Wall Street Is Wrong About Inflation And Gold Is Heading To $7000 | Steve Hanke

Wall Street believes the inflation problem is solved, rate cuts are imminent, and the AI productivity boom will continue to drive equities to record highs. Johns Hopkins Professor of Applied Economics Steve Hanke says they are looking at the wrong data, and investors who follow the mainstream consensus are walking into a trap.

In this interview with Jeremy Szafron, Professor Hanke breaks down why the current market calm is an illusion. He completely dismantles the narrative that the Middle East conflict and oil prices are the primary drivers of inflation. Instead, he points to the true elephant in the room: commercial bank lending. With bank credit expanding at nearly 7 percent, Hanke warns that a resurgence of sticky inflation is already baked into the economy, regardless of what the Federal Reserve does next.

Hanke also takes aim at the Silicon Valley tech elite and the narrative that Artificial Intelligence will trigger a massive deflationary boom. He calls the AI productivity thesis pure hype and warns that tech billionaires pushing for Universal Basic Income are actually peddling a socialist agenda to protect their massive valuations.

For precious metals investors, Hanke delivers a definitive outlook. He explains why the recent pullback in gold and silver was simply a shakeout of weak hands, confirming that the secular bull market is fully intact. Hanke lays out his case for a 7000 gold price target and reveals his exact HALO strategy Heavy Assets Low Obsolescence for navigating the coming commodity supercycle. Finally, he issues a stark warning to dump long term bonds and completely dismisses Bitcoin as a speculative asset with zero fundamental value.

Recorded April 23 2026

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Key Takeaways:
-The Real Inflation Threat: Commercial banks produce roughly 80 percent of the broad money supply. Accelerated bank lending guarantees higher inflation.
-The 7000 Gold Target: The secular bull market in precious metals is intact, with options markets supporting a run to a 6000 or 7000 peak.
-The HALO Strategy: Geopolitical fears are sparking a massive run on critical materials and HALO assets, creating a new supercycle.
-The AI Illusion: The Silicon Valley narrative that AI will save the economy from inflation is completely disconnected from monetary reality.
-The End of Bonds: The longest bull market in history for bonds is officially dead, making long term bonds a dangerous hold.

#Gold #Inflation #SteveHanke #Investing #Commodities
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Disclaimer:  
The videos are not intended to provide trading advice, and the views expressed do not necessarily reflect those of Kitco Metals Inc. Kitco News, its anchors, producers, and reporters are not responsible in any way for the performance or actions of any sponsor, advertiser or affiliate of Kitco News. In no event will Kitco and its employees be held liable for any indirect, special, incidental, or consequential damages arising out of the use of the content in this video.

Transcript

SPEAKER_03 0:00

Kitco News in Focus with Jeremy Stafford.

SPEAKER_04 0:03

Welcome back. I'm Jeremy Stafford. It's great to be back with you. Market's still looking relatively calm today, even with the pullback from record highs. The AI trade is still driving sentiment. A lot of investors seem to think that the inflation problem is manageable, that the Middle East supply shocks are temporary, and the next big story is rate cuts. But today's guest says that's kind of the wrong read here. He says Wall Street is looking at the wrong inflation story. The U.S. debt path is getting worse, and the bigger risk is what happens when money, debt, and complacency all collide. So today we're going to test that thesis. If the mainstream is misreading inflation, debt, and market risk, what does that mean for the dollar, for gold, for silver, and of course for mining stocks that many investors assume will automatically benefit here? Joining me now is Professor Steve Hankey. Welcome back to Kitco News. Steve, good to see you.

SPEAKER_01 0:51

Great to be with you, Jeremy.

SPEAKER_04 0:53

A lot to get to in the market, you know. I mean, there's this talk a little bit about Iran happening today, and of course, Hormuz, and we see uh oil being back up, but I kind of want to start with that contradiction. Uh, even with stocks pulling back just a bit today, I mean, the broader message from the market still is screaming resilience, as you know. I mean, investors keep buying the idea that companies can muddle through the noise. Uh, what are they still not seeing here, Steve?

