The dollar hasn’t just declined — it’s collapsed in slow motion. According to Keith Weiner, it’s lost over 99% of its value since 1913. But most people don’t notice, because they’re looking at gold charts the wrong way.
In this episode, Keith breaks down why gold isn’t going up — the dollar is going down. We explore the deeper signals that gold is revealing, what the recent breakout really means, and how a quiet, long-term repricing of trust is unfolding in real time.
We also dig into why silver still matters, how the monetary system actually works under the surface, and what comes next for those still holding their wealth in paper. If you’re trying to understand what $4,000 gold actually means — and why this shift is more structural than speculative — this is a conversation you can’t afford to miss.
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Transcript
Monetary Metals:
Welcome back to the Gold Exchange podcast. My name is Ben Nadelstein. I am joined by the CEO and founder of Monetary Metals, Keith Weiner. Keith, thanks for joining us. In last year’s Gold Outlook report for 2025, you wrote, If this year is like last year in absolute terms, we’re likely to see over 3,700 for gold price. If it’s like last year in percentage terms, it’s more like $4,000. Today, gold is sitting at 37,33. Where are we in the gold bull market right now?
Keith Weiner:
We’re in the thick of it. A lot of people try to say, Oh, first ending, third ending, eighth ending. I can’t necessarily do that. I’m not sure that anybody who pretends to do that actually can, but I don’t claim that. But what I can say is, as we look at our fundamentals, in regular readers of my work, going back 15 years, know that we look at the gold basis. Gold basis is futures price minus the spot price. That really gives you a pretty good understanding of what’s moving in the market. Let’s say the price is moving up, and the basis is the spread is widening. That’s telling you that the buying is occurring in futures, which is lifting the futures price. Then the market makers, the arbitragers, are pulling spot price up, but with a little bit of a lag and a little bit of reluctance, so that spread is widening as the whole thing is moving up. If you see a rising basis with a rising price that’s telling you that it’s speculators in the futures market, which is important to know because nobody holds a futures position for the long term. It’s expensive to hold.
There’s the cost of carry, which is the contango. If you’re playing with 20 to 1 leverage, it’s got to be a quick stab in and out. Either you’re taking your profits or you’re cutting your losses. That’s not a position somebody holds for 15 years or leaves it to their great grandkids in a trust. Whereas if they’re buying metal, that metal presumably can be taken out, put in either a private safe somewhere or in a brinks vault somewhere, and who knows when, if ever it’s coming back to market, could be a trust for the grandkids, et cetera. What’s interesting now, and this has been on and off a feature of this bull market, and I’ve been saying since post-COVID, this isn’t the same trend, the same pattern that we saw after the last bull market ended, second half of 2011, through 2018 into 2019. Every time the price blipped, I came out, I felt like a broken record. All the gold analysts would say, That’s it, rocket ship, gold’s taking off. I would say, Today is not that day. I’m sorry. Sure enough, it would turn right back around because you’d see it in the basis. Every time the price would rise, the basis would blip up along with the price.
This isn’t good. That is not what’s happening in this bull market, and certainly not at the moment. The price of gold has really risen in the last couple of months. What’s interesting is the basis, and maybe even more importantly, the co-basis, which is our measure of scarcity to the market. It’s been flat like a table. As price is rising, the metal is not becoming more abundant to the market. It just isn’t. Now, that means that people are buying metal rather than buying futures, and that is a sign of it’s durable. Now, a lot of people will say this market has gotten ahead. It’s moved fast. It’s due for correction. Maybe that’s true. Markets move in strange ways, and fundamentals doesn’t mean that the herd can’t suddenly decide to head fake and then run to the left side of the ship before they run back to the right side, maybe. I wouldn’t bet on it, but I wouldn’t say it’s impossible. But what I can say is the fundamentals are good and strong, as strong as they were at the beginning. My call was essentially saying the price of gold is going to be rising, and there’s a lot of macro reasons why.
