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As May came to a close, Craig Hemke sat down with veteran macroeconomic analyst Alasdair McLeod to discuss the state of the global economy, the future of precious metals, bond markets, inflation, and the growing risks facing fiat currencies.
Gold And Silver Outlook As Fiat Currency Risks Rise
Throughout the discussion, McLeod argued that investors are witnessing the early stages of a much larger monetary shift that could have significant implications for gold, silver, bonds, and equities. According to McLeod, the economic environment is no longer defined by temporary inflation pressures but by a broader deterioration in confidence surrounding government currencies. He explained that commodity prices had already been rising before recent geopolitical events intensified market concerns. In his view, this indicates a decline in purchasing power across major currencies rather than a sudden commodity boom. McLeod stated, “The purchasing power of the currency you're measuring it in moves down,” emphasizing that rising commodity prices should be interpreted as weakening currencies. He further warned that investors accepting modest government bond yields may not be adequately compensated for future currency risks. As bond yields continue to rise globally, he believes markets are beginning to recognize this reality. McLeod described the situation bluntly, stating that the world stands “on the edge of disaster.” He argued that central banks are increasingly turning to gold not because they are simply diversifying reserves but because they are actively reducing exposure to fiat currencies. “They want to get the hell out of the currencies,” he said. For investors evaluating the future of wealth preservation, McLeod repeatedly stressed that gold remains real money while paper currencies derive their value solely from public confidence.
Buy Gold As Central Banks Continue Accumulating Precious Metals
A major focus of the discussion centered on the growing role of gold as a monetary asset. McLeod challenged conventional assumptions regarding interest rates and gold prices. Many market participants believe higher Treasury yields should be negative for gold because gold itself offers little or no yield. However, McLeod pointed to historical precedent from the 1970s, when both interest rates and gold prices rose dramatically at the same time. He reminded viewers that gold increased from $35 per ounce to approximately $850 while interest rates surged into double digits. The reason, according to McLeod, was that investors were responding to growing currency risk rather than simply comparing yields. “Gold is still money and the dollar is rubbish,” he stated, arguing that decades of monetary policy have not altered gold’s fundamental role as a store of value. He further suggested that investors often focus too heavily on short-term price fluctuations while ignoring the larger trend. Rather than waiting for minor pullbacks, McLeod believes investors should focus on securing exposure to physical precious metals before confidence in fiat currencies deteriorates further. He even suggested that a scenario involving a major decline in the U.S. dollar within the next eighteen months cannot be ruled out. While he stopped short of making a formal prediction, he emphasized that such an outcome would not surprise him. In that context, the debate over whether to purchase gold a few hundred dollars lower becomes insignificant compared to the potential magnitude of the long-term move.
Buy Silver As Industrial Demand And Physical Tightness Increase
The conversation also highlighted McLeod’s strong outlook for silver, which he believes may ultimately outperform gold due to growing physical shortages and expanding industrial demand. According to McLeod, silver faces a unique combination of factors that differentiate it from many other commodities. He pointed to increasing consumption from photovoltaic manufacturing, military applications, and other industrial sectors. At the same time, he argued that available above-ground inventories remain limited. “The investors have hardly started,” McLeod observed, suggesting that retail and institutional investment demand has not yet fully entered the silver market. He believes that once gold becomes too expensive for many smaller investors, attention will naturally shift toward silver. As he explained, an investor who cannot afford an ounce of gold may find silver significantly more accessible. This dynamic could create a powerful wave of demand. McLeod also discussed China’s growing role in the silver market. He noted that China has become increasingly active as a buyer of silver from Western markets while continuing to build inventories. In his view, this trend reflects the growing importance of physical metal ownership rather than paper exposure. He argued that the market is underpricing silver and warned that investors focusing only on futures market activity may miss what is happening in the physical market. The growing disconnect between paper prices and physical demand is, in his assessment, one of the most important developments currently unfolding.
