Rate Cuts, Gold Path to $5K & Why Silver Just Became “Critical”

Craig Hemke (00:00)
Well, greetings everybody from Sprott Money, SprottMoney.com. We've reached the end of August and what a month it has been. It is time to wrap it up. It is Thursday, August the 28th, and this is your monthly wrap up. I'm your host, Craig Hempke, and joining me to wrap things up and look ahead is renowned author and analyst, Nomi Prince. ⁓ She's very busy. She writes a lot of books.

Dr. Nomi Prins (00:23)
you

Craig Hemke (00:24)
And it's good to get a chance to pick her brain. Cause a lot of stuff we'll talk about today is right in her wheelhouse. Noemi, thank you so much for visiting with me.

Dr. Nomi Prins (00:32)
Thank you so much.

Craig Hemke (00:34)
It's great to see you and I can't wait to discuss where we are two thirds of the way through the year. ⁓ A couple of things before we get going. One, remember this is all from Sprott money. You want to go to Sprott money.com every time you're in the market looking for some precious metal and you should be ⁓ in the market looking for precious metal. Don't let the rally scare you off. Some of the stuff we're going to talk about today will probably inspire you to think, yeah, know what? Prices might have a ways to go higher. So Sprott money.com.

or course call them at 888-861-0775. ⁓ One more thing before we get started, it is a monthly wrap up. We're recording this with, as I look at the clock, I got about 30 hours to go, maybe 28 hours to go before the month end and we're having a great month. Gold's up almost 4 % on the month. If we can close where we are right now, 3417 spot, that would be a new all time

Monthly high which is always important on the monthly charts and silver as well could be painting its highest monthly close. It's August of 2011. No me 14 years wandering in the desert. Anyway, it's been a great month. Keep an eye on those monthly charts everyone watching this and see where they wrap up Friday. If you're looking at this over the weekend because it could really be a harbinger for where we're going as soon as September. No me let's get everybody caught up on what you do.

You've written several books. I know you're in the process of starting another one. Tell a little about your background, but also please give everybody the address of your sub stack because that's where they want to follow you.

Dr. Nomi Prins (02:15)
Great. Thank you. And again, this is such an exciting month and I know we're going to dig into so many things that are transformative for ⁓ everybody's portfolio going forward as well. So what we do at at print sites and the sub stack is print sites dot sub stack dot com is we have a number of tiers where we basically analyze the markets and present mono portfolios with investment rated research ⁓ every month. And we've got two different tiers. So we've got small caps on the founders plus tier. We've got

larger mid caps on our premium tier, which are paid in a lot of complimentary research as well. ⁓ I myself, my background, I'm nice to run research departments at Bear Stearns as a senior manager director in London, at Goldman Sachs as a managing director on Wall Street. So I bring a lot of the analytical experience, but also all the geopolitical activities that I do and that my team does around the world and with respect to Washington and the relationships that the capital has throughout the world to bear on.

all of this research. We launched about 14 months ago. Our portfolios are doing super well. I'm really excited to welcome new people in. This is really kind of an independent labor of love connected to everything else I do and extending from it. So thanks for the opportunity to mention this. And I encourage everybody to just check this out. We just dropped a new monthly issue with a really cool new trade recommendation that augments a lot of what I think we're going to talk about and have a lot of good names in there as well.

Craig Hemke (03:41)
And Nomi Prins, P-R-I-N-S. And so, hey, it's Prinsites, P-R-I-N-S-I-G-H-T-S dot sub slack dot com. I did it. I got it out. Okay. Anyway, and yeah, with your background and experience and with where I think all this is kind of looking like it's headed over the next eight to 12 months. What a great time to be a subscriber there. ⁓ Nomi, you've written several books. ⁓ And I ⁓ just, I'm always amazed.

Dr. Nomi Prins (03:42)
Yeah.

That's right.

Craig Hemke (04:11)
when anybody can write any book. you do such a great job. I wanted to have you on. If people follow the content that we have here at Sprott Money, you remember a couple of weeks ago, had Daniel DiMartino Booth on to talk about the Fed and these challenges, if you will, from the executive branch ⁓ towards the Fed's autonomy and independence. And I want to get into that. You wrote this great book. I'll put it right here in front of my face. All the President's Bankers, which is a great play on words, all the President's men. ⁓

The hidden alliances that drive American power. ⁓ So where I think things are really interesting, Nomi, is where it seems Trump and Besant want to take us. are giving, to me at least, little warning shots. Besant talks about blending the Fed and the Treasury together, working more hand in glove in managing the and the deficit. know, Trump, obviously, if he could fire Powell tomorrow, he would. But by May, he's putting somebody in there that's going to do his bidding.

