Matthew Piepenburg: 7 Signals, 1 Golden Direction

These gold guys, they're they're pushing their narrative. But no, I think those of us who understand the bigger picture at 30,000 ft, the unique debt currency rate and bond context that we're in in 2026, this is just gold reloading. If anything, it's repricing in my way, tinfoil-hatted, deliberately. If I were at the CME or the COMX or the LBMA, I would want to do what they did in January, which is raise margins, push the price down, and reload my bullets at a cheaper price.

I really believe that that's separate and apart from the other forces, the force selling by countries like Turkey or Saudi Arabia, the force selling by triple-levered ETF tourists in the space, or the force selling by the shadow banks, the hedge funds early in the year because when they saw those signals, it was a sell-off. But it was a fantastic opportunity for central banks, pre-Iran, to stack gold at a cheaper price, which if I were a nefarious player in the interworld, was exactly what I would do. Because they do see, like China, like the BRICS, like most of the central banks, the longer direction of gold as a net settlement asset, as better collateral to US Treasury or any paper currency. That is no longer a gold bug argument. That is the discussion in the rates market, in the credit market, in the currency market. So this is beyond just gold's a good investment for wealth preservation, which of course it is, or gold at spot is certainly higher than cost of production for miners. It's way beyond that. It is a sea change in how the world sees collateral, and that I think is what's being missing in the price action headlines, which are meant to distract or entice or click. But the real change is much more clever, and it's a sea change in global collateral.

Are we still in the "I told you so" phase? Was like, you know, we were dancing a little bit, you know, $5,600 gold. Or are we already back in the "eating crow" phase here?

Look, remember just a couple years ago, gold was half this price. It's gone up 128% in 5 years. I think you should be entertained. But it's not an "I told you so" smug, but it's also not humble pie, because gold is moving secularly in a direction that to me is very obvious. Not selling my book, very obvious. I don't think it's ever good to be smug. I don't think it's ever good to lose conviction if you have it for the right reasons. Our conviction is 10, 20 years out. 10, 20 years ago, that doesn't mean we're not interested in price, even in paper currencies. But again, when you understand the magic trick of focusing on price in fiat dollars or currencies, and you look at the real, what's happening with the hidden hand, which is the obvious 10 of 11 last quarters over 200 tons of central bank gold standing, gold stacking since we weaponized the dollar, 2022, 5x central bank gold stacking. You and I have talked ad nauseam. I'm no fan of central banks. I don't like them. Can't beat them, can't join them. But I watch what they do, not what they say. And they are picking up gold for a reason. We don't know what's coming off the ComX or where it's going. I think it's going to JP Morgan and some of the Fed banks, and it's going overseas. It's our number one export, gold, because the world wants physical, not paper claims. And China and Hong Kong are creating a settlement system as we speak that's going to get rid of the CME like paper game in New York and London, and they're going to base it on physical, which is why Hong Kong's vault just increased by 10x, because China's very patient, playing the long game. They are moving the direction of gold from west to east, and it's going to be more fairly priced going forward than we saw in London or New York. And I think that's a fantastic, misunderstood, hidden move, in addition to the collateral moves, in addition to the currency moves, that is a lot more boring than price action this month, this year, and headlines about the war, of course, but it's a very hidden, subtle, but absolutely essential watershed this year.

Let's talk about the medium-term price movement. Now, let me give you two bare cases that I'd like you to respond to, please. The first is simply, um, looking at historical precedents and how gold has performed in prior gold, gold bull cycles. It's peaked very dramatically and then doesn't stay at the peak for very long, right? Double top in 2011, double top in 1980, and then comes down at least 40 to 50% in both cases. Um, gold's already fallen about 25 to 30% since the top in late January when I spoke with you last. Yeah. Um, arguably it has a little bit more room to climb just based on historical precedence. That's number one. Sure. Number two is what you brought up earlier, which is a seismic shift happening in the bond market. Yields have been going up, but it hasn't been going up recently. It's been on an upward trend ever since 2020, basically when it dropped. Uh, we're no longer in a zero interest rate environment. The Fed is no longer dovish. What we spoke last, the Fed was dovish. Now we have Kevin Walsh, and his Fed is less dovish, given current inflation expectations. So with those two forces combined, higher interest rates and the possibility of a secular, uh, bond bear market for the coming years, we have here a situation where gold faces higher rates, which it doesn't do, or doesn't like, and a situation where gold may repeat what it's done previously, which is to go down 40 to 50% from its top every single time it has topped.

No, those are excellent points, and they're so fun to talk about. The first one, when you look at the peaks and then it retraces and stays there forever, and you use an example like 1980 during the Reagan era. Remember, US total debt during the Reagan era was a trillion dollars. Today, our interest expense alone is a trillion dollars. So it's a very different world in terms of currencies and trust and debasement in 2026 than 1980. It's a very, yes, we had, we were coming out of the stagflation of the '70s. There was a big spike because of rising yields. Second point, but I'm saying the macro condition, the debt conditions, the monetary conditions, and the strength of our dollar in general, and paper currencies in particular, was different in 1980 than today. The trust is very different than today. So, that's the first point I'll make. When you're looking at 40 trillion versus a trillion in debt, your currency has nowhere to go but to be debased. But you're saying, Matt, you've got higher yields now. Pet rocks like gold and silver offer no yield. Rising yields are a historically obvious headwind for gold and silver. Isn't this obvious? And again, I think that is true for traditional investors who don't look to the second derivative thinking. Look under the hood a little bit deeper, because yes, of course, if you're getting, if you're getting a yield on the 10-year on any country, it's higher than the inflation rate, well, you're getting a positive, you know, you're getting positive real yield. Gold gives me nothing but negative price action and pain and stress. But again, that's a misunderstanding, because I'm not the first or the last. You've interviewed John Williams. You know about the real CPI scale. Everyone knows that inflation is a joke. We'll get into that with Wars in a second. But I think like Michael Green and Groman and many others, that the real inflation rate is correlated to the, you know, the debt, the growth of debt every year. We're looking, I think, at an in the CPI scale aside, which is comical, just comical.