But it’s not a mania. It’s not like millions of people jumping in with extreme leverage or anything like that. At at least not yet. It’s going to keep running. What happens in Q4? Do we get that correction that everyone’s calling for? I don’t have that crystal ball. These are not predictions that are subject to that precise timing, especially in the near term. But if you look at the macro side, it’s all bad news, which means people would say good for gold, which drives me crazy. I remember a headline, someone said, nuclear war between North and South Korea would be good for gold. I’m just like, do you people not hear what you sound like? 30 million people about to die and disrupting global trade and everything else. This asset that we’re betting on is going to go up. Really? But the US is even more profitable get than anybody would have assumed, including myself. The fiscal picture is even more bleak than it was. The political picture is completely hopeless. Nobody’s even talking about slowing the spending or doing anything, let alone meaningful, doing anything whatsoever. The only thing that is now the controversy is how fast they’re going to lower rates.
Obviously, lower rates is going to be fuel for more people to buy gold because one of the reasons to not buy gold is treasury bills are paying a yield. You take away the yield, you take away one reason to hold treasuries, and gold is people are going to turn to it. But I look at… Instead of saying gold’s going up, I look at it and say the dollar is going down. The dollar recently hit an all-time low of 8.2 milligrams of gold. That’s down from 1913, it was 1,500 milligrams. It’s down to essentially eight. What is that? 99.5%. Is that my math right? Something like that. Which is really bleak. I mean, it’s the entire world, everybody’s savings, every business has this capital in dollars, and that’s all just eroding. If you hold gold, it’s not that you’re getting richer, you’re avoiding the losses. You’re not taking gains, but you’re avoiding losses, which is almost as good. Now, in silver, that’s an interesting thing. In gold, cobasis has been table flat as the price has risen. In recent months, silver has gone up in dollar terms even more than gold has, and the cobasis has been rising a bit.
Not massively, not as in permanent backwardation type scary stuff, but with that rise in price, the metal is scarcer to the market than it had been a few months ago. That is very noteworthy and very bullish. I think I said gold could be 3700, and silver could be 36 or 37. Obviously, underestimated silver. At the time, silver was what? 30? 28? It was like 36, 37 was a pretty bold prediction at that time. Now it’s looking Oh, yeah, you completely underpredicted what happened. Here we are in the ’40s. Is ’50 within striking distance? Yeah, potentially it is with the cobasis behaving the way it is as the price has gone up. Yeah, 50, the all-time high in silver. Twice we hit it, just under. 1980 and 2011. Can we break past that? Yeah, we could. Will it be Q4? Maybe. Will it be Q1? But it’s very bullish looking at the moment.
Monetary Metals:
Keith, can you talk about the difference between gold and silver? A lot of people own gold because they see it as this safe haven asset. They see debt rising, they see currencies falling, they think maybe it’s time to own some gold. But silver often has a different story. There’s this industrial component. People own silver less as a monetary or safe haven asset, but sometimes purely as a speculation. Do you see silver and gold continuing to trade together as monetary assets? Assets, or do you think there’s going to be a divergence between gold prices and silver prices and how they move?
Keith Weiner:
I mean, they’ve always traded together, even if the gold-silver ratio is rising or if it’s falling. And I don’t think that’s going to change. When people say, Oh, well, industrial demand is consuming all the silver. They’re essentially arguing, Silver is being demonetized. Money isn’t consumed until it’s gone. It changes hands, but it doesn’t go away. If it’s really going away, you’re saying it’s being demonetized, and then silver is going to become a cheap version of platinum or palladium or something, with all the volatility and all the lack of moneyness that that implies. We’re monetary metals. We’re interested in the two metals, which are money, gold and silver. Yes, there are speculators that when they think gold’s in a bull market, they buy silver because they expect an extra kick. Silver is a smaller market than gold, certainly at the margin. So you can get bigger swings. The whiplash on that tail can be wicked. If you get it right, you can make a lot of dollars. I was going to say money, but a lot of dollars anyway, or a lot of gold. If you buy it at the right moment. A lot of people may not know, monetary metals used to run a little hedge fund.
