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As part of Sprott Money's monthly Ask the Expert series, Craig welcomed financial analyst, author, and former Wall Street insider Nomi Prins for a wide-ranging discussion about financial markets, gold, silver, central banks, and the growing disconnect between financial assets and the real economy.
Gold, Silver, And Financial Distortion: Nomi Prins Explains Why Physical Assets Matter More Than Ever
Drawing on decades of research and nearly eight books, Prins explained why today's financial system shares striking similarities with previous speculative eras while highlighting why investors should continue focusing on physical assets rather than paper promises.
Black Tuesday, Financial History, And Why Markets Continue To Repeat Themselves
The conversation began with Craig referencing Prins' earlier book Black Tuesday and her more recent work Permanent Distortion: How Financial Markets Abandon the Real Economy. With financial history approaching the 100-year anniversary of the 1929 crash, Craig asked how much today's markets resemble those of a century ago.
Prins explained that speculation has always separated financial markets from the real economy. "There are different ways to speculate that divorce themselves from the real market and the behavior of real assets." She noted that before 1929 there was rampant speculation in real estate, bank stocks, trusts, and corporate shares, where insiders accumulated positions before selling to unsuspecting investors. While financial instruments have evolved dramatically over the last century, she believes the underlying human behavior remains remarkably similar. According to Prins, the real economy represents what people actually need every day, while finance increasingly represents a separate system that often becomes detached from physical reality.
Silver ETF Distortion And The Difference Between Paper Silver And Physical Silver
One of the discussion's most compelling sections focused on silver, particularly the enormous disconnect between paper trading and actual physical supply. Prins used the example of the SLV exchange-traded fund. "The average, just SLV... trades on average about 25 to 50 million ounces... a day." She explained that annual trading volumes through a single ETF can represent between five and ten billion ounces of silver, while global mining production totals only about 800 million ounces annually. "We are at the sixth year of a structural deficit in that extraction." For Prins, this demonstrates exactly what she described throughout Permanent Distortion—financial markets create enormous amounts of synthetic exposure while physical supply remains fundamentally constrained. She argued that although investors can create virtually unlimited paper claims on precious metals, they cannot create additional physical ounces. "So it's important to follow the money, but also to follow where and how is it being distorted."
Commodity Supercycle And Why Physical Assets Matter
Craig then discussed Prins' earlier book All The Presidents' Bankers and asked what has changed since it was published more than a decade ago. Prins explained that while political relationships between Wall Street and Washington remain largely unchanged, commodity markets have once again become central to global finance. She described how banking empires originally grew around physical commodities including oil, steel, manufacturing, transportation, and industrial production.
"What drove the initial financing and capital... was based on commodities." Today's markets, she believes, are returning to that reality as demand grows for gold, silver, copper, uranium, rare earths, and other critical materials necessary for modern economies.
"The physical assets... are having more of their mega super cycle moment." Although the individuals occupying positions of influence may change over time, she argued that relationships between finance, government, and commodities remain remarkably consistent.
Federal Reserve Policy, Inflation, And The Limits Of Central Banking
Craig shifted the discussion toward Federal Reserve policy and newly appointed Fed Chair Kevin Warsh, asking whether meaningful changes should be expected. Prins acknowledged that every Federal Reserve Chair attempts to establish credibility while emphasizing independence.
However, she believes the institution itself remains constrained by realities beyond monetary policy. "The Fed central banks can't actually control inflation." According to Prins, central banks can influence interest rates and liquidity, but they cannot manufacture oil, copper, silver, uranium, aluminum, rare earths, or other physical resources.
"It has no ability to control the supply chain at any level."
She argued that inflation increasingly reflects shortages and physical constraints rather than monetary policy alone. While financial markets obsess over every Federal Open Market Committee meeting, Prins believes those debates often exaggerate the actual influence of small interest-rate changes.
