GOLD at $30,000 – Economic Demolition Just Started (Uncut) 03-28-2025

GOLD at $30,000, China Won’t Accept it, Economic Demolition Just Started | David Collum

Are you saying you’re willing to buy gold at $20,000 or $30,000 if you owe China a trillion dollars and you say, look, I’m going to pay off the debt with our gold, which we price at $30,000. Is China going to accept that? No. And so that seems silly to me.

One would call this maybe this is a demolition phase where the entire building, not building seven, some other real demolition, where you destroy the building, bring it to the ground, clean up the rubble, and then you rebuild. And I think Trump wants to do the demo in the first year and the rebuild in the second. Hello, and welcome to Soar Financially, a channel where we discuss the macro to understand the micro.

My name is Kai Hoffman. I’m the EJR mining guy over on X and of course, your host of this channel, and really looking forward to welcoming back an old friend of the channel, David B. Colum. Dave Colum, he is known to us, and I’m really looking forward to catching up with him.

It’s been again, way too long that we’ve had him on. It’s been 11 months. As I said to him earlier, we missed each other in New Orleans this year.

We missed our six-month interval and six-month cycle catch up. So we have to do it now, and I’m really looking forward to hearing his opinion on how things have been going, especially over the last three, three and a half months here. Really curious what his thoughts are.

Before I switch over to my guest, please hit that like and subscribe button. Helps us out tremendously. We appreciate it, and it just helps us grow, bring fantastic guests on this channel.

So thank you so much for doing that, Dave. It’s great to welcome you back on Soar Financially. It’s good to see you again.

Yeah. It’s my pleasure to be here. These chats are fun, and as I like to say, if you want to record them, that’s fine too.

No, it works better for everybody. It’s a win-win for everybody, and of course, appreciative of your time, Dave. Let’s dive right in, and maybe we’ll start with a very, very general question at first, and then we’ll dive a little deeper.

But what’s your current assessment of the economy and the financial markets, Dave? Well, I think the economy is in rougher shape than we thought. And it might not be that it’s yet showing it, but I think we’re going to suffer a big hangover from all the fake jobs created in the last year of the Biden administration by pumping vast numbers of government workers into the workforce. And rumor has it that Trump’s undoing that in various ways, and it might not even be a large absolute number, but it’s a disruptive sort of approach.

And I’m not dismissive of the approach. It’s a little like amputating a leg, because that’s your best option. And so right now, I support what he’s doing.

I have questions about a lot of it, but it sure beats what we were experiencing a year ago. But I think he’s going to send us into a recession. It might be on purpose.

And recession is not some black and white thing. It’s like, oh, we just stepped into the recession, not falling off a cliff, where one minute you’re there and the next minute you’re hurtling somewhere. But it tends to become self-feeding because, first of all, people start cutting back and then they start cutting back in anticipation of having to cut back.

And then by the end, you’ve got companies reporting horrific results because they’re trying to basically purge all the bad accounting that they used and things like that. All the chicanery they used to pump their company’s well-being. And then the final stage is where they maybe are building cookie jars and saying, OK, so we’re going to take big losses here and then we’re going to pocket the money somewhere.

And then as we pull out of this goddamn tailspin, we will have cash to be able to make a run into the next rising market, I guess. So we’ve just started. If it started, we’ve just started.

The people squealing at 10% drop in the markets, they’ve got to get a cash scan. Yeah. Now, we talked about 11 months ago and cracks were already obvious.

We talked housing market, for example, already. So the question is, why 11 months later, we’re still not officially in that recession? Like, what’s the prolonged suffering here? Like, how have they managed to sort of push us to the limit and we’re still not seeing that? Well, this is not a strong opinion, but it’s a thesis. So I’d like to ask the question, the CPI, of course, is a piece of crap, right? There’s a thing called trueflage, which, in my opinion, is a thinly veiled attempt to monetize the CPI.

So someone comes up with what is perceived to be a different way to do it, and then they end up with the CPI and then they charge people. And then there’s other ways to measure inflation. The question is, if you were to take a guess, say, what is the current inflation rate? How many, what percentage above or below the CPI would you put it? Where would you put it? I actually know the trueflage number as of yesterday.

It was 1.78% yesterday. I just don’t believe it. It seems too low, in my opinion.

The CPI, based on my theory that they’re just trying to mirror the CPI, right? So what do you think? I’d say the economy’s been running, the inflation’s been running above the CPI for actually quite a few years, right? That’s a shadow stats, Chapwood Index type of a thinking. So how much higher do you think it would be than reported CPI? Well, a factor of three, at least. Factor of three.

So 3%, 4% maybe, right? Yeah. And I would say that’s been going on for how many years? Decade, two decades? At least 15. Like, when did we start printing money? 2008, 2009? So 16 years.

So then the question is, if the GDP is corrected for inflation, inflation’s being underestimated by 4%, and the GDP is less than 4%, I would argue we’ve been in a recession for 15 years. Yeah. Now, of course you can’t talk about that.

You know what I mean? It’s like, that fact doesn’t exist. It doesn’t make sense. The British empire was in recession for a century.

Interesting. Yeah. Do we need to maybe rework the definition of a recession then? Well, yeah.

Yeah. Let’s, that’s right. So once we had a depression, they go, we can’t use depression anymore.

So a recession, the definition is going down. So it’s like saying, okay, why don’t you, it’s like you’re in a sand trap. You play golf? You play golf? Uh, no.

I throw further than I hit the ball. Any golf will tell you that, you know, depending on what you like, I actually like sand traps, but once you’re in a sand trap, whether you’re on the way down or the way out, you’re still in the sand trap. So, so I would say that you are not out of a recession or whatever, dimple, until you’ve, you’ve gotten out the other side.

