Wall Street’s $620 Billion Crisis – What’s Coming Next (Uncut) 03-28-2025

Wall Street’s $620 Billion Crisis—Nomi Prins on Recession, Gold, and What’s Coming Next

Wall Street is sitting on a set of unrealized losses, meaning they’re just book losses right now of $620 billion and rising very rapidly of unrealized loan losses. And what that means is they have loans on their books. These are in commercial mortgages.

These are in corporate loans. These are in some consumer loans, but for most part, commercial and corporate loans that are hemorrhaging, where the delinquency values are up to pre-financial crisis of 2008 levels and where they haven’t had yet to book the losses, but the losses are growing. So that’s like a ticking time bomb for Wall Street.

Hi, Naomi. Thank you very much for joining us today. How are things in Los Angeles? They’re great, Jimmy.

So glad to be here with you today. Well, it’s a pleasure to have you now. You have written many books on the Fed, and this is where I want to start our conversation.

We recently had a Fed meeting and the Fed took their growth rate assumptions down from 2.1% down to 1.7%. And at the same time, they also increased their inflation expectations from 2.5 to 2.8%. And these moves had to do with the uncertainty associated with policy changes around tariffs. What were your takeaways from this Fed meeting? So I have seen growth figures come in lower. The Atlanta Fed has a tool called FedNow, which is a more accurate tool for predicting and noting the forecast for economic growth, more factors and some of the other data sets out there.

And they’d already concluded it was going to be slower growth. So that in itself, that the Fed then turned around and said, yes, we are actually going to experience slower growth in 2025 was not shocking. And in fact, I think growth could still slow from that 1.7% prediction if we continue to have this tariff uncertainty.

And if what’s already been sort of baked into the cake of the uncertainty that we’ve experienced continues to fester. So that’s one thing. The fact that the Fed also raised its inflation prediction again for the same reasons we’ve been looking at inflation figures that are going to hover in that high 2.5, 2.8, maybe even touch 2.9 or 3.0 level.

The issue here is that the Fed seems to think it can actually stick a landing of inflation down to some magical 2% number when the fact is there are so many supply chain, geopolitical and other reasons why inflation is what inflation is at any given moment. And the Fed really can’t do that. But what was interesting about the meeting was that the Fed was sort of pivoting from that language about the bravado of fighting inflation to, you know, it’s kind of still there.

And yes, it’s increasing, but also we’re focusing on lower growth, which is what makes sense. They should have been doing this. So I think what they’re doing in their language is misjudging that ability to be able to reduce rates by more than they had forecast in December of last year.

They forecast 50 basis points of cuts for this year. The expectations like Fed watch or that could be between 50 and 75 basis points. I think it could be as high as as one full point.

And that’s also because we are seeing growth slowing. Inflation is going to be there and the Fed is going to have to come to terms at some point with the fact that it can’t get that 2% just because it wants to. That’s interesting.

So you think the economy is definitely slowing down? What signs are you looking at that would indicate that? So one of the major signs is the debt overhang that we’re looking at. Obviously, we have a massive amount of debt at the government level, 36 trillion and counting as we speak. And that’s one element.

And what that means is the government, regardless of what it cuts, doesn’t cut whatever the efficiencies are, is that it has to pay somewhere between 880 billion to a trillion dollars a year in interest rate payments just to get in to keep the lights on. And that’s that’s a massive overhang. But if you drill down with that to the business level, the small business level, the consumer level, we are seeing that at every level along the way, there are record amounts of debt at higher rates, higher costs than there have been in many, many years.

And that’s a direct result from the increase in interest rates that we’ve seen since 2022. And obviously, last year, there was a reduction of a point, 100 basis points in those rates. But the overhang is still there.

And so what you have is this this meeting of inflation on lots of levels that hasn’t gone away. And even if it’s slowed down a bit, prices are still rising. It doesn’t mean that prices don’t still rise.

And you have debt overhang at interest rate levels that aren’t coming down fast enough. And that creates a real wear and tear on the economy. We’ve seen that in confidence levels going down.

We’ve seen that production levels going down, manufacturing going down recently in some of the most recent statistics. What that is, is that wear and tear of that meeting between debt to grow or debt to survive versus the cost of that debt. And that’s going to have an impact on the economy as well, of course, uncertainty.