We've also got this, what might end up being like a Supreme Court test case with what's going on with Lisa Cook. ⁓ What are your thoughts as you observe everything that's taking place? And I'm interested to get it because of your background. Where do you think all this is headed?

Dr. Nomi Prins (05:27)
Yeah, it's really an interesting time for policy and the government with respect to President Trump, and also where we come from historically. And so it's interesting you mentioned all the president's bankers, because I did write that book 10 years ago, and the idea was to trace the history of the relationships between the Treasury Department, the executive branch, the president, the White House, and bankers and the Fed. And obviously, we're years past that, but what's really interesting to me right now

is if we peel away sort of the headlines about Lisa Cook, if we peel away what's gonna happen with treasuries, which yes, the Treasury Department is going to participate more in effectively buying back ⁓ or purchasing some of that treasury debt. The Fed of course has over $6 trillion worth of assets on their books still, much of which is treasuries or mortgage securities, which relate to treasuries, are effectively quasi treasuries as...

as we look at them from the standpoint of debt accumulation and assets on the reserve books of the Fed. ⁓ The interesting thing that's happening now is that that's sort of potential fusion between the Treasury Department and the Fed, which yes, from a legislative perspective from the Federal Reserve Act of 1913 is an independent body. ⁓ The president can appoint its governors, the president can appoint its leader or the head of the FOMC board, but Congress has to approve it. That was how it was set up.

in the Federal Reserve Act of 1913. And in that book you held up, I spent a lot of time out in Jekyll Island going through archives and research of how all of that went down years before that Federal Reserve Act happened and the trace to the Wilson White House at the time under which it was passed. And so there are a lot of... ⁓

relationships now between historically where the individuals who are involved in the Treasury Department, two of which were involved in the creation of the Fed, and the legislation that went to Wilson that created the Fed, even though was a separate entity relative to the independent body that would be the Fed. And the reason it was created independently with congressional ⁓ oversight in terms of ⁓ studying its budget, in terms of the leaders and improving them or not when they come down from the presidents, ⁓ is that at the time,

The United States was undergoing a lot of economic turmoil. There had been a big panic in 1907. JPMorgan and the bankers got together, tried to save it, use the Treasury's money, it was kind of like the first bailout, in order to save the banks that Morgan wanted to save. And he did, but then he said, look, you know what, we need more help. Hence, the Federal Reserve was ultimately born a number of years later. And that's true of a couple facts.

So there's always been that connection where money's either come from the treasury to the bankers to help the markets and the feds sorted itself out to become a support to Wall Street. But it was positioned to the country as this independent body that would help the public, that would help the economy, that would help funnel money when there was a problem on Wall Street through the farmers, through the middle of the country, to the West Coast.

as the country was growing and developing during those times. And that was how it was sold. That's how the legislation remains. ⁓ In 1977, there was a dual mandate that was thrown into legislation where the Fed was required to keep prices stable. Hence, we talk about inflation a lot now. Powell certainly has in recent years, as well as maintain a maximum employment. And so there's been a lot of legislation that's come through. And what's happening now is there

is still in dependence of the Fed. And we'll talk about how that relates to Lisa Cook and the Supreme Court potential battle that might arise. But also there is a very strong connection to the Treasury Department. There's a very strong connection to the President. And even though it operates independently, officially, ⁓ there is a lot of interaction that happens between and amongst people. I mean, just look at the fact that Janet Yellen, who was effectively Powell's boss,

right when were number two before President Trump first, you know, basically put him up into the number one slot. And she became the Treasury Secretary, you know. And you go back in history, there's so many examples of the sort of jumping back and forth between those posts or in number twos of those posts and so forth in terms of policy. And I think we're just seeing another wrinkle of that. So if we get away from the sort of headlining sensational aspects of the personalities involved,

There is just strong precedent for just a lot of blurred lines, even though again, officially still independent between the Fed, the Treasury Department, and the White House.

Craig Hemke (09:52)
Yeah. You know, and this thing with, ⁓ Governor Cook and whether or not, ⁓ the pre the executive religious use it because we're setting some precedent, perhaps. Does the executive branch have that power to reach down and actually manage the personnel? ⁓ and I wonder if this isn't almost like a test case ahead of where they want to take things. Cause I, cause Besson is on the record.

has stated on a couple of times. He wants to meld together, blend together the operations of Treasury and the Fed in order to manage this exploding debt and deficit that obviously they can't really get under control through budget cuts and everything else like they were. Now they're going to try to grow their way out of it. I wonder if, I mean, what would the impact be if it is, if Cook does actually get removed, forcibly removed, allowing

Trump to replace her with somebody else.

