Transcription
We had a spectacular rise in in gold and silver. The gold rally really took place over a more extended period of time. Really gold broke out in early 2024 and had a slow and steady rise uh to 4,000. Then it kind of had a very quick move from 4,000 to above 5,500.
Silver really went nowhere as gold went from 2,000 to 4,000 and then finally moved from 3,000 to 120 and in fact the move from 80 to 120 was like a few days. Uh so I think once silver broke out above 50 that was both a psychological and a technical uh overhead resistance going all the way back to the Hunt brothers and 1980. So I think once that happened a lot of money came into silver came into gold and silver obviously got ahead of itself. The exchanges came in several rounds of uh you know margin hikes and I think some of the speculators got caught and there was you know a lot of volatility people got forced out of positions uh a lot of uh weaker longs might have bailed out you saw the media talking about a silver bubble uh which you know bubbles don't form over a matter of days or weeks it's something that forms over a much longer period of time than that.
Um, but I think a lot of people uh may have been scared out of the market who recently got in. Maybe other people were motivated to take profits uh hearing all of the talk of a bubble and the bubbles popped and the market's going to go down. But I think the volatility uh makes sense given the move that preceded it. I think it's a huge breakout in silver. I think silver prices are headed substantially higher from here. Uh I think a lot of this volatility will ultimately uh you know go away and I think we'll see a far more orderly appreciation of silver maybe something more similar to what was going on with gold up until uh the recent volatility and I think the bull market in gold is going to persist. uh you know gold is only about 10% off its highs. So you know nothing like silver down 30 40% from its highs. So it's just a normal correction in the a silver in the gold bull market. But I think what happened in silver is a very rare event but it coincides with something that was also rare which was this massive breakout in in in silver.
Peter Schiff says gold and silver are going much higher. Silver's drop from $120 to $70 is a buying opportunity, not a crash. Physical silver is already running short, and gold below $5,000 is still a bargain. The bull market in both metals is nowhere near over. Thanks for watching. Give a thumbs up and subscribe to Fine Metals for the latest insights.
As far as silver, expect more volatility. So silver as we're talking is just below 76. Yes, it could easily fall below 70 and so you'd be down close to 10% on paper if you bought some here. But again, I wouldn't worry about it. I don't think silver's going back down below 50. In fact, I don't even think it's going to get anywhere near 50. So I think we're not that far. Maybe the upper 60s or, you know, low 70s is maybe about as cheap as you can get it. But the other problem you have is that physical silver is getting harder to procure. So the premiums that people are paying now on silver coins and bars, especially low denomination, are higher. So even if silver goes down $10, it doesn't mean you'll be able to buy it $10 cheaper if you actually want physical. So you've got two things working there. You've got, you know, the scarcity of the physical metal. Yeah. If you want to buy a futures contract, you may be able to buy it, but buying a futures contract is not the same as getting metal delivered to your door, you know, which is what we're doing at Shift Gold. So, I I just tell people just buy whatever we got while we have it in stock because I could tell by what's happening in the market that we're going to run out at some point. it's going to be hard to get silver phys uh because I think there's been a big disconnect between the paper market and and the real market and eventually that's going to resolve itself with the futures moving higher. Uh but in in the short run, you know, the futures price could do whatever it's going to do, but the physical market is limited by the actual supply of deliverable silver and the demand for that silver, which is growing, not just by investors, but by industry that needs silver. So if you if you're, you know, making batteries and the batteries need silver, you can't just buy a silver contract. You you can't put the contract into your battery. You got to actually have real silver delivered to you. So you have to buy it in a physical market.
The US economy isn't really growing, right? We just inflation can can look like growth. And yes, there is an overinvestment right now in AI. Almost all the GDP growth comes from this AI spend. Um but massive amounts of debt are being accumulated to pay for all this. And we have no idea if the return on investment is going to be worth it. I I don't have any doubt that AI is going to be substantial in its ability to increase uh productivity over time. But who knows if the investments that are being made today uh are really necessary to to to bringing that about. I I don't know. um a lot of the stuff that they're buying today may be obsolete in four or five years. >> Well, that capex cycle $660 billion is an insane number and uh it it's tough to >> and nobody talks about like what are we not doing? Where's all this money coming from? >> I mean, what are we not doing? Because we don't have an unlimited amount of capital. And so, if we're spending all this building out this AI infrastructure, what are we not doing? Where's the money coming from? you know, we'll find out like because there's obviously a lot of things where there's been underinvestment to to to pay for all this.
