Transcription
We're in a debt-based collapse. Uh, so uh, I'm that guy who, you know, pretty formulaic. We've got to drop that template over everything and recognize that the funding mechanism for our sort of debt-fiat world uh is unraveling at the moment.
Hello everyone. Welcome to Wealthon. I'm Maggie Lake, and joining me today is Francis Hunt, founder of the market sniper.
Hi Francis, it's great to have you on with us, Maggie.
Delighted to be with you. Thank you for the invitation.
So we have had a lot of market volatility, a lot of narratives flying around. How would you describe what's happening right now in markets and in the US economy? What kind of mental model are you working off of?
Yeah, I'm pretty habitual with what I do. I start with saying, Maggie, that we're in a debt-based collapse. Uh, so I'm that guy, you know, pretty formulaic. We've got to drop that template over everything and recognize that the funding mechanism for our sort of debt-fiat world uh is unraveling at the moment. And interestingly enough, we we made a call in uh September of 2020, very close, wasn't too far off its high. Uh, and that's kind of a disappointment as well for me about the rest of market commentators because in essence, post the events of CV19, we had an immense amount of money creation, and we actually had a blowoff valuation in bonds and an extreme low dip in yield. So everyone should just remember that that relationship is inverse, and that is, in tech macrotechnical terms, uh um typical of end of trend, and we we appeared to be—I don't know a single other soul that at the tail end of 2020 said the 40-year bond market bull is over—and the repercussions of that is probably the biggest call I've ever made in my life, and we have called single-digit oil about 18 months before in the early parts of 2019. 19, that was also the precursory part of those events. Uh, and actually the the the loss of the foundation of the fiat financial system. Everything is built on that. Um, that is the beginning of the end. This is reset. And we also used to use an analogy: 40 years escalator, because it was a bull market that built up since the 1980s, which was Paul Volcker who devalued all that debt, bringing the rates up during the stagflationary era. You'll uh you you were a lot younger, lady, uh I'm sure if you're around, uh and so was I, um but we are we are at that point now again where we have way too much debt and there's no funding. Now a lot of people have realized that now. We had Stanley Druckenmiller, Paul Tudor Jones come on tail end of 24, admit that they now short, so they would have probably been putting that trade on during 2024, but I'm disappointed by the number of macrotechnical analysts that aren't looking at the big charts that didn't see that blowoff valuation, and it's the last time we've ever going to get that opportunity where so much money can be shoveled into the debt market that demand was there to allow uh for that amount of proliferation to take place. You're not going to have that again. Uh, in short, the the dice has turned now, uh the waitings in that dice has turned, and it's a very hard to get a bit in the debt markets, and now everybody is looking at it as uh financial repression, real-term devaluation on an extended term. So, in other words, it's a bad bad hold for an extended period, and now you've had Jamie Diamond come out and say that. So it's gone from a very brave and innovative call in 2020 to still being an outlier in 21 and 22. Not much spoken in 23. 24, we started to get some big voices drop, and now everybody in Twitter is talking about the long-term rates going up. Um, and uh that that framing is now the dawning realization of the normal curve where we were a bit early, but the big meat of the money and the institutions. We had the Philippines today saying they don't want to buy treasuries anymore. That means they'll probably be joining China and being a massive gold accumulator. This this is a the huge problem that America faces.
And the other part to this, and I'm going long form here, so I'll shut up after this, is not only is it the US now, but we've we and we dealt with this. We were actually on our own YouTube channel highlighting a year and a half ago that the Japanese rates that were historically barely above zero had setups that were pointing to higher rates across the long end range. And we've covered all the European nations, although admittedly off a lower base, all with further higher um targets technically to come in the debt market. So what we're actually seeing is America started the fire in the debt market, and we've got all these silos of nation states, many most of them western nations, but the horizontal across them all is they all have a debt funding market basis, and it's going to burn right through, and of course, Japan is a doubly extra worry because of its role as a cheap funding nation to the US. So that's quite a lot to give back to you. So I'll let you come back on that.
Yeah.
No. And it's so helpful, and and we're going to sort of unpack and tease out what some of that means, but I just want to sort of underscore this. You know, we're we're talking about—I heard you say collapse. Um, the end. We've reached the end. This is really strong language. What does that mean in practical terms? If I'm listening to this because, you know, there's a lot of accusations that there's just a lot of doom porn out there, right? So, what does what does it mean? What does collapse mean? What does that look like?
Uh, you're 100% right. It's very tempting for people to want to be the, you know, the headline grabber and be absolute blackpill uh doomer. And I I don't uh put out this degree of drama on account of attention-seeking. I think uh when you've had this level, we've got 45 years now under the belt, um we are we are done in the existing system. I truly feel it, fats, and it is foundational to fiat. So you know if we have a contagion in the bond markets, um it affects everything. The stock market doesn't go up. You know, there's there's equities that have borrowed to pay dividends. There's real estate collapses. There's bank-base collapses. This is not an environment of, oh, but everything else will be fine. In fact, the stock market will go up because people will be getting out of debt. This is a foundational aspect, as I keep saying, and that means real real uh contagion across the board. Uh, and it's and it's going to be potentially very very problematic. I I'm actually going to show you a diagram I've done. I'm not going to say it's a masterpiece. Uh, I'm some way off of Picasso at the moment myself, but I do want to show this particular diagram uh that I've been showing a number of people, and I call it a sort of convexity chart. And it it it actually ties in very nicely with Ernest Hemingway's famous quote: How did you go bankrupt? It's slowly at first, and then all of a sudden very fast. Uh, and this is my convexity chart of let's just talk about debt valuation and its credibility as a reserve asset where you were at about near on 100% after Paul Volcker had started uh finished actually, my apologies, his rates hiking, and you're at about there around about then, slowly we built up, we started to exploit the US started to exploit the fact that they were um the hegemon, and they could continue. We're good for it. We're good for it. You don't even have to worry too much. So the credibility started leaking. You had events like um uh you know, the Long-Term Capital, for example, a little bit of a wobble, you had further events, and then suddenly you start to get a point where the convexity starts to accelerate. Now I I assess that we're somewhere over here there with the emoticon. As I say, it's not an overly serious mathematical diagram. This is just a a discussion concept. Uh, and the problem you have here is it's a bit like slipping down a mountain on wet slate. If you couldn't stop the process early on, it only gets more impossible. So you as we get tend towards a near vertical drop, um you're hitting the ground. So a I think it's not reversible. You don't get back. This plays out. It's kind of like the snowball heading down the mountain. It's already halfway down the mountain. Um, it gains scale and breadth, and it gains momentum. It's hitting the village. You're not, whoa, we can do something and stop it and just melt it right there, and it just turns into a nothing burger. I'm afraid certain things then once they've passed a certain point, they have to play out, and the village gets hit. You remove the people from the village, the houses are gone. Um, that's kind of um the the analogy I'm giving you. And the other aspect about this is there's going to be a quickening that most people don't realize. So they've said, "Yes, it's there's been inflation. Things have got more expensive. There's suddenly going to be a period with debt devaluation." So here's how it went: A small step back. The TLT, which we shorted back in the tail end of 2020, um went down 50% over two and a half years. During that period, the dollar was reasonably strong. Then we've had a period of real dollar weakness and the debt just staying where it is because it started to become an open secret: The debt markets collapsing. So now it's paused. Everyone gets short. Now you have to shake them out of that trade. The dollar takes the loss. And that's a little bit of what we've had. The dollar has come down quite extensively, as you say. So initially, it's left foot, right foot, left foot, right foot in the devaluation process. The problem is we're heading to a gallop, and eventually it's almost like a kangaroo step. It's both feet simultaneously. So when we get a disorderly debt descent, you're going to have at the same time the buying power of fiat dropping. I'd like to give a small example of that uh to you. And I'll use something non-American because it's tempting for people to say, "Well, I'm just beating up on the US. I'm not an American, and I'm I'm just mean." No, I love the American people. I've always had a great time there. I've always been amazing to me. I wish this wasn't happening, but this is also where we are, and I need to say what I need to say. So, if I take you to uh a tweet, I think let me just locate it for a quick.
