Latest / Financial Survival Network / Precious Metals Shine Bright in Times of Inflation - Alan Hibbard #6070

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Precious Metals Shine Bright in Times of Inflation - Alan Hibbard #6070 · Financial Survival Network

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We're in an interesting point now because so many dollars have been created that just
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about every asset class is at an all time high. I mean, precious
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metals, real estate, stocks, bonds, pretty much everything is in a
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bull market, and so it can be confusing to say, like, is
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something going to continue to go up or not? I mean, it could
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be the case that real estate and the stock market goes up, but they
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just might not go up as much as something like gold or some other investments.
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And welcome you are listening to and watching the Financial Survival Network. I'm
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your host, Carrie Lutz. Well, we have a gold and Honest money
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expert with us here, Alan Hibbard. Alan's great to have you on the
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show. You work with Mike Maloney. The site is Goldsilver dot com.
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You got a question for Alan or myself, shoot me an email kl at
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carrie lets dot com. We'll get you an answer. So, Alan,
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where are we right now? We've seen gold and silver, gold now trading
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at thirty two and a half dollars an ounce thereabouts, silver over twenty four
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hundred. What are these numbers telling you? Yeah, well, basically we're
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in a precious metals bull market, there's no question about it. So gold
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is moving up, silver is moving up. Like you said, Silver's up
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over thirty percent on the year already, and gold is up over twenty percent
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from its lows in February, I believe it was. So these are pretty
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strong moves. And this is part of what I would say is a big
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picture around inflation. So inflation is kind of the main story. Yes,
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we're getting a little bit of a reprieve in the United States, and yes
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it's possible we get a rate cut or two or even three in the coming
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year. But really, we've created so many dollars over the past few decades.
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Eventually they're going to come back home and they're going to show up in
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consumer prices, and investors of all shapes and sizes are going to move into
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gold and silver as they've been doing lately. All Right, So you don't
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think it's too late to get in on the party. No, I don't
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think it's too late. Usually, these big bull markets and precious metals are
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measured in years, are usually like a decade. If we look at the
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nineteen seventies, there's basically ten years of a really strong bull market in both
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metals, and it's looking like we're shaping up for another bowl market of a
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similar size and scale, and we're only maybe a year or two into it.
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So I would say there's still a few years left, all right,
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at least a few years. So you have any feelings about bitcoin and other
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so called cryptocurrencies, Yeah, I'm a big fan of bitcoin. So my
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portfolio is basically gold, silver, and bitcoin and that's it, which is
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a bit extreme, but it's three kinds of money and I'm a big fan
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of that right now. I personally don't like taking a lot of centralized risk,
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whether it's in companies or countries or currencies. So gold, silver,
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bitcoin, those are money, and so I'm a big fan of those.
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However, most other cryptocurrencies i'm generally not a fan of from an investment perspective
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because they're too idiosyncratic. You have to make too many specific bets on specific
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companies and technologies and their ability to market and execute. And that could make
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sense for some people, some investors, but it just doesn't make sense for
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me. So I like bitcoin, but not really the others. All right,
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So talking about gold and silver mining stocks, they have been a little
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late to join the party. Usually they lead the party. What you're feeling
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there, Yeah, Well, I don't usually choose specific names, again because
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of the idiosyncratic risk, and it would require me to do too much due
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diligence on specific companies and you know, management and the specific nuance that they're
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facing in individual countries and jurisdictions, and it's a little too granular for me
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specifically. But in general, you're right, mining stocks have been lagging,
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and generally, if you hold stocks a long period of time, you're going
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to underperform the metal itself. So if you just hold gold or silver,
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you usually perform better than holding a mining stock for the same length of time.
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So mining stocks are more high risk, high reward. If you can
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get the timing right, you can obviously get way bigger returns, but there's
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a risk there. So we will see these mining stocks pick up I'm not
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sure which ones, I'm not sure when, so I don't really want to
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touch any specifics on that one. Okay, And all right, so is
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there any other investments that you see besides astoria. I know you say you're
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invested gold, silver, bitcoin, but what else if you're looking to branch
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out a little bit, Yeah, well, eventually, I mean, I
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would love to be holding stocks, you know, dividend paying stocks, real
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estate, CASHULW, real estate. That's ultimately what I want to hold.
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I think that would be more fun, more exciting, it would have better
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returns. But when I look at the stock marker right now, it just
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feels a little overvalued. And I look at real estate it feels the same
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way. So pe ratios are super high, dividend yields are super low.
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So for me personally, it just it just doesn't seem that attractive. And
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I like to invest over the long term. I like to play these long
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cycles that take ten years to play out or twenty years to play out.
