How to Get Rich with Gold as the World Crumbles | John Rubino
What this covers
In this interview, I talk with John Rubino (https://rubino.substack.com/) about navigating today’s turbulent world—rising debt, geopolitical tensions, and the financial crises reshaping the global economy. We dive into why gold is a key investment during chaotic times, risks to watch for, and how to potentially get rich in the process.
We also explore the challenges in the mining sector, sentiment around junior miners, and strategies to thrive in uncertain markets. Whether you’re a seasoned investor or just starting, this conversation is packed with actionable insights.
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👨💼 Guest: John Rubino 🏢 Company: Rubino Substack 🌎 https://rubino.substack.com/ 📅 Recording date: December 11th, 2024
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Timestamps 00:00 Intro 00:29 Overview of Macro Trends 01:07 Introducing John Rubino 02:04 Current Geopolitical Risks 13:10 Financial Crisis and Debt Spiral 24:22 Potential Resolutions and Monetary Reset 30:08 The Role of Bonds in a Recession 36:38 Energy Crisis in Germany 46:18 Gold Market Dynamics 52:45 Potential Risks and Bear Case for Gold 55:41 Mining Stocks and Sentiment 57:11 Closing Remarks
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Rabino argues the US faces an inevitable debt spiral and currency crisis driven by parabolic interest costs, creating both existential financial danger and significant wealth-building opportunities for those positioned in hard assets like gold and quality mining stocks.
- US government interest costs are rising parabolically ($1.5T annually, approaching $2T), forcing accelerating debt growth that becomes mathematically unsustainable
- Currency collapse via inflation is more likely than orderly monetary reset because governments won't voluntarily surrender money-printing power, creating a 'crackup boom' where real assets surge while currencies collapse
- Gold and mining stocks are asymmetrically positioned: limited downside in near-term recession, massive upside if gold reaches $10,000/oz under gold-backed currency system
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Post-currency collapse, there is high risk of authoritarian leadership emerging because populations devastated by wealth loss are willing to accept dictatorial 'strong man' governance in exchange for promises of stability and restoration of lost wealth.
“post-c currency collapse is a very dangerous time because people are pissed off you know and when when they're really angry they're willing to consider you know the strong man alternative where somebody comes in and says listen I'll stop the bleeding and I'll get back what was stolen from you just let me suspend the Constitution for a few years”
There are two different types of default: explicit default where governments cannot pay interest (unlikely for the US because it can print money), and implicit default through inflation where the government devalues the currency and reduces the real value of savers' wealth.
“there are different there are different kinds of defaults okay one is where the government just can't come up with the money money to pay the interest and that's not an issue for the us we can just print it you know we we can transfer a trillion dollars to some bank's balance sheet to cover the interest on their government bonds with a mouse click no problem at all um the other kind of default is where you devalue your currency in a way that takes wealth away from the owners of that currency that's what inflation is”
Mining stocks have not appreciated significantly despite gold prices reaching $2,700, because mining has become much harder (deeper, smaller deposits, higher labor costs, higher energy costs) making profitability gains from higher gold prices muted.
“$2600 an ounce gold should have lit a fire under the mining stocks you know if we were talking if was if it was three years ago and we were talking about this and I said oh 2600 is coming you'd say oh my God you know the miners are going to go up by four times that amount and I would agree with you that they haven't is due in part to the fact that mining has gotten much harder than it used to be”
Long-term government bonds are not a hedge against the long-term inflationary currency collapse scenario, because when central banks aggressively ease to prevent depression, they devalue currencies, causing bonds to lose value.
“they're emphatically not a hedge against what comes after that when the FED steps in and or all the big central banks just aggressively ease and you know devalue their currencies like crazy to prevent another 1930 style deflationary crash”
A common pattern in governance is that when a country mismanages its economy, political leaders look abroad for an enemy to distract the population from internal mismanagement; this has worked well for maintaining power.
“the idea of um a country that mismanages its um economy then looking abroad for an enemy that they can use to distract their people from their own mismanagement that's very common and uh and you know makes a lot of sense psychologically that if you've screwed things up you want to distract people from your screw-ups and one way to do that is to pick a fight”
A government default can occur through two mechanisms: (1) inability to come up with money (not an issue for USD, can be printed), or (2) currency devaluation/inflation that secretly harvests currency holders and bond holders without explicit default declaration.
“there are different there are different kinds of defaults okay one is where the government just can't come up with the money money to pay the interest and that's not an issue for the us we can just print it you know we we can transfer a trillion dollars to some bank's balance sheet to cover the interest on their government bonds with a mouse click no problem at all um the other kind of default is where you devalue your currency in a way that takes wealth away from the owners of that currency that's what inflation is inflation is a slow motion secret default where the government basically harvests all the people that trusted it”
Governments that mismanage their economies commonly manufacture external enemies and pick fights to distract their population from domestic economic failure, creating political cover for poor governance.
“the idea of um a country that mismanages its um economy then looking abroad for an enemy that they can use to distract their people from their own mismanagement that's very common and uh and you know makes a lot of sense psychologically that if you've screwed things up you want to distract people from your screw-ups and one way to do that is to pick a fight”
Gold markets are extremely thinly traded relative to the available gold in the world, meaning that large investor flows into gold can move prices significantly upward.
“gold and silver are such thinly traded markets you know gold there's quite a bit of gold in the world but most of it isn't for sale so the available gold is an extremely thinly traded Market uh and so you could see a lot of people trying to get in through that little door you know and and push the price of gold way up”
There is a near-term bear case for gold: during 2008 and 2020 stock market crashes, gold and silver declined 30-40% alongside equities as investors liquidated all assets for cash, creating risk of a similar sharp correction in this cycle.
“look what gold and silver did in in 2008 and in 2020 when we had really sharp um stock market markets really really sharp Corrections in stocks um they got precious metals got sucked down with equities in both of those cases and went down you know 30 40% or more in the case of silver um and that's a very real I would call that a probability um rather than just a possibility”
Developed weapons systems including EMPs, cyber attacks on banking and power systems, hypersonic weapons, AI-piloted drone submarines with nuclear weapons, and bioweapons are deployed and waiting to be used, with no way to predict consequences if one side feels existentially threatened and unleashes them all simultaneously.