Federal Reserve History And The Panic Of 1907
Craig and Prins then revisited financial history, discussing the Panic of 1907 and the eventual creation of the Federal Reserve. Prins explained that the crisis itself centered around copper speculation and banking instability before J.P. Morgan organized financial support that effectively stabilized markets. She described how the Federal Reserve was later promoted as a solution that would prevent similar panics.
Nevertheless, she noted that financial crises have continued throughout modern history. "We've had many panics since then." From 1929 to 1987, 2008, and numerous smaller liquidity events, she argued that financial instability remains a recurring feature despite the Federal Reserve's existence.
Buy Gold Instead Of Treasuries? Supply, Demand, And Long-Term Value
The interview concluded with an extensive discussion about gold and why Prins believes long-term supply dynamics continue to favor physical ownership.
She explained that China has steadily reduced Treasury holdings while increasing official gold reserves alongside numerous other central banks.
"If I'm investing just on the sheer logic of all of that... I'm not gonna buy treasuries, I'm gonna buy gold."
Prins also shared long-term purchasing power research comparing cash, Treasury bonds, gold, stock markets, gold producers, and junior mining companies dating back to 1992.
According to her research:
- Cash steadily lost purchasing power over time.
- Treasury bonds approximately doubled purchasing-power-adjusted value.
- Gold increased roughly fivefold.
- The S&P 500 generated approximately fifteen times purchasing-power-adjusted returns.
- Leading gold producers generated approximately twenty times returns.
- Successful junior mining companies produced substantially higher gains.
- She emphasized that none of these long-term trends change one fundamental reality.
"It takes time to get gold out of the ground." Likewise, silver continues operating under structural production deficits while demand continues expanding from industrial uses, electrification, defense spending, and technology. "It is very easy to create fiat money... But you cannot do that with physical assets."
Gold Spot Price, Silver Spot Price, And Long-Term Investing
Throughout the interview, Prins consistently returned to one central theme: physical scarcity ultimately matters more than financial engineering.
While paper markets, derivatives, ETFs, and monetary policy may create temporary price distortions, they cannot manufacture additional gold, silver, copper, uranium, or other critical commodities.
As governments continue expanding debt, central banks continue managing liquidity, and structural commodity deficits remain in place, Prins believes investors should pay closer attention to physical supply rather than short-term market narratives.
For investors monitoring the gold spot price, silver spot price, or considering whether to buy gold or buy silver, her message remained remarkably consistent throughout the conversation: follow the physical market, understand long-term supply constraints, and recognize the growing difference between financial assets and tangible stores of value.
Conclusion
As financial markets become increasingly dominated by leverage, derivatives, and synthetic products, Nomi Prins believes the importance of physical commodities continues to grow. Whether discussing the lessons of 1929, Federal Reserve policy, Treasury markets, or global commodity shortages, her central argument remains unchanged: real assets cannot be created with the push of a button.
For investors seeking long-term wealth preservation, understanding physical supply dynamics may prove far more valuable than reacting to short-term headlines.
If you're considering diversifying your portfolio, now may be an ideal time to learn more about investing in physical gold and silver, monitor the gold spot price and silver spot price, and evaluate opportunities to buy gold and buy silver as part of a long-term wealth preservation strategy.
Investors looking to monitor the spot price can follow live market gold pricing and market silver pricing.
Previous Podcasts You May Have Missed
Readers interested in learning more about the outlook for gold, silver, mining stocks, and the broader economic forces shaping today's markets may also enjoy these recent discussions from Sprott Money:
- Silver Explosion Ahead? Gold Pullback & Stock Market Melt-Up
This discussion explores whether the recent correction in precious metals represents a buying opportunity, examines the outlook for silver prices, and discusses the risks posed by elevated stock market valuations and speculative enthusiasm surrounding artificial intelligence. - Biggest Gold Bull Market Ever – Brien Lundin
Brien Lundin shares his perspective on why the current precious metals cycle could become one of the strongest bull markets in history. The conversation covers central bank buying, persistent inflation, growing government debt, and why long-term investors continue to accumulate physical gold and silver.
