PodCasts Archives - McAlvany Weekly Commentary

Will vaccines be mandatory? As credit replaces money, should velocity be redefined? Covid 19: Health crisis or global economic crisis?   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Will Covid Be The Excuse For A Cashless Society? September 30, 2020 “At the end of the day, if you think about the MMT [Modern Monetary Theory] crowd, you have the ability to print. That’s one version of power. But the thing that’s required for you to not lose legitimacy is that you still maintain the power of coercion by taxes. But again, the more you control your audience and control the capital pool, the easier it is to maintain legitimacy, if you are in that MMT crowd.” --David McAlvany Kevin: Well, I had a new experience this weekend. I’ve done many zoom calls during this period of time, but I wasn’t actually part of a zoom conference until this weekend at Wealth Conference. And I thought, you know, since I can actually use a visual, I’m used to just talking on the phone, I thought I would do that. I took a $20 gold piece, one ounce, St. Gaudens back from 1908, and I held it up with a $20 bill, Dave. I said, originally this $20 bill was just simply a receipt for this $20 gold piece. Then of course I had prepared fifteen $20 bills, and I counted it out right there on the screen. And I said, when I started in 1987 with Don McAlvany that’s what this $20 gold piece was worth – 15 of these receipts. And then I went on to say, now it’s close to 100 of these $20 bills. So it was interesting to me, I’ve never even done that visual. I’ve talked about it on the phone, but when you visually see that an ounce of gold stays the same, buys the same amount of bread that it did 100 years ago, but it takes one hundred $20 bills to do the same thing, it’s powerful. David: When I’ve done something similar to that, my experience from that point forward has been a diminished interest in those paper receipts. I look at them with some degree of disdain and I have this compulsive desire to want to get rid of them as quickly as possible. And it could be on anything. I’d rather buy T-shirts. Frankly, the smarter thing would probably be to buy gold or silver, but it doesn’t matter, I just look at it and I think, “This is a game and this game is being played on a clock, and if the time runs out, then it’s going to go from 1 to 15 to 100. To what’s the next multiple? Is it 200 or 1000? At a certain point, you realize that all we ever were playing with was confetti. And that’s the beauty of the old gold standard. It’s fascinating, I’ve had this conversation with Richard Duncan offline about velocity of money, the change in the monetary system and why velocity is no longer important. And it’s a good conversation. It’s a healthy exercise. Kevin: Right, because you’ve said if velocity increases, we’ve created an awful lot of money, so inflation has to hit. David: And I want to hit this maybe next week, because we have the Z-1 report out. Doug Noland did a great job exploring some of that in last week’s Credit Bubble Bulletin, but I’m going to wait until next week to not only engage some of Doug’s comments, but also look at sort of Rich and my back and forth on that old equation, MV = PT [amount of money times velocity equals price times transactions]. Kevin: One of the things I like about Duncan is, he does raise my blood pressure because I don’t always agree with him, but MV equals PT has been a standard, and that’s being challenged by Richard. David: Yes, so we agree that we have a new money and it is credit, so the old velocity doesn’t make sense anymore, and I’ll concede that to a certain degree. But I think if we’re saying we have a new M in the equation, we also have to look at a new V in the equation, which captures the growth in credit. And that’s why we will focus on the Z-1 report and say that velocity is...

Dollar bounce gives opportunity to gold buyers BIS expresses concern about record equity valuations Election focus just changed radically to RBG replacement   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Bullard: “Inflation could run hotter than expected…” Ya Think? September 23, 2020 “The markets are going to be on edge with November fast approaching. But there are real, tangible implications, if you’re talking about tax policy, which would shift with that president, impacting corporate profits and thus impacting prices. So you know, regardless of what the Fed does to suspend the sun, moon and stars, they’re going to have a lot more heavy lifting to do, given a certain outcome.” – David McAlvany Kevin: Well, a lot of things can change in a week, Dave, but I want to start with you talking a little bit about your 1st 100-mile ride. You’ve done a lot of endurance types of sports, but you’re training for this full iron man, and you told me about the 100-mile ride and what you were doing the last 20-25 miles? I think you were just white-lining. David: Yes, it’s sobering when you think, “I’ve got to get off the bike at 112 miles and then run a marathon.” I did run two or three miles afterwards, and the first couple were downhill and felt great. And then it just flattened out and I thought I was going to die. So there was a point at which I was just staring at the white line, and just listening to the sound of the wheel as I was going down the road. Kevin: We’ve talked about long rides. You have to sometimes just focus on making circles. You just make circles, because otherwise you’re just going to want to quit. With the run, you and I have talked about doing a little bit of an inventory of your body, and with the swim, what’s your form like? If you can turn your brain to focus on the simple things, especially when things get really, really painful. I think that’s really the key, isn’t it? David: Yes, I think one of the ways that you manage volatility, whether it’s your own emotional volatility in something like this race I’m training for, or even in a portfolio as an individual investor, if you’re looking at technique and rules and guidelines, as opposed to focusing and fixating on a goal, you can create your own volatility by fixating on the goal. One day it seems to be moving away from you, and then the next day it’s moving back toward you, and you can drive yourself crazy that way. Kevin: Look at the dollar. The dollar has been rallying, and gold and the stock market, some of these other assets that have been rising are going down. But really, if we look beyond that, if we’re looking at the longer term, we have to say, has anything changed? We have inflation expectations. Look at what Bullard had to say about inflation. Even the Fed is preparing us for higher inflation. David: I thought his comments were edifying. There’s a good chance of an economic boom following the Covid-19 pandemic. That was one of his observations, which, of course, off of a very low base of economic activity that’s not difficult to predict. But his inflation comment that inflation would run hotter than expected is directly to my point in recent weeks. You adjust that inflation target. That’s a new policy regime. You put it to higher levels to allow for what is, in essence, a wider credibility band. Kevin: Sometimes in politics we look for the October surprise. Everybody is holding their breath for the October surprise. But beyond that are we looking for an inflation surprise? David: I think there is an inflation surprise coming, and I think we had the quote from the Goldman Sachs commodity man last week, Jeffrey Currie, basically saying the same thing. You’ve got the political temptation to alleviate the debt burdens which are being created today. So right now it’s about balance sheet expansion,

