$200k Bitcoin, $4k Gold In 2025 As ‘Day Of Reckoning’ Comes For Stocks | Lawrence Lepard

The only significant catastrophic failure risk for Bitcoin would be a major unknown bug or security flaw, not hacking or quantum computing, and after 15 years and 870,000 blocks, the odds of catastrophic software failure are quite low

“what's going to stop it from having that performance I mean the only thing I can think of is just catastrophic failure and you know I was worried about that catastrophic failure like what hacking or what we no I don't worry about hacking because it's it's it's technal you know secure people are worried about Quantum Computing but I think that's too far off I don't worry about that no just I I don't know I mean just some some bug that's that's we're not aware of that just causes the whole thing to blow up I mean I was worried about that much more so in the earlier days um and we're now 15 years in and 870,000 blocks into it um I think the odds of that are quite low”

Bonds are 'certificates of confiscation' because holders face real purchasing power loss through inflation, especially in high-inflation regimes (like the 1970s where all bond holders lost money on a real basis)

“bonds are certificates of confiscation and I it would not surprise me never heard that before you haven't heard that before oh yeah you haven't been around long enough there was a there's a great Economist in the 80s named um Solomon uh he was at Solomon Harry Henry Kaufman he was the Solomon Brothers Economist and he in the early '80s he coined the phrase you know long-term government mons or certificates of confiscation cuz we just out of the 70s when that was true everyone who owned Bond lost money on a real basis”

The sentiment indicators show zero bears left in the market, with sentiment charts off the chart bullish, which is a classic indicator that the last buyer has arrived and the market could turn at any point

“I saw Bob pror had a great chart on on sentiment I mean the the positive you know the sentiment charts there are no bears left everybody's bullish I mean there literally no bears left and the sentiment charts are off the chart so to speak so U and that's usually you know when that occurs everybody's all the way in and when we run out of new buyers you know it'll eventually start to go the other way”

The US federal government spent $6.75 trillion in fiscal year 2024 (ending September 2024), with 80% of that ($5.4 trillion) consumed by Social Security, Medicare, interest on debt, and defense, leaving only $1.35 trillion for all other government operations, making meaningful deficit reduction mathematically impossible without touching these four areas.

“we spent 6.75 trillion last U fiscal year end in September 80% of that is social security Medicare interest and defense so you know when they talk about taking a hatchet to government and cutting government unless you're going to touch those four areas um and they might touch defense a little bit because they might be able to end the Ukraine war um you know it's going to be hard to cut so the remaining 20% even if you take 30% off that that's $270 billion a year”

There has not been a truly prolonged and serious bear market since 2008—for over 15 years, 'it always paid to buy the dip' no matter where the dip occurred, creating a false belief that this condition will always be true, but McHenry believes this is not a permanent condition.

“we haven't really had we had some very sharp bare markets but we haven't had a truly prolonged and serious bare Market since &' 08 since &' 08 it's it always paid to buy the dip you know no matter where the dip was it paid to buy it you got you came out you got made whole and it went higher and you know having studied financial markets and looked at history hundreds of years and hav been in them since the 70s I just know that that's not a that's not a condition that will always be true”

Consumer credit has exploded as households have maintained their lifestyles during and after the inflation of 2020-2021 by borrowing heavily on credit cards, lines of credit, and auto loans, creating an unsustainable situation where consumers must make payments on accumulated debt and face constraints if debt growth slows.

“the consumer got hit badly with all the inflation in the 2020 21 period yeah and the way they dealt with that was they borrow you know they tapped their credit cards they tapped their lines of credit they took on more credit for their automobile purchases etc etc and if you go look at the charts on those statistics you can see the consumer credit is just gone you know people have maintained their Lifestyle by going into debt but you know the one thing that happens when you do that is you've got to make the payments”

Bitcoin ETFs created a positive network effect by reducing adoption barriers—friends who feared government outlawing Bitcoin became willing to buy after the SEC approved Bitcoin ETFs, expanding the user base.