And while you do that, I'm going to say that I'm glad you're bringing this up and keep looking for that. I'm glad you're bringing this up because I think as you hear all the narratives, and this is why it's important to cut through and really focus on what's going on. There is this sense of, well, you had this coming, US. It's, you know, there's a comeuppance that you you deserve. Um, a lot of people are are angry about some of the rhetoric coming from the administration. They feel like they've been insulted, and this is good for you. This is happening, and it does cause you to wonder whether that sort of bias there. So, I'm glad you're addressing this.
So, show me show me the tweet.
There is some media, particularly within America, that's still very—I don't want to say American maximalist in that other way. Don't worry. China gets patriotic push back. Yeah. China gets more wrecked than us in all of this. Don't worry. You know, we we're still in the pound seat. And I really want to say be careful with that position if it's one you have. Um, because you you can be in a bit of a national echo. Uh, and I mean I was a South African during apartheid. I I know how just having, you know, a local media bouncing in your head can skew your biases uh very very easily and very quickly. So I want to warn Americans about that. Uh, but I'm also warning the world about debt category. So it's not like everyone else gets off scot-free. The debt market is particularly in the western world, and China is very indebted, but there's a little bit about China that makes it tiny bit more unique, but let's get on with that article I was warning you about what's happening in Japan, so this is, you know, agnostic—no one's here is—Japanese rice has gone up 100% over the past year, the biggest jump in data going back to wait for the year, special year 1971. Now I think you'll know what our economic environment was associated with that and what Nixon did in 1971 after America literally spent more on munitions to the with the military-industrial complex than the entire World War II during the 60s uh with Agent Orange and, you know, um flamethrowers and bombing jungles etc into a cinder because it was far away someplace we didn't know. We didn't feel it like we felt World War II. It was epic in scale, far larger. So we the Japanese are finding their rice going up twice as much, and they're facing a 3.5% inflation. And I'll always say official stats understate generally in my view. It's not in the government's interest to be on the high side. Um, and this is part and parcel of what's really happening is fiat devaluation and debt devaluation simultaneously. We're seeing the long end of the Japanese debt getting higher and higher and higher at 3.5s on some durations, 30s and 40s are getting very very high. No longer the zero cheap funding place certainly on the long-term side that it once was. And that could have a carry trade multiplier effect that does some real damage also to how people have speculated in markets that is almost unquantifiable. So what's happened here is in a short time, suddenly your rice is double. Now going back to my diagram uh that I was illustrating, it suddenly creeps up on you in a very short time that a lot of things have got a whole bunch more expensive. This is the acceleration period that I'm referencing in my uh cheeky diagram there with unhappy face there. This suddenly starts to happen in much shorter time. That's the and suddenly very fast bit of going bankrupt. And the faster the debt devalues, the more likely the fiat is devaluing simultaneously with it. Now, the reason it's less noticeable nowadays is because we have a synchronized leper colony of uh nations, particularly western nations, but most nations that have all pursued a proliferation overspend uh debt. There's no nation of sound money. Some might try make a case for Switzerland and Singapore, and then Latin America maybe Uruguay, but in essence, debt has been proliferated, and governments have overspent, and that is inflationary, and that has been the case for multi-decade, and the foundation the conveyor belt that has allowed that has now broken the bond market. So that's why I say this time is different. That's why and that's my justifications for saying why this is so much more extreme, not for headlines but just for how it is um that we're looking at, and I position you you know you're almost 2 minutes to midnight during this acceleration phase, and that's the the saying that nothing happens for decades or little happens in decades and decades happen in weeks, and I'm afraid to say I think we're in that decades happening in weeks moment, and the the other key point before I hand back to you, Maggie, here as well because I'm going long form on you is that the interesting part is the reserve assets that are not part of the fiat debt pairing will appear to do the exact opposite of this chart. So if we take gold, a sound value, and I'll just use the orange for obvious reasons, its chart in terms of in a simplistic sense of how it will look will start to look exactly like that, almost the mirror opposite, right, and the important part of that is people will get shaken out. So I heard some interesting headlines: Europe says the financial markets are unstable because of an uh because of the gold market. Um, I think the British market or the BBC has said gold's a bubble, and as I've already highlighted, we're probably only somewhere here in the gold movement as we are somewhere equivalent in the debt sliding to the downside movement. So it's going to get a lot worse on the debt-fiat side, and that is going to reflect in the parabola that I'm expecting out of gold uh as as a reserve asset and also the new system, which is going to quite clearly be CBDC stroke crypto-based, for which we're sitting with Bitcoin at about 2.2 by market cap. Let's allow for all the other tokens at 1.8 trillion. You're at around 4 trillion on the crypto market caps. Now, a lot of nonsense in there. We know about that as well. Some of it seems to be an interesting funding mechanisms for politicians. I don't know if you want to go there. But nonetheless, the key ones that will be part of CBD systems are going to have to expand to accommodate what's a 300 400—your guess is as good as mine, Maggie—trillion debt system that's actually collapsing. So I used to use the analogy: Jupiter has to collapse, and the beach ball in the corner of your room has to expand for the new assets uh to be transferred into the new system. So there's an old donkey that's literally being ridden into the ground, and the new tonto silver white pony is jogging alongside waiting for us to cross over. So those are the analogies I'd use for where we are at and what you should expect: a quickening in the decay of the old and the acceleration of real reserve assets plus the expansion of the new system.
