Francis Hunt, founder of The Market Sniper, joins Maggie Lake for an alarming and wide-ranging macro discussion. He warns that the global financial system is already collapsing, starting with the U.S. bond market and spreading across fiat currencies worldwide. According to Francis, we’ve reached the end of a 45-year supercycle of debt, and what comes next is a full reset: collapsing markets, a global depression, rising authoritarianism, and the dawn of a new digital system.
Key Topics:
- Why the 40-year bond bull market is dead
- How fiat currency is losing its credibility fast
- Why gold is the ultimate reserve asset, and will go parabolic
- The real role of Bitcoin and select digital tokens
- How CBDCs will power the next monetary system
- Why property and equities could crash hard
- The coming wealth shift from West to East
- How governments will clamp down with surveillance and taxation
- What investors can do to protect and position themselves
Volatility got you concerned? Get a free portfolio review with Wealthion’s endorsed financial advisors at https://bit.ly/4ju3Z3N
Hard Assets Alliance – The Best Way to Invest in Gold and Silver: https://www.hardassetsalliance.com/?aff=WTH
Francis Hunt 0:00
We’re in a debt based collapse. So I’m that guy, you know, pretty formulaic. We’ve got to drop that template over everything and recognize that the funding mechanism for our sort of debt Fiat world is unraveling at the moment.
Maggie Lake 0:20
Hello, everyone. Welcome to wealthion. I’m Maggie Lake, and joining me today is Frances hunt, founder of the market sniper. Hi, Frances, it’s great to have you on with us.
Francis Hunt 0:28
Maggie, delighted to be with you. Thank you for the invitation. So
Maggie Lake 0:32
we have had a lot of market volatility, a lot of narratives flying around. How would you describe what’s happening right now in markets and in the US economy. What kind of mental model are you working off of?
Francis Hunt 0:45
Yeah, I’m pretty habitual with what I do. I start with saying Maggie that we’re in a debt based collapse. So I’m that guy, you know, pretty formulaic. We got to drop that template over everything and recognize that the funding mechanism for our sort of debt Fiat world is unraveling at the moment, and interestingly enough, we made a call in September 2020. Very close. Wasn’t too far for its high and that’s kind of a disappointment as well for me about the rest of market commentators, because, in essence, post the events of CV 19. We had an immense amount of money creation. We actually had a blow off valuation in bonds and an extreme low dip in yield. So everyone should just remember that that relationship is inverse, and that is in tech macro technical terms, typical of end of trend. And we appeared to be, I don’t know a single other soul that at the tail end of 2020, said the 40 year bond market bull is over. And the repercussions of that is probably the biggest call I’ve ever made in my life. And we have called single digit oil about 18 months before in early parts of 2019 that was also the precursory part of those events, and actually the loss of the foundation of the Fiat financial system. Everything is built on that. That is the beginning of the end. This is reset. And we also used to use an analogy 40 years escalator, because it was a bull market that built up since the 1980s which was Paul Faulkner, who devalued all that debt, bringing the rates up during the stagflationary era. Your you, you were a lot younger lady, I’m sure, if you’re around, and so was I. But we are, we are at that point now again, where we have way too much debt and there’s no funding. Now, a lot of people have realized that now we had Stanley Druckenmiller, Paul Tudor Jones, come on tail end of 24 admit that they now short. So they would have probably been putting that trade on during 2024 but I’m disappointed by the number of macro technical analysts that aren’t looking at the big charts, that didn’t see that blow off valuation. And it’s the last time we’ve ever going to get that opportunity where so much money can be shoveled into the debt market that demand was there to allow for that amount of proliferation to take place. You’re not going to have that again. In short, the DICE has turned. Now the weightings in that DICE has turned. And it’s a very hard to get a bit in debt markets. And now everybody is looking at it as a financial repression, real term, devaluation on an extended term. So in other words, it’s a bad, bad hold for an extended period. And now you’ve had Jamie Dimon come out and say that. So it’s gone from a very brave and innovative call in 2020 to still being an outlier in 21 and 22 not much spoken in 2324 we started to get some big voices drop, and now everybody in Twitter is talking about the long term rates going up, and that that framing is now the dawning realization of the normal curve, where we were a bit early, but The big meat of the money and the institutions we had the Philippines today saying they don’t want to buy treasuries anymore. That means they’ll probably be joining China and being a massive gold accumulator this. This is a huge problem that America faces. And the other part to this, and I’m going long form here, so I’ll shut up after this is, not only is it the US now, but we’ve we, and we dealt with this. We were actually on our own YouTube channel highlighting a year and a half ago that the Japanese rates that were historically barely above zero had setups that were pointing to higher rates across the long end range. And we’ve covered all the European nations, although admittedly off a lower base, all with further higher targets, technically, to come in the debt market. So what we’re actually seeing is America started the fire in the debt market. And we’ve got all these silos of nation states, many, most of them Western nations, but the horizontal across them all is they all have a debt funding market basis, and it’s going to burn right through. And of course, Japan. One is a doubly extra worry because of its role as a cheap funding nation to the US. So that’s quite a lot to give back to you. So I’ll let you come back on
Maggie Lake 5:08
that. Yeah, no, and it’s so helpful. And we’re going to sort of unpack and tease out what some of that means. But I just want to sort of underscore this, you know, we’re talking about, I heard you say collapse the end, we’ve reached the end. This is really strong language. What does that mean in practical terms, if I’m listening to this, because, you know, there’s a lot of accusations that there’s just a lot of doom porn out there, right? So what does what does it mean? What does collapse mean? What does that look like? You?
