Gold Revaluation Is the Only Way to Settle International Accounts (Uncut) 02-06-2025

Will Bessent Break the Dollar? Gold Revaluation Is the Only Way to Settle International Accounts.

These entities probably thought, wow, we got the Chinese New Year, it’s usually really quiet, market goes down, let’s take this opportunity to buy a lot of gold. Do you think that they looked at that? I think it’s a Trump administration coordinated move, basically. I think it’s a coordinated project or operation, if you will.

What I mean by that is they just want to get this done quickly. The Chinese New Year situation you’re talking about is a coincidence, but it’s not something that they’re considering. I think their consideration is that they want to get this written thing done as quickly as possible.

Thursday, February 6, 2025, Medeco 64, home of alternative economics and contrarian views. Today, we’re going to look at why Treasury Secretary Besant is going to break the dollar. Some of you might think you’re crazy, why would he want to break the dollar? Well, just like George Soros broke the pound in 1992, and Besant used to work for Soros, I think they’re going to break the dollar.

Back in 1992, Eric, and I’ve got Eric from Hong Kong here today. Hi, Eric, how are you doing? I’m doing good, Mario. Thank you for having me on.

Hello. Let me just continue here with my thesis first. What happened in 1992, and I remember it well, I just arrived in London in the beginning of September for a new job at Cantor Fitzgerald.

I worked at Cantor Fitzgerald. I used to work in Switzerland before that. My friend who offered me the job, we negotiated in the summer on a salary.

I took the exchange rate, Swiss franc versus the pound. You could get 2.8 francs at the time for a pound. Then I get here, and two weeks you have the Soros breaks the pound, and the Swiss franc drops from 2.80 to 2.40. I thought, wow, I’ve been hard done here by this move.

One thing I remember, Eric, it helped the UK economy eventually bottom and come out of a recession. What I’m trying to say here is that the only way to devalue the dollar really truly is versus gold. As you know, we started out at the Bretton Woods.

The dollar was as good as gold. Yes, you can only devalue it versus gold. Before we go further, Eric, and listen to what you think is going on in the gold market, I’m going to read a passage here from a pocket book of gold by Jim Sinclair.

He wrote this around 2010. He says on page 52 and 53, deficit spending, however, ultimately takes on a political life of its own outside of economic reality or reason. With a currency run by a government engaged in large scale budget deficits, especially when accumulated as a debtor nation, the limitations of the currency are revealed.

Devaluation ultimately ensues, which in larger economies has historically manifested itself as a revaluation against gold. This is why it is gold’s job, especially during periods of monetary stress, to balance the international balance sheet of a nation. However, in the case of the United States, the current mathematics—this was 11 years ago or even more—of such revaluation are somewhat shocking.

It says here, let’s put the numbers into the equation. At the time, Eric, the U.S. Treasury security debt to foreigners was $3.125 trillion. I checked here before we started.

As of April last year, it was $7.9 trillion. If you take that and divide it by how many millions of ounces the U.S. supposedly has, $260.2 million. At the time when Jim Sinclair wrote this book, the figure was $12,006.67. Now, Eric, I did the same calculation with the $7.9 trillion, and I got $30,300.7. So I’ll let you take over now and tell us what you’re seeing out there, Eric.

Well, Mario, I think as we are all aware, I should call it a crisis. There’s a crisis brewing at the LBMA right now. We all know that the LBMA right now is being drained of its physical gold, and the delivery time for physical gold at the LBMA has gone from T plus 2 to T plus 60 or T plus 84.

So a substantial increase in time when the LBMA members can actually get the buyer the physical gold on the contracts. So why did this happen? Well, a lot of experts on X and also mainstream media has connected the LBMA physical gold drain with a COMEX physical gold drain. Now, I’m going to read a passage from Rob Keynes of the Freedom Report.

He recently posted this, tweeted this on his X account. Delivery notices are up to 44,972 contracts of 100 ounce gold for February contract. That is 4.5 million ounces valued at roughly 12.7 billion in gold per morning spot prices.