I think it's inflation ddollarization which is a function of a loss of confidence in the US in its ability to honestly repay its debts in the independence of the Federal Reserve in the Fed Fed's commitment to uh maintain the dollar's value or fight inflation. I think, you know, markets are coming to terms with the reality of, you know, $38 trillion national debt rising, you know, you know, in perpetuity by two, three, four, five trillion a year. Who knows? Uh, you've got Donald Trump wanting lower interest rates, putting pressure on the Fed to lower rates because we need lower rates because we can't afford to pay the rates because we have so much debt. Uh Donald Trump's main goal is to continue to inflate a bubble. He doesn't want asset prices to go down. He wants the stock market to keep going up. He wants the real estate market to keep going up. The only way to do that is by sacrificing the value of the dollar. And that's what they're doing. And so if we're sacrificing the value of the dollar, why does the world want to hold the dollars? The world doesn't want to be sacrificed. Foreign central banks don't want to hold a currency that's going to depreciate as a reserve. So foreign central banks are moving from dollars to gold. Uh international investors are doing the same thing and you know Americans are going to be doing the same thing. It's going to be a mass exodus out of US dollars into an alternative and gold is the most viable monetary alternative. I mean for banks it's really the only alternative. uh you know, private citizens, yeah, they could buy stocks, they could buy real estate, they could buy other things, but but gold and silver are going to be a big part of what investors buy when they want to get rid of their dollars.
And well, you know, to the extent that the markets already expect the tariffs to be ruled unconstitutional, and they are. So I mean if the court rules uh correctly they will get thrown out. I think the question is how will the administration respond? How much of the tariffs uh will he be able to continue anyway despite the ruling? Uh that's hard to say. And will the court rule that the funds previously corrected collected need to be returned? Um so that remains to be seen whether they'll just say look you can't impose these tariffs prospectively. But I don't know if the court's going to rule that everybody who paid a tariff is entitled to their money back. Now, they should be uh but I don't know if it's just going to be confined to the party that sued and that party will get their their money back. Uh and that everybody else would have to file their own lawsuits to get their money back. I I I don't know. I don't know how disruptive it would be on the US government to return all that money. Um but you know I think that to the extent that the court strikes down the tariffs and there is an economic problem that may have happened anyway even if the tariffs were upheld. It does give the Trump administration a convenient scapegoat because Donald Trump's narrative was the tariffs were great the tariffs were making us rich. We had a booming economy because of the tariffs. Now, all that is a lie, but that's what Trump's been saying. Now, if the Supreme Court eliminates the tariffs, which is actually a good thing, which actually would make the economy better, right? But let's say the Supreme Court throws out the tariffs, and then the economy crashes, which it would have crashed anyway. Now, Trump could say, you see, look, everything was great and look what the court did. The court ruined this great economy that I created. So I I think politically it's actually better for Trump if the Supreme Court, you know, overrules the tariffs.
>> Now that the the precious metals have dropped. Like what's the situation here for the mining companies? Is there still room to run and what's the opportunity here? >> Yeah, I mean there's a lot of room. Um Wall Street has pretty much been skeptical of the gold rally ever since 2000. So the whole time gold was going up, Wall Street was expecting it to go down. In fact, if you go back to early 2024 when gold was at 2,000, uh major banks that that that cover mining companies were putting seller recommendations on Pneumont and Bareric and the rationale was gold has peaked at 2000. there's no upside. And so why own these miners when all that's going to happen is the price of gold is going to go down? And and so these companies have never never really reassessed that that bad that bad conclusion. Uh and and so they've watched gold prices more than double uh since that that forecast, right? Um, and even though the gold stocks have, you know, let's say they've tripled as gold went from 2,000 to 5,000, and that's a little bit more than the increase in the price of gold. One would have expected a lot more than that given the magnitude that $5,000 gold has on their earnings. the your earnings don't just triple when the price of gold triples. Your earnings move up by a much greater factor than that. You know, if your if your cost of mining gold is 1,500 and the price is 2,000, you're making $500 an ounce. But if the cost goes to 5,000 and you're still at 1,500, right? You're making $3,500 an ounce. seven times the profits on on not not three times. So there should be a lot more leverage because these companies are inherently much more valuable today. Yeah.
And what people also don't think about is the cost side of this because the costs have been a big problem for the mining companies until very recently. Oil is barely over $60 a barrel. That's cheap, you know, in relationship to where it's been in the past. I mean, oil's been over a hundred when gold prices were a lot lower than they are right now. So, that's the main cost in mining. I mean, you've got uh wages and then you've got energy. And energy is generally number one and maybe wages number two. And the wages are not up that much given, you know, where the dollar is right now. If you look at the Canadian dollar, the Australian dollar, some of these South American currencies, they're still relatively low compared to where they've traded against the US dollar in the past. So, the operating costs are low. And another thing that people don't consider is that silver is a byproduct of mining gold. And almost all the gold mining companies mine some silver. They also may mine some platinum and other precious metals. And what the money they get from mining silver doesn't show up as earnings. It just shows up as reducing their costs. So their cost to mine gold goes down if they get more for their silver. So if they're selling their silver at 80 bucks and they used to sell it at 30 bucks, that's a lot of money, you know, you know, so that lowers their cost. So you're going to see not only the top line going up, right, but that the cost going down. So the margins are just exploding for these gold miners.