Francis Hunt 5:42
100% right? It’s very tempting for people to want to be the, you know, the headline grabber, and be absolute black pill Doomer. And I don’t put out this degree of drama on account of attention seeking. I think when you’ve had this level. We’ve got 45 years now under the belt. We are, we are done in the existing system. I truly feel advanced, and that is foundational to fiat. So, you know, if we have a contagion in the bond markets, it affects everything. The stock market doesn’t go up. You know, there’s, there’s equities that are borrowed to pay dividends. There’s real estate collapses, there’s bank based collapses. This is not an environment of, oh, but everything else will be fine. In fact, stock market will go up because people will be getting out of debt. This is a foundational aspect, as I keep saying, and that means real, real contagion across the board. And it’s and it’s going to be potentially very, very problematic. I’m actually going to show you a diagram I’ve done. I’m not going to say it’s a masterpiece. I’m some way off of Picasso at the moment myself, but I do want to show this particular diagram that I’ve been showing a number of people, and I call it a sort of convexity chart, and it actually ties in very nicely with Ernest Hemingway’s famous quote, how did you go bankrupt? It’s slowly at first, and then all of a sudden, very fast. And this is my convexity chart of let’s just talk about debt valuation and its credibility as a reserve asset, where you were at about a year on 100% after Paul Faulkner had started, finished. Actually, my apologies, his rates hiking, and you’re at about there, around about then, and then, slowly we built up. We started to exploit the US. Started to exploit the fact that they were the hegemon and they could continue. We’re good for it. We’re good for it. We don’t even have to worry too much. So the credibility started leaking. You had events like, you know, the long term capital, for example, a little bit of a wobble. You had further events, and then suddenly you start to get a point where the convexity starts to accelerate. Now I assess that we are somewhere over here, there with the emoticon, as I say, it’s not an overly serious mathematical diagram. This is just a discussion concept. And the problem you have here is it’s a bit like slipping down a mountain on wet slate if you couldn’t stop the process early on. It only gets more impossible. So you, as we get tend towards a near vertical drop. You’re hitting the ground, so a I think it’s not reversible. You don’t get back. This plays out. It’s kind of like the snowball heading down the mountain. It’s already halfway down the mountain. It gains scale and breadth, and it gains momentum. It’s hitting the village. You’re not Whoa. We can do something and stop it and just melt it right there, and it just turns into a nothing burger. I’m afraid. Certain things. Then, once they’ve passed a certain point, they have to play out. And the village gets hit. You remove the people from the village. The houses are gone. That’s kind of the analogy I’m giving you. And the other aspect about this is there’s going to be a quickening that most people don’t realize. So they’ve said, yes, it’s got there’s been inflation. Things have got more expensive. There’s suddenly going to be a period with debt devaluation. So here’s how it went a small step back. The TLT, which we shorted back in the tail end of 2020 went down 50% over two and a half years, during that period, the dollar was reasonably strong, then we’ve had a period of real dollar weakness and the debt just staying where it is because it started to become an open secret. The debt market’s collapsing. So now it’s paused. Everyone gets short. Now you have to shake them out of that trade. The dollar takes the loss, and that’s a little bit of what we’ve had. The dollar has come down quite extensively, as you say. So initially it’s left foot, right foot, left foot, right foot. In the devaluation process, the problem is we’re heading to a gallop, and eventually it’s almost like a kangaroo step. It’s both feet simultaneously. So when we get a disorderly debt, do. Sense you’re going to have at the same time the buying power of Fiat dropping. I’d like to give a smaller example of that to you, and I’ll use something non Americans. It’s tempting for people to say, Well, I’m just beating up on the US. I’m not an American, and I’m I’m just mean, no, I love the American people. I’ve always had a great time there. I’ve always been amazing to me. I wish this wasn’t happening, but this is also where we are, and I need to say what I need to say. So if I take you to a tweet, I think let me just locate it for a quick
Maggie Lake 10:30
and while you do that, I’m going to say that I’m glad you’re bringing this up and keep looking for that. I’m glad you’re bringing this up because I think as you hear all the narratives, and this is why it’s important to cut through and really focus on what’s going on. There is this sense of, Well, you had this come in us. It’s, you know, there’s a come up and set you deserve. A lot of people are angry about some of the rhetoric coming from the administration. They feel like they’ve been insulted. And this is good for you. This is happening, and it does cause you to wonder whether that sort of bias there. So I’m glad you’re addressing this. So show me. Show me. The tweet is
Francis Hunt 11:07
some media, particularly within America, that’s still very, I don’t want to say American maximalist. In other words, don’t worry, China gets dramatic pushback. Yeah, China gets more wrecked than us in all of this. Don’t worry. You know, we’re still in the pound seat, and I really want to say, be careful with that position if it’s one you have, because you can be in a bit of a national echo. And I mean, I was a South African doing apartheid, I know how just having a local media bouncing in your head can skew your biases very, very easily and very quickly. So I want to warn Americans about that, but I’m also warning the world about debt categories. So it’s not like everyone else gets off scot free. The debt market is particularly in the Western world, and China is very indebted, but there’s a little bit about China that makes a tiny bit more unique. But let’s get on with that article. I was warning you about what’s happening in Japan. So this is agnostic. No one’s here’s Japanese. Japanese rice has gone up 100% over the past year, the biggest jump in data going back to wait for the year, special year, 1971 now I think you’ll know what our economic environment was associated with that, and what Nixon did in 1971 after America literally spent more munitions to the with the military industrial complex than the entire world war two during the 60s with Agent Orange and, you know, flamethrowers and bombing jungles, etc, into a cinder because it was far away someplace we didn’t know. We didn’t feel it like we felt World War Two. It was epic in scale, far larger. So we the Japanese are finding their rice going up twice as much, and they’re facing a 3.5% inflation. And I’ll always say official stats understate generally. In my view, it’s not in the government’s interest to be on the high side, and this is part and parcel of what’s really happening is Fiat devaluation and debt devaluation simultaneously. We’re seeing the long end of the Japanese debt getting higher and higher and higher at 3.5 on some durations, 30s and 40s are getting very, very high, no longer the zero, cheap funding place, certainly on the long term side that it once was, and that could have a carry trade multiplier effect that does some real damage also to how people have speculated in markets that is almost unquantifiable. So what’s happened here is, in a short time, suddenly your rice is double Now, going back to my diagram that I was illustrating, it suddenly creeps up on you in a very short time that a lot of things have got a whole bunch more expensive. This is the acceleration period that I’m referencing in my cheeky diagram there, with an unhappy face there, this suddenly starts to happen in much shorter time. That’s the and suddenly very fast bits of going bankrupt. And the faster the debt devalues, the more likely the Fiat is devaluing simultaneously with it now, the reason it’s less noticeable nowadays is because we have a synchronized leper colony of nations, particularly Western nations, but most nations that have all pursued a proliferation overspend, debt. There’s no nation of sound money. Some might try and make a case for Switzerland and Singapore and then Latin America, maybe Uruguay. But in essence, debt has been proliferated, and governments have over expense, and that is inflationary, and that has been the case for multi decades. And the foundation, the conveyor belt, that has allowed that, has now broken the bond market. So that’s why I say this time is different. That’s why, and that’s my justifications for saying why this is so much more extreme, not for headlines, but just for how it is that we’re looking at. And I position you, you know you’re almost two minutes to midnight during this acceleration phase, and that’s the saying that nothing happens for decades. Little happens in decades. And decades happen in weeks. And I’m afraid to say, I think we’re in that decades happening in weeks, moments and the the other key points, before I hand back to you, Maggie as well, because I’m going long form on you, is that the interesting part is, the reserve assets that are not part of the Fiat debt pairing will appear to do the exact opposite of this chart. So if we take gold as sound value, and I’ll just use the orange for obvious reasons, it’s chart in terms of, in a simplistic sense, of how it will look, will start to look exactly like that, almost the opposite, right? And the important part of that is people will get shaken out. So I heard some interesting headlines. Europe says the financial markets are unstable because of an or because of the gold market. I think the British market, or the BBC has said gold’s a bubble. And as I’ve already highlighted, we’re probably only somewhere here in the gold movement, as we are somewhere equivalent in the debt sliding to the downside movement. So it’s going to get a lot worse on the debt Fiat side, and that is going to reflect in the parabola that I’m expecting out of gold as a reserve asset, and also the new system, which is going to quite clearly be cbdc stroke crypto based for which we’re sitting with Bitcoin at about 2.2 by market cap. Let’s allow for all the other tokens at 1.8 trillion. You’re at around 4 trillion on the crypto market caps. Now, a lot of nonsense in there. We know about that as well. Some of it seems to be an interesting funding mechanisms for politicians. I don’t know if you want to go there, but nonetheless, the key ones that will be part of CBD systems are going to have to expand to accommodate what’s a 300 400 Your guess is as good as mine, Maggie, trillion debt system that’s actually collapsing. So I used to use the analogy Jupiter has to collapse, and the beach ball in the corner of your room has to expand for the new assets to be transferred into the new system. So there’s a old donkey that’s literally being written into the ground, and the new Tonto silver, white pony is jogging alongside, waiting for us to cross over. So analogies I’d use for where we are at and what you should expect a quickening in the decay of the old and the acceleration of real reserve assets, plus the expansion of the new system.
