How A Secret Gold Revaluation Solves The Debt Crisis (Uncut) 04-23-2025

How A Secret Gold Revaluation Solves The Debt Crisis | Clive Thompson

President Trump has in the last day or so expressed extreme unhappiness with Jerome Powell. I think he might have even suggested that if he could he’d fire him or he might fire him. Obviously he can’t do that legally but maybe maybe Jerome Powell will feel he has no choice but to step down.

From my perspective I think that if if Jerome Powell was to leave the Fed it will create a degree of panic in the very short term but it will also very shortly afterwards create a massive rally in gold and the equity market. Hello and welcome back to Soar Financially, a channel where we discuss the macro to understand the micro. My name is Kai Hoffman, I’m the Edge AR mining guy over on X and of course your host of this channel and I’m looking forward to welcoming a first-time guest to the show.

It’s Clive Thompson and he’s a retired wealth manager from Switzerland. He’s been in the business for over 50 years and I’m really looking forward to discussing what is happening in the economy right now. The discussion is going to have a bit of a gold focus of course as well.

What is gold trying to tell us? Why is everybody fleeing to gold seemingly? We’ll have to discuss and and then maybe most importantly can the gold market absorb all the capital that’s being thrown at it? That’s a that’s a really good question. Clive will need to get to that point during our conversation but before I switch over to my guest, hit that like and subscribe button. Helps us out tremendously bringing fantastic guests like Clive on the program and it is free to support us that way.

So thank you so much for doing that. Clive welcome on to the program, thank you so much for joining us. Kai it’s really kind of you to have me on your show.

I hope I can bring a bit of Swiss perspective to the show as well and I’m very happy to talk about gold because as you know Switzerland is one of the countries in the world with the most gold per inhabitant and yeah well let’s let’s just see where it’s going to go. What’s your first question Kai? Absolutely let me fire away Clive. You know we’ve all been market observers.

The volatility has been crazy. Gold record highs pretty much every single day. Bond yield searching.

What do you make of this? What’s the state of the economy in the financial markets right now Clive? Well obviously there’s several questions there. There’s the gold question, the stock market question and where’s the economy going. So let’s start a little bit with where I think a good place to start is the stock markets.

We’ve seen stocks rising for more than a decade and they’ve been going from record to record to record and in the recent two years or so gold has started to play catch up and is now overtaking the stock markets in terms of speed. And historically when gold has been on a run it’s run for decades or more. So I think we’re on a at the start of a very long bull run in gold and I’ll talk about why this is happening and what I think comes next.

But let’s just sort of talk about the big thing on everybody’s mind and this is the I call it an event. So throughout history in stock market terms, in gold terms, we have non-stop events as you know there’s an event where every year or two we have an event and I think tariffs in my view is an event, is a global event. And what’s been going on with the tariffs has been shaking everybody up a little bit.

One day they’re on, next day they’re off, next day they’re on, then they’re off, then they’re up. And there’s been some very strong words used on both sides against the, let’s call it enemies in a certain sense, I mean I use that with big inverted commas, who’ve been taking advantage of America, and let’s use that inverted commas as well, by offering their goods and services at too cheap a price and therefore causing American industry to to some extent wither away. So I’m not getting into the, I don’t want to get into the politics of this or whether it’s good or bad.

I mean every country’s got the right to put whatever tariffs it likes on its local, on imported products. I mean most countries have what’s called a VAT, value-added tax or a TVA in France and so forth, a sales tax in America. And in most countries as goods come into the country they pay the VAT on the way in and then the country pays the same VAT rate on both domestically produced goods and on goods which have come in from overseas.

I think there’s nothing wrong with that system because each country has to have its own level of taxation. But in this case it’s kind of gone horribly wrong in my opinion because it’s kind of turned into a war, a sort of war of words, a spat over the tariffs with retaliatory actions on each side, which is not really the way it’s supposed to work. But what’s this doing? It’s making people feel very uneasy, very worried and of course from a corporate point of view they don’t know where they stand.

They can’t plan because they don’t know if these tariffs are going to be in place tomorrow. They don’t know how much they’re going to be and you can’t, you can’t really plan anything in terms of trying to figure out what you’re going to do if one day the tariffs are 10%, the next day they’re 50% and the day after they’re cancelled, where are you? So this uncertainty means that the stock market has taken a wobble. We’re down about 10% across the board on the stock market and to get to the point about gold, where’s the money for the stock market going to go? Well traditionally sales of stocks tend to find their way into the treasury market, not so much into gold and certainly not recently, but not in the last few years anyway, but recently we’ve seen in the last few weeks and especially last week we saw the biggest ever increase in the gold ETFs inflows in terms of tons of gold coming in.

So there are signs that the public at large are now starting for, after a very very long time, to invest in gold and that’s, that’s the, this is early signs. Now people have been listening to me on other podcasts will have known that I’ve been saying for many years there’s no evidence that mom and pop are buying into the gold market or buying gold at all, but I think that’s now, the evidence is now that that’s started. No I think, I think so as well, especially the pace of the gold, the gold price rally here and the recent gold report from the World Gold Council sort of underlined that as well, that ETF buying has picked up, but maybe an interesting indicator for mom and pop buying is bar coin and bullion of course demand and that hasn’t picked up yet.

Well I dispute that. What would you say to that? Yeah I dispute that because I’ve heard from two sources, one of them is one of the largest gold, no it must be the largest gold coin seller here in Switzerland. I’m very good friends with them because I’m regular customers with them.