And, and, and, and so, so I don’t think to say hurrah, everything’s fine when you’re sitting in the very bottom of the sand trap. It just doesn’t make sense to me. So I, you know, the fact that you’re recovering, it’s like, oh, you had 104 fever, now you have 103 fever.

Everything’s great. Right. I don’t think so.

That’s not how it works for me. So, uh, so you’re on the road to recovery. So I, I think, I think we’ve got, I have this suspicion, you know, every, every serious problem and in the modern era, serious problems seem to be the norm now because they’ve intervened too much.

Um, I think the word private will be profoundly present in the discussion when we get into the next serious problem. And it will be in the form of either private debt or private equity or both. Um, could be saving private Ryan, um, could be cover your private parts.

Um, but the word private is going to be prominent, I think. And I think, I think, you know, I’ve seen claims of, you know, the private debt market being unregulated, unmeasurable. And then people claim to know how much, uh, wouldn’t remember in 08, 09, when the Bear Stearns hedge funds imploded and the first news reports.

Now there were some of us who are already saying, look, we’re in a world of trouble. Some of us were watching the market ABX index and things like that. And the real estate market rolled over in 06.

So we had plenty of warnings, problems were coming, but, um, but Bear Stearns two internal hedge funds were 600 million a piece imploded. And you go, so what, right? Well, that, so what turned into a whole lot more than so what. And so once, once you start down that slippery slope, uh, it’s sort of, it’s an emergent system and, and, and no one is driving that cab at that point that the fed can twirl all the knobs they want, there’s nothing they can do.

Um, we just went through the longest period of an inverted yield curve. I’m not a big fan of these indicators, but that seems to be a pretty good correlation of inverting a yield curve of recession is in your future when it uninverts so that the famous bear steepener argument and, uh, and what I don’t know is, is if there’s some correlation, I don’t know, with an inverted yield curve, one would think deeply inverted would be a problem. I also don’t know if the duration of the inversion is a problem.

People claim it is, but there’s people claim all sorts of crap on the internet. So, um, so, so, but it was the longest period of an inverted yield curve in history, supposedly. And so I would say that based on historical precedent, we have a recession in our future or are in one.

Uh, in 91, they interviewed, they polled 51 economists and said, will we have a recession in this year? And they said, no. And it turned out that, um, history showed that when that poll was done, we’re in a recession. So it shows you that you can’t ask the economists.

Um, so yeah, I think we’re in trouble. And then it gets to the question that no one ever seems to want to talk about. I can name a dozen people willing to talk about it and, and, and 8 billion who seem to not be aware of it.

And that is, um, the, the profound valuations of the market. So when someone shows me some plot that goes back to 2022, I don’t care. It goes back to 2020.

I don’t care. It goes back to 2015. I don’t care.

It goes back to 2008. You’re starting to get my attention. But that actually is the good news plot that shows everything’s going up.

Uh, I got my plots have to go at least back to the eighties, seventies, sixties, fifties. I want to see the historical record. And because whenever they cite, you know, how things are going to do, it’s always relative to some historical benchmark and, and the historical record does not mean 19 does not mean 2022.

And, uh, and so I did happen to notice that over the last five years, the S and P is up 139% seems like a lot for five years. Um, um, something like Microsoft, I think is revenues are up 150%, but it’s share prices up 10 fold. That doesn’t seem terribly sustainable.

Nvidia revenues are up 25 fold and you go, Whoa, that’s pretty good. Well, their, their share price up two or 50 folds. So that doesn’t seem very sustainable.

And, you know, same thing is true with Apple, Apple’s or Apple’s revenues are up something like 50% since in the last 10 years, their share prices up, you know, 10 X. And so there’s, I have this suspicion, I have this hunch that, um, we find a, we kind of Bitcoinized, um, the markets where people have lost sight of the fact that you are buying a revenue stream, so I don’t think of it as like buying a bond. And, and, and you’re saying, look, I’m buying it to get a return of X bucks. You know, X percent return on my, my dollars.

They’re just buying it because some argument about it’s going to go up. And, and that’s, that’s a gold argument. Gold guys, the only reason to buy gold is you think it’s going to go up.

The only reason you buy Bitcoin is because you think it’s going to go up. And, and, uh, and, and you could have a good case. That’s fine.

But if you start doing that with the markets, uh, you end up wishing you had not because they are tied to revenue and earning streams. And so one of my favorite examples, actually, I wrote about this. I used a bunch of different examples, but it was after the.com bus, um, Buffett actually lamented owning Coke.

Now, anyone who knows Buffett says, really? I don’t remember that. Yeah, he did. He did mention that he did it kind of softly under his breath.

And what he was pointing out, if you dig in, is that Coke had a PE of 50 in 1998. So Coke was priced to return 2% cashflow. Now in 1998, you could get a treasury for 6%.

Now you say, well, Coke’s a company though, you know, so that’s different. Yeah. Okay.

So Coke in 1998, pretty much owned the global beverage market, right? There are other, but, but it’s not like they hadn’t penetrated all the different continents. And if you were to say on an inflation adjusted basis, can Coke double its earnings? You’d say no. And if you can do it, then you, it probably means your inflation metric is wrong, probably blew it there.

Not because yeah, Coke is like a Coca-Cola is like a royalty trust where it just pumps out liquid and, and you just collect the profits from selling that liquid. And, and, but the idea of doubling, doubling the earnings of Coke legitimately is, is almost impossible to imagine and, and Buffett knew that. And so he realized that when it got to a P of 50, he should have sold it because it was again, price to return 2%.

