Support. It was resistance for a very, very long time. The fact that it came right back up is certainly bullish. Well, hello there, my friends. Chris Marcus here with you for Arcadia Economics, as once again it is time to check in with Andy Sheckman to take a look at anything happening on the retail silver market or news affecting the silver industry. That obviously is happening each week and especially in our election year, I’m sure will be quite a volatile one.

So, Andy, it’s great to have you back here as always, and thanks for making some time to join me. And how are you doing today, my friend? Good to see you brother. Always happy to be here. Thanks for having me. Doing well, thank you. Well, certainly was an eventful week in the past week here since we last talked. And one thing I’d like to start with, fortunately this headline is from back February 15, so if anyone watching at home, don’t freak out.

Gold is not below $2,000 again, although I guess we’re reporting on Monday the 19th, anything is possible. Although gold has rebounded, obviously we saw a dip following the CPI report last week which showed inflation still very much active, not going away, which we see the market digesting when and how that is going to affect upcoming fed interest rate cuts. But Andy, I think it was a positive sign that while we did see gold drop below $2,000 an ounce did pop back up there rather quickly.

I might add that something that we also talked about last week on the show was at least looking at the CoT report on the silver side in particular where we saw the banks getting long silver. I wonder if that is more than just a coincidence to see that things didn’t drop further and actually had a nice rebound in both gold and silver. And here we can see prices Monday afternoon as we’re recording this.

Gold back up to 2029, silver back over $23 but back to the original note here. Any thoughts on what we’ve seen over this past week? Where did go over 2000, although under 2000, but fortunately has bounced back higher and maybe lending credence to the idea that 2000 still serving as bit of a floor right now. But curious your thoughts on any of that? Yeah, I think 2000 is certainly a round number and appears to be support.

It was resistance for a very long time. The fact that it came right back up is certainly bullish and always coincides with some sort of numbers that are being released, whether it be the inflation or the unemployment numbers. And look, inflation is coming in much hotter than they anticipated and well, that’s not much of a surprise as far as I’m concerned. But the numbers that we keep being told, whether it be employment numbers and the price goes down or the inflation numbers, they just seem to be less than accurate, I guess you could say, and the market reacts, or it is given a little bit of a push to react to those markets, certainly to make the system in an election year seem stronger than it is.

They bring out all these big employment numbers in January, they will be revised just like the entire 2023 numbers were revised downward by 40%. The revision in the unemployment numbers and the lack of clarity and transparency and the changing of the metrics used for gauging inflation in the CPI is justification when these numbers come out for short term gyrations in the price of gold, and it’s just more of the same.

The noise, as far as I’m concerned, it’s all noise. And the short term movements, the short term gyrations, the short term technicals to me don’t have much bearing whatsoever on the ultimate direction of the market moving forward. And again, look, I don’t care what you see, gold dropping below 2000. You’re seeing massive deliveries off of Comex still over the last couple of weeks, huge deliveries coming out of Comex and huge deliveries coming off the LBMA, and gold being priced almost $100 higher on Shanghai, and silver almost $3 higher on Shanghai.

The big money is accumulating and arbitraging and siphoning gold and silver using these ridiculous prices of the west. And yes, 2000 ought to be support, but the reality is it should be a whole hell of a lot higher and silver should be much, much higher. One of these days you will see a positioning like we see right now, where the commercial banks are in a very bullish position and the managed money in a short position in a compromised position should the price start to go higher.

And the question is, at what point will the commercial banks not sell into a rising market? That’s really the question here. And Ted Butler talks about this all the time. Maybe we’ll see that happen this time. Maybe this will be the move up, maybe it won’t be. But through all of this noise, we see the most well funded and well informed traders on the globe continue to drain.

The exchanges, continue to accumulate using this price, this volatility in this tight trading range that people make a big deal of. But look at it from a step back. It’s been in a trading range forever with great volatility. That’s enabled the big money to pickpocket the exchanges. If it goes too low, it gets too much attention. If it goes too high, it gets too much attention. But keep it in a tight trading range with great counterintuitive and volatile price action, and you can systematically drain the exchanges.

So I think the mistake a lot of people make is looking at the micro and looking at the short term, and look at the big picture and see that the economic picture. See the big picture with the bricks. See the big picture with the central banks accumulating it. See the big picture with the exchanges being bled dry. And then see the big picture growing, of arbitrage rearing its head on the Shanghai Gold exchange.

