Silver Fireworks! | Goldman Sachs Makes Huge Gold Price Call

Mike Maharrey: Greetings. I’m Mike Maharrey, an analyst and reporter here at Money Metals, and I’m thrilled to be joined today by Brien Lundin. He is the CEO of Jefferson Financial, the publisher of the Gold Newsletter, and the man behind the New Orleans Investment Conference. And let’s be honest, an all-around great guy. How are you doing? Brien Lundin: I’m doing great, Mike. Well, you are an all-around great guy. I’m a big fan of you and your content and the whole team there, so really appreciate the opportunity to be on, especially when we can talk about such fun matters as what’s going on in the markets right now, at least from my perspective. Mike Maharrey: I know it’s pretty exciting. So we’re talking today on Tuesday. This interview will actually air in a few days, but we actually had gold flirting with $4,000 an ounce today. I don’t know if the spot price ever quite got over there, but I do know the futures price was above 4,000 when I looked at it earlier this morning. Are you surprised at how fast? I think we all kind of felt like 4,000 was in the sites, but are you surprised how fast we’ve gotten here? Brien Lundin: Yeah, and we all kind of expected it was in the sites, but that depends on how long ago you were talking about when a year ago if we would’ve talked about these kinds of numbers, they would’ve firmly placed the tinfoil hat on our top of our heads much less when we were talking about all these numbers years and years ago. So it’s been absolutely stunning. I think everybody’s trying to catch their breath and say what now? We’re not used to being right, much less so, and at least in this aspect of our lives. So yeah, it is absolutely stunning and I think it’s more surprising for those of us who are in the market how rapidly it’s happened even than those outside of the market, the generalist and the like, who are seeing it as just yet another market that’s going up because of all this liquidity and all these oceans of liquidity slouching around the world. But I think we are those gold bugs and silver bugs and people who have been in this market for so many years, we’re looking at it with some real trepidation. We know that gold doesn’t do something like this unless it’s telling us something. And right now it’s not whispering, it’s screaming that something’s up. Mike Maharrey: Yeah, it is funny. You actually kind of touched on something that I was going to ask you because I know for me I almost feel like a whipped puppy. It’s like, ‘Oh, this is great, but please don’t hit me. Brien Lundin: It almost feels like before the hit comes upside your head. Mike Maharrey: But I mean, why do you think that is? Why are we so I don’t know even how to put it. It’s almost like we’re scared by the success and that things are actually playing out how we thought they were going to play out. Brien Lundin: Why do you think it is exactly why a whip puppy cringes when a hand is raised? Because we’ve gotten beaten back by the powers that be so many times and it’s amazing for us, and somewhat unbelievable at our core, to see that the powers that be try to do, to play the games that they did for many years and then they just get bulldozed over by the market. I mean, it’s wonderful to see, but it is a bit scary to be so right. And a part of it is be careful what you ask for because you might just get it. And what does this mean? It reminds me, and I posted this on X today or yesterday and I didn’t give credit to it, but it was a conversation I had over email with Jim Grant really a few years ago, and Jim is the ultimate gold bug as you know, and he signed off his email to me, here’s the $25,000 gold. And I replied to him. Jim, when gold gets a $25,000, we’ll be lighting our cigars a hundred dollars bills with our AR fifteens draped across our laps. And that’s the truth. Be careful what you ask for in that kind of an environment. And I’ve got a lot of some pushback on X over the last day on that people saying, “Oh, it won’t be that bad. Just long time coming.” We always knew it was going to happen, and it’s not going to be mad Max. And my reply is nobody knows. Nobody knows what it’s going to be like. All you can do is recognize the trend and be glad that’s your owning gold going into it. So I think that’s kind of where we are. It is a bit scary though, to see this kind of a run. Mike Maharrey: Yeah. You said that this run of gold and silver both, they’re kind of screaming something. What is it screaming? I mean people out there who might not, maybe they’ve got their headphones on and they’re grooving to some music or something. What is this market telling us right now? Brien Lundin: Well, I think it’s saying that there’s going to be a reordering of the financial sphere that the system, and I’m not a big believer that the dollar is going to lose its dominance in its global reserve currency status anytime soon for a number of reasons. But I also don’t believe it’s the US itself or the dollar itself. I think it’s all fiat currencies. And when you have 45 years since basically 1980 of ever lowering interest rates, ever easier money and ever greater debt accumulation as a result is to come a reckoning. And we’re in the end game. We don’t know how long it’s going to last, but I think there’s a recognition out there that this is coming to