Episodes

Dan Ferris: Hello and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by the Stansberry Research.

Corey McLaughlin: And I'm Corey McLaughlin, editor of the Stansberry Digest. Today, Dan interviews Keith Weiner, founder and CEO of Monetary Metals.

Dan Ferris: And today, Corey and I will talk about bonds and bond yields and GDP and banks and all kinds of stuff.

Corey McLaughlin: Remember, if you want to ask us a question or tell us what's on your mind, e-mail us at [email protected].

Bonds are so darn exciting, aren't they?

Corey McLaughlin: Bonds. Stocks and bonds, stocks and bonds. Everybody loves bonds.

Dan Ferris: Yeah. Bonds are potentially very exciting because you know if they're stressing the bond market, that's not good for equities. As we speak here, the action in equities has been down, down, to down, down, down.

Corey McLaughlin: Since this whole month really. Equities have been down. Bond yields have been doing things again, I would say.

Dan Ferris: Yeah. I tend to think more about spreads that yields. Maybe you should talk about yields and I'll talk about spreads.

Corey McLaughlin: Yeah. I'm along the same lines as spreads. The 10-year Treasury yield is back to where it was in October back of '22 when stocks bottomed. Also, if you go farther back, same level as 2008. So showing that higher for longer environment is pretty clear, I think, to a lot of people now that the 10-year yields, which is widely followed, is going where it's going. Then, yeah. The spreads, I'll let you talk about. There's some interesting stuff going on there at the same time.

Dan Ferris: There is, but it's like really near term and really not huge. If I'm looking at BoA, high-yield index option-adjusted spread – that's a lot. That's a mouthful. But it's the Bank of America high-yield spreads, junk spreads. Going back to maybe July last year, close to 6%... well, 5.99%. I'm going to call it 6%, but now below 4%. Moving a little bit lately, but not – I don't see the distress. In the stock market, it looks like somebody is not happy about something, but I don't see that distress in the general trend of spreads.

Corey McLaughlin: Right. I'm with you on the high yields.

Dan Ferris: Yeah. I keep seeing people talking about it, but I keep looking at the data. I'm like, "What are you looking at here? I don't see what you're seeing." So that's where I am on – high-yield spreads to me is like – it's the next thing up from equity. Equity is the most risky part of the capital structure. Then the next thing up from that is high yield or junk bonds. You figure, well, if there's distress in the junk bond market, that's not good for equities. Equities look worst to me than high-yield spreads right now.

Corey McLaughlin: Correct. I agree with that. I'm also looking at the spread on the 10-year and the two-year, that inverted – that inversion, which has been in place for over a year and has been a recession indicator. I've written a lot about this. I've gone a yield-curve nerd perhaps. When it inverts, which it did last spring or summer, a recession is typically followed between six and 24 months. That's been the range, so for that recession to officially arrive. So we're approaching the back end of that range and now recently the 10-to-two spread is starting to inch back closer – is reverting, I would say.

So while the 10-year yield has been going up, the shorter-term stuff has been – and the two-year and everything below has been either the same or going down slightly. So the spreads are narrowing. The curve is early signs of getting back to normal. The reason I bring this up is because this behavior has happened literally before every recession going back 50 or 60 years. So this is the point where that recession that everybody has been waiting for, it seems to me that I'm seeing some signs that more people in the market are preparing for that to actually happen now perhaps.

We saw a little bit of this back in March with the bank crisis. Same thing. The spread started to narrow. After the Feds stepped in it went back to the same story and that same inflation gliding down story. Everything is fine, soft landing, blah, blah, blah. Now what you're seeing in stocks now it could be – who knows? I don't know what's going to happen. Stocks could fall a bit more because I've been along with this – when this switch happens with the 10-year, two-year before the recessions, the last two times the curve has been inverted for this long was in 1980 and '81. There were two different times.

Each – both of those times when this happened, stocks went down about almost identically, 13% ahead of that change. So we're down 5% now. Could this be that repeating itself? Maybe. I'm not sure or stocks could go up tomorrow if Jerome Powell says something positive at Jackson Hole. It's an interesting time for me. It's an interesting situation, I think. Right when everybody is giving up on the recession it might actually pop up late this year, maybe next year.

Dan Ferris: Yeah. I really got concerned about a recession earlier this year and it was typical recession call. It just didn't go anywhere. Technically, we did have two quarters of negative real GDP. I was pinning my – hitching my start of that wagon, but it really didn't go anywhere. Now if I look at a longer term, a few-year chart of homebuilders or trucking or something, it doesn't look bad at all. There's a little – everything is ticking down lately, but that's a very short-term thing. I've got – I'm just looking at a chart of the Nasdaq and S&P 500 and Nasdaq down about 8% since mid-July and S&P down 4.5%. OK. It's not pleasant, but who cares really at that point? And whether or not –

Corey McLaughlin: Yeah. I think those are what people called garden-variety corrections before in the good, ole days.

Dan Ferris: Exactly. I will say that I've never said we were back in a bull market. So I think this is a huge – we've seen a huge bear market rally, like the one from I think it was November of '29 to April – March or April of 1930. It was really hefty 48% or something like that. Obviously, that was a pretty serious bear market. So I'm still bearish. I still think we're in a bear market and at the very least, probably a sideways market for years to come. So I'm sitting here thinking, OK, is all this starting to add up?

