What The Trump Administration Is Planning With Gold (Uncut) 02-13-2025

Tom Luongo: What The Trump Administration Is Planning With Gold…

Now we can start the process. So if you start thinking about the consequences of everything I just said, which is to finally answer your original question, the gold price has to be much higher than it is now. Do I think it’s $80,000 or anything? No.

But let’s start with five or six or seven. Is it going to be 10? Is it going to be 12? Is it going to be 15? It could be 15,000. I don’t know.

If you had to make a market around, not saying you’re betting your life savings on this, 10 years from now, what do you think the gold price is? Well, hello there, my friends. Chris Marcus here with you for Arcadia Economics. And today we have part two of our interview with Tom Luongo.

And here we go. You mentioned before that you think that the Fed in their current position, they want a higher gold price. Would you go as far as to say that the Fed and the Treasury want a higher gold price? Sure.

Why wouldn’t they? I think Treasury wants to issue an asset-backed domestic dollar to circulate next to Federal Reserve notes. I think the Fed needs to go back to its pre-Banking Act of 1935 conception, its original conception. The Banking Act of 1935 is what changed the Fed into its current monstrosity today.

With the FOMC, the singular Fed funds rate, all of that. In effect, doing away with the Federal and the Federal Reserve, which was a federation of 12 member banks, just like the United States is a federation of 50 little countries. We happen to call them states.

For people who talk about Federalism, we don’t have any Federalism left and we need to get back to Federalism. So why wouldn’t we want the Fed to, I think what we should have is a Federal Reserve that acts as a lender of last resort, if we’re going to have a Fed at all, which I think at this moment in time, we still need to have a Fed. That should be a lender of last resort to the domestic banking markets so that we have booms and bust cycles, which are a natural part of the business cycle as malinvestment builds up within any system, any economic system.

The question is whether we exacerbated the highs and the lows by tinkering at the edges with monetary policy. But a lender of last resort to keep the banks solvent and keep the commercial paper markets solvent during exogenous events, fine. I have no problem with that, at least in theory.

It can be replaced with something else if you want to replace it with, well, let’s just deal with that tomorrow. But the other thing the Fed should do in today’s world is manage the flow of dollars across the national border, meaning setting the price of dollars in the offshore markets. And that price should be higher than it is in the domestic markets.

So that’s why we need to have, I think we’re going back to a two-tiered monetary system. I think we’re going to a partially closed capital account with a domestic onshore dollar versus a domestic or an international euro dollar. And the people who are screaming about tariffs and they’re screaming about reintroducing gold to the monetary system and this, that and everything else are all people who are sycophants for the euro dollar system.

And maybe I’m wrong, but I don’t see that we don’t need to do that. We have assets that should stay here and circulate here. And as we build wealth, we convert it into hard assets, which we then monetize and use to build as savings.

And then we take that pool of real savings and monetize it and turn it into investable assets that we then go build new beautiful things with. Like, I don’t know, rebuilding Philadelphia or rebuilding, go pick a city. Let’s start with one.

And stop with this nonsense that we shouldn’t do that. And we should just send all the fruits of our labor overseas to the highest bidder. No, that’s what the Fed should do.

And the Fed has, and over the course of the last few years, if you look carefully, you’ll see at every turn, the Fed has made it harder for all, for foreign central banks to go and grab U.S. dollars from U.S. private markets. They have to go to the Fed. When the, when a foreign bank gets into trouble, they got to go to the Fed standing foreign repo facility.

For example, this is one big one. When Powell first raised the reverse repo payout rate, five basis points above the Fed funds rate, which is what started the process where I got to meet all you great people, all the, all the podcasters that I now consider friends, you, Tom Bodrovich and all the others, right? Which was that initial idea. What was, that’s what we all remember.

We forgot that at the very next Fed funds meeting, Fed FOMC meeting, Powell stood up the foreign repo facility at the same time. So he drained the world of offshore dollars and then said, oh, by the way, if you want treasuries and you got to go through this facility. So he pulled the money back and then said, oh, by the way, if you want more of it, you got to pay, you got to go through my paywall and it’s more money.

And that’s what’s like, that’s part, that was part of the process. And when I saw those two things back to back, that’s when I, it all really started to click for me. So, and there’s been more done since then.

I can’t remember all of it because there’s so much rattling around in my head. So I apologize if I don’t remember everything and every presentation I do on this stuff, but understand that that’s what the Fed has been doing. And I’ll be honest with you.

I don’t think Trump has a problem with any of it because if he did have a problem with it, he would have thrown Powell under the bus the other day for not cutting interest rates. Because remember what percent and Trump have both said is that we want to get interest rates down, but we want to do it organically. We want to lower the cost of doing business in the United States by making the United States economy more efficient.

