Transcription
The next crisis is going to be the whole currency system. The uh eye of the storm in my opinion is the sovereign debt.
But you're saying it's a global sovereign debt crisis. What does a global sovereign debt crisis mean? What does that translate into? Does that yield a new global monetary system?
The West and its allies, they're the ones who are going to suffer. I would say we could go as high as 7,000 by the end of this year. I wouldn't be surprised.
7,000 gold by the end of this year. What takes us there?
Inflation is deliberate policy. It's not something that comes out of the blue. And governments and central banks are going to keep doing it until they can't. This conflict in Iran is going to be akin to Britain's Suez crisis where after that Britain really went downhill. It is going to accelerate dedollarization. It's going to be a multipolar currency system with gold and silver as the major reserve assets.
You recently said on your YouTube channel that silver can reach $100 per ounce by July. Break that down for us.
This is The Real Story with Michelle MacColl.
Hello, I'm Michelle MacColl. Thank you for joining us here on The Real Story, where we go beyond the headlines, beneath the surface, and behind the curtain to show you what is really happening with money, markets, and power. And the macro picture is getting increasingly complicated. Inflation is heating back up. Oil prices are surging. Treasury yields are climbing again. Producer prices just hit their highest level since 2022. At the same time, economic growth in the US is slowing and that is reviving fears of stagflation, persistent inflation, weakening growth, tighter financial conditions, and mounting debt stress. Yet, equity markets continue to hit new record highs. But bond markets are flashing warning signs. The 30-year Treasury yield has surged above 5.19%. That is the highest level since 2007, right before the 2008 financial crisis hit. The 10-year Treasury yield is pushing back towards 4.7%. Investors are demanding much higher compensation for holding US debt. And according to the newly released Fed minutes, many policymakers are in fact now openly discussing the possibility of raising rates again if inflation remains persistent. Gold and silver of course are back at the center of the macro conversation and my guest today says that this environment could become extremely bullish for precious metals. In fact, he believes silver could retest $100 an ounce as soon as July. So, what comes next for the US economy, for gold, for silver, and for the markets at large? Let's bring in Mario. Mario is a former London bond and futures markets professional turned macro commentator known for his deep skepticism of central banks' fiat currency systems. He was born in Brazil where he experienced inflation firsthand and Mario brings a sound money and Austrian economics perspective to his analysis of gold, silver, monetary policy, and the shifting global financial order. Mario, so good to have you with us. Welcome.
Oh, thank you. And it's great to uh speak with you, Michelle.
It's it's a long time coming. Mario, I have of course watched your channel many, many times. You are also the host of Macro 64, a YouTube channel which you describe as the home of alternative economics and contrarian views. So let's dive right into it and start with that. What is your most contrarian economic view right now?
Well, right now is that we're going to see a lot higher bond yields and that gold and silver are not going to go down. That uh they're not uh higher interest rates or yields are not headwinds uh for for the precious metals. Uh mainly because we're in a bear market uh in bonds and we have been since 2022. Uh and uh if you look back uh at the uh early 60s to 1980, the 10-year yield went from below 4% to double digits and gold went from 35 to almost 900.
Okay. Now, typically the thinking is Mario that uh higher yields are are bearish for gold because people don't have a benefit. They don't make money by holding gold. They can put money in the treasury which is deemed as safe and get return on that money on that investment, whereas holding gold does not produce uh yield. So why would this case be different if if we're going to have continuously higher yields? Why is that counter to the typical idea that this is bad for gold?
Well, because uh if you have uh a bear market in bonds where uh the uh the yields uh the high yields become higher and higher through time, it it means that the bonds are losing the principal is losing value. So, if you buy a bond at 100, a 10-year Treasury uh note at 100 and and the yields keep going up for the next five years, your your capital might become worth like 60 cents instead of 100 cents. So, yes, you're going to get like a coupon, but it's not going to make up for the loss uh in in the principal. Uh prior to 2020, like uh since the early 1980s, yields uh were making lower lows and lower highs. So uh when yields went up, people knew that that was a a kind of corrective uh move and that eventually uh yields would go back down to to help uh the economy. Uh they would go up when uh there were price pressures and then they then would would go down and bonds stayed very firm and over time of course these yields became lower and lower and that helped bond prices. And to me, the biggest signal that we're near an end of this bull market was in 2019 when we had uh about 17 trillion dollars in negative yielding bonds, which was something prior to that was something that was never even uh touched upon in academic books about bond investment or fixed income investment. And the only reason it happened was because central banks uh did so much QE that they drove the yields uh into negative territory. And and I warned back then that that was a sign of a huge bubble and that bonds would turn uh and they have. So that that's basically why I can understand the argument that you made there. People say that uh high yields uh you don't get the uh income in gold so you put your uh money into bonds, but if b if the value is going down and investors are moving away from bonds, like they are, especially Treasuries, uh yeah, it it's not going to end well for for for bonds.