Gold Spot Price, Silver Spot Price And The Disconnect Between Paper And Physical Markets
Another significant topic involved the relationship between paper pricing mechanisms and physical market realities. Hemke raised concerns about long-standing issues within futures markets, particularly the disconnect between derivatives trading and actual physical supply. McLeod agreed and expanded the discussion by comparing precious metals to global oil markets. He argued that futures prices often fail to reflect the real-world cost of obtaining immediate physical delivery. Referring to reports of vastly different oil prices in certain regions, he noted that physical scarcity can create pricing conditions that diverge sharply from exchange-traded benchmarks. McLeod believes a similar phenomenon exists within the gold and silver markets. He explained that large quantities of precious metals have been flowing from Western vaults into Asia for years, indicating that physical demand is stronger than many investors realize. “We are underpricing the stuff over here,” he stated. As inventories continue to decline, he warned that markets may eventually encounter a situation where promised deliveries become increasingly difficult to fulfill. Although he acknowledged that such an outcome remains speculative, he emphasized that physical flows reveal important information that paper prices often obscure. This divergence is particularly relevant when evaluating the future direction of the gold spot price and silver spot price.
Precious Metals, Bond Markets And The Future Of Fiat Currency
Toward the end of the interview, Hemke and McLeod discussed declining open interest within gold and silver futures markets. Despite historically high prices, participation levels remain surprisingly low. McLeod interpreted this as evidence that traditional market participants may be increasingly reluctant to take large positions. “These markets basically are seizing up,” he said. In his view, low open interest reflects a market struggling to reconcile paper pricing with physical realities. Rather than indicating weakness, he believes it highlights a broader recognition that gold and silver are being mispriced. McLeod also suggested that many short sellers have become increasingly cautious due to the risks associated with physical shortages and changing market dynamics. Looking ahead, he expressed interest in developments surrounding the St. Petersburg International Economic Forum, which he believes could provide further insights into global attitudes toward the dollar and the future of international monetary systems. Ultimately, McLeod returned to his central theme: confidence in fiat currencies is eroding while confidence in tangible assets is rising. As governments, central banks, and investors reassess monetary risks, he expects gold and silver to remain at the center of the conversation. His conclusion was clear. Precious metals are not simply commodities; they are enduring forms of money that continue to preserve value as currencies face mounting challenges.
Conclusion: Why Investors Continue To Buy Gold And Buy Silver
The discussion between Craig Hemke and Alasdair McLeod presented a detailed examination of inflation, bond markets, currency risk, and precious metals. McLeod’s message remained consistent throughout the interview: investors should focus less on short-term market noise and more on preserving purchasing power. Whether discussing central bank gold purchases, rising bond yields, tightening silver supplies, or weakening confidence in fiat currencies, he repeatedly emphasized the importance of owning tangible assets. For those seeking protection against monetary uncertainty, his preferred strategy remains straightforward: accumulate physical gold and silver and view them as long-term stores of value rather than speculative trades.
For additional information on precious metals, investors can review:
Craig (00:27.128)
Hello again from Sprott Money and SprottMoney.com. We have reached the end of the month of May. Goodness gracious, two thirds of the way through the second quarter already. It has been an eventful 30 days, and it's certainly probably an eventful month of June as well. But we're here to wrap up May. I'm your host, Craig Hemke, and joining me to put it all together is my old friend Alasdair McLeod, one time head of research at Gold Money.
Macro analyst, economic analyst, precious metals analyst, extraordinaire. Someone we want to pick his brain a little bit. Alasdair thank you so much for joining me.
Alasdair (01:07.428)
Very much my pleasure. Thanks, Craig.
Craig (01:09.994)
It's always so fun to visit with you, my friend. I and I look forward to it. I've first and foremost, as I always like to remind everybody, this content just doesn't just magically appear. It is sponsored and produced by Sprott Money. So let's buy the dip. we're certainly getting that opportunity here as May ends, and you can do that with great deals at SprottMoney.com. Just go to that website, you'll always find terrific deals on
precious metals, storing precious metals. They'll ship it to you for free if you just buy a small amount. A great company, great service, and great products. Again, sprottmoney.com. Alasdair, before we begin, you where can people find your work these days? Because these days people need to find your work.
Alasdair (02:00.664)
Well i b basically the only place is my substack and you get there by going for McCloudfinance dot com and that website will take you into my substack. So McCloudfinance.com. M-A-C-L-E-O-D and Finance we all know how to spell, I assume.
Craig (02:21.05)
F-I-N all right, one word, right? All right, one word. All right, it has been an eventful month, Alasdair. you know, the the the entire set of circumstances for 2026 took this huge shift back on the February 27th, 28th when this war started. You know, we we began the year with the prospect of rate cuts.
