Kellen Ainey (00:01)
Hi everyone and welcome back to the Ask Andrew podcast. have Andrew Slay joining me once again. Welcome Andrew.
Andrew Sleigh @ Sprott Money (00:08)
Great to be back. Thank you very much, Galen.
Kellen Ainey (00:10)
And before we do get started, we do just want to point out that we have a current promotion for our Canadian clients for Canada Day. So please feel free to check the SprottMoney.ca website and see the great deals we have on specific products. Well, so welcome back, Andrew. Since the last time we spoke, there has been a lot of news. ⁓
Andrew Sleigh @ Sprott Money (00:32)
yeah, guess there has been. There's no shortage, that's for sure.
Kellen Ainey (00:36)
So I actually have a client, he wanted me to ask you this specifically. He'd like to stay anonymous, but what impact does the current tensions in the Middle East, specifically Iran, have on oil prices and in turn, how does that impact both gold and silver prices?
Andrew Sleigh @ Sprott Money (00:55)
Well, for oil, if this continues to escalate, ⁓ there's been lots of talk about Iran shutting down the Strait of Hormuz. And if that occurs, then 25 % of the world's oil flows through that strait. And they've done talks about, let's say over a matter of months, the spike in what oil price would go to is many hundreds of dollars a barrel, which if it was prolonged,
could spike and create a worldwide depression as a result of inflating the cost of oil that trickles down through everywhere within our societies. know, cost of farming, cost of transport, cost of the food getting to the grocery store, like in every aspect of life. And every time something has to touch and transport something, that adds more cost to whatever it is that is coming to your table. ⁓
And they say that could be, you know, it's one way to have a sort of a they've said a hyperinflation event around the world and then be able to point a finger at a global conflict as a as a blame game, as opposed to the government's all been printing their own money into oblivion. It's just another cover. So so we'll see where it goes. but so that's part of oil. Oil could go up dramatically as a result. Now, part two for gold and silver.
⁓ Well, it's again, just money printing. So the forces of that alone on global conflict would force gold and silver up again. You people out of fear, ⁓ out of more money printing, all aspects are going to be pushing the gold and silver up, you know, again.
Kellen Ainey (02:50)
Well, with war heating up as well and with wealth and I'm sure you've seen it also with all the warheads that are being sent from both Israel to Iran. I believe there was even a strike in Qatar. There's a lot of silver being used there as well. That's silvers in every single one of these warheads. It's not going to be well, you're not going to be able to get that back. It's been blown to smithereens, right? So do you see that having a direct impact or is it really just more so the ⁓
Andrew Sleigh @ Sprott Money (03:10)
Yeah, that's right. It's an outer myth.
Kellen Ainey (03:16)
the economic impact that oil has and then we see that impacting both gold and silver.
Andrew Sleigh @ Sprott Money (03:23)
I think the economic impact is going to be a bigger play than on metals, particularly silver, than usage in weaponry. ⁓
I'd like to say that the more that there's weapons being used that are consuming silver, that's just one more pressure on silver. So if you have enough individual items creating pressure, i.e. ⁓ retail demand starts to move upward, so there's pressure, ⁓ i.e. institutional investors start to buy silver in a much bigger way, that's a lot of pressure.
War continues on and is consuming silver. There's another pressure. So if you start adding on a lot of minor things on their own collectively, they can create quite a problem. And I think it's going to be a collective issue more so than just a single item. Like, I mean, it's 500 ounces for a Tomahawk missile. So if that blows up, that's 500 ounces, but there's 800 million ounces a year being produced. What's 500?
Kellen Ainey (04:27)
And you're, so are you saying
the 800 million, is that in silver as a total or are you saying that's silver that's solely being used for weaponry?
Andrew Sleigh @ Sprott Money (04:36)
No, 800 million is the amount in total that's mined every year.
Kellen Ainey (04:41)
Okay, okay.