So it’s that we don’t, we can run 2% real interest rates at a three and a half percent yield on the US 10 year. Now you can only do that with a, by rebuilding your pool of real savings or by unlocking the savings you have, which have been pushed off out of circulation because of financial repression at the zero bound. And that what we’ve lived through for the last three years was the building of the wall with high interest rates to cut the froth out of the system, get rid of what they did to us during COVID, get us back to 2019 levels and then start, now we can start the process.

So I don’t know, but I mean, if you start thinking about the consequences of everything I just said, which is to finally answer your original question, the gold price has to be much higher than it is now. Do I think it’s $80,000 or anything? No. But let’s start with five or six or seven.

Is it going to be 10? Is it going to be 12? Is it going to be 15? It could be 15,000. I don’t know. But- If you had to make a market around, and you’re not saying you’re betting your life savings on this, 10 years from now, what do you think the gold price is? About 15 grand an ounce.

About 15 grand. I think, what I used to say, Chris, was this. Again, referencing stuff I said last year, but I’m now in a different paradigm because of what we’re looking at.

But what I said last year was that at some point, we have a leverage within the Fed’s balance sheet. The Fed is the only issuer of currency now. Now we’re talking about a two-tiered monetary system, so I guess that’s off the table.

But let’s just use that framework, even though we’ve already established that maybe that’s most likely not what’s going to happen. We have a $7 trillion balance sheet at the Fed now. We’ve got $700 billion worth of gold on the balance sheet, roughly.

I don’t know. Maybe it’s 750. I don’t know.

You can calculate it out at $2,900 an ounce, $3,000 an ounce. Let’s call it roughly an 11 to 1, 10 to 1, 11 to 1 ratio. Is that enough to engender trust in the American financial system? No, clearly not.

Gold price needs to rise. Or the size of the Fed’s balance sheet needs to come down. What if the Fed cuts its balance sheet in half? Now it’s a 5 to 1 ratio.

It’s 5.5 to 1 ratio. Is that enough to restore trust? I don’t know. We’re going to decide where trust is re-established when we say, okay, it’s done.

Maybe we see the Fed cut its balance sheet in half and the gold price rise from $2,900 to from that gold we have on reserves from $700 billion to $3.5 trillion and the Fed with a $3.5 trillion balance sheet. That would get us a 15 grand. Because we’d have $3.5 trillion worth of gold on the Fed’s balance sheet.

The Fed would have no mortgage-backed securities, no treasuries, plus a couple of trillion dollars in notes and circulation or whatever. Roughly, that’s where we would be. Then we would have that.

Then the liabilities of the Fed’s balance sheet would be the notes and circulation, blah, blah, blah. That work for you? That’s assuming we didn’t buy any gold and put any more gold on the Fed’s balance sheet. That’s assuming a lot of Ceteris Paribus, all these, none of that is, it’s not a complete argument.

It’s a model. But it gives you a framework with which to think about where you could be. We could also be looking at a nominal GDP of real economic wealth generation, not what we currently have, which I think is about half of that.

I think our nominal GDP is about twice or more of what I think our real GDP is. So what if we had a real GDP of $30 trillion as opposed to a fake one? Well, then we’d need a $6 trillion Fed’s balance sheet and $30,000 of gold. Again, assuming no treasury asset-backed currency, backed by a sovereign wealth fund.

But we know they’re putting a sovereign wealth fund together. And they know, and you know, now here’s another one for you. They want to buy a million Bitcoins.

Well, at $100,000 a piece, that ain’t a lot of money. That’s not interesting until, that’s not an interesting amount of money until Bitcoin’s a million dollars a coin. Then it’s a trillion dollars.

Now we’re talking a sovereign wealth of a country that’s building $30 trillion worth of wealth every year. That’s a pool of real savings, along with gold, along with oil and gas revenues, along with, along with, along with. Now you’re talking a real account.

Now $4.5 trillion worth of Fannie and Freddie shares that they sell into the market. Because remember, those Fannie and Freddie shares were pulled off the market at $80 a share back during the global financial crisis. They’re currently trading for about six.

Fannie and Freddie have real, real operational cashflow of $150 billion a year that they’re making. So how much is Fannie and Freddie actually worth? Are they, are they worth $80 a share or are they worth $800 a share? That’s a good question. Go look up how many shares that the treasury of the Fannie and Freddie of the treasury owns.

Then do some math. I’ll leave that. That’s your homework folks.

You do that one. You’ll be like, dollars not going fucking anywhere. Holy shit, dollars not going to die.

Now what? Now the gold punters have a real, real hard look in the mirror. They really do. I made that, I took that, I, I, I had to look myself in the mirror 10 years ago on this stuff.