And he didn’t sell and he was kind of punishing himself a little bit for that. And, and so so even he lost sight of the fact that that P tells you something very important. So what happened? Well, Coke then spent without inflation adjustment, spent the next 15 or so years underwater trying to catch up.

And so they didn’t double their earnings. They, they, they, they burned the clock while inflation burnt. They burned 15 years and they burn a whole bunch of shit.

And, and so it hasn’t been a good investment. Pfizer, by the way, you know, Pfizer’s at the same price now as they were in 97. So despite the fact that they, they are wholesale mass murderer sorry, I shouldn’t say that despite the vaccine and all of a sudden they’ve treaded water for, for, for three, three decades.

So if you’ve been told, look, Pfizer is going to make the vaccine that’s going to be used for a global pandemic and say, well, I think I’ll buy shares of the Pfizer. Right. They didn’t even respond in, in 2021 very well.

So the market didn’t price vast profits into the Pfizer model. And part of it’s because Pfizer needs gargantuan numbers of huge blockbusters just to tread water. And, and the vaccine was not that big a blockbuster, believe it or not.

And there was some one-off dividend payments and stuff, which I haven’t done the math on. I keep saying, I haven’t done it. I’m going to do it.

There’s actually, there’s a spike in the dividend return for about a year. And you could actually take the market cap and the percentage spike and say, okay, here’s how much they paid out. And that was the sort of unusual cashflow maybe from the, from the vaccine.

So the bottom line is I have the market price at 200% over historical average valuation. How do I define historical average? 1880 to 1990, seems like a good 110 year period. 1994, the valuations, what you can look at 25 of them, they all do the same thing.

They take off. They just, they just launch out of the channel that they were in. And, and if you boot up a chart, boot up an inflation adjusted or boot up a valuation metric and go back to 1880, and you’ll find like, for example, a K shill or PE average around 12, and it’s slopped around a channel between sort of six and 15 or something like that.

And we’re in six and 20. And now we’re at, so the average was 12 and now we’re at 38, which is where that gets you 200% over historical average valuation. Now, that argues that we’re looking to get back to the historical average, which is an optimist’s view of the world.

Because you really got to spend half your time below the average for it to be an average of a 70% correction, 65, 70% correction. And I don’t think it’ll happen all at once because dip buyers will save it. So then they’ll get up and it’ll rally again, and then they’ll get knocked down again.

So if instead you say, let’s grow our way out, let’s just grow. Let’s assume the GDP is 2.5%, not negative, like I said earlier in the podcast. Let’s say it’s 2.5%. To grow your way out of a 200% overvaluation at 2.5% a year, it takes 45 years.

So I argue that if the market regresses to the mean 45 years from now, it will be priced inflation adjusted at exactly the same price. And that’s happened many times before. People don’t know this.

1929 to 1991, no gain. Interesting concept, 45 years. Who’s got the patience for that? After it starts correcting.

My patience is going to stop long before I get to that. Why I don’t know much of the market. But if they keep this juggling act going for a long time, I’m going to go to my grave while they juggle.

But I think anything you get from here, you’re going to get back. No, it’s a good point. You mentioned the Bitcoinized thing.

And it’s a really interesting theme, also coming from the mining space or so. Instant gratification is, I think, the key word here that we’re going for. Because if the stock market dips now, we’ve been used to 20% gains on an annual basis ever since 2008, 2009, pretty much, with very few dips in between, besides 2022.

CAGR was 20% on the S&P 500. By a bunch of measures, by the way, over sort of an infinite window, the market returns about 4%. So we’ve been way above average.

After taking out all the fees and taxes, and not even taxes. Taxes, believe it or not, are not taken out. So why should people panic right now? That’s maybe the question.

Why should they start moving funds into other asset classes, perhaps? And maybe, have we started seeing that already, Dave? Gold. Panic, no. I realize, I tend to shift asset classes not by selling and buying, but rather by reallocating.

And so when I get bullish on something, of course, I’m getting old enough now where I don’t have that time luxury. But if I go bullish on equities, I just take all my contributions to my retirement stuff, put it in equities, right? So that’s why I did it. So I average in by using all contributions going into my new ideas.

Now I have to actually do it differently because I’m almost 70 years old as of next month. And so you can’t go to Europe, I don’t think. I think there’s talk of going to Europe because Europe looks cheap compared to the US.

But be very careful of a benchmark that itself is a bubble. So like when they would say, equities are cheap because of the interest rates, they go, well, you’re comparing the equity cheapness to the most expensive bond market in the history of civilization. So you’ve got to be a little bit careful using that as your benchmark.

And it turns out that if you want to say equities in Europe are cheap, that’s fine. But if you’re going to use an equity market that contains Facebook and NVIDIA and Apple and Microsoft, that’s a dangerous benchmark. So I like metrics that are either much longer historical or are not sensitive to the denominator.

And there are a bunch of them, and I like to look at a whole bunch of them. But again, the case Shiller sitting at 38 as opposed to an average of 12. Now, the average is not 12 if you average across the whole window.

But what it does is it goes along and then all of a sudden it curls up from 94 on. So I say, let’s use the baseline up to 94 and then let’s look at how much it curled up from 94. The average over the last 20 years is 26.8. So I just looked that up.

So but that’s still… That means the price returned 4% at best, right? Yeah. I’ve just… What is this website? GuruFocus.com. I just typed in the case Shiller PE over the last historical, and that’s sort of what popped up. We’re sitting at about 36 right now.

