Transcription
If he was really hawkish, they would have already raised rates. I mean, they had an opportunity to raise rates and, and, and they punted. You know, he's not a real hawk. Maybe he's a chicken hawk.
>> That's Peter Schiff, the man who called the 2008 crash, on the new Fed chair who talked tough and did nothing.
>> The stock market may be able to continue to rise, but I don't know that it will rise as fast as inflation. So, investors on paper may believe that they're richer, but in reality, they'll be poorer.
>> Even the most famous bear on Wall Street thinks stocks can keep grinding higher first. Why? Schiff says Washington needs the market to go up before you vote. They're going to have to do some kind of massive stimulus. They're going to want stimulus checks. They're going to need to goose the economy or the market somehow to try to create some optimism into those elections.
>> Not a bull market, we know. So, we made him commit a number on gold, a date on the dollar, a name for the next superpower. And again, remember, nothing in this video is financial advice. It's for educational purposes only. Guys, without further ado, this is a good one. Let's welcome Peter Schiff to the stage.
Peter, welcome back. It's great to have you. Thanks for being on today. Really curious to get your thoughts of what's going on. We got the new Fed chair in. We got the Iran war coming down. We've got oil rate oil prices coming down. One of the things that you keep saying is the only thing that matters is the debt. And you say that despite everything else that's happening right now, you don't see long-term rates coming down. Why is that?
>> Well, the debt is not the only thing that matters, but it's certainly a big part of the problem. But no, I don't see much leeway for long-term interest rates to fall, given the enormity of the debt out there and the inflation rate. You know, there's not a lot of incentive for creditors to loan the US government money for 10 to 30 years at, you know, 4% or even 5%. Inflation, I think, if properly measured, is at least that high, if not higher. And so, you're losing the real value of your yield, and your principle is being debased over time. So, it's a losing proposition for lenders. So, I think the only way to attract buyers of our debt is to pay them higher yields. They're certainly not going to lend us money at lower yields.
And the only real way to drive down interest rates would be for the Fed to buy more treasuries. But the only way the Fed can do that is by creating more inflation, which actually compounds the problem by making treasuries even less attractive. And that means that there's more upward pressure on rates. And if the Fed tries to alleviate that by increasing even more its purchases of US treasuries, then it has to exacerbate the inflation problem to do it. So, there's really no way out here. I think that rates are going to spiral much higher.
And what does that mean for our economy and for people who are looking to invest in, you know, things like risk assets or, you know, risk-off assets, dollars, gold, things like that?
Well, you know, so long as the Fed leaves short-term interest rates below the rate of inflation so that short-term rates are negative, the stock market may be able to continue to rise, but I don't know that it will rise as fast as inflation. So, investors on paper may believe that they're richer, but in reality, they'll be poorer. But I think there are certain assets that will perform much better in a highly inflationary environment. So, I think maybe some of the big tech companies may not continue to do as well as they have, but a lot of, you know, resource companies, companies that are value dividend oriented, that are able to increase their dividends as much or greater than the inflation rate, foreign stocks, emerging markets, things like that, I think will perform a lot better in an environment where investors recognize how high inflation is and that it's going to continue.
We had, you know, we just had Wars, the first FOMC come out. Everyone was trying to speculate, you know, before he actually made any statements, what his position would be. I think a lot, a lot of people assumed it would be hawkish. It came out quite hawkish, and it does seem like there was a curveball in there. He's going to take away the dot plot, or at least he's not giving us any kind of foresight into what he's thinking for the future. Was it surprising to you at all what the FOMC said and what Wars' kind of stance, and what do you think that means for the next 12 months or so in the economy?
>> Well, I mean, if he was really hawkish, they would have already raised rates. I mean, they had an opportunity to raise rates and, and, and they punted. So, you know, he's not a real hawk. Maybe he's a chicken hawk. But the appearance is that maybe he's less of a dove than Pal was, or Yellen, or Bernanke. And that would be very problematic, I guess, for the markets, if he really comes out in future FOMC meetings with some aggressive rate hikes.
