Latest / Financial Survival Network / Buffett’s $347 Billion Warning: Jim Welsh Explains Why a Secular Bear Is Here #6321

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Buffett’s $347 Billion Warning: Jim Welsh Explains Why a Secular Bear Is Here #6321 · Financial Survival Network

0:00
Speaker 1: You know Warren Buffett, you know he has three hundred
0:02
Speaker 1: and forty seven billion dollars in cash. It's almost thirty
0:06
Speaker 1: percent of his portfolio. Prior to the selloff in two
0:10
Speaker 1: and two thousand and two he had about twenty percent.
0:14
Speaker 1: Before two thousand and seven and eight nine he had
0:16
Speaker 1: about twenty five percent. So his cash position is the
0:21
Speaker 1: highest it's ever been as a percent of his portfolio.
0:24
Speaker 2: You're listening to Carrie Let's's Financial Survival Network where you
0:28
Speaker 2: get valuable information you just can't find anywhere else to
0:32
Speaker 2: thrive in today's trying times. You need the Financial Survival
0:36
Speaker 2: Network now more than ever. Go to Financial Survivalnetwork dot
0:41
Speaker 2: com and get your free newsletter and gift. Financial Survival
0:45
Speaker 2: Network now more than ever.
0:51
Speaker 3: And welcome you are listening to and watching the Financial
0:55
Speaker 3: Survival Network. I'm your host, Carrie Letz and with us
0:59
Speaker 3: today is Jim Welsh macrotides dot com. And where you
1:05
Speaker 3: out there who are watching and listening. There's a link
1:10
Speaker 3: in the show notes that will give you Jim's latest
1:15
Speaker 3: to August missive and.
1:19
Speaker 4: Will will and be enlightening.
1:22
Speaker 3: You know, I've gone through it, and you know, like
1:27
Speaker 3: it's a weird thing like if you don't like the
1:30
Speaker 3: numbers that the system's putting out, rather than changing the system,
1:34
Speaker 3: you just fire the person who's responsible for the numbers. Now, look,
1:39
Speaker 3: those numbers are useless from month to month. They're kind
1:43
Speaker 3: of useless because they're always being revised up or down,
1:47
Speaker 3: and they're deceptive. Right, The employment numbers are completely deceptive
1:51
Speaker 3: because if they wanted to the government really wanted to
1:56
Speaker 3: give the true numbers, they've got the information in real
1:59
Speaker 3: time in terms of withholding taxes and taxes being paid
2:04
Speaker 3: from salaries, and then they could make adjustments for number
2:09
Speaker 3: of self employed people and number of people in the
2:13
Speaker 3: so called gig economy. Those people are supposed to be
2:18
Speaker 3: paying quarterly self employment tax. So they can revamp this
2:23
Speaker 3: system to make it much more accurate, and yet.
2:26
Speaker 4: They choose not to.
2:28
Speaker 1: What's your take on this, Well, you're touching in all
2:31
Speaker 1: key points. What they don't do. The BLS Bureau Labor statistics,
2:37
Speaker 1: they hadn't gotten to the twenty first century yet really,
2:40
Speaker 1: because the survey they sent out to businesses is done
2:43
Speaker 1: by mail, and so the net result carry is they're
2:47
Speaker 1: surveying about twenty five percent of all jobs.
2:51
Speaker 4: If you're will that are right.
2:53
Speaker 1: Back in time for any given month, so they're only
2:57
Speaker 1: getting about fifteen percent of the picture. So automatic you
3:00
Speaker 1: have a built in problem where you're going to invite
3:02
Speaker 1: revisions as opposed to using technology and getting the information
3:07
Speaker 1: all the information very quickly. In addition, the birth death
3:12
Speaker 1: model has been I think the biggest problem area. Back
3:18
Speaker 1: in two thousand, the BLS said, you know what, we
3:21
Speaker 1: can't keep track of all the companies that are starting
3:24
Speaker 1: up and a lot of small companies that are disappearing,
3:27
Speaker 1: and so we're going to come up with an estimate
3:30
Speaker 1: of how many new companies are being formed each month,
3:33
Speaker 1: how many are going away? And in recent years, in
3:37
Speaker 1: twenty fifteen, I believe the number is the birth death
3:41
Speaker 1: model created twenty eight percent.
3:44
Speaker 4: Of all the jobs.
3:46
Speaker 1: Last year it was forty nine percent. So you have
3:50
Speaker 1: this one input, Carrie that I think is kind of,
3:54
Speaker 1: you know, going crazy and creating a bunch of jobs
3:58
Speaker 1: that don't exist. As the BLS gets subsequent surveys back
4:03
Speaker 1: in and quarterly information, they then revise the numbers down marketly.
