The meeting focused on the historical context of gold prices, with Bob Hoye discussing the influence of past financial bubbles on the market and emphasizing that the strength of the U.S. dollar is often overstated. He anticipates a rise in the real price of gold, which would be advantageous for gold miners, and suggests investment strategies that include three to four-year good-grade corporate bonds as a safer choice in light of potential market volatility. Hoye also highlighted a selection of promising junior gold stocks, indicating their potential for substantial gains in an upward-trending market.
Find Bob's charts here: Charts and Markets -Jr. Gold
Find Kerry here: FSN and here: Inflation.Cafe
You're listening to Carrie Lutz's financial survival network where you get valuable information you just can't find anywhere else. To thrive in today's trying times, you need the financial survival network now more than ever. Go to financialsurvivalnetwork.com and get your free newsletter and gift, financial survival network now more than ever. This is financial survival network on your host, Carrie Lutz, and, well, gold, have you watched gold? Have you watched silver? Gold over $2,700 an ounce, silver over $34 an ounce today before pulling back a little bit. And by the way, this is October 21st of 2024. Bob Hoy is with us now the master of economic history who can read the future by simply looking at the past. Bob, it's great to have you back on. So what is happening now? Okay. Good to be with you and with our listeners and thanks very much for the rave review. I'm going to try hard to live up to it. Check the accidents over getting a little overbought in the weekly, but the rise is not over. It might run into resistance in the next month or so. Well, there is some resistance in the chart there and it's getting overbought, but not enough to make a call to change anybody's position. And it's a good benchmark for the whole precious metal sector, gold and gold and silver stocks as well. So I'm enjoying the rally and content with the gains and looking on this move for a little more yet. So how much higher can it go? I haven't put it well, as I said, on silver, it's at a zone of resistance at 35 level. And then we look at it from a historical view and also to put the history together, Terry. You have to de-place the price of gold and, of course, it's been in the right of the year to go by the consumer price index, or we call it the rate of inflation. Because in England's long history of the senior economy, there was a long period when gold was convertible or the currency was convertible into a fixed amount of gold, i.e. a gold standard. But within this, the real price of gold fluctuates, and the old story about getting it to buy a man's suit, say that can vary all over the place. So what happens with gold de-plated is that it downkicks going into a great financial bubble. And, of course, the last big high for gold in silver was in 2011. I mean, that was a cashier blow off. But then as the post bubble contraction comes in, the real price is turned up, and it has. And I've got a chart going this turning point on the bubble in 1929, 1873, 1825, 1772, and all the way back to 1720. So it's a consistent pattern, and it leads to overall a 20-year bull market whereby gold real price goes up. Okay, last year, you're going, June, we found a nice, a more vivid way of looking at it. I took price of gold divided by the CRB quantity index, then suggested that the CRB quantity index is actually a proxy for the cost of mining. So, the CRB is going down relative to the bullion price, the profit margins are going up. And it has nothing to do with the dollar, with the Dx. Now, all the gold in silver bucks out there, I'll get excited. And in their mind, the only way the game will work is that dollar is going to crash. Well, here's another one from history. One of the, I got four items that are key to tracking the transition from a great financial menu to a depression. And one of them is gold price going down a little as the bubble finished, then going up. Got that one. The other one is the copper goes up with the bubble and then goes down. And that one is working. And then the other is real long interest rate, like for the 10 year, it goes up. And then of course, the fourth item is the US dollar becomes the senior currency becomes chronically firm. And I think I can give an explanation of why this happens. It's because during the financial bubble, everybody around the world who always didn't give York the world's best who said it, impulse money, and then when the bubble is over, the pressures are that you pay the money back. So everybody out there is selling something. The other guy's currency or selling copper, whatever they produce in order to get their hands on dollars in order to serve as obligations in New York, as the financial capital. A long time ago, it was the British pound and London went London was the financial capital. So this has been around for a long time. And so I really like working with the gold divided by the CRB. And it is up, as you would expect, that new highs not over God. But this is now, I think, eight months of rising. So on this schematic, all the gold miners, their profit margin should be improved roughly through this business of gold bullion price outperforming the cost of mining. And this is a very practical way of looking at it rather than getting all excited. But the evils of the Fed and the dollar is going to go to zero. Well, there's a whole lot of current, it's not this, it's going to go to zero before the US dollar that. And as I say, it breaks in the senior currency and be described as being due to the deserve it thing, debt obligations in New York. Take a look at