“over the past 20 or so years we've developed some hellacious new weapons just um things that are almost inconceivable when they're Unleashed on the battlefield we haven't used them yet but um the next War could be the war in which we use things like EMP weapons and and um cyber attacks that knock out banking systems or um Power grids or Hypersonic weapons or um AI piloted drone submarines with nuclear weapons you know we've got all these things out there”
New weapons technologies including EMPs, cyber attacks on banking and power grids, hypersonic missiles, AI-piloted drone submarines with nuclear weapons, and bioweapons present an existential threat if deployed in a major war where one side feels threatened.
“over the past 20 or so years we've developed some hellacious new weapons just um things that are almost inconceivable when they're Unleashed on the battlefield we haven't used them yet but um the next War could be the war in which we use things like EMP weapons and and um cyber attacks that knock out banking systems or um Power grids or Hypersonic weapons or um AI piloted drone submarines with nuclear weapons”
The new Trump administration's DOGE (Department of Government Efficiency) is unlikely to cut $2 trillion per year from the federal budget because most federal spending is transfer payments (Social Security, Medicare) and defense, none of which the administration is talking about cutting.
“there's no way that doge is going to cut $2 trillion a year out of the federal government just because so much spending is transfer payments um you know we transfer money to the big defense contractors who then build weapons and nobody's really talking about um cutting the defense budget in a nominal sense in other words making it smaller and bringing home all our soldiers from overseas nobody seems to be talking about that um and you can't cut Social Security payments or Medicare coverage because baby boomers get that stuff now”
Baby boomers will violently resist any reduction in Social Security or Medicare benefits because they have become psychologically entitled to these benefits and will organize massive protests if threatened.
“if you want to see a fascinating piece of civil unrest what try to cut baby boomer um um entitlements you know we'll be out there in our wheelchairs you know uh in in the millions um protesting and maybe violently so because we just you know this generation just won't give up the entitlements to which we have become entitled in our own mind”
Foreign central banks are buying gold as a hedge against currency devaluation and US debt problems, creating tailwind behind gold prices.
“foreign central banks buying gold which puts a big Tailwind behind gold”
A longer-term bear case for gold exists if the US chooses a 1930s-style deflationary depression route (allowing debt defaults and deflation) rather than hyperinflation, but this is unlikely because it would require leaders to be as unpopular as Hoover.
“the longer term be case is um is less likely but still possible and that is that when when we come to the crossroads of hyperin lating or um going back to a 1930 style deflationary depression we choose the 1930s you know and decide okay we're just going to let this debt be wiped out via default and in that way we're going to you know protect the Integrity of the financial system um and and protect the value of the dollar um the reason it's unlikely is because that requires the people in charge to be this Generations Herbert Hoover in other words the guy that we still remember from a hundred years ago who who brought on the Great Depression nobody wants to do that now”
Mining industry faces a labor shortage as an entire generation of mining engineers retires and the pipeline of replacements is too small, requiring higher wages to attract talent.
“there's a whole generation of um mining Engineers who are retiring and the pipeline of Replacements is much smaller it's not big enough to uh basically replace all those guys who are retiring so you got to pay up to get good talent now too”
Long-term government bonds could deliver 50% profits if a recession and equities bear market occur, as investors flee to safety and the Fed eases aggressively, pushing bond prices up.
“if we so say we have a recession equities bare Market um bank failures the the yada yada the whole you know list of things that go with deep recessions and equities bare markets the government steps in and starts easing aggressively again so we get back to 0% interest rates well if you own a portfolio of long-term government bonds uh you'll make a 50% or so profit on that”
Historical precedent from Weimar Germany hyperinflation and the French Revolution (which had hyperinflation) shows that post-currency collapse periods are dangerous because angry populations are willing to embrace strong-man alternatives who promise to stop the bleeding.
“look at um look at wear Germany and what happened after that and or um um the the French Revolution which had a hyperinflation and then they got Napoleon after that which would ushered in a whole generation of European Wars so you know postc currency collapse is a very dangerous time because people are pissed off”
Bonds are not a hedge against what comes after recession when central banks aggressively ease and devalue currencies to prevent deflationary crash; in currency devaluation scenario, bond holders get destroyed.
“but they're emphatically not a hedge against what comes after that when the FED steps in and or all the big central banks just aggressively ease and you know devalue their currencies like crazy to prevent another 1930 style deflationary crash”
Rising inflation contributes to rising interest rates, which increases interest costs on debt, forcing more borrowing, which makes debt rise faster, creating a doom loop where rising interest rates lead to rising debt until the system blows up.
“a simple straightforward scenario would be for the debt that we've taken on so far to increase both inflation and interest rates and Rising inflation contributes to Rising interest rates that makes um the interest cost on that debt even more onerous and because that interest has to be borrowed it makes the debt go up even faster so we get into a a doom Loop basically where Rising interest rates lead to RIS Rising debt”
The US could have descended into dictatorship after the Great Depression but instead elected FDR, a controversial figure to the establishment who kept the system together and maintained democracy; we could face a similar choice in the current crisis.
“after the during the Great Depression we could have gone the German route and and and had a dictatorship but instead um we elected a guy who was you know at the time considered to be a bullsh or something like that by a lot of the people in charge but but he kept it together and for you know 15 years or whatever it was he was in charge the system survived and uh and was ready to go on to the next stage without a dictatorship”
Markets naturally overshoot and create cycles of exaggerated trends that eventually revert to mean (intrinsic value), and the people who get it right by buying at the bottom after the reversion are the ones who get rich.
“by Nature we get overe excited and that overe excitement manifests in the financial system as uh as really extreme events and Trends and then those Trends eventually revert to mean in other words you have a big crisis that takes you back to the intrinsic value of the assets of the world um the people who get it right are the ones who get rich in the process”
DOGE cannot cut $2T annually from federal budget because so much spending is transfer payments; nobody is talking about cutting defense budget nominally (making it smaller) or bringing home soldiers from overseas.
“there's no way that doge is going to cut $2 trillion a year out of the federal government just because so much spending is transfer payments um you know we transfer money to the big defense contractors who then build weapons and nobody's really talking about um cutting the defense budget in a nominal sense in other words making it smaller and bringing home all our soldiers from overseas nobody seems to be talking about that”
Germany's CO2 emissions are through the roof compared to France due to lack of nuclear power; France can produce cheap nuclear but Germany complains about having to buy French nuclear power in summer when river levels are too low for cooling, creating hypocritical energy policy.