Just for the viewers who may not follow the bond market that closely. Uh let's break down what rising yields actually mean because many people hear the term higher yields, higher treasury yields and they assume that that simply means that investors are earning more interest and that's a good thing. But yields have an inverse relationship to price. Yields rise because bond price, bond prices are falling. Uh for example, so if investors no longer believe a bond is paying enough interest relative to the risk of holding it, relative to inflation or the risk of giving that loan to the government, they sell the bond and as the price of the bond falls, the effective return or yield rises. So, in many cases, rising yields can reflect uh declining confidence, rising inflation expectations, or growing concerns about government debt and fiscal stability. And that's what we're starting to see here. And, you know, we we get people glaze over when they hear about Treasury yields and the bond market. And a lot of us hear the words, we're going above five uh percent for Treasury yields for the 30-year. The tenure is nearing five and that's terrible. But simplify why that's so bad. Simplify what that can lead to. Simplify for the viewers that are not that conversant in this particular area of the economy. What that means, what that translates to and what that means for the average person and investor.
Well, first of all, uh the bond market is the biggest uh capital market. It's big, even bigger than stocks. And in the case of the United States, the US Treasury is considered the risk-free rate of return, the 10-year yield. So, mortgage rates, corporate uh yield, corporate bond rates, uh uh credit card loans, everything is priced off the 10-year yield. So, if they're rising, that means the the cost of credit throughout the economy is going to be uh higher. I I saw I just saw an article on Bloomberg actually before uh we started talking uh and it says home buyers hammered as war-fueled bond rout drives up rates. So the other thing apart from that is uh the reason why higher yields are not good for uh people who have invested in bonds is that for example, you buy a bond issued by the treasury uh tomorrow, let's say at 5% uh 30-year bond and you pay a 100 and then in six months time uh the yield uh is up to like 6% in the secondary market. Well, that that 100 is is probably going to be worth let's say 95. I haven't done the exact calculation, but what it means is that you are getting 1% less than you could have uh gotten if you had waited uh to to buy that bond. So uh yeah, in the past uh before 2020 uh there's a a point where the higher yields would turn and uh it it was the analogy I have for the those 40 years is that the uh the credit market was sailing downwind and it was really good for borrowers uh because they could always refinance at lower rates. They could uh buy more assets and it helped everything. But now we're sailing against the wind and it's a lot tougher.
So what is likely to break first here? Housing, private credit, where where do you see this bond bear market really manifesting in the ugliest form first?
Well, I think private credit is already um in trouble. Uh housing could could be as well. But I think this is going to be a much bigger crisis because if we go back, let's say, to the .com bubble, that was like a a tech bubble crisis. Then after that, they pumped up the uh system again. Alan Greenspan cut rates to around 1% and that created the housing bubble. And then we had the housing bust. Uh and uh now I think uh that uh the the next crisis is going to be the whole the whole currency system and the currency system in the US and everywhere else under a fiat currency system is uh the other side of the currency are are bonds. Uh they're just cash, but uh for cash in the future, people lend that and I think uh that's why it's going to be a huge crisis. It's and it's going to affect everything and it's something that has hasn't happened really. You have to go back uh to like the early 1930s when they had a major sovereign debt crisis or you can also go back to 2010, 2012 in Europe, the uh the the sovereign debt crisis there of the major, not the major, but the periphery like Portugal, Italy, Ireland, Greece, and Spain. I think that was a a precursor. They they were able to kick that can down the road. But what it showed, Michelle, is that like when Greece went under, all those other countries went under as well and they had to bail it out. So, but now we're talking about the biggest uh countries in the world like the US, Japan, the Eurozone, not just the Mediterranean countries, but France, Germany, the UK as well. The other thing is with uh the bull market we had for 40 years, uh there's so much debt that was taken on that now we are at a point where I think we have about 12, 12 trillion to 14 trillion needing to be refinanced in the OECD in the next uh 12 months or so. And uh a lot of these bonds are like five-year bonds that were taken on when rates went down to zero during um COVID and all the QE. So yeah, it's um that that's where I see the big crisis and it's going to affect everything, of course. But uh the uh eye of the storm in my opinion is the uh sovereign.
But you're saying... but but you're saying it's a global sovereign debt crisis. So if this impacts everyone around the globe, or are some uh economies immune, or are we too intertwined at this point? What does a global sovereign debt crisis mean? What does that translate into? Um, does that yield a new global monetary system? Break down what that crisis actually looks like. If it's global, it's not just the US, it's other countries as well.
