➡ Trump has announced plans to penalize countries that are moving away from using the U.S. dollar, a process known as de-dollarization. This comes amidst a rise in gold and silver prices and a potential increase in the Federal Reserve’s interest rate. Meanwhile, Russia and China are using gold to bypass U.S. sanctions, and reports suggest that other countries are also considering moving away from the dollar. This could have significant implications for international trade and the global economy.
➡ The article discusses the rising budget deficit and concerns about inflation, particularly from JP Morgan CEO Jamie Dimon. It also highlights the potential impact of Samsung’s new battery, which uses more silver, on the silver market. The article also mentions the unrealized losses of US banks and the effects of inflation on savings. Lastly, it discusses the views of former Federal Reserve chairmen on the gold standard and the power of central banks to create money.
➡ The article discusses the concept of voluntary tax compliance in the U.S., suggesting it might be misunderstood or misrepresented in official documents. It also talks about the trends in gold and silver investments, highlighting that despite fluctuations, there has been a consistent increase in the price of gold since the end of the gold standard. The author mentions a book by Joe Bannister and a report from the In Gold We Trust, both providing insights into these topics. Lastly, the article acknowledges the sponsorship of First Majestic Silver and anticipates an upcoming interview with its representative.

Trump threatens to punish de dollarization. I would not allow countries to go off the dollar. Well, hello there, my friends. Chris Marcus here with you for Arcadia economics, and certainly an eventful couple of days it has been. And lots of gold and silver related news to dig into, including Trump announcing what he plans to do and how he plans to respond if elected president, uh, in terms of the countries that are de dollarizing. So a lot to dig into. Of course, we did over the weekend have the second Trump assassination attempt, which another sad day for the country, in my opinion.

But we’ll, we’ll come back to that and more. But first, let us take a quick look at the pricing. I’m recording about 06:00 p.m. eastern time on Monday, where we see the December gold futures over 2600 for another day in a row. Crossed over that level on Friday. Quite a rally towards the end of the week in both gold and silver on Friday. And even despite all those sell offs we’ve had over the past couple of months, I know they’re sometimes a little discharring on the days they happen. Yet despite all of that, we have $2,600 gold in the futures.

And of course, we have the Fed coming up on Wednesday, where currently the futures pricing is showing a 60. They’re up to 67% of 50 basis points, only 33% of 25 basis points. And it seems like Nick Timoros of the Wall Street Journal and others who often seem to have the news before it is released publicly, are now suggesting that the Fed is leaning towards 50 basis points. I still would be a little surprised if that happens, but just a guess there, and I guess we’ll find out soon enough. Would seem odd that after everything he said, to immediately jump into a 50 basis point hike, although they have surprised us before.

So we shall see. We fun watching gold and silver on Wednesday if we do get 50. And anyway, if we take a quick look over here at silver. Nice to see silver back over $31. What a roller coaster this year has been. On the silver side, you can see again, we were down at $22 at the beginning of the year, then got over 32 a couple of times down, even got below 28. I think it was a little, yeah, under 27, I thought it had gone that low. We see the low there, 26.50. So certainly a couple of days where you’re what might be wondering, maybe you knew all along.

But sure enough, here we are back at $31, ahead of the Fed rate cuts, and also with the dynamics in silver, where we have the reported deficit over the past couple of years, and as we detail frequently here, no real signs in sight of that being resolved in a non market, fracturist manner. So either case, if you hit that subscribe button, we will keep you posted as more comes out on that. And before we get to that Trump news, a quick look at last week’s Cot report, where in both gold and silver we continued to see a reduction of the bank short position.

Here you can see that I did not make my red box as low as I intended, but reducing 12,900 longs and 12,900 shorts and 2200 longs. Similar picture in silver where the banks let go of 2600 shorts and added 359 longs. So decent chunks. And again the second week in a row that we see the banks covering at higher prices. So makes you wonder if that means they are giving up hopes of being able to cover at lower prices and perhaps because of what we’re about to dig into, I would suggest it would at least be worth considering.

I’m not suggesting that the banks are asking for my opinion on that one, but in either case, a few things that may be worth considering before adding additional shorts. If I were running such a thing is the news Russian begins paying China traders in Hong Kong using courier gold. Why are they doing this? Some russian businesses have begun using gold to pay chinese suppliers to get around us sanctions and threats of sanctions against chinese banks affecting Russia. China bank transfers again, on one hand, not shockingly new. We’ve seen this trend really pick up since the Russia invasion to Ukraine in 2022, which was quickly followed by Russia being kicked out of the swift system and sanctioned.

