Latest / Financial Survival Network / Fed Rate Cuts Coming -- Dana Samuelson #5813

Transcript

Fed Rate Cuts Coming -- Dana Samuelson #5813 · Financial Survival Network

0:00
I sadly don't think that we'll get to that point where gold backs a currency
0:04
anymore, because you said it. It takes the power out of the politician's
0:07
hands, and they're going to hang onto that power as long as they can,
0:10
and I'm really afraid they'll blow up the dollar and the financial system of
0:13
the process. It's not a happy thought, but it's a realistic one.
0:17
I think you're listening to Carrie Letz's Financial Survival Network, where you get valuable
0:22
information you just can't find anywhere else to thrive in today's trying times. You
0:27
need the Financial Survival Network now more than ever. Go to Financial Survival Network
0:34
dot com and get your free newsletter and gift. Financial Survival Network now more
0:41
than ever, and welcome. You aren't listening to watching the Financial Survival Network
0:49
of your host Carrie Letz. Well, gold looked like it was going to
0:53
break out and stay over that two thousand range forever. It would be a
0:58
distant, a distant glimmer in the times when it was below two thousand.
1:04
But here we are, and it's retraced a bit. We're under two thousand.
1:08
But we got a special guest for you today and his name is Danis
1:14
Samuelson, founder president of American Gold Exchange, a company I once bought some
1:22
gold from a long time ago. Then it's great to have you on the
1:25
show. So what is going on with gold now? When do you think
1:29
it will raise num it's upward journey or will it hi carry well? Thanks
1:34
for having me, It's great to be here. I appreciate your being a
1:36
previous customer of ours. So gold gold is consolidating right now around the two
1:41
thousand dollar mark. You know, last year we had a pretty whipsad year
1:46
because the dollar was abnormally strong due to an interest rate differential here in the
1:52
US compared to the other major economies of the world. The Fed raised rates
1:57
harder and faster than they have before, and interest rates here were higher than
2:02
in Japan, the Eurozone, Great Britain, which made the dollar become very
2:07
strong for a period of time and pushed gold down to a six local low
2:10
of sixteen thirty five. Now we've seen a big correction back up, especially
2:16
after the bank failures Silicon Valley Bank. We're gold punched up to previous all
2:22
time high of two thousand and eighty dollars an ounce about a month ago.
2:25
And the key to the gold market now, in my opinion, is the
2:30
value of the dollar relative to other currencies. And on the Dollar Index,
2:36
which is now at about one oh three, the dollars looking up a little
2:40
bit better than it has in the last two months, where it channeled at
2:44
a bottom of one oh one and a half. Gold tends to trade inversely
2:47
to the dollars. So when the dollar is strong, like it was last
2:52
year at a peak of one fourteen on the Dollar index, that's when gold
2:55
bottomed at sixteen thirty three. Today the dollars of one oh three, I
3:00
do think we're going in towards an economic slowdown, if not a full blown
3:05
recession, it looks like we're on the cusp of that, which would weaken
3:07
the dollar. That'll help to buoy gold higher, because as I said,
3:12
gold trades inversely to the dollar. More importantly, we've got bond yields are
3:20
near cyclic cyclogal highs right now, and your treasure yield about three and a
3:24
half percent. Remember that was about one percent two years ago. And gold
3:31
does not do well typically when yields are high, because gold doesn't pay a
3:37
dividend. Well, if the FED is forced to pause, which they will
3:40
probably they may be done raising the federal funds right now. We'll see how
3:45
inflation goes. But gold has responded to the anticipation of a pause, and
3:49
that's part of the reason that's bullied up to around two thousand dollars announced and
3:53
held that floor for quite a while. Now two months, when yields come
3:59
down, that will really open the door to higher gold price, and I
4:01
think that we're on the we're looking at that later in the year, either
4:05
as the FED decides to cut interest rates or the economy slows down. Either
4:11
way, I think yields will ease, if not fall further from the heights
4:15
that they're at now and now will move the gold price. So I think
4:17
gold has upside potential of ten to fifteen percent in this environment. That's a
4:21
pretty easy gain barring any other unusual for circumstances in the economy, like another
4:30
big bank failure. It looks like most of the banking issues have been pushed
4:33
through the system, although some systemic risk. The risk still exists, I
4:39
believe. Yeah, So what of the bank failures and all that, You
4:43
think it's really behind us or road as it just left the headlines for a
4:49
while. Well, it's hard to say. You know, the first two
4:54
weeks follow wing the Silicone Valley bank failure, we saw a huge exodus of
4:59
excess cash reserves and banks moved primarily into the US treasury market, and that
5:04
was a crisis of confidence in the banking system. If that rate of deposit
5:11
departure had continued, it would have severely challenged the banking system. So confidence
