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Speaker 1: With silva, you have the industrial use and that creates

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substantially momlatility. So one interpretation of the rise is that

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the economy might be doing better than expected.

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Speaker 2: You're listening to Carrie Lutz's Financial Survival Network, where you

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00:00:16,519 --> 00:00:20,480
get valuable information. You just can't find anywhere else to

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thrive in today's trying times. You need the Financial Survival

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Network now more than ever. Go to Financial Survivalnetwork dot

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00:00:29,440 --> 00:00:33,799
com and get your free newsletter and gift. Financial Survival

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Network now more than.

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Speaker 3: Ever, and welcome.

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Speaker 4: You are listening to and watching the Financial Survival Network.

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I'm your host, Carrie Lutz. Well, market's going crazy. Silver

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almost at forty dollars an ounce, just a hair's breadth away.

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We've got gold up there at record levels. We've got

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Bitcoin up at record levels or near record levels, let's

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put it that way. Bitcoin so volatile. Axelmurk is with

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us now live from the vineyard and you know him well,

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a well known fund manager who has a pensiant for

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precious metals.

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Speaker 3: Axel.

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Speaker 4: Great to have you back on. It's been too long,

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but silver. Are we heading for a silver squeeze? A

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short squeeze? It seems like it's baked into the cake

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to this observer.

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Speaker 1: Great to be with you. It's been way too many years.

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So I'm a simpleton. I focus mostly on gold, and

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the reason I say that is because gold has much

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simpler dynamics. With silver, you have the industrial use and

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that creates substantially more molatility. So one interpretation of the

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rise is that the economy might be doing better than expected.

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Regarding the squeezing offline we talked about a little bit,

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I think precious metals invest does. I always think the

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special that the market gets particularly manipulated. All markets with

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with derivative markets are quote unquote manipulated, and and what

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that really is, it's it's really dynamics that are the

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consequence of these markets. It doesn't necessarily mean that they

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are the various actors that they just want to make

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it buck along the way. With regard the potential for

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for a more volatile move to the upside, well we've

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seen of course that that that we've had this move,

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gold has moved quite substantially. Silver historically can be quite

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amplified in its move, and so I wouldn't rule it out.

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I actually think it's it's quite possible. Whether that's new

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to a short squeeze or not.

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Speaker 3: I don't know.

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Speaker 1: I it's it's nice to put a narrative on things,

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but I like to keep it simple for me. The

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key thing is that silver is signaling that the kind

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of the bottom isn't falling out of the economy, and

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that's why it's it's it's playing catch up in some

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ways and then some.

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Speaker 4: Also. Don't you think there's some renewed investor demand for

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the shining metal as well?

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Speaker 1: Well, there's certainly been been broadening and just for contact

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for those who don't know us, we manage a two

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and a half billion in both gold and the gold

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miners or precious metals miners that include silver do not

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many good pure plays on silver, so it's often more

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of a byproduct. And indeed, the way I would just

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kind of astracted speaking group the investors aside from the

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central banks, you got the diversifier, you got the investor

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who's concerned about the person car of the dollar, and

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then you do also have the speculator, and the speculator

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tends to be more on the mining side than the

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physical side. Many of those speculators are more on the

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cryptocide these days, they are not very loyal. They'll go

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whenever there's action. Now, what we have seen is we

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have seen more interest from every one of these constituents,

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and we have more conversation on the physical goal side.

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We see flows on that side, we see on the

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on the mining side, in part because there's been disappointment

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with the larger mining companies, we've there's a lot more

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attention to what we do. But even within the industry

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of course as well, merger activity has kind of moved higher.

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Speaker 3: And the other day I.

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Speaker 1: Got a question about convertible debt. How much we own

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of that, and there's sure we own some. But the

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equity markets are open, meaning there is an ability to

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raise capital. The question to me is what does it

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mean with regard to the phase we are in. And

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the short answer is, it's possible that it's a short window.

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It's possible that's a tenure window. It's it's very very

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difficult to say. We don't see signs of excessive deals.

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We don't see signs of people getting into the space

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who who have.

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Speaker 3: No business being in that space.