The fact that silver is almost $2 and 80 or higher in Shanghai than it is on the LVMA and Comex is a massive deal where you will see more and more metal arbitraged off for those big traders that have access to both. And I think this will come in a very abrupt fashion, where one of these times, the managed money gets caught with their pants down. They continue to think that everything is the same.

And recency bias enables them to go naked short to very large positions. And as the price starts to rise, they’ll have a very hard time finding anyone, I. E. The commercial banks, willing to sell metal to them at the prices that are being quoted on western exchanges, which I think just about everyone watching this show would say are too cheap. Well, I hear you, and in there, you mentioned keeping an eye on the big picture, which I think certainly is something that’s handy to keep in mind, especially when we’re looking at gold and silver, where things don’t often seem to be quite as linear as we might like or hope.

Yet terms of the bigger picture, something that doesn’t get as much attention. Fortunately, on the Friday show, Rafi talks about it plenty. But here we have a chart showing that the m two money supply is contracting at levels last seen during the Great Depression. Curious what you make of this, especially at a time where we’re coming up on the year of anniversary of when we had some significant issues that led to the failure of a couple of banks.

And now we can see that money supply contracting quite rapidly here. And obviously, that’s not really the precedent you want to see matching back what we had in the Great Depression. But any particular thoughts here, along with what we’re just a couple of weeks away from now? The expiration of that bank term funding program. And curious what you would say to that. Yeah, expiration of the bank term funding program, and probably pretty dang close to the bleeding dry of the reverse repo market, meaning the liquidity in the system will be all but nil.

I think that this is a very big deal. And if you look at, on a historical standard, look at the equity markets and the money supply moving in opposite directions, to see an all time high, basically, in the equity markets while the money supply is dropping, is a very ominous sign. And last time that happened was, I think, if I’m not mistaken, right around the Great Depression, where it turns over and heads down.

Look, this whole economy, Chris, is a byproduct of suppressed interest rates and easy money, a decade’s worth, where you had money flowing all over the place, and interest rates very cheap. And it enabled people to speculate. It created distortions in asset prices and in business conditions that just as bullish as times were with easy money and low interest rates, I would argue, will be exponentially more difficult and painful.

The unwinding of all of these distortions, as we see the money supply falling off a cliff, the availability, if they are, we take them at face value of the Fed to come in and backstop these banks that otherwise, many of which probably would have failed, these banks had to post collateral at par, and these loans need to be paid back. And that’s what people aren’t talking about, is that, yeah, they got the money, but now these loans need to be paid back and there’s not going to be the help.

And then all the money in the reverse repo market, which has been used to finance the treasury’s spending habits, where does it come from? Where does the liquidity come from? Where does the money come from? It’s not a good omen, if you will, for the future of the economy. As we start to run into what I believe will be a recession, you got the head economist for Citibank saying by 2024 we will be in, by mid 24, a very deep recession.

You’re already seeing rumblings of it in Japan and in the UK and around the world, where you’re seeing these countries that are starting to witness not only a slowdown in economic growth, but also a cascading global commercial real estate problem that is all kind of connected together. And I would suspect that 2024 will bring some, very certainly by March and April, some very eventful things we talk about the banks in particular.

Look, you got all of these loans and leases that need to be reset at much higher rates that the regional banks hold the majority of all of those loans, 70%. So as we start to see the unwinding, as we start to see companies not be able to get liquidity that they need to run their businesses, creating big problems in the small businesses. The inability to reset your commercial real estate loan, where the Xerox building in Washington sells for about 10% of what it did 15 years ago, that’s just one example.

But as we start to see more problems in the commercial real estate problem, not just in the United States but everywhere, the systemic nature of it will start to affect the economy as well. And then we get into the residential real estate, it all starts to snowball. But, yeah, when you realize that much of the growth has been because of easy money and low interest rates, seeing the opposite and an acceleration in the money supply, making it that much harder to find credit is only going to make things that much more difficult.

At the same time, we see inflation very sticky and not going away. So we are on the cusp of, I don’t know, stagflation, where you have little or no economic growth and contraction characterized by much higher prices and higher taxes. And I think we are heading into some tough times. And the banking issues, well, they’re not behind us at all. Quite to the contrary, by March or April, we may actually see some rather interesting times in the banking sector.

Yeah, I agree with what you’re saying there. And certainly when you add on this one that I was reading in Dave Cransler’s short sellers journal earlier this morning, interesting note. The Buffett indicator, the ratio of market value of the entire stock market to GDP, historically around 65%, peaked at 88. 3. Prior to the 1929 crash. At the peak of the. com bubble, we were up at 136. 9.