It’s still a massive correction, even if we just go back to that average. Well, for that average, it was 30 years of being way above the previous 100-year average. So it’s really being distorted by the 94 for the last 30 years.

And you get asked why, and you bring on Mike Green and he says it’s passive investing. I think it’s a good, solid argument. And there’s potentially demographic arguments why.

And the fact that… Think of it as a piece that grows at 2.5% a year. And more and more investors are buying this pizza. So what happens is the slices get smaller, the prices get higher.

Because right now, the S&P is still basically growing at 2.5% a year. But there’s so many more owners of it that you have to pay a fortune to get your share of that. Therefore, it’s overvalued, right? I want to buy the pizza when for a few bucks, I can get half the pizza.

Absolutely. Why would you pay more than that? Dave, you touched on something earlier, and I need to follow up on that. You said the recession might be deliberate.

So I need to follow up based on the context that you mentioned. Well, we might have been in a recession for the last 20 years. And why are you thinking it might be deliberate now? What prompted that statement? It wasn’t a statement.

You cautiously said it, almost under your breath. But what prompted that? It must have been something that triggered that thought. Well, first of all, the Fed often triggers recessions.

So that can be deliberate. I don’t think the deliberation I’m implying is that. I think that there’s a lot of debris built up in the system.

So the brain is an interesting metaphor. You know why you have to sleep? Because the brain uses a huge amount of energy, and there’s a huge number of byproducts. And so sleeping is when your brain basically is turned down to a very low ebb.

And the byproducts are flushed out of your brain. So it’s like flushing the toilet. That’s kind of a recession.

Evening sleeping is kind of a mental, a metabolic recession. And so you have to go through them, right? Because you build up stupid businesses and leverage and NFTs and crazy shit like that. And then if you look at the presidential cycle, you look at the market’s performance over each presidential cycle, it’s a popular plot where it’s historically flat for two years, then goes straight up for two years.

And one could argue that that is the party in power jiggering to try to run into the next election with momentum. And certainly Biden did that. Biden, they not only jiggered by putting a lot of money in this.

So like when you give a ton of money to a gazillion illegal immigrants, that money being flushed into the system is hugely inflationary. It’s pumping a huge amount of money in and they’re buying food and stuff. So in that sense, it’s just government sponsored spending.

And then what’s the recession? Well, for starters, getting rid of all the illegal aliens, that’s part of the purge. The rest of the purges, we undeniably have a commercial real estate problem. So we got office buildings that are not full and things like that.

And what do you do with a 50-story office building in a big city that’s not cash flow positive? Now, I actually have this low probability theory that the illegal immigrants being put in hotels were actually a bailout of the commercial real estate property market where they were saying, OK, we will pay $300 per illegal. You fill up your hotel with capacity. Meanwhile, it’s not like you’re offering room service to these guys.

So you’re running the hotel as cheap as you can. And when it’s all done and we flush them back to Venezuela, you take that money that you accrued and you renovate the hotel and you start over. So I couldn’t help but think that was maybe a bailout of wealthy people on properties that were not usable.

Just a thought. That’s just an intriguing thought. Now, the world is never what you think it is.

Here’s one for you. Everyone’s watching Jasmine Crockett, right? This seems like a non sequitur right now, but I’ll get to the point. So Jasmine Crockett looks, first of all, like a moron, right? She’s pretty moronic.

She says stupid things. You could be getting deceived by the fact that she seems to have come out of the hood. And so you’re hearing this sort of jargon delivery and Congress isn’t known for the high IQs of its occupants.

And I posted something yesterday on Twitter about what she had the brain the size of a walnut. And about an hour later, I ran across a video that said she went to elite schools. We’re being duped here.

And it showed an interview of her before, right as she was running for Congress for the first time a couple of years ago. And she was smart and articulate. And so all of a sudden, and then someone put the two next to each other, juxtapose them.

And there was Jasmine, this hood rat and Jasmine, this prep school grad, and they were just two different people. And the question is, are we just being duped? Are they just, is this professional wrestling or is the entire world professional wrestling? You know, people claim that George Bush, when he was governor of Texas, he was a totally different persona than when he was president of the United States. And he had this habit of acting like an idiot.

And the claim is, look at what happened to Elizabeth Warren. I used to know her before she became famous. She was not this wretched soul that we see.

She’s given a job. She’s given a role. She’s told, go out there and squeal like a wretched human being.

And we’re getting duped on a lot of stuff like this, I think. And we’re getting duped on a lot of the wars. We’re getting duped on all sorts of things.

Just quickly coming back to the recession topic, what could be the end goal of it being deliberate? And I’m hinting at, and I don’t want to put words in your mouth. You want to purge the system fast as you can. Right? So one could argue that what he is doing is like, so I refer to it as a bubble looking for a pin, and it just got hit by the ultimate Patriot missile.

Right? Capital P Patriot, right? The MAGA missile. And he is doing things that a rational individual would say, you know, that’s going to be economically problematic, dude, kicking all those people out of work and just being that disruptive. And if your goal is to, so one would call this, maybe this is a demolition phase where the entire building, not building seven, some other real demolition, where you destroy the building, bring it to the ground, clean up the rubble, and then you rebuild.

And I think Trump wants to do the demo in the first few years and the rebuild in the second, maybe that would be this sort of, you’re saying, you know, Reagan did that. I don’t know if he did it intentionally, but that’s Reagan. The morning in America was after a profoundly painful recession in the first two years.

And then, and then all of a sudden this, are you better off now than you were four years ago? And the answer is yes. And so I think Trump might be trying to imitate that and say, okay, let’s, let’s, let’s clean up the government. Let’s not worry about the damage.