Now, what the markets are pricing in and what the dot plots reflect is maybe two quarter-point rate hikes between now and the end of the year, but that's not nearly enough given how high inflation is and the trajectory that it's on. The Fed would need to be far more aggressive than that to actually have a meaningful impact on bending the curve. And I don't know that the Fed actually has the appetite to do that. And in fact, rather than addressing the problem, he again punted by creating five task forces to study the problems. The problems don't need to be studied. The problems should be readily apparent by now, and the solutions are pretty obvious, but because the solutions are politically unpopular, they won't be implemented. So, what you do in that situation when you have a problem that you can't solve because of the politics, then you create a committee or, in this case, a task force, and now you have an excuse why you're doing nothing because, you know, you're waiting for the recommendations of the task force. So, probably nothing is going to happen between now and the end of the year at a minimum, because, you know, we're going to be waiting for the task force to figure out what to do.
Inflation is high. There's no doubt about it. Do you, now that the war seems to be coming to an end, and we, we expect to see oil, well, do you expect to see oil coming down, I guess, is the first question. But if you do, is, do, do you think that's primarily where the inflation numbers come from, was energy, or?
>> No, I mean, energy is certainly part of what's moving the CPI, but inflation was not created by energy. I mean, that's why, you know, Morris wants to set one of his committees is to try to figure out what's driving inflation. Well, inflation is always driven by the same driver, which is the Fed itself. The Fed is responsible for our inflation. And to a degree, the US government, because the two work hand-in-glove to create the inflation. The government runs the deficits, and the Fed monetizes them. But the Fed also controls short-term interest rates, which influences credit. And the supply of credit is also important in driving inflation, just like the supply of money, because credit acts like money. If you have credit, you can buy stuff. And it's that demand that is fueling the price increases. And you don't need a task force, you know, with the best and brightest minds in the country to try to figure out what we already know.
But I, you know, I think oil prices are not going to come down the way people hope now that the war, in theory, may be over. And I don't know that it's over. The shooting has stopped potentially, or the bombing has stopped temporarily, but who the hell knows when it might resume? We really don't know. The strait may be open now. It may be closed tomorrow, next week, next month. No one knows. So, I think there's going to be a risk premium that's going to be in the crude oil market. And I think that now, while the window is open, I think a lot of countries will try to stockpile oil, replenish their strategic reserves that might have been depleted, and try to prepare for the next time it's closed. So, I still think there's going to be a lot of demand for oil. There's a backlog. There's supply chains have been disrupted. So, I think oil prices are more likely to rise back up towards 100 than go back down, you know, to 50.
>> That makes sense. We have one of the most expensive stock markets that we've ever seen. We just had the SpaceX IPO. We've got Anthropic and Open AI coming again this year. Over $200 billion in new liquidity coming into the market of supply, essentially. You know, how does that affect the market overall?
Yeah. Well, you know, it's the most expensive market in history, but that's because of the huge weighting that's given to just a handful of companies. So, that's really what's driving it. It's a very narrow market. It's being driven by, you know, these AI-related companies, hyperscalers, chip companies. And so, that's distorting the whole valuation. And you know, and I think the market is even more expensive than these valuations indicate because a lot of these tech companies are earning a lot of money right now, but we don't know if these earnings are going to continue the way investors expect. So, the P/Es may actually be quite a bit higher than what is currently indicated based on estimates for earnings because the current earnings run may not be sustainable because a lot of the earnings are being fueled by debt. The companies that are spending money are borrowing it, and they may be overspending. We don't know. So, there's a lot of uncertainty in the market in addition to the fact that it's the most expensive that we've ever had. So, there's a tremendous amount of risk there. So, I think investors that are in these names have to be very careful with an exit strategy because obviously most people are not going to be able to get out. They're going to go down with the ship. You know, some people will be able to get out with profits, but I think most people will watch their profits evaporate because they don't get out.
Yeah. I mean, I saw something the other day that I think Amazon does about $720 billion of revenue a year. SpaceX, I think it's, it was like 13 or 18 billion, and they're trading at roughly the same valuation. I guess it kind of tells you what kind of froth that we have in the market at the moment.
Yeah. And also, you know, a good portion of the SpaceX revenue is from leasing their excess computer capacity to Anthropic and maybe another company. And that's providing them with billions of dollars of revenue, but I don't know how sustainable that is. This could just be a temporary thing where that revenue is here this year, maybe next year, but it may go away. So, you really have to strip a lot of that out because it may be just, you know, a one-time revenue source. That's not something that you can depend on in the future. The only real revenue that they have, or profit part of the business, is Starlink, and you know, it's hard to know, you know, how to value Starlink. I mean, I'm a customer of Starlink, and you know, and I don't know how much competition it may have. I mean, obviously, it has a good, you know, advantage because it has all those satellites up there, and it has the capacity to launch them, but as far as the space part of SpaceX, who knows if that's ever going to make any money? I have no idea.
