00:14 All right. Gold and silver, precious metals are getting hammered this week a lot, especially yesterday. Yesterday was ugly. Gold got down to around $4,000 per ounce. Silver was 6162 at a couple moments, especially last evening. They've rebounded a little bit today, but only a little bit, which means the downside is still emerging here.
00:34 And these are the lowest prices we've seen in either gold and silver in quite some time. And as we'll go through here, you'll see how big the downturn has gotten to be, which raises a whole bunch of questions starting with, first of all, what's going on? What's behind the sell-offs here, the latest selloff here, and more importantly, what can that tell us about all the other stuff that we're interested in? Yes, if you're a precious metal investor, we want to know what's going on with gold and silver and what that means as far as
00:58 both the short term as well as the long run and short run. I got to say it. I've said this before, said this since last fall, expected this kind of volatility to precious metals. However, even though it's not unexpected, there is still information inside the gold prices, what's behaving, how precious metals are behaving here in June, especially as it relates to all the other stuff that we've been talking about especially yesterday.
01:24 I went over this yesterday. So, spoiler alert there. We've got a lot going on in precious metals. Like I said, I think the most important part of it is the signal, the information content that we're getting in the price here and the price action. But with gold being down and especially the timing, given the timing of how everything's really shaking out, that first question, first thing that everybody goes to especially today — today the ECB hiked rates for the first time — is the central bank rate
01:51 hiking campaign which maybe got started here. Is that the reason why gold is down? The shortrun correlation does seem to fit because gold, silver — the near-term sell-off that we're experiencing right now goes back to last Friday, last Friday payroll reports, hawkish Fed, hawkish ECB, hawkish central banks.
02:11 Is rate hikes or are rate hikes to blame for what's going on in gold and silver? Is it reflation? Because we know gold is a safe haven asset. Is the AI bubble, for example? Is it starting to really spill over in the general economy? Is China coming back because of it? Is there a trade boom here? Is it reflation that's taking a little bit or maybe a lot out of the safe haven bid for gold and silver? Maybe that's the reason why gold is down or in combination with rate hikes.
02:37 Or is it potentially something else and we'll look at that as well. Plus, we've got other things to cover. What's happening in silver? What that means? And silver is a big one, too, especially as it relates to number two and number three, as we'll see. Plus, copper. Copper can also give us a lot of information about all of the things that we're talking about here.
02:56 So, let's talk about metals because there's big stuff happening in metals. Let's start with gold. Gold is down sharply. Lowest price since November. Down, like I said, almost $4,000 an ounce. Didn't quite get that far. I think the low was 4040 4030 somewhere last night. It's bounced back a little bit here today. Up about a percent, maybe 2%, but not really a huge snapback given the massive move lower in gold prices.
03:20 Since last Thursday, since Thursday's close, gold is down roughly 9%. Like I said, it's been low. It's been down around 10%. And going back to the peak in January, you're talking about a substantial 25% decrease off the top. So, this is a significant sell-off. Again, not necessarily unexpected.
03:39 I've been expecting this volatility all along, but it's still important to go through what's happening here. The immediates — just straight away looking at the chart you can see March 2nd as the near-term top there is really the end of that last trend and that's March 2nd is the arrival of the Rand conflict which immediately okay oil prices inflation rate hikes this sounds like central banks hiking rates and as well I don't want to say as everybody knows as everybody says higher interest rates are bad for gold and we'll get to that in
04:12 just a second here we'll dispel that myth quite a bit. But at the very least, again, today the ECB hiked rates first time since — was it 2023. So the first rate hike out of a major central bank, though the Reserve Bank of Australia has hiked three times already this year, but rate hikes out of the ECB.
04:32 And just for a second here, how ridiculous is this? Just to digress for a moment, how ridiculous is it that a central bank like the ECB is hiking off of a 2% policy rate and going to 2 and a/4% and expecting that to make any difference in what everybody says is a historic energy shock? How in the hell is a quarter point rate hike supposed to be some kind of solution to an energy shock to keep inflation that's already unleashed in CPIs at least in the short run — it's just the whole thing with rate hikes and central banks is
05:01 utterly ridiculous and I wish more people would see through the BS at what this really is. Central bankers are pretending that they have serious levers of control over the economy and marketplace when they really don't. This is all reallying stupid. So, but anyway, which is a good segue into the rest of this part of the video.
