ERIC KING: It’s been a wild week in the metals markets as usual, but there’s continued pressure as everybody’s very discouraged that’s in this sector. As we come to the end of this long consolidation after gold hit $1,500 and then rallied to $2,070 and we’re muddling around still. Stephen, where are we headed from here?
Dr. Stephen Leeb: Well, Eric, let me be honest with you. The precious metals market may muddle along for another month to three months. But this is the key. When gold starts to rally, the upside is going to be the real deal. The next stop, probably in the neighborhood of $5,000/ per ounce, as I’ve been saying. And the stop after that is… the sky’s the limit.
There will be multiples of that eventually because gold is the one thing that can really save this planet in regard to creating a financial doorstop for regulating monetary policy. It’s the only way of disciplining us in regard to reckless spending (and I’m referring to Americans.) They’re the worst and least disciplined of any major country at this point. Let me give you an example from this week’s news.
Chairman Powell gets up and the Fed announces their decision, which was basically no decision!
I listened to feedback about the Fed meeting and there was a consensus of ambiguity. I have never witnessed a situation where a Fed meeting was left in a total state of incertitude. Back in the 1970’s, when the Fed announced a decision, it was crystal clear. If the Fed decided to hike interest rates, they hiked rates. That meant hawkish quantitative tightening would kick in. If the Fed decided not to do anything at all, the message was still clear. If the Fed decided to lowered rates, they got looser. That meant the Fed was dovish and quantitative easing kicked in. There was never any grey area (most of the time) even after the Fed started revealing a lot of their thinking… And announcing exactly what they were doing. Nevertheless, in the past it was clear whether they were tightening (hawkish) or whether they were loosening (dovish.)
The FED Is Having A Midlife Identity Crisis…
This is the first time that I’ve ever seen the Fed present themselves in a way that many people are left bewildered. It seems there are contrarian viewpoints. After Powell’s speech, many people believe the Fed is dovish. On the other hand, people said this was a very hawkish Fed- based upon what Powell said in the interview afterwards. But both are very strong beliefs. In other words, the Fed doesn’t even know how to present itself!
It’s like the Fed is having a midlife identity crisis… Are they hawkish or are they dovish? You could interpret what they say either way. And I think there’s a very good reason for that. Why? We have finally reached the point that Americans are starting to realize that money can only get you so far. Eric, until very recently, I think this country was under the belief that money could solve all of our problems.
Whatever problem we have… If it’s a pandemic, we’ll pay for a vaccine. Whatever problem arose, we could solve it with money. And suddenly it’s dawned upon us that we have problems that cannot be solved by money. How can the Fed, for instance, deal with a chronic, acute shortage of oil? All the money in the world- an infinite amount of money is not going to secure a finite amount of oil. And a lot of that oil is stockpiled away. Whether the Fed initiates quantitative easing or tightening, it’s not going to solve that problem. Forget about it! Nor is the Fed going to shift gears dramatically.
What’s Happened To The American Skilled Workforce?
Furthermore, the United States (in terms of basic math skills for a 10th grade student) is ranked 36th in the world. It’s simply unbelievable. The reason I single out the statistics regarding math skills- if you look at the profile of employment in this country, you find a big gap between people that have had some college and people that have a bachelor’s degree. The reason for that gap is the noted statistical decline in math skills that are needed for the ‘so-called’ skilled jobs. That’s where the skilled labor shortage stems from, and that’s why wages are starting to rise. People that have basic math skills are suddenly in great demand because we have such a service-oriented economy. When you have a service-oriented economy, you need math to do any relatively important job. And that’s where the United States has just fallen down. All the other developed countries are excelling in education, whether it’s Germany, Israel, France, Denmark, Norway… So how did this educational ‘slip’ happen here in America? I believe the United States slipped when our religion became money. Americans believed that money could solve any problem. And now we’re forced to accept that’s not the case.
The Petrodollar Is Running Out of Gas (no pun intended)
The last vestige of the United States is attempting to keep things going as far as the dollar goes… Because that’s really the only power we have left. The petrodollar is metaphorically running out of gas and in response, the U.S. is doing it’s best to keep gold suppressed and the dollar strong.
Surprisingly, after Powell’s speech, at least the media seemed to arrive at a consensus. It was kind of hawkish. The Fed is hawkish, even though interest rates haven’t done much since his speech. And they can’t. That’s another major problem that we have right now in the United States. We cannot raise interest rates that much without invoking a recession. It’s such a thin line to walk. Likewise, we have no ability to stop disinflation from happening.
The last show of what we’re trying to do with money and our ability to print as much fiat currency as we want; hold down the price of gold. While at the same time, inversely doing whatever we can to keep the dollar going up. Now, I can’t tell you exactly how long it will take before this game ends, but it could end very soon… Perhaps a few months. I don’t think we’re talking in years anymore. I think that those days are long gone. This is something that’s going to happen fairly quickly, and I don’t think you’re going to see gold dip below $1,600 at its lowest.