Craig Hemke
Hello again from Sprott Money, SprottMoney.com. We've reached the about the middle point of July. And that means it's time for your Ask the Expert segment, something we do every single month. And this month I'm happy to host Nomi Prince, analyst, author, call her Wall Street Insider. And I like to call her a good friend. We've known each other for quite a long time. And so it's always good to get her thoughts. Nomi, thank you so much for joining me to talk about the markets.
Nomi Prins
Yeah, thanks so much. Great to great to see you again.
Craig (00:58.007)
Great to see you too. Again, everybody, please remember a couple of things. One, Sprott Money is who puts this content out there for you, free of charge. So hit the like or the subscribe button. Or hey, if you're in the market buying the dip, go to sprotmoney.com. They will help you out. Great deals on precious metal, but also storing that metal. So go to sprottmoney.com and check that out. And then be sure to check out Nomi's content.
You can find her Nomi Prince.com. Get a link to all the different books she's written over the years. some of the other services she provides. You go to her Substack. Princeites. Hey, I see what you did there. Not insights, Princeites. All right. Princeites. P-R-I-N-S-I-G-H-T-S. Substack.com. Keep up to date on what Nomi's thinking. We're going to find out what Nomi's thinking right now.
Nomi Prins (01:36.845)
Yeah.
Craig (01:53.046)
Nomi, I want to start though. You are a a very proficient author, and you've got six or seven books that you've written. I mean, I can't even write one, but I you have the you don't maybe have the same ADHD that I have. I get squirrel. a little too distracted. So anyway, I want to go back though, because this is currently on my mind. you wrote a book back in 2011 called Black Tuesday about the events of
Nomi Prins (02:01.75)
Yeah, so coming on eight.
Yeah.
Craig (02:21.877)
What's basically now a hundred years ago. and your most recent book is called Permanent Distortion with the subtitle of How Financial Markets Abandon the Real Economy. I'm in the process of reading the Andrew Ross Sorkin book, 1929. So all this is on my mind. And that history repeating, rhyming, that kind of thing, and some of the similarities. And in Sorkin's book, you know, in the 20s, he talks about how people are like,
can't go down. We're it's a global thing now and all this stuff and all the speculation going on. As an author, an expert, you've studied this stuff. How much does it rhyme versus a hundred years ago?
Nomi Prins (03:03.618)
It is really interesting that it is a hundred years, and we talked about 1929 as some, you know, mystical past date, but but we're we're heading up to that century. a lot of things have stayed the same in that there are different ways to speculate that divorce themselves from the real market and the behavior of real assets. And in the lead up to 1929,
you know, there was rampant speculation in real estate. There was rampant speculation in in trust and in in bank stocks and other types of corporate stocks and amassing them and getting sort of people in, and then the insiders selling them off from basically underneath real buyers, and you know, it sort of led to the crash and so many things going on. And and there's an element that's always been prevalent in the difference between finance.
And financial systems and and mechanisms and instruments, you know, all these like big words, but the way in which finance works and the way in which the real world works, because the real world is really the the reflection of what we need and do day to day. And finance is you know a different kind of manifestation of that. So there's similarities. Like if we just look at something small like the the latest shift in silver prices, we have a huge ETF, exchange traded fund called SLV.
there's a lot that represents silver, but but in that people can take paper positions and what is allegedly real silver behind it. I say allegedly because the idea of a share in SLV, and it trades like shares, you can trade in nanoseconds with big volumes, is that they each represent point nine of an ounce of actual silver, and that somewhere the silver is all locked up, and if everybody sold every share of SLV, they'd all get their silver. It doesn't work that actual way. In reality,
The average, just SLV, there's many different exchange traded funds for metals, including silver, but just SLV, the largest, it trades on average about 25 to 50 million ounces, allegedly that represent real silver a day. In major volatility periods, like at the end of June, when silver was totally dumping in a couple of days, it trades up to 50 million ounces. To do the math on that, that's between just trading one ETF.