SPEAKER_01 1:19

Well, I I think they're not seeing a lot of things. Basically, that you mentioned the word uh complacent. I think the markets are very complacent right now, uh right across the board. And you also mentioned in well, there are number just a number of things going on. One one reason that they're complacent, I think, is because earnings have been so strong, and and uh particularly bank earnings have been strong, and that that gets into another aspect that you uh flagged, and that's inflation. And and let's just walk let me let me walk you through my view on on the earnings in banks. And and what does that do? That increases the capital that banks have, and and that gives them more reserves, more firepower. They can increase the loans that they're extending, and when they increase the loans that they're extending, that increases somebody's uh the size of somebody's checking account, and checking accounts are part of the money supply, so it increases the money supply, and eventually that feeds through to what? Inflation. So we're not going to get the inflation genie back in the bottle because already the loans being extended by banks are growing, they've been accelerating, and they've been now growing at almost 7% per annum. And the rate consistent with hitting my inflation, or I should say, not mine, the Fed's inflation target of 2% is about 6%. So they're already elevated, accelerating, and elevated, and and those loans are very important, Jeremy, because most people don't realize that the money supply is not really a Fed thing. It's a commercial bank thing. Commercial banks produce about 80% of the money, broadly measured, in the United States, as well as Canada and uh virtually every other country around the world. Around 80%. The big chunk is comes from commercial banks. So that's kind of my my take on inflation, is that it's it's gonna get worse. It did jump in the United States, the headline CPI jumped from 2.4 percent to 3.3 percent uh in the from uh February to March. That didn't surprise me because I saw the acceleration coming for the last 18 months in the money supply, and I looked at the three-month annualized inflation rate in February in the United States. It was what? It was exactly 3.3 percent, which was a March readout. So none of this surprised me. And and again, the basis for my thinking is a quantity theory of money. It's all about what changes in the money supply. It's not changes in the oil prices, by the way, or or commodity prices, or any particular price. Those are relative price changes. If the price of oil goes up, which it of course it has, uh what does that mean? The price of oil goes up relative to everything else. And and the the best example to kind of natural experiment to make this point is if you look at uh precisely 1979 in Japan. Japan, of course, doesn't produce any oil. We had an oil crisis in 79, and and what happened in 79? Well, the inflation rate actually went down from 4.1 percent to 3.7 percent, 4.1 in 78, 79 it was 3.7. The the inflation rate actually went down. Well, why did it go down? Because starting in 1974, the Bank of Japan decided it was going to squeeze the money supply and reduce its rate of growth, which it did. So oil prices boomed in 1979, but inflation actually went down in Japan because prior to 1979, they'd been squeezing the the money supply, slowing it down, and that was feeding through with the traditional lags and into the into the CPI. So so that's the that's the nub of the the argument. And and the arg the argument is most people just are completely confused about the causation related to oil and inflation.

SPEAKER_05 6:06

Right.

SPEAKER_01 6:06

Every single article you you read is gonna say, oh, inflation went up in the United States, it jumped up to 3.3% from 2.4% because of the oil price increase. No, that they are that they're often correlated, but the reason they're correlated, for example, in the 1973 Yom Kippur War in that oil crisis, what happened to Japan? Japan, the inflation went up when the oil prices went were going up. They were highly correlated, positively correlated. Why? Because prior to 73, in 1971 through 1972, the average rate of growth and broad money in Japan was 25%. A huge expansion. So of course, you got a huge inflation. It just happened at the same time the relative price of one thing in the basket was was going up a lot, which was oil. So that's the that that's a that's a main thing, and and and it's very hard to get it out of people's heads because it's in the press all the time.

SPEAKER_04 7:16

Right. Yeah. I mean, you know, just to pin this down, too, uh we want to get into the oil side, but I mean, you that was an interesting point because you're saying obviously stronger earnings increase bank capital, that gives banks more room to lend, and that lending literally creates new deposit money, which works its way through the system with the leg, but it shows up later in prices. I mean, a lot of people would argue that the market would would still you know say stronger earnings and more lending can also reflect a healthy economy, not just inflation risk. But how do you distinguish between productive credit growth and and you know, kind of credit growth that that ends up debasing purchasing power?

