What Bonds, Oil & Gold Are Telling Us | Michael Lebowitz

[00:00:01]and we should be live. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert, welcoming you here for another session with the great Michael Liowitz. Uh Michael is Lance Roberts's partner in crime over there in Raia. Um Michael, thank you so much for joining us today.

[00:00:19]How you doing?

[00:00:20]>> Good. Thank you for the uh putting great in uh into my title. I like it.

[00:00:25]>> Oh, well, we got to distinguish you from Lance. That's a pretty easy way to distinguish you from Lance. We've got the only so so okay Lance and then the great >> the okay Lance the the great and wonderful and magnificent >> Mr. Leewoods. Got it. Got it. Exactly.

[00:00:40]>> That a couple of things Michael. Um I owe you uh a debt of gratitude here because I called you to do this or I texted you to to see if you could do this late last night. Uh we had a last minute cancellation and you were extremely gracious to say yes, I'll jump in and talk about this. So, thank you for doing that. [snorts] Um, secondly, I have to name these things uh before they go live. And uh when we talked last night, I said we'd talk about bonds, which we're going to do, but I also named it what bonds, oil, and gold are telling us. And I hope you can also help talk uh to those other two topics a little bit later in the conversation.

[00:01:19]>> They're all the same story, so one story tells all.

[00:01:23]>> Okay, great. Um, but we'll we'll we'll we'll start off with the bonds uh side of things. So, uh I guess we'll get to bonds in just a second, but let me just ask you at a very high level, Michael.

[00:01:34]Um if you had to pick a word or a phrase, how would you c categorize the markets right now as you see them?

[00:01:43]>> Complacently optimistic.

[00:01:46]>> Okay. I don't know if you can really put those two words together, but I feel like it is complacent in that the price of oil will kind of stay rangebound. The Iranian conflict will stay rangebound between escalation and deescalation, but not exploding one way. Um, and with it, the market seems to just be very stable at the surface. Very different underneath, but stable at the surface.

[00:02:13]>> Okay. Uh, so sort of like a duck, huh?

[00:02:17]very calm and stable on the surface, but something furious going on underneath.

[00:02:21]>> Exactly. That's a great way to describe it. A duck. My duck theory.

[00:02:25]>> Okay. Right. Um All right. So, you know, I spend a lot more time on this channel talking about stocks than bonds. Um but I do try to check in with Lance at least every week briefly about what the bond market's telling us. But I'd like to do a deeper dive here today with you. Um, so, uh, Mike, I I guess let's start any way you like. I'm letting you know that I did get the slides you sent me. I'm kind of loading them into the system now. So, just tell me whenever you want them brought up.

[00:02:56]>> Um, why don't we start there? Because the question that is asked of me three, four, five times a week, uh, what's happening with bonds or what where are bonds going? It's it's usually phrated phrased one of those two ways. And my answer to where are bonds going? I go, if you tell me where the price of oil is going, I'll tell you where the price of bonds are going. And the reason are the graphs up. Uh Adam, >> uh they are processing. So I'll tell you as soon as they're ready.

[00:03:29]>> Okay. Um I know the first graph we had a problem with. So let me know when that comes up. But what it's going to show you is the correlation of crude oil with five-year yields. and it goes back to 2019 and it's a volatile graph. Some the correlation is generally positive by it's roughly 20. Yeah, see the reason >> we're getting the same issue there, Michael. I'm sorry about that.

[00:03:56]>> Okay, so what you would see is not an orange line, but a blue line. Um, yeah, it's weird that it's doing that. a blue line that's very volatile and it whips around between typically plus 35 and minus5 correlation. Sometimes there's a decent correlation with yields and oil prices. A lot of times it's kind of negligible, hovering near zero. Right now it's over 50%. That's the highest it's been except for a very brief moment during March of 2020 when oil was trading negative and bond yields were plummeting. Um again positive correlation. So we have a very positive correlation and you can just see it in the daily moves. If you know when I wake up first thing in the morning I can look at oil I know what bonds are doing and I know what gold's doing almost by just looking at the price of oil and you know what's going on in Iran. You don't know the news but you know that it's escalating or deescalating. Rumors are are good or bad. Um so I I just feel for the bond market we're in this there you go.

[00:05:10]uh we're in this temporary period where it's more about oil prices than the economy than inflation than the typical the long-term historical drivers of bonds. Um, and to kind of show this a little better, we're going to go to the second graph in a second here, but it's important to note that historically, uh, yeah, that one. Historically, the C bonds and inflation are very highly correlated. So, if you tell me where inflation is going to be over the next year, I would give you a very good guess on where bonds are going to be over the next year. And that's a very well-known relationship. But something very strange has happened over the last since basically the Iranian conflict started.

[00:06:00]And what you can see in this graph is that let's focus on the middle line, the blue line. That's fiveyear inflation expectations.

[00:06:08]They started when this conflict started at basically 246 on the left side.

[00:06:14]They're now 228. Inflation expectations have actually declined. they they rose but then they have net net declined since the conflict began. So if you're using 50 years of historical correlations and data, you would say bond yields which start at 362. I I would take the under that they should be 350ish 360 some something slightly less than 362. Maybe there's a little bit of a premium for war and you know other issues but they're at 430 and this graph is actually a few days old. It could be a little bit higher right now. So, it's weird that the historical steering wheel for bonds is telling you yields should be flat to lower, bonds are higher. And what that translates into is real yields. So, real yields are just interest rates minus inflation. And that bottom line shows you that they've gone up almost a full percent since the conflict started. So, basically, the market is kind of jackal and hiding.

[00:07:18]Jackal and hide is is playing jackal and hide. In one sense it's telling you don't worry there's we're not worried about inflation and then another sense it's telling you be worried about inflation.

[00:07:30]U it's pricing in this war premium. So maybe it's that the mar bond market is scared that things get out of control in Iran and oil prices are not 70 80 90 but 150 250 200 something you know we've seen forecasts like that um maybe that's the concern of the bond market and it's preparing for that yet at the same time inflation expectations and these are measured by tips this isn't a survey you know where someone calls calls you on the phone and says where do you think inflation's going to be this is money being put to work is telling you they're not really concerned about inflation.

[00:08:08]They think it's a very temporary transitory issue. Um, >> so Michael, sorry to interrupt, but let me let me interject. Um, it's really interesting. Um, I guess one question is is could the bond market be worried about something else? So, hey, it's not necessarily inflation that we're worried about, but it's it's something else.

[00:08:29]maybe a a coming credit crunch or, you know, something else that's not directly tied to inflation.

[00:08:38]>> Yes, I would. But if I were to guess, I wouldn't say a credit crunch or a liquidity crunch because you would see that in the stock market in other areas.

[00:08:46]>> You see credit spreads blowing out if that were the case, right?