Tesla profits? - They lose on car sales but gain from carbon credits S&P 500 - Six stocks only account for 100% of the gains, the rest lose $20 gold piece goes from $20 to $2000 since the Fed started in 1913   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Zombification & The Free Money Apocalypse September 16, 2020 “In one sense, we’re destroying capitalism and don’t know what system will replace it. And that’s what you see with the orchestrated fiscal policy initiatives, monetary policy initiatives. We want a world where there is no more business cycle. We want a world where there is no more pain. We want a world that is utopian in nature and goes beyond the vagaries of the market and the cruelties of capitalism.” – David McAlvany Kevin: David, sometimes you think about some of these companies as the living dead. But before we get to that, you said that your daughter, who didn’t know what we were going to talk about today, got up singing a song with zombies in it. David: (laughs) It’s song from the nineties by the Cranberries, and over and over again they have the word zombie. I have no idea why she actually thinks of herself as the eighties girl. That’s kind of the era of music that she likes. Kevin: She stands about 4’5”? David: That’s right. So, yes, I woke up to, as I’m finishing my thoughts and notes for the commentary today, I hear in the background, “Zombie, zombie.” Kevin: You’ve been talking zombies because you’ve been talking about some of these companies. Look at Tesla. That zombie phrase, by the way, before we jump in here, was used back during the last tech stock bubble – zombie companies. What that represents is companies that actually are running almost purely on debt, virtually no profit, yet their stock is skyrocketing, David: Yes, it’s old world to think that you need earnings and profits, New World to think about leverage and the potential of what gets unpacked from sort of the pro forma bliss. Tesla is probably squarely in that camp. And it’s weird because, how do you consider it a zombie with a recent market cap of $450 billion? Kevin: Isn’t that amazing? Almost half a trillion dollars? That’s more than almost all the other automakers combined. David: The company loses money on car production, but shows earnings exclusively from its sale of carbon credits. Let that sink in.  Kevin: What the heck is a carbon credit anyway? David: It’s a different kind of zombie. True, their production is about 360,000 to 370,000 vehicles. And in a bizarre twist of financial market fate, this is like a casino. When you look at the behavior relating to investors in Tesla, the company is worth more than nine of its competitors combined. Those nine competitors produce 50 million cars per year. Kevin: Let’s compare that again. Tesla sells 367,000 vehicles. They’re worth almost half a trillion dollars, and that is more than all these other nine competitors that sell 50 million cars per year? David: We used to say when you’re talking about McDonald’s you make it up on volume. Today you make it up on carbon credits. Why bother with cars when you can sell carbon credits? It’s the wave of the future. Just for the record, we are not short Tesla, we are not long Tesla. We are neutral in our opinion. Well, we’re not neutral in our opinions, but at least we are in our positions. Kevin: I’m thinking that’s probably good, because how long can you print free money? Granted, you get something for free, but it will ultimately cost you everything. But just to show that you’re not picking just on Tesla, let’s look at the NASDAQ because if you really look at advancing shares versus declining shares,

When does Fear Of Missing Out change to Fear Of Staying In? Complete reliance on complete control of the Fed Inflation mixed with repression - Who loses?   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Free Money Plus Free Time Will End In Free Fall September 9, 2020 “What does it mean to walk through the transition periods in the years, maybe it’s weeks or months, but I think years ahead, as we let some of these fundamental economic maladies play out? The reasons why we wanted gold a year ago, closer to $1200 an ounce, and we still want it today and don’t consider it overpriced, is because these are monumental problems which they are just beginning to address.” – David McAlvany Kevin: David, I’m looking at these markets, and I think a little bit of jazz. Somehow, some way, a lot of things remind me of jazz. As you know, I love to play the trumpet. In the 1980s I got a chance to get on the phone and talk to Dizzy Gillespie on the radio. He’s the famous trumpet player who played the horn with the bent bell. I didn’t know what to ask him so I asked him what mouthpiece he used. And I will never forget. He answered my question right there on the radio. But see, Dizzy was still alive. The guy that made him really famous, actually, was Charlie Parker, who had died in the in the mid 1950s. The analogy I’d like to use here, Dave, is that Charlie Parker was amazing. Nobody could play like Charlie Parker. But the problem was, Charlie Parker had to use drugs to play the way he did, and he knew it. And Dizzy Gillespie refused to use the same drugs, take the same risks, and he lived much, much longer. But there is this allure, and this is where I’m going with the money. We’re getting free money everywhere, and people have free time, they have free money, they’re speculating on things. You’ve been bringing up Tesla, and in a strange way, it’s a little like Charlie Parker’s band. There’s this urge to take more risk. There’s this urge to take drugs. Dizzy Gillespie basically lived because he didn’t. A lot of guys died of heroin just because it made them play better. David: Well, I owe everything I know about jazz to you and the introduction to Keith Jarrett many years ago. I’ll be forever in your debt because it is still an amazing contribution we listen to almost on a weekly basis. Kevin: But what about this? Is free money a little bit like heroin and jazz and risk taking? And where does it lead? Does