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So as I look at something like the Dow gold ratio, for example,
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that basically shows the flow of capo from the centralized portion of the economy,
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you know, the Dow Jones to the decentralized portion of the economy gold right
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where gold doesn't have a single issuer, it doesn't have a single management company,
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it doesn't have a single interest rate or anything like that. And so
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with the dowgold ratio, capital moves back and forth from decentralized to centralized,
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and it can take a decade or two or three to make one swing back
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and forth. So as I look at the Dow Goold ratio, it's particularly
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high, which means that the Dow zones has been performing well in the past,
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in the recent past. However, looking forward, I'm expecting that ratio
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to come back down, which would suggest that gold would outperform the Dow in
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order for that to happen. So that's sort of my play now is just
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wait for that ratio to revert. It could take another ten years, could
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take fifteen years. I'm just going to be patient and when it reverts,
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that's that's what I'm planning anyways, to move most of my you know,
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my precious metals into stocks and just sort of buy an index and then wait,
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you know, twenty years or thirty years in that position. So that's
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my strategy. I hope it works. We'll see. All right, what
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about real estate? Because real estate's always marketed, is a hedge against inflation.
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Obviously the inflation isn't going away. It's not transitory. Now they're saying
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it's sticky. I would say, semi permanent. You got an opinion on
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that. Yeah, you know. So I'm certainly not a real estate expert.
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I like to stick to, you know, precious metals and sound money
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fundamentals. But I can say about real estate that Robert Kiyosaki has a great
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quote on real estate. Someone wants asked him, hey, is now a
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good time to get into real estate? And he said, it depends are
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you good at making money in real estate? So it's kind of like,
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you know, it's not so much what the market is necessarily, it's not
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going to be an automatic. It's also about your individual skill, your ability
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to find a good deal, your ability to know how much leverage to use,
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if any, and that sort of thing. So I'm not really sure
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if real estate is going to make sense for any particular person to get into.
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That's going to be super specific to them and their risk tolerance and their
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skill set. Okay, so, but you're not philosophically opposed to it.
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Oh, of course not. No. I want to own real estate eventually,
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it's just not yet. Not yet for me. Firstly, I can't
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speak to anybody else. So inflation though, like when we look at the
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price of real estate, I look back at my parents' house in nineteen sixty
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three, a custom about fifty six thousand dollars dollars. Last time I saw
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that hast sell like four or five years ago, it sold for one point
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four million. You think that the housing has run its course and it's going
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to also see a retlacement like the dow. Yeah. I mean we're in
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an interesting point now because so many dollars have been created that just about every
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asset class is at an all time high. I mean, precious metals,
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real estate, stocks, bonds, pretty much everything is in a bull market.
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And so it can be confusing to say, like, is something going
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to continue to go up or not? I mean, it could be the
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case that real estate and the stock market goes up, but they just might
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not go up as much as something like gold or some other investments. So
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if you look at the nineteen seventies, for example, the price of a
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median home doubled in that decade, which isn't bad. You know, it's
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roughly seven percent a year. The price of your house doubled, you know,
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no problem with that. However, the price of gold went up twenty
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five x twenty five acts. So if you held gold instead of a house,
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you could buy twelve houses at the end of the decade instead of just
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sitting on the one house you had the whole time. So I would expect
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something like that to happen, where the price of real estate could go up,
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and that could be a function of inflation. But on a real adjusted
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basis, if you account for the price of gold, I expect the price
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of gold to go up a lot, and so real estate might look like
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it went down in comparison. Okay, so everything is relative here. What
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about what kills your thesis? What makes it so that gold silver actually go
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down, although maybe not in real terms but nominal terms, and it turns
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out that there were better opportunities. It's a great question. So there's a
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few things. The first one that comes to mind is it could be an
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issue of timing where this thesis could play out, but it could take,
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you know, fifty years before it finally reverts. And I'm dead in a
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grave, and then my whole thesis was bunk. So it could just be
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an issue of timing. But it really feels like with all the geopolitical uncertainty,
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all the debt that's everywhere, I mean, you know, thirty five
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trillion in the United States, it really feels like it's happening now. And
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we're getting those nice, nice technical moves in both gold and silver, So
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it feels like it's happening now. But it could be an issue of timing.
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It could be delayed. Also, it could be an issue of currency
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supply, like we've seen entwo currency kind of rounding, rounding off, tapering
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off. That could continue if there's a huge, huge credit contraction. If
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there's a deflation in the currency supply, that could cause asset prices to go
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down, including gold and silver, possibly real estate and the stock market as
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well. And again everything's relative, so it's possible that more air comes out
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of out of gold and silver than the stock market. So those are kind
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of the two ways that that thesis could be wrong, but they just seem
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like unlikely scenarios in my mind. So like a deflationary depression kind of like
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what we had in the thirties. I remember that. My mother told me
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stories like if you had one hundred dollar bill, you couldn't go to a
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supermarket and cash it. You had to like kind of do it privately and
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you might get ninety five cents on the dollar, meaning one hundred dollars bill
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would get you ninety to ninety five dollars. Could that ever happen? Again,
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Well, sure, Yeah, I guess something like that could happen.
