Trump vs The Fed, and the Gold-Silver Domino Effect

Craig Hemke (00:01)
Hello again from Sprout Money News at SproutMoney.com. It is now July 2025. We have officially entered the back half of the year. And it's time for your Ask the Expert segment. I'm your host, Craig Hempke. Joining me this month is my old friend, John Rubino. John, of course, the legendary founder of the Dollar Collapse website, which he sold a couple of years ago. And now you can find him on his Substack, which

to me is a must read. It's something that I check out as often as I can, rubino.substack.com. And it's gonna be great to pick his brain a little bit about the goings on here in July. John, thank you so much for spending a couple of minutes.

John Rubino (00:52)
Hey, Craig. It's good to talk to you again. And, you know, this is not the usual summer doldrums for us. There's an awful lot to talk about.

Craig Hemke (01:01)
That is for sure. Let's start, though, with some big news. In the summertime, one of the biggest sales all year from Sprott Money is the big summer sale. Summertime, summer sale. Kicks off here on July the 23rd runs all the way to August.

John Rubino (01:31)
Want to just start over? Okay. Okay, good.

Craig Hemke (01:59)
the sixth. So you got a good two week window to visit SprottMoney.com even if Canadian or US deals for everybody. So please check it out. Go to SprottMoney.com. You'll see the banner for and be directed to the summer sale page right there on the home page. So please go sure check it out. Great deals on physical metal and man it is a hot time for physical metal that's for sure and that's what I want to talk to John about.

John, we're recording this now. It's gotten to be a little later in July, recording this on the 22nd. This week, following on the last week, there has been a lot of talk about Fed independence. ⁓ President Trump would like to see much lower interest rates. And so he's piling on Chairman Powell. ⁓ Let's start with that. What do you make of this kind of full frontal attack on the Fed, you know, trying to bully pulpit?

lower interest rates from the Fed.

John Rubino (03:02)
This is something you very seldom see because governments always try to bully their central bankers, but they do it behind closed doors. Trump is doing it. He's tweeting it, you know? And so that's completely different environment for monetary policy to take place in. ⁓

Okay, two things with this. One is Trump is an easy money guy and he always has been because he's a real estate developer and you know, cheap money is the lifeblood of real estate. lower the interest rate on your capital, the more you can do with it. So for him, low interest rates are, you know, an unalloyed great thing and he wants that from the Fed.

And he's not shy about demanding it. The other thing is he will get what he wants eventually because ⁓ either he browbeats Chairman Powell until he just quits. Trump replaces him with somebody who's ⁓ you know a zero percent interest aficionado or you know, Powell's- Powell stays out his term. Still, it's really contentious and he feels a lot of pressure to ⁓ ease and maybe goes ahead and does it while he's in office. Either way, Trump gets lower interest rates by the end of his term. Or the only thing- the other thing that can happen too is that we have that recession finally that has been looming out there for such a long time and the equities bear market that goes with it and that normally causes the Fed to cut interest rates by about five basis points.

I'm sorry, five hundred basis points or five percentage points. So that would take us down to zero and a little below on the Fed funds rate. Then the question is, what is the bond market going to do with suddenly dramatically lower interest rates in the U.S.? And I don't think it's clear because normally the Fed has the power to to manipulate yield curves if it wants to because it can buy long term bonds, force the price down if it wants to. And

Craig Hemke (04:48)
Right. Right.

John Rubino (05:05)
you know, we'll see. We'll force the price up and force interest rates down. So we'll see if the government tries to do that, whether they can succeed because, you know, right now, who in their right mind would lend money to a country with government debt, 120 % of GDP and interest costs on that debt at a trillion five and rising because we're borrowing that interest. So each year the deficit gets much bigger. So I would think the bond market would be pretty skittish if we lower interest rates dramatically at the short end of the spectrum and then try to bully the bond traders. And it could be that we get the opposite of what Trump wants, which is, you know, he gets higher interest rates instead of lower, which is basically what happened when the Fed started easing last September. They cut the Fed funds rate, but the 10-year Treasury yield went up from there.