If a large chunk of these deliveries don’t go out, then hell will break out on the exchange. So I wrote something on my X account, I tweeted this, commenting on the fact that the COMEX, if it’s anybody else, they would stop the big gold buyer from taking delivery and withdrawal of the physical gold. The only possibility that this is being allowed without the COMEX stopping it is if the physical gold buyer potential withdrawer of the physical gold at the COMEX is the Fed, the US government, or one of their proxies.

Now, if you remember the Hunt brothers, we talked about that before the show, they were stopped from conquering the silver market in 1980. The COMEX raised margin requirements, right? Use whatever means necessary to stop the Hunt brothers. Now I know that this time the situation is a little bit different because all indicators are pointing to the fact that the big physical gold buyer at the COMEX right now is price insensitive and also margin insensitive.

Because Rob Coleman has recently posted that the COMEX is continuously raising margin requirements for gold. Yet we don’t see any indicator of these delivery notices going down. So the only explanation that I can reach from all this evidence is that, like I said, the physical buyer is probably the Fed, the US government, or one of their proxies, and they don’t want any paper traders to take advantage of this tariff arbitrage that is going on.

That’s why they raised the margin requirements. That’s very interesting because usually the COMEX raises margin requirements when the market is rising a lot to take out the speculators and the price corrects sharply. And we haven’t seen that lately.

We’ve seen the price continue to go higher. And so could you explain maybe to the viewers why it would make sense for the US to bring back their gold? Is it because they don’t have the gold that they profess to have? I think it is because they’ve been leasing a big part of that gold to keep the price under control for so many years that now the other thing, Eric, is that they see that the BRICS, Russia and China, they’re going into a gold system, some kind of gold system. And I don’t know if you saw recently Marco Rubio, the Secretary of State, basically admitted that we’re now in a multipolar world.

So do you agree with me then that the US, the only way for them to get back into this multipolar world would be to massively devalue their currency, but they have to do it versus gold? Because if they try to do it versus other currencies, the other currency are just going to devalue as well and it’s going to be a race to the bottom. So why not have a race to the bottom just versus gold? Is that how you see it too? I see that, Mario. And what I see right now is that, like you said, they probably do not have the 8,100 tons.

I’m talking about the US, okay? They probably do not have the 8,100 tons of physical gold that they tell the world that they have. So they probably don’t have it, all of it. They might have, my theory is that they might have 7,000 tons or maybe less.

Some people say less, right? Nobody knows. We’re just all speculating, okay? But if they don’t have all the 8,100 tons of gold and they want to do what you’re saying or in the case of what Judy Shelton has proposed, which is the Trump administration launching a physical gold US treasury bond in 2026, they will need to audit the 8,100 tons of gold that they have. So that would mean that they would be in a tight timetable.

They need to get whatever they have right now in terms of physical gold, they need to get it back to 8,100 tons as soon as possible in a tight timeframe. Now, I wrote something on my ex account that is related to this. I said, people have been asking me why the US tariffs on Canada and Mexico gold and silver, why the US tariffs on Canada and Mexico gold and silver, if the US wants to repatriate as much gold and silver as possible, wouldn’t it be easier if there are no tariffs and they just give it up? And I said, the answer is speed.

The US government is on a set limited timeframe to get all the good delivery gold and silver bars it needs, which ties back to what I just said. They need the gold for the audit. Now notice that the tariffs on Canada and Mexico are delayed until March 1st.

That would put a fire under the participants’ feet to ship as much Canadian and Mexican gold and silver bars to the US, which is the COMEX, before the deadline. Participants might also borrow gold and silver bars from the CBs to ship to the US. Now that was like a, I believe a Bloomberg report that LBMA members are actually borrowing physical gold and silver from their respective central banks to ship to the US.

And I said, the US government and its proxies are the counterparty standing for physical gold delivery at the COMEX. So does that make any sense? I mean, it’s a long answer. Oh no, it does.

I saw that post or tweet that you said about why would you stop the tariffs for a month? And it makes sense because people say, oh, they might start it again in March. So let’s get all the gold, as much gold as we can. I just brought this up.