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Speaker 1: I mean, of course, to something extent that always happens

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a little bit, but there is, but there is over all,

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I still feel that this is an early inning, but

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that's more of a feeling.

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Speaker 3: I don't have a crystal ball either.

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Speaker 4: Well, but look, you've been in this for decades, somebody

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like you says, I think this is starting to happen,

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and it's happening now. I think it's incumbent upon everybody

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who's watching this to say, what does this guy know

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that we don't know that you don't know? And where

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do I find out? So this is your gut talking,

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and this is your expert system with decades of experience.

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What is the most important factor you think that is

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pointing to potential upswing in the metals here?

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Speaker 1: No, First of all, it's a little bit more than

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my gut. I'm on record as an inside of Baya

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in the mining space, and I haven't sold anything in

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that space, and so I put my money where my

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mouth is. Just to clarify that it's not for the

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faint of heart. I do have to put that caveat

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out there. It's a very volatile space. My speech is regulated,

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So I got to add that. When we when we

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talk about the potential for the for the upside, the

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I mean we've seen the price of gold was substantially higher.

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The market is paying much less fond ounce of precious

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metal in the ground, but of course that means also

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valuations are in that sense more modest, And of course

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we've seen a significant move, but in my assessment, nothing

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compared to where where we would be if the market

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were to assume that these markets are more permanent the

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current level. I happen to think that there are plenty

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of underlying drivers that provide kind of support for where

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we are subject to shorter volatility. Some of them are

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the ones I'm trust you have discussed with many of

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your guests about the deficits and whatnot to make sure

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I give you your view or something that maybe they

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don't hear everywhere else. One fact I think that's completely

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underestimated is the impact on financial flows from teriffs. And

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let me go to the stupid Trader Joe's or a

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supermarket example that's like, oh, you have a trade defastate

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with Trader Joe's. Well, what people don't realize that if

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you get this trade more into balance, it does affect

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financial flows as well.

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Speaker 3: And in my.

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Speaker 1: View, the rise in interest rates longer term interest rates

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in the US in recent months is the direct results

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of the teriffs, meaning that deficits are less financed from

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abroad than they previously have been, and that translates to

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a higher cost of boring and from that lead all

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kinds of unintended consequences, notably also increased pressure on the

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federal reserved to lower rates and whatnot. But it's that

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that sphere of things I think we need to pay

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attention to. The low long term interest rates could of

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course also be higher growth attention because of the regulation.

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But if if I'm correct, then we have to be

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very careful with regard what we call is exorbitant privilege,

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which is really the idea that we can borrow and

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the infinite amount of money very cheaply to invest for

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higher returns abroad. And so if we throw a wrench

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into this global system, and not saying they aren't good reasons,

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maybe from trades should be rebounced, But if we throw

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a wrench into that system, it does have an impact

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on financial flows, and I think that is one of

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the underestimated factors. Beyond that, yes, these these mining companies

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that are producing are going to be very, very profitable,

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and unlike another eras we've had that the the overall

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cost of mining hasn't exploded as much, and it's been

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it's it's it.

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Speaker 3: We are in a in a much.

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Speaker 1: Better sweet spot, so to speak, than we've been in

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the past.

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Speaker 4: Yeah, yeah, well, and so we're at record goal prices.

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You know, I saw a statistic I've new and for

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years that silver is the only commodity in the past

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forty years that hasn't made a new high and probably

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more than forty now. And how much higher can gold go?

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And how much? How much higher is possible here without

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some major world disruptions taking place?

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Speaker 1: Well, I won't give you a price target. Let's talk

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about disruptions though for a moment, of course, different types

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of disruptions. Historically, I don't like geopolitics as a driver

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for the price of gold, simply because the market gets

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used to anyone crisis. Let there be a terrorist attack,

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the price of gold goes up right and very quickly

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market used to it, even if that terrorists are taken

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to might continue. What has changed, though, is that I

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think we're in a new year in the sense that

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the peaceful period since World War Two has somewhat come

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to an end, and you're the financial survival network people

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to relate to that. But the kind of what we've

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seen in Ukraine or Gaza are but symptoms of a

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new era that we live in, and very abstractly, it

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means that the cost of doing business has gone gone up.