You know, I mean, I don't know if there's going to be a real viable commercialization of space. I know that Elon Musk talked about how he wants to make it possible for everybody to go into space. Who wants to go to space? If I want to go to the moon, if I want to orbit the Earth, maybe I want to go to Mars, that, you know, he wants to make that possible. I just don't know how commercially viable that's going to be. You know, how much would a vacation on the moon cost you? And, you know, most people would rather go to Tahiti. I mean, it's going to be very expensive and not very comfortable. I mean, I don't know. None of these spaceships look particularly comfortable to spend, you know, spend a week, you know, cramped in there. And, you know, there's no, there's no nicer place in our solar system than Earth.
>> Yeah.
It's got the perfect climate for humans. You know, it's great. You know, you could have a lot of fun on planet Earth. I, you know, I don't know how many people are going to spring and go up into space, but commercial aspects, I mean, maybe there's some things that we could do in space, but again, I, I, it just seems that the costs are enormous to get to do stuff up there. And I don't know, you know, what the benefits are going to be. Yeah, I can see putting satellites up there. Yeah, that's, you know, that, that's viable, but I'm not really sure right now, you know, you know what else. I mean, there's maybe some military applications of space. But again, I don't know what that's worth.
So, with this kind of uncertainty and everything, because it, we really don't have clarity on kind of the direction of the market. We, we have some now hawkish Fed, which is never good. Certainly, it doesn't seem like we're going to have, you know, massive amounts of relief from the Fed or quantitative easing in any way. If anything, maybe it's more leaning toward tightening or something.
>> A hawkish Fed, a really hawkish Fed would be good. Now, it wouldn't be good for the markets right now because the markets are dependent on cheap money, on an easy Fed. But that's part of the problem. The solution is much higher interest rates, much tighter monetary policy, a much smaller Fed balance sheet, but in order to get from where we are to where we need to be, we have to burst a lot of bubbles. And that means a lot of people lose a lot of money. And so that is being resisted. The people that benefit from inflation are doing everything they can to make sure that they don't lose those benefits. And they have more political clout than the people who suffer from inflation. The people who suffer from inflation most are just ordinary people. You know, the middle class, the working poor, retirees, and, you know, they, they, they don't, you know, have the clout at the Fed or in DC that these big donors have who are making a fortune off of cheap money.
So, so in that, in that example, what you just, we were just talking about, Leia, it sounds like the hawkish Fed you said was good for us eventually, but maybe have to go through some pain and suffering first. Is that right? Kind of walk through what that looks like, and then at what point does it become kind of better for the markets?
>> Yeah. Well, a hawkish Fed, a truly hawkish Fed, will reduce inflation dramatically, which would, you know, benefit the people who are suffering from the rising cost of living. But it would force the US government to cut spending, and so that would harm the recipients of that money. The people who are getting checks from the government would be getting smaller checks from the government. So, you know, also as interest rates go up, asset prices come down. So, the people who own stocks would see the value of their stocks go down. The people who own real estate would see the value of their real estate go down. And so that would hurt the owners of those assets, but it would help the people who want to buy those assets. If you don't own a home, but you want to buy one, but you can't because they're too expensive, well, if the prices come way down, then you now you could buy a house. So, there's going to be winners and losers. The same thing with stocks. Let's say you're an investor who's got a lot of cash because you think stocks are too expensive. You'd like to buy stocks, but you don't want to pay these high prices. Well, if the market goes down 50%, you'll buy, right? So, it's, it's bad for the people who still own them because now their wealth is cut in half, but it's a good opportunity for the people who've been waiting to buy.
So, there's always going to be winners and losers. But overall, the total economy will benefit from higher interest rates and lower inflation. Savers will benefit. They'll get paid a return on their savings, and there'll actually be more capital available for businesses because there'll be more genuine savings that banks can loan. Right now, there's very little savings funding real capital investment. A lot of it is just going through Wall Street, which is funding government deficit spending, speculation, share buybacks, all sorts of financial things that don't really benefit the real economy the way increased savings and capital investment would.