SPEAKER_01 7:53

Well, it it it it number one, banks are are are making extending credit for uh bankable projects. And and and and what's that mean? That means a project in which the bank thinks that the free cash flow coming from the uh uh creditor uh or the debtor, I should say, the debtor, the the person who borrowed the money, is going to have enough free cash flow to amortize the loan and pay the interest and pay the thing off. And and and so they're they're all in principle productive. And if they're unproductive in a systematic way, the bank, of course, goes bankrupt. Now, the second aspect of that is well, what about the inflation part of the thing? And the inflation part of the thing is if the banks are lending at a rate that's excessive, let's say, over in the United States, just roughly rule of thumb, more or less six percent per annum, six, seven percent per annum, something like that, then then you got a problem. If the if all of a sudden the loans start growing at, you know, let's say 10%, which I think they might, by the way, in the United States, because because of two things. The banks had very strong earnings, so their capital is going up. That means their firepower is going up. They they have the that that means, in short, a loosening of monetary policy. When bank earnings go up and their capital goes up and their reserves go up, that that in effect is saying looseness is in the cards. The other thing that can affect bank lending is are the regulations that are imposed on banks. Because if bank regulations are tight and squeezing the uh the reserves that they have, what what's that mean? That means tightness is squeezing. This is what happened after the great financial crisis started in 2008. We we had Dodd-Frank, we had Basel III coming in, all these things squeeze the capital and the reserves that were available to extend loans, the basis for loan extension. And and now the bank regulations are being loosened up in the United States. So that's a second factor that will loosen. So there's a policy, explicit policy to loosen in the sense that bank regulations have been loosened up and some of them have been gone away with, which is, in my view, some of it good, actually. Uh but also you have this spontaneous thing going on with bank earnings. It has it has nothing to do with policy per se, but but it is a real effect that will influence the course of the growth and the money supply.

SPEAKER_05 10:57

Yeah.

SPEAKER_04 10:57

So, I mean, you know, on the policy, because you're uh your warning is that if the if if gr loan growth moves towards that 10%, that it is effectively a new loosening cycle, right? It makes because the banks are earning more, their their capital improves, they lend more, deposits expend, and that feeds into money supply. Uh if if banks are getting stronger earnings and more capacity to lend, why hasn't the Fed already leaned harder against that? I mean, are policymakers just missing the signal? Are they are are they just accepting more inflation risk than they admit?

SPEAKER_01 11:27

Well, they they they they number number one, uh all of this is laid out in uh in a new book that Matt Sukirki and I uh wrote called Making Money Work, uh, which by the way, yesterday we had a a piece uh op-ed in the Wall Street Journal that that gets gets into some of this. Um and and and and the point is in the book that the the our point, our critique of the Fed is that the Fed doesn't look at changes in the money supply. They they don't think changes in the money supply have any material uh uh and and consistent effect on changes in economic activity and inflation. That's the view of the Fed. And it's the official view, by the way. Chairman Powell has testified over and over on this, and and most of the other central bankers, whether it's in Canada or the European Union, ECB, or almost everybody, has this modern view, this bizarre view that the quantity theory of money that re says there's a relationship between changes in the money supply and changes of economic activity and inflation. Uh that that view has been discarded by the central bankers. So they don't realize that the biggest, and and the thing Sukurki and I emphasize in making money work, we've got a whole several chapters on this, is that bank regulations are a means to introduce monetary policy. People focus on the Fed funds rate, the Fed funds rate. That's a second or third order condition. The first order condition is what are changes in bank regulations? What are those? And how do they affect bank capital? Because the bank capital and reserves that the banks have, that will determine really the that's the elephant in the room. That's who's producing 80% of the broad money or the commercial banks. So those regulations are very important to keep your eye on and focus on. And as I said, the the bankers, uh, the central bankers didn't realize this when the great financial crisis occurred in 2008. We had Dodd-Frank regulations coming in in the United States, and we also had Basel III regulations coming out of Basel. All those tightened up in they increased the the required capital asset ratios at banks. And as a result, the the loans being made by the banks right after the great financial crisis hit, actually they went negative. They were actually sucking down and and and pulling away from the money supply. Quantitative easing one, quantitative easing quantitative two, and three, because the contribution of the commercial banks had gone negative, had gone south, had gone negative. So if the if the Fed hadn't engaged in quantitative easing, they had contradictory policies. The bank regulations were very tight, and as a result of that excessive tightness, the Fed had to come in with quantitative easing one, two, and three to increase the contribution to the money supply, that 20% that was being contributed by the central bank. So on the on the one hand, they they were squeezing the money supply, and on the other hand, they they reacted by quantitative easing. And and as a result, the money supply, by the way, as you'll recall, Jeremy, it grew very slowly coming out of the great financial crisis. And and a lot of people, particularly people in the metals market, by the way, got this completely wrong. They were looking at the growth in the Fed's balance sheet. It was it was exploding. And and a lot of metals people said, oh, we're gonna have hyperinflation. They were looking at the Fed's balance sheet. They said, oh, we're gonna have hyperinflation. They didn't realize the elephant in the room was actually contracting its contribution.

