Speaker 1: Well, keep in mind that neither silver nor gold actually changes.
It's our perception of the metal that changes. It's the
price that changes. I sometimes joke that the goal of
gold and silver is to cause maximum frustration, with silvia
being far better at it than gold.
Speaker 2: 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 Survivalnetwork dot
com and get your free newsletter and gift. Financial Survival
Network now more than ever.
Speaker 3: And welcome you are listening to and watching the Financial
Survival Network. I'm your host, Kerry Lutz, and today with
us is Axel merk Axel been in this space a
long time. You've been pretty much spot off about what
was going to happen today. It's October twenty first, twenty
twenty five. We're seeing a huge, huge raid. I would
like some might call it a raid. Others would say
it's profit taking. Gold is down two hundred and thirteen
dollars the ounce, Silver down nearly three and a half
dollars the ounce. What exactly is going on?
Speaker 1: Here, hey, Kerry, and by the time your listeners are
watching this, who knows where we're going to be. It's
certainly a very exciting time to talk and to what's
going on where we are. I think last time we talked,
I may have said that there are different types of
players in the precious metals market, and I grouped them
into the diversifying investor, into the gold bug, or the
person concerned about the purchasing power. You have the central banks,
you have the speculator, and the speculator obviously has come
in in recent months. They were somewhat absent pursuing meme stocks,
cryptocurrency investments and others spack investments. Central banks have been
more active. What's noteworthy about the trend we've had and
I gather you have different guests give different answers, but
we have not seen a retail frenzy on the way up.
This is notably absent and also obviously as any but
you will follow the market for well knows. When the
price of gold shoots higher, often it's in the context
of traditional equities plunging, and that also there have been
some hiccups in the markets. Maybe that hasn't happened but
when we talk to coin dealers, for example, they getting
new inventory from retail selling their gold to them. When
we talk to wholesalers, they're not selling anything because the
coin dealers have enough inventory. So that's not a sign
of a retail frenzy. But yes, the speculators are the
what's happening today is we talk without getting too technical. Actually,
let me get very technical.
Speaker 3: Yeah, you get technical audience there.
Speaker 1: And I know you love conspiracy theories, so let me
give you one here. Maybe the deala gamma in the
options market is ten times what it usually is, and
so that sounds as fancy as it is. Basically, you
have market makers in the options market that are trying
to make a living and they have to. They're not
they're not speculators that they're they're balancing their books. And
there are situations when that's what it means when the
dealer gamma is high, when anything that happens in the
market is exacerbated by the dealers trying to to to
hedge their book and so when the move goes up,
they piling the upside. When the moves go down, they
pilon a downside. And that's why that's a big reason
why we've had these major moves now and up, down
and up and currently down again. And when that happens,
it is it is really the dealers in the in
the derivatives markets just trying to keep their books in balance.
And and so that is the the noise, the icing
on the cake on top of it, so to speak.
Obviously the other reasons why the price of goals has
moved higher for quite some time. But in this this
amazing volatility we're experiencing as we speak, it is the
the dealers in the options market that are busy.
Speaker 3: Okay, so we got a gamma squeeze I think they
call it. And basically uh Wick rule we both know
has said that the eventually these parties that are executing
these very complicated edges in the silver market are going
to have a religious experience and they are going to
be annihilated. Are we getting to that point now or
is it exagination?
Speaker 1: Well, yes and no. The pushback I give is the
precious metals investor always thinks they're special. This sort of
stuff happens in any market where there's a derivative market. Now,
clearly because there's a physical market, things get more interesting
and and and say, we know that there was a
flight of precious metals into the US in the springtime
because there was a fear there might be tariffs. They've
been stories, not the stories, but London gold was shipped
to Switzerland being refined to the US. Huge silver shipments
to the US. Keep in mind that that silver has
like a fraction of the density of gold and in
pre value here and and so when when you have
the same dollar amount of silver ship these are the
big logistical efforts. And so when you when you talk
to the vault, they are they need to work for
the money right now, shipping the stuff around right and
and the gold and the silvera coming back into London
right now, where where historically there's the hop of liquidity.
