This investing podcast interviews industry experts so you’ll learn what to do, what to ask, and ideally how not to lose money. I’m just like you… I want to make money from the stock market but I find the terminology confusing and it’s hard to know where to start. Personally, I want to make informed decisions. Let’s learn together on Intel for Investors!
Today’s Episode… When there’s a stock market crash brewing on the horizon… What are safe-haven investments during an economic turndown?
Intel for Investors
There’s no question in my mind that gold is going to surpass $2,100 very quickly and silver is headed for $30 per ounce, so this is an opportunistic sector. Gold and silver have gone up tremendously, respectively since 2022. If you’ve got money in the bank earning a quarter percent, you’re losing ground because of progressive inflation.
Dr. Stephen Leeb
Yes, absolutely, and that’s been the case now for nearly a decade. Inflation has been higher than most interest rates and it’s understated. I don’t think it’s an open secret- it’s not a conspiracy– it’s just a fact. I would say since the late 70’s, inflation has been understated.
The necessities of life have been understated- home prices, food prices… It goes on and on. The typical person in this country has to really, really struggle and now we’re facing shortages which will only get worse…
We are going to have to figure a way out of this. It breaks my heart because I grew up during a time when America was the greatest country in the world, economically and in every way. However, we’ve managed to rip that apart. And the pandemic just accentuated American devolution and what’s going on globally right now… I’m at a loss for words.
Intel for Investors
Goldman Sachs said recently that copper could be the new oil. Stephen, is this a logical insight?
Dr. Stephen Leeb
I think it’s a logical presumption but I think that oil could also be the “new oil” for a while. We cannot achieve building a ‘green’ infrastructure without using fossil fuels to get us there. Therefore, oil isn’t going away anytime soon. It’s essential to the progress of a sustainable future but we are far, far away from achieving that on a global scale. And yes, I believe that copper is undeniably one of the most critical industrial metals on the planet.
There are two things at play right now on a macroeconomic level. First, you’ve got the many countries in the ‘developing world’ rapidly developing into emerging markets on the global economic stage. Most of these countries have already joined the Shanghai Cooperative Organization (SCO) and nearly forty countries have also petitioned to join BRICS. This clan of countries spans from the Middle East, Africa, South Pacific, to South America where the average income levels are roughly 1/5th the average American income level. And truth be told, these countries are growing very quickly.
Secondly, we have a bogus climate change agenda, and the global elites have turned this issue into a religion. And it’s not a religion, it’s a cult.
Intel for Investors
Global elites are pushing climate change and the other agenda they are pushing is white supremacy. Neither is an issue that most people consider paramount. They consider their jobs and family to be most important at the end of the day.
Dr. Stephen Leeb
Yes, but this absurd climate change agenda is the one that keeps me up at night.
Intel for Investors
The Biden administration did cancel all drilling which was also absurd because it was producing economically cheap oil. And cheap energy is the bedrock of bringing any country back.
Dr. Stephen Leeb
I have believed for a long time that humanity eventually has to transition from fossil fuels to renewable energies. Not because of climate change- the models put together by these so-called experts are just ridiculous. But the real reason is that eventually we’re going to run short on fossil fuels and I bet we already are. We had this mindless policy on fracking, which basically, fracking over the past 10 years has cost this country nearly a trillion dollars. There was never a year in which fracking was cash-positive. Although it held oil prices down there wasn’t very much investment in additional oil production. And now we are going to need it because if you want to make this renewable energy transition- if there are shortages in the world- you are going to need a bridge.
Earlier you mentioned copper- which Goldman called the “new oil.” Well, you are going to need the “new oil” to produce the “old oil.” That’s the point, oil is everywhere. If you’re going to make steel- you need oil. If you’re going to make a transition between oil & gas to renewable energies (which include the sun, the wind, and their carriers; electricity and hydrogen) I think almost anybody would agree you can’t make that massive of a transition in 10 minutes or even a few years. You can’t ban oil.
Intel for Investors
Without fossil fuels, you’ve got to have a dependable source of renewable energy or some way of storing energy. It’s one thing if you are producing energy- but it’s useless if it’s not dependable. If it’s a cloudy day you’ve got to have the ability to store it in batteries. If it’s wind power then you’ve got to have a dependable source of constant wind blowing. There are many caveats and variables when it comes to creating consistent renewable energy sources.
Dr. Stephen Leeb
And if the wind isn’t constantly blowing, you have to have a way of storing the energy in batteries so you have access to it. But we don’t have any mass way of storing this energy as of now.
Intel for Investors
Who makes the storage, who makes the batteries, who makes the solar cells, and who makes the wind turbines? It’s all coming out of China.
Dr. Stephen Leeb
Well, it’s not entirely all coming out of China. The U.S. does have some companies- General Electric has made quite a comeback and they’re one of the few real success stories in terms of industrial progress but you’re right. As of now, in many cases, the countries in this world that are competing and cooperating are Europe and China.
When it comes to things like hydrogen- which is going to be important in a new economy- I’m not talking necessarily 5 or 10 years but maybe 20 to 30 years from now. However, it will happen gradually. All of a sudden you’re not going to turn the light switch on and hydrogen is the main carrier of electricity or all of a sudden you turn another switch and everything is back to electrical.
We’re not doing enough here in the United States, we don’t have enough chargers in this country to get the EV revolution going. If you just look at Tesla, this great success story unfolds. All of Tesla’s success happened in China. Before they opened the factory in China, Tesla was trading at roughly $60 to $70 per share. The reason you don’t have EVs in this country is that we never invested in the proper infrastructure for charging the batteries for electric vehicles. I don’t want to sound like a hawk but the whole initiative was a colossal disaster and waste of money.
Intel for Investors
Well, we’ve wasted more money now than ever before. I’m looking at the M1 money supply and it’s the highest I’ve ever seen in my lifetime. Can we sustain something like this? Can we sustain this type of spending?
Dr. Stephen Leeb
No, we cannot. Investors beware. In my opinion, there will be some event that will happen soon that will cause a stock market crash or in other words, the market to come down sharply. And when that happens, I think that will set the stage for what people are calling this ‘monetary reset’ where you have an entirely new currency system.
Intel for Investors
And what’s that going to look like, Stephen?
Dr. Stephen Leeb
In my opinion, the best case for the world would be a collection of these so-called digital currencies. Not Bitcoin but it would be something more like the digital yuan, the digital euro, the digital yen. Hopefully, the digital dollar. They would form a collection of currencies that would be used for trading amongst countries. But the amount of these currencies would be backed by gold and that would limit how much the world can spend. It will determine how fast economies can grow and it will be a way of managing all the world’s money. In my opinion, it would be like the Federal Reserve. Perhaps representatives from every country might meet monthly and the price of gold will be allowed to rise. I think gold- eventually (if it’s going to back up all the world’s currencies) is the direction we need to take. And gold is the only metal that can do this because it’s the only metal that’s not going to disappear. We don’t need it for industrial purposes, so it has to have a major role. This is basically what my new book ‘China’s Rise and the New Age of Gold’ inherently entails. I don’t have a crystal ball and I may not have the details of everything exactly right- but the gist is that a collection of digital currencies will be backed by gold. And you’re going to need a very, very high gold price eventually because inflation ever rising, and before too long… People will begin to get scared about their retirement savings and financial welfare.