“our CO2 emissions are through the roof um compared to France it's absolutely ridiculous um and then we're complaining to France as well for example during the summer when we have to buy nuclear energy and they can't produce enough cuz their River levels are too low to cool their nuclear power plants like it's absolutely moronic”
Foreign central banks are buying gold, creating tailwind; retail and professional investors buying inflation hedges creates sustained demand; gold market is thinly traded (most gold isn't for sale), so incoming demand can push prices sharply higher.
“there's really no end to that now you know if if people um develop that kind of an attitude and then you've got foreign central banks buying gold which puts a big Tailwind behind gold and then um Reg investors and the rest of the financial markets in the US decide that inflation Hedges are a pretty good thing to put their clients into um you know gold and silver are such thinly traded markets you know gold there's quite a bit of gold in the world but most of it isn't for sale so the available gold is an extremely thinly traded Market uh and so you could see a lot of people trying to get in through that little door you know and push the price of gold way up”
Mining stocks should have surged when gold hit $2,600/oz but didn't because mining has become much harder; deposit sizes are smaller, depths are greater, labor costs are higher, energy costs are higher—all combining to reduce mining profit margins.
“$2600 an ounce gold should have lit a fire under the mining stocks you know if we were talking if was if it was three years ago and we were talking about this and I said oh 2600 is coming you'd say oh my God you know the miners are going to go up by four times that amount and I would agree with you that they haven't is due in part to the fact that mining has gotten much harder than it used to be you know later today I'm going to post a thing on um on copper uh where there there's this really good graph a really good chart that shows the size of copper deposits and the um the depth over the past Century and you know 100 years ago that you you would find these giant copper deposits right on the surface where you just strip mine that ore and then over the years the deposits that people are discovering have gotten smaller and deeper in other words much harder to exploit”
Baby boomers will not give up entitlements to which they've become entitled in their own mind; attempting to cut Social Security or Medicare would trigger civil unrest with millions of wheelchaired elderly protesting violently.
“you can't cut Social Security payments or Medicare coverage because baby boomers get that stuff now and we're not going to let go of that you know we if you want to see a fascinating piece of civil unrest what try to cut baby boomer um um entitlements you know we'll be out there in our wheelchairs you know uh in in the millions um protesting and maybe violently so because we just you know this generation just won't give up the entitlements to which we have become entitled in our own mind”
Investors should focus on high-quality mining companies and avoid low-quality names in the current speculative market, as quality becomes essential during cycles.
“I I still think miners are to be owned at least the really high quality ones don't don't dick around with low quality in this market”
The reason Italy, Greece, France, and Spain could sell bonds in open market was market perception they were German bonds because Germany backed the ECB; the big risk now is if Germany stops being the guaranteed backstop of ECB while bailing out countries it can't control.
“the reason that Italy and Greece and France and Spain could sell Bonds in into the open market was that the market perceived them to be German bonds because Germany was backing up the um the ECB and it seems like the big risk now is that people are going to stop assuming that Germany is just there with unlimited money to back up the ECB while it's bailing out all these other countries that they can't control their budgets”
In a currency collapse scenario, the people who get burned are those with bank accounts, government bond funds, and cash; their wealth shrivels as the currency becomes worthless, while 'gold bugs' who own physical gold, high-quality gold stocks, oil stocks, and copper miners do much better.
“the people who get burned are the ones who trusted the government in other words the people with bank accounts and Government Bond funds and a lot of cash sitting around um that cash becomes much less valuable and so do those bonds so their wealth shrivels um and the people who didn't trust the government the gold bugs of the world you know the people who own high quality gold stocks and and gold and silver in physical form and other kinds of hard assets like oil stocks and copper Miners and things like that they tend to do much better”
Germany is in recession (past 2 years per IWS forecast) with terrible growth ahead (0.1% projected) due to high energy costs (€936/MWh, highest in Europe) from failed ESG/renewable energy policies that stopped subsidies for electric vehicles.
“Germany's in a recession it's not being talked about in in news headlines but I just read it last week again the iws uh one of the institutes that does economic forecast in Germany said well we've been in a recession for 2 years and the growth next year looks terrible as well maybe 0.1% growth next year... we have dun FL meaning it's it's too dark and the wind is not blowing um so our energy cost per megawatt hour is 936 per megawatt hour it's the highest in Europe by far Finland is like 40 um France is 200 something Euros”
The junior mining sector is ultra-high-risk; when risk-on sentiment prevails, capital flows to NASDAQ/Tesla/Nvidia/Bitcoin instead of mining stocks because those have more explosive upside potential.
“we're we're in a very speculative market like I almost call like it is an ultra high-risk Market the the the mining space why when when you mentioned it's we're in Risk on mode like why didn't the minors fall into that category uh well part of it is that the uh the numbers that the miners are generating don't really justify speculative valuations you know they're they're generating some pretty good numbers but uh you know first of all those numbers have to be sustainable in other words gold has toay at this level or go up which is a you know that's a bet that you're making when you buy a gold miner and the second thing is that there's not a lot of other stuff out there like if you're if you're a speculative minded investor you're buying Bitcoin or Nvidia or Tesla or just the NASDAQ”
Warren Buffett is currently selling tech and big bank stocks while buying bonds, which suggests he expects an equities bear market and recession where bonds become safe havens.
“Warren Buffett is buying a lot of bonds right now he's selling tech stocks and and big Bank stocks and buying bonds um I think his rationale for that is that the next stage of this process is a equities bare market and a recession”
Germany is currently in a recession (two years of recession acknowledged by forecast institutes) with projected growth of only 0.1% for the next year, yet this is not being discussed in mainstream news headlines.
“Germany's in a recession it's not being talked about in in news headlines but I just read it last week again the iws uh one of the institutes that does economic forecast in Germany said well we've been in a recession for 2 years and the growth next year looks terrible as well maybe 0.1% growth next year”
Germany's electricity costs per megawatt hour are 93€, the highest in Europe by far, while Finland is 40€ and France is 200€ (note: France data suggests transcript error), making German industry uncompetitive.