SPEAKER_05 15:57

Yeah.

SPEAKER_01 15:58

So what happened after the great financial crisis, by the way, the balancing out, negative commercial bank contribution, positive contribution by the Fed, the central bank, and and and if you aggregated the two, we had very slow growth in the aggregate broad money mafers, M2 in the United States, and we had a very slow recovery, by the way. And and we didn't have much inflation. Forget the hyperinflation, we didn't have much inflation. So everyone, everyone has that story just completely wrong.

SPEAKER_04 16:37

You know, there's there's lots to get here too, but I want to go back to that point because if that Basil era kind of restraint fades and bank credit starts to expand faster, does that become just another argument for owning gold before inflation data shows up more clearly in the official data, you know?

SPEAKER_01 16:54

It it's definitely a another reason. There are many, but there it's another reason to be uh holding gold and and silver for that matter. But sticking with gold, I think the secular bull market is intact. We got some consolidation around a little below 5,000 going on now for a while, which which doesn't bother me because it just it means the the contracts are in stronger hands and and that's that's fine with me. Uh but it I think the market will peak out, the bull will peak out around six to seven thousand dollars an ounce. And if you look at the current situation, the the calls outnumber the puts for the May uh gold contract by about four, uh almost four and a half to one. So that that's that's a bullish signal. The options market thinks it's going up.

SPEAKER_04 17:50

You said six thousand, seven thousand. Uh you if you if you're kind of right uh that that Wall Street is blaming you know the wrong inflation culprit. What do you think that means for gold right now? I mean, is gold already seeing this monetary reality, or is the metal still underreacting? Or to to your point there, Steve, I mean did it shake out some loose hands?

SPEAKER_01 18:10

I think it just I I think there was a lot of speculation, loose hands, weak hands shaking, you know, that that that that always happens, especially if you if you have a market that was going up as fast as gold and as fast as silver, silver is the same thing. Uh both of those markets were, you know, I couldn't believe how fast they were going up. You had a you had a lot of you know characters in there that with weak hands. Those have been shaken out and it's settling down, and it'll it'll start making another run. And it it will, I think, end up peaking out around six to seven thousand dollars an ounce. So it has quite a ways to go. It's every everything is in order, as they say, and uh that's that's that's my view. You want to be long gold. Yeah, in fact, speaking of commodities, you want to be long all commodities now, Jeremy, because yeah, I think we are entering a super cycle again with the commodities. So it's it's not only the precious metals, but if you look at things that I that I watch that are, shall we say, the critical materials. Uh well, we we you can throw oil in there, you want to be long oil. If if you're willing to take have a volatile ride, you want to be long oil. But look at look at what's happened to ferrovanadium since uh December of last year. Ferrovanadium, it's up 90%, molybdenum up 25%, lithium carbonate up 39%, lithium hydroxide up 49%, lithium spotamine up 52%, tantalum, huge spike, one 133% since December. Neobium, 28% up, aluminum, 22% up, tin, 21%, steel, 16%. So so you have all of these things happening, and and what you'll see, you'll see more spikes occurring. And that that's typical of a super cycle.

SPEAKER_04 20:21

Yeah, a lot of people taking profit too.