[00:08:49]>> And you would Yeah. And you would actually see Treasury yields probably falling. Uh, right. And credit spreads widening. And I'll actually show you something. Our fourth slide has a little bit on that.

[00:08:59]Uh my only thought is that this is about the deficits related to the war that now we got this whole another batch of spending that has to be funded. So it's more supply in the market.

[00:09:13]>> But if you were worried about that, wouldn't you think inflation expectations would be going up >> in theory? that that's why it's very uh it doesn't make a lot of sense based on everything we know historically on what drives bonds. So >> So Margator asks here, are the inflation numbers accurate? I mean, could could part of this be a a broken signal from either one of these indicators?

[00:09:39]>> Well, inflation expectations or tips it it's it's not broken. This is what people are putting money into. This is people voting with their wallets. So inflation expectations are not broken.

[00:09:51]Is CPI a broken measurement? You know, we can de we could spend 10 hours debating that. Uh but when you're if we're looking at a five-year bond, you're looking at quarter by quarter where is inflation going to be. And we can argue whether the current, you know, the current CPI number is right or not, but we're talking about years two, three, four, five out there. And that's why inflation expectations are a better tool for this analysis.

[00:10:21]Um but but to the point on CPI, it came down. There was some very encouraging news in the last CPI report. Energy certainly helped it come down, but we saw core services were unchanged. Uh you know, so and there were plenty of deflationary uh indicators within that. Core CPI is 2.6%. 6% uh PCE coming out I think it's in two weeks towards the very end of this month is supposed to fall from 4.1 to 3.7 with a core going to I think 32 or 33. So, you know, as long as oil doesn't really jump from here, gasoline doesn't really jump, some of that trend will hopefully be intact, which uh may help take that premium out of the ye out of longer term bond yields.

[00:11:18]>> All right. So, >> but let me let's go to that third flow here. So, yeah, you want to go to the next graph?

[00:11:24]>> No. Yeah, that No, that was a great question. Let me go to the third graph because it just shows the same thing in a different light. And what this shows are those real yields again. And you could see they were on a nice steady trajectory downward uh kind of from that post high inflationary period down and then they just popped once the war started. So again, it all kind of leads me to believe that whatever is going on in bonds is transitory. doesn't mean, you know, I'm I'm not using the word transitory to mean 30 days or three years. I don't know how long oil prices are going to stay elevated, >> but I think this is an event that will eventually go away and with it, we'll get normalization of all these weird functions in the bond market.

[00:12:13]>> Okay. So, is the best way to think about that that spike there that that's just the war premium that bonds are placing on the situation right now? It it goes back to what you asked me why why are bond yields acting differently than inflation expectations and it's that you know call it a war premium call it a deficit premium call whatever fear or concern is driving yields higher um but again I I think you need to just look at the price of oil for now and that will kind of determine where things are going now if you want to trade this market I think one thing that's been very interesting is there's kind of been this equilibrium of sorts. When the price of oil gets too high, Iran and the US come to the table. When it gets too low, they feel empowered. So, they feel empowered to kind of ask more of the other party to to escalate actions. So, we're back towards that upper end of the range again. So, maybe we're getting to the And look, midterms are inching closer every day, right? So Trump has to be more and more um thinking about what's the price of gasoline going to be on November whatever that Tuesday is November 4th 5th whatever it is and Iran you know is losing precious revenue that they need to fund the company fund the uh country >> country so so they're both while Iran likes higher oil prices it's only good if they can sell oil into it so you know I think we're into the upper end of that band. So from a very short-term perspective, assuming that that higher oil price drives the two parties to at least be friendly with you, talk publicly friendly with each other, that should help bring oil back down. Now, if that equilibrium breaks, then it's a whole different story. But, you know, we've kind of seen that escalation, deescalation, reescalation going on and on, and it seems to be tied somewhat to the price of oil. There's obviously other factors.

[00:14:18]>> Okay. So, I want to kind of ask you a punchline question, but feel free to defer it if you want to walk through any more data or logic beforehand.

[00:14:26]Are you sounds like you're thinking um maybe I'm reading this the wrong way, but it sounds like you're thinking you'll take the under on what bond yields will be by the end of the year.

[00:14:38]>> Yes. Yes. Again, with the huge caveat that Iran doesn't explode, >> right? that it doesn't get out of control and and that's a big caveat.

[00:14:49]uh because you know let's go back to the underlying data what drives bonds it's not Iran it's inflation it's economic activity we are seeing inflation when you strip out all the oil stuff actually looking very good uh shelter prices are catching up as we've talked about for multiple years now they're really starting to catch up >> when you say catching up you mean the the disin the disinflation Yeah, it's catching down. Yeah.

[00:15:19]>> So CPI is a very flawed indicator in that it takes a long time for 40% of the index to catch up to what's going on in the real world. And in a real world, rents are flat at best and declining in many, many locations. House prices are flattish. And yet we're still showing three 4% in the shelter component, which is 40% of CPI. and and this has been a known issue and it takes a long time for it to catch down or up to whatever is going on in the real world. So even if house prices, rent prices start gapping higher today, that indicator will still keep coming down.

[00:16:01]Um so you know I think on the inflation front you know again oil has a big thing big component of CPI not just gasoline but it's plastics it it's transportation it affects many different industries so some of that is still flowing through um on the economic front we have this you know the phrase is getting very overused but a K-shaped not just consumer but economy We have AI, AI spending, AI investment is driving GDP. Without it, GDP is sub 1%. The consumer in aggregate is weakening. Um, I say in aggregate because we have K-shaped consumption. The top 10, 15% are consuming, right? That they're driven higher stock prices, spend more, house prices are still doing well. You know, they're basically still at the highs, give or take a little.

[00:17:02]>> Yeah, >> that's because podcasters had to jump in at the top. Now that that's happened, they're going to come down. Yeah.

[00:17:08]>> Right. Remind me when we're done. I got to call my wife to tell her to list our house. We got to get out of it now that you're getting into the market. Yeah.

[00:17:14]Yeah. Um >> and employment, I think, is a big issue, right? The unemployment rate has stayed low, but we've seen very weak growth.

[00:17:23]And it appears that, you know, we we've seen weak growth. weak weak monthly job growth, you know, kind of in the 50 to 100 range when we should to keep up with the population be closer 150 200 and that slowly adds up over time. Even though it doesn't show up in the unemployment number because there's people leaving the workforce and there's other factors, we generally have a a weakening labor market.

[00:17:51]>> I I totally agree with that. Although, let me ask you this. If AI does start to deliver the promised productivity gains, then we we may not need we may be able to have a lower baseline going forward.

[00:18:04]Correct.

[00:18:04]>> That's the million-dollar question, right? That's a much much bigger question. Uh I started thinking about how to write an article on this and it's a little perplexing because it's >> you sound like Lance.

[00:18:18]>> Yeah.