Is the market doing actually pretty well so far this year and going to embolden the Fed, they'll continue to hike? Are trucking and homebuilding and other things rolling over? Is this it? Are we done with this rather large rally that took basically a year almost from October to August in the S&P 500? That's a long time. Better part of a year, not almost a year. I don't know. I tend to think that sometime before the end of this year we will realize that we're still in a bear market. If not, I'm going to have to say that I'm wrong about that at some point here.

Corey McLaughlin: I've never – I haven't been comfortable saying that we were in a new bull market either, as I said before, just because we haven't been over the highs from earlier in 2022. At the same time, there was a bottom of some sort in October, but I think that was more related to the peak. That was what I said is the peak inflation bottom. Everything after that to me is new. It's still within – you can still say it's within a bear market. Last week when I said I wasn't sure if say another hundred basis points of rate hikes was baked into stock prices or quote, "priced in," so to speak. I think we might be seeing some of that happening right now because our old friend, the FedWatch tool, I clicked on that. For the first time I see some bets on a 6% fed-funds rate at some point by the end of the year. So those weren't even available previously. Now they are –

Dan Ferris: Right. It wasn't on the chart. That's right.

Corey McLaughlin: It wasn't on the chart. And now it's like single-digits percentage. It's there now. So I think – what really surprised me this week was the GDP projection number out of the Atlanta Fed for the quarter is almost at 6%.

Dan Ferris: It was 5.8%. Yeah. I saw that.

Corey McLaughlin: Yeah. So you put these things together, 6% GDP, 4% inflation, low unemployment, reportedly. Take that on its own. What would anybody do as a monetary policy maker? You're not cutting rates. Maybe you're holding them the same. Could easily raise them. Why not at this point if you're them?

Dan Ferris: Right. You're not doing 75 basis points, but you're doing something, maybe another 25 or something. Powell made the statement about the effects still lie ahead of us of hikes they've already made. I forget exactly how he put it, but that's what it amounted to. You have to wonder if maybe they'll either keep it steady for a while or increase very slowly as the economy – what you just described is not an economy that is contracting in any way and we know that employment data too is huge, multi, multidecade lows in unemployment.

I would be emboldened to answer your question. If I were a monetary policy person, I would be emboldened to hike. I would be saying, "Well, if we want a hike and we really care about inflation, we got to – we're still at 4%. By the measures we care about we're close to 5%, even. We got a lot of basis points to wipe out there. So we better get to wiping out." I don't know.

Corey McLaughlin: No. I'm with you. I think it's an interesting time here for me again just looking at this.

Dan Ferris: Yeah. It feels pivotal to me. It really does. When I look at KRE, the regional bank, ETF or KBW, the larger bank ETF, I feel like they're at a point that could be really pivotal for them because they bounced off the bottom in May and then they've rallied nicely through actually the first week of August. Then they're off with everything else since. So if there's weakness in the banking system, which according to Moody's and maybe now Fitch. Fitch is talking about downgrading maybe even JPMorgan Chase, the biggest fricking bank in the world, the one that we all know is never going to be allowed to fail.

Corey McLaughlin: Yeah. I like how they worded it. They said, "We're going to have to downgrade you. We might have to downgrade you." OK. Seems like you already should if you might have to.

Dan Ferris: Yep. If they downgraded the federal government and that's the thing that makes it too big to fail, I guess you have to downgrade the "too big to fail," right?

Corey McLaughlin: Yeah. A lot of – if you look at technicals a little bit too, a lot of the – or all of the indexes have – which are pretty extended on this bullish run, have fallen through the 50-day moving average already. S&P is probably about 5% or 6% from its 200-day moving average if it still keeps – if this turn continues. So again, you would add that up. It'd be about a 10% correction, which seems appropriate for given what we've seen so far. It wouldn't be the end of the world.

Then you get to that point, you see what happens, what the world is like then. I wouldn't be surprised if a bit more selling here. Then I always think, people – I feel like the market always responds to anything the Fed says, will latch on to something positive. You got the Jackson Hole meeting coming up and I feel like that will be maybe a stopping point for this, but we shall see.

Dan Ferris: A stopping point for hikes, for hiking?

Corey McLaughlin: No. A stopping point for like this stock slide at stake. I feel like people just like to hear some messaging from the Fed about, "Oh, this will be OK," for a brief moment because they're expected to pause, to not hike. So if that message continues, that will probably be well-received.

Dan Ferris: Yeah. So that's Friday, August 25. So we shall see. The Federal Reserve chief, Jerome Powell, scheduled to speak at 10:05 Eastern Time on the 25th. So yeah. Markets will be open.

Corey McLaughlin: Mark your calendar.

Dan Ferris: Yep. They have been highly – they've tended to be highly reactive. I put a bunch of charts. I was just like the chaos around 2 p.m. the day the Fed released is just ridiculous. It's crazy. I was compelled to put a bunch of charts into The Ferris Report to show how highly reactive the market is to this. So we'll see. We'll see what happens in Jackson Hole and what these guys are saying. I hate that the umpire is running the game. I really do.

Corey McLaughlin: Me too.

Dan Ferris: And with that, maybe we will go ahead and talk with our guest today, Keith Weiner. I follow him on Twitter and I just find him really interesting. I promise, if you own gold or even if you don't and you just think about owning gold or maybe you've never thought about owning gold, you should listen to this. Keith just has a different way of talking about gold and he runs a company that is very involved in the gold market. We'll get into that. I really love hearing from someone who's doing something that I agree with and thought I knew something about, and they just have a different take on it, an insightful take. So I've set you up. So now let's go ahead and talk with Keith Weiner. Let's do it right now.

