giustra on The US Audit & Hidden Gold Flows
Summary
Transcript
Welcome back. I'm Jeremy Saffron. [music] If you look at the screen today, well, you see gold back near $5,000 on the spot side US. You also see silver up about 11%. And if you look at the headlines, they're about government stockpiles. But let's be honest here about the carnage that we just witnessed. Last week's the metal complex didn't just see a correction, it was a liquidity event. We watched a 20% drop in gold, not to mention silver's haircut, and that wiped out months of gains for the junior miners in about 48 hours. Now, this selloff triggered by CME margin hikes and shifting Fed expectations introduced record- setting volatility, and it was a stress test of the entire paper market. And now, just as the dust settles, the White House has stepped in. Yesterday, the administration launched Project Vault. and according to the White House is a $12 billion initiative backed by the Export Import Bank to finance the stockpiling of critical minerals. Now, the timing is notable and the announcement raises legitimate questions about whether governments are becoming active participants in these markets, potentially changing how prices behave. And it's not just Washington. Just this morning, the European Union signaled that it wants a formal critical minerals partnership with the US to counter China, even discussing joint stockpiling and price support mechanisms. That's according to Bloomberg. So this is no longer theory. The West is now openly talking about coordinated industrial policy in metals because China already does it. All right, we got lots to get in today. Joining me to dissect the plumbing of that flash crash, uh the reality for the miners and and what's being called state capitalism and the shift is Frank Gustra, no stranger to this show, of course, and CEO of the Fiora Group. Uh great to see you, Frank. Thanks for making the time. >> Yeah, thanks for having me on. Uh we got quite a few things to get into and I know that we're in a little bit bit of a different time zone here. So I want to talk about before we get into debt that that last week's crash. I mean we saw margin hikes, massive volume. Was was this simply just leverage getting purged, you know, margin calls, CTA just deleveraging rather than any fundamental change in the long-term thesis to gold? >> There was no fundamental change in the long-term thesis. This was a uh an overdue event in my opinion. I've been saying to my [snorts] friends for quite some time that I can't believe that both gold first and then silver following went straight up without a correction. I mean that was a parabolic move especially with silver and that you know anybody that believes that that can m sustain itself without a correction >> you know it hasn't been in the market long enough. I've been doing this for over 40 years so it didn't it didn't surprise me at all. Secondly, I think that um uh it was in my opinion uh it happened on a Friday and I you know they raised the margin requirements um Asia was closed so there was no support. It was a Friday afternoon and they they you know the LBMA and whoever else you know the ComX whoever whoever short has short positions on silver especially um I'm sure participated in that downward um takedown in my opinion it was a takedown so you know I I to me it was a non-event a lot of people were panicking I had a lot of my friends calling me oh my god is this it is it over going guys it's the nothing has changed changed in the supply and demand dynamics uh for both both gold and silver that the fundamentals still remain intact. This was a correction that was long overdue and look it rebounded today quite nicely. Both both metals have rebounded quite nicely today. I I think it you'll see a consolidation in in this range and then eventually I think both gold and silver especially gold I'm more of an expert on gold than I am on silver but I think both will move in tandem. So basically kind of a vacuum move, you know, where the market just had no real bid underneath of it. A nice correction today. Obviously, you're seeing this happen. I I want to ask you about the the dis, you know, this this whole talk about the paper market, you know, that we've been hearing about. I mean, when we use those terms a lot, but we got to be precise. I mean, when people hear paper gold, where are we actually talking about it? Is it futures contracts? Is it unallocated accounts? Is it ETF options? I mean, where does the stress show up first when the system breaks? I I don't I think it's a combination of a whole lot of things plus leverage. Um and I think that obviously it for the past 40 almost 50 years um the paper market has controlled the gold price. Um players that normally don't take delivery, you know, they're just roll over their contracts and it's used as it also in my opinion been a mechanism to suppress the price of gold. M >> now what's changed is that the pricing of gold is now being set by those that take physical delivery and I'm talking mostly about Asian markets, China in particular. Um that is the way the gold price is going to be set from here on in. The paper players are losing their efficacy. um they're not having the same cut kind of impact that you would have normally seen in years past where you know they would destroy the you know gold rallied they destroyed that rally quite successfully and I think that that game is uh coming to an end. >> Yeah. Yeah. I mean the viewers at home I keep getting written to and what we're really asking is in in a crisis I mean is gold just a claim on a screen or is it the actual bar in the vault? Well, [laughter] in a crisis, you better own physical gold. Paper gold won't cut it. You know, I've been talking about a currency crisis, specifically a dollar crisis, but it I think it relates to all fiat currencies. We're