Swiss Banker Prefers Bitcoin | Clive Thompson

We're closer to the end than we ever were. We're, you know, if we were at 5 minutes to midnight 5 years ago, we're now at 3 minutes to midnight.

That's not a perma bull. That's a Geneva banker who spent 50 years guarding fortunes for the rich. Picture a farmer with everything to lose.

Are going to invade my will village and take my wives, my cattle, and my gold. Well, they can't take my Bitcoin.

He didn't come to sell you anything. He laid out a way to raise trillions in US debt. by repricing gold to $15,000 an ounce. Proof the Fed is printing again under a word that sounds harmless and the one market he says is about to crack.

I'd go for Bitcoin to be honest with you. I think gold and Bitcoin both recover at some point in the next 12 months, but I would say Bitcoin will be the biggest performer because it's it's a much faster moving asset. It's a it's a very leveraged play on currency confidence. He's not guessing about gold, Bitcoin, and the reset he sees coming, guys. And again, remember, nothing in this video is financial advice. It's for educational purposes only. I'm really, really happy to have Clive back on the show. You guys loved him last time he was here. This is something you definitely want to watch. Without further ado, guys, let's bring Clive onto the stage. Clive, welcome back to the channel. It's great to have you here. last time we had you in March. Uh the video did really well. People loved listening to you. So, I'm really glad I'm sure the audience is really glad to have you back. Welcome. Thanks for being here.

Well, thank you very much for having me back on your show, Kyle. It's a real honor. Uh what would you like to talk about today?

Yes. So uh I want to go back to to your history first of all and you know you spent 50 years inside the banking industry and eventually walked out of there uh understanding that monetary debasement or fiat debasement was something that they were doing on purpose uh and kind of led you into this idea of hard assets. Can you just tell us a little bit about that whole the whole thing there?

Well, well, I I understood long before I left the banking industry that we were in a debasement phase. This uh this is something which I kind of learned, I guess, in my early 30s, maybe a bit later than that, but it took a while for me to for the realization to set in what is causing prices to rise. Uh you know, of course, we all knew the word inflation and I was uh growing up in an era of in the UK of high inflation. we had doubledigit inflation. Um I I recollect uh in my second job writing to my boss to complain that my pay rise was only 25% when in inflation was touching 30%. And I and I felt I should get more um which obviously I solved by changing jobs because those were the days when you could change jobs and double your salary every time you change job uh because of the very high inflation rate. Um so I was you know I was aware of inflation but I wasn't necessarily aware of what causes it which is debasement of the money supply or basically in modern day printing more money. Um now I think the uh for decades I always understood inflation to be the the inflation of the money supply i.e. as the money supply gets inflated there's more money around therefore people can bid up the price of goods and services. And we were living uh back in the 1970s in a world of very uh fixed supply. You couldn't double the supply of most things, you know, whether it be vegetables or pizzas or or what or eggs or whatever people would would buy, unlike today where supply is a lot more flexible. Um but over the years, I've come to realize that it's not just the money supply which is part of the inflation. It's also the level of government debt. Now, governments are continually spending money. Uh they're spending more than they can collect in taxes. And as they spend that money, that extra money, they have to borrow the difference. So, the government gets poorer and they're pushing money into the economy. And that money is finding its way through the economy into the hands of the wealth accumulators, basically business owners and people who work very hard, that sort of person. And those people uh they don't cons they don't consume more everyday goods. They would 50 years ago perhaps they would have done but not not in today's world. You don't eat more pizzas. You don't uh uh necessarily go out go on more holidays or anything like that. But these people they got this wealth which they're now accumulating for their retirement for their old age for better things. And where are they going to park it? They're not going to park it in in monetary assets like bonds and cash for the most part. Uh unless they're very riskaverse. they're probably going to park it in things which can not only keep up with inflation but outpace inflation. So this is one of the reasons why the equity market's done so well over the last well throughout my actually throughout my entire career and you know as we speak now although it's having its wobbles this week it's still doing very well.

Yeah. So, I'd love to get your since we last last spoke, we've had uh Kevin Walsh come in and gave the first FOMC and everybody um, you know, everybody's calling him uh, you know, came in quite quite hawkish. There was really no no dove insight in any translation, reading between the lines, nothing. Uh, I had Peter Schiff on the show last week and he said he wasn't really a hawk. He called him the chicken hawk, which I guess he just means uh scared of, you know, like like a scared hawk. Uh meaning that if he was really a hawk, he would have actually raised rates because that's what at least according to beer thinks he should have done because of uh inflation for example. So, um, you know, what is your take on Worsh and what's going on? I mean, another thing, too, which is kind of confusing, I guess, to some degree to, I'm sure, a lot of people, is that, you know, Trump nominated Worsh. Uh, he was very hard on Jerome Powell for not lowering rates. You know, he called him names, too late, Powell, and this and that. and you know and uh and then when wars decided to keep rates flat, Trump just kind of wrote off as like well, you know, it is what it is. So what's going on?

