Latest / Financial Survival Network / Argentina Say Adios to Central Banking -- Rise of a New Gold Standard - Bob Hoye #5964

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Argentina Say Adios to Central Banking -- Rise of a New Gold Standard - Bob Hoye #5964 · Financial Survival Network

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In order to manage the economy. You can't have a gold standard because the
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bed has got to be ready to expand credit at an instant noted. But
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what you have with a gold standard is that it enstrained what the central bankersh
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can do. You're listening to Carrie Lutz's Financial Survival Network, where you get
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valuable information you just can't find anywhere else to thrive in today's trying times.
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You need the Financial Survival Network now more than ever. Go to Financial Survivalnetwork
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than ever, and welcome. You are listening to the Financial Survival Network.
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I'm your host, Carrie Lutz got a special treat for you now, Bob
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Hoy. He's got his favorite pick and mining stocks, which are literally I
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don't even know if they're the redheaded stepchild anymore. Maybe they're the bold headed
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stepchild. Bob. The sector has been beat up. And is this a
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opportunity or a jumping opportunity like jumping off a bible. Yeah, very good
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praise. As you know, I took a degree in geology and actually got
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summer jobs in the field working for juniors so I've always been partial to them,
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and I've had some very good ones over the decades. And for example,
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nineteen ninety five I got a list from a gold fund manager. I
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said, hey, John, give me a list of act braids and stocks,
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and he got five and Jeff Juniors and one of them in ninety ninety
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six turned out to be Eric Kleeper. I made you Discovery in Peru and
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the dot went to thirty dollars, which was wonderful. So then with looking
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at how devastated many of the golds are, and particularly the juniors, they
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really are a washed right out. And you've got the Toronto Venture Capital Adventure
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Stock Index which is all the juniors, and it really is down and technically
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it's the exhaust that beat up whatever, and it looks like it's forming a
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bottom. So what we did was take take a list of maybe it's about
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fifteen a small cap gold stocks, no silver shift great gold stocks, and
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they range from small producers, small pre production, just straight exploration and in
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it is one that has the property that geologically speaking could be a big winner.
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And we all know that in South Africa with waters Ran gold system,
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well the number usually is that it's produced forty percent of all of the gold
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ever mined in history. I don't know, millions and millions and ounce of
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it fifteen average, I think fifteen grams a ton. So there's certain striking
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symbols about that geology. And a company I'm involved in and have been has
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a witwaters Ran property in Colombia. Actually it's on the border of Columbia and
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Brazil, and locals on both sides of the border watch to see this thing
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go ahead. And we've had it for a number of years. But what
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has happened with this company recently? Well, actually a year ago one of
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the japan big Japanese trading firms came in and ran a survey or banded iron
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formation. And banded iron formation can occur near or part of a wet waters
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Rand system. We're not interested in that, but a major mining commandy is
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so. But to get down to ours, the main read is about twenty
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kilometers long and it shows h you know, gold samples all the way along
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as clock vaulting were been remenalized. And there's actually a couple of locals making
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a living there banging in the gold off the rock and crushing it up and
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panning it for gold well, which we don't mind, but this is the
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gold sort of dissemine and various forms along the thirty kilometer reef, sorry,
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twenty kilob reefs. And of course that would indicate that this should be an
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project for a huge mining company because they the recent recommendation from the consoling geologists
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in South Africa was a big drill set up on top of a certain place
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and drilling down for the intercept the structor. But we have a modest drill
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on the property and water pumps or stuff like that. So a few months
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ago we were getting the equipment turned up, you know, the pump,
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water pumps going and the drill going. So the drillergists drill the hole on
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the edge of this reef and in less than fifty meters down he came up
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with the right stuff. And this is uh And in the wet water system,
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the best grades are carried in what's called the conglomerate zone. And so
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this drill hole accidentally intercepted a conglomerate conglomerate strata. And we've got the gold
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samples of the core samples and the gold and also the particles of gold are
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a certain nature. So we've got both. We've we've got the the conglomerate
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strata and it's got the right kind of particles of gold in it, but
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it's all it's less than fifty meters down. So we got the one hole
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in it. But then once we're underway and then that sets up for easy
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drilling along strike. The other would be drilling for ordinary gold at some depth.