it lead to an early death of the system? David: Yes, it is a lot like debt, because debt, as we’ve often said, just brings tomorrow’s consumption into today. So you’re packing in a lot in a short period of time, but you can also expect maybe a faster flameout. And if Charlie was that guy, unfortunately, that was the case. Our friend Alan Newman, who promises to retire and never will, sent me a special report at the end of last week. He said, “In the 56 years of observation, we can say with absolutely no reservation, that this is the riskiest environment we’ve ever seen.” I think it’s worth remembering that bear markets take on a certain character, and they typically do surprise a lot of participants. We were putting in all-time highs February 18th and 19th just before the stock market rolled over, and if he took a poll of any group of investors in the week leading up to that, it would have been smiles all around. It would have been Charlie Parker happy. Kevin: That drug basically was replacing – once we got through March, drugs, the debt, was replacing actual GDP numbers or corporate profits. Look at the corporate debt markets. They were already rising before Covid hit, but at this point a lot of these businesses aren’t selling anything, they’re just borrowing. David: Yes, the Financial Times marks the corporate debt market in the US at 1.919 trillion for the year,

Wealth disparity and the dropping value of the Dollar Without the “awesome eight” stocks, the broader stock market is flat to down Fed’s Jackson Hole Revelation “Sure we don’t mind higher inflation”   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Unlimited Debt & The Erasure Of Consequence September 2, 2020 “When we look at the erasure of consequences and the muting of signals, you just have to broaden your spectrum and look at other things that give you signs and indicators. Money-printing? Monetization? Do they matter? Yes. The U.S. Dollar has dropped from $102 in March to $92 and change here in early September. If it doesn’t bounce soon, we’re going to have some real issues, and the dollar is telling more of the story at this point.” – David McAlvany Kevin: David, we’ve come out of four weeks with various guests, and there really was a deliberate action in all of that. As we look at what could be either devastating consequences of a lot of debt or the erasure of consequences and a continuation just by taking out more debt, we’ve had guests that have talked about both. I think it’s interesting so that we can learn how to argue our own point to listen to people who maybe don’t agree with everything we’re thinking. David: I think it’s fun to have options. If you have ever hit the restart button like when you’re playing a video game, it’s just not going well for you, you realize you’re not going to get a new high score, I think back to when I had one of my kids and it was like the first week, and so I’m not involved, really. I can help do dishes or whatever else, but there’s a lot of things that I can’t do. And so I’m up late at night playing Angry Birds on my iPad and I know from the first shot whether or not it’s going to be a good game or not, and I just I want a do over. And then I want another do over. No, I want another do over. It was amazing. I got all-time high scores and I just kept on getting all-time high scores, and I looked at the games that I threw away. The opportunity to restart was pretty compelling. Kevin: The difference between a video game where you don’t feel the restart at all, let’s say you’re playing one of those first-person shooters, you don’t really feel it, so you can press the button. I remember when I went paintballing with my son. The difference between hitting the restart button and actually getting hit with paint, you realize you’re not going to get away without some sort of consequence. Paintball, then, to the next level would be a real gun fight. In a real gun fight, you really don’t have the chance to hit reset, do you? David: I’ll never forget my brother and his best friend Shane used to hit the paintball on the weekends, and I don’t know what it was, if it was machismo, or they just knew they weren’t going to get hit because they were that good. Kevin: They took their shirts off. I remember when Shane was bleeding. He was showing it off. So going to that, in a way, the Federal Reserve has allowed us to pretend that we can hit the reset button without consequence. Richard Duncan talked a little bit about that, and he’s like, “Well, just keep hitting the reset button, baby. Borrow more.” David: Yes, we just finished the best August for stocks since 1986, and it was the worst August for the U.S. dollar since 2005. And it’s a fascinating contrast. There is a story to be told there. Over the last few weeks on the commentary we’ve journeyed through the ideas of the 4th turning, and it just so happens that we are at a critical time of social and cultural angst. And I think that discussion with Neil Howe brings perspective to the current events which have taken a decidedly violent tone of late. And it removes, actually,

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Inflation pressures mounting or can we just print forever? The future conflict with China Politics: If the “Blue Zone Wins,” does the “Red Zone Comply,”? Neil Howe is the Managing Director of Demography at Hedgeye. President of LifeCourse Associates. Author of The Fourth Turning, Generations, and Millennials Rising.   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Neil Howe: Fourth Turning Predictions August 19, 2020 “Boomers have been pushing all their lives to let loose all the diversity and individualism of America, all their talents, all their vices and virtues – let it go. And this is the result. We’re living in it today. We’re living in the end-point of those trends, and the result is a country which has become almost ungovernable.” – Neil Howe Kevin: Our guest today, Neil Howe. David, this is our fourth time to have him on. He wrote an excellent book called The Fourth Turning. You are the one who turned the office onto this, well over a decade ago. David: It has been a really helpful overlay for thinking about changes in the macro economy, anticipation of many of the things we have talked about with financial market issues, economic concerns, political dysfunction, even geopolitical conflict. There’s a way of looking at things which can be sort of dire in nature, almost sort of terminal – things are getting worse and worse until they get worser, and that’s really not what you get with this particular model of history. The Fourth Turning, what cycles of history tell us about America’s next rendezvous with destiny, kind of gives you an impression that over the last 600 years, combining English and American history, you’ve got this pattern of recurrence, and things do get worse, and then they do get better. And