Gold Successfully Tests $4k Support - Ep 1047

Precious Metals Volatility and Market Analysis [00:54]

• The precious metals market experienced significant volatility, with gold and silver reaching new highs before a sharp intraday reversal.
• Gold closed above $4,200 and silver above $53 on Wednesday, then made new highs, with gold peaking around $4,375 and silver reaching $54.40 by early Friday.
• A sudden reversal on Friday morning saw gold drop about $180 and silver $2.50, ending the week at $5,250 and $5,175, respectively.
• Monday saw a $130 rally in gold, reaching $4,378, but silver did not retrace its previous high.
• Tuesday brought a major drop, with gold falling over $300 (6.5%) and silver by more than $3.
• Wednesday saw further selling, with gold dipping to around $4,016 before bouncing back to close the week near $4,110, and silver closing just above $48.50.
• Both gold and silver are now in correction territory, with gold down 6.4% and silver down 11% from their record highs.
• The speaker emphasizes that gold corrected to $4,000, not from $4,000, indicating $4,000 is now a strong floor, unlike previous psychological resistance levels like $2,000 or $3,000.
• Mining stocks (GDX and GDXJ) have seen larger drops (14.5% and 15.5% respectively), with silver stocks down over 20%, despite silver's high price.
• The speaker views $4,000 as the "new $3,000" for gold and anticipates a similar floor-building behavior.
• The media's portrayal of gold's decline as the end of a speculative mania is contrasted with their positive framing of Bitcoin ETF inflows.
• Significant inflows into GLD over the last four months are noted, contrasting with massive outflows in previous periods.
• The speaker believes investor interest in gold is increasing and the recent pullback is a normal part of a bull market, designed to shake out weak hands.
• Central bank buying of gold is ongoing and expected to continue as they seek to diversify away from US dollar reserves.
• The speaker predicts that current highs are temporary and expects gold to move significantly higher before year-end.

"The revolution starts now."

Economic Data and Federal Reserve Policy [13:54]

• The upcoming FOMC meeting and potential for a rate cut are discussed as a catalyst for gold.
• September CPI numbers showed consumer prices rose 0.3% month-over-month, below consensus but higher than the previous month's sequential number.
• Year-over-year CPI is up 3%, which is 50% above the Federal Reserve's 2% target.
• Despite inflation being above target and rising, and stock markets at record highs, the Fed is expected to cut rates, which the speaker deems a mistake that will fuel inflation.
• Core CPI (excluding food and energy) is also up 3% year-over-year, still 50% above the target.
• The speaker notes that lower oil prices (falling below $57/barrel) have helped keep CPI from being even higher, but expects oil prices to rally.
• The national debt surpassed $38 trillion for the first time, even during a government shutdown.
• The speaker argues that the CPI understates price increases, with unofficial rates potentially at 6%.
• The Federal Reserve's decision to cut rates when inflation is rising is seen as "throwing gasoline on the inflation fire."

"The Fed is expected to cut rates yet again. And that is despite the news that we got today."

Market Manipulation and Economic Principles [20:53]