Alasdair (02:23.054)
Something like something like that.
Craig (02:47.564)
you know, some easing, everybody buying gold and silver, and then you know, this war started. The month of May hasn't really brought us any substantial progress on that end. where do you think we stand, at least at this point, economically, monetarily, with so much still in flux?
Alasdair (03:06.19)
Well, we stand on the edge of disaster, really. I mean, I think that it will actually hit the markets when we see bond yields run up again, particularly at the long end. And they're breaking out. I mean, they're all some of them are already broken out. I mean, Germany's, for example, France's, Japan's, they're already breaking out on the upside. The other G7s will follow. but if you look at the pattern of
Craig (03:24.878)
There we go.
Alasdair (03:34.757)
How bond yields have progressed, we had that big, big rise between 2020 and 2022, 23, 22. Now, interestingly, that was mirrored almost exactly by a huge, great rise in commodity prices. And also gold and silver moved strongly at the same time. Since then, you know, the sort of the worst of the inflation scare has sort of tailed off.
and we had a brief peek on when Russia announced its special military oper operation, which was what February, March 2022. Since then, I mean, basically bonds have consolidated sideways to upwards, and gold has sort of continued to run, actually. I mean, particularly from the second half of last year. Other commodities, however, were tended to move sideways along with
bond markets, though they did begin to pick up in the second half last year. Now the the point about this is that the idea that inflation suddenly you know is is only the result of this mess in in in the Gulf, the Straits of Hormos and all the rest it, is actually completely wrong. There was a huge great bull market developing in commodities, the whole way across the commodity space before this happened. This is very, very important.
Craig (04:58.487)
Mm-hmm.
Alasdair (05:01.708)
If you look at it in purely purchasing power terms, when the whole of the commodity basket moves up, actually what's happening is that the purchasing power of the currency you're measuring it in moves down. That is so important to understand. So you know, this basically tells us that the expectations for the purchasing power of commodities outside the G7 in particular.
is that the purchasing power of their currencies will go down. Now, this is very important because if you're a an investor looking to get a return on government debt, then you're going to be factoring this into your equation. And so you'll be saying to yourself, Well, hold on a minute. Is 5% on a US Treasury of say 12 to 15 years? I mean, is that
Craig (05:46.892)
Right.
Alasdair (05:58.947)
Sufficient compensation for what I see ahead? The answer is probably not. And that is the why bond yields are beginning to break up on the upside. Now, if you're you know as a modernist, let's put it this way, someone who who only understands the world of currencies, you look at the relationship between the yield that you get, let us say, on US treasuries and the yield you get on gold.
Craig (06:08.149)
Uh-huh.
Alasdair (06:24.974)
You know, the former's going to give you five percent, the latter's gonna give you half a percent. So if the yield on US Treasuries rises, you think, well, it gets it more expensive to hold gold. Now, for a lot of the time that has been the case, but it is never the case when we're talking about risk in fiat currencies. We learned this from the nineteen seventies.
We went into the seventies with the Fed funds rate sitting at around about three and a three quarter percent, something like that. Gold was thirty-five dollars. We came out of the nine nineteen seventies, in fact I think nineteen eighty-one, we saw gold eight hundred and fifty dollars, and we saw the Fed funds rate at nineteen percent. So where's the correlation? I mean the answer is that we are moving away from a situation where there is very little perceived risk in a currency.
To a situation where the risk is increasing. And it's not for nothing that central banks basically are queuing up to buy physical gold. What actually are they doing? It's not a question of buying physical gold, they're selling the currencies. They want to get the hell out of the currencies. So that basically, I think, Craig, is is is what's happening. That's the big picture behind it. The other aspect of this is that while the the sort of big questions over the value.
Craig (07:28.44)
Yeah.
Alasdair (07:48.149)
of a fair currency are now being asked increasingly around the world. At the same time, we see, if you like, faith in these currencies diminishing, we see an equity bubble which is fueled entirely by credit. I mean this last month, I mean equities have just literally gone through the roof virtually everywhere. Now the answer I think, one answer, which is slightly trite but nevertheless I think will prove true
is there's an old adage, sell in May and go away. Well we've got a few days left in May to sell. Now's the time to sell. What I would strongly suggest you do is when you sell in May and go away, don't just go into currency, don't go into bonds, but go into real money, real legal money. Ever since Roman law basically set real money for us, for everybody around the world. I mean the reason it came
Craig (08:24.854)
Yeah.