Craig Hemke (05:57)
Right, right.

John Rubino (06:00)
and ⁓ that was just a what a half a point total cut in short term interest rates so let them try for something more serious and you could get a commensurately larger increase in long term interest rates so anyhow the short answer is that who really knows there's there's probably financial chaos coming in all of this because we just don't know first of all what trump gets and when and what the

Craig Hemke (06:17)
Thanks.

John Rubino (06:29)
bond markets do in reaction to those lower interest rates. So I think this is a very dangerous time for being long bonds put that way because I think that that's a market with a lot of embedded risk and we just don't know how that's going to play out.

Craig Hemke (06:48)
I wonder, John, you is a, again, you famously founded dollar collapse all those years ago. So you're kind of a market historian in some regards, right? That you've tracked this. And I've long thought that ⁓ they're laying it out before us, that the Fed back in coming out of World War II into the early 50s had a policy of yield curve control as a way to try to get rates lower and real interest rates lower to battle the massive debt to GDP that we had coming out of World War II, like I said. So I've long thought that was going to be part of the playbook here. Do you think that's, I mean, they're telegraphing Powell's gone one way or the other and that Trump's going to want somebody in there that's going to cut the Fed funds rate. Do you think a sister policy to that would be yield curve control?

John Rubino (07:41)
might have to be if the bond markets don't cooperate and we get higher long-term interest rates that's massively deflationary. ⁓ So governments at least recently in the last 10 or 15 years have responded to something stuff like that with an aggressive attack on long-term interest rates. In other words, you create a bunch of new currency, you buy a bunch of bonds, and that raises their price, lowers their yield. So you get lower long-term rates. If they try that again, that might work or it might spook the bond markets even further. And then you get chaos. When bond traders say, no, I'm not going to buy bonds at this interest rate. I need a much higher yield, you know, so I'm waiting for 7 % on the 10 year or something like that. And that would cause chaos. the government would have to step in and try more aggressively to push interest rates down and look for the system. And then you get the pressure on the currency at that point. So who wants to own the currency?

Of a country that has 120 % debt to GDP, massive interest on that debt, and is actively trying to inflate away that debt. You really don't want to own the currency of a country that's doing that. So it could be that we finally get that dollar crisis the next time the federal government tries to manipulate the yield curve. And that could be a 2026 story very easily. That could be something that happens in the short run here. For many different reasons. Either Trump gets what he wants from the Fed or we get that recession and the Fed feels for it. You all of that stuff could happen ⁓ in the not too distant future. So I think to call now the calm before the storm kind of implies that it's calmer now than it is. But this might be something we look back on and think, wow, you know, last July, that was so much easier to figure out than today. So we'll see.

Craig Hemke (09:26)

Don't you feel a little bit like I've been using this analogy all year that, me, I'm John or Russell Crowe at the end of the John Nash movie, you know, and he's got all these, remember they fight going to his garage. He's got all those pictures on the wall and he's connected to all his strings, trying to make sense of the whole picture, you know, because they're, mean, they're foreshadowing what they're going to do, whether it's next month or next year, you know, getting rid of Powell and putting, you know, an easy money person in there and whether that comes with yield crew control. Whatever policies are going to go with, you know, Jen, they've also been talking all this, you know, getting gold reshared, you know, and is gold going to be remonetized in some way or at least revalued on the, on the treasury's balance sheet? ⁓ do you think that's something that could be a part of this picture too?

John Rubino (10:40)
monetary reset is the natural outcome of a currency crisis if we have that so that's that's in our future too it comes you know the natural course of things it will come after the the fed messes up the the yield curve and the dollar tanks and then then something like a new gold standard becomes the least bad option on a list of really bad options you know because the government doesn't want to give away the power to create money out of thin air but that might be the

Craig Hemke (10:45)
Yep.

Right, right.