“The ETFs came in and they were a really positive thing because what they did they said to a lot of my friends who wouldn't buy it well Larry I'm not going to buy that because the government's going to Outlaw it well suddenly the SEC says it's legal and not only is it legal but we're creating an ETF and all those friends said oh okay I get it you're right maybe I should buy some and they did”

Judy Shelton, who Trump nominated for the Federal Reserve board, has thought deeply about sound money, but Congress and Senate 'savaged' her nomination because there aren't many people in government who are fans of sound money

“another person who's thought a lot about this is a woman named Judy Shelton Who Trump nominated for the FED board and of course Congress and Senate just Savaged her because they you know the it's safe to say as I'm sure you know and I think this is true in Canada as well there aren't a lot of people in government that are really big fans of sound money right they they like the system they got”

Chris Leonard's book 'Lords of Easy Money' is a non-controversial mainstream analysis from a Wall Street Journal reporter that is devastatingly critical of the Federal Reserve, yet received positive reviews from major financial press. McHugh's forthcoming book covers similar ground but with stronger language.

“there's a book out that I would highly recommend to people and you as well David called the Lords of easy Finance by or the Lords of easy money by Chris Leonard so here's a guy who is a Wall Street Journal reporter very mainstream nothing controversial about this guy and he wrote this book that is actually a devastating criticism of the fed and how out of control it is and how it creates these cycles and how they blew the call on so much of this stuff and the so he wrote it and he said all those things he said them very polite way my book says the same stuff but not so politely um and and but here's the thing he got you know he got positive reviews from you know the New York Times the financial times the Wall Street Journal they were all like what an amazing analysis”

While McHenry applauds Bent as a smart choice and would prefer him to Janet Yellen, he does not share the market's enthusiasm about the progress government efficiency reforms will make because the problem is 'quite deep' and the hands will be 'full'—spending cuts are insufficient given the fiscal math.

“I actually applaud this choice I think bent is a very smart guy and given how bad the US fiscal situation is I think we need a very smart guy uh in that seat uh to help the country um I I um I don't share the Market's enthusiasm for how much progress they're going to be able to make or how simply they're going to be able to solve this problem because the problem is quite deep and I think they're going to really have their hands full”

The bond market is in the process of failing, as evidenced by the 10-year Treasury yield rising 75 basis points despite the Fed cutting interest rates—a move that should theoretically push yields down—indicating the Fed has lost control and is 'too loose' while also being trapped by the need to keep funding costs down.

“one thing that's interesting as you know I know is that they cut interest rates the FED cut interest rates and yet you know the 10year has gone up 75 basis points so that's not supposed to happen and it tells you that the FED is probably too loose and yet because they are you know the ones setting the short-term rate and Janet's using the short-term Market to fund a lot of the debt that's rolling over um they're under a lot of pressure to keep cutting rates in an effort to you know make the US funding costs not go up um because interest expenses running at a $1.2 trillion rate they certainly don't need that to get worse”

In hyperinflationary scenarios, stock markets historically do well because stocks represent claims on real businesses that will reprice in the new currency—Venezuela, Zimbabwe, and Weimar examples all show equity markets rising alongside hyperinflation.

“if we have have a hyperinflation likee scenario as you know anyone who studied history knows stock markets do well with really runaway inflation I mean you know the Venezuela Market the wart Market the Z I mean everything goes up at least because at least a stock represents a claim on a business that will repic in the new currency”

Interest expenses are running at $1.2 trillion annually, and if the 10-year yield continues rising, the US will face significantly higher debt service costs, worsening the fiscal situation

“interest expenses running at a $1.2 trillion rate they certainly don't need that to get worse”

Even if 75% of the government workforce is cut (as Musk suggested to Tucker Carlson), this would not fix the debt problem immediately because the debt itself is not being absolved—only the cost of government operations is reduced, which is marginal relative to the deficit.

“even if you were to cut 75% of the government Workforce which is what Vex said in an interview with Tucker crowson that's not going to fix a debt issue right away it's not that's still there yeah I mean they're not it's not you know they're not absolving the debt just cuz government employees are getting”

Bitcoin's dollar-cost averaging (DCA) strategy is optimal: McHenry has bought Bitcoin at $15, $30, $50, $70, and will continue at $90+, treating it as a long-term store of value

“I've always recommended people have a little bit of it or you know you know have the only wrong allocation is zero and you should dollar cost average on your Bitcoin purchases I mean I was buying it at 15 buying it at 30 was buying it at 50 was buying at 70 you know when I get some more money I I'll buy it at 90 I think it'll be much higher in 5 or 10 years but between here and there it could go up and down a lot”

There is no viable path out of the debt crisis without pain. Like an alcoholic stopping drinking, the US has been using monetary expansion to deal with the hangover created by past expansions, and stopping this cycle will be painful but necessary for normal economic function and to solve political strife and wealth inequality.