Dr. Nomi Prins (10:54)
Well, there's a lot to unpack in that, mean, if she were to be forcibly removed, which we can sort of unpack a bit as well, and also, or just, you

Craig Hemke (10:57)
Yeah.

Dr. Nomi Prins (11:04)
be over it and resign or whatever might happen if there was a vacancy there that ⁓ as with the other vacancies, President Trump as sitting president would suggest appointees ⁓ and then they would basically be voted on and they would sort of go through again part of the legislative operations that we have. And that would happen if Lisa Cook wasn't there and that would create a four to three majority ⁓ for effectively federal ⁓ reserve governors who are

Craig Hemke (11:17)
Mm-hmm.

Dr. Nomi Prins (11:33)
appointed are very strongly connected to this administration, which has been fully on record of saying that we want rates to be cut. Yes, there is a need to continue to buy Treasury debt. Other countries are not buying as much of our debt and we're creating it faster than we ever have before. These two things are going to continue. And so there is a lot of conversation about that at the White House and in the executive branch. So we would have a four, three FED. We would probably have rates cut in a more accelerated fashion.

And there would probably be some kind of backdoor QE to augment the Federal Reserve's book, which is currently around $6.3, $6.4 trillion, still significantly higher than it was when it was $4.5 trillion in the wake of the financial crisis of 2008. It's lower than almost $9 trillion it was in the wake of COVID, but it's still very, very high. So we could see that grow. We could see some sort of a combination develop between the Treasury Department and the Federal Reserve. But let's realize, though, that the Federal Reserve, by

invoking QE by being involved in this expansive historical period of their book, know, larger than it's been in wars, larger than it's been since the creation, larger than it's been in the wake of the Great Depression. ⁓ These are all about

emerging up activities between the Treasury Department issues and creates that and the Federal Reserve which takes it on its book. And in COVID when it had that massive expansion that was because there was a lot of subsidies going on originally under the Trump administration then extended under the Biden administration with respect to increasing debt and helping the economy and people along in the wake of COVID. And then the Fed took a lot of those bonds on its books. It still again has a lot of them. Treasury Department created the debt. So these lines are already crossed. If we have a separate governor on the side of Trump,

mean that ⁓ rates will be cut in a more accelerated fashion. That said, I still think rates are going to be cut in September, as does I believe a lot of the market anyway, because Powell did suggest that would happen at Jackson Hole just recently. So there is a lot going on. Now, can she be removed from the standpoint of the legislation? Technically, if you read all of the legislation that's related to how pointeys are

put on, there's less language about taking off, so can be interpreted by the Supreme Court if it went to that. It still has to be passed the way the language is right now by Congress. Of course, Congress has majority Republicans right now in both houses, so we could see that, but it isn't necessarily, and I'm not a lawyer and I don't sit on the Supreme Court, but the way I see the language, ⁓

It would be difficult without it going back to Congress, which again is controlled ⁓ by the president in both houses to simply remove someone from their post. But again, there's not as much language about removal as there is about appointment, even though again, I'm not a Supreme Court justice. It seems like the intent is there, but that could be a matter for the Supreme Court. ⁓

decide. When I say intent, I mean that it has to go through Congress and ⁓ not at the behest of the president.

Craig Hemke (14:43)
All right. And again, bigger picture. mean, Trump's made it pretty clear that if Powell survives this all the way through and doesn't resign or doesn't get fired or whatever, he's going to be replaced with someone that Trump will do Trump's bidding, you know, and all that. So you can kind of see where this is headed by next year anyway. It'd be interesting to see how that they operate and manage the back end, the longer end and all the duration and

how they attempt to ⁓ stabilize the yield curve. I've always wondered about whether they'd try yield curve control again as they have in the past just to kind pay off yesterday's debts with the cheaper dollars of tomorrow. Do you think that's a possibility they'd give that another run?