I mean in their shop whenever I’ve got a bit of spare money to buy a coin or a, you know, it’s not always gold coins, it’s, you know, you can buy a silver coin for 40 or 50 Swiss francs, but I’m in their shop regularly and I get, you know, have a relationship with them. I say if you get something new give me a call, it’s looking beautiful, I’m in there to buy it. They tell me that last week, and actually that might be now the week before because probably about 10 days ago, that they’ve never seen so many people coming in the shop to buy.

They said they had to order three times new supplies in the same week when they normally order once and I heard from a second source, and on the spur of the moment I’ve forgotten where it was coming from, but it was exactly, it was, I think it’s out of North America somewhere, but the coin dealer was saying, and he was saying to me directly, no actually he was saying to somebody who communicated it to me directly, that they’ve never seen so many orders. So yes, there are some words somewhere that some coin dealers have got people selling, but I believe what’s happening is buying too. There’s a lot of buying going on.

Yeah, it’s like what you mentioned is the last two weeks, I think the World Gold Council report was only until the end of March, so I’ve got to defend them just a little bit, their position, but you’re absolutely right, things have changed the last two weeks. Liberation Day was April 2nd, so. You can see the next week, the last week of the World Gold Council, which does show it’s the highest, the highest going back for many, many, many years.

It’s never been as high as last week. Now really interesting insights there, really appreciate you providing some extra colour there. You mentioned a few things I want to follow up on, and you know, we can take this any direction, because I purposely phrased my question quite open to begin with, but we need to talk about the terrorists maybe first, because they’re dominating headlines obviously, but it’s not just companies that are seemingly confused, but also the Fed in the US, and confused is maybe too strong of a word, but they’re having a hard time reading the signal, and they’re showing inertia.

They’re not doing anything until they have more clarity, and I’m not really sure what that really means, because they keep saying, oh well, we’re data dependent. I’m not sure if they’re waiting for 7% inflation readings here due to tariff impacts, and then that’s just, you know, not an expectation, it’s just, I’m trying to draw a picture here, Clive, but what is the Fed doing? Like I don’t really want to be in Jerome Powell’s shoes. I feel like that’s a very unthankful job right now, because trying to read the tea leaves here on what might happen, whether tariffs are inflationary or not, I’m really curious what your thoughts are on that, and would you want to do Jerome Powell’s job right now? Definitely not.

I mean, President Trump has in the last day or so expressed extreme unhappiness with Jerome Powell. I think he might have even suggested that if he could, he’d fire him, or he might fire him. Obviously he can’t do that legally, but maybe Jerome Powell will feel he has no choice but to step down.

From my perspective, I think that if Jerome Powell was to leave the Fed, it will create a degree of panic in the very short term, but it will also very shortly afterwards create a massive rally in gold and the equity market, and the reason for that is if Jerome Powell was to go, people will take the view that Trump will put in place his, I don’t know, we don’t his favourite nominee for the job, and his nominee will be somebody who wants to do or agrees to do what Trump wants, i.e. be very accommodative. What does that mean? It means they’ll lower interest rates a lot, multiple times, and almost certainly help out the Treasury by buying lots of government bonds to stop the long rate, the 10-year rate, from rising too much, thus pushing a lot of money into the economy and creating an economic boom. That’s, I think, what would happen, but obviously on day one, when Jerome Powell resigns, there’ll be some degree of panic because people won’t know what’s going to happen next.

So what will Jerome Powell do? Will he stay in place, or will he decide to leave, inverted commas, gracefully? I mean, he won’t say, I’m going because Trump doesn’t like me. He’ll say, I’ve got an illness, or it’s time for somebody new, who knows, but, you know, everything we know about history tells me that it’s never a great idea to be the enemy of the king. No, absolutely, and yeah, it brings me to Roman times where they had food tasters and people like that, right? But one thing, and I read an interesting comment, I think, in the Financial Times as well, it gave me a bit of food for thought.

It’s like, yes, he wants to get rid of Powell, but the question, and he doesn’t provide a solution, that’s my point. He doesn’t offer, hey, maybe we install person XYZ over here and provide a solution to the problem, right? It’s just more noise, for lack of a better term, for now. I don’t want to get political here, but it’s just a lot of sable rattling, and we don’t even know if he has the power to fire or sack Jerome Powell at this point.

Well, I read that they’re already interviewing people for that job, but there’s no word on who are the candidates, at least I haven’t seen any word on those candidates, but it doesn’t mean to say they’re interviewing for that job next week. They’re obviously interviewing for when Jerome Powell’s term expires, but it might expire sooner than expected. What is it? March 26, I think, is the official end.

I might be wrong on a month here, but it’s definitely next year, maybe March or June or something like that. It doesn’t really make a difference because he’s in the line of fire right now, absolutely. But maybe asking you, Clive, what should the Fed actually do? Trump wants lower interest rates.

I think we can get it from a debt perspective and maybe boost the economy, but if you were Jerome Powell right now, would you cut rates or would you keep them where they’re at right now? Are they doing a good job? Are they doing the right thing here? Well, first of all, there is no right answer. You’ve got the dilemma between sound money and a terrible economy or a better economy or a booming economy and high inflation. So that’s the dilemma they’re going to face.

So I think if it was me, I would go for multiple cuts in interest rates and in rapid succession because I know that prices are going to rise. But I would say that these price rises are a one off caused by the tariffs and the tariff uncertainty. And therefore, I can I can ignore the price rises, which will be coming.

Of course, I can ignore them and therefore concentrate on the economy. Now, nobody’s going to throw you they might throw me down in flames for the high inflation, which will follow. But that will probably be more of my successors problem than my problem.