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Keith Weiner: Thanks for having me, Dan.

Dan Ferris: So I just had to have you on the show because I follow you on Twitter and I really like your feed. You're about as snarky as I am on Twitter.

Keith Weiner: On a snark scale from one to 10, we're both 11, is that what you're saying?

Dan Ferris: Something like that. Sometimes I want to get people in for a different view and sometimes like a combination of lots of thoughtful views about things. That's the category you're in. We share an affinity for – well, among other things, if I just look at your pinned tweet – here it is, "An underappreciated idea of the Austrian school. The damage is done during the boom. The bus does not destroy wealth. It's just the accounting catching up to the reality." I've been writing lately about how the greatest economic calamity in history is holding interest rates at zero and some places in the world negative for more than a decade. So I think we're on a similar page there.

Keith Weiner: Absolutely.

Dan Ferris: We're also both gold guys, I think. I won't say gold bugs. I don't use that word anymore. But we're gold guys.

Keith Weiner: I don't prefer that term myself.

Dan Ferris: Since we're not going to use that term, how would you describe, for example, why start Monetary Metals in the first place, your company?

Keith Weiner: So that's my origin story a little bit. I founded and built a software company called DiamondWare. We made a 3D-spatial-audio technology for voice communications. It's amazing how many problems we solved and patented 13 to 20 – more than 15 years ago. I sold the company 15 years ago. It's going on 20 years ago that, today, plague as well on these video and audio in conference calls and including you plug in a device and it doesn't even figure out the right device to use. Anyway, I sold that company in August 19, 2008, days before the crisis really went into high gear. I sold it to Nortel Networks. It turns out, as a historical footnote, it was the last acquisition Nortel ever did.

So as things are going over the edge, first I felt very surreal. Then bemused and quickly alarmed that everything – all this stuff is happening. None of the mainstream stuff, even Investor's Business Daily, Wall Street Journal, Financial Times, nobody really seemed to start at the beginning. There's a time we're starting in the middle. Well, you see there's so much money and they print that. And there's even too much more money than there had already been too much and then that caused the crisis. I'm like, "What?" So I started to study obsessively to just try to figure out and protect myself.

It wasn't an interest in economics. It was an interest in – I've worked 14 years to build this company, had a good exit, a good liquidity event, sitting in cash in a couple of "too big to fail" banks. What do I do? The more that I studied, the more I realized there's a broken monetary system. That's the root of it. It's not real estate. It's not the Community Reinvestment Act. It's not, "Oh, the banks aren't regulated enough," as some people tried to say.

Dan Ferris: That's a favorite of mine, by the way.

Keith Weiner: There's not enough regulation.

Dan Ferris: The banks aren't regulated. It's just a favorite of mine. It's just ridiculous. Anyway, I interrupted. Continue.

Keith Weiner: No, no. Sure. So monetary system is broken. I said, "Well, maybe I don't necessarily have all the answers, but clearly gold has to be a part of the solution." There's an axiom in medicine that whatever caused the disease, more of it won't be the cure. If you're an alcoholic and your liver is dying and all these things, more alcohol can't be the cure, right? So gold vanished since 1971 from the monetary system at least. Relegalized for possession for American citizens in 1975. By that point it wasn't the monetary thing anymore. It was a speculative toy that if you bat it around in the futures markets or whatever.

I said, "Gold is part of the solution. I want to be a part of the solution." In a normal world I would have done another software company. My team had followed me to hell and back. They were saying, "Hey, when are we going to jump and do another company?" I had access to capital, advisers. I think I actually knew what I was doing by then as a software CEO. I was like, "No. I'm going to go in a different direction. I'm going to be in the gold space because I want to be part of fixing this." So Monetary Metals, we're a bit different. I don't really want to try to plug the company here, but we're not about promoting the idea and this is the gold-bug idea. Buying gold because the dollar is going to be worthless by tomorrow morning.

Then gold is going to go up. So then gold being up, you sell it to take profits in the form of more of the dollars you just said were going to be worthless by tomorrow morning. I fundamentally don't get that and I piss off a lot of people every time I talk like this and I can't help myself. I've got a big foot and a big mouth. It's just foot-and-mouth disease. I don't get that. So Monetary Metals is about paying interest on gold. If you have gold and gold is money and those are certainly my beliefs, then you should get money on your money. You should get more gold in the form of interest.

It turns out that's how the world's monetary system is going to be redeemed. There's a lot of interesting economic things that come out of that. It's a bottom-up, entrepreneurial free-market gold standard zooming the scale. And the motivation – yeah. I want to make money of course. Every entrepreneur does. But the motivation is to try to help the world rediscover a gold standard in return that gets you honest money. It takes an interest rate to do that. So that's what I'm doing and that's why I'm doing it.

Dan Ferris: I find this very interesting, especially with all of the – I don't know – just if I can generally throw it in a category of crypto staking, people basically earning interest on their crypto. I like you as a sound competitor to that idea because I always have the same question. I think I know the answer. I'll let you answer it, but I always have the same question. I really don't understand where the interest comes from in crypto. Ultimately, I don't, but it comes from a real market demand in the gold and silver space, doesn't it?