This came out yesterday, the FT. Actually, the story about the Bank of England was broken, I think it was last Friday. And I was just walking out of the physio.

I had a bad elbow and I saw it on my phone, the notification from the FT. And I said, wow, this is important. The Bank of England can’t deliver for four to eight weeks.

It doesn’t make sense. So I made a quick video and it came out. And now a lot of people are talking about it and they’ve talked about it as well.

It says, US gold rush drives up borrowing costs for precious metals. Prices have climbed more than 8% this year. And not just the prices, Eric, but also the lease rates are spiking, which means I think a lot of the paper shorts are desperate and they’re trying to cover their shorts.

Could you do that? Yeah. Well, let me point something out, right? The paper shorts are desperately covered. Who are the guys who are standing for physical delivery? I mean, normally, right? Like people just take cash settlement.

But right now, it seems like Rob Keane has observed and the entire situation would be drained at the LBMA, physical drain, and they’re shipping physical bars to the climax. It indicates that whoever are the counterparties to the shorts that you’re talking about is most likely the US government or one of the proxies. Because they don’t seem like this entity seem to have no cash constraints.

They don’t care if the climax raises marginal requirements, right? They want the physical. They want the physical gold. So what I see is going on is that the party that is standing for physical delivery, like I said, is the US government, the Fed, or the proxies.

And then the parties that are bringing the gold in, like you said, they are afraid of the tariffs being implemented, right? So the tariffs in itself is not a nothing burger. It’s not a, some people call it a distraction, a front. It’s not a front.

It’s what I call an accelerator. It accelerates the process of the US government getting the physical gold back into US jurisdiction. Okay? So that would all make sense if you think of it that way, right? Sorry, go ahead.

No, it’s okay. You said that it would accelerate. And we saw yesterday the US trade data came out and the budget deficit, sorry, the trade deficit reached an all time high.

And the reason given was that companies were by accelerating their purchases of foreign goods. So yeah, it makes sense, Eric. And the other thing I wanted to ask you is because every year around this time, or around when China has its new year, and the Chinese take it, I don’t know, it’s about a week, you tell me in a minute.

But there’s usually the market is very quiet, gold market. And if anything, the bullion banks and the usual suspects, they use the opportunity to sell gold. But this time, it’s been the other way.

And would it be possible that these entities probably thought, well, we got the Chinese New Year, it’s usually really quiet, market goes down. Let’s take this opportunity to buy a lot of gold. Do you think that they looked at that? I think it’s a Trump administration coordinated move, basically.

I think it’s a coordinated project, or like operation, if you will, right? What I mean by that is, they just want to get this done quickly. So it’s like the Chinese New Year situation you’re talking about is a coincidence. But it’s not something that they are considering.

I think their consideration is that they want to get this freaking thing done as quickly as possible. Sorry, Eric. No, I agree.

And do you remember, I don’t know if you saw this, and it’s actually from you. I just searched on X. I searched Donald Trump Jr. gold. And I found this.

Yes, yes, yes. You posted on January 28. Donald Trump Jr., he put this, the ultimate guide for gold for the Trump era.

And he’s advertising here for a gold dealer. Well, I forgot about that. I mean, if you think about the timing, it’s almost immaculate, right? It’s almost impaculate.

It’s like a signal to his friends, buy gold. And I made the comments, actually. When that came out, I said, hey, Donald Trump basically told you to protect yourself with physical gold.

If you don’t listen, it’s your fault. And then people, of course, like a lot of trolls, they attacked me for saying that. They come back and they say, well, Donald Trump, he’s just shilling for a business, has nothing to do with gold.

He’s just trying to make money doing advertisement for somebody else. But hey, you know what? We’ll find out very soon, within the next 12 months, if I’m right. And if I’m right, then Donald Trump did tell people what’s going to happen.

And he did tell people to buy gold before the gold price rises significantly. As a matter of fact, you’re right, Mario, right? Donald Trump Jr. made that post. After he made that post, gold went up, I think around $200 US.