But if you're looking conservatively at 10% inflation compounding per year, I think it's closer to 12. Some say it's could be as low as eight, but if you're being generous, and we have a 10% actual inflation, not the Misfit Island of Misfit Toys at the BLS telling us it's 4.2. That's a joke. Yeah. So, if you're looking at 10% actual inflation, not the official lie, the BLS, you take the L out of the BLS, and then you get the real inflation number. If you get 10% inflation, you're getting 4% 4.4% yield on the 10-year, 4.48% today. You're actually losing six, five to six percent the moment you make your bid on a treasury. In other words, you're getting negative real yield. You're not getting positive yield. So, these rising yields aren't really a headwind for gold. They're, they're a sign of dishonesty. That may sound sensational, but it's basic math if you trust the real inflation number as opposed to the official one. So, again, the rising yield argument is a traditional headwind. If you look deeper, you're not getting positive yield today. You're getting robbed. You're getting lied to, and you're getting robbed on your bond market, in a 10-year, anything further out, all along the yield curve, you're losing money. But the narrative is, and this is the trick again, left hand versus right hand. If I'm a Federal Reserve chairman, or I'm a central banker in Europe or the US, or I'm a politician, left or right, or certainly if I'm in the White House, left or right, I need to do what Russell Napier says, pretend you're running positive real rates when you need to run negative real rates. Other words, boring stuff, financial repression, they call it. You need inflation to be higher than the yields so you can base, you can inflate away your debt by inflating away your currency. And it's exactly what they're doing. It is literally the oldest trick in the book of history of all broken, bankrupt countries, whether they were oligarchies, monarchies, democracies, whether it was ancient Rome, 1990s Yugoslavia, Banana Republic South America. We have a Banana Republic balance sheet. We have a Banana Republic reaction. Now, we're not Weimar or Zimbabwe because we're home to the world reserve currency. So, we have, we can do this game longer. We can lie better. But there's absolutely not positive real yields. It's negative real yields. And we are debasing our dollar and we are debasing our currency to sustain our bond market, to buy bonds and keep those yields fictionally lower or controlled. And yet, think about this. People talk about Wars. He hasn't done anything yet in rates this year. I'm going to explain why he's a dove, not a hawk, but he hasn't raised rates yet. And he may in October, but the bond, the 10-year went up 75 basis points on its own, him doing nothing. And again, in the DXY, didn't rip on that. The strong dollar case isn't correlated to the to the rising yields the way it should if it was a legitimate currency. All I'm saying is we don't have positive real yields. We have negative real yields. Most investors don't realize that. The street sells you that. The registered investment advisor down the road sells you that. Consensus sells you that. If you actually trust the official CPI scale, fine. You're getting very little yield, but you're getting some. If you don't, and I start from the premise, maybe it's a bias. I don't trust the BLS. I don't trust the government, left or right, in either part of the Atlantic Ocean, on either side of the stream. And the actual inflation numbers I'm looking at, and the rest of us on the street who are worried about wealth preservation, we know that we're losing money the moment we buy a government bond.

If we look at the daily moves in gold, what is really pulling on the price right now in either direction? Like if you look at it, is it just the Fed interest rate talk? Is it the rate hikes that are pushing pressure on, or is there more to it? Like what else is involved?

It's a huge question to answer, but I think the simple fact is, yeah, the price action, the signals, the algo traders, the hedge funds, the swaps. I think it's more than just headlines about more conflict. I think it is confusion about what is happening at the ComX, the CME in London with the deliveries. What will they be able to do to make it a sell-only exchange or reduce paper claims? Is there a new repricing coming in 2026 in the East? How will we prepare ourselves? I think right now they want a narrative that is somewhat headwind narrative to keep the gold price down while they collect it, and then they have to, they have to position themselves. Who's going to be the new referee in this soccer pitch? If it's not New York and London, if it's going towards the East, how are we going to prepare for that? I think the fact that Judy Shelton is talking about a gold-backed treasury is more than just optics. Whether it happens or not, it's a recognition that gold plays a more powerful role as collateral and trust, and they're watching the East beat us at the game to catch up. We have to get some of those bullets back. We have to keep the price narrative down. We can use the positive real yields as a headwind story when, in fact, when we look at real inflation, yields are incredibly negative, not positive. That's a way to inflate our way out of debt. It is. But that's not a headline. That's not what the market wants to tell you. It's what we all know. But I think this combination of the moving chest pieces, East to West, West to East, actually. I think the banks reloading. I think the narrative of hawkish, war-ish, and a strong dollar and positive real yields. All of that is affecting the gold price now. But it's a false narrative. That's not conspiracy theory. It's the narrative I would present to reload when I need to reload. And I think that's what's happening. Gold investors are looking at the price and saying, "Well, yes, maybe it has relevance from a macro thematic point of view, but the price hasn't done anything for me in the last three months. I needed gold to hedge against volatility when there was a lot of chaos in the Middle East, and it wasn't there doing what it was supposed to do."

I think let's start there. The last time I spoke with you was late January, after it had just run up to its all-time highs around $5,500. It's come down from its peak band, and ever since then, it's just been trailing sideways and slightly down, and gold investors are a little bit disappointed. And in fact, sentiment in the gold mining index has been at multi-year lows, despite the fact that the price itself is still higher than it was a year ago.

Sure. No, these are important questions. We get them every day, and they're obvious. We always, of course, have an answer, and that can be cynical on the buy side because these guys selling the book are always going to have an excuse or an explanation for gold. For us, it's been a fantastic time to buy more. And of course, everyone says that. But I want to put it into some context, because these are critical questions. Um, it is important to remember that when we met in Vancouver in January, that was at the apex of the euphoria. Even I thought the price was too high, too fast. But remember, even the fall was really from the highs in January. When you look at the gold price today, it's only about 5% down from its all-time high close in '25. So, it's a 5% correction. The real correction was the January bloodbath on Black Friday. Uh, it's also, again, before we get into the details of the war and what gold and why gold did what it did, it's important to keep it in mind, too. There's a couple things. Um, you know, gold's been up 128% in the last 5 years, over 1500% since 2000. So, aren't you not entertained by gold? We're not apologizing. Gold's been behaving extremely well. And I also think it's important, before we start looking at the current details, just to keep things in perspective, because we do think this is an extraordinary moment for gold, and it's a secular bull market. I think we're just in chapter 2, and I've been saying that for years, because there's so much more to come.