05:22 Are rate hikes to blame for gold? And I kind of spoiled it here. If rate hikes are really just utterly symbolic and nothing more, can we really expect gold prices to behave like this where they're down 25% from the peak, down 9% over the last several days? Is it really rate hikes out of central banks that account for this? And the answer is no.
05:42 Just look at interest rates. This is what nobody ever does. Everybody talks about these myths. Rate hikes are bad for gold or precious metals. Well, put up a freaking chart and actually see what's going on here. We've seen interest rates. We just use Treasury rates here. It doesn't matter which ones you use because the bond market is globally synchronized by and large.
06:01 So interest rates, the ups and downs over the last couple years. You can see there are three big increases in Treasury rates over the last three years that are much bigger than the one we have today. And gold didn't really respond to any of them. You can make somewhat of a case, back in 2022, the big rise in prices or big rise in the interest rates then maybe took a little bit of buying interest out of gold.
06:22 I'm not saying that interest rates aren't a factor at all, but they are nowhere near close to the top factor. And you can see it right here on the chart. 2023 rates are going up. Gold was still higher to maybe level. 2024, sticky inflation, oil prices, central banks may be higher for longer. Rates went up. Gold went up too.
06:42 Later in 2024, the Fed's rate cut regret after the 50 basis point rate cut. Suddenly, rates backed up then too. Gold continued to go higher. So, at the very least, again, interest rates are not the top factor in precious metal demand either way. In fact, they're not even at the top half of the list here.
07:02 And you go back even further than that. Look at the difference between the 2010s and 2020s. Interest rates are substantially higher in the 2020s, though they're still not high. Historically speaking, rates are still low, but it hasn't been an impediment to gold whatsoever. Something else is driving gold in the bigger picture term, bigger picture factor.
07:20 We know what that is. There's no mystery here. It's not central banks. The reason why you're taught and told that interest rates are the primary factor of setting in goal is because first of all from the central bank perspective they have an interest in getting everybody to believe that interest rates are the most powerful instrument because that's what they wield or the most powerful level of control when it's really not.
07:42 Interest rates are information not tools. So, gold prices continue to go higher regardless of what interest rates are doing, mostly regardless of what interest rates are doing, which is safe haven demand. That explains the gold price behavior, especially in the 2020s, as forgot how to grow is remembering to get worse and worse and worse in many different ways.
08:02 We've got a credit cycle bubble. We've got a whole bunch of transformational changes going on in China and overseas. Not a lot of are good, and I'll get to that in the silver part of the video. So you can see why gold prices would go up even as central banks raised rates in 2022 and 2023.
08:19 The two don't really correlate. It's safe haven demand. Now with gold, there are other factors to consider. So if you got safe haven demand as the fundamental baseline, there are also other short-term factors. Before we get to those though, I did want to go through the tips market here because if you think if you still believe that central banks and rate hikes are bad for gold, then it would, one rate hike out of the ECB or maybe one out of the Fed wouldn't necessarily make a big difference.
08:44 But if you're thinking that inflation is potentially getting out of control, that maybe will be a series of rate hikes. And so maybe the market is looking at central banks to undertake not just one or two but maybe three four — maybe this is like 2022 all over again where central banks are going to have to panic over an oil shock.
09:04 Well again the tips marketplace will dispel any fantasy that you have about a series of rate hikes out of central banks because much like last year when we went over tariff inflation and central bankers everywhere were going crazy about the inflationary potential of tariffs, the tips market and other markets too.
09:21 There we focus on tips because it's easy to see and find. TIPS market said there is no tariff inflation. Yes, there might be some small limited temporary impacts on CPIs, but nothing that's going to cause the central bank to raise rates. Now, the big difference this year versus last year is strictly that oil prices have had a direct impact on CPIs already.
09:42 Three of them got March, April, and now May. So CPI rates are up in the short run. What the tips market is saying is that's pretty much all you're going to get. You're going to get a shortrun impact on the CPI. Then after that, there's really not a whole lot of inflation potential. We know why that is, too.