Alasdair (08:46.53)
real money in America was it came out of Britain and the law which you inherited was originally Blackstone's commentary, which was a huge great tome on all the laws, etc., in Britain, before you made up your own laws. And you made up your own laws, basically, which said gold is money, silver is money, and the rest is credit, confirmed by the great John Pierpont Morgan in
Craig (09:13.314)
Yeah.
Alasdair (09:13.858)
It was to the Congress in nineteen twenty-five when he said precisely that. Now, in spite of all the propaganda that we've had since nineteen seventy-one, gold is still money and the dollar is rubbish. So it is pretend money. It it it's imaginary money. It's not the real stuff. And when you have imaginary money, what's its value? Its value depends on the faith that you and I have in it.
And if we're losing the faith in it, it doesn't matter what the quantity is, it goes down to zero. We if it's not wanted, then it's got no value at all. And that I think is where we're heading. And and we were heading that way anyway, because I think we were coming to the end of the fiat currency era. you know, Mr. Trump has or President Trump as he as you might call him, has just basically hastened the process for us.
Craig (10:10.978)
Yeah. Yeah.
Alasdair (10:12.644)
I think it's gab gonna happen sooner. I mean I can see a scenario where we could find that the dollar could completes come collapses completely within a year to eighteen months from now. I mean, I'm not forecasting it. I wouldn't be surprised. But where this is so relevant, I think, for everyone, is if you do understand that you've got to protect yourself by having a little bit of gold, an insurance policy or something like that.
Then fiddling around for a hu few hundred bucks, thinking, well, you know, it's it's it's it's just drifting off and it's drift. You know, I'm gonna put my limit in at four thousand two hundred or whatever. I mean, forget it. You're missing the point. You know, you're probably I mean, if you're very lucky and you can spin a coin on that one, you might get some. But on the other hand, if you miss it, next stop is gonna be I mean, you'll be chasing your tail all the way up. And in silver this is particularly the case, I think. It's
Craig (11:06.679)
Right.
Alasdair (11:10.18)
There, you've got the additional difficulty of very little overground stocks which are not spoken for. And at the same time, you've got massive and growing industrial demand because of all this PCG stuff, you know, photovoltaic sales, and also the military, which has expended virtually all its ammunition, you know, it's desperate for silver. the investors have hardly started. I've been a few guys in.
Craig (11:23.246)
Mm-hmm.
Alasdair (11:38.401)
Asia and India is sort of collecting a few silver coins and a few small bars and all the rest of it. But you know, I mean basically the investment community haven't latched onto it yet. That's going to happen, Craig. When gold goes up, I think that the smaller investor is going to turn around and say, I can't afford to pay six thousand dollars for an ounce of gold, but I can afford to pay a hundred dollars for an ounce of silver or whatever the figure is. So
yeah I can see I can see a rush going into silver if you like once gold starts going up. Will gold go up? Of course it will, because what's going on is our currencies are going through the floor. and you know you know, just because it pauses, it doesn't mean to say it stopped. It's gonna continue at an accelerating rate, which is why bond yields will rise, equity markets will collapse, sell them in Maine, go away.
Craig (12:13.526)
Uh-huh.
Craig (12:18.732)
Mm-hmm.
Alasdair (12:34.26)
And precious metals will have the appearance of rising, whereas in fact they're just maintaining their value.
Craig (12:41.196)
Right, right. Alasdair, I think you you you of course hit the hit it right on the sweet spot when you mentioned treasuries and the nominal treasury yield and how it's going higher. D do you think I I would assume you saw back I guess last month in April when suddenly Henry Paulson, the former US Treasury Secretary, kind of came out of the woodwork. I mean, I hadn't seen that guy in a decade.
To warn that we are approaching, he was on Bloomberg, so we're approaching this point where, in his words, we're gonna hit the wall. And the Fed is gonna have to have this break the glass moment. now when I heard that, I thought he was warning that nominal rates were gonna get so high that the Fed better have some type of yield curve control, you know, QE plan at the ready. what do you think he was implying and what would that mean for gold?