coming to the end of the fiat, the time of fiat, and I think that um you're going to see uh a very big change in in in the way that gold and and other precious metals are going to be priced. Um so I'm I'm not sure what your question was. What was the question? >> Uh I think it's just about that physical. It seems physical is still king. >> Yeah. You know, listen, if to me, if you don't own physical gold, you don't own gold. It's really that simple because in a crisis, if you go to exchange your gold ETF for gold bullion, it's not going to be there. >> It's not there. And all by by the terms and conditions of the ETFs, they can pay you the cash value if you want to redeem, but they won't give you the physical gold. And most people don't know that. And you know to me that's you know cuz when a crisis does come um you know governments go um go to extremes to protect their currency >> and you know in terms of capital controls and currency controls etc. And so I think that if you don't have that your hands on the physical gold or it plays somewhere you don't really own gold. >> Yeah. Well said. And I guess what the White House is starting to notice too, we got to talk about this, you know, this announcement, this project vault, $12 billion in export import loans to secure supply. And it wasn't really just a press release this morning. I don't know if you saw this, but the market is moving. Uh this morning, Glen Core announced that potential transaction with USbacked Orion critical minerals consortium have been tied to Congo copper and cobalt, but $9 billion in implied value. We saw Robert Freedelland, you know, at the White House yesterday for that launch. When you see Robert, who has been screaming about this for decades, by the way, standing next to the president, is that a signal that the US has finally woken up or is the 12 billion still a drop in the bucket compared to what China has built? >> You know, it's interesting. I've known Robert for 40 years. I used to be his um primary banker back in the late ' 80s, early 90s. uh he was the first to text me that that that video this morning. So I saw it quite early and you know obviously very proud of himself sitting there in the the Oval Office with President Trump. >> But listen um two things. First of all 12 billion isn't a lot of money. It's it's a good start but it's not a lot of money when you think the amount of money that China has invested in critical minerals around the world for the past 25 years. The West, US and Europe are trying to play catch-up now. And that's why you're seeing all of this scramble to lock in deals with companies, with countries. Um, and they're playing catch-up. They have no choice. China controls the critical minerals market and has for a long time. They control not only the a lot of the mining, but they control the processing. And so the West has to play catch-up. They don't have any choice because now we have a a world that's been bifurcated into well two main camps and a lot of smaller camps. Um and it's a huge competition and you know the US with their tariff threats against China, China is playing its cards you know export restrictions on silver etc etc etc. So, you know, this is going to be um and the only solution because there is a shortage of these minerals, especially copper, which I quite like a lot. Uh there's a real shortage and the only thing that's going to fix that shortage is a higher price because as we all know in the mining business, it takes many years to find these deposits, develop them, and put them into production. Sometimes up to two decades. And you know, you can't just turn on the switch and have production. You know, I'm you know, I I I don't normally like exploration. I'm more of a development production guy, but you know, I you know, I like copper so much that I've, you know, I've got my own exploration play now that I quite like in in Colombia, copper giant. And you know, it's early days. It's got risk, but the prize is big. And you have to look at copper. And we're, you know, my organization is looking at a number of different copper opportunities. Uh, we like it a lot and I think that, you know, outside of gold, which is my favorite metal, copper's next. >> Interesting. Yeah. A lot of a lot of headlines and of course I'm sure Freeland is doing he's been preaching about this for a while. So, you know, seeing him at the White House, I'm sure you were the first one to text. I got to ask you, I mean, you know, this project vault, it looks a lot like Beijing's playbook. I mean has the US basically kind of conceded that the future of resources is state capitalism where the government picks winners and sets floors rather than free markets. >> Yeah, I think they may have reached that conclusion. I don't think they see they have much choice. They have to move quickly and you know the industry moves at a certain pace and if the government throws in capital as they're doing now, it's going to move a lot quicker and so you know they're they're doing it because they have no choice. It's it's that simple. They have no choice. They have to do these kind of deals to catch up to China or not not catch up to China but to compete >> and have access to these minerals for all of the things that they need. Electrification of of of of the system of you know [laughter] clean energy defense you name it. The power the the electricity grid in the United States is in it's a disaster. It needs to be upgraded. Hasn't been upgraded upgraded in decades. So you have all of this need for copper as Freedom loves to tell you and um and there's a supply deficit. No one knows where this supply is going to come from to meet this demand. >> I got to ask you, I mean what's the endgame here? Does the shift towards national stockpiles basically mean globalization is officially over? I mean are we moving from just in time