“I think there's there's really no way out of this without pain I mean it's it's kind of like being an alcoholic I mean we we you know we've been we've been drinking too much and we've been you know dealing with The Hangover by drinking more and we got to stop drinking and and then you know and that's a painful process stopping drinking but guess what if we if you stop drinking and reset to a sound money standard then we'll go back to having a normal life and a normal economy and inflation won't be the big problem that it is and we'll be able to meet our commitments and there won't be all the political strife and the wealth inequality I mean all the problems that we're solving from right now in my opinion emanate from the issue of having an unsound currency and that started in 71”

Bitcoin is a digital form of sound money with a fixed supply, functioning as a ledger similar to how money has always functioned, and as more people use it and the network grows, Bitcoin will increase in value over time—this is the best-performing financial asset of the last 15 years.

“I view Bitcoin as really kind of a digital form of gold I mean it's a it's a limited Supply digital asset which you know for some gold people that's hard to get their arms around because you can't touch it but it's a it's an immutable Ledger and um money has in my opinion always been a ledger and as long as you know that the Network's going to keep working there's risk in that but as long as you believe that then it's a logical conclusion that something with a fixed Supply that more and more people are using and and growing and going tarw will increase in value over time”

Bonds are 'certificates of confiscation' (a term coined by Henry Kaufman, Solomon Brothers economist, in the early 1980s), because bondholders lost money on a real (inflation-adjusted) basis during the 1970s, and McHenry expects this dynamic to repeat.

“I think bonds are certificates of confiscation and I it would not surprise me never heard that before you haven't heard that before oh yeah you haven't been around long enough there was a there's a great Economist in the 80s named um Solomon uh he was at Solomon Harry Henry Kaufman he was the Solomon Brothers Economist and he in the early &' 80s he coined the phrase you know long-term government mons or certificates of confiscation cuz we just out of the 70s when that was true everyone who owned Bond lost money on a real basis”

A real Day of Reckoning is coming with the stock market, which is historically overvalued at levels exceeding 1929 and 2000, and when the market turns, it will create severe economic dislocation because consumer spending patterns are based on stock market performance

“it's hard to overemphasize how extremely overvalued this is this is like in the top 1% of valuations ever it's more overvalued than 29 it's more overvalued than 2000”

The notion that Elon Musk and the Department of Government Efficiency (DOGE) can quickly cut $2 trillion from the federal budget without causing a massive recession or dislocation is an 'enormous fantasy' that ignores the mathematical constraints of the budget structure

“the notion that we can take $2 trillion that we can take2 trillion yeah Tesla's was doing well um you know out of the out of the budget deficit quickly without pain without causing a massive recession or a lot of dislocation I mean I I I got to tell you that's just a that's in my view that's just an enormous fantasy”

Bond markets face a 'picking up nickels in front of a steamroller' risk: they may rally briefly on recession fears, but when the Fed responds by printing massively (as it will), rates will rise and bond investors will lose money on a real basis

“the trade is to buy a long Bond because rates will come down in the long end and they might but to me that's picking up nickels in front of a steamroller um because I I I think that you know we know that when that if and when what I just described occurs we're pretty sure that the FED will do what they've always done which is they'll print like crazy and that will lead to you know interest rates you know higher higher interest rates and bigger deficits”

Bitcoin and gold performance tracks M2 money supply growth more than it tracks stock market (NASDAQ) movement, though they are indirectly correlated through debt-to-GDP growth

“they're very they're somewhat correlated a lot of people think Bitcoin is just a liquidity widget and it trades with the NASDAQ and there's certainly been a piece of that but I think over time I mean it's interesting today that the stock market and the NASDAQ are up and gold and Bitcoin are down yeah I think over time Bitcoin is going to trade much more like gold it's just going to be it's going to be more as a sound money asset rather than as a liquidity widget like the NASDAQ”