And then yes, you have of course the rivatives on
top of that that exacerbates some of these moves. But
we are we are seeing some astounding things happening in
the markets. But it mostly means that the market is
working because it's a we. Yes, we may not like
these derivative players, but the on integral part of the market,
and there is an underlying physical that we sometimes tend
to forget. When you see the price of gold coded,
it's that of a London bar in London, and it
is noteworthy if the price in the rest of the
world is different, that shows logistical squeezes and temporary supplying
demand imbalances. But in the environment in right now, we've
obviously had had a tremendous move higher and currently volatility
has shown to be not just on the upside but
the downside.
Speaker 3: All right, So the volatility, so are we imagining these
rates happening? Is the price being manipulated by other players?
What exactly is happening here?
Speaker 1: Well, the reason you can look at these things from
any prism you like. The reason I don't like the
conspiracy angle in general, and I know you're in a
different camp, but the reason I don't like that is
because that assumes that if you only get rid of
the bad apples, everything would be dandy. And I'm actually
far more pessimistic. I am saying, is the dynamics of
the system that drives into where we are or not.
Whether you label these things conspiracies or not is in
my view secondary to me. It's just no, because the
conspiracy angle suggests that it plays into the thing that
there's an end game, there's a reset, there is this
or that, and my view is there's always a tomorrow,
and say society adjusts, regulators adjust, and by the way,
they don't play a fair game. They will change the
rules of the game along the way if they don't
like what they see and say, we have moved further
and further away from a gold standard over the last
hundred years. We'll just continue on that path. And it's
going to be a charpy road. And yes, we are
currently experiencing an interesting episode in that. But keep in
mind that we've talked those about the debasement trade, right
this is if this is the debasement trade, it's the
very early innings of that, because we have not seen
fundamental stress in many of these markets. Yes, other central
banks are diversifying, but those things are happening on the margin.
And gold is a disproportionate beneficiary because that market isn't
so huge. But it is not as if confidence has
been lost in the dot because if so, you would
see very different directions in the treasury markets. But what
we do see is that when you have and we've
talked about that, when you have tariffs, you're not not
just throwing a wrench into the flow of goods you're flowing,
you're throwing a wrench into the flow of money of cash,
and that makes the financing of deficits in the US
more expensive. That creates more pressure on the Federal Reserve
to keep rate slow. And so the sort of things
we see is is kind of a preview of what
we might be seeing if or when we see a
more disorderly conduct. But for the time being as well,
I tell those things are it's actually quite quite orderly.
Speaker 3: And is there a shortage of SOB or is this
imaginary wish for thinking? Uh, propaganda, manipulation, call it what
you like. Is there real shortage?
Speaker 1: There is this magic thing that every gold and silver
investor should be away of. It's called the price. When
there is no silver, the price is going to be
higher when, as I mentioned earlier, right, the price you
see quoded. Let me focus on on gold. Here is
the price of gold of a London bar in London,
and if there were no gold, the price would be
infinitely higher if somebody wants to get a bar there.
And so it's a and you can look at stress
into the system if you see it differential pricing in
different locations right. You can see those sort of things,
or you can see shortages if you don't need to
call up your volt manager, if you don't have a
personal volt manager, but you can look at the spreads
in the physical ETFs. The market makers are hedging themselves,
and if they're unable to hedge themselves, that means there
is stress in the market. Even one of the things
that happened in the springtime when there was the flight
of gold from London to the US, the big volume banks,
they had some of their gold stored with a Bank
of England, and the Bank of England is a government
bureaucracy with an antiquated storage system. Vaulting gold is actually
more complicated than you might imagine. A modern vault has
all of the client's vault on a palette or a
series of palets. What the Bank of England historically does
is they have a bunch of gold and if gold
is sold from party A to party B, they enter
it in their computer, which means but they don't move
the gold, which means your gold could be spread across
tons of different palets, and so when you need to
get gold out in volume quickly, they're just not capable
of doing it, and so the vaults in London were
concerned that yes they have the gold, but they might
not be able to get it in time. Now was
some stress, but the stress never translated into increased spreads
in the market. You would have seen it that buying
and selling gold costs a very different amount if that
stress were to have been realized. And so while it
is a real market, and then you remember the negative
costs in the price of oil when the storage costs
work were high. Right, So this fine print does matter.