Well first of all I'm quite sure that uh President Trump would not have appointed Kevin Walsh unless he sincerely believed that he would make the economy as robust as possible for his elections, his midterm elections. So he he must have a have had and probably still has a belief that interest rates will be lowered. Um I think there's another side to it that is central banks they've kind of shifted from their hard money stance of many years ago. Uh there is no choice. Um if you were to adopt a stance which is designed to uh re in the money supply, re in government debt uh making it very hard for the government to borrow money, things would spiral out of control very quickly. When I say spiral out of control, the government has literally no choice but to borrow a lot of money. And unless somebody's standing there as buyer of the last resort or at least as potential buyer of the last resort of those government bonds, uh the the the eventual buyers are going to ask for a a higher interest rate and the higher the interest rate, the faster things could go wrong. So I think we're sort of sitting at the moment somewhere between the uh relative safety of government bonds and a risk that they might spiral out of control. Now that relative safety or spiral out of control, we're sitting in the in the phase of the the public at large, the world at large trusts the government, trust the US government uh not to do anything silly and trust the US government to keep the everything in check. But that confidence might erode very rapidly. Uh that's not a prediction. It's it's just something which uh one has to accept as a possibility. And if that were to happen then we could have a very rapid deterioration in trust in government bonds which means that the yields would go up meaning that the risk of uh the interest rate over time uh rapidly approaching uh a level which is higher than the taxes they're collecting. Uh so that when we get to that point there something has to be done and you know what are the options? will raise taxes uh relatively unacceptable uh lower spending relatively unacceptable uh or um start some sort of monetary control some sort of control over the people and the way I think that would happen would be uh you it could be some sort of capital control but I think more likely it's the introduction of some sort of competing currency for the US dollar whether that be the CBDC the central bank digital currency or stable coins or something similar. Uh back in the UK where when I was very young there were there were Russian coupons floating around and Russian coupons they weren't the currency but you couldn't spend your money on day-to-day needs unless you had the Russian coupon. Now I'm not saying we're going to go to Russian coupons but what I'm saying is if the monetary situation gets out of control something has to give. And the winners are not going to be those who are holding government cu uh bonds or those who are holding very large cash balances. If you're holding if you're if you're the man in the street and you just got $500 or $1,000 or $10,000 in your account, I think you're going to be just fine. I don't think it's a problem because the man in the street, they'll see him all right. But what they're not going to see all right are the foreigners. Why should they? Uh what they're not going to see all right are the billionaires and the billionaires. uh you know to some extent that those people will be absolutely fine because they have all the other assets which will see get them to the other side. They have their equities, they have their gold, they have their property, they have their yachts. So all of that will still be there whatever happens. But they might find that the 2% which might be a million dollars or $100 million that they got in the bank just isn't there and is undeployable.

Yes. I want to go back just to a little bit about kind of like the wares uh the the feds. I mean the whole world kind of looks at the you know United States uh kind of monetary and fiscal policy and Fed policy. Uh you said something has to give and you believe that Trump would not have nominated Worsh had they not had some sort of plan in place to give the kind of economy that Trump wants to look good for re-elections whether it's midterms or 2028 whatever likely midterms in the short term uh what does this mean for folks who are holding Bitcoin or gold

So the plan of the government and the hope of the government is that they can keep kicking the can down the road and they have always done that successfully in the past. So every time there's a recession or a a crisis or a pandemic or a war uh or a slowdown of the economy, you print your way out of it by basically reflating the economy, the government borrows money, government spends that money, the economy gets reflated and everybody keeps their jobs. And the plan is to keep doing that, add infinitum. So far it's been very very successful because the rate of inflation has not risen very much. But where the inflation has been seen has been the in the price of assets which people use for saving. Uh and by that I mean is whether you look at property prices or equity prices or bitcoin price. Of course we know that some of these things are way down at the moment from their peaks. But at the end of the day, step back 10 years ago and look at the price of almost any asset which is in which is desirable and which is in limited supply and you will find that we've had a significant rise in the price. Uh not not if you look back one year depending on the asset. For example, gold is I think uh probably still higher than one year ago, but it's well below the level of the end of January. And Bitcoin also it's it's it's effectively half price now. um if you want to look at that. Uh so these you know the but but step back four five or six years ago or 10 years ago and you'll find that these these assets have gone up by more than the rate of inflation. The reason they rise or have been rising by more than the rate of inflation and I think that equities last year went up about 40 something%. The reason they rise by more than the rate of inflation is because people are no longer saying I'm buying these assets or buying assets other than treasury bonds to keep pace with inflation. They're saying I'm buying these assets because I want to hold something which will still be there when we get to the other side of what I don't know what's coming but something definitely in my view could come. uh you know it obviously the government plan of kicking the can down the road continue inflating the economy asset prices keep rising that's great until suddenly nobody wants to fund the government when that happens then something breaks basically the bond market breaks so it's it's not that I'm saying this is going to happen and it's around the corner we're not in that scenario what I'm saying is if there were an erosion of confidence it would become much harder to raise money except at higher rates and then things start to break very rapidly. Uh so why are people buying these assets? Uh they're buying the assets not for the inflation protection anymore. They're buying these assets to get to the other side.