Maggie Lake 17:29
Okay, so when you’re talking about CDs, central bank digital currencies, is the acronym you’re you’re using to refer to part of what may be the new system. So let’s, let’s kind of again, tease out a couple chapters of this. The quickening here are. Give me a timeframe on that. We’re two minutes to midnight. But in market terms, are we talking about the next couple of months? Think we’re going to see a spike in things like food prices in not just Japan, but in Germany, in the UK, in America. Is that facing us? Do you think we could see that sort of market response in the next couple of months?
Francis Hunt 18:16
I do think you’re probably already seeing it in slight but you’re going to see it in a far more aggressive manner over the course of the next month and during this year, and it’s probably going to continue to accelerate that it’ll be a day to day talking point, even for people not in finance you know, the taxi driver to the little old lady going to the store. In other words, yeah, it’s going to be of natural consequence. However, as in my diagram, I showed the debt going to zero, I don’t feel that they get to allow everything to go down there, because the system breaks in fragility long before we actually declared debt valuations as being next to zero or near to zero. So the way we built so much pain on it, there’s going to be a circuit breaker where political intervention will come in and say, Whoa, we’ve got to do this, or that’s got to stop and hold on. And there’ll probably be some smoke screen geopolitical events, because it’s a great way. You know, they never let a good opportunity go to waste in terms of other things, in terms of how they want to set themselves up for the way forward. So this is going to be a very tumultuous period. FX, volatility will be vast. Social will be vast. So you can have a lot of people on breadline, unfortunately, and there’s going to be a polarizing event coming out of this in terms of how people, those that are prepared in a true form, and those that are caught blindsided by this, which is typically what I’d say the less financially educated. So it’s gonna be particularly hard on the working classes, middle classes. I feel the Western governments are gonna have to go into scavenge mode, which is where they reduce services and go into maximal extraction of tax. So you. Already had unrealized capital gains mooted and various other things. So it’s quite likely to be a very unpleasant period. From a fiscal point of view. The budget deficits are always going to be under, get under guest and they’re going to come in over the tax receipts are going to continue to disappoint.
Maggie Lake 20:19
What you’re describing is a global depression. Yes, yes, it
Francis Hunt 20:23
is. And that’s there’s a lot of social unrest that goes with it. And again, I hesitate to say that I’m not trying to be black pill guy. The contagion effect of the synchronized nations across all the nations in this effect, and the fact that the fire burns from the US, across debt markets, across the whole because everybody is now looking with a more jaundiced eye at this asset class, at a whole, and the inflation and everything that’s going with it. It’s going to be very disruptive. Unfortunately.
Maggie Lake 20:55
Let that sink in for a minute, because that’s a very worrying picture that you paint. Why? As you say, this has been brewing, and we’ve heard this warning for years. Everyone could see this in a way coming. And even if I think back to oh eight, the great financial crisis, we know that the wheels were coming off the system. We know that there was extreme strain. Liquidity was drying up, bankruptcies were happening. It was unraveling. And out of that came unexpected policy moves. And you could say it’s kicking the can down the road, but, is there something that is coming that we don’t expect, like, why now? Why will the Why would a global depression happen now? Why? You know, can policymakers not come up with some innovative even if you think it’s BS quantitative easing, call it whatever financial mechanism to sort of at least stop or slow this watch. Have to be a total. I
Francis Hunt 22:04
almost feel I know the question, and want to help you verbalize you. Because what’s on people’s
Maggie Lake 22:09
mind, right? These are what your critics will say, or the people on the other side of this argument would say,
Francis Hunt 22:15
yeah. So let’s go from 1987 99 2008 and 2020. Shall we just a quick, short overview? So 87 Greenspan came in, and he dropped rates, and we rebounded really quickly. End of drama anyone who said it was the end of the world was, in fact, a drama queen. It wasn’t. And we were to have the best stock market period for an extended period. 90 nine.com airplanes were supposed to fall out the sky. By the way. I was not one of those people who said that, in case you just think I have this tendency. I was not it was nonsense. I wasn’t concerned. I would have flown on New Year if I’d needed to. Again. Liquidity rate drops. The US had a small recession that did for George W Bush. Read my lips. You might remember that in the Oh 102, and then brought in the Clinton era, you were at the peak demographics. I want to point out, which is why Clinton got technically a surplus. That is when the average Boomer, your largest demographic, was 47 years old, which is the highest tax contribution to the take in terms of your work, how much you’re doing, and how proficient and how senior you were, that’s the biggest take, and that was peak America, if you’ll forgive me for saying that. In terms of income, that’s not a moral statement. So I don’t want to offend anybody. I know the US audience really well. Then we had 2008 now, 2008 was far larger. Now, I’ll pass on long term capital, and some of the other stuff that happened in between 2008 was far more larger and far more systemic. And they had to do QE one, we never came out of it. That was a true, I think, a depression. It’ll be recorded in enough time, looking back, they never want to tell you it’s a depression in in the moment. They kind of retrospectively engineer that. It’s called the Great Recession, but it was a pretty much bank failure, two years of negative growth, typically, with most nations, it was a depression, that’s the that’s the official actual definition, by the way, for a depression with financial failure. Now the financial failure was not allowed to happen, and we hadn’t used quantitative easing. Quantitative Easing is a concept that was in almost named by Professor Werner, who started it in Japan with the great boom of the Japanese, which ended in the 80s. So we now did that for the first time. We did it once. We didn’t do it sufficiently. We did a few 100 billion. They came back. Did it a second, a third? And we really lumped out of that. You’ll probably recall, and many of those of our viewers that were watching it, 10 wasn’t a great. Year 11 wasn’t a great. Year 12 was like, does this