Keith Weiner: Yeah. I was going to say, to have a sustainable and scalable yield or interest rate, you have to be financing productive enterprise. So you're either enabling production to happen at all or you're enabling growth in production. So a productive company adds another tool and then they double their output. The interest that the lender makes is part of the increase in profits due to the increase in production, which is finance by the investor. It seems to me crypto, the whole idea is to be internally, self-contained software ecosystem. It's self-referential.

Dan Ferris: Yes. Exactly.

Keith Weiner: We're all going to sit here in a circle and let them use the really rude term that a bunch of fraternity boys perhaps might use in this situation. We're all going to sit here in a circle and somehow interest is going to magically grow and compound. At the end of the day, everything would seem to be working as long as prices are rising because really what it was, was it was increase in leverage. You're borrowing crypto in order to dump it so you can get more dollars or USDT, I think, and then buying more crypto. So as long as the price is going up, everybody appears to be winning. That's in my quote in my pin Tweet on Twitter. Then you're just buying more and more and more and leverage is going up and up and up. It works like any Ponzi scheme or pyramid scheme works so long as prices are endlessly rising.

Then the moment the prices refuse to continue to go up, then everything blows up. The bad guys – it's discovered that it was a well-known insider secret that these guys were cheating and all kinds of malfeasance was occurring and in one case the guy pushed a button and $10 billion of client assets to an offshore LLC that he was the sole owner of. I'm like, "What company would even have a button you can even do that?" I don't know. Anyways, leaving that aside, the whole ethos is get rich quick. It's not surprising that the company is built on the ethos and thought the same thing.

If you're trying to build a company and you get rich quick, then you find that it's easier to build a scam than do something real. So the whole thing comes down to there's a lot less today offered in terms of yield bond on crypto because a lot of the guys that were offering it are now under indictment or prison or bankrupt or some combination of all those three.

Dan Ferris: So I've set our listener up. Right now they're wondering, "OK. The yields on crypto are phantasms," but how do you goat the yield out of gold and silver? Explain that to me.

Keith Weiner: So there a lot of different companies involved in the gold industry. They need finance. There are two programs. They have the leasing program. That's for company that need a physical – this is physical stuff. It's not a financialized leverage, hypothecated kind of thing. Let's say you're a jeweler, a manufacturer. Every day you buy a certain number of fresh bars for gold and then you put them through process or you squash them under rollers and then you cut out little shapes and then you have to bend them and polish them and weld them and whatever. It takes a few weeks to go through the factory.

Then every day you're buying X amount of new gold, but every day you're selling at the same amount essentially a finished product. But there's always in your pipeline, let's say, a thousand ounces. You need to finance that. That's almost $2 million. So you could borrow $2 million to buy your $2 million worth of inventory. The problem is if the price of gold – so let's say you did that not too long ago at $2,000 an ounce and now it's $1,900 an ounce, I risk – I don't know if that's a gold price today, but I think it's $1,904. Goes to $1,900 an ounce, which is a 5% drop. So now you have $1.9 million asset, but you still have a $2 million liability... 10% drop is a calamity on the asset side of your balance sheet. So that's – anyway. So you could hedge it. Whenever people say, "Just hedge," I won't go off into my rant about you just hedge.

Dan Ferris: Just hedge.

Keith Weiner: Yeah. Hedging is a bigger deal and it requires more capital and there's moving parts and risks and costs and all those things or you lease them out. So that's what we do. So we provide a lease. Then they have a thousand ounces. They don't have the price exposure. They operate their business to make a spread, that is they're buying gold at the price of gold. They're selling jewelry at the price of gold plus, let's say, 20% and they're in business to make that 20%, but not to bet on the price of gold. We also have – so there's a lot of different industries if you think about it. Refiners, mints, bullion dealers, jewelers, high-tech manufacturers. There's more than half a dozen verticals that need gold as inventory or as a work in progress.

We also have the lending program for companies that have a gold income. The obvious example of that would be a gold miner. They literally pull gold out of the ground and then they sell it for dollars and then they declare on their financial statements they have a dollar income. Imagine giving somebody a bar of gold, let's say, for Christmas or a birthday present and you wrap it in paper, but you pretend that the paper is the real significance of it. Of course the, whatever, 13- or 15-year-old kid can feel that there's some heavy metal in the middle of it and tears the paper off.

So they have a gold income. That's what they pull out of the ground. They have the same thing if they borrow dollars and the price of gold drops, they can get squeezed because the liability is going up relative to the econ. But if you borrow in gold, then it just makes it simpler, easier to the mind, takes risk out of the equation. So we're financing mines. There are other companies that have a gold ecom and we will be announcing deals for those when they come up. And we're doing leases to the industry. These are all real businesses, jewelers, companies that are doing real things. This is not a self-referential, we're all sitting here in a circle in a softer platform, magically levitating and that's the difference.

Dan Ferris: So I don't know if we can talk about – I'd like to talk about gold in general. It's an interesting time for it, I think, because of, I guess, one of our previous guests Brent Johnson would call the milkshake, the giant milkshake that was poured during the COVID era by all the central banks in the world and lots of fiscal stimulus too was created at that time. It – then of course this year we get bank failures, three of the four largest bank failures in U.S. history and Moody has just downgraded – or took action, various actions on 27 banks. Fit just talking about taking actions on banks. So it's the kind of time when gold is on people's minds.

Keith Weiner: Absolutely.