an end and we see where the trend is going. Obviously this bull market has been driven largely by central bank buying, but this latest surge over the, well, really there’s been a couple of times, there’s a big surge in April of this year where we gained almost $500 in about two and a half weeks. And similarly over the last month or so when we’ve done about the same and what happened, what was driving that, I don’t think it’s been all central bank buying or at least not all the central banks we see. And most people say, well yeah, China’s probably in their buying, that’s what we’re not seeing. Brien Lundin: I think it might be the US in their buying. And that’s something I’ve been talking about a good bit lately. And I posted a chart that showed all the talk. I actually plotted the Twitter – the X post mentions – about a Fort Knox gold audit, and they peaked in February and then radio silence and from roughly that point on the gold price took off. And is that probably just a coincidence? But that would explain a lot if all of a sudden they said, stop talking about an audit of Fort Knox. We’ve got to get some gold in there before we start auditing it because that would really shape things up if we audited it and there was no gold there or some of it was missing. So, I’ve long believed that this central bank buying a good part of it is gold going back to where it should have been all along and not just additions to reserves. So yeah, I don’t know what the question was originally. Mike Maharrey: No, that was great. The couple of things popped into my head. You talked about this ordering of the financial system and you and I are definitely on the same page. I’ve never been one to say, ‘Oh, we’re going to have this overnight collapse of the dollar where we wake up one day and all of a sudden, oh no, the dollar is not the reserve currency anymore.’ To me it seems more like this kind of a slow bleed, a death by a thousand cuts as the saying goes. But what’s kind of interesting is that the mainstream has definitely taken notice. You see the term de dollarization in the mainstream financial media, maybe not as much as we would see it in our circles, but it’s definitely out there. And it’s interesting to me because I go back, I started talking about this kind of the threat of de dollarization back in 2017, 2018 people thought it was the tinfoil hat thing. Oh yeah, Mike Meharry is crazy, and now it’s in this kind of mainstream talk. And I’ve said for a long time it doesn’t require a complete meltdown of the dollar to cause a great deal of trouble for the United States because we depend on this dollar dominance to basically support the borrowing and spending machine. And I think that the world is kind of looking sideways that doesn’t saying we’re not really interested in supporting this anymore. Do you get that sense as well? Brien Lundin: Yeah, to some degree you recognize the trend and just because you see the trend doesn’t mean you have a good handle on when it’ll end. But I think you have to define your terms. And I think a lot of people use these terms interchangeably when they couldn’t be more different. And it happened on CNBC this morning, they were talking about gold and somebody said, yeah, the dollar index is meat is really hitting a key support line. So that’s probably got a big part in it and it doesn’t, it’s totally irrelevant. The dollar milkshake theory, Brent’s a good friend of mine, it’s irrelevant to the price of gold. It matters in a whole lot of different areas. But the dollar index is the dollar measured against all the other trash out there. It’s the best looking leper in the colony. So, it doesn’t really, for traders and everything else has a lot of influence and a lot of relevance. But if you look at what is a true measure of the dollar’s worth, it has collapsed because it’s collapsed against gold. And if you look at the dollar index’s correlation to gold, which everybody thinks is so close as an inverse correlation, it really isn’t over long sweeps of time. Gold does what it’s going to do and it does that because the dollar and other fiat currencies are losing their purchasing power and it’s as simple as that. So, the dollar index is not. It may be an indication of the dollar losing its status among other fiat currencies and its reserve currency status. But the real indication of the dollar losing its reserve currency status is the make of central bank reserves. And by some measures, Tavi’s now famous chart, the dollars already, I mean, gold’s already surpassed the dollar in terms of US treasuries. If you look at beyond charts, were still have a little ways to go. I don’t know what the difference is there, but the trend is clear gold is now becoming the dominant central bank reserve holding. Mike Maharrey: That’s a really good point. And I think I’ve probably been guilty of that as well. But it is a reflection of not just the dollar, but this entire fiat construct that’s breaking down and failing. And I think that’s a really important thing to remember. As you were saying that it occurred to me, I just saw today that silver is at an all-time high in rupee terms. So, there’s another fiat currency that you can measure silver against, Brien Lundin: And that probably has a good bit to do with an un-respected bit of knowledge is that silver is one of the great, I mean, India is