Chris Marcus: Trust Your Gut on Gold and Silver

by birtanpublished on August 28, 2020

I'm charlotte macleod with the investing news network and here today with me is chris marcus founder of arcadia economics thanks so much for being here with me online today charlotte great to see you again uh fun talking silver

Price a little higher than last time so it's a pleasure to be here and thanks for having me yep very excited to hear your thoughts so i'll jump right into the questions i'm actually

Listening to your book right now and one of the first things you talk about there and one of the first things so it's not a spoiler is about gold's previous all-time high in

2011 and how that made you want to look more closely at the precious metals you mentioned it just didn't make sense to you that it reached the level that it did and then it fell so i wondered if you could start us off

By talking about that and what caught your attention there because i think it could relate to what's going on today sure and certainly probably overlooked but to me a very at least in my life has

Been a seminal moment because back in september the pre of 2011 when gold had reached its previous high broken through 1900 which was taken out recently but at that point was the high

Keep in mind this was after qe2 the debt ceiling debacle us getting downgraded by s p and it seemed as if the world was in a very similar state of mind as now and seeing that the

Debts are getting bigger and it was funny because i just come back from europe i was back home for a day or two and then i had flown out to san diego because i was actually going to see rick

Rule and it was that labor day weekend and just remember it clearly because it was in a hotel in san diego and i believe it was the sunday night i think it's september 6th and you have gold's above 1900

And it's late in the morning maybe midnight california time and i get this email from one of the wall street journal alerts saying that the swiss have just pegged the frank to the euro

Now to put that in context going back then you know you had trouble in europe the dollar was really on the rocks perhaps more than ever aside from perhaps even more so than now even though there's so much many more of

Them now but basically when the the the european central bank was already printing so when the swiss say you know then they're being looked at as the last safe haven

And now they're saying you know we're going to start printing to make sure our currency doesn't go up and i'm as soon as i read them like wow we might is tonight going to be the night we see gold

Breakthrough 2000 but instead there was this plummet in the middle of the night where uh it's actually a wild chart i believe it drops down comes back up and then it's you know 60 bucks lower

By the next morning and again it was helpful because by this point i had had a really uh good option training background i was running a options trading post um worked for a

Shop that trained us well with decision making so i had a lot of familiarity with markets and i couldn't figure out how that made sense and i i think that was around when i

Started reading about ted butler and i remember being on the floor and thinking one day it's like yeah i guess i had heard someone say somewhere that maybe gold and silver were manipulated so it's like

Was in there somewhere and then was just trying to figure it out because there was just more money being printed than ever i never expected the prices to come down as much as they did

Um i wonder if it were not for the prices coming down then was the dollar closer to going off the tracks back then because traditionally you know gold and silver eventually soar

And that's when i think people start to notice and we've seen that now where gold source through 2000 silver is up a couple of bucks and i don't know if i would say it's a mania

Yet but like you start getting it on the cnbc ticker and there's more inflows coming in um so that was where a lot of this began and uh i guess the book was almost uh

You know a decade later of research trying to see either i was missing something or if this came down mainly because banks dumped a lot of volume on a very thin market and an illiquid time and

Drive the price lower um my understanding in studies of markets is that you can you can push the beach ball underwater but watch out when it snaps back which i think we're starting to see now

Right and with that context i was wondering if you could talk about what we've recently seen in the gold and silver markets gold passed its all-time high quite

Recently and we did see it then fall back i know among our listeners there's been some comments that that was a manipulative move what's your take on the activity we've seen

Recently yeah well i'm gonna see if i can pull up this this great chart that i have that i think puts things in perspective quite nicely because you know on one hand

I mean i think the fed is guaranteeing that not only whether it's 2 000 or 3 000 i mean from anyone who's studied weimar germany or any previous hyperinflation especially if you have an austrian

Economics background there's a reason why they can't raise interest rates they i don't think they really want to i don't think they ever will i mean then you have to start paying all the interest expense

