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Gold Price Climbs Ahead of Easter Weekend; “Acceleration” of a New Banking Crisis in the Cards

The Daniela Cambone Show Mar 28, 2024

“We’re going to see recession globally, at least in major economies,” warns Peter Krauth, the bestselling author of “The Great Silver Bull” and renowned expert in precious metals investing. In a conversation with Daniela Cambone, Krauth highlights the alarming financial risks posed by the failure of regional banks. “During the great financial crisis, it took over two years and it took something like 220 banks to reach about $500 billion in losses. Last year it took five U.S. banks to reach that same amount in a month.” Krauth’s insights extend to the precious metals market, where he predicts gold prices to soar to $2,500 this year, while silver is anticipated to surpass $28 an ounce.

CHAPTERS:

00:00 Banks failure
1:55 Gold price
3:12 What influenced silver price?
8:00 Hedge fund into silver
9:45 Egypt/Turkey gold
12:50 Silver market
14:11 Silver price projection
14:57 Gold price projection

TRANSCRIPT FROM VIDEO:
Daniela Cambone (00:06.916)
Hi, this is Daniela Cambone. Welcome back to the Daniela Cambone show. Joined today by the bestselling author of the great silver bull, Peter Krauth. He’s also the editor behind the silver focused investment newsletter, silver Peter, so good to be back with you. I see you’re joining me from my hometown of Montreal. Welcome.

Peter Krauth (00:30.062)
Thank you so much, Danielle. Always a pleasure to be back with you.

Daniela Cambone (00:33.78)
Look, you are one of the silver gurus out there. So obviously we’re going to talk silver, we’re going to talk gold. But I thought it’d be fun, Peter, to just start with where we are at today, because I believe the last time we spoke was exactly a year ago. We were both in Zurich for a conference and we were right in the middle of Credit Suisse’s downfall. We were in the midst of the beginning of the banking crisis and you know, what a, what a place.

We were really in the heart of the matter. I kind of want to ask you, Peter, one year later, have we become complacent to banks failing here?

Peter Krauth (01:14.378)
I think so, Daniella, absolutely. I mean, you know, obviously black swans are by definition unpredictable, but if you look at what some of the bigger risks, outlying risks there are out there for the U.S. and for the global economy, I think that overextended banks really is one of those. Here’s an interesting statistic. It took during the great financial crisis, it took over two years and it took

Daniela Cambone (01:38.009)
I’m not here.

Peter Krauth (01:42.042)
something like 220 banks to reach about $500 billion in losses. Last year it took five us banks to reach that same amount and it took a matter of perhaps a month. So the concentration is scary. The acceleration is scary and I think people really do need to, uh, to pay attention to those risks.

Daniela Cambone (02:02.48)
Absolutely. And let’s talk about the metals now and how they’re responding. I mean, obviously, since we’ve spoken, we’ve seen such a run up in gold, obviously in silver, but gold making new all-time highs. I mean, how much of the fear of the banks do you think is helping the gold rally right here, Peter?

Peter Krauth (02:22.69)
I think it’s certainly a factor. And one of the questions I keep getting is, is this really gonna be sustained? And frankly, one of the interesting indicators is to look at what happens with currencies versus gold, for example. And you typically can have a more sustained gold rally. You can have more confidence in the rally if it’s happening in all the major currencies. There was one holdout, now.

A few weeks back, we had all-time highs in gold, and that, you know, consisted, or stayed consistent for several days, a week in fact. The last holdout was the Swiss franc, oddly enough, and we had that a few days ago. We had a breakout into an all-time high in the Swiss franc. So now that we have that, we have a sort of, you know, one big indicator that we can, that this breakout’s likely to be sustained and to lead on to newer highs.

Daniela Cambone (03:17.676)
Now, let me ask you, Peter, because you know the silver investor is going to say, Peter, we’ve been hearing this for so long. We’ve been hearing talk of triple digit silver for so long. We’ve been patient. How do we know this time it’s different?

