➡ The demand for commodities is expected to rise by 45 to 55% from 2010 to 2025, despite the global population not increasing by the same rate. This is due to factors like the shift towards cleaner energy, infrastructure development, and emerging markets. However, there’s a concern about where these commodities will come from, given the lack of investment in new infrastructure in the West. The trend over the next five to seven years is expected to be volatile, with opportunities to buy and sell. The price of silver is expected to break past $50, and gold is also expected to trade much higher by the end of the decade. The platinum market is particularly exciting, with a supply-demand deficit that can’t be easily resolved due to issues like negative capital expenditure and depleted above-ground stockpiles.

➡ The speaker discusses the potential for a significant increase in platinum prices due to its current undervaluation and limited supply. They also mention that despite the rise in gold and silver prices, retail and wealth management markets are not yet diversifying into these metals. The speaker suggests that when other markets, such as AI and crypto, start to decline, there will be a shift towards precious metals. They also touch on the role of China and India in the gold and silver markets, noting that while China is buying a lot of gold, they are not seeing the same trend with silver.

➡ The article discusses the current state of the economy, highlighting the high levels of debt and the likelihood of the Federal Reserve lowering rates. It suggests that this could lead to a deflationary collapse and a debt crisis. The author also mentions the potential for yield curve control, which could have significant impacts on monetary value. Finally, the author provides information about his services, which include portfolio analysis and advising on precious metals.

Especially your clients say, well, is the move already happened or are we just getting started? How would you answer that? The land of Arcadia. Well, hello there, my friends, Chris Marcus here with you for Arcadia Economics. And today I’m excited because we have a bit of a treat. This is something that I guess we should do more often and fortunately we’ll get to do today because we’re going to get a look at the precious metals from the east, where certainly we hear a lot about, read a lot about, although fortunately David Mitchell is on the front lines there as he is part of Indigo precious metals and auctus metal portfolios.

So David is joining us from Singapore and it’s a pleasure to meet you, David. And I know it’s a little bit later your time as we’re recording Monday morning here on the east coast, but another week of trading is up and going and appreciate you making some time to join us. So before we get started, most importantly, how are you today? Very well, Chris, A little bit tired. Long day. Walking into my bedtime now. Yeah, well, I could imagine. And long day, long first half of the year in many ways because as I’m sure you guys are feeling the impact of the American tariff policies and a whole lot of change that’s been going on since the Trump administration took over for the second time.

But let us take a quick look at the pricing as we begin here today because on a Monday morning, somewhat quiet. Gold down almost $5. Futures still above 40, 34, 13. And here we see silver down a bit under the 39 level again, which had crossed over thanks to Jerome Powell and that fantastic speech on Friday. But David, before we dig in, just any thoughts on this rally that we’ve seen the past year and a half, which when I think of, you know, especially what drove silver, wasn’t like the deficit was new. I felt that really the main driver of silver at this particular time was the Gold Rally, which what is the main driver of the Gold Rally? I would go with the Far east and in particular China buying, but would love to hear your perspective on what we’ve seen over this past year and a half here.

Yeah, of course. Thanks for having me on, Chris. As you say, it’s been an interesting 18 months. The rallies in gold was obviously a long time coming from a huge consolidation pattern which invariably was extremely bullish. We broke out, but invariably, if you look back through cycles, gold is the first mover. Meanwhile, the supply demand picture in the pgms and silver are built ever more explosive. I think we are very much in the early days of these moves. We’re very much looking forward to the next decade, to be honest with you, not the rest of the decade.

I should be saying into the year 2032. It’s going to be very interesting. Yeah. When you say that you think that we’re still in the early days, I tend to agree with you when I think about some of the things that are happening in the treasury market and US policies. But what makes you. When people, especially your clients, say, well, is the move already happened or are we just getting started? How would you answer that? I’ve been in the financial industry for 40 years now, trained across multi asset classes. So I’m very much an historical analyst when it comes to precious metals.

At the moment. I spend a great deal of time on educating our clients. And this is from wealth management to portfolio management to pension funds to family offices and the man and woman on the street. Education is extremely important. And what’s driving these particular markets and the cycles that they’re in. The volatility has to be fully appreciated in its full context compared to the other asset classes. Silver, for example, when silver moved down to 36.37 a week or so ago, everyone was clawing on the sides of their beds, borrowing themselves silly, and yet silver was up 25, 26% for the year and still up roughly a dollar for the month.