it’s just a helpful pattern. It’s worth noting that models are helpful for explaining how things work. They’re useful for organizing data and understanding what it means. We also know from the history of science that models change, and that interpretive frameworks once accepted as a helpful sort of Rosetta Stone by which you understand and interpret things, they can be discarded. You have the Ptolemaic model, accepted for hundreds of years. Then came the Copernican model. Where are the flaws in this model? That’s something that a listener should be thinking about it. And yes, it’s helpful, very helpful. And it continues to be after almost a decade and a half of ruminating on its content and reading it, re-reading at three or four times, it’s just worth turning over. Kevin: That was something that I was careful about when I read it. Any time I read a book that says this is a model that repeats over and over and over, that can be very useful but you also want to keep in mind that it is a model. You brought up the Ptolemaic model. That was when people believed that everything circled the earth – earth-centric. And then Copernicus – that was heliocentric. And if we go to the stars down the road, we’re going to have to look at a different model than just heliocentric. Same thing with Fourth Turning. One of the things that impresses me about Neil How, though, is that I can go back and listen to the past shows – 2011, 2017. Like you said, this is the fourth time that we are interviewing him. It’s a useful model. This is a book that was written in the early 1990s and came out, I think, in the mid 1990s. And it’s still being used now. In fact, not only is it a model, in a way it’s a talking point. You’ll hear people say, “Well, we’re in a fourth turning.” It’s a cliché at this point. *     *     * David: Neil Howe, great to have you back on the program. We were interested in getting your perspective on the state of our union about six months after the Trump Administration moved into the Oval O...

Credit is the new money, get used to it Creditism can only survive if we keep borrowing trillions Duncan sees the only utopian hope is through credit About this week's guest: Richard Duncan is the author of three books on the global economic crisis. The Dollar Crisis: Causes, Consequences, Cures (John Wiley & Sons, 2003, updated 2005), predicted the global economic disaster that began in 2008 with extraordinary accuracy. It was an international bestseller. His second book was The Corruption of Capitalism: A strategy to rebalance the global economy and restore sustainable growth. It was published by CLSA Books in December 2009. His latest book is The New Depression: The Breakdown Of The Paper Money Economy (John Wiley & Sons, 2012). Since beginning his career as an equities analyst in Hong Kong in 1986, Richard has served as global head of investment strategy at ABN AMRO Asset Management in London, worked as a financial sector specialist for the World Bank in Washington D.C., and headed equity research departments for James Capel Securities and Salomon Brothers in Bangkok. He also worked as a consultant for the IMF in Thailand during the Asia Crisis. richardduncaneconomics.com   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Richard Duncan: It’s Too Late To Turn Back Now… So Borrow More! August 12, 2020  “We’ve had the longest economic expansion in history through can-kicking. I think it’s a great alternative to depression and war. So if we can kick this can down the road for another 30 years, marvelous, I’m all for it. By then we’ll have artificial intelligence and quantum computing and the next generation, if they can’t solve their own problems with those sorts of tools at their disposal, then they deserve the calamity that befalls them.” – Richard Duncan Kevin: David, we talked about the last two weeks as being sort of combined. We talked last week to Doug Noland and he basically says, yes, we’re past the point of no return. Kicking the can down the road is just going to end badly. Today we’re going to have an alternative viewpoint that, yes, we’re past the point of no return, and kicking the can down the road may be the only hope for utopia. I think you love putting these types of things out there for people to think about. It will create some tension. There will be disagreement in the minds of our listeners, but that’s the idea. David: I’ve loved getting to know Richard Duncan over the years and will always remember sitting at dinner with him at a hotel in Denver many years ago, my wife and I were there, and to this day he asks, “How is Mary Katharine?” He knows her by name. I appreciate who he is. I appreciate how he thinks about things. I appreciate how he analyzes information and the conclusions that he comes to. Many times I find myself in agreement with him, and sometimes I don’t. But it’s always a good idea to mix with people that you not only have intellectual respect for but who challenge your thinking. And Richard Duncan continues to be one of these additive factors, as we assess the world of money and credit, of asset prices, and of where we go next. David: And both of these men individually have come up with a way of redefining money. What happened in the redefinition of money when we went from 1968 to 1971, that period of time where money was backed by gold and then all of a sudden, money became credit. Now Doug Nolan coined the phrase, the moneyness of credit. That’s almost exactly like what Duncan said when he redefined capitalism as creditism. Both of those guys are looking at the same things. Duncan would say borrow more money and use it wisely. That’s the only hope. David: Like I said last week, there is a healthy tension between these two points of view,

Credit is now the new money - A game that can’t last “Moneyness of Credit,” works as long as the Fed can turn fear to greed Noland sees credit dystopia vs Duncan’s credit utopia (next week’s show)   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Doug Noland: It’s Too Late To Turn Back Now… I Believe You Should Take Cover! August 5, 2020 “At some point, a crisis of confidence in this so-called money is inevitable. People aren’t going to trust it forever if you continue to create trillions and trillions backed by nothing but a promise from a central bank and a promise from governments. That’s the flaw in all of this. You can’t sustain the perceptions of moneyness forever. History has many examples of how money is destroyed by over-issuance, and now we’re watching it in real time.” – Doug Noland Kevin: I’m really looking forward to the next two weeks, Dave. This week we’ve got, of course, Doug Noland on, and Doug Noland has been a master at analyzing the dangers of credit for the last three or four decades. He’s now on the team. He was somebody that we’ve read for decades before he ever came on with you and I love it. I love