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It would probably require a combination of factors in order for it to happen.
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Yeah, I guess I haven't thought through that scenario in particular, but I
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wouldn't rule it out right. Basically, anything could happen if a certain combination
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of factors happened. So, yeah, that seems like it might be kind
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of extreme. There would be probably other things going on in the economy.
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There could be like power outages or something catastrophic that could create a scenario like
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that, But again, kind of kind of a fringe case that I wouldn't
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bet on, but maybe just be prepared for. Yeah, Well, if
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the money is supplied crashes by even a few percent, we could be looking
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at serious deflation and then major defaults. Finally, we should talk about the
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banking crisis, what's happening there and how this all impacts on money. Is
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there any way to get out of the banking crisis now other than inflating.
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That's a great question. That's a million dollar question, a trillion dollar question,
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trillion dollar question, exactly exactly. The numbers get bigger every day,
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so it's a great question. I don't know. I mean, when you're
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on a co monetary system like this and in the absolute fundamentals is just print
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money and promise it into existence, you get into this vicious cycle where anytime
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you need money to pay off your debts, you're just printing more money and
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creating more debt. And so that's how we get to thirty five trillion,
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and that's how these numbers really get out of control. So I think that
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the way out is they're probably going to inflate their way out. Otherwise,
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like there's outright default where you say, hey, we're just you know,
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we're just not paying it back, and that's World War three or worse.
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So I think it's going to be inflated away. So I mean, that's
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kind of good news for any individual who has debt because you can pay that
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debt back with inflated dollars obviously, so the real cost to you is as
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much lower, but it's going to look pretty ugly for the whole banking sector
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and for the government as well. Hey, I couldn't agree with you more.
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And finally, let's talk about the election, but I want to talk
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about Argentina. What's happening there. Argentina has been a basket case since I
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can remember. It's you know, multiple currency crashes, et cetera. Now
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it seems they've turned the corner. This guy Milee has literally cut everything in
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his power. We got an election here. Could that happen in the US?
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Well, it would be fun to watch, I'll tell you if he
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can. You know, he just goes up. He's cutting all the budgets.
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I forget the Spanish word, but he's like cut this, cut this,
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yeah, great, Yeah, those fun to wy definitely. So yeah,
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he basically slashed like almost every government department and it's looking like he's stabilizing
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the country. It's you know, got he got a balance budget in something
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like the first eleven weeks being in office, which is just just incredible.
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So could something like that happen in the United States? Boy, I'd love
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to dream about that. It's I just feel like there's not a whole lot.
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You know, we don't have a dictatorial system. We can't have a
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president that just comes in and does something like that. You know, we
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have checks and balances like you know, Congress and so forth. So I
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don't really see that happen. Mostly checks and no balances. Oh that's a
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good one. We need that. Yeah, you're right, So I don't
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see that happening. I mean, it would be nice, but we just
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have too many politicians and too strong of an incentive to just keep going down
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the path we're on and and try to, you know, police the entire
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world and try to set policy for the entire world. And I just don't
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see something happening in the United States like what happened in Argentina. Yeah.
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Well, there's one means of doing it in the US, and that's called
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pound men authority. There is actually a case against Nixon right around the time
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of Watergate and his imminent resignation where he held back four hundred dollars now four
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hundred million dollars is a rounding error. Congress went to court, lost the
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case, he lost the case. It didn't. Really, it's never been
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fully tested, let's put it that way. So if you impound a third
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of the US budget, all right, and there's other little tricks to get
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rid of employees as well, maybe then, but sounds like a long shot
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to both of us. Yeah, exactly, I don't really see that happening.
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I mean, it would be nice, but again, we've just gone
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so far down this path, and we've put ourselves in a position of entitlement,
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not only in the government but with so many of our citizens as well.
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It's really hard to take that away. And I really don't see any
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any of our leadership having the discipline to do something like this, much less
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the courage. So I don't see it happening. A one term president who
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has nothing to lose, never underestimate. We can always hope right back to
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sound money. But inflation's just too easy. It's just too easy to print
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the money and let the chips fall where they may. Alan, we find
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you at goldsilver dot com. That's the place, goldsilver dot com. All
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right, excellent, Well, hey, you will be a regular on the
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show from this point on. You got any question for Alan myself? Shoot
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me an email. Al at Carrie lets dot com. Link to Goldsilver dot
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com is found in the show notes to this interview on Financial Survival Network dot
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com. While you're there, sign up for your free newsletter Alan A pleasure.
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We'll talk to you again real soon. Hey, thanks, Erret,
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Thanks for listening to Carrie Letz's Financial Survival Network, your solution to today's trying
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