So right now, of course, we’re in the middle of not knowing what’s actually going to happen with respect to tariffs between the US and other countries. What’s going to stick? What isn’t? What negotiations are going to happen beneath the surface? And all of that uncertainty also hangs on the economy. It makes growth projections and strategies and forecasts for companies a lot harder, and therefore there’s more hesitation.

And that hesitation means the economy is not growing while that hesitation exists. So all of these elements really contribute to a slowing down of the economy. Yes, I thought it was very telling when we saw Delta, American and Southwest all come out with profit warnings.

And they all cited the fact that one, people aren’t traveling for pleasure because they’re concerned and people aren’t traveling for business. They took a real hit in business because there’s just so much uncertainty associated with the tariffs and the trade wars and people don’t know what they should do, where the economy is going. And then when you look at the retail sector, you touched on that a little bit, but a store called Forever 21, I believe it’s a retail store that caters to young women, but they just declared bankruptcy for the second time.

We’ve had numerous other stores in the past year also declare bankruptcy and go out of business. And in 2024, there was 7,300 retail stores that shut down and went out of business. And industry experts are expecting that number to double in 2025.

So when you went from 7,300 up to 15,000, give or take. And so once again, kind of shows what’s happening there with the consumer. And I recently read a report by David Rosenberg.

He penned a piece citing the weakening consumer and he was looking at not only retail stats, but also restaurant stats. And he thinks this is the beginning of a consumer recession. But what are your thoughts on the research that you do? How do you think the health of the US consumer is right now? Yeah, I mean, those are all real and visceral elements to how the consumer mindset is pivoting.

When we see, for example, that restaurant frequency has gone down overall, but the restaurant frequency that people are still doing is turning towards casual restaurant experiences and cheaper restaurant, fast food type experiences to still socialize, but not the middle to higher end. So all of these little tweaks are what consumers are doing naturally. And then when you aggregate that up through the entire country, that’s where we see it impacting the full economy.

So, for example, even grocery store purchases, right? We know that the price of eggs is very high. We know that if we have tariffs, the price of avocados is going to be high. There’s various things that happen, but all of them contribute to an overall grocery checkout experience.

So I think this is what we’re seeing in the numbers in terms of the cost of groceries. Just an average basket of groceries is still increasing by more than the average rate of inflation. So people are seeing it in their food purchasing.

And if it’s happening in your food purchasing, the things that are basic needs, again, you extrapolate that and you start to tighten your belt along everything else. And that’s where you get up to Delta in America and all the airlines saying, look, people aren’t spending what they are on travel that they used to because what can go? You know, if you need to feed your family first, what goes out of the grocery basket? And then if you don’t need to travel, you know, what do you economize on? What do you minimize? And all of these choices have a contracting result on the overall economy. And that is what we are seeing.

You know, people just buying less, deciding not to buy items that aren’t even necessary luxury, but are just simple choices along a food chain as to what is purchased and how the experience is more eat at home versus restaurants and so forth. So all of that, all of that has an impact and then it has an impact on the industries that supply any of that, whether it is the restaurant industry, whether it’s a seafood experience. I just spoke at a global seafood conference out in Boston a week or so ago.

And the major fear of domestic North American and global companies throughout the seafood chain, that’s that’s the sort of getting of the food to transporting to putting in restaurants. There are concerns about the uncertainty of tariffs and the consumer preferences. So then they start cutting back what they supply, but they also increase their prices at the same time because they’re trying to make ends meet.

And that has a bigger squeeze on the consumer. So all of these factors have an impact on the economy. Why? Yeah, it’s funny you mentioned that because I was in the grocery store recently and I saw the price of lobster increased by three dollars a pound.

And that’s exactly it. I mean, everybody will see in their own thing. When I went to just our local Ralph’s in L.A. and I bought what I thought was five things and it was eighty three dollars.

Right. And I checked out. And as I was doing that, I asked the woman at the checkout counter, like, has anybody literally anybody come in here and bought stuff for less than fifty dollars or how many? And she’s like, no, they’re not like every everyone is coming in.

Everyone’s economizing on their decisions and still walking out to the best of their economic abilities with a high tab. And then and then regular feet of family. People are walking out with, you know, cards that are just way beyond what they would have thought they would they would have to pay.