Nomi Prins (05:18.338)
5 billion to 10 billion ounces of silver a year. We only extract about 800 million ounces of silver per year from the ground, and we are at the sixth year of a structural deficit in that extraction for what is actually needed in terms of real silver from the ground. So and that's one one ATF. So the magnitude of distortion, you know, you mentioned my book, the magnitude of distortion.
Craig (05:27.955)
Right. Right.
Nomi Prins (05:45.536)
you know, from 1929 type of instruments, similarities and additions into today's world continues to run rampant. and that's why, you know, it's it's important to follow the money, but also to follow where and how is it being distorted. So you can also look at where the long-term investment trends are, like with gold, like with silver, like with physical commodities that you can't actually distort.
Craig (06:11.883)
Right, for sh and again, that's why I guess history rhymes, right? Because people are still people and bankers are still bankers. I know me, I I went in kind of preparing myself to speak with you today, I was looking through your books. I didn't realize all the president's bankers came out nearly twelve years ago.
Nomi Prins (06:31.946)
It it's insane. It was a long time ago. And I think actually all of Sorkin's books, not all of them, but we we we seem to have this sort of parallel track in publishing a book like within the same actual year or within a year or two of each other as we sort of follow different parts of the, you know, just the financial system history, et cetera. But yeah, it was twelve going on, yeah, years ago.
Craig (06:52.403)
Has anything changed? I mean, I I remember reading it twelve years ago going, Whoa, geez. And again, this is one of Nomi's books, All the President's Bankers, like kind of a play on all the president's men. What's changed since you wrote it? Because it was such a scathing reta critique of the current situation and system.
Nomi Prins (07:10.572)
Yeah, it was over a century of history. And and and interestingly enough, current book I'm working on Commodity Wars actually does a historical loop to that book, and I'm re examining some of the additions to the history that we look at. And in that, All Presence Bankers really started with the Rockefeller era, the the JP Morgan era, you know, the real era where there was, you know, a few large financial slash industrial titans. Morgan was always financial Rockefeller kind of
was industrial with oil and then sort of straddled with, you know, board seats and everything else. Ultimately, the whole Chase infrastructure now we've got JP Morgan Chase. They all married physically, each other's families and, you know, in terms of the entity that that we have now. And what I did was I traced some of that. but I I also looking back, what what has changed and actually gone back to that period,
Is that what drove the initial financing and capital and the ability of banks to like have their friends deposit and do deals with them to basically corner the market, MA, the whole nine yards, was based on commodities. It was originally based on you know Carnegie, Rockefeller, Steel, factories, Ford, cars, the needs that he had, glass, oil, all of these physical commodities that over history
we really pay attention, as did I, to the financial side of that. But really, the financial side wouldn't have even existed without all the mechanisms that were going around the physical assets. so that's what's interesting. That it hasn't changed, but we've kind of come full circle. Now the physical assets I think are are having more of their mega super cycle moment, as are the people that are involved in them.
In terms of people, in terms of the revolving door though, that I I followed between Washington and Wall Street, the Treasury Department, and like CEOs of major banks, that's pretty much stayed in there. I mean, you know, the the amount of Goldman Sachs alumni who become Treasury Secretaries or the advisors that have come out of chase, all the sorts of revolving doors in different departments of Washington.
Nomi Prins (09:18.724)
that have kind of a straight line through to different departments on Wall Street. that's pretty much stayed the same. you know, even even our our Treasury Secretary is not from Goldman Sachs, I mean certainly a lot of relationships between, you know, who runs the coin, as they say. I'm also watching House of Dragons. So who runs the coin? back then, yeah, gold was a big scene, just in in the recent episode. But and and who runs the country and and how policies are set.
Craig (09:35.319)
They think a lot of
Nomi Prins (09:47.166)
whether it's national strategic defense, whether it's economic, whether it's energy policy on the back of these relationships between commodities and then sort of how they're amplified in finance. None of that's really changed either. You know, sort of different people, different faces, but similar institutions.