[00:18:19]>> Every every two things I say, oh, I'm writing an article on that. Well, you know, we got to keep you guys up to date. Uh, >> I'm kidding. You guys write a ton and >> honestly, this is this is a great example. I'm writing this for me. I'm writing this for me so I can figure this out.

[00:18:36]>> Think through. Yeah.

[00:18:36]>> Right. Think through it. Um, it it'll force me to read some articles. It'll force me to look at opposing sides. I was just listening to a great uh YouTube. It just started by Chad Jones.

[00:18:49]Uh and the biggest the biggest question for me is this AI spending is going to boost the economy but with limited impact and lessening impact going forward. What really matters is like let's look at the Hoover Dam, right? The Hoover Dam helped GDP. A lot of people were employed, a lot of resources were bought to build, you know, that massive dam. But at the end of the day, the benefit of the dam was not the GDP that it added for I don't know how long it took to build a couple years. It was that it allowed for the whole southwestern US to to grow out to to >> perpetual stream of energy that it provided afterwards. It way more than paid for itself.

[00:19:34]>> It's still paying for itself. It's still benefiting those initial payments.

[00:19:39]That's what AI is. AI is not this spending that's helping GDP. That's nice, but it's not sustainable and it's its impact is going to lessen because you can't keep growing at those growth rates. Again, like inflation, it's about growth rates, not absolute numbers.

[00:19:56]>> So, if you know the growth rate slows even though it's still growing, that can have a negative impact on the economic growth rate. Um, so the question is when does the productivity hit? When do we start seeing those benefits? Is it a year from now? Is it 20 years from now?

[00:20:14]>> You know, we don't know. You know, we've seen it with the internet. It can take a while for those benefits to truly come through because it's not just the AI.

[00:20:23]>> People have to learn how to use it.

[00:20:25]Software has to get used to it. It has to We don't even know where it's going.

[00:20:29]There's this whole now opensource AI, which is is it going to be free? Because if it's free more or less except for like heavyduty AI usage, people will use a company people and companies will use it a lot more than if you're paying by tokens and you don't even know how much.

[00:20:48]You know, if I want to do a project, I want to model X Y and Z right now. I don't even know what that's going to cost me. That that's kind of crazy, right? I don't know how many tokens I'm going to use in the process and I don't know what it's going to cost me. name another project that a company >> gets into where they say, "Yeah, it's just open-ended. Spend whatever you need to spend." Right? That's not how it works.

[00:21:13]>> And spend as much as you possibly can.

[00:21:14]Yeah. So, Fred Hickey, I don't know if you saw the interview I did with him, but you know, he he basically spent most of the interview talking about this where he said the economic model for AI currently. He his words was dis disincintegrating in front of our eyes.

[00:21:29]But he's like if it really ever had an economic model because I don't think they've really >> they're figuring it on the fly. So they just decided we're going to pursue this at 100 miles an hour and we'll just try to figure out how to build the car as we do.

[00:21:41]Right. Right. Right. When and there was news this week of Kimmy 3 by um >> China >> China by China. I forgot the name of the company. Um which is open source which basically means that it's it's essentially free. You know there's security there's concerns with it. It's not as good as the best anthropic has to offer, right? And you wonder security issues too like is is are these Chinese firms getting access to all of our corporate data if you integrate it in your company.

[00:22:12]>> A lot of different issues but also a lot of uh tools out there on how you can kind of stop it. You bring it into your own network. You you know I look this you didn't bring on the technology.

[00:22:25]>> The point is we just don't know yet.

[00:22:26]Right. As you're saying there's a lot that's unknown. Right. But I think if it can become a free or near free, you know, lowcost uh AI, the productivity benefits blossom much sooner than if it's this very warped weird uh token method. I don't know. Here in DC, we have a couple toll roads that the toll differes constantly based on traffic. So, you know, to get from basically the Maryland Virginia border to nut back to 95 around the beltway sometimes can cost five, six bucks.

[00:23:04]Sometimes it can cost 50 bucks.

[00:23:05]>> Yeah. Surge pricing.

[00:23:07]>> Surge pricing. It's the same thing. You I I need to know I need to at least approximate what is it going to cost me to to create this model. And God forbid I get stuck halfway and I've already blown through $5,000 and that was my budget. What do I do then? am I just stuck with $5,000 worth of worthless, you know, half-finished model? Um, so, you know, but again, the I think where we all need to think about is how and when and where do the productivity benefits of AI begin to acrue.

[00:23:41]>> Yeah. Well, I can't wait to read your piece just because again talking with Fred, you know, we're seeing signs Chimath Palipatia who's >> you know a big uh he's a a big champion of AI and he's he's using it like crazy in his companies you know he admitted that you know token usage sorry token cost has been going up so much that he had asked his CTO recently what's happening with our our token costs and the CTO said well they're doubling about every 45 days And Chimath was like, "Wow, that that's not good." Well, okay.

[00:24:13]How are my productivity gains? And the CTO was like, "Maybe 5%." So Chimath is just like, you know, all right, I'm I my costs are exploding and I'm not getting really that much for it. So we're having to really rationalize token usage right now. And he's like, if I'm doing that, >> all the other firms are going to have to as well. So, you know, presumably switching more to open source models would would obviously reduce the token cost there. There's a lot of things that could could uh affect in the mix, but but right now I I think we're not seeing a lot of examples of >> company X, you know, adopted Anthropic or OpenAI or whatever and their productivity tripled. You know, >> that's going to be a while. I mean, it's like any new technology. Don't expect it overnight. There are I mean, look, we're more I'm more productive. Lance will tell you he's more productive, but you know how much >> does he really do anything? He says he does.

[00:25:08]>> Yeah. I mean, can if you if you multiply zero by a thousand, isn't it still zero [laughter] >> in theory? [clears throat] But you know what? What are those productivity benefits really worth to our bottom line? I don't know. Maybe maybe it it means I have more time to spend on other things which show up. But it's very hard to measure how much saving me an hour a day, allowing me to work an hour on something else benefits the bottom line. I think every company is going to have trouble for a while until the the benefits become more uh highlighted >> more concrete. Yeah.

[00:25:44]>> Yeah.

[00:25:45]>> Okay. Well, I'll look, like I said, I really look forward to reading um what your outcome there is. Um I just got to answer a question here. Um, Alice is referring to the um comment I made about pod podcasters jumping into the top of the housing market. Alice, you you probably missed my announcement the other day that that I ended up buying a home. Um, actually, embarrassingly, first-time homeowner at age 55. Um, and and by doing so, as a guy who's waited out the housing market for literally decades, uh, I am sure I'm the greatest fool. And now the national housing market's going to roll over here. Um, also let me just show you Michael real quickly because you're getting a lot of love from people. Uh, where is it? Um, Michael is Mr. Gentleman in your channel. He's very grounded but analytical and insightful. Always love listening to him. And then someone else chimed in and said he's pragmatic, mechanical, and to the point. So, just know that you got a fan base here, Mike.