Let’s not, let’s not worry about the fact when we amputate the leg, we’re taking a little too much lagness, maybe. I do believe that the people say you should use a scalpel, not a chainsaw. I actually disagree with that at some level.

I don’t think he can, I don’t think he can do what he’s trying to achieve if that’s really what he’s trying to achieve. Again, kayfabe, don’t forget, could all be fake. But if he’s really trying to clean up the system, I think you really have to go in there with explosive devices and, and, and, and just, just rip off limbs.

And, and, and then, and then, and then start cauterizing wounds on an as needed basis. Well, he’s got only got four years. So if you were to put that on a timescale, He wants to see, he wants to see the fruits of his labor before four years.

Yeah. Well, we’ve got midterm elections coming up where he might lose the majority of the house. He might not care about that.

He might actually get things he needs in place. So he’s got to get the legal structure in place in two years. But he doesn’t necessarily have to have support of Congress in the second two.

That’s interesting. Interesting food for thought, of course. Because my mind also goes to debt refinance and having to have, you got to have some liquidity, of course, because about $7 trillion in debt come due this year that needs to be refinanced.

So a deliberate recession. Well, that’s a different question. Well, but that’s a good question.

It is. Absolutely. It’s not going to be China.

May not be any of the BRICS, which takes out what Saudi Arabia and places like that. Um, the petrodollar could be Kaputsky, you know, um, um, and, and then, and then often them to say, well, the federal monetize it again. I go, here’s the problem.

When they monetize it the first time inflation was perceived to be not a problem. Now, I think it was a problem, but it was not a headline problem. And, and so they did stuff that looked seriously inflationary, which some people thought it would be, but they somehow got away with it.

They somehow, it was not inflationary because they bailed out the banks and the banks just parked on the money. So they basically reliquify the banks so that they were still functional institutions while destroying a bunch of other crap. Um, and, but this time I think inflation is now a headline number as in inflation is very real and very scary.

I think the second the marketplace and the populace and the populists, um, get a whiff of inflation risk picking up, there’s going to be hell to pay. So I’m not sure that they have, uh, those tools in their toolbox to use. I think it could be that the second that there’s a sense of monetization of debt, some very bad things will start breaking.

Yeah. Once the balance sheet of the Fed starts expanding again. Uh, yeah, I think people say, Holy shit, we’re going to have inflation.

And if they, they do the go direct, Oh my God. Right. That was really a bad trigger.

So, um, so they’re, they’re kind of now between the rock and the hard place. And, and I don’t, I don’t even think they can do it and then suffer inflationary pain. I think the pain will show up the second the market smells it.

Yeah. Well, you know, the, the cheese has been put in the trap. Yeah.

Mickey is free. The cheese is not free. It’s a trap.

Exactly. I think that’s where we’re headed. Right.

The question is now, do we have the, the, the top golfers on the course to sort of, uh, you know, get us out of that sandbox? Do we, I don’t, you know, one thing you don’t get to do is stop playing. Right. There’s no end.

I call this the Mobius strip from hell. You just keep going around and around and around. And so you don’t, you don’t get to stop playing.

And so there will be, there will be an, you know, a future. Um, I, Trump’s approach has got a lot of people very enthusiastic. I do not believe.

So for example, Trump’s got all these guys committing billions of dollars to build chip factories in the United States. Right. So, so let’s think about that for a second.

So they’re going to commit $10 billion to build a chip factory. How long is it going to take for them to get the plans off, off the drawing board written off the drawing board and to break ground on a chip factory? And I would be surprised if you could do that in less than four years. Right.

I don’t think we have the technology to build a chip factory here. Well, TSMC down in Arizona is building that chip factor. I’m not sure where Intel stands.

I think you’re talking about Intel, right? $10 billion was for Intel. Are they actually building it now? Yeah, yeah. It’s almost complete.

When did they start planning it? When did they, when did they first declare? Nah, three years ago, four years ago. I need to fact check that. Actually that I don’t know.

Yeah. There you go. Four years ago.

So, so these companies are saying, oh yeah, we’re going to build plants in the United States. What they’re really saying is Donald, get off our asses. We’re promising to build the plants.

You can pretend like you got a big win. And we’re not going to, we’re not going to break ground until 2028, which means they can say, sorry, we didn’t do it after all because, because of A, B, C, and D. And so, you know, promises are cheap. And so, you know, any company that’s got a half of a brain is going to promise Trump whatever he wants.

And then they’re just going to do whatever they want to do. They’ll slow walk the factory. They’ll have plans.

They’ll pretend like they’re going there. They might even break some ground and cut down some trees and bring in some bulldozers. But that’s not building a chip factory.

There was a headline today in Bloomberg. It just sort of fits what you’re saying. It’s not a chip factory, but Microsoft abandons more data center projects in US and Europe as well.

So there, we’re already seeing a disruption in the AI market, which is indirectly related to the chip market here and the chip factories here. Do you see AI as our saving grace? You talked about GDP growth earlier. So I’m curious what your thoughts are on that.

I think you just gave the answer here. I think it’ll be really useful. But I don’t think it’ll be a massively profitable thing in the sense that a huge amount of capital will be expended for all the companies to just race along with each other in dead ties.

So, for example, Google. What? Google didn’t win from AI. That’s for damn sure.

Google had what a lot of people thought was a moat. And all of a sudden, AI shows up next thing they know, they’re playing catch up. And now, all of a sudden, Google’s competing with all sorts of AI companies.

Anyone who can code is making an AI company. So Nvidia is selling chips to a bunch of guys who are taking out loans from not only normal banking operations and private debt markets and things like that, but also they’re being vendor financed by Nvidia. Vendor financing was a catastrophic problem in the dot-com bust, right? When Global Crossing was vendor financing their customers, it didn’t work well.