And so, yeah, what you’re seeing on any product level, you know, you aggregate that up. People have to make decisions. That’s what we’re seeing right now.

You couple that with debt. You couple that with the fact that, you know, the consumer is experiencing record household credit card auto loan payments on debt, not even just the level, but the payments that we’re saying before. And that that has an impact as well.

That squeezes the consumer. Yes. Great points.

I mean, I shop at Costco on a regular basis and I go there to save money. I used to spend three or four hundred bucks, but now it’s five or six hundred bucks. Exactly.

And it’s even at Costco, the prices are going up significantly. So that’s a good overview of what’s happening with the consumer. Now I want to move on and talk about what’s happening with a lot of the corporations and also the banks.

And in one of your recent sub stacks, which was titled the Fed’s Balancing Act, you discuss the mandate of the Fed, which is to control inflation and also keep unemployment low. But you also brought in a third element, and that was Wall Street. Maybe you can just speak to that and what’s happening here with the interest rates, because these look at the yield on the 10 years, been very volatile here in the last six months.

Right. So, you know, as you know, I spent years on Wall Street. I was a manager after Goldman Sachs and other senior positions in other places.

And what I do know, looking at how this year, by the way, there are record bonuses that have just been announced as being paid to to Wall Street for twenty twenty four amidst all of this and the increasing uncertainty and economic slowdown, because Wall Street is trying to do a couple of different things. They want the Fed to cut rates because that gives them the opportunity to use cheaper money to to speculate more, to encourage more deals with with corporate customers and so forth, because the cheaper that money is, the more ability Wall Street has from an investment banking standpoint to to do more deals at those cheaper levels or to use the cheaper levels as an incentive to push more deals, which is which is what the larger banks on Wall Street do and why these bonuses are so high, because they started to do that last year as as rates were being cut. On the other side, they’re not being cut fast enough.

And so what’s happening is Wall Street is sitting on a set of unrealized losses, meaning they’re just book losses right now of seven six hundred and twenty billion dollars and rising very rapidly of unrealized loan losses. And what that means is they have loans on their books. These are in commercial mortgages.

These are in corporate loans. These are in some consumer loans, but for most part, commercial corporate loans that are hemorrhaging where the delinquency values are up to pre financial crisis at 2008 levels and where they haven’t had yet to book the losses. But the losses are growing.

So that’s like a ticking time bomb for Wall Street. And the more that they can use the Fed’s knowledge of this to push for lower rates, the easier it will be for them to restructure some of these loans at those cheaper rates and sort of extend the problem out. It doesn’t mean the problem goes away.

It doesn’t mean these loan losses won’t grow, but it means that they can restructure some of these loans at lower interest rates, make money on the restructuring. So so banks and money themselves and also for themselves borrow money more cheaply from the Fed in order to grow and speculate whatever else they do. So they’re in a position where they’re losing money, they’re not booking it and they want cheaper money to be able to to go about their business more more sort of freely.

So so that’s that’s a concern. We did see a number of banks fail in in early 2023, including Silicon Valley. And the problem with what’s happening now is there’s no obvious one bank that’s going to go under.

It’s a sort of a pan across mid-level banks that does connect into the larger banks. That’s one reason why Bank of America CEO Moynihan was was very specific about suggesting that there’s a connection between economic slowdown and rates without saying, oh, you need to cut rates specifically publicly to the Fed. But a lot of these conversations happen behind the scenes.

And going back to what we were saying before, that’s one of the reasons Powell is pivoting to. Let’s look at this economic growth slowdown as a potential reason to save face with the fact that they’re probably going to cut rates by more than they said because of these bank problems. Add that one final thing.

The Fed itself has a book of six point seven trillion dollars worth of assets, which are U.S. treasuries and mortgage securities, which are linked to the 10 year, as you said, in U.S. treasuries and sort of the middle part of the U.S. treasury curve, which banks pledge to them in reserve or which they’ve bought through their quantitative easing programs in the past. They buy bonds. They give money to the banks.

Well, they remit the interest on that money to the Treasury Department for a portion of it. They are at a record loss and shortfall of the amount that they’re remitting to the Treasury Department of a quarter of a trillion dollars. Right.

