Rachel’s note: In recent months, the government’s ramped up its money printing to insane levels. And it’s only going to get worse.
Our goal at the Dispatch is to help you prepare for the chaos ahead. That’s why today, we’re bringing you this conversation between Casey Report chief analyst Nick Giambruno, and his longtime colleague, Chris Lowe.
Below, Nick details the secret that can help you make the right moves in your portfolio… no matter what the government throws at you…
Chris Lowe: Hey, folks. Chris Lowe here. I have Nick Giambruno on the line, editor and chief analyst at The Casey Report and Crisis Investing. Hey, Nick, how are you?
Nick Giambruno: I’m doing great, Chris. Great to be with you.
Chris: Good. You’re still in Argentina, I believe, riding out the pandemic.
Nick: That’s right. I’m in rural Argentina.
Chris: How is the lockdown there?
Nick: It’s pretty strict. We can’t really leave town without official permission. But that’s okay. We’ve got everything we need here. And it’s actually an ideal bug-out location. So we’re going to stay here until the coast is clear.
Chris: I wanted to catch up with you because we’ve seen a lot of volatility come into play recently.
A while back we had the news that President Trump had contracted COVID-19. He went to hospital. Now, he’s out.
September was a pretty rough month for stocks, with the S&P 500 down about 4%. And the VIX Index is on the rise.
[The CBOE Volatility Index – or VIX – is Wall Street’s “fear gauge.” It rises when investors see stormy waters ahead for stocks. It falls when they see calmer waters ahead.]
This shows investors are starting to get a little bit more nervous heading into this election. I wanted to catch up with you about some of the moves you’ve been making in The Casey Report. In particular, I want to talk to you about gold – and how it helps folks ride out stormy periods.
You started recommending gold stocks in The Casey Report back in July 2018.
As we’re talking right now, you’ve got gains of 106%, 59%, 44%, 42%, and so on. So I want to cast back to when you started recommending gold. Back then, what told you that this would be a good time to start buying both gold and gold stocks?
Nick: Back in May 2019, I really saw all the stars aligning for gold. And it was, at that point, extremely clear to me that we were entering a bull market for gold. I could see this wasn’t just any bull market. I thought it could be the biggest bull market for gold in history.
And the reason why is clear, when you look at the basics. You have to look at the fundamentals to see why gold is so attractive.
And that is… it’s simply money. It’s the free market’s monetary policy.
The biggest catalyst that made me want to go to gold is that governments are destroying their currencies with wrong-headed measures that they think will stimulate the economy. They’re inflating the currency at a historic rate. This trend is happening primarily in the West, but it’s all over the world. And it’s only gotten worse.
Gold is just an alternative monetary product. It’s a superior monetary product. People don’t realize this. And when you understand this, it’s almost like having a cheat code in a video game.
Most people are stuck using the crap that the government gives you. They think it’s money.
And most people think money has to come from the government. That’s as ridiculous as saying that shoes, cars, or food have to come from the government.
Money is a good in the economy, just like any other goods. I view it as an aberration of mass psychology that most human beings don’t even know what money is.
It’s almost a secret knowledge. It allows you to see what’s going on – and to make the right moves.
So, the main reason I went into gold – and the main reason I’m still very bullish on gold – is because of a monetary phenomenon.
Chris: I was reading back through some of the original reports you put together. One of the things you talk about is inflation of fiat currencies like the U.S. dollar, and the involvement of government policy in that.
And this was back in May 2019 – long before coronavirus hit the headlines.
But this year, we’ve seen the government do some very novel things. For example, they’ve been sending out checks to people – essentially, just conjuring money out of thin air and popping it into people’s bank accounts.
Since you started recommending gold and gold stocks as a way of protecting buying power and wealth, how far have we moved in the wrong direction?
Where do you see us now, in terms of the debasement in fiat currencies that you’re talking about?
Nick: We’ve clearly crossed the Rubicon here. That’s the nature of fiat currencies – and the nature of democracy, too.