Yeah, we have to go back I guess to the Bretton Woods system and uh a lot of the all the western countries, their their monetary and financial systems are a derivative of the US. So I I I think it would hurt all all those major countries like Japan, Canada, uh the Eurozone, the UK, Norway, Denmark, uh Japan, South Korea, Australia, New Zealand. I I think the countries that could be kind of immune, well, one especially is Russia because they've been kicked out of the the system. Uh they're outside the uh western financial system uh since 2022. So I think they would be okay. Uh China, right now their their bonds are behaving. I think uh the last I saw, and I could be wrong, but their 10-year yield was below 2%. And uh even though there is a lot of speculation they're hiding a lot of losses from the real estate bubble. Uh but I I think uh yeah, I think China and Russia might be able to weather the storm better, but yeah, the the West and its allies, they're the ones who are going to suffer.
Thank you so much for watching and supporting these conversations. If you're enjoying this content and want more in-depth interviews and analysis on the forces shaping markets, money, and geopolitics, make sure to subscribe to the channel and set your alert notifications as well. I really appreciate you helping us grow this community. And if you would like to learn more about precious metals and get a customized precious metal strategy that best suits you and your finances, you can reach the expert team of brokers at miles at info@mfranklin.com. Now back to my conversation with Mario and Neko and stay tuned to the end for his outlook on silver. What does that suffering look like? What does that storm look like for people in the United States if this does in fact blow up into a sovereign debt crisis?
I think it's already showing up. The cost of living for the bottom 90% that that's uh yeah, becoming harder and harder. Um, I I think uh the top 10 might keep doing well if I if they keep pumping uh the uh if they come in and try to save the system and do more QE and print money, but it's not going to be good for anyone. Um and uh it will mean um like a higher cost of living. Basic necessities are going to be very uh difficult to get. Uh the currency is not going to buy as much and uh I think we could even see uh investments in in paper assets, they're going to suffer. That's why I'm u positioned uh in gold and silver and also hard assets and and mining companies. I think uh yeah, the the commodity and hard asset space has been neglected for too long and there hasn't been that much investment in in production and exploration. So yeah, uh when people uh let's say take a small, even small percentage of all the the funny money that's going into tech and everything else, real estate and private equity, they take a little bit of that and they put it into gold, silver, and other commodities. It's going to make a huge uh difference to those prices. And I think that's the way it's going. Uh the other thing is socially and politically uh we're already seeing it, Michelle. There's a lot of uh instability everywhere in the West, politically, socially, and also geopolitically, of course, with uh uh wars popping up all over the place. And to me, they they seem to be more proxy wars. And I actually think President Xi was right about what he said that um he was concerned that uh uh the US and China were falling into Thucydides' trap, which is basically um the geopolitical uh let's say concept that a waning power will uh try as hard as possible to stop a rising power from emerging and that creates a lot of geopolitical instability and I think unfortunately that's going to continue.
Uh yeah, and that has certainly been the thesis of uh Ray Dalio. That is one empire starts to lose its place at the top, it creates conflict and chaos. And uh that may be what we're seeing right now. Um, and before I get to the warning and before I get to your outlook on on gold and silver, you mentioned that in this environment uh you see paper assets declining. Does that mean equities as well, like the stock market? Because with this background, we still continue to see soaring equity markets. Uh many would argue that it's because of liquidity coming in and there's nowhere else to put your money. Uh that it's another way to fight against inflation by having exposure to the equity market. You could even go so far as to use the mightiest term of uh a cracker boom, that everything rises in this environment. So when you say paper assets, I believe was a term you used. What does that mean? What is your broad outlook on US equities in this environment that you see happening?
Yeah, I think it's going to be like uh from the mid-60s until the 80s where they went sideways. Uh sometimes they went up. Uh I I think uh like you said, there's a lot so much liquidity that is going into like uh tech and AI and now people are talking about the uh SpaceX IPO. Everyone's really excited. But uh yeah, so paper assets, yeah, stocks in the general stock market, bonds, fi financial uh products, like uh corporate bonds. But what I think is going to happen uh like uh from the mid-60s to the early 80s, the uh hard assets are going to outperform uh the paper assets. And eventually, I see the, for example, the Dow to gold ratio going a lot lower because in 1980 it went down to one. Right now, I think it's just above 10, but it's been as low as nine recently. And so that's how I that's how I see it. I think holding um stocks, techs, and bonds uh in the next 5, 10 years, it might not lose you uh any u let's say nominally a lot of money, but in real terms, in terms of gold, silver, and everything else you need to survive, it it's going to lose purchasing power, that the currency that is.
How would you define hard assets?
Well, assets that are you have to get out of the ground, that you have to work hard to like uh produce. It's not like uh derivatives or or bonds, which are just a loan that you can create like governments can create out of thin air. Commodities, uh uh commodity money, physical gold and physical silver. Uh th those are hard assets to me.
Does real estate count as a hard asset in your in your book here?
I guess farmland would because you use that to uh grow crops, which are kind of they are commodities. But yeah, I think real estate, if you don't uh if you don't uh if it's not leveraged, if you haven't borrowed that much on it, should be fine. I mean, over time it's uh always something uh that is good to have. But uh what I think the people that might get hurt are people who who leverage uh to to flip it and stuff like that, that could be in trouble because if yields are going up, it's going to hurt uh people with uh with debt.