But yes, there is always at the right price, there
is always the metal available, and if and doubt requests delivery, right,
and so if you don't think there is the pressures
medal available, then I have it sent to your home
and you'll see whether you get it. Type of thing, right,
But that's the sort of thing that kind of caused
exacerbate price links.
Speaker 3: So interestingly enough, you know silver broke that magical fifty
dollars resistance point almost fifty years forty five years in
the making to break that, and if you wanted to
get technical, you could say it was a cup with
a handle fifty year pattern. So it was coiled up
like a spring. Why was the price of silver. Why
did it make a new high when every other commodity
known to man during our forty five year timespan was
making new highs. Silver was the only one axle in
forty five years never made a new high. Is that
conspiracy talk? Or is that is that natural market behavior?
When sugar, when you know, you name it, everything, wheat, soybean,
everything made do highs. But silver?
Speaker 1: Yeah, Well, keep in mind that neither silver nor gold
actually changes. It's our perception of the metal that changes.
Is the price that changes. I sometimes joke that the
goal of gold and silver is to cause maximum frustration,
with silver being far better at it than gold. Even
and clear, we've had some amazing moves in the early eighties, right,
and it's taken till now to get to it. The
key difference between gold and silver is, of course, that
silver has significant industrial use. Indeed, you probably have stories
that the solar panels, the cost of silver is now
one of the biggest components, and so you can have
real shortages when when everybody is trying to to to
make solar panels and whatnot, it's say, why we haven't
reached a new high before. It's always fun to play
kind of general in hindsight and and give arguments to
these things. Clearly, we we had a short squeeze in
the early eighties that was quite phenomenal. Right. And and
because these markets are not as liquid as it appears
to be, because they can push things, buy things with
a push off a button, you can have outsized moves.
That is that is part of the markets.
Speaker 3: Right You.
Speaker 1: You don't see that in the financial market much Also,
increasing quality of grain, the quantity of grain is in
many ways much easier than increasing the quantity of silver.
The I'm not going to say there was no conspiracy.
I'm not going to say there was conspiracy. Clearly that
the Hunt brothers had as a goal to corner the market.
So they're the conspiracy if you want to have one, right,
But I think we're giving both policy makers and the
big banks too much credit. If if one asserts that
their goal in live is to manipulate prices, they they
run a hedgebook. They are not in the they're not
in the business of of managing price A or B.
If you talk to far folks at the Federal Reserve,
they don't understand gold very very different from a hundred
years ago. If you talk to to CEOs of banks,
they don't, they don't some of them don't know how
much gold their own bank calls. Right, and and the
the I once talked to the head of global commodities
of a major international bank. He and this was fifteen
twenty years and fifteen years ago or so went, yeah,
twenty years ago. May no, fifteen years ago. He was
not aware that they could not deal in physical gold, right,
the head of global commodities at a major bank. I'm
not going to name them, but it's that tells you
how how little they know. This guy knew the derivative market, right,
but he wasn't aware that their own bank cannot facilitate
physical gold anything, and and and so, and then you
talk to the folks on the physical side, and they
are they're really they they have the physical business. And
then of course there's there's a lot that they provide
in services as well, where they are constrained by by
what the bank as if they engage in some other
activities with some of the gold. But again they're not
in the speculation business. And and the big banks they
they have as a business a hedging function and so, yes,
that might impact the price of gold or silver. Absolutely,
that can happen. But it is not because they they
are conspiracy theories. It's just because they're running their business
based on based on their their their client demand.
Speaker 3: Okay, so, but these humongous short positions that never seem
to go down and then coincidental markets get slammed right
before options expiration. Isn't that indicative of a little game
playing there?
Speaker 1: Well, of course it's game plan. But to me, that's
not the same as conspiracy theory. So I think we
might be just using different words. But yeah, there are
plenty of speculators there, and as we see, right, and
that's why I expanded earlier on the on the options market,
on the on the on the dealer, Gama the dealer,
they are trying to make a living, right and and
say they are incentivized to hedge their book. And yes,
it's a quote unquote game. And if you don't know
how to play that game, if you are an innocent
retail investor that plays that and I discourage anybody to
play these volatile markets, in the rods markets in particular,
they'll they'll get wiped out. If they use leverage, they'll
lose money. And so in that sense, absolutely it's a game,
but it is not a government orchestrated conspiracy where they're
trying to kind of mess with you. It's it's just
that these derivers markets attract speculators, they attract hedges, they
attract folks doing arbitrage and whatnot. And if you are
somebody who just wants to join own a coin of
gold or silver, you look at it and scratch your head,
what the heck are these guys doing?