supply chains to just in case economic blocks? >> Yeah. Well, I think globalization is as dead as the dodo >> bird and uh you know that's not going to well certain parts of globalization supply chains are going to be very difficult to dismantle. Okay. As as much as certain players would like to see it dismantled it the world's too integrated to allow that to happen fully. But that said, I think the world is splitting up into camps and they're going to be both in in in the economic and geopolitical sense. And I think that that's just going to be the way it's going to be for the next number of years until we get some sort of new world order because the old one's dead. >> Yeah. Yeah. Well said. Uh the debt reality, I mean, let's get to that because if we zoom out, I mean, to the root cause, we're talking about buying minerals, but the US national debt just crossed 38.49 trillion. I mean, Frank, is is is it mathematically possible to fund these new strategic stockpiles and re-industrialization programs without massive debasement? I mean, are we effectively printing money to buy hard assets? >> Well, listen. Hey, if you were the US government, if I were the US government and I was had the printing machine, which I have access to because I have the global reserve currency, I'd be printing as much as possible this worthless money to buy real assets like minerals. So, you know, I'm not surprised they're doing it. But listen, we're all living in borrowed time. Literally on borrowed time because the debt is so high. You know, the CBO, Congressional Budget Office, predicted that by 2050, the the US deficit is going to be $150 trillion. I mean, that's insane. We'll never get there. I mean, things are going to implode long before that. And that's not accounting unfunded liabilities of another hundred trillion plus. So, um, we're living on borrowed time and there's going to be a debasement of currencies. That's the only way historically that we've seen a reset in the global monetary system is you start with a complete debasement of currencies. You destroy them and then you have to start from scratch. And every time that can hit throughout history that we've had paper currencies that were destroyed, what happened? We went back to using gold as a means of backing currency. So I see that coming. I don't know in what shape it's going to take. You know, there's many ways you can use gold as a back, not a a traditional backing as a currency. There are other ways of doing it, but gold is now being remonetized. It's and that's no longer French theory. >> Gold is now playing a central role in the global monetary system. That's just a fact. You're seeing all the central banks, they own more gold now than they own US dollars. And who would have predicted that 5 years ago? But it's a fact. It's happening. So, we're going to see a a a a change which will involve a lot of chaos, a lot of disruption, a dangerous time perhaps between countries, but out of that will rise eventually a new system, a new monetary system because this old one is dead. >> Yeah. Uh I want to ask you about because the Financial Times was reporting that she is trying to, you know, back the the the wand with gold. I want to get into that. But before we do, just on this because I was reading your um your latest piece, you were also talking about this fiscal event horizon. You know, interest payments now consume nearly 15% of the federal budget. If the Fed has to print to cover the interest, doesn't that make gold price irrelevant in dollar terms? I mean, are we simply measuring the collapse of the currency here? >> Well, keep in mind that, you know, we always make the mistake of looking at the gold price going up. >> Yeah. But what is happening and if you if you look at it across different currencies over the last let's say take over the last 10 years and use different currencies whereas the you know the yen the Turkish lera the Argentine peso it doesn't m gold is the constant so what's happening is that the currencies are devalued against the constant which is gold okay that's what's happening here >> and so when if you look at the US specifically I mean think about this year alone they're going going to roll over 25% of their outstanding debt has to roll over. That's over 10 trillion just in the next 12 months. Okay? You have to find buyers for those treasuries at a time where when countries around the world are disposing of their US dollars and replacing it with gold. So that's a bit of a challenge for for for the US right now for the Treasury. um they have I think they have some ideas of how to fix that, you know, and I think it comes in in two different two two different methods. One is not to allow China and Russia to buy Venezuelan oil with yuans, which they were doing. So that whole thing with Venezuela was really a shot across the bow. I think to anybody that wants to abandon the petro dollar although it's already losing its efficacy. 20% of the world's oil is now traded in non-dollar terms mostly you want. Okay. So so that's that's a big problem. Yeah. It's wild watching it too. I mean this latest news just kind of seeing where Russia is going to be with with India now confirming that they're going to try and stop buying Russian uh oil too. I mean if you're >> corre correction correction Jeremy >> India did not say that. >> President Trump said that India they simply can't they imported one and a half million barrels of oil a day from Russia. >> Crazy. >> Okay. There's no way they can replace that with Venezuelan oil because that production is not there and it's going to take years and years and years and tens of billions of dollars of investment to get the Venezuelan oil industry up back up to a production rate that can make that supply. So Trump can say a lot. He says a lot of things. >> Yeah, of course. >> And but India was very careful