So, if you had to crystallize your macroeconomic outlook into a couple of sentences, uh where things are now and where they're going, what would that be? What is your macroeconomic outlook in that time frame?
Yeah. Um, you can't fight uh math, because that's basically what it is. Uh, we have a debt-based system. And uh the debt is growing and grew a lot over the last 45 years. And uh unfortunately, now the cost of servicing the debt and renewing the debt is getting uh larger and larger. And uh there's no way. The only uh Mises said that one way to stop the inflation because growing debt in a fiat currency system is inflation. There's only two ways to do it. One is to stop it, raise rates and collapse everything, or the other one is to keep uh inflating, keep keep the debt going and that will end up in a collapse, but it will be like a hyperinflationary crack-up boom, melt up, whatever. Uh, either way, I think it's really prudent to have some physical gold and silver and hard assets outside the system because even if we if they uh do pull the plug and we have a a deflationary collapse, uh there's there's going to be massive bankruptcies everywhere and uh you will want to have uh gold and silver as well. But personally, I don't think they're going to do that because politicians, they never like to see uh deflation and depression. They'd rather inflate.
Right, debase the currency, devalue the currency. Um, hence your outlook for gold. So, let's get into some price outlooks and we'll start off with gold. Where do you see gold uh ending this year and where do you see gold in two years' time and then in five years' time?
Yeah, I mean, I was thinking earlier today. I think and it might sound not very uh specific, but uh I remember after uh the 2024 election, gold had gone up to 2800 and then it dropped to 2500 after the result and a lot of people were worried. And here we are now at four and a half thousand, almost I think near there, so two thousand, almost $2,000 higher here. Um, but if I had to uh pick a number, I would say we could go as high as 7,000 by the end of this year. Uh, I wouldn't be surprised. And in two years' time, we could be, yeah, we could be uh even at 8, 10,000. I wouldn't be surprised.
7,000 gold by the end of this year. What What takes us there? I mean, if if we're not, what's what's the narrative? What drives us there? If if the Fed's not cutting rates, which it it may not. Now, the the latest status is actually expecting uh well, there's there's about 40% chance according uh to the CME market Fed Watch tool that they'll actually hike again. So, what propels gold to 7,000 by the end of 2026?
Well, I I uh look at that on a technical basis. I look at technical analysis as well. So I I I think uh it could be fairly easy to get there if we go through the the old high at 5600. And uh if you look at the bullion banks, even though uh I I think the bullion banks, I've been following them for since 2002 and I always found that their forecasts were very conservative and they always had to revise it higher with the exception of Goldman Sachs, who see gold at 5400 at the end of the year. Most of them see it around six and even higher than 6,000. So that's why I I think 7,000 wouldn't be a a stretch. But in terms of what might drive it there, it's difficult to say because uh a lot of people thought at the beginning of of this war uh against Iran that gold would uh go to the moon because oil would go higher and it's a safe haven. And it hasn't really done that, even though we're still up on the year. So yeah, all those reasons you said that uh they might hike rates uh might not uh be uh let's say positive for gold, but I think uh a lot of times you get something like that and it's like uh it's already priced in because people are looking at it already. So yeah, mostly technical. But fundamental, uh yeah, it's difficult to say, Michelle, because right now everything is so uncertain uh between uh the US and Iran and this conflict that uh if there is a resolution very soon, uh yeah, it might uh might help things. It might drive oil lower and it might uh make the central banks hold off uh from raising rates. I mean, I saw some uh statistics in Europe uh today, the uh purchasing managers' index service sector, they all dropped well below 50, even though the US one's still holding up, but I think it's only a matter of time. So yeah, if we uh get some kind of resolution to the Iran war and and then u yeah, we could see u things calm down. Uh the central banker and the economy slows down, then they might actually have a reason not to raise rates. Uh and if anything, uh I follow M2 or money supply and for all the major countries, it's making record highs. So they they are kind of inflating. They're talking about higher rates, but at at the same time, they're pumping the liquidity into the system.
Well, we are getting a new Fed chair, Kevin Warsh, will be stepping in. Do you see him impacting things? I mean, he's come on board and at first he wanted to be uh conservative, counter to what President Trump had been urging Fed Chair Powell to do. Kevin Warsh also wants to rejigger how we calculate inflation. What do you expect from the Fed chair if you think that um that may ultimately land up driving gold a bit higher? What what is your outlook there?