Dan Ferris: What I wonder is, am I right? Am I really right to have gold on my mind? Is that just part of the answer to all of this? Why do I really want – I know the reasons why I would say that I want gold. Is it really going to function that way because in, well, 90 years ago they just outlawed it and said you're not allowed to have it anymore. So I wonder what are the odds of something like that happening again? How much – how afraid are we of – do we really think we'll be able to use our gold? If gold becomes that important to individuals and not just central banks who have been buying it lately, would the government take action that would negate all this interest that we have in it?

Keith Weiner: My caveat to that is nobody can predict the future madness of politicians. The president madness is already unpredictable enough. There's no telling what anybody might say or do. And particularly when the people are demanding emergency measures and getting emotional about it. That said, I'm controversial in the gold space for arguing that there's no confiscation coming because two reasons. FDR had two reasons for confiscating in 1933 both of which are inapplicable today. The first is at that time you weren't buying gold, you were redeeming.

So you deposited your gold in a bank and you got a piece of paper, which is your right to withdraw your gold. Now you can pass a piece of paper to somebody else and then it's his gold and he's withdrawing it. It was a withdrawal. When you withdraw credit from the bank you force them to sell an asset, which is doing two things. It's forcing the bond price down because they have to sell, which forces interest rates up and Roosevelt wanted interest rates down. He was absolutely an admirer of gains and gains that would drive the interest rate to zero. Secondly, this was of course causing great distress to the banks and causing bank failures and obviously bank runs. So he wanted to end the bank runs.

So if you make the currency irredeemable, there was no such thing as a bank run anymore, not that way anyways and stabilize the banking system and push the interest rate down rather than up. Today, there's no such thing as redemption because no bank deposit is a gold deposit. They're all deposits of irredeemable Fed credit slips. So gold has nothing to do with the banking system today. They don't have to care.

So I had – on our podcast, the Gold Exchange, I had Danielle DiMartino Booth and we're talking about this idea of does the Fed care about gold. She worked at the Dallas Fed for nine years before writing a book called Fed Up, which is an interesting book. She said in nine years of being at the Fed, nobody ever asked her any kind of research report on gold. Nobody talked about gold. Nobody thought about it. Nobody cared about it. She's had conversations with, he calls himself Fed Guy, I want to say his name is Joseph Wang, who has also become what of a notable personality on Twitter. He was at the New York Fed involved in the open market operations.

He has said the same thing to her that she said to me, which is nobody at the New York Fed was asking about it, thinking about it, asking for any analysis or reports on it. I just don't think they care because it's not a banking system asset anymore. It's not something that they follow. Now to your point about Brent, I've been saying, but not in as spiffy a way for long, long time that basic scenario is all of the currency is down against the U.S. dollar. That the other currencies were all U.S. dollars derivatives anyways.

The idea that the dollar could collapse and its derivatives could survive is absurd. But that has nothing to do with the price of gold in dollar terms, and that is actually the dollar sinking in gold terms, while other currencies are sinking in dollar terms. So he of course gave it the very famous milkshake moniker you see now. Remember on Twitter, it was not so long ago that everyone said, "Oh, Putin is great. And gold standard, the ruble is going to be super strong. I'll be an idiot for shorting it."

Dan Ferris: Yeah.

Keith Weiner: The ruble is breaking down to multiyear lows again. If you zoom out and you look on Yahoo Finance as far out as it zooms, I don't know if it's 20 or 25 years or something, you look at a ruble, it's just a red line down into the right. It's brutal. Somebody on Twitter was posting – and there's country-specific reasons why of course. You look at the Turkish lira, that's a total trainwreck, if not a hyperinflationary collapse. There's somebody on Twitter posting about country-specific reasons – he's  Israeli and why the Israeli shekel is collapsing. The Argentinean peso, the Chinese yuan is breaking down.

Every one of them you can say, "Well, you see what happened was this internal country-specific thing," but they're all forced to – oh, and then I was in Zurich the other day talking to folks I know there that are in the gold and finance spaces. This West National Bank is now trumpeting that they feel the Franc is undervalued. They want you to buy it. Meanwhile, what are they doing? They are selling dollars to buy francs because their selling pressure, they're defending the Francs or attempting to. Of course that never ends well.

So currency after currency after currency is falling. I guess the dollar – and meanwhile, gold is sitting here. The price of gold has subsided slightly, but in other currencies it's either at or near record all-time highs and the U.S. dollar not very far from an all-time high, while it remains unloved and neglected. We are the opposite of the shoeshine boy giving you tips on how to buy gold. Today you tune in to CNBC and they have that little scrolling ticker on the bottom right hand corner that goes through oil and S&P and the Nasdaq and whatever. Gold used to be every rotation and now it's like once every other, once every third. It's a lot less.

Completely unloved, completely ignored and yet, here it is, pretty strong pricing through all that. I think that we're in, if you want to call it a boom market in gold or a bear market in dollars. I think people got very used to the long pattern we had from August 2011 through 2018, which was definitely a "sell the blip" market. We're not in that mode anymore. Post-COVID, we're absolutely in a "buy the dip" market and the price is pretty clearly heading higher. I may be forced to eat my words on that, but I don't think so. I think the press is heightened because gold is the one thing that they can't debase, but more importantly, it doesn't have a counterpart. It doesn't default.

If you own a piece of gold, Warren Buffett derides it, you put it in your desk draw. Twenty years later, you pull it out, it's still the same lump of gold. True. He regards that as a bad thing. He's talking about slack of the yield. We've written an open letter to Warren Buffett saying, "What you said was true, but no longer." But in terms of owning the gold metal, it's the avoidance of taking the counterparty risks of buying something else or the end of the market price risk of buying let's say real estate, which is a terrible time to do that right now.