And that’s growing. So no bank, including the Fed, which is basically, you know, the sort of mother to the banks and father to the banks and parent to the banks, is really doing well with where things are. So I know you said you’re looking for interest rate cuts of a full percentage point, but let’s just say circumstances don’t allow that to happen.

And maybe they can’t even cut by 50. And I don’t know, for whatever reason, let’s just say oil rips the 100 bucks a barrel from its current levels. OK, and that would really add to inflation.

And once again, when you talk about a psychological point of view, even though it’s a small component of the CPI numbers, it has a very large psychological component. But do you think under that scenario where the Fed can’t cut, can we get another SVB problem, maybe a much larger situation than we saw with the Silicon Valley Bank? Yes, or a succession of banks, of regional banks in the Midwest, which are close to where those bankruptcies are happening, but really throughout the country. Because if one bank goes under or two or even if they have to book a large loss because they are at a point where they have to for regulatory purposes and they can’t carry it further and they can’t restructure because rates are continuing to stay high, that can exacerbate this problem.

So I want to ask you about Scott Besant. He has said that he and his team are resetting the U.S. economy. And during this process, the U.S. economy might go through some pain.

And he also went on to say that he cannot guarantee that there will not be a recession. What are your thoughts on that? And do you see the possibility of a recession happening in 2025? So, you know, differentiating between like a slowing economy and actually a negative growth economy, I think we can see and we probably will see some negative growth this quarter for the first quarter of this year. I mean, that is what the Fed has forecast, parts of the Fed have forecast to have negative growth this particular quarter.

And that’s a direct result from all of the uncertainties that are happening right now and the inability of companies to sort of move forward with decisions or putting down payments for growth or whatever it might be. That doesn’t mean that the full year is going to be recessionary. That just means that we could see quarters of negative growth mixed with quarters of positive growth, which could, in effect, lead us to not that 1.7 percent number.

It could lead us to a 1 percent number overall, a 1.2 percent number overall. So we still have an economy that’s sort of stumbling along, not necessarily full on recessionary for the year, but potentially recessionary for a quarter or two, but on average, just stagnating while inflation is rising. So you get what economists refer to as stagflation.

It’s just basically a stagnant economy, inflation rising, which is all that combination of words is. And that is something that we can definitely see. And in terms of what Vicente said and what the Treasury Department has said, it’s valid to know.

And it’s logical to say that if we do have uncertainty and we do have some slowdowns and we know that the cost of debt’s high for the consumer on up through the government, if nothing sort of gives in that scenario and if rates kind of stay where they are and tariff uncertainty continues, et cetera, that there will be, and President Trump has said this, there will be potential pain along the way. And we’re seeing the beginnings of that, not like the beginnings, like point zero, you know, starting beginning, but, you know, sort of the early stages of what we could see from the standpoint of pain and a slowdown. Whether it’s a full on recession, again, it depends on your definition of recession.

We could see a quarter to negative growth. I think net net, it’s more stagflation right now. And it depends on the sector.

Some sectors are doing better than others and will do better than others because they’re part of a sort of larger trend picture. That could be the energy sector. It could be the mining sector because of the last latest executive order that the administration just put out on critical minerals.

There could be those sectors that outperform. So it doesn’t mean everything’s uniform, which is why as an investor, you have to be particular. But it’s not like there’s one black and white sign of recession.

There’s not one black and white sign of growth in one area. It’s really a combination of all of these factors. You mentioned earlier you were talking about the debt level.

So it’s at around 36 or 37 trillion dollars. Interest payments are well over a trillion dollars. Now it’s going to keep climbing.

And the deficit, where is it now, six or seven percent? Yeah, I mean, and debt to GDP is like still 124 or so percent. Yeah. So the current administration said their goal is to get it down to three percent.

Do you think that’s possible, to take it from seven percent down to three percent? Debt relative to the deficit? Yeah, the deficit within the next four years. I think that’s going to be a really tall order. I wouldn’t say, given what we’re seeing right now, it’s possible.

And what would have to happen is there would have to be certainty about tariffs wherever they’re going to stay or not stay. And a lot of them cancel each other out. So there will have to be negotiations that if the steel and aluminum tariffs at 25 percent, but processing is happening in Canada or some aluminum is coming from another country, ultimately things net out.