For those who are watching, I mean, not obviously you can't give financial advice or anything like that, but what, what are you doing kind of with your portfolio right now? Are you predominantly coming into cash, you know, looking for that kind of pull assets, or?
>> Financial advice? Yeah, I mean, my advice is, you know, I think people should be prepared for stagflation where the inflation rate is actually very high, and the economy is quite weak, in a real inflation-adjusted way. So, instead of owning cash and bonds, people should own gold. People should hold their liquidity, their safe money, in real money, in gold. For their stock portfolio, I would focus on the international markets where the valuations are not nearly as high, and in some cases, the valuations are fair, and in, in some cases, in a lot of the emerging markets, there's actually bargains. And so, that's what you want as an investor. You want to buy assets that are cheap, and you want to buy assets that provide a meaningful return in the form of a dividend. So, that even if the stocks don't appreciate, you still have a lot of income being generated from your investments, which you could either spend or you can reinvest. You could take your dividends and you can invest them to compound the returns. So, there's a lot of opportunities if you want to look internationally, look at emerging markets, which are historically cheap right now compared to the US. And foreign markets, which, you know, have underperformed the US, outperformed dramatically last year, and they're outperforming again this year. So, I think that that long-term trend has turned back into the favor of international investing. And most Americans are, you know, dramatically underinvested internationally. In fact, there are some Americans that probably have no exposure internationally. They're totally concentrated in the US, in the S&P and the NASDAQ. And I, I think the returns there over the next decade are not going to be good. I think they're going to be much better if you look internationally, if you look at real assets, commodities, you know, stuff like that. I mean, look, look what's happening with copper prices, you know, record highs, and look at coffee prices, and look at beef prices, record highs. I mean, these commodities don't have anything in common.
Other than the fact that they're at record highs. So, you can see that there's a lot of pressure building from inflation on commodities.
>> I never, I, yeah, I'm, I guess I, I'll say I'm one of those who actually haven't really been looking outside of the states for opportunities so much. I am looking at one deal, private equity deal in India right now. But, um, I'm still kind of exploring what, how comfortable I am with that market. But, uh, just what other markets are interesting to you or to someone who's listening? Like, I wouldn't even know where to begin.
Yeah. Well, you know, I've, I've been a big fan of investing in China, and, um, you know, China's been kind of asleep for a while, but I think it's going to wake up. I think there's a lot of stuff happening in China and in Southeast Asia in general, too. A lot of that related to China, but there's no question in my mind that the 21st century is going to belong to China. It's not going to be the American century. Our century was the 20th century. I think the 21st century is going to ultimately be dominated by China, and more and more economic activity is going to be centered in in its sphere of influence, which is going to be more Southeast Asia. So, I think that's where the bigger money is going to be made. I'm not, you know, necessarily happy about that as an American. I would prefer that American dominance continue, but I, I just don't see that happening. Given the, the, the, the structure of the economy right now and the way the political winds are blowing, it's going to be very difficult for the US to maintain the dominance that it once had.
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All right, guys, back to the video. Let's go back to the, the what we talked about before, the debt and the, the demand for the debt. You know, obviously we had the Genius Act passed, stable coins, you know, Bessent says that stable coins will help offset that, increase the demand for the debt and the, through treasuries. And then you got guys like Brent from the dollar milkshake theory saying that, you know, he believes that the demand for the dollar will continue because and stable coins makes it easier to export the dollars via and then by doing that, easier to export the US debt as well. So, different types of buyers, you know, people who want dollars, essentially. Why would that combination or wouldn't that combination buy, you know, the government's an extra decade or so?
I don't think stable coins are going to add much demand for US treasuries. Because, first of all, the stable coins themselves don't even pay any interest. So, you know, why, why would you hold them? I can, I can understand why you might use them outside the US as a potential medium of exchange, but why you would want to hold on to them and earn no interest? It's the stable coin issuers who get all the interest, but the owner doesn't get the interest. In, in fact, that, you know, part of these the regulations that they're looking at passing bans the stable coins from being interest-bearing. So, I don't see a lot of demand for non-interest bearing dollars when you can take your dollars and you can buy treasuries directly or you can deposit them into a money market and earn interest. Why would you give up your interest? It doesn't make any, any sense. No, certainly no Americans are going to want to hold stable coins. And we have no problem dealing with, you know, dollars without having to go into a tether or something like that. Americans could just use all, you know, all sorts of payment rails. We, you know, you know, I, I can see, yes, if you're in a small country outside the United States, where your local currency is not very good, and you're looking for an alternative, somebody might look at the US dollar and think that, oh, I'll use a US stable coin. But we don't have a monopoly on stable coins. The Europeans can issue stable coins backed by euros. The Japanese can have them in yen. You know, the Chinese can have them in RMB. You know, the British can have pounds. So, you know, the dollar will still compete with other currencies in stable coins the same way it competes with it, you know, now.