People get all hyped up about democracy, as if it’s some kind of secular religion. It’s nothing good. It’s two wolves and a sheep deciding what’s for dinner.
And the combination of democracy and fiat currency leads to a very predictable outcome. Look no further than Argentina.
In short, what happens is that the masses vote for free stuff. And that’s financed by printing money – until the currency is destroyed.
It’s the same cycle that will happen in any country that has fiat money and a democracy. And it’s happening in the U.S., too.
This is not a mystery. What’s happening is very obvious.
Look what’s happened since this COVID-19 hysteria has swept the world. In my lifetime, I’ve never seen bad political and economic ideas spread as fast as I’m seeing right now.
I imagine it’s reminiscent of when the Bolsheviks took over Russia and fascism swept Europe. With all these policies of lockdowns and giving people free money, we’ve reached the end game…
If the government can’t even taper a little bit on Social Security, do you think they’re going to stop giving people checks in the mail? It’s going to be politically impossible. Forget about it stopping. It’s going to increase.
The coronavirus hysteria has provided a cover to implement the basic income and helicopter money. In a democracy, they’re never going to vote to stop these things. They’re only going to vote to increase them.
This is why we’ve crossed the Rubicon. It’s too late now. All you can do is abandon ship and save yourselves. And one way to do that is through gold.
Chris: Let’s track back to the summer of 2018. Gold is up about 50% since then. But you were actually recommending gold mining stocks.
And as a broad index of gold mining stocks, the VanEck Vectors Gold Miners ETF (GDX) is up about 67% since then.
So we’ve got this differential. Right now, we’ve got gold up 50%. But gold miners, in the broad sense, are up 67%.
And your top-performing gold stock is up 106%.
So, can you explain to folks where gold stocks fit into your thesis?
Why did you decide to play this set-up by the stocks, as well as bullion itself?
Nick: It’s an important distinction. Gold bullion and gold coins are simply money. Think of them as honest, sound cash.
In terms of real purchasing power, it may go up a little. But mostly, it’s going to hold its value. So that’s for prudence.
But for speculation, upside, and profit potential, we look at gold mining stocks.
If you’re bullish on the trend of gold – which is really just bullish on the trend of honest money winning out in the market – then gold stocks provide you with leverage on your gains.
So that’s what they’re for. They’re speculative in nature. They’re certainly not the same as gold bullion, which you can save for your retirement or for your kids.
Think of gold bullion for savings and prudence, and gold stocks for speculative upside.
Chris: You’ve also recommended silver miners. Do you see silver through the same lens as gold? What’s the difference?
When we talk about gold, we often hear from readers who want to know how silver fits in.
What’s the relationship between silver and gold?
Nick: I’m not as bullish on silver for prudence and savings. Silver is even more leveraged and volatile than gold stocks.
Simply put, silver is an inferior form of money to gold, for a very simple reason… Silver is primarily an industrial metal.
I’m not interested in a money whose value is held hostage to the whims of ever-changing industrial conditions.
If people stopped buying solar panels for a month, that would really hurt silver. That makes for a very poor money.
You don’t want something as money that is primarily used in industry. It’s the same reason that copper is an inferior money.
All that being said, silver stocks are way more volatile than even gold stocks. And that can be volatile to the upside.
In a precious metals bull market, if gold is going to spike, silver typically spikes, too. That’s because silver isn’t 100% an industrial metal. It’s about 15% or 20% a monetary metal.
So, in a monetary phenomenon like we’re seeing here, where gold goes up, silver will go up, too. And it will go up orders of magnitude more.
The problem is that this induces more production of silver. That eventually leads the price to crash, as we’ve seen in history.
Once silver spikes – and I think it will spike – I’ll be looking to get out quickly.
Chris: We’ll leave things there, for now. Thanks, Nick.
Rachel’s note: Nick has a lot more to say about gold – and how to use it to protect against the government’s insanity – in his urgent briefing.
And be sure to tune in for the second part of Chris’ and Nick’s conversation in tomorrow’s Dispatch…