But in the 1970s, we saw a massive move from $35 to $850. Everyone in the gold space understands that. What many people forget is during that period, we saw five 20% or greater corrections in the gold price. And in fact, between '74 and '76, the gold price halved from $200 to $100. We all know what happened after that. It went up 8x to $850. So it's just a reminder that, as I said in January, and we said in Vancouver, gold doesn't move in a straight line. And even in a secular bull market, there's a lot of shakeouts. Some, I think, are very deliberate, because it's important to get into that. And in terms of the war, why didn't gold behave in chaos? Why didn't it act the way it should have been? Uh, I've talked about this too. In the meantime, you and I haven't had a chance to speak in the interim, but there was a number of incredible factors in this particular type of war, because of the oil and the dollar relationship, we can get into, but there was a force selloff at so many levels. First, you had a lot of the tourists and triple-levered ETFs who were just joining the trade, and as soon as those daily margin calls came in, the daily rebalancing, they had to sell on a signal. A lot of the hedge funds were algo-driven. They sold on a signal. When you had Black Friday come in, sell-off in silver, sell-off in gold. They're not in it for wealth preservation. They're not in it for the macros. They're in it for the trend and the momentum. They're CTA-driven. So, they sold off. That's a lot of selling pressure on the gold price and silver. What was also extraordinary, in addition to the algos and the ETFs, was the sovereigns themselves. Uh, countries like Turkey, that absolutely high conviction in gold, but they import more than 90% of their oil and gas, uh, through external parties, and a lot of that was coming through Hormuz. So they needed to actually sell their best, most liquid, and valuable asset to come up with cash to buy oil in US dollars. Right? You also saw countries that certainly had no shortage of oil but needed to buy everything else. And so that was like Saudi Arabia, massive amount of selloffs. And again, I've said many times, Turkey didn't just sell their gold, they swapped it in Switzerland. They're going to get it back. They sold their treasuries too, but they don't want the treasuries back. They just want their gold. So during the war, there's a lot of force selloffs. Prior to the war, there was Black Friday. After we met, there was the algo-driven trade. So those explain it.

I'm not here to say that gold only goes up in the right from here either. But I am here to say with complete conviction, from all of the things I see, it's going to go much, much higher over the two years. Again, priced in dollars, euros, Swiss francs, whatever. Kind of silly, but this is the very first chapters of a secular bull market. And if you're an investor for the right reasons, I don't look at the daily price, but there's no doubt. It's interesting, the memo of understanding torn up, gold barely does a hiccup. Uh, but gold can be a very valuable, liquid asset in times of, uh oh. And if we have a mean reversion in this immortal S&P, gold could sell off significantly then too. Uh, but again, for us and our clients, we're just looking at bonds and paper currencies, and that gives us so much calm in this crazy storm.

Well, gold is still fulfilling its role. It's providing the last provider of liquidity. Absolutely. It's like our market is the only market when price goes down, people don't buy more, right? They wait for confirmation. They wait for higher prices to see maybe the trend. Yeah.

Why is that? Yeah. You know, I think I would take it. I think in every asset class, hard assets, risk assets, even real estate, I always see people buying tops and selling lows. Always. We would like to think that that would be different for those who understand history and math. We have some very sophisticated clients coming, not all Swiss, but B, and they are buying at lows. They do have that massive conviction. But even among the most sophisticated class, there's a nervousness. There's the psychology. Rick Rule calls it irrational versus rational. But I think the most rational investors in the space are making the calls to buy now. If anything, they're waiting for it to go a little lower. And that again is a mug's game. But if I'm looking 10, 20 years out, if I'm thinking my grandkids, like my grandmother thought of me, I really don't worry about whether it's at $51 or $41 is irrelevant when it's I see it at $15, $17, $20. And I see, I'm not going to measure that in a paper currency anyway. How many barrels of oil? How many pieces of real estate? How many real things can I buy? Not measuring in a currency that I've lost faith in a long time ago.