But I think the real winner and what really threatens the dollar is the concept of tokenized gold. Because if you're going to tokenize something and you're not going to get paid a yield, why hold dollars in the form of a token when you can hold gold? And what happens with tokenized gold is now you've really taken gold and made it more portable, more fungible, more divisible, a bigger threat to the US dollar than it is in its physical form where it has a lot of limitations. You know, US dollars are easier to deal with than gold bullion if you want to, you know, engage in commerce. But once you tokenize gold, you put it on a level playing field. I can take tokenized gold and I can go in and buy a cup of coffee with it as easy as I can with US dollars. The big difference is between the time I, you know, deposit or earn my gold or save it and buy the cup of coffee, it doesn't lose purchasing power. I'm not going to need more gold to buy that coffee the way I'm going to need more dollars because the price won't go up. It'll, you know, it may even go down. So, that's tokenization. Stable coins, I believe, are actually a threat to the dollar because they make gold an even stronger competitor to the dollar. And and that's the real competitor to the US dollar. We, we compete with gold, and this is going to increase the advantage that gold has because gold is a much better store of value than the dollar. The only thing the dollar can do to compete is pay interest, and you lose that when you go to a stable coin. But the dollar's advantage has been it's easier to use as a medium of exchange. Well, tokenization solves that. So, now gold is just as good a medium of exchange as the dollar, but a much better store of value. So, what are you going to use? You know, use tokenized dollars. I mean, I, I got a choice. I can have a tokenized US dollar or I could tokenize gold. You know, I'm going to choose gold. Why not? All else being equal, they're, they're just as fungible or they're just as, you know, usable as a medium of exchange. You know, why settle for the dollar when you can have gold?
>> Yeah. I mean, you and I have talked about this idea of tokenized gold on the, on the show before, and I believe, um, yeah. Anyway, we'll talk offline, but, uh, you know, I, I also agree with you. It's a, it's a very, very good idea. I mean, gold is something that, and what we talked about before, last time you were on, was we talked about kind of the shortcomings of physical gold and how tokenizing solves that. What I would say, just to kind of what you were saying though, on that one point, just to kind of steel man it for a second, is that you might get some of the same arguments that you get when people talk about Bitcoin, for example, like why would you spend an asset that you think may, you know, is, may increase in value in the future or volatile? If you're a business, you can't have, you know, volatile assets on the books. You need to, you know, watch your budget and get something that at least in the short term or interm is going to be more stable. And that's kind of where I think demand is. And then you, the, the importing of stable coins or the, that, that argument that I was talking about before, mostly like you covered it, was for, you know, hyperinflating countries or countries where they would prefer rather than holding the local currency to hold dollars, for example.
>> Yeah. I mean, to me, the, the ironic thing about Bitcoin is that the, the one thing that may come out of it is tokenized gold. So, like, you know, Bitcoin was marketed as, oh, this is the gold killer. This is what's going to make gold obsolete. Bitcoin is the new gold. It's the improved version. It's gold 2.0 because it is more portable. It is more fungible. It is more divisible. All that. Well, once you tokenize gold, gold now has all those properties that Bitcoin, you know, claimed to have as an advantage over gold. But the one property that Bitcoin never had that gold has was it is intrinsic value as a metal. It's, it's its real utility and use case from which its actual value is derived and which enables it to be a store of value. Bitcoin never had that. And, and so when you, you take gold and you put it on a blockchain, it has all the characteristics that Bitcoin claimed was its advantage over gold. The only difference then is when you have physical gold tokenized, you do need a third party to hold your gold. With Bitcoin, you don't need a third party. But the problem is most people who own Bitcoin use a third party. I mean, that, you know, all, look at all the Bitcoin ETFs, look at all the Bitcoin treasury companies. So, a lot of people have decided that they want their Bitcoin exposure through a third party. Look at all the people who deposit their Bitcoin on an exchange, and now they trust a third party. So, third parties are all over Bitcoin. So, why not have third parties with, with your gold? It's no big deal. It's the same thing.