“we have dun FL meaning it's it's too dark and the wind is not blowing um so our energy cost per megawatt hour is 936 per megawatt hour it's the highest in Europe by far Finland is like 40 um France is 200 something Euros”
Volkswagen is laying off 30,000 workers because ESG initiatives and electric vehicle production targets are not economically viable without government subsidies, and stopping subsidies has revealed the underlying uneconomical nature of the transition.
“we're seeing Volkswagen laying off 30,000 people because the easg initiatives didn't didn't work um people are not buying the electric cars that the rate that the government wants them to buy because they stopped subsidies and come and and in people say it's like well it doesn't make any sense for what we're doing”
Kai's personal energy bill in Germany (39-35 cents/kWh) makes air conditioning financially unsustainable, while a friend in Utah pays 7 cents/kWh, creating a 5-7x cost disadvantage for energy-intensive operations.
“my friend in Utah like one of my best friends he tells me he's paying 7 cents a kilowatt hour I can't compete I'm paying 39 or 35 or something like that like how how am I supposed to compete I can't like I can't even run my air conditioning all day here like it would be Financial ruin like I'm exaggerating a little bit but you get my point”
The US government debt expense chart is parabolic and going straight up right now, indicating the trajectory will reach $1.5 trillion in annual interest costs in the not-too-distant future.
“if you look at the chart of the US government's debt expense it's parabolic it's going straight up right now um which means we're going to have you know a trillion five of Interest costs in the not too distant future per year”
Kai observes that the world is already in a stealth or low-level World War with Chinese ships dragging anchors destroying Baltic Sea cables, pipelines being blown up, and numerous acts of aggression and terror happening globally without formal war declaration.
“we're in a stealth war or World War already we have Chinese ships dragging anchors across the Baltic Sea floor destroying cables um pipelines being blown up in the Baltic by who knows who uh I'm sure people know like who who who it was and who who was the who was the target but like aren't we seeing that already there's so many random acts of Terror”
We've had a bull market in equities basically since 2010 (15 years of continuous growth) coupled with massive debt accumulation, so a recession and equities bear market would be overdue and expected.
“we we've had an equities bull market for uh for basically since 2010 so 25 or 15 years you know of a of a by and large bull market and an economic expansion in which we build up insane amounts of debt so you would expect a recession to flow from that and an equities bare Market”
The US has taken on unsustainable levels of debt and is on a trajectory toward a gigantic financial crisis due to exploding interest payment obligations.
“the gigantic financial crisis that's coming because of all the debt that we've taken on and that we continue to take on is looming out there”
The US has followed a pattern of manufacturing external enemies over decades, starting with Saddam Hussein, then Assad in Syria, then Putin in Russia, with Xi in China likely next.
“first it was aad well a little further back it was um Saddam Hussein that we used for that that role and then it became Assad in Syria and then it became Putin and I'm sure it'll be XI in China next if if it comes to that but that's just been our pattern in in the US and in NATO for the past few decades”
More likely than voluntary monetary reset is a market-forced 'crackup boom' scenario where people lose faith in fiat currencies, dump dollars and euros immediately when received, buy real assets (gold, silver, farmland, oil wells), prices of real assets spike, and currencies fall into disuse, requiring systemic rebuilding.
“I don't think we're smart enough yet and I think the people with the power to create money out of thin air aren't going to give it up willingly so more likely will be the scenario where the markets just force it on governments in other words like I was saying interest costs start to spike deficits go up even faster than they are right now people lose faith in the currency that's the crackup boom from the Austrian School of Economics um and they just dump dollars and euros and Yen when they get them they buy real stuff the price of real stuff like gold and silver and farmland and oil wells goes through the roof um and the currencies just fall into disuse basically they they are just given up on by everybody so something new has to be built from that um systemic rubble”
That kind of currency default (through inflation/devaluation) is a 'virtual lock' to happen in the next decade, making it essentially certain barring unexpected policy shifts.
“that kind of default virtual lock in the next decade virtual lock that's that's uh yeah no it's like I tend to agree”
A gigantic financial crisis is coming because of the debt that we've taken on and continue to take on, and people can get rich if they play it right by positioning in gold, silver, and quality mining stocks.
“I mean the um the gigantic financial crisis that's coming because of all the debt that we've taken on and that we continue to take on is looming out there we've blown it on a Biblical scale a gigantic financial crisis is coming and U you might get rich if you play it right”
In the crackup boom/currency collapse scenario, those who trusted government (bank account holders, government bond fund holders, cash holders) get burned as their wealth shrinks; those who didn't trust government (gold bugs owning physical gold/silver, high-quality gold stocks, oil stocks, copper miners, hard assets) do much better.
“in that scenario the people who get burned are the ones who trusted the government in other words the people with bank accounts and Government Bond funds and a lot of cash sitting around um that cash becomes much less valuable and so do those bonds so their wealth shrivels um and the people who didn't trust the government the gold bugs of the world you know the people who own high quality gold stocks and and gold and silver in physical form and other kinds of hard assets like oil stocks and copper Miners and things like that they tend to do much better”
The optimistic scenario for preventing crisis would be if major governments recognized they're in an untenable position and voluntarily reset to sound money (gold standard, blockchain-related, or something backed by hard assets) that removes government ability to create money out of thin air.
“the optimistic scenario in which we are actually wise would be for you know the major governments of the world just to recognize that uh they're they're in an untenable position and then they just do the monetary reset you know they give up the power to create more money out of thin air and they go back to something like a gold standard or you know I'm not ready to call for a Bitcoin standard yet but you know might be some kind of blockchain related thing maybe it involves gold silver could it could be any number of things”
Currency collapse through hyperinflation is more likely than orderly reset because governments won't give up fiat money creation power without a fight, and that fight will involve currency collapse.
“I don't think governments will give up without a fight and that fight is going to involve a currency collapse um so you know the rest of the decade that might be the big headline story of the rest of the decade”
The soft landing scenario (no recession) is extremely unlikely given the extent of financial excesses built up, and any normalization of interest rates or growth slowdown will trigger equity bear market and recession.