So I think AI will be potentially revolutionary and not that profitable, because I think a huge amount of money is going to be spent on Blockbuster video. How’s that doing? A lot of money was spent on Blockbuster and on Netflix showrooms and stuff like that. And then creative destruction, it’s easy to forget about how expensive the destruction part is.

Yeah. And I think we’ve been shown the mirror there with DeepSeek. While we probably don’t believe the $5 million expenditure number, we can believe that it was much cheaper.

Therefore, means is going to be even better. But it just wiped out a whole bunch of capital. One of the things Jobs was really good at, Jobs seemed to absolutely dismiss the idea of trying to protect his own products by not innovating.

He seemed to be more than happy to mow down his own market lead. And again, though, that’s expensive. Creative destruction, it hit me several different ways.

One is, for example, we’re talking about labs that were eight years old. They’ve been renovated eight years from floor to ceiling renovated. Eight years earlier, we’re going to be putting a new appointment in there.

And one of my colleagues said, well, we have to renovate them again. I said, you can’t get eight years out of a renovation, you’ll go bankrupt. You’ve got to get more years than eight out of that.

And if you don’t think so, bulldoze your house every eight years and build a better one and tell me how that works out for you, because it’s not going to work out for you. And so the question is, can you have a replacement cycle that is so fast that you haven’t yet amortized your debt from the previous cycle before you generate new debt for the new cycle? And I think the answer is yes. I think hyper layering of generations is expensive.

And so you really have to put in a new generation and make some money and then put in the next generation. Yeah, I don’t think we’re in that stage yet. There are money making stage on AI, like we’re far away from that.

And by the way, private equity looks like a sci-fi movie in terms of destroying humanity to me. I know that in theory and practice, the utopian version of private equity is where you buy shitty, buy up a bunch of stuff that’s fragmented and inefficient. You make it efficient and you improve the company, whatever.

But when your dentist gets bought up by private equity, what you’re essentially going to find yourself doing is paying for everything you paid for before, plus the profit of the private equity guys. So what did you get out of that private equity buy? And I just noticed that my dentist may have been bought by private equity without fessing up. And then I no sooner started to suspect something was fishy with my dentist than I read an article where they’re saying private equity is attempting to hide the fact that they bought various organizations.

So they’re trying to keep them looking mom and pop because they know people don’t like private equity. So instead of putting some big logo like VCA Veterinary Hospitals, which are everywhere, you pretend like that’s still just a couple of vets doing work on your dog. And by the way, the prices are going up too fast.

Like that, a vet tell me, a private vet say, look, get dog insurance, get health insurance for your dog. Because the price of a surgery is up to like $10,000 now. And so right now it is still profitable to take out debt, buy up various companies, strip them down to bare bones, load them up with debt, pay yourself big, handsome fees and profits and one off payments and stuff.

And then take the shell of a company that shouldn’t be worth anything because you’ve destroyed it and sell it in the open market because there’s still dumb money out there willing to pay for this shit, not being able to do a bean count on the balance sheet. With a, according to Rosner and Morganson, with a 47% probability of it being bankrupt within three years. And so then the question is, is it possible that as long as buying companies, destroying them and selling the dead carcass is profitable, is it possible that that is good evidence that that money, monetary policy is still to lose? It might be actually.

Right. When we, monetary policy will be sufficiently restricted when that’s no longer profitable. A quick fun fact for you, by the way, OpenAI has 400 million users, but only 10 million of them are paying.

So just a quick, quick fun fact thrown in here. And Dave, last few minutes I want to spend with you on gold. We need to talk about the move in gold and what it is telling you.

Like we’re over $3,000, obviously, like you’ve been saying, like maybe some money is rotating, but I don’t believe that fully yet that the money started rotating into gold. I think there’s other factors for it. And I’m curious what else you’re seeing and why gold has been so strong recently.

And is it overhyped perhaps? I’ve asked that before that question. I can’t shake that feeling a little bit without being, you know, a gold bear here, which I’m not, by the way. Well, again, it depends on, can you hear me okay? Yeah, I can hear fine.

Okay. It depends on the time scales. So if you’re worried about some digestive process, it’ll take six months.

I don’t care. It gets back to, don’t show me a chart that goes back to 2022 or back to 2020 or back to whatever. Show me all the way back.

And so, so gold right now has gone up a lot, but it certainly hasn’t gone parabolic. And it certainly hasn’t gone hyperbolic. It’s getting pressed, but you don’t have, I don’t think retail investors are jumping into gold yet in a serious way.

There’s a lot of cockeyed ideas out there in the gold market that maybe they’re not cockeyed, but I don’t understand them. So I’m going to put them in the cockeyed category until I can decockeyed if I am. One of which is this idea that they’re going to revalue gold.

And I don’t even understand what that means. I don’t. And so they say, well, okay, so you got Fort Knox and you got three big gold depositories in the United States.

So you revalue the gold to $3,000 an ounce. Okay. Okay.

So now you have, let’s assume there’s 8,100 tons. And, and, you know, this whole idea of sending in a camera crew into Fort Knox, what a stupid idea. It’s like Al Capone’s vault with Geraldo.

Um, there’s going to be gold there to audit the audit. Fort Knox will require very careful analysis. We’re not probably going to do it.

So, um, so, uh, but the point being is, is that, that, so let’s pretend that the 8,100 tons of gold that we claim we have is, is real. And that comes down to something like, I don’t know, $800 billion. I know it’s a lot of money, but, but first of all, it’s not that much compared to our debt of, of, you know, a 38 trillion compared to our, it’s not even a lot of money compared to our deficit, which is somewhere like heading for 2 trillion.