Peter Krauth (03:32.018)
I mean, you know, if you look at the silver market, it really is gradually becoming more of an industrial metal. We’re already now at about 60% of consumption or demand going towards industry. But that just makes the, in other words, more silver being consumed by industry leaves less silver available for investment. So I think that when you get the investment demand really kick in, to really kick in,

That’s when you’re going to have an even bigger effect from that because you simply have less silver being made available for investment. A lot of it is getting consumed. And as we know, you know, follow the silver industry, consume silver by industrial, the industrial side, very, very little of that ends up getting recycled just because so much is used in small quantities and the cost of recycle is, doesn’t justify the.

the pursuit of getting the silver back out and back into the market. So, you know, there are different things. I have a theory as to why the silver price has sort of been seen capped for the last few years. And I think that’s only going to last for a little while longer. And it’s a question of really secondary inventories and where they’re going and how much of that is actually left.

Daniela Cambone (05:00.012)
So talk to me, what is your theory of voice cap that the.

Peter Krauth (05:03.054)
So absolutely. So if you look at, you know, you’ve got really two sides to the investment demand, sorry, to overall demand, you’ve got industrial and then you’ve got investment demand. Anything beyond that, so that’s sort of, let’s say when in a year where you have a silver surplus, goes into secondary inventories. That gets stashed into the futures markets, it goes into silver ETFs, for example, and it accumulates there.

But in the last four years, we’ve had deficits and structural deficits in the silver market. So, you know, a structural deficit doesn’t mean that the consumers, especially the industrial consumers, are not getting their silver. They’re still getting it from somewhere. And the most obvious source is that they’re getting it from these secondary inventories. So if you look at the major futures markets and the ETFs, so the major futures markets would be

Daniela Cambone (05:49.432)
It was like, she took her period, but she caused a massive effect.

Peter Krauth (06:02.93)
the COMEX, the LBMA and Shanghai, and then the global silver ETFs, you see something really interesting. So the pattern is for the last four years, those inventories have been steadily drawing down. And if you look at overall inventories in the three futures markets, they’re down about 40%. Now inventories are not all available for delivery. It’s only what we call registered silver.

in those markets that’s available for delivery. And the registered silver is actually down closer to 70% in the last three to four years. And I do obviously my own proprietary research on the silver side. And if you look at the silver ETFs, like I say, they’ve seen their inventories gradually fall. Now SLV is the world’s largest silver ETF. And if you go back.

Daniela Cambone (06:44.508)
Mm-hmm.

Peter Krauth (06:59.206)
to inception, which was 2006. There has not been, until the last few years, there has not been a sustained period where if the silver price was either rising or going sideways, that their holdings, so the quantity of silver backing that ETF was actually falling. That’s never happened. It’s only started to happen in the last few years. So prior to that, even if you had big corrections in the silver price,

Daniela Cambone (07:26.036)
Right.

Peter Krauth (07:26.138)
you would see very small and very temporary drops in their silver inventories. Now, in the last few years, you’ve seen something like 30 to 40% drop in the silver that backs the SLV and silver ETFs globally. So, so bottom line is this, I think that in both the, the futures markets and with the silver ETFs, you have large players who go in, who, who need to consume the silver are

Daniela Cambone (07:52.937)
Mm-hmm.

Peter Krauth (07:55.73)
buying long futures contracts, standing for delivery when those mature, and or buying silver ETFs and trading in their units for, uh, for the physical silver taking delivery.

Daniela Cambone (08:06.588)
Well, to your point, Peter, I mean, I just read that hedge funds are starting to take an interest in silver as it could be the next major momentum play. At least that’s what they’re seeing in the precious metals market. A CFTC report showed money managers increased their speculative gross long positions and COMEX silver futures by 7,900 contracts to close to 54,000 for the week ending March 19th. At the same time, short positions fell.

close to 3,400 contracts to about 16,000. So hedge funds are noticing silver, preferring silver over gold, would you say right now?

Peter Krauth (08:45.042)
I mean, the setup certainly is more compelling. That’s how I view it. I think that the nimble ones are noticing that structural deficit and the tightness. I mean, an interesting note. So I was at a conference just a month ago talking to a large silver producer that sells part of its production to China and part of it to the West. And they said that the market is so incredibly tight that the Chinese are asking them

Daniela Cambone (08:49.008)
Right.