listening to you guys talk. David: He joined our asset management team four years ago and time has gone by very quickly. Love working with Doug. When you work with people who are incredibly sharp, it sharpens you. And I think the last 3-4 years have been… I’m grateful. I’m grateful for just being able to continue to grow and hone a skill set within the asset management space. Noland is someone who is very analytical. Next week we have a person who is very analytical as well and actually loves the study of money and credit as well. So we go from Doug Noland this week to Richard Duncan next week. Kevin: But they don’t necessarily agree on outcomes. David: You’re right. There is a fork in the road. As they analyze similar things in terms of money and credit, there is a potential for a negative outcome in terms of Noland’s analytical framework. And there’s also potential for a negative outcome in terms of Richard Duncan’s framework and that necessitates a different set of decisions. And so there is an inevitability to credit growth and expansion. For Noland that comes at a high cost, ultimately. And for Duncan, it also comes at a high cost, but that’s why we must press on and press forward. Kevin: You know, I think about where the two of them agree. They would both say that we’re past the point of no return, that money turned into credit, and we’re now in a credit expansion. Noland would say kicking the can down the road is ultimately going to end in dystopia. What Duncan would say is, it’s our only chance at utopia. And they both know that credit probably ends badly, but I think Duncan would just like to have it end badly after he passes away. David: That may be, so if we have a shot at utopia, let’s spend a little bit more. And that’s a little bit like looking at the hair of the dog as the real solution to a problem with alcoholism. You’re right. It will take away some of the consequence in the short run. Kevin: Do you remember Ian McAvity said that a doctor told him to not stop smoking because he had smoked so much that it would probably kill him. David: That’s right. “You quit now and you’re dead.” That’s really what we’re talking about. Great back-to-back weeks here. I hope for the listener that they appreciate the tension that’s created and the appropriate place to sit, somewhere right in between, sitting with that tension and allowing that to sort of inform your more critical appraisal of the markets. Kevin: Right. And it may create some aggravation. If you’re not debating with the people you’re listening to,

Compounding silver ounces from 125 to 9500 ounces - Click Here to download the free report Invest with the next generation in mind Heart breaker, price maker, inventory taker, is the Fed’s theme song   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Gold Hits All Time High and the Price Doesn’t Matter July 29, 2020 David: All the money in the world doesn’t bring you relational connection and meaning. All the money in the world can’t buy a utopian existence. It’s been tried before. It’s been mandated. It’s even been forced in a top-down manner. That was, in large part, the 20th century narrative. You’ve got competing visions of the future with varying degrees of freedom and control with this utopian overlay.                                                             --David McAlvany   Kevin: You know, last night when we were talking, we were Facetiming again because that’s how we’re doing our Talisker, and you’re doing your cigars, and there was a lot of activity. I noticed that your wife left, you know, and she gave dinner instructions to you, and I thought, oh, well, she’s at least taking care of you. David: Yes, she had an obligation she was getting to. Said she’d be back around 9, 9:30. But our oldest boy, he’s got it dialed in. He knows what’s for dinner and he’s got it taken care of. So I go inside and I start talking to the kids and something is on my mind, and I’m like, now this is too important a teaching moment. This is kind of dorky of me, but I grabbed the chalkboard… Kevin: (laughs) So this is what it’s like to be the son of Dave McAlvany. David: I started. You know, we go through the perspective triangle. We go through how many loaves of bread an ounce of gold will buy. We talk about the gold/silver ratio. We talk about all these things. 45 minutes goes by and I’m like, alright, what’s for dinner? When is it ready? And Declan’s like it’s been ready the entire time. Oh, okay! (laughs) So we’re supposed to have potatoes with chili on top. We just ate the chili. We forgot about the potatoes altogether. Kevin: You were just so absorbed. I mean, you were so absorbed in the whiteboard. David: Well, Mary-Catharine was aghast. She came back and looks at this board is like, what happened here? It looks like you’re sort of planning the, you know, overthrow the world or something. It’s all there. The grand strategy. And the potatoes are still in the oven. Kevin: Yeah, well, you know what? The kids are gonna remember that because Monday was a historic day for them. I mean, that’s when gold hit an all time high. So that’s when you get the whiteboard out. And you basically say, okay, prices don’t matter. Let me show you why prices don’t matter relative to dollars. David: Yeah, it was an important conversation. My colleague Lila Murphy often says you’re never ready for what you expect. And no matter how hard you try to wrap your mind around a future circumstance, the circumstance and direct experience, those things are unique and you can’t be completely prepared for them. So this week silver briefly surpassed $26. Gold flew past the old highs set in 2011 to reach $1980 an ounce. That was in overnight trading and, you know we anticipated this price move but are still surprised by it somehow. We anticipate the demand dynamics for gold and silver continuing to be very strong in the months and years ahead, in response to the continued market dynamics like we have today. Kevin: Well, this is predictable. I mean, massive deficits, you know, the economics that we’re seeing now, really, you talk about MMT (Modern Monetary Theory), we’re right in the middle of Modern Monetary Theory. Just print without stopping. David: Yeah, if it’s massive deficits,