So extraordinary right now. And it's like a magic trick, David. I mean, you know, the trick to being a magician is look at my left hand while I'm doing the trick with the right hand. Keep you focused here. I think there's so much focus on the price action in gold, understandably, but the real story is the bond market. And the bond market is not sexy. It's not as sexy as SpaceX trading 100 times earnings. I get it. But the, you know, it's $145 trillion global market, the bond market. It's $20 trillion more than the stock market. It is the basis of everything. It's not that complicated, but it's absolutely essential. And I think what, when we can just spend a couple seconds on this, there's a sea change happening right now. It's well beyond the gold bug argument or gold allocation or the gold debate with the DXY. Gold is the new trusted collateral. And I think that has to sink in and really be understood. And without getting complex, trust is a very hard metric to quantify and qualify and measure. When you have a country that's the home of the world reserve currency and the sacred cow US 10-year Treasury, when that country is $40 trillion in public debt, that's a problem. When you weaponize that currency and that US Treasury in 2022, that's a problem. When the world is $360 trillion in debt, in US in general, distrust. That's why we're seeing decade, decade highs in yields going up because bond prices are going down. Whether it's in Canada, whether it's in Germany or France or Italy, certainly in the US, Japan, yields are decade highs. Yields are boring. Again, not as sexy as SpaceX or Palantir or Nvidia or data centers, but when yields rise, that means trust and demand for bonds is falling. And trust and demand for bonds is falling because there's so much debt. And therefore, the world moves on collateral. Everything, interbank lending, cross-border transactions, for decades, for 50 years, that collateral was the 10-year US Treasury. That was the key of the banking system, the derivative system, the everything system. And what is so misunderstood right now is that this isn't a gold bug case from an executive in Switzerland. The new collateral isn't sovereign bonds in general or 10-year US Treasuries in particular. The new collateral is gold. I'm not saying that again as a Swiss gold executive. I'm saying that because look at the flows and look at the math. Central banks hold more gold than do US Treasuries. Something would be unheard of 5 years ago. Since we weaponized the US Treasury and the dollar in '22, whatever you think of that Ukrainian debacle, central banks have been stacking gold at 5x levels, five times in this period since the Ukrainian war started. The BIS has made gold a tier one asset. Um, so, and you have this de-dollarization meme, which is a reality. Embridge, etc. There is a clear preference for gold as the new collateral. So central banks have been stacking, not just at record levels since 2022. In the last 11 quarters, we've seen 10 quarters of over 200 tons of central bank buying. It's extraordinary. And you've also seen China in May buy 160 tons. Now, China, whatever you think of it, they're not stupid, and they're very patient, and they're playing the long game. The head of the Shanghai exchange said in 2014, in front of a bunch of Western bankers, when China wasn't taken seriously, he said, "Very soon, China will be setting the gold price." And what's happening is China is stacking gold in a fire sale right now. As we're all looking at the right-hand magic trick of tech, the stock market, the DXY, the dollar, positive reals, negative, fuzzy, fagazi. These central banks are stacking gold, and they're restacking gold, and they force it down in a fire sale, thanks to the help of the ComX and the London exchange doing these tricks in January and February. The bottom line is this is extraordinary when a precious metal is now becoming the new collateral. Doesn't mean a gold-backed yuan or a gold-backed BRICS currency. It means gold is trusted now more than government debt.

So what do you make of this? Uh, there was a lot of speculation on July 4th if, you know, President Trump was going to like back treasuries with gold or, right, things of that nature. And, uh, I, I didn't give a whole lot of weight to it, but I did watch the speech to see if that was going to happen, 'cause they're saying there was some excitement about it, and then, uh, many people were disappointed afterward. And so, um, I mean, obviously, it's still possible. Anything could happen. I mean, he could sign something today, and, you know, whatever. But what do you make about all that? Is all of that noise? It seems like it'll be, it would be a significant shift, but the likelihood of it happening, I'm, I'm just not, I'm not sure, not entirely sure.

Yeah, this is the classic. You know, Judy Shelton, a former Fed nominee, really putting her neck out there for the last couple years, ever since Trump was elected and even nominated that there would be by our 250th anniversary an announcement of a gold-backed long-dated US Treasury. And many thought that would be on the 4th of July. It may or may not ever happen, or it may happen 20 minutes from now or 20 weeks from now. You and I will never know. What I make of that, and what I've said for the last few weeks as this has been coming towards fruition on the 4th of July, is I said it, it's almost, certainly is relevant whether it actually happens. I think in many ways it will inevitably, but regardless of that, the very fact that a former Fed nominee has been talking about this is, in and of itself, a phenomenon that you can't ignore. To see someone basically say, "We need a gold-backed US IOU," and have that taken seriously by the markets, and have it debated, and have Bessant talk about, you know, monetizing the asset side of the balance sheet for the betterment of American security and people. This is all about gold. And what this is saying, regardless of when it becomes official or more debated or legislated, what it says is that even a Fed nominee and a Treasury Secretary are saying out loud that for our IOU, for our bonds to really be taken seriously, they can no longer be backed just by the full faith and credit of the US Treasury Department or the US government or Uncle Sam. We need to give it more credibility by linking it to gold. And that would have never been discussed 10 years ago or 5 years ago in Wall Street or in DC, because that is the blasphemy in Wall Street and DC. Gold is the secret they don't want you to talk about, because that's the antidote to the US dollar. Now the US dollar is so openly distrusted that they have to say the quiet part out loud. Even Morgan Stanley has to say the quiet part out loud after years of pooh-poohing gold. Last year they recommended a 20% allocation, and even the too big to fail banks are projecting gold at prices this year higher than I would. So Wall Street and DC have no choice now but to use that four-letter word in normal conversation, which would have never been allowed before. And the only reason it's even creeping up for consideration and possible legislation is because they're saying, and they're admitting without having to say it directly, gold is trusted more than we are. And by the way, that's even true among the BRICS nations. They're not all kumbaya trusting each other from India to Russia to Brazil, but they do trust gold, and they do have a common distrust of the US dollar. They're not making a gold-backed yuan or a gold-backed BRICS currency. They're making a gold-backed trading system, collateralized by gold as opposed to the US 10-year. And that's been in motion for years, and it's happening at a faster pace. All of these countries, including the US, are basically saying, "We trust gold more than the paper promises of Uncle Sam." That should make people sit back in their chair and ask why. And the answer is $40 trillion in US public debt and $360 trillion in global debt and GDP. That's one-third of that. There is no way to pay for and monetize our debt levels without debasing our paper money. Whether that's a pound, a euro, a peso, or a dollar, Canadian, Australian, American, that is the future. And stablecoin will not absorb all those US Treasuries. We need to debase the currency, run negative real rates. That is, inflation is higher than the yield, and then just lie about the inflation and call it positive real rates when it's really negative. And that trick is as old as history, from ancient Rome to today. Gold is being stacked at record levels by central banks, 19 straight months by China. China is not buying gold at these levels for dentistry or making golden monkeys. They're thinking years ahead. And as the world distrusts all these IOUs from these broken and broke sovereigns, including the ECB banks and the central bank, including the home world reserve currency, they're watching us shoot ourselves in the foot with our currency, debating relative strength. Well, they're basically saying this is the new collateral. It's the new system of money that is far bigger than my views just on the gold price this quarter or next week. And I think it's very misunderstood. Um, and we're playing games with stablecoin. We're playing games with a hawkish Fed, and all this. It's just noise. Fed isn't hawkish. It's totally dovish. It has no choice. The ECB is going to be dovish. It has no choice. The Bank of Japan has no choice. They're going to debase their currencies while China's stacking real money, while we play with paper money. And I think again, it can be far more complex than that, but it's very simple. Gold is distrusted more than paper currencies. And that's not a sensational, that's not a fable. That's a fact now. And that's why the short-term price movement in gold is actually, for us, fantastic, because you can get more of it on sale, like the Chinese and everyone else. But the longer-term implications and direction for this price as trusted store of value is way past the dollar debate or the Bitcoin debate. It's really gold is emerging as central to the new system.

