Dollar Collapse and Gold Prices Rising Warn Investors

Craig Hemke (00:01)
Hello again from Sprott Money, SprottMoney.com. We are now well into the month of September, about to wrap up the third quarter as a matter of fact. It is time for your September Ask the Expert interview. I'm your host, Craig Hemke, and joining us for this month is my old friend, Alistair McLeod. Alistair, sure nice to see you.

Alasdair MacLeod (00:29)
Lovely to see you, Craig.

Craig Hemke (00:32)
I would imagine ⁓ most people are familiar with your work and if they're not, they're gonna get a chance to know more about it. I wanna invite everybody first though to recognize that this content does come from Sprott Money. So you wanna keep them in mind when you are adding to your stack. And it's important to realize when prices are going up like this, it's not the price of the metal really that's going up. It is the dollar that is going down, your Canadian dollar. A golden Canada just hit 5,000 Canadian this week.

That might seem expensive. I'll tell you what Sprott Money does have fractional gold coins for sale on their site. You don't have to buy a whole ounce. You make it fungible. You can buy fractions of an ounce in coin form at SproutMoney.com. So go there, check it out or feel free to call them up. 888-861-0775. Alistair, my old friend, long time head of research at Gold Money.

I guess we call you semi-retired now a little bit. Alastair, your work can be found at Substack, correct?

Alasdair MacLeod (01:33)
Yeah, my wife doesn't think I'm semi-retired. I mean, the problem is that, you know, a retiree sort of basically gets out of business completely. But obviously, I can't stop thinking about what's going on. And nor can you, Craig. I mean, that's where we are. So I'm really concentrating on my sub stack and I've got a mission and that's to educate as many people as possible about what is actually happening. And I think it's so important. Because we're looking at the destruction of fiat currencies. mean, fiat currencies started in 1971. Currencies were already weakening off the dollar, off the gold standard before then. And now 50, what, 54 years later, it's coming to an end. And that's damned important. It's very important to understand really what that means for individuals. And what it means for them, not just their portfolios and all the rest of it, but for their currencies as well. So that's my mission, to try and educate as many people as possible. I've, know, something like 15 months, I've managed to acquire, I think about 16,000 followers, you know, total subscribers, of which we've got about two and a half thousand paid. And I would encourage everyone to consider paying. I mean, because...
You will get the full service then. And what's it going to cost? It's going to cost something like a Starbucks coffee once a month. Not a lot. And it could well be a lifesaver in the sense that if you really don't understand what is going on, you'll get legged over by your lovely government. It's as simple as that.

Craig Hemke(03:11)
And then. Precisely. What's that address? Where do people find it?

Alasdair MacLeod (03:23)
It'shere. Well, there two ways you can either go to mcleodfinance.com or ⁓ alistairmcleod.substack.com. I think you'll probably find that mcleodfinance.com is the easiest spelling to get there. But anyway, either of those addresses will do it.

Craig Hemke (03:40)
M-A-C.

Let's do it. Let's start there. ⁓ In terms of that education, I already mentioned it once, you know, it's really not the price of the gold that's going up. It's the value of the dollar going down. I always like to show people this, Alastair. We probably, you and I have probably done this before. That's not a real London bar. It's a piggy bank, right? But if it was a London bar, it'd weigh 400 ounces. When Nixon closed the gold window and we...

Alasdair MacLeod (03:54)
Yeah. Yeah.

Craig Hemke (04:06)
World went off the gold standard in 1971. It took about 14,000 US dollars to buy one of those. 25 years later, it took a little more than 100,000 US dollars to buy one of those. It now takes about 1.4 million US dollars. I mean, what more can you add to that, Alistair?

Alasdair MacLeod (04:20)
Yeah!

Well, basically, you've said it all. mean, the purchasing power of the dollar has fallen 99%. Those are numbers you're saying. 99 % since the dollar went totally fiat. Now, the dollar started declining before then. I mean, bear in mind that until 1934, you had $20.67 to the ounce. And that was from, what, 1856 or something.

And it was de facto, but then it became de jure with the gold act in 1900. basically when the Fed came along, they screwed everything up because under Benjamin Strong, they expanded credit. mean, Benjamin Strong was a great believer in stimulating the economy with extra credit. And that led to the roaring 20s, which led to the collapse. 1929 and 1932 enhanced, I may say, President, not President Trump, President Hoover's tariffs at that time, which was the Smoot-Hawley Tariff Act of 1930. And President Trump is doing exactly the same at the top of the debt-cum-credit bubble, which makes 1929 look like a pimple. I mean, this is the big one. It really is. And it'll destroy the currency. I think it's so important we've got to understand this and we've got to be prepared for it.