in their response. They talked about yes, we're coming to an arrangement but they did not talk about the oil. >> Mhm. oil is going to be interesting. >> They will find and trust me, they will find ways around it. >> They have no choice but to import Russian oil. It's right next door. They need it. There's nowhere else to get that kind of oil. And um you know, I just don't see things changing in the way that the headlines will suggest. >> Yeah. I mean, Europe is also, you know, a big buyer of that Russian oil, too. So, [laughter] um well, if if governments are stockpiling minerals, I guess the next question is obvious. Who's stockpiling gold? I want to kind of look at the global flows here because the official numbers are a bit confusing. We just pulled that new data from the World Gold Council. We'll show it on the screen. Uh Frank, look at this. Poland reported buying 102 tons. China reported adding only 27 tons. Now, officially reported central bank purchases show China added very little relative to its peers, but many ar you know, obviously argue China accumulates through other channels. But how should investors interpret that gap? Is the official reporting incomplete? I mean, it looks like countries are buying into this market. >> Yeah. You know what? The the China thing has been so uh misleading for so many years. China owns a lot more gold, >> a lot more than the 2,300 tons that they've officially reported. And you just have to look at the physical gold flows coming from the west going to the east over the last 25 years to understand that there's no way that they only have 2,300 tons. And even Goldman Sachs came out uh number of months ago to suggest it could be up to 10 times higher than that. Um I've been saying that for years and years and years that there's no way that they're reporting what they're buying and it's probably stuffed into different institutions within the Chinese system, but it's there and they're going to use it and you will probably find out how much they really have when they want you to know. While they're still accumulating, they're not going to tell you. Yeah. >> Um, so and countries like Poland have been very clear about how much gold they want to buy. They've been very transparent saying that they have a target of how much gold they want to buy and they're not finished yet. Countries like Saudi Arabia are buying it covertly. Um, they don't report, they haven't reported since 2015, but you see the physical flows going there. They're buying it. They're just not reporting it. And so it leads you to a conclusion that why Does someone accumulate an asset quietly and covertly sometimes for what purpose? They're because they don't want the world to know that they're in the market accumulating. I started my life as a trader on a trading desk. And the one of the first lessons you learn when you're accumulating a position, you don't show your hand because someone's going to frontr run you. So, you know, I I believe that there's a lot more gold being bought than is being reported. And could that lead you to >> and even by the way even even even even the world gold council acknowledges that there's the reported >> official reported purchases and the flows which they have to guess where it's where it's which pockets it's going into. >> Yeah. Yeah. And when you see an article like the Financial Times is writing about she Jingping coming out saying we want to be you know a a reserve currency what uh what are your thoughts behind this? Why why wouldn't he want to, you know, that for his country? You know, what they what they want most is to create a a sanctionsfree trade channel that is protected from US dollar sanctions. >> And so that's why they've been slowly selling all of their treasuries, you know, slowly, but they're consistently selling their treasuries uh and replacing it with gold. And I think it's my belief that the gold will play a role in giving the yuan the kind of credibility that it needs to be a reserve currency. And it's not going to happen overnight. This is going to take a number of years to get. But you know, China plays the long game. >> Now they have they have 5 year, 10 year, 20, 50 year plans. And so they're they're going down their path. But in essence, it's all about creating a global financial system that sits outside the US dollar. And they've done that with a number of institutions that mirror exactly what the West created. You know, institutions that compete with the World Bank, institution swap arrangements that compete with the IMF. Um, they have all sorts of systems in place created with a number of other countries, mostly the brick countries to sit entirely outside the US dollar system. >> Mhm. So yes, he I'm sure G has a plan and the plan is to make the yuan a reserve currency over time and I think gold's going to play a role in that. >> Yeah. I I mean just on the math I mean the US has over 8,000 tolerance. China reports and we just talked about that you know through their official channels about 2,200. I bring it up because you know if Beijing is serious about being the reserve currency credibility, don't they need far more metal than what they have? >> Yes. But I believe they have it. That's what I've been saying all along. And no, they're not. They're still per they're still acquiring it. So, who knows what their number is and what their ultimate goal is. But if they're still buying it and they're not reporting what they truly have, there's a reason for it. That's just logical. >> Yeah. We hear, you know, from the from the mints. We've had, you know, a couple of people on the show that have said that the governments and the sovereigns have been going in as the hidden hand, working with the banks, accumulating this metal and not necessarily reporting it itself. I mean, could that be happening here? Could Could China have more than 8,000 