Sam Lawrie: Gold and the Return of the Banking Crisis

Sam Lawrie from Adams Bullion converses with your host Tom Bodrovics about the US market's response to the recent hotter-than-expected CPI inflation data. The data increased the value of the US dollar and consequently caused a significant decrease in gold and silver value. They assess the long-term implications, noting that sustained high interest rates could greatly increase the cost of the maturing US national debt. Lawrie acknowledges that initially, high-interest rates may discourage gold investments but maintains that a bullish perspective on gold is more favorable in the long term. The termination of the Bank Term Funding Program might trigger downside movements, he suggests. Lawrie speculates that Jerome Powell's unexpected switch in stance concerning interest rates in December could be due to a possible banking sector crisis. He notes a political push for lower interest rates in countries such as Australia and argues that despite being above inflation targets, having lower rates benefits lower-income individuals, which could push the economy towards hyperinflation. The conversation covers the political use of the oil market, with Lawrie attributing the draining of the SPR last year to inflation moderation. He also highlights the current Middle-Eastern issues and the strained relations with Iran as potential triggers for oil price increase. Lawrie predicts that inflation will intensify over time, driven by high oil prices which will increase the cost of nearly all goods. He argues that people are inclined to spend money today if they believe it will lose value tomorrow. Despite the predicted intensification of inflation, Lawrie notes that several western governments are considering ways to manage inflation. He discusses the consequences of central bank gold leasing on gold revaluation and advises people to contemplate national-level counterparty risk regarding gold ownership if a revaluation event occurs. The conversation also covers the US stock market, with Lawrie pointing out the substantial gains from top companies like Facebook, Google, and Microsoft. He characterizes the situation as strange, likening it to a bubble where fundamentals no longer bear significance. Lawrie is also keeping a keen eye on Treasury auctions, noting that if there aren't enough buyers, the Federal Reserve might have to buy some of that debt. Lawrie concludes the conversation by noting an increased interest in precious metals from first-time buyers and an evident shift towards silver due to the gold to silver ratio, despite supply chain issues and rising freight costs. Time Stamp References:0:00 - Introduction0:35 - CPI Reports & Gold Mkt.4:05 - Fed Bank Term Funding5:17 - DXY Vs. Gold7:55 - Fed & Powell Reversal13:40 - Oil, SPR & Inflation17:00 - China Reopening19:08 - Peak Oil & Shale21:03 - Inflation Outlook & Rates29:08 - Debt & Systemic Risks33:32 - Equity Market Value36:24 - 2024 Outlook & Bonds39:13 - Gold Sales Trends42:26 - Wrap Up Talking Points From This Episode * The recent CPI inflation data caused a decrease in the value of gold and silver, but a bullish perspective remains in the long term. * Jerome Powell's switch in interest rate stance in December may indicate a possible banking sector crisis. * Inflation is predicted to intensify over time due to high oil prices, leading to an increased interest in precious metals. * Guest Links:Website: https://adamsbullion.comTwitter: https://twitter.com/adamseconomicsYouTube: https://www.youtube.com/@thepubliccrusader