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