So if inflation is much higher than it's purported to be, then why is Warsh still a dove, like you said?

Well, Warsh is he's fascinating. I mean, Warsh is fascinating. He's bringing in regime change. He has all, he's got five different projects now, or task forces. Yeah. One is the information task force, which is very Orwellian. Uh, the other is the inflation task force and balance sheet task force. Okay. Take all the fagazzi out of Warsh. He's a maven. He's a political careerist. He's also a clever banker and a lawyer. And take about and talk about regime change. He was just in Portugal in Europe, where I'm coming from, and he was talking to European central bankers. He says, "We have to get price stability and 2% inflation." Well, first of all, we haven't been at a 2% target for decades before and years after it was raised. We were there for 20 seconds in 2020. So, they failed at that. So, he's talking very hawkish. He says, "We're going to get to 2% price stability. We're going to control this." As for our country, meanwhile, the Fed's own projections for inflation is 3.6% CPI, and right now it's at 4.2%. So, he's not even close, as usual. But again, it's kind of like Gerbils. Tell the lie long enough, you'll believe it. It's, I hate to say it. But what Warsh is, like, like Yellen, like Powell. In fact, mathematically and quantifiably, he's already more dovish than Powell was after he pivoted from higher for longer in 2025. And what Warsh is doing is, is classic again, fugazi, fugazi. Look at this hand. I'll lie with the other. So, what he's doing, first of all, even before Warsh, you have to understand, there's always backdoor QE or backdoor liquidity, not just QE money printing or mouse clicking. You can take money from the Treasury General Account. You can put in hundreds of billions from the repo markets. You can issue bonds from the short end of the yield curve. You can guarantee the 70 cents on the dollar bonds during the banking crisis at par for the big banks, as we did in '23. So, he, there's all kinds of tricks to put trillions of backdoor liquidity to keep banks liquid, because the Fed's mandate is not unemployment and inflation. The Fed's mandate is to keep banks liquid and lending, because the Fed is owned by shareholders, and those shareholders are banks. Sorry, everyone on Wall Street knows this. It's important for your listeners to figure this out. Many of them already do. So the key is to keep banks liquid to make more bad loans in places like private credit. But so what Warsh is doing is like, "Well, we're going to, we're going to be a regime change." Meanwhile, just last month, again, boring, off the headlines, and I hate to be the bearer of boring news, it's not that complicated, but he does things that are so boring, no one notices while he's talking hawkish. And what he did, and again, this is fact-check yourself, this is the Bank Policy Institute, boring. But a few years ago, in '23, Basel out of Switzerland, the Basel 3 reg said, "Hey, you banks, all of you need to be a little more careful with your leverage. You need an airbag to protect us from another uh-oh moment." And what many things were happening in that very boring fine print of Basel 3, again, boring. But one thing is about $89 billion, $88.7 billion, in fact, are is required for banks to have capital reserves. That means money they can't lend has to sit there. Well, needless to say, American banks don't like having capital sitting there doing nothing, because every dollar that sits there, they can't leverage 10 to 12x for new lending and new profits and new risk. So, what did Warsh and the bankers get together and do last month, and fast-tracking through, is they're simply not going to comply with Basel 3. Again, so boring. But get rid of all the noise, all the fog. All that means is that $89 billion, $88.7 billion on capital reserves can now be levered 10 to 1. That's roughly a trillion dollars in new liquidity.

So you think money supply will still expand under Warsh?

It's off the balance sheet, off the Fed liquidity into the big banks. It's still supporting liquidity. It's still a debasement trade that's off the balance sheet that is too boring and too complex for the average, very smart citizen to keep track of. We have to. I have to. I look at the bond market and the central banks and yields and backdoor liquidity, because it really is the skunk in the woodpile. He has a very hawkish tone, but a very, the skunk in the woodpile. These hawkish talk with liquidity through the back door, and again, trillions through the repo markets, the TGA accounts. There's always ways to keep those banks liquid so that they can make more dangerous loans and have another potential banking crisis that we will have to bail out with more debased money. At some point, all the non-QE QE, like we saw at the end of December, becomes just outright QE to monetize the debt.

What are you looking for for the rest of the year? You know, we have in the US. I'm just, you know, I don't want to put words in your mouth, but you know, new Fed chair, Yellen, you know, a couple more, you know, maybe even rate hikes. Like, what are you looking for that could direct or give us a bit of direction here?

Look, it's the new Fed chair is another classic example of headline price action versus what's happening behind the scenes. He's completely violating the Basel 3 Accords. He's going to allow capital reserves to be remonetized, relevant directly into the banks. More leverage, more risk. That could be risk on. It's just, it's business as usual. Whether Powell, who was the most dovish supposedly hawkish member, and Warish, who's supposedly hawkish, has actually just gave more money to the banks than ever before. It's what people can't see. Whether it's the Treasury General Account, repo, the reverse repo markets, guaranteeing big defaulted banks' treasuries at 100% par rather than 70% loss, or whether it's supplemented leverage ratios, or what these Basel 3 regs he just violated mean. Boring, boring, boring. All I'm saying to listeners is there's billions and trillions of backdoor non-QE QE happening right now. He can put a hawkish beak and tape it to his face. He, like any other central banker, has to debase. They have to revalue their gold, debase their dollar, and reset into a digital currency issued by a tether. It can even be Walmart. It can be Visa, Mastercard, or now DoorDash, this 140 companies that just agreed to a stablecoin to absorb treasuries. There's all kinds of tricks in fugazi, fugazi. But the Fed is still liquidifying the banks to keep them liquid so they can keep lending into a bubble. And that bubble can last 10 more minutes or 10 more months. It's insane. We are so hyper-financialized. Our equities market is two and a half times our GDP. We can't afford a recession or a mean reversion because we can never repair it with our Fed. We can't without killing the currency. So we are living in a very fragile time. And to answer your question, it's Dickinsonian. It could be the worst of times or the best of times. It all depends on when this massive, overvalued by every metric, liquidity-driven nonsense blows this S&P, or we just nationalize it at the expense of our currency. And none of us can predict that or what happens when another memo of understanding gets torn up or some other headline. When you and I met in Vancouver, did we know we kind of thought there could be problems in Iran? Did we know there'd be a Super Silver Friday 3 days later? We're little pawns in the machine. We just got to be patient pawns.