Alasdair (13:40.123)
I I mean I we can dismiss yield curve control under these circumstances because yield curve control assumes that there is some stability in yields. we're talking about a situation where there is no stability and therefore it cannot be controlled by if you like, Fed's action. I think what Paulson was was saying, I mean, he was probably looking not just at the financial situation. I'm sure he talks with
Craig (13:50.742)
Yeah, that's true.
Alasdair (14:10.19)
people like Jamie Diamond, who's you know, warned us many, many times that you know, we're we're on the brink of a disaster, whether it's to do with you know, private equity or whatever. I mean all these things, huge great losses, cockroaches coming out of everywhere. You know, it's the sort of thing he's talking about. With which I agree, incidentally, I'm not I'm not mocking him. so there's that. And also don't forget that Paulson also
Craig (14:12.398)
Mm.
Alasdair (14:39.81)
was right in the center of things in the 2007-2008 crisis. And as such, I think he was Treasury Secretary at the time, wasn't he? As such, he had he had to talk to America's major creditors. Now I understand and I have this literally on firsthand authority, that when he spoke to the Chinese, you know
Craig (14:45.027)
Right.
Craig (14:50.306)
Yep. Yep.
Alasdair (15:07.938)
They were quite understanding of the situation and prepared to be helpful. The Russians, however, were sorely tempted to upset the apple god. So what we now see what we now see, I mean I'll give you the reference. That was a an interview which Robert Preston did with Poulson, which was never published, but it was referred to by Peston Preston in his blog. So, you know, forgot it wasn't published.
Craig (15:17.614)
Imagine.
Alasdair (15:35.877)
Because it for whatever reason it didn't make the cut, probably too sensitive, but it was reported by the man who interviewed him. So that's first hand. So you can see that you can see that. The other thing is that Pulson would also have spoken to other major, major banks, not just Jamie Diamond, but you know, the the heads of the other major banks, all of whom are now forecasting higher gold prices. Now, why are they forecasting higher gold prices?
Craig (15:40.44)
Yeah.
Alasdair (16:05.56)
Well, it it's my view that these guys know the heads of all the central banks around Asia and all the rest of it. And either them directly or their senior researchers or you know, people in Asia, whatever, you know, the their top management there, you know, sidled up to you know the sort of friendly central banker and said, Hey, what is it with gold? Why are you buying gold? And you know, the central banker will say
Off the record, we're selling dollars. I see. Now, if you're a banker, you know, do you say the dollars had it and gold is going to go to infinity? No, you don't do that. What you do is you come out with a forecast which is positive and seems not extreme, let's put it that way. Because as soon as you produce an extreme forecast.
Craig (17:00.92)
Reasonable.
Alasdair (17:04.216)
People think that you you know, y y the standard of your quality res the the quality of your research is rubbish. Whatever, whatever, whatever. So what you you know you and I have probably suffered from that in the past.
Craig (17:17.179)
Yeah, we probably have, yes, yes, uh-huh.
Alasdair (17:20.334)
But from you know from a bank's point of view, if they see the way in which this is going and they know it on good authority, then they will come out with a forecast which say is twenty percent above the current level. And then they'll look very clever in retrospect. But the fascinating thing is that none of these banks actually have put in process, if you like.
A means whereby their customers, their managed customers, very often amounting to a trillion dollars or more, have got no means of buying physical gold. You know, th so you've got the bank saying one thing, and the investment management side actually taking no action whatsoever. I mean so, sell it may and go away, equities of course.
Craig (18:11.662)
Mm-hmm.
What happens when they do?
Alasdair (18:17.55)
And I think you might find there's a bit of a momentum developing, let's put it that way, as the funk money goes out of fiat currencies into the real stuff.
Craig (18:17.848)
Yeah.
Craig (18:26.472)
Alasdair, one one other angle I'd like to explore with you while I have you on the line. you and I have railed against the pricing scheme for as long as we've known each other, which is a good decade plus. the fact that we, you know, since 1975, well, actually since the fall of the London gold pool, really, there's not really been a physical connection to price. It's
Price is determined through the trading of these derivatives, which is in my mind is why the silver gold ratio is all out of whack and all that kind of stuff. I you had mentioned to me the idea that kind of a secondary impact of all this war stuff is a growing realization, or now maybe just a flat out realization, that there's Western paper price of crude oil.