Andrew Sleigh @ Sprott Money (04:43)
So then half roughly, it's 50, 60 % roughly goes to commercial use. Whether the military is included in that category is unknown. I've not seen any data on that at all.
Kellen Ainey (04:56)
Yeah, I've seen it. I believe I've seen at least the most recent Sprott study was a 55 % for industrial use. And again, I haven't seen anything that directly clarifies military falling under the industrial use of silver, but I would agree. think that's a safe assumption.
Andrew Sleigh @ Sprott Money (05:11)
Like to.
The military is just an unknown. They don't even talk about it. One of the largest users in the states of silver is the military and NASA. But they don't even mention it. They don't even talk about it. It's a non-discussion. So who knows?
Kellen Ainey (05:24)
Boy, I believe that.
Well,
even with their driving in technology, everything like that, like all the little tools that the soldiers use too, I'm sure they're going to be driven by electricity and silver is going to be used in each one of those applications.
Andrew Sleigh @ Sprott Money (05:44)
Yeah, Like that's just going exponential all the time. You know, pretty soon it'd be like all the different electronic gear that every soldier has will have like an ounce of silver on it. When it used to be a car used to have an ounce of silver. Now it's three ounces of silver and then it's soon going to be three kilos of silver because of the battery technology and whatever. I mean, it's just going up and we don't know where it's going to end with regards to
when it hits the fan and it's all of a sudden there's a dramatic shortage and it's now no longer available. None of us know that date. So it's just good to be beforehand as opposed to after. So, yeah.
Kellen Ainey (06:27)
So with gold specifically, where do you see that positioning itself as tensions continue to rise between Israel and Iran, and well, the US as well?
Andrew Sleigh @ Sprott Money (06:38)
That will only continue to go higher. ⁓ Gold is not only a fear trade, it's also the monetary trade. And as war continues, they're printing dollars to... ⁓ Well, I'll say it this way instead. So war is like the most expensive thing the countries get involved in. And that's on purpose. This is a cover for the financial system collapsing. And they're going to blame war. They always do. That's what they've done since the dawn of time.
And so these conflicts will continue. This is one of the reasons why Canada is continuing to send money over to Ukraine when it's it is like flogging a dead horse. That's that country is lost. Like, why are we sending more money there? They're doing it because they need to print more money to keep the system, you know, the gears from seizing and it hides the inflationary effect because it's being sent overseas. So this is one reason why these
global conflicts are used is to, we have to create all this cash, otherwise the system locks up. So now we got to have a conflict in Israel, Iran, continue to send money at Ukraine. ⁓ The list goes on and sooner or later that won't be enough. They'll have to have another conflict because, it's very similar to ⁓ the big, beautiful bill that was produced by the administration there a few weeks ago. ⁓
Well, the one prior to that was one or two, 1.2, 1.3 trillion dollars. So why wasn't the next bill 1.5 trillion? Why did it have to be, what was it? 3.4, 3.3, whatever it was, 3.8 trillion.
Kellen Ainey (08:21)
It was in between
that, yeah, that 3.2, 3.4 range. Yeah, it's a pretty outlandish jump to say the least.
Andrew Sleigh @ Sprott Money (08:29)
Yeah. So why did it have to be that much more? And the reason it has to be that much more is because the debt based system, which is the entire global currency system as we know it now, needs to have cash exponentially created to keep it from locking up. That's why it had to be 1.2 to 3 point whatever. And then the next one that comes out will be 5 point whatever to 6 point something. It will just keep getting bigger. Exponentially.
Kellen Ainey (08:57)
Well, it's,
it is funny because that's, that seems to be kind of the fallout between Elon Musk and Donald Trump was that big, beautiful tax bill. ⁓ Obviously I don't have ears on the inside or anything like that, but it's, they had a little bit of a back and forth on social media where it's, it seemed to very much where that was the big, beautiful tax bill was the catalyst.