SPEAKER_01 20:24

Yeah, yeah, you you that's why you get the spike and the you know backs off. Uh same same thing we had with gold and silver. Uh spikes uh goes up extremely rapidly and and then backs off a little bit and and consolidates and then makes another run for it. Assuming your secular bull market is intact or you're in a super cycle, that's that's typical of what happens. So I think we we will see more spikes and uh and and and continued upward trend. So you you you want to be, you know, they they call it pi pivoting away from the tech stocks into halo, heavy assets, low obsolescence. You want to be halo because people are hoarding commodities now, and this this comes into the Gulf. What's happening in the go in the Persian Gulf and the Strait of Hermuz? Now, with all the upset that's occurring, uh people are going, oh, we we really should have more inventory of these things coming out of the Gulf to hedge. They they can't you can't do a perfect hedge, but you can what do you do? More oil storage in Asia. The average storage inventories was only 30 days. So they they were in a pickle when when the when the war broke out. So maybe maybe they'll want to be hoard hoarding inventorying more. Helium, sulfur, oil. Fertilizer. All these things, if if if you think there's a risk that you haven't attended to, you want to have a precautionary inventory. I think we're set up for another supercycle because there will be an augmented demand just for precautionary inventories across the board on all these things. Why do you want to hoard rare earths? Because you're worried that China might cut you off.

unknown 22:38

Yeah.

SPEAKER_01 22:38

Why do you want to how about Taiwan, where they're using a tremendous amount of helium to produce chips? Well, maybe maybe you'll have more inventory of helium.

SPEAKER_04 22:49

Now, if so, if you like critical materials, does that make resource equities more attractive than gold miners here? I mean, or do gold miners still kind of win on a risk-adjusted basis?

SPEAKER_01 23:01

Well, gold miners are okay, but I, you know, I I I think lithium will make another big run. And I another one I think is uh vanadium. I realize those are kind of exotic for a lot of people, but they're things that I follow.

SPEAKER_04 23:16

So we've hey we've been talking about them. We've been talking about that. And uh, you know, uh actually this is interesting because in that theory, you were talking a little bit about, you know, wanting to sell AI stocks, this kind of stuff. I want to get into that because the reason matters is you know, the investors are hearing a very different story from some influential voices. Uh Trump's pick uh for the Fed, Kevin Walsh and others are making the case. I think Elon Musk is talking about it, that AI-driven productivity can be structurally uh disinflationary. Uh, I want to play you a quick clip from CNBC.

SPEAKER_00 23:48

What we call AI in a couple of years we'll just call business. And uh AI is gonna make almost everything cost less. And the U.S. can be a big winner, and uh and it's a hugely exciting moment. If I were to step back for a minute, if I were the president, what I'd be worried about is a central bank that doesn't see any of that. A central bank that is stuck with models from 1978, governance from a prior period, and don't recognize we could be at the front end of a productivity boom. And if I were the president, I'd be worried that they might not see it. And they might think economic growth is somehow going to be inflationary. I think we were probably in the early innings of a structural decline in prices. Ken sees it on the front lines of real businesses, and I think if you look over uh the period of the next year or two, it's a pretty special moment.

SPEAKER_04 24:36

So, I mean, is Kevin Wartz right that AI changes the inflation story, or is this just uh the next fashionable narrative that that lets the consensus ignore what actually drives prices?