one of the great silver sinks of the world. We put out a report in our first silver bonanza report in 1993 that detailed that surprising statistic. Nobody really understood it. India is known for gold and if the rupee is losing value against silver, that’s the reason why people are buying silver and silver demand in India is spiked recently. Mike Maharrey: Yeah, we saw that. So I wanted to touch on what Morgan Stanley, CIO, Michael Wilson said the other day, I’m sure you’ve heard about this, he actually kind of broke with the conventional wisdom. It’s always been the 60 40 portfolio, 60% equities, 40% fixed assets, so bonds basically. And he said that we need to start thinking about a 60, 20, 20 portfolio balancing with 20% going to gold. I thought this was really significant coming from a mainstream American financial advisor. Did that strike you the same way that it did me? Brien Lundin: Well, I guess so that it’s coming from a mainstream advisor, but it’s simple math. If you go back over history, and God knows, I’ve been actually looking at this specific question over 30 years now, and that is what is the optimum portfolio makeup for optimum risk adjusted return, the so-called efficient frontier risk adjusted return that modern portfolio theory would designate. And years ago, early nineties, I was looking at it when we were putting out one of the first hedge funds really, and back then it was found that using all the higher level math, et cetera, that if you had 5% allocated to gold, and keep in mind this is after a decade of underperformance by gold, if you had 5% allocated to gold, it improved your risk adjusted return. It was kind of a moderator, contra, cyclical, et cetera. Well, all of these calculations are done by back-testing a decade or more. And over the last 25 years, gold has actually outperformed every other asset class. And if you look at that, then the numbers modern portfolio theory is just going to say, well, you’ve got to up your percentage to gold to get a better return, except in this case is trying to get a better return and not moderate risk because the risk part is the crazy thing that’s happened. And that’s gets into all this passive portfolio management problems and issues, but everything has been lifted on a sea of liquidity. So these correlations that used to be inverse have gone positive and largely positive. They’ve all trended toward one stocks, bonds, commodities, precious metals, monetary metals. They’ve all been lifted on a sea of liquidity that has been gushed forth by the Fed and other central banks. So it’s really made a mess of all of those analyses. So, I’m not surprised that gold has shown to provide higher returns with a higher mix, but it’s interesting how the risk adjusted return may have fluctuated over these decades when everything’s been driven through financial repression in central bank liquidity provisions. Mike Maharrey: Yeah, I was talking to Stefan Gleason. For folks who don’t know, he’s the boss here at Money Mills. Brien Lundin: Yeah, that dude! Mike Maharrey: And we were talking about this, and he brought up the point that you could almost say that the modern financial advisor network, the conventional wisdom, it’s almost been fiduciary malpractice to basically steer people away from gold for so long. Why do you think that is? And maybe are we seeing a shift where it’s just too hard to ignore now? Brien Lundin: Probably trailing commissions in lack Mike Maharrey: Thereof? Yeah, that was my thought too. Brien Lundin: There’s just no money in it for them. There’s also been a concerted effort to label that kind of thinking, the tinfoil hat, kind of a thinking as gold bugs. And believe me, you as well are very familiar with it that the doom and we’ve always been doom and gloomers, et cetera, et cetera. And I appreciate that probably more than any other human on the planet. I’ve seen really smart people grace the stage of my conference over many, many years and predict the coming collapse of western civilization, et cetera, et cetera. And all of a sudden I’m starting to think maybe this is the time because the numbers are actually getting so compelling. And when you see mainstream people, I mean you look on CNBC now and some of the smart renowned as being the smartest people on Wall Street and in the investment industry are saying the same thing that we’ve been saying for decades. It really does seem like it’s finally coming to a head here. Mike Maharrey: Yeah, I think a lot of people don’t understand, and I’m definitely, I mean I’ll confess to being a doom and gloomer in a lot of ways, but I think a lot of it is kind of a, I don’t know, for me, I tend to step way back and I’m looking at things in this kind of big macro picture with this kind of Austrian economics understanding. And I’ve tried really hard not to try to say, okay, in 10 years we’re going to have this or make, but just the system as it is is unsustainable and it’s been unsustainable for a long time. And I think that’s kind of why folks like you and I kind of have this worldview, whereas people that are just looking at yesterday’s data or whatever, might have kind of a different picture of what’s going on. It’s maybe a little bit of a longer view. You think that’s a fair assessment? Brien Lundin: Yeah, absolutely. And again, we recognize and have recognized the trend for a