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What does it mean when one of Wall Street's biggest banks quietly recommends that its clients shift half of their bond holdings into gold? Just think about how enormous that is. For decades the 6040 portfolio was considered a law of nature, and now a banking crisis has rewritten it. At the same time, a man who works for the president sits on the Federal Reserve's interest rate-setting committee and says: "The Fed has no job of protecting the dollar.
Gold is rising rapidly, silver is soaring, and the gold mines are doing something almost no one expected. Stay tuned, because in the end you'll see how it all fits together and why a single number in the bond market might be the most important clue of all." Before we continue, if you enjoy sharp, easy-to-understand analyses of what really moves gold and silver , click "Like," subscribe to the channel, and turn on notifications.
I make these videos so you never have to guess what's happening behind the headlines, and your support ensures it gets passed on. And now we begin, because this story starts with a single sentence from the US Federal Reserve. The Fed has signaled that at least two more interest rate cuts are expected before the end of the year.
For the precious metals scene, that sounds like music to their ears. Lower interest rates generally weaken the dollar, and a weaker dollar usually drives gold and silver prices higher. Peter Schiff, one of the loudest gold bulls of all time, said it quite directly. In his view, the fat was never truly independent.
Most people would have believed that, he says. But this belief is now crumbling because the curtain is being pulled aside and everyone can see who really has influence. His prediction is that the dollar could fall sharply, while gold will rise sharply. Keep in mind that this is his opinion and that he has been bullish on gold for a very long time.
We will examine his story against the data as the video progresses. So what do the numbers say? Gold is up around 40% this year. Silver is at about 48%. These are enormous returns for every asset class, and they seem even greater when you consider that last year was also strong for metals. But the real stars are not the metals themselves, they are the companies that extract them from the earth.
The GDX, a popular fund invested in large gold mines, has risen by approximately 113% this year. The GDX Yat, which includes smaller mines, is at around 115%. Compare that to the S&P 500, which has risen by about 13.3%. Mining stocks have thus outperformed the Lightindex tenfold. That's not a small distance, that's another universe.
And now it gets interesting. Schiff argues that stocks don't look so good when you measure the stock market in gold instead of dollars. His idea is simply that a dollar can lose value over time, and if you measure everything in dollars , it can mask the damage. In his eyes, gold is the honest measure.
If the S&P gains 13% in dollars while gold rises by 40%, then stocks have actually lost ground against gold. In the video, he mentioned a decline of about 27%. But if I calculate it myself, 1 urgent 30 divided by 1.40 results in a decrease of approximately 19%. Still a significant drop, but it's worth being precise.
Either way, his argument remains valid. What looks like a bull market in dollars can look like a bear market in gold. Let's take a look at what happened on a recent trading day , because it shows just how wild mining stocks have become. Gold rose by just over 1% that day, about $40. However, both the GDX and the GDX Yard jumped by around 5%.
That's roughly five times the movement of gold itself. The GDX closed at an all-time high, the highest ever recorded . The GDX J reached a level it hadn't seen in about 13 or 14 years. Over the entire week, the GDX gained approximately 3.75% and the GDX J approximately 2.2%. Mining stocks often behave like gold with a turbo button.
They rise faster when gold rises and fall faster when it falls. Keep that in mind, because it works both ways. The biggest winner of the day was Barck Gold, which surged by around 10% . That's rare for a company of this size . Smaller mining companies fluctuate so much, but Barrick is one of the largest in the entire industry.
Newmont, the largest of them all, also gained almost 5%. To be fair, even the biggest gold mines are tiny compared to the giants of the tech world. One could say that the entire mining sector is a small pond, but small ponds can make big waves when money flows into them. And money will flow into the ship right now.
Why? Because of something that happened in the middle of this week, which has been described as a bombshell . For decades, investors have repeatedly heard the same advice. Invest 60% of your money in stocks and 40% in bonds. It's the classic recipe, the simple, home-style cooking of investing. You only change it when you get older and reduce your stock holdings and take out more bonds shortly before retirement.
Otherwise, the formula remains the same. But last week Morgan Stanley proposed a new version . Keep 60% in stocks, reduce bonds to 20% and put the remaining 20% into gold. This is a very big departure from the textbook, and it came from a major bank, not a gold trader or an outsider commentator. Consider what that means in simple terms.
If a customer currently holds 40% of their savings in bonds, the only way to reduce their savings to 20% is to sell half of those bonds. And a large portion of what people hold in bonds are US Treasury bonds. When Schiff considers this advice, he therefore sees more than just a minor portfolio adjustment.
He sees a silent sell signal for American national debt. The bank explains that gold can serve as a hedge against inflation, which ultimately means that bonds may no longer protect people as well as they used to. That's a remarkable statement for an established company. Let's talk about the timing, because it's inconvenient for Washington .
The US government is running record budget deficits and the new spending law, often called the Big Beautiful Bill , is increasing the pressure. This means that the Treasury Department will have to raise enormous sums and needs buyers for all these bonds. According to Schiff, the problem is that the usual buyers are withdrawing.