4:09
Speaker 1: In addition to the muffing numbers that get revised, so
4:13
Speaker 1: you one hundred percent right, There are ways that the
4:16
Speaker 1: BLS can do this to make these data points more accurate,
4:21
Speaker 1: more timely, because the bottom line is when a number
4:25
Speaker 1: gets announced, well, you know, you created two hundred thousand
4:28
Speaker 1: jobs or lost two hundred thousand jobs, financial markets move
4:33
Speaker 1: on that data point. Sixty days later, six months later,
4:37
Speaker 1: they get revised. Oh no, it wasn't two hundred thousand
4:39
Speaker 1: plus or minus, it was only eighty four. So it's
4:43
Speaker 1: integral that they get this stuff tied up. And my
4:48
Speaker 1: guess is there will be an honest effort to do
4:50
Speaker 1: that in the next you know, year or two.
4:54
Speaker 4: Yeah.
4:54
Speaker 3: Well, it seems to me they're about as efficient as
4:57
Speaker 3: the FAA. You know, if you put the as in
5:01
Speaker 3: charge of air traffic, we would have estimated airplanes landing
5:08
Speaker 3: airports and we wouldn't know what the heck was going
5:12
Speaker 3: on there. So maybe we should be grateful that a
5:15
Speaker 3: person wasn't running the FAA.
5:17
Speaker 1: They're only doing the labor market.
5:19
Speaker 3: Yeah, they could do a lot less damage there than
5:23
Speaker 3: managing metal in the sky. But yes, seriously, this is
5:28
Speaker 3: a big problem because it's just like GDP. GDP includes debt,
5:34
Speaker 3: so it's not really measuring true economic growth, and then
5:38
Speaker 3: GDP is subject to error because the inflation rate really
5:46
Speaker 3: is impossible to actually calculate under our presence system.
5:52
Speaker 1: Yeah, Now, basically you get nominal GDP, which is how
5:56
Speaker 1: much the economy grew minus the inflation rate to get
6:01
Speaker 1: the GDP number that they're reporting. So obviously, if you
6:04
Speaker 1: report that inflation is less, that's going to boost GDP growth.
6:09
Speaker 1: And conversely, if inflation's bigger, it subtracts from GDP growth.
6:15
Speaker 1: So the other issue, and a lot of people I
6:18
Speaker 1: don't think understand it, including a lot of people in
6:20
Speaker 1: the business, is that inventories and trade are huge swing
6:25
Speaker 1: factors within that report every month. So in the first
6:29
Speaker 1: part of this year, we saw an enormous amount of
6:31
Speaker 1: companies buy stuff ahead of the tariffs. Well, because that
6:36
Speaker 1: production came from overseas, the Census Bureau subtracted i think
6:42
Speaker 1: close to five percent or maybe it was four percent
6:46
Speaker 1: from GDP because it's gross domestic production, so they subtract imports.
6:52
Speaker 1: In the second quarter, imports dropped significantly and added more
6:57
Speaker 1: than two percent to GDP. And inventories are the same way.
7:01
Speaker 1: You know, a big boost inventories, oh, we're going to
7:04
Speaker 1: add that to GDP. And so you had this year
7:08
Speaker 1: especially Carrie. These swing factors are huge in terms of
7:13
Speaker 1: these numbers, and there's not much you can do about that.
7:16
Speaker 1: The methodology, to me is logical. We're measuring gross domestic product.
7:22
Speaker 1: At the same time, a lot of people don't fully
7:24
Speaker 1: comprehend that. I don't know that the media does a
7:27
Speaker 1: good job of educating people to be aware, especially in
7:30
Speaker 1: this environment that we've been in that to get the
7:35
Speaker 1: true measure of GDP or growth, look at final sales.
7:40
Speaker 1: To me, that's the number that gives you a better
7:44
Speaker 1: indication of what's happening as opposed to the GDP number.
7:48
Speaker 3: Hey, well, I have an idea, And instead of celebrating
7:54
Speaker 3: the job's numbers and the GDP numbers when they're released,
8:00
Speaker 3: how about we don't even bother covering those numbers and
8:04
Speaker 3: we only cover the revisions.
8:08
Speaker 4: Why not?
8:09
Speaker 1: You know, no bottom line does have to have to
8:12
Speaker 1: be improved. Now, President Trump fired the BLSA BLS commissioner
8:18
Speaker 1: because of these revisions, and he said it was all political.
8:22
Speaker 1: But as I pointed out in my letter that in
8:26
Speaker 1: August of last year, the BLS announced a big negative revision.