• Skepticism and fear, rather than greed, still dominate the gold market, indicating it's not in a bubble.
• Pneumont's record earnings and revenue, more than doubling year-over-year, were met with a 7% stock price drop due to concerns about Q4 cash flow impacts from severance payments and construction costs.
• The speaker criticizes investors for focusing on short-term negatives (Q4 costs) while ignoring the fundamental strength (higher gold prices offsetting expenses) and undervaluation of the stock (12x earnings, a 50% discount to the S&P 500).
• Production delays are re-framed as a positive, meaning more gold will be mined and sold at potentially higher prices in the future.
• The speaker points out that gold stock earnings have consistently beaten estimates, yet the initial reaction has been to "sell the news," a sign of a bull market climbing a wall of worry, not a speculative frenzy.
• The crypto industry is identified as a segment that "proclaims the death of the gold bull market," hoping for a rotation into Bitcoin.
• The speaker dismisses the idea of rotation from gold to Bitcoin, stating gold buyers are not interested in "fool's gold."
• Bitcoin is seen as having stalled, not receiving a bid as a risk asset or safe haven, and the speaker anticipates a rotation out of Bitcoin.
• The crypto industry's substantial donations to a $300 million ballroom project at the White House are seen as an attempt to gain government support for an industry that would fail in a free market.
• The speaker strongly opposes government intervention in private investment, arguing it distorts capital allocation, lacks accountability, and is unconstitutional.
• Government intervention is contrasted with the private sector's profit-and-loss motive, which ensures resources are allocated to their highest and best use.
• The potential for future administrations (e.g., AOC) to replicate government investment in favored companies is highlighted as a danger.
• The speaker criticizes the construction of a lavish ballroom at the White House, calling it a waste of money given the national debt and the country's status as a republic, not a kingdom.
• The current government shutdown is predicted to be longer than the record 35-day shutdown during the Trump administration in 2018-2019.
• Trade negotiations with Canada have stalled, with the speaker noting that current protectionist policies contradict Ronald Reagan's free trade principles.
• JP Morgan's move to allow institutional clients to borrow against crypto collateral (Bitcoin and Ether) is seen as ultimately bad news due to the inherent volatility and illiquidity of crypto, increasing downside risk.
• The speaker plans to launch a "goldback token" or tokenized gold platform at Shift Gold, challenging CZ of Binance's criticism of tokenized gold by pointing out the reliance on third parties across the entire crypto industry.
• The speaker reveals their main YouTube channel has been "shadowbanned" for years, severely limiting its reach, while a newer Shift Gold channel is experiencing much higher viewership, indicating the shadowban is algorithmic.

"The crypto industry fails without the government propping it up because it can't survive in the free market."

The Specter of Government Intervention and Market Distortions [31:00]

• The Speaker criticizes the proposed $300 million ballroom at the White House, questioning its necessity and the motives behind industry donations, suggesting a quid pro quo for government favors. This is framed as a misallocation of resources that could be used to pay down national debt or invested productively.
• The comparison to historical monarchies is used to illustrate the inappropriate opulence of such a project for a republic.
• The lengthy government shutdown, now exceeding 24 days, is discussed in the context of potential political maneuvering and the possibility of it breaking previous records, with market performance being a key factor influencing the duration.
• Trade policy is examined, specifically the disruption of negotiations with Canada and the use of advertising featuring Ronald Reagan to critique protectionist measures, highlighting a divergence from Reagan's free trade advocacy.
• The speaker vehemently opposes the idea of the government investing taxpayer money in private companies, particularly in nascent fields like quantum computing. This is deemed unconstitutional and a perversion of market principles, as it bypasses the profit-and-loss mechanism that guides private investment and ensures efficient resource allocation.
• The lack of personal financial risk for government officials making such investment decisions is contrasted with private investors' accountability, leading to a higher likelihood of misjudgment and waste.
• The distortion of capital markets is a central theme, where government endorsement of specific companies can manipulate investment decisions, diverting capital from potentially more deserving ventures that would have attracted funding in a free market.
• The underlying principle of government planners substituting their judgment for the market's is fundamentally flawed, especially given that presidential administrations change, creating a dangerous precedent for partisan capital allocation.
• The crypto industry's reliance on government support and its lobbying efforts are scrutinized, particularly the donations to the ballroom project, suggesting a desire for regulation that favors them over free market competition.
• JP Morgan's new policy allowing loans against crypto collateral is viewed as a dangerous introduction of leverage into an already volatile and illiquid market, increasing systemic risk.
• The speaker plans to launch a tokenized gold product ("goldback token") at Shift Gold, challenging criticism from CZ of Binance by highlighting the universal reliance on third parties within the crypto ecosystem (exchanges, stablecoins, ETFs).
• The speaker laments their main YouTube channel's alleged "shadowbanning," which has significantly reduced its reach, contrasting it with the higher viewership on the Shift Gold channel, and announces a strategy of simulcasting podcasts on both platforms to counter this censorship.
• The call for audience engagement (likes, comments, watching full videos) is presented as a way to help algorithms promote content and bypass perceived platform restrictions.

"If an investment is worth funding, it will attract funding in the private sector because people will want to invest in the company. If a business can't get private capital, it's probably because it's a bad idea."