end? Yeah, we really, really went slowly through that, and then we did twist. And eventually round about 17 and. 60 during that time, China was having an absolute boom, and did their version of property so they were desynchronized. They were creating a lot of heat in the economy, and Australia didn’t really have a property correction meaningfully because of that relationship and proximity to China. So that’s what was happened. Then we did quantitative easing. Was took a long time before we we got to any sense of normality 2020. Was full shutdown. They went straight to trillions. There’s actually was a hidden bank loans to the tune of 21 plus trillion given not only to American banks, but you EU banks as well, by the way, that is one of the most hidden pieces of information that no one talks about. Actually, it was a bigger bank bailout in some ways, in terms of loans granted then 2008 and nine, which was accepted as a bailout of the banking system. But also, what they did do this time is they gave stimulus to the end consumer, because you needed the heat to come back into the economy. So small businesses and individuals got at least 1 trillion of the seven lots of funny quangos got money with various agendas. We parked that up for now, but that did the least leave to a consumer rebound, and it’s one of the reasons, and I’ve taken as their lesson learned from Oh 809, so you need the end guy also to feel a little bit better and also to be spending and they did that, and that’s why you had a bigger run up. But that then led to the blow off events. So there’ll be a lot of people in the comments to this video will say Francis is wrong. They’ll do what they always do, printer go or quantitative easing, all of these responses. So to those people who are thinking that, here’s the key difference, the thing that has changed is that when you do printer go blue, you actually are issuing debt and there is a demand for it. That means everything else is not demanded. You created so much fear that you run into the bond market to be safe. Equities crashed. Bitcoin fell from 14,000 at one point to 4000 all of these things. There was mad panic. It was shock and awe, a bit like the Rumsfeld Middle East. It was shock and awe for financial markets, and the only beneficiary was the bond market, that led to the final technical blow off top. And since then, people don’t trust the bond market, and they’ve also become more circumspect about America. So there’s recent terrorist tantrum. Initially came across a bit isolationist. He was attacking Europe, China and everybody, and you had that key moment, and this is such an important point, and we actually warned this moment would happen as well. So in 2022 in September, Liz truss and quasi quieting in the UK were thrown under the bus by the Bank of England, largely for not matching the rates that America had gone up the pound at a crisis, and also doing a budget that was stimulus orientated, not too different from this big, beautiful package right now. So I’m showing you parallels here for a reason. What ended up happening is they were thrown under the bus because the bond market went into a collapse, and at the same time, their rates shot up. When your bond collapses, rates shot up. But instead of the pound getting more valuable, it crashed too. That’s called the broken seesaw. And I do diagrams for this for people who don’t understand bond markets. And I said that right there is a microcosm that the US is going to see. It’ll first just be a flash behind the curtain, but it will come back for far longer, far longer, and then it will become the norm, and that will be the contagion of the collapse. So when trust, when Trump had his tariff tantrum, and we were at the peak, what actually happened is there was a withdrawal of money out of America who has been the most attractive global investment environment, mag seven, everything of tech worth having. The SNB, the Swiss National Bank is virtually a hedge fund stuffed with American tech stocks in it. What happened? Withdrawal out of treasuries, which sold the treasuries off, pushed the rates up, and selling of the dollars, repatriating the money, leaving broken seesaw rates up, dollar down. Shock, horror. It can happen to us too. The hegemon. But he quickly walked back from that, and then he said, I wasn’t afraid about the bond market. I suspect somebody informed him that he should post something about not being afraid of the market, because they were very afraid about the bond market. It’s never official until it’s been officially denied, as I like to say. But anyway, that was a real, real jab with a knitting needle for America. You can get exactly what happened to the UK. We predicted it. We have YouTube showing it, and it’s happened once, but it was quickly walk back. Now, the problem that’s happened is even though you walked. It back, people, it’s a bit like I almost we’re married, and I and I almost thought of kissing another lady in front of you, and then I just pulled back. You don’t look at me your husband anymore in that same light. And I’m afraid for America that my almost cheat is now shown you a little bit of how I’m thinking, I’m not a loyal husband to you, and that is how the world will now be looking at America in terms of they’re going to be far more pragmatic and far less Pat’s americano maximalists. And that’s a real, real problem, because actually, the debt contagion started in America because they were the issuer for the world, in some senses, but certainly for America, during CV 19, they were the biggest proliferator of currency, and that is why we have lower rates in Europe. But they’re going to go higher. And we actually have lower rates in China, and some people incorrectly, and these are American maxless that I follow. Say, China’s in a depression, because at 1.6% rates, no, no, they are less expected to go into debt default than America at 5% in other words, the pricing for failure. We are now no longer on a return on of on capital. We are on a return of capital. This is a preservational story, so the rates are about risk now much less than return. The focus has pivoted, and I’ve said a lot there, so let me just hand back to you. Back, yeah,
Maggie Lake 31:30
so, and I’m going to put China off to the side, because it is so complex, and there are certainly people who make compelling arguments about a lot of the risk is off balance sheet there. There’s no transparency, and so, you know, be careful. You know, we have to be careful. That’s a little bit of unique, as you said, a unique situation. But let’s put that off to the side for a second, so we are no nation is sound. The bond market’s broken. Global depression is likely. What does that mean for equities? Because a lot of people are that is their big exposure, especially American investors, but but actually, around the world, we know that everyone has been overweight US equities. What is this? How does this translate into the equity market?