tons? >> Yeah, they they could easily. Like I said, Goldman Sachs suggested it could be up to 20,000 tons. >> Yeah. Yeah. Exactly. >> Who knows? Well, I I don't know. I don't have the answer, but I know it's more than 2,300. >> Yeah. It's wild to watch. Uh, okay. Okay. Well, I want to pivot to the endgame that you've written about because you use the word Aelion, you know, to describe that that central bank digital currencies, the CBDC's as we've talked about and everyone seems kind of distracted by the volatility and gold and this project vault. But, uh, do you worry that pol policy makers will kind of say, you know, the market is is too wild. We need a digital dollar to stabilize it. >> Well, I again, I don't know about the dollar per se. Uh I know a number of other countries and I can't remember there's like 126 countries experimenting with central bank digital currencies uh preparing for that eventuality. I think eventually that's where the whole world is heading to digital currencies. Um, the US has another plan that I've talked about a lot recently, which is to to create a bigger environment for stable coins because all stable coins have to be backed by something liquid like US treasuries. So if you create more stable coins and there are more and they're used more around the world for settlements, payments, creating a financial products etc. It creates demand for US treasuries at a time when we're losing the petro dollar status. So I think that that is more of a um what the what the US is focused on right now is to to have the stable coin be the new gimmick, >> right? that's stabilizes, you know, the the the treasury market because the treasury market has to sell to somebody and it's a new pocket. It's in a virgin pocket now they've established. So I think that that is their current um goal right now is to focus on stable currencies and making them universal and applicable in in countries because that that helps their cause. >> Yeah. So, so basically, you know, a backdoor policy to create synthetic foreign demand for US debt using crypto rails to to fund the deficit. >> That's right. That to me I you have to ask yourself if you look at this logically and I said earlier about the amount of debt that has to roll over this year to find new buyers. Um, >> and that's going to and and when the deficit is growing at $2 trillion a year and that's not going to change. it's only going to increase uh cuz interest costs are starting to bite. You know, we were dealing with zero interest rates a number of years ago. That's no longer the case. And that's why I think one of the reasons that Trump is so dead set on getting the rates down to 1%. Cuz it's bankrupting the US. Interest payments are over $1 trillion. And as the deficit grows by$2 trillion dollars a year or more, those interest payments become more and more, you know, and pretty soon you all the taxes you're going to collect are going to go to pay interest. >> Yeah. >> So you need to find new buyers for these treasuries. And you know, we've I think everybody's come to the conclusion that Congress, whether it's Democrats or Republicans, have zero interest in cutting costs. Neither side. I know they do it for different re different reasons, but it's always about spending more and more and more. Even President Trump now wants to increase the defense budget from a trillion to one and a half trillion. Well, that money's got to come from somewhere, you know, and it's not coming from tariffs. Tariffs, the tariff revenues are tiny compared to what's needed to to finance the government. So, I think I think we're heading towards a a very big problem. And you know, I think that the the policy makers at this stage are trying to figure out the best way to mitigate, you know, the disaster that's is going to fall upon everybody within a number I think within four, five, six years, we're going to have a serious serious problem. >> You know, it's interesting when you say that. I mean, stable coins, if they become the settlement layer for trade and payments, I mean, doesn't that actually extend dollar's dominance, right? I mean, could they could they possibly succeed here? Well, they could if if as I I've said it, you know, yes, if they're very successful and it's uh becomes universally stable coins become universally accepted as a new financial system for payments, settlements, financial products, etc. then yeah perhaps but they got to really really succeed. >> Yeah. Yeah. And what does that mean for surveillance? I mean you know we've seen even in Canada you bank accounts being stopped. I mean when when you start to talk about these digital programs CBDC especially our audience they get a little bit worried about state surveillance. >> Yeah. Well you should be worried. [laughter] >> Yeah. >> I don't think it's a I personally I don't think it's a good thing. I think the more surveillance means the more control. And if they get if we evolve into a digital currency world which is controlled by central banks then every action you take every dollar you spend can be monitored and they will use the excuse of fine-tuning the economy to either reward you or penalize you for certain expenditures or limit your your they can do at a press of a button. they can cut you off, punish you, do whatever. I think that's a bad thing for society. I think it's, you know, any type of government control is always going to end up hurting the average person >> and that's just the way that history is and history has proven that, you know, you can't give governments too much power. >> It's interesting. I I can't stop thinking about Fort Knox in this a little bit because you know the the claim of 8,000 tons and and you know haven't seen a full public audit in decades as you know but I mean if gold custody is now the whole game Frank I mean doesn't America have some the same credibility