Craig (10:08.811)
Yeah. you're right about House of Dragon. They're they're it's like they read the old JP Morgan quote about who he has the gold makes the rules, right? They're really that's big focus of the most recent
Nomi Prins (10:19.468)
No, it is. I mean, if if you saw that, I mean and and actually interestingly, and we had Costco selling gold bars, you know, last opening that up to their customers. We got, you know, House of Dragons basically talking about, you House of Morgan, right? You know, and talking about gold and the coin. You know, th it's interesting that that a lot of this certainly the commodity side has become more and more mainstream. not that it hasn't over the years, but we're in a particular period where there's just more information and discussion and
Craig (10:25.323)
Yeah. Yeah.
Craig (10:33.163)
Yeah.
Nomi Prins (10:48.258)
Yeah, T V shows that are are really digging into literally commodities.
Craig (10:54.347)
Yeah, for sure. This this leads me right into what I want to ask you next about Kevin Walsh. Jerry Powell, at least, was famously a lawyer or whatever his background was, not necessarily a Wall Street, but maybe he kind of was tangentially, but Walsh comes in to replace Powell and
D I d I think to me he's kind of trying to establish his gravitas no me. You know, he's not just a sock puppet for Trump. We're gonna be tough, we're gonna look out for the little guy and mandate, you know, our mandate and all this kind of jazz. you g he says he's gonna inflation's his number one priority to help the little guy and he's gonna get the balance sheet in control. Well, I don't know, what do you make of it? I mean, where do you is he any different any of the rest?
Nomi Prins (11:42.85)
So w what you said, and the first thing you said about him was interesting because I I agree with you about the sort of gravitas element. The the role of of the chair at at the Fed has a much longer life. Well, it it has a longer life than one term of a presidency in which you know Trump is in his last term. And as a result, if you're gonna command in that role and and have that sort of power or maximize your power position.
which they have all done in their different ways over the his history over the years, you know. Warsh came in and basically made a statement about how he would give fewer statements. I mean, he basically said that, you know, under under his Fed, there would be less, and and the the initial statement was was was quite a bit shorter in words, but that he would he would provide less guidance for guidance to the markets.
Craig (12:24.538)
Right.
Nomi Prins (12:36.754)
and I think implicitly saying it would be data related, which is exactly what Powell did or said anyway, just in a different way. I'm not saying they're like the same two people, but but they they do have this this role and they do have to put their own stamp on it, regardless of the relationships they may have with the president or Congress, or or the banking community. And I think that's what Warsh did by saying, look, basically we're gonna be looking at i inflation, we're we're gonna run this Fed like
the Fed's supposed to be run, you know, helping the little person, et cetera, et cetera, you know, emphasizing the mandate. But you know, there's also a lot of conversation about how the inflation metrics might have to be changed as well. If we look at where inflation is right now, and obviously it's come up because of the oil spikes, because of what's going on in Iran. But you know, in the last couple prints, you're talking low fours, high threes. Before that, we had gotten down to sort of mid-high twos. That's pretty average inflation. So this idea that
of what we have over time, that inflation can even be quote knocked down to what the current literally pick a number and just make it stick or or let's use it two percent inflation that the Fed has talked about for the past few decades. It it it's really it really doesn't it really doesn't matter in that I think the Fed is going to or under his Fed there's going to be different metrics or they're gonna talk about looking at various numbers in different ways.
you know, I think what we need to do, and we're looking for this, is is be prepared for some sort of statement, a research report, or combination that talks about what's really driving inflation. And in a way, and this is a one of the major themes that I had in permanent distortion, and it's only more so since that book came out, which is in 2022, which is that yeah, the Fed central banks can't actually control inflation. They can control the cost of money.
Craig (14:10.838)
Force it.