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With a big joke. So this is this is absolutely incredible. It's
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a it's one of those happy things that happened in mining explorations from time to
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time. So we liked the list of juniors and people can can request it
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and we've glad to send it out and we emphasize that one of them,
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cst Casego Resources, had a very large pospect. Then that's amazing. I
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know, we talked about the company and it was kind of not doing much
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and then all of a sudden, right before you're very hot, it's dead,
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along with a lot of the juniors. And you take a look at
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the PSD venture, which is a good proxy for junior goals. But it's
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interesting carry to go back to the gd XJ well, the h K stood
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for Exploration Juniors and Now that sounds like kid locks in there. So the
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GdK is no longer an index of junior called they all grew up. Yes,
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well anyway, So then that leaves us with the ventor. Now,
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my colleague Ross has done his usual technical stuff on it, and the TF
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ventor, which is a proxy for the juniors, is totally beat up and
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what we call a downside pitulation, and it also has a sequential buy in
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it now, so it looks like it's basing, you know, after severing,
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you know, a dismal hit and it's oh, you got everything here,
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You've got the sector completely devastated. Now, as you know, on
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gold, I do gold's real price, which is deflated by the CPI or
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better you know, the rate of inflation, and better than that is gold
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deflated by the CRB, the commodity index. Now, the reason why we
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do this is that the commodity index is a proxy for mining costs. So
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if the CRB is falling relative to gold, which it is now on that
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trend, this could at some point begin to enhance private margins for gold miners
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and also the secondarily valuation of mineral prospects in the field, and then also
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even make it clearer we did gold divided by crude oil now and in any
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kind of mining, energy costs are about sixty percent huge of overall costs.
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And if you've got energy costs as represented by crudeo falling relative gold, which
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it is doing, that then is enhancing operating margins. So if you I'm
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not really bullish on gold in US dollar terms, right, because in a
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post bubbles and traction s in your currency, which is the US dollar,
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becomes chronically firm. Now ironically gold's real price becomes chronically firm, and as
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I've said, the best way of keeping track of that is relative to the
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CRB or relative to crude oil. And these now are in up trends,
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well established up trends. That will be the foundation for the next major move
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up in the gold sector. So that would be all gold stocks. And
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but as I say, there the forlorn doctor, the equation of the suck
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the juniors. And here's another one. Seasonally on the Vancouver Stock Exchange,
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you can have a low going into Christmas because part of December you've got tax
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laws selling, and then at Christmas time the promoters are all doing something else.
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And then traditionally it turns around and starts to look act a little better
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in the new year. So everything set up for people to be buying junior
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golds. Carry all right, I like it, I like it. Sons
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of near Man gets going, Yeah, on it gets going, It seeds
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on itself. And so now how does this compared to other sectors. Well,
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we're in a bear market for like say the S and T, although
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it's been acting very well lately, but generally we think that the top in
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January twenty to twenty twenty two was the end of a great bubble. And
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what happens is in great financial bubbles like recently and then nineteen twenty nine or
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eighteen seventy three, they had a methodical They have key components. So the
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four items that we keep track of to keep you know, if you we're
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at to a contraction. It's one of them is that base metals coppers real
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price, which was up with the bubble, then heads down, which is
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the case gold goes the other way. It's real price go down with the
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bubble and then goes up after the bubble, and this has been working out.
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Then another is that the senior currency becomes firm, and that generally is
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working out. But and and the other one is that that real long interest
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rate, it's bottle right, and it's a killer now so far the increase
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in real rates for the long treasure, you know, a tenure, it's
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gone from sort of google minus point four h percent now about two so to
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ten. So is that about two and a half for scantage points And people
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are complaining about rising rates. Well, in a post bubble and previous post
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bubble crashes, the real long indust rate is gone up by sort of in
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the league of ten to twelve percentage points, and this thing is up now
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two and a half percentage points, and there's pain. Can you imagine what
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it's like if it goes up that part? So you get this this contrast
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whereby real long rates go up, but also the real price of gold goes
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up. So when the S and P is not getting killed, the gold
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stocks will be rising. But also carry beyond this is that the stated GDSK
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could probably outperform the S and P. Now you've got some hot shot fund
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manager, equity guy, and he's looking at a couple of quarters whereby the
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GDXJ is outperforming the S and P. He may not normally buy gold stocks.
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But because of that outperformance, he's going to have to buy gold to
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get in the hot play. So this is where I see wonderful stop ahead
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for all, you know, the whole range of gold stocks for now.
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This can go on for a number of years. We're not talking about the
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next six months. We're talking a number of years where the gold stock would
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be outperformed, not just going up, but outperforming. The S and P
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going to love it. Yeah, really, wow, amazing, amazing,
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you need the promised Land's finally going to be here. Huh yeah, But
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look at it happened in nineteen following nineteen twenty nine. Then the previous bubble
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was eighteen seventy three, and that was a thing thing you went into a
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multi year well. Actually in England was the senior economy then, and by
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eighteen eighty, economists in England began to call a contraction the Great Depression.
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It ended in eighteen ninety five, but gold generally went up through the period.