[00:26:42]>> Thank you very much, everyone. Um, Adam, we actually there was one more graph or one more uh >> I was going to ask you if you want me to pull it up. Yeah, the credit spreads one.

[00:26:51]>> Yeah, let's just talk about it. I I'm not sure how visible this will be. So, we're working on a new version of Simplevisor. We're actually going to put it out for beta testing to about 10 or 20 people, I think, next week, early next week, and then hope to get it to go live very shortly thereafter. And one thing we've done is is enhanced our credit spread report. And because it is again, even if you're just a stock investor, it's very important to follow.

[00:27:21]So I I cut two there's more to the page than this, but I cut two parts of it out. Can you read those numbers? Are they visible or?

[00:27:29]>> Yeah, it's it's kind of hard for me, but I see it at a smaller scale than other people.

[00:27:34]>> Okay. So what we have are the B of A ICE indexes for corporate bonds. So you can see on the left side top graph it goes from triple A down to triple C. Triple B and higher up to AA is considered investment grade. Double BB and triple C are junk. And what we're first looking at is the current spread. So the first number to the right of the letters and that's how much you're getting paid over US treasuries. So, let's just look at we'll use tripleB for this example. Sort of in the middle there. You get paid about 1% more for a tripleB bond than you do a US Treasury. So, what so first of all, what does that tell us? And we need context, but it it think of it as a valuation just like a PE for an equity.

[00:28:24]When equities when pees are high, it's telling you that sentiment is really strong, that everyone expects great things to happen and it's a period to be cautionary. When pees are very low, it's a time when everyone's scared and you should think about buying. Kind of going against the grain. Spreads are the same way. The lower they are, the more complacent the market is. are not willing to accept a high premium for the risk that they're taking in owning corporate bonds which can default to treasuries which won't default.

[00:28:58]>> Right. And sorry just just to make sure folks follow it's an inverse relationship in terms of pees versus credit spreads. Right.

[00:29:05]>> Right. Exactly. But they're telling you the same thing.

[00:29:08]>> Yep.

[00:29:09]>> Uh or and you know I would say that credit spreads take it a step further.

[00:29:13]They're more of a macro indicator because they're they're also a look into liquidity. You need good liquidity for credit spreads to get really tight like this. And typically when liquidity is suffering is when spreads blow out or widen out. So, so, so what's very important is not just the number. 97 97 basis points for tripleB tells me nothing if I'm new to this, right? So, let's provide some context. So the next uh four columns over tell you where it is historically over the last three months, one year, 5year, and 20 years.

[00:29:48]So you could see that over the last 3 months, it's in the upper 70 75% or so of its range. So it's kind of elevated.

[00:29:57]It's telling you that that yield spreads for tripleB bonds have risen.

[00:30:02]You know, maybe we should be a little cautionary. But if you scroll to the right, just go to the 20-y year, you can see it's in the bottom 2%. So yes, they've they've that that spread has risen a little, but it it pales in comparison to its range over the last 20 years. And then at the bottom, we just graph those ranges. So the the bottom graph on the left is the three-year. And if you stare at it close enough, you can see the slight uptick over the last few [clears throat] months. But you what what's even noticeable even just on a three-year graph is it's at the bottom, right? It it's at the bottom and the 20 year or the what I have the 15-year you don't even see it, right? You can't even see the recent uptick. Um, and you know, you can see the average. And I purposely didn't do 20-year because the 20-year includes the financial crisis when spreads went to eight basis points for triple B to 8% for tripleB and it just makes everything else look flat. So, I kept it a 15-year and you can see it can still go up to 4% uh 3%. Uh, so they're cautionary, but they're also at the same time telling you that sentiment is good and liquidity is great right now.

[00:31:19]>> So, we track these somewhat closely, not just to know what's going on in the corporate bond market because we do trade and invest in those markets, but just as much to tell us what's going on with with liquidity, sentiment, etc. >> Okay. Um, John here says, "Hey, aren't you saying this backwards? Shouldn't I be concerned that the spread is at the bottom of its range over 20 years? And let me take a crack at answering and then you can, which is well, it sort of depends on your timeline. Um, so from a reversion to the mean standpoint, yeah, maybe you should say, well, look, if they're the credit spreads are on the floor, then the only really direction they have to go is up and at some point they'll start mean reverting and and yeah, things will get a little rockier when they do. question is is right now nobody's worried and if you if you were worried uh about you know this trend line being below its its moving average um it's or or it's average for the past several years it's been below it for what two years Mike so it's like >> you know you you might be waiting another two years for for that to start mattering but but right now as Michael Liowitz is saying um market's just not worried now you could maybe translate that into an overcomplacency indicator Um but um you know credit spreads and I'd love to hear your thoughts on this, Mike. Credit spreads are kind of an early warning indicator, right? They're one of the first things that start moving and they they generally don't just spike overnight from complacency to fear. You know, they they they start moving. So watching credit spreads on a regular basis is a smart thing to do because if they start showing some momentum to the upside then you can start saying all right look somebody somewhere is starting to get nervous where else is this going to start manifesting in the market >> right you answered that well I'm not you know the concern wouldn't be the word but I would say put this on your radar this is you know we're trying to forecast the future and there's so many different factors and it's all dynamic but this is one factor that that is worth uh understanding that the market is very complacent just like pees you know KPE is pretty much the highest it's been going back to 1880 whatever whenever the you know the Schiller started tracking that is that a concern yes but should it dictate your trading your investing behavior it should no it should be a factor you should understand what it means and like this I The two were telling you that you need to you can't just go away for three months and not pay attention. You need to to pay attention to understand what these mean and look for signs that something's cracking in the corporate bond market in the stock market just probably even more importantly in the liquidity markets. So this you know credit spreads are somewhat a function of credit of uh credit spreads are a function of liquidity but you know like we've talked about in the past like looking at uh sofur you know repo rates versus fed funds are there cracks developing in basically the foundation of the whole financial system and that that's you know that we're looking for more evidence other than oh there's a dark cloud over there deep on the horizon time to you bring the boat in and batten down the hatches. No, it's clouds come and go all the time, but we want to keep our eye on that side of the sky.

[00:34:53]>> Yeah. And to be clear, just because you use the term cracks in the foundation of the financial system, I don't think you're seeing any right now. Correct.

[00:35:00]>> Nope.

[00:35:01]>> Yeah. Okay. Um All right. Uh so I want to I want to move over to oil. is provided that we've said most of what you want to say about bonds. Is there more to more you want to share or?

[00:35:16]>> No, no, I think uh we've covered it. Uh as goes oil, as goes bonds.

[00:35:21]>> Actually, John just asked another question first. He said, "Hey, our explanation makes sense to him." So that's good. But he says, "Is there a standard measure of acceleration in credit spreads or would he have to kind of, you know, monitor himself and maybe come up with his own way to measure basically what do they call that? the second derivative.