Dr. Nomi Prins (15:29)
I think that will be tricky because of the immense amount of debt that we do have. So if you try to do a swap right now, what you would be doing is you'd be issuing, yes, potentially long bonds at lower rates, but also you have them at market rates. And so what you actually need is more purchasing of treasuries by the Fed or somehow by the Treasury Department, or in combination with the Fed. You really need some element of QE to ⁓

to substantially impact the long end of the curve. That said, if we were to have a more accelerated definitive idea of what will happen in the short end of the curve, ⁓ for example, someone who was more ⁓ vocal about say cutting rates than Powell has been, unless KG, unless let's watch every data point, we care about inflation and all the things that he has said, and we had a more definitive acceleration of the cuts in the front end of the curve.

that could have more of an impact on the back end of the curve as well as some form of QE, which I think is what's going to happen. Because what we've seen right now under the 100 basis points of last year that the Fed caught rates from September to December. So we're in the same period right now that we were in last year when rates were cut 100 basis points. So we went through this entire year with no cuts. We got to September, we have Jackson Hole behind us, we got 100 basis points of cuts. And the reason that Powell gave at the time ⁓ was

that the labor market was slowing down, which we kind of see now as well. I think if we get a lower print by even a 10th of a percent for the September number, I think we could even see 50 basis points right now. I don't think Powell wants to do that, but I do know that he has opened the doors at Jackson. Well, and if the print is just bad enough, ⁓ we could see 50 so he can sort of claim. ⁓

is some form of independence related to the data, even though inflation is still high, as opposed to merely political pressure. It's a very fine line. And I think that will depend on the data. But that will ultimately be what allows the back end of the curve to come down significantly in race, because we're not going to see a whole lot of buying come in from central banks around the world. We've already seen them repositioning, for example, in gold.

Many of our allies, particularly the ones we're slapping ⁓ the majority of tariffs on, ⁓ and that's not going to change. So it really has to come internally. And I think the White House is very aware of this. And that's where we're going between now and May.

Craig Hemke (17:55)
Yeah, that kind of sets us up for the rest of our discussion here, Nomi, because again, whether it's in the short term, like what we were talking about with the gold price and what's even rallying today based off a lot of this, but boy, heading into next year, ⁓ it's going to be rather, I think we make a compelling case for not only gold and silver, but all commodities and hard assets. ⁓ That's kind of a direction you want to go with your research and your writing. ⁓

Tell everybody a little bit about where you think this heads and, you know, where the shining assets will be going forward.

Dr. Nomi Prins (18:34)
Yeah, so mean, just starting with gold is the obvious one. We've, and I've said for a year and a half now, we'd hit 4,000 by the end of this year, which I still believe we will. And again, we're going to see.

gold rally, I think more in the next part of the end of the year as we get a rate cut, as we get more central banks coming in and buying as they sort of assess what's going to happen into 2026 and where they're at geopolitically from a tariff perspective with respect to U.S. and the weakening dollar relative to other currencies. So we're going to see gold at that level. We're going to see it hit $5,000 by the end of next year as we continue to do this path.

In terms of silver, we've seen as you mentioned before, we've had the silver now basically at that sort 2011 brink.

And I think silver is going to really break out for two reasons. One is, you know, it's companionship to gold. sort of has this year, it's performed as well as gold last year and underperformed gold. But there's a couple of things really, really ⁓ that are helping silver and particularly junior miners in jurisdictions that are neutral to the United States and to US tariffs and industrial production and so forth, which is that ⁓

Craig Hemke (19:30)
Yeah.

Dr. Nomi Prins (19:45)
The White House, well, effectively, not the White House, but the U.S. Geological Survey is part of the U.S. government, ⁓ has just put both silver and copper on the critical minerals list. That is important because what that signifies ⁓ is that

the government considers them critical to defense of the nation. And what does that mean? It means that those materials are required in energy and in rewiring, in defense weaponry and in infrastructure development for technology, for AI, for chips, for everything going forward. You can't build these things without silver. this designation for the first time is very, very important. It was also the first time that copper, which has now 50 % tariffs on it,

has basically been put forth as a critical mineral preceding this event on something called the 232 section from a 1962 trade act that President JFK was the signer for in 1962 when we're in the middle of the Cold War, basically a few days before the Cuban Missile Crisis. So we have had precedent.