We closed it down some years ago, but a little hedge fund that traded the gold-silver ratio. We either owned gold or silver, depending on which one we thought was going to outperform. But silver The difference between the two historically, and I think it’s largely true today, yes, you have the industrial demand and at the margin, that can move it around a bit. But when you look at what does the silver price correlate to? Does it correlate better to copper, oil, or gold? The answer is very definitively gold, not copper and not oil. It doesn’t trade as an industrial. It trades as a monetary metal. Within that monetary As you understand, silver has tended to be, always has been, I mean, for going back many hundreds, if not thousands of years, silver is for the wage earners. If you are a skilled technician today or machinist or electrician or something like that, and you want to set aside 10% of your weekly wage, $100, $150, that level of wage. Gold is not terribly efficient, and gold is not emotionally satisfying. If you’re going to buy $100 worth of gold, you’re going to pay a big fat premium because you’re buying a tiny little quantity, basically a gram, maybe less than a gram at this point.
It’s expensive to machine things that precisely. The cost of manufacturing and packaging comes in a certa card. The cost of all that packaging, distribution, and handling is a very great percentage of the value of the metal, and so it’s not a great value, number one. Number one, and number two, it’s not very emotionally satisfying. A certain card is about the size of a credit card. There’s a little clear plastic window in there. Inside that plastic window is floating this tiny little chip. To call it a bar is making a mountain out of a mole hill. It’s a tiny little thing, and it moves around in that little window. It’s not very satisfying. You buy $100 worth of silver, $150 worth of silver, it’s two or three one-out silver coins, and maybe a bit more. You have a decent handful. Silver is twice the bulk for the same weight. You got a whole bunch of bulk, you get a whole bunch of weight. It’s a decent handful of it. There’s an emotional satisfaction to that. Wage earners that are stacking, it’s silver. Wage earners are under a lot of pressure. I’ve been talking about that for years.
Gold is owned by the capital owning class, silver by the wage earner. But of course, the capital owning class can, if they choose to, they can certainly switch to silver or add some more silver to their position as a kicker to the gold, if they think of it that way. I’m sure we’re seeing some of that right now. It wouldn’t take that much of that. There’s some decent analysis of the size of the silver market and obviously the size of the private wealth market. What if they were to put one? There’s a fallacy of saying, What if all those people were to put 1%? Yeah, but they haven’t. To speculate that they will is a fallacy. But if we’re getting a certain amount of that movement now, yeah, you could see a big swing in the price of silver, which we have. Silver sitting here and did it touch $45 the other day? It certainly in the $44’s. Big move as a percentage. It’s not over at the moment. We’ll see where it all goes. But it’s very exciting until you realize that the only way profit from it is by selling your metal. I just saw there’s a bullion company in another part of the world offering a gold decumulation program, so-called.
I guess the idea is you buy If you denominate your thinking in dollars, you buy $100,000 worth of gold, and every month you get a dividend, and you still have $100,000 worth of gold as long as the gold price is going up. How does this work? Well, the amount of gold is dwindling, but as the gold price is rising, it takes less and less gold to add up to $100,000. Okay, decumulation is a great word. And for those who want to decumulate their legacy and their estate and their networth and everything else, okay, sure. But wouldn’t it be better to earn interest on it and spend the interest and not consume the principle?
Monetary Metals:
For those looking to accumulate more gold ounces, they can check out monetary-metals.com. Keith, next question for you. So we’ve seen this gold price run up almost towards $4,000. What would it take for gold prices to hit this $4,000 mark? Is it central bank buying increasing? Is it a stock market correction? Is it inflation rearing its head again? What is the factor in your mind that will push gold past this $4,000 mark? And on the other end, what could bring gold prices cratering back down below $3,000?