And as often happens with sanctions, seems like this one is leading to more gold trade in order to get around the sanctions. So keep that in mind. And of course what do we have next here is that Trump threatens to punish de dollarization. I would not allow countries to go off the dollar. One quick note again about the assassination attempt over the weekend. I mean, I still looking into that one, so I’ll reserve further commentary. Yet we really at the place where if someone has views or is running for president and someone else doesn’t like him, I guess I’m assuming here that it wasn’t just the unconnected lone gunmen.

In either case, I think there’s a lot of evidence to suggest that might be the case. In the first attempt, obviously things a bit new in the second attempt, although if I had to put an ounce on it, I would lean towards that side. And obviously that’s a really sad event for the country, for any country. And, you know, I try to be careful about tying in the political events or things like that and how that affects gold and silver. But when you see things like that, I do think one could argue whether it’s correct or not.

But there are people that buy metals because they are concerned by what they’re seeing with the government. And with that said, let’s get back to the de dollarization comments. He says, I would not allow countries to go off the dollar. I’m not entirely sure that that’s going to be his decision ultimately, although basically what he’s putting behind that you leave the dollar, you’re not doing business with the United States because we’re going to put 100% tariffs on your goods, which on one hand sounds good, although it seems like the rest of the world is not necessarily too concerned about that.

Here we see Putin instructs government to consider export restrictions on a number of goods, including uranium, titanium, nickel, and has instructed his government to analyze the possibility of restricting exports of strategic raw materials. So another step of moving away, and again might add, this is at the same time, won’t go into it in today’s show, but this was a report from June 11 from Russia’s pivot to Asia future BrICS currency to combine a gold standard and sovereign currency mix. So again, we’ve talked about this plenty. That would include 60% basket of BRICS national currencies and 40% gold reserves.

I just put this here again to show another media outlet reporting on it. Again, do we know exactly what is true coming out of Russia or coming out of the United States for that matter? Either. But just to the degree that we’re seeing multiple reports in here addressing this one, they started by talking about how Vladimir Putin has held meetings with Dilma Rousseff, the head of the BrIcS new development bank, and again, suggesting that it is not just people on the Internet. But could they be lying? I suppose so, but we’re getting a lot of reports like that.

At the same time, will the threat of tariffs impact a situation if Saudi Arabia is reportedly open to a petri one closer China ties? The minister says, I’ve heard. Did he leave him nameless? Someone that I highly respect and is great at covering the financial markets. He said he takes the South China Morning Post with a grain of salt. Okay, that’s fair enough, although here we have from Reuters, China’s Li, saudi crown prince discuss cooperation in Riyadh meetings. So doesn’t seem like they are necessarily yet afraid of the consequences. And in terms of something else that probably does not help bridge that gap.

This came out back in July. I saw it a couple of weeks ago in meaning to share this, but here Russia accuses us of bankrolling ukrainian attempts to assassinate Putin. Again, I hope we avoid world war three, but just to the degree that it’s not going on a good trajectory. Now, I know that’s not rocket science, but I think a lot of people don’t see these things. And again, I’ll leave it to you to decide what actually did or did not happen, but Putin believes it happened. Then certainly again, I wonder how that plays out in terms of international trade.

Trump is saying he’s going to do the 100% tariff, the rest of the world continues to walk away from the dollar, and maybe they don’t care. Maybe they’re not worried about losing that customer. And certainly I’m not happy about this, but I think there’s a lot of policies of the US in recent years and decades that have contributed to that feeling. And ultimately that’s where we end up terms of other reasons that they might be walking away. Here is the US budget deficit in the month of August over the past twelve years, and hopefully my face isn’t covering that red bar where you see it has shot up quite a bit.

Obviously you would see a similar pattern in other months, and we won’t hammer away on the budget again today, except to show you that it’s a trend that is not going in a good direction. And I might add that even JP Morgan CEO Jamie Dimon was warning about and cited, as he talked about the concerns he has of inflation, because of the deficits, because of the expected infrastructure spending, that if we do go into a recession, some arguing that we’ve already done so, but if that is more overtly recognized, you sure think there would be more spending on the way.

And either case, in terms of silver, though, here’s something that I’ve mentioned over the past couple of weeks. Obviously people have heard about the new Samsung battery. Much longer lifetime and charging. Shorter charging time, longer lifespan of the battery allows you to go a lot farther and also consumes a lot more silver. I think it was 32oz to 5 grams in the previous battery that is being used. And one of the things that I heard Eric Sprott mention in one of his calls with Craig Hempke was that the battery wasn’t just they developed it, but that there already is the process underway of allowing other companies to potentially adopt it.

So I was searching for that and found this article where see Samsung to mass produce solid state batteries for super Premium EV’s by 2027. So first of all, a couple years off still at this point, but multiple automakers have been testing product samples, bringing them closer to hitting the market. And as we see here, we’ve supplied samples to customers from the end of last year to the beginning of this year and are receiving positive feedback. So just in terms of giving you a little idea of where things stand, it’s not just that they developed it, but it is being tested by other automakers.