10:00 There's no mystery in this either because energy shocks are not inflationary since they destroy demand along the way. And that's what the TIPS market is saying. So, if you're thinking as far as gold prices, if you still believe central bank and policy rates play a role in gold, the tips market says there's not any inflation risk that's going to keep central banks hiking one after another after another after another.
10:20 They might get one or two because they need some time to realize that they're wrong about the inflation potential, but that's all you're really going to get out of central banks. Again, the tips market, nothing is ever 100%. But as far as, here's one of the deepest markets in the world, most sophisticated.
10:36 And by the way, this is historically validated. You can line up the 10-year break even rate in particular against the CPI. And not only does it match, there is predictive power in the TIPS break even rate. So historically validated TIPS market saying there is no inflation risk as close to 100% as you're going to get.
10:53 Just like last year with the overblown tariff inflation nonsense, central bankers are panicking over — I don't want to say it's nothing but they're panicking over inflation that doesn't actually exist outside of the shortrun impact of energy prices and it doesn't matter what measure you look at shortrun long run they're all the same nothing has changed as far as the marketplace is concerned especially the long run break even and you put that in historical context you can see how limited the market sees
11:23 inflationary potential here in the 2020s, not just more recently, but the entire 2020s as it relates to the pre204 drop in oil prices, the oil crash, and therefore CPI rates around much of the world. So, no series of rate hikes here. That's not what we're looking at. We're not looking for the central banks to go one one one and then just continued on forward.
11:48 Instead, they're likely to be one and done. Maybe two at most. There's a possibility ECB gets another one because they're going to continue to panic and oversell the inflation story out of oil prices, but the market says that's not happening. So, not only do we have no correlation between interest rates — some people talk about real rates, but it doesn't really matter here.
12:06 There's not really a correlation between interest rates or differentials and gold prices. And even if there were, it's not likely that interest rates are going to go that much higher to begin with, at least shortrun rates. So, we got to look at other things. But before we do, I do want to remind you that I'm having a webinar Sunday, June 28th.
12:22 And this is the kind of stuff that we're going to go over in an investment context. How can we use these signals? Because frankly, I'm sick and tired of this inflation debate and people talking about inflation, inflation. You hear it all over the media. You hear all this conjecture about is this inflationary? Central bankers say we have all of these tools and information at our fingertips that we can use either for interpretation or analysis, but also in investing.
12:44 If you want to know if inflation is a big threat, we have the ability to. Nothing is ever perfect. The tips market is far from perfect, but it's not just the tips market. We have multiple tools at our fingertips. So our webinar June 28th, not only we going to go into the inflation aspect of it, we're going to put this in an investment context in a portfolio management context because I think this is badly needed especially now when you have all sorts of — I don't say conflicting information because the overwhelming consensus across the
13:11 mainstream inflation rate hikes the rates are going to go up. So we have a lot to discuss where it comes to what's happening now. Plus, we got to incorporate all the other stuff we've been talking about, the macroeconomic signals, the macroeconomic cycle, the private credit cycle, what that means as far as private credit overall, which also feeds back into what we're seeing in the tips, right? So, there's a link in the description to sign up for Sunday, June 28, 5:30 p.m.
13:36 Eastern time. There's a lot that we need to go over and clear up here. So, let's go back to gold. All right. So, it's not rate hikes and we'll talk about the reflation possibility in a second. Look, we've been talking about dollar shock. Energy shock equals dollar shock from the very beginning.
13:54 That's the reason why gold prices started to go lower as soon as the Iran conflict showed up. It wasn't that this was inflationary or that rate hikes — the gold market and precious metal market was afraid of rate hikes. It was the dollar shock effect that also spills over into precious metals because historically one of the shortrun factors, one of the big shortrun factors in gold prices is dollar illiquidity.
14:18 We see that time and time again. Go back to 2008. You see three big drops in gold that correspond exactly to three of the biggest bouts of illiquidity in the dollar crisis back in 2008 and into 2009. Same thing in 2011, which we'll go over in silver in just a second. So there was already a liquidation phase in the precious metal market back in March when the dollar shock really started to show up as the energy shock really got going and during that period we even saw we got confirmation that some central banks were using their gold reserve
14:50 assets as a way to raise dollar liquidity. Turkey being the primary example of this and there's probably other central banks beside but Turkey's the one that we have solid confirmation on and this is the reason why they hold gold — not a monetary asset, it's a reserve asset, it's a portfolio asset, its role is as a store of value and it's been a very good one here in the 2020s really since 2022 during the entire forgot how to grow period safe haven demand has gone up and up and up
15:20 so as a reserve asset has performed exceptionally well. The problem with it is because gold is not a monetary asset, it needs to be liquidated, turned into something liquid in order to be useful as a medium or to pay off debt or to be lent out to somebody else so they can use it to buy a more expensive oil price or more expensive oil.