And then there is a real price if you need it tomorrow. and the damage that that's doing to confidence in this western pricing scheme. Can you just kind of expand on that a little bit and how that might impact things in the metals going forward?
Alasdair (19:25.166)
Yeah. Yeah.
Alasdair (19:38.261)
Yeah, it it it's interesting because I mean the pricing in the West, if you're looking at you know, NYMEX and and and so on, for oil, seems to me to be to not reflect what the hell's going on in the Middle East. it reflects more, I think, the situation in terms of the supply in America, for example. and you know, the price there
Is completely divorced from everywhere else. So we look at the the price of dub West Texas Intermediate, and we see it jump up to, let's say, $110 on some news, you know, that there's a bit of bombing going on somewhere. it's not actually reflecting any reality at all. I mean, that's just sort of marginal shifting stuff. It's just paper, paper pushing, paper pushing. And the thing that's fascinating is that.
Craig (20:33.891)
Yeah.
Alasdair (20:36.724)
you know, there are all sorts of prices for oil all around Asia. And I mean there was one report, which I understand is is was accurate that Sri Lanka paid two hundred and eighty dollars a barrel for oil. I mean, you know, when you haven't got it and you must have it, you will pay whatever it is. And if you know, if it's a question of phoning the tanker, passing Colombo, which is the capital of Sri Lanka, saying, Oi
Craig (20:40.238)
Mm-hmm.
Craig (20:57.24)
Right on.
Alasdair (21:05.252)
What have I got to give you for you to come and drop anchor here and give us some of your stuff? So there are these prices all over the place. And this is particularly relevant, I think, when it comes to the pricing of gold and silver. I mean, we have seen for a long period of time gold and silver migrating out of America, out of I suppose Europe as well. it
Craig (21:07.021)
Yeah.
Alasdair (21:35.183)
Going into China. There is obviously a different price in China compared with us. Otherwise, you wouldn't get that flow of metal. Now, I know that there are all sorts of reasons why there should be a price differential. I mean, this imported silver, for example, as I understand it into China, suffers a 13% tax. So you've got to pay the tax before, you know, so that accounts for the premium. But nonetheless, you know, the metal flows. And that tells us something very, very simple.
And that is that we are underpricing the stuff over here. And it's getting to the state where you know the the available stocks are really being drawn down and down and down. And there will come a point when suddenly you open the vault and it's empty. You think, my God, we promised to deliver this stuff tomorrow. Where is it? That sort of thing. I'm being I'm I'm you know, I'm I'm dramatizing it a bit. But
Craig (22:28.205)
Yeah.
Craig (22:32.59)
But still.
Alasdair (22:33.874)
I can see you know, th we had this situ I mean, fascinating let me go back a little bit because the situation was shown at a sharp relief when President Trump threatened China. I mean, I'm going back to last September, threatened them with a hundred percent tariffs. So China turned around and said, Okay, no rare earths. We're stopping rare earths at export or we're can controlling it, if you like.
Craig (23:01.176)
Mm-hmm.
Alasdair (23:02.014)
and immediately Trump backed down. What we didn't know at the time was that some sort of similar policy must have come out on silver. Because literally within two weeks of that, three weeks probably topps, on the ninth of October, there was a huge great shortage of silver, deliverable silver, appeared in London. And we had a lease rate that jumped up to forty percent. And of course, you know, that was the beginning of the run in silver, which went all the way up to what, one hundred and twenty dollars before
Craig (23:04.142)
Mm-hmm.
Alasdair (23:32.139)
know, it's sort of the parabolic spike, as it were, showed some signs of of of faltering. So China, I mean, China is still exporting silver, but I would believe that that silver being exported is if you like, under long-term contracts which have already been agreed. So that can't stop. But China has returned into the market as a buyer of silver.
From the West. I mean, you can see the the the you know from customs figures, the amount of silver going down to China exceeds its exports by something like three to one. Now, China is a is is a major producer of silver. Not only is it a big miner, I mean it's a lot smaller in mining terms than say Mexico, or I think it's probably number three to Peru. But because it imports non ferrous ores for refining.
Craig (24:04.696)
Right. Right.
Craig (24:09.998)
Mm-hmm.
Alasdair (24:29.294)
I mean, that's really where seventy percent of the silver comes from. So, you know, they have been hoarding silver for a hell of a long time. And the situation was not helped internationally, if you like, in terms of availability of silver, when America decided that silver was a cur a critical mineral. Now, were the China was China going to supply America with its critical mineral at a nice cheap price? Well, it hell is like that wasn't gonna happen. So Yeah.