The Federal Reserve's primary tool is the printer, so whenever a financial crisis or problem emerges, the Fed responds by printing money, which has historically driven massive appreciation in gold, Bitcoin, and other hard assets

“their Hammer is the printer and so every financial problem looks like a nail and so they're going to you know they're going to turn on the printer”

Scott Bessent is presented as a smart person appropriate for treasury secretary role, but even a capable person cannot solve an mathematically unsolvable problem—the fiscal deficit requires 40% cuts to entitlements and defense, which Trump has publicly committed not to cut

“but that but that's what it would take and and the you know and the military-- industrial conflex would go berserk if you cut them 40% so you know I I I just don't see it I I just really don't see it but obviously the trend is is you know in their favor and I look okay you know because I don't want to see my country fall apart I you know I applaud the notion of trying to get the government reigned in and under control that's all good stuff”

Bitcoin and gold correlate strongly with M2 money stock (which grew 42% during COVID) and debt-to-GDP ratio, because the Fed's balance sheet expansion creates M2 growth through bank reserves, and if credit is cheap enough, banks lend it out—all three indicators (M2, debt/GDP, and asset prices) move together.

“well obviously they're correlated to this because they both took off in 2020 just as this this went up 42% during Co right and they both took off like a rocket so they're very heavily correlated to this but keep in mind that this is indirectly correlated to the thing you referenced which is the debt to GDP you know that the government runs and so because you know effectively the FED is the monetary mechanism that creates the growth in the M2 by putting the reserves on the bank balance sheet and if the price is low enough for that cost of credit then the banks loan it out and M2 grows so so it's all they're all one they're all birds of the same feather”

Government will always do what it has to do to keep itself alive, and historical precedent (Roosevelt confiscating gold) shows governments can override property rights when they perceive existential threat.

“the government will always do what it has to do to keep itself alive until we get it under control”

Bitcoin ETF ownership concentrates coins in honey pot institutions, creating a confiscation risk if a future Democratic administration decides Bitcoin and gold are causing a Keynesian system failure and passes a law to seize Bitcoin from ETFs (analogous to FDR's 1933 Executive Order 6102 gold confiscation).

“if we the US in four years we have a Blue Wave we go back to a democratic Administration the Dollar's failing inflation's High and the Socialist Democrats decide that Bitcoin is the cause or Bitcoin and gold are the cause it's these sound money people that ruining our beautiful Keynesian system and you know furthermore they they know what ra they know what Roosevelt did with gold where he confiscated furthermore they're going to pass a law that says that you know the US government's going to seize all the Bitcoin”

A monetary reset is necessary and preferable to the current unsustainable path, and the best plan for this has been articulated by macro analyst Luke Groman, who advocates for a debt jubilee or currency revaluation approach similar to biblical and Babylonian times.

“what I believe should happen is is and I this is where I hope bent you know is intelligent about all this we really need to do a monetary reset the guy who's actually been talking about this loudest and has the best plan is Luke groman who's a macro analyst you know we really need to we've got too much debt and uh we can't pay it all back and I'm sure most of your listeners are familiar with the concept of a debt Jubilee which was used in biblical and Babylonian times when the debt got too large they just forgave it all and started over again”

When Roosevelt devalued the dollar (from $20.65 to $35 per ounce of gold, a 70% devaluation), it was effective—1934 was a pretty good year—demonstrating that currency revaluation can have positive economic effects

“Roosevelt grabbed the gold and then he immediately changed the price from 2065 to $35 it was like a 70% devaluation overnight and what it did and and by the way it helped right after he did it 34 was a pretty good year”

Roosevelt abandoned the gold standard in 1971 (actually 1933, but context suggests misstatement) because France was running on the bank demanding gold, draining US gold reserves at $35/oz, forcing Nixon off the standard

“in 71 the French stopped trusting that we were going to give them their dollars at 35 give them their gold at $35 an ounce and so they said said hey you know what we don't want these dollars anymore give us those ounces and of course the ounces were flowing out the door so fast that Nixon oh hang on a second we're not going to do this anymore we're going off the gold standard which really was a default on on earlier uh earlier uh comment”

All current economic and political problems—wealth inequality, political strife, inflation, inability to meet commitments—emanate fundamentally from the problem of unsound currency that began in 1971 when the US abandoned the gold standard.