But at least I’ll have left with a really fairly robust economy, provide a cut interest rates enough and then engage in quantitative easing, i.e. quantitative easing is when you when the Federal Reserve or the Central Bank, wherever it is on the planet, decides to buy government bonds to stop the yields rising. And where do they get the money to buy those bonds? They print it. So the liability side of the balance sheet is the money which they print and the asset side is the bonds they buy.

And of course, when you buy when the the Central Bank buys government bonds, it increases their price and lowers the yield. The advantage of lowering the yield on the bond side, there’s two advantages. One, it’s for the government because it costs the government on their maturing debt, it will cost them less to roll over the debt in terms of long term interest rates that they get to pay.

But secondly, in most countries, mortgages are tied to 10 year rates or longer dated bonds. So if you can get those rates down, mortgage rates go down, which is good for the housing market. And we mustn’t forget that in many countries, people tend to spend part of the equity in their house.

In other words, if their house is going up in value, their house is doubled in value or tripled in value, they feel a lot more comfortable about spending money than if they’re if they’re struggling to pay the debt on the house, and it’s only worth what they paid for it. And people do spend their equity. I don’t know how it is in America, but I think that’s the case in America.

And I know it’s for sure it’s the case in the UK. Oh, absolutely. And people are definitely consumer sentiment.

Jerome Powell said it as well in his speech at the Economic Club in Chicago. I think the consumer sentiment is down. People are just, as you said, there’s just too much uncertainty.

People don’t know what is going on, how those tariffs, which is everything off, which was the main event here, are going to impact them personally. Let’s talk about the tariffs in the grand scheme of things, because it feels like, as you said, the tariffs were a big event that triggered a lot more than just a tariff debate and infighting or fighting a trade war with China, for example. It triggered capital flight and capital moves or gigantic capital moves.

One, we talked about gold, but also just out of the US dollar system in general. Can you comment on that a little bit? What are you witnessing in front of our eyes right now? So up until now, people have been natural equity buyers, and when they sell something, they’ve been selling US equities, they put it into dollars and then go back into the US equity market for the next hot thing. But now people feel rather uncertain and rather worried.

So as they’ve been selling US equities in particular, they’re bringing that money home to Europe or wherever they live and probably putting it into cash or bonds. That’s what the evidence is, not to the equity market yet. They’re putting into cash or bonds back at home where they feel more comfortable than having it in a distant foreign market where you don’t know what’s going to happen tomorrow, especially with relating to interest rates and debt and tariffs and trade when they’re seeing the dollar going down.

The dollar’s come down. If you look at the DXY, that one’s called the Dixie, that’s the dollar index. That’s come down from about 110 to 99 nearly.

It’s 99.18 I see on my screen there. So that’s come off nearly 10 percent or maybe a bit more, maybe about 10 percent. So the reason it’s come down is people are bringing their money home to Europe.

But it’s not just people. I think that Mr. Trump has rattled a lot of his close friends and allies around the world with these tariff proposals, because there’s been some rather harsh words used. And although these countries are many countries are friends of the United States and have good trading arrangements with them, and they’ve always been happy to hold U.S. Treasury bonds and notes.

Suddenly, they’re getting a feel of nervousness because there’s been words used like we’ve been looking after you in Europe for the last 50 odd years and providing a security shield. Well, now it’s payback time. And so there’s a feeling, I think, that countries might come under some pressure in lots of different ways to make concessions to the United States.

And the United States is quite free to ask for that. But in what form will those concessions be requested? Well, one thing, I don’t think the United States is going to be very favorable towards countries which are massively selling their treasuries. And probably they’ll be looking for countries to buy U.S. treasuries.

So in recent weeks, we’ve seen the price of treasuries come off. The yield’s gone from 3.9 on 10 years to 4.4 thereabouts. And so somebody somewhere is selling them.

And I’m just wondering if perhaps some foreign central banks have got some treasuries maturing, they’ve let them cash in, and then they’ve taken the money back home and not reinvested it into new treasuries, perhaps because they feel that there’s going to be pressure to buy more down the line. And if you’re going to be pressured to buy more, you probably want to own less at this time so that when that pressure comes, you can go back to normal. It’s just a speculation on my part.

I don’t have any evidence of this. But it would seem to be that if you’re nervous about your treasuries anyway, and you’re nervous about how they’ll behave, maybe it’s time to diversify a bit and have a bit more gold, have a bit more European bonds, Swiss franc bonds, Japanese yen bonds, British pound bonds. If I was a central bank, we’d be having that discussion if I was on the board.

What about capital controls? Let’s say Germany says to the pension funds, no, you cannot invest in the US anymore, or at least a certain percent has to be invested domestically, for example. What does that do? I think we’re seeing some of that. I think there was a Danish pension fund that said, no, we’re not investing in the US, we’re moving all our capital back to Denmark, and we’re investing domestically.

We’re not investing outside of our country or outside of the EU. I’m not exactly sure what he said anymore, but it was out of the US. Do you see that trend continuing and maybe even picking up pace? Well, capital controls, otherwise known as exchange controls, are a bad thing for all concerned.

We used to have that. When I was a young man and started working, we had exchange controls. We had something in the UK called the dollar premium, and that meant that it was almost impossible to invest overseas.

If you did happen to have overseas assets, you could bring them back to the UK and get a better rate of exchange than the official rate of exchange, but if you wanted to go on holiday, you weren’t allowed to take more than 50 pounds with you, and to check you weren’t doing that, that’s 50 pounds in foreign currency, to check you weren’t doing that, you had to have the back of your passport stamped with how much you changed into the foreign currency so they could check on you. I did, if you’re allowed more than one stamp a year, but certainly when I went abroad the first time, it was 50 pounds, and that was what you were allowed. So you didn’t have a lot of spending money.