Keith Weiner:
The question of what could bring gold above $4,000? It’s not one single thing, it’s so many things. So this price rally over certainly the last 12 months, but I think it’s been more like about 16 to 18 months at this point, has been largely without the participation of Western retail investors. As the price really got going, let’s call it $22 to $2,400, somewhere in that vicinity, I think, the Western retail capitulated. In a certain sense, you can’t blame them. Pavlov’s dogs are trained every time he rings the bell, getting food, and therefore, they salivate. The market, post-2011, every time it blipped, they were trained, not going to be durable. This one is, obviously, but that’s why. If Western retail investors decide they want to get back in, it wouldn’t be that hard to say, Yeah, another $300, less than $300 from where we are right now to get to 4,000, sure, easily. Any further bad macro news? I think most people think the Fed is going to slowly ease interest rates and that Well, they probably won’t go as far as the extremists. Miriam just appointed to the Fed board said the interest rate should be 2%.
Well, okay, they’re not going to be that extreme, but maybe it goes to three, three and a quarter, 275, and who knows? Well, what if it really did go to 2 and beyond? Well, that right there could spur a lot of buying. People mix up rising prices due to non-monetary forces, such as, I don’t know, what if you deport all the labor force that produce things like food and construction materials and cars and everything else, and you tariff the hell out of imports besides, which also affects domestic producers because they import a lot of things. You could really drive consumer prices to skyrocket, but it’s not monetary. You could get people to buy gold as a defensive hedge against that. Then they get disappointed because it’s not monetary, and therefore, gold isn’t really going to respond to it. That’s what happened 2009 to 2011. A lot of people bought gold for the wrong reasons. At the time, I’m watching it saying, Well, this isn’t good because what happens when they realize their error? At that time, they thought hyperinflation was imminent, which it wasn’t. That can happen. You could have a shift in the geopolitical order.
That’s not going to be good for any paper currency. You could see a lot more people flocking to gold. The buying in gold, while the Western investors, retail, particularly, has set this one out, the buying in gold has been largely the Chinese world the Turkish world, the Indian world, and Arab world. In Turkey, there’s 80 million population. The banking system there offers gold-denominated bank accounts. They’re not sound because all the banks have to give the gold to the central bank, which sells it to manage imports. It’s what India did. That’s not really sound. But anyway, people participated in that. There’s 120 million gold-denominated bank accounts. There’s one and a half gold bank accounts for every man, woman, child, infant, elderly in the country. The Turks are with gold bank accounts the way the Americans are with guns or maybe cars. I mean, there’s more than one per person. Those worlds, Those four worlds have been buying gold, mostly as a hedge against their own government and their own currency. If those currencies begin to tip down even further, the Lira has been an absolute train wreck. If you want to start going steeper. The Indian Rupee has never been a good currency, but it could accelerate.
You could see a big rise in gold prices. Now, we are seeing, we’ll say, the smart money in the West, family offices, institutional money coming into gold now, not retail. People are buying one or two ounce gold coins in a store. I don’t think that’s happening right now very much. But institutional money, smart money, so-called, or at least big money, leaving aside what money is dumb and which money is smart. Big money players are coming into gold, and if that accelerates, you could see it’s going to be higher gold prices. The central banks themselves, I don’t think, really to move the price the way people assume they do, but they’re very famous, and a lot of people may buy because they say, Well, if our central bank is buying, I should buy. So psychologically, the central bank buys whatever, 10 tons or 50 tons, but that induces 70 million people to buy 700 tons, then obviously, you can have an outsized effect. Now, would you call that the central bank buying raise the price, or would you call it buying by the people, or people because of the central bank. What’s the sound of my left hand clapping versus my right?
A lot of different things could cause it to go up. What could cause the price to drop? Obviously, if we have a real financial crisis, a banking system crisis, where suddenly credit is just pulled back from every possible place, and you have loan defaults, you have the bank’s retrenching, you have a lot of fear. But more importantly, nobody has any money. Things that are bought on credit, so housing seizes up because people don’t buy houses for cash, they buy it on credit. Auto seizes up, massive layoffs, and huge dislocations, and all of a sudden, a shortage of credit, which is what we call money today. We confuse money and credit. In that scenario, certainly all the leverage in the gold market is going to be yanked out, and that caused the gold price to drop 30% in 2008. Now, I’ve argued in years past, I think there’s less leverage in the gold market now than it was in 2008, and so you probably don’t see as much of a drop. I do note that in 2008, the gold price was the first asset to recover and move on to all-time highs. In January of ’09, gold was already higher than it had been in April of ’08, before the acute phase of the crisis.