Craig Hemke (05:57)
Do you see ⁓ any other way that this can be managed by the central banks? I mean, are they just going to continue to follow the same blueprint of quantitative easing and yield curve control and everything else that they can do to keep the plate spinning?

Alasdair MacLeod (06:10)
Yeah, I mean, basically, no. We used to have a phrase, which I don't hear nowadays about kicking a can down the road. You people, think, whoops, I don't think it's, you know, they start talking about a reset and, you know, all this sort of rubbish. I mean, the fact of the matter is that the Fed has got no control over the situation and it can't have control over the situation because the situation is politically driven. And until you persuade an electorate,

Craig Hemke (06:17)
Good point.

Alasdair MacLeod (06:40)
to give up all their welfare this and welfare that and all the pressure groups to look, you're out of here, forget it, we're actually going to deal with this one seriously. Until that happens, no, mean, there is absolutely no solution. And I've always said it's crisis first, solution second. mean, once you have the crisis, then you can start talking about a solution.

But is that really going to work? Well, you know, I'd like to think so. But the fact of the matter is that when you get those extreme economic and monetary conditions like, you know, the credit collapsing in terms of its value, all bets are off. I mean, this is what they found in Germany, because what happened in 1920 to 23 led to Hitler, led to the Second World War. You know, mean, Hayek actually

Craig Hemke (07:35)
All.

Alasdair MacLeod (07:39)
put this very, very well in his, his road to serfdom. You know, he sort of had a bit where everybody starts saying, we need a strong leader, you know, to get us out of this mess, you know, because they'd had enough of the weak politicians who screwed it up. We need a strong leader. What do they get? They got Hitler. What are we going to get? You know, you know, Trump

Craig Hemke (07:58)
That's the concern for sure. It's like,

reach forward.

Alasdair MacLeod (08:05)
Trump could well be a sort of fairly ⁓ moderate individual by comparison.

Craig Hemke(08:10)
Bad Host didn't have his other prop handy, but you recognize this book, obviously. ⁓ I'd invite anybody. I mean, this is When Money Dies by Adam Ferguson. It was written a couple of decades ago, became very popular after the great financial crisis and the paradigm shifted to QE and everything's gone since, because everybody thought, here we go. And the parallels, like you said, especially here in the States, to that Weimar period.

Alasdair MacLeod (08:13)
Yes! Yeah!

Craig Hemke (08:39)
societally, economically, everything. I mean, that's hundred, almost exactly a hundred years later. And it's almost exactly the same thing. Alastair, I thought though, as we exited that period in 2010, 2011, you know, I thought, man, can they keep kicking it down the road? And instead we've entered almost into that crack up boom phase that the Austrians always talk about.

Alasdair MacLeod (09:02)
Yeah, we're not quite there yet. I mean, you mentioning the, you know, Adam Ferguson's book, When Money Dies and all rest of it actually hits the nail on the head. Because I put out a note, I think it was a few days ago, which looked very, very carefully at what happened in Germany between 1918, which was the end of the First World War, and 1923. And there were three phases. The first one was between

1918 and 1920, when the purchasing power of the Reichsmark fell about 80%, something like that. So, you know, this was a nasty situation. Now, this is actually quite like what happened ⁓ following the COVID shutdowns. And then we had this inflation, which meant that the purchasing power of the dollar actually fell. Not as much as 80%, admittedly, but it fell quite sharply.

Craig Hemke (09:52)
Right? Right?

Alasdair MacLeod (10:03)
And then what happened in Germany from around about February 1920 to December 1921 was suddenly things improved. And the Reichsmark actually went up against the dollar, which remember was on a gold standard, on a proper gold standard, you could exchange your dollars for gold at 20.67 to the ounce.

The Reichsmarkt was strong. Businesses were recovering, if you like, from the shock, the post-war shock. There was a certain amount of tourism going on. mean, things were really humming. The stock market tripled. Everybody thought, you know, this is absolutely wonderful. You know, we've got over this, et cetera, et cetera. But then there was a crash. I think the stock market lost something like 25%. In the December of 2021.