John Rubino (11:10)
the least horrifying thing that they're staring at. So that might happen. But then Trump has some gold bugs in his circle. So let's say he takes a couple of them, puts them on the Fed, and the Treasury Secretary is apparently a big owner of gold. And maybe they just pull a new gold standard into the present. You don't wait for a crisis to force it, and they just announce something like that. That's you know on the list of quote unquote crazy things that Trump has done in the last six or eight months- ⁓ I don't think that's number one. You know it's a it's something that they they it is now conceivable. That one day we just wake up and we're on a new gold standard so you know sooner the better as far as I'm concerned it's- it's- ⁓ doing something like that means by definition. To dramatically devalue the dollar. And

Craig Hemke (11:46)
Yeah.

John Rubino (12:05)
that's what you have to do for today's amount of gold to back a currency where there's so much of it out there is with the dollar. And that's terrible for people who trust the government. Like if you've got a big treasury bond fund in your IRA or you've got a bunch of cash under the mattress or you've got a bunch of bank stocks or something, know, anything like that where they depend for their value on the value of the currency and we devalue the currency by three fourths of whatever it takes. ⁓ Those people who trusted the government get screwed over. And they're really the least ⁓ least deserving of that kind of a fate. And when it happens, it'll cause a lot of civil unrest. So we got to get through the rebellion of the people who saw their nest eggs just melt away before we actually have a stable monetary system that will be zero inflation going forward. again, chaotic times coming. You know, the sequence of events is impossible to predict, the big wild things that flow from pretty much any option right now in terms of policy are out there just waiting to happen.

Craig Hemke (13:06)
Thanks.

He's got gold all over his office. I just saw a thing from the Oval Office today. There's just gold everywhere. He talks about the golden missile dome. He talks about the golden passport, you know, if you want to pay $5 million to become a citizen. The coming golden age of America. He used that or this is the gold. I mean, he uses that metaphor quite a bit. It'd be interesting to see. You know, the talk with Judy Shelton about gold back treasuries, that sort of thing.

John Rubino (13:39)
Mm-hmm.

Craig Hemke (13:47)
As you said, there's not enough gold. The gold's not at the right price ⁓ to make it happen. Do you think, John, ⁓ do you ascribe to this idea of a crack-up boom ⁓ that in the final stages, which maybe that's where we're at, just everything outside of treasuries, I guess, and the dollar itself, everything starts going up in value pretty quickly? Do you think we're in that period?

John Rubino (14:13)
Well, yeah, a crack-up boom is where it becomes clear to a critical mass of people that it's the government's explicit policy to devalue the currency going forward. And they just give up on the currency. And by giving up, I mean they convert their...dollars or euros or yen into real stuff like oil wells and cattle farms and gold and silver and that sends the price of those things through the roof and that's inflation right when when the prices of a bunch of things just go straight up that's borderline hyperinflation and then you know the currency collapses and we get the monetary reset so yeah i think a a crack up boom is basically the mechanism by which most of this stuff happens. So I would say, it's highly, not just possible, possible, but highly probable that something like that happens in the next three to five years.

Craig Hemke (15:07)
See if that impacts or how it impacts the precious metals. We've had a heck of a year so far with the gold price. 25, 26 % this year, 25, 28 % last year. So two great back to back here. Silver trying to catch up. John, are you watching silver closely and what do you make of it here as it approaches $40?

John Rubino (15:28)
Well, in a precious metals bull market, that's what happens. Gold gets the ⁓ initial bid, because that's the name everybody knows, and that's what they associate with inflation hedges and ⁓ currency resets and things like that. ⁓ so gold goes up first. Silver lags. The gold to silver ratio, which is how many silver ounces it takes to buy an ounce of gold, goes up.

Into the 90s, sometimes touches 100. And then at that point, silver looks so cheap to the people who have made a bunch of money in gold that they start switching over and they start buying silver. Silver is a tiny little thinly traded market. And ⁓ just a little bit of money flowing in from outside into that market sends the price up dramatically. And it outperforms gold for the last couple of years of the precious metals will market.