in general for looking at our stockpile of critical minerals historically and saying, all right, these things are important to the national defense of the country, the economy, and its energy strategies. That's what's happening now in copper because of the tariffs, because of the... ⁓

because of 232 and because of the necessity and the competitive necessity in the world. So silver just popped in there as well as that sort of sweet swap between gold and copper has a monetary significance from a wealth perspective, coinage perspective, historical perspective, a safe haven perspective that gold has, but it's also now critical from an industrial defense and minerals standpoint. So both of these two additional materials,

silver and copper are going to see significant highs coming over the next part of this year and going forward. And junior miners, people and companies that are taking supply out of the ground in places that are already permitted, close to permits or in jurisdictions that are allied with the United States are the ones that are going to pop the most. That's what we look at in our portfolio in terms of junior mining, which silver and copper miners have all of those things. ⁓

basically coming together and there's some exciting names and opportunities there for the level as well as ⁓ some of these companies. And of course, larger companies are doing well in the back of all this as well. The better they do, the more possibility Wall Street can come in and do some &A deals, which are at historical highs now. We just wrote a piece on that with respect to where markets are at, where commodities are going and where Wall Street and private equity is positioning itself into this next mega wave of the combination of geopolitics,

commodities and finance.

Craig Hemke (22:37)
and commodities, hard assets in general, something that you think we're entering a new golden era.

Dr. Nomi Prins (22:44)
We are absolutely and I would be remiss if I didn't mention uranium and rare earths as well in that ⁓ there have been significant ⁓

advances in terms of policy with respect to uranium in the last few years, but sort of capping just this month with the U.S. fast-tracking UEC's uranium energy corps' sweet water facility in Wyoming, because that basically is the first time that we have fast-tracked as a nation uranium processing, because it's necessary not just to find it, but to process it, to enrich it, and not to rely, which we still do until 2028, enrich uranium on Russia and on Kazakhstan.

So ⁓ there's a lot to go in terms of that asset as well. Rare Earths, another sweet spot between ⁓ metals and minerals and the critical nature of them with respect to permanent magnets, defense systems, AI and so forth, is also going to be very, very important. I mean, if you're talking about the investment ⁓ in terms of putting money into the right...

junior mining, rare earth companies and processing facilities. This is the time to do that and just kind of sit and watch it grow. ⁓ Because all of these things are coming together. So it's not just about commodity prices. It's not just about central banks and gold. It's about a fundamental shift.

that has accelerated under this administration, but has started actually with this administration the first time, Trump and gone through Biden and now back to this period in US history where there's an acknowledgement that we need to protect and grow our arsenals of all of these materials and the processing of all of these materials. And I talk to people in Washington every day. This is not gonna be reversed. It does not matter who will be in the room. It's accelerating now.

Craig Hemke (24:29)
Yeah. Yeah.

Dr. Nomi Prins (24:32)
⁓ But it's going to continue. And so it's a very, very exciting time, not just for commodities, but for that intersection of policy and commodities and therefore where investors have significant opportunities over the basically long haul.

Craig Hemke (24:49)
Yeah.

I would imagine this will be a focus of your next book, but it's also something that ⁓ you write about frequently at print sites, correct?

Dr. Nomi Prins (25:00)
Yes, ⁓ I follow, we follow all of these trending events. Again, I'm talking to people on the ground around the world and with respect to where their governments are positioning their policy, with respect to how ours is, where the intersections are that you don't hear about in the news. And all of that comes to bear in our research and certainly in our model portfolio selections. ⁓ And in terms of my book, yeah, I am very excited about this period in history. I feel like if I could live for another hundred years and look back

at what is happening right now, I would want to write about it. So right now I'm kind of chasing ⁓ everything that's going on and I'm really excited about embarking on this next book, which will basically be the intersection on a domestic and global basis of policy of commodities and of money.

Craig Hemke (25:49)
I can't

wait. I envy you for writing it. I know that I couldn't do it, but I do want to tell everybody that you're, I think you lay out a great case ⁓ and the research that you do, the analysis that you do. ⁓ If you're interested in staying on top of this, that's Substack. Again, print sites dot substack.com is where you want to go. Nomi, it's just been great to visit with you.

I really appreciate you taking the time to bring us all up to speed on your current thoughts and I hope we can do it again soon.

Dr. Nomi Prins (26:23)
I look forward to it. Thank you so much.

Craig Hemke (26:26)
And from all of us at Sprott Money, SprottMoney.com, thank you for watching. It has been a heck of a month of August. We're getting a little three day weekend here in the U.S. and then it is all systems go coming in September. So keep an eye on this channel, like, or subscribe wherever it is that you're watching or listening so you don't miss any content. We're to do it all again in September and every month going forward. And as Nomi said, the rest of this year might get pretty interesting. So again, thank you, Nomi. Thank you everybody for watching. and we will have ⁓ more content coming for you as soon as September kicks off. Thanks for watching everyone.