Foreign central banks that used to buy government bonds were net sellers, and many of them are now opting for gold instead. The social security fund, once your constant buyer, has become a seller to cover its shortfalls . And if ordinary investors follow Morgan Stanley's new model, they too will become sellers, as will the Federal Reserve itself.
Normally, the central bank can step in when the buyers disappear, but at the moment the Fed is continuing to slowly shrink its balance sheet. A process called quantitative streamlining. The pace is slow, but the direction is still to sell, not buy. The question Schiff keeps asking is therefore simple and uncomfortable.
If everyone leaves, who will be left to buy US debt? He suspects the government could pressure banks to buy more government bonds , but then the banks would give out fewer loans, which could put a strain on businesses and households . He also doesn't believe that stablecoins will fill the gap. We'll get to that in a moment.
There is a sign that the markets are already reacting. When the Fed cut interest rates by a quarter of a percentage point, most expected borrowing costs to fall across the board. Instead, long-term yields rose. On the Tuesday before the cut, the yield on the ten-year government bond was around 4.02%.
By the end of the week, it had climbed to 4.13 %. The 30-year yield was around 4.7%. How strange is that, actually? The fat lowered short-term interest rates, but the market demanded more to lend money long-term . Schiff left it in such a way that investors did not believe the reassuring story of the fat.
In his words: Inflation fears and a weaker dollar are pushing the long end of the curve upwards. Why this is important for ordinary people: Mortgage rates follow long-term returns much more closely than short-term interest rates. So if fat falls, but long-term yields rise, mortgage rates may not fall as much as the White House would like.
This is the opposite of the goal behind all the public pressure on the field. Schiff takes the logic a step further. If long-term interest rates continue to rise, he believes the field could eventually be forced back to quantitative easing, i.e., printing money to buy bonds. He warns that this would only further fuel inflation and give investors even more reason to flee bonds.
It becomes a loop, and he believes that gold is the place people flee to. Let 's now talk about the man who sparked part of this debate. Stephen Maron formerly headed the President's Council of Economic Advisers and now sits on the Fat's interest rate-setting committee. In a television interview, he said that interest rates needed to fall significantly further because, in his view, the Fed was far above the so-called neutral interest rate, the level that neither stimulates nor hinders the economy.
Schiff strongly disagrees. He claims that the Fed is actually below the neutral interest rate. Monetary policy was therefore too loose, and the FAO should have raised interest rates instead of lowering them. He cites the long end of the bond market, the price of gold, and the growth of the money supply as evidence.
Schiff also points to inflation. Prices have been rising faster than the 2% target of the fat industry for about 5 years, and the fat industry's own forecasts do not foresee a return to 2% for another two years or so. This adds up to a long period above the target. He considers the fat forecasts unreliable and says he has addressed this in a separate video, which I recommend if you want to hear his full argument.
To be fair, other economists see things differently. Some believe that inflation is cooling down and the labor market is weakening enough to justify cuts. There is a real debate here, and one should bear in mind that nobody, not even Schiff, can predict the future with certainty. But the comment that really alarmed Schiff came next.
When Miran was asked about the dollar, he said the exchange rate was not part of the Fed's mandate, pointed out that the Federal Reserve Act said nothing about a strong dollar, and stated: " Monetary policy is the president's responsibility, not the central bank's." Schiff believes this statement should worry anyone holding dollars.
His reasoning is simple. The Fed's main task is price stability. Prices are measured in dollars. When the dollar loses value, you need more dollars for the same things and inflation rises. Therefore, he argues, stable prices cannot be protected without protecting what the dollar can buy. He put it even more bluntly.
Either someone does n't understand what the Fed's mandate really is, or they aren't being honest about it. He says there is no third option. Miran and others would likely counter that the Fed's statutory objectives are stable prices and maximum employment, and that exchange rates are a separate matter regulated by the Treasury Department.
This is a fair legal interpretation and it shows how the same facts can lead to very different conclusions . But Schiffssorge concerns the practical side and believes that the value of the dollar and the task of the Fed cannot be so neatly separated . Then there is the political turn. Steve Bannon, once one of the president's closest advisors, has spoken out in favor of Scott Bess becoming Fed chief while remaining Treasury Secretary.
This would mean that one person would be at the head of both the central bank and the finance ministry. Schiff calls that a terrible idea. Traditionally, there is a wall between the two. The Ministry of Finance spends money and manages it . The fat controls the money supply. The wall exists so that the central bank can say no if government spending becomes reckless.
Without them, the Fed could go from being a referee to a cheerleader, and Schiff considers that a serious risk for the dollar. This is where the bigger picture begins to come together. Imagine a fat chief who also runs the Treasury Department, an interest rate-setting committee with a member from the White House entourage, and a government that has to borrow record amounts.
Schiff says that this is exactly the situation in which confidence in a currency can begin to slip. And when trust erodes, people look for something that doesn't depend on the promises of any government. That, he argues, is exactly what gold has been for thousands of years. Of course, critics would say that the Fed has weathered political pressure before and that markets often overreact to headlines .
Only time will tell which view is right. Now think about what this means for people who currently own no gold at all. Schiff points out that most of Morgan Stanley's clients do not own one. Suddenly, a fifth of their portfolio is to be invested in gold . That's a very big step when you're starting from scratch.