By the way, if Trump’s really achieved something and it’s not just headlines, we should see the curvature and the deficit. By the end of 2025, we should see a deficit that has somehow responded to all these discoveries. And if we don’t see it, then it means they’re just, you know what it means? You know, when, um, when some company signs a 10 year contract to sell something to some other company and they book all their revenues that year, that’s what, that’s what the Trump administration is doing.

They’re finding inefficiencies, the government, and they’re booking all their savings that year. And, and that doesn’t work. I, I want them to book the savings when they actually stop the flow, save the money, you know, deal with the problem, cauterize the wound.

And I think right now we’re still just getting headlines. So the gold market, um, so, so I don’t understand revaluing the gold because you say, okay, let’s call it then 3000. So now we have, we have 700, 800 billion dollars for the gold.

What does that get me? And, and you start getting silly answers like, you know, use better uses collateral. And I go, we had 8,100 tons of gold and a fourth grader could calculate that it’s worth 8 billion, 800 billion, even though we’re not pricing it that we’ve got 8,100 tons. So who needs to know? And then I asked silly rhetorical questions that I think are more problematic than people think.

Why don’t we just, uh, why don’t we just put a price tag on Yosemite national park at 2 trillion? And then, and then use that as backing and, and, and when, when they want to use gold back, you name it, I go, so would, would they be willing to give up the gold? So like a gold back treasury, if, if there, if someone has a treasury, can they turn it in for gold? And they’ll go, they’ll always say, oh, well, no, I go, then it’s not backed. And then I heard something about a 50 year treasury, you know, and I go, so if, if the, the treasury defaults, will they give you the gold? You sure about that? And, and then I also like to point out 50 year treasury and do you get the gold anytime you want, or do you get it at the end of 50 years or do you not get it? Again, these are questions no one seems to answer. Let’s say you’re going to get it at the end of 50 years.

I’ll promise you anything in 50 years. I’ll promise you the state of New York. I don’t care.

It doesn’t matter. It’s 50 years from now. I got a bridge to sell you in San Francisco.

That’s right. That’s right. I’ll tell you what.

I’ll sell you plots of land on the moon. And, and so that seems to, and then they talk about revaluing it to 20,000. I go, what does that mean? The market set the price at three.

Are you going to, are you saying you’re willing to buy gold at 20,000 or $30,000? No. And if, if, if, if, if you owe China a trillion dollars and you say, look, I’m going to pay off the debt with our gold, which we price at 30,000, is China going to accept that? No. And so, so that seems silly to me.

And so I can’t, all these, all these ideas and I go, they’re not going to give up the gold. They’re just, it’s just a lot of hooey. I, by the way, one of the few who don’t seem, doesn’t seem to like Howard Lutnick.

I find, I feel like I’m getting molested when he talks. So, so the gold market is very interesting, but there’s, there’s some, I think, very poorly thought out ideas flying around the internet, which I’m told occasionally has mistakes on it. And, and for which people don’t seem to be able to give me a coherent answer.

And they’re not able to give me an answer that I say, oh, okay, now I understand. So maybe, maybe to summarize, Dave, maybe as a final question to our conversation here, if I were to give you a million dollars today, how would you allocate it? If I, well, I put it to your treasuries, but, but if you made me, no, no, that’s my best play. No, I’m kidding.

I was just like, I’m trying to be funny here, of course, so. Yeah, yeah, yeah, yeah. But, but, but if, if you said, put it, you know, distribute it, I’m looking at platinum.

I think the platinum depends on a couple of things. One is that it depends on the, on the idea that the internal combustion engine is not dead. It depends on the, on the conclusion that the, the pure EV is not the best choice.

I think a hybrid is the best choice. I am told I’m not a car guy, so I don’t know for sure. I’m at the mercy of people telling me things that the hybrid has more platinum in it than an internal combustion engine.

And so that would actually produce an increased demand for platinum. Platinum has been dead flat, as in ridiculously, like someone has set the price of platinum at a thousand dollars an ounce and won’t let it move for about 10 years now. And it was higher before.

It’s one of the only metals that hasn’t gone through a meme phase. Not that I invest in meme stocks, but, you know, put it this way, I’m not buying into a meme phase. That’s important.

And, uh, I’m not buying it yet because it’s just, if you look at a chart of platinum, it’s just flat. It looks like a heartbeat monitor. Yeah, yeah, yeah.

Except with no pulse. Little, little. Let me bring that up here real quick.

I got it. I got it open here. Let me bring it up real quick, just for everybody to see.

So while you’re bringing it up, I’ll tell you, I reached out to Peter. I know some smart guys. Yeah, there you go.

Right. I know, but go further back. That’s nothing.

Uh, I think I need to go premium before I do that. I can, that’s 10 years. I don’t get 25 here.

That’s just a chart. That’s not 10 years. That’s only four years.

Let me see. There we go. Sorry.

There you go. That’s 10 years. Yeah.

So, um, so I don’t need to buy platinum until I see some evidence that this zombie is about to come to life. And, uh, and, and, and then of course, where do you get platinum from? Well, one of the places is South Africa where they’re supposedly massacring white farmers. And so it could be a failed state, which means the platinum miners, which I own a small amount of are probably cheap for a reason.

And therefore, uh, maybe don’t buy the platinum miners. Um, David Einhorn, when they said in an interview, he said, invest as directly as you can. So if you’re bullish on platinum, don’t buy the miners, buy platinum.