“all the problems that we're solving from right now in my opinion emanate from the issue of having an unsound currency and that started in 71”

The Federal Reserve is losing money and showing losses as a 'deferred asset,' so the Fed is not in any position to have excess money to buy Bitcoin as proposed in strategic reserve plans—however, the Fed could print money to fund such a purchase.

“the FED is losing a ton of money yeah right they are yeah they're calling it a def they're calling those losses a deferred asset which I find hilarious but the fed's not in any position to have excess money to buy Bitcoin however they can print money”

Buying long-term bonds in anticipation of a stock market crash might generate short-term gains as rates fall, but this is 'picking up nickels in front of a steamroller' because once the Fed prints massively, interest rates will rise again and bonds will be destroyed—the trade has asymmetric downside.

“I mean the trade is to buy a long Bond because rates will come down in the long end and they might but to me that's picking up nickels in front of a steamroller um because I I I think that you know we know that when that if and when what I just described occurs we're pretty sure that the FED will do what they've always done which is they'll print like crazy and that will lead to you know interest rates you know higher higher interest rates and bigger deficits”

Gold stocks have dramatically underperformed gold metal despite the 20-30% annual return on gold itself, typically because equity investors don't yet believe $2,600 gold is sustainable

“gold stocks will take off um you know the real cheap asset right now gold stocks I mean as I'm sure you're aware and you sit in Vancouver I mean they just haven't gotten that much love I mean gold was up 20 or 30% this year the stocks are up a similar amount typically the stocks you know multiply the return on the metal by 2 to three x so gold up 10% stocks up 20 to 30 that hasn't happened the reason that hasn't happened is that people still don't believe the $2,600 gold price is sustainable they think it you know Bloomberg consensus estimates are that it's coming back down to 2050”

Tariffs can be used as a negotiating tactic to force other countries to 'play fair,' and have the positive side effect of raising government revenue (which the government desperately needs)

“the tariffs to me are a negotiating tactic you know they're going to they're going to basically go to other countries and say you know play fair we're going to hit you with a tariff um the the positive about the tariffs is that they actually uh will raise revenue for the government and the government needs to raise revenue everywhere it can”

If the dollar is devalued against gold backing at $20,000 per ounce, and the US holds 261 million ounces, this would raise $5.22 trillion into the Treasury General Account (based on Mark Groman's calculation), providing funds to pay down debt to manageable levels

“as as Luke's example would be we have 261 million ounces of gold or that they believe we do and we might you would say suddenly the us is going to buy and sell gold at $20,000 an ounce for every $4,000 you mark it up or every you mark it up um no $4,000 you get a trillion dollars into the TGA and you use that to pay down the debt we get the debt to a manageable level again”

Bitcoin ETFs have grown to massive size very quickly compared to gold ETFs at their launch, creating concentration risk where governments could theoretically seize ETF-held Bitcoin via law or executive order, similar to Roosevelt's gold confiscation (Executive Order 6102)

“the issue that's going on that that has that there is some risk inherent to it is um all those ETFs now own a ton of coins in fact there's a great chart that shows the growth of the ETFs and it's stunning how how big they've gotten and how quickly they've gotten that big I mean compared to the gold ETF when it was launched and that one did very well by the way they've just it's it's stunning how quickly the ETFs have grown but here's a threat you know we the US in four years we have a Blue Wave we go back to a democratic Administration the Dollar's failing inflation's High and the Socialist Democrats decide that Bitcoin is the cause or Bitcoin and gold are the cause it's these sound money people that ruining our beautiful Keynesian system and you know furthermore they they know what ra they know what Roosevelt did with gold where he confiscated furthermore they're going to pass a law that says that you know the US government's going to seize all the Bitcoin and so you have your Bitcoin at you know Fidelity or you have your Bitcoin at ibit or you know coinbase wherever it might be they're going to send you a check for the dollars but they they're going to take the Bitcoin themselves and so it's you know kind of a 6102 attack”

A currency reset backed by gold or Bitcoin would cause a severe one-time inflationary shock in global terms, with the US experiencing significant inflation, but then allowing a return to sound money principles and normal economic function with stable inflation and political stability.