[00:35:40]>> Yeah, I mean you can look at you can apply MACD and momentum and all the stuff we use moving averages is you know which moving averages and I'm sure people do it but you know just looking at the the graphs at the bottom provides some context. We also I don't show it here but we also show the intra credit spread. So what's triple B ver doing verse double A and what and that's another place you'll start to see problems.

[00:36:08]>> So right now triple C has actually been widening out a little bit but then actually you could see it on the 20 year they're in the medium uh you know basically at average at 50 something% whereas single B double B is down at the very lowest of all historical evidence.

[00:36:27]So I'm not too worried about triple C.

[00:36:30]That's kind of a quirky that's junk borderline default and there could be a few few uh bonds that are affecting that or other issues. But I want to see if all of a sudden single B starts widening out versus tripleB. So you start getting a divergence within the credit stack itself. You know, that's that's one place to look for early signs. Uh but again the graph kind of shows you uh what's going on. If you start seeing it accelerate I would start then looking in the money markets and the repo markets.

[00:37:04]Is there a liquidity problem? What's going on with corporates? Is this is this just a segment of the corporate market like we keep hearing about Oracle and software. Is is this just the software stocks are are having an impact on the indices but most of the other bonds are untouched. So there's a lot of nuance to it, but you can use technical measures, you know, qualitative, you know, you can do it a number of different ways, but just keep an eye on that side of the sky. That's that's kind of all I'm saying. No matter how you want to do it.

[00:37:38]>> All right. And if you want a cheat code for this, folks, just keep watching the weekly market recaps with me and Lance or me and Michael when Lance is away in vacation because we keep our eyes on credit spreads real closely. That's something that I'm always monitoring with Lance. So if they start doing something that's worth noting, we'll definitely be talking about it on that weekly program.

[00:37:58]>> And this gauge will be on a new S. It was on the old Simple Visor and we had data issues. We've resolved the data issues and we've enhanced actually the offering. So we're going to get this up and running as soon as possible to the to the public and you'll be able to see it there on Simplevisor.

[00:38:15]>> Great. Um I got to take one last question from John because it's back on the housing side of things. He says,"Adam Tagert, the greatest fool.

[00:38:23]Wasn't that illustrated on your Apple commercial?" That's so funny that he remembered the Apple commercial. Um, and I challenge anybody who watches that commercial to assemble an HP in as quickly a time as I did, even though I got smoked by the kid and the dog setting up their iMac. Uh, I think I'm pretty proud of that setup time for that that HP. Um, okay. So, uh, oil. Um, as we're talking, Michael, I think WTI is like uh somewhere in the getting close to the mid 90s. Yeah, it's 94 right now.

[00:38:58]Sorry, Brent. Brent futures 94 is getting close to 87 again futures.

[00:39:05]>> Um, so that's that's a pretty dramatic movement in the past couple weeks because what like three weeks ago or so, right?

[00:39:12]>> Like just cracked below 60 briefly.

[00:39:14]>> Yeah. 70, right?

[00:39:15]>> Yeah. So obviously that's in response to the resumption of kinetics with Iran and no one knows for sure where oil's where the war is going to go and therefore where oil is going to go. Um so I guess just as you as you watch the oil market right now, what are you what are you taking away from this price action?

[00:39:36]Again, I kind of think that oil in a weird way, oil is what's driving the actions between both kinetic and diplomatic between the US and Iran. When when oil gets up to where it is and slightly higher, it starts maybe we got to stop stop bombing. This isn't this is having a negative impact on us and our allies. Uh let's let's start talking more friendly to Iran.

[00:40:04]let's get them to the negotiating table and same on their side. The similar issues and then you know so we're at the upper end of that range. So hopefully cooler heads prevail and we get back to the negotiating table and try to figure something out. Um but you know we'll see we'll see how this if this equilibrium can hold and if it doesn't hold you know we really run the risk that the hoodies close the Red Sea whatever you know I I don't know how effectively they can but you know they can certainly slow down traffic at a minimum will Iran start bombing oil production facilities at its neighbors. What will we do? Will we take Car Island? Will we bomb Iranian oil facilities? So, you know, the potential for it to get out of hand with a huge impact on oil prices is there. I don't know how from at least Trump's perspective, I don't know how logical that is going into a midterm election where we know that people care more about their wealth, their money, their spending, inflation than they do about politics when it comes to voting. Um, so you know, I think the election will also kind of keep a keep that equilibrium in check. Um, >> so let me just ask you this, Michael. So Scott here says with a confidence I don't think really anybody uh has right now uh because no one knows it's going to happen. But he says oil's going to 150 bucks a barrel soon. So just assume for a moment, let's toss Scott a bone.

[00:41:41]Let's say it does.

[00:41:42]>> What does that world look like? What happens in the markets?

[00:41:45]>> Stocks go down. Bond yields probably go higher. Good. Go higher. Uh inflation gets temporarily out of whack. GDP probably falls decently.

[00:41:56]Um I I think what will matter is not if it's at 150, how and why it gets to 150. What are the causes?

[00:42:07]uh and how short-term or long-term is that whatever action it was that got us there and I actually wrote I think it was a week ago I wrote an article talking about headwinds and tailwinds in the market and I discussed a lot of headwinds and tailwinds but I I kind of was hoping that the most important part that I got through there was that when we look at these factors and we talked about with credit spreads and valuation They're factors. There are many factors.

[00:42:39]We think about it like hurricane forecasting. And you know, we see this starting about this time of year. We see it where they have a low pressure system sitting in the middle of the Atlantic and then a bunch of spaghetti like uh lines, some going into Florida, some going, you know, into the east coast, some going to the Gulf of Mexico, some curving out to see. And they put this cone of uncertainty around it. And that's the way we should approach for we shouldn't have it's so dumb I think when when when the Wall Street Journal asked 15 20 Wall Street anal where's the S&P going to be what I would like to know from them is where do you see kind of the best case scenario worst case scenario and where's kind of that median because no one knows what's going to happen. There are some very positive things that can come out of Iran and some very negative things that can come out of Iran. So, we should be prepared for $150 oil. We should be prepared for $50 oil. And we should be prepared to stay in this equilibrium for however long this takes. So, so I guess the advice is don't it's really hard to have a forecast of a definitive price or target or time or whatever it is. have a have a cone of uncertainty where you've you've looked at all the different scenarios and then as new information comes in you can adjust that cone up or down to the east or to the west and get a better and better forecast just like hurricane forecasters do.

[00:44:12]>> So just to be super clear you have your cone of uncertainty but you have your different playbooks for each major trajectory right?

[00:44:20]Okay, if this happens, which we put a 20% probability, we don't we don't think it's the default probability, but we know that if it does occur in that 20 percentile of probabilities, we've got a plan for that.