Nomi Prins (14:29.004)
They can sort of control money supply, which if you just look at it and zoom out, you'll notice that it doesn't really care about where rates are either. but in the short term, it can sort of be manipulated that way. But again, the the Fed cannot control real assets, as we're talking about gold now and silver, and copper, and aluminum, and rare earths, and uranium oil, it has it has no ability to control the supply chain at any level. So the idea of it being an arbitrary any central bank of of inflation by
the tightening of some money in the long end is is is a bit it's it's a bit arbitrary. I mean it it is just that. We saw inflation over 2% the entire time that the Fed reduced rates from five and a quarter to the 375 that they are now. All the time and with all of the angst in the market about each FMC meeting and whether or not inflation was too high in the interim, what the Fed would do, they cut rates while inflation was above their target.
That's what actually happened. The debate about whether that could happen each time was was very, you know, fear-provoking in the markets and it created a lot of waves. But the reality, now that it's all been done and dusted for the Powell period, is that's what happened. also what happened under Powell and so far into the beginning of Warsh is the Fed's balance sheet grew from December of this year. Obviously grew into COVID, it came back.
Craig (15:24.556)
Right.
Nomi Prins (15:49.226)
It grew from December of 2025 through now by about $250 billion, which is about equivalent to how much treasury bonds in the tenure were issued around that same period. I'm not saying they were only buying 10 years, but the the numbers equate to sort of trying to dampen the effect of sell-offs or less institutional central bank investment in long-term US Treasury bonds. whatever the reason for it is that the book did grow. and so I think under Warsh, he's not going to be able to dial that.
Back. He's not going to be able to take away the end of QT because I don't think it's in the best interest of the U.S. Treasury. It's not in the best interest of managing the inflation of the country in managing the cost of servicing the massive debt that keeps growing that the country has. And at the end of the day, the Fed is an institution that's technically there to provide.
liquidity to the banking system and stability to the financial system. It's not really there officially to, you know, dial back inflation by a couple ticks here or there, which it really can't control anyway. It's just we we've adapted this narrative mostly since COVID and since we saw those those very high spikes when supply started again and all the maneuverings since then and in between then and now with with the straight. But but really it's not going to do very much.
Craig (16:57.579)
Right.
Nomi Prins (17:16.25)
with respect to being able to control. And if we have a twenty five basis points hike between now and the end of the year, that's like a you know, that's like a statement hike. That's not anything that's really gonna do something one way or the other.
Craig (17:26.091)
Yeah.
Maybe that's really all they can't. Like you said, they can kind of jawbone, you know, to try to impact the emotion that drives inflation in the first place. I you know, it's funny you mentioned that 'cause again, getting back to history, was w the panic of nineteen seven or whatever, wasn't the enactment of the Federal Reserve didn't they try to sell that as this is a way we're gonna keep that from happening again?
Nomi Prins (17:51.694)
Well that's I I I I I do love your your your historical analysis on that. Nineteen seven, the panic actually was about copper, I ironically, and back to the speculation on an asset that actually has a physical restriction from the ground, especially at that time and for a different reason as regards electrification now. yeah, there was there was there was a ton of problems with cornering that market, banks closed.
Craig (18:01.205)
Yeah.
Nomi Prins (18:15.372)
Margins got called, JP Morgan got a bunch of people into his library and said we need to do something. Notes went back, it's all on all the president's bankers and other places. You know, I I I I read the actual letters, you know, the notes going back and forth to to Washington about how to enable Morgan to effectively fix the panic, which ultimately happened. It was the first QE, it was actually a $25 million basic check from Treasury Department to to JP Morgan, and he doled it out to his friends.
and then of course, years later, a lot of conversations, the Fed Reserve Act was passed in 1913 and it was sold under the Wilson administration, as you mentioned, to be this way of sort of equaling the playing field between what was happening in Wall Street, the speculators, that part of the market, and all of the banks throughout the country, the 12 different reserve sort of focal points of the that that the Federal Reserve is is is superviding.
Craig (19:05.174)
Right.
Nomi Prins (19:06.259)
And and make them all better, you know, make the money flow. You know, farmers needed it in the middle of the country, you know, Chicago needed it, San Francisco needed it, you know, it was it was gonna sort of make things nice. And the reality is we've had many panics since then. We we we've definitely had stock crashes, we've definitely had liquidity squeezes, and we've had the big ones that we know about, you know, that we talk about the 1929s, your 2008s, your 1980s, eighty seven, when when the SP crashed, you have all these sort of moments.