Argentina. They're always complaining about the strong dollar, but they always use dollars in doing cable into New York. And then the great Thomas Gresham in 1550 was the financial agent for England in the money market in Antwerp. That was then the commercial and financial center of the world. And in his letters, he points out to the crown how difficult it is in meeting debt obligations for weak currency to the strong senior currency. So there's lots of letters about that, which I've enjoyed reading. I've got a book on Gresham. And then there's many sources on Gresham. And of course, there's Graduate Law, which is bad money for the good money. He wrote something pretty close to that, but hey, I'll give him credit for it. He got it. He nailed it in. The problem is servicing debt from a week to a strong senior currency. So this is what the world is going to be facing with over the next couple of decades. So and that's a long time, but it's done gold, real price. So with the real price going up, it produces their profit margins that will be enhanced. And then even that then puts the better valuation on, you know, exploration bets. And it's just the way it works, though. Great. Yeah. So rumor of the dollars demise have been greatly exaggerated, huh? Yeah. It's not. Let's put it this way. A complicated good move for gold based upon a falling dollar is a speculation in foreign exchange fluctuations. But if you go with the idea that with commodity prices being weak, their profit margins are improving. And therefore their cash flows are improving. So then when you're buying the gold sector based upon a stream of increasing earnings, that's investing. And I can see it with the big stock market gets bad and I believe it will. And then you've got ordinary fund managers, equity fund managers who wouldn't touch the golds with a 10 foot ball. But if you get a couple of quarters where the GDX is outperforming the S&P, those guys looking for performance will have to buy the golds. So I'm very bullish on gold stock for the early years in a multi-year bull market for the golds. So 1930, my God, you had gold stock going to the moon. So mine, that sort of stuff, Placer, yeah, Placer started at 1922. And then if you go back to previous depressions, there was always the real price went up. And then eventually there was many unemployed and commercial areas around the world and the real price was high. So then you had your great mobile gold rushes at the worst of a depressant. Understood. Yeah. So 1849, California gold rush, the present bottom was 1844, 1845. And then the 1897 gold rush up and the Klondike, that was the great president of the 1895. Gotcha. Right. Gotcha. So what more can we look forward to here, Bob? In the stock market, it's not yet over, Bob, but when it finally gets there and rolls over, we'll be going into a bear market. On the broad side, even treasuries are vulnerable, mainly to a liquidity crisis. So for fixed income people, we say, take a look at the three, four year, good grade U.S. corporate bonds. You'll get it. And because if you go short term, right, females are very positive things. The yield is going to head towards zero. But if you're in a three year, good grade corporate bond, you're getting a decent yield and the price won't whip saw you, but it's going to be maturing a par for years or for years hence. So that's kind of a nice investment world. I mean, even equity people, rather than being long equities and vulnerable there, like parking and three to four year, good grade corporate. Okay. All right. Well, you have a list of stocks that you expect to perform well. So how well is it performed so far this year, Bob? Our list of gold juniors, yeah, there's been a couple of turkeys that have done nothing out of a list. I think it was 11. But on average, they're up 10% in the Christmas. And so the point of going at gold juniors when it really takes off, these things have the potential, making big moves. I mean, you can buy some leverage up on them, but that's, whereas if you buy a suite of junior golds, the downside is not much, and in some cases, the upside could be rather good if somebody may, well, the sector will do well in rising markets for general gold shares because at a bear market, they get overlooked because when you come out, you get the typical stock outperforming first, then the middling size ones, and then finally, the juniors get tagged up. And so the percent gains in these things can be rather good as the bull market continued. And then you also have the possibility that one of them could come up with the discovery in which they, if you've got a global phenomenon, the way back when, oh, 1996, I made a list of five during your golds. And one of them was Iroquipa, and it went to $13. It was taken over by somebody for a $1.1 billion market cap, so gold juniors. Very well. All right, well, always interesting speaking with you there, and people put a bar about the list, and we'd be glad to send it. All right. And actually, we're going to put a link to your list in the show notes to this interview on financial survival network.com. If you've got a question for Bob or myself, shoot me an email right away to kl@carryluts.com. We'll get your question answered quickly. And hey, while you're at the site, please sign up for your free newsletter. Bob, it's always amazing talking to you. Be well. And stay dry. Here you got like major flooding up north there. So stay dry. We have some rain, but it's the storm and quit now and great to talk area look forward at any time. Yeah, we've been having our share of rain here too in Florida, so we can totally empathize with you. Talk to you again in a month or two and see where this mess leads us next. (upbeat music) (upbeat music)