“if you mark gold up that much that would be a very inflationary event in worldwide terms and so the US would suffer pretty severe one-time inflation and I think there's I think the bottom line is there there's really no way out of this without pain I mean it's it's kind of like being an alcoholic I mean we we you know we've been we've been drinking too much and we've been you know dealing with The Hangover by drinking more and we got to stop drinking and and then you know and that's a painful process stopping drinking but guess what if we if you stop drinking and reset to a sound money standard then we'll go back to having a normal life and a normal economy and inflation won't be the big problem that it is”

Even if Elon cut 75% of the government workforce (as he said in a Tucker Carlson interview), it would not fix the debt issue in the short term because you are not absolved of the debt just by reducing government spending.

“and by the way even if you were to cut 75% of the government Workforce which is what Vex said in an interview with Tucker crowson that's not going to fix a debt issue right away it's not that's still there yeah I mean they're not it's not you know they're not absolving the debt just cuz government employees are getting the math”

Unsound currency (fiat money not backed by gold or fixed supply) starting in 1971 is the root cause of modern economic problems including wealth inequality, political strife, inflation, and unsustainable deficits, and returning to sound money standard would solve these structural problems

“all the problems that we're solving from right now in my opinion emanate from the issue of having an unsound currency and that started in 71”

The Federal Reserve should be replaced or reformed given the damage it has caused to the economy through boom-bust cycles, as documented in 'The Lords of Easy Money' by Chris Leonard (based on interviews with mainstream economists)

“There's a book out that I would highly recommend to people and you as well David called the Lords of easy Finance by or the Lords of easy money by Chris Leonard so here's a guy who is a Wall Street Journal reporter very mainstream nothing controversial about this guy and he wrote this book that is actually a devastating criticism of the fed and how out of control it is and how it creates these cycles and how they blew the call on so much of this stuff”

A monetary reset backed by gold or Bitcoin (or combination), where the old currency is devalued in terms of the new currency, would make previously unpayable debt manageable, and is a fairer path than continued deficit accumulation or eventual collapse

“we could establish a new currency back it with a sound backing whether it be gold or Bitcoin or some combination of the two then say you know the old currency it's devalued in terms of the new currency and then suddenly the old debt would become manageable that's an entirely possible path and it would be a fairer and more balanced and less chaotic path than the one that we're on which is you know let's just keep running up the deficits until we can't do it anymore and the whole thing collapses or we print money and we you know we either we either collapse because we stop printing money and we have deflation and we have a depression like air event or we continue printing money and it it compounds on itself and eventually that becomes super high inflation you know and we get a a gresham's law event”

Elon Musk is 'a brilliant guy and has done a lot of great things but tends to be a dreamer and unrealistic,' with examples being his promise of self-driving cars five years ago (not yet delivered), raising questions about the feasibility of his claim to cut $2 trillion from budget deficits quickly without pain.

“I elon's obviously a brilliant guy and has done a lot of great things but but he tends to be a dreamer and he tends to be unrealistic I mean he promised self-driving cars five years ago and we're still not there yet we're getting close um and you know the notion that we can take $2 trillion that we can take2 trillion yeah Tesla's was doing well um you know out of the out of the budget deficit quickly without pain without causing a massive recession or a lot of dislocation”

The US stock market is in the top 1% of historical valuations, more overvalued than 1929 or 2000, due to free money and low interest rates creating an enormous bubble that will turn painful if any adverse catalyst emerges.

“for those of us who are Market historians and have' looked at the market you know valuation wise I mean it's hard to overemphasize how extremely overvalued this is this is like in the top 1% of valuations ever it's more overvalued than 29 it's more overvalued than 2000 I mean the the you know there's a lot of good analytical work out there that just shows that the free money that we had the and and the low interest rates that we have have blown an enormous stock market bubble”

The current 'Bent trade'—long bonds, short gold, short Bitcoin, bullish on the stock market—is what the market is currently pricing in, but this thesis is 'fundamentally wrong' because spending cuts cannot mathematically solve the fiscal problem and will not occur as proposed.