long time. It’s easy to spot a trend. It’s not always easy to spot its end. And so we don’t know when suddenly something that hasn’t mattered matters. And we know as well here in New Orleans that complacency kills. So, we saw those levies going to disuse and never worried about it because nothing happened. And all of a sudden it matters. And I think we’re kind of in that spot now. Paul Tudor Jones is one of the smartest guys out there, and he was essentially preaching a financial apocalypse yesterday on CNBC and everybody kind of, oh, that’s interesting and moves on. How am I going to make my money today a thing? Mike Maharrey: Yeah, it’s kind of a, doesn’t matter until it does. What’s that saying? Things happen slowly and then all at once. Brien Lundin: Yeah, that’s exactly right. Mike Maharrey: Okay. I’m going to shift gears a little bit here. I came across an interesting data point the other day, and I actually wrote an article about it. Gold miners as a whole, if you’re looking at this specific index of gold miners have outperformed AI chip makers so far this year, which I thought was interesting because everybody’s all ai, ai, ai, and I know the miners kind of lagged early in the bull market and there was a lot of complaints about it from some folks, what’s wrong with the gold miners? We’ve got this huge run up in the price of gold and the gold miners are lagging now. They seem to be catching up now. But I’m curious if you can maybe step back and give a little bit of an overview of the relationship between moves in a bull market for physical metal and the mining stocks and how those two kind of interplay maybe from historical perspective. Brien Lundin: A lot to unpack there. Everybody keeps talking about how gold moves and the miners move afterwards, but that isn’t actually the historical fact. It used to be the truism used to be that the miners predicted a moving gold and they led gold regardless, right? This bull market is unique and the history of gold as an investible asset, which goes way back to 1974. But this bull market is unique because this is the first one where the miners and silver have lagged gold to such an extent because central banks don’t buy miners in silver. And they have moved. They finally moved because the western investors who have typically sparked these kinds of bull markets in the past, all of a sudden tried to get in and they saw that the price of admission to the party was so high with gold having moved. So, they’re entering through the individual through miners and through silver. And so, we’re in a catchup phase. So, the miners, the large miners, the big producers have doubled or even tripled, yet measured on price to earnings, measured on price to nav, price to book, all these historic standard metrics. They’re still at the low end of their historic ranges because their earnings have increased more rapidly than their prices have. So, they’re still long-term undervalued. The juniors you go into look at those in a lot of different metrics, but they’re still undervalued and they’ve doubled or tripled most of them, or a good many of them over the last six weeks, eight weeks, something like that. So, we’ve seen huge moves and people are stunned and starting to talk about taking profits and taking profits, which is always a good idea. You should always consider taking money off the table. But I think that the sector, the equity seems so overbought right now, not so much because they are at the peak of a move, but because they were so undervalued before, We were looking at junior explorers with under 5 million market caps a year ago or six months ago, and now those companies are trading for 25, 30 million market caps. Historically kind of normal. We were looking at companies of big resources that were trading at less than $10 an ounce in the ground, and now they’re $30 to $40 an ounce in the ground, which is still on a long-term basis when these deposits sell for $150 an ounce in the ground really undervalued. So, they were just beaten up and forgotten for so long, and I think that really taints our view on where they are now. They’ve come a long way, but they’re still historically undervalued. Again, all this said, there’s been a lot of profits made in the sector and people should always look at taking something off the table. Mike Maharrey: So, the early part of this Gold Bull run, we had kind of a lot of American investors in particular sitting on the sidelines. We saw it really pronounced in the physical market where really buying was or selling was outpacing buying. I think we’re starting to see more American and Western interest in gold. We’re particularly seeing that in this big surge of metal into the ETFs. But looking at $4,000 gold, that’s a big number. You’ve got all these people sitting on the sidelines. Are they too late to the party? What would you tell somebody who’s like, oh my gosh, am I missing out here? How do you look at the way the average investor here in America should be thinking right now? Brien Lundin: And I get back to what I always say, two reasons to own gold to hold gold. One is insurance, one is investment. If you’re looking at it as an investment, you probably should stay out. It’s moved so far and look to the more undervalued leverages on gold, silver, and mining stocks in a way, as a way to participate in the investment