So, you know, so this is why I have very little patience for a lot of the people in the industry, by the way. They, they mean well, but they’re, they’re not, they’re, I, I, you know, I have a hard time with it, but you know, we’ll see. I mean, but there’s, it’s coming and you can see it.

And I think a slow, steady rise in the price of gold is exactly the way you handle this. And you just naturally, you know, look, if it rises 20% a year, you know, a few years before you know it, $15,000 an ounce. Sounds good.

It would have to rise more than 20% a year, obviously to go from 3000 to, to get a 500% return in 10 years. Right. They’d have to rise roughly 40% a year, Cogger, something like that.

Just roughly off the top of my head. Well, I think what you’re saying makes sense. And I’m guessing for most people watching, or I don’t know, maybe some people aren’t satisfied if we get $50,000 gold.

I guess everyone has their own expectations. Tom, we’ll start wrapping up. I appreciate all the time you’ve already shared here already.

Although I guess the last thing I’d just like to run by you, obviously we’ve had a lot of tension in the gold market. We’ve seen the spread between New York and London blow out. We talked more about gold already.

I’ll, I’ll mention here was Daniel Galley, who’s had several interesting silver reports in the past year. And here he’s mentioning the, this is accelerating the timeline to depletion of the free floating stockpile. I’m not saying that we’re having a shortage tomorrow, but especially when you look at the environment in the mining stocks, it’s not like all hands are on deck.

These guys are starved for capital. We saw the LBMA vault report. They showed the January numbers, big drop off as metals left.

Lastly, Bank of England saying 48 weeks. Tom, I’m guessing that this guy’s commentary didn’t win you over completely. He did say gold is heavy, which was insightful.

But anything related to all that, he says it’s fine. Oh yeah. I think this is, I think this is, I think the, I think Trump and dissent and everybody else are making a run on the Bank of England.

That’s the, that’s the big one folks. I, I’ve been arguing for years that SOFR was the real declaration of independence by the United States. We finally have financial independence because we now get to set the cost of our own damn money for the first time ever, 250 years folks.

So yeah, we’re implementing Basel III, London, get over it. You won’t be able to use unallocated pool accounts. You’ve rehypothecated my money a thousand times and say, oh, we have reserves on the balance sheet and we’re going to use that to write 4,000 gold contracts against my frigging stock of 10 frigging gold eagles and say, no, I’ve got tons in the vault.

No, really? Yeah. Okay. Pull the other leg, it plays fucking jingle bells.

Like these people are the problem and they need to be wiped out. Okay. The Bank of England is bankrupt folks.

They’re getting bankrupted over Ukraine and their obligations there. They’re trying to shake Apple down for the encryption keys to all of it because they want to control the flow of information to be able to use it against everybody to stay in control behind the scenes. I’m done.

I’m over it. They’re the problem. They need to be wiped out.

City of London and their infinite rehypothecation scams needs to go away. And there are many ways to skin that cat. Now ask yourself the question, why is Ripple so disruptive? I’ll leave you with that because what currency in this world settles 30% of all Forex transactions? The British pound.

That’s what, and Ripple can take all that business from tomorrow. And then what? These people have been running a scam with our money and our tax money wandered through our government agencies and our NGOs and our politicians to then sell us our lives back to us to undermine us a pennies on the dollar and steal it all. No, now you’ve cut off their cashflow.

USAID is gone. When they audit the Pentagon, gone. When they audit the state department, gone.

CIA, gone. When all that cashflow is gone, now they got to spend assets and their assets are being repatriated over the United States because we’re implementing Basel III as of July of this year. That’s the story.

That’s why London’s being drained. That and because we’re telling everybody, drain London because the COMEX is going to get drained as a speculative process. Again, go back to what Vince and I have talked about.

And I know you’ve talked to Vince about this. The GLD is going to be where you hedge your FX risk with gold. It’s no longer going to be the COMEX.

The COMEX will go back to being what it’s supposed to be, which is a commodity futures market to coordinate production and consumption. That’s all it’s for. And it should be a physical delivery market completely.

And if you want a financialized market, we’ve got GLD for that. And we have a trusted intermediary to decide, trusted being by the government in the form of JP Morgan, who will look to the government and say, can I sell that 50 tons of gold redemption off of GLD to the Indians, to the Reserve Bank of India? Yep, that one can go through. But what about the one to the Bank of China? Nope, sorry, that one doesn’t go through.

That’s what I mean by soft capital controls on physical gold and silver. And silver is going to be under the same rules. And then we’ll depreciate the COMEX.