Yeah. I guess if I were to kind of extrapolate what you're saying and let me know if I'm if I'm right on this is that if you zoom out and look at, you know, a bit longer. Yeah. If if you're not focused on day-to-day candles, but if you zoom out to a longer time frame, it really hasn't kind of mattered what the Fed policy was, who was in office, who was making decisions. At the end of the day, national debt keeps rising, government debt keeps rising. There there's really and I've heard so many people say this like one way to kind of get your way out of and refinance that debt and that's to kind of print money debase the dollar and any assets that are priced in the dollar go up uh as a consequence of the dollar becoming debased. Is that a fair way to sum it up?

Yeah, exactly. It's a very fair way to sum it up. Or we could put it just another way and say it's not the assets themselves going up, it's the currency going down. Yeah, there there there's an everinccreasing supply of the currency in its all its forms and I include in that treasury bills, treasury notes and treasury bonds. That supply of currency is rising rapidly. Um, you know, it's probably somewhere the rate depending whether you're looking at the short end or the long end. The shorter rate is probably about 4 and a half% a year. The longer is about 8% a year. When I say long, I'm talking about uh the government debt. Um so across the board it's probably about 6 and a half 7% of the a year at the moment increase in annual supply of monetary assets including the promises to print money in the future the government bonds um push and that that increase that rate of increase is increasing it's accelerating so that acceleration looks to me like it's going to continue and I think it probably looks to looks to many investors like it will continues. So many investors are saying uh I it's not an asset I I want to be in I want to be in something else. That's why you know there's this big big diversification out of uh treasuries and out of uh cash except by those who have no choice but to hold them such as central banks and so on. What except for guys like Warren Buffett who are mostly in cash right now. I'm wondering what are your thoughts on him? What's go he's

is he going to just keep waiting and waiting and waiting or what's going on?

Um Warren Buffett and I both have something in common although I I don't want to describe myself as being like Warren Buffett but I I do have one thing in common with him and that is neither of us like to buy overpriced assets. uh but where we differ uh is that uh I don't think that gold is an overpriced asset and I don't think that uh equities are a um in general overpriced. I do think we have overpriced parts of the stock market that's definitely true. Um if I look at the AI sector, the data center sector, the semiconductor sector, there's an awful lot of money flowing into that sector. uh and it's an area where the cash flows from end users aren't actually currently sufficient to pay the electricity costs. On top of that, there's all the capital costs going into the sector. Um probably something like 10 times the electricity cost. 10 times what people are paying in is going in annually in investment into training the AI tools into the buying them the the the chips the the Nvidia chips and others and going into the data centers. So there's and that that money going in that capital expenditure is set to increase for the next few years. I I hear that it's going to be 800 billion this year. Next year it's going to be a trillion. The year after it's going to be 1.2 two trillion whereas the amount of money coming in from investors into that sector is something like 50 or 60 billion in terms of fees that people are paying and the electricity costs are higher than that already. So the question is will the amount of money being paid into that sector that that broad uh AI sector increase sufficiently to make those investments those trillion dollar a year investments worthwhile as investment for the companies which are making those investments. I have my doubts. I think that uh down the line of course the AI sector is going to continue to expand massively but uh and they'll think of all sorts of new things to extract money from the end users such as advertising such as on selling uh agents and all kinds of tools but there's there's probably some sort of limit as to how much can go into the sector and I don't know if it's going to be I don't quite know where the figure lies to justify the billion dollar a year uh sorry trillion dollar a year investments which are being made But my view is we're not going to get there and therefore there'll be consolidation in the sector. The there'll be there will still be new arrivals who are undercutting the others. Be hard to put the prices up because of the competition uh because of over capacity. Uh I think that that means that the profit expectations for these companies for the entire sector will not be as high as people are currently expecting. Yes, there'll be still be massive growth, but that mass it'll be massive growth minus X whatever X is because of the over capacity and therefore the share prices of the companies which are involved in the SE sector will probably not be as high as we are currently expecting. Therefore, I would say that there's a danger that NASDAQ comes off quite a bit. Now, let's not forget that we did have a major decline in NASDAQ in uh the year 2022. A lot of people have forgotten that, but it went down, just to remind people, by a third, 33 or 30 32 or 33% in one year, much further than all the other major indices around the world, much further than the S&P 500. And that was because uh for whatever despite the fact we we're sort of coming out of the COVID pandemic and and so forth, people basically decided to sell off everything techreated and then we're back on the races. But I think that you know people have to be aware that can happen again. We could have a uh so what I'm trying to say is I don't think the stock market is overvalued but I think there's parts of it which are very overvalued and when that part the AI sector comes down it will bring down the major indices.