[00:44:32]>> Right. Right. Have a plan. Right. Think about it. I mean, you don't necessarily have to have a plan written down and what you're going to do, but have it thought out. We've thought about out $150 oil for the last two months, right?

[00:44:43]We've seen forecasts of that for a long time. So, we've thought that out. We've also thought out what happens if this thing resolves peacefully. There's potentially a glut of oil coming onto the market and oil's down possibly in the 40s. What does that mean?

[00:44:58]>> So, so you know, it's fine to have a forecast or a guess or whatever you want to call it, but just think about all the different scenarios along the way and how you should react to them. And again, it's I can't tell you how I would react to 150 oil because I don't know how the market's going to react and I don't know why oil's at 150. And there's still a ton of unknowns that that I can't address, but I can think about it and I can understand what's likely to do better or worse in that scenario.

[00:45:29]>> So you your job at the end of the day is to manage capital, right? So it's it's to come up with these scenarios, come up with a game plan for each and then make audible calls, you know, in reality as the data unfolds in real time.

[00:45:41]>> Correct.

[00:45:41]>> So you've got a current allocation right now. At what higher oil price do you start making some changes?

[00:45:50]>> I don't know because that's where I want to see how the markets react. If oil goes up to 110 and the stock and bond market don't seem to care, we'll be on higher alert, but we may not make any changes.

[00:46:02]If if oil goes to 110, stock market starts really getting hit, bond market goes up in yield, we'll make changes quicker.

[00:46:11]>> Okay.

[00:46:11]>> So, >> and I'm curious because some of that is reactive, right? You're waiting to see what the market does. But is there an element of proactive there? Like, hey, over 110 bucks a barrel, even if the market hasn't hasn't broken, we're just worried that this has more weight, so we're going to do something at least.

[00:46:26]>> Yeah. I think something Yeah. Yeah. Like I think if someone if I got that call and said, "Hey, oil is going to be 110 in two weeks, count on it." We would take some action. We'd probably add to our energy exposure, reduce some of our other equity exposure, maybe put a hedge on the bond side, u you know, things like that.

[00:46:48]>> Okay. All right.

[00:46:49]>> But you can hedge by buying oil stocks, too, right? You don't necessarily have to sell, although you may want to sell, too. But you can buy oil stocks. You can buy calls on oil stocks. You can buy oil futures.

[00:47:03]Um other, you know, industries that may benefit from higher price >> benefit from a higher price. Yeah. Um all right, folks. Not to make this a continuous commercial for our weekly market recaps. But obviously, if you want to find out what RA is thinking in real time as the situation develops from here, you're going to get that every week from Lance and or Michael, depending on who's on the show that week. Um all right. So, uh, we've got, uh, probably about 10 minutes or so left, Michael. Um, and if there are some questions from the audience for you, I'll pull them in as they come in. Um, but let's talk about gold for a moment.

[00:47:41]>> Okay.

[00:47:42]>> So, it's funny. We had a couple people earlier in the questions in in the the chat kind of lamenting the fact that they they didn't get out in January. um which don't want to pat ourselves in the back too hard. Um but we were telling people to either take some gains or hedge then because we thought that things had gotten crazily out of control. Um and then of course the the metals have cooled off. Um [clears throat] personally I think there's been kind of um several shoes that have dropped since the the zenith of the blowoff top earlier this year.

[00:48:18]One was just the mania the fever broke, right? So the froth needed to be um removed from from the pricing and that's a big reason why the price of the precious metals have sold off as much as they have. Um secondly, the war broke out and oil prices, you know, shot higher and a lot of countries who had been net buyers of gold um had to start selling some of that gold to afford that higher priced oil. So that took a big marginal buyer out of the equation and brought some additional selling pressure in there. Third, we had Kevin Worsh take over as chair of the Fed and he basically had to prove his bonafidees as you know an inflation hawk and he came in basically delivering his version of the draggy speech. I'm going to do whatever it takes to get inflation down to 2% not 2 point something but 2.0%.

[00:49:10]Price [snorts] stability is my main thing. I'm going to forget about everything else. Um and [clears throat] the markets, you know, rightly I think interpreted that as probably not being super gold friendly in the near term because real rates would be higher or likely to be higher. Um so we had those sort of you know three things going on.

[00:49:28]Feel free to add anything else to that mix that you think is relevant. Um so [clears throat] the question has been gez well where's the bottom for gold in all this? And you know pretty much every month since January it's been tracking down and down and down. It's now starting to show, you know, maybe a little bit of firming up here. Probably too early to say with confidence, but um that's the situation we find ourselves in today. As you look at gold and its prospects here right now, what do you see?

[00:49:54]>> Just look at the bond market. It it's that second graph we showed with the real rates, real rates are rising. And historically there's a good correlation between real rates, so rates above the rate of inflation, >> inverse correlation, >> inverse correlation, and gold prices.

[00:50:10]And and the way I think about gold is it's a bet on the Fed. It's you want to be long gold when the Fed is doing stupid things and you want to be short gold when they're doing the right things, when they they're they're kind of pushing restrictive policy. Policy, no matter what anyone else says, is extremely restrictive right now. real rates are over 2%. They really haven't, you know, if you look at that graph, you got to go back to 2008 and a couple minor instances. So, the Fed is is doing the right things. They're trying to get inflation down. They may raise rates.

[00:50:42]They're being restrictive. And that's not when you want to own gold. Now, you know, you mentioned earlier that that gold just saw this momentum surge, right? We have seen that since CO started in various sectors. the meme stocks, the NFTts, the cryptos, the we even saw with like utilities and staples kind of November, December, January where they were just kind of starting to go for them parabolic. You know, it's not it doesn't look the same. We've seen it with the chip companies. We've seen one bubble after another. Gold and silver got caught up in this momentum squeeze driven by this narrative about deficits that kind of was put in place to support the the drive. Like all all momentum driven, the momentum has to give out. Gravity catches up. It fell.

[00:51:34]Then the war started and I think ever since the war started, the its correlation to real rates has reasserted itself. So, you know, I think if you want to know where gold's going, it's the same question as where bonds going.

[00:51:49]Go look at oil prices. I think that's gonna tell us. And like you said, I think Worsh has a, you know, I'd like Powell, too, when he came in. Turns out I didn't like him once we kind of got to co I saw his not his initial response, but the extended response. So Wars is saying all the right things right now, but like Mike Tyson said, once you get punched in the face, everything changes. Uh so we'll see what happens when Worsh gets punched in the face, whether he can really be this this good kept uh Fed chairman that he kind of puts himself up to be potentially or he goes back to QE and doing a lot of stupid things that the central bankers have done for the last 30, 40 years. Yeah. Uh well, we will see. You know, Wars has been saying, "Don't expect QE from me because he's he's basically um saying he he'd ideally like to shrink the Fed balance sheet. He doesn't think the balance sheet is a great tool and he'd much rather work with the policy rate itself." But again, right now those are just words. So, you know, >> and you know, there's liquidity issues with that. So that's very easy to say but it I don't think in in practice it's easy to reduce liquidity in the markets okay >> without impacting financial markets.