SPEAKER_01 24:48

Well, this this is a narrative that's coming out of Silly Valley, otherwise known as Silicon Valley. This this is a this is the hype, the AI hype kind of thing. And and number one, uh it hasn't happened yet because productivity actually went down in the United States in 2025. Not only GDP went down a little bit, but productivity also went down. So if AI is you know the greatest thing since sliced bread, it it just hasn't happened yet. Now, let's let's assume that it does. We've had other booms in productivity from about 1865 until the first world war, there was a there was a you know a lot a lot of technical change. Railroads, telegraphs, electricity, uh, you know, all kinds of things were happening. And and and there was a big boom, not only in productivity, but economic activity. Now, for the first 10 years of that boom, actually we had deflation. And and not not not not no inflation, we actually had an essay the longest stretch of deflation we had in the uh US was in that first 10 years of that huge boom period. So that so that's consistent with the with this narrative that they're giving. But then then the the the money supply got goosed and started increasing at a more rapid rate than a much more rapid rate than economic activity, and we had inflation. So it's it's conceivable, or there's something to their argument. They're they're at least thinking in terms of the quantity theory of money, that that the rate of growth and productivity in the economy on one on one side has to be related to the money supply. And it's and what they're arguing is basically they're assuming the money supply growth remains constant and the productivity and real rate of growth in the economy boom, and in that case, we we we wouldn't see an inflationary surge from AI. We might even see a modest decrease in prices or mild deflation. That that's that's an assumption. But but the assumption historically doesn't hold water because it usually doesn't work that way. You you get a boom in productivity and a boom in real economic activity, and and and the central banks goose some money supply and it grows faster than the productivity and real economic activity, and you get inflation.

SPEAKER_04 27:41

Right, right.

SPEAKER_01 27:42

So it depends on what's going on with the monetary policy. And and and I don't I don't buy, by the way, the the Silly Valley productivity argument because they claim that it's going to be orders of magnitude. The potential growth rate in the United States would jump from, let's say, two or two and a half percent where it's at now to like five or six percent. There's just no way. It's not going to happen.

SPEAKER_04 28:10

Right.

SPEAKER_01 28:11

So so to so to cut the legs out from under them right away, their their productivity narrative boom is not going to happen anywhere near the magnitudes that they're talking about. There'll be a lot of shifting around and changes in the in the job picture and so forth, like we had in agriculture. Remember, it at the turn of the 20th century, but at the start of the 20th century, most people, you know, over a third of the people in the United States were far working on the farm. Now you have less than, I think, 1% working on the farm. Why? Because you've had over a long period of time huge increases in productivity and huge increases in output from agriculture. But but that we've lost workers and then so what? Yeah. So I mean it's it's been great, by the way, for the United States because it's freed up a lot of labor to go into other things that are more uh attractive and product productive.

SPEAKER_04 29:18

So I mean, we could say uh uh, you know, because if AI lowers the cost of goods and services, that's it could not be trivial. But are you saying productivity can matter maybe at the micro level, but still lose to debt and money at the macro level?

SPEAKER_01 29:34

Uh that's one way to put it, but it's that's that's an accurate characterization. And and they're what they're trying to do basically is the following. Here's the Elon Musk has been all of this is repeated by these Silicon Valley guys, by the way. That's where the idea comes from. And they're saying, don't worry about AI, it's not going to create inflation. So don't worry about that. And then they and then the next thing they do is what Elon Musk and most of them have been proposing, by the way, which is a very bad idea, and that is a permanent income. They say, don't worry about AI. If you lose your job, the government's going to give you a permanent income. It's going to put you on the dole permanently. A terrible idea, but Musk is peddling this as well as all these uh billionaires from Silicon Valley are peddling this idea. And the reason they're doing this is to get the public off their back. Right. To keep the AI investment hype going and the AI investment boom going. And you know, they're raising capital and all kinds of new startups and all that stuff. So that that's what's going on. But the most of it is just utter nonsense, by the way. If you really look at it, if you really look at it carefully and slice and dice this thing, it's it's a narrative that doesn't hold water.

SPEAKER_04 31:09

Well, yeah, because I mean, so so when you mentioned you know Silicon Valley people like Elon Musk talking about some form of permanent income or universal high income, are you saying that that whole world view assumes abundance first and simply ignores the monetary consequences if the state is financing the checks?

SPEAKER_01 31:27

Yeah, and and and by the way, it's very interesting that all these big capitalists in Silicon Valley, they're these these people are fundamentally socialist. So so Elon can put that in his pipe and smoke it. That's a pure socialist policy that he's he's portraying. Which by by the way, so somebody asked me the other day, they said, Well, has this ever been tried before on a large scale? And I says, Yeah, all you have to do is look at Europe. I mean, de facto, in some place like France, where they have over 57 percent of the GDP being uh accounted for by government expenditures, what do they have? De facto they have a permanent income. They it's the welfare state. It's it's just a it's the welfare state morphing into uh uh this permanent income thing. So you here you have all these uh you know preachers in Silicon Valley because that basically they're preachers, by the way. Right. Uh and and and a lot of this is just uh charlatanism.