pro problem it accuses others of >> this has baffled me this has baffled me and I'll tell you what's baffled and yes the last audit was 1953 I think last time they audited Fort Knox 1953 >> and you have to ask yourself especially Especially when Trump first became president, there was a lot of hype and excitement that he wanted Fort Knox audited. Elon Musk wanted Fort Knox audited. They were marching down there. There were a few few senators saying the same thing, everything. And then it went crickets. And you have to ask yourself why. It's not of It's not rocket science to do an audit. it wouldn't you know you have to ask yourself why don't they want to do an audit and I can think there's many possible reasons but there's a reason which is probably not a good reason why they don't want an audit uh maybe it's pledge that gold is pledged maybe it's not some of it's not there it's been lent out um who knows or the opposite that they're trying to accumulate maybe maybe they're accumulating gold maybe they seen the writing on the wall and don't want to get into this whole how much gold do we have uh debate until they've accumulated enough gold. You we know that last year there was a huge inflow of physical gold for about four or five months. Yeah. >> Last year coming from the UK. Now there were excuses for that. They were trying to get ahead of the tariffs etc. But you don't know. You don't who bought it? Where did it go? Is it the banks? Is it institutions? Was it the government? We don't know. So, I don't know the answer and I'm not going to speculate, but I'm puzzled why they won't do it. And at the same time that all the policy makers and government officials are promoting Bitcoin and they don't talk about gold, they talk about Bitcoin and they're getting the public hype. the mainstream media, you know, the billionaires, the the government, you know, Trump's family, everybody's hyping Bitcoin as a store of value and they won't audit Fortnox. I mean, it's all weird and I I don't know what what it all means, but there's something fishy going on. And I guess one day we'll find out what it was. >> Yeah. Because I mean, you know, the the simple thing to do, a credibility move at least, would just be to prove transparently that the gold is actually there. I mean, if if if gold truly didn't matter in a fiat system, Washington would would welcome transparency, right? I mean, is I guess my question is, is it more realistic, Reed, that the US wants gold to stay in the background quietly as a kind of a backs stop while they run the system on dollars and treasuries? >> Yeah, it could be. It could be. You know, downplay gold, which by the way is what they've been doing for 40 years. you know, downplaying gold as a barbaric relic. You know, doesn't really, you know, central bank >> chiefs saying that it's they don't understand what gold is and all these stupid things. They of course they know what what gold is and what role it plays. But to underplay it because I don't think 8,000 tons is enough to back the US dollar in any meaningful way. I mean, not even close. I mean, for for gold to give a backing to the US dollar with the amount of currency that's out at the moment, the money supply, it would have to be a lot higher, like a lot higher. So maybe they're just downplaying it because they have no choice. You know, they don't have enough gold to, you know, if they suggested that gold really did play a role, then they would have to answer the question, well, do we have enough? >> Yeah. Well said. Uh, okay. I've left you here, 33 minutes. I got to ask you briefly on the miners because obviously we saw juniors saw that draw down 30 40% last week. We saw a couple of others kind of maintain. We're seeing a bit of a a bump today. Um talk to me about it. I mean we know how volatile the mining market is but you know gold can be 5,000 miners can still destroy dilution you know shareholder value. Do you see new discipline emerging? I mean what's h what happened there? Well, I I the discipline that listen, I've been through many uh mining cycles. You know, I got into this business back in 1978, so I've seen quite a few cycles of where you've had bull markets and bare markets in the mining stocks, especially the juniors. Um so, you know, this this you know, the flash crash on Friday. >> Yeah. >> Yeah. I took everything down with it. But you know what? Now they have to climb back up. >> Yeah. Yeah. I don't I if anybody panicked on Friday and sold their positions, it was probably a really dumb move because gold will consolidate and it will eventually head higher. Uh it might head higher sooner than we think. >> Uh so I think that you know you have to have the experience of having been around a long time to know when not to panic. You know just go you know this is this the demand supply dynamics have not changed. This was this was a paper crash played by many different players for different reasons. And and by the way, there was a lot of speculation and leverage that drove mostly silver up to incredible heights that got unwound very quickly. And you know, one of the lessons you learn is you don't play this stuff with debt. >> You don't leverage this stuff. >> You buy gold because you want to own it. It's paid for. It's your store of wealth and it's a percentage of your portfolio. Period. Yeah, >> the stocks is another that's a whole other thing. I I've been in the mining finance business forever and you know I I think that we're still early days in in the mining cycle bull market. I think most >> Americans are don't don't a don't own gold or silver and haven't even looked at the mining sector. So this this bull market is still early. You haven't seen the type of euphoria that I've seen in the past bull markets when all the institutions are just begging to invest. You got the retail players, everybody's talking about