So education is everything in this particular part of the cycle. When we talk to wealth management groups and portfolio managers, they have not participated in this market as of yet. And the retail sector has very much not participated in this sector as of yet. And considering the global headwinds and the commodity cycles that we’re particularly focused upon, we’re very much focused on market research more than going down rabbit holes. We spend all of our time analyzing numbers, supply and demand pictures, forward demand, production lines, cost of production, debt markets. Debt markets is the driver of all this particular precious metal cycle and the commodity cycle.

Indeed. And obviously our glorious policy leaders globally and central bankers, they very much created this cycle in its full fruition which is going to culminate into the end of this decade. Again, education, understanding the cycles, understand the supply and demand picture. Yes, I certainly can understand and appreciate what you’re saying there, especially about the volatility, which I get it. Some people may or may not like it. You know, there’s a lot of things we do or don’t like, but I think it’s especially in the environment we’re in, wise to be prepared for it. And you highlighted quite nicely how we’ve had these sell offs in Silver and I’m sure you hear it every day.

You touched on it a little bit. Where people are, I don’t know, Silver’s back below $37 and feel very anxious yet hey, if you take a step back and look at where it was just less than two years ago and then where it stands today, what, what do you actually tell people when Silver is down $2 after it’s rallied and they’re a little concerned, what do you say to them in that situation? To be honest with you, we give them a, a great deal of macro backdrop and a great deal of long term chart and analysis, long term cycle analysis.

So we do warn the clients of major levels to warn about it is very constructively bullish and we’re nowhere close to levels that would endanger this bull market. The supply demand picture continues to deteriorate, the industrial demand picture continues to escalate and then you’ve got to look at the major cycles and where we are from a fiscal standpoint and an AI standpoint AI is obviously expediting global job losses as we walk into, let’s call it drunken sailors spending, spending like drunken sellers on shore leave. The governments are in a fiscal situation they can’t simply get out of.

So as we escalate that with the job losses that are being instigated by the, the efficiencies that AI is producing, where does that lead us as we get the deflationary collapse at some juncture within the near term I’m looking, generally speaking from my long term macro analysis and charting analysis is probably three to six to maximum, eight months away as this deflationary collapse gets underway in a debt crisis, in a global debt crisis, the largest global debt crisis in monetary history what is going to be the immediate policy reaction? It’s going to be aggregate expansion, it’s going to be money printing.

Now the first cycle, which I was obviously very involved with coming out of the GFC, monthly aggregate expansion, 0% interest rates. That tsunami of liquidity walks straight into the housing markets and the equity markets driven by hard policy decisions to get the wheels of the global economy turning again and working again. But this actually drove a particular cycle. This cycle drove negative capex of the commodity sector. Looking at the hard data I’m looking at we’re looking at anywhere between negative to flat capex over the last eight to ten years within the commodity sector. Why go and dig a mine or plant a wheat field when I can make more money buying Nvidia stock or bitcoin or properties in various cities around the world.

This time around, as we hit the deflationary collapse and that tsunami of money restarts itself. And this would be a tad more aggressive than the GFC, that’s for sure. The 14 years of money printing since 2010, where’s that wall of money going to? Well, governments will instigate enormous infrastructure build outs. There’s a billion people on the planet that don’t have any access to electricity and we’re moving into an electrical age. We’ve seen it in the in the west, particularly Europe, particularly America and emerging markets. There has to be an enormous amount of infrastructure buildout. That wall of money will move into the commodity sector this time around because massive infrastructure buildouts will be instigated by governments, new military spending and rearmament, etc.

Geopolitical tensions. And that’s an enormous excuse for governments to say hey guys, we’ve got a lot of job losses on the streets at the moment with the AI efficiencies but we need to build infrastructure. And all you guys and girls that have lost all your jobs, we’re going to push you into the infrastructure because we need humans for this. But you can’t build infrastructure without commodities and the commodities are in a perilous situation with backwardation curves across most of the commodity sector itself. If not outright backwardation curves, you’ve got extreme supply demand tightness. And if you look at the beginning of 2010 to 2025 from various individual research analysts, you’re looking at a 45 to 55% increase in the demand for commodities.