“we we've had an equities bull market for uh for basically since 2010 so 25 or 15 years you know of a of a by and large bull market and an economic expansion in which we build up insane amounts of debt so you would expect a recession to flow from that”
The financial situation cannot be fixed because the money has already been borrowed; the math of American debt ($35 trillion against an $80 trillion economy with 5-6% annual deficits) is an equation already written on the blackboard that must play out with continued rising debt—there is nothing that can be done to avoid this.
“but the finance thing we can't fix because we already borrowed the money you know there's nothing we can do about that um and so the math of American debt and European debt and Ja Japanese debt is pretty much um an equation that has already been written on the Blackboard you know we we have to have debt continue to rise which raises interest costs which further increases the debt which hobbles a government at some point when they U when they can't figure out how to cover their interest without crashing their currency so that all has to happen still”
Bull market in equities has existed since ~2010 (15 years of bull market with economic expansion) built on insane amounts of debt accumulation, so recession and equities bear market are overdue.
“we we've had an equities bull market for uh for basically since 2010 so 25 or 15 years you know of a of a by and large bull market and an economic expansion in which we build up insane amounts of debt so you would expect a recession to flow from that and an equities bare Market”
Bear case for gold is near-term: gold and silver fell 30-40%+ in 2008 and 2020 during sharp stock market corrections, which is a real probability rather than just possibility.
“there's a near-term bare case for gold um look look what gold and silver did in in 2008 and in 2020 when we had really sharp um stock market markets really really sharp Corrections in stocks um they got precious metals got sucked down with equities in both of those cases and went down you know 30 40% or more in the case of silver um and that's a very real I would call that a probability um rather than just a possibility”
Gold post-election dropped $200 because election chaos scenario (close race, civil unrest) that was priced in didn't occur; instead Trump won decisively with mandate to stop wars, reducing World War III risk that had supported gold as chaos hedge.
“going into the election remember the polls were a dead heat and so there there was this scenario where you know it's like a 0.1% victory for one side or the other the other side um um assumes it's been stolen from them they hit the streets and then we have um another month of civil unrest and and lawyers and recounts and everything so chaos you know there was a very real chaos scenario in this election it didn't work out it turned out to be um you know borderline Landslide definitely a mandate for Trump uh who is promising to stop the wars so gold which tends to go up in um during chaotic times and war is the ultimate in chaotic times all of a sudden people were like oh World War III might not happen after all well I can I can sell my War Hedges and gold is one of them so they they they went um risk on for um Tech and Bitcoin and risk off for safety assets like gold”
Warren Buffett is buying bonds while selling tech stocks and big bank stocks, suggesting he expects a coming equities bear market and recession, followed by a flight to government bonds as safe haven during the downturn.
“Warren Buffett is buying a lot of bonds right now he's selling tech stocks and and big Bank stocks and buying bonds um I think his rationale for that is that the next stage of this process is a equities bare market and a recession which we're overdue for”
A less likely longer-term bear case for gold would be if US chooses 1930s-style deflationary depression (letting debt default rather than inflating) instead of currency devaluation; this requires people in charge to be Hooverian (willing to destroy themselves politically).
“the longer term be case is um is less likely but still possible and that is that when when we come to the crossroads of hyperin lating or um going back to a 1930 style deflationary depression we choose the 1930s you know and decide okay we're just going to let this debt be wiped out via default and in that way we're going to you know protect the Integrity of the financial system um and and protect the value of the dollar and and then you know once we hit bottom and we're uh we're un you know we're we're no longer deeply indebted then we'll do what we did in the uh the 1950s and 40s and and 60s and 70s we'll just we'll grow... the reason it's unlikely is because that requires the people in charge to be this Generations Herbert Hoover in other words the guy that we still remember from a hundred years ago who who brought on the Great Depression nobody wants to do that now”
US dollar, euro, and yen will eventually 'fall into disuse' as reserve currencies when global faith in fiat systems collapses, requiring new monetary frameworks built from 'systemic rubble' at the bottom of the cycle.
“something new has to be built from that um systemic rubble and then at the bottom you have everybody getting together very chastened and uh and talking about what they can do going forward”
Generalist investors in a risk-on market are buying Bitcoin, Nvidia, Tesla, and NASDAQ index funds rather than mining stocks, which explains mining sector underperformance despite improving fundamentals.
“they're they're generating some pretty good numbers but uh you know first of all those numbers have to be sustainable in other words gold has toay at this level or go up which is a you know that's a bet that you're making when you buy a gold miner and the second thing is that there's not a lot of other stuff out there like if you're if you're a speculative minded investor you're buying Bitcoin or Nvidia or Tesla or just the NASDAQ you know NASDAQ St you're hurting me”
The US and NATO have been blundering into World War III through military escalation with Russia and China, including sending weapons to Ukraine, conducting operations in the South China Sea, and proxy warfare in the Middle East.
“we've spent the last three or four years blundering into World War II where we're uh you know our our ships are bumping up against Chinese ships in the South China Sea and we're sending americanmade and managed weapons over to Ukraine to be used against Russia the world's biggest nuclear power and then the Middle East is on fire”
The post-Trump election drop in gold prices of $200 per ounce occurred because investors had priced in chaos risk and World War III risk, which the Trump victory reduced, allowing them to sell 'war hedges' and move into risk-on assets like Bitcoin and tech stocks.
“going into the election remember the polls were a dead heat and so there there was this scenario where you know it's like a 0.1% victory for one side or the other the other side um um assumes it's been stolen from them they hit the streets and then we have um another month of civil unrest and and lawyers and recounts and everything so chaos you know there was a very real chaos scenario in this election it didn't work out it turned out to be um you know borderline Landslide definitely a mandate for Trump uh who is promising to stop the wars so gold which tends to go up in um during chaotic times and war is the ultimate in chaotic times all of a sudden people were like oh World War III might not happen after all well I can I can sell my War Hedges and gold is one of them”
The Ukraine-Russia conflict is easy to settle conceptually: Ukraine agrees not to join NATO and Russia agrees to pull soldiers back to a predetermined point; the war stops and this solution literally amounts to a phone call from Trump to Putin.