it, everybody wants to own a mining stock. We're not we're not even close to that. Hasn't even started. >> I was going to ask you because I I remember you and I think it was Pierre Lassand were had that oped, right, talking about um you know, financial institutions, but also pension funds and what have you coming into the market and actually buying those assets. Have you seen anything like that? I mean, has that even that hasn't even really begun? >> Not the pension not the pension funds. I they they have, as far as I've seen, they haven't really come into this market yet. >> I mean, they may own Newmont or Bareric, but you know, they're they're not there like they used to be in the past, like Ontario Teachers and Case and all these uh in past markets, they were they were players. They're not there yet. >> Yeah. I I asked this to a couple of people over at V-Rick last week. uh Randy Smallwood included because obviously he runs a uh a royalty company and offers financing to these companies, but he's he's competing with state capital now in this whole state capitalism thing. I mean, you get a little worried when when you know governments are coming in and buying mines. >> No, it it doesn't worry me. I just think that you know when governments buy anything, [snorts] it's bound to be a disaster eventually because they don't really know what they're doing in this sector. This is a very very tricky business, the mining business. And when you know, government's just throwing money, you know, some of it's going to be wasted. A lot of it's going to be wasted. >> All right. Uh quick rapid fire to you. If uh we're talking, what is the one asset class that you would not touch right now? >> Bitcoin. >> Yeah, I knew that hasn't changed. I knew it hasn't changed. >> No. No. And listen and and listen and this for your viewers because I know there are a lot of Bitcoin fans out there and I'm on Twitter X a lot these days >> making fun not of Bitcoin because I have nothing against Bitcoin. Okay. But I just the Bitcoin maximus that make these crazy predictions about where Bitcoin is going tomorrow, next month, 5 years from now. these silly silly prices and they're preying on the greed and FOMO of unsophisticated investors and it's like it's a parade of these people on there and I just love love poke poking fun at them because you know they're running out of buyers. Bitcoin is running out of buyers. They're running out of reasons why people should buy. they come up with, you know, Bitcoin has been Bitcoin's purpose has changed so many times over the last 10 years and and the reasons why people should buy Bitcoin have changed and evolved. We've talked about a government Bitcoin reserve. Then now you had the the whole ETF hype. Then you have the Treasury companies, Bitcoin Treasury companies. Now there's over a hundred of them. They're all they're all underwater now. Yeah, >> and there's going to be a great unraveling of Bitcoin when this all it's starting to unravel now. Michael Sailor strategy is below cost as of this morning. His cost is about 76,000 something. He's and it's going lower and there's going to be an unwinding of a lot of these treasury companies and Bitcoin is going to go in my opinion, okay, I may be wrong, but in my opinion, it's going a lot lower and when it does at some point it might be a buy, but not at these prices. Yeah, this is good. I didn't have it in in here, but I mean, you've been in this long enough and and you could maybe take the opportunity just for the younger population that hasn't even ever heard of leverage and margin calls and it feels like a lot of people were doing that with Bitcoin. I mean, how dangerous is that? >> It's dangerous. I used to run an investment back bank back in the 80s and 90s called York Securities and I I was a CEO until 1996. So, you know, we used to have a lot of clients all over the place that played margin accounts, and I learned very quickly how dangerous that is because, you know, the margin works great on the way up, but it just will destroy you on the way down. And the banks and brokers when when a margin position is uh starting to break, they'll sell they'll sell you out automatically. They don't care how much you money you lose. you will lose all your equity and then they'll come after you for more if you're still if you're still in the red. It's it's you know it I've I've never I think when I was in my 20s I traded margin accounts. I I haven't since I think that's a dumb way unless you're a really sophisticated institution that knows how to use debt intelligently. Okay. At at a time, you know, there are times where it might work, but people that buy with debt on especially asset classes that are volatile like Bitcoin >> or junior mining stocks for I don't buy junior mining stocks with debt. >> Don't buy Bitcoin with debt. It's really simple. You know, volatile assets. >> Yeah. You should just the amount of money that you have that you're willing to lose. Okay, fine. put it in and you know take your chances but that that is horrible you know and this is what what again what happened last week with the especially with the silver players. >> Yeah. Yeah. Well said. Uh okay back to that. I mean you talked about jurisdiction. I was going to ask you outside of North America. Where do you trust to build the mind? But I think you you kind of answered it here. You're liking Colombia and you're liking copper. >> Yeah. No, listen. I like lots of places and there are places I won't go. Yeah. >> Um but um you know, Colombia's great, you know, uh Peru, great. We're also in Argentina. >> Um British Columbia, you know, we we found a new way to do business in British Columbia with with mining opportunities, and that's to work with First Nations groups, and we're the first to do it. And we just decided it's better to bring them in as partners rather than to have