Toilet paper & now cash brings comfort in time of Covid19 Gold to silver ratio narrows rapidly from 125 to 86 to…? Will the Fed bail out the municipalities and states? To sign up for the MWM Tactical Short call Click Here To learn about the compounding ounces strategies mentioned in the program Click Here   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick A Fist Full of Dollars, Fifties & Hundreds Please July 22, 2020 Municipalities are increasingly unable to meet their obligations and are unwilling to implement austerity. Look, it’s even harder to do those things in an election year because you’re setting a dangerously partisan tone if you are the one with the budgetary knife. So cuts are being made, but they’re just not deep enough. And that’s where I think, by the end of the year, you’re talking about massive interventions bailouts, which is going to be necessary. - David McAlvany   Kevin: David, I’ve been talking just straight for the last couple of weeks to clients who are wanting to hear more about this cash shortage, this change shortage, and I’ve been thinking about it. There are really two types of people right now. There’s mask and no mask, right? There are also people who trust the Fed. Look at the investment community right now. Trust the Fed. We don’t want cash. We want stocks. We trust the Fed, even if it doesn’t make sense. And then there are the people who say, you know what? We don’t trust anything. We’re holding on to cash. Those are the consumers. And so everybody who really doesn’t trust the Fed wants a fist full of dollars. David: Yeah, the Federal Reserve, it’s fascinating. They have to provide more and more dollars when there’s not the money that they’ve already printed in circulation. So this scarcity of dollars that’s out there is in part because you have almost the impending storm mentality that’s in the marketplace today were, you know, what I mean by that is, coming into hurricane season, it’s not unusual with a storm coming in to go to the ATM or the bank and get a few extra physical dollars, maybe stop off and grab an extra tank of propane and make sure you get water and provisions and things like that. And you’re just thinking ahead because you know if the lights are out and the electricity’s off, your credit card doesn’t really do you any good. Kevin: Talk about sort of sad timing, actually, because the actual movie Fistful of Dollars has a great theme song. In fact, you sent it to me, right? I was making breakfast for myself this morning. As I made the eggs, I just played it over and over and over again. Ennio Morricone, he passed away just recently, and he was the Spaghetti Western, the composer who really set the way we hear the West from a European’s point of view. David: There are hundreds of recordings, not just from the Spaghetti Westerns, but he was an amazingly talented film score composer. And, yeah, I read his obituary in The Economist. And you know, I was listening to my old favorites from “The Good, The Bad and The Ugly” and “A Fistful of Dollars.” And that’s exactly what people want right now, it is at least one fistful of dollars. Kevin: Okay, It’s not just the cash, it’s not just the disappearance of cash that’s speaking to us right now. The gold/silver ratio was 97 a few weeks ago, it’s 86 today. Silver sometimes really is one of the best reactors to future potential of inflation. David: Yeah, and we’ve been seeing that in terms of kind of the broadcast from the industrial commodities as well, where you’re seeing copper and nickel and zinc and some significant moves in industrial commodities, which would be complementary to the move in golden and silver, and suggest that there is some concerns about inflation on the horizon. And, you know,

Gold to Silver Ratio narrowing… finally Covid providing cover: Spending trillions for political gain Tesla close to being worth more than all auto manufacturers combined   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Politicians’ Bidding War – Who Can Give The Most In Trillions? July 15, 2020 This country needs great diplomacy. This country needs great civility. This country must have sufficient sentimentality to recognize that what we have in the historical log, there is something worth preserving. The world gets really rocky from here if we don’t embrace some of the intangibles that keep legacy alive.    -David McAlvany   Kevin: We were talking last night and I was sharing with you, my wife got back from the store this weekend. She went to the grocery store and she said, Kevin, I didn’t get any change. And I had forgotten to tell her that I’ve been getting emails and texts from clients around the country showing signs that say, we need exact change or you’re not going to get any change back because there’s a “COVID related coin shortage” right now. I just think it’s interesting, Dave, you’ve been talking and I’ve been talking last few years with people who are saying that cash is cursed, and it’s actually going to be eliminated from the system at this point. I’m thinking of Ken Rogoff, you know Reinhardt worked with Rogoff. I just think it’s sort of a convenient thing at this point to look at cash as something that whoops there’s contact, maybe it would transmit COVID. Maybe we need to eliminate cash. David: Remember Gresham’s law, where bad money drives out good money, and…it’s kind of interesting because it’s as if Rogoff would say, yeah, but what if we take out the ability to move? And I think that’s ultimately what they’d like to do. You know, the same thing was happening where currency, a similar experience to what your wife had and what is coming now with getting changed back or not getting it back. Hoarding of coinage started in the 1960s, early 1960s, before devaluation of the US dollar and the breakdown of the Bretton Woods system. But you started to see coins disappear in ‘62, ‘63, ‘64… Kevin: That was when they had silver in them. David: And by the way, inflation was 1%, it was 1.5% and it stayed between 1% and 2% for 5, 6, 7 years, and it wasn’t a concern. It wasn’t like, oh, people are hoarding because they think they need a real tangible specie, a currency. There was no indication of inflation, but there was a wisdom in the common man’s view of things. And that, I think, is perhaps what we see now. If you look at the massive amount of credit that has come into the system, credit being the new form of money, maybe it is that bad money is driving out the good again. Kevin: And, you know, I brought up silver being in the money while you were talking there, but you know, the gold silver ratio, which typically fluctuates from around 31 ounces of silver to one ounce of gold. You know, in our career here, it’s gotten to 90, even 100 one time until this year, and it went well over 100:1. We’re starting to see that narrow, just like we thought, over this last week. David: It had a peak of 125, as you said, never seen before now, where in the nineties, was stubbornly between 96 and 98, slipping to 94 this week as silver plays a little catch up in the $19 range, with gold holding above $1800. And you mentioned last week in the commentary that if we got to see the price of gold stable above $1800 for a number of days, it is a very positive sign. And that probably meant opening up the door to retesting the old highs, 1920, 1930. And by the way, if there’s that kind of energy in the gold market, you can expect quite a little spurt in silver in here is well, will those gains at some point be digested? Certainly will.