And that’s why the COMEX wants to maintain its near monopoly over being the clearinghouse for US treasuries and not letting LUTNIC go over to England and set up an exchange, a clearinghouse over there with the Bank of England being the guarantor. I don’t trust LUTNIC as far as I can throw it. Unless he’s got some other angle on this that I haven’t been able to figure out yet, I’m running with that until proven otherwise.

Like this has to end. The United States is declaring independence from continental Europe. And we have to get over the fact that these people are not our allies.

And they have never been our allies. That’s the way it is. Going to be an exciting time.

And Tom, perhaps just in wrapping up, obviously, I’m guessing there are people watching who would like to stay posted on this. And I know of one great place to do that. And perhaps you could just let people know what they get over at Gold, Goats and Guns, at which I might add, I’m a proud Patreon member myself.

And I love getting your columns in the podcast. You get a couple of podcasts a week. So if some of you out there like to listen rather than read, Tom’s got you covered there too.

But Tom, anything you can say about the site? Sure. The website is, the blog is for the podcast and any public articles I deign to write anymore, which are really, really difficult to do with everything that’s going on out there. But you can see what Quinny’s telling you.

You can become a Patreon over at Patreon.com slash Gold, Goats and Guns, where we do the twice weekly market reports, which are one hour podcasts where I both do a rant similar to this, whatever’s going on in the day, plus cross-market analysis of everything from gold to the Dow, to Bitcoin, to the US-German 10-year spread, to you name it, as well as the monthly newsletter where myself and my partner at Gold, Goats and Guns, Dexter White, publish a monthly newsletter where we have a bespoke portfolio and we look ahead as to where things are going politically, culturally, economically. We cover all of it in that respect, a cross-market analysis of what’s going on in the world. And I also do private podcasts and private articles for the patrons as well.

I also do bespoke chart reads for people as well on a weekly basis. That’s part of the routine as well. But we keep up with all of this stuff.

And the general idea of the layout of where we’re headed, that’s what we do. And we do try and keep the pipeline filled as best as possible. And then, of course, my Twitter feed at TFL1728, which is where the snarky stuff, the best snark happens on a daily basis.

Where you share your approval of Elizabeth Warren’s latest policies. Tom, I was noticing this picture over here. It looks like you just read a Zero Hedge article about Nancy Pelosi’s trading.

No, it’s just like, God, I’ll be honest with you. Like, I’m not messing with this guy. Yeah.

I’ll be honest with you. Grok’s image generator is kind of fun. But yeah, so there you go.

Never, never, ever underestimate the power of the meme to get across the right to information at this point. So we will save the country or meme triangle. That’s right.

Yeah. Well, I certainly appreciate that there are, and I don’t know how many people quite like Tom there are out there, but I appreciate you’re out there. Nice to see everybody.

Vince Launchy. I was calling him Lancey for like two years. Then one day he told me it’s Launchy, but.

Yeah, because he’s, I guess he’s Italian. I remember the first time I met Vince, we sat there and we chatted and we did the first time he was on the show. And before we hit record, he’s like, I really do appreciate you actually saying my name properly.

I’m like, dude, I’m Italian. Of course, that’s how you pronounce your name. Like what? Well, you guys do some great shows together and I know people always love it when you come on here and thank you just for making some time and great to catch up with you again, especially with everything that’s happening right now.

And like you said, gonna, gonna be some exciting times coming and we’ll have to catch up and do this again soon. I always, Chris, you know, you give me a call. We’ll, we’ll do the thing.

I think we put this one together in what a day. So happy to. Yeah, absolutely.

All right, sir. I’ll see you soon. Take care.

Take care, Chris. Enjoy your day. Well, thank you once again to Tom for both parts of this great interview that he shared.

Hopefully it gives you a lot to think about and helps to at least put in context some of these things that are happening and what they could conceivably mean and what Scott Viscent could be getting at. So a lot happening and certainly appreciate Tom coming on there. Before we wrap up, would like to thank today’s sponsor, Silver Viper Minerals, who some of you know, has been working on getting a deal in place so they can get back drilling again.

And as Steve Cope of Silver Viper mentioned on our last call, they appear to be on track for a deal. And certainly with a company that like many of the junior miners has gotten beaten up in the rally and at least is an opportunity as they are about to get set drilling again. So just wanted to let you know about that.

You can find out more about them at SilverViperMinerals.com. If you want to get details about what’s going on with their deal and drilling programs, you can go to the contact tab or you can email me at Chris at ArcadiaEconomics.com and I’ll be happy to get you more information or get you in touch with Steve. But I did want to let you know that is an interesting timing with what they have going on there. And certainly for the mining stock investors, something might want to take a closer look at.

But anyway, we will wrap up for today. Thanks again for being here. Hope you enjoyed the show.

Thank you, Tom. And go out, have fun watching these gold and silver markets.