5:16
was restored because the FED backstopped the depositors over two hundred and fifty thousand dollars
5:24
all of them. They put another three hundred billion back in the system that
5:28
they were trying to take out to help liquefy things. So confidence is back,
5:32
but that doesn't ease the fact that there are a lot of treasuries and
5:38
securities that are held by banks that are upside down right now because they yield
5:43
his jump so much and we haven't seen a rate increase from the FED and
5:48
yields rise like this at this rate since the last inflationary cycle. Now,
5:53
I got a little snow on top of the mountain over here, so I
5:56
remember the last inflationary cycle, and today you've got money managers, bankers that
6:01
are in their thirties, that are in their forties, even in their fifties,
6:04
that don't know what how to manage risk in a rate environment change like
6:10
we've seen, and that's exactly what happened in Silicon Valley Bank. They didn't
6:14
manage their risk properly, specifically duration and yield risks. So there are still
6:18
problems in the system, and easing of the rates will help to mitigate some
6:25
of the losses that are on paper. It all comes down to whether they
6:29
have to actually take the losses that they have on paper or whether they can
6:31
trade themselves out of their losses. Over time, We'll see, But another
6:36
shoe could still drop it just will it Maybe Maybe it's hard to say,
6:42
Well, it's not just the United States banks that are on the balls of
6:46
their feet, so to speak. China, you know, their banking industry
6:50
has been insolvent longer than the US's has. And Europe with the bailout of
6:57
the Deutsche Bank and the credits was for ust acquisition, all these things that
7:02
a banking system that's kind of on its way out. Perhaps well, there's
7:09
no doubt that there's a lot of fundamental problems with our overall financial system.
7:13
You know, too much debt. We've just increased the deadload dramatically over the
7:17
last fifteen years from the Great Financial Crisis and then COVID. Now inflation is
7:23
here, and it's probably much more entrenched than most people realize. I have
7:28
a hard time believing that we'll get the base line rent down to less than
7:31
three percent, and probably less than four percent may be difficult for the Fed
7:35
to achieve unless we go through a real strong economic slowdown and the demand just,
7:42
you know, really dramatically falls. You know, if you look a
7:45
look at in the big picture, between seventeen ninety five and nineteen ninety five,
7:48
the US accumulated five trillion dollars in debt, and in the last twenty
7:51
eight years we've multiplied that sixfold. And that is just an astronomical rate of
7:58
increase. It just cannot be sustained. Yeah, the whole system's unsustainable the
8:03
way it is now. How bad do you think the recession's going to be
8:07
here? At DANTA? That's inevitable recession. Well, as I mentioned,
8:11
I'm kind of an armchair macroeconomist. It's really hard to say. The jobs
8:18
market remains strong, but jobs are the last thing to go. You know,
8:22
we've already seen the housing market dramatically impacted by higher interest rates. Manufacturing
8:28
is usually the second leg to go to weaken, where orders fall off and
8:33
then profits fall and then employment falls. I think they call that the hope
8:41
cycle, housing orders, profits, employment. Right now, we're somewhere between
8:46
orders and profits, and it just depends on how weak, you know,
8:50
how much resistance the economy really gets from these higher interest rates. One thing
8:56
we are seeing is bank lending is slowing down dramatically, and that's going to
9:01
help the Fed attain their goal of slowing the economy down without potentially raising rates
9:05
further. But bank landing is the key to small business and medium sized business,
9:09
and that's half of the economy. And you know, I saw what's
9:15
his name among Shark Tank, Kevin O'Leary is at his name, Yeah,
9:18
do an interview a couple of weeks ago, and he said, you know,
9:22
businesses that can typically borrow against ninety days of receivables at seven or eight
9:26
percent are now paying twenty five and thirty percent interest to get that same ninety
9:33
day receivable ash flow back from lenders. And that's a killer for small businesses
9:39
who can't you know, wait that long between paying for their goods and being
9:43
paid for their products or services. Materials rather and then products and services.
9:48
So that's sure, it's hard to say in my opinion, but I think
9:52
if you look at the yield inversion curve, which is steep, and it's
9:56
been steep for nine months now, that's is one of the biggest recessions we've
10:01
had since the eighties. Now, whether we have materializers or not, it
10:03
all boils down to consumer spending, which is of course seventy percent of our
10:07
economy. Yeah, so we have this recession and then the FED cuts rates,
10:15
but economic activities down, deficit goes even higher than it is now to
10:20
two three trillion a year. Where does that leave us? It's just the
10:26
debt. We have a debt problem, and we keep compounding it by creating
10:31
more debt. Isn't that the solution that our leaders are constantly putting forth right?