Okay. So, um, when you're talking about CD, central bank digital currencies is the acronym you're you're using to refer to part of what may be the new system. So, let's let's uh kind of again tease out a couple chapters of this uh the quickening here. Um, are give me a time frame on that. We're two minutes to midnight, but in in market terms, are we talking about the next couple of months? Do you think we're going to see a spike in things like food prices in in not just Japan, but in Germany, in the UK, in America? US. Yeah. Is that facing us? Do you think we could see that sort of market response in the next couple of months?
Uh, I I do think you're probably already seeing it in slight, but you're going to see it in a far more aggressive manner over the course of the next months and during this year. And it's probably going to continue to accelerate that it'll be a day-to-day talking point even for people not in finance. You know, the taxi driver to um the little old lady going to the store. In other words, yeah, it's it's going to be of natural consequence. However, as in my diagram, I showed the debt going to zero. I don't feel that they get to allow everything to go down there because the system breaks uh infrail long before we actually declare debt valuations as being next to zero or near zero. So the the way we built so much pain on it, there's going to be a circuit breaker where political intervention will come in and say, "Whoa, we got to do this or that's got to stop and hold on." And there'll probably be some smoke-and-mirrors geopolitical events because it's a great way, you know, they never let a good opportunity go to waste in terms of other things in terms of how they want to set themselves up for the way forward. So, this is going to be a very tumultuous period. FX volatility will be vast. Um, social uh will be vast. So, you're going to have a lot of people on breadline, unfortunately. And there's going to be a polarizing event coming out of this in terms of how people—those that are prepared uh in in a true form and those that are caught blindsided by this, which is typically what I'd say the less financially educated. So it's going to be particularly hard on the working classes, middle classes. I feel the western governments are have going to have to go into scavenge mode, which is where they reduce services and go into maximal extraction of tax. Uh, so you've already had unrealized capital gains muted and various other things. So it's quite likely uh to be a very unpleasant uh period uh from a fiscal point of view. The the budget deficits are always going to be under underguessed, and they're going to come in over. Um, the tax receipts are going to continue to disappoint.
What you're describing is is a global depression.
Yes.
Yes, it is. And and that's there's a lot of social unrest that goes with it. And again, I hesitate to say that—I'm not trying to be blackpill guy. The contagion effect of the synchronized nations across all the nations in this effect and the fact that the fire burns from the US across debt markets across
The whole because everybody is now looking with a more jaundiced eye at this asset class as a whole, and the inflation and everything that's going with it. It's going to be very disruptive, unfortunately. Let that sink in for a minute, because that's a very worrying picture that you paint.
Why? As you say, this has been brewing, and we've heard this warning for years. Uh, everyone could see this coming in a way, and even if I think back to '08, the great financial crisis, we know that the wheels were coming off the system. We know that there was extreme strain. Liquidity was drying up. Uh, bankruptcies were happening. It was unraveling, and out of that came unexpected policy moves. And you could say it's kicking the can down the road. But, but is there something that is coming that we don't expect? Like, why now? Why will the glo- why would a global depression happen now? Why, you know, can policymakers not come up with some innovative, even if you think it's BS, quantitative easing, call it whatever, financial mechanism to sort of at least stop or slow this? Why have to be a total—I almost feel I know the question and want to help you verbalize because—and I'm asking what's on people's mind, right? These are what your critics will say, um, or or the people on the other side of this argument would say.
Yeah. So let's go from 1987, 99, 2008, and 2020, shall we? Just a quick short overview. So 87, Greenspan came in, and he dropped rates, and we rebounded really quickly. End of drama. Anyone who said it was the end of the world was, in fact, a drama queen. It wasn't. And we were to have the best stock market period for an extended period. 99—com—airplanes were supposed to fall out the sky. By the way, I was not one of those people who said that. In case you just think I have this tendency, uh, I was not. It was nonsense. I wasn't concerned. I would have flown uh on New Year's if I needed to. Um, again, liquidity uh in rate drops. The US had a small recession that did for George W. Bush. "Read my lips," you might remember that, um, in the '01-'02, and that brought in the Clinton era. You were at the peak demographics, I want to point out, which is why Clinton got a technically a surplus. Um, that is when the average boomer demographic was 47 years old, which is the highest tax contribution to the take in terms of your work, how much you're doing, and how proficient and how uh senior you were. That's the biggest take, and that was peak America, if you'll forgive me for saying that in terms of income. Um, it's not a moral statement, so I don't want to offend anybody. I know the US audience really well.
Um, then uh we had 2008. Now, 2008 was far larger. Now, I'll pass on long-term capital and some of the other stuff that happened in between. 2008 was far more larger and far more systemic, and they had to do QE1. We never came out of it. That was a true, I think, a depression. It'll be recorded in enough time looking back. They never want to tell you it's a depression in in the moment. They kind of retrospectively engineer that. It's called the Great Recession, but it was a pretty much bank failure, two years of negative growth. Typically with most nations, it was a depression. That's the that's the official actual um definition by the way for a depression with financial failure. Now, the financial failure was not allowed to happen. And we hadn't used quantitative easing. Quantitative easing is a concept that was in almost named by Professor Vera who started it in Japan with the great boom of the Japanese which ended in the 80s. So we now did that for the first time. We did it once. We didn't do it sufficiently. We did a few hundred billion. They came back, did it a second, a third, and we really limped out of that. You'll probably recall, and many of those of our viewers that were watching it, 10 wasn't a great year. 11 wasn't a great year. 12 was like, geez, does this end? Yeah, we really really went slowly through that. And then we did Twist and eventually round about '17 and '16. During that time, China was having an absolute boom and did their version of property. So they were desynchronized. They were creating a lot of heat in the economy, and Australia didn't really have a property correction meaningfully because of that relationship and proximity to China. So that's what was happened. Uh, then we did quantitative easing, it took a long time before we re—uh, we we got to any sense of normality.
2020 was full shutdown. They went straight to trillions. There's actually was a hidden bank loans to the tune of 21 plus trillion given not only to American banks but you uh EU banks as well. By the way, that is one of the most hidden pieces of information that no one talks about. Actually, it was a bigger bank bailout in some ways in terms of loans granted than 2008 and '09, which was accepted as a bailout of the banking system. But also what they did do this time is they gave stimulus to the end consumer because you needed the heat to come back into the economy. So small businesses and individuals got at least one trillion of the seven. Lots of funny quangos got money with various agendas, but we park that up for now. But that did at least lead to a consumer rebound, and it's one of the reasons—and I take it as their lesson learned from '08-'09. So you need the end guy also to feel a little bit better and also to be spending, and they did that, and that's why you had a bigger runup, but that then led to the blowoff event.