Nothing else. The stock market was, what, 10, 15 years before it recovered to where it had been. That could cause a drop. Hard to predict how far it would drop. Would it go as far as 3,000? Yeah, that seems likely. Would it go to 2,000? That seems unlikely. I think 2,000, 2,500 is probably an absolute floor, even in that scenario. If that scenario doesn’t which I don’t think it will, everybody’s always fighting the last war. Maginot famously was trying to fight World War I in 1940. Not smart. This time around, the Fed thinking is that the 2007 Fed, 2008 Fed, was completely asleep at the switch, that it was essentially negligence. This Fed is hyper proactive. I don’t think they’re going to allow any of the kinds of things that the Fed in 2007 allowed. And so I don’t think we’re going to see that crisis because I think they’re going to be jumping all over it, which is inflation ordinary, at least as far as the gold price is concerned.
Monetary Metals:
Keith, we’re currently seeing all-time highs across many different asset classes. Gold is hitting all-time highs. Stock markets are hitting all-time highs. Even cryptocurrencies like Bitcoin are hitting all time highs. Our debt is, of course, hitting all time highs, and home prices as well, all time highs. So we’re seeing these highs, these record prices across all of these different asset classes. And yet the Fed has decided that they’re going to start cutting rates. So between these different asset classes, whether it’s interest rates, housing, gold, stocks, Bitcoin, which do you see most likely as first to falter drastically? Because we’ve seen these all time highs Doesn’t this mean at some point we’re going to have to see a correction or a reversion to a mean?
Keith Weiner:
I’m not sure what the mean is. I mean, interest rates have been falling for decades. The wear on that falling slope, do you say, is the mean. Now, Bitcoin, as I looked on my screen today, it’s 111,000, not exactly an all-time high. Very hard to opine. I mean, even the people that call themselves Bitcoin experts regularly get it wrong in direction and magnitude, and they’re off by massively. I don’t think anybody knows where that thing is going. It seems to me that… You talk about asset categories. Copper today is well under five bucks. Crude oil is in the ’60s. Commodities absolutely are not showing signs of inflation. Gold being money rather than a commodity or a different commodity anyway, the money commodity, obviously, and silver, responding completely differently. There’s a controversy over whether falling interest rates precipitate falling asset prices or rising asset prices. I think the confusion is what’s causing what? And also the timing of it. Normally, the central bank cuts rates in response to a crisis that’s already erupting. It’s the crisis that causes lower asset prices. Then the lower interest rate that the central bank not only sets initially, but maintains long past the end of the crisis, or arguably indefinitely, eventually sees much higher asset prices.
So if this time around, there are people that are criticizing the Fed, not because the Fed shouldn’t exist. That criticism is way outside, polite company. But they’re criticizing the Fed saying, You’re making the wrong call with inflation being robust, i. E, non-monetary forces driving lots of consumer prices into the stratosphere, you should be hiking or at least holding steady and not cutting. And yet the Fed is cutting, I think for two reasons. One is they have to, and then two, Trump wants zero interest rates. I think he’s going to get zero interest rates one way or the other, whether that’s a good or bad thing is a different story. With lower rates, especially in the absence of a great financial crisis, asset prices should be higher. Asset prices are essentially the inverse of interest rates, especially perpetual assets. So real estate being an obvious one, stocks Being the other, those are perpetuities. Gold’s a little bit different, but put gold in that category as well. These are perpetual assets. They’re not like a five-year bond that has a bunch of coupons for 60 months, and then it’s done. These are things that last forever. In theory, the price every time the interest rate halves, in theory, the price of these things doubles.
If interest rates are going to drop back down, we’ll see where things go, but quite possibly higher, a lot higher.