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And then the previous one was eighteen twenty five bubble and then a long
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contraction and where gold real price went up, and it goes all the way
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back to the South Seat bubble in seventeen twenty. So all of these key
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four points on monitoring the transition from great bubble to contraction, it happened five
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times before. So and all I can say now, although you had the
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monstrous intrusion of COVID lockdown and then now I think that the strengthen the US
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economy to the of the third quarter was due to people trying to get back
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to ordinary after being locked down. But the key thing is that the four
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features of the transitions from a boom to bus are tracking well. And also
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here's one that happens on every business cycle. And I've got the charts on
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the yield curve back to eighteen fifty seven. And when in a boom,
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any kind of a boom, the short rates will eventually zoom up and get
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higher than long rate. And that's called an inverted yield curve. So the
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curve inverted in March, and it's inevitable on our numbers. Every yield curved
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inversion has been followed by a resection without accept Now, the one more aspect
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of this is that if the inversion is is dynamic, or let's put it
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right, the more dynamic the inversion, the more severe the recession and the
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numbers going into the inversion in March. We're fairly dynamic. So two things.
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Recession is inevitable. Second, it will likely be severe, and there's
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nothing anybody can do about it. Yeah, they can print all the money
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in China, and what does it accomplish? Right? Yeah, Now here's
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one from an editorial and Barrens, you know, the high end sample publications
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in July nineteen thirty two, which was actually the bottom of the first major
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hit in the post nineteen twenty nine con directions, and they edit royalize that
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every anti deflationary measure taken by the FED is not to be working. And
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they also mentioned no, that's that's sproximating the quotes. And they also the
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article also mentioned that the antideflationary measure was to buy bonds out of the bar
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pet. So I can outline that where most standard economists lay the blame for
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the nineteen twenty nine crash and depression on the FED for being too tight,
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I can show that the FED was easy all the way down. And then
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that little editorial in Barons where they say if they were buying bonds out of
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the market to stop the contraction, and it didn't work. That says it
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all doesn't care. It certainly does. But if at first you nastic seed
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to keep trying, because even if it doesn't work, you still get brownie
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points from the public. Right, Oh, well, these guys are getting
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their pushy salaries and memberships in the right clubs and all assets of stuff for
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you know, ethnically, all the FED can do is depreciate currency. And
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then you get into a post bubble contraction and they cannot depreciate currency. I
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mean carry it's like a like a pub with no beer, no fun at
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all. Yeah, but who's going to go there? Who's going to go
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to a public? But yeah, the FED will can be again complete me
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dimon, No, we want to go back to one more the eighteen seventy
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three bubble now. And in London the they head editor for The Economist,
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Walter Bashan, he published that in a boom a contraction is sort of a
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neuralgia, that's the term you used, and he said it can be prevented
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by the Bank of England providing, you know, injecting credit and currently into
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the mark. Was he related to out a team time, Yeah, and
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so it's yeah, at the same time, in New York, the Herald
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newspaper had an editorial pointing out that in the US they had a better chance
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at preventing problems as the US did not have a center bank, and heeteen
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seventy three it was sort of a national banking system, but they did not
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have a central bank. So then you had the thinkers of the time editorializing
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that in the US nothing could go wrong because they did not have a central
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bank. In London it was nothing could go wrong because they had a central
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bank. And what it was believed then that the Secretary of the Treasury could
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issue credit and currency an in the amount because they were not on a gold
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standard. And crash and that depression in England, which is the place to
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follow it because it was a senior economy, lasted till eighteen ninety five,
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and through that period goal th real price went up. Guys in the gold
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business made buddy. Yeah. Now I'll give you an example. Home Misteak
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was the premier producer going into nineteen twenty nine. The stock went down with
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the crash and their earnings went down with the boom. So you could buy
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it in nineteen thirty one for nine dollars a yere, So you go into
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the end of nineteen thirty two. It was March nineteen thirty three when Roosevelt
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started messing around with the gold price. So to the end of nineteen thirty
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two, gold was still fixed at twenty dollars and sixty seven cents and ounce.
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Well, the stock was up one hundred and thirty percent from its low,
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and their earnings were up about one hundred and thirty percent from the low.
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Gold was still fixed at twenty dollars and sixty seven cents. What happened
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is their cost the mining crashed. Equipment became available because base medals were shutting
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down. Miners were available because base medals were shutting down. So this is
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how gold works in the post bubble deflation. And then eventually at the very
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happy time in mid nineteen thirty ninety thirty five, homestake stock was up to
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something like sixty five dollars, and in those days, gold miners paid out
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virtually everything by way of dividend. So on your original nine dollars purchase,
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you were getting not only that gain to sixty five dollars, but you were
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getting nine story four dollars a share dividend annually on a nine dollars purchase.
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Pretty good. Talk about profitability of gold stocks in a post bubble contract.
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Amazing, amazing. So there's my happy story. History's going to repeat itself.