What happens to gold if oil continues to go up?

I mean, old gold is becoming uncorrelated from everything. Gold can go up when rates are going up. Gold can go up when rates are going down. Gold can go up, you know, when oil is going up and going down. I think the real question with oil isn't what will the gold price do. The real question with oil to me is how will gold be purchased in the future? Will it be purchased in US dollars? Well, the petrodollar, which seems to have gone through some gyrations in the last few years. 20% of US, I mean, 20% of all global oil purchases were outside of the US dollar. That was unheard of 10 years ago. The reason, and you can get debates of the reason we were in Venezuela and the reason we were in Iran wasn't democracy and safety and drug-free streets in New York and freedom and democracy in Iran. The reason was both Venezuela and the Ayatollah wanted to sell oil to China outside the US dollar, and they were. If that were to continue at that pace, then who would buy our US treasuries and US dollars? Because the oil was that sponge. Stablecoin is the news.

How important is the petrodollar to the everyday average American?

To the average American, it's very important because it's absolutely essential to the hegemony of the US dollar and the US Treasury. There's no coincidence that we created the petrodollar right after we decoupled from the gold standard, because we now had a nothing-backed dollar. The gold price should have ripped. So we need to make demand for the US Treasury and demand for the dollar forced. And so we basically, at knife point, forced OPEC to do the deal. The petrodollar deal is the link here. If the petrodollar breaks, demand for treasuries becomes slower. Uh, yields go up, interest rates go up, and our living cost. And then we have to debase the dollar to pay for our interest rates. And by the way, it's a deadly serious game. Ayatollah Khomeini, Muhammad Gaddafi, Saddam Hussein, it was a fatal game to try and sell oil outside of the dollar. They all tried. And, you know, certainly Venezuela tried. He wasn't killed, he was whisked away by the Delta forces. But we take it very seriously. We need to sell oil in US dollars. And then, by the way, the producers of that oil, they have to buy our US treasuries. It is a sponge for an otherwise completely inflated and debased and untrusted dollar. It's the bully. Now, what's happening now is going to be interesting, because why did just a year ago this month, why did we create this genius act, and why did Trump call it the new oil? Because what is stablecoin to do with oil? No, it's the new oil because stablecoin forces issuers of stablecoin are forced to take your dollar and buy US treasuries. It is creating synthetic demand for US treasuries. It is a new kind of oil. In other words, no one else wants our US treasuries. American citizens don't want our US treasuries. But hey, if we get them to buy stablecoins, we give them a trackable, programmable, centralized dollar. They give us the dollar. They give us a buck. We then, by law, invest that dollar into US treasuries, and we get the yield. So we get your dollar, and you get, we get your yield, and you get a programmable, trackable, centralized, basically central bank digital currency issued by a private issuer. And again, just this month, 140 companies from Blackstone to DoorDash to Visa and Mastercard just agreed to the dollar unit or the $1. It's the new digital currency, new e-oil, coming from 140 countries, a major corporate cooperative act to create more stablecoin-like demand for US treasuries. That business, the market for stablecoins, $320 billion, they think it's going to be $2 trillion by 2028. That is a major sponge for an otherwise unloved, weaponized, over-indebted US treasury. Again, very boring. But if nobody buys those US treasuries, and if the oil market slowly moves East, and China definitely wants a non-dollar energy solution, they're definitely going to get one. If we've lost the petrodollar, or at least some of the bullets in that six-shooter, we need something else. And that's where stablecoin comes in. Anyone listening to here should know that you'd be far better off buying a two-year US Treasury than a stablecoin, because at least you're getting yield. You're giving your yield to Tether or BlackRock or Blackstone or, you know, DoorDash when they start giving you this nice, super-fast, transparent e-dollar, but you're getting nothing. You're getting suckered, and you're getting a programmably trackable dollar or digital dollar. So the centralization is slow dripping in. You know, you've got guys like Bren Johnson saying this could save, you know, this could be the solution to the strong dollar and save this otherwise bankrupt US Treasury. I think an e-dollar is still a bankrupt, worthless, debased dollar, but if it creates synthetic demand for the US Treasury, that buys the government some time. It's a very desperate act. It is somewhat genius. It's somewhat devious, but it is absolutely desperate, because the real reason we had to create stablecoin is no one else would buy our treasuries unless we force the issuers of these stablecoins to buy them by law.

It's fascinating. A geek for military thinking, but

I'm certainly no military expert, and nobody listening wants my opinion, left or right, on the war. I just wonder how you think hedge money has now been... I think, I think that to the economics, and what you said, this was, of course, a proxy war with China, just like the Ukraine is a proxy war with Russia, on the backs of a lot of dead Ukrainian and Russians, right now. And, and, and you can take that or leave that. This war in Iran was a direct proxy war with China. It's a financial war. You got to give Jim Rickards credit. You know, he talked about a currency war becoming a trade war, currency war, and a hot war. We had a hot war, but it wasn't directly with China. He used the narrative of Iran and, and nuclear weapons. Buy it or leave it, I don't know. That's for everyone to determine their own. But for me, the economics of it were very obvious. That's neither left nor right. Pro-Trump, anti-Trump, it doesn't matter. Any citizen of the White House is going to have the same problem. We can't lose the petro dollar. We don't want China having a non-dollar oil solution. China is absolutely going to get that. They have the power to do that. The question of whether this was a failure, you can look at missiles. You can look at nuclear. You can look at reparations. That, that's accounting, probably is a failure. Some will disagree. They're very, I'm very patriotic, but I don't think it was a very smart war. That's just my personal opinion.

