I think the silver is increasingly being viewed.
As a strategic metal Silver is also is already coming to be recognized
in that fashion in the two precious metals bull, markets that I have
enjoyed in my lifetime.
That silver is a late cycle mover.
People have been trained by the last 40 years to buy the dips and
they've been trained by declining interest rates to understand that
the capitalized value o ponds always goes up.
The arithmetic has changed even the junk bond index which is to say an
index which requires you to take credit risk.
Is yielding 4.7 in a world where your savings are depreciating and
purchasing power by 6.5.
The takeaway 6.5 from 4.7.
And you get a negative number which means you have to pay to take the
credit risk.
The questioners question is fantastic because it really changes the
way.
People will be forced to invest the largest institutional investors in the world.
Traditionally have had 40 percent of their portfolios in debt.
Now, they're confronted with the fact that 40% of their portfolios are
causing their beneficiaries.
Reach the retirees, the University's, whatever to lose money on a
guaranteed basis.
I don't know what the outcome would be.
I don't know when it will come, but I do believe it will be profound.
Understand we have to undo, undo, 40 years of training, the period
1982 2022 has been a very benign period.
But unfortunately, that part of the benign period is over when more
and more.
Or individuals say to the financial services industry.
You know what, I don't want to pay you a fee to lose money.
Then the institutions will change right now.
They sell the easiest thing to sell.
And the easiest thing to sell is the supposed safety of fixed income
obligations.
The truth, is that investors want income, increasingly the investing
public that part of the investing public that has money is old and
those people want income.
They think, unfortunately, that what they want is relevant, what's
relevant, is what you can have.
There is lots of income around there in Passbook savings deposits.
As an example.
The eel do 25 basis points, but getting paid 25 basis points in a
world where your currency is depreciating by six and a half percent is
obviously problematic.
What investors haven't gotten around to figuring out yet.
Is that even by taking the credit risk associated with the
The high-yield bond index or some of these leveraged mortgage funds
that are yielding four and a half or five percent.
That even taking credit risk.
They aren't keeping Pace with inflation, understand to, in some of
these leverage mortgage funds Dunnigan.
What the investor doesn't understand is the way that they're getting
this five and a half percent.
Yield is that they are buying 30-year.
3.4%
More mortgages and their funding that were, the fund manager is by
borrowing money in the money market in the overnights.
In other words.
They're borrowing 90-day money to finance 30-year money.
If the short-term interest rate goes up or that credit becomes
unavailable, the yield on those instruments, goes Sub-Zero.
The first thing that has to happen, probably is that one of the big
leverage mortgage REITs has to go upside down.
Down there has to be some circumstance where the time spread which is
to say, the carry trade involved in borrowing short and lending long
causes people pain.
I think as soon as that happens that the behavior changes.
Very very, very rapidly.
Every time I ask investors if they're happy with their existing
banking relationship every single time.
The answer is no, and every time I talk to
Sophisticated depositor.
And I say, how do you feel about the fact that these lending
institutions are borrowing money in the overnight market and lending
it for 30 years of living on the time?
Spread.
Does that make you feel comfortable?
And they say it makes you terrified now, I maybe pay better attention
to this than other people, but the fact that the suit circumstance is
so dire that a 68 year old who's allegedly, and retirement is starting
a new bank.
Tells you that behaviors are and will change.
I just can't tell you when I think that silver is increasingly being
viewed as a strategic metal.
Although perhaps not by the general public.
If the gentleman is referring to a strategic metal in a, non monetary
sense, that is to say, it's used in micro electronics and particularly
its utility in solar power, understand that these solar panel arrays,
don't
Work without the reflective property of silver.
Silver is also, is already coming to be recognized in that fashion
with regards to investor appetite for silver.
I believe myself that the current silver fan club.
Still views, silver as a monetary rather than an industrial material
and I would point out that crew that at least in my life.
Time in the two precious metals bull markets that I have enjoyed in my
lifetime.
That silver is a late cycle mover, which is to say the first half of a
bull market, is normally dominated by gold the second half by silver.
The silver market is more of a momentum oriented Market.