Francis Hunt 32:16
The best is to I’m going to include housing and stocks, because Americans care about their property too. It’s probably second after stocks. And if you’re in the UK, it’s maybe the other way around, first the property and then the stocks. But it’s going to apply to everybody. So when you’re in a debt based collapse, what actually happens is the origination of new debt largely stops almost zero. I mean, by the way, on that fact, this is not just me spitballing. 41% of new mortgage applications are being rebutted in the US, and 36% on auto. So what’s actually happening is finance being refused. Well, why is finance being refused? Because when you originate a debt, in other words, you give someone a loan, but you now have that as your asset. If that asset is not so unsellable, securitization, moving the risk somewhere else, someone else buys it and receives the payments, then you don’t want to hold it yourself. All the risks all on you. And what’s happening is, as I’ve said, it’s no longer about return. It’s about risk. People are feeling risk averse at the moment, and they just say, I don’t want the credit risk. I don’t want the credit risk. In other words, cars can drop in value. They’re subject as a leveraged as a leverage purchase, in many cases, because of car payments. They could drop in value by 40% if everyone had their cars repoed. How would you secure against that there’s not enough people to buy the second hand car market. It’s going to sell very, very cheaply. And the same goes for property. If you’re looking at seven or 8% now for a fixed deal on a US property, you’re not spending what you were spending when it was 4% or four and a half or five. So the point of affordability, you’re at maximum affordability ever in terms of property, even though you’re not technically at the highs of oh seven in mindset, the pricing is higher. The payment cost is much, much higher. It’s actually unaffordable. And then the average age of home purchases now 57 where previously it was 31 decade a half ago. So this is telling you, established people only are getting into the property ladder. It’s too expensive. So it’s there’s some good news to just so that I don’t say, do if you’re if you know Gen X or something said, and you’ve been waiting for property markets prices to come down, I think you’re going to get that. But the unfortunate part is, if you have to leverage to get into that property, there’s going to be very little available. It’s going to have very high margins, and they’re going to price for risk like they’ve never priced before. That means it’s going to be very expensive monthly for you to do, and you’re going to ideally need larger deposits as well to get it. So we. To go back to a far tighter underwriting environment when it eventually does come back, but initially, there’s going to be that shock and horror. You know, when markets gap that there’s just very little financing at all available, everyone is in a mad panic, and even good business is turned away because there’s no appetite to originate new debt so you can have a housing market crash. What that does is it makes all banks lending books come under mark to market, probably bankruptcy, because you’re sitting with a massive mortgage portfolio. And the asset that you lend 500,000 to to a veteran who got a zero down deal because, you know, he worked for the thank you for your service, and you know, He’s a war hero, suddenly, is now selling for 180,000 and he can’t make payments anymore, or he’s always veteran. Payments are being cut because we’re in scavenge mode, and all this is going to hurt all of us. We’re all in this together. You know, we get this sort of solidarity, but suffrage type political messages, and unfortunately, there’s a lot of people that come out with worse living standards out of this process. So you then ask me now, how’s the stock market doing that environment? When I say, Well, you effectively got bankrupt banks that if mark to market would be deemed bust, who don’t want to lend. And you have many, I can’t remember this how far back, but at one point, there was 15% of the s and p5 100 that actually borrowed to pay dividends. So you’ve got corporates with debts that have loaded up to debt. There was a famous comparison between Coca Cola in the last 15 years. You know, today versus 15 years ago, it’s worth two and a half times more. It’s got significantly more debt. It’s not got any more gross sales, and its profitability has gone down, but its market cap is two and a half times higher. So what you’ve actually got is financial leveraging, while debt was cheap, loading up on debt in the balance sheet, but it was largely investment bank had, you know, you can do it. Don’t pay dividends. Rather, put it on a loan, buyback shares, etc, etc, push market cap up at the expense of real, long term, good, sound money principles. So there’s a lot of rerating that’s going to happen. And if you look at the overall value, I can as a non American, just look at market caps. American stock market. Market caps is like the Burj Al Arab in the desert. You know, it stands like this, and everybody else is little Pippy, and we say, Hold on a minute. I fear that that’s going to be changing. And there’s a big appetite for Middle East to get into tech and various other things. You’ve got Elon going taking neuralic to the Saudi you’ve got deals with Trump going on with the Saudis. They don’t just want to be the guys that pull the tar out the desert. They want to be something else. They’ve already doing sports and World Cups and paying the most for footballers. They’re going to be entertainment. They’re going to do a lot of things. And I fear that this is the West moving to the east in terms of wealth and business and the future. Unicorns may not be in a Californian garage that you know, they could be in a Middle Eastern garage, or maybe Singaporean, or if they Chinese list in Singapore, which would be a more acceptable face of the Asian side. So that’s what I see. Unfortunately, I’m seeing a reshaping of the entire capital formation space as well and future technology. So the dominance, I think we’ve had, us as dominant technologists, and I fear that’s the last ace in the hand that is being bled away as well. So that will have a large amount of effect. I mean, if, for example, politically, Trump has threatened apple today. We’re speaking on Friday. Of course, this will go out a few days later. But, you know, turning to Tim Cook, well, Tim Cook might say, maybe we need to be somewhere else as head office level, you’ve already got Intel, Intel that identifies more as an Israeli company than an American company. So there’s quite a bit happening that could see that, you know. And I know this comes as a shock to many people, but I was in South Africa, and we went through a similar process. You know, all the mines got dual listing in London. All the CEOs moved to London, and then the then the London listing became the primary listing. And that’s that’s how an asset that digs the gold out in your country actually just ceases to become a branch office. And the extraction, the money, the dividends, the salaries, now become a million pounds instead of a million rands more expensive homes are being bought by the CEOs, and that was the oppenheimers. That was the goal. That was everything being taken and listed to see out the uncertainty of the change in the political guard once Mandela was released. And it’s very hard for people to visualize this. No South African. I remember saying it’s going to change. It’s got to change what’s going on in here. Everybody was No, no, no, no, hyper normalization in that environment. And that’s why it’s tough for an American to hear someone like me saying pieces are going to get moved around on the board, and some of what you held dear may not be entirely in your back garden anymore.
Maggie Lake 40:18
Yeah, that’s a fascinating concept, fascinating point. It’s funny. As we enter a period that supposedly regionalization and anti globalization, the idea that these companies would consider, you know, consider themselves moving around the global economy to benefit their shareholders, is interesting. I think there’s again. I want to, I want to keep this conversation moving forward, but I’m just going to flag. I think there are some people who will have comments about the depth of capital markets, liquidity, rule of law. I mean, the capitalist backdrop for the UK and for the US allowed for some of what you just described. I think there are people who wonder if you can just pick it up and replicate it in places that have very different political leadership. But that’s a super interesting conversation, and I think one people should have their minds open to. So
Francis Hunt 41:10
we’re seeing the erosion of that though, right? This is, this is why people in the wing very prepared to play or certainly talk again, where they’ve changed. You know, Saudi was a place where teenage, pregnant women got buried up to their heads and stoned. And I also seem to remember that a journalist came to an unsticky end. So I’m very conscious of what you say there. But there’s a lot of money, and there’s a lot of people that saying, Hey, if you just come here for business, we’re a low tax environment, 9% that’s friendly for capital is us going to remain a low tax environment if they go into a debt scavenge mode as a result of having to cut services. You’ve got a demographic like this. You have 14 citizens holding up every person pension, and now you’re going to have three. Are the millennials going to want that? They can also go to Dubai, and they can also get tax free salaries and pay 9% corporate tax. This is the great concern we have. We’ve actually got communist countries that are actually mocking, at a business level, greater capitalism than capitalist countries that have started to have Marxist ideologies. So we’re getting this thesis, this anti thesis. And the synthesis is this, these peculiar hybrids of a kind of corporate, corporatisation. And I’m observing this, and you’re absolutely right to, you know, wave a flag on that. I will get pushback on that, but it’s there’s a lot more going on in the movement of money, and that starts with the gold, which I feel has moved from west to east as well,
Maggie Lake 42:41
yeah. And absolutely, this is why this, this, that could be a very interesting sort of, you will come back and visit that Francis, because I think it’s a really fascinating point. I’d also say what happened to Jack Ma is another, everybody thought that about China too, moving to some sort of state capitalist type thing. And then, of course, there was a but again, there may be backfills, but the directionally, you know, it’s something to keep our eye on. So we’ve covered the sort of economic implications of this. So let’s dive into a little bit of the investment implications and I and for all of the the very, it’s not even fair to say negative, right? This is a very dark picture that you’re painting about the potential dislocations that can happen in the market. Is there opportunity, if this is a collapse, is there a reset that we can think about? And I’m not just looking to say, like, give me an optimistic view. I’m not looking at that. But how, as sort of investors and individuals, can we think about preparing for this? How are, what is the, what are the investment implications here?