Gold is the thing you own when you don't want to address or speculate in anything else. We're now in times where that's probably pretty good. It's occurring to a lot of people that's a good idea. It's not just us gold people that think that. It's a lot of other people that are coming to that.

Dan Ferris: I'm fascinated just with the simple fact that you turned on a dime from a software career to a career in metals. I'm fascinated by that one fact. When you were originally starting your story I thought, "Oh, wow," because the logical thing to do – we see it all the time. A guy sells his software company, goes and starts another software company. But you got here by wanting to preserve what you had, you told me. I'm fascinated by that too because that's one of my standard – people say, "Gold is stupid. It's a pet rock or whatever," and then they quote Warren Buffett and that's the end of the conversation. I think it's been used to preserve wealth for thousands of years, thousands and thousands of years. If you ask old European money that's been around for a hundred years, how'd you do it, well, it's like gold or land. They don't say dollars.

Keith Weiner: Everybody in Germany would have some gold. Everybody in Turkey has gold. Everybody in India has gold. It's Americans that are blissfully ignorant about it.

Dan Ferris: I would say everybody in Asia really.

Keith Weiner: Yeah. So to your comment about thousands of years, most people in the gold community would say 5,000 years and that's what I used to say. It was relatively recently, a couple of months ago, that I read – I don't know when this occurred, but I read an article a couple months ago that there was some warrior king that they found buried in Bulgaria and he had six or seven kilos of gold in his tomb, including a sheath for his you-know-what. It was clearly ceremonial. It was clearly that they valued it as something associated with what's legal or royal or leader class properties. It was highly valued. Then the tomb dates or the burial dates to something like 6,500 years ago. It was 4,500 or 4,600 B.C.

So it's actually even longer ago than 5,000 years that people have been using gold, valuing it, treasuring it, ordering it, burying their tombs with it. I guess I want to put in a plug and encourage everybody. I had a debate organized by the so-called forum on gold versus bitcoin. It was hosted at the Mises Institute in Auburn, Alabama and I was the gold guy obviously. I debated Pierre Rochard, who's the bitcoin guy. I'll give the spoiler and say I won by a pretty big margin, but I encourage everybody to listen to it because I lay out the case for why gold is money and bitcoin is not money and never worked as money, could never worked. He conceded my key points in his – I backed him into a corner and he conceded it. It's right there on the video. You can see it.

Dan Ferris: Yeah. I don't mind spoiling, if you don't. If you want to tell me your key point I'm all ears.

Keith Weiner: Well, bitcoin will never have a stable value and can never have a stable value. Because it's not stable, that means it's not suitable for borrowers. The borrowers – everyone is told bitcoin is going to go out by a thousand times. Well, think about borrowing to finance a farm or a restaurant or anything else, something that is promised to go up. Your mortgage has gone up a thousand times. So you're buying a house today with a mortgage of $2,000 a month, but they're telling you it will be $2 million a month in a few years. That would be insane.

Then obviously bitcoin is also subjective to gigantic 80% crashes. So how can you tell me that a conservative saver – in the bank I used an example of an octogenarian widow. So picture an elderly lady in her 80s, no more income potential, hasn't worked in decades, widowed. Can you tell her to put her life savings into it? If not, then how the hell do you justify calling this savings? Anyways, that was a very interesting section of the debate.

Dan Ferris: Yeah. We had – I hope people will go listen to the debate, by the way. I do. Where did you say it is? Where can we find it?

                                              

Keith Weiner: It's on YouTube. Just Google: Soho forum, gold bitcoin, Weiner. There's probably a million ways to find it or you can put the leak in the notes for the video wherever this podcast is.

Dan Ferris: Sure. That's cool. We had George Gilder on the show and we talked a little bit about gold with him. He was saying, "Look, bitcoin is not going to work. One of the primary things it doesn't do that gold does, is grow with the global economy. We produce new gold because we have a constant demand for it. We expend capital. We invest capital in producing this monetary asset whereas with bitcoin the supply has been really limited by the whoever, Satoshi or whatever. It will always therefore be extremely volatile." That's one of the ways that he was explaining the volatility of it. We know it's not going to grow. So when we see growth, what are we going to see? bitcoin going to a $100,000. So it's never going to really be a responsive asset and monetary assets need to respond to what's happening in the world.

Keith Weiner: That's right. They need to be steady in value, not something that's skyrocketing in value. That's what gold is. So some people derive gold and say, "Gold is not going to skyrocket." You're right. If you want to skyrocket and generate an intergenerational fortune, owning gold isn't going to be that. If you have entered into a self-fortune and you don't want to lose it, well, gold is great for that. One thing I say to people is that in Geneva and in Zurich, there's countless private bank board rooms. And every day in those board rooms some patriarch of a family is coming in and setting up a multigenerational trust structure to make sure that his grandkids and beyond are taken care of.

Those things always have gold in them. It's not a matter of price. The gold can be $2,000, it can be $1,500, it can be $3,000. Whatever the price is, he's always putting – the trustees, the banks are always saying – it's not a huge allocation. It might be 4% or 5%. I don't think it's massive, but there's always gold in those things. Bitcoin, I would doubt it because nobody has the slightest idea if bitcoin is going to be around in a hundred years.

Dan Ferris: Right. But is there no role for it? We're both criticizing it, but is there no role for bitcoin whatsoever? Is it really just too broken to work?