8:31
Speaker 1: Over eight hundred thousand jobs disappeared, and that was about
8:36
Speaker 1: two months before the election. So if you're going to
8:39
Speaker 1: play fair, is fair. The reality is the BLS did
8:42
Speaker 1: something two months before the election that made Biden look
8:47
Speaker 1: his economy look a little less strong. So I think
8:50
Speaker 1: the charge that is totally driven by politics and so forth.
8:54
Speaker 1: You know, I don't buy it. The need to increase
8:57
Speaker 1: better data, that's a legitimate criticism and needs to be addressed.
9:03
Speaker 3: Yeah, well, here's what the chat GPT said about that.
9:08
Speaker 3: Ignore the first print, watch the revisions, and the benchmark
9:12
Speaker 3: July seventy three k is within the statistical fog. Household
9:17
Speaker 3: employment fell, participation slipped, and the last big benchmark took
9:22
Speaker 3: eight hundred and eighteen thousand jobs off the books. The
9:26
Speaker 3: birthday death plug likely overestimated. At the turn netnet, the
9:31
Speaker 3: real job market is flat to slightly negative right now,
9:36
Speaker 3: stall speed, not expansion. And that brings us to something.
9:43
Speaker 3: I don't want to call it disturbing, because truth is
9:46
Speaker 3: truth and truth doesn't care whether you're disturbed or not.
9:51
Speaker 3: But you've got a secular bear market warning out there.
9:55
Speaker 3: You're convinced most investors are unprepared buying hold will be
10:01
Speaker 3: buy and lose. And in your special report, the theme
10:06
Speaker 3: is the coming secular bear market.
10:08
Speaker 1: Yeah, basically, you know what I'm saying is, if you
10:11
Speaker 1: look at from the thirty thousand foot level, you can
10:14
Speaker 1: see sentiment is wildly bullish. You have rampant speculation. This
10:18
Speaker 1: is hard to believe, Kerrie, but sixty percent of all
10:22
Speaker 1: the options traded on individual stocks and indices are on
10:27
Speaker 1: the instruments that expire in twenty four hours.
10:31
Speaker 3: That's nuts. Can only pros can make money that way,
10:35
Speaker 3: and only the people writing them are making money.
10:39
Speaker 4: Why is it in the short term?
10:41
Speaker 1: Obviously, right now, on the short term, that strategy has
10:44
Speaker 1: been working because if you're buying calls on Nvidia and
10:48
Speaker 1: other AI related type stocks and so forth, you know,
10:52
Speaker 1: the tailwind has been pretty strong. My point, though, is
10:56
Speaker 1: that when someone buys a call option ten to fifteen
10:59
Speaker 1: percent out of the money the dealer sells them that call.
11:03
Speaker 1: Now the dealer is theoretically short that that stock and
11:08
Speaker 1: have to take positions to hedge it. And so to
11:11
Speaker 1: a certain extent, what's happening with this? Sixty million shares
11:15
Speaker 1: or sixty million options have been trading a day, and
11:19
Speaker 1: sixty percent of them are for twenty four hours or less.
11:23
Speaker 1: So and it says you had the tail wagging the dog.
11:26
Speaker 1: But from the bigger picture standpoint, these are all symptoms
11:30
Speaker 1: of a lot of speculation. From the valuation standpoint. You know,
11:35
Speaker 1: Warren Buffett, you know he has three hundred and forty
11:37
Speaker 1: seven billion dollars in cash. It's almost thirty percent of
11:41
Speaker 1: his portfolio. Prior to the selloff in two thousand and
11:45
Speaker 1: two thousand and two, he had about twenty percent. Before
11:48
Speaker 1: two thousand and seven and eight and nine he had
11:50
Speaker 1: about twenty five percent. So his cash position is the
11:55
Speaker 1: highest it's ever been as a percent of his portfolio.
11:58
Speaker 1: And it's not a timing tool, but it's another one
12:01
Speaker 1: of these symptoms carried that, oh, is the market at
12:05
Speaker 1: a place where you want to be buy and holding
12:09
Speaker 1: long term? And so my point and that special report
12:13
Speaker 1: for those who request it, and the information will be
12:15
Speaker 1: on your website. You know, looks at prior secular bear
12:21
Speaker 1: markets like nineteen sixty six to nineteen eighty two, two
12:24
Speaker 1: thousand to two thousand and nine, where the SMP goes
12:28
Speaker 1: through corrections of thirty forty fifty percent and its stretched
12:31
Speaker 1: over a decade in the case of sixty six eighty two,
12:35
Speaker 1: sixteen years. So I think we're nearing that point where
12:39
Speaker 1: we're likely to see one of these extended bear markets,
12:43
Speaker 1: and most investors are oblivious to it. Understand, that's the
12:47
Speaker 1: way markets work. At tops, everyone knows all the good
12:50
Speaker 1: reasons why the market's in great shape and is just
12:53
Speaker 1: going to keep going on up forever. And that's when
12:56
Speaker 1: you need to pay more attention and be aware that
13:00
Speaker 1: at you know there's danger at your door.