15:41 So, gold needs to be liquidated and oftentimes what you see is that they take gold out of their reserves. And I'm not just talking about foreign officials either. It's not just about central banks but anybody who owns gold in any significant fashion including banks, private banks and other types of import export forms.
15:57 You take gold out of your reserves you have to sell it to raise liquid dollar liabilities and from your perspective liquid dollar assets. You convert gold to a monetary form and therefore becomes useful for whatever it is you're trying to do faced with a shortfall of US dollar liquidity because during times like this dollar liquidity gets really tough.
16:16 So it makes sense that foreign institutions as well as private sources would use their reserve assets and gold being a primary reserve asset, one who has performed exceptionally well over the last couple years — sell a little bit of gold, raise dollar liquidity when faced with a dollar shortfall.
16:34 So we saw that back in March and I think we're seeing it again here. It's not rate hikes, it's not inflation, it's not central banks, it is dollar shortfall. We also have to be, to be specific here — central banks in particular don't necessarily sell their gold. It's oftentimes said to be selling gold, but even Turkey is a perfect example.
16:54 They swap their gold. The effect on the price is the same either way, but swapping versus sell — when you're swapping gold, you're basically using gold as collateral to raise dollars on a shortrun basis, which means you're not expressing an opinion on gold. It's not like Turkey saying, "We don't want gold.
17:10 We're just selling out of it." They're raising dollars using gold as some kind of asset. Some of it might be sold outright, but a lot of it is just as collateral. Therefore, it's gold swap, gold lease, more like a gold lease. But either way, gold is used as a way to raise liquidity, which has a negative effect on the gold price in the near term.
17:29 So, as the gold is swapped, it ends up getting sold. It gets dumped on the market either way, regardless of the ownership situation. I did want to bring that up as a clarification. So Turkey swapped a lot of their gold, which means they still want the gold, but they needed the dollars, which goes to one of the reasons why we're going through this.
17:46 It's another key point of confirmation on the dollar shortage. They want the gold, but they need the dollars more than they want the gold. Therefore, they have to use the gold in one way or another. And by the way, it's the same thing with US treasuries. A lot of times these governments want the treasuries. However, they need liquid dollars in the short run.
18:03 So use treasuries as collateral to raise dollars either through repo or some kind of swap there as well. Reserve assets can be used in multiple different ways, but they all point back to the same thing which is dollar shortage. So I think that's what's happening in precious metals here. And that's why it fits with the March 2nd top in gold that I showed you in one of the slides before.
18:25 The oil shock — it's not about central banks. It's not about inflation because the oil shock, the energy shock is a dollar shock. And that's the real correlation here. And with gold prices being down as much as they are, I think it's really two factors. One is the dollar shock, dollar shortage, but also — gold, the reason why I was expecting gold volatility to begin with, a lot of people were, was that gold went up way too far, way too fast last year.