Peter Krauth (09:14.33)
the silver, they’re asking them to lock in their deliveries weeks in advance. They’re willing to pay them in advance and they’re willing to pay them $3 overspot to get the silver. So they really absolutely want the silver. And, um, and I, and I think, as I say, it’s just, uh, right now it’s more, it’s more compelling. Obviously gold has done well, and it’s going to continue to do well, but you know, gold at all time highs probably is sort of more fairly valued. If you look at money supply, if you look at

Daniela Cambone (09:24.419)
Hmm.

Peter Krauth (09:43.546)
risk of recession, if you look at inflation, et cetera. Silver really is the outlier and has just tremendous potential at this point.

Daniela Cambone (09:51.836)
So speaking of people who really want silver, I know you’ve done extensive research looking at Turkey, looking at Egypt. I mentioned Turkey, obviously inflation spiraling out of control. There are 67% people obviously looking for things outside of the money system, Peter, but talk to me about your findings, which I find extremely interesting coming from Turkey and Egypt.

Peter Krauth (10:09.33)
Thank you so much.

Peter Krauth (10:14.486)
Yeah. So Turkey, as you said, something like 65, 67% annual inflation. The price of silver in Turkey, the Turkish lira is up seven times in the last three years. And then you have Egypt, where gold is traditionally being used as a gift for newlywed brides, for newborns. And they’re saying in Egypt, silver is the new gold. They’re turning to silver instead because they’re finding it too expensive.

price of silver has doubled in the past couple of years in Egypt. So that shows how the demand really is shifting. And India has seen its imports of silver soaring. Turkey has seen its imports of silver soaring. Really this is sort of staying under the radar, I think, for a little while, but it’s going to change. I even put together…

for my presentation in a recent conference. I looked at what some of the dynamic was in terms of forecasts and then eventual actual results. So I call it the silver 2023 realities. The supply forecast for silver was that it was actually gonna grow in 2023 by 2%. In fact, it fell by 2%.

Industrial demand thought they thought it was going to grow by 4%. It was revised. The growth was revised up 8%. Solar demand was forecast to be 140 million ounces of silver last year. It was revised 190 million ounces and then the supply deficit for 2023 was forecast at 142 million ounces and then they revised that to 194 million ounces. These are really big misses. And so, you know, it’s very much

off, I think that the market is very much being underestimated. And I think the pressure on the price, uh, from the supply that these industrial users are able to get from this, these secondary inventories that I explained earlier, that’s got a limited life. If I had to guess, I’d say 12, 18 months. Um, anything can happen in the meantime, but if nothing, you know, explosive happens to silver before then, which I certainly doubt.

Peter Krauth (12:40.102)
But if it did, I think that’s going to be the limit of these secondary supplies.

Daniela Cambone (12:45.42)
And the gold silver ratio is telling us basically, silver’s still cheap. And so is Robert Kiyosaki reminding us of this. If you follow Robert, you know. He loves silver for being so cheap right now. Okay, so yeah, sorry.

Peter Krauth (12:49.482)
Absolutely. I do. Absolutely. You bet. You bet. Yeah. No, no, I was just going to say, you know, people need to understand the silver market. It is, it’s its own animal. And I like to see silver is a patience trade. It’s kind of like Bitcoin and uranium. And if you look at what happened to both of those assets in the last few years,

Daniela Cambone (13:08.719)
Yeah.

Peter Krauth (13:17.894)
they just moved sideways, and then exploded higher. If you look at the last sort of, um, I guess I’m going to say two quarters. So about the last two quarters of both, uh, the last quarter of 2023, the first quarter of 2024, approximately both of those assets doubled, um, in price. And so it took a matter of months before that happened. I see silver doing something similar when it exactly that will, you know, and what will a trigger be hard to say.

But, you know, I have an interesting quote from someone, a lot of people who follow this space know Rick Rule. He said, the silver market, the silver equity market resembles that of uranium in 2022. It’s stupidly cheap. And so, I mean, I could hardly agree.

Daniela Cambone (14:02.3)
Mm-hmm. And you know, Peter, I know you don’t like giving forecasts, but the people wanna know, when you’re saying you’re bullish silver, where could you see it going? And gold.

Peter Krauth (14:10.196)
Hahaha

Yeah. I mean, yeah, I guess a relatively conservative forecast is that for the first half of this year, we could see it breach 26, which if you look at, you know, sort of technically that seems to be a bit of a ceiling. I think it’s going to breach that in the next few months, this next quarter. And then once we breach that in a meaningful way, I think that’s going to start to become a new floor. And so we’re going to really see it stay above 26.

