Alisdair Macleod: Banking Chaos - Silver Explosion Inevitable! Trainwreck Like Never Before

Rate suppression prevents necessary economic evolution by keeping unprofitable businesses alive on cheap credit; recessions serve the economic function of driving out unprofitable enterprises and reallocating capital to entrepreneurs with better ideas and products, enabling genuine economic progress.

“the point about a recession is that it drives out businesses which are no longer profitable it reallocates capital to um entrepreneurs if you like with new ideas um better products better services and that way you get economic progress but of course economic progress is not something that you can measure you can only measure the amount of credit being deployed in the economy so if you PFF up the credit you create the illusion of economic growth but actually all that is going into bust Industries which should go bust but are basically continuing on the lifeline of suppressed interest rates”

India's economy is now entering the rapid-growth phase that China experienced 15-20 years ago, and India is transitioning from initial economic liberalization to full global integration with increasing exports and domestic consumption

“the Indian econ is one that's taken on the running if you like in terms of expansion things have quaten down in China China has moved I think from the initial stages of uh economic liberalization um and that's something which now India is benefiting from its economy has been growing at a pretty rapid rate the sort of rate that we saw in China 1520 years ago um and part of that of course is um they get more and more integrated into the global economy with uh product being exported to everywhere”

Japan and the Eurozone are prime examples of the terminal consequences of negative interest rates: in Japan, 30+ years of deficits (averaging 6-7% of GDP) funded through Bank of Japan monetization has created a 250%+ debt-to-GDP ratio with the central bank owning 60% of all government debt; the Eurozone with negative rates now faces massive bankruptcies as rates normalize, threatening the euro system entirely

“you can see this in in in the US but it's absolutely as clear as anything if you look at the Japanese situation I mean and also the Eurozone situation where the suppression of interest rates took them into negative in you know into into negative overnight money I mean just absolutely crazy now that interest rates are rising I mean they've started Rising properly in um uh in the Euro Zone um there are going to be many bankruptcies there and that's going to threaten to undermine the Euro Zone uh the Euro system completely and could even lead to the end of the Euro um I mean I think we've you know we're running out of time on on F currencies anyway but you can see there is a specific danger which the Euro faces”

Australian manufacturing collapsed and automotive manufacturing ceased due to government interference and policy instability, not market forces, illustrating how political control destroys productive capacity.

“we don't have a manufacturing business anymore especially Automotive simply because of the challenges and the problems that government put their hands into all the time”

Currency education is a long-term process, and the fundamental problem is that fiat currencies have nothing backing them—they must be anchored to real value, which historically has been the role of gold and other precious metals.

“they just don't grasp the concept that the currency actually has nothing behind it um it is not tied to it you need to Anchor that currency to a value and that has been the role of money which is gold silver copper whatever I mean but you know times it it is gold more than the other two”

Jamie Dimon, CEO of JP Morgan (the most powerful commercial banker in the world), stated that Washington faces a 'Global Market Rebellion' over record US debt and described the situation as 'a cliff where going 60 M an hour towards it'

“recently the CEO of JP Morgan Jamie Diamond said that Washington was facing or faces a Global Market Rebellion over record US debt quote it is a cliff where going 60 M an hour towards it what comments can you offer on this quote from Jamie Diamond I think um I would say that people should listen to what Jamie Diamond says he is the most powerful commercial Banker in the world”

Jamie Dimon's 2023 shareholder letter states he expects volatility in interest rates that could reach 8% or even higher, anticipates stagflation, and is expecting to reduce exposure to risk—signals that interest rates will go up and the largest, most important commercial bank (the Fed's market conduit) is positioning defensively

“in his letter to shareholders with the um 2023 accounts which were released I think sort of just a week or two ago um he he uh uh said that uh he expects volatility and interest rates and he said they could go to 8% or even more now you know this is um he's and he's also you know he's also saying stagflation using those terms um and you know producing exceptional risks to the bank and so on and so forth now I mean what he's clearly saying is that interest rates are going to go up um and he is going to try and reduce his exposure to risk”

Silver is used extensively across industries—outside of oil, it may be the second most-used commodity in the world—with photovoltaic cells as a major new driver of demand as countries invest in renewable energy infrastructure