[00:53:10]>> So there was a one of like the very first financial podcasters um and I used to listen to this guy I mean god can't believe how long it's been you know 20 years ago basically.

[00:53:26]Um, this was back when I was still at Yahoo before, you know, thoughtful money wasn't even a twinkle in my eye at the time. And, um, his name was Jim Paplava.

[00:53:34]Did you ever listen to Jim Paplava at Financial Sense?

[00:53:38]>> Yes. A long time ago.

[00:53:40]>> Yeah. So, he used to do this this weekly recap. Um, but anyways, one thing that Jim said, um, and this was this was back, I think, during like the Arab Spring when oil prices, you know, got up to what, 149 bucks a barrel or whatever back then. Um he said that uh the price of oil is now the new Fed funds rate and yeah it was basically the thing that that sort of priced everything else uh around the world and it was out of central banker control right you can't can't magically print up more barrels of oil >> right >> and um you know I thought that was a really um significant and meaningful statement and was true at the moment he mentioned it.

[00:54:29]Um, you know, then the shale revolution happened. Lots of things happened to get the price of oil down back under control. But, um, I I do think it is sort of a sleeping giant that when it does decide to awake, um, it it to your point, it's like it almost is the thing that that matters most, right? Doesn't matter what policy makers want to do. If you just can't get access to more oil, uh you you can't really change the price of oil very quickly from a policy standpoint.

[00:54:59]>> Right. That's right. Right. The Fed, you know, the Fed's in a really is potentially in a really tough situation.

[00:55:05]Let's go back to $150 oil. It's inflationary, right? It's going to have an inflationary impact. Now, there's a lot of other goods that will fall in price because people have to spend five, six, seven, eight bucks on gasoline. So, they're going to spend less on all the other items, right? That's a different conversation. But inflation should uptick, right? At the same time, companies are going to struggle. They're going to lay off people. The economy will falter, you know, some degree. We don't know how much. But let's just say all of a sudden GDP is running zero. The unemployment rate is now 47 instead of whatever it is, 42, 43, right? But inflation is running 5%.

[00:55:44]What's the Fed supposed to do?

[00:55:46]>> Right.

[00:55:47]>> Right. Well, they can cut rates, but they're going to have zero impact on inflation, very little impact on inflation. Uh, so it's really a tough potentially a tough situation the Fed could get stuck into. But again, I I you know, I'm kind of somewhat hopeful um that this equilibrium of oil prices and the fact that it kind of drives the action of our government policy, military policy makers uh holds and that just keeps the price of oil constrained until hopefully this whole thing's behind us and there's some sort of resolution.

[00:56:28]>> Okay. So for much of the war, price of oil and price of gold have been inversely related for the reason I mentioned earlier, right? High oil prices, countries were having to sell their gold to to finance that that oil.

[00:56:43]Um what's what's interesting is right now um I'm just going to share my screen here. Um we have kind of a rare day where both uh price of oil you know oil futures are up pretty dramatically two and a half percent or so and the precious metals are up about two and a half% as well. Um you know one day is not a meaningful trend. Um and Michael can you see my screen here?

[00:57:11]>> Nope.

[00:57:11]>> Oh okay. Sorry I thought I was thought I was sharing it.

[00:57:14]>> I I I was Yeah, I see it now.

[00:57:17]>> Now you see it. Okay. Yeah. So you can see uh WTI and Brent are bright green here up to two and a half percent. Same thing with gold and silver. Um so you know you can't really read too much into one day's worth of action. Um but um >> and bonds if you notice bonds were down a little but not a lot you know like we've seen. So I I just think >> there's a little bit of complacency that's been going on with the price of oil the last few days. I, you know, I wouldn't read much if anything into it, >> but if oil then pops above a certain, there's going to be some number >> that it gets above and that's going to wake the market up, >> right? The market's going to stay. Yeah.

[00:57:58]We thought this was transitory, but now all of a sudden we think higher oil prices are going to be around for longer. Yeah.

[00:58:03]>> Right. Right. And it's also I think the market has gotten complacent to uh the deal making the oh, we have a deal, we don't have a deal, let's talk. Oh, they're they're not agreeing to anything. You know, this constant bicker public bickering back and forth that gives us no idea of where things really stand. So, it's just making the market complacent >> and just assuming that it'll just be fine.

[00:58:30]>> Yeah. But my my guess where I was going with this is my guess is even though there are some people saying, "All right, maybe maybe it looks like the precious metals are beginning to catch a bit again. Silver's just cracked above 60. Um, gold's back above, you know, 4,000. Now it's 4150ish right now and momentum looks to the upside. Maybe the bottom is behind us. Sounds like you would you are saying I'm not adding to my positions yet. I'm going to wait to see what resolves with the oil price before I I start really getting into the precious metals.

[00:59:00]>> I'm going to keep an eye on real rates.

[00:59:02]That that's the that's the thing. And real rates today aren't they're not declining.

[00:59:08]>> They're not declining yet, >> right? They're [clears throat] not. But again, I you know, I not even sure a week's going to tell you anything. If gold can keep going there, and it may be just getting momentum. There were a lot of people that bought it at 4500, 5,000 that were like, "Wow, 4,000 I should add here." Now, this is a good point. It looks stable. I'm going to add. So, you just have a lot of technical uh factors to consider as well.

[00:59:34]>> Yeah. Okay.

[00:59:34]>> It's not just, you know, again, a day is irrelevant, >> right? day is irrelevant but u one thing I'll note is uh in simple advisor you guys have that quadrant basically of of how all the different sectors are performing you know it kind of tracks how they do um over time >> and the gold miners have been stuck in the the bottom left quadrant um which is kind of where the unloved lived and they've been there for a long time >> um with with >> precious metals you know having made some material movement in in the relatively near term here. Um obviously if that momentum continues or even if they can kind of hang on to it um presumably that those mining shares should start coming out of the basement.

[01:00:17]Um and so I'm not saying you're saying this but this might be a time to start nibbling in that space.

[01:00:23]>> Yeah. The the tricky part when you have like specific sectors or factors that are driven by an event it it it yes it's been very oversold.

[01:00:35]they perform really poorly versus the market. Um, but again, I'd be careful that and they're due for a rebound. So, what I would do, Adam, the way I would look at that analysis is really run GDX versus GDXJ and and GLD. And re really where you want to see that that uh split like you would love to see GLD in the upper right, GDX in the bottom left. That to me would be a time to sell GD GLD by GDX.

[01:01:07]>> Buy the GDX. Got it.