So it was a tough old world under exchange controls. Now, obviously, there’s capital controls could come in many forms, and they can be quite lightweight, such as saying to your pension funds, you have to invest X, Y, Z pension of your pension money into our government bonds. Now, that’s not really a capital control as such, but of course, it has the effect of a capital control, because if you’re a pension plan fund, and you were planning to invest, let’s say, 40% of your assets globally, but now there’s a new rule saying you’ve got to have 70% of your assets in domestic government bonds, that means the most you can have globally is 30.

So it’s a kind of control. And it already exists in many countries where we have rules about what your minimum requirement in bonds or fixed income or government bonds must be. So it would just be a variation on the rules.

I don’t I don’t much like it. I think pension funds should be free to do what do as they please. But you know, we’re in this world where there’s this kind of aggressive action from governments who are short of money.

And they’re trying to do what they can to get some pay pay for the ever expanding government debt around the world. Now, that makes sense, because you need to foster an attractive investment environment as well. Like why would a pension fund invest, let’s say in Germany, for example, if they don’t see any growth, because they need to deliver that growth to pay out the pensions as well, right? We talked about, you know, tariff impact on fiscal monetary policies, but not really geopolitics, we loosely touched on it.

But what is the impact on a geopolitical landscape? And on the geopolitical map here? What is your assessment? Well, I think I mean, I’m talking politics, and I don’t really like to talk politics. But I think governments around the world are saying, let’s take Canada, for example, there’s been some very aggressive words used on both sides. Well, I’d say aggressive on one side and reasonable words, but aggressive actions on the other side.

Now, America and Canada, I’ve always understood them to be close friends, and the people like each other. And I though I had some kickback from somebody in America who said, what the Canadians are friends, they’ve been screwing us over for decades and doing is, you know, putting our factories out of business. Oh, gosh, I thought they were friends.

But you know, there’s always a very strong view. So I’m upsetting some people by saying that they’re friends, perhaps, but I thought they were. But now suddenly, if you’re in Canada, and we have seen these retaliatory actions by Canada to Americans terrorists, they must be thinking, can we trust our neighbour as much as we always used to in the past? You know, we don’t know what they’re going to do next.

And I can see lots of potential things they might be thinking about, not least of which on the on the financial side, we might get this situation where they say, there’s limitations on how much Canadians can invest in America, or we’re going to have limit Americans ability to invest in Canadian companies, or, you know, we don’t know. But I think I think from a, if we extend that to the whole world, everybody is now a little bit more concerned about the risks they have, if they’re overexposed to the United States, overexposed in terms of trade, well, that’s going to look after itself with the tariffs anyway. But secondly, overexposed in terms of being exposed to the government debt, and the government, the US currency.

And I think that’s why we’ve seen these yields rise and seen the dollar fall. I mean, it’s it sounds counterintuitive to have a falling dollar when you impose tariffs. Because if you think about it, if you put tariffs on incoming imports, it means America buys less from overseas.

Therefore, less dollars flow out of America, more dollars stay in America, therefore, the dollar should be strong. But in fact, it’s going weaker, which means that the strength that you might expect from having a better balance of trade is being overwhelmed by sentiment of people saying, I’ll bring my dollars home. Thank you very much.

Yeah, isn’t that even an end goal of the US to degree, like even if it was achieved indirectly, meaning like we do want a weaker dollar, you want to stay in the reserve currency. I don’t think anybody’s questioning that status right now. But like, I spoke with Judy Shelton yesterday, and she called it cheating when other countries devalue their currency versus others.

I’m seeing it indirectly happening in the US right now that the policies are pushing the dollar lower slash cheating. I’m using air brackets here. Or you know, what do you call them fake? Right? Is that sort of the cheating? Is that deliberate bringing the US dollar down? I don’t know.

I mean, I don’t think so. And I also would say that we’re seeing two sides of the coin, you know, that his this this new word about having the dollar down, it seems to be a new thing. I mean, historically, they’ve wanted a strong dollar, you know, so that people will be willing and wanting to invest in the United States.

So the landscape is shifting a little bit to this, we want a weak dollar, so we can compete with our neighbors. But you know, I think at the end of the day, currencies should find their own level, according to the balance of trade, if we would still in the in the old world of exchanging balances in gold, as opposed to dollars, each currency would find its own level. According to its trade balance, so there wouldn’t be any trade deficit, because if you had if you’re running a trade deficit, your currency would keep falling until your goods are sufficiently cheap, that people are buying a currency and push it back up again.

And that’s what should be happening. But but I think we’re in a we’re in a funny world. I mean, to give you an example here, the country I’m in Switzerland, we’ve been accused of cheating.

Yet, when I look at the numbers, we’ve got the strongest Swiss franc in all of history against the dollar. It’s never been as high as this. And in terms of the balance of trade, yes, we are exporting more Swiss goods to America, then we are importing more American goods to Switzerland, of which one of our exports is gold bars, which they’re buying for us.

But when it comes to services, we’re buying far more American services in Switzerland, than they are buying from Switzerland for the Americans are buying from Switzerland. So we’re buying education services, accounting services, office services, software services, medical research services, all kinds of services are being bought out of America. And Americans are buying some services.

But when you add the services and the goods together, the balance of trade is about 80 billion in each direction. So, you know, there’s a lot of confusion about which countries which are cheating or not. So anyway, accused of cheating, which has got 41% terrorists put on it until they put it back to 10.

So I don’t think there’s any merit in or any need for countries to manipulate the exchange rate. I don’t actually believe the Americans are doing it, except maybe with words, but I don’t think there’s any. I don’t think the Central Bank, the Federal Reserve is going into the market and artificially buying foreign currencies to push up the value of foreign currencies to push down the value of the dollar.