So at least as you’re thinking about Samsung batteries going forward, then you have that context. Interesting tweet from Charlie Bellello. Most absurd number in CPI according to us government cost of health insurance, and I’m sure everyone has experienced this, has declined 31% over the last two years and 10% over the last five years. So if you are making your decisions based on CPI and that seems a little odd to you, may I suggest shadow stats or the chaplain index that give a much more reasonable idea of what’s going on? And might add that even the CPI is up.

I think it’s over 21%. I think it was 21.7 to be precise, since before COVID So even the CPI numbers as they are, shows that prices of things are up 20% in the last four years. So can factor that in. Maybe that’s why Jamie Dimon is saying what he is saying. In terms of other banking news you can see here. Us banks unrealized losses hit 512 billion in the second quarter of 2024, marks the 11th straight quarter of unrealized losses on investment securities for banks. And sitting out there, of course, we still have commercial real estate unresolved and a host of factors that seemingly are going to make it harder for any of those deficit numbers that Jamie Dimon was warning about to come in all that much.

And lastly, a few comments here. I’ve been reading this fantastic book that I’ll leave you the title here. By no means is this any form of advice, but rather just some interesting things that come out of this book that examine some of the federal tax code. And anyway, I had a couple highlights that I wanted to pull up here. And first, Joe Bannister mentions at one point, as George Jackson eater states in his book what’s behind inflation and how to beat it. An inflationary rate of 3% a year means that the dollar one saves at the age of 20 will be worth $0.25 when he retires at the age of 65.

And I mean, obviously we know the effects of inflation and how it compounds. Although that one really stood out to me. At 3% a year, your retirement, 45 years later, your dollar is worth $0.25. Now, if you’re saying, well, the Fed has a 2% mandate, not 3%, he might have the mandate, but I’m not sure if that’s what actually ends up happening. Although for those of you who want the 2% a year number, that comes out to $0.40 after 65 years. So, but, but you don’t have to take my word for this because fortunately we have some comments on some of the people in charge of implementing those policies.

Here’s an interesting comment from former Fed chairman Paul Volcker. He says it is a sobering fact that the prominence of central banks in this country century has coincided with a general tendency towards more inflation, not less. By and large, if the overriding objective is price stability, we did better with the 19th century gold standard and passive central banks, with currency boards or even free banking. Truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create money is the power to destroy. So these are the words of Paul Volcker saying that we did better with the 19th century gold standard.

Now, when you think about that, I’m falling in love with this quote quickly, because again, it’s not me saying it or not, people in gold and silver, or even Jamie Dimon or whoever you want to put in there, but this is Paul Volcker, that among the Fed chairman, even one of the most well known, one of the most well respected man charged with beating inflation back in the eighties. So if he’s saying what the Fed is doing isn’t as good as the gold standard, what is the takeaway from that? Where does that leave you? And I hear people say about, well, the gold standard is not feasible under this current regime.

And point in time, I’m just sharing Volcker’s opinion. Of course, after Volcker came and went, we did have, well, not this one. We had Alan Greenspan, who in his 1966 article in the objectivist entitled Gold and Economic Freedom years before he became chairman of the Federal Reserve, he mentions the abandonment of the gold standard made it possible for the welfare status to use the banking system as a means to unlimited expansion of credit. And we will skip down to paragraph two. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.

There’s no safe store value. If there were, the government would have to make its holding illegal, as was done in the case of gold. Financial policy of the welfare state requires there be no way for the owners of wealth to protect themselves. This is the shabby little secret of the welfare state is tirades against gold. Deficit spending is simply a scheme for the hidden confiscation of wealth. Let me repeat that. Deficit spending is simply a scheme for the hidden confiscation of wealth. And what do we have record amounts of is deficit spending. Gold stands in the way of this insidious process.

It stands as the protector of property rights. If one grasps this, one has no difficulty in understanding the statist antagonism towards the gold standard again, which I think makes a lot of sense. Of course, he became known for lowering interest rates, which got the nickname the Greenspan put. Now he criticizes Bernanke. But anyway, you see, this is what some of the leaders, past leaders of the Fed are saying, and maybe why the Philadelphia fed did a study on the impact of a gold standard and how that would affect prices. So could be. Anyway, here is another one.

This is from, this is all from that tax book, says Beardsley Rummel, one time chairman of the Federal Reserve bank of New York. Interesting comments here. The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for the national government. Two changes of greatest consequence have occurred in the last 25 years which have substantially altered the position of the national state with respect to current requirements of financing. First of these changes is gaining a vast new experience in the management of central banks, of course, which we find out later on did not work out well, and according to Paul Volcker and Alan Greenspan, and then the second change is the elimination, for domestic purposes, of the convertibility of the currency in gold.