Today, the ratio at 185%. It’s detached from the real economy. And you can see that in the Russell 2000, you got the Russell 2000. Almost all the stocks are getting their ass kicked. The small caps, they’re getting killed. You look at the S and P 500, most of them are underwater. You got seven stocks holding up the market, and that’s called breath. B-R-E-D-T-H-A little bit holding up the whole thing.

And every time that’s happened in history, bad things have happened. You can’t just have a little bit of the market holding up the whole show because of the wicked performance of the magnificent seven. It’s not a good thing. All of these things are coming together at the same time. In an election year, in a year where you have 35 other countries now formally applying to BRICS, and 200 meetings leading up to the big one in October, so many things happening, whether you’re talking about here domestically, with the end of the bank program by the Fed, or the increase of the money supply falling off a cliff, or the commercial real estate problem, the election, the border problem, the recession wave, if you will, that’s happening all around the globe.

This is not ending. This is just beginning. And whether you see it in Great Britain or in Japan, or all around the country here, coming to the United States, Germany, and then you look at the layoffs that we’re seeing. I mean, look at all of the companies that are laying off 20,000 people out of Citigroup, 12,000 people out of ups, 35% of the twitch workforce, 20% of the Hasbro workforce, 15% of the Xerox workforce go down the line.

Wayfair, 13% of its workforce. Not eBay, 9% of its workforce. It’s not just traditional businesses. There are a lot of tech businesses in there that are laying people up, and this is only accelerating. And so, yeah, I think that a recession, I think slowdown, coupled with the m two, money supply falling, coupled with the reverse repo, these are all very scary things that I think, ultimately put greater strain on the banks, put greater strain on the economy, and will only, I think, accelerate this event that people see coming with the banks.

And the consolidation of the banks, which will then start to also greatly, I think, affect the commercial real estate market. And think of all the businesses that spring up around all of the big buildings in the inner cities that are already experiencing crime and lawlessness and mass exodus. Over a trillion dollars worth of business has left New York City in the last year. And why would they stay there after what we see happening there? And more and more business leaving these cities, making the commercial real estate that much worse, hurting the small businesses around there that much more.

And who owns all the loans but the regional banks? Well, what does the modern monetary theorist want? I. E. The number two in charge, Lil Brainerd at the US government? A consolidation of the banks. And this is exactly how you do it. You incentivize people to overextend, whether it be in their business operations, or in their asset purchases, or whatever it may be, and then you raise rates eleven times in a year and a half or whatnot.

And now they’re talking about not maybe pivoting. In fact, you got Lauren Summers coming out and saying, I think they’re going to raise rates. Well, we’ve been saying that. We’ve been saying they’re not going to lower rates. They can’t. If they do, they’ve lost all credibility. And now inflation is hotter than they thought. So are they actually going to raise rates next time? Which is going to put more strain on the banks and more strain on the commercial real estates.

It’s a doom loop and I think people are way too complacent right now. They’re sitting in the eye of the storm thinking all is good, soft landing is coming. No it ain’t coming. But by the information, when you look at these massive layoffs and then you look at the Bis, let’s take the eye out of that and just call it Bs. Saying that 300 plus thousand jobs were issued in January, they will come back and revise those numbers, but at the same time we’re seeing massive good paying full time jobs being shed in favor of two or three part time jobs to make ends meet, blurring the reality of these employment numbers.

And I don’t even need to go down the road with inflation, but I’ll tell you, inflation is here to stay and I think it only gets worse moving forward, putting even greater strain on this whole system. Then rates got to go higher than the whole thing. I mean you can see it’s a doom loop. So yeah, I think that this is the calm before the storm. Chris, I think we haven’t seen anything yet.

Well I hear you and perhaps that has something to do with this great chart that Luke Roman kindly posted. I love that chart. You can see central bank purchases of gold in the blue line which have been going up over the past decade, whereas we see treasuries in the orange, that is foreign official purchases of US treasuries dropping off quite a bit. Well this is what you and I talked about on our walk.

And I said to you, I agree with Luke that you don’t need to see a common settlement currency or a common reserve currency because look, if you look at the price at the value of gold since 2000 it’s appreciated by 7. 8% per year. The S and P 7%, the bond market a fraction of that. So when you look at these countries they say look, what the hell do we need to take the dollar and buy treasuries for? That was the petro deal.