“the Ukraine thing is very easy to settle conceptually you just agree that Ukraine's not going to join NATO anymore and Russia agrees to pull its soldiers back to some you know predeter predetermined point and uh and then that's basically that the war stops and that is literally a phone call from Trump to Putin you know that that's all the harder it would be”
The US is blundering into World War III with ships bumping against Chinese vessels in the South China Sea, American-made weapons sent to Ukraine against Russia (the world's biggest nuclear power), Middle East on fire, and proxy armies fighting each other—a very dangerous time partly due to US stupidity.
“still the thing that gives me sleepless nights is what has done that for the past few years and that's War you know we we spent the last three or four years blundering into World War II where we're uh you know our our ships are bumping up against Chinese ships in the South China Sea and we're sending americanmade and managed weapons over to Ukraine to be used against Russia the world's biggest nuclear power and then the Middle East is on fire”
Neoconservatives are people who believe the United States should rule the world for the next thousand years and any wars needed to achieve that outcome are good because they lead to 5% of the US population ruling 95% of the rest of the world.
“neocons are that short for neoconservatives and those are people who believe that the United States should rule the world for the next thousand years and whatever Wars we have to fight in the short run to make that happen are actually good things because they lead to this great outcome which is five the 5% of the population that lives in the US ruling the the 95% of the population that lives in the rest of the world forever”
A gold-backed currency system with 40% gold backing requires approximately $10,000/oz gold price to back outstanding dollars; this is the likely endgame, making current $2,700 prices look cheap and $3,000 ownership advantageous.
“to do a new gold standard in which for instance the outstanding dollars um are backed 40% by gold a lot of people who've run those numbers get a price of $10,000 us an ounce for gold to make that kind of a gold standard happen so if that's our endgame and $10,000 an oun is the end price for gold in that process then all of a sudden $2,700 an ounce doesn't look crazy expensive you know it feels like a good price considering where we've been but if you look at where we're going uh people who bought at $3,000 an ounce are going to be very happy when gold is $10,000 an ounce”
Germany's debt-to-GDP ratio is still low (62% vs France 110%, Italy 130%), providing some financial flexibility, and Germany's cautious spending approach historically was viewed as smart even if it left country exposed if others spend recklessly.
“our debt to GDP ratio in Germany is still very low um meaning it's only 62% versus France is 110 Italy is 130 so we do have some Financial flexibility like we've always been very cautious on spending rightly or wrongly like depends on if all the drunken Sailors on the ship start spending money like crazy whether you should participate or not or whether you're the smart one standing at the end but if the world def Falls around you what good does it do you”
Neoconservatives are psychopaths in a lot of cases and should be swept out of office; they seem to want wars against China and Russia that would break both nations and make them protectorates so the US gets manufactured goods and natural resources on its terms.
“those guys are um they're psychopaths in a lot of cases and they should be swept out of office so we'll see how that goes you know if that's what happens it would be a very good thing... a lot of people seem to want war in the American hierarchy and that's what's so scary about it these guys I mean they their plan actually call for Wars against China and Russia that break China and Russia and make them protectorates so we get the manufactured goods of the natural resources or whatever on our terms um and that's an actual plan in the highest reaches of the US government”
The US blew up the Nordstream 2 pipeline, which constitutes an act of war against both Germany and Russia, making infrastructure destruction a legitimate form of prosecuting war at lower escalation levels.
“I'll just go out on a limb and say obvious ly the US blew up the nordstream 2 pipeline you know and that was an act of war against both Germany and Russia uh and so when you start taking out people's infrastructure um that can legitimately be interpreted as Prosecuting a war”
Long-term government bonds were phenomenally good to own from 1980 to 2022 (42-year bull market), and we could see a quicker version of that scenario in the near recession.
“long-term government bonds were phenomenally good to own from basically 1980 0 all the way to 2022 or so um and we could have a quicker version of that this time around”
RFK Jr. as head of FDA is too wild to contemplate, but if he has actual power to implement policies, much of what he would do would be awesome because US is the least healthy rich country and it's the fault of big food and big pharma secretly harvesting people.
“RFK Jr the head of the FDA that's just that is too wild to even contemplate um and you know I think a lot of what he would do if he ends up having the actual power to do it would be awesome U the US is the least healthy rich country ever probably you know and it's the fault of big food and big Pharma here basically again harvesting people secretly”
Trump could potentially serve a role similar to FDR during the Great Depression, where he provides stable leadership through the crisis without establishing dictatorship, allowing the system to survive and transition to recovery.
“it would be really really ironic if Trump turned out to be the the FDR in this scenario that would be something that was unexpected 15 or or 10 or even five years ago you know but U it's possible that he's a candidate for that kind of thing where um stable wise leadership gets us through the worst part of the crisis and then we're able to be a functioning democracy going forward”
The US likely blew up the Nordstream 2 pipeline, which constitutes an act of war against both Germany and Russia because it destroyed critical infrastructure.
“I'll just go out on a limb and say obvious ly the US blew up the nordstream 2 pipeline you know and that was an act of war against both Germany and Russia uh and so when you start taking out people's infrastructure um that can legitimately be interpreted as Prosecuting a war”
Musk and Ramaswamy's decentralization plan to move agencies out of Washington to other parts of the country could prevent bureaucrats from becoming 'swamp creatures' who shift allegiance from home state to Washington DC.
“they're also talking about decentralizing the government where they move a lot of agencies out of Washington and into um other parts of the country to keep the guys running the agency from becoming swamp creatures in other words from shifting their allegiance from their home state to um Washington DC that would be great too”
The Trump administration's election may reduce the risk of World War III because Trump and figures like JD Vance and Tulsi Gabbard are promising to close forever wars and pull back from military escalation, though neoconservatives still hold significant power in the new government.
“the last election might change it because we uh we kicked out the warmongers and we brought in people who are at least talking about closing down the forever Wars and and pulling back from the abyss”
The Ukraine-Russia conflict could be resolved through a simple phone call and diplomatic agreement where Ukraine agrees not to join NATO and Russia agrees to pull its soldiers back to predetermined lines.
“the Ukraine thing is very easy to settle conceptually you just agree that Ukraine's not going to join NATO anymore and Russia agrees to pull its soldiers back to some you know predeter predetermined point and uh and then that's basically that the war stops and that is literally a phone call from Trump to Putin”
Currency devaluation/inflation default is virtually locked in for the next decade as the baseline outcome; it's not a possibility but a probability that approaches certainty.