“bent trade is again this is what the market thinks the market could be wrong long bonds short gold perhaps even short Bitcoin La the stock market but you think most of this is going to reverse because the thesis here for the pent trade is fundamentally wrong I think that's right now now you know I may when I say reverse I don't say tomorrow this trade could be on for a few months at least and maybe even a year but I I don't see how mathema Ally it doesn't catch up with them”

Gold will reach $4,000 by end of calendar year 2025 and Bitcoin will reach $200,000 by end of 2025, both substantially outperforming current levels

“I believe both gold and Bitcoin my projection for next year kind of calendar 2025 year end gold will probably be at $4,000 and Bitcoin will probably be at 50 or 200 $200,000”

Housing cost softness or price declines could provide positive input to CPI, but this is a 'cooked number' because the government uses owner's equivalent rent (OER) methodology that doesn't truly reflect market rent dynamics

“housing is a big component of the CPI and uh and I think recently housing has started to show signs of softness which would be you know a very big positive and I was just on a panel with Danielle Martino booth and she said she thought we would see some housing price softness so and of course that's all a cook number because they do owner's equivalent rent anyway”

Gold will reach $4,000 by year-end 2025 and Bitcoin will reach $200,000 by year-end 2025, driven by expectations of monetary debasement despite near-term optimism about the Trump administration.

“my projection for next year kind of calendar 2025 year end gold will probably be at $4,000 and Bitcoin will probably be at 50 or 2 200 $200,000”

Gold stocks have significantly underperformed relative to the gold price itself—while gold was up 20-30% this year, gold mining stocks were up a similar amount, when typically stocks multiply the return on metal by 2-3x, indicating the market still doesn't believe the $2,600 gold price is sustainable.

“the real cheap asset right now gold stocks I mean as I'm sure you're aware and you sit in Vancouver I mean they just haven't gotten that much love I mean gold was up 20 or 30% this year the stocks are up a similar amount typically the stocks you know multiply the return on the metal by 2 to three x so gold up 10% stocks up 20 to 30 that hasn't happened the reason that hasn't happened is that people still don't believe the $2,600 gold price is sustainable”

Bitcoin and gold are not correlated the same way because gold does not have a halving cycle like Bitcoin, but they are 'somewhat correlated' and historically gold has moved first to sniff out monetary debasement, with Bitcoin following on a lag.

“Are you applying the same cycle analysis to gold as you did with Bitcoin I am not it's not quite the same this doesn't have the having cycle but they're very they're somewhat correlated”

Gold is up 170% in three years and Bitcoin is up 3,000% in three years compared to Treasury bonds, which indicates the bond market is in the process of failing as an asset class

“in Gold terms you know um compared to the bond Gold's up 170% you know in 3 years and bitcoin's up 3,000% in three years and this is what this tells you is that the bond market is in my opinion in the process of failing”

Bitcoin Community is divided between anarchists who don't want government to buy Bitcoin (because they want the state to fail) and pragmatists who want the government to buy Bitcoin to pump the price, reflecting different ideological commitments

“Bitcoin Community is going to divide on this and I'm not quite sure where I am um so there's a part of the Bitcoin Community that's absolutely completely Anarchist and and and we don't want them to buy it or those people don't want them to buy it because they don't want the state to survive you know what I mean so their view is I hope they don't do a strategic Reserve because um you know I want the fat to fail and therefore the government will fail we'll get a new you know we'll do a new system a new government there's another part of the you know Bitcoin Community that's kind of like no I want to pump my bags I want the I want the state to buy it because it'll push the price up higher and I'm American and I want the US government to succeed and live and you know I've got a foot in both of those camps I mean I understand both points of you”

There has not been a truly prolonged and serious bear market since 2008; every decline has been a profitable 'buy the dip' opportunity, which cannot be assumed to persist forever based on historical patterns.