But financially, the way to test whether this was a successful war or not, is to see what China does with its buying of oil and whether it's in a some gold-backed, embbridge type kind of net settlement, whether it's Russian oil with with rubles and yuan swapped in Shanghai for gold. That's the real test of whether this was a successful war, because the whole point of this war was to force a new regime in Iran to sell oil only in dollars to everyone, including China. I don't think that's going to happen. I don't think China will allow that to happen. That's still to be determined. But the real measure of the success, because this is a petro dollar war. This is a US Treasury war. It is not an Iranian freedom war. If you look at it economically, that will be the test. Where will and how will China buy its oil? It's a net importer of oil. It can get it from Iran. It got a little bit from Venezuela. It can get it from Russia.

Iran and Russia are happy, very happy to sell their oil outside of the US dollar. And the question is, how much power? Can America just kill or fight everyone who wants to leave the petro dollar? There were years where it could. China is very different today than it was in '73, '74, when we created the petro dollar. Russia is very different today. Uh, Iran is very different today. And we thought we could poke the bear with Iran. Um, and, uh, apparently it was a little harder than we thought. And again, that's just the economics of this war.

Eric Sprout said something interesting. I just want to investigate a little bit with you as well. He said there will be a shortage of gold, and he, he gave some numbers, but overall, we don't produce enough. China soaking it all up.

Right? Do you see actually like a, a gold squeeze? Like we've talked about the silver squeeze before, and I don't want to get euphoric or anything about it. I'm just looking at the supply and demand.

Yeah. Um, is that a possibility? A gold squeeze?

Think about it. It was a great point. I'm, I'm curious to read it and see what he said. But look, we got 8 billion ounces above ground gold in the world. 7 billion of that is held by big institutional players, central banks, sovereign wealth funds, commercial banks. Maybe 500 million to a billion ounces are freely traded in the world. It doesn't take, I mean, supply and demand still matters, notwithstanding all the trickery in London and New York for decades since we went off the gold standard. Adding futures contracts to gold was a deliberate Kissinger play in the '70s. We all know that. We've all read the books. China knows it, too. And, and supply and demand will eventually raise its beautiful head again. Natural price discovery based on physical trades, and given the stock to flow in the natural scarcity of this metal, and given the growing, difficult to measure distrust in paper currencies and IOUs with yields spiking at, you know, decade highs across all the big countries. All of this is a way of saying eventually, when natural supply and demand, which China is now trying to make more real, it's a beautiful moment of higher and higher demand, higher and higher distrust, and the same supply of the 116 million ounces mined per year. So, it's way past the Bitcoin debate now. It is a real, honest, with real property metal whose supply isn't going to increase from a meteor coming from the moon, and whose demand from the biggest players on earth, from the BIS to the Bank of Japan to the Fed, is going to increase. You don't need to be a genius to see the converging forces for gold longer term. And no, it doesn't mean gold only goes to $10,000 next week.

But again, when my grandmother bought 400 ounces, it was for a few hundred bucks. It's worth $2 million today. It's important to keep the larger history in mind. Ray Dalio, Egan Vangers, myself, you, we all know you need to understand math and history to stay calm in gold, mining, speculation, equities, embedded leverage, fantastic. Very different. Very different mindset. Respect it. But the spot price still matters from cost of production. So, it's still relevant. But for boring guys like us who just don't trust paper currencies,

Uh, this is a fantastic time to be buying right now. Fantastic time. Old case. It's a reality. And I think what no one is noticing as well is just in just last month, the June 24th becomes effective July 24th, and I'll stop on this, but it's critical to understand when the, the largest ICBC, the largest bank in China, just stopped paper trading of gold in their banks. The, the margin levels, 140% made it impossible to trade paper gold. That becomes effective in July, at the end of this month. But what it really is a setup for is this. China, Shanghai is in a deal now, a clearing settlement deal with Hong Kong because of the capital controls in China. They need a free door to bring the, the settlements. That's Hong Kong is a, the settlement partner for this. Hong Kong's vaults have increased by 10x. Because what this all means, all the fugazi, fugazi means is

China is going to create a gold settlement exchange with fair pricing and less paper manipulation, less leverage, less futures contracts, because they want to win the game. They want to move the flow of gold and the gold pricing from paper claims to physical gold.

Right? That means fair price discovery in gold. That doesn't mean gold goes to $10,000 on July 24th. But you have to follow the direction of the puck.

China, love them or hate them, are playing the long game. Well, we're debating stablecoin or Nvidia or SpaceX valuations or Tether, and what this really means, and maybe a Judy Shelton long-term, long duration, and gold-backed US Treasury. China's going to reprice gold fairly without all the paper nonsense we see in London.

What do you mean by reprice? How would they do that?

Well, when you have, if I have a car that's worth a million dollars, it's a unique car from the 1920s. And I give everyone in this room, a claim says this, this million-dollar car, you have 100% claim to it. If I give it to 10 people,

I say, I hold the car in my garage, but the 10 of you all have the same claim for that car. As long as nobody asks for the car, I can keep making this. I can sell these paper claims to 10 different people.

But that's not a real ownership of my car, is it? You don't really have, you have a paper claim to it.