But maybe that’s what America is accusing other countries doing. Maybe America is saying, look, all these countries, they’re exporting stuff to us. And then they’re taking the money they’ve got and buying dollars.

How terrible is that, pushing up the dollar, making it an advantage? Well, what do they want? Do they want them to sell the dollars or keep the dollars? It’s not very clear. I think that’s why people are confused. Nobody really knows which way this is going to turn out.

Yeah, no, absolutely. But words lead to action. I think that uncertainty, I think, is exactly what we’re seeing right now in the markets.

The media has been using a term, the list trust moment in the US, Trump’s list trust moment, bond yields spiking, currency being devalued. How would you apply that? You’re obviously from the island, from England, Clive. How would you apply that? Is that a correct assessment there? Well, we’re not at the list trust moment yet.

But if we see bond yields spike, I guess it’s going to spike to 5%. We’re at 4.4, something like that at the moment, the 10-year rate. If those bond yields spike to five, and if it happens very quickly, I would say that would be our list trust moment, that the confidence has been lost.

They have not achieved their objectives, either through the Federal Reserve reducing interest rates or through the policies, because the market will be voting with its feet. I think there’s a real chance that we will get a list trust moment in the coming months. But it’s a tightrope.

And what we have seen is every time there’s a little bit of a panic, and there was a panic when the spike interest rates spiked up to over 4.5%. That’s the moment when Trump announced that he’s putting a 90-day suspension on the tariffs. It’s all back down to 10% now, apart from China. So he obviously saw that the markets were starting to panic and took action, which is kind of what happened in the UK when we had the list trust moment, when gilt yields were starting to spiral out of control.

And suddenly, the Bank of England stepped in and helped the pension funds out by supporting the price of gilts with the help of the British government, who gave them, in that case, I think, an unlimited guarantee that we’ll see you’re good for all the losses you’re going to make on this. Now, really interesting, like interesting times. As you said, it could happen next week, right? Or in the next couple of months.

So we’re actually not talking about like, ah, this is years down the road. No, no, no. This could happen literally tomorrow, depending on what kind of words are coming out of the White House, quite honestly.

You touched on the dollar, Clive. And I want to come back to the currency real quick and currency discussions that are happening around the globe right now. And Bretton Woods 3 is sort of a term that’s been thrown around as well.

It’s just a new currency regime. How do you see global currencies develop here? Well, I think some central banks realize that we’re coming up for a new agreement on currencies of some form. Obviously, Bretton Woods was the agreement in 1944, in which all countries around the world agreed that instead of being on a gold standard, they would be on a dollar standard and the dollar would be on a gold standard.

So the understanding in 1944 was that all countries could trade amongst themselves, exchanging dollars, but full net, which are a lot easier to move than gold. I mean, we don’t have any traffic jams or anything when you move dollars. But the understanding was those dollars could at any moment in time be changed into gold at the fixed price of $35 an ounce.

And there was no dispute about that. And any country could go along to America and say, here’s my dollars. Could you give me the gold? The only trouble was America took advantage of that position.

And instead of issuing dollars backed by gold, they issued dollars backed by thin air. In other words, they ran the printing presses without buying gold. And they ran the printing presses to pay for all kinds of things overseas.

And where I think a lot of Europeans are very grateful for that expenditure, because it reboosted many economies, including and also in Japan. It boosted the economy as the Americans spent heavily on our goods and services and infrastructure, all kinds of things. But at the end of the day, a lot of these dollars were printed out of thin air.

And then by the 1960s, countries were going back to America saying, here’s our dollars. Can we have our gold back, please? And so it was getting a bit more, a bit slower. And America at that time, lost literally half of its gold reserves by handing them back to countries around the world.

But they realized that if everybody started asking for their gold back, they would have zero gold and they still wouldn’t have enough to pay everybody. So that’s when Nixon in 1971, in August, I think it was August the 15th, put in place the temporary restriction on the conversion of dollars into gold. And from that date on, that temporary restriction of conversion of dollars at the official price of 35 to gold is still to this day suspended.

So where could it go now? I think it’s time to have a revaluation of gold and go back to some sort of gold standard. And that would be a new Bretton Woods, where once again, we’re on a new standard. But I think knowing that this is coming, there’s probably an almost certainly some central banks who say, if we have another Bretton Woods conference, and there’s a new gold standard, well, one, we’re not going to let America be the sole arbiter of how much gold there is, and how what the price is, it’s going to be have to be something, some more uniform currency, maybe as agreed between currencies, but those who’ve got the gold will be the ones who have a say in what the relative exchange rates will be.

And therefore, I think a lot of countries are saying, let’s acquire gold. But of course, as we stand, America still has far more gold than all these other countries. You know, I think globally, reserve gold reserves are around 17%.

But countries are trying to build that percentage of gold in their reserves up so they can have a seat at the table. If there is Bretton Woods conference, but we don’t at this point have any news that there will be such a conference. We don’t know.

Yeah, no, it’s an interesting debate, because China obviously holds way more gold than they report to anybody, the IMF, or just state publicly. And I think the world is still in denial that China might actually be sitting on a what you call it like a ticking gold time bomb, let’s call it that, when it comes to a new currency here. And but nobody knows when they’re actually going to pull that sleeve out of that ace out of their sleeve.

Right? It’s an interesting debate. And it’s a bit of a wild card that the market might have to deal with or the world has to deal with, you know, some some time down the road. So officially, China has a lot less gold than the world average.

It’s about 6%. And the world average is about 17% of reserves. So China’s got a long way to go.

And it’s got a long way to go just to catch up with the American number. Yeah. What is the official number? Something? Yeah.