So there will be a lot of people in the comments to this video will say Francis is wrong. They'll do what they always do—printer go or quantitative easing—all of these responses. So to those people who are thinking that, here's the key difference. The thing that has changed is that when you do print a go, you actually are issuing debt, and there is a demand for it. That means everything else is not demanded. You created so much fear that you run into the bond market to be safe. Equities crashed. Bitcoin fell from 14,000 at one point to 4,000. Uh, all of these things, there was mad panic. It was shock and awe. A bit like the Rumsfeld uh Middle East. It was shock and awe for financial markets, and the only beneficiary was the bond market. That led to the final technical blowoff top, and since then people don't trust uh the bond market, and they've also become more circumspect about America.
So this recent tariff tantrum initially came across a bit isolationist. He was attacking Europe, China, and everybody. And you had that key moment, and this is such an important point, and we actually warned this moment would happen as well. So in 2022, in September, Liz Truss and Kwasi Kwarteng in the UK were thrown under the bus by the Bank of England largely for not matching the rates that America had gone up. The pound had a crisis and also doing a budget that was stimulus orientated, not too different from this big beautiful package right now. So, I'm showing you parallels here for a reason. What ended up happening is they were thrown under the bus because the bond market went into a collapse, and at the same time their rates shot up. When your bond collapses, rates shot up. But instead of the pound getting more valuable, it crashed too. That's called the broken seesaw. And I do diagrams for this for people who don't understand bond markets. And I said that right there is a microcosm that the US is going to see. It will first just be a flash behind the curtain, but it will come back for far longer, far longer, and then it will become the norm, and that will be the contagion of the collapse.
So when trust—when Trump had his tariff tantrum and we were at the peak, what actually happened is there was a withdrawal of money out of America, who has been the most attractive global investment environment. Mag 7, everything of tech worth having. The SNB, the Swiss National Bank, is a virtually a hedge fund stuffed with American tech uh stocks in it. What happened? Withdrawal out of treasuries, which sold the treasuries off, pushed the rates up and selling of the dollars, repatriating the money, leaving broken seesaw, rates up, dollar down. Shock, horror. It can happen to us too, the hegemon. But he quickly walked back from that, and then he said, "I wasn't afraid about the bond market." I suspect somebody informed him that he should post something about not being afraid of the market because they were very afraid about the bond market. It's never official until it's been officially denied, as I like to say. But anyway, that was a real real jab with a knitting needle for America. You can get exactly what happened to the UK. We predicted it. We have YouTube showing it, and it's happened once, but it was quickly walked back. Now the problem that's happened is even though you walked it back, people—it's a bit like I almost—we're married, and I and I almost thought of kissing another lady in front of you, and then I just pulled back. You don't look at me, your husband, anymore in that same light. Uh, and I'm afraid for America that my almost cheat uh is now shown you a little bit of how I'm thinking. I'm not a loyal husband to you. And that is how the world will now be looking at America in terms of they're going to be far more pragmatic and far less uh patriotic maximalists. Uh, and that's a real real problem because actually the debt contagion started in America because they were the issuer for the world in some senses, but certainly for America during CV19 they were the biggest proliferator of currency, and that is why we have lower rates in Europe, but they're going to go higher, and we actually have lower rates in China, and some people incorrectly—and these are American maximalists that I follow—say China's in a depression because they had 1.6%—6% rates. No, no, they are less expected to go into debt default than America at 5%. In other words, the pricing for failure, we are now no longer on a return on of uh on uh capital. We are on a return of capital. This is a preservational story. So the rates are about risk now, much less than return. Uh, the focus has pivoted, and I've said a lot there. So let me just hand back to you too on back.
Yeah. So um, and I'm going to put China off to the side because it is so complex, and there are certainly people who make compelling arguments about a lot of the risk is off-balance sheet there. There's no transparency, and so you know, be careful. You know, we have to be careful. That's a little bit of a unique, as you said, a unique situation. But let's put that off to the side for a second. So uh we are—no nation is sound. The bond market's broken. Global depression is likely. What does that mean for equities because a lot of people are—that is their big exposure, especially American investors, but but actually around the world we know that everyone has been overweight US equities. What is this—how does this translate into the equity market? The best is to—I'm going to include housing and stocks because Americans care about their property too. It's probably second after stocks, and if you're in the UK it's maybe the other way around, uh first the property and then the stocks. Uh, but it's going to apply to everybody. So when you're in a debt-based collapse, what actually happens is the origination of new debt largely stops. Almost zero. I mean—by the way, on that fact, this is not just me spitballing. 41% of um new mortgage applications are being rebutted in the US, and 36% on auto. So what's actually happening is finance being refused. Well, why is finance being refused? Because when you originate a debt, in other words, you give someone a loan, but you now have that as your asset. If that asset is not so unsellable—securitization, moving the risk somewhere else, someone else buys it and receives the the payments—um, then you don't want to hold it yourself, or the risk's all on you. And what's happening is, as I've said, it's no longer about return, it's about risk. People are feeling risk averse at the moment, and they just say, "I don't want the credit risk. I don't want the credit risk." In other words, cars can drop in value. They're subject as a leveraged um as a leverage purchase in many cases because of car payments. Um, they could drop in value by 40%. If if everyone had their cars repoed, how would you secure against that? There's not enough people to buy the secondhand car market. It's going to sell very very cheaply. And the same goes for property. If you're looking at seven or eight percent now for a fixed deal on a US property, you're not spending what you were spending when it was 4% or four and a half or five. Um, so the point of affordability, you're at maximum affordability ever in terms of property, even though you're not technically at the highs of '07 in mindset. The pricing is higher, the payment cost is much, much higher. It's actually unaffordable. And the average age of home purchases now 57, where previously it was 31 a decade and a half ago. So this is telling you established people only are getting into the property ladder. It's too expensive. Um, so it's—there's some good news to just so that I don't say do—if you're if you know Gen X or something Zed and you've been waiting for property market prices to come down, I think you're going to get that. But the unfortunate part is if you have to leverage to get into that property, it's going to be very little available. It's going to have very high margins, and they're going to price for risk like they've never priced before. That means it's going to be very expensive monthly for you to do, and you're going to ideally need larger deposits as well to get it. So, we're going to go back to a far tighter underwriting environment when it eventually does come back. But initially there's going to be that shock and horror, you know, when markets gap that there's just very little financing at all available. Everyone is in a mad panic, and even good businesses turned away because there's no appetite to originate new debt. So you're going to have a housing market crash. What that does is it makes all banks lending books come under mark to market uh probably bankruptcy because you're sitting with a massive mortgage portfolio, and the asset that you lent 500,000 to to a veteran who got a zero down deal because you know he worked for the—thank you for your service—and you know he's a he's a he's a war hero. um, suddenly is now selling for 180,000 uh and he can't make payments anymore or he's or his or his uh veteran payments are being cut because we're in scavenge mode, and all this is going to hurt all of us. We're all in this together. You know, we get this sort of solidarity but suffrage uh type political messages, and and unfortunately uh there's a lot of people that come out with worse living standards out of this process.