On the us debt all these derivatives start getting triggered um so i think you have a long-term trend that i don't see how it's reversed in fact someone asked me what's the hedge for

Silver i don't know i guess your downside is if the fed raises interest rates undoes all the quantitative easing nancy pelosi and donald trump sit down play checkers and start cutting the debt

They tell social security and medicare recipients the money's not there i mean outside of that i mean we're even where we are now and jerome powell's getting ready uh

To talk about they're they're they're planning something historic they're already doing qe and at jackson hole they're getting ready to do something historic

So i would suggest that in the long term you kind of know where things are going to go in the short term uh here's our chart from august 19th you see the volume here and just so

Happens when gold just drops off a cliff what is this 40 50 bucks almost you see the volume there um you see it again here let's see if i have the uh silver chart up for that day here again

You see the drop in the price and remember you can sell the banks can i you or i can't charlotte but it's you know if you're banging you just sell any amount of contracts um and just hammer it similar to what we

Saw in september of 2011 and i might add that at the option trading shop that i worked for we were specifically trained you would never execute something like that

Because for example if i let's say i buy a call option and want to hedge that by selling stock it's a really thin stock we just you know drift out a couple shares every once in a while

Because you want to sell for the highest price but if the markets are closed on a holiday weekend on a sunday night it seems bizarre that you know someone with a ton of gold just

Figured oh well the swiss are going to start printing their currency i better get rid of this gold you've seen the same thing happen repeatedly bart chilton of the cftc confirmed it

The department of justice has decided to label jp morgan as a criminal racket and charged their traders with ricoh statute um if it seems baffling that

As that's happening we still see that same pattern that sure looks manipulative to me i'm stunned by it as well and wish the cftc or department of justice would comment

Because i think it's affecting investors on at least weekly if not sometimes daily basis and i would just suggest to folks that it's not the way i would set it up i

Don't think it's legal moral ethical or anything like that but what i found helpful about trading it's a good science of differentiating between what i want or what i think is fair

And what's going to happen because think about it like this let's say gold's at ten thousand dollars in two years i'm not saying that's gonna happen i wouldn't say it's impossible either

But even if gold went to ten thousand dollars in two years there'd still probably be a couple hundred days where the price was down so the difference between what if silver just chugged up towards 26 hadn't gone

To 29 and then down i think taking a step back at times is probably uh the most valuable thing you know it's like most metals investors if they just went on vacation

And stopped checking the chart for two or three years they'd come back and they'd probably be in pretty good shape so you know uh that's at least one way of handling some of these

Short-term gyrations right i it so it definitely sounds like you're seeing some similarities between what happened before what's happening now and i guess the question that many people want to know

The answer to is what does that mean for the path forward it's it's definitely difficult to say but can you shed any light on your thoughts there sure um

And that's where let's let's pull up we're recording this on wednesday before the uh jackson hole speech just so i mean i can understand sometimes that people think i'm making this stuff up because it's so wild jerome powell

Set to deliver profoundly consequential speech changing how the fed views inflation so they've already increased their balance sheet over seven trillion dollars

To put that in context remember from the fed's inception in 1913 to 2008 we had 800 billion less than a trillion in the last now a decade has gone up seven fold bernanke powell janet yellen all tell us

How it's temporary it's going to be undone and then here i mean these guys they're actually talking about you know pushing inflation higher

Because it wasn't quite high enough over the last decade i mean they're adding trillions out of pop so i don't think there's i don't know how quickly it'll happen and gold will be

Back over 2000 but i mean like when you have that policy i don't know i sit here and i try and figure out like if you tell me i can't invest in gold silver

Mining stocks or any sort of you know commodities that are hedged to inflation like i don't know what else to do i mean to look at a share of tesla you know what you know what the you know tesla is now at least as the other day

Was more expensive than an ounce of gold it was over two thousand dollars and do you have any idea what the what what the price of a tesla share was last september so about a year ago yeah much less