18:45 So it's a combination of things. Gold went way too far, way too fast in late 2025, early 2026, in particular, January 2026. So it was probably higher than it would otherwise have been because momentum pushed it higher and higher and higher. See the turnaround in momentum after a big rally, the correction that was probably going to come anyway and then you add to that the energy shock becoming a dollar shock and I think that's why you've seen gold come off 25%. It's a combination of those two
19:13 factors, not what everybody else is saying. And so in many ways it's a confirmation that we are experiencing an acute — well, parts of the euro dollar system, parts of the world are experiencing an acute euro dollar shortage. Now there was a story in Bloomberg earlier this month where they said India was another central bank that sold gold but the Reserve Bank of India said no no we didn't sell any gold and Bloomberg ended up retracting that story and the reason I'm bringing it up is because India's heavily involved in gold
19:42 but also because the Bloomberg story was plausible. India has been absolutely pressured and I've been talking about this a lot recently including yesterday's YouTube video how governments and authorities around especially Asia are getting increasingly desperate. When you're increasingly desperate it's not a big leap to say we're going to start selling some of our gold or we're going to start leasing and swapping some of our gold to raise dollar liquidity. Now the Indians it's a little bit different story
20:07 because India historically they have a very different relationship with gold holdings than say other countries like Turkey do but then again Turkey's in a much more dire situation. But either way, it connects everything together. The idea that India could be selling its gold assets whether it has or not and whether the gold selling might be coming from not the Reserve Bank of India or the official Indian holdings but potentially some Indian bank holdings — that's a possibility too. It's not so implausible
20:36 because we've already seen it in Turkey and we already know there's a connection between dollar shortages and at the very least gold and precious metals through India anyway. Talked about this last month — how the Indians have been limiting gold buying which is definitely a factor here in the overall trajectory of gold too because with India not necessarily banning gold but making it harder and more expensive to import gold and silver precious metals, Modi talking to Indians directly hoping to get them to not buy jewelry, there's a little
21:07 bit less of demand and probably substantially less demand than there otherwise would have been because of the dollar shortage linkage in order to preserve dollars to be able to buy oil. The Indian government has made it more expensive like I said to import precious metals. So there is a dollar connection to this time on the demand side of precious metals which is certainly playing a role because India was a huge part in the runup to begin with — India along with China.
21:34 So if India is buying less gold because they have a bigger dollar problem there's still the same connection. Gold prices are going down on both the supply and demand side, the sell and buy side, because of this dollar shortage, dollar shock that's taking place. So gold is going down not entirely because of the dollar shock.
21:52 Like I said, a couple different factors, but it's much more about the dollar story than it is certainly central banks and rate hikes. In fact, that's really not what's going on at all here to begin with. So that brings us to silver. Obviously, if gold is going to be weak, silver is losing its fundamental support from the precious metal side.
22:11 But there's also questions about silver on the demand side. Because as silver was going higher, especially last year, as it got into the supply squeeze, the idea was that maybe silver was telling us something about AI technology, a reflationary period in the global economy that was just getting underway, which some people turned into some kind of commodity super cycle, maybe even an inflationary super cycle.
22:34 And you kind of just had to shake your head because it was very clear what was happening in silver was more so a supply squeeze than it was some fundamental repricing of global economic circumstances. And I will get to that in just a second too. But for now, silver — ugly day yesterday, like I said, down around $61 an ounce.
22:49 It was 13% since last Thursday. That's as of today, though maybe not the latest price. Roughly 13% over the last several days. So pretty substantial liquidation there. It's off 45% from its closing high back in January. Got a little bit higher intra today. Gotten pretty ridiculous as it continued to shoot up in completely parabolic fashion which is never a good chart to see.
23:15 So big drop in silver prices, a lot of correlation with gold. I think the interest here in silver is okay how much of it is gold on the precious metal side — therefore safe haven demand, the cheaper alternative to gold, though these days it's not nearly as cheap as it used to be — and how much is industry, how much is the AI thing spilling over from copper into now maybe silver, maybe even a turnaround in the global economic fortunes because a lot of people were expecting the economy to pick up in 2026 especially via China. So
23:44 how much of this is maybe just industry. When you look at the gold to silver ratio, which I'll get to in a second — so we got the silver signal as well as reflation questions here and which direction we're going to take, which direction we think silver's going. So, if silver is supported by industrial demand, we would expect it to go higher again at some point.
24:08 If silver instead — overstated industrial demand is more likely to be pushed around or driven by the other mechanics that we just went over in gold, then there's very likely — and I believe this is the case — to be more near-term volatility to the downside. I still think silver, as markets always do, markets always overshoot on the upside and then overcorrect on the downside.
24:33 So if we look at the gold to silver ratio, gold to silver ratio as a guide, it got down to around 46 which was ridiculously low which told you gold or silver was expanding and rallying far in excess of the gold — which people, okay, that's the industrial part of the metal. Silver wasn't just catching up to gold as a safe haven.
24:54 It was surpassing it because industry is going to be booming. The economy is going to be in a super cycle. All that kind of stuff. Setting it aside for a second here, gold to silver around 46 to me is way overdone. It really needs to be up around 80, which means that it needs to get back to 80 in order to have a fundamental value or fundamental support from gold, which would put silver as of today roughly around $50 per ounce.