Craig (19:13.269)
Yeah.
Nomi Prins (19:34.392)
But there's so many little ones in between, like SLV squeezing silver today that, you know, won't get necessarily as much attention in the annals of history, but are part of the thing that the Fed actually can't control and and really negates the idea of why it was created.
Craig (19:53.11)
Right, right. Well and I I guess where I'm kind of leading you with this is in into my final question, because part of the reason gold has fallen so sharply over the last four months is this notion that the Fed's gonna be hiking rates due to inflation. and again, the the Fed was set up to provide liquidity to to grease the system. They've kind of morphed it into greasing the government, right, at two trillion dollars a year in deficit. But
The American public has been sold this kind of bill of goods that what they're really here for is this dual mandate, right? That Powell and Yellen and Bernanke and all the rest have talked about and now Wars too. In the end, the real mandate is their origin their original mandate, right? To keep the markets afloat. And so if gold's going down because, well, he's going to shrink the balance sheet and they're going to hike rates, if if it if it's really their original mandate, it would seem that's just all.
Job owning, that's just all hearsay. That's there's when it comes down to brass tacks, they're gonna stick to their first mandate, aren't they?
Nomi Prins (21:00.398)
Absolutely. If there was a banking crisis, they would they would figure out a way to fix it. And there has been again, so this is short near-term growth in in in their balance sheet. The balance sheet is still two trillion dollars more than it was at the height of the post financial crisis. So the idea that you know Powell or or course or anybody's like shrinking it while debt's growing, while the servicing is growing, is is is kind of not a thing. but what's interesting about gold and and and the sort of narrative and this connection.
I think it relates to to so therefore it's better to buy treasuries because they give you real yield and and gold sort of doesn't. We did a study about and I went back to for various reasons, but 1992, which was when China first decided it was going to be a rare earth. you know, the Middle East has oil, China has rare earths. It went about this whole capability that it's built, and basically it it creates all of the supplies for our entire military as a result today. But there was a through line.
Craig (21:33.259)
Yeah.
Nomi Prins (21:58.082)
That was around the first time that they started really investing in US Treasuries. They got to 1.3 trillion of holdings in US Treasuries. Now they're at 650 billion. So they've they've they've significantly reduced their treasury holdings. they've of course increased their gold holdings. They're still nowhere near the percentage of reserves they were at during the financial crisis. So this the People's Bank of China, who does continue to buy gold, as do other central banks.
are still below some of the percentages of reserves that they have been at their historical highs. So there's a lot of buying still to be done just to get even while they're reducing the amount of treasuries they're buying, while there's more treasuries in the world. So if I'm investing just on the sheer logic of all of that, the numbers, the supply and demand, the the value, and and where it's coming from, I'm not gonna buy treasuries, I'm gonna buy gold. That's just that that just makes sense. But the other thing is we did a a study, if you had had
Back to nineteen ninety two again. J just just a point. There's no magic about it except for what I just said about but of oil and rare earths in China. If you had a hundred dollars in cash in your pocket in nineteen ninety-two, it would be worth about sixty percent less today, right? In terms of purchasing power. If you had used that same hundred dollars to buy treasury bonds with all of the, you know, different coupons or investments, blah, blah, blah, over the same years, it would be worth about two times your investment netting for purchasing power.
Gold would be about five times your investment, netting for purchasing power, not paying interest officially, just in terms of your value, five times. SP would be about 15 times again purchasing power. The top gold mining company today, or some of the top, would be 20 times. And junior miners who are still in business today and have grown would be a hundred times.
Craig (23:18.657)
Mm-hmm. Uh-huh. Yeah.