Craig Hemke (11:07)
For 1921. Easy mistake to make. Right. Easy mistake to make.

Alasdair MacLeod (11:09)
Sorry, 1921, you're right, I keep on being essentially out of this one, so please excuse

it. It's my advanced age, I think. Anyway, between 1921, end of 21, in other words, through 22 and 23, what happened was that the purchasing power of the Reichsmark began to collapse, and the collapse was total. Now, so far,

Craig Hemke (11:18)
Might do.

Alasdair MacLeod (11:39)
We've had the post-COVID thing, which led to inflation, dah-dee-dah-dee-dah. And now, guess what? Perhaps the long bond yield has not really declined. It's still held between 4.5 and 5%. if it goes through 5%, then we will be bricking it. It really will be very serious. But meanwhile, of course, the S &P went up from something like 4,200 in 1922.

Craig Hemke (11:57)
All

Alasdair MacLeod (12:09)
to where we are now, which is what, six and a half thousand. This actually looks very, very much like that period in Germany between 1920 and 1921. So what follows? Well, yeah, this is where we are. So how is it gonna happen? That's the question. Well, I can see a number of things. We just had Stephen Mirren appointed to the FOMC, no, he's not quite there, but it's just a question of.

Craig Hemke (12:23)
You're right, that's the bad news.

Alasdair MacLeod (12:37)
signing on the dotted line, he will be in the FOMC. He was the Mara Lager guy who wants the dollar down and reckons that he can get everybody to agree to it. Good luck to that. I mean, you know, they are going to destroy the dollar. The foreigners so far and large institutions for some reason are asleep at the wheel. They don't understand what's happening. There is a deliberate

policy to drive the dollar lower. And if you look at the chart of the trade weight, it is awful. It's about to fall from where it is, which is about 197 and a half, down to 90, and I doubt it will stop there. So what's this mean? This means that the purchasing power of the dollar is declining. Now, on top of that, what do the foreigners do? Well, I mean, everybody, including the large institutions, stand back and they don't buy treasury bonds.

I mean, certainly with anything mature, you know, in terms of length of maturity, they're not going to touch it. The only thing that will sell is near cash, which is actually what T-bills are. It's almost like cash, printing cash. So that's what's going to happen. Now, you will get a rising ⁓ level of bond yields just at the moment when the Fed is trying to reduce interest rates. Well, that's going to do. They're going to have to reverse that. All the dollar tanks.

If the dollar tanks, what does that do to its purchasing power? It begins to collapse. And then on top of that, we've got tariffs. Now, I know everybody's running around saying, well, know, tariffs haven't had any effect, but it does take time for this to work through. And I reckon in 2026, you're going to see a combination of a collapsing dollar, higher tariffs, pushing up prices, if you like, and I mean, that's so much like Germany between 1922 and 1923. So the next question is, I mean, we all reckon that the Germans were muppets and stupid and all the rest of it at that time. But actually, if you read the history, you see, well, you know, it was politics. It was politics. And also, there were elements of industry which were quite happy to see a mark because it lowered their the manufacturing costs. You had the inflation king Hugo Stinnis. You had, and this is a familiar name even today, Fritz Thiesen, know, steel magnet, etc. I mean, it was wonderful for them. They were making huge money because their costs were based in Reichsmarks and ⁓ they were selling it into global markets and getting gold back dollars for it. I mean, it was brilliant.

But once the collapse really starts, it just gets a momentum of its own. And I cannot see any politician in America or anywhere else in the world with the authority to deal with this situation. This is a frightening situation. And the moment this bubble pops, and it is a bubble, Craig, the moment this bubble pops, we will be going into that phase.

Craig Hemke (15:34)
Right. Right. You know...

Alasdair MacLeod (16:02)
which they had in Germany between 1922 and 1923. And for those who don't know, don't have a sense of inflation history on this one, before the war, 1914, when the Reichsmark was on a gold standard, the gold mark, in other words, was worth 23 US cents. At the death in November 1923,

There were over four trillion marks the dollar. That was the scale.

Craig Hemke (16:38)
We've all seen that chart, right? It's probably in this book somewhere, you know, where at the end, it just goes, at the end, it's like this. And you can actually kind of see that in the gold chart, right? I mean, you could say, right, right. It's not that like, it's already going parabolic. No, there's a way for this to play. mean, is that, I mean, in the end, Alistair.