“that kind of default virtual lock in the next decade virtual lock that's that's uh yeah no it's like I tend to agree I'm curious how that all plays out”
China-US conflict is similarly resolvable through negotiation where China agrees not to invade Taiwan in exchange for US military base reductions around China, yet continued US pressure suggests preference for ongoing tension.
“same thing with China you know we we cut a deal in which China agrees not to invade Taiwan and we in and we agree to do some other things like pull back some military bases around China and um and you know the the the pressure is lessened that way too these aren't really complicated things because we've been blundering into them”
The possible US strategy of de-industrializing Germany while separating it from Russia could result in Germany's economic collapse and European instability if it succeeds, which would be self-defeating for the US since Germany is a major US ally and partner.
“what are the ramifications of that like let's Germany tumbles like the whole of Europe falls down us loses as a big big partner yes we're not pulling all our weight when it comes to like military spending and all of that that could that could be rectified through political negotiations I think”
The optimistic scenario to prevent financial crisis would be for major world governments to recognize they're in an untenable position and voluntarily move to sound money (gold standard or blockchain-equivalent), eliminating government ability to create money out of thin air.
“the optimistic scenario in which we are actually wise would be for you know the major governments of the world just to recognize that uh they're they're in an untenable position and then they just do the monetary reset you know they give up the power to create more money out of thin air and they go back to something like a gold standard or you know I'm not ready to call for a Bitcoin standard yet but you know might be some kind of blockchain related thing maybe it involves gold silver could it could be any number of things but the the common thread is that um we go back to sound money of some sort”
There are three to four different ways to make substantial money during the coming financial crisis, primarily through gold, silver, mining stocks, and potentially short positions in large technology companies.
“there are three or four different ways to make a lot of money in the process so it's it's almost an optimistic scenario because it's you know potentially um that's how you get rich”
After the immediate post-election euphoria fades, gold will resume appreciation as investors realize that the financial crisis mechanics (debt spiral, interest costs, inflation) remain unresolved and Trump will push for lower interest rates, which is good for gold.
“after the dust settles a little bit um Everybody um starts realizing that the stuff we talked about today is actually true that uh okay you know maybe we won't have World War III but we're still um you know borrowing this much money interest costs are still doing this the Trump wants lower interest rates because he's a real estate guy you know his formative experience with interest rates is that low is good high is bad and he's going to insist that the FED start cutting interest rates well that's good for gold”
A gold standard where outstanding dollars are backed 40% by gold would require gold prices around $10,000 per ounce, making current prices of $2,700 highly attractive for investors betting on currency reset.
“to do a new gold standard in which for instance the outstanding dollars um are backed 40% by gold a lot of people who've run those numbers get a price of $10,000 us an ounce for gold to make that kind of a gold standard happen so if that's our endgame and $10,000 an oun is the end price for gold in that process then all of a sudden $2,700 an ounce doesn't look crazy expensive”
German politicians currently lack backbone and the ability to implement real change, with all major parties either too far right (with problematic historical associations), too close to Russia on the left, or lacking pragmatism.
“I don't see any politicians that have any backbone right now meaning like they can actually stand up or change like it's the same old doesn't matter what party what label you put on it right now unless you go very far right which seems to be a bit more pragmatic in my point of view but really difficult to elect because there are there's a few party members that are way too far right”
Mining stocks remain very cheap relative to their potential upside, making them attractive for value investors even though they haven't participated in the recent speculative rally.
“there there could well be a time here when the NASDAQ is down by 40% gold hasn't gone down at all and the miners are basically the only entities left generating positive quarter over quarter comparisons you know that that's a real possible scenario out there and uh so you know Miners and and in any event the miners are one of the only groups that are still cheap”
Germany is last in AI technology development and cannot run server farms due to expensive power; cloud storage companies exist near Kai's location but can pay for power through unclear mechanisms, suggesting they're externally subsidized.
“we're we're La dead last in AI technology and developments like we can't run server Farms it's too expensive we do have quite a bit of cloud storage here which is interesting I need to look at how much they pay actually next door where I live there's a big cloud Farm um so not sure how they're paying for power”
Neoconservatives are people who believe the United States should rule the world for the next thousand years and that whatever wars are necessary to achieve this are justified because they lead to US hegemony over 95% of the world's population.
“neocons are that short for neoconservatives and those are people who believe that the United States should rule the world for the next thousand years and whatever Wars we have to fight in the short run to make that happen are actually good things because they lead to this great outcome which is five the 5% of the population that lives in the US ruling the the 95% of the population that lives in the rest of the world forever”
Mining stocks are still cheap (haven't gone up much) which is bad short-term but good long-term because there are still bargains; value investors looking for entry points into sectors that will improve dramatically should view current prices as opportunity.
“so you know Miners and and in any event the miners are one of the only groups that are still cheap so if you're a value investor then the ERS are actually behaving in ways you like to see because it gives you an entry point um for something that ought to improve dramatically in the future so you know I still own a lot of mining stocks I'm looking for high quality names you know and it's just uh the downside is that they haven't gone up yet but the upside is also that they haven't gone up yet too much and that uh that there's still some Bargains out there”
Q4 mining company numbers should be good because gold prices have been higher in Q4 than Q3, and if Q4 revenues translate to strong cash flow numbers, this could get mining stocks onto the screens of momentum investors and initiate a positive trend—but this has not yet happened.
“Q4 numbers for the miners ought to be good again you know Q2 numbers were good Q3 numbers were good because the price of gold was going up and that was filtering to an extent down to the bottom line so uh you know the the operating environment is better than it used to be for the miners and there's going to be another quarter because the the average price in this quarter um has been higher than the average price in the third quarter so um the miners are going to report higher revenues again and maybe this time it's enough to uh to generate some really good cash flow numbers and get onto the screens of momentum investors and that might do it you know that might send a lot of outside Capital into the mining industry or at least start that Trend”
RFK Jr. as head of the FDA represents a potentially transformative appointment because the US is the least healthy rich country, and this unhealthiness is the fault of big food and big pharma 'harvesting people secretly', making FDA reform potentially beneficial.