While the planet hasn’t increased their population by 50%. We can understand why you’ve seen an increase in commodities because obviously the decarbonization of energy production that our global governments have married themselves to emerging markets, the China rebuild, infrastructure rebuild and yet you’ve had negative capex as this new infrastructure build out that’s coming in the West. Where are all these commodities going to come from? The tsunami of aggregate expansion that’s coming because we can’t deflate our way out of a global debt crisis. We can only inflate our way out of global debt crisis and we can’t default on Elvis Lake because that’s tends to trigger a domino effect for the system as we experience in the gfc.

So it’s very clear cut from our perspective, don’t get me wrong, it’s going to be volatile. There’s going to be opportunities to buy into dips and to sell into rallies. But the very clear trend over the Next five to seven years is without doubt and we spend a great deal of time looking at asset class ratio analysis. We all testament portfolios is about a dynamic long only physical portfolio rebalancing based off our internal algorithms and internal research. And that’s obviously performed very well indeed compared to holding just physical gold or just holding physical silver. There are extreme opportunities at the moment.

I’m obviously not talking about the mining sector, I’m just talking about the metals themselves. But there is extreme opportunities that are coming. I failed quite a lot in that last five or 10 minutes and I apologize. No, no, it was perfect. And a lot of great points you have there because obviously it’s like we have this situation where we need a lot of metals and you would think, oh well, maybe if we have all hands on deck we can get there. And as you point out, we’ve had the opposite of that, which. Well, here’s a silver question.

You can feel free to pass on this if you like, but based on you’re looking at a lot of different factors there. And obviously with silver just under $40 this year, there’s been a lot of talk whether we’re finally going to break 50 again. I see some really big silver price targets being thrown out there. You know, in the back of my mind I wonder to get to the some of these bigger numbers, maybe that requires a dislocation between the supply and demand where we actually get an industrial user not able to source what they need.

But what would you say to people that are asking about $50 silver? Is that something you see in the short term or any thoughts on? As I say, we produce a great deal of research and I speak to bullion bank traders. I was very much involved in the precious metal cycle from 2002 where I went very, very long indeed with a clear cycle target 2011 and the numbers I produced then. And I was like, I say I was getting long in 2002 and I said to my colleagues within the banking industry that I was targeting $2,000 gold and $50 silver.

They laughed. They said it’s just not possible and there’s enormous official intervention at various levels all the way up in gold and it’s not going to break this time around. Where are my targets? $50 silver is going to be broken easily. I don’t know why people, I mean I can understand why people make a big thing of it because it’s an enormous double top from 1980 and 2011. We’re going to break it easily. We’re going to go much Higher. I dare not tell you my, my actual price targets, which is actually based off significant technical analysis, fundamental analysis, macro cycles and ratio analysis.

But they are many multiples from here. So silver’s. Silver’s going to go gold in this cycle, ultimately into the end of this decade, in 2032 is going to trade much higher from today. I can prove one of my analytical pieces was I downloaded. I spent a great deal of time doing it. I downloaded M2 and then I concentrated on moving the lowest monetary base. Downloaded it from the Federal Reserve going all the way back to the 1940s. Had to do a lot of analytical work to fill out the gaps that the data had. And then I calculated the gold reserves and the gold reserves in the USA has actually moved quite considerably over a period of time and looked at the live valuations and then wanted to calculate a ratio.

I can prove today that gold is cheaper than it was in 1971 based on MO and we are in a monetary debasement this ultimately. So I have an analogy that the GFC was the aperitif. We’re walking into the main meal. The GFC was very sharp and quick. It was a v shape over 2, 3, 4 years. This one’s going to be long, I’m afraid. A deflationary collapse followed by a stagflationary picture which I can’t. And I’ve looked at it and I’ve tried to pull my analysis to pieces. I just can’t find where it falls apart considering the debt.

And that’s the central focus of all of this. So silver’s going much higher, gold’s going much higher. They are exciting trades in of themselves but the PGMs are much more exciting to us at the moment, particularly platinum. And we were very involved in rhodium from $700 all the way up to the mid-20 thousands from 2016 to 2021, 2022. We got our clients out of that and got our clients out of palladium, about 3,000. We are now very, very excited about platinum. The structure of the platinum market in and of itself is going to drive platinum to outperform gold and silk alter justice is irreversible.