[01:01:08]>> Yeah. So, so it's, you know, the problem with GDX, I think what I'm trying to say is that GDX is not, it's an equity, but it's kind of a equity driven by gold prices versus the stock market. It's got a funky beta, so to speak. So, that analysis is a little tricky for gold miners. So, again, I would look at GLD versus GDX. when you see a divergence, whether it's an R analysis or just some technical other technical things, that's probably the time where, you know, and hedge funds will buy GDX and short GLD, right? They'll just they'll just say, "We don't really care where the two are going. We just think they're going to converge in price, >> right?" Yeah.

[01:01:50]>> And that's probably the smarter play until we have more clarity on what's going on.

[01:01:55]>> Okay. Yeah. you're kind of you're kind of validating my analogy with the precious metals complex of the whip, which is um the gold price once it moves, you know, it moves um and it moves a certain distance, but it moves first >> and then GDX follows that, but it it follows on a greater um covers more ground >> and then of course you go further up the the um the whip and then GDXJ is sort of the top half of the whip and then I think the I I call silver the the little tip of the whip >> [laughter] >> later, but it moves faster and bigger.

[01:02:28]>> Yes. Yes. And actually, our new simple visor will allow you to run that analysis not just on sectors and factors like we have now, but on your portfolios, our portfolios, or any custom mix of stocks. So, we could do GDX, GDXJ, GLD, SLV, uranium, and we could throw them all in there, and we could try to figure out what's oversold, what's overbought. That would be the analysis. That would be very helpful.

[01:02:56]>> Okay. Um, all right. We're going to start wrapping up here because it's after 9ine and I promised you I'd keep this to an hour. Um, there was a question here that Alice answered. I just want to answer in case other people have it, too. She said, "Do either of you ever sell your physical or only your paper gold or paper first?" Um, so I'll answer my I'll give my answer on this, Michael, and you can give your answer.

[01:03:20]Um, I kind of follow like what Rick Rule says. He says he saves in gold, so he makes all sorts of investments. But when he has when he's taking money off the table that he wants to have around for a long time, he's actually putting that in the gold to have for the foreseeable future. So, I look at my um I look at my physical metal holdings as like a one-way valve. I put money I put stuff in, don't really take stuff out.

[01:03:47]>> [snorts] >> Um, part of that is, um, you know, of everything that that Michael and I and the folks on this channel talk about that I have the greatest confidence in when I look to the long-term future, it's the, um, the decline in purchasing power of fiat currency. And so, um, basically gold, precious metals, but particularly gold, is my defense against that. And so, um, to me, this is just sort of building up long-term wealth that I will do something with later on in my life if I've got something I really want to do and I'll have confidence that the purchasing power will be there or it's part of my legacy, you know, something to pass on to future generations. So, I look at the physical stuff again as as just a stack that I'm building over time until I have some big life decision that I I want to trade it for something else. Um, the paper materials I use for speculating on the price of gold. So, if Michael and I are talking about gold being particularly oversold, you know, at a certain period of time, I'll often use paper instruments to place a bet on the direction of of where I think gold's likely to to go. And the intent there is to hold it until that move happens or doesn't happen. And then I liquidate the position. So, I use gold basically for trading um whether it's a long-term a short-term or a long-term trade. And I use gold as sort of a perpetual savings account. What's your answer, Michael?

[01:05:14]>> So, I have a chunk of gold and silver. I think chunk is a technical word, right?

[01:05:19]Uh it's in my basement.

[01:05:21]>> It's not quite a buttload, but it's it's on the way there. Yeah.

[01:05:24]>> Right. Right.

[01:05:25]>> To be technical about it. Yeah.

[01:05:27]>> Right. Um hold on. There's something beeping in my ear here.

[01:05:33]Can you hear it?

[01:05:34]>> I can't. So, talk through it. Yeah. Um, so it's in my basement and to be honest, I don't know exactly where it is. If you gave me an hour, I would find it. Uh, and the point is that it I treat it as my insurance policy. It It's what um I'll probably hold forever. My kids will be cleaning out the basement when I'm long gone and I'll say, "Oh, look what we found. What a coupe dad was." And you know, but I I don't touch it. It's there. To be honest, I don't even know how much exactly there is. I have a rough idea in my head.

[01:06:09]>> And on occasion, I'll >> Well, once the stack gets taller than you, it's, you know, it's really hard to know, right?

[01:06:15]>> Yeah. It's not taller than me. U [laughter] not taller than my dog. Uh uh I'll occasionally trade paper gold ETF, but it's purely just trading, you know, sometimes options, just more having fun. Um but I, you know, I just kind of think of it as an insurance policy and don't even like I didn't even entertain going to find it to even see when gold was at five and silver was 100, what was it, 120? I didn't even go down there and try to figure out what I even owned to do the math to figure out what it was worth. So, it's just kind of out of sight, out of mind, and it's there. And, you know, like you, I may decide to sell it at some point, uh, or likely just leave it to my kids.

[01:07:01]>> Okay. All right. Well, um, we're going to have to leave it there. Michael, this has been great. Again, thank you so much, not just for sharing all your expertise with us, but for dropping everything when I pinged you super late last night to do this. Very much appreciate it.

[01:07:16]>> My pleasure.

[01:07:17]>> Take care.

[01:07:17]>> All right, folks. Do me a favor. Um, those watching the live chat, please tell Michael how much you enjoyed him today. Uh, if you're watching the replay, and if you're watching live too, do us a favor. Um, show your appreciation as well by hitting the like button and then clicking the subscribe button below. I see here on the count here, we've got a couple thousand people watching live. Um, I think that something like only like 30% of people who watch this are actually subscribed to the channel. Um, let's try to fix that. Folks, please do hit that subscribe button. We're trying to get to 200,000 subscribers uh by mid end of the summer. I guess we're getting close to midsummer. So, um, if you're watching and you're not subscribed, please do take the two seconds to do that. Lastly, um, and Michael is, you know, one of the people that do this for you all, um, if you would like to get help from a good professional, uh, financial adviser to figure out, uh, how to navigate what the future might look like, especially if it, uh, looks the way that Michael thinks it could. Um, obviously I, you know, if you've got a great one already who's advising you, don't mess with success. But if you don't have one, consider talking to one of the adviserss you see with me on this channel week in and week out. Perhaps you'd like to talk to Mike himself and Lance and the team there at RAA. So to do that, just fill out the very short form at thoughtfulmoney.com.

[01:08:35]Only takes you a couple seconds to fill out the form. These consultations are totally free. There's no commitments involved. It's just a service these firms offer to be as helpful to as many investors as they can. Thanks so much, Michael. Um really appreciate it. Look forward to having you back on soon. Um you know, even if Lance isn't going on vacation, maybe we'll just push him out of the chair for a weekend and get you back on soon. whenever you want. Be happy to.

[01:08:57]>> All right. Thanks so much, my friend.

[01:09:00]And everybody else, thanks so much for watching.