Yeah, I mean, um I think he had to try to uh sound tough on inflation because and and I think the vote in the Senate was like the narrowest margin to elect a Fed chairman. So, a lot of opposition to him because a lot of senators and people thought that uh Trump uh would get someone that would do what he wanted. So, yeah, he had to to sound tough that he was independent. And uh I I think though any Fed chairman uh in the last uh well, since Paul Volcker, when uh whenever there's a crisis and there's a problem with with liquidity in the financial system, they they they will do whatever it takes to keep the system going. And that usually means uh cutting cutting rates or printing more money. And and I think uh this new Fed chairman, Kevin Warsh, will will do the same. Uh yes, he he wants to use uh mean uh what's it called again? U mean PCE. Yeah. Mean uh it's a way to measure the PCE where you take out the the highest uh movers uh to the upside and the high highest mover to the uh downside. It's uh to to smooth out the PCE. And I've looked at that and usually when uh prices are dropping, this measure looks very similar moves in tandem with the normal PCE. It's only when uh prices or inflation start rising that it makes a difference. It it f I think it fools people because it looks a lot lower. So that that's an excuse to uh cut rates. I think that he's going to use. And I heard that he uh mentioned something about AI as well, that it would be deflationary, kind of implying that it would be easier for him to cut. And uh yeah, so I don't think he's uh the new Paul Volcker because when Paul Volcker was around, the uh debt to GDP, public debt to GDP was around 32%. Now it's like almost 132%.
Right. I mean, as you say, even if he wanted to be the new Paul Volcker, he's in no position to do so. And look, whether it's Warsh or any other Fed chair, the way that we get the inflation data presented to us has always been manipulated and uh sanitized and not quite exactly as what it is. So, this could just be another way to make it look even prettier and uh uh allow for different kind of action. But um at the end of the day, people still see what inflation is. They they feel it when uh they're making their purchases. Uh as we know, the government data on inflation um well, I'm sure most of the viewers of this channel uh raise a very skeptical eyebrow whenever it comes to data regardless of the administration coming out of there. Look, as as you mentioned, a lot of this hinges on what happens with the war in Iran. And granted, I mean, that has been uh a big factor of uncertainty. The Iran conflict is of course largely behind this inflation surge as it continues to disrupt the global energy markets and fertilizer markets and a whole host of things that go through the Strait of Hormuz. Um, markets have somewhat become a little bit desensitized to the latest headlines under what this has been a fragile de facto ceasefire between Iran and the US. The latest that we have on this, and granted this could change by the time we post this video, but that Iran is saying that the latest peace proposal submitted by the US has uh partly bridged the gap between the two sides. Interestingly enough though, Tehran, according to Iran, is reportedly in active discussions with Oman to establish what could become a permanent peacetime toll structure for ships crossing the waterway. That's according to the Iranian foreign minister. This has not been confirmed by Oman. Um, uh Iran has also reportedly established a new regulatory body called the Persian Gulf Strait Authority or PGSA, requiring ships to submit extensive cargo ownership, crew documentation before receiving authorization to transit. And there are reports that Iran and uh some trading partners are increasingly using Bitcoin to grant safe uh access. They're using Bitcoin to purchase insurance to go through the Strait of Hormuz, Bitcoin and other cryptocurrencies. Again, uh President Trump earlier this week said he would take military action again. He subsequently stepped back away from that, saying that Gulf allies have urged him not to do so. At this point, how do you see this Iran conflict playing out from where we are right now? Because as you say, this is what hinges uh on so the the Fed policy, so much of the global macroeconomic picture hinges on how quickly this conflict is resolved or what the next move is. How do you anticipate this playing out?
Yeah, I think uh Iran holds uh uh the most important card, and that's that they can they don't have a problem with just uh time. They they can keep uh holding off the US and uh the the longer it drags on, the the worse it is for for the Trump administration, especially with uh elections coming up in November, the midterm. terms. And uh yeah, like you said, the markets are desensitized right now. It's like a seesaw. You you hear something that Iranians being hawkish and then oil goes up, uh gold and silver go down, the stock market goes down, but it's becoming less and less uh volatile like it was a month or two ago. And uh yeah, I think um eventually what will happen is that Yeah, they'll come to an agreement and I think President Trump will say it was a win, even though it might not be a win, really. I I think uh Iran has said that uh in the uh nuclear side, the uranium enrichment side, that uh they're not going to give that up. And they're also looking for uh for uh like uh compensation and I think also some of the funds that uh the US has frozen. And I even heard that a proposal that the US would pay that in tranches, is like 25%. So they're kind of uh they're not as hawkish. And I think the US realizes now as well that unless they have millions of troops and they invade Iran and take over that country, it's really hard to beat a country uh from the air, just bombing them. And I don't think the American people have the appetite to uh to go and fight fight this war in Iran like where you probably need 3 million troops to invade Iran and like take over it because Iran has probably about a million um active uh duty uh troops that they could u could use. So just uh flying over Iran and uh bombing uh sites and stuff, I I don't think that's going to do anything. So that's why uh I think Iran is going to get quite a bit of what uh they want. And uh if you remember well, in the beginning of the war, uh the objective of the Americans was regime change. And and they killed the Ayatollah Khamenei a few days after it started. And I think at that time, probably uh the Trump administration and his advisors were probably really optimistic. But here we are, almost three three months later, and it's still ongoing and the regime uh still there.