13:02
Speaker 4: If you think life is you know, the market's easy street.
13:05
Speaker 4: We're not there yet.
13:07
Speaker 1: Things like the Advanced Decline Line continue to make higher
13:10
Speaker 1: highs historically, that's a good guide post. In feber I
13:14
Speaker 1: noted that the AD line was not making higher highs
13:17
Speaker 1: relative to the high it had made in November of
13:19
Speaker 1: last year, which suggested we were set up for a
13:22
Speaker 1: pretty good correction. So I'm waiting for things like that
13:26
Speaker 1: to more pinpoint the timing of when I think we're
13:29
Speaker 1: going to see a much more significant correction and you
13:33
Speaker 1: know it lasting longer. We're not there yet, but it's
13:37
Speaker 1: always better to be prepared and be on the lookout.
13:40
Speaker 1: And that's all I'm trying to do is just say, folks,
13:42
Speaker 1: there are a lot of reasons why caution needs to
13:46
Speaker 1: be exercised at this stage of the game.
13:50
Speaker 3: There's one indicator that I really like a lot. There's
13:54
Speaker 3: been numerous indicators that predict recessions at every corner, every turn.
14:01
Speaker 3: Occupancy rates in Las Vegas. Because Las Vegas, they should
14:07
Speaker 3: call it the discretionary income parting, right grabaganza, Yeah, the
14:15
Speaker 3: Lost Vegas right, yeah, yeah, yeah, you're you know, outside
14:22
Speaker 3: of compulsive gamblers, which are a big problem, let's face it,
14:26
Speaker 3: but Vegas isn't really built upon compulsive gamblers. I would
14:31
Speaker 3: say they're the profit and the casual visitors pay the bills.
14:38
Speaker 3: The problem is they're down double digits.
14:41
Speaker 4: Now.
14:41
Speaker 3: There are reasons for it, like it's become a ripoff,
14:45
Speaker 3: extracted enterprise that doesn't provide value for the money that
14:50
Speaker 3: you're paying, like thirty dollars bottles of water. And I
14:54
Speaker 3: love it there, but I like the people watching in
14:57
Speaker 3: the food I don't and the shows. But it's become
15:00
Speaker 3: prohibitive to the point where you know, like the fast
15:04
Speaker 3: food joints are mobbed and the really great restaurants are
15:10
Speaker 3: fairly empty. So the fact that it's declining is really
15:14
Speaker 3: an alarm bell, isn't it.
15:16
Speaker 1: Well again, it's you know, if you look at the
15:19
Speaker 1: delinquencies on auto loans and credit cards, they're reaching like
15:23
Speaker 1: ten and fifteen year highs. So one of the things
15:27
Speaker 1: I've had is that the bifurcation in the economy. You
15:30
Speaker 1: have the bottom fifty percent of wage runners who have
15:33
Speaker 1: been getting squeezed by inflation. And some of those are
15:36
Speaker 1: the people you're talking about who would maybe in the
15:38
Speaker 1: past taking trip out to Vegas, but they look at
15:41
Speaker 1: the prices and they can't afford to do that. As
15:44
Speaker 1: a counterbalance though this, you know, over the fourth of
15:48
Speaker 1: July weekend, I think you had three million people going
15:51
Speaker 1: through TSA checkpoints. Something similar like that is going to
15:54
Speaker 1: happen this weekend, and so you have this bifurcation. And
16:00
Speaker 1: carry with those who have assets like stock portfolios on
16:05
Speaker 1: their own home, they're feeling a pretty significant wealth effect
16:09
Speaker 1: and have and that's one of the things that I
16:12
Speaker 1: think is continuing in helping them to continue to keep spending.
16:17
Speaker 1: But if you're a renter and your rent has gone
16:19
Speaker 1: up forty percent but your rages haven't, you're really under
16:23
Speaker 1: the gun. And so there's crack showing up. And what
16:26
Speaker 1: you're citing in terms of Vegas is one of those cracks.
16:31
Speaker 1: As I said, delinquencies on credit cards, auto loans, they're
16:34
Speaker 1: up ten to fifteen year highs. So underneath the surface
16:40
Speaker 1: there's weakness building. The number of corporate bankruptcies has moved
16:44
Speaker 1: up pretty aggressively this year, so the signs are there.