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Countries will invest the fortune into defense. Germany alone wants

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to invest the five hundred billion, and in order to

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get done they have to promise five hundred billion in

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infrastructure investment. The EU wants to spend much more money.

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They have different motives because they want to have EU

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jointly guaranteed debt. But we have an era of more

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industrial policy to address whatever the governments believe are the

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important issues of the day. In the US we clearly

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have shifted also more towards industrialist policy. Those policies cost money,

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they're expensive, they're inefficient. They may be the right thing

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for national defense or whatever it may be, but it's

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not cheap, it's not efficient. The US is no longer

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the guarano that global trade on global seeds is safe necessarily,

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and so all of that is a disruption. And in

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that sense, yes, the there is is less global certainty

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and it translates to higher cost of doing business. It

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translates to governments to spending more money, and presumably a

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lot of that is going to be deficit spending.

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Speaker 4: Right, So continued devaluation of the currencies. You know, how

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much more can they be devalued before there's a major

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economic disruption of a loss of confidence in the system

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here a because we think it can't go it any worse,

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but you know, technology.

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Speaker 1: Eail, it can always get worse. And that is one

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of the things, especially to just offend some gold bugs

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out there, because a lot of folks say, oh my god,

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there has to be a reset at some point, there

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has to be this or that there's always a day after.

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And just look at Latin America, right they You would

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have thought that some of these countries have done well

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and then they suddenly there's integrate or whatever it is.

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There's life is always there is a day after and

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society adjusts.

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Speaker 3: Just think about it.

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Speaker 1: In the nineteen fifties there was one bread winner in

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the house and people could have a decent living. Now

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if you nowadays and if in nowadays you have two

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bread winners. Similarly, people haven't saved enough for retirement. Well,

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I guess what if you are sixty seven and have

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a job. You're proud that you have a job. You're

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not lamenting twenty four hours. I mean some people might,

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but most people they take it as a pride that,

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oh I can still work, I can still be productive.

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And so we are adjusting to whatever the cards we're

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dealt with now. It doesn't mean we have to put

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up with it, and we doesn't mean we have to

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kind of put up with the erosion of the perchain

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cower that we have. But I've argued for a long

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time that kind of the the populist device we've had

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and including current president, is just the symptom of people

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being very dissatisfied they've seen an erosion of the perchain power,

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and they'll lead to more populist politicians, either on the

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left or the right. Could have a sharp turn to

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the left after this presidency. It's completely feasible. People are

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just dis chant. Just look at New York City what's

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happening there right as an example, and a lot of time,

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the sort of solutions that are being proposed are more

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addressing the symptoms rather than the root cause. And say

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when people say, oh, the government needs to go back

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to the gold standard, I when the interests of government

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are not aligned with the interests of investors. I would

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not hold my breath that that's going to happen. And

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so investors might want to take care of their own

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gold standard if that's what they if that's what they

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believe is the appropriate thing to do.

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Speaker 4: Yeah, there's no desire among the world's governments to reign

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in the deathicit spending. It's not just the United States.

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It doesn't have a monopoly on it. It's China, it's Japan,

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it's every country in the world except maybe Russia. And

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there's no political will it appears to actually come to

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terms with this situation. So then what's the endgame?

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Speaker 3: Here? Is the endgame?

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Speaker 4: A new economic system? Is the endgame? A reshuffling of

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the deck chairs on the Titanic?

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Speaker 3: What is it here? Give us your insights.

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Speaker 1: No, I don't think there's an endgame. It's a process.

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And one thing people have said I mentioned earlier about

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the exorbitant privilege and Moody's I think has said, oh,

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there is no alternative to the dollar, and therefore don't

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worry about any of these scenarios. My scenario is that

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that does not need to be an alternative what we

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will see is that disintegration of global finance. We will

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see and again it's a quote unquote less efficient way

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of operating. We will see more patchwork of things. Of course,

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eventually something may come up. But there's of course a

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reason beyond I talk about it. I don't like the

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impact on financial flows and terrorists. There's of course a

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reason why the US is the growth engine of the

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world that goes far beyond that, right, and so those

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advantages will persist. But at the same time, when financial

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flows are inhibited it it will create more pockets. Ultimately,

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it is healthier for many economies if they finance themselves domestically.