“if you study the markets if you look at the re uh how many excuse me how many are that silver is used and then all these industries I think outside of oil I think it might be the second most used commodity in the world uh so but pH photovoltaic cells that's where silver is being produced and it and India is going to produce a lot of a lot of silver panels”

India has a population of approximately 1.4 billion (just surpassing China), with roughly 750 million (about half) still lacking electricity in their homes, creating massive demand for solar panel deployment to electrify the population

“India has a population of about it's just over now China it's just beaten China for population about 1.4 billion 7 50 or half around about half still do not have electricity in their homes well they don't have electricity in home so they're going to use solar panels to produce electricity”

The entire financial system's collateral base consists of financial assets (bonds and equities) whose values are declining as interest rates rise, creating a collateral crisis where the system's backing assets are evaporating.

“the banks collateral and this the the whole system's collateral is uh if you like Financial assets not only bonds but equities and so on and so forth you get Rising interest rates what happens to the values of those they go down you end up with equities with a bare market and that bare Market is going to be very severe um that I absolutely no doubt”

China holds roughly $700 billion in US Treasuries as part of a total multi-trillion-dollar dollar position, and is actively selling these treasuries alongside selling dollars, which means the US government cannot rely on foreign funding going forward

“they've got something like I mean I don't know what the total dollar position is it's going to be in the trillions but of that roughly 700 billion is invested in us treasuries so he'll be selling those as well and the idea that um the US uh government can fund itself um with the aid of um foreigners you know that's that's going away that's not going to happen I mean it really isn't the largest identifiable holder of um us treasuries is a seller of dollars”

Governments have 'run out of road' for kicking the debt can down the road because debt levels are already unsustainable; any attempt to increase debt further signals to markets that debt levels will go even higher, and for nations already in debt traps (particularly the US), the only buyer for new debt becomes the Fed itself (monetization)

“we have run out of road when it comes to kicking the can down that road I mean it can't be kicked anymore because the debt levels um are already unsustainable if you give it another kick then really what you're telling the markets is that um uh you know the debt levels are going to go um uh even higher and these are for uh um uh countries for Nations whose currencies are already in debt traps I mean this is the problem with the US government I mean we we're talking just a moment ago about the Chinese you know the Chinese um selling dollars and you know who's going to buy all this debt I mean if you're going to create more debt the only buyer out there has got to be the Fed so um that's you know so monetizing the debt”

Commercial real estate has become 'unmarketable' and 'valueless' because banks don't want to take it on their balance sheets; property financed at suppressed interest rates is failing as rates normalize and offices sit empty due to work-from-home trends and economic downturn

“the losses on Commercial Real Estate commercial real estate become has become completely unmarketable I mean it's it's valueless in effect because the bank ERS don't want it they don't want to take it on their balance sheets um you know if let us say the property company defaults um and uh you know offices are empty people are working from home or they're not working full stop um you know the whole thing has just gone horribly wrong all this property was being financed at at suppressed interest rates that suppression is um alleviated somewhat and we've returned to something a bit more realistic it is going to go higher”

Private equity model for utilities like Thames Water: buy the company with 5x debt leverage, harvest the 8% guaranteed profit (set by regulator), achieving 40% ROE on equity before capital costs—this works fine until rates rise, then the company can't refinance and is bust

“private Equity what do you do well you buy the company don't you and you buy it with debt and you Lees up five times 8% is 40% return on your Equity wow isn't this brilliant now that works fine till interest rates rise and that's where we are now 10 water can't ref Finance itself it's bust”

India continues to open coal power stations despite environmental criticism, creating political pressure to offset this with increased photovoltaic cell production, driven by government encouragement and likely subsidies, with major conglomerates like Reliance Industries expanding photovoltaic production

“one of the things which um they are open to criticism on politically is um they continue to open uh co-i Power stations for example they are doing things which uh from the environmentalist point of view um are very destructive for the environment you know so they are not ESG compliant this brings political pressure if you like um in in onto India to come up with various means of offsetting this and one of these is to increase production of photovoltaic cells and uh so rather very much under government encouragement and I think subsidy uh though I can't swear to that um large Indian businesses which you know would be well connected with government um are expanding photovoltaic cell production and one of the foremost companies is a big big conglomerate called Reliance Industries”

Brian and Darl have been saving in gold and silver for 25 years because they view gold and silver as money, not as an asset that will appreciate and be sold off—continuous buying is necessary because gold/silver retain value when fiat currency goes to zero

“we've been saving in gold and silver for 25 years and that means that we believe gold and silver is money right it's no good buying at once and think that's going to save save you on the day or save you save save you down the future you got to continue to buy it because it's it's money it's you're not buying a asset that is not going to be used anymore you're buying an asset that you will be using it when the fear currency goes to zero”

Fiat currencies are running out of road structurally and face an inflection point, with the implication that currency collapse or fundamental restructuring is imminent.