Other than a few interviews as you guys have known I've gone kind of quiet but here's why. Cuz I've been building something in the corners of the market that are actually moving right now. The thing that I've been building is called the data room. And to explain why it needed to exist. Well, let me start with the problem. I've spent a long time in crypto and I've been inside of these groups before, these paid groups. Just understand that the guys who are posting there are generally paid to post and often times you're not the customer, you're the actual exit liquidity. So, the data room is the opposite of all those other high noise rooms. It is institutional grade research across three areas that I've spent my time on. crypto, AI, and private markets and macro. I pull the source. I pull the filings. I read the transcripts and I lay out the bullcase and the barecase. I go where the opportunity actually is. So, this is built for people who are tired of being talked down to, people who want depth, not the hype, and a room full of serious people instead of a chat group full of rockets and emojis and LFGs. There are three ways in. So, if you guys are done with the noise, if you want research instead of signals and reasoning instead of hype, the link is in the description below. It is wop.com/thedata room. And I'll always be straight with you guys on this. Everything in the data room is research and analysis. It's not financial advice and I'm not your financial advisor. You make your own calls. The data room, just make sure you're making them with the best information I can put in front of you. This is where we will be going hard. I'll see you guys inside.

One thing that I' I've heard you talk about is you said that the Fed is quietly printing again and they're calling it plumbing. Like where is that money actually going and where's it coming from?

Um so at the end of the day when the where the the government prints it basically is buying assets with that money it prints which is government bonds. That's the end that's the bottom line. Um and why are they buying but government bonds? because it keeps the yields in check, making it easier for the government to borrow money. That's it. And and uh I mean, but where is this money? They're not they're not are they saying this out loud? Does everyone know that they're and what is this what is the amount that they're buying back right now?

Um so they're doing it very quietly. I I we I haven't got the figures in front of me, but it they've turned around for what was called quantitive tightening. Quantitive tightening was where they were reducing the size of their balance sheet. The balance sheet for some time now has been increasing again. So, as the Fed's balance sheet gets larger, there's two sides of it. The asset side gets larger and the liability side gets larger. The liability side basically is the new money they're printing at the moment and the asset side is what they buy with those with that money. Now whe whether they are holding bank uh as as assets whether they're holding bank deposits or government bonds the bottom line is that money is finding its way uh into the government bonds and and suppressing yields. So by suppressing yields it does make it easier for the government to borrow money at an acceptable rate. We don't know where the you know where the crossover point lies for it to become unacceptable for the government. Nobody can tell you that. But I would guess that the government's not willing to borrow money on the 30-year level at more than say 5.5%. I don't think they want to borrow money at the 10-year rate for at more than five. Uh so we could guess whether that that's where there's a mental um uh limit for the government to for the central bank to say well every time we see rates going above that will start to pump money into the economy to make it easier. But of course there is a there's a quiddquo there. If you pump too fast and too much then people start to say ah the inflation's increasing inflation of the money supply therefore I'm going to be less willing to buy the government bond. So it's kind of a balancing act. is between the devil and the deep blue. So, you can't do too much of it, but you can't do too little of it.

Yeah, that makes sense to me. You hold both gold and Bitcoin, and I'm curious to get your thoughts on where you believe uh each one has a strength and a weakness. I also believe, and correct me if I'm wrong, that you've slowly over time increased your position in Bitcoin from initially 1% or so to about 5%. So I'm curious uh one how do you see the difference between the two of them today and what's made you increase your position and like how high will that number go?

So um the re reason it's increased it's not uh because I haven't been a buyer of Bitcoin. It's more that Bitcoin has risen in price. Uh so I I have published on LinkedIn over the years what's called an asset allocation table. Um and I five years ago I think it had about 1% in Bitcoin as an asset allocation. Uh and say I can't remember the figure now but maybe 60% in equities and maybe 10% or 15% in gold something like that. Um over the years and each year I adjust the asset allocation table as to what I think is a good mix. But after an asset has risen a lot, the question is should you hang on to it or should you top slice it. So showing the um waiting uh as we saw at the start of this year, it's gone what every year the weighting of bitcoin has gone from 1 2 3 4 and then five at the start of the year. That was a reflection of the fact that the bitcoin price was not only five times what it was, it was maybe seven times what it was. So realistically speaking, anybody who's following that asset allocation would have been top slicing at the higher levels.