to fight them um you know, when you're trying to get permitted. So, we've done that a couple of times here in BC. Uh, and we'll continue to do that. I think it's it's a great model. Um, you know, collaborate instead of instead of fighting it. And so, yeah. So, BC and Ontario, uh, you know, we're happy there. I don't have anything in the US at the moment. Not cuz I don't want to, I just don't have anything. >> Yeah. Um but but you know there there are lots of there are countries I you know I just won't go to and I remain nameless but I just won't go there. >> Not not this Congo deal that we're seeing uh today. Um okay. Well then I mean if you could only own one metal for the next decade is it still gold? >> Yeah because listen gold gold is unique. It is money. Okay. None of the other metals are money. You know, silver used to be money. >> Yeah. >> But gold is money. And um I believe that we're going to see a great implosion in the value of fiat currencies as measured by gold. Um and that's just the writing's on the wall, the debt, the money printing. It's just we're going down a path of predition right now that cannot be reversed. There's no way to stop the this train. So, so I believe gold plays a central role in everybody's portfolio. And I don't say put all your money in gold, but it's certainly 10 20% of your portfolio should be in gold. Mine is more, but you know, that's cuz I, you know, I I have high confidence in what what's happening in the world. >> Um, but so gold is my favorite. Copper is next. I really believe that copper is going to have an incredible run because it is needed badly by everyone and there's a huge competition for it right now and there's not enough of it and it takes years to find these new deposits. You have to find these mega deposits like we're looking for we're looking at in Colombia know if we're successful and it's you know it's exploration so it's risky but we think we're on to something where it could be a multi- billion ton deposit and you know that's the kind that you know the US's of the world and the China of the world they all need access to those deposits so yeah gold and copper for me >> interesting on that copper development I'm going to get written on these comments what what was the name of that company I should know >> copper giant >> copper It it's listen it's it it you know we're at 1.1 billion tons now. I suspect we're going to be a lot higher in the next 12 months in terms of tonnage. I think we we found a geological model that is very very rare and the only ones that exist are uh uh uh Los Blanos Rio Blanco um and uh Cuchikamada in Peru and Chile. And these are district plays. These are mineralized deposits that took 10 million years of mineral fluids flowing through it to create the deposits. 10 million years. That's extremely rare. We only know three other ones and they're the ones in Peru and Chile. And they suggest that these are district plays or clusters. So now we're not only drilling the deposit, but we're looking at also the region and 120,000 hectares to see if there are other potential deposits there. Now again, I'm going to be very careful here. I own 19.9% of the company. So I'm talking my book here. >> Yeah. >> It's exploration, so it's risky. Okay. So those are the caveats. >> But >> you know, if you're going to take risk, >> I like Aubrey. Yeah. >> All right. Interesting. Uh Okay. Well, then just finally here before I let you go, just on a personal side, Frank, I mean, you've seen this, you've been in this industry a long time. You've seen these these cycles. I mean, did this one surprise you? The run up so fast to 5,000 and and and you know, do you feel validated? You've been talking about this a long time. >> Yeah, I have been talking about it's 25 years to be exact. Um about the gold, you know, I started buying gold when I was 250, 300 an ounce. >> Um it yeah, it it did surprise me that it ran basically from 1900 to 5,000 without taking a breath. You know, it had a few dips, but not you know, they were one day dips and then it would go right back up. It very much surprised me. Um, but it's not it's not the kind of parabolic move that you see at the end of a cycle. I've seen those before. I saw it in 1980. I saw it again in in 2011. Um, where you have this parabolic move that just goes straight up because everybody wants it. Um, most investors are not have no exposure to gold. It's still a very small percentage of most portfolios. it. They either don't believe it or they think it's too late. They missed it. Whatever the reasons are, they're not in the game yet. But, you know, it I think they're still climbing that wall of worry. And and at some point, uh you'll see when when the broad market comes in both into physical the physical metals and the stocks. You haven't seen that at all yet. >> Yeah. >> I I think Freriedeland put out a piece the other day where he mentioned me. It was on Twitter. He was basically doing an interview. He was talking about the years when we knew each other back 30 years ago, 35 years ago. And when we saw a real bull market in mining stocks, you haven't seen it this time around. It's not here yet. When you see a real bull market in mining stocks, you'll know it. It is insane. And we, you know, that's still to come. >> That's good. A lot of people will be excited to hear that. Not the parabolic move you see at the end of a cycle. Uh, we'll leave it there. Thanks for making the time for us today, Frank. I I appreciate it and uh best of luck. >> Nice to talk to you. >> Thanks, Frank. That's Frank Stra, CEO of the Fior Group. Uh we appreciate the insights. Now, listen, governments are buying, the debt is compounding, and the volatility is raising real questions about market structure. [music] For the latest data, keep it locked here. I'm Jeremy Saffron. We'll see you next time. Heat. Heat. >> [music]