SPEAKER_04 32:39

So I mean Silicon Valley is that story is is abundance first, but your critique is obviously the monetary math still comes first.

SPEAKER_01 32:48

Absolutely. Yeah, yeah. I it there there's a big difference between the Silicon Valley rhetoric and reality.

SPEAKER_04 32:58

Somebody's selling stock, you know, somebody's selling stock. Uh okay.

SPEAKER_01 33:04

No, somebody's peddling stock, and uh they did a pretty good job of that, by the way.

SPEAKER_04 33:08

Yeah, yeah. In history too, Professor. Uh let's get into the bond market just because it's not technical, but it kind of matters. I mean, Treasury just carried out a $15 billion buyback operations. Officials say that this is you know transparent routine debt management, not hidden QE. Fair enough. But but does the need for larger regular buybacks tell us something about how much maintenance the Treasury market now requires in a high debt world?

SPEAKER_01 33:36

Well, I my knee-jerk reaction uh originally when I saw this was uh well, maybe that's true. And then I did look into it, and and it is fairly routine, actually. It's nothing to get really excited about one way or another. The bond market, the key the key to the bond market, though, if you look at the 10-year, it's now you know 4.2, 4.3. I I think those yields will go up as as inflation goes up. And uh you you don't want to be long bonds. You don't want to be long the 10-year. I I'd be I'd be out of there. Uh and uh so that's that's my message on bonds. You you you want to be into hard assets. Yeah. We had, by the way, it it's interesting. The long one of the longest bull markets in history has been the bond market from starting in 1980 uh until just a couple years ago, but it broke down and uh and and and and it no longer exists. I mean, we we are not in the in this huge secular bull market and bonds anymore. And I think right now, it for at least the short term or intermediate term, you you don't want to be long bonds. Interesting.

SPEAKER_04 34:58

Uh, you know, you talked about hard assets there. Let's bring it back for the Kiko audience, uh, a little bit to the mining side, because this is, you know, where some of our viewers live, and and tech reported a sharp jump in earnings, but management is already kind of warning that the energy shock is pushing up diesel, freight, uh, and explosive costs on that side. Even if gold benefits from policy failure, miners still obviously face that cost pressure. Is is this one of those moments where the physical metal works better than the equities?

SPEAKER_01 35:29

Well, I I maybe I I don't, Jeremy, I I don't know because I'm not I'm not following the miners uh in in any detail at all. And the and the reason for that is that that I trade the physicals. I mean, in in the in the futures market, in the paper markets I trade them. I don't I'm not trading the physicals. But and and and this is my rule of thumb is what with when you look at natural resources and and you think commodity prices are gonna go one way or the other, you trade the commodity. You you you I I did I just stay away from the refiners, the miners. Uh I I trade oil or I trade copper. Or I trade in case of lithium, of course, in that case, you've got to go with somebody who actually some of these critical materials you and like vanadium and lithium, you you have to buy uh into a company that's producing them because there really aren't there's no paper market. Yeah. And even even the physical market is not very transparent in those things. So even if you were trading physicals, you'd have to be a highly specialized uh operation.

SPEAKER_04 36:51

You know, I mean, tack to our investors that are precious metals investors, maybe not on the miners, but Boolean, you know, they're looking at that silver drive up. That kind of scared them a bit. We saw this small correction that's shaking out of hands. Uh your thesis, I mean, 6,000, 7,000, it's still very lucrative year for this, uh, for this, for this kind of a market. Um, what should a serious precious metals investor maybe do differently this quarter, in your opinion?

SPEAKER_01 37:21

Well, as I say, I I'm just in the paper market. I'm not going to change anything. Yeah, yeah, yeah. And yeah, and and and and think about it this way. If if you have a market going up, let's say we're let's say gold's at 5,000 now and it goes to 7,000. Is is it really worth worrying about the detail of who and getting out in the weeds? Are you gonna are you gonna use strategy A or B or it's just going up by so much that any strategy you have is gonna do very well. So why why waste a lot of time worrying about it? And now there are people and certainly Kitco uh viewers that that they're into mining and they're into mining stocks. Well, fine, but I'm not into mining, and I'm not into mining stocks. So so I I I really have no advice to give them that is intelligent because I haven't done any due diligence. I I have no opinion about the miners because I'm not trading the miners. Yeah, yeah.