Alasdair MacLeod (16:42)
It is, it is, I can tell you, it is in that book, yeah. ⁓

Yeah, yeah, it's just starting. It's literally just starting. Yeah.

Just stop.

Craig Hemke (17:04)
Again, I want to advise everybody, I mean, please check out Alistair's subsack. You've got to stay on top of this information as you have to for your own financial protection. If this is all headed where Alistair and I think it's into this year, into next, ⁓ you haven't seen anything yet. ⁓ Alistair, what can people do? I mean, is it as simple as making sure you have enough gold and silver? What? I mean,

What other steps can you take?

Alasdair MacLeod (17:34)
The way I've described it to everybody who will listen is get the hell out of credit Part of problem is that people don't understand what credit is. I mean we we know We know you know when we borrowed some some money, you know, someone's given us credit, know Say but actually everything in the economy Exchanges on credit. It doesn't exchange on gold Gold is real legal money without counterparty risk

Craig Hemke (17:40)
Yeah? Right. Right.

Alasdair MacLeod (18:04)
So to a lesser extent, silver, the point being it is final settlement under common law. And this was set up by the Romans way back in 448 BC. Would you believe this? It's that old. So, you know, when it comes to credit, credit is not final settlement. So, okay, you might think you're getting final settlement. You sell a service to someone and they pay you from their bank account. That's not final settlement.

because you become a creditor of that bank. And then that money you paid into your account and your bank becomes a creditor of you. It's not final settlement. And if you look at the currency itself, that's not final settlement either. Because if you look at the central bank's balance sheet, you've got credit and ⁓ bank reserves on one side as liabilities on the bank. And guess what? It's got to be backed by assets of the central bank on the other side of the balance sheet.

Craig Hemke (18:37)
Yep. Yep.

Alasdair MacLeod (19:03)
This is not final settlement. Everything is credit and it's best to understand that. even if you have, mean, not just currencies, bonds, obviously, are credit. You you own bonds, someone owes you. you know, we're aware that most of this is government. And if government reneges, you've had it, you've lost it. That is the risk you're taking. And what I'm saying is that this is the point where that risk is coming home.

big time. Just look at what's happening to every G7 government's finances. They are out of control. I think the one that's going to crack it, Craig, is actually the US dollar, because that is the biggest currency on which all the others base themselves. We can see what's happening. I've just described why the dollar is purchasing power. And I always like to put it as purchasing power rather than inflation.

Craig Hemke (19:40)
Right. Yeah, your bond market, our bond market. Mm-hmm.

Right?

Alasdair MacLeod (20:03)
Purchasing power actually is the better description. That is going down the swanee. And when that goes down the swanee, it takes all the other currencies with it. And I think that, we've, the situation, one of the things that's driving it, which you should be aware, and it's becoming a bit more obvious now, is an economy which is going into recession. What that means in terms of relation to the debt is, first of all, more debt has to be raised in order for the government's books to balance.

Craig Hemke (20:12)
Mm-hmm.

Alasdair MacLeod (20:34)
And it also means the ability to cover that debt in terms of revenue, tax revenue, if you like, is lessened. So, you know, if you're sitting there as an investor and you're thinking, should I buy this stuff? This is what you're seeing. it, sorry, you know, the amounts being raised soaring out of control and the ability to pay for it diminishing. So what are you going to want? You're going to want a higher bond yield, aren't you?

Craig Hemke (20:45)
you

Alasdair MacLeod (21:03)
So that 5.1 % ceiling, which so far we've seen on the 30-year US Treasury, that'll be broken. And when that gets broken, where does it stop? 10 %? I don't know, 20 %? Yeah.

Craig Hemke (21:13)
So, so. Aleister, well, and so, my final question for you, is that acceleration of the devaluation, the creation, I sound like Jesse Jackson. Is that acceleration of the devaluation due to the creation of just almost infinite amounts of cash to service that debt? I wonder if what ultimately the policy is going to be is some form of yield curve control, like a modern monetary theory.

where the US just says, we're just going to buy everything. Would that not work? At least temporarily?

Alasdair MacLeod (21:50)
No, that doesn't work.

It doesn't work because the emphasis is to go the other way. mean, yield curve control works in a stable situation. Because what happens with yield curve control is that the central bank will go out and they will buy long term debt and sell short term debt, which does that to the yield curve. This is out of control. They can't do it. They just cannot do it. It's not going to work.