It's 225 bucks so it's gone up ninefold i mean you have a bond market with zero point six percent yield and the fed says that their two percent inflation mandate isn't high enough

It's like anybody else noticing that i mean i don't so i mean you know if you told me silver trades below 20 bucks again in the next year i wouldn't say that's impossible i think maybe it's getting less likely um

You know one of the things i've been aiming to at least contribute to with the book or the show is at least i don't think most people have any idea what's been going on and you know it's you said you you're

You've listened you started listening to the book and it's like they don't tell you about that stuff anywhere and i think that when it's like really put in context when people be

Say okay yeah that is weird that gold would plummet in the middle of the night when the last supposed safe haven says they're gonna do a hyperinflation campaign and um you know but i guess the way

Things are set up now it's there's a lot going on and people are looking for the next day or the next quarter or next 10 minutes um but i think if you uh if you're in a marketplace where there's

Not much patience and you can be the patient person that alone is probably a good starting point for any uh any strategy that you're putting into effect right and patience does seem to be very

Key when you talk to people who are watching what's going on in silver and gold it seems a recurring theme is something is going to happen to change this people are very convinced about

That and the question is when and that when question seems to just hang over everything that's going on how do you deal with that uncertainty in your day-to-day life i think it's a great question

And i would say that that's really the focus of what i do i've had my days where i'm looking at that kid code chart and running around the house swearing and you know at some point it's like

Maybe the markets are always going to do what the markets are going to do and what we can control is our mental reaction um again that's why i said before you know even if gold went to ten thousand

Bucks there's going to be days where it's down and in fact the more that we can step away from the day-to-day in fact i love i've been listening to a lot of audio books

The market wizard series by jack schwagers incredible you hear one great traitor after another and when different markets different time periods they all describe the same thing

I love watching the movie the big short because that describes the same thing and you saw that you know they their own ways like one guy got laughed at you know another guy's wife or his investors were upset

You know and maybe i don't think any of these things are hard i mean you you again you you can look at the charts you see the volume you know it's like okay well that's weird that the department of

Justice and is arresting them for spoofing and it's continuing i mean but it's really that mental part you know how do you take a step back but what i find

Is helpful is seeing okay yeah well this is actually kind of how it's happened in all these cases this is why you know the mortgage bubble collapsed when it did i mean i would suggest we might be

Pretty close to the end point of the metal suppression we're seeing record delivery amounts almost monthly on the comex in a couple of days we'll find out it

Looks still a little early to tell but looks like maybe another new record at the same time is metal actually leaving the comex i mean these guys i believe some of the

Banks have been fined for submitting false information so i mean you know how do i handle all that mentally i find that that that's why i left wall street that's why

I like gold and silver but i don't want a gold and silver trust where jp morgan is the custodian i find that when you when you interact with people who do good business who try to find arrangements for hey how

Can i combine what i do with what you do and what that guy does and everybody wins so that's why i love the mining sector you have a lot of people that are like that you have a lot of people that are got into metals for the

Same reason and they're finding solutions at least this part is financial um you know whether slv actually has the medal i don't know maybe there's some hidden fee they they

Pop on you but i find when you deal with criminals that have a track record whether they get caught today or tomorrow um i don't know the exact date but to me

The you know how small the silver market is you just keep piling money in there it's like what are people supposed to think when we're at this point it's not like there's talks about

You know well we really should start cutting the budget they're just they're just upping the ante on unlimited so i would say that you know again that's why it's like

I wish people could just go on vacation just stop checking it um or you know listen to the people that you have on your show you have some great investors and they all

They all say the same thing right i mean it's like you talk i know you talk to rick rule you ask him about silver he says the same thing so it's really perhaps um you know that mental adjustment where

It's you know the more we remain calm and have a good perspective shockingly anything in life you follow that formula and it goes well okay and on that note in your day-to-day

Life are you are you doing any trading or are you in any way related to precious metals or are you a buy and hold kind of person this is a