When Push Comes To Shove…
Gold is going to have a strong rally, but this time around, I don’t think they’re going to be able to push down the price of gold. No matter how hard they huff and puff, I don’t think (even with paper money and paper gold) that they’re going to shove the price of gold per ounce down below $1,600.
once gold starts to rally… we are looking at $5,000
It’s the beginning of a new monetary system, one that is going to be centered around gold. A monetary system backed by gold imposes discipline. It was the lack of monetary discipline that really destroyed a lot of the basic freedoms that we have in the United States. We lost it when we lost the discipline of the gold standard. Truth be told, Americans should be welcoming a gold standard because it can help us get our mojo back… Our creativity back. Goodness knows, all of the world uses our inventions from over the past century. In fact, other countries not only use our inventions, they have improved upon things that we invented in the first place. Yet ironically, here we are in the United States stuck without any supply chains. For Americans to oppose something (such as the gold standard) that could bring us back to a position of real strength… It’s nothing less than tragic. But again, I think that we’re finally realizing the limitations of money.
We’re not going to create more oil with money. We already tried that with fracking and it failed miserably. Essentially, we could create more oil with fracking. But that’s a mute point. The important thing to understand is that the United States tried to create energy independence and it backfired by creating massive losses. It instigated oil prices that were artificially low, not to mention, it’s one of the inherent reasons that oil’s in such short supply today.
It’s Time To Pay The Piper
I think it’s finally dawning on U.S. policymakers that they can’t keep printing money as a solution to all of the problems in this country. Money makes the world go round but it’s not the answer to everything. There are fundamental limits. And if we want to create a prosperous economy over the next century, it needs to be globally prosperous. We’ve got to cooperate with other countries. We’ve got to drop all this dislike or hate of other nations. The problems we’re facing in today’s world are global problems, and they’re going to require worldwide solutions. Unfortunately, I think the United States is the country that is primarily standing in the way of establishing global cooperation. And we’re the country ironically, that is most harmed by this lack of cooperation. The United States is paying the highest price and I mean that literally and figuratively. Our inflation is currently higher than anywhere else in the world.
The United States is paying the price and we should. We will inevitably benefit the most from strict fiscal discipline. The next decade might be really tough… But what if that segues into a really prosperous century to come! We’ve got to bite the bullet here. And the gold standard, a worldwide monetary system backed by gold, is the only answer I can fathom. History has proved the gold standard worked in the past. I think that’s where we’re headed from a global ‘monetary policy reset’ point of view… And it’s not far beyond the horizon.
It will require agreement among all the major powers in the world, but I think our world leader can come together and agree. I think we can come to reasonable terms. After all, the United States was allies with Russia during the Second World War. Does anybody remember that Stalingrad hadn’t been for Stalingrad? Who knew what was going to happen? When we have to face problems that are existential threats to the entire world… Like sustainability… Like commodity shortages… Like the environment… When we address the fact that these are worldwide problems, people from all nations come together with global solutions.
ERIC KING: What is your current stance on the market?
Dr. Stephen Leeb: At the moment, I’m very bullish on gold. Bullish on silver. Bullish on commodities. Bearish on the financial system that we have in this world right now.
United We Stand… Untethered We Fall
Although, more importantly, I’m bullish for Americans to rally together united as a country to address our economic problems. I think the best chance we have to correct our economy is to go back to what has worked for us in the past; the gold standard. That’s what Americans should be realizing for themselves. And when you address monetary policy in a meaningful way, you realize that gold is the only viable option to back currency. When Nixon untethered the dollar from gold, that’s when America started to fall.
When I say gold is the key to everything, I’m merely citing America’s own history. And that’s where we’re at right now, we’re right at the cusp of beginning to realize it. The world is starting to slowly form a consensus that the next rally for gold is going to be the biggest you’ve ever seen, and we’re getting very close to that moment.
As stated previously, I’ll be very surprised to see gold prices sink to $1,600 per ounce, but that would be the ultimate low. In fact, I doubt we’re going to see gold prices much lower than what they are right now. Investors should be looking at risk groups like this. We’re going to see big moves in the gold and silver markets albeit the recent precious metal market turbulence. For reasons unbeknownst to me, silver has become something that is a threat to the dollar. It makes sense that if they are going to suppress gold prices, they might as well suppress both. However, silver is actually a metal that is needed. It’s critical for solar production and renewable energy infrastructure, amongst many other industrial uses. Silver and copper are critical metals to build a future that is no longer dependent on fossil fuels. We’re going to need to use the remainder of fossil fuels on this planet to build a sustainable future.
Biggest Reasons To Own Gold… Now
Right now, there are two reasons you need to own gold. First, you’ve got to have it as a major hedge in your investment portfolio. For the first time in my fifty year career, if your portfolio consisted of nothing other than precious metals and a few other commodities, I would not disagree. But let me be utterly clear, I’m not recommending that. However, you might consider a heavier weight of commodities and precious metals in your investment portfolio than previously considered. As a money manager, I always recommend reasonably prudent diversification.
The second reason you need to own gold: Gold’s rally is getting very, very close. I’m not saying tomorrow, but probably within the next two to four months there will be a rally in the gold and silver markets that will be one of the greatest breakouts any market has ever had.
My final message… Own gold, silver and other critical commodities (at least hedge with these assets in your portfolio.) The days of the dollar are over and it’s right in front of us! It’s become crystal clear that dollar hegemony (the ability to print endless amounts of fiat currency) is not a viable solution. We have reached the point where problems can no longer be solved with reckless and unlimited money printing. The day of a new monetary system is dawning and Dark-30 is upon us.
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