Yeah, I know you mentioned. You continue, please. So it’s, it’s a magnificent setup. I wouldn’t necessarily play the PGM market by miners because that doesn’t make much sense. The miners are in a, in an awful shape at the moment. The PGM miners, that is. So I’ll play it from, from the hard metal itself. Yeah, yeah, I know you had mentioned before we started recording that you had some thoughts on platinum where I know there’s been a lot of interest in that lately. With the move platinum’s made, we hear similar dynamics to silver and copper. Where in a structural deficit is that still the case in platinum and anything else in particular that you would pass along on platinum and why you’re focused on that in particular.

So we looked, we employed people on the ground in South Africa to look at the mining industry. I’ve got a great many contacts in South Africa actually. You look at it and the reason why I talk about South Africa is obviously 72% of the world’s platinum comes from South Africa. Roughly 8 to 9% comes from Zimbabwe and 12% comes from Russia. So roughly 92% of the world’s platinum comes from South Africa and Russia. South Africa being the prominent part of this equation. South Africa is moving into a complete failed state as probably most people are simply aware of.

Eskom, which is the utility provider is being strip mined by various groups. Mismanagement extraordinaire. You look at the PGM miners themselves. We’ve pretty much exhausted the ore grade now. We’ve recognized new ore grades. But the problem is CAPEX has been negative for about 7, 8 years. So you’ve got an 8 million ounce market demand market per annum with 7 million ounces approximately as production and recycling. So you’ve got a million ounce deficit. We’ve done significant analysis and we’ve talked to the various research agencies around the world and we’re quite close to a few of them. All research agencies are stating that this supply demand picture can’t change.

There’s going to be continued significant supply demand as far as the ice can see. And when you have a supply demand deficit that deficit gets filled by above ground supplies. But we’ve done an enormous six month analysis of UN contract data which tracks all the metals around the world in various different forms. China have been consuming a gargantuan amount of platinum. They understand the importance of the metal and how critical it is for future industrial applications and, and future energy resources and various other technologies that are advancing. So this supply demand picture is getting worse. So where’s it going to come from now? The West.

The supply stocks have been depleted. So if we get a price rise of 2000 to $3000, can we get extra supply into the market? The simple answer is no. There is no physical way that we can increase mine production. Not unless we spend an enormous amount of money in capex which they don’t have. And that will take anywhere between five to seven years. And there is no above ground stockpiles in the west that can just suddenly flood into the market and rebalance the supply demand deficit. It doesn’t matter where the price goes at the moment, you’re not going to increase supply.

So we need a price that’s going to instigate demand destruction. Now what is that price? And then we’ve done a great deal of research on that and it is many multiples from here. And I won’t go into the exact numbers that we’re looking at because it might scare the listeners off. But as I said to a fund manager, but it’s big, it’s a big number. As I said to a fund manager a few months ago, I said, how many trades do you come across where you simply can’t lose money, bar the volatility. If you hold it for a period of time of let’s call it three years, you simply cannot lose money.

But the upside is many multiples. That’s platinum at the moment. Any drawdowns in price, we are in the market buying. Well, we do have a lot of platinum fans in our audience, so I’m sure they’ll be happy to hear that. And yeah, interesting dynamics there. And again, I appreciate you pointing out how you could raise the price, raise the price to any level you want, but it’s still not a matter of, okay, well we got, you know, an extra shipment of platinum coming out of the mine today. There’s years, some cases, decades before that process starts giving you more metal, which I tried to mention a lot here.

I don’t know that many other people in they’re looking at these things are thinking about that. So I’m glad you mentioned that. The one thing I definitely wanted to touch on before we wrap up is that obviously you talked about how even retail in some places in the east still not getting into the metals yet. And certainly it’s been interesting here in the West. Now we have seen gold and silver going into the ETFs and other indications that even institutional demand has started to come back. More so this year than last year. But certainly on the retail level been a lot of selling, especially on the silver side.

