Palisades Gold Radio: Higher Inflation and Rates will be Good for Gold (w/ Brian Hirschmann)


Palisades Gold Radio
Jan 31, 2022

Tom welcomes Brian Hirschman back to the show. Brian is Managing Partner of Hirschmann Partnership which is occasionally referred to as the “World’s Most Bearish Hedge Fund.”

Brian expects inflation to persist for longer than most investors expect due to massive government debt. Inevitably, the U.S. government will default which will send miners and gold far higher. We could expect some benefits from labor and supply chains improving but inflation has many causes. At some point, government debt will matter, and much higher inflation will result.

Investors shouldn’t be too concerned about interest rates as the bigger driver of gold will be risks of default and inflation. Markets are different today due to the enormous size of the global asset bubbles. Gold will move higher when investors realize that inflation will be here to stay.

Crypto remains a much smaller asset class than gold and therefore the impact of crypto is likely not that significant. Many crypto investors are more speculative and most aren’t that interested in metals. Gold is the ultimate low-risk asset whereas cryptocurrencies remain risky speculative assets.

Over the long term, the gold price will drive the mining equities much higher and we’re starting to see this occurring. Gold miners should go up much higher than the returns on gold when the bubbles start to burst.

All governments have too much debt and are trying to keep rates low thru regulations. Banks now own four trillion in debt securities issued by the Fed. Should foreign debt holders realize the risks then they will start selling their treasuries. This could easily trigger a crisis since we can’t control other countries with regulations.

Marginally higher interest rates today will likely not have much impact on inflation but could impact default risks. Brian compares the status of the U.S. with that of the last European debt crisis.

China’s real estate bubble is even worse than that of the United States. When it pops we will see severe impacts on global markets.


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