You value oil in dollars and take the excess and put it into treasuries. But why hold treasuries when last year for the first time in 45 years they were way more volatile than the gold price? But go back to 2000, gold has appreciated by almost 8% per year and it doesn’t have counterparty risk and it doesn’t have the risks associated right now with this system, interest rate and inflation risk the way that the bond market does, or the default risk, and it has no counterparty risk if it’s in your own possession.

So what all of these countries have been doing, which is putting great strain on the settlement value of the dollar, which ultimately hurts the reserve status, is they’re trading with one another in local currencies. Egypt just came out and said all the BRICS countries need to do this. We’re already seeing it in Russia and Iran and Saudi Arabia and China. They’re all trading with one another, India using local currencies, and instead of putting their excess currency into us treasuries as they’ve done their fact, they’re selling them and putting it into gold.

So the lack of settlement in us dollar currency starts to disrupt the reserve status of the dollar ultimately. And when you’ve then pulled the reserve influx out of the equation and put it into gold, as that chart is showing, well, these countries making a decision that look, we don’t need to settle in dollars and we don’t need to save in dollars and in treasuries, and that is why you don’t need to have a BRICS currency per se, just an agreement amongst these countries where now 35 more countries have joined, 20 have expressed interest.

On top of the ten. You’ve put that together with the Belt Road and the Eurasian Economic Union and the Shanghai Cooperation Organization, you’re talking almost nine out of ten people on the planet. If all of these countries say, you know what, screw the dollar, we agree to trade with one another using our local currencies. And I got that first ever trade last week using Project Mbridge, which is the bridge between central bank digital currencies.

And in this case it was united Arab Emirates trading with China using the m bridge, which sidesteps Swift. So now they have a way to trade outside the Swift system, using their own local currencies, accepting their own local currencies and then putting the excess into gold. And in the case of China, you have all of these countries like Iran, who’ve been doing this for a very long time, sidestepping us sanctions by trading with China, selling them their oil, getting yuan in return and exchanging it immediately into gold on the Shanghai gold exchange for, you know, again, the recency and the normalcy bias of the dollar bulls will be to their unwinding.

And a guy like Luke, who is so smart and he’s know I put him at the top of the list in this industry, know economists intellectually, but he’s spot on there. You don’t need a common currency to massively distort and disrupt the reserve and settlement. Well, let’s call it the settlement and ultimately the reserve status of the US dollar. It’s happening in real time. And that’s what that chart shows you.

Yeah, certainly does point it out well. And you can understand the reasons why it’s happening. That’s why we sit here and talk about this each week and follow along. So I get it that the pricing moves, when the pricing moves, again, not always as linear as we would hope, but appreciate. It won’t be linear. It’s way too big of a deal to be linear. And this is a once in a generation type of deal.

And some of it will be linear and then the rest will be exponential. And that’s why I talk about this little by little by little by little, and then all at once. And if you look at the progression, it has been somewhat linear, but the exponential part of it hasn’t happened yet. And I think that’s when it becomes an awakening by the mainstream. Who says, how the hell did this happen? But guys like you and I have been talking about the little by little by little, till we’re blue in the face and to our own sanity, sometimes to the detriment of our own sanity.

But I think if you really start and stop and internalize it a little bit, something of this nature, a once in a generation shift of crossing a rubicon of historical precedents, it won’t be easy. Most people won’t have seen it clearly. That’s just the way these things go. And only very few people who have taken the initiative to do things of their own volition, rather than following the herd, will be the ones that benefit.

And that’s why you have very few legendary investors. And if you took the common denominator from almost every one of them, it would be that they did things everyone thought they were idiots to do, buy things when everyone was. I don’t want that. And selling it. And that’s how you make a lot of money. Well, what are we taught when we’re little kids? Buy low, sell high. But it might be the hardest thing in the world to do.

It’s very hard to buy high when conventional wisdom says you’re an idiot, and it’s even harder to sell, or buy low, rather when everyone says you’re an idiot, and then to sell high, buy low, sell high. You know what I’m trying to get at here? It’s very hard to buy low when everyone thinks you’re stupid for going down that road. I’ve been there many times myself. I sold my house when I had a brand new little baby in the middle of winter in Minnesota and rented, almost to the detriment of my marriage.

And all my friends thought I was an idiot. But they were building houses in my neighborhood that were bigger, in the same school district for two thirds the price of my house. So I did it. I sold the house. And it was a very scary thing to do. Everyone said I was an idiot. I put all my money, the equity, about quarter million dollars, into silver at $9.