So I know a lot of people are thinking, all right, once silver breaks through 30, retail mainstream is going to pile in and start buying physical. Has not happened here. Obviously we hear a much different picture in China, especially on the gold side. But anything you could touch on there of what is actually happening, what are people actually doing in the East Obviously China, the jewelry market, the gold jewelry market in China is enormous and you’ve now started to see a marginal shift from gold jewelry manufacturing into platinum jewelry manufacturing because they recognize that gold from a ratio trade, sorry, platinum from a ratio trade to gold is ludicrously undervalued.

So they’re starting to move that. So that’s putting further constraints on the supply demand picture silver. As you just stated, all we see in Asia is every time that the silver price rises, all we see is the retail market selling. We do not see participation from the retail market as of yet as we do not see participation from the wealth management market as of yet. And I’m very close to a, a great many of the wealth management market from small private banks to pension funds to wealth managers to family offices, the family offices that have been strategically long gold for many decades.

There isn’t much change there. But from new buying it’s just not happening yet. Which confirms my longer term perspective of where these prices are going to go. Because when does a bull market end with non participation? It’s, it’s ludicrous. So this market will they, they will get involved. I think everyone’s still married to the, the dot com boom, the well not dot com boom. Now we’ve got the AI boom, Nvidia boom, the Microsoft etc boom. Crypto obviously is still very much focused for everybody. When those markets start to turn and unless you don’t believe in gravity or mother nature anymore and two plus two equals four, these markets will turn and that’s when the ratios will kick in again.

And when I’m talking about a ratio, I’m talking about the ratio between the commodity sector to the S and P. And when we look at roughly 30 to 35 different ratio analysis they’re all historically at the most extremes we’ve seen for near 100 years in some cases. And again we’re, you know, we look at various different analysis. The fourth turning we’re walking into, it’s, that’s why I moved into this particular sector about 12, 14 years ago even though I was very involved in the precious metals from the early 2000s is this is going to be a generational type revaluation, a generational rebalancing of asset classes.

Don’t get me wrong, I’m not telling people to start selling the stock markets. I still believe we’re going to see higher highs in the stocks before we start coming under a great deal of pressure. But diversification is essential and the retail market and the wealth management market are not Diversifying as of yet. Yeah. So it’s quite exciting for us. Yeah. I mean if you can handle the volatility, I think it should be an exciting time for precious metals investors. It’s funny, every once in a while I’ll be having one of these conversations and someone will mention something to the effect of, you know, well, it’s been a tough time for gold and silver investors.

I’m like, come on now, you know, we’re near 43,450, we’ll see what it takes to get the silver bugs happy these days. Although David, you touched on this a little bit, but just more specifically if you can confirm, because especially with China, you’ve seen they’re buying a lot of gold. I mean, obviously I didn’t mention India and India is, is an enormous player in this particular market. The, the Indian silver import data is gigantic and obviously gold as well. It’s, they’re walking into the buying season. Diwali, Bali, buying season again into October. It started off at a slow start because gold is quite a high level and we’re at a level where we’re consolidated the last three months.

So the Indian traders are actively watching which way this market goes. That silver input data into India is just enormous and they’re using it for industrial end use applications. Jewelry demand, investment demand. It’s a full spectrum of usages. So it’s getting interesting. Thailand, Indonesia, very concentrated on gold. As far as I know, no one’s really looking at platinum, the BGMs, which seems somewhat ludicrous. Gold is your inherent portfolio diversifier. Silver is becoming quite exciting and I guess when we take out 50 and take out $60, maybe the market starts to wake up. Well, nothing will stop this cycle.

Well, I think people will be excited for that. And just touching back on China though, I want to make sure I understood clearly because again we hear obviously they’re buying a lot of gold. Yet I think in the west people often assume that they’re doing the same thing on the silver side. But it sounds like you’re not seeing that in the east and in China on silver just yet. No, don’t be wrong, is there is a reasonable healthy demand, but nothing like people believe in or anticipate. It’s not, it’s not triggered yet. Alrighty, that makes sense.

And David, the final one for you here. I know you said you’ve been doing this for 40 years and it seems like you have a very methodical approach. So I’m hoping maybe you’re the guy who can explain it and maybe you figured it out. Where Jerome Powell. Fantastic speech on Friday. I was thinking it was there a chance we could have gotten him to go back out for around 2 in the afternoon. Get get silver over 40 before the weekend. What I was left before and after confused about. Inflation is rising. It’s already been. Well he even mentioned that it’s been above their mandate for the past four years, which that part I agree with.