Monetary Metals:
Keith, I now want to ask you a series of lightning round questions you can answer as quickly or as slowly as you like, but these will be from various different topics. So first question, what do today’s gold prices tell us about people’s confidence in the federal reserve’s credibility, whether that’s to maintain inflation, whether that’s to keep our debt under control. What does this say about the dollar’s credibility, the Fed’s credibility, and do those things matter to gold prices?
Keith Weiner:
I think credibility is going down, but I think there’s a baby boomer expression, which I hate in a certain sense, but I love in another sense. It’s not a problem until it’s a problem. No, I don’t think it matters that much until suddenly, catastrophically, it will matter more than anything else in the world. And we’re not at that point yet.
Monetary Metals:
Next question for you. Do you think Western demand for gold will rise to meet Eastern demand levels, or is the opposite more likely that at a certain point Eastern demand will fall back down towards Western levels.
Keith Weiner:
I think Western demand is likely to rise.
Monetary Metals:
And do you see the US as being the center of that Western demand for gold, or do you think other countries, like Germany or France or the UK, are going to be the ones to pick up the slack in the gold market?
Keith Weiner:
It’s very hard to say what’s going to be the microtiming between Germany versus the UK versus the US, but I think they’ll generally be pretty close in timing. Culturally, it’s not homogeneous, but Hollywood exports its movies. Nashville and other music centers export other parts of the culture. Nba, these things are global. People are tuned into the same memes, the same ideas, the same trends. I think the West is going to discover they need gold. And it doesn’t mean the East will stop. It doesn’t mean the gold necessarily moves from one way to the other, but I think it means the price is likely to go up.
Monetary Metals:
Next question for you. In our Outlook report for 2025, we discussed how higher interest rates could hurt different markets, for example, debt maturities in the real estate sector. So far, we haven’t seen a major blowup. Why do you think that higher interest rates nearing 5% haven’t yet caused a major crisis in the stock market or in the real estate market?
Keith Weiner:
The stock market being perpetuities Essentially, it’s signaling this inverted yield curve, which you can see on any treasury site, extended even all the way out to perpetuities, which there are no perpetual treasuries. That, to me, is maybe controversial, but pretty straightforward. Now, the broader thing is, if stocks do react when there’s a financial crisis, when there’s suddenly a credit crunch, and parties are defaulting left and right, and all these things are going on, why didn’t that happen? I don’t remember. It was Hound of the Baskervilles. It was one of the Sherlock home stories, where Sherlock noticed there was a dog that did not bark during the night when there was a murder committed, and therefore it had to be somebody that was well known to the dog, and that therefore the person no one else suspected was actually the murderer. I think it was Hound of the Baskervilles. Anyways, something that didn’t bark in the night is the spread between junk bonds and treasury bonds didn’t blow out. Now, you and I did some stuff one October, several years ago, before the Fed was hiking rates, as I recall. The topic was zombies. It was October, and for Halloween, we’re talking about zombie month.
A zombie is a company whose profits are so low, it can’t even service the interest expense, let alone repay the principal. At that time, 20% of all corporate debt out there was zombie debt. Then you take the interest rate, the Fed funds rate, from zero to five and a quarter %. A lot of companies, so basically, you just move the margin 500 basis points up. A A lot of companies that had not been zombies, that were above that margin, above this margin, are now well under this margin. What percentage of companies would be zombie at five and a quarter %? We don’t know. I haven’t seen any updates on that statistic, but presumably, a hell of a lot more than 20%, maybe 50% or maybe even 75%, who knows? At the same time, credit conditions, in theory, should be a lot tighter with higher interest rates, and yet no blow up. What is going on? The best I can piece this out, and this is speculative, I always try to be clear when I’m talking about monetary science, when I say interest rates must fall, that is the conclusion of logic, where B necessarily follows from A, if it’s a logical proposition.