Francis Hunt 43:48
So this is a reserve asset crisis with debt no longer being seen and no longer performing like a suitable reserve asset. So positioning in something that is a reserve asset for your primary balance sheet is essential, and the best aspect of that is gold, and you’ve already begun being rewarded quite well for that. And I expect that actually, that too many people. Here’s a big warning, you’re going to get top callers on gold all the way up, all the way up to a number you probably never even dared imagine, although it’s not the same dollar, it’s not really about gold. So this is a hyper devaluation period where gold just holds it own. But the degree of devaluation of all the malfeasance built up over 45 years is all being manifested in a very short time. So the temptation is going to be for a lot of people to get out and to clinch profits. Nobody ever got went to the poor house taking profits. No, this is a sit this is a sit still and wait, because we haven’t really begun the RE rating, the full re rating, the curtains feel a bit pulled back, and some people are put seeing that things aren’t grand, but we haven’t had the real re rate. We haven’t had the capitulation. So. So reserve asset positioning, hard physical assets. Property is a hard assets, but it’s a financially leveraged one. So in terms of valuations, if it were me and I had 15 Airbnbs with just 10% down, I would have be I would have nine of them. I would live in one and I’d have nine of them on the market. That’s not financial advice. I’m just saying the rating, the downside rating on property, is going to be quite poor, and even if they manage some softer version of this, but it took a bit longer, you’re going to have negative, real growth in that asset. But I think unfortunately, this has to get disorderly. I use my analogy of the snowball halfway down the mountain, and already, you know, a few kilotons big, with rocks and everything in it, you just don’t stop it at that point. But let’s say I’m too pessimistic. You know, you will, you will have stagnation for a decade and a half, and under performance so overweight in the reserve asset. I sometimes like to give the analogy, Maggie, your house is already on fire, and I’m the online insurer, and I’m still taking insurance on your property. In spite of that, you can lay off that risk. Do you lay off 5% of the value of your house, you know, 50% 100% or maybe 250% and get a better house. So that’s how I determine my gold positioning. I would say I’m disproportionately This is not portfolio theory time. There’s not 101 different ways to make money. This is a this is a crisis we’re being insured against. The one inevitable tsunami is the only thing you want, a boat every nothing else matters if you don’t have the boat, Noah, you know, and the ark, you know, call all the metaphors you like. So, so precious metals, is it? And by the way, they will continue to over perform against mines whilst there’s an inflationary and loss of value, money value as well. So it’s the reason mining is underperformed. His costs have also been going up. And actually miners have battled and actually diluted ounces per share as well, to a degree. But that’s also the cost we need to see, that sudden forward pricing in miners. That’s when you get the acceleration period. Too many people are moving into silver too soon, in my opinion, massive bull silver. But it comes. It comes much later, and this is such a bigger cycle, you’ve got to sit in place, not be too early. There’s stepping stones, and you’ve got to jump on them. Once you jump off it, it sinks, and you’ve got to keep moving. But if you jump too soon, the other one’s not fully ready, and you’re jumping into the water and you’re going halfway down into it. So I actually see the Gold Silver ratio getting more distorted before it goes down. It’s a very controversial opinion. 99% of people are all going, we had 100 we traded 100 you should all be pivoting your gold into silver, and I’m going no reserve assets based crisis. It still hasn’t played out be in the reserve asset. When the bond market that was your reserve asset, that Buffett said paid interest. By the way, when you have negative interest, like you have on the short end of the Swiss not paying interest is a feature in gold sense. But you know, this is a reserve asset crisis. Being the primary reserve asset, the reserve asset of Kings is gold, the utilitarian money of the people, is silver, and that comes later. And of course, the industrial use. But what do you think is going to happen in industrial activity? How many people are going to be solar paneling their house in a crisis where the house has lost 40, 50% it’s not going to be happening. People are gonna be losing their jobs. That’s what’s going to be happening. There’s going to be right sizing. There’s going to be massive amounts of unemployment claims and the government finance is going to get worse, not better, as the crisis goes deeper in so you first go a lot worse before it goes better, reserve assets. So too many people are looking past gold. What’s the next? It’s already moved too much. It’s too expensive. You don’t know how much malfeasance, fraud and over indebtedness has to be unwound. This will look cheap in a year’s time to me. So I’ve made a specific statement, and I only gave you really gold there, but I’m saying I said a lot with that, hold and keep stacking. And in terms of how I buy now, I’d buy 75% gold and only 25% platinum and silver as alternatives. I already have both, but I continue to play the primary card. Stay with the trend winner for now. We pivot when the multiple reverses very clearly on a big time frame. And you’ll also know it, there’ll be some sign of we just there’s some business activity. They’ve got to have silver, and there’s just none of it left around. And then it starts to over accelerate for weeks on end. Versus silver, we’ll go back down through the 100. We’ll come right down to 75 then I only buy silver, and I’ll also point to platinum in there, which is looking really well. So owning the metals first, and then those miners. Will start to move to once you start to get the out performance in silver, that’s probably also going to be a key we’ve already had great runs on one or two miners. The great concern I have is if you don’t have the share certificates, we’re talking about an environment of immense counterparty risk failure, and that’s where you need to have that separate discussion about the great taking without share certificates. I assume you don’t have it. So if you’re not easily getting share certificates, it’s much better to just be cramped up in the reserve assets, gold and some silver. That’s my take.