Craig (24:47.095)
Right. Right.
Craig (24:53.048)
Right.
Probably just not gonna work that way.
Alasdair (24:58.094)
So you could see that suddenly everybody wants silver. and we're talking about the real stuff. We're not talking about the paper stuff at all. If you can buy paper and get delivery, then you might want paper. And that indeed has been happening. India, I mean this is for farce. I I mean it really is. The government put in subsidies to encourage industry in industry to
Craig (25:07.662)
Right. Right.
Alasdair (25:26.306)
start producing photovoltaic cells, have fifty percent of its energy coming from you know solars, whatever, whatever, whatever, whatever. Because it was, on the other hand, it was still building coal-fired power stations and all the rest of it. So so you get something like Reliance Industries, who put some huge amount of investment into solar panel production. So they become very, very large importers of silver.
Where they get it from, I don't know, Stanford Delivery or Cobex maybe Stanford Delivery in London. anyway, Modi now turns round and says to the people, please don't buy silver for at least a year. What a joke, what a joke.
Craig (26:08.983)
Right.
At Alastrave, I'm I'm I'm I'm keeping you longer than I promised, but I do have I gotta ask you one more question about all of this. I does the is this what's being reflected in the open interest of contracts on the Comex? Because gold, you would think, I mean, we're at these record prices, silver's, you know, above fifty dollars and has been now for eight months. You'd think.
That the demand for contracts and exposure, even speculative exposure, would be through the roof, and yet both gold and silver open interest are at multi decade lows. I mean, levels not seen since two thousand five. What's the deal?
Alasdair (26:55.406)
Well, you raise a very, very good point because when you have very low open interest, and in Silver's case it's the lowest for twenty years, what this means is that there are no bulls in the market. So why are there no bulls in the market? I guess if you go to a market maker and you see the screen price, let's say it's something like seventy five bucks or something, and he makes you you know, he says, Well, you you can buy it at seventy eight if you want.
Craig (27:02.775)
Yeah.
Craig (27:23.192)
Yeah.
Alasdair (27:23.554)
You know, in other words, I think they're deterring business. Why? Because the word is out. You don't you mustn't be short. The word is out amongst the bullion banks, the market makers and all the rest. They're desperate to close their positions down. And so I mean, even gold, I would say the oversold condition in gold is four hundred thousand contracts. We're at what? three hundred and sixty seven thousand. We're well under that. I mean, silver i I mean these markets basically are seizing up is the short answer.
Craig (27:36.344)
Yeah.
Craig (27:46.637)
Yeah.
Craig (27:53.368)
Yeah, yeah.
Alasdair (27:53.907)
And I think it reflects a s very, very simple fact, and that is they're completely mispricing gold and silver.
Craig (28:01.752)
Mm-hmm. Uh-huh.
Alasdair (28:03.684)
You know, I mean i it's it it really is as simple as that. If they were pricing it correctly, we would see good volumes, buyers and sellers, decent open interest, they'd be trading it. They wouldn't necessarily be running huge, huge, great short positions, but I mean what they would be doing is they'd be trading and trading and trading it and making a lot of money on the trades. And, you know, that's what they've been doing until very, very recently.
so so I think that's the answer to the to to the conundrum. And I think they've probably got the same problems in in in London, though the figures there are less available, let's put it that way.
Craig (28:34.06)
It's just it's just
Craig (28:40.64)
even less available. I it's just the strangest thing. Even the hedge funds, you know, the smallest positions they've had in years. And like I said, overall con if you add up all the contracts down the board is the lowest in 20 years. And it's like the exact opposite of what you would expect. And it just makes you wonder if they're, you know, the mar participants, let's put it that way, are questioning the integrity and and why even horse around with these with these exchanges.
Alasdair (28:52.846)
No.
Alasdair (29:09.74)
Yeah, I think the other thing, Craig, that you've got to just bear in mind is, you know, what what are the vested interests of the players in this market? If you're short, you want to see it done. So basically, what the guys who are short of say silver or gold on Comex futures, if they see a bit of news which allows them to bang the price, they'll do it. They'll hit it very, very hard.