>> I, I, I definitely won't argue that one. I mean, most people are doing custody, and that's, you know, it is what it is. I mean, love it or hate it, it's just different, different, uh, different things for different people. My, I, my question on the tokenized gold thing though, is, um, you're kind of speaking about it like it's going to be a revolution when it comes to market, but we've had, you know, token to tokenized gold for a long time. I mean, Tether launched it back in 2020, and, uh, you know, it grew a lot from 2024 until gold kind of peaked, and now it's, you know, coming back down a little bit, but we've had tokenized gold. So, what makes it different? Um, you know, like what would make it more usable and more aware? A bigger market cap, a big, more interest, for example. What, what, what is Tether Gold not, not doing exactly?
Well, the reason that there's not more demand for tokenized gold now, I mean, part of it is there's a lot of regulation and compliance costs that governments have layered in there. So, it's not as easy for companies to just launch the product and absorb all those costs because there's not necessarily a lot of demand for tokenized gold yet because most of the demand for tokens is from, you know, people who want to get rich quick, and gold has never been a get-rich-quick scheme. You know, people want to go to the moon with Bitcoin or the next Bitcoin. So, it's basically been used as, you know, a very highly speculative trading vehicle. And, and so that's not really what tokenized gold is for. Tokenized gold, I believe, is going to be for use as a medium of exchange. And very few people use Bitcoin or any tokens right now as a medium of exchange. That's not what they're being used for. To the extent that you want a medium of exchange, you use dollars, you use euros, you use pounds, you use yen. You know, people are not using any of these tokens as a medium of exchange. But I think that will change as the inflation rates get higher and higher in these major fiat currencies, and more and more confidence is lost, then you'll start to see more demand for alternatives. And I think that's where gold is going to shine as an alternative to fiat currencies for commerce, as a medium of exchange, as a unit of account. If, you know, if the inflation rate is manageable, if it's three or 4% a year, okay, you know, but if it starts to be 10, 20% a year, it starts to, you know, exact a significant cost even on short-term transactions, and that creates an incentive to try to avoid that loss by using gold instead.
You, you mentioned, uh, you know, one of the criticisms around stable coins was the lack of interest-bearing, uh, on, on holding like dollar stable coins. Is there a way that you, that a tokenized gold could be interest-bearing?
>> Well, the token itself can't be interest-bearing, um, for one reason is that the gold itself, um, does not generate a yield. But,
>> Right.
What you could do with your gold is you could take your token and deposit it with a lending institution, and that lending institution can loan out your gold,
>> Right?
And pay you some interest in gold. Just like if I have dollars, the dollar itself doesn't generate any interest. If I have a $100 in my wallet, I am not earning any interest. I don't get, the US government doesn't send me a check because I have $100. But if I take the $100 and I deposit it into a bank, the bank could pay me some interest because I gave the bank my dollars that it can then loan out, and it can charge the borrower some interest and cut me in on it. Right? So, you could do the same thing with tokenized gold. I can take my tokenized gold to a company that will hold my tokenized gold and pay me interest. But now, you know, I am a creditor. I have loaned my gold to a financial institution that has promised to pay it back. And in the interim, they're going to pay me some interest. So, you can do that. And in fact, you could do the same thing with these stable coins. I think that the stable coins themselves can't pay you anything.
But a third party can take your stable coin and, and, and, and use it and pay you something to the extent they can loan it out and generate some interest.
>> Yeah, like on a, for example, but you could do, and then, you know, I could see tokenized gold being on a, also, for example.
>> Yeah. I look, gold is the best money that we have. And if you, if you go back to the origins of paper money, all of the first paper money was not fiat. It was all backed by and redeemable in gold. And so, the innovation of a note backed by gold made gold better money than without the note because it made gold, gold more divisible, you know, more, more portable, more fungible. Tokenizing it does the same thing, only better because for a note, a paper, a physical paper note, you and I have to be in the same room in order for me to hand you the, the note, or I can put it in an envelope and I can mail it to you, and you can wait to receive it. But if it's in the form of a token, I can instantaneously transfer it to you wherever you are. And I'm not transferring the actual gold. The same thing was with a note. If I have a note from a bank or a government, whatever, that's backed by gold. When I give you that piece of paper, I haven't physically given you the gold. The gold is still sitting in the same vault. But what I've done is now you own the gold because the evidence of ownership was that piece of paper that I just gave you.