This is speculative that the regulators have given green light to certain institutional balance sheets, pension funds, insurance funds, annuity funds, to buy higher yielding junk stuff and lower investment-grade-rated stuff without taking the capital haircut that they normally would have to take to allow them to recapitalize. Remember, all these guys have taken huge capital losses. When the interest rate goes up, the 10-year treasury fell almost 25% in the price of the thing, the market price. These guys all lost a huge amount of capital. To recapitalize, well, would you rather try to recapitalize slowly at 5% or recapitalize faster at 8. 5%? I think the regulators gave them the green light to load up on this stuff with an implied backstop of, Hey, we’re not going to let all this paper default and let you get screwed. We’re keeping the market under control. These companies can roll their liabilities when due, and we’ll keep the game going, and if necessary, we’ll buy it off of you and shove it upstairs in the attic. If we need to, That induced all of those three categories of institutional players to load up on the stuff that otherwise they would have been selling and not buying.
The net effect is, Hey, the economy seems quiescent. Everything’s fine. There’s no blow-up. There’s no whatever. It’s great. The economy is evenly rotating. New economy, whatever term they want to use for it. But it’s really masking an underlying problem that required a greater degree of intervention than the previous go-around required. And that’s the problem, is everything requires exponentially more effort to keep it going. And how long can that go? Well, that can. There’s a few more kicks left in it. Sorry, that was supposed to be a lightning answer.
Monetary Metals:
Keith, what do you think about the politicization of the Fed? Obviously, the Fed decides as a political body whether to set interest rates higher, lower, stay the same. But now it feels like there’s even larger intrusion of politics into to the Federal Reserve Board with President Trump saying that he wants to kick out certain members, replace certain members, set interest rates basically himself. What do you think about the fact that there’s this increasing political nature of the Fed, which already was political? Do you think that this is going to be bullish for gold because people say, I just can’t trust the Fed to not be fully political? Or do you think that actually merging the Fed with the Treasury, making it a more democratic institution, will be beneficial for the economy?
Keith Weiner:
Will the central planners finally get it right just this one time? I just feel it in my heart. I know they’ll get it right this time. All the other times were different somehow. It needs to be said, the reason why having a central bank was plank number five in Karl Marx’s Communist Manifesto was to politicize what would otherwise be economic decision-making, to take away from individual decision-makers, whether to extend credit with their money, or whether to keep it under their mattress, if they so chose, and politicize it. That said, and so the Fed is the politicization of the single most important price in the economy, which is the price of money. That said, there are degrees of it. I’ve always said that having an irredeemable currency managed by being borrowed into existence by a central bank is the third worst system. It’s a really bad system, but it’s the third worst system you could have. The second worst would be one where it’s printed by the legislature, and the absolute worst worst would be one that’s printed by the executive. We are lurching closer to that. How close do we get there? I don’t know, but no, it’s not good.
I think it does make more people question, what the hell is really going on and how safe is this And maybe I should buy a few ounces of gold just to protect myself.
Monetary Metals:
Keith, what do you think about the strength or weakness of the dollar compared to these other currencies? Recently, we’ve seen the dollar fall against other currencies. It’s weakened against these other currencies, and of course, against gold. Where do you see this policy of a weak dollar? Do you think that this is structural, that there will now be a weak dollar going forward? And how will that affect gold?
Keith Weiner:
I don’t really think you can measure the dollar, either its alleged strength or its alleged weakness, against the Euro. And the dollar index is largely the Euro. So you could say the Euro is going up against the dollar. I don’t really think it’s correct to say the dollar is going down against the Euro. It’s like the steel meter stick and the gummy bears. You can’t say the steel meter stick is getting longer relative to the gummy bear. You can say the gummy bear is… Someone stepped on it, squashing the gummy bear, where the gummy bear is elastic. The steel meter stick is what it is. Gold is going down. The dollar is going down against gold. Look at our website. We have graphs showing the price of the dollar, currently at 8. 2, 8. 3 milligrams. All of these trends are driving the dollar to be devalued, not necessarily against consumer prices, which have a whole bunch of other reasons why they can go up or down, including that the producer Consumers of those consumer goods are under a great deal of stress and have to produce more, just to dump more on the market in order to service their debts.