To be to be honest, it wasn't it whilst it was an increased asset allocation, it was an acceptance that you shouldn't be going back to 1%. Uh it was an acceptance that Bitcoin is becoming um a more uh at least if we go back to the start of this year had had been becoming a more uh potentially useful asset. There are many large institutions who think you should have some Bitcoin in your portfolio. There's far more large institutions who think you should have zero. Uh and I'm not going to say one is right or wrong. The question is where where the level should should lie. Uh those would follow the asset allocation at 1% would have been well over well over seven. Should have been coming back a little bit. But to say you should suddenly sell it all and go to go back to one wasn't really my kettle if it wasn't wasn't my idea. Uh so and and gold also increased its asset allocation as well. And the reason for that was exactly the same reason if it went from 15 to I think something like 20 25%. Uh and it wasn't just gold it was the precious metals sector which would include gold silver alternative precious metals and gold miners and uh silver miners. uh so the exposure to that sector we saw increasing to something like 20% or 25% even I can't remember the figure on the spur of the moment I can go back and check but the reason was once again the prices of precious metals and the underlying had been rising and it didn't it doesn't make sense to sell them at a time when the world uh is getting more worried about what's coming in the future. We are we are entering a more dangerous phase when it comes to the uh debt debt based western government system. You know we're we're closer to the end. Assuming there is an end, we're closer to the end than we ever were. We're you know if we're at 5 minutes to midnight uh 5 years ago, we're now at 3 minutes to midnight.

Yeah. you've talked about and I you know um you've talked about this idea and uh a lot a lot of people have but I want to get your thoughts on it is and I'm wondering why we haven't done but the United States repricing the gold reserves I think it's at what $42 an ounce right now or something when it should be 4500 or whatever the price is right now. Uh so do you think that's going to happen? And if it does, I know that there is one this proposed bill where some of that, you know, budget neutral strategy goes into buying Bitcoin. Do you think Bitcoin catches any of that if they do repric it?

Um yeah. Is it going to be repriced?

Well, uh it appears that President Trump is a bit big Bitcoin fan. So if the uh Judy Shelton's bill gets passed uh clearly uh some of it might well find its way into Bitcoin. It wouldn't surprise me a bit. But I don't think that's the central thesis for Bitcoin at all. I think the uh the thesis is that um pe broadly speaking people want to own there's an army of people who want to own it for various reasons and they're not nefarious. Obviously, there are some nefarious uses, but there's armies of people who think, "Well, I better have some just in case, cuz I don't know what tomorrow holds." You can imagine you might be a large uh uh businessman in a dodgy country where they might suddenly seize all your assets tomorrow. Well, if you've got some Bitcoin, you can cross the border to the next country and start up again. you might be friends with a politician and I I can think of one example uh of of a lady who's been accused of being friends of Putin when she has never had any dealings with him, doesn't know the man, but but she does hold some political views which are uh not aligned with France and she's found that she's been uh sanctioned under the Russian type sanctions uh as a friend of Pittig. you know so she's struggling to pay her bills because she can't pay her rent because her landlord's with a bank who won't take sanctioned money as an example. Now I don't I don't think she's got any Bitcoin but had she got some Bitcoin there would be there would be an easier way around it. But around the world we have people who think that I don't know what's going to happen tomorrow. Maybe my wife is going to divorce me. Maybe um uh the the the the chiefs of the next village I'm in living in Africa somewhere are going to invade my will village and take my wives, my cattle and my gold. Well, they can't take my Bitcoin. So, everybody can have their own reason for having something which nobody can take off you. And I think that's the that's the thesis for Bitcoin. This is not a price prediction. It's not to say I think Bitcoin is something which is going to go up or down in price. It's to say I think that people want to own it. and there's a growing number of people who want to own it because you trust that when you need to turn it into cash, you'll find a way to do it. And I have one very personal example of when that happened. Um I was in uh I think it was Zerat or it might have been S uh it was Zerat and I was at the railway station just standing around and talking on my phone and a guy came up to me and said, "Um, I've lost my phone. I've lost not my last I've lost my wallet and I I have to buy a train ticket and can you help me out and I said well you know I'm not really into giving out giving out money for beggars but he said well he said I I can pay you but I've only I've only got bitcoin on my phone.

Oh well okay I've got a wallet. Um so so I I tried to do a calculation as to I don't know how much he needed 100. He needed maybe a hundred, but we I wanted to do it for a bit more just to make sure. So I think we worked out at $150 or $200 worth of Bitcoin. And we figured out the way to move Well, I say figured out actually it's not very hard. You just scan scan the QR code from one phone to the other to except I hadn't done it before. Move the Bitcoin from him to me. Maybe I got to 150 200 at least that's what I thought I got. And he got I gave him the money. It actually turned out that I miscalculated the exchange rate. add up a little bit better than Os than I should have done. He'd probably paid me $250 worth of Bitcoin for $150 of cash. So, you know, he ended up but but the reality was the guy wasn't a fix. He had no money. He he but he had access to Bitcoin on his phone. That was it. And we did the deal. It was good for me. I mean, I haven't spent I haven't turned the Bitcoin back into cash. It's still sitting there on my phone somewhere. But you know, if one day I'm stuck at a train station with nothing but a phone, no no no access to cash, well, perhaps I'll do that in reverse.