That has to happen to create a stable environment under which companies can make decisions. So that has to happen in order for us to have some better equanimity between debt and the deficit. And we have to have growth.

So we actually have to be investing in certain sectors and invest in such a way that the growth outpaces whatever inflationary pressures the spending in those areas could do. A lot of people sort of mix up this idea of, well, if you invest or if the government invests or the private sector invests or they invest together in any particular sector, let’s just call it mining processing, just as a very mini subsector. We focus a lot at Print Sites on real assets, like mined assets and processing, which right now is predominantly done in China.

But let’s say that changes, that costs money. And so there has to be a firm decision that, well, that might cost money and that might have a slight inflationary impact on money. But the net result should be more growth and the growth should outpace the inflation.

So it’s not stagflation. And that can help to reduce the deficit by growing the economy around it, as opposed to simply, you know, sort of cutting some costs, which won’t necessarily get us there. There’s sort of a drop in the bucket.

I’ll give you an example. We just wrote this piece on how defense is sort of moving from some of the U.S. expenditures, which are still massive, to Europe, which is increasing its defense. Well, the Department of Defense Secretary said that he found, or that Doge found, 480 million dollars worth of potential cuts to defense contracts.

Well, you know, compare that to a 770 billion dollar budget. I mean, any of us can do that math if we just think of it our own pocketbook terms. It’s not a lot.

So that doesn’t really decrease a deficit. That’s like sort of a very, very minute potential adjustment, but it doesn’t shrink a deficit. Yes.

Okay. Seeing how you just brought up this last note that you wrote about the defense spending, you also spent a lot of time in that same note talking about the European defense spending. Maybe you can just take us through that and tell us what the gist was of that report.

Yeah. So we are looking at a sort of massive trend towards, and a lot of reasons for it, towards Europe upping its level of defense spending and also manufacturing and production of defense-related equipment, materials, and so forth. And some of that acceleration is a direct result of what the Trump administration has been doing in terms of reducing its funding or its help towards Ukraine, requiring or asking President Trump has for NATO to be more of a potential from 2% of GDP to 5% of GDP.

That hasn’t happened, but there is a sort of process by which some of what’s happening in the US has an impact on what’s happening in Europe. And on the other hand, Europe has been increasing its defense budget anyway, even before this point, over the last few years since this episode of the Ukraine war escalated in 2022. Most recently, there is a proposal for a 150 billion euro fund for basically local defense companies and lending into those growth areas.

And that’s just one of many proposals that are just coming up now. So there’s a lot of money that’s going into fortifying defense in Europe, in the UK, and even US defense companies are sort of trying to stake more claim in that part of the world as are European companies. And so we’ve been following a particular company, which we’re doing a full analysis on in our paid issue on this week coming out, that really kind of circles into all of that, where the contracts are coming, where the funding’s coming, this big trend of defense movement in funding and in geopolitical, just repositioning.

So this is something that’s not going to go away. It’s something that’s had a number of catalysts, the Ukraine war and the recent White House decisions, but it’s definitely something in play that’s going to be a trend for a longer term. And it’s just accelerating now.

It’s amazing how these two big events in the last five years, COVID being one and the invasion of Ukraine being the other one, has just totally realigned how things are done, right? We had so many issues with the supply chains, right? And we couldn’t access advanced semiconductor chips, for example, or lithium ion batteries. I was also surprised to see in your note when you were talking about Germany, which is the largest economy in Europe, only has 20,000 combat ready troops available. I thought that was shocking.

Germany has, relative to some other countries in Europe, for example, France, Poland, has been reticent in terms of the idea of investing or sort of augmenting its defense footprint, whether that’s on an individual level or production level. And that’s why I think there right now is a pivot moment, even for Germany, where they have upped their percentage in NATO, where they’re taking more of a leadership role in Europe in general to increase defense there. But they had been sort of lagging what you would have expected them to be doing until these moments.

I want to talk about equity valuations now. And once again, we’re going back to uncertainty, but because of all this uncertainty that we’re experiencing, we’re seeing a lot of volatility in the financial markets. Let’s just look at the S&P, for example, but we probably lost 10% of its value.