Disconnect: 2nd quarter 2020 best in 20 years for stocks as economy collapses If it’s broke… buy it! Hertz & Carnival soar!? Jeremy Grantham: “Own zero stocks… less than zero is not a bad idea"   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick No Football? No Problem! Sports Betting Meets Day Trading July 8, 2020 All the money in the world can be thrown at an economy that is stuck. You may draw a few more sports bettors into the Wall Street Arena, but the games end when the music stops, we may not have a scarcity of money, but I think when the music stops, there’s always been scarcity of chairs in that particular game.   - David McAlvany Kevin: It’s funny, Dave, you can get online and you can find betting lines on just about anything. I mean, it could be politics, it could be on the way a sitcom is gonna end. But strangely enough, the betting world is really, really getting into the stock market at this point. David: Well, they’ve lost one of their favorite places to bet, which is on sports, and we have in America an obsession with sports. We love baseball. We love basketball. We love football. Whether it’s the Super Bowl or the Stanley Cup or the World Series, there are live audiences, and there are massive numbers of fans that watch from the comfort of their own homes. Kevin: Except for now, we don’t have the sports, other than, you know, my son has shown us that on some of these channels, they’re doing video games that look like the sport. It’s just not quite the same thing. David: Right, and I’ve had a number of people say, hey, are you going to compete in the virtual race such and such this weekend and I’m like… Kevin: (laughs) A virtual race? David: …I don’t know that I want to sit in my basement and try to duke it out with somebody in Boulder. Kevin: Well how much money is involved in the sports betting industry? David: It’s a global audience, and those enthusiasts drive a hundred billion dollar a year sports betting industry. And these sports bettors are obviously more than a little bored in the age of COVID. Kevin: But they always find a place to go. They always find a place to go. David: Yeah, Dave Portnoy—he’s a popular figure in the sports betting universe—he’s taken his energy to day trading in stocks and has made headlines for ridiculing Warren Buffett and other hedge fund managers, as he would describe as sort of old, washed up failures. And of course, that’s by comparison to his investment prowess, right? So imagine, if you can, someone even more irreverent than Jim Cramer, maybe even with a little bit more ego, if you can imagine such a thing, touting penny stocks and sort of looking at bankruptcy stories, not necessarily a turnaround story but actually going all in on companies like Hertz post-bankruptcy. His famous quote from last month was: “Stocks only go up, this is the easiest game I’ve ever been a part of.” Kevin: Well, thanks to the Fed, I mean stocks really only do go up until they go down, until somebody has to sell. David: I think that phrase, that quote, captures, it reflects the understanding that today’s day traders have of market dynamics. Kevin: Do you remember the old days when you used to have a trading platform and you actually paid a little bit of a commission every time you did a trade? At this point, you’ve got services like Robinhood, you know, granted, hopefully you never have to sell a stock, but you can certainly buy for free. David: Yeah, and you might wonder, what is the business model that allows for, whether it’s a Charles Schwab or Robinhood or anyone else, to either reduce their commissions or fees for a trade to dollars, pennies, or even free.

