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

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substantially more molatility. So one interpretation of the rise is

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that 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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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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com and get your free newsletter and gift. Financial Survival

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Network now more than ever.

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Speaker 1: And welcome.

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Speaker 3: 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. Bitcoins 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 1: Axel.

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Speaker 3: 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, great to be with you. It's been

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way too many years. So I'm a simpleton.

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Speaker 1: I focus mostly on gold, and the reason I say

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that is because gold has much simpler dynamics. With silver,

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you have the industrial use and that creates substantially more molatility.

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So one interpretation of the rise is that the economy

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might be doing better than expected. Regarding the squeezing offline

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we talked about a little bit, I think precious metals

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invest does. I always think the special that the market

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gets particularly manipulated. All markets with with derivative markets are

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quote unquote manipulated, and and what that really is, it's

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it's really dynamics that are the consequence of these markets.

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It doesn't necessarily mean that they are the various actors

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that they just want to make it buck along the way.

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With regard the potential for for a more volatile move

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to the upside, well we've seen of course that that

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that we've had this move, Gold has moved quite substantially.

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Silver historically can be quite amplified in its move, and

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so I wouldn't rule it out. I actually think it's

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it's quite possible whether that's new to a short squeeze

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or not. I don't know. I it's it's nice to

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put a narrative on things, but I like to keep

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it simple for me. The key thing is that silver

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is signaling that the kind of the bottom isn't falling

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out of the economy, and that's why it's it's it's

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playing catch up in some ways and then some.

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Speaker 3: 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. There 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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And the other day I got a question about convertible debt.

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How much we own of that, and there's sure we

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own some. But the equity markets are open, meaning there

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is an ability to raise capital. The question to me

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is what does it mean with regard to the phase

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we are in. And the short answer is, it's possible

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

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It's it's very very difficult to say. We don't see

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signs of excessive deals. We don't see signs of people

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getting into the space who who have no business being

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in that space. I mean, of course, to something extent

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that always happens a little bit, but there is but

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there is over all, I still feel that this is

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an early inning, but that's more of a feeling. I

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don't have a crystal ball either.

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Speaker 3: 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 short 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 of 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. And in my view, the rise

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in interest rates longer term interest rates in the US

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in recent months is the direct results of the teriffs,

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meaning that deficits are less financed from abroad than they

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previously have been, and that translates to a higher cost

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of boring and from that lead all kinds of unintended consequences,

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notably also increased pressure on the federal reserved to lower

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rates and whatnot. But it's that that sphere of things

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I think we need to pay attention to. The low

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long term interest rates could of course also be higher

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growth attention because of the regulation. But if if I'm correct,

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then we have to be very careful with regard what

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we call is exorbitant privilege, which is really the idea

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that we can borrow and the infinite amount of money

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very cheaply to invest for higher returns abroad. And so

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if we throw a wrench into this global system, and

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not saying they aren't good reasons why maybe from trades

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should be rebounced, but if we throw a wrench into

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that system, it does have an impact on financial flows,

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and I think that is one of the underestimated factors.

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Beyond that, yes, these these mining companies that are producing

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are going to be very, very profitable, and unlike another

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eras we've had that the the overall cost of mining

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hasn't exploded as much and it's been it's it's we

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are in a in a much better sweet spot, so

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to speak, than we've been in the past.

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Speaker 3: 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 3: 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 can always get worse. And that is one of

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the things, especially to just offend some gold bugs out there,

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

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has to be a reset at some point, there has

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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. Just think about it. In the nineteen fifties

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there was one bread winner in the house and people

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could have a decent levy. Now if you nowadays and

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if in nowadays you have two bad winners. Similarly, people

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haven't saved enough for retirement. Well, I guess what if

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you are sixty seven and have a job. You're proud

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that you have a job. You're not lamenting twenty four hours.

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I mean some people might, but most people they take

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it as a pride that, oh I can still work,

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I can still be productive. And so we are adjusting

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to whatever the cards we're dealt with now. It doesn't

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mean we have to put up with it, and we

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doesn't mean we have to kind of put up with

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the erosion of the perchain cower that we have. But

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I've argued for a long time that kind of the

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the populist device we've had and including current president, is

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just the symptom of people being very dissatisfied they've seen

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an erosion of the perchain power, and they'll lead to

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more populist politicians, either on the left or the right.

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Could have a sharp turn to the left after this presidency.

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It's completely feasible. People are just dis chant. Just look

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at New York City what's happening there right as an example,

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and a lot of time, the sort of solutions that

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are being proposed are more addressing the symptoms rather than

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the root cause. And say when people say, oh, the

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government needs to go back to the gold standard, I

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when the interests of government are not aligned with the

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interests of investors. I would not hold my breath that

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that's going to happen. And so investors might want to

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take care of their own gold standard if that's what

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they if that's what they believe is the appropriate thing

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to do.

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Speaker 3: 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 1: Here? Is the endgame?

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Speaker 3: 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 1: What is it here? Give us your insights. No, I

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don't think there's an endgame. It's a process. And one

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thing people have said I mentioned earlier about the exorbitant

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privilege and Moody's I think has said, oh, there is

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no alternative to the dollar, and therefore don't worry about

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any of these scenarios. My scenario is that that does

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not need to be an alternative. What we will see

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is that disintegration of global finance. We will see and

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again it's a quote unquote less efficient way of operating.

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

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

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

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

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why the US is the growth engine of the world

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

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

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

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

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Many countries are boring in US dollars because it's been

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cheaper to find out their projects. Part of that is

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

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

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

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

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

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They are big, and they can spend a lot of

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money and say it will be a disintegration. Also, what

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

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all dynamics between countries will resurface. I would think we

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

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

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of all places, is plunging above it's 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. So there is And the other

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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 act together.

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But we'll see a thousd 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, stock or gold or or a

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piece of real estate. And of course we have our

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reasons why we want to diversify or be concentrated, or

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why we think one is better than the other. In

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a in an unstable world, you got to think more

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about the basics, right, are your property rights the secure

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and how? And I live in the world where maybe

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taxes will.

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Speaker 4: Have to go up because at some point in some

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government has gone that out there and say, well, with

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high taxes we can solve all the problems out there,

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which of course is not going to happen, but a

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lot of damage can be caused along the way.

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Speaker 1: Yeah, yeah, so yeah.

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Speaker 3: 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 run

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the way right. They will make liquiding be available to

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the banking system because that is what keeps the glue together. Indeed,

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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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is 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 3: 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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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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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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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 is probably the best thing

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that you can do. And that I can say without

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my regulator slapping my wrist.

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Speaker 3: Yeah. Yeah, nobody can take issue with that one, that's

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for sure.

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Speaker 1: All right.

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Speaker 3: 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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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 on 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

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

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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 3: 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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00:23:40,359 --> 00:23:44,079
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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00:23:54,880 --> 00:23:57,799
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 1: 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 1: Now more than ever