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Too many countries are boring in US dollars because it's

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been cheaper to find out their projects. Part of that

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is because the domestic markets aren't sufficiently developed, and that's

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because there'sn't enough trust in these markets because of a

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lot of reasons. That's not going to change overnight, and

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I don't think that the Europeans are going to get

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to act together tomorrow. Quite the opposite. But they can

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spend They are big, and they can spend a lot

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of money and say it will be a disintegration Also,

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what happens along the way, in my view, is that

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that all dynamics between countries will resurface. I would think

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we should keep a close eye on what's happening in

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Turkey and in other places we've seen. I mean a Russia,

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of all places, is plunging above its waistline. It's a

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tiny economy, right, and it's controlling a lot of the

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imagination in the world in what they can do. And

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they've re engineered the economy that they're kind of dependent

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on military spending now.

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Speaker 3: So there is And the.

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Speaker 1: Other thing to keep in mind is it's a go at.

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Endgame is at some point the bond market will tell

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the government in the US to get the back together.

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But we'll see a thousand eight remember two thousand and eight.

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Government can change the rules along the way. So even

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if I had a crystal ball, or you did, or

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one of your guests had, we just don't know how

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exactly it's going to play out, because the rules of

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the game when the government is cornered will change. And

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it's enough and address that living within your means, controlling

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your Yeah, you can live within your means. You can

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try to reduce or eliminate your debt. You can try

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to have more income and expenses. I mean, we talk

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about gold and silver and whatnot. The reason we do that,

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of course, is because we want to preserve our purpose

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and power and and and yes, if we get again

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on top of that, that's fantastic. But that's usually what

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investment is about, and what whatever people do, it's somewhat

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related to that, right, I mean, if you buy your

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favorite in the video.

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Speaker 3: Stock or gold, or or a piece of real estate.

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Speaker 1: And of course we have our reasons why we want

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to diversify or be concentrated, or why we think one

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is better than the other. In a in an unstable world,

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you got to think more about the basics, Right, are

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your property rights secure and how? And I live in

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the world where maybe taxes will have to go.

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Speaker 5: Up because at some point in some government has gone

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that out there and say, well, with high taxes we

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can solve all the problems out there, which of course

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is not going to happen, but a lot of damage

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can be caused along the way.

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Speaker 3: Yeah, yeah, so yeah.

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Speaker 4: I think the first order of business of any organism,

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living organism and governments and countries are living organisms, and

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one way of looking at it is survival, keep the

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game going, and you know they'll do whatever they have

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to to basically perpetuate their existence at the expense of

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the country, the world, et cetera. You know, what are

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some things you think that they're going to try to pull,

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so we can be a little prepared for it.

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Speaker 1: Axel Well, I think we should study the your zone

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debt crisis, like what happened in Greece, what happened in Spain,

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what happened and the sort of politics that go on

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or in the US right when in September October two

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thousand and eight, when when the markets brought politicians to

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their nees and got bail out. The one thing kind

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of to take this back on a higher level, we

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live in the credit driven society. We have fracture reserve banking,

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and you talk about the Federal Reserve worrying about interest

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rates and unemployment. Well, those are subordinate mandates to the

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primary mandate, which is financial stability. And we know the

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playbook of the central bank that they'll for to.

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Speaker 3: Run the way right.

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Speaker 1: They will make liquiding be available to the banking system

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because that is what keeps the glue together.

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Speaker 3: Indeed.

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Speaker 1: I mean, if you if you want to go in

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these scenarios in March twenty twenty, when when the pandemic hit,

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you might recall your viewers might recall we had this

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one day when the market's absolutely crashed. The one thing

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that happened overnight that night was that the currency markets

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got unhinged. There were spreads of five six percent in

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major currencies. And the reason that happened is because the

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folks that the Federal Reserve were sleeping. It was nighttime,

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it was past midnight, and it was further a wave

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of a shark. And and and yes, I mean if

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they if they were wake, they would have they would

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have done something. And it was just stunning to watch.