Speaker 3: Right?
Speaker 1: I mean, as a just as a business, we own
physical gold, right, we don't do any derivatives, we don't
do any lending and so forth. But I do think
it's helpful to understand what's happening in these markets to
to to also try to keep a cool head when
the volatility does increase. One of the advantages of a
physical coin is that you are not tempted to trade
it because you can't just push a button to buy
and sell. That that provides the sort of restraint that
I think for most investors is helpful. Obviously, if you're
a day trader who thinks you can make money on
this stuff, be my guest and then go for it.
Speaker 3: That's your own risk. But we've seen JP Morgan, We've
seen numerous players in silver get snagged by the regulators,
pay huge fines and promise to never never beat their
wives again.
Speaker 1: Right, and they they will never do that again, now
if they, I mean, if there's money to be made,
you'll have some bad apples, of course. I mean, that's
say the I picked up I picked up a copy
of Moneyball, Mike Lewis's. Yes, well you know what the
subtitle is. I don't have it here in front of
me right now, but it says something like how to
win the Unfair Game, right and and and so it's
it's ay, these there are players in the market that
are trying to game the system. And and yes, if
they are in the position of power, then then clearly
they might have a leg up of others. What I'm
the only reason I'm pushing back against the conspiracy theory
is that it's part of life. Get on with it, right,
You've got to figure out what you want to do
with your investments. And if the market doesn't go your way,
blaming others for it is not going to help you, right,
And that's what there is. That's that's really part of
the reason why why I do the pushback. I'm not
arguing that they are bat layers, and they are not
arguing that some people don't want to do something. But
especially the precious metals market, there's a lot of constituents
that are not for big government. So don't expect government
to help you with any of this stuff. That's really
my message to that. That's on your own and figure
out how you want to survive these markets. Right, You're
in a survival network, so don't count on the government
building you out. You've got to figure out yourself how
you're going to deal in the Streacher's world. That's really
my message in all of this.
Speaker 3: I couldn't agree with you more. And conspiracies kind is irrelevant,
I think, is what you're saying, because it is the
way it is. That's the market we're participating in. You're
participating in everyone is, And whether there's manipulation or not
is besides the point, right, because.
Speaker 1: It's there.
Speaker 3: It's the backshop manipulation in every market. It's just interesting
that this market is so emotional and that people are
so they get really emotional about metals, Like.
Speaker 1: Is that is that because gold is so simple? Right?
Yet we have I mean, I think part of it
is that gold doesn't have counterparty risk, and so oh
those reasons, many love it, except you introduce counterparty risk
the moment you touch it, right, because you risk losing
it or whatever it might be. And so that creates
as internal tension, and I think is at the core
of a lot of the emotion that comes with it.
Speaker 3: Yeah. No, I mean it's like to cry about conspiracy
theories is like crying about the income tax. You know,
it's pointless, it gets you nothing. You can observe it,
and all of us, in our own minds discount what
those bad players are doing. By the way, the name
of the book was Moneyball, The Art of Winning an
Unfair Game. You could call it silver silver investing, you
could call it gold investing. You could just say investing
the art of winning an unfair game. Because everything is
rigged here. So I think it's more important to know
that the riggings happening, but don't blame it for your
eventual gain or loss. Use it to your advantage. Right,
It's like right, institutions on Wall Street, they're all about
quarterly earnings. They're all about day to day trades, you know,
trading short term game. But if you're a long term
investor in the right stocks, you kill them every time
because you're not playing their game. How do you do
that with medals?
Speaker 1: Now, you've got to if you use the word game right,
you've got to figure out what your own game is.
And I'm my speech is regulated, so I can't give
investment advice. My advice is you don't need to have
a great plan, but have a plan. You got to
have and you've got to have some system, and buy
and hold is as good a plan as many the
one other item, though, I just like to mention that
the context of the current volatility is most investors have
a certain risk profile, and you can't easily quantify that
standard deviation and all that stuff. It doesn't really make
any sense. But one yardstick, especially for the retail investor,
I think, is that if you get nervous about the
holdings you have, if you can't sleep well at night
because of the investors you have, you might be over invested.