Maggie Lake 50:30
Yeah. Francis, so there are some that say, in a financial, you know, depression, market collapsing, debt blow up. Everything sells off. Everybody has to raise money, and they’ll sell even gold, and so it’s vulnerable to that. Do you see that? Is that, in your mind, just a buying opportunity, it
Francis Hunt 50:51
will be a buying opportunity. And the reason I’ve mentioned gold more than I’ve mentioned bitcoin is during the carry trade fear moment of August 24 which I think we will revisit. I think that’s just the tremor, but gold went down 4.9% and then went off to make new highs. Bitcoin fell 30% during that period. It’s at an all time high as well, but that’s a much harder hold into that environment. And there wasn’t the worst crisis we’ve ever had. It’s it was probably the feature fear moment of that year. But it wasn’t a classic year for drama, if you want to call it that. So I would say the low beta to the downside on gold is actually a very useful feature. Does mean you don’t make quite what Bitcoin will do. Of course, if you’re already 22 trillion market cap, you’re not going to do something that’s something that’s 2.2 trillion market cap. Could do the 10x is more likely on Bitcoin than gold, or they both do it, and bitcoin does a 30x you know, obviously a smaller market cap, and if it’s going to play that role, but I don’t want to be all in digital you want to be able to hold it. And I will even go so far as to say I have concerns for us gold bugs, because they will probably be targeted for unrealized capital gains, as will crypto, which is digital and is far easier to track, by the way. So even though this is a Fiat based crisis, and this doesn’t really mean gains, we’ve just held value, I do feel scavenge governments are going to be coming for us for a take on their own malfeasance and hyper devaluation of currency. So people need to protect against government. Your biggest enemy in this scenario is government, because they want to retain their size. They want to retain their existence, and they’re going to be cutting services immensely, and they are going to be seeking out extra funding because the funding vehicle of issuing greater levels of debt will be broken. So think how they’re going to be and we’re going to see a big uptick in very strong totalitarian type statements. Again, not a very positive take, but I see the Western having a lurch to the left in terms of becoming across very Marxist and totalitarian. So you’re gonna have to watch that. So people should think of where they want to see this out the West has been. Here’s the West’s population, roughly there, and that’s our average income. Here’s the rest of the world’s population and their average income. I think there’s a leveling we go down immensely in living standard for the rest to go up three or 5% and but when
Maggie Lake 53:24
you say where to see it out, it’s, it’s, I mean, what are you saying? Move to another country. I mean that that’s that, in practical terms, that’s tough, right? Very
Francis Hunt 53:33
tough. It’s not a popular there’s nothing I’m saying here. Is popular as it is. There’s nothing I’m saying. And as someone who had to leave his country, who loved this country, etc, I couldn’t get employed. That was the wrong time. They were reverse, racing positive. Let’s not get into the weeds of what it was I had to leave to grow. And I’m actually very grateful that I did that, because relative wealth to my people who stayed behind, I was able to move forward immensely as a result of doing that, and I still go home, and I still see it as home, but now I’m a tourist in my own home. It just happens to know everything very well, and you you might need to frame in those lines. And of course, when you talk children and wives, these are not easy cells that go but we have a community of people that have done that. We have a South African in Britain, who’s left Britain with South African wife, two kids that are in a French school in a Spanish speaking nation, and they’ve only spoken English before, and the kids have adapted immensely, and they’re going to grow out of this. They’re going to speak Spanish, French and English, and so they’re going to do just damn great. But is it an easy path? Would you volunteer for that obstacle course? I would say many wouldn’t, and I understand that. But right now, you’re having this particular fiscal, globally coordinated leper colony obstacle course put on you, in front of you, like it or not. So you’ve got to decide on what terms you’re going to run it. Because run it, you will have to. You can even cry. And fall in a heap and get battered by it and be ward of state. Or you can say, we’ve got to do this. Let’s get fit and ready for it. How do we take it? It’s an opportunity. You were born for these times. Maggie, you were chosen to be seeing through these events. It’s economic history in the making. And you know what? Great leaders are born in hard times, not in soft times. So that’s the way to approach this, you know, I’ve got this obstacle course to run, and I’m going to do it, and I’m getting fit and ready, and that means financial preparation, that actually means some physical fitness, I would suggest, and mental dexterity. I’m actually quite a happy person, and I enjoy it, and I live a good life. And, you know, I swim in the sea almost every day, and I ride mountain bikes, and I ride motorbikes, and I do a lot of things that are a lot of fun, and I have great friends, so and I warn them, because unfortunately, this is my work, and I see it coming, and it’s a story of economic history that will be, you know, 400 years of the making in scale, people will be wondering, what the hell were those people thinking? But it doesn’t come to an end. It
Maggie Lake 56:00
does Francis. So leaning into that positive thought and the innovation that might be necessary, let’s, let’s close this out on you mentioned Bitcoin. Let’s close this out on digital so if and where you where we started, which is this is this is ending. You believe there will be something new. Many people point to something, and I don’t even want to say crypto, because that’s a word that’s misused, but something in the, you know, Blockchain, digital asset space, um, is it? Is it Bitcoin, or is it more likely, something that we don’t maybe even have or understand? Now, it’s such a new that this system that you think is ending is so old and well understood and complex, and it doesn’t seem like the new one is built to the point where it can sort of take off. I know you described it as a galloping horse, but it doesn’t seem like it’s ready yet. Am I wrong on that? How do you see that playing out, and where can we position ourselves? I would
Francis Hunt 57:04
never say you’re wrong, but we don’t know what’s prepared behind the curtain in terms of this event. And I would argue that smart minds have seen this day coming for a lot longer than you and I have even speculated it on it, and we have, actually, the eurozone has a launch of a cbdc this year. So they might be preempting when that’s almost definitely going to be needed, even it might be synchronized to tie in with this collapse, it might be that smart. I don’t think the people you know that we see like legarde and fonder lion on the European side are the people that are making really doing the development on this. There’s people behind that that are putting things into place that are probably quite advanced in testing anyway. But your question was around Bitcoin, Bitcoin in terms of utility, I think the best it can hope to be is the digital gold. It’s not the fastest, it’s not the cheapest, it’s in terms of utility. I don’t expect it to be excessively used the day to day. Transactional aspects are going to come from other tokens that are better. I mean, when is the first iteration of software, anything involving software, Blockchain, or anything like this, been the best? I mean, are we all on the iPhone ones at the moment? No. So I think the maximalist argument is a very poor one in terms of utility. It might have the longest duration, which is still pretty short, in 13 years, but be accepted as the digital gold. So it’s where you save. Okay, fair enough. Is it private? Is it really going to be releasing us to be more libertarian or less? So I think we’re losing liberty. I think we’re the you only have to listen to Carstens of the SMB, and quite clearly, they desire to know every transaction you make. They want a part of every transaction you make. They want to know what’s income. I think we’re going to go to real time, taxation, unrealized capital gains, and a lot of things in the scavenge mode of absolute digital control. So I think it’s an undermining the biggest death of anything has been privacy over the last three decades. You know, Zuckerberg started saying, you know, privacy is over. Get over it. He had to bend his tune a little bit, but I think he spat the words out that he really meant long time ago when his social media came out. If you look at the you know, where these things started, I think there’s a lot of I live in a conspiratorial world, I’m afraid, where I think a lot of these things were orchestrated and were Skunk Works in some NSA, CIA, stroke, Mossad, whatever you want to do, intelligence network. So we are farm animals to be farmed by our protectors in some ways, in me, and I don’t see this as a good event, I think that escalates digital means they have ultimate power over where you are. Everything tracks you, everything surveils You, what you’re doing. You have a biometric thing. They know my face. They know my ID, they know my fingerprint every time I log in.