Andrew Sleigh @ Sprott Money (09:22)
Well, also on top of that, know, Elon and his group in the Doge program were there and he spent all of his own free time finding out all of the basically fraud spending that was going on at USA aid and the list goes on. It's on and on and on forever. And it started off being like $2 trillion. And then it wound up being something like ⁓ a,
maybe a few billion or maybe a few hundred of millions in the end. So he spent all that time and effort uncovering all these programs that were complete fraud. Congress never sat down and voted on any of them. So it was basically the system won. And Elon found out that he was doing nothing but spinning his wheels and that Congress had no desire to change a damn thing.
And so there was no boating on reducing any of that stuff that he uncovered. So he decided after taking all the flack from that, and then of course now all of sudden the certain people in the States were targeting his businesses and whatnot because they all got coerced into thinking that he was doing bad things when he was really shutting down absolute fraud. He's like, why am I doing this? Why am I...
Why am I here taking all this on the chin for a public debt now hates me even before they loved me and now they're vandalizing my dealerships. And now it's just like, there's nothing but loss there for Elon. So he tried to prevent and reduce all the capital spending he could in the States, all for a nothing burger. And then, you know, the administration comes out with a bill that's double the size of the last largest bill ever produced. like,
I don't blame him for losing his cool because it's absolutely warranted. would be in the same case. I'd be saying, what the heck? You guys are just bananas now.
Kellen Ainey (11:26)
Well, not to mention the Tesla stock price throughout all of it, right? That had taken some significant would even be a small world, that small word that had taken some significant hits. And then I think it really only, and it definitely hasn't rebounded to its previous position, but it had some, it had a very good day within the last week. I believe that was Monday, ⁓ where it started, we're starting to see a little bit of a rebound now that he's out of government and focusing back on Tesla again. And this isn't even getting into anything like SpaceX.
Andrew Sleigh @ Sprott Money (11:53)
They just launched.
That's right. And Tesla just launched a, ⁓ some kind of tablet, that communicates with the starling. ⁓ yeah, just, I just saw it on something just in the last day or two. ⁓ and it's really cheap. It's 179 bucks. And it looks like a small tablet that's going to basically, ⁓ compete with, ⁓ like the Apple tablets and the Android.
Kellen Ainey (12:04)
Okay, I wasn't aware of that.
Andrew Sleigh @ Sprott Money (12:22)
tablets and all that kind of stuff. ⁓ So 179 bucks, supposed to do everything it does. ⁓
Kellen Ainey (12:29)
Yeah, so
a full-use tablet. I did not hear about that at all.
Andrew Sleigh @ Sprott Money (12:35)
Yeah. Well, you're the you're more techie than I am. I'm surprised.
Kellen Ainey (12:38)
Yeah, that's quite surprising that you're introducing the new technology to me to be honest with you.
So I do have a question from Terry Moore, 861. How does gold value increase when inflation is wiping out any increased value that the gold maintains?
Andrew Sleigh @ Sprott Money (12:57)
⁓ I don't know if that's a true statement, to be honest. ⁓
Kellen Ainey (13:03)
So speak to that, please. Because that, think, would be answering the question in itself.
Andrew Sleigh @ Sprott Money (13:04)
So.
So it takes more dollars to buy gold. in itself, is now, ⁓ gold doesn't go up, silver doesn't go up, the dollars go down. So gold and silver buys whatever it buys and it takes more cash to buy ⁓ whatever it is that you have to go and buy. So for example, ⁓ let's use our textbook case, Venezuela, where ⁓ I know the silver numbers off
top my head. The gold ones I don't know, but I can do some conversion. January 2018, it was 684 Venezuela Sovereign Boulevard for one ounce of silver. And that's what it cost to feed yourself for a month, one ounce of silver or 684 bucks. And then their currency accelerated downward. six months later, it was 90,000 Sovereign Boulevard for the same ounce of silver.