Question that we also post on twitter last week and we've we did find that most people are buy and hold type of people so just wonder where you stand there yeah well it's a mix um for a long time

I wasn't doing any trading because i guess one thing maybe better than gold or silver i took a lot of the money i'd saved learned marketing and i wanted to have some sort of business that was sharing

Something that i enjoyed that was also offering something to the world so keep in mind that i know sometimes people say if they don't have money to buy gold and silver but if you understand this stuff

That's you know a great asset too um you know as the business came together it's nice and i think for most people and myself as well starting with some physical bullying

Is a good way to go for i invest in the mining shares i think you know obviously there's risks i mean maybe one day the government will say we're going to try and nationalize the

Miners i don't necessarily think that's going to happen it's actually kind of interesting if the government tried to nationalize the mining industry that would actually

Send the gold and silver prices skyrocketing because we know what happens when government tries to run a business so you'd have we'd have a real shortage then but you know there's different risks again i

Have a trading background so there's a degree to which i'm comfortable assuming those again i even trade options on some of these silver mining stocks which is highly speculative

And in a bear market like the last nine years you get clobbered pretty good although part of that was contingent upon i made arrangements to arrange my life whether it was business or where i lived or the

Different things i did you know so it will change over time with all of that said ironically uh the more i think about it i feel like the less that i do and the less that i touch it and more to

Just put stuff in there and leave it and not try and say well it went up is there going to be a correction and i'm going to buy it lower i don't know maybe there is or not but to me my what i feel confident in is

That all right five or ten years from now there's some way this racket is still going then i'm happy i love taking that bet what's gonna happen tomorrow i'd be flipping a

Coin i mean you know we've seen with the manipulation i mean you could even have powell say that it's gonna have like a six percent inflation target and if they dump enough paper contracts

On gold and silver you'll see the price go lower and i would suggest if you know there's a possibility that happens being prepared for that adjusting your trades knowing that

That's until it's finally overwhelmed or manipulated or exposed which i like to think is closer to the end but again partly because i study it a lot i'm willing to take

Certain risks that you know i understand you know i help my mom with some one account of hers and you know i i manage that differently so um you know there's some mix but i'm i'm

Learning to do as little as possible and i think there's a lot to be uh said for that okay and on the note of investing what are you seeing in terms of interest in

Precious metals right now i know there's been a lot of talk that people who were not interested before now we're seeing the high prices they're coming in of course most recently and maybe most notably we

Had warren buffett news about barrick gold uh he of course has a history in silver as well so maybe talk to me about what level of interest you're seeing from people

Because you probably with your book and everything would have a sense of that yeah yeah it's interesting because i get to talk to a lot of the mining companies and also

Investors and managers and it's growing now has it grown from like one percent of the population to 1.2 percent maybe although that's still the thing is even if you grow a percent

With how small this these markets are especially silver so i don't know that uh everyone in the mainstream i mean obviously they're not selling some of these tech stocks because they're still

Like what if what if tesla goes down to like 200 bucks you know what if the market's disappointed with whatever powell says you know what if what if god forbid they

Actually raised interest rates i mean it's like at some point either if they take away the money then some of that money is going to come out of there and it's like i think with the the chaos you'd have in

The banking would flood into silver or they'll keep printing and you know it's i think it's just becoming so obvious like people can't ignore it anymore the stuff that you're hearing in the

Book i think if everybody knew that silver wouldn't be anywhere close to 28 bucks so there's a degree to which you know there's financial crimes there's not you know

Not the stretch to say that they're charged with the rico statute several guys already pled guilty they've also all mentioned was done with knowledge of their supervisors and was widespread practice

Within the firm and that also matches everything i've heard officially unofficially anecdotally i mean you know so it's like once people start finding out about that

You know i'm not saying it's a mainstream frenzy although you know you start getting gold at 2 000 2500. you've seen how people are coming in i bring orders

Uh for people to buy gold and silver to uh precious metals dealer they're getting a lot of new people who are buying this isn't just the gold and silver bugs anymore