Yeah, that makes a lot of sense. I've had some similar situations before uh where it really saved me. Um, but yeah, fascinating story and awesome to hear that close to home. But back to the question of the rebalancing of the uh the gold sitting at the Fed,

it would make a lot of sense. Um the government has done similar exercises before in 1934 on the 31st of January 1934 and when it revalued gold uh in 1974 when it pushed it from 35 to $42.22. And basically when you revalue gold you're creating money out of thinner air. Now that was a slight there was slightly different exercises back then but the principle is the same. But the way it would work this time around is through what's called a sale and repurchase agreement with the Federal Reserve. So the government has the gold. It belongs to the government. The reason it belongs to the government is they basically did a a purchase of the gold uh a forced purchase from the Federal Reserve back in 1934. So back in 1934, the Federal Reserve had all the gold and the government said, "Whether you like it or not, we're buying that from you at $20.22 22 cents an ounce and you're going to go to the gold and we're going to give you something called in exchange called gold notes. The thing about gold notes is they don't represent gold. They represent dollars. They are irredeemable. The Federal Reserve may not redeem them except if the government decides to do so. They bear no interest. So they are perpetual and they're not part of the government debt. So all we do is effectively repeat that kind of exercise in a slightly different way. Sell the gold to the Federal Reserve for today's market price or more likely a much higher price. which I'll come to that in a second. And immediately buy it back from the Federal Reserve for gold notes, which means that the government keeps the gold, gets to keep the gold and has a whole bunch of money for the sale of that gold whilst issued in exchange piece of paper which is worth absolutely nothing. It's a bit like a bank note if you like, worth nothing. Just just a bit of paper the Federal Reserve can't then turn around and say, "Give us our money back." but they can from an asset and liability point of view treated as an asset. So even though these gold notes that they hold or at the moment in theory are worthless cuz it's a perpetual zero coupon. What's a perpetual zero coupon worth? Nothing like a bank note. In theory it's worth but they could they're treating it on their balance sheet as an asset. So let's repeat the trick. I mean when I say let's repeat I think it would be a great idea to repeat the trick. sell the gold to the Federal Reserve immediately. Buy it back. The Federal Reserve prints the money, pays it in cash to the government. They've got the cash now. Then they buy it back, but with the gold note, not with cash. So now they keep the cash and they keep the gold. Which means that whatever cash they get in can be used to fund the current year's deficit, but that would generate 8 or $900 billion. Not enough to fund the current year's deficit in full, only about a third of it. But if they did a much larger a much higher price and I've suggested perhaps $15,000 might be a good price to choose because by using $15,000 per ounce of gold, the government would collect uh several trillion enabling them to not only fund the current year's deficit, meaning that as uh they spend money, they wouldn't have to borrow it, but secondly, it means that they'd have a surplus left over beyond this year spending. So they could as bonds start to mature and this bonds maturing all the time. They could retire these bonds with the cash they've just got from the Federal Reserve without needing to borrow money to roll over. So what's been going on at the moment? We've been borrowing from Peter to pay for Paul. So every time a bond matures, they borrow from someone else to pay back the person who's just got a maturing. Well, they wouldn't need to do that. What would that mean? It would mean that the national debt would start to shrink slowly over the next 12 months, 18 months maybe. So the national debt would shrink a little bit. It wouldn't go to nothing. It would go to, let's say, from 30 39 trillion to 37 trillion or 38 trillion. It would go down a bit. Meanwhile, as this is happening, the economy continues to expand. So GDP continues to rise. the debt is going back down which means the debt to GDP ratio of the government starts to go lower which is something that hasn't happened in decades but a lower debt to GDP ratio makes the whole system a lot safer and therefore it can last a lot longer. Now when's the time for the government to revalue gold? Is it just now in the middle of the cycle and say let's let's give it a go and see what happens? there's no panic, no crisis. They're kicking, they're printing money like there's no tomorrow, there's no no consequence. So, not really today, but if we suddenly start to go into a bit of a a panic season with government bonds or the currency or whatever, well, that's an excellent time to do it because it reassures the market, oh, we're not uh we're no longer in as deep trouble as we are because the debt to GDP ratio is going down. We're not having to borrow from the public. And because they're not borrowing from the public, we now would have a shortage of treasury bonds compared with the potent number of potential buyers. What does that mean? It means that as the buyers are still there, the the world's still creating money. So the buyers are still going to be there, the they're bidding up the price of the bonds, which means the yields have started to come down, which means when the government eventually does return to the market a year and a half, two years, 3 years from now, they're going to find the yields much lower, it's going to be a lot easier to borrow money at acceptable interest rates.

Is there any I'm I'm just wondering how does I I don't I guess the government doesn't really need to answer to anybody other than the people, but like they don't. Is there any precedents in history before where any scenario where something was like the idea of repricing gold at $15,000 to me doesn't make any sense. I don't know how you get away with that.