And the volatility that we see is of course quite
elevated right now. I've been cautioning on the way up
that yes, this volatility can also happen on the way down,
right when something appreciates and now we appreciate it. But
let's keep in mind that that portion of the PORTFOLI
if it outperforms other portions, is taking on a bigger shale, right,
And then if that is that end, if that portion
is more volatile than the rest of the portfolio, it
means your overall portfolio is more volatile. I think people
need to be cognizant of that. And and say and
and if if that's more volatility that or more risks
that people are comfortable with, it's all right to take
some chips off the table, even if you think that's that.
Ultimately those prices will go higher, because if you have
more risks that you can stomach, then you will be
selling at the wrong spot at the wrong time.
Speaker 3: And it's a ay.
Speaker 1: And I may have mentioned as.
Speaker 3: A story Investing Life Axel.
Speaker 1: Yes, yes, yes, I mean I think I mentioned your program.
And let's spring of two thousand and nine, people said, oh,
you got to double down on stocks, and people say
that just about every day. But if you have lost,
if you didn't rebalance on the way up, lost half
of your net worth and the financial crisis, going even
more into stocks, it's just an unprudent exposure. You've got
to take the prudent steps on the right kind. Now,
if you're somebody who who has plenty of other income
and whatnot, and and and happen to like pressures metals,
by all means, stay with it.
Speaker 3: Right.
Speaker 1: I'm not telling people that they have to sell out
as the as the price is going up, but people
do need to do a gut check in the health
check that they're okay with the volatility that we have.
And by the way, when retail sales at in when
the market goes down, it's called retail's panicking. When professional
investors do exactly the same thing, they do risk management
and and and say it's say it's they They they
want to sound smart because they get paid for what
they do, but then they are just as emotional animals
as anybody else.
Speaker 3: Yeah, that's why the best traders are unemotional. Right, Maybe
that's why algorithms are so good because they're unemotional. Yes,
so all right, so one piece of file advice. Uh,
as far as what's happening to metals prices right now,
what do you tell people just in general, no investment advice,
but psychologically, how you weather the storm.
Speaker 1: Well, I mean, we're still substantially higher than than just
a few weeks ago, even days ago. I suppose the
added volatility is insignificant, part due to the fact that
speculators are back. And if you're old enough, and many
gold investors are, remember the speculators. They were absent for
several years because there were SPACs, meme stocks and other things.
But in recent weeks crypto hasn't done so well. Meme
starks are I'm doing so great the max evens I'm
not double aing every week. But gold has been going higher.
And this, this cohort of not so loyal investors has
come back into the precious metalist market, and so I
would expect volatility to stick around for a while and
just run has to be cognizant of that, right, And
this is gold on silver investing is not a one
way street. You've got to have a good stomach for it.
And of course it feels much better when it goes
up in a straight line. But that's as we can
see as we talk. It's not happening every day.
Speaker 3: As Benjamin Graham once said, the tree does not grow
to the sky. And when you do see parabolic moves,
then inevitably you're going to see a parabolic move downward
when it goes up, and vice versa. Axel, Where do
we find you? How do we connect with you on
the web?
Speaker 1: Best place Marcinvestments dot com is the website we have
exchange treaded products in physical gold. We do have a
closed and fund in the gold mining space. We haven't
touched on that. I can't talk about the products here,
but come to our website. We manage over three billion
in golden gold mining. We have a free newsletter on
that website, and then you can find me on social
media at Axel Mark is my Twitter handled and I
can't talk specific stocks, but I will give plenty of
opinions about what's happening in the market.
Speaker 3: All right, Well you know what they say about opinions.
Axel appreciate you coming on. Any questions comments, shoot me
an email KL at Carrie LUTs dot com and make
sure you visit the site Carrie LUTs dot com. That's
the easiest place. Financial Survival Network dot com. It'll all
take in my substock. That's the new home of the FSN.
A lot of you, thousands of you have found us there.
Please keep visiting Axel. We'll talk to you against Sue.
We won't let as much time go by again. I
promise be well.
Speaker 1: My pleasure.
Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival Network now more than
ever
Speaker 1: CRUs