16:48
Speaker 1: So to me, this plays into what we just talked
16:50
Speaker 1: about in terms of a secular bear market, where what's
16:54
Speaker 1: feeding the beast is asset values. Well, if we see
16:59
Speaker 1: a significant client in the equity market that lasts more
17:03
Speaker 1: than two months, home prices coming down. I got to
17:06
Speaker 1: report a couple months ago laying the groundwork of why
17:10
Speaker 1: I think home prices are going to drop fifteen to
17:12
Speaker 1: thirty percent over the next five years. So if you
17:15
Speaker 1: see those hits to wealth, then those who have been
17:20
Speaker 1: spending will become much more cautious. And so again, these
17:24
Speaker 1: are the storm clouds out there in the future. In
17:27
Speaker 1: the near term, you know, the market's technically in decent shape.
17:32
Speaker 1: So I'm not saying, oh my god, this guy's about
17:34
Speaker 1: to fall. I'm just saying that right now things are okay,
17:38
Speaker 1: but there are some storm clouds out there that are
17:41
Speaker 1: suggesting that the underpinnings of the economy may not be
17:45
Speaker 1: quite as strong and rosy as a lot of people
17:47
Speaker 1: like to think.
17:48
Speaker 3: Yeah, and you know, visitor volume in Vegas, just getting
17:54
Speaker 3: back to that theme, is down the eleven percent year
17:57
Speaker 3: over year in June and a year to date in
18:02
Speaker 3: the I think as of July was down seven point
18:06
Speaker 3: three percent, So you know, that's definitely an issue. Air traffic.
18:12
Speaker 3: The only good thing to come in the air traffic
18:14
Speaker 3: segment now is that you no longer have to take
18:17
Speaker 3: your shoes off when you're going through TSA.
18:20
Speaker 4: I mean that's a big that's a mile, So that
18:22
Speaker 4: act is.
18:23
Speaker 1: Right versus twenty five years ago, where you know, it
18:26
Speaker 1: was very very much different. So, yeah, not having to
18:29
Speaker 1: take your shoes off, thank you very much. Yeah, especially
18:32
Speaker 1: you have high shoes and you're going to try to
18:34
Speaker 1: make a plane pretty soon.
18:35
Speaker 3: They won't be confiscating your toothpaste and suntan lotion and
18:41
Speaker 3: my contact lens solution which costs twenty bucks a.
18:44
Speaker 4: Bottle for two bottles.
18:47
Speaker 3: And denver Tsa thought that this was a threat, a
18:51
Speaker 3: global threat to air transport, certainly in America, but perhaps
18:58
Speaker 3: around the world. Because it's liquid, man, I could I
19:01
Speaker 3: could be mixing it into all sorts of dastardly things.
19:04
Speaker 1: Right, Well, they took one look at you and they said,
19:06
Speaker 1: we better check his bag really carefully.
19:08
Speaker 3: So you know, oh, man like why this is crazy systems,
19:15
Speaker 3: But it's just indicative of a dysfunctional government that no
19:22
Speaker 3: longer can accomplish its basic functions or has great difficulty
19:28
Speaker 3: and expense in even attempting.
19:31
Speaker 4: To do that.
19:33
Speaker 3: So looking at what we talked about here, you know, buffets, cash, hoard, inflation,
19:41
Speaker 3: and the fed secular bear market, a gold look at
19:46
Speaker 3: gold and silver. Now's we got to talk about silver, copper,
19:50
Speaker 3: potash just added or will be added shortly to the
19:54
Speaker 3: government's official critical mineral list. This means a boom in
20:01
Speaker 3: my opinion for the mining sector because because it's an
20:05
Speaker 3: emergency and it's critical now, a lot of the environmental
20:08
Speaker 3: reviews and the legal reviews that would take place ordinarily
20:12
Speaker 3: are going to be basically cost.
20:15
Speaker 1: Right or expedited, you know, significantly faster than what they
20:20
Speaker 1: have been in the past or whatever have been obviously
20:22
Speaker 1: in the last administration. A couple of things that will
20:25
Speaker 1: point out the chart pattern of gold. For instance, my
20:29
Speaker 1: take has been since we hit that high in April,
20:32
Speaker 1: you know, the markets correct.
20:34
Speaker 4: Either two ways.
20:35
Speaker 1: Either you get a decent size decline and a lot
20:38
Speaker 1: of people are bush, or you get a sideways chop
20:41
Speaker 1: where you just wear people out. And gold has been
20:44
Speaker 1: doing the sideways chop. I think getting above thirty four
20:48
Speaker 1: to oh three, which it did today, is the signal
20:52
Speaker 1: that gold is on its way to a new all
20:55
Speaker 1: time high. So my take has been the last few months, hey,
20:58
Speaker 1: we're going through this correction. When it's over, we're going
21:01
Speaker 1: about thirty four ninety six, My guess is thirty six
21:05
Speaker 1: hundred and thirty seven hundred, And there's a lot of
21:08
Speaker 1: things coming into it, Carrie, you know, perception about the
21:12
Speaker 1: FED and all likely the hood the FED will cut
21:16
Speaker 1: the fund rate at the September meeting. But you know,
21:20
Speaker 1: inflation is at about three percent, so that.