And that's what it cost to feed yourself per month. $90,000 or one ounce of silver. And then two years later, July of 2020, was 5.9 million silver ounces, pardon me, 5.9 million sovereign boulevard dollars for the same ounce of silver. And that's what it cost to feed yourself for a month. Still one ounce of silver or $5.9 million. And then it went on from there and went to hundreds of millions.
And so the point is ⁓ that if we use that overlay for a second, ⁓ their currency hyperinflated to basically nothing, but the silver still buys the same thing it did, you know, six years earlier. And it didn't change and it saved all of your wealth. So if you and I were in Venezuela 20 years ago and you were the billionaire, literally,
And I was someone that had a pocket full of silver or in this case, let's just say gold. And we transport ourselves to modern day Venezuela now. Your billion dollars will feed you for a matter of months and then you're completely broke. Like you are penniless. But my goal will feed me for years. So who's got more money now?
Kellen Ainey (15:29)
So what you're saying more so, correct me if I'm wrong here, that it's not that the value is in wiped out with the inflation, is it's more so that gold and silver are a hedge against that inflation. Am I correct?
Andrew Sleigh @ Sprott Money (15:42)
Yeah, yeah, 100%. So, and then just to sort of maybe for the for the viewer to hit it home a little more in another direction is that we go back to a gold coin in 1900, bottom and suit and top hat and all the trimmings that you could possibly put on a gentleman back in those days. And it was also a twenty dollar American bill. So was either 20 bucks or one ounce of gold. They're completely interchangeable.
So what's changed over the last 125 years? Now, the same ounce of gold buys exactly the same amount of stuff, maybe with extra, but now it's 3,500, whatever spot prices of US gold, and now it's 3,500 US dollars to buy the same suit. So your ounce of gold still buys a suit, but now you need 3,500 US dollars to buy the same suit.
Kellen Ainey (16:41)
Exactly.
Andrew Sleigh @ Sprott Money (16:42)
The gold has maintained your wealth and purchasing power throughout. And there's lots of other examples on the silver side where an American dime from 1964 literally at that time bought a gallon of gas in the US. Now, 1964 and earlier, American change was 90 % silver.
Today, that same dime will still buy you a gallon of Gahassan Estates. Okay?
Kellen Ainey (17:19)
fair point I didn't look at it that way actually
Andrew Sleigh @ Sprott Money (17:21)
All right.
You know, from the Canadian perspective, you know, we have 1967 old, it's called junk silver is the technical term, but from the old money is silver dollars. It's called silver dollars for a reason and dimes quarters, 50 cent pieces. they're 80 % silver. And so a silver dollar today is worth approximately 33 bucks. It's legal tender, $1. So if you saved, you know, 29, you know, 10 grand in, in
$1 bills from 1967 and you had them now today in your pocket. You've got whatever 10 grand buys today Which means you've lost I don't know let's call it 90 % of your purchasing power because back in 1967 you could probably buy a house for 10 grand Now you can't even buy a car for 10 grand if I had 10,000 silver dollars
Kellen Ainey (18:00)
Yeah.
Andrew Sleigh @ Sprott Money (18:19)
I would have $330,000 in value that I could go buy a house somewhere, rural area, obviously not Toronto. Okay. So if you hold and save in dollars, as the dollars go down to become virtually worthless, people will be impoverished by that. If you hold physical silver and gold, that is the best hedge and defense.
against the effects of inflation. So the effects of inflation do not erode the ⁓ gains of gold. The gains of gold is actually the defense against the inflation which maintains your wealth no matter what the currency goes to. So and on top of that I would also argue that your purchasing power with gold and silver goes through the roof. So when we
When we get to the point of hyperinflation and everyone is broke, what do goods and services sell for? Like next to nothing. Like what can you buy a house for if nobody has any money? And at that stage, that's when we're going to hit the ⁓ plan where you can buy a house for one or two ounces of gold. And then whatever the ratio of silver is to gold, it'll be the equivalent silver as well. So if it's 101, it'll be one ounce of gold or a hundred ounces of silver.