Well, we do that same trick in the COMEX. You have 10 times more contracts for the same bar of gold or silver than is actually available. And what China is saying is, we're not going to play this fugazi, fugazi with leverage and paper claims. It's going to be a physical gold-based exchange. And the first signal that came out in June, just again, unnoticed by everyone because we're all chasing SpaceX and IPOs. The fundamental trick here is that gold is the new collateral. It is going to be priced based on physical supply and demand, not leveraged paper claims, which is the whole basis since 1973 of the COMEX, CME, and the London markets. It's absolute legalized price fixing in London and New York, which has been the game for years. China saw this in '73. They knew it was happening. It actually happened at the US embassy in London. There were cables. It was top secret, but it was a deliberate game to price fix legally, gold and silver that has been slowly dying in the COMEX since 2024 because of all the deliveries and the exodus of the metals out of the COMEX, but it's all boring. It's all complex. It's all very simple. We're not going to have leverage in games and card tricks. We're going to have physical supply and demand, and it's going to be based on the East, not the West. This is a seismic shift in how gold operates as trusted collateral, not just as a debate or an allocation or an insurance hedge or relative pricing. If you believe the inflation is is here, the S&P can inflate too. Remember, since the S&P spiked in Q4 of 2021 to today, the S&P is up 60%. It's down 40% in gold terms. In other words, it's up since 2021, but when valued about gold and not the dollar, when you value it in gold, it's actually down because gold is a better measure of wealth than paper currencies. But if I were looking to invest today and I have an inflationary long-term outlook, which Graham and Gonac and Buffett have, I would invest in assets that do well in an inflationary scenario, even if we have intermediary disinflationary forces, which we can easily have. Deflation. Inflation isn't a debate. It's a cycle.

I'm just trying to figure out like plumbing wise, like you, you just touched on stablecoins.

Keep liquidity, create the new oil and stablecoins to absorb some of those unloved treasuries. If they can sustain that and keep the narrative positive, it's risk on because the markets are Fed driven. They have nothing to do with supply and demand. The days of Benjamin Graham are gone. Jeremy Grantham, he knows this. Gunlack, he knows this. It is not a normal market anymore. I mean, look at SpaceX at 100 times earnings. Nobody cares. Look at the IPOs. Nobody cares. So, is until something hurts us or until we have a real liquidity vent where we, we just can't do it and we have to admit to QE, QE. This, this nonsense can continue.

It really can. And right now, the narrative is tech's going to save us, even though they're a little overvalued. You know, wars may be hawkish, but what's another rate hike to us? Because that'll just force QE down the road. The Fed has our back. The Fed has our back. The Fed has our back is the shareholders to the Fed, the shareholders of the banks, and they got to keep liquidity in. We can see deflationary forces, but they're going to keep liquidity for the banks until that becomes unsustainable, and no one can time it. But I think it's risk on for now in a, in a, in a market that has lost all rational sense, all valuation. It is Charlie Mccay's "The Madness of Crowds." It is Husman's moment of craziness. And no one can time that. I, I've got to quote something here. I got to find it real quick because I saw it this morning. Bloomberg sent it out, and I hope I didn't delete it. Ah, where is it? It was, um, I think it was in the daily briefing of Bloomberg this morning, and, uh, Nvidia is now cheaper than Hershey.

Yeah. Cuz like Nvidia came down price-wise, and now it's cheaper than Hershey on a valuation basis. Like, how do you wrap your head around that?

Well, think of, think of companies that have actual pricing power. They can do whatever they want. They're still going to be buyers.

Chocolate. That's more addictive than cocaine, literally. Chocolate, Pepsi, Coke. These companies have pricing power. The sin stocks. Yeah. The beverages. Uh, you know, Coca-Cola, Pepsi, they have pricing power. Healthcare, defense has pricing power. And Nvidia is, is, as Jeremy Grant said, it's like it's, it's selling shovels in a gold rush during the, the tech boom. But they can be, you know, winners today and losers tomorrow. But those boring things like chocolate and stable, free cash flowing, price buying stocks, they're going to be winners no matter what. Defensive stocks are going to be winners. That's, that's getting into the markets. It's also important to, when you look at this market since the S&P's peak in Q4 of '21, stock market's up 60% today. But in, in gold terms, priced in gold, it's down 40%. So again, it's what are you measuring these returns in? This is where you got to come back to earth. If you're measuring your wealth in paper currencies in your 401k or in your portfolio, up 60% since '21,

But in gold terms, it's down 40. Think about that. Just think about that. What is real money? And the system and international system, not just you and I, is rethinking what is money. And that's why gold as collateral is way beyond just gold as a wealth preservation asset. It is part of a systemic change that we're living in right now.

What Goun is saying is yes, they're not looking to US Treasuries as a safe haven anymore. That goes to the original point I was saying about the new collateral from is moving west to east towards physical precious metals. It just is, towards gold in particular. US Treasuries, German Bunds, JGBs out of Japan, the Guilds out of the UK, they're not trusted. But the US Treasury, which is the key tenure, is the key treasur, the key IOU, is even less trusted. So I think what Gunlac is saying there is absolutely relevant. What Grantham, Jeremy Grantham from GMO, is saying

And he has been saying this for years, but he's been very modest. He says, "Look, I like Warren Buffett, another name. I hope I don't confuse." Like Berkshire is $400 billion in cash. They're not trying to time this overvalued market. They just know that it is. Jeremy Grantham, a GMO, is saying the same things. So when he looks at price to book, price to sales, price to earnings, they're at all-time highs. And when he looks at the monthly dividend yields, they're at all-time lows. And when he looks at the overvaluations, he's basically saying, "I can't time a bubble. I can just see one." And some bubbles can go longer than I predict. He's saying two years out, one year out. Um, he's retired now, Grantham, but he's been saying this for a while, and he's cautious. When, what, what Buffett and Grantham, not Goodlack, have in common is they are ti, they can recognize overvaluation. This is way past just SpaceX and the amount of capex it's is plateauing in these data centers and this the fabulous 7 and the amount of money they're wasting, which is symbolic of the end of a credit cycle, by the way. Um, the, the overvaluations, the M&A deals and the overvaluations on book sales, etc. All the metrics they would look at in Jeremy Grantham's time as a value investor. There's no value there. He's saying, "I don't know how this thing ends. I don't know what needle pops this balloon. I'd rather just get out of the kitchen before Thanksgiving if I'm a turkey. I just want out. I don't know what day is Thanksgiving. I just don't want to be caught in it."