It’s recovered here in the last couple of days, but who knows what’s going to happen in the coming weeks. But where do you see the S&P going? And maybe you can also speak to the European markets, because at the same time the S&P has been coming off, the DAX has caught a serious bid. I believe it’s up 15% on the year.

So that movement between these markets has to do with where there seems to be more certainty, which is in Europe. We did a piece on this, what’s in Europe and some of the emerging market countries. It’s in sort of Pan-Asia outside of China a little bit, but also countries like Vietnam, Indonesia, and so forth that are sort of growing economically relative to the U.S. So if we just look at Europe and Eastern Europe, there is a higher growth of investment funds, not necessarily all of their economies, because they’re in balance.

Some economies are better than others. Spain is better than Germany and so forth. But there’s been an influx of investor funds, not just from the U.S., but also from, for example, China and Pan-Asia, because of the uncertainty over U.S. tariffs, how that’s depreciated the dollar most recently and where some of that movement is.

And with respect to U.S. markets, they’re a bit less balanced in that we know the sort of magnificent seven is a big component of the main markets. And so if something happens in one of those, it tends to be a multiplying effect. And that’s part of the correction is along with the uncertainty, whereas some of the European indices, the DAX, the FTSE are a bit more diversified in terms of the sizes of the companies that comprise them.

And so that really plays a big role as well as their more solid location and the general pivot of the world to being a bit more reconstructing trade agreements and investment and direct funding agreements relative to uncertainty in what’s happening in the U.S. and in our policies relative to other countries. So you said earlier you’re expecting the U.S. economy to pull back. We’re going to see a definite decrease in growth.

But in terms of the S&P, let’s just say for round numbers, we’re down 10 percent right now. Do you see it getting hit by another 10 percent like at the end of the year when we’re talking, is the S&P down 20 percent? I don’t think that. And that’s primarily because I think the uncertainty that the S&P is struggling under right now has to do with what’s going on with tariffs for the most part.

I mean, yes, it’s slowing the economy a little bit, but we’ve certainly seen markets outperform the economy and our market outperform the economy. That was definitely what happened when rates were lower and the Fed was in easing mode. We can definitely see the economy slowing and a market going up.

I think what’s impacted this market, and we compounded by discussing whether the economy is going to grow or not in the media and so forth, is that we have policy uncertainty at this moment. And that does have an overhang. And it has like a knee-jerk reaction within the U.S. market, which is part of the reason we’ve seen this correction.

And you put on top of that the uncertainty over the Fed, as we’re discussing. Is it going to be 50 basis points, like they said? Is it going to be 75 or 100 because of slower growth and other issues like we believe? And is it going to be in between? Is it going to be none of that if inflation spikes? So there’s still that uncertainty. I mean, I think in general, there’s an expectation of two to three cuts to an average somewhere between 50 and 75 basis points.

But that hasn’t been sort of substantiated by the Fed. And markets like certainty, markets want tariffs to be sorted out. Markets want 100 basis point cut in the Fed.

And if those two things happen for however they do, whenever they do, that’s going to light a fire under the U.S. market. It might keep the dollar still lower because rates might come down and that in terms of a currency perspective. But that’s one of the reasons I don’t see a massive downfall of the S&P to head the end of the year.

We could end down relative to the end of last year, but I don’t see sort of that other leg going if the inflation, sorry, if the tariff uncertainty gets sorted out within the next quarter. I mean, if it doesn’t, we have to readdress this. But to the extent that a lot of what’s on the table gets resolved or at least substantiated, I think that will go a long way if growth is still slowing and the Fed comes in and cuts more, I think that will go a long way.

So I think this quarter is going to be very, very pivotal. We’re going to see in the meantime earnings come in that could be most likely will be negative in terms of overall relative to projections from last year, because we have had this slowing quarter. So we’re talking near end.

I don’t see it being 20 percent down versus last year. Yeah, it’s hard to believe we’re at the end of the quarter. We’re going to see Q1 numbers soon.

It’s going to be quite interesting to see the commentary of some of these companies. But you mentioned earlier you’re bullish on the defense sector, which makes total sense. Now, you’re also bullish on gold.

Tell us about your thesis. And you’re also at the Austrian Mint. Tell us about that.