And, um, and he’s now, I know thinking about platinum. He hasn’t said anything publicly about it. Um, I was with Peter Bookfire in November, the meeting that you bagged out, you bailed on us, you skipped it, you bum.

Um, and, and he had taken his first position in platinum about a month earlier. Okay. And, um, and, uh, uh, Mitch Fierstein is a, was a raging platinum bull about a year or two ago.

And of course his money has been dead money, which is okay because smart guys are always early. Um, and, and so, uh, and, and so the other provider of platinum is, is, is Russia. And I was going to ask a follow-up question to that.

What happens when the US and Russia kiss and make up and Russia maybe starts supplying the world market with platinum again? Well, that’s, that’s risk. I’m, you know, platinum, owning pure platinum, you’d probably rather have Russia abandon the world, you know? So, um, so I don’t know. It’s, I, I just don’t know.

And, and by the way, right, what’s the worst economy in Europe? What, what economy would you point to and say, there’s the disaster? I’d say Spain, perhaps. Germany? Yeah. We’re not doing too great, but I look GDP number wise, if you count the UK, they’re definitely behind us right now.

Uh, but boot up, boot up the decks, boot up, boot up Germany though, shut down all its power plants and stuff, right? Germany’s made some, they seem to be de-industrializing. Yeah. We’re definitely going backwards.

Yeah. Yeah. Boot up the DAX over about five years.

Index. Where is it? D 40. Here, let me share that.

One second. Also, we’re running up on time here in a second, but, uh, there we go. Perfect.

That’s the DAX. Now tell me that’s, that’s the chart of a country that’s in trouble. Doesn’t look like it, does it? No.

But I think it’s just a sign that the markets are disconnected with reality. Markets reconnect with reality when you least expect it. So I think they will.

So the problem is I wouldn’t go to Europe. You know, Jeremy Grantham says, you know, Asian value stocks, right? And they go, how the do I pick Asian value stocks? Right. Oh yeah.

There’s some little micro cap in Indonesia. Oh, like I’m going to know what to buy there. Right now.

I might see if I can find a way to, I don’t know what Grantham’s minimum buying is, but I can imagine buying one of his funds, but it could be a billion dollar buy-in for all I know. I haven’t even checked into it. I think there will be a valley of death in front of us.

I think the U.S. when, when the U.S. sneezes, the whole world gets sicker than shit. And so I think we’re going to go through the valley of death to get to the promised land and the promised land might be a Trump induced promised land, but it’s going to take, we can’t be 200% over historical average valuation and get to the promised land. I just don’t see how you do it.

You’re already overpriced. I think we can all agree that the system is broken and it needs fixing and it’s going to be painful. Like the words detox and shock therapy have been thrown around.

And I think that’s very fitting because that’s exactly what it is. We’ve been addicted to cheap money. Now it’s time to tie the patient to the bed and detox.

Right, right. And you don’t want to be an owner when that happens. So you really want to try to find out where is, this is the time in ancient time, you went underground in your tunnels that you dug.

And in modern era, you get out of the splash zone at SeaWorld. You just, this is the time where you, you avoid risk and you’ve tried to figure out what that means, which in itself is not easy, but you avoid risk. You don’t buy 30 year treasuries, my opinion.

I don’t care if you think they’re going to get more expensive. That’s a trade and I’m not a trader. They don’t pay me enough to hang onto a treasury for 30 years at four something percent.

No, that duration premium or that term premium is still not enough. Even for me, it sounds sexy at four and a half percent, but I’m sorry. That does not sound sexy.

That extra 0.2 over the 10 year or the extra, what is it? 0.8 or so over the two year. Sorry, no way. That’s as close to inverted as you can get.

That’s a flat yield curve. Yeah, absolutely. Dave, I can’t believe we’ve been chatting for 55 minutes.

It feels like we just started chatting a minute ago. We do have to put a bow around it. And really, thank you for your time.

Like where can we send our audience? How can they follow you? I know you put out a tremendous letter at least once a year, but where can our audience find it? At DavidBColumn on Twitter. Oh, here’s one. I forgot to pump this.

Hump and pump. My year in review is the pinned tweet on Twitter. It’s free.

But if for some reason free is too cheap, it turns out Bob Moriarty and his team take my year in review and turn it into a book and they sell it for me. And they don’t get any money. I actually get a modest profit, but I’ll put it this way.

It allows me to do a few Chinese takeout meals at Amazon for 20 bucks. So if for some reason you don’t like free and you want to pay money, you can get the book form, which is better formatted. I can say that it’s hard bound at Amazon for 20 bucks.

So, you know, my spelling checking is pretty good. It’s not too bad, but it’s checked yet again. So it’s been through yet another layer of spell checking and they do a nice job.

And so I’m glad they do it. I think Bob’s frustrated that I don’t hype it better. Bob hypes it better than I do.

Perfect. We’ll put a link down to Amazon down below. We won’t even make it an affiliate link.

It’ll be all straight to it. So definitely do that. So Dave, thank you so much for your time.

It’s great to catch up. Let’s hope it’s not November. I’ll definitely be in New Orleans this year, so we’ll get to see each other there.

Yeah, I’ve already signed up for New Orleans. Perfect. Yeah, I need to book my travel.

It’s still a ways away, but I’m coming. So I’ll look forward to it. Dave, thank you so much for your time and everybody else.

Thank you so much for tuning in here to Soar Financially. I hope you found this conversation with Dave Colm informative and educational. If you did, leave a comment, leave a like.

We tremendously appreciate it. Thank you so much for tuning in. We’ll be back with lots, lots more.

Thank you.