If it's two ounces of gold, that's 200 ounces of silver. If the ratio is 50 to one, it'll be 50 ounces of silver for the house. So I I'll stay on that side of the equation. So I'm not going to step back into the fiat pile of crap.
Kellen Ainey (20:06)
So this is going more so into, and this is going to be a little bit more of a touchy question. We spoke about Canada needing to buy gold and how they actually sold off majority of their gold reserves at certain points. ⁓ So this is a question from Robin Dash Hood, spelled R-O-B-Y-N. Why would Canada need to buy gold? Can they not tax the miners in gold instead of Canadian dollars?
Andrew Sleigh @ Sprott Money (20:35)
Well, it's actually a very interesting question. Never really thought of it that way before. If you tax the miners, you're taxing in dollars and you're not backing a currency. And so I don't think that really solves anything. It would be the same as saying, OK, if our country is going to continue to try and stay together and keep the system propped up, why don't we just tax all the citizens more?
Like as sooner or later, we're all broke, right? Like we can't pay any more taxes and it breaks. It fails at that point. So.
Kellen Ainey (21:11)
mean, to your prior points, we're very close to that. From a new study just released today, for every dollar that a Canadian makes, they spend $1.85. So we're very, very close to that. Canadians having no money already.
Andrew Sleigh @ Sprott Money (21:24)
So if you have.
So in the same circumstances that if you have private companies that are mining gold and they're being taxed in oblivion, they're just going to walk away.
Like there's no point in doing all that work and have no reward. So they walk away and then the government steps in and we all know how that how that goes, how how well government can be run by business. It's it's a it's a fantastic thing to do. OK, so just ask Venezuela, Argentina, you name it, any communist country ⁓ there, they're splendid. They're all good. So. ⁓
So you wind up having the mines shut down eventually or being run by government. But before it's run by government, let's go back to the taxation issue for a second. So you're taxing free enterprise more dollars to keep the system afloat. So that doesn't back the currency with anything. All that is is tax revenue that goes right back into the pot of carny, which then sends it to Ukraine.
Like it doesn't do anything positive. So the only way to stop a currency from hyper inflating to become worthless is you actually have to, instead of taxing the gold mines at some point down the road, and this could be years away, ⁓ the country would take ownership of the gold mines. Or then they would use all the gold that's ⁓
that's ⁓ been not predicted, but they do all the tap holes, drill holes, and they can measure it all off. And they get a really accurate idea of how much gold as an estimate is in an area. So they could use that and have the gold in the ground be an instant backing of the currency. Or they're going to just turn around and do the honorable thing, which would be start getting some gold mines to
produce gold as quickly as possible and start buying it from them and start restocking Bank of Canada. And I don't think that's going to happen because the government has no interest at all in backing a currency. They want the currency to fail. And that's the history playbook right there. They're in debt beyond their eyeballs. There's no way that we can repay it. So now it's foot to the floor to accelerate the dollar to nothing. And when our dollar becomes nothing, therefore the debt becomes nothing.
And it's the playbook of every fiat currency in history that ever existed. So like I wouldn't bet against that.
Kellen Ainey (24:16)
So yeah, from what I'm understanding, the government really has no, not only interest, but they have no real reason to actually bail out the Canadian dollar. Is that what I'm understanding here?
Andrew Sleigh @ Sprott Money (24:27)
Yeah,
they want the Canadian dollar to go to And that's why they're spending money like crazy is that while they can buy stuff still, they know the currency is going to go to zero or it's not zero, it's like one trillionth of a cent. ⁓ It's going to decline. So while they can, buy stuff, they build a new hospital, they build a bridge, build an airport, whatever it is they can. And they're spending money like crazy.
to accelerate this thing down because when the dollar goes to zero, they bought these things for nothing. The same playbook we mentioned a few weeks ago when I talked about China using Yuan and they're using debt to buy infrastructure around the world. know, the Belt and Road Initiative, harbors, airports, they're buying gold hand over fist with Yuan, I'm assuming. And then when their currency collapses, they get it all for nothing. And that's...