Keith Weiner: It's a casino. Has it done well for MGM Grand or Caesars Palace or the Wynn? Sure. Have fun and some people have made a lot of money in it. Some people have lost a lot of money in it. If it's entertainment or it's a chance to speculate and find a way to make a big capital gain in the Fed's crazy casino world that they've created? Sure. But it doesn't function economically the way – even ordinary currency does, the way the dollar does, let alone the way gold does. It doesn't play a monetary role anyway.

Dan Ferris: Yeah. So I think we agree about bitcoin. Let's just forget about that for a second. Then the next thing that folks will tell me about crypto, they'll say, "Well, it's not about bitcoin. It's about the blockchain." All I can think of is like Long Island Iced Tea blockchain company and stuff. It just seems too much of a buzz word to me. I don't know.

Keith Weiner: Well, the cure for that might be the next buzz word, which is now AI. So for a while blockchain based companies had enormous amounts of capital being showered on them. I think that capital – that spigot has shifted and it's now sprang on to the AI crowd and not on blockchain crowd. I think Blockchain is interesting and I think there's no question that there are interesting and important applications for it. Blockchain reminds me a lot of, as a computer guy I'm going to go back a few years and talk about a computer protocol, which is called SIP, which stands for Session Initiation Protocol.

The voiceover IP companies got together and devised this protocol for how you do phone calls using an Internet and computer instead of phones as the edge devices. At that time when that came out, everyone was saying SIP is going to do this and SIP is going to do that. It's going to revolutionize the world and all these things. At the end of the day it was pretty much relegated to when people want to use the Internet and your supercomputer. Today, by the way, a laptop or a mobile phone is a supercomputer by the definitions that they have in the early 1990s in terms of how much a computer can do. If you want to use that supercomputer over the Internet to make calls, SIP basically won in that space and great.

It didn't take over the world. It didn't revolutionize that we own sliced bread and all the other things that it was allegedly going to do at that time. I suspect the blockchain – the application is where it matters. Supply-chain tracking, you want to know the providence of the goods. You want to be able to prove the source of that gold, the source of that coffee bean, a source of that beef. Where did that come from? Whose hands did it go through? If it was in a refrigerated container, is there continuous temperature records of what the temperature was inside? Did it thaw and refreeze or whatever it's not supposed to do? Great.

I think there's applications for that. To have a token that represents only itself and that's the [inaudible] money, no, that's not the application. So yeah. We'll see some interesting applications we're watching. Absolutely.

Dan Ferris: Yeah. We don't have to make predictions. It's just – I'm just trying to be a little skeptical about the idea that this ledger system will replace the global banking system. That's the part I –

Keith Weiner: [Inaudible] banks. What is the job of a bank? It's accredited intermediary. You have all these depositors that don't have the amount of savings required to lend to – most businesses are borrowing a hell of a lot more than what one [inaudible] can do and they don't have the financial sophistication to do the due diligence. So the banks are intermediaries, credit intermediation. People have lost side of that and they call bitcoin finance. One thing bitcoin has never done and will never do is finance anything in the sense of paying for the capital expenditure and increased reduction. Bitcoin doesn't do that.

Nothing in that ecosystem has even targeted that. The closest thing I get is some sort of P2P lending thing. Then the problem is who is the one who decides that these 10,000 people all should put in, whatever, a thousand dollars each into this loan? Who decides that's a good loan? Traditionally that was the banks. I don't see blockchain or bitcoin or any of these crypto exchanges disrupting banks in that sense.

Dan Ferris: OK. Why don't I go ahead and do my final question, which is the same for every guest. No matter what the topic, I always ask every guest this exact same final question. It is very simply, if you could leave our listeners with a single thought today, what would it be?

Keith Weiner: I think if there's a theme that I always return to at the end of the day, and I'll just use inflation as an example of the theme, Stalin, I don't know if he actually said this or it was just reported he said this, but everybody attributes to Stalin when he said, "One death is a tragedy. A million deaths is a statistic." So statistic becomes antiseptic and inflation is reduced to a statistic. People say, "Well, how much of the money supply increased or how much of the price level increased?" Those two are presumed to be cause and effect and more or less proportional generally and an interesting theory and I argue they're not, but whatever.

There's an overarching thought that I always return to, and that is the root of the issue isn't that consumer prices rise or don't rise. The root of the issue is honesty. If I borrowed from your -  call it borrowing, but I don't have the means or intent to ever repay you and on top of I put together a system so complicated that it obfuscates the fact that you're actually lending. You think you have money when in fact you're actually a creditor. So you think that it's printing money when it's actually borrowing and you're the lender. You're the chump who is lending to. So you don't know that you're lending. You wouldn't approve to lend.

I want to know people who have dollar balances who just absolutely say, "Haha. What fools are financing Treasury debt?" It's like, "You are, but you just don't realize it." Of course they don't have the means or intent to repay, which No. 1, means yes, we're inevitably headed toward gigantic crisis. But the whole thing is ultimately crisis of honesty. It's a fraud. It's a counterfeiting operation that they conduct. At the end of the day what's needed is honesty in any monetary system and the only way you get honesty is in the free market because if the government is running, they're running it for their own benefit. It's just too tempting.