Uh it's probably still a very small percentage of the population but you don't need 50 you can't have 50 percent of the population get into silver i mean it's like probably when i don't

Know maybe you break two or three percent so and i mean like you know as we hear the banks are getting clobbered on their shorts some of them are running for cover they've already

Hsbc lost 200 million dollars in a day back in march you know okay so what are these you can see on the cot report it's amazing they actually share this for some reason but there's a field that

Says the four largest traders who are short silver are collectively short about 244 million ounces so that means on the way from 20 to 28

Those four presumably banks lost a collective uh two billion dollars i mean that adds up after a little bit maybe the fact that the fed prints it and gives it back in some qe program the

Next day which is why perhaps it's hard to know the day-to-day of when things are going to happen but again you know if people set their investments

There are ways you can hedge out the time risk and for everyone who's tired of waiting and doesn't like the manipulation i get that although keep in mind if the prices really are going to go up and you have a

Chance to buy something cheaper again accepting any trading situation not even just gold or silver but anything in life all right here's what is not what i think bill should have done or what you know your spouse you wanted them to

Do it's whatever is accepting that and you can plan around this and use it to your advantage okay that is some good words of advice as we're wrapping up here a little bit i

Want to ask you if you have any final thoughts for the audience and i also want to ask you about your event coming up it's called silverfest what should we know about that yeah well

Silver silverfest certainly anyone who's invested in silver interested in silver wants to find out more about what's going on anything uh about what we talked about today

Uh we i'm blessed that we have experts from around the world who are going to be joining us it's my first arcadia's first conference um unfortunately we can't do it in person this year but it'll be online

September 11th 12th and 13th uh the 11th is more of a party we'll be watching trading places together charlotte hopefully you'll be able to make it there and join us

Um it just kind of hit me how you know there's some a lot of gold events and some gold and silver but i feel like the silver profile it's kind of a unique type of person that you know is loyal

We're a little moody and you know but it's like and it's nice we actually started planning this before the price broke 20 but now we have a a price increase to celebrate

Really just also connect people i know a lot of people often feel like i'm the only guy in my town that gets this or they don't have anyone to talk to about it um so i mean we have quite a guest list and

It's going to be a lot of fun so anything silver related it's fortunately free for people to attend and um i guess parting thoughts i would say just in general like most things in life

Trust your gut uh i believe we're witnessing the ultimate emperor's really naked moment this isn't complex financial analysis sometimes i think of it as the greatest hypnotic thought experiment in history

Where you know you have i mean it's really a matter of perspective some people say tomorrow jerome powell issue policy i don't know you could call that bond market manipulation

But i think if things feel weird you say you know gee that's odd that everyone's listening to the fed and there was bernanke back then who said subprime was contained

You know they said the quantitative easing was temporary jerome powell said everything was fine until corona hit yet he was doing trillions of dollars of swap lines months before that was lowering interest

Rates before we even heard of corona and you're thinking gee this doesn't add up there's a reason why i think it's unfortunate that a lot of people that we've been told to trust are stealing right in your face and i

Think that's not the way i would choose to do it but as much as possible say all right well it is what it is uh fortunately you can get silver for 28 bucks

I think when uh the market really sniffs out what's going on keep in mind even jp morgan got clobbered on their london whale big trade back in uh 2011 or 12 and i would suggest there's

Going to be a point when enough people realize it may be beginning now we're seeing a run on the medals now when the break point is you know not letting that dominate your life

Perhaps is the best thing to go you know there's ways to prepare in advance and um and just trust your gut you you if you're watching this now if you watch the last half hour of this

Then i would just say trust what feels right to you and the stuff is out there and you're gonna be in good shape okay well thank you so much for sharing your thoughts that was great um and we'll be looking

Forward to your event coming up in september um okay sure appreciate that and thanks again for having me great once again i'm charlotte macleod with the investing news network and this

Is chris marcus with arcadia economics you

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