So you then ask me now how's the stock market doing in that environment? Well, I say well you effectively got bankrupt banks that if mark would be deemed bust uh who don't want to lend, and you have many—I can't remember this how far back, but at one point there was 15% of the S&P 500 that actually borrowed to pay dividends. So you've got corporates with debt that have loaded up to debt. There was a famous comparison between Coca-Cola in the last 15 years, you know, today versus 15 years ago. It's worth two and a half times more. It's got significantly more debt. It's not got any more uh gross sales, and its profitability has gone down, but its market cap is two and a half times higher. So, what you've actually got is financial leveraging while debt was cheap. Uh, loading up on debt in the balance sheet. Uh, but it was largely investment banker, you know, you can do it—don't pay dividends, rather put it on a loan, buy back shares, etc., etc. Push market cap up at the expense of real long-term good sound money principles. So, there's a lot of rerating that's going to happen. And if you look at the overall value, I can as a non-American, just look at market caps. American stock market caps is like the Burj Al Arab in the desert, you know, it stands like this, and everybody else is little Pippy. Uh, and we say, "Hold on a minute. I fear that that's going to be changing." And there's a big appetite for the Middle East to get into tech and various other things. You've got Elon going—taking Neuralink to the Saudi. Uh, you've got deals with Trump going on with the Saudis. They don't just want to be the guys that pull the tar out the the desert. Um, they want to be something else. They've already doing sports and World Cups and paying the most for footballers. They're going to be entertainment. They're going to do a lot of things. And I fear that this is the west moving to the east in terms of wealth and business. And the future unicorns may not be in a Californian garage. You know, they could be in a Middle Eastern uh garage or maybe Singaporean or if they Chinese list in Singapore, which would be a more acceptable face uh of the Asian side. So that's what I see. Unfortunately, I'm seeing a a reshaping of the entire capital formation space as well and future technology. So, the dominance I think we've had—US as dominant technologists—and I I fear that's the last ace in the hand that is being led away as well. So, that will have a large amount of effect. I mean, if, for example, politically Trump has threatened Apple today, um we're speaking on Friday, of course. Um, this will go out a few days later, but you know, turning to Tim Cook, well, Tim Cook might say maybe we need to be somewhere else at as head office level. You've already got Intel that identifies more as an Israeli company than an American company. So there's quite a bit happening that could see that you know—and and I and I know this comes as a shock to many people—but I was in South Africa, and we went through a similar process—you know, all the mines got dual listing in London, all the CEOs moved to London, and then the then the London listing became the primary listing, and that's that's how an asset that digs the gold out in your country actually just ceases to become a branch office, and the extraction—the money, the dividends, the the salaries—now become a million pounds instead of a million rands. Uh, more expensive homes are being bought by uh the CEOs. And that was the Oppenheimers. That was the goal. That was everything being taken uh and listed to see out the uncertainty of the change in the political guard once Mandela was released. And it's very hard for people to visualize this. No South African I remember saying it's going to change. It's got to change what's going on in here. Everybody was—no, no, no, no, no—hypernormalization in that environment. And that's why it's tough for an American to hear someone like me saying pieces are going to get moved around on the board, and some of what you held dear may not be entirely in your back garden anymore.
Yeah. Uh, that's a fascinating concept, fascinating point. Um, it's funny as we enter a period that supposedly regionalization and anti-globalization, the idea that these companies would consider, you know, consider themselves moving around the global economy to benefit their shareholders is interesting. I think there's—again, I want to I want to keep this conversation moving forward, but I'm just going to flag—I think there are some people who will have comments about um the depth of capital markets—liquidity—rule of law. I mean, the the capitalist backdrop for the UK and for the US allowed for some of what you just described. I think there are people who wonder if you can just pick it up and replicate it in places that have very different political leadership. But that's a super interesting conversation, and I think one people should have their minds open to. Uh, so we've seen the erosion of that though, right? This is why people in the wing very prepared to play or certainly talk again where they've changed.
Yeah. You know, Saudi was a place where teenage pregnant women got buried up to their heads and stoned. Uh, and I also seem to remember that a journalist came to an unsticky end. So I I'm very conscious of um what you say there. But there's a lot of money, and there's a lot of people that saying, "Hey, if you just come here for business, we're a low tax environment—9%. That's friendly for capital." Is US going to remain a
Low tax environment if they go into a debt scavenge mode as a result of having to cut services? You've got a demographic like this. You have 14, uh, citizens holding up every pessent, uh, uh, pension, and now you're going to have three. How are the millennials going to want that? They can also go to Dubai, and they can also get tax-free salaries and pay 9% corporate tax. Uh, you this is the great concern we have. We've actually got communist countries that are actually mocking at a business level greater capitalism than capitalist countries that have started to have Marxist ideology.
So we're getting this thesis, this anti-thesis, and the synthesis is this these peculiar hybrids of a kind of corpora corporatization. And I'm observing this, and you're absolutely right to, you know, wave a flag on that. I will get push back on that, but it's that there's a lot more going on in in the movement of money, and it starts with the gold which I feel has moved from west to east as well. Yeah, and and and absolutely this is why this this that that could be a very interesting sort of you we'll come back and visit that Francis, because I think it's a really fascinating point. I'd also say what happened to Jack Ma is another everybody thought that about China too moving to some sort of state capitalist type thing, and then of course there was a but again there may be backfills, but the directionally, you know, it's something to keep our eye on. So, um, we we've covered the sort of economic implications of this, so let's dive into a little bit of the investment implications, and I and for all of the the very um It's not even fair to say negative, right? This is a very dark picture that you're painting about the potential dislocations that can happen in the market.