“I think this new government is getting set up to do so many amazing things like U RFK Jr the head of the FDA that's just that is too wild to even contemplate um and you know I think a lot of what he would do if he ends up having the actual power to do it would be awesome U the US is the least healthy rich country ever probably you know and it's the fault of big food and big Pharma here basically again harvesting people secretly”
Q4 mining company numbers should be 'good again' because gold prices in Q4 are higher than in Q3, and if the numbers are strong enough, momentum investors will recognize and drive capital into the mining sector, catalyzing mining stock appreciation.
“Q4 numbers for the miners ought to be good again you know Q2 numbers were good Q3 numbers were good because the price of gold was going up and that was filtering to an extent down to the bottom line so uh you know the the operating environment is better than it used to be for the miners and there's going to be another quarter because the the average price in this quarter um has been higher than the average price in the third quarter so um the miners are going to report higher revenues again and maybe this time it's enough to uh to generate some really good cash flow numbers and get onto the screens of momentum investors and that might do it”
Precious metals sentiment in junior mining sector was positive for about six weeks after Fed started cutting rates, but dissipated when Fed signaled it would be 'data dependent' again and cut only once, leaving mining stocks in 'purgatory' until at least January 28th Fed meeting.
“it felt like as soon as the FED started uh or cutting interest rates sentiments changed completely in the junior mining space um I mentioned sense of euphoria it wasn't euphoric but a sense of euphoria maybe for six weeks and then the FED said ah we'll cut once now we're data dependent again and that was the end of that we have a new president moving into the White House nobody knows if we're going to see another cut December personally I don't think it's going to happen so the mot is going to stay in in purgatory like in the in the middle of nothing”
DOGE (Department of Government Efficiency) guys have opportunity to improve government efficiency using e-commerce and tech company techniques pioneered by Amazon and Google, making government phenomenally more efficient.
“the the Doge guys um also have a chance to do a lot of interesting things with government efficiency like you know do Buy something through Amazon right now and then go and try and do something um with the IRS or something and you find out how different today's um e-commerce is from today's government so that means government could get phenomenally more efficient um using the techniques that have been pioneered by um Amazon and and Google and companies like that”
Rabino has assumed for the past 15 years that the financial system was going to end in a fiery way; the numbers have just gotten much bigger and things are moving much faster, making him closer to the 'death spiral doom loop' part of the story.
“as far as Finance the financial system goes I've always or at least for like the past 15 years assumed it was going to end at some point in in a in a probably fiery way um and I still think that the numbers have just gotten much bigger now and things are moving much faster so we we're um closer to that the death spiral Doom Loop part of this story than we have been in the past”
Germany faces the risk of electing either extreme-right politicians (who are historically problematic) or extreme-left politicians aligned with Russia (BSW party), with no moderate leaders offering real backbone or pragmatic solutions—this creates danger of political instability.
“unless you go very far right which seems to be a bit more pragmatic in my point of view but really difficult to elect because there are there's a few party members that are way too far right that based on history we have bad you know bad uh um experiences with that um not saying we're bringing back a dictatorship but there's a few people that are a little too far to the right probably but and then there's the the extreme on the left which is probably like the BSW which is probably a bit too close to Russia again uh as well so it's like it's it's difficult and there's nobody with a real backbone that you could say let's throw him in the mix let's vote for some real change I don't see it”
Government could become phenomenally more efficient using techniques pioneered by Amazon and Google for e-commerce, but the gap between modern e-commerce efficiency and government bureaucracy remains enormous.
“do Buy something through Amazon right now and then go and try and do something um with the IRS or something and you find out how different today's um e-commerce is from today's government so that means government could get phenomenally more efficient um using the techniques that have been pioneered by um Amazon and and Google and companies like that”
The 1950s-1970s era represented a period of stable US balance sheet and rapid growth, suggesting this is a model for post-crisis reconstruction if the US can successfully deleverage before rebuilding.
“then we'll do what we did in the uh the 1950s and 40s and and 60s and 70s we'll just we'll grow because we have a relatively stable balance sheet um that's highly unlikely but it's possible”
RoboDM Substack has over 20,000 subscribers and focuses on actionable investment advice related to macro-economic analysis and commodity positioning.
“he's the founder editor and you know the the brains behind robo. sub.com over 20,000 subscribers already”
The conversation is motivated by helping people understand macro-level financial crises in order to make better micro-level decisions about mining stocks and personal financial positioning.
“we discuss the macro to understand the micro”
The recent US election brought in people talking about closing down forever wars and pulling back from geopolitical confrontation, offering hope that the next six months will determine if this represents actual policy change rather than rhetoric.
“having said that the last election might change it because we uh we kicked out the warmongers and we brought in people who are at least talking about closing down the forever Wars and and pulling back from the abyss and and you know here's hoping um the next six months or so will will tell us whether that's actually true”
There are a million different ways financial crises could play out, creating intellectual challenge in how to prepare for multiple divergent scenarios while all containing opportunities for those who see them coming.
“there's a million different ways this could play out and that creates the intellectual challenge is how do you prep for something like this where there's a lot of different scenarios all of them are kind of dire or almost all of them are kind of dire especially for people who trust the government but they they also contain a lot of opportunities for people who see it coming”
DOGE decentralization proposal to move agencies out of Washington would prevent them from becoming swamp creatures by shifting allegiance from home state to Washington DC, which would be great.
“they're also talking about decentralizing the government where they move a lot of agencies out of Washington and into um other parts of the country to keep the guys running the agency from becoming swamp creatures in other words from shifting their allegiance from their home state to um Washington DC that would be great too”
Kai reads headlines suggesting Ukraine-NATO mood is softening (NATO Russia weapons boost before truce talks) and interprets this as positive momentum toward de-escalation and peaceful resolution.
“I often skim headlines and one thing that has me a bit positive it feels like and that's more guts got feeling then overall like percentages or anything the the mood in in the Ukraine is softening meaning like I read one headline NATO Russia's weapons to Ukraine to boost KF before truce talks just the word the two words of truce talks in that headline is shows to me that there's a bit of a softening stance”
Kai notes that Rabino sounds more doom-and-gloom in this conversation than 8 months ago, suggesting the financial metrics have deteriorated and timelines accelerated.
“John like I can't help but feel like you you feel a lot more or you sound like a lot more doom and gloomy today like than our maybe previous conversation eight months ago like has has anything changed”