And it's not just about Morgan Stanley. Schiff mentions that the well-known bond investor Jeffrey Gunlach recommended on CNBC that 25% of the entire portfolio be held in gold. The reaction was shock. Other guests on the show admitted that they do not own one. Schiff's response was that they were too late to the party and that a flood of new buyers would drive the price significantly higher.
He even jokes about where this could lead. If 6040 becomes 60 2020, he says, then the next step might be 60 1030 and eventually 60% stocks and 40% gold, completely without bonds. That's obviously a playful exaggeration, but it makes a point. Once a trend starts, it can continue longer than people expect.
At the same time, it should be remembered that portfolio models change slowly, that large institutions act cautiously, and that gold has had long periods in history where it didn't go anywhere. A record-breaking run does not guarantee a record-breaking future. So what could weaken this whole story ?
We'll take a look at that in a moment . But first, a brief word about crypto. Schiff has clear opinions on stablecoins. These are digital tokens designed to maintain a stable value, usually pegged to the dollar. Proponents hope that they will create new demand for government bonds, as the companies behind them often hold government bonds as collateral.
Schiff is not convinced. He argues that the demand is mainly hype and poses a pointed question. Why would someone hold dollars in a stablecoin and earn nothing when a money market fund pays interest? He says that if you exchange one for the other, the issuer collects the interest and you don't receive any.
He also notes that government bonds buying stablecoins might simply be at the expense of money market funds that would have bought them anyway . Then he turned to Bitcoin, one of his favorite targets. On the day he spoke, Bitcoin had fallen by about one and a half percent. Measured in gold, it was about 16% below its record high of just over a month earlier.
In dollars, the high was around 125,000 and the price closer to 115,000, which is a smaller decline. Schiff's bigger point concerns the long term. In terms of gold, he says Bitcoin is about 15% lower than it was 4 years ago. If Bitcoin is supposed to be digital gold , he asks, why has it lagged behind real gold for such a long period of time, despite all the hype?
Bitcoin fans would respond that gold is a poor benchmark for something so young, that long-term growth has been enormous, and that four years are just a snapshot of a longer story. And it is precisely this kind of disagreement that makes markets interesting. There's a deeper question behind this. Some analysts speculate that governments could eventually bring digital assets into the official financial system via tokenized reserves and similar tools.
If that happens, Bitcoin could transform from a way out of the system into a tool within the system . This idea is speculation, not a confirmed plan, but it raises a fascinating question. Could integrating digital money into government policy keep the old financial system alive, or could it accelerate its replacement?
Nobody knows yet. If the system finds a way to embrace new technology , the dollar could remain strong longer than skeptics expect. If it fails, the shift away from traditional investments could accelerate. This is the real test, and it is one of the reasons why I believe the next one to two years could be unusually important for everyone involved with precious metals .
So let's put the pieces of the puzzle together and be honest about the risks and opportunities. The bull market collapse rests on several pillars. The government is lowering interest rates even though inflation is above its target. Long-term returns are rising, not falling. Foreign central banks are buying gold, and a major bank is advising its customers to do the same.
At the same time, mining stocks are rising faster than metals. If these trends continue, gold and silver could still have room to rise, and mining stocks could move even faster . This is the scenario that the ship describes, and it is internally consistent. But there are counterarguments. Gold and silver have already risen sharply, and large rallies can be followed by sharp setbacks .
If inflation cools down faster than expected, if the dollar stabilizes, or if bond yields rise high enough to attract buyers, the pressure on metals could ease. Mining stocks are particularly volatile because their profits depend on costs and operations as well as prices, and the advice of a single bank does not guarantee that millions of investors will follow it.
Therefore, every course target you hear, including that of the ship, should be understood as a possible scenario, not as a promise. What I would pay attention to if I were following this story. Observe what long-term government bond yields do after each fat session, because that is the honest reaction of the market.
Watch to see if other major banks copy Morgan Stanley's pro-gold advice. Observe whether foreign central banks continue to buy gold at the same pace. And watch the debate about who really controls the Fed, because this debate can shape how much the world trusts the dollar. These are the signals that show you whether this story is gaining momentum or losing it.
The main lesson is simple. When those who write the rules of investing start changing them, it deserves attention. Even if they disagree with the outcome , whether they agree with Schiff or consider it too dramatic, the shift towards gold in mainstream portfolios is a real development and the questions it raises about debt, trust and the dollar are not going away.
So stay curious, stay skeptical, and always check the numbers yourself. If this overview has given you something to think about, please click "Like," subscribe to the channel, and turn on notifications so you do n't miss the next update. Share this video with a friend who follows the markets and let me know in the comments if you think gold will really rise significantly higher or if the bulls are getting too carried away .
I read your comments and would like to hear your perspective. investment advice. All opinions expressed, including those of the commentators mentioned, are not a guarantee of future results. Investing in precious metals, mining stocks, bonds and digital assets involves risks, including the possible loss of your money.
Always conduct your own research and consult a qualified financial advisor before making investment decisions.
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