25:18 So to me, $50 is sort of the next level. Although, like I said, I expect it to go even lower because markets overshoot on the downside. Now, as it overshoots on the downside, if we do see lower than $50 per ounce, that could present a tremendous buying opportunity depending upon a couple other factors, which I'm not going to get to here.
25:37 Already talked about this in our deep dive analysis, but either way, as it sits, gold to silver get back to 80. Silver's got to go down to 50. Now, why would gold to silver have to get back to 80? Some people have made the argument that the gold to silver ratio should be, as I just said, somewhere around maybe 55 to 60 like it was in the early 2000s, right up until around 2011 and 2012.
26:01 And that's not an accident that the gold to silver ratio began to rise around 2011 and 2012. So should we see gold to silver ratio like it was in the early part of the 21st century or should it be like it was in the late part of the 2010s and throughout the 2020s so far? And the difference between that again is industrial demand for silver.
26:24 So if you think the AI bubble is going to be sustainable — or it's even beyond AI, that the global economy is indeed picking up — then you would expect the gold to silver ratio to be 55 maybe 60. If you don't think that's happening, then gold to silver ratio gets back to around 80 at a minimum, if not 85, maybe 90, which means there's a bigger downside to silver.
26:44 And why do we think that's the case? China is a really good proxy here. So global demand for just industrial — because that's what China does. China is industry. China will be making around roughly half of everything that's made in the entire world will be made out of China. And as you can see around 2011 and 2012, China's economic fortunes dipped down substantially and never came back.
27:11 Which is one reason why the gold to silver ratio went from around 5565 to suddenly 80s and 90s. It went to 80s and 90s because demand for gold outstripped silver because industry was in a massive secular funk. And as industry is in a massive secular funk, you can also appreciate why demand for safe haven would be a little bit higher than demand for silver and industry.
27:35 So gold higher relative to silver as China's economic fortunes continue to diminish all throughout the 2010s right on into the 2020s. Less industrial demand, more safe haven demand, more safe haven demand for gold rather than silver. Therefore, gold to silver ratio expands. Here we are in the 2020s and once again we see the same thing.
27:57 If anything, the economic prospects and industrial prospects as we see them through China — it's not just China, but China is a very good proxy for it globally speaking. There's not a part of the world or part of the goods economy that the Chinese don't touch and aren't really the center of.
28:14 So, as that's the case, the gold to silver ratio really should be back where it was in the late 2010s and the 2020s so far. Even if AI is going to contribute something to industrial demand for silver, the baseline, the fundamental value is nowhere near what it would need to be to be a broadbased secular trend back to something like the early part of the 21st century.
28:35 That is everything that we're hearing out of China. If you've watched this channel, you know we've been on top of China from the very beginning, but more recently, China's economic fortunes continue to get worse, not better. Even as the export boom continues to boom — they got tremendous trade numbers out of the Chinese — which is not really a good sign for a bunch of reasons we don't need to get into here. But the upshot is the gold to silver ratio again showed that silver
29:04 expanded far in excess of what the fundamentals on the industrial side or the safe haven side would actually argue for. And again, we've seen this before. 2011 — if you remember 2011, very similar story. The world thought that industry was going to come roaring back. Even if the US economy was toast after 2008 — which by the way, it was — and Europe was in the same boat as the US.
29:28 Therefore, the developed economy growth prospects and growth profile for the developed world weren't great. A lot of people believed that the China in particular, but emerging markets, would emerge from 2008 completely unscathed. That was sort of the 2010 early 2011 bubble which led to a supply shock in silver among other things.
29:48 So there was going to be excessive industrial demand for silver over and above gold which has sent the gold to silver ratio plummeting down to even below 40 I believe at the peak. However, as you can see that was a wrongway bet similar to what we're seeing here today. China wasn't going to expand forever forward.
30:08 Instead, they realized — as the world realized around the 2011 Euro dollar number two crisis — that this was going to impact the entire world. And therefore, the industrial baseline that everybody thought was pushing silver up to that point, almost $50 per ounce, just completely vanished and disappeared because it was never there to begin with.