After that post. So I don’t know. It’s interesting as well that I saw on Instagram about over a month ago, maybe even more, two months, something popped up from Donald Trump Jr. And I didn’t follow him at the time.

And I clicked on it. And then I looked at his profile, and he had this link to Birch Gold, and it had his name on it. So he was already pushing people to get into gold back then.

Which is strange, because all you hear is about how this administration wants to get involved in Bitcoin. And it almost feels like a distraction to me. What’s your view on that? I think the whole crypto Bitcoin thing, it’s not the first time I’ve been saying this.

I’ve said it many times on many interviews. I think, yes, they are a distraction. They’re basically the perfect liquidity sink.

They don’t want everybody to rush into gold, and then have the gold price go up to, I don’t know, $8,000 within a really short period of time. They want the whole gold revaluation process, if you will, be in their control, in a controlled accent, in a controlled rise, without surprises. So I think that’s what this is.

They don’t want everybody to be in gold. But at the same time, he announced it, Donald Trump announced it through his son’s ex account, because he does want to warn his followers about what’s to come, and to protect themselves with physical gold. Yeah, that makes a lot of sense.

And what do you think China and other countries who’ve been buying gold? I’m sure they’re looking at all these developments. Is that going to push them to come in and start buying before the US buys even more? Or do you think they have enough now, and they’re just sitting and waiting? The Chinese government, they don’t care. They buy at every price point.

The Chinese citizens, they are buying right now. I mean, if you look at the situation that the Chinese gold jewelry retail is booming, a lot of people are buying. My friend Bai from Shanghai has videos of this, of people packed at these gold markets in China, lining up to buy physical gold.

Now, I think if gold breaks US$3,000, and people ask me, well, isn’t China using RMB and kilograms to calculate the gold price? Yes, but they look at the international gold price, too. They look at the gold price at the ComEx and the spot Western gold price as well, right? And US$3,000 is a psychological barrier. Once gold passes US$3,000 and it stays above, US$3,000, I think a lot more people in China will start buying gold as an investment.

Okay? Because right now, people are buying it as a hedge to inflation, hedge to the RMB yen, okay? Maybe an insurance kind of savings for a rainy day, but they’re not really buying it as an investment in China. So that’s my answer. I see.

And yesterday, I saw an article that came out on Bloomberg, Eric, and it says Russians bought a record amount of gold last year as they sought to protect their savings amid sanctions obtaining the equivalent of about a fourth of the country’s annual output. So even Russian retail is getting involved in gold, which is very interesting. So I don’t want to put you on the spot, but I think this process of devaluation might take a year or two, or maybe, I don’t know, Trump wants to really accelerate it.

So my question to you is, where do you think, aside from that equation that I went through in the beginning that gave us a level of 30,300, where do you think is a realistic target for gold? I’m not even going to say 2025, but in the next year or two, where do you think we’re going to have to go to balance the accounts, international accounts? Because that’s what it is, really. It’s going to be about balancing the international accounts. Okay.

So I’m going to read something that Luke Groman posted on his X account, and it answers your question. It says, as impressive as the rally in gold is, the market value of U.S. official gold is only back to 9% of foreign-held U.S. treasuries. We have to get to 20%, which is 6,300 U.S. dollars gold, just to get back to 1989 levels when the U.S. unipolar moment began.

And 40%, which is $12,600 of gold, just to get back to the long-term average. So Luke answered you, right? I mean, just to get back to the long-term average of 40%, we have to get to 12,600 gold. Now, is the Trump administration ready to do that in one go? I have no idea.

But Trump has the balls to tell the CIA to retire, like the entire CIA. I saw that. I mean, that’s insane, right? So after that news, I figure he can do anything.

He’ll try anything, right? But whether or not he’ll go $12,600 U.S. dollars gold in one shot, I have no idea. It’s like, I mean, Winston Churchill, I think, revalued gold against the UK punk back in the day, but he did it like the price he set was too low, right? I remember Jim Rector say this. Yeah, Eric, he didn’t even revalue it.