The gold market is more of a fear oriented market.
So those people who are wondering why with inflation at a nominal, six and a half.
Percent and probably really a higher percent.
Why the silver price hasn't moved yet?
Need only consult the 1970 to 1981 bull market where silver was a very
late mover or 2002-2011 bull market where the same circumstance
happened when the circumstances behind the reason that I think it's
going to go up change.
So let's examine those reasons.
We've done this before on your show, but I know that your viewers
Cycle.
The first reason why I believe precious metals are going to go up and
understand that the principal reason in my experience, why precious
metals prices escalate is because investors and Savers are concerned
about the purchasing power of other savings and investment
instruments, particularly those denominated in Fiat currencies.
So let's figure out why people might be afraid.
The first is quantitative easing.
We've talked about this before quantitative easing, the fact that 35%
of the dollars in circulation.
Nation have come into existence in the last two and a half years.
The quantitative easing is counterfeiting.
It isn't like the economy has grown by 35%.
We didn't need to accommodate an increased flow of currency because of
increased economic activity.
We did it by creating more species currency units.
This is counterfeiting and increasing the supply of something in
particular, the spurious supply of something, lowers its unit value.
Pretty obvious.
The second is more pernicious, even more pernicious.
Pardon me that's debt and deficits even now the government concedes
that the federal debt is going to be paid.
It's going to be rolled over and the numbers are alarming.
The on balance sheet liabilities of the US.
Government are almost 30 trillion dollars.
Twenty two trillion dollars, net of the feds own counterfeited balance
sheet, but the off-balance sheet liabilities exceed 120 trillion dollars.
So the federal government not state
Local governments, the federal government owes 140 trillion dollars
and they propose to pay this debt with a budget, that's three trillion
dollars in deficit.
In other words, rather than pay it down.
They're going to increase it by three trillion dollars a year at least
compounded over time.
This presents a credit risk, which nobody talks about, but it
certainly causes other risks in terms of the stability of the of the
Currency the third and probably from a Savers point of view.
The scariest is negative, real interest rates.
If you buy the, world's Premier savings instrument, which is the US
10-year treasury, the deepest and most liquid Security in the world.
The arithmetic works like this the government pays you about 1.6
percent currently a year for 10 years.
Absolutely positively.
This is going to happen because remember, they can counterfeit, they
can print what they pay you back, but they pay you back in a currency
that's losing.
Its purchasing power by their estimates, at 6.5 percent, a year, which
is to say they almost certainly guarantee you about a 5% compounded
loss in
Other words, they guarantee to scrape off 5% of the purchasing power
of your savings every year for 10 years.
Our mutual friend, Jim Grant calls.
This return free risk.
So gold is competing with return, free risk, but the most important
points I call it point for, but there's actually two points.
We've sort of covered.
The first is that the market share of precious metals is at historic
low point at a historic low Point.
Even
Though, all the attributes around precious metals are positive, were
acting on information that we've been taught over the last 40 years,
and ignoring this each H that's occurring in the market.
And that sea change will be most applicable to the institutional
investors that we talked about before that 40% of investment assets
held by the biggest, institutional investors in the world, the biggest
institutional investors in the world.
Old have Bond portfolios that they're looking to for stability and the
only thing that's table now is the losses that their sustaining on
their bonds.
As these institutions are forced to descend remediate out of long
bonds to protect the savings, the lifestyle of their pension
obligations, or the maintenance of Stanford University or the future
well-being, of citizens in the sauce.
Her little foot, the disintermediation out of bonds because of
negative.
Real interest.
Rates are is the thing that's going to propose Propel gold and silver.
So, when would I sell my gold and silver?
When those conditions changed, when governments stop counterfeiting,
when federal state and local budgets are balanced, or at least when
the accumulated deficit?
Is late is less than the rate of economic growth when negative, real
interest rates are over.
In other words, when there's a positive yield in the US 10-year
Treasury.
And when
The market share of precious metals, relative to other asset classes.
At least goes back to its 30-year mean that is to say above
one-and-a-half percent until those factors have changed.
I'm stand alone.