So obviously, that’s the official number given to us by China. But we do know that twice in the past, they withheld information about their gold purchases for many, many years, and then suddenly reported Oh, by the way, you forgot to tell you over the last five years, we’ve accumulated 500 tons or 600. I don’t think it was.

And that was suddenly put into if you look at the World Gold Council’s numbers, you’ll see these numbers suddenly appear. So it’s nothing, nothing, nothing, nothing. And then one year, 600 tons appear.

And there’s a little note saying, China announced that they bought this over the last X years, little by little, and not told anybody. Yeah, no, it’s an interesting topic, because China is not an exporter of gold. They’re one of the world’s largest producers of gold as well.

And everybody’s wondering, where’s it going? Right? A couple couple more things on gold. Of course, we need to talk about the gold reserves or the gold flowing back into the US. I’m curious what your theory on that is.

You touched on the gold being distributed into the world. Now it’s coming back to the US. I’m curious what your theory behind that is whether it’s just really practical for pragmatic reasons, or if there’s more to it.

So you know, a lot of gold has been flowing out of London, the 400 ounce bars coming out of London, they go to Switzerland to be refined back into 100 ounce bars, and then go to America as 100 ounce bars, which is what is used on Comex. We have seen in the month of February, and which is a month of February and in the month of April, not so much in March, we have seen in February, three times the normal delivery amount for February. And in April, we’ve seen, and we’re only about 10 or 12 days into April, we’ve seen three times the normal delivery amount.

When I say delivery, I’m talking about delivery notices. This is where gold is going to be delivered to people who bought the gold futures. So what can we conclude that for some reason, there have been or there still are big buyers out there of the gold in gold futures, buyers of the 100 ounce bars, and those buyers are choosing to take delivery.

Now, to start with, we might have thought in February, it’s all to do with the tariffs, because people are buying gold ahead of the tariffs, and they want to be well prepared. But we now know that tariffs won’t apply to bullion. Yet, we still have these all time record for April deliveries taking place.

So what this means is that there are genuine buyers, it’s nothing to do with tariffs at all, there’s a genuine buyer or buyers taking delivery of 100 ounce bars. And now this is not mom and pop stuff. This is 100 ounce bars are like $300,000 each, a bit more than that.

Whoever’s taking delivery is a big player, really big player. Now there’s several possibilities. It might be US banks who are preparing for what’s called Basel III.

Basel introduced by the Bank of International Settlements, which is not legally binding. But which is generally followed by major Western countries. And it’s already followed by a number of Western countries.

This year, we’ve got most countries, like Japan, lots of countries followed in the past or started to fall in last year or two. This year, Switzerland, United Kingdom and EU are coming on stream with Basel III. America, we don’t know when it’s going to happen because they haven’t passed the legislation yet.

But Basel III allows for gold in your physical possession, if you’re a bank, to be treated as a tier one asset. The importance of that is that it’s treated as the safest and most liquid form of asset a bank can hold. So exactly the same as holding cash in terms of the way the Bank of International Settlements looks at it.

In other words, it ranks at the highest possible level when it comes to having enough reserves to meet regulatory requirements. So lots of banks around the world own gold, but they own gold futures, they’ve got gold, they’ve lent it out. But what this means is that if they want to qualify for Basel III, they can’t own paper gold anymore.

They can’t have lent it out to a third party. They can’t have it in custody by a third party. They’ve got to have it physically present in their vaults, and then they can call it a tier one asset.

So this makes physical gold much more attractive than paper gold. And this might explain why we’re seeing record deliveries out of COMEX as banks, and I assume it’s American banks, possibly are preparing themselves for Basel III by actually getting their hands on the physical gold instead of virtually owning it through paper, through the futures, which wouldn’t count for tier one assets. So it might be that.

It might be a large player like a government, let’s say, and I know there’s been a lot of speculation that maybe the US government is buying it, either secretly in the same way that China might be secretly buying gold. By the way, I don’t think China would take gold out of COMEX because they could just as easily buy it from London. So I don’t think China is the COMEX buyer.

But it might be Mexico. It might be Canada. It might be the United States if that rumor were true.

And of course, some people are saying that maybe the gold in the vaults isn’t there and they have to replenish it. I was going to say they might have hired Captain Obvious if that were the case. It’s a possibility, but it could be that America is looking to shore up its reserves on the sly, and that would have the effect of reducing the dollar and pushing up the gold price.

And there’s another reason why it would suit America to have a very high gold price, and that is the revaluation benefit if they go for it. I’ll explain how that would work. I mean, there’s more than one way, but they played this trick several times in the past.

There was obviously the 31st of January 1936 trick where they basically took all the gold off the Federal Reserve and then revalued it upwards the next day, making a huge profit for the government and obviously a not so happy Federal Reserve who lost their gold the day before it went up by 50%. And they did this again shortly after 1971. They revalued gold from $35 to $42 an ounce, booking billions in profit.

Now, what’s the advantage of booking billions in profit? Well, first of all, it reduces the budget deficit because your deficit doesn’t seem so big if you made a profit, it kind of eats into that. But the second way of doing this is, and I think they will probably try something along these lines, is to do a sale and repurchase agreement. And the way that would work as I see it, they would sell their gold, the Treasury would sell their gold because the gold is owned by the Treasury, the United States government, not by the Federal Reserve, as some people think.

They would sell their gold to the Federal Reserve in exchange for newly printed money. So the Federal Reserve would print a lot of money in exchange for the gold and give it to the Treasury. And then the next day, through the sale and repurchase agreement, they would buy it back from the Federal Reserve.

