TLDR;
In this interview, Haime Carrasco discusses the current state of the global economy, emphasizing the role of debt and credit bubbles, and the potential for a significant wealth transfer to gold and silver. He highlights the importance of understanding historical context and economic principles to navigate these changes, advocating for a strategic allocation to precious metals, particularly silver, to benefit from the inevitable unwind of the current monetary system. He touches on the rise of BRICS nations, the shift towards sound money, and the implications for investors.
- The global economy is facing a massive debt and credit bubble, which is unsustainable.
- Gold and silver are essential lifeboats in the current monetary environment, offering a safe haven for wealth preservation.
- The rise of BRICS nations and the shift towards de-dollarization signal a significant geopolitical and economic realignment.
- Investors should consider a strategic allocation to precious metals, especially silver, to capitalize on the coming wealth transfer.
- Understanding historical context and economic principles is crucial for navigating the complex and evolving market landscape.
Intro [0:00]
Charlotte Mloud introduces Haime Carrasco, a senior portfolio manager and financial advisor at Harborfront Wealth, setting the stage for a discussion about the resource sector and current market dynamics. Haime expresses his honor to be on the show, acknowledging Charlotte's reputation and the quality of her previous guests.
Gold, silver wakeup call [0:28]
Haime Carrasco discusses his approach to analyzing markets, emphasizing the importance of understanding how the current economic situation, particularly the massive debt bubble, has developed. He points out that the current debt bubble is the largest in history and was facilitated by the repeal of the Glass-Steagall Act, which previously restricted the activities of banks. He expresses concern about the consequences of excessive credit in the system and highlights the ongoing global readjustment and power shift, where gold is central. Carrasco notes that central banks of the BRICS nations have been accumulating physical gold, signaling a return to sound money. He argues that the price of gold needs to be much higher than $3,600 to fulfill its role in settling international trade and that positioning oneself for this future is a wealth transfer opportunity.
Fed, interest rates, inflation [8:31]
Haime Carrasco addresses the complexities of the current economic situation, particularly concerning interest rates and the Federal Reserve's actions. He emphasizes the massive scale of debt, with the US federal debt alone at $35 trillion and total credit in the system exceeding $2,000 trillion, which he believes will never be repaid. Carrasco criticizes the belief that central banks control the value of fiat money and points out that institutional money has only a 2% allocation in the precious metals sector, which is historically low. He warns that pension plans will likely have reduced purchasing power and advises individuals to take control of their financial positioning. Carrasco notes that the free cash flow of the precious metals sector is now surpassing high-tech, attracting investment. He advises to patiently acquire assets in this sector and hold them until they reach more realistic values.
Return to sound money [14:41]
Haime Carrasco discusses the potential end result of the transfer towards sound money and precious metals, framing it within a historical context. He draws parallels to the period when republics were born due to similar economic troubles caused by hyperinflation, noting that societies reorganize during such times. Carrasco anticipates a return to a gold standard, similar to what occurred in 1789, which facilitated the industrial revolution. He highlights the social dislocation caused by wealth concentration, where a small percentage of the population controls the majority of the wealth, mirroring historical patterns. Carrasco expresses optimism about blockchain technology's role in rebuilding society due to its decentralized nature, contrasting it with the centralized ledger system of banks. He suggests that blockchain could revolutionize voting and other societal structures.
BRICS and Project mBridge [19:52]
Haime Carrasco discusses the increasing prominence of the BRICS nations in the evolving global economic landscape, attributing their rise to their large populations and military strength. He contrasts the economic policies of Europe, which he views as a "basket case," with the growth and development in Asia, particularly China. Carrasco points out China's significant advancements in infrastructure and technology, positioning it as a key economic engine. He underscores the importance of commodities in the future economy and questions which currency will be used to pay for them, highlighting the power shift occurring.
Which currency wins out? [23:33]
Haime Carrasco discusses the potential currency for international trade, mentioning Project mBridge, an alternative to the SWIFT system developed by the Bank of International Settlements for China. He explains that mBridge facilitates trade settlement in countries' own currencies with gold in the middle, providing greater economic control. Carrasco suggests that the future currency system will likely be a basket of currencies with gold as the central element for settlement. He raises concerns about the US's position in this new system, questioning whether the gold is still in Fort Knox. Carrasco believes China holds a significant amount of gold, citing data from the Perth Mint and other smelting points.
Gold and silver price outlook [26:49]
Haime Carrasco discusses the potential future price of gold and silver, referencing a paper by Sultan Pner, who estimated that gold should be at least $7,000 just to trade settle the energy trade of the original BRICS countries. Carrasco believes the real number has another zero behind it, indicating a price of $70,000. He emphasizes that the true opportunity lies in the price of silver, which needs to increase significantly to catch up to gold. Carrasco advises setting up an allocation to precious metals, with a minimum of 30% for his clients. He explains that silver's price is misunderstood because most of its production is a byproduct of mining other metals, leading to a structural deficit.
Gold and silver stock strategy [33:05]
Haime Carrasco outlines his investment strategy for gold and silver, emphasizing the importance of allocation over timing the market. He notes that the gold-silver ratio is currently out of balance due to silver being a byproduct of other mining activities, but anticipates that the price of silver will rise to catch up. Carrasco mentions that he has been building silver companies in his portfolio, taking profits from gold companies like Agnico Eagle. His strategy involves acquiring silver producers at cheap prices and waiting for their free cash flow margins to increase. He plans to take profits from his silver companies when the gold-silver ratio reaches 40 to 1. Carrasco prefers investing in producers over physical gold and silver because their earnings grow at a faster pace due to the leverage effect.
Developers and juniors [39:06]
Haime Carrasco discusses his approach to smaller gold and silver companies, including developers and explorers. He explains that while his core strategy focuses on producers, he also allocates a portion of his portfolio to explorers for clients who are comfortable with higher risk. Carrasco highlights successful investments in companies like Fosterville South Exploration (FSX) and AAX, noting significant gains from pre-discovery investments. He mentions a recent private placement in a Mexican silver explorer/developer with promising permitted projects and a low valuation. Carrasco emphasizes the importance of stock selection and taking profits from exploration companies to add to producer positions.
"Monetary storm" ahead [43:41]
Haime Carrasco shares his final thoughts, urging investors to have an allocation to the precious metals sector, which he believes will be the prime beneficiary of the coming monetary storm. He advises looking at the chart of gold in one's own currency to understand that it's not just gold going higher, but the value of earnings going down. Carrasco highlights that individuals are being hit by personal taxes and inflation, which devalues their labor earnings. He reiterates that gold is money in this environment and that the producers of gold will benefit the most because their earnings will accelerate at a faster pace than inflation.
Outro [45:47]
Charlotte Mloud thanks Haime Carrasco for his insights on gold and silver. She reminds viewers to like the video, subscribe to the channel, and leave comments.