SPEAKER_04 38:28

Makes sense, makes sense. Uh we get questions. There was a couple of them on Twitter saying, Oh, what does Steve think about the miners? But I mean, you still like the physicals. Uh you're not watching Bitcoin at all. I uh in my research this morning, uh, I saw a couple of Bitcoin headlines, and you know, not not a fan of that.

SPEAKER_01 38:45

No, I no. Bitcoin is just a highly speculative asset with zero fundamental value. So that that's that that's that's my view. If you want to speculate in it, it's fine. I I don't I don't care. But it it does it is something with no no fundamental value. Now it it one one argument some of my friends make that that like the miners, by the way. They they always say, well, hanky, why why are you just treating physicals, even even treating, I mean futures. Why are why are you just treating futures? Okay, you can you you know you can you can get some leverage in there and do that, but why not mine miners? Because they're uh you get a lot more leverage. Because because they're setting on huge deposits, and you know, you leverage it up. They make that argument, but it it never swayed me very much.

SPEAKER_04 39:45

Interesting. Uh our time always kind of runs out too fast. I was saying we need to have you on the program more, so we're definitely going to do that. Let me end with this one. I mean, for people at home who who feel like the the mainstream story doesn't always match the way they're living through. I mean, we get talk about it. Wall Street says everything's okay, but they feel the pinch at the gas pump specifically now. Well what are they getting right? And what what is Wall Street still getting wrong?

SPEAKER_01 40:11

Well, I I don't number one, that Wall Street isn't on the pivot that I I I think is fundamental, and that's good going from the high-tech pivoting into the commod a commodity super cycle. That there are a few people that are talking about this and and the importance of it, but but generally that's not the case. That that's that's one big thing. I mean, that that's a big strategic thing with me. It would be, you know, good going again into Halo, heavy assets, low obsolescence.

unknown 40:46

Yeah.

SPEAKER_04 40:47

I mean, you know, not everyone's into monetary policy as much as you and I, Professor. I mean, a lot of people at home they feel that squeeze, and you know, they hear experts on MSNBC, for instance, saying things are basically fine. What is the mainstream kind of still missing about the real economy? You want viewers to know?

SPEAKER_01 41:07

Well, uh I think there are there there are a lot of things, but the one thing, how about inflation?

SPEAKER_05 41:18

Yeah.

SPEAKER_01 41:19

Now now the general public is starting to inflation expectations have gone up, but for the wrong reason. They they've gone up because they think oil price increases cause inflation. No. The fundamental thing is that the money supply is accelerating, and I think will continue to accelerate, and that means inflation is baked in the cake, more more inflation, and if that's the case, you can do your analysis and figure out where where you want to be because of that. And and and one thing you and where you don't want to be, and I think you don't want to be in bonds. Long-term bonds, I mean. Short duration is another thing. But if you're in if you're in cash, you're in short-term bonds, but or bills. Yeah, yeah.

SPEAKER_04 42:14

Yeah, what an interesting time. Uh I guess we'll continue to watch some of these private credit risks that are starting to show up as well. Uh, as I said, Professor, please come back to us uh in a couple of months. I appreciate your time today. Thanks for cutting through the noise.

SPEAKER_01 42:29

Thank you, Jeremy. Look forward to seeing you again soon.

SPEAKER_04 42:32

You betcha, sir. We will. Thanks so much. All right, and to our viewers, there's where we kind of look past the mainstream sentiment and focus on the math that actually improves and impacts your portfolio. If you appreciate this kind of unvarnished look at gold, silver, the global markets, make sure to subscribe to the channel. We're closing in on one million subscribers, and we're glad to have you along with the ride. I'm Jeremy Saffron. It's great to be back, and we'll see you next time.

SPEAKER_03 42:57

Kitco News in Focus with Jeremy Saffron.

SPEAKER_02 43:02

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