21:23
Speaker 4: Data is not good.
21:24
Speaker 1: Look stated you know, President Trump, I'm sorry dated inflation.
21:30
Speaker 1: Yeah well yeah, So I think those are the things
21:35
Speaker 1: that psychologically feed into you know, and is a tailwind
21:40
Speaker 1: for gold and silver, and so I think in the
21:44
Speaker 1: near term to me, my analysis of the gold chart
21:48
Speaker 1: suggests it's about to pop to the upside. We're going
21:52
Speaker 1: to see silver obviously follow and probably as it has
21:56
Speaker 1: been doing the last couple of months or so. I'll
21:58
Speaker 1: perform gold to the upside. So near term, I think
22:03
Speaker 1: finally we're getting indications that gold is ready finally to
22:07
Speaker 1: make a move to the upside, and to it, you know,
22:10
Speaker 1: a new all time high.
22:11
Speaker 3: Forty dollars silver right now as we speak, looking at
22:15
Speaker 3: kit Goes ticker, which I don't really appreciate. But for
22:18
Speaker 3: spot thirty nine two, we just broke thirty nine. That
22:22
Speaker 3: is a huge technical spot. It's bounced back and forth
22:26
Speaker 3: over it. But once we hit forty forty is like
22:32
Speaker 3: the better circle the wagons, because those short positions there
22:37
Speaker 3: are in real jeopardy and you can't just.
22:40
Speaker 4: At some point, you can't just up up your.
22:45
Speaker 3: Your price limit, you know, you just can't keep getting
22:48
Speaker 3: run over, like resetting your options prices.
22:53
Speaker 1: I'm old enough to remember the spring of nineteen eighty
22:56
Speaker 1: when the Hunt Brothers attempted to corner silver. It traded
23:00
Speaker 1: up fifty maybe fifty one.
23:02
Speaker 3: Fifty might have tra it traded over fifty for a day,
23:07
Speaker 3: but I think it closed fifty.
23:10
Speaker 1: Yeah, and then it dropped the ten bucks very quickly.
23:12
Speaker 1: I mean, they basically screwed the Hunt Brothers as a
23:14
Speaker 1: story there. We don't need to bother to cover it.
23:17
Speaker 1: But my point is, you know, you get above something
23:20
Speaker 1: like a forty, you have to start beginning to look
23:23
Speaker 1: at well, that fifty from forty plus years ago is
23:27
Speaker 1: out there and is a test of that coming. And
23:31
Speaker 1: I would say there's a good shot that is going
23:33
Speaker 1: to make a run at that fifty dollars mark at
23:36
Speaker 1: some point in time, and maybe it could happen very
23:40
Speaker 1: quickly given the setup that we have. There's another inflation
23:44
Speaker 1: report that comes out tomorrow. I think the PCE it's
23:48
Speaker 1: not going to be good news the next CPI. The
23:53
Speaker 1: PPI report that came out for July was ugly, So
23:56
Speaker 1: again my point is, you have a backdrop that inflation
23:59
Speaker 1: is all already at three percent and the tariffs are
24:02
Speaker 1: going to bleed through and cause more inflation on the
24:06
Speaker 1: good side. The thing that I find interesting is that
24:10
Speaker 1: in his Jackson Whole speech, Chair Paul acknowledged the good
24:14
Speaker 1: side inflation but didn't reference services and both the ISM
24:19
Speaker 1: service indicator was up to sixty nine percent. Historically, there's
24:24
Speaker 1: a nice correlation between moves in that index and the CPI.
24:30
Speaker 1: So my point, Carrie is that the inflation news is
24:33
Speaker 1: going to get worse in the near term, and I
24:38
Speaker 1: can't imagine that that won't be a tailwind for the metals.
24:41
Speaker 3: Okay, and I am in complete agreement with you. There
24:45
Speaker 3: one interesting note going back to the eighties.
24:49
Speaker 4: You know, the.
24:50
Speaker 3: Last time silver hit fifty, it's the only commodity to
24:55
Speaker 3: have not established a new high in over forty years. Yeah,
25:01
Speaker 3: and that that alone makes you think. And then you
25:06
Speaker 3: look at the price action. It's a coiled spring, it's
25:09
Speaker 3: a jack in the box, and when it pops, especially now,
25:13
Speaker 3: the fact that Uncle Sam has said it's a vital
25:17
Speaker 3: critical mineral or metal, if you will, could.