“I mean I think we've you know we're running out of time on on F currencies anyway”

Politicians represent the 'zombies'—big incumbent industries that want government subsidies and cheap credit and don't want to face competition—rather than new businesses, causing them to lock up capital and labor resources inefficiently, which is the root problem in the broader economy

“they will Scramble for it because if they don't get anything and it doesn't matter what the price is you know they're going to go bus they're going to go out of business and it's the zombies basically who are the politicians are representing they didn't represent the new businesses the new businesses you know which have yet to start yet to make an economic impact uh they are representing um the people who Lobby them you know these are the big Industries these are the ones who want government subsidies these are the ones who don't want to face competition these are the ones who want cheap credit and what they're doing is they're basically locking up capital resources labor resources and deploying them inefficiently”

Chinese individuals are both enormous savers and 'the maddest punters in the world'—they love to speculate and bet, so financially sophisticated Chinese are buying paper gold futures on the Shanghai Futures exchange, which forces the bullion banking system to go short and cover positions elsewhere in London and COMEX

“while the Chinese are enormous saving Sabers I mean we're talking about in this sense they're taking a long-term view they are also the maddest punters in the world I mean they they love to have bets they love to you know sort of speculate if you like so um you know you've got the guys with actual money um you know thinking you know right yeah where are we going to really make money what can we bet on and if they're not betting on the number of lumps in a sugar bowl they go into the Futures exchange and they will buy paper gold and ramp up the prices”

Chinese financially literate individuals understand that the People's Bank of China is not actually 'buying gold' but rather 'selling dollars' and exchanging them for gold as a policy of winding down dollar and euro credit exposure

“when people say that the Central Bank of China the people Bank of China is buying gold they've actually got it the wrong way around it's not buying gold what they're doing is they're selling dollars now guys in China who you know sort of actually analyze these things and think about it they understand that”

Reliance Industries commissioned the first phase of a 5 gigawatt photovoltaic cell production facility in March, with total capacity to reach 20 gigawatts, requiring massive silver acquisition

“back in March they commissioned um uh the first phase of their uh photovoltaic cell production which is a 5 gwatt facility the total will end up as 20 gaw but of course they needed to get hold of the silver so what do they do well suddenly you start finding that from January this year um the standing to delivery on comx is just going absolutely crazy”

Mainstream media in Australia does not cover gold's record highs or its 850-point rise over 22-23 years, and if they did, it would trigger massive public demand to purchase gold.

“I thought to myself you look at mainstream media in this country no one ever talks about gold um if mainstream media stood up and said hey gold has just reached its highest point in recorded history if they stood up and said hey Gold's up 850 in the last 22 23 years I mean do you think that would make a difference yes you would see people just waiting in massive cues to buy gold”

The exodus from mainstream media is occurring because citizens sense they are being censored, even if they cannot identify the specific mechanism, making independent media and alternative channels increasingly attractive.

“this is why so many people are turning away from mainstream media I mean they don't necessarily recognize the process by which it's controlled but um they just know that they're being you know shot shot Al line and um they would far rather go and watch a movie or watch you and me”

Bond prices will collapse sharply as interest rates rise toward 8% (per Dimon's forecast); the duration risk of holding existing bonds becomes catastrophic as the yield curve normalizes.