What Rummel is saying, in effect, is that with an endless supply of borrowed funds, it is not necessary to tax in order to run the government. So I think a lot of people have heard that. And why is that interesting? Well, just as we wrap up here, I’m going to leave up a few of these slides. Let’s just say my phone on its own took pictures, not giving any commentary or advice. Let me make some commentary. This is definitely not advice, just more confusion of why in a note from the IR’s commissioner, instructions for form 1040 would include the word volunteer.

Voluntary seems unusual, probably just a mistake. Unless former commissioner Fred T. Goldberg gave a reminder that government in a free country can only be financed through voluntary compliance, which is odd. Here’s another one. You’re among the millions of Americans who comply with the tax law voluntarily, and an article into dissatisfaction spurs. Look into the tax agency. We can hear Harry, Bob Kerry, Democrat from Nebraska, mentioned that it’s a voluntary system. People don’t perceive it to be fair. People will not voluntarily comply. I’m assuming these are all mistakes. So again, don’t act on any of this. This must be a mistake in the documentation of such an agency that would say thank you for making this nation’s tax system the most effective system of voluntary compliance in the world.

Wow, that’s exciting. So anyway, a few notes from this book that I’m reading that I’m sure is 100% untrue and you shouldn’t take seriously or wonder why that word would appear so often in their own internal documents and letters to the people who might be voluntarily paying tax. Anyway, I’ll stop being silly here and by all means, if you want to read for yourself there by Joe Bannister. Fantastic book. Almost finished with this one going through the appendices now, and they are quite fascinating. So as we wrap up at a few last few, a few last few last few quotes from the in Goldbee Trust report that I’ve been meaning to share, and today is the day.

So this one here, how can the declining interest of western financial investors in gold actually being explained? In our opinion, it seems that western investors are stubbornly sticking to the old playbook for gold. Rising real interest rates translates into a lower gold price, therefore lead to net negative gold sales. And as I’ve been saying far too often over the past two months, and citing that Goldman Sachs report where they laid out the obvious, where we see western investors return to the gold market as interest rates are getting ready to be cut. And sure enough, that has been.

In fact, it was Goldman Sachs that Vince Lansing reported on this morning, who talked about larger than normal inflows into the gold and silver ETF’s. And certainly we’ve seen that impacting the price as well, and also showed the data of the ETF’s, you see metal going in there. So here’s another one that I think will help a gold investor sleep soundly at night. Because since the IPO of gold, referring to Nixon, ending the tie to the gold standard, you have the average annual increase in the price of gold in US dollars has been 10%. Annualized growth rate is 7.8% and okay, I understand, maybe two years, if we were looking at the numbers, would look a little different.

So you can look at different time periods. Although gold at $250 in the turn of the century, now at $2,500, silver was four or $5 back then, now up at 30. So certainly. Well, I know there’s times where we feel clobbered in gold and silver. You look a little bit further over time if you’re not, and especially on silver. I get it. $50 is a relevant point. Those were two peaks, one of which lasted, I think, a couple of hours. The other, 2011 silver, did stay in the forties, or, well, not stay in the forties after hitting 49 in late April of 2011, came back.

It was actually within four days that it got back down to 33, which is, I’d forgotten about how far and how quickly it had come down. But if you’re not measuring from those peaks and looking from a longer, if you take out the spikes, unless someone bought all of their silver at $50, I think it at least gives a different picture on the matter. So anyway, the last one from the in gold retrust report, which again came out in April, they mentioned the World Bank Gold investing handbook for asset managers, which we talked about before, although I thought this was worth pointing out.

Central banks are recommended to hold up to 22% gold, and we did have the polish central bank say they are targeting, I believe it was 20%. We’ll touch on that in another show soon. But anyway, that is it for today. Except before, as we wrap up again, did want to thank First Majestic Silver, who kindly sponsored today’s show that we’re bringing you. And they had their deal with Gato’s silver $970 million deal for first majestic to acquire Gatos. And then a couple days following that, they did announce a share repurchase program and fortunately we did hear word back from First Majestic.

Be great to get Keith’s insight into what he is thinking and doing with some of the recent moves, and I believe it will be next week. In either case, in the next two weeks we’re getting a call set up with Keith and will be great to check in with him. So thanks to First Majestic and thank you at home for watching hit the like button or share the darn thing if you found this useful and wonder if other people are going to start paying attention to things like these soon. So always helps us to get the word out to people and certainly appreciate you being here.

Hope you’re having a great afternoon and we will see you again tomorrow.
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