25:22
Speaker 4: Just give it the impetus.
25:24
Speaker 3: And I don't think the government's going to nationalize silver mines,
25:28
Speaker 3: but I think they will do exclusive supply contracts with
25:33
Speaker 3: the big producers. There's only a few of them that
25:36
Speaker 3: they have to bother with, and the US and Canada
25:39
Speaker 3: and those companies can't exactly say no, but what they
25:44
Speaker 3: can do is buy some futures to protect their margins
25:50
Speaker 3: because the price of silver will once that gets out gent,
25:53
Speaker 3: it's going to explode.
25:55
Speaker 4: Yeah.
25:55
Speaker 1: Well, and the other thing the point you made is
25:57
Speaker 1: that silver hasn't made a new high where probably every
26:01
Speaker 1: other commodity on the planet has in the last forty years.
26:05
Speaker 1: You know, start to attract money. You know, you look
26:08
Speaker 1: at gold, you say, wow, this made a big move already,
26:10
Speaker 1: and I look at silver has kind of and now
26:13
Speaker 1: it looks like it's coming to life. So that alone
26:15
Speaker 1: starts to attract some money for the catch up trade.
26:19
Speaker 1: Now I'm not talking to ketchup that you put on
26:21
Speaker 1: your hot dog.
26:22
Speaker 3: Yeah, the catch up trade, well, we have wars over ketchup,
26:25
Speaker 3: so I not have trades over it, you know, just
26:29
Speaker 3: looking at it. The buffet warning, I mean that kind
26:32
Speaker 3: of says it all. I'm surprised, but I'm not surprised
26:35
Speaker 3: that Buffett isn't buying silver. The last time he tried
26:39
Speaker 3: that little trick, Martin Armstrong exposed him and exposed the system,
26:46
Speaker 3: and you know it took ten years to get over that,
26:51
Speaker 3: even though nobody remembers it now. So so metals, you
26:57
Speaker 3: got any feelings about bitcoin crypto? I mean I saw
27:00
Speaker 3: it hit one hundred and nine thousand the other day,
27:03
Speaker 3: back up to one eighteen now, which tells me another
27:07
Speaker 3: coiled spring, another another potential short squeeze. Position because they're
27:14
Speaker 3: gobbling up a bitcoin like they can't get enough these institutions.
27:20
Speaker 1: And you know, the allocation has been you know, very
27:22
Speaker 1: very small. The Trump administration has kind of ordained bitcoin
27:29
Speaker 1: or legitimize it, and so that is helping as well.
27:34
Speaker 1: What I have observed, though, Carrie, is between the dollar, Bitcoin,
27:38
Speaker 1: and gold, what has often happened is one of the
27:42
Speaker 1: three will be running while the other two are either
27:45
Speaker 1: going sideways or down. And if we're right that in
27:48
Speaker 1: the near term, the metals are about to have the
27:50
Speaker 1: light shine on them. Maybe Bitcoin, you know, it's head
27:55
Speaker 1: heck of a move, Maybe it goes into a sideways
27:58
Speaker 1: chop for a period of time. In terms of the dollar,
28:02
Speaker 1: I think the dollar is nearing a very important low,
28:05
Speaker 1: but near term it looks like it's going to go
28:08
Speaker 1: down again and take out the low from a couple
28:10
Speaker 1: months ago. So that will be another tailwind for gold.
28:14
Speaker 1: But if I'm right, because positioning on the dollar is
28:17
Speaker 1: very negative, a lot of shorts sentiments very negative. I've
28:23
Speaker 1: seen more articles in the last couple of months. Well,
28:25
Speaker 1: maybe the dollar status as a reserve currency will get
28:28
Speaker 1: challenged and so forth goes to me, are all symptoms
28:31
Speaker 1: from a contrary opinion perspective that all right, it's a
28:35
Speaker 1: little late to be really negative the dollar. It's already
28:38
Speaker 1: down eleven percent this year. From a price pattern standpoint,
28:43
Speaker 1: I think the dollar will be completing the correction that
28:47
Speaker 1: started after a peaked in October of twenty twenty two
28:50
Speaker 1: at one hundred and fourteen to seventy five. So my
28:53
Speaker 1: point is, I think there's a window for the medals
28:56
Speaker 1: to have a pretty good run here the dollar goes
28:59
Speaker 1: to a low or low. But if I'm right and
29:02
Speaker 1: the dollar makes an fairly significant low, then the metals
29:06
Speaker 1: will probably have a fairly good sized correction. And the
29:09
Speaker 1: rally in gold that I'm talking about, I've been saying
29:13
Speaker 1: we've got a wave five rally coming here to new highs.