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I mean there if you ever saw markets completely falling

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apart for about two or three hours, that was the

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case there before they they kind of put Humpty dumpty

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back together. But that's the that's kind of the idea

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that there's there's a certain risk or just fast forward, right,

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I mean, the reason what happened in in Iran there

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was attack on the on the central bank and causing

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a financial panic induced by by the idea and what

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if something like that work to happen in the US right,

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And of course we think we are called more sophisticated

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and better in this and that, But it's it's it's

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always interesting as to kind of can you imagine scenarios

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that could happen? Sure, I mean anything can happen. Diversification

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is the name of the game. You can't safeguard against

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any possible scenario. You also have to assign some probabilities

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to it. Now I happen to put more weight on

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kind of high risk, low probability events. But everybody needs

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to be so comfortable with what they do. And one

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thing I tell people, ultimately, if they invest in themselves,

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that's probably the best investment they can do, because you

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are fixed income generating machine that you have a much

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better control of than whether you buy a stock with

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a click off a button.

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Speaker 4: Agreed, Agreed. Rick Rules said the same thing. I've said

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the same thing for many years because from personal experience,

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every time I've invested in myself, better tools, better knowledge,

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00:22:08,119 --> 00:22:11,640
it's always paid dividends. It used to be when I

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was in business, every time I upgraded my computer, it

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00:22:15,839 --> 00:22:18,559
made money for me. I had no idea how it worked.

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I just knew that updating it, whether it saved me

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00:22:22,000 --> 00:22:24,480
two minutes of waiting around every day and I did

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something more productive. I don't know why, but that upgrading

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and better tools for yourself and in human capital increased

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knowledge is always going to pay better returns than anything

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else you can do out there.

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Speaker 1: No, absolutely, it's a it's a if you're thinking about

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doomsday scenarios, investing in yourself.

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Speaker 3: Is probably the best thing that you can do.

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Speaker 1: And that I can say without my regulator slapping my wrist.

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Speaker 4: Yeah, yeah, nobody can take issue with that one, that's

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for sure.

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Speaker 3: All right.

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Speaker 4: So, Axel, where's the best place to find you? To

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00:23:00,039 --> 00:23:02,480
read your work? To connect with you on the web?

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00:23:02,960 --> 00:23:05,279
Speaker 1: Back Investments dot Com is our website. There you can

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00:23:05,319 --> 00:23:07,279
see what we do in the gold and gold mining site.

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00:23:07,319 --> 00:23:09,880
We have a free newsletter. We periodically have webinars on

407
00:23:09,920 --> 00:23:14,119
gold miners and whatnot. Follow me on Twitter at Axelmerk

408
00:23:14,240 --> 00:23:18,160
is my handle there imus about what's happening in the world,

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00:23:18,240 --> 00:23:21,279
off the Federal Reserve, in the precious metal space and whatnot.

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I can't talk about products on social media, but otherwise

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I'm quite accessible, all right.

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Speaker 4: Hey, Well, appreciate if you've got a question out there

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00:23:28,400 --> 00:23:32,680
for Axel or myself. Just shoot me an email Klatkerrie

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00:23:32,920 --> 00:23:36,599
Lutz dot com. We'll get your quick response back and

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00:23:36,839 --> 00:23:40,319
you'll find a link to accel site in the show

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notes of this interview on Financial Survival Network dot com.

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If you visit, we just ask that you sign up

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00:23:46,160 --> 00:23:51,839
for a free newsletter. Axel always always intellectually stimulating experience.

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00:23:52,240 --> 00:23:54,799
When we talk, you make me think about things that

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I might not have otherwise thought about, so we won't

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let as much time go by till next time.

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Speaker 3: I appreciate you coming on my pleasure.

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Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your

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00:24:06,960 --> 00:24:10,759
solution to today's trying times. For the latest, go to

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00:24:10,960 --> 00:24:15,359
Financial Survivalnetwork dot com. Financial Survival Network

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00:24:15,680 --> 00:24:17,200
Speaker 3: Now more than ever