Well, the the fact is they've uh back in 1934 they repric the day after they bought the gold from the Federal Reserve at $20, they repriced it at $35. which was a 60 65 63% increase in the price of gold that had zero impact on prices or the currency. Didn't change a thing. So there's a precedent already in that respect. But there's a precedent everywhere you look. I mean let's face it the price of everything has gone up a lot. you know, stock market, gold, to what extent has that had an effect on, uh, or to what extent has had a negative effect on anything? It hasn't. So, I don't when you say get away with it, there's there's nothing to be got away with. It's just deciding that there's a new price for gold and we stick with that new price. Of course, it'll on on the day they do it, assuming they're standing behind the gold price as buyer as buyer of that gold at that price, they'll have an immediate reaction. There'll be a lot of gold will immediately flow into the United States as people take advantage of it. you know, the human brain is like this. When you see a new price for something, you immediately think the old price was the correct one and the new price must be a mistake. Therefore, what am I going to do? I'm going to find a way to grab that new price while it's still available. I mean, this is what happened in the in the 1930 uh late 1930s. after the government had repriced gold to $35. Of course, you couldn't turn it in anymore because it wasn't at least if you're a man in the street, you couldn't go to the government and say, or the the mint and say, "Here's my gold. Give me $35." Because you were supposed to have turned it in the year before when it was $20. And it was illegal to hold more than 5 ounces or or five coins. But what did people do? They would go to the jewelry shops and say, "Uh, would you like to buy my gold necklace?" Oh, um, by the way, I've got this double eagle. And the the jeweler would they'd have a nod and a wink and the jeweler would uh drop the double eagle into the pot with the gold chain, add a bit of base metal, smelt it, and then take it along to the mint and collect his $35. A nice profit for the jeweler, but he wouldn't have he would have paid more than $20 to the guy who brought it in. The guy who brought it in was taking advantage of the fact that he can now get a higher price, and that higher price might not last. and we we see this you know whenever you see a uh an asset repriced suddenly and unexpectedly there will be a queue of people willing to sell that asset at a much at that higher price. One classic example in my personal career was when the peg between the Swiss Frank and the euro broke. I was in Switzerland at the time the Swiss Frank was pegged to the euro. 1uro was worth sorry or yeah 1 euro was worth one Swiss Frank and 20 or let's put it another way a Swiss Frank was worth 80 cents. One day without warning uh the Swiss central bank declared the peg no longer applies that particular day during the course of the day the exchange rate went from 120 to 80 or even 70 cents. So it was it about widely of course it bounced back a bit but effectively ended up at let's call it as near as makes a difference one to one. So there was for anybody who happened to hold Swiss Franks a 20 you could buy 20 you could get 20% more euros for your money. And as I was going home from work that day, every foreign exchange shop in Geneva, there's lots of them around the train station, had a long queue of 20 to 30

or 40 people queuing up to change their Swiss Franks into euros on the basis that they think that exchange rate that now exists will be gone tomorrow. Of course, it didn't go. It stayed around and now the Swiss Frank is worth considerably more than the euro.

But so the director of trouble carried on. But people thought at the time, I must grab it quickly but while it's still there. So yeah, that's what would happen. Yes, if the gold price was revalued to 15,000, a lot of people would grab that price immediately, sell their gold to the treasury. The treasur say, great news, we got lots more gold. That's what we need. And you know, tough tough luck on the Chinese who are converting their US uh treasury bonds slowly but surely to gold cuz now they're going to have to have to pay a lot more Treasury bonds to get a bit of gold. Um, you know, that would be the perhaps the the the thinking of of how they've screwed over the Chinese. At least I'm sure Mr. Trump would point it do it that uh put it that way.

>> Um so yes, people would be taking advantage of it, but at a certain point the public at large would say, "Hey, this this price is now permanent and the price of gold in the free market would trade above $15,000 if that was the figure they set it at."

>> Yeah, that that'd be interesting. I'm curious if you I mean that's one perspective I have not heard so far. I'm curious, do you have any other contrarian views uh that let's say that we do another interview? Well, hopefully we do it before a year from now, but let's say any contrarian views that might be popularized the next year or so.

You know, I don't think the financial system that we're in last in the present way for forever and we've seen every currency on the planet since the beginning of time are the few which exist today go out of existence. Um I have a bank I have a bank note collection uh of uh bank note hundreds of bank notes from all around the world which don't exist and most of them have got a lot of zeros after the one you know a million 10 million 100 million billion 10 billion 10 trillion etc. So I I kind of I I kind of it was a lot of fun when I was younger to collect the ones with lots of zeros and all of these don't exist uh anymore. The currencies don't exist.

Now, in some cases, people could convert their currency from old to new. And especially if you were the man in the street, you generally got away with converting the little you had into the new. But those who had large numbers found it much more difficult. Uh so there's countless stories of people who had perhaps borrowed money to buy a house and then found that they the the the the money they' borrowed the mortgage if you like was with due to the high inflation rate before the currency change was withered away to almost nothing. And in some cases uh when they converted from old to new uh they were allowed to convert some of their assets and maybe some of their mortgage was converted. depends on the country and the location uh cuz each country would have its own rules. But the bottom line is the winners were those who hold assets and the losers were those who held nominal assets. And if you happen to be uh at both ends of the scale, you held assets and you borrowed money, generally you were the biggest winner.