Yeah. So what we’ve seen in gold, obviously touching over three thousand and we’ve been targeting that sort of a year or two ago to reach that level over this period, is that gold is receiving so many sort of hugs from the investor and the central bank and the retail community because of its staying power, because it’s solidity, because there’s so many reasons why gold has been sort of that touchstone over these uncertain periods. It does act as an inflationary hedge, does act as a diversifier against the U.S. dollar as countries trade more and more with each other and sort of less in dollar terms.

It does act as a wealth preservation, generational preservation. And you mentioned I was just in Austria. What’s interesting, too, is certainly for Europeans anyway, is that it grows without a tax hit.

So you can basically, for example, buy solid gold coins from the Austrian Mint, keep them at the Austrian Mint and have no tax implications. So for Europeans, there’s that benefit as well. We have seen more inflows into both ETFs and physical purchasing of gold for that reason.

We have seen more purchasing gold, of course, by the central banks. I don’t think this diversification away from the dollar is going to stop. There’s no particular reason for that, given just where we are out in the world and more pull towards outside of U.S. trading.

And so even though the dollar will still be the dominant reserve country currency, it’s not going to go away. There’s a lot of shifting. And gold is the recipient of all of that.

It sort of is welcoming all of that volatility and all of that uncertainty and all of that change and desire to preserve wealth and preserve sovereignty and to preserve diversification of currency as one asset. And so that’s what we’re seeing. And so I think gold could reach 5,000 by the end of this administration, not because necessarily what goes on in any one of these factors, but that’s because that’s where all of these factors are indicating we can go.

And it’s also we have a lot of numbers on this through Penn State. It’s also where if we look at an analysis of these and other kinds of factors going back in time over the last 20 years or so, we’ve seen the biggest bumps in gold happen where there’s a confluence of all these sorts of events. And right now we’re looking at like at that confluence, but on steroids.

And so that’s why I think we’re going to see that eventual push. And we are seeing it. It’s not gold’s not volatile.

It’s just it’s just trending upward where it belongs to be because of all these factors. Yes. And to your point, it’s going to be interesting to see if these central banks continue to buy it.

I believe in the last two years they bought over 25 percent of annual production, which is a massive number. I also saw in one of your notes you were referencing China since the trade war or tariffs started with them in 2018. I believe you talked about how they continue to sell down the U.S. Maybe you can just take us through that.

What do they own back in 2018? What do they own now? And where are those additional funds going? Yes. I mean, they used to own going into 2018, about one point three, one point two trillion dollars worth of U.S. treasuries. And today they own about 750 billion.

So to an extent, some of that selling happened into the 2018 tariffs on expectations of them and just in general, China pivoting to trading with other countries and not just because of tariffs, just because they’re growing in their sovereignty. Some of that started in the wake of the financial crisis, but it just accelerated through these periods. And so now we’re seeing that they basically have repositioned their own book of assets, the People’s Bank of China, to have far less treasuries and far more gold.

And that trend, both of those two things are continuing to grow. In other words, the decline in treasuries as an overall percentage of their book and an increase in gold, which is still very small, still under 5 percent of their book. But an increase in gold to offset or to be that that hedge to fiat currencies where they do have a stockpile of physical gold to back up what they have in terms of more liquid reserves.

And so that’s going to, I think, continue as well. All very interesting points. Well, listen, that was a great conversation, Nomi.

And I want to thank you very much for spending time with us today. If somebody would like to check out your Substack, where can they go? Thank you. And it’s been a pleasure speaking with you.

We’ve covered so much. Anyone can come and check us out on printsites.substack.com. And we have different levels in terms of real drill down investment types of products, as well as free essays to get people familiar with the work we do across basically everything that we’ve discussed here today. And you’re also very active on Twitter or X. What’s your Twitter handle? Active on Twitter, Nomi Prins, at Nomi Prins, active on LinkedIn, active on Instagram.

And Instagram, I think it’s at real Nomi Prins because someone tried to hijack my name at one point. So those are all ways to keep in touch. When somebody tries to hijack your name, that’s always a good sign.

It means you’re very popular. You’re popular. It’s just a pain to sort of fix, but yeah.

Well, once again, thank you. Thank you so much.