Craig (29:35.981)
Yeah.
Alasdair (29:38.137)
If they see a bit of news which you know might generate a bit of buy buying, they'll just mark the price up to try and s to squash it. And this is why the open interest has remained so low, partly. And I think also they've widened their prices considerably. So you know, that's the way it is. I you know, it's the way markets work. I mean, I remember in the London stock market in the days when we had jobbers, you know, I I
Craig (29:46.274)
Yeah.
Craig (29:52.77)
Yes.
Alasdair (30:05.774)
We knew jobbers. I mean, we dealt face to face, so we knew these guys and we went out and drinking with them and all the rest of it. So you learned how they worked. You know, and they would you know, if they could see someone coming towards them, they would know probably on this guy's past business whether he was a buyer or seller. And load the price accordingly. Come on, wouldn't you? I would. We're in the business of trying to make make Missoula. You know, this is this is this is the name of the game.
Craig (30:25.666)
Yeah, yeah. Yeah. Yeah.
Craig (30:32.675)
Yeah.
Alasdair (30:35.79)
Who gives a damn what what's going on in gold and silver? But if we turn a few bucks out of it, great, brilliant. Just don't get caught on the wrong side.
Craig (30:41.016)
Right, right, right.
Then people are wising up. And like you said, I think it's interesting that the the oil price disparity around the globe is has had to be eye opening. yeah.
Alasdair (30:54.38)
It does, and I absolutely and I think y you know, you're raising this point I think is is desperately important because when you start to look at other paper prices in relation to what's going on with the physical in other parts of the world, you see the same sort of thing. Not as acute, admittedly, but at some stage it could well become acute, and I can certainly see that happening in precious metals.
Craig (31:08.963)
Yeah.
Craig (31:16.982)
Yeah. Well, it'll be interesting to see what happens next. that'll be as soon as June, my goodness gracious. We'll get another F O C meeting in June. We get a whole load of extra economic data. It's gonna be another crazy month, but at least, Alasdair, we've been able to wrap up May. Looks like you've got something the last you'd want like to add. Lay it on me.
Alasdair (31:33.839)
Yeah, just one last point. Wha and you know this this is not something that might not it might not matter, but I think it probably does under the surface. You got the St Petersburg International Forum coming up, I think it's in the middle of this month. This was the forum f the forum when Putin stood up. I think it was in twenty twenty one.
Craig (31:49.782)
Hmm.
Alasdair (32:01.722)
twenty twenty no, it's twenty twenty two, it was after the special military operation started that year. And he said, you know, look, if you've got if you've got currencies, you know, dollars, whatever, whatever, they steal it from you. If you've got gold in their vaults, get it out under your control. And that was actually the beginning of the real trouble for the dollar. It really was.
Craig (32:21.218)
Get it out there. Yeah.
Alasdair (32:30.85)
I will be listening with great interest to see what he and maybe a few other speakers will say at that conference. It's well attended. I mean you you I think that that conference was attended by some fourteen thousand individuals representing over eighty governments officially. Yeah. So I mean, you know, I think the back chat, if you like, in the bars and around the corridors and all the rest of it will actually be the end of the fiat currency system.
Craig (32:36.14)
Yeah.
Craig (32:52.802)
No, no.
Craig (32:59.052)
Yeah, yeah. That's middle of June.
Alasdair (33:01.922)
I think it's middle of June. I haven't got the exact dates, but it's usually June. Yeah.
Craig (33:03.374)
I I know I appreciate the heads up. And so I'm sure everybody watching is like, ooh, yeah, you're right. I'm gonna make sure I make note of that. Alasdair, thank you so much. It's always so fun to visit with you and you're just always so insightful. again, people can follow you by going to mcloudfinance.com and then go into your Substack.
Alasdair (33:24.514)
Yep, absolutely. And that just takes takes you straight there. It's been very much my pleasure, Craig. Thank you.
Craig (33:28.579)
You not. it's always great to visit with you. And again, I want to thank Sprott Money for putting all this on. It has been a busy month, but boy, June's going to be busy as well. So we'll have a whole full month of content coming for you again in June. So hit that like or subscribe button so you don't miss any of it. You're notified as soon as something gets posted. and like I said, it's gonna be a busy month. Thank you, Alasdair. Thank you, Sprott Money, and thank you everybody for watching. We appreciate it.
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