>> Yeah, that makes sense. Um okay, CL, so just the last part of the show here, we do a a kind of rapid fire round. I don't even know this from last time before, but I do think Bitcoin has bottomed.

>> Um, I I don't think it's bottomed. You know, there's no such thing as a bottom of Bitcoin. It keeps going up and down like a yo-yo. Uh, the trend at the moment is down. I think that continues for a while, but when it bottoms, we we won't there's no way to nobody's going to ring a bell. Uh so if you don't have any and you think you need to have some and you're thinking about owning it for the purposes of price, the way to play the game is to buy a little then buy a little bit more and then buy a little bit more so that you're not putting all your eggs in the in one basket at one price. You need to do it over a period of time. But u you know to second guess where the bottom or the top of an asset lies uh is is a particularly dangerous game. Do I do I think that it's going to be higher over time? Yes, I think it's likely. I think there'll be more people in 10 years who will want to own it than there are today. But in between now and then, it's going to be swung around by changes in the laws. It's going to be swung around by the attitude of investors. It's going to be swung around by how people feel about other things. You know, if people come out of the stock market, they'll be looking to buy other things, and Bitcoin will be one of those things. If uh people um suddenly find there's a massive increase in personal freedoms, i.e. they're restricting what you can do with your money, the demand for Bitcoin will be higher. Uh on the other hand, if they bring in laws saying that Bitcoin is being taxed at 100% in some countries, those people in that country won't want to own it or if they do own it, they won't want to disclose that they own it. So, you know, there's swings and roundabouts depending on which way things go. And there will always be ups and downs but realist if we talk about the number of people who will the network effect that's not going to go south in my opinion I think it's uh it continues to increase.

>> in the next 12 months what outperforms gold or bitcoin

>> I'd go for bitcoin to be honest with you um I think golden I think gold and bitcoin both recover at some point in the next 12 months u that's my uh my hope um but I would say Bitcoin will be the biggest performer because it's it's a much faster moving asset. It's a it's a very leveraged play on currency confidence. So the factors which could make gold start moving up would be the same factors broadly speaking as could make Bitcoin moving up. But Bitcoin always has a much more leveraged effect in both directions. Uh can't tell you why but that is has always been the case. So yeah, I think Bitcoin, if we if I take a positive view on gold, I've got to take a positive view on Bitcoin. I think Bitcoin does better, but that's not investment advice. Would I put my assets into Bitcoin because of it? Uh, not more than a tiny percentage.

>> Yeah. Well, Clive, uh, thanks so much for coming on. For those who want to follow your work, who aren't familiar with you already, where can they follow along, uh, social media, websites?

Well, I' I've got a I've got an interesting website called clivetoson.com and on that you can find a portfolio um analysis uh tool where you can put in any asset allocation you like including Bitcoin, including gold, including bonds, including equities and all kinds of other things like the CBI or real estate and see how it would have performed since 1971 with any mix with or without reallocation, with or without fees. You'll find out how uh without with or without rebalance. find out how that portfolio would have performed over any period of time and you'll be able to also discover from any particular date what the optimal asset mix would have been or should have been. I also have a tool which allows you to put in a variety of scenarios on my website about to guess the gold price. So you it it's got a future gold price in there. put in some scenarios like we go into a recession or they raise interest rates or they lower interest rates or uh there's a stock market crash and it will move around the future guess or estimate of what the gold price will be. Uh so that's one thing and the other thing I'd like to just draw everybody's attention to you can see behind me something called Little Trot. It's a series of books that I've written, children's books about finance.

>> Yeah.

>> So the Little Trot series are uh they're poetry. They're beautifully written stories with lovely pictures. Um, this one is called Little Trot and the Great Gold Rush. Uh, where Little Trot discovers that there's gold in their hill, those hills, but to start with, he starts to learn about gold from his friend and later off he heads up into the mountains to try and find some gold. He doesn't have any success in it, but he hits on a nice plan at the end to sell the shovels.

>> Smart. But the the purpose of these books is to introduce the vocabulary that children should have early on in life which is not really taught in school. It's the sort of words I wish I would have known by the time I got to the age of 18. Uh so you start with simple words. Book one's called Little Trot Learns to save money and there's words like deposit, withdraw, interest, uh and and so on. Uh book two is about inflation. Little Trot discovers inflation and we discover that printing money causes inflation in that book. Uh, and Little Strot gets frustrated because the prices are rising faster than he can save. But there's a happy ending to every book. So, they're great presents for birthdays and so on. And they've got uh on Amazon five-star reviews across the board on every site.

>> I love that. That's great. Awesome. Clive, thank you so much for coming on. Uh, always a pleasure to have you. Hopefully we can do it again very very soon.

>> Thank you very much, Kyle. Look forward to it. Bye-bye now. Cheers.