“as far as bond prices are concerned they will continue R Rising remember that um Jamie Diamond uh record you know 8% was possible or even more so what does that do to U you know bond prices along the the eel curve I mean it's it's it it collapses them in effect”

Silver has been suppressed in price relative to gold for 20 years because China deliberately controlled the silver price through relationships with JP Morgan and commodity traders like Trafigura/Glencore to build a strategic stockpile as silver was refined in China

“I mean the history of this is uh that China has been um in in my view controlling the price for a very long time...from the Chinese point of view they wanted to continue to build the stockpile so their relationship with JP Morgan was to manage the price in such a way that the price was kept down and they could con continue to increase their stockpile so they controlled the price JP Morgan was acting as an agent for the Chinese government”

China's savings rate was calculated at 47% of GDP as of 2022, representing $18 trillion of unspent income that must be allocated somewhere within the Chinese economy

“uh China has a savings driven economy it's calculated that the rate of savings is I I think in in 2022 which was the last figures which I see the savings rate was build as being 47% of GDP now just think about that for a moment 47% of GDP right that's 47% of the equivalent of 18 trillion”

If 10% of China's total 47% savings rate is invested in physical gold at current prices, it would equal approximately 11,000 tons of gold annually, exhausting global output and leaving nothing for central banks or other Asian buyers

“if you just look at those numbers 47% of 18 trillion and just to seal that 10% of that is invested in Gold that works out 11,000 tons 11,000 tons this year next year the year after whatever whatever whatever right so you can see you know that there is a huge underlying pressure”

Jim Sinclair (deceased precious metals analyst) stated that despite disliking central banking, central bankers are intelligent and own gold themselves to protect their positions, demonstrating that gold ownership is about power, control, and influence

“Jim Sinclair Jim would always say as much as he dislike the central banking system he said they're smart they all own gold they own gold to protect their position it's its control its power its influence it's all of those things”

Currency debasement awareness and education only propagates over time, making the current moment an opportunity to position ahead of the inevitable demographic and educational shift in understanding.

“this is um an education process which um only gets resolved over time effectively um I just hope we can push people along a little bit to you know be a little bit ahead of the curve and understand what is actually happening in this context”

The Australian government (in a budget speech the night before the interview) claimed interest rates will come down, but given the debt levels, rates cannot come down and will rise instead, contradicting government/politician claims

“we just had a budget here in budget night was last night our Treasurer came up and said we've done this and we've done this and everything is going to come to a close where we can we believe we believe the interest rates will come down you know they're they're looked upon as the you know the god of treasuries and whatever it is but Alistair you said it right and JP Morgan said it right interest rates are going to rise they're not going to come down they're going to rise”

Silver should be priced at approximately $50 per ounce given demand fundamentals, potentially $250 per ounce when accounting for currency debasement, making current $30 prices 'cheap as chips'.

“don't you think it should be more around $50 an hour and and I'll get back to that in a minute $50 an considering the demand coming out of India now I recognize that $50 is just a figure what's the price of a US dollar what is the value of a US dollar look in my opinion an ounce of silver should be if you want to talk US Dollars should be$ 250”

The gold-to-silver ratio currently stands at 82 times and has historically spiked to 112 times, representing a severe mispricing of silver relative to gold

“the in the gold silver ratio which I look at at the moment is 82 times um and it has been up briefly uh to some when silver fell down to nine bucks or something it briefly hit something like 11210 so this is you know in a sense it's completely mispriced”

A strategy for experienced investors is to buy silver now (capturing both volatility leverage and suppression-correction dynamics), hold it until prices rise significantly, then exchange it for gold at favorable ratios (potentially getting 2x the gold amount compared to buying gold directly now)

“so anyone who wants to play catchup with precious metals could well consider uh using China as the root into gold if you like um and what I would do um under those circumstances it look to by silver and at some stage um when it has risen significant ly then exchange it for gold and you will get probably twice as much gold as you would if you just bought gold now”

This convergence of Chinese dollar-selling (driving gold demand) and Indian industrial silver demand (eroding China's price control) at the same time creates a simultaneous shock: money returning to both gold and silver, causing an exceptional repricing opportunity

“this is happening at the same time as um uh China in particular is selling dollars in order to buy gold and um other Asian nations are doing the same so there's an element of money if I can invent a word coming back into silver which I think um could well mean that not only does it outperform Gold by um you know sort of roughly nearly two times which is the sort of volatility relationship but I can see it actually um having to correct that um supr ression if you like uh the suppression of price for the last 20 odd years by China that could be quite tramatic”

As interest rates rise, bankers rationing credit don't ration it for government (because regulators classify government debt as lowest-risk), so governments resort to short-term T-Bill financing (3-6 months) along the most-profitable part of the yield curve, creating rolling refinancing pressure and dependency on continuously available funding