Is there opportunity if this is a collapse? Is there a reset that we can think about? And I'm not just looking to say like give me an optimistic view. I'm not looking at that. But how as sort of investors and individuals can we think about preparing for this? How are what is the what are the investment implications here? So this is a reserve asset crisis with debt no longer being seen, uh, and no longer performing like a suitable reserve asset. So positioning in something that is a reserve asset for your primary balance sheet is essential. And the best aspect of that is gold. And you've already begun being rewarded quite well for that. And I expect that actually that too many people here's a big warning. You're going to get top callers on gold all the way up all the way up to a number you probably never even dared imagine, although it's not the same dollar. It's not really about gold. So this is a hyper devaluation period where gold just holds its own. But the degree of devaluation of all the malfeasants built up over 45 years is all being manifested in a very short time. So the temptation is going to be for a lot of people to get out and to clinch profits. Nobody ever got went to the poor house taking profits. No, this is a sit. This is a sit still, uh, and wait because we haven't really begun the rerating, the full rerating. The this the curtains feel a bit pulled back, and some people are put seeing that things aren't grand, but we haven't had the the real, uh, rerating. We haven't had the capitulation.
So, reserve asset positioning hard physical assets. Property is a hard asset, but it's a financially leveraged one. So, in terms of valuations, if it were me and I had 15 Airbnbs with just 10% down, I would have be I would have nine of them. I would live in one and I'd have nine of them on the market. That's not financial advice. I'm just saying the the the the rating the downside rating on property is going to be quite, uh, poor. And even if they manage some softer version of this, but it took a bit longer, um, you're going to have negative real growth in that asset. Uh, but I think unfortunately this has to get disorderly. I use my analogy of the snowball halfway down the mountain and already, you know, a few kilot tons big with rocks and everything in it. You just don't stop it at that point. But let's say I'm too pessimistic. Um, you know, you will you will have stagnation for a decade and a half, uh, and underperformance. So overweight in the reserve asset. I sometimes like to give the analogy, um, Maggie, your house is already on fire, and I'm the online insurer, and I'm still taking insurance on your property in spite of that. Uh, you can lay off that risk. Do you lay off 5% of the value of your house, you know, 50%, 100%, or maybe 250% and get a better house. So, that's how I determine my gold positioning. Uh, I would say I'm disproportionately, this is not portfolio theory time. There's not a hundred and one different ways to make money. This is a this is a crisis where being insured against the one inevitable tsunami is the only thing you want a boat. Every nothing else matters if you don't have the boat. Noah, you know, and the ark, you know, call all the the metaphors you like. So, so precious metals is it, and by the way, they will continue to overperform against mines whilst there's an inflationary and loss of value, money value as well. So it's the reason mining has underperformed is costs have also been going up, and actually miners have battled and actually diluted ounces per share as well to a degree, but that's also the cost we need to see that sudden forward pricing in miners that's when you get the acceleration period too many people are moving into silver too soon in my opinion massive bull silver, but it comes it comes much later, and this is such a bigger cycle you've got to sit in place not be too early. They're stepping stones, and you got to jump on them. Once you jump off it, it sinks, and you got to keep moving. But if you jump too soon, the other one's not fully ready, and you're jumping into the water, and you're going halfway down into it. So, I actually see the gold silver ratio getting more distorted before it goes down. It's a very controversial opinion. 99% of people are all going, "We're at 100, we traded 100, you should all be pivoting your gold into silver." And I'm going no reserve asset-based crisis. It still hasn't played out. Be in the reserve asset when the bond market that was your reserve asset that Buffett said paid interest. By the way, when you have negative interest like you have on the short end of the Swiss, not paying interest is a feature in gold sense. Um, but you know this is a reserve asset crisis. Be in a the primary reserve asset. The reserve asset of kings is gold. The utilitarian money of the people is silver, and that comes later and of course the industrial use. But what do you think is going to happen in industrial activity? How many people are going to be solar paneling their house in a crisis where the house has lost 40 50%? That's not going to be happening. People are going to be losing their jobs. That's what's going to be happening. There's going to be right sizing. There's going to be masses of amounts of unemployment claims, and the government finances is going to get worse, not better as the crisis goes deeper in. So you first go a lot worse before it goes better. Reserve assets. So too many people are looking past gold. What's the next? It's already moved too much. It's too expensive. You don't know how much malfeasants, fraud, and overindedness has to be unwound. This will look cheap in a year's time. Uh, to me, so I've made a specific statement, and I only gave you really gold there, but I'm saying I said a lot with that. Hold and keep stacking. And in terms of how I buy now, I'd buy 75% gold and only 25% platinum and, uh, silver as alternatives. Uh, I already have both. Uh, but I would continue to play the primary card. Stay with the trend winner for now. We pivot when the multiple reverses very clearly on a big time frame. And you'll also know it. There'll be some sign of we just there's some business activity. They've got to have silver, and there's just none of it left around, and then it starts to over accelerate for weeks on end versus silver. We'll go back down through the 100. We'll come right down to 75. Then I only buy silver. Uh, and I'll also point to platinum in there which is looking really well. So owning the metals first and then those miners will start to move too once you start to get the outperformance in silver. That's probably also going to be a key. We've already had great runs on one or two miners. The great concern I have is if you don't have the share certificates, we're talking about an environment of immense counterparty risk failure, and that's where you need to have that separate discussion about the great taking. Without share certificates, I assume you don't have it. So, if you're not easily getting share certificates, it's much better to just be cramped up in the reserve asset, uh, gold and some silver. That's my take. Yeah, Francis.