Kellen Ainey (25:22)
Yeah, well, it's funny. I actually
saw a couple of our commenters. They, ⁓ it wasn't so much a question, but they're, they're fully in agreement with you that in a couple of years, China is going to be setting both the gold and silver spot pricing just because they will have the biggest stockpile of it in the entire planet.
Andrew Sleigh @ Sprott Money (25:39)
100 % though the one with the most metal makes the rules. In fact, they just invited foreign investors to start doing ⁓ Trades on a Shanghai gold metal exchange So like that's just the last couple days
Kellen Ainey (25:53)
wow, okay, that's, yeah,
they're really trying to get people out of the New York Stock Exchange from what I hear.
Andrew Sleigh @ Sprott Money (25:59)
Yeah. Monetarily, they don't have to shoot one shot. Like they're doing all, like from a kinetic war, they don't have to do any of that. You know, we're so busy falling on our own swords in the West that economically we're absolute disaster. Our currencies will fail. Meanwhile, they're building infrastructure and they've got lots of debt. They've got problems too, but they're also manufacturing everything for everybody. So we're not.
Kellen Ainey (26:29)
Exactly.
Andrew Sleigh @ Sprott Money (26:30)
If we're going to go down for the count, you know, we don't have gold. They do. They're going to back their currency at some point when this plays out. And, and then when the economy starts to recover, do whatever it's going to do, which will take years, you know, they're, they're in a position where they can make everything for everybody again.
Kellen Ainey (26:51)
Well, it's like we had said before, right? They're an exporter economy. Their economy relies more so on their exporting power than it does on their dollar power or their yuan power, what I could call it. But they've really positioned themselves where they're the number one exporter. They're the number one manufacturer for every Western country in the world. So realistically, it really does look like the US is between a rock and a hard place.
There's, it's going to be a 20 year, about a 25 year slow burn, it looks like as of right now, there's really no way out of
Andrew Sleigh @ Sprott Money (27:28)
⁓ well, there isn't any way out of it. It's the currency goes to zero and we're going to all wind up being a really deep economic trouble. We're going to have a massive depression on steroids in the West. you know, how long that lasts? Well, the Great Depression effects were lasted for 25 years. And there's there wasn't any debt in the Great Depression. Look what we got going on now. I mean,
You know, like it's there's not even a it's not even a fair comparison as to what's going on right now versus what happened in the Great Depression. It's not even close. Like it's only close with the amount of unemployment and whatnot. But when you compare the amount of debt in the system and the value of the dollar, ⁓ it's it's not it's apples and oranges now. So we're we are so far past the Great Depression with what's You know, I don't even have a way to measure it.
because ⁓ everyone's going to be broke on this except for people that are owed the system.
Kellen Ainey (28:34)
And while like, yeah, I could see how that would happen. ⁓ Unfortunately, that is all the time we have today, Andrew. As always, it's been nothing but a pleasure picking your brain and hearing what you have to say about not only gold and silver, just geopolitics and the global economy. So as I had mentioned, as I had mentioned, we do have that Canada Day sale. How can people connect with you directly to, well, take us up on those great prices?
Andrew Sleigh @ Sprott Money (28:50)
Yeah, good news and bad news.
Okay, thanks, Kellen. So you can contact our office at 1-888-861-0775. Anyone that wants to speak to me, my extension is 230. And you can reach me by email at deathofthedollaratspraatmoney.com. Thank you very much, Kellen. That was three good questions. Those were good ones.
Kellen Ainey (29:24)
Yeah, it was a little shorter today, but there's nothing wrong with asking some good questions at the same time.
Andrew Sleigh @ Sprott Money (29:30)
Yep. All right. Have a good one. Cheers.
Kellen Ainey (29:31)
Cheers, Andrew, you have yourself a good one.
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