Well, I think that was one of the uh preferred objectives was uh regime change. They seemed to kind of uh move the goalposts on that one uh a little bit. I don't know that that was explicitly stated. I think that was a strong preference. Uh one of the very clear objectives was to rid Iran uh of its nuclear capacity as well as significantly debilitate its missile capacity, which would uh ensure that should they try to uh get nuclear weaponry in the future, that it would be a lot harder to do if they did let the the missile capacity continue. At least that's what Secretary uh of State Mark Rubio, Marco Rubio had to say about that. Uh but to your point, regime change certainly would have been what they wanted. And they have continued to take out one head of the existing regime after another, and the opposition there has not uh risen up successfully. A lot of it due to the uh oppression of the regime of the people on the ground. But nonetheless, that result does not seem to be coming through for the Trump administration. And so you're thinking that a ground invasion is not going to happen. No one has the appetite for that, especially with elections coming up. And that some kind of um deal is reached, one that would be presented as positively for the Trump administration, regardless of whether it is or it isn't. Um, what does that mean though for how the rest of the world perceives the United States and the dollar and the ability of the United States through its military might to secure these uh geopolitical pathways, which is one of the reasons that the dollar is in fact the global reserve currency here. So what do you think that means for the trajectory of the dollar?
Well, I I think it's an even um another nail in the coffin of the u power and uh the power of the dollar in the United States. Yeah. If they fail to uh to get their objectives in Iran, and I think the rest of the world will see that um maybe uh Trump's base, his supporters will buy into the uh the narrative, and I think that's what he cares about, really. Uh the other thing I I didn't didn't say uh as well is that apart from needing uh millions of troop uh troops to to go and try to uh uh change the regime in in in Iran, like they did in Iraq in 2003, um America's allies are not really, they don't really have the u appetite for for helping. And even though u the US says that the Strait of Hormuz is a lot more important for for uh Europe and let's say some of the uh the Asian countries, and that they should do something about it, a lot of them say, well, the only reason the the strait is uh like closed or very difficult to to go through is because you guys started the war. So yeah, there's not uh yeah, that's why yeah, so the the dollar and the reputation of the US uh will be be hurt badly uh if they don't really get uh their objectives. And if you remember uh last year, they had that 12-day war and Trump said that they obliterated their nuclear program. So, uh people are like, uh waking up to the fact that uh um yeah, you can't really trust what uh the Americans are saying.
So, what what does that mean when uh we say it's not good for the dollar?
Well, yeah, it's just that the less um clout you have around the world and the the less uh your allies are behind you.
What what I mean does practically um does this accelerate the dedollarization process? Does that mean uh central banks continue to buy more gold? Does this accelerate a potential change in a global monetary system? Does this accelerate uh the status of the the demise of the status of the US dollar as uh the global uh reserve currency? Um unless something dramatically changes here with this war, it looks like we're headed in that direction. So give me your outlook on the global monetary system, let's say in in five years' time and and 10 years' time.
Yeah. So I think uh this uh conflict in Iran is going to be uh akin to uh Britain's uh Suez crisis where after that Britain really went downhill. Uh the pound wasn't as important anymore and like you said, it is going to accelerate dedollarization. Uh and uh the other thing is that countries will want now a a neutral reserve asset, and that's what gold and even silver are to some extent. So in 5 years' time, I see uh gold and silver being a lot more important, but also for uh uh for countries, they're going to be dealing more in their own currencies and especially still dollars, uh and also yuan and the euro, and and maybe some other currencies. That that's how I see it. So it's going to be a lot more uh decentralized. It's going to be a multipolar currency system with gold and silver uh as the major reserve assets, I would say, because why would you want to finance uh the US or why would the US want to finance China by holding their treasuries, or or vice versa with the EU. So yeah, that's how I see uh the uh world uh system. It might not even be a system. And it might be just like u it just evolves like it did in the 19th century.
Elaborate on that.
Yeah. In the 19th century, we didn't have international organizations like the IMF, the World Bank, and and countries just traded and they settled uh their surpluses and deficits uh in in gold. So it was just uh >> it was just it wasn't really a system. Uh it was just countries trading and yeah, that that's how I see it. Maybe the BRICS might might try to uh like make it more of a system, but in a way, I think that's good. It's just a a free market in in money and trading and um yeah, and going back to uh to real money after all. JP Morgan said that gold is money, everything else is credit.
So a more fragmented multipolar world uh with multiple currencies operating with gold ultimately being that mutual reserve asset. That's certainly a topic we explore extensively on this show, as as well as how you make physical gold um more operable in this changing digital world. And uh we've talked about that at length also uh on this program, but we're running out of time here. And of course, you mentioned silver. So, I have to get back to that silver outlook that I mentioned at the top. And Mario, you recently said on your YouTube channel that silver can reach $100 per ounce by July. That's very soon. Uh we're at around what did we say, $76 right now. Break that down for us. How does silver reach $100 by July?