10:37
That's that's what we've been doing for fifteen twenty years now, and we're
10:41
hearing the endgame because the interest that we're going to pay on our debt now
10:45
is going to be the highest line item on the US budget and over a
10:48
trillion dollars a year. Two years ago, our interest on our debt was
10:52
half a trillion, five hundred billion. So we're getting into the point of
10:56
time where GDP we'll take all our GDP just to pay the interest on our
11:03
debt at some point in time, and that's when you know, things really
11:05
fail, that's when the fun really starts. So all right, at that
11:09
point, I guess you could expect to see gold go far higher than it
11:13
is now. Yeah. It's the currency of last resort and the world's oldest
11:18
and safest trusted form of money. Yeah. Gold is an international asset,
11:26
it has no counter party risk, it's immediately liquid anywhere it's it's immediately valued
11:33
all over the world instantly. The gold that will be a great hedge to
11:39
have in an event where the dollar just continues. So we was purchasing power
11:43
if it doesn't blow up all together, which will eventually happen if we don't
11:48
change the course that we're on and politicians just don't have the resolve to fix
11:52
the problems that we have. Yeah, and the isn't that the truth?
11:58
And it's not just the US currency that'll go And they'll all go up and
12:03
smoke together, won't they. Yeah, I believe that. Uh, you
12:07
know, the dollar is the king, it's you know, there's been a
12:11
lot of talk at d dollarization. I think that that's a process that has
12:15
started in earnest. It will take quite a while for that to manifest fully,
12:18
probably ten twenty years, to be honest, unless I'm wrong, but
12:22
I do think I don't think the system can stay intact that long. The
12:26
way we're going now with debt and the continuing loss of purchasing power dilution of
12:35
value of the currency, is we print more and more of it and increase
12:39
our debt. I mean, what was global debt was one hundred and fifty
12:43
percent of global GDP twenty ten, and now it's two hundred and fifty percent.
12:48
It's it's a worldwide problem, and it will blow up fiat currencies.
12:52
Hey, So one final buspin for you, the future of the backing currencies
12:58
with the precious medals. It's the last thing the politicians ever want to do
13:03
because that will take away their power. Is it inevitable or will they keep
13:07
fighting it to the very end? Well, I would love to see that.
13:11
That would put the gold price in anywhere between ten thousand and fifteen thousand
13:16
dollars announce and higher. If it were to fully back the dollar or other
13:20
currencies, I think we might see a partial backing of something like the Chinese
13:24
you want. I sadly don't think that we'll get to that point where gold
13:28
backs a currency anymore, because you said it. It takes the power out
13:33
of the politician's hands, and they're going to hang onto that power as long
13:35
as they can. And I'm really afraid they'll blow up the dollar and the
13:39
financial system of the process. It's not a happy thought, but it's a
13:41
realistic one, I think. Date. I would just add to what you
13:46
said. The politicians will absolutely fight it to the very end until they have
13:52
absolutely no choice. There's no other option. Because look, any fee out
13:58
system relies upon confidence. And I always say the root called the root of
14:05
the word confidence as con right. So once the con is over, that's
14:09
the end of the confidence, right, Yeah, exactly, And we are
14:13
headed that way. And you know, in a fractual banking system, I
14:16
mean it's been exposed with these bank failures that we've had. You know how
14:20
thin this system really is, and you know, the pressures from the dead
14:26
and these higher interest rates are just revealing the fragility of the system, and
14:33
we cannot just continue to add another five ten trillion dollars to our dead without
14:39
creating some other unintended, unintended consequences, one of which will be the end
14:43
of the dollars purchasing power at all. So true, a once upon a
14:48
time of the reserve requirement at these banks, the amount of reserves they had
14:52
to keep on hand or depositors was ten twelve percent. Now they've done away
14:58
with that since the last finance crisis. There is no reserve requirement, which
15:01
means infinite hyper hyper leverage, hyper hypothfication, all that good stuff. Data
15:09
and just tell us where do we find you? How do we connect with
15:11
you? Find you work well? My company is American Gold Exchange. We're
15:16
located in Austin, Texas. We're a national physical precious metals and vintage US
15:20
gold coin dealership. Our website is www dot A M E Rgold dot com,
15:31
amaregold dot com. Our general email address is info I NFO at amergold
15:37
dot com and if you want to take a look at our website, we
15:39
have live transparent pricing. We're very competitive, have an impeccable reputation in the
15:45
national market for forty years, so we'd love to try and help people if
15:48
they're interested in physical precious metals. That's what we do, all right.
15:52
Hey, we appreciate you coming on. If you've got a question for data
15:54
myself, email addresses k l at Kerreluts dot com. You'll find the link
16:00
to a marigold in the show. That's this interview on Financial Survival Network dot
16:04
com. Just click through. While you're there, sign up for your free
16:07
NEWSLETTERDA that a real pleasure will have you on again. Thanks so much,
16:11
Thank you, Carrie, it's pretty pleasure speaking with you today. Best wishes,
16:15
thanks for listening to Carrie Letz's Financial Survival Network, your solution to today's
16:21
trying times. For the latest, go to Financial Survival Network dot com.
16:26
Financial Survival Network now more than ever.