And I think in the second half of this year, we could easily see $28, maybe better. But for now, I’m willing to say we’ll see probably 28 before the year is out.

Daniela Cambone (14:52.825)
And gold?

Peter Krauth (14:54.81)
Gold, my goodness, at this point, I think that this year we’re going to probably see 2,500. I think that becomes realistic. And an interesting thing I came across, it’s not just conspiracy theorists and hard asset lovers that are turning to gold. There was some big news a few days ago. Bank of Japan finally raised rates first time in 17 years. That apparently is a

a foolproof indicator of global recession whenever that happens. So you know, I think that’s likely. I’m very much in that camp. We’re going to see recession globally, at least in major economies. But what really shocked me was an interesting headline about, and this from Dow Jones, okay, headline from Dow Jones saying that the government pension investment fund of Japan, which is the world’s largest, is now starting to look at

Daniela Cambone (15:28.251)
Yes.

Peter Krauth (15:54.202)
what they call illiquid assets. So, I mean, Danielle, I don’t know who writes these headlines, but it’s the most ridiculous thing. Illiquid assets, they’re looking at things like gold, Bitcoin, and they call them illiquid assets. I think that’s just the most, well, first, it’s interesting that they’re looking at these assets, which they typically don’t hold. So that tells you really something in terms of where they see inflation going. But then to call them illiquid assets, I mean, doesn’t this, you know,

writer have an editor that looks at that and says, you know, makes no sense. Not that the editor would necessarily know different, but that just shocked me. I thought that just ridiculous.

Daniela Cambone (16:26.316)
No. You’re right. Right. Yeah. I think unfortunately, there’s a lot of weak journalists out there, Peter, and who really don’t understand this market at all. And then you just get these sloppy headlines. But such a good point on Japan, because I’ve been hearing that for more than one source. So we’re going to be following that story closely. Because like they’ve been telling me, that could really be the butterfly effect that

Peter Krauth (16:46.32)
You sure do.

Daniela Cambone (16:55.972)
would just affect the global monetary system. Peter Krauth, always good catching up with you. Get his book, The Great Silver Bull. I didn’t wanna mess that up, The Great Silver Bull. And you were like killing it on Amazon, right? It’s one of the best sellers, yeah.

Peter Krauth (17:00.075)
Exactly.

Peter Krauth (17:13.718)
Oh, absolutely. It’s, yeah, I mean, it’s interesting that about a year ago, or a little less than a year ago, I was offered by a German publisher to publish the book in German. And so it’s now available in German and they’re doing really well with the sales. You know, the regular versions, the audio version, everything is really, you know, adding up and people are interested. So it’s a good sign. I’m really happy to see great feedback.

Daniela Cambone (17:26.159)
Yeah.

Daniela Cambone (17:36.165)
Yeah.

Yay. Well, I’m happy for you. You deserve it, Peter. And we’ll see you soon. Maybe I’ll see you in Montreal. Thanks for, thank you. Thanks for coming on and thank you all for watching. We’ll have more great content coming your way. So be sure to stay tuned to the Daniela Cambone show only on ITM trading. And don’t forget to sign up to stay on top of it all at danielacambone.com. And another reminder, if you haven’t booked,

Peter Krauth (17:48.235)
I look forward to it.

Daniela Cambone (18:05.94)
your Calendly session. It’s like, you just book a calendar appointment with one of my associates over at RTM Training to basically set up a free strategic session to go over the topics we’re covering or your money, you know, what to do with it, how to protect yourself given the environment. It’s just a really great experience. So do that. We’ll see you soon.

SOURCES:

https://x.com/peter_krauth?s=20

https://www.google.com/finance/quote/GCW00:COMEX?sa=X&sqi=2&ved=2ahUKEwj40_21neWEAxUEHkQIHb1XC4kQ3ecFegQIDRAX&window=YTD

https://www.nytimes.com/2024/03/18/business/bank-of-japan-interest-rates.html

https://www.dowjones.com/scoops/overhaul-japans-pension-fund-change-way-trillions-yen-invested/

https://promo.thegreatsilverbull.com/

Sources & References In This Article

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