It's the one ring in Lord of the Rings. Even the good characters, Gandalf and Galadriel are saying, "Don't give me that ring because I'd be tempted to do good with it, but you'd turn me into a dark queen, beautiful and terrible and shake the foundations of the earth," and all that stuff. That – giving them this power creates that – what was the old saying, absolute power corrupts absolutely? But at the end of the day it's an honesty problem and that's the thing that gold really brings. It's not about quantity. It's not about "Do prices rise or fall?"

It's about if you have an ounce of gold, you have an ounce of a real thing and nobody can just cheat or lie or commit fraud in a ledger or whatever it is. It is what it is. It's that monthly memo in desk draws as Warren Buffett derides it, but there's an honesty to it. There's no real way to cheat it. If you cheat in a free market then all of the other participants will quickly strip you of their capital certainly and [inaudible] and that's a healthy thing. I heard somebody say, and I can't think of the attribution, capitalism without bankruptcy is like religion without health. But it's a cleansing thing precisely because it washes away the things that are unsound and most of the things that are unsound are un-honest in some way or they're counter fake or cheap or counterfeit or whatever it is.

That's the root of it. That's the thing I would ask everybody to ponder and look at whatever system or whatever scheme. Who's trying to do what? What's the game here? Is it an honest one? If everybody starts to think more along those lines we'd have a different political system. We'd have a different monetary system. We'd have a different legal system. There's a lot of things that would be quite different if people thought about that in that way.

Dan Ferris: All right. I like that answer. Honesty. Well, thanks for being here, Keith. I really appreciate you taking the time to talk with us.

Keith Weiner: Thanks for having me on the show. This was fun. Hope I added value.

Dan Ferris: You will probably be invited back in 6 or 12 months too.

Keith Weiner: Awesome. Looking forward to it.

Dan Ferris: All right. Thanks again, man.

Keith Weiner: Thank you.

Dan Ferris: Many mainstream analysts are predicting that stocks will recover soon, but I say we'll instead witness a cash frenzy unlike we've experienced in 21 years before stocks recover. I'm urging Americans not to buy a single stock until they see it. I predicted a Lehman Brothers crash in 2008 and I called the top of the Nasdaq in 2021. But this, this is the No. 1 most important thing to pay attention to for 2023. I'm not talking about another market crash or politics or inflation or any of these other things.

As all this unfolds, the financial consequences of what I'm talking about could last for several decades if you don't understand what's happening. There will be winners and losers and now is the time to decide which one you'll be. This is why I strongly encourage you to read about my warning totally free today. It's all spelled out in a free report we've put together. Get the facts yourself. Go to www.StockDeadZone.com to get your free copy of this report. You can learn how to get my four steps to prepare for what's coming. Again, that's www.StockDeadZone.com for a free copy of this new report.

The first thing I want to point out that Keith just talked about was when he talked about the ring of power, this awesome power of government to create money and of, you can say, of the central banks in the world. This awesome power is something you don't even want it. You think you're going to do good with it, but it turns you into something that's not so good. I thought that was – maybe it's such an obvious point, but I thought that was really important. I think it's important to say basic things like that over and over again because they're so simple and obvious, just the metaphorical value of the Lord of the Rings story as being a world where they valued their freedoms.

They always talked about free men in that story and where there was a threat from this dark power that would highly centralize – the one ring of power would highly centralize power. I don't know much about the author, Tolkien, but I'm sure he knew all that. I'm sure he knew exactly what he was saying there. That's important. I think gold can help you get outside of that centralized system, which is another thing Keith pointed out. He said he doesn't worry about gold confiscation because it's just not part of that centralized financial system that we have. It's not currency. It's not a banking asset except by other central banks in the world.

The United States does own its token amount of gold. I think that's – I think that idea of gold as a way to get yourself outside of the system, the financial system, whatever you want to call it, the banking system, the currency, is really important. I mentioned, as I have before, if you ask an old European family what do they own, it's like land and gold and art and stuff. Keith was talking about people in Swiss banks opening trust for successive generations. Gold is always in there. If you start to think that way, I think it gives you the correct perspective.

I think short-term thinking is a big thing that catches people up and screws them up financially from borrowing too much to get some thing, some car or some house or something that you really want right now, but can't quite afford, all the way to not diversifying your assets outside of the financial system because you never know what's going to happen over the long term. That alone, that discussion when I asked him the final question, man, I know it's a free podcast, but that was worth the price of [inaudible] and then some. That was really great. Just the whole idea that you can deposit money. There's a way to make money from gold that doesn't – it's not wholly reliant on valuing it in dollars.

Keith explained how his business works and how they lend gold basically and get paid in gold and the kinds of businesses that need that service. Then that way he can pay his interest to his clients and they see – he says they see the interest in ounces build up in their account and it's a wonderful moment. That's how he delights his customers. That's a really interesting thing and I'm willing to bet that the more successful he becomes, the more imitators there will be. I could see that getting to be a very, very large business because all the young folks who thought they were going to get interest from crypto and maybe like Keith said, the guy who promised them that is now in jail and they lost all their money. They still have that idea. They still want to earn interest and yet they probably want to go outside of the normal banking system. That's why they went to crypto.

So I think there's a heck of a good future ahead for Keith's idea for his business and for others that imitate him and I think that he's right. When you can't invest in anything else because it's too expensive and for whatever reason, getting some gold is never a mistake. All right. Well, that's another interview and that's another episode of Stansberry Investor Hour. I hope you enjoyed it as much as we did. We provide a transcript for every episode. Just go to InvestorHour.com. Click on the episode you want. Scroll all the way down, click on the word "transcript," and enjoy.

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