“they don't ration it for the government incidentally because um the regulator says that um government debt is the highest form of credit and the least risk so you have no um haircut on that so uh all you've got is duration risk so it's all ends up short-term financing for the government and um so you know they're in the T Bill market for example just um you know uh roding over 3mon T bills or six-month T bills you know perhaps few venturous Banks they're looking at one year T bills but they will just go for the maximum yield along that bit of the curve which really is about three or six months”

Mainstream media in Australia (and implicitly elsewhere) imposes censorship through editorial control such that if someone made the case for gold, they would be cut off, because mainstream media needs access to government information provided in off-the-record briefings, and media organizations no longer seen as friends of government are excluded from these briefings

“there is a problem with mainstream media and that is absolutely the is that they they actually impose they censor if you like um through editorial I mean if if someone went on to mainstream ma media and made the case for gold I mean made it sensibly they would just cut I mean you know because because um apart from anything else mainstream media needs access to government information now a lot of this information is provided in off the Record briefings if you are no longer as a media Mogul a friend of government you are not invited to these off you know off the Record briefing you are cut out”

Ordinary Americans, Australians, and citizens of major Western currencies are the last to understand what's happening to their currencies; they will hold onto their currencies, see prices rising, not realizing it's the purchasing power of their dollars/pounds/euros declining, not goods prices rising—this is an education process that only resolves over time

“the ordinary American doesn't understand it I have this problem here you know talking to people about this thing I mean I've almost given up talking to um but you know they just don't grasp the concept that the currency actually has nothing behind it um it is not tied to it you need to Anchor that currency to a value and that has been the role of money which is gold silver copper whatever I mean but you know times it it is gold more than the other two so people in Australia people in America um they are the last to understand what's happening to their currency they will hold on to their currency um they will see things going horribly wrong they will see prices rising not realizing that it's not the prices of goods Rising but it's the purchasing power of their dollars their pounds their Euros the year going down”

The Asian continent, particularly SCO (Shanghai Cooperation Organization) and BRICS+ partners, represents a rapidly industrializing world that is separate from the Western alliance, and India's development will be the most evident expression of this shift

“the Asian continent um the the partners of the Shanghai Corporation organization and their extension through bricks bricks Plus um you know we've got a whole world which is away from us as uh the Western Alliance if I can call you know uh our camp that there's a whole world there which is rapidly industrializing and nowhere is this going to be more EV evident than it is in India”

Thousands of Chinese people were filmed desperately queuing for hours to buy precious metals at retail stores, with stores turning away massive numbers daily because they couldn't process the demand

“there was were thousands of people tens of thousands of Chinese people desperately wanting to buy precious metals so they it was like looking at a football stadium with 100,000 people they were everywhere desperately attempting to purchase medal and but the problem was as it just takes hours and hours and hours to feed these people through but as the day was getting on they would the the store was turning these people away and asking them to come back tomorrow but tomorrow was the same”

The current situation is 'a train wreck rapidly approaching'—McLeod finds it 'very difficult to see how we're going to get out of this year 2024 intact' with currencies that still have value

“this is this is a train wreck rapidly approaching it really is um I'm always too early on these things I'll admit that but I I'm finding it very difficult to see how we're going to get out of this year 2024 intact and by that I mean intact with currencies that still have any value left in them”

Russia announced in early April that it would double its supply of gold and currencies (dollars, pounds, euros, and other exchange currencies), and approximately two weeks before this announcement, gold took off like 'an absolute rocket'

“the other thing that I read too is about uh just before or beginning of April when Russia came out with a statement that they were going to double their supply of gold and dollars and and pounds and and and euros and whatever exchange currencies right but being that being said it was about two weeks before gold actually took off like an absolute rocket”

From January 2024, COMEX standing for delivery (physical silver delivery against futures contracts) 'went absolutely crazy' with approximately 1,500 tons of silver being stood for delivery, indicating massive industrial demand

“from January this year um the standing to delivery on comx is just going absolutely crazy and um I haven't actually sort of calculated it recently but something like 1500 tons of silver has been stood for delivery on comx I mean this is a huge quantity if you think about it”

The immediate recommendation is to first 'sell Australian dollars' and then get out of credit and into real money (gold and silver) as a matter of urgency

“as to your point about you know um uh you know buying gold um well I would say first of all it's selling Australian dollars um you need to get out of credit and get into real money I I think uh as a Ree of urgency that is my view anyway um looking at everything”