30:28 So, the gold to silver ratio — and you can see the visible correlation with Chinese GDP — that's not a random correlation. That's not an accident. China's GDP gives us a rough proxy for industrial demand, big picture terms. Therefore, something like silver. So, the gold to silver ratio really should be around 80 and 90 like it had been late 2010s and 2020s because the prospects for China and the rest of the world did not change magically over the last couple years.
30:57 When you look back in 2010, 2011, the big run up in silver — this is the scary part. If you're a silver owner, it's a good thing if you're looking to get into silver and buy it cheaper. There is a possibility that silver could play out the same way today as it did back then with January of 2026 being April of 2011.
31:18 April 2011 when silver got up to around $50 per ounce. Similar chart, similar pattern, similar downturns. You look — I've circled all the downturns here. Those are the liquidations, dollar shortages. A big one in August of 2011. This the third one on the chart here, that was very clearly a dollar shortage. Another one showed up in 2013 just before the emerging market crisis that became Euro dollar number three.
31:39 So the chart that you want to be careful of is silver replaying 2011, which as I said, as silver goes lower as we expect it will — you got to be careful about where the entry point is if you're looking to buy because there'll be a couple factors that will determine are we following the 2011 pattern or is there a different pattern that can get us back into a rebound more quickly.
32:02 But either way it adds up to more shortrun pain in silver for the reasons that we just went over. But for the broader discussion — silver is acting out anti-reflationary. What it says is — before I get to copper, but to finish up a thought here on silver — what silver is telling us by coming down is that the perception of this industrial turnaround super cycle was overstated by what was nothing more than a supply squeeze in silver.
32:29 It wasn't a fundamental sustainable demand. It wasn't the AI boom leading to a longrun future of the secular super cycle people been talking about. It was just overstated. And so now that the silver market is correcting, we also have to correct how we view the contributions of the technology boom and AI and everything else in the context of all the rest of what's going on here in 2026.
32:55 Not a super cycle, not a turnaround, not even a reflationary impulse. So copper. Copper is a very good metal to — better than silver. Copper is pure and they call it Dr. Copper for a reason. I even forgot to put Dr. Copper the illustration here. But reflationary signal out of copper — and you can see copper continues to go higher over the last couple years though it's pretty volatile.
33:18 A lot of that has to do more with supply than actual demand though there is definitely some increase in demand. But is it a sustainable increase in demand? Does it signal something more than just a shortrun or intermediate term trend? How do we know? We compare copper to gold. Copper to gold ratio is a dependable historically validated signal of reflation or even inflation versus disinflation or even deflation.
33:45 And despite the fact that gold is a lot lower over the last couple of months for the reasons we just went over — more dollar reasons than anything else — and copper has remained relatively stable to high, the copper to gold ratio hasn't really rebounded all that much. It is at least off of its record low that was set before the Iran conflict started, but it isn't up that much.
34:04 In fact, the current copper to gold ratio is basically where it had been at the bottom of the pandemic lockdowns in March and April of 2020. That's not reflationary. Now maybe copper to gold continues to go a lot higher though given everything we just went over and a whole bunch more including the tips market and yield curves, the chances are not very good.
34:25 So even the copper to gold ratio or copper itself is not sending us a reflationary signal. And you put that in a historical context. You look back throughout the history — copper to gold here is at the low in 2016. It's comparable to December 2008 and February 2009. We're not talking about a reflationary signal out of copper, at least not anytime soon, which would take away that explanation for why gold is lower, which again points directly toward dollar shortage more than anything else. And this also backs up
34:54 what we just went through in silver, the copper to gold ratio. Therefore, copper is telling us there isn't some secular trend in demand where AI is going to unleash a longrun accelerating increase in industrial activity or whatever. China's not turning around. Emerging markets are not somehow some growth engine that's going to just show up out of nowhere.
35:17 More than likely, what's happening is shortrun fluctuations that are meeting the end of those shortrun fluctuations in the form of an energy shock that's becoming a dollar shock. And the dollar shock is shocking the hell out of precious metals in other markets, too. And it's shocking the hell out of central banks to panic them to the point that the ECB just treached themselves.
35:37 They're going to regret that rate hike. I guarantee that. So, just to review here — gold down big. Not because of rate hikes. There's not really a correlation with interest rates. It's more about safe haven in the longer run versus dollar conditions in the short run, which is good news if you're a gold owner because shortrun dollar conditions, they tend to run their course at various points.