>> The same thing with a token. The gold is in a vault somewhere, and I have a token that says I own it, and I give you that token, and now you own it.
>> Yep. Makes sense that. Yeah. You're bringing back the original form of what the dollar used to be before, before, uh, 1971, I guess.
>> Well, of course. Yes. The dollar was actually defined as a weight of gold. I mean, that's actually what a dollar is. It's a, it's a measure of a particular weight of gold or silver. It, it was never supposed to be just a piece of paper with ink on it. That's not what a dollar was supposed to be.
>> Yeah. I for, I forget what it was, but it was, um, what was it? And then it was the $1 by the Coinage Act of 1792. But basically, if you had $20 was an ounce of gold. That's basically what it is. So, if you, if you had $20, you had one ounce of gold.
>> So, the dollar was a 20th of an ounce, basically.
>> Okay. Yeah. I was trying to think, think what that was.
>> Yeah. It was a specific number of grams. I forget off the top of my head exactly how many, but the dollar was worth about 1/20th of an ounce of gold.
>> Okay, cool. Now I'm going to do some just rapid-fire questions I do at the end of all the interviews. By the end of 2026, gold above or below, uh, or under 4,500, or let's just say above or below 5,000.
>> Yeah, you know, we're at about 4,200 now. I mean, I think it will end the year above 5,000. We'll see. I, I think, you know, it's got some resistance up there. I had, I had thought it would be above 6,000, but that's going to be a tough climb. It's not impossible, but I, I think, you know, the gold can have a strong, uh, back half of the year, especially if we get some surprise rate cuts from the Fed, if we get, um, a, a, a big increase in the QE program, which, you know, all that could happen with the midterm elections coming up. You never know.
>> Exactly. Um, so I guess, I think the economy is a lot weaker than people think, and there, there could be a lot of upward pressure on interest rates and a lot of pressure on the Fed to try to diffuse that bomb.
>> Yeah, I, I think so too. I was actually wondering what you thought about the midterms, if there was any kind of tricks up the sleeves of the administration because, uh, yeah, I mean, Trump always talks about strong stock market and this and that, and, you know, he wanted lower rates and too late Powell and all this stuff, and, you know, we're coming into July here pretty soon. Midterm's right around the corner, and, you know, I think a lot of people aren't really happy with the current administration.
>> No, I mean, if you look at consumer confidence numbers, they're at historic lows. They're the lowest they've ever been. And that means lower than they were during the Great Recession following the 2008 financial crisis. Lower than they were during the COVID pandemic. So, you have to ask yourself, Donald Trump is out there saying, "We've got the greatest economy in the history of the world." Well, if that's the case, why have consumers never been so pessimistic about the economy, even more so than we were when we were in the worst recession since the Great Depression? And if you look at Trump's popularity, it's the lowest it's ever been, lower than any point during his first term. And, and so during the midterms when Trump was president the first time, he lost the House and the Senate, or I, I think he definitely lost the House. I for, um, but I think this time they're going to lose the House and the Senate, and the Senate. Most people think the Republicans will keep the Senate. They pretty much have conceded the House because the, the margin is so narrow, there's pretty much no hope of holding the House. But I think that things are so bad that the Democrats will take the Senate. And so, I think, you know, in order to try to prevent that from happening, they're going to have to do some kind of massive stimulus.
>> Yeah.
And, you know, they're going to want stimulus checks, or they're going to want, they're going to need to goose the economy or the market somehow to try to create some optimism, uh, you know, into those elections.
>> And losing the House and Senate, do you think that that will affect, uh, risk assets at all? Yeah. In what way?
>> Well, I mean, divided government is actually a little bit better than one party control, even if it's a Republican party. But I don't know. Donald Trump is kind of a Democrat, you know, and so he may work well with a Democratic House and Senate on a lot of very bad legislation that makes government bigger and more expensive.