But instead of delivering money back to the Federal Reserve, they would deliver them what’s called gold notes. Now, that’s something the Federal Reserve already holds from the 1930s. But they’re not worth gold, they are worth dollars at the official price.

And they’re not counted as part of the government’s debt. So basically, if they’re getting the cash at all, they wouldn’t need to borrow as much, or they could even potentially reduce their debt a little bit. Or they could potentially spend that money and boost the economy depending which way they want to go.

But they’re not increasing the debt by the fact they’ve done this, they’ve just magically turned something they happen to own into a bunch of money, and they still own it. So it’s, you can call it magic money if you want. But that’s the way.

I’m sorry to give them the idea of how to do it, because I perhaps I shouldn’t be doing that. But that’s the way to do it. But what does that mean? It would shoot the American government to have the highest possible gold price.

Because the higher the gold price, the more they can magic out of this. So already, if they just took their gold reserves, official reserves, as of today, and did it, they’re already getting back a trillion, which is not quite enough to pay off this year’s deficit. But what if the gold price was double today’s price? Well, they could pay off a year and a half of deficits and have no deficit for a year and a half.

That would look really great on the numbers, wouldn’t it? That sounds too smart. That sounds too logical, almost, you know? That’s an interesting theory, because I’ve had Andy Schechtman and a couple other guests on that said like, well, if we revalue gold to $142,000, we could get rid of all the debt, right? And just on the balance sheet and have equilibrium on the balance sheet. It sounds a bit far fetched, but like the way you’re explaining it, it actually makes sense.

And I wouldn’t put it past them, quite honestly. So, you know, it’s another form of reset. Obviously, it devalues the currency to some extent.

But when they did this in 1934, that was the big one. There’s been the small ones late since then. But when they did this one in 1934, effectively, the dollar was devalued by, as near enough, it wasn’t quite 50%, but close to 50%.

Did prices go up by 50%? No, they were the next day, the day before and the day after, they were the same thing. The only people who were unhappy about the devaluation of the dollar, well, of course, there were some gold bugs. But the other people who were unhappy about the devaluation of the dollar were the French, the British and the Swiss, because our countries all held dollars that were, at the time, gold.

This was before Bretton Woods, but dollars were gold. I mean, dollars were just a representation of gold. It represented a certain amount of gold.

If you had $20.67, that was an ounce of gold. I mean, they didn’t look at ounces of those, they looked at it as grains of gold, but the same principle applies. And suddenly, instead of having an ounce of gold, they had 0.6 ounces of gold, in other words, they lost 40% or nearly 50% of their value overnight.

So you can imagine the foreign exchange dealers around the world were quite unhappy, but it didn’t affect the average American. The prices were the same the day before and the day after. So yeah, they could do it again.

And everybody in the world would be very unhappy that suddenly their dollars are worth less, but maybe the dollar in America will still buy you the same amount of gasoline and everything else as it did the day before. It makes a lot of sense. And I really appreciate you going into detail here, Cleve.

To wrap up the conversation, Cleve, you’re a retired wealth manager, but let’s assume you’re unretired today. And I’ve come to you with a million dollars to invest. And let’s take all the financial advice and all the disclaimer aside and knowing like, okay, what’s your risk profile? How would you allocate a million dollars right now? Well, I think you’re going to make it 10 million because I don’t really want to deal with poor people.

All right, I’ll see myself out. Appreciate it. I’m teasing a little bit here.

Obviously, first of all, I much prefer when it comes, first of all, you’ve got to be very diversified across all the asset classes you can find. The more you can find, the more you can diversify. You can have zero or close to zero in some asset classes if you wish, but you need to have them on your radar screen because there’ll be times when you want to move assets into those asset classes.

Right now, despite everything we know about the equity markets going south, I still think there’s a strong argument to have a large exposure to equities. You know, I think 50 or 60 percent is not an unreasonable number, provided that you don’t do it via ETFs, exchange traded funds. Now, exchange traded funds are great for the man in the street who can’t diversify.

But if you have a million dollars, you could absolutely diversify. And what does diversification mean in terms of equity? You can take that 50 percent you’re putting into equities and you can pick and choose different equities from all around the world who you think will be just fine, notwithstanding the machinations going on in America and the tariff changes. Just to give you a little illustration, just last week, I bought some shares.

I won’t name the name because I don’t want to be a stock pumper. I bought some shares in a Swiss company, which I have every reason to believe will be a net beneficiary of America’s tariffs because they rearrange companies and relocate them and organize things like that. I won’t go into the name of the company, but there will be companies which are doing things domestically or which make products which are where the supply demand is very inflexible or companies which benefit from defense, which is going to get more spending in Europe.

I mean, there’s all kinds of things. If you look closely, you will find you can diversify into companies. So that 50 or 60 percent, which one puts into equities, if it’s not an ETF, you can be very focused on the types of companies you invest in, making sure that you own high quality companies which are reasonably priced and which have got growth prospects.

Now, that’s not easy because very, very few companies meet those criteria. But if you look hard, you’ll find them. So you’ve got to be prepared to put in the work.

Now, then we come on to the rest of the asset classes. Of course, gold and silver. I do think there’s a strong demand from argument having an exposure that I personally think six percent in gold and six percent in silver is a good number, but it’s not a problem if you want to have more.

And that six percent on each side, that’s 12 percent in total, can be divided between a certain amount of physical gold at home. That is your ultimate parachute that you’re never going to sell or trade. And then what you might want to sell or trade at some future date could be an exchange traded funds.

And I know some people will be writing on your comments saying exchange traded fund of physical. That’s just paper because a promise the government confiscated. Yes, it’s a risk.

But, you know, you can’t keep a huge amount. If I said 12 percent of gold, that’s one hundred twenty thousand dollars of gold in your home. It’s 10 million.