Maggie Lake 59:50
Is this the answer? Is this? The Is this the system that we are moving into? It’s
Francis Hunt 59:55
the answer for rulers. It’s not the answer for subjects. It’s an amazing. Answer for those that rule over us, it’s not a great answer for us in terms of liberty. Look, things will become convenient. They’ll keep getting easier and more convenient. We all carry around devices as if there are prison tags without even having to be asked to wear them. And I’m seeing already, you know, the new AI thing, which has a loop to carry around your neck and, well, you know, help answer questions. My partner was just telling me she wrote an email, and it’s this, aI had read her email and gave her a prompt. You by the way, remember to follow up this person then, you know, it’s read the email, and in the letter, he said, Yeah, we will talk to you when you come back from holiday, you know. So it’s actually quite clearly comprehended. The discussion is listening in on the discussion is probably now, in one way that’s super convenient, and in other ways, it’s goddamn creepy. So, I mean, how do you digest that? However you like I don’t like it.
Maggie Lake 1:00:56
So, so it sounds like you’re it sounds like you believe the opportunity here. I don’t even know opportunity, because this is preservation, right? This isn’t chasing returns. So the safe thing, the right thing to do, is to really look to precious metals. But you don’t sound that bullish on also having a sort of barbell with Bitcoin. Or do you like, how should, how should that fit into there will
Francis Hunt 1:01:21
be appreciation. They need the market cap of the suite of tokens that they intend to use to match their assets that they already hold in the old system. So what we’re going to have is, as I mentioned, as Jupiter contracts, the air being let out has to inflate. This the second new system. So we’re in this transfer period. I believe the bridge, the golden bridge, is gold for you in preservation. But I also think certain status tokens that have expressly stated that it’s our intention to work for with CBD season, with the banks, the B to B element, and I mentioned XRP in that we’ve got beautiful technical setups, and I expect them to go up immensely as part of this inflation of the new system. So there’s going to be upside money making opportunities in that and but I don’t, I just say, Don’t love that, right?
Maggie Lake 1:02:16
There’s social risk to that, but from an investment point of view, will see an increase. We’re
Francis Hunt 1:02:21
just talking cold blooded make money. I mean, we, 15 years ago, we said, by the military industrial complex, but hold your nose while doing it. And you know, we’ve had rayathon long. My apologies, reathon, what’s our Northrop, Grumman, Bae and the main one, Lockheed Martin. You know, they’ve done 30, 40x on that. So we saw this hyper militarization coming now, with America actually losing access to its debt funding mechanism, that we are less bullish now we think that’s a place to have gone out of there, but so we will, we will say where we think things will go up, even if we don’t like what they stand for sometimes, and I see a number of status tokens doing exceedingly well. That will be part of the new grid in the new world. We cover that in the crypto sniper, our second YouTube channel, as well as the traditional markets in the market sniper. So there are money making opportunities. In fact, I’d say the opportunities are exploding. Some are short, quite clearly, and some are the alternatives that have to get larger in this period and that and it’s going to happen actually, very fast. So there’s going to be certain. This is why we mentioned. It’s a polarizing period. Those that invest for a transition between two systems, and with a focus on reserve assets as well, are going to come out of this exceedingly wealthy. And that’s, you know, our community is all about build wealth and then preserve that wealth in us, in a statist environment, which is actually going to be very hungry for capital from its citizens and then secure as much freedom. Those are the three things we should all be focusing on, in my opinion, and that’s what our community focuses on. Francis,
Maggie Lake 1:04:04
this was, I think, a very timely and fascinating discussion. I usually ask people, where would you be wrong? Like, what would make you change your mind? I think you seem pretty clear that you believe this is happening. So maybe it’s just what would shift the time frame? What would buy more time? Because it sounds like you’re, we’re on the slope. What would cause you to think, Okay, hang on, it’s still coming off.
Francis Hunt 1:04:30
That question. I love that you do that, and then you show the mindset of a great investor, and we do actually stay, say the very same thing. We’ve been very early in the debt base collapse call, and we continue to get affirmation for our view. So that’s that’s when you on the trend, you ride it. And that’s where Stanley Druckenmiller puts the pig on the table. There’s occasionally moments when you quite clearly, are on trend, and you must press home that advantage aggressively. That’s what I take from the pig. Don’t, don’t lose all concept of money management. And. Sizing, but be aggressive. So I think we’ve earned the right with what we’ve seen transpire. I mean, everything in the headlines have come rushing towards our original view. We’ve gone from being absolute fringe lunatic to middle of the mainstream. Now, how do they slow it? How do they slow I think they’ve done an immensely good job of slowing it, even as long as we’ve got have taken to get to here. The problem we now have is that it’s very specifically in the debt markets. Now it’s quite clear there’s an active, ongoing rejection in the debt markets. So a slowing would be And don’t forget, Trump’s administration has somewhere between seven or 9 trillion to roll he really needs lower interest rates to have a reduced well, they won’t get a reduced interest payment, but not as high additional interest payments on all that role. So he needs a recession, actually. He needs a bad, bad recession and the stock market to collapse that could actually get some money finding its way back into bonds and but my fear is the pipe that run that siphons that off to Bitcoin and gold, particularly gold, is going to be too fat now, and you’re going to get more of the benefit go to the gold than to the bonds. And that’s the problem. Once you you’ve shown that we’ve turned the and you’ve got everybody positioning short. Don’t forget other Americans, Druckenmiller, Tudor Jones, are shorting their own nation states debt. That’s how bad it’s got Buffett stood down Captain America, and he said the most bearish things, this was the guy who told you who won the lottery for being born in America. He said he’s concerned about the dollar, he’s concerned about the trade deficit, and he’s concerned about the overall debt problem, and he has no idea what he’d do if he had to deal with that. But somehow, it’s got to get got to be better. And I’m standing down. This is a guy who looks like he’ll live to 140 he just loves what he’s doing, drinking Coke and playing the markets. And he’s actually going to let a new internationalist flavored manager is probably going to have a lot bigger allocation outside of the US. That’s my personal view in terms of what’s probably going to happen. He doesn’t want to be the guy that ever to be the guy that ever said, I’m stopped by in America, but he has. He’s been hoarding cash for, I don’t know how many quarters. So none of that was apparent in 2020 it’s more apparent today. So we’ve continued to get that endorsement of much bigger minds and names than ourselves throughout this period. So I would say it’s a strong view that I have. But can you be wrong? No, what we need major recession. You need to see a disproportionate reaction to downside in the rates. I don’t think you’ll get it. I think you get a small degree of rates. You’d need lots of cuts in a real low environment, but you’re just never going to kick remember, rates down, Bond valuation up, you have to scare the people that are in hyper valued equity so much that they choose to buy debt, not gold. And I’m not sure you’re going to you’re going to get the same flow ever again, because that’s that, that’s that’s broken now. The trend has changed. The reversal is in, and that’s why this 2025? Year is not 2020. Is not 2008 and is not 1999 2003 let me rather say, the bottom of those recessions, you don’t have the funding conveyor belt at the bottom of the foundation to support you anymore
Maggie Lake 1:08:19
difficult times ahead, but Francis, so appreciate you giving us so much to think about as we as we walk through what we usually expect to be quiet months, but it doesn’t feel like it’s going to happen this year. So thank you so much for your time. Absolute pleasure.