So, uh, there are some that say in a financial, uh, you know, depression market collapsing debt blow up everything sells off everybody has to raise c money money and they'll sell even gold and and so it's vulnerable to that do you see that is that in your mind just a buying opportunity it will be a buying opportunity, and the reason I've mentioned gold more than I've mentioned bitcoin is during the carry trade, uh, fear moment of August 24 which I think we will revisit. I think that's just a tremor, but, uh, gold went down 4.9%. And then went off to make new highs. Bitcoin fell 30%. Um, during that period, it's at an all-time high as well, but that's a much harder hold, uh, into that environment. And that wasn't the worst crisis we've ever had. It's it was probably the feature fear moment of that year, but it wasn't a classic year for drama, if you want to call it that. So I would say the low beta to the downside on gold is actually a very useful feature. Does mean you don't make quite what Bitcoin will do. Of course, if you're already 22 trillion market cap, you're not going to do something that something that's 2.2 trillion market cap could do. The 10x is more likely on Bitcoin than gold or they both do it and Bitcoin does a 30x, you know, obviously a smaller market cap and if it's going to play that role, but I don't want to be all-in digital. You want to be able to hold it. Uh, and I will even go so far as to say I have concerns for us gold bugs because they will probably be targeted for unrealized capital gains as will crypto which is digital and is far easier to track by the way. Um, so even though this is a fiat-based crisis and this doesn't really mean gains, we've just held value, I do feel scavenged governments are going to be coming for us, uh, for a take on their own malfeasance and hyper devaluation of currency. So people need to protect against government. Your biggest enemy in this scenario is government because they want to retain their size. They want to retain their existence, and they're going to be cutting services immensely, and they are going to be seeking out extra funding because the funding vehicle of issuing greater levels of debt will be broken. So think how they're going to be, and we're going to see a big uptick and very strong totalitarian type, uh, statements. Again, not a very positive, um, take, but I see the western having a lurch to the left in terms of becoming across very Marxist and totalitarian. So, you're going to have to watch that. So, people should think of where they want to see this out. The West has been here's the West population roughly there and that's our average income. Here's the rest of the world's, uh, population and their average income. I think there's a leveling. We go down immensely in living standard for the rest to go up three or five percent. And but when you say where to see it out, it it's it's I mean what are you saying? Move to another country. I mean that that's that in practical terms that's tough, right? Very tough. It's not a popular there's nothing I'm saying here is popular but it as it is. There's nothing I'm saying. Uh, and as someone who had to leave his country, who loved his country, etc. I couldn't get employed. It was the wrong time. There were reverse race and posit polit weeds of why what it was I had to leave to grow, and I'm actually very grateful that I did that because relative wealth to my people who stayed behind I was able to move forward immensely, uh, as a result, uh, of doing that and I still go home, uh, and I still see it as home, but now I'm a tourist in my own home who just happens to know everything very well, and you you might need to frame in those lines, and of course when you talk children and wives these are not easy cells, uh, that No, but we have a community of people that have done that. We have, uh, a South African in Britain who's left Britain with South African wife, two kids that are in a French school in a Spanish-sp speakaking nation, and they've only spoken English before, and the kids have adapted immensely, and they're going to grow out of this. They're going to speak Spanish, French, and English. Um, and so they're going to do just damn great. But is it an easy path? Would you volunteer for that obstacle course? I would say many wouldn't. Uh, and I understand that. But right now, you're having this particular fiscal globally coordinated leper colony obstacle course put on in front of you like it or not. So you've got to decide on what terms you're going to run it because run it you will have to. You can even cry and fall in a heap and get battered by it, um, and be warded of state or you can say we've got to do this. Let's get fit and ready for it. How do we take it? It's an opportunity. You were born for these times Maggie. You were chosen to be seeing through these events. It's economic history in the making. And you know what? Great leaders are born in hard times, not in soft times. So that's the way to approach this. You know, I've got this obstacle course to run, and I'm going to do it. And I'm getting fit and ready. And that means financial preparation. That actually means some physical fitness, I would suggest, and mental dexterity. I'm actually quite a happy person. And I enjoy it. And I live a good life. And, you know, I swim in the sea almost every day. And I ride mountain bikes and I ride motorbikes and I, uh, do a lot of things that that are a lot of fun and, uh, I have great friends. So, uh, and I warn them because unfortunately this is my work, and I see it coming, and it's it's the story of economic history that will be, you know, 400 years of the making in scale. People will be wondering what the hell were those people thinking. But it does come to an end. It does Francis. So leaning into that positive thought, um, and and and the innovation that might be necessary, um, let's let's close this out on you mentioned Bitcoin. Let's close this out on digital. So if and where you where we started which is this is this is ending you believe there will be something new many people point to something and I don't even want to say crypto because that's a word that's misused but something in the you know blockchain digital asset space, um, is it is it Bitcoin or is it more likely something that we don't maybe even have or understand now it's such a new that this system that you think is ending is so old and well understood, uh, and complex and it doesn't seem like the new one is built to the point where it can sort of take off. I know you described it as a galloping horse, but it doesn't seem like it's ready yet. Am I wrong on that? How do you see that playing out and where can we position ourselves?
I would never say you're wrong, but we don't know what's prepared behind, uh, the curtain, uh, in terms of this event, uh, and I would argue that smart minds have seen this day coming for a lot longer than you and I have, uh, even speculated it on it, and, uh, we have actually the Euro zone has a launch of a CBDC this year, so they might be preempting when that's almost definitely going to be needed even it might be synchronized to tie in with this collapse it might be that smart, uh, I don't think the people you know that we see like Lagard and Fonda Lion on the European side are the people that are making really doing the development on this. There's people behind that that are putting things into place that are probably quite advanced in testing. Um, anyway, but your question was around Bitcoin. Bitcoin in terms of utility, I think the best it can hope to be is the digital gold. It's not the fastest. It's not the cheapest. It's in terms of utility, I don't expect it to be excessively used. The day-to-day transactional aspects are going to come from other tokens that are better. I mean, when has the first iteration of software and anything involving software, blockchain or anything like this been the best? I mean, are we all on the iPhone ones at the moment? Um, no. So, I think the maximalist argument is a very poor one in terms of utility. It might have the longest duration, which is still pretty short in 13 years, but be accepted as the digital gold. So, it's where you save. Um, okay, fair enough. Um, is it private? Is it really going to be releasing us to be more libertarian or less so? I think we're losing liberty. Uh, I think we the you only have to listen to castons of the SMB and quite clearly they desire to know every transaction you make. They want a part of every transaction you make. They want to know what's income. I think we're going to go to real-time taxation, unrealized capital gains and a lot of things in the scavenge mode of absolute digital control. So I think it's an undermining. The biggest death of anything has been privacy over the last three decades. You know, Zuckerberg started saying, you know, privacy is over. Get over it. He had to bend his tune a little bit, but I think he spat the words out that he really meant long time ago when he's, uh, social media came out. If you look at this, you know, where these things started, I think there's a lot of I live in a conspiratorial world, I'm afraid, where I think a lot of these things were orchestrated and skunk works in some NSA, CIA, uh, stroke, Mossad, whatever you want to do, intelligence network. So we we are farm animals to be farmed by our, uh, protectors in some ways in me and I don't see this as a good event. I think that escalates digital means they have ultimate power over where you are. Everything tracks you. Everything surveills you what you're doing. You have a biometric thing. They know my face. They know my ID. They know my fingerprints every time I log in. So is this the answer? Is this the is this the system that we are moving into? It's the answer for rulers. It's not the answer for subjects. Uh, it's an amazing answer for the those that rule over us. It's not a great, uh, answer for us in terms of, uh, liberty. Look, things will become convenient. They'll keep getting easier and more convenient. We all carry around devices as if there are prison tags without even having to be asked, uh, to wear them. Um, and I'm seeing already, you know, the new AI thing which has a loop to carry around your neck and will, you know, help answer questions. Um, my partner was just telling me she wrote an email and it's all this AI had read her email and gave her a prompt. You by the way remember to follow up this person then you know it's read the email and and in the letter he said yeah we met we we we'll talk to you when you come back from holiday you know so it's actually quite clearly comprehended the discussion is listening in on the discussion is probably now in one way that's super convenient and in other ways it's goddamn creepy so I mean how do you digest that however you like I don't like it, um, so so it sounds like you're it sounds like you believe the opportunity here. I don't even know opportunity because this is preservation, right? This isn't chasing returns. So, the safe thing, the right thing to do is to really, um, look to precious metals, but you don't sound that bullish on also having a sort of barbell with Bitcoin or do
You like how? Should how should that fit into I think there will be appreciation. They need the uh market cap of the suite of tokens that they intend to use to match their assets that they already hold in the old system. So what we're going to have is, as I mentioned, the as Jupiter contracts, the air being let out has to inflate this the second new system. So we're in this transfer period. I believe the bridge, the golden bridge is a goal for you in preservation.