That’s how you get soft prices. Even if the currency is shit, you can get soft prices in terms of that currency, but you can’t hide it in terms of gold. So it’s a lot of different things going on. Euro versus dollar, consumer goods versus dollar, dollar versus gold. Three different dynamics that people treat them all as one, but really should be looked at as three different scenarios.
Monetary Metals:
Keith, now I want to ask you about stable coins. They have increased the demand for these safe haven assets in the US Treasury. Do you think that the institutional interest from these stable stablecoin issuers into the treasury has bolstered demand for the US dollar and has bolstered demand for the US Treasury, giving this debt dynamic and the fiscal situation we’ve seen another chance of life? Do you think that stablecoins have basically given the dollar a new hope?
Keith Weiner:
So I think, at least in the US market, stablecoins don’t increase the demand for the dollar and hence a treasury bond. They substitute for something else, which would be a bank deposit. So it’s a shifting, it’s a disintermediation of banks. And people are saying, I’d rather deposit in Tether than in JPMorgan Chase. So it’s this intermediation of the banks in the US. In the rest of the world, stablecoins might be a form of dollar that otherwise they couldn’t have had at all. They would have had to hold Rupees or Lira or something like that. Now there’s a market where they can hold stablecoins. If that blips up the price of Tether, one Iota, then Tether will issue more units and buy whatever it is they buy anyway. There’s some question around that. But in theory, they’re supposed to be buying treasuries. So yeah, that would be an increase in demand in treasuries relative to what previously had existed. The treasury market is so big. It’s one of the reasons why the dollar can’t be displaced. The treasury market is so massive that even if China is making a big move in or out of something, it’s not really going to move the treasury market very much.
There’s no other currency that comes remotely close to that, having that liquidity, that depth, other than gold. How How much does that really change the interest rate that we see versus what we would without the stablecoins? Hard to say, but I don’t think it’s a massive effect. I really don’t.
Monetary Metals:
Keith, last question on gold and silver for you here. In terms of outperformance for the rest of the year, which do you think is more likely that gold prices will outperform silver price appreciation or the other way around?
Keith Weiner:
I think the gold-silver ratio will fall, which means silver will be going up in gold terms or the The price of silver will be rising in dollar terms faster than the gold price. Just given the fundamentals, that just seems a pretty obvious call.
Monetary Metals:
Keith, now I want to ask you about monetary metals where we pay a yield on gold and silver paid in gold and silver. How do you think the monetary metals yields, which are currently at 4% for gold, might change or might face pressure or an increased demand if US dollar interest rates fall?
Keith Weiner:
When US dollar interest rates went from zero to essentially 5% plus, there was definitely an investor expectation that the gold interest rate should go up. At that time, we were paying two and a half A % and maybe 3% in some cases, and we’re now paying four. It’s a market, right? In the early days, a lot of people… It reminded me with the old E. F. Hutton commercial. When E. F. Hutton talks, everybody listens. People would be, Keith, what do you think the interest rate should be. I was like, Hey, I’m really, really reluctant to want to even answer that because this has got to be a market. I don’t want to substitute myself as central planner for Powell as central planner. I think the market is so much bigger now, it’s a little less risk of that. But that caused an upward pressure on interest rates. It’s logical to assume maybe the reverse might occur when dollar rates go back down, but we’ll see. We’re not seeing that at the moment, anyway.
Monetary Metals:
Keith, what’s a question I should be asking all future guests of the Gold Exchange podcast?
Keith Weiner:
Without getting too technical. There’s a lot of questions that people don’t really think about. I guess this is for guests that have a monetary theory. How do you explain Skyrock in consumer prices with flat, soft, or outright falling prices of the underlying ingredients, the commodities that go into them. Crude oil is 60 bucks. Shouldn’t a conventional theory say that the price of things made with oil should be lower? How do you explain that?
Monetary Metals:
Keith, thanks so much for joining us on the Gold Exchange podcast. For those interested in earning a yield on gold paid in gold, they can check out monetary-metals. Com. Keith, thanks so much.