36:01 And as long as the safe haven demand of the 2020s hasn't changed — which there's no sign that it has — then the fundamental longrun sustainable demand for gold as a safe haven is still there and should emerge at some point once we get through the correction and maybe the short-term parts of the dollar shortage. However, the caution is the dollar shock gets — and like I said, we're seeing governments around particularly Asia get increasingly desperate.
36:25 The more desperate they get, the deeper the dollar shock gets, the more there is a shortrun downside to gold prices, not just silver. But rate hikes — nope, that's not it. Reflation — you don't see that in copper to gold. You don't really see that any place else. The curves aren't saying it. The curves aren't seeing it.
36:41 So, that's not the really reason why gold prices are down either. It's not like the safe haven demand has completely disappeared and everybody's just happy and optimistic about where the world is heading from here on through the rest of the 2020s at the very least. Is it something else? Yes, it's something else.
36:56 In the short run, it all the telltale signs of gold as a reserve asset being liquidated is exactly it's designed to do it designed to be. And as gold is liquidated on the marketplace, it gets dumped on the market. Price depresses the prices in the short run at the very least. We've seen this time and time and time again.
37:15 You combine that dollar pressure with the overextended — how far gold had gotten last year. The correction was coming. The dollar amplifies the correction. Silver — we're not getting some kind of long run signal out of silver, which means unfortunately I think there's a lot more downside in silver left to go. I hope it's not the 2011 pattern.
37:37 That's a possibility you're going to have to keep in the back of your mind as we go forward here. But silver — AI is not going to turn everything around. Same thing that we're getting out of copper. Copper remains high largely out of supply factors more than demand. And even so, the copper to gold ratio remains closer to the bottom.
37:56 It's record low than anything looking like reflation, let alone a sustainable economic boom. So precious metals are telling us — gold in particular — dollar shortage and an acute one, which fits with everything that we've been seeing. And if you put this in the context of interest rates, a dollar shortage is spreading and escalating is not going to be something that's going to help central banks get toward their rate hikes that they seem to want to get to.
38:22 The ECB might get a couple rate hikes. There's a possibility the Fed does because these things take some time to work their way through the system and it takes even more time for backward-looking macroeconomic data to be conclusive enough for the ECB to realize that they made a mistake.
38:39 Now you look back historically — whenever we've seen this, we've seen this a couple of times — 2008 being the extreme example. In 2008, the ECB hiked rates in July of 2008. The Fed was very close to doing the same thing, a lot closer than people realize. The Fed almost hiked rates in the middle of 2008. They turned around really quickly because the world completely fell off — meltdown. We're probably not going to have that degree of meltdown here, which means — and even then, from July 2008 to September, central banks didn't cut
39:08 rates again till after Lehman Brothers. There's still a threemonth gap between when they hiked and when they eventually cut. And those were under the most extreme circumstances. Same thing in 2011. The ECB hiked twice in 2011 and it took a couple of months and a change of leadership from Trice to Mario Draggy before they started cutting again.
39:26 But even then, at the very least a couple of months. You go to 2018, which is another example. It took the Fed and the ECB — the ACB didn't start hiking rates, but other central banks did. The Bank of Canada — it took them several months to realize that they were wrong about rate hikes.
39:42 So, there is a window for central banks to hike rates because it will take them some time to realize that the reason they hiked rates was wrong to begin with. And the consequences and risks in the real economy are exactly opposite of what they thought. And the gold and silver selloffs here are another couple of critical signals that fit within that overall framework.
40:03 We're not seeing something like a broad-based supply shock like 21 and 22. That's not what we're seeing here because — for a variety of reasons we don't need to get into, don't need to belver this here — but precious metals fit within that overall framework that the curves are tracing out, the frowns and forward rate curves, the tips market, the flatness and the yield curve and everything else.
40:24 The precious metals are telling us about dollar conditions as well as other factors that fit within that. So be careful about what's going on in precious metals. It does make a difference as far as the information we're getting out of it. We'll see where it goes here in the short run or if there's another leg down in the near term if we get more liquidations.
40:44 That's kind of what I'm watching here. But with that, thanks everybody for joining me. I'll be back again pretty soon.