Yeah. So here's the chart. And the reason why I see it going probably to near 100 by July is that we saw a low here on March 23rd uh around 60. And ever since then, we've seen higher highs and higher lows. Uh and the recent low here uh also hit this uh trend line that we had broken out of. It retested it and it's held. So if we make a a new high uh in the next few weeks, uh I mean, and we go through 90, uh it's a it's a very uh uh like it's not very far away from 100 and that's why I said I think we could go to 100. It's just uh it looks like we're now back on the uh the trend is higher because we're making higher highs and higher lows. Uh of course, this is nothing is ever like uh in technical analysis can change, but it looks pretty good in my opinion.
And what do you think could be the fundamental or macro narrative that gets that to align with the technicals?
Yeah, I guess it would be uh like the uh some kind of uh like uh settlement uh in this uh Middle Eastern conflict.
Yeah, that that would help uh silver because silver and gold have been like uh every time things get worse uh geopolitically with that war, oil goes up and gold and silver get uh yeah, they get hit hard. So yeah, I would think uh it would be pointing to some kind of resolution of the conflict. Before we get more into price forecasts, uh I believe that you said that you have some sources that are indicating that central banks and sovereigns in the Middle East are buying silver as a monetary asset. Correct me if I'm wrong and and if not, please elaborate on that.
Yeah, I mean, I've been hearing that since last year, like uh to like the second half of the year that they've been buying not just silver, but gold and physical um. And if you think about it, the the higher the price of silver goes, and I mean, we are at unprecedented prices going back if you go back 45 years, if someone had uh uh told you like a year ago that silver would go up above 100 and would be at 75, people would have questioned that because that 50 level had been such a a big barrier. But the higher the price goes, the the more interesting it becomes as a reserve asset because it's more interesting to hold gold in a central bank vault if it's at $150 or $200 than it is at $20. So it's less bulky. Uh and uh I think the other reason they're buying physical silver is because there's a yeah, there's a realization that countries need to uh safeguard uh like real things, real uh real raw materials for uh for developing uh new technologies, AI, and also for electrification, especially with what's going on in the Persian Gulf or with the Strait of Hormuz. I think like China has proven that they they've uh rebalanced their energy uh like infrastructure quite well. They they're they're doing a lot of uh uh let's say they're moving towards EV EV a lot in China, and they actually uh use thermal coal to to power their electric uh power for for the EVs. Of course, in the West, we're not doing that because we, especially here in the UK, we're into this climate change uh thing that we can't use coal.
Well, that's a whole other conversation amongst other things that are happening in the UK, some other uh very um well, some policies that I certainly don't agree with. But again, that's a whole other conversation. But let's bring it back to silver. I get the idea of resource nationalism and I get the idea of of countries doing that and and protecting uh those kind of assets, but I believe you said that it was being viewed as as a monetary asset uh and hoarded on that level according to the reports that you have. Can you expand on that a little bit? Um, and if so, if that trend continues, is that one of the narratives that becomes so bullish for silver?
I think so. Yeah. And it's both monetary and also for a resource called nationalism.
So uh yeah, and u I think also it's going to be a big part of the u monetary system, if you want to call it, for for China, really. They're the ones leading the BRICS and they've been buying a lot of silver as well. I think in March, they bought a record amount of silver. And yeah, and I've in in India, even though they they they're asking people to stop buying gold and silver, they they did make silver uh from I think April 1, you can use it as uh collateral for for loans. So it's becoming much more important. And I think it could it could be the same thing for uh these countries and China. Um, I mean, you look back in historically, I think China, the the word for bank is silver. The word for money uh in many languages is silver. So why why not go back back to it? And it does have that unique dual identity of being an industrial as well as a monetary metal. And the industrial uses for silver continue to increase from electrification, weaponry, AI, data centers. Again, topics we've expanded uh and discussed at large on this channel.
On this show. Let's get back to some of these price forecasts as we wrap up here because it's fascinating to see some very dramatically bullish forecasts coming out of Wall Street when it comes to silver. Bank of America recently issued one of the most aggressive institutional silver calls that we've seen in decades. BOA is saying that silver could potentially trade anywhere between $135 and even $300 per ounce by the end of 2026 under what they say is an extreme upside scenario. And their thesis there is based on the possibility of a massive compression in the gold to silver ratio combined with a tightening physical market and gold potentially moving towards 5,000.
We've got Citygroup Mario also highly bullish. They're projecting silver could reach between $110 and $150 per ounce later this year. They're citing several physical shortages in key global trading hubs. Goldman Sachs says uh silver could average between roughly $85 and $100 per ounce largely driven by structural industrial demand tied to electrification, solar, AI infrastructure and the uh broader energy transition. JP Morgan sees silver remaining historically uh near the low to mid $80 range through the year end. Um, those are the bullish voices. Uh, what do you make of some of those forecasts? uh, you said you see silver hitting 100 by July. If that happens, um, where do you see silver by the end of 2026?