Craig HemkeDope With A MacBook (22:08)
Right? What if they don't sell the short term? What if they don't sell the short term and they just say, hey, we are a buyer of everything above 5%.

Alasdair MacLeod (22:23)
Yeah, well, how do they finance it? You've got two sides of the balance sheet. If you're going to issue currency or short term debt into the markets, then you've got to have the other side of the balance sheet. Basically, you just destroy the value of your own credit, which is what they will be doing.

Craig Hemke (22:29)
Yeah? almost one way or the other, right? I mean, there's really no solution.

Alasdair MacLeod (22:54)
No. Well, there is a solution, but politically it's not on. The solution basically is to really slash public spending and put the dollar back on a gold standard. But you've got problems there. mean, the idea that you can get on a gold standard. First of all, nobody believes that they've actually got the gold. They would have to prove that, you know, and governments are not in the business of telling the truth in these matters. ⁓

Dope With A MacBook (22:55)
Look. It's unparalleled. Yeah. Yeah. That's for sure. ⁓

Alasdair MacLeod (23:24)
And furthermore, Craig, there is nobody in government who actually understands the relationship between gold and currency. They all think the dollar is actually money. It's not. They don't understand this. They have got to relearn economics. They've got to relearn what money is and what credit is. So you've got all these PhDs sitting in the Fed and presumably also in the US Treasury.

Dope With A MacBook (23:33)
Yeah, that's a point. Yeah. Yeah.

Alasdair MacLeod (23:52)
They've got to go on a re-education course. How long is it going to take them to understand that? You know, this is not going to happen. It's not going to happen. Believe you me.

Craig Hemke (23:57)
Right. Yeah, they're all politicians and, know. Well, in the first Hempke administration, I would hire you, Alastair, to come in, but I'm afraid other than that, all we can do is use our platform to warn everybody about how the situation is likely to continue to play out. Your plat, like I said, I just emphasize this enough as we wrap up.

Alasdair MacLeod (24:08)
I tell you what, I'm sorry. Yeah.

Dope With A MacBook (24:24)
AliceDair, A-L-A-S-D-A-I-R, dot McLeod, M-A-C-L-E-O-D. ⁓

Alasdair MacLeod (24:27)
See ya. On the substack, there's no dot between Alistair and McClark.

Dope With A MacBook (24:35)
Well, see, I can't even get that straight. Anyway, but I if you go to Substack and search Alastair McLeod, bet boom, or McLeod Finance.

Alasdair MacLeod (24:43)
Or just mcleodfinance.com gets you there.

That's by far the easiest thing. And I think you've got enough Scotsmen in ⁓ Canada and the Northern US in order to be able to work out how to spell my very Scots name.

Craig Hemke (24:49)
That is right. It was five bucks a month. Is that what you said?

Alasdair MacLeod (25:02)
No, I think it's 10 bucks a month, which is roughly a cost of a Starbucks, isn't it? Yeah.

Craig Hemke (25:05)
Right, exactly. again, 30 cents a day.

Alasdair MacLeod (25:12)
So do yourself a favor, have a little less caffeine and learn something.

Craig Hemke (25:18)
Right. And move to protect yourself and your family and your net worth. People on this platform have heard me say this multiple times over the last couple of years. You've got to find independent objective voices to guide you through this because your stockbroker, financial planner, they just think tomorrow's going to be like yesterday. Right. You've got to think for yourself. And people like Alistair can help you do that. ⁓ Alistair, thank you so much for your time. We've all...

Alasdair MacLeod (25:21)
Absolutely. They know nothing.

Dope With A MacBook (25:47)
always benefit from hearing from you and thank you.

Alasdair MacLeod (25:50)
That's very much my pleasure. Thank you for having me on, Greg.

Craig Hemke (25:53)
And from all of us here at Sprott Money and SprottMoney.com, hey, keep an eye on this site and this channel. Of course, there's all kinds of content that comes at you every month. Thanks of Sprout Money. So keep an eye on this channel, subscribe so you're notified every time there's something new, but also again, thank them by helping yourself with more physical metal. Go to SproutMoney.com and they will. help set you up. They'll store it for you as well. They'll deliver it to you for free if you buy more than 500 bucks, which these days doesn't take a whole lot to get that done. Again, Alistair, thank you so much. Thanks everybody for watching and we'll have more content for you as the month of September continues.