He went back to the same rate that they had before World War I, and that’s why it failed. Okay, there you are, right? So I don’t know if Trump is going to do like a too low of a price, right? If like, let’s say he does like, some people say $3,000. It’s a joke, right? But some of these guys, they’re absolute trolls on X, right? They say, you know, Trump is going to revalue it to $3,000.

I mean, come on, we’re $100 away from $3,000 U.S. You have the nerve to write that on X? Are you kidding me? Right? Okay, so- They don’t know. So let’s say that Trump, that would be a huge mistake. That would be basically what Winston Churchill did.

Yeah. What you said. I guess the Rue Groman figure is similar to what Jim Sinclair was saying here.

Jim Sinclair was giving you the 100% figure, and Jim Groman is giving you the 40% figure. So there you go. Yes.

Yeah. So Eric, I just, I don’t want to keep you too long. What about the miners? How do you see them? And maybe you could tell the viewers the difference between, you know, the producers and the explorers and how they react to gold.

Okay. So I’m going to read you something from my pinned post. And I wrote this in January of 2022.

So three years ago, right? Okay. This is what I wrote. I wrote that, let’s get something straight.

Most regular people do not own a significant amount of physical gold bullion compared to sovereigns and central banks. I’m talking about individuals, not everybody together compared to CBs, right? Individuals do not own a lot of physical gold. Okay.

On average. Precious metals price suppression is a game between countries. They don’t care about the tiny number of individuals who own physical gold.

Gold price revaluation will screw over most people in the world, except for a few gold owners, because it is an act by the central banks and the sovereigns to capture productivity from the common folks to write off their debts and finance government. Most small investors are invested in miners, which are physical gold proxies. And when physical gold becomes very difficult to get or unavailable, or the GLD gets exposed as a fraud, miners will fly because they’re the only gateway for the mass public to be exposed to physical gold upside.

So Mario, do you agree with everything I said on that pinpost? Yeah, I agree with all that you said there. And I liked the way you defined that revaluing gold is like to capture the productivity of the masses. And I think you’re spot on there.

And yes. And I think the miners, they’re going to be a little bit like the dot com of the 90s and early 2000s. And maybe even like the tech bubble.

And you have to be really careful and not be too greedy and get out when you’ve done really well. Is that the way you see it too? I think miners haven’t even started yet. I mean, a lot of them just hovering around their lows.

They are probably, some of them, 80% below their 2021 highs. So we haven’t even started yet. But I don’t give people investment advice.

They have to do their own research and they have to figure out what they want to do. I agree with you. And always make sure you have enough savings and that you’re not in debt.

That’s the way I see it. If I don’t have spare cash, I won’t put it into the market because I need to keep that. I need to build a reserve first.

So that’s what I tell people. And we’re not giving investment advice either. So, Eric, I really appreciate you coming on.

It was short notice. But I think we are in unprecedented times here, not just in gold, but in the whole financial, world’s financial and economic system. I just want to say one more thing, Mario.

In the past couple of years, people are really upset with miners because gold went up almost double in value. And a lot of these miners are languishing. They underperform physical gold in terms of their share price.

And the real reason behind that is because the input cost of the miners went up. So yes, gold price went up, but their cost went up. So they weren’t making a ton of a lot of more money.

Some of them are. Some of them managed to control the cost and they’re making more money. So their share prices went up.

So please don’t use those examples to attack me because I just explained that. But most of them have the cost went up along with inflation. So therefore, their stock price performance were muted.

Right. But we are heading into a stage where potentially, like you said, the Trump administration may revalue gold rather quickly. If that happens, there might be a period of time where inflation actually doesn’t, you know, rises rapidly.

But the price of gold and potentially silver rises rapidly. So in that scenario, miners will do well because their cost is contained. But their underlying asset, which is the physical gold and silver, is going up rapidly.

Great, Eric. Thank you very much. And I know you’re going to stay up.

You stay up for the U.S. markets. You’re in Hong Kong, of course. And yeah, I wish you all the best and we’ll keep in touch.

Thank you, Mario. Have a nice day. You too.

Take care.