Now we're in a unique precious metals bull market in the sense that it might be leading up to a currency reset that gives us a gold standard, you know? So it could be that it's not just a couple of years from now that this thing has to run. It could be that it runs longer and stronger than previous precious metals bull markets, which means for silver, let's say silver is going to outperform gold as gold makes its way to 10 or $15,000 an ounce.

That's a big number for silver. You we're talking a couple of hundred dollars an ounce there, if not more. And I wouldn't just flat out predict $200 silver anytime soon. But when markets get crazy, sometimes things go parabolic. And I think silver is a candidate for something like that. So it's not cheap anymore. We're one good day away from $40 an ounce right now.

Which is only ten dollars off the all time high for silver but I think those previous all time highs- ⁓ are not going to be. Very much resistance once things get going I think they'll blow right through fifty dollars an ounce. And ⁓ then who knows so silver still by at this price you know it was a better by. Twenty four but- it's still a ⁓

So I think the silver story is intact and the big final run is still out there waiting to happen. So if you haven't missed the boat, if you're not all in on silver right now, you know, there was, your stack is paltry, you know, you still have time, but I, and I'm not selling anything yet. You know, it's going to be hard to figure out ⁓ at what price we should start lightening up. That's, that's a subject for another.

Craig Hemke (18:05)
Right.

John Rubino (18:09)
show but you know will 50 be where we need to start handing off some of our silver to the new money coming in I think maybe not you know I think we might just be long and strong into some much bigger numbers.

Craig Hemke (18:22)
That's always the hard part when it comes up. It's like, well, okay, if I ever sell an ounce of silver or gold, well, then I'm getting my dollars back that I don't want. You know, I don't want those back, you know? And so it's kind of a conundrum. ⁓ As we wrap, John, though, I want to direct again, everybody to your great Substack, robino.substack.com. It's not just simply a currency or a gold and silver. Driven Substack. mean, you have all kinds of great topics that you write upon there, which is makes it unique. You do, follow the mining share some, and you talk about your mining share portfolios. As we wrap up, mean, how do you feel about the mining shares at this point?

John Rubino (19:03)
you

you know I started the sub stack in twenty twenty three instead of model portfolios. And twenty twenty three was the beginning of a brutal bear market for precious metals miners you know so I spent a year with yeah I spent a year with like everything I recommended going down and so a whole long list of red red red red and- but the last year has been as good as the previous year was bad so now- I'm very proud of the- precious metals model portfolios in that sub

Craig Hemke (19:09)
Okay? Nice timing. Right.

John Rubino (19:33)
Resilience what you can do in your life and with your finances beyond buying gold and silver to make yourself resilient in the face of potential chaos that's coming our way and there are a ton of things to do you know staying healthy is probably the biggest one bigger even than finance because if you're not healthy you have no ability to roll with punches when when things get crazy out there so that's job number one, stay as healthy as possible. And then how do you manage your relationship with your community and your job and et cetera, et There's a lot we should be doing to be ready for a world that takes a few years to sort out because everything is kind of failing at the same time.

Craig Hemke (20:44)
Yeah, yeah, great advice, John. Like I said, that kind of holistic approach, you know, not just laser focused on gold and silver is I think what makes it unique. And again, from my opinion, check it out, Rubino.substack.com. John Rubino is always a great guest. It's always so fun to visit with you, John. And I thank you so much for spending some time with me.

John Rubino (21:09)
That's Craig. Talk to you soon.

Craig Hemke (21:11)
On your way out, again, don't forget about the Sprott summer sale. Go to SprottMoney.com and right there on the home page, you can be directed to that sale page. Check it out. You'll find great deals. And as John said, ⁓ it's not too late to be adding precious metal to protect yourself against all the stuff that's coming over the horizon in the next eight or 12 months. So again, thanks Sprott Money for ⁓ putting these videos out by visiting their site.

And be sure to like and subscribe because even though it's getting late in July, there's more content coming that you're gonna wanna see and you're gonna be notified as it comes out. So again, thank you, John. Thank you everybody for watching. And again, keep an eye on the Sprott Money channel for more content as the month of July continues.