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Huh oh, Yeah, we're on track for a How did the the
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the unusual thing was provid shut down and then everybody gotten back to busy and
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I think I think they're kind of all back to being normal. And then
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now comes in the downside and as I say, you've got the warning from
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neol crab becoming inverted in March and there's there's no way out from that.
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One. Got a question for you Argentina. Yeah, talking about getting down
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to central banks. What's going to happen to Argentina when they shuddered their central
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bank? They're going to live happily over Hey, I I they that new
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leader. I can't a miniate. What is Yeah, we as truly libertarian?
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Yeah, it is moted a shame. How do you elected? How
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do you get elected when you're a libertarian? I thought, Look, I've
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been a libertarian my whole life, just about out my twenties, and I
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never thought I could get elected to anything litt alone. Don't know the guy
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it was the times people have had enough of the old intrusion and went to
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this guy's story. Now also, my I think to be practical, they
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will the whole system. The planners of the world will resist uh anseling a
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sept for banks. But what they can do, and what this guy likes
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to do, put the mount of gold standard or just say restrict the money
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supply. But he has to do it in a way that his successors can't
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undo it, and that might necessity older. It does provide discipline, yes,
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so yeah, uh you know they they economic uh de Side says that
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in order to manage the economy, you can't have a gold standard because the
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Fed has got to be ready to expand credited an instant. But what you
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have with a gold standard is that it enstrains what the central bankers can do.
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They start losing a whole bunch of gold short rates store. They don't
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like that, so then they back off doing stupid and try to maintain their
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gold reserve. That's why they got rid of it in the few place,
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right. Oh yeah, in Canada, in order to join some G twenty
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or something like that, they insisted quietly under the table they Canada sell all
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of its gold at which it did do. It's crazy, yep, yeah,
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crazy. But it's interesting that some central banks have been accumulating gold now,
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whether they're doing it because they're fear of their own inflation or because the
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real price is going up and intuitively they find it attractive. But at any
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rate, any of the central banks that are buying gold or acts buying the
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only reserve that a central bank should have, which is gold. Yeah.
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Uh. You know, you keep telling me that it's going, it's going,
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it's going, and I have to admit I've been skeptical. But but
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Argentina is definitely cause for hope. Huh oh. Absolutely for me. It
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was a fabulous shock because I wasn't following it that closely, and all of
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a sudden, a pure libertarian wins the most important office in the land.
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Wow, who would have thought? Do you ever think that could be possible?
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After the war, Argentina was extremely prospicous because they were shipping all kinds
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of food, grains and resources and everything else to Europe. And then along
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came Prone and he gave everybody pensions and the pure socialism and avertally ruin the
29:02
country. But do you get Argentina back on to down money and that country
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can turn back into a wonderful producer game. Yeah. It was the fifth
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most prosperous country at the turn of the twentieth century, right, yeah,
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yeah, wonderful. It was very very was something. Yeah. Yeah,
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and there's still living also. And then one country goes big old. It's
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like an idea and the financial markets thought, oh, we've got to do
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it too. Oh and I think it will happen. You know. Can
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you imagine if they become like the Hong Kong where the Chile, like Chile
29:45
was all these years, if they become that, Yeah, that would be
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because they've got great recourses there, They got great yeah, so yeah they
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could do. Oh yeah, what can you imagine Canada and the US on
30:00
gold standards? I can't, But that Carodle is the ambition of the app
30:04
government and it provides a benchmark for all of the financial markets and everything.
30:12
I'd be happy if, yeah, if the Canadian dollar got up to a
30:17
dollar ten relative to the US. Yeah, everything. They don't wait,
30:22
do they have been there for a long time? Yep? God yeah,
30:25
well that was in two thousand and eleven. If I remember correctly, you
30:30
were like a dollar yeah of the US. Yeah. I bought a couple
30:34
of old sports cards from the US when the dollar premium was great. So
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I know you like to race, yeah, yeah, yeah, yeah,
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all right, Kerry a little bit that. Oh by the way, if
30:48
you're out there and you want that list of companies, send an email and
30:52
put in the subject line OI list h o ye list, and we will
30:59
send it out to you. Sound good, Bob, Yeah, that's that
31:03
terrific and we would welcome well, we think it is a good bet in
31:07
here people might just have some exposure. Absolutely could not agree with you more.
31:11
All right, Bob, Hey, you got a question for Bob Gates.
31:15
Harry he has got a question for Bob or myself. Email k l
31:18
at Carrie LUTs dot com will get you an answer, Bob. Always a
31:22
pleasure. You be well for you two, and have a very good Christmas
31:25
Eve. And thanks for listening to Carrie Letz's Financial Survival Network, your solution
31:30
to today's trying times. For the latest, go to Financial Survivalnetwork dot com.
31:37
Financial Survival Network now more than ever