And that may be something that is done to avoid like impeachment or impeachment hearings. Because obviously, it's going to be a lot different for Trump on Capitol Hill when he doesn't have his allies in control because Trump is very popular within the Republican party. And as a result of that, all the Republicans are afraid to defy him, and they really pretty much march to whatever drum he wants to beat. But that's not going to be the case in the Democrats. In fact, the Democrats win votes by opposing Donald Trump, by showing how much they're against him. And, and so that's going to be a very different climate for the president, um, you know, in, in the final two years of his term, uh, when he's got a hostile Congress.
>> Yeah.
Yeah. We'll see how that plays out in the next 12 months. What's a bigger risk? The dollar collapse or a stock market crash?
>> Well, you know, it's hard to say. I mean, I think it's maybe, if the stock market goes down a lot, the Fed is going to cut rates and stimulate, which is going to make the dollar go down. So, if the stock market goes down, I think the dollar will go down, too. If the dollar goes down first, the stock market may not go down. And, and certainly if the Fed starts cutting rates or does QE, it's the dollar that's going to go down, not the stock market. So, I would say that the greater risk is the dollar.
That makes sense. Do you think that the dollar will still be the world reserve currency in, let's say, 2035?
>> Um, probably not. I mean, it's, it's already, gold has already eclipsed treasuries as the number one reserve asset. Central banks still have more dollars than gold, but by 2035, they won't. That central banks will have more gold than dollars. And so, at that point, it'd be hard to argue that the dollar is the reserve when central banks have more gold than they do dollars.
>> True.
Um, it could be, there could be a lot less, you know, it may not be that it's like, you know, kind of close. The dollar's, uh, you know, central banks could have divested of most of their dollars by then.
>> Okay. And, and what on the timeline do you, 2035 is a little far out. Do you think by 20, 2030? I don't know. Maybe that's a little soon, but you think it's going to happen. How quickly do you think that will happen? I guess is the, the,
>> I don't know. I mean, it's, you know, it's, it's something like we're living on borrowed time as it is.
And the dollar's, you know, day of reckoning can come any day. We just don't know. You know, there's that old saying, or was it Mark Twain who said, uh, how did you go broke? Slowly at first, then all at once. And we've been going broke slowly for decades now. We're going to get to the all at once part, and so I think once it really starts to unravel, it's going to happen quickly.
>> Yeah, I think so too. Um, Peter, uh, thanks for coming on again. For, for those who, uh, you know, want to follow what you do, uh, where can they follow you?
>> Well, you can certainly follow me on, on social media. You know, I just went over one and a half million followers on X, so, starting to build a bigger platform there. Um, so go to my, my X account, but I'm also on Instagram, YouTube. I've got about 625,000 subscribers to my YouTube channel. My podcast obviously is there. It's also on shiftradio.com. So, you can listen there. You know, go subscribe to my YouTube channel and get notifications. I just did a podcast last night, you know, on, on the Fed. Probably do another one on Friday. I do one or two a week, and so people should make a habit of watching those. But yeah, I'm, you know, I'm also on, on, on Facebook and, and, um, um, what's the other, uh, um, um, Tik Tok, you know? I mean, I'm, I'm trying to, I'm trying to be where the people are, you know, so I can get my perspective out there, get people, you know, listening to what I have to say, following my posts. You know, I find too now, you know, back in the day, I used to, you know, talk to financial reporters. They'd call me up and they'd get my take. I don't have to do that anymore. They just follow me on X because I read all these articles. They just quote my, my, my posts. So, I don't actually have to communicate with journalists. They could just look at what I already wrote, and they can incorporate that into their stories. But, you know, it's great to have people directly following me. And, and more important too, not just, you know, once you start following me, but, you know, get your friends, your followers to follow me, you know, so I can expand my reach.
>> Yeah.
Yeah. I mean, it's already, I mean, I, I think I just hit 1.5 million followers a couple of weeks ago, and in the last couple weeks, I got another 20,000 on top of that. So, you know, they start, they start to, they start to go. I mean, it took to get my first million probably took 12, 13 years, but the second million will happen in a couple years. So, it starts to, you know, starts to gain the momentum as you, as you get a little bit bigger. It makes it easier.
>> Yeah, that's awesome. Well, congratulations, Peter, and thanks for coming on. Really appreciate your time. I know that's a, it's a rare commodity. So, thanks for coming on.
>> All right. My pleasure. Take care.