And I sold it at $44 and built a dream house, turned it into a million. I followed my gut. I did what I knew was right. I didn’t listen. I’m not a legendary investor, but I’ll tell you damn what. That’s how legendary investors are made. They do things out of their own research and their own volition, and they do not follow the herd, because the herd never wins.

The legendary investors do things that everyone thinks is crazy. Look at what’s his name from the big short. Everyone thought he was crazy, and he became a gazillionaire because he saw it and knew it. But that is the truth of it. If investing were that easy, then everyone would be gazillionaires. No, you have to buck the trend. You need to buy when there’s blood in the street and sell when everyone is frothing at the mouth for it.

Really hard to do in both instances, and equally as hard to convince people that a system that everyone has known for the past three, four generations in this country is coming to an end. And yet, those who listen to you and I, and hopefully you and I, will be positioned appropriately and in the right place when this change happens. And people say, how the hell did you know? Well, how the hell did you not? And that’s the sad part of it all, is that our success, Chris, yours and mine, will come at the expense of everyone around us who we love and care about, because they will be run over by what they did not ever see coming.

And you and I can sit and go for walks like we did the other night and beat our heads against wall, wondering, how is it us that is crazy? Or is everyone else around us just have their eyes closed? And I think history will tell you and show you that there are very few people who have their eyes open. And if people spent as much time trying to preserve what they’ve worked their ass off their whole life to make, they would be much better off.

It’s a very interesting phenomenon where we spend literally 40 hours a week, let’s say, for our entire life, really, most of it anyway, working to achieve something, to build a nest egg for our family, to provide for our kids and our family and our future generations. Yet when it comes to saving it and investing it, we give up and we give all of that authority and autonomy to somebody else who doesn’t care quite the same way that you do when you realize what would happen if you made a misstep with all of your life’s efforts.

And I find it to be wholly crazy that people do that. So that’s why there are very few people that really ever win in investing. And I think that’s the difference. And that’s why I appreciate guys like you who go out there and constantly, even when it’s not visible to everybody, and say, this is what’s coming. And hopefully people take the time to listen and do a little bit of due diligence and a little bit of research and not rely completely and totally upon an advisory that doesn’t have the same vested interests that we all do with our own funds.

Well, that’s why we point things out here and share things that perhaps people aren’t looking at quite as much and give people information to incorporate with everything else they’re seeing and hearing and making their own best decisions. So, Andy, in closing, before we wrap up anything on special this week, that if people are looking, as you mentioned, preserving wealth via gold or silver, that they could be aware know, Chris, we do have specials, but like I’ve said, I think truly everything is on special.

I really do believe that. I mean, the prices are crazy. Yeah, we have the backdated or the 2023 silver britannias for 315 over spot and the 1oz that we’re just going to stick with silver on this one right now. So with silver 315 over spot on the 2023 silver britannias, but honestly, everything is on sale and it just makes no sense to me at a time when we’re seeing record withdrawals coming out of the big exchanges, I.

E. The sophisticated money front running the retail public doesn’t get it. So it’ll be that way until it changes. And I’ve been saying this to you now since late November. Best time I’ve seen in, literally, if I put it all together in my career right now, to be buying metal where it should be way harder to get and way more expensive than it is, it’s the value of a generation, if things go the way I think it will.

So everything is on sale right now, and all you need to do is send an email to arcadia@milesfranklin. com and ask for a price sheet or questions on anything. Because our price sheet that we will send you is much more competitive than the one on our website. Ask us for any questions, anything you’ve heard on this interview or questions on precious metals, iras, or just want the price sheet and we’ll send it to you and do all we can to make doing business with Miles Franklin a good experience.

Well, I sure appreciate that. I know that there’s a lot of people in our audience who appreciate that, have taken advantage of that over the years we’ve been doing this. So, Andy, thanks again for joining me this week, and it was great to see you the other night. We will do more of that. Chris, you’re a good friend and someone I’m very proud to be associated with. I truly am.

And little by little, I hope you and I make a little bit of a change. But like I told you a while ago, I will ride shotgun with you for the rest of this crazy year. And I promise you that between now the 200 meetings in Russia leading to the big bricks meeting in October and the November election, that there will be lots of crazy days and lots of crazy things to talk about.

But I couldn’t think of anyone I’d rather talk to the world about this stuff with than you and look forward to picking up where we left off next week. Well, it sounds good, my friend. I’ll see you then. Okay, brother. Stay well. .

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