Fed now purchasing virtually everything including corporate bonds Dodgy debts, CLO's, & Poison Apples FDIC considering scrapping quarterly bank reports...   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Fed’s Money Man Can, Just Like The Candy Man Can July 1, 2020 Mood is everything when it comes to politics, because now we’re talking about the mob. And if there is anything we’ve learned in the last three to six weeks, is the mob can be happy on Tuesday, very unhappy on Thursday. Will it be the defining factor in November? Adequate liquidity between here and November influencing social mood such that it is the determining factor in who wins or who loses? - David McAlvany Now here are Kevin Orrick and David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick along with David McAlvany. Dave, I couldn’t get this song out of my head, “The Candy Man” back from the sixties or the seventies, but I’m thinking about the Federal Reserve. They “can take a sunrise and sprinkle it with dew and cover it with chocolate and a miracle or two…” You know, the Federal Reserve Man, the money man, the money man can. And you know, I thought about it. The money man can cause he mixes it with liquidity and makes the world taste good. You know what we’re seeing right now, if I were to go into the bond market corporate bond market and try to buy Bond. Guess who I’m competing with. I’m competing with the Federal Reserve man, the candy man, the money man, the people who can actually just print money and buy it right out from under me, even corporate bonds right now! David: There’s a lot to talk about in the debt markets and the lion’s share of the Fed purchases are still focused in the ETFs where the structure of the product is unstable when investors are selling, very stable when investors were buying. But again, if you’re unable to accommodate liquidations, there’s a structural issue. So the Fed has stepped in and they are the buyer of first last resort whatever for ETFs. But now they’ve started the corporate bond purchases and, you know, thank you for smoking, they’ve bought some Philip Morris and a little bit of everything. They want to represent a bond index. The problem is, when you’re talking to the average middle class man or woman, you say, well, we’re also buying Daimler Chrysler, we’re also buying some foreign corporate bonds. It doesn’t necessarily make sense, but then again, maybe it doesn’t have to make sense as long as the candy man is making us all happy. Kevin: You think about a bubble. Okay, a bubble, the substance of a bubble is almost zero, okay, but it looks large and it’s empty inside. I think about the European Central Bank over the last few years just buying everything. And now what we’re seeing is the same thing. So we’re continuing to try to keep this bubble inflated. I heard a story, a lady we know was getting married, and her father wanted her to have a particular dress. Well unfortunately from the time that she picked the dress out to the time that she was going to buy the dress, the wedding shop went out of business and it was owned by the creditors. And now this lady was very fortunate because her father had the wherewithal to buy the whole inventory so that she could get that dress. So are we getting our entire financial system out of hock? Is it a similar situation right now with the Federal Reserve just buying everything? David: Let’s hope it’s a happy wedding because frankly, when the Fed gets involved, oftentimes it’s more of a shotgun wedding type of a thing. And you know, the forced issue is what we’re concerned about. You’ve got yield curve management, it’s not like it is the first time we’ve seen it. They’ve talked about it, the Federal Reserve has,

Fed backstop creates unreal disconnect Statues Fall: Woodrow Wilson, Teddy Roosevelt, & Ulysses Grant? If you saw a Marxist revolution happening would you know?   The McAlvany Weekly Commentary with David McAlvany and Kevin Orrick Wall Street Fiddles As Rome Burns June 24, 2020 David: If you’ve never studied the horrors brought about by Marxism, you should look at the 20th century, with more blood and gore than any in history, and realize that replacing the stars and stripes off of a narrative of social injustice, if you want to replace that with a hammer and sickle, it’s a deadly move. It’s one that truly reflects Santayana’s is warning: if you don’t learn from history, you will repeat it.  -David McAlvany   Kevin: I read an interesting book called Brainwash by Dominic Streatfeild, and he talked about various things like sensory deprivation, MKUltra mind control, hypnosis. A very, very good book, actually. But there were five techniques for interrogators when they’re trying to interrogate a prisoner that they would use. They were actually called the Five Techniques. It was all designed to eliminate the identity of the person, whether it’s putting a hood on or making them stand for hours against a wall, sleep deprivation, bread and water diet…but the idea was to eliminate any identity before you actually started the interrogation. Dave, I see that happening in the nation right now. Our identities just being stripped. David: You know, what’s interesting is we’re not coming from a perfect place. If you think about your own family or my family, I could tell you all the foibles and mistakes of an earlier generation that feed into who I am today, the way I think and operate today, and it is what it is. I’m not making an apology for the past or justifying the past. It is what it is. We take it in stride, try not to let it hamstring us, but also appreciate the contribution that it makes to what we will be in the future. So identity is something that we have as an individual, we have in the context of family. We have in the context of a community and even of a nation, and you’re right. The loss of identity, the confusion of identity is something that is very critical if you in fact want to create a brand new identity. But can we actually do that as individuals? Kevin: You turned me on to a quote by Thomas Sowell. He said, “We have reached the ultimate stage of absurdity, where some people are held responsible for things that happened before they were born. While other people are not held responsible for what they themselves are doing today.” Boy, that’s the news. David: (laughs) Well, try to imagine that I don’t have an axe to grind and as a market observer I’m looking for cause and effect. I want to understand what’s transpiring to change the face of opportunity for everyone in America. And we have to try this anyways, even if we do it imperfectly and not perfectly or, in that since, impartially. Kevin: Well, like you said, it’s a market commentary, but it’s also a political commentary because the markets are affected by politics. Our lives are infected by politics. I look at what’s going on right now, though, Dave, whatever side. I mean, there’s so many sides right now, but it reminds me of cult reprogramming. You know where again the loss of identity or when you see a communist takeover that you purge the nation of its history first so that people don’t remember. You and I have talked about Shostakovich. When he wrote his Fifth Symphony he was in fear for his life in communist Russia because it didn’t quite fit the narrative that they felt Communist music should sound like. It’s a magnificent symphony, but he almost lost his life for it. David: Well, it’s now critical to distinguish the issues of police reform and the historical cultural hara-kiri bein...