Craig (23:42.614)
That's
Nomi Prins (23:43.5)
The specs and I I I did a lot of different you know, we we ran a lot of different numbers, but but the specs of junior developers going out, exploring, finding, getting you know, capitalized by the larger companies, you know, becoming bigger versions of themselves. So if you look at the the waterfall of actual new supply of gold into the market and gold and paper products, gold is still more valuable than.
A lot of them and and the producers of gold and the explorers for gold, much more so. And you can cut that history up in many different ways. those are some some you know zooming out numbers. But the point being that it takes time to get gold out of the ground, it takes time to find gold. We are about to be at a deficit for gold again, six-year running for silver for current demand, not even talking about extra data centers or electrification.
resupplying defense departments around none of that, just just current demand. and treasuries are basically forty trillion dollars worth of debt to United States, where it's even hard to determine what that debt's actually doing, what economic benefit it's actually connected to beyond the budgets that continue to grow in terms of long-term economic growth. So you know this all goes back to it's it's very easy.
Craig (25:04.885)
Mm-hmm. Yeah.
Nomi Prins (25:09.882)
to create money, oddly. It's very easy to create fiat money. It's very, it's it's very, very nanosecondy technologically doable. and that's what central banks do. But you cannot do that with with physical assets. And you certainly can't do that to match demand for the use value of those assets, whether it's as a monetary anchor as it is for gold, and gold also has other physical needs.
Craig (25:25.739)
Yeah.
Nomi Prins (25:38.956)
that it that it also focuses on, that it also is a hard metal, is able to to do. S same with silver, with conductivity, same obviously with copper, with electrification, magnets, permanent magnets, rare earths, uranium for fuel, there's so many.
Craig (25:54.476)
and kinda go back to where we were. all
Nomi Prins (25:57.196)
And with that, my light just turned off. So something I said about electrification. just darkened the but but yes, the the the point we need actual things.
Craig (26:00.69)
my gosh. you
Craig (26:07.061)
Yeah, for sure. And again, they can Wall Street can lever this stuff up and print all these derivatives and all these ETFs and everything they can to make money off of the physical. But he in the end, they need the physical. That was that panic in nineteen seven we talked about. You never know when that might come again. And the Fed, I don't know, no me I just can't imagine. I mean we're recording this t today on the fourteenth and Warsh is in front of Congress and th and he's like and the head of that
House Financial Services Committee or whatever it was said, Well, you gotta stop enabling the politicians who won't make hard choices. They're not gonna stop. They're gonna continue to enable.
Nomi Prins (26:42.39)
Well they're not gonna stop in also, you know, questions there, which will also touch inflation and consumers and everything, 'cause you have to if you're a congressperson. it it's all buying that narrative that the Fed can actually actually do something about supply chains.
Craig (26:51.925)
Yeah.
Craig (26:56.567)
Right.
Right, precisely. Nomi, I've kept you longer than I promise. I thank you so much for sharing your time. Hey, I just on the way out, again, someone goes to PrinSites.substack dot com. What will they find there?
Nomi Prins (27:12.544)
it it'll take you to a landing page and you can make your choice as to some of the complimentary material we provide in research in different tiers. our founders tier is the one that includes it all, as well as our portfolio recommendations, mile portfolios, we track everything. I go everywhere, including deeply underground to see silver mine sites, et cetera, and it just gets you access to all of that for being a better investor.
Craig (27:35.383)
I mean, and that's what people need, especially a time like this. You need as much fair, objective, balanced information as you can find. and so please, my personal recommendation go to printsites.substack.com and check out what Nomi has. On your way out, don't forget to check out SprottMoney.com as a provider of great prices and deals and storage of your physical precious metal. And lastly, hit that like button or subscribe button because
There's more content to come as we go through July and into August. You don't want to miss any of it. If you hit that like or subscribe to get notified as soon as something is posted. Nomi, thank you so much for your time. It's been fabulous. I appreciate it.
Nomi Prins (28:14.648)
Thank you so much.
Craig (28:16.544)
And from all of us here at Sprott Money, SprottMoney.com, thanks for watching, but keep an eye on this channel as the month of July continues.
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