Anterview with Andy Millett
This interview with Andy of Natural Resource Stocks was yesterday
“Alasdair Macleod joins Andy Millette to break down why the recent collapse in gold and silver prices may be far more misleading than most investors realize. He argues that the paper market has detached from the underlying bullion market, that speculative participation is unusually weak, and that retail demand in the Far East is still holding up despite the selloff. The conversation then moves into options pressure, backwardation, and why bullion banks may have a major incentive to keep prices suppressed into expiry and quarter end. From there, Macleod lays out a much larger macro case involving oil, commodity inflation, bond yields, and the growing pressure on policymakers to choose between defending the dollar and rescuing the financial system. He explains why he believes that choice ends with more QE, more currency debasement, and a much harsher repricing of credit. He also makes the case that gold reasserts itself as real money when faith in credit instruments breaks down. If you want a hard asset view on what the next 6 to 12 months could look like, this interview lays out the thesis in plain language.”
Key topics
Gold and silver correction versus physical demand
Paper pricing versus bullion reality
COMEX open interest and weak speculation
Backwardation and the silver squeeze
Options expiry and price suppression
Oil, war, and the next inflation wave
Bond yields, rate pressure, and the debt trap
QE, credit destruction, and currency debasement
Gold versus credit and the gold standard case
Gold is insurance. It protects your wealth. Don’t look at it necessarily as an investment. It generates no cash flow and has storage costs. Keep what you have and add to it if you can afford it. It’s peace of mind, which I fear will be needed soon.
Turkey sold 58 tons of Gold - it's selling reserves to try and stablize its currency. As USD revenues for other countries dry up, they will also come under pressure to sell reserves. Some of those reserves will be Gold.
Dollar strength will eventually break the Dollar system, but nobody knows when.
Of course Gold is insurance and physical can't be effectively transacted in anyway. But we live in a FIAT world and we will live in a FIAT world as it dies and transitions into something else. In that case, to say that Gold doesnt matter as an "investment" is to say, to a large extent, gold doesnt matter. I'm not going to put all my FIAT into physical Gold because I need to eat, pay for gas and run the furnace, all paid for in FIAT. So Gold as investment matters.
The best guess I've heard of where the bottom is, is 3500. We had a little bounce yesterday which has turned into a an even stronger decline today...so 3500 is still looking like a good line.
Thats 800 USD down from here, another 13% or so. Ride it down if you want, noting is certain. The past says (at least in our life times), gold bottoms are always pivots to new gold tops...the only thing we need to question is: banks have turned to Gold as a reserve and banks may have second thoughts now about an "asset" that can lose 25% of its value in 2 weeks.