Yet he talked about how he has it under control and is going to bring it down by continuing to cut interest rates, which now it’s been a while since my business school days on the trading floor, but it seemed a little odd to me. Any thoughts on that one? Again, it’s to do with the debt markets. I mean obviously Powell and the Fed are under enormous political pressure to lower rates. Bessant and Trump start rolling over. I heard Trump wants lower rates subtly, but at the end of the day all he wants to do is roll over the debt and the new debt issuance at reasonable rates because the debt dynamics are inflating at an exponential rate.

So this is about debt management more than anything and we should be under no disillusionment about financial repression, AKA inflation. Inflation data is not wholly accurate I would suggest, and that’s a small one, it’s direct policy. They need to inflate their way out of this debt crisis. But the problem is we’ve got debt at every level. Coming out of the second World War they instigated the same policies, but we only had debt levels at the sovereign balance sheet level, not at corporate and domestic debt. And we also had a demographic explosion and an infrastructure rebuild out this time around.

We’ve got debt loads at corporate, domestic, sovereign and shadow banking level with extreme leverage piled on top of that debt levels like we’ve never seen before. So again, it’s all about the debt structures. So I don’t take much credence to what the Fed’s doing or not doing, to be honest with you. I mean, okay, Trump and Beton create the volatility in the metal stores which we’ve got to love them for. The Fed will be forced into lowering rates. That’s undoubtable. Every forward indicator I’m looking at, every forward macro indicator I’m looking at is turning over negative.

So there is going to be a downside to this. This is the longest economic expansion if we believe that their GDP growth numbers and their inflation numbers because if we actually use real inflation data it would be negative gdp. But anyway, this is the longest economic expansion in Modern history. This is not going to end very well at some juncture. So a deflationary collapse in a debt crisis rates have got to go lower. But I think what’s going to happen is that you’re going to get a more extreme contango curve so much more higher ended on the back end of the curve which is going to force more action.

I’m an avid believer that yield curve control is going to come in at some juncture which has enormous repercussions from a monetary debasement standpoint. But like I say, I don’t take too much credence from the Federal Reserve lowering rates in September or October or November or December, they’re going to cut rates is it’s unavoidable at this juncture. Well, I think you’re quite right and it’s funny you mentioned, well not funny that you mentioned yield curve control seeming as are on track for that. But I. One of my favorite Ben Bernanke articles he actually wrote for the Brookings Institute about yield curve control even talked about his helicopter money policy and negative interest rates and explaining the true plan which unfortunately David, you’ve seen and through all of that and laid it out quite clearly.

So perhaps just in wrapping up, could you let folks know where they can find you the different things that you help your clients with and also where they can find the writing? Yeah, we do an enormous amount of research. Altus metal portfolios, that’s A U C T U S and then we’ve got Indigo precious metals. We like I say we spend a great deal of time with each of our clients understanding what they’re looking for, educating them on cycles when they should be buying, the overall cycle length when they need to get out, what sort of multiples or lack thereof we should be looking at which metals, what should be the breakdown of the portfolios? Altus is designed for high net worth individuals and family offices, wealth managers.

It’s all about portfolio analysis of physical precious metals which are held in the bonded vaults in Singapore predominantly. We’re very cost effective globally. The vast majority of our client base is international. Alrighty. Well we have. I’m sorry we. Do you have something else? So please contact us if you need anything. Well and I will also have the links to both of these in the description field below. And certainly sounds like you’ve been doing quite a thorough analysis on all of the dynamics in these situations that are going on, which not the easiest thing to do but David, a pleasure to catch up with you here today.

I, I think you’re pretty much spot on as far as I can see. And like you said, it’s there’s going to be volatility. You can like it or not like it, but having a good plan in place and understanding what’s coming, especially the debt dynamics, which interesting, we’re at 3, 438, 39 in silver. And this is still while the majority of the world is thinking, okay, well, they’ll just borrow a little more and keep pushing it out. But I think you’re quite right. There’s a day of reckoning coming which is what has led many of us here.

So thanks again for staying up late there in Singapore, which I hear is becoming the new gold capital of the world. And we’ll have to check back in with you as things develop. Thank you, Chris. I’m going to rush off to bed now. All right, Sounds good, my friend. Appreciate you being here.
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