“unless you were you know unless we think about it now we haven't really had we had some very sharp bare markets but we haven't had a truly prolonged and serious bare Market since '08 since '08 it's it always paid to buy the dip you know no matter where the dip was it paid to buy it you got you came out you got made whole and it went higher and you know having studied financial markets and looked at history hundreds of years and hav been in them since the 70s I just know that that's not a that's not a condition that will always be true”

Bloomberg consensus for gold price is $2,050, significantly lower than McHugh's $4,000 forecast, indicating the market does not believe in sound money thesis or imminent monetary debasement

“Bloomberg consensus estimates are that it's coming back down to 2050 my view is it's going to 4,000 so so you know one of us is going to be right”

The Bitcoin strategic reserve proposal cannot be sold until 2045, which some argue removes the risk of dumping that could suppress the price, but storing Bitcoin has no storage costs—only the storage of keys is required—and holding Bitcoin provides price appreciation upside as the best-performing asset.

“unlike a traditional banking Reserve however they would be held by the treasury and couldn't start to be sold until 2045 and that said you cannot sell does not give you resilience it gives you storage costs okay first of all there's no storage cost on bitcoin all you need are the keys it's free um and I don't know why they don't think it gives you resilience because it's the best performing asset ever and it's going to go up in value”

In 3-year terms, gold is up 170% and Bitcoin is up 3,000% compared to bonds, which indicates the bond market is failing because it is being outperformed so dramatically by hard assets.

“you know the last threeyear performance of Bitcoin or gold to debt you know and I just did some charts on this which are on my Twitter feed for this New Orleans conference you know in in Gold terms you know um compared to the bond Gold's up 170% you know in 3 years and bitcoin's up 3,000% in three years and this is what this tells you is that the bond market is in my opinion in the process of failing”

The market is currently pursuing a 'Bent trade' (optimism about Scott Bent's treasury appointment and spending cuts), but this trade is fundamentally based on incorrect assumptions about what can actually be accomplished

“long bonds short gold perhaps even short Bitcoin La the stock market but you think most of this is going to reverse because the thesis here for the pent trade is fundamentally wrong I think that's right now now you know I may when I say reverse I don't say tomorrow this trade could be on for a few months at least and maybe even a year but I I don't see how mathema Ally it doesn't catch up with them”

The Financial Times article criticizing a Bitcoin strategic reserve for not providing 'resilience' is misguided because Bitcoin has no storage costs (only key management) and is the best-performing asset ever, so holding it provides both resilience and appreciation

“first of all there's no storage cost on bitcoin all you need are the keys it's free um and I don't know why they don't think it gives you resilience because it's the best performing asset ever and it's going to go up in value but yeah look the ft is on the other side of this I mean they you know um you know the establishment does not like Bitcoin let's face it most of the establishment does not like Bitcoin”

McHugh would not be positioned in equities during a hyperinflationary scenario despite the nominal price appreciation, because equities are already not cheap and don't offer value, whereas precious metals do.

“I mean they're not cheap to begin with I mean don't get me wrong if we have have a hyperinflation likee scenario as you know anyone who studied history knows stock markets do well with really runaway inflation I mean you know the Venezuela Market the wart Market the Z I mean everything goes up at least because at least a stock represents a claim on a business that will repic in the new currency sure as you as you further know Bond markets get just destroyed you know on that note how do you feel about bonds”

Sentiment indicators at the New Orleans financial conference show that there are 'no bears left' and everyone is bullish, with positive sentiment charts 'off the chart,' creating a condition where there are no new buyers and the market will eventually reverse.

“at this conference in New Orleans I saw Bob pror had a great chart on on sentiment I mean the the positive you know the sentiment charts there are no bears left everybody's bullish I mean there literally no bears left and the sentiment charts are off the chart so to speak”

Gold's recent 3% daily decline is partly due to ceasefire negotiations between Lebanon and Israel reducing geopolitical risk, but the bigger driver is hopeful yet 'fantasy-like' belief that Scott Bent and the Department of Government Efficiency can solve fiscal problems through spending cuts.

“I think that's probably a piece of what's going on in gold today but I I actually think the bigger piece is the is the hopeful and and I would call somewhat fantasy-like belief that Scott bassent is going to work miracles and and that that the Elon and and VC Doge you know Department of government efficiency uh are going to be able to cut expenses”

If McHenry is correct that gold goes to $4,000, gold mining stocks should outperform, multiplying returns by 2-3x relative to the metal—this is his investment thesis and what he is betting on for the next year.

“if I'm right the gold stocks are going to go a lot higher in the next year which is obviously what I'm betting on”