>> Yeah, I mean I agree with uh Bank of America. Uh, I think if we break 121, which was the high at the end of uh end of January, uh, it will go very quickly up to probably like 200. So maybe not 300 like uh Bank of America sees it, but why not 200? And I think uh in the last few months since the top in gold and silver, the uh euphoria and the froth has been taken out of the market and uh, yeah, people there's a wall of worry right now. I think there's a lot of worry. A lot of people uh, yeah, concerned that it's going to go lower and usually that's a good thing that that's a reverse indicator for for uh, for for you know, the sentiment being being being low. And I saw the other day as well uh Michelle that I think Bank of America bought a large big chunk of a silver mine as well. >> I don't know if you saw that. So yeah, >> I I I I did see that.
Um, so to be clear, you're seeing silver $100 by July and $200 by the end of 2026. That's your outlook for silver right now. >> Yeah. I mean, if we break uh $120, it could very easily go there. I I think it's possible. Yeah.
H >> How does that fit into the sort of stagflationary issues that we discussed at the top of the show? Slowing economic growth. Um, obviously rising interest rates uh could uh if if there if that happens, cutting rates uh could play into the silver idea. But how how does this rising silver price play into that bigger macro economic picture and the concerns that you had about stagflation?
>> Well, >> given the industrial aspect to silver. >> Yeah. Yeah. I I mean um back in the 70s uh you had stagflation and gold and silver did well. So that that's why I see it doing well. And I think uh the central banks and governments they don't want the economies they they hate recessions. We never have a recession for more than a few months. So I if the the stag part of stagflation gets worse uh they will make sure that uh things get back on track and uh I think that's why yeah silver will do well plus you were talking about the structural deficits that silver six years I think of deficits uh and there's not that many new uh like pure play silver mines coming for for production it takes takes years to uh develop uh explore and develop the mines. So yeah, um the setup is really good for silver and like you said the gold silver ratio still up until a couple of weeks ago it was coming off. We've come back up a little bit. I don't know if it's around 60 or so, but there's potential for it to go a lot lower. It was at 30 uh in 2011, but as you know, probably uh historically the last well 2,000 years, the average is more like uh in the teens than where we are.
>> And you said you were very bullish on miners as well at the top of the show. Uh, there has been some concern that margins are getting squeezed for miners as we're seeing higher energy costs. Uh, how do you calibrate those concerns?
>> Well, yeah, that that's true. Energy costs are going up, but if they go up 30 or 40%, but the miners uh their mar their profits go up 150 or 200%. Uh, yeah, it will make a little difference uh to their profits, but they're still making a lot of money. So that's that's how I see it. Do you have any particular miners that you are especially bullish on that you can share?
>> Well, I just have the the major ones uh like in in gold uh and silver and I I'm more weighted towards silver right now. Yeah. Companies like Aino in the silver sector, uh, Pan-American Silver, Newmont, just boring stuff. the the big ones.
All right, Mario, we are really out of time now. So, as we wrap, give me your point of highest conviction.
>> Oh, well, yeah, the point of highest conviction is uh knowing uh what I know about like uh inflation and uh the Austrian school and what Von Mises said that uh inflation is a deliberate policy. It's not something that comes out of the blue and uh governments and central banks are going to keep doing it until they can't. And uh, yeah, the the uh the best uh financial insurance for that are hard assets, especially gold and silver.
>> All right, Mario, thank you so much. Where can viewers find more of your work? And uh >> Yeah, on YouTube 64. And I would add as well, Michelle, that a lot of uh my videos are copied and my face shows up a lot of AI. So, make sure you check that you see my face that it's at Manco64 and I'm also on on X, >> right? >> U Monco 64. I'm fairly active on X.
>> You know what they say, Mario, imitation is the sincerest form of flattery. So, uh, but but I hear you. I hear you. A lot of, uh, impostor accounts, uh, that we have to deal with as well. But, uh, thank you again so much, Mario. Really appreciate your insight. Thank you again for joining us, Mario.
>> You're welcome.
>> And as always, thank you for watching. Thank you for spending your time with us. We know your time is valuable, and we certainly appreciate you choosing to spend it here with us. If you enjoy our content, find it informative, interesting, educational, even entertaining, or hopefully all of the above, please make sure to share it with friends and family and help us grow this community. And if you haven't already, please subscribe. Also, if you would like to learn more about building a precious metal strategy, you can reach out to info@marsfranklin.com. There is a team of specialized advisors and brokers that can guide you personally and if you mention my name they will give you an extra special deal. Also check out the website milesfranklin.com. As always leave us your comments. We do love hearing from you. Feel free to praise whine or just opine. For me, Michelle McCrory and the rest of the team, we'll see you next time. Until then, stay sovereign. This is the real story with Michelle McCori.