But I also think certain status tokens that have expressly stated that it's our intention to work for with CBDCs and with the banks, the B2B element, and I mentioned XRP, and that we've got beautiful technical setups, and I expect them to go up immensely uh as part of this inflation of the new system. So there's going to be upside money-making opportunities in that. Um, and but I don't I just say don't love that, right? There's risk to that. There's social risk to that. But from an investment point of view, you will see an increase.
If we're just talking cold-blooded, make money. I mean, we 15 years ago, we said buy the military-industrial complex, but hold your nose while doing it. Uh, and you know, we've had Raytheon, Long um, my apologies, Raytheon. Um, what's our North Grim, BAE, and, uh, the main one, Lockheed Martin. Uh, you know, they've done 30, 40 x's uh on that. So we saw this hypermilitarization coming. Now, with America actually losing access to its debt uh funding mechanism, that's we are less bullish now; we think that's a place to have gone out of there. But so we will we will say where we think things will go up even if we don't like what they stand for sometimes, and I and I see a number of status tokens doing exceedingly well that will be part of the new grid um in the new world. We cover that in the Crypto Sniper, our second YouTube channel, uh as well as the uh the traditional markets and the Market Sniper.
So there are money-making opportunities. In fact, I would say the opportunities are exploding. Some are shorts quite clearly, and some are uh the alternatives that have to get larger uh in this period, and that and it's going to happen actually very fast. So there's going to be certain this is why we mentioned it's a polarizing period. Those that invest for a transition between two systems and with a focus on reserve assets as well are going to come out of this exceedingly wealthy, and that's you know our community is all about build wealth and then preserve that wealth in a in a statist environment, which is actually going to be very hungry for capital from its citizens, and then secure as much freedom; those are the three things we should all be focusing on, in my opinion, and that's what our community uh focuses on.
For instance, this was I think a very timely and fascinating discussion. Um, I usually ask people what where would you be wrong? Like what would make you change your mind? I think you seem pretty uh clear that you believe this is happening. So maybe it's just what would shift the time frame? What would buy more time? Because it sounds like you're we're on the slope. What would cause you to think, okay, hang on, it's still coming? You're absolutely right to ask that question. I love that you do that, and you show the mindset of a great investor, and we do actually stay say the very same thing. We've been very early in the debt base collapse call, and we continue to get affirmation for our view. Um, so that's that's when you on the trend you ride it, and that's where Stanley Druckenmiller puts the pig on the table. There's occasionally moments when you quite clearly are on trend, and you must press home that advantage aggressively. That's what I take from the pig. Don't don't lose all concept of money management and sizing. Um, but be aggressive.
Uh, so I think we've earned the right with what we've seen transpire. I mean, everything the headlines have come rushing towards our original view. We've gone from being absolute fringe lunatic to middle of the mainstream now. Um, how do they slow it? How do they slow? I think they've done an immensely good job of slowing it, even as long as we've got have taken to get to here. The problem we now have is that it's very specifically in the debt markets. Now it's quite clear there's an active ongoing rejection in the debt markets. So a slowing would be, and don't forget Trump's administration has somewhere between 7 or 9 trillion to roll. He really needs lower interest rates to have a a reduced uh well they won't get a reduced interest payment, but not as high additional interest payment on all that roll. Um, so he needs a recession. Actually, he needs a bad, bad recession and the stock market to collapse. That would actually get some money finding its way back into bonds. And uh, but my fear is the pipe that run that siphons that off to Bitcoin and gold, particularly gold, is going to be too fat now, and you're going to get more of the benefit go to the gold than to the bonds. And that's the problem once you you've shown that we've turned the and you've got everybody positioning short. Don't forget other Americans, Druckenmiller, Tudor Jones are shorting their own nation states debt. Uh, that's how bad it's got. Uh, Buffett stood down. Captain America, and he said the most bearish things. This was the guy who told you he won the lottery for being born in America. He said he's concerned about the dollar. He's concerned about the trade deficit, and he's concerned about the overall debt problem, and he has no idea what he'd do uh if he had to deal with that. But somehow it's got to get uh got to be better. And I'm standing down. This is a guy who looks like he'll live to 140. He just loves what he's doing, drinking Coke, uh, and playing the markets, and he's actually going to let a new internationalist flavored manager who's probably going to have a lot bigger allocation outside of the US. That's my personal view uh, in terms of what's probably going to happen. He doesn't want to be the guy that ever said, "I'm stopped by in America," but he has. He's been hoarding cash for I don't know how many quarters.
So, um, none of that was apparent in 2020. It's more apparent today. So we've continued to get that endorsement of much bigger minds and names uh than ourselves um throughout this period. So I would say it's a strong view that I have. But can you be wrong? No. What we need: major recession. You need to see a disproportionate reaction to downside in the rates. I don't think you'll get it. I think you get a small degree of rates. You need lots of cuts in a real low environment, but you're just never going to kick. Remember rates down, bond valuation up. You have to scare the people that are in hypervalued equity so much that they choose to buy debt, not gold. Um, and I'm not sure you're gonna you're going to get the same flow ever again because that's that that has that's broken now. The trend has changed. The reversal is in. And that's why this 2025 year is not 2020, is not 2008, and is not uh 1999 uh or 2003; let me rather say the bottom of those recessions. You don't have the funding conveyor belt at the bottom of the foundation to support you anymore. Difficult times ahead, but Francis um so appreciate you giving us so much to think about um as we as we walk through what we usually expect to be quiet months, but it doesn't feel like it's going to happen this year. So, thank you so much for your time. Absolute pleasure. [Music]