case. If you’re looking at it from the insurance standpoint, I think the question is not whether you can afford to buy gold at these prices, but whether you can afford not to, because every dollar you put into gold is going to, most likely, nobody knows the future, but most likely retain its purchasing power over the next, whenever, three years, five years, 10 years, 20 years, that same dollar of left in the bank as cash is likely to lose and accelerating at an accelerating rate, purchasing power over the next few years and going much further forward. So, you are protecting wealth, you’re protecting purchasing power by putting it into gold. That’s been a lesson of history over a long period of time. So yeah, it’s a great savings tool. It’s a way to save money and protect yourself and insulate yourself. And that’s one of the things the mainstream is talking about now, is that people are regarding gold. They even mentioned that on CNBC this morning, people are regarding gold as being more reliable than a dollar. Well, duh, right? So it’s only taken you 40, 50, 60 years to come to that conclusion, but at least you’re thinking about it now. Mike Maharrey: Yeah. Thank you. Alright, so we’re getting close to the New Orleans investment conference. Tell us what’s on tap and why should folks that are listening consider going? Brien Lundin: Well, there’s one truism, one thing that’s rung true over five decades of investing history, and that is in a metals and mining bull market. You need to be in New Orleans, you need to be at this event. It’s the best place to get the best advice. We’ve got the smartest to my mind because I picked them all out for the intelligence. And they’re well-reasoned arguments. They are the best analysts and commentators and strategic thinkers in macroeconomics, metals, miners, geopolitics that you’ll find anywhere. I tell people that you could find two, three, maybe four of our speakers at any other conference, but you’re not going to find 40. And that’s just what we have. So, this is by far the best lineup of speakers. It’s the best place to find other investors who are in the sector, who are independent minded, who are very successful and have ideas to share. That’s a huge value. And our exhibit hall is packed with all of most of at least tomorrow’s and next year’s biggest winners in the mining sector. Every year, many of, if not most of the biggest winners of the next year are found in our exhibit hall, and that’s what’s going to happen this year. Again, it’s teaming. We’re selling out and left on boost in the exhibit hall. We’ve got our speaker lined up. I urge people to go to New Orleans conference.com and look at our speaker roster. It is the best you’ll find. I think it’s our best in many years even, and it’s kind of the place to be. I would encourage people not to wait though, because availability in our host hotel is tightening very quickly and this is going to be one of the biggest years we’ve seen in decades, and it’s going to be packed with opportunity. You don’t want to miss it if you’re in this sector. Mike Maharrey: And it’s right around the corner November 2nd through 5thh. I said that right? Second through the fifth. Brien Lundin: Yeah, coming right up. Mike Maharrey: Yeah, very exciting. And of course you get to go to New Orleans. Who doesn’t want to go to New Orleans? Brien Lundin: Yeah, it’s kind of fun. Mike Maharrey: Yeah, great. Good food and good music, man. Brien Lundin: It is. And we bring a good bit of that into the conference. We have great food. We have great social events. We have James Rivers closing out the conference. He’s 86 or 87, I think. He is one of the icons of New Orleans music. He won’t be doing this much longer. Really something to see. Mike Maharrey: So where can folks, first off, let folks know where they can find out about the conference and where they can get tickets and all that information, and then let folks know where they can follow you and avail themselves of your wealth of knowledge and commentary that you’re throwing out there? Brien Lundin: Yeah, well, new Orleans conference is a great place to do all of that. It’s NewOrleansConference.com. Very simple. People can follow me on the X @BrienLundin. Weird spelling on both of those. So, look it up. And GoldNewsletter.com is where you can get my weekly and or monthly advice and a free report on how to invest in metals and mining. But November 2nd to 5th, it’s coming up quickly. This is going to be our biggest year in many, and it’s going to be an awful lot of fun and an awful lot of opportunity that you don’t want to miss. Mike Maharrey: Well, Brian, I’m really happy that you spent a little bit of time with me today. I very much appreciate your insights and your wisdom, and it’s always a pleasure to talk to you and we’ll definitely get you back on here again. For sure. It’s going to be interesting to see $4,000. Well then what? Right? That’s maybe just another milepost in what’s been a pretty interesting race. So thanks again and really, again, really appreciate all that you do and glad there’s a Brian London in the world. Brien Lundin: Thank you so much, Michael. It’s a great pleasure as always, and look forward to talking to you in the future. We’ve been scarily, right so far less that we continue to be, and thanks for the opportunity. Mike Maharrey: Yeah, have a good one.