That’s one point two million dollars of gold in your home. You don’t want to keep that much at home. So that’s why you’ve got no choice.

You’ve got to go into these exchange traded funds beyond a certain point. And then, of course, there’s the gold mining stocks. And I think you need to have a percentage in gold mining stocks or mining stocks in general.

So certainly I would have some exposure to that asset class gold and silver. The current exposure to it is almost nothing. Just to put it in perspective, the global assets under management, that’s where it’s professionally managed by asset managers, is one hundred and twenty seven trillion dollars.

The amount of gold in those portfolios is believed to be already less than one percent. So no impact at all. And the annual gold production is not point two trillion dollars.

So if you had just one percent of assets under management move into gold, it would be like buying the next five years of mine production globally. So a very small shift, very small shift in asset allocation to gold globally would create a more more buying pressure on the gold price than people will be able to withstand. Of course, as the price goes up, there’s lots of gold out there which is waiting for its price.

So it goes there would be sellers appear, but it would still go a lot higher if asset managers were to move even half percent of the gold. So then, of course, we’ve got lots of other instruments in the world. We’ve got property and property funds.

And again, when I talk about property, some people will say, oh, commercial property is all finished and interest rates, house prices going down. But when you look at it, there’s every kind of property on the planet from theme parks to shopping malls to luxury properties. And thankfully, we have in this world a large number of real estate investment trusts specializing in everything from hospitals to amusement arcades to apartments.

You can pick and choose those areas which you think will be net beneficiaries, or you can pick and choose the real estate investment companies, which you think have found the magic formula to get the right ecosystem where you’ve got jobs, entertainment, utilities and shopping. You know, there’s there are formulas out there which do work. But so real estate is a sector where you shouldn’t have zero exposure to.

It’s just a question of how you allocate it to the right sector or the right part of the real estate market. And then depending on the country you’re in, there will always be some special instruments available. And I’m not referring to hedge funds.

I don’t really think all that much of hedge funds. But there are lots of investment companies which do specialist strategies. I mean, some people have heard of insurance related bonds.

These are bonds where you could lose all your money, but there’s funds which specialize in this. You get much higher rates of interest. There’s one of my favorites, which I’m looking at now is something called reverse convertibles.

I won’t go into the details of what that is, but it’s a very interesting area where you’re modifying the risk and reward. You might have upside, but you also get a modified risk and you get a higher interest rate as a compensation. Then, of course, there’s some real specialist lending funds out there which have very high rates of return, you know, 12%, that sort of thing.

If you find them and you trust them, they may be illiquid. There’s private equity. Something I like here in Switzerland is called Viagé.

Viagé is a concept where you buy a house at half price. I mean, it could be at a reduced price, but the person who’s resident there can live in the house until the day they die. So it’s typically for 80 year olds upwards.

So you probably got a life expectancy of seven years. But the advantage of buying property in Viagé is even if property prices don’t rise, the properties in the Viagé will rise in price because you bought them at half price. And the other advantage of buying something at half price is if you’ve got a million dollar property and it rises by 100,000, if you paid a million dollars, you made 10%.

But if you only paid half price, 500,000, it still rose by a million. So you make 20%. Are you with me? Absolutely.

No, it makes a lot of sense. We don’t have that model really here in Germany, but you sort of could, but it’s not like formalized per se. I don’t know.

Do you have, you might have something called equity release. Maybe, I don’t know. That’s a word which is used in some Anglo-Saxon countries for the same principle.

But I don’t really know if that works. And then, of course, you’ve got funds specializing in royalties, insurance policies and all kinds of things. So if you look carefully and you’ve got the money to diversify, and I’m sorry to say with a million, you don’t really have enough to get through all these things.

You’re not going to qualify in lots of areas, but with 10 you would. You can actually spread it around and have lots of different types of things so that your exposure to any one thing is not that big. And all of these things will be pulling in different directions depending on the economy.

No, it makes a lot of sense. And you made it clear that I need to hire somebody to assist because it sounds like a full-time job here, Clive. I’ll definitely reach out once I hit that personal milestone here, I guess.

No, Clive, but to really appreciate our conversation, like where can we send our audience? Where can they follow more of your work? I’m writing several times a week. I posted this last day or so on LinkedIn. I wrote a post about the amount of gold in the world related to the amount of other assets.

I wrote a post about Basel III, which I discussed just now. And I’m always finding new topics and interesting topics. Sometimes they’re historical topics.

And I have quite a lot of people subscribing to my LinkedIn every day. And those who’ve got a question on investments, I don’t give investment advice. I’m not paid for anything.

I’ve got nothing to sell, no services or anything like that. But I’m happy to help people see if their investment strategy is on the right track or if it’s not trying to help them point them in the right direction without advice as such. And of course, yeah, what I don’t do is get a lot of people writing to me saying, I want to become a private banker.

I want to get into wealth management. How do I do that? I don’t give careers advice. So that won’t help.

Sorry. No, no worries. No worries.

Clive, really appreciate your time. Thank you so much for coming on here on SOAR Financially. Thank you so much.

We’ll have to do this again soon. Where in Switzerland are you, by the way? Near to Geneva. Okay.

Yeah, I’m most often then in Zurich, but we’ll have to find a time to catch up at some point. So if you do come our way, you’re very welcome to look me up and we’ll get together for a cup of tea or whatever you invite. Thank you so much, Clive and everybody else.

Thank you so much for tuning in. As you might have heard, I need to open a merch shop and really boost the subscriber numbers here to qualify for Clive’s advice here. But in the meantime, I hope you enjoyed this interview with Clive Thompson.

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Thank you.