29:16
Speaker 1: So my point is, if all these pieces fall into
29:19
Speaker 1: place near term, the metals have a great run. The
29:23
Speaker 1: dollar makes a low over the next one to three months,
29:26
Speaker 1: and if that unfolds, then that'll bring the backdrop of
29:29
Speaker 1: why there'll be maybe six months to nine months from
29:33
Speaker 1: now the beginnings of a significant correction in the metals,
29:37
Speaker 1: So you know, near terms, some of these things are coming.
29:40
Speaker 1: In the other thing, I'm going to point out is
29:42
Speaker 1: treasure yields. I believe the long term trend in treasure
29:45
Speaker 1: yields is up, and so we near trim, we might
29:48
Speaker 1: see a little bit more relief. The tenure might get
29:51
Speaker 1: down to about four oh seven, but after that, I
29:55
Speaker 1: think it's going above five. A lot of supply continues
30:00
Speaker 1: to come. President Trump has not really narrowed the deficit,
30:04
Speaker 1: and if we see the economy slowing meaningfully at any
30:08
Speaker 1: point in time in the next couple of years, the
30:11
Speaker 1: deficit is going to jump to three trillion, that's a
30:13
Speaker 1: lot of paper. At the same time, the Japanese thirty
30:17
Speaker 1: year yield has made a new all time high. Germany
30:20
Speaker 1: Great Britain yields are going up. So we're in an
30:22
Speaker 1: environment carry where these other governments in Europe especially, they're
30:27
Speaker 1: increasing defense spending from under two to five percent, so
30:32
Speaker 1: that the world is going to be competing for investment
30:37
Speaker 1: dollars as governments sell bonds, using out and tipically, if
30:41
Speaker 1: you don't have enough demand, you got to raise rates,
30:44
Speaker 1: rates go up to attract buyers. And I think that's
30:48
Speaker 1: the world we're going to be in over the next
30:51
Speaker 1: handful of years.
30:53
Speaker 4: And so.
30:55
Speaker 1: You know, that's another reason why I think the equity
30:59
Speaker 1: market is going to experience a secular bear market. I
31:04
Speaker 1: believe a secular bear market has already begun in the
31:07
Speaker 1: bond market. Now, when I say secular in the bond market,
31:10
Speaker 1: we're talking thirty five plus years. So this isn't something
31:13
Speaker 1: oh yeah, four years now, it's going to be over now.
31:16
Speaker 1: Three years from now will be where it becomes more obvious.
31:19
Speaker 1: And on the tenure, I think the tenure goes to
31:22
Speaker 1: seven and a half percent.
31:23
Speaker 4: All right, reason.
31:24
Speaker 1: Why it got over fifteen and a half in eighty
31:28
Speaker 1: one down to fifty five basis points in twenty twenty.
31:32
Speaker 1: The fifty percent retlacement of that move is about seven
31:35
Speaker 1: and a half. So I'm not even talking about, oh
31:38
Speaker 1: my god, treasure yields are going to take out there
31:40
Speaker 1: nineteen eighty one highs. I'm just saying they're going to
31:42
Speaker 1: retrace fifty percent. And as you noted, with all the
31:45
Speaker 1: debt that we have out there, anything meaning for move
31:48
Speaker 1: like that in treasure yields is going to be really
31:54
Speaker 1: challenging for both the government and the economy.
31:57
Speaker 3: All right, Jim, that was exhaustive and I really appreciate it.
32:02
Speaker 3: Anybody interested macrotides dot com. The link is in the
32:07
Speaker 3: show notes so you can download the latest edition where
32:11
Speaker 3: all of this is discussed and a lot more. If
32:14
Speaker 3: you got a question for Jim myself, shoot me an email,
32:18
Speaker 3: klatcarriets dot com. What do you think are we headed
32:22
Speaker 3: for a secular bear market? Our interest rates going higher?
32:27
Speaker 3: Are precious metals prices going higher?
32:30
Speaker 4: Why don't you put it in the.
32:32
Speaker 3: Q and a section on YouTube if you're watching it there,
32:36
Speaker 3: or shoot me an email let me know your thoughts.
32:40
Speaker 3: Obviously it's perception, but there's also reality behind that perception.
32:46
Speaker 3: That's what you need to be thinking about. Jim always
32:48
Speaker 3: a pleasure. Thanks for coming on.
32:51
Speaker 1: My pleasure as well. Carrie take West, stay well.
32:54
Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your
32:58
Speaker 2: solution to today's trying times. For the latest, go to
33:02
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33:08
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