Silver SMASHES Through $100 | Frank Holmes on Global Currency Wars

Mike Maharrey: Greetings, I’m Mike Maharrey and I’m joined today by Frank Holmes. Frank is the Chief Investment Officer at https://www.usfunds.com/" target=”_blank” rel=”noopener”>US Global Investors and the Executive Chairman of https://hive.io/" target=”_blank” rel=”noopener”>Hive Blockchain Technologies, a fine analyst and an all-around great human being. How you doing, Frank?

Frank Holmes: Outstanding, my friend.

Mike Maharrey: Well, I appreciate you taking a little time out of your day to hang out with me and talk about gold and silver. It’s been a crazy year and it seems to just keep getting crazier. I was thinking the other day about just maybe two or three years ago when you’d hear people talk about $5,000 gold, and there were a few people out there. They were mostly labeled as kind of cranks and maybe a little conspiratorial. And here we are knocking on the door of $5,000 an ounce. Are you surprised about the speed that we’ve seen gold gain?

Frank Holmes: No, no, I’m not because the world is reliquefying. Rates are looking to come down to more than 150 basis points still in the US. There’s lots of political moral suasion with the head of the Federal Reserve to be more accommodative, get mortgages down. And I think the big part of that is that when I took economics back in the ’70s, I’m aging myself now, the biggest multiplying effect in an economy is housing. That $1 is all of a sudden worth $12. A government goes and builds a hospital or government building, that $1 is $4. When they build a house, it’s 12. So you’re seeing the president push against the Blackrocks buying any more housing, forcing rents up, making things affordable. He’s doing everything to ignite job creation, the multiplying effect of the economy. I think that that’s just really important that relates to the working person every day going to get a new house, et cetera.

But I think there’s something else that’s important is that the total global debt, the total global debt is about $350 trillion. The December numbers haven’t come out yet, but based on the money printing models we use, it’s going through $350 trillion.

And so, when you look at that, that the global economy is $120 trillion. So, we’re saying that the global debt in US dollars is more than three times the GDP. And we are seeing the G20 countries continue to use MMT, modern monetary theory, to print money faster than the GDP can grow means that the idea of alternative assets such as gold and silver are capturing more and more appeal. We saw the last quarter, no more pennies. And it’s been decades since a penny had a penny of copper in them.

It didn’t have any coppers. And I know I’ve collected thousands of coppers, real copper pennies that are now worth almost 10 cents if you melt them down. So we’re going to see nickels, dimes, quarters. They’re all going to go. Maybe we’ll come up with a $1 coin. We’re seeing that Nike stores are saying they’re out of pennies and quarters. So if you have to pay with your credit card only. This happened after COVID with Nike stores and some of these other stores. So, something else bigger has all of a sudden gone through that inflection point. It’s like in Canada in the winter, and when the spring comes, all you have to do is go from 31 degrees to 33 degrees and the ice melts. And you get this, “Oh no, I’m falling in that freezing water.” And that inflection point started to happen last year with the money printing that is still on steroids

And China is in another country is doing it. And then we have a currency war. And clearly what China’s been doing is weaponizing the BRICS countries. Now we have to remember the BRICS countries was only five names. Now it’s what, 15 names? And that whole idea that they’re predominantly commodity exporters, China has turned around to say, “No, only trade and remember.” And so you’re seeing this battle to attack America’s trading mechanisms. And so I think that the whole idea of Venezuela is not just the oil. Oil is a key component to get control of the currency. It’s now trading in dollars. It’s not trading in renminbi. It’s trading in dollars. It’s not trading in euros, it’s trading in dollars then to euros. So, I think that’s part of that steppingstone, but then it’s to take all that oil and start giving it back to the country to rebuild itself and shut off Cuba.

So, Cuba is really the desperate country where there’s only four hours of electricity a day. And it was also a Czech move against China and it was against Russia. So, we’re seeing those dynamics play out and that’s the fear trade. And that drives, holy shoot, something is happening and it’s running in parallel. So, it’s not just one thing. We then have a new leader of Japan who’s very phobia of China and China’s strategy in Asia and with Japan. And she’s been very vocal about it before the recent all of a sudden saying she would partner with Taiwan to protect it with America. Then China cuts off the strategic minerals. So what’s happening is this wonderful commodity called silver is now a strategic metal. And silver is very key like rare earths for a lot of the weaponry. This segues back to all the MMT money printing is no longer going for European social welfare programs.

It is going for national security. It is for rebuilding security. And it doesn’t just a wall. It is weaponry to protect against the aggressions of Putin and what we’ve seen what China could do. So we’re seeing a currency war against destabilizing the dollar. We’re seeing it all of a sudden show up in commodities like silver. And silver is not only for solar panels, which is big industrial, it is also very key for weaponry. And the other big part, which I shared with Robert Friedland, and he just put it on Twitter, was the biggest AI data center build in the world right now was in Abilene, Texas. Well, they are using copper for conductivity, and so they have pure copper. So, that huge $500 billion spend needs a lot of copper, not just for cable wires. It’s for the whole infrastructure for the coolant systems, and it is for the conductivity to move electricity and also heat and the transfer.

So, what we’re seeing is that copper is going to become that strategic mineral for weaponry. So any copper movement starts going through to China. You may see Japan all of a sudden come into interceding and say, no, we need those strategic minerals. So the world is changing. And then I saw last night an incredible YouTube, all AI, all fud about silver. And it had incredible ships showing the silver basically going from Taiwan to China, but the Japanese came in and they interceded and captured $500 million worth of silver. Well, nothing of that’s really shown up except for this conspiracy stuff. And I thought it was like reading Tom Clancy.

I really did. I don’t have to go read. I love reading that before I go to bed. Especially for my age, I got the big type, Michael, and the big type that I can read for the three chapters, and then I don’t want them to have my iPhone so I go to bed and sleep. And it was so interesting to watch that and then do the research on to find out that it was this fun. And this person has been doing, it’s called Asian Guy. And all he does is everything’s conspiracy, every government policy, it’s all pro silver, but he’s not selling you a silver coin. He’s not selling you to go and buy through his website silver. It’s really interesting that who’s the creator behind this sort of AI that adds to the Tom Clancy storytelling.

That aside, silver is a strategic mineral now. And so I think that we’re going to continue to see the electrification of Europe. They still haven’t woken up. I thought that President Trump in one of his interviews asked them, where do they get their batteries from? They get them from China. You don’t make batteries in Europe, you’ve outsourced everything, and then you were relying on Putin for your energy for LNG, and now you’ve got a problem. You’re pickled with buying LNG everywhere. So we’re seeing these parallel battles happening out, but everyone’s focused on Greenland and everyone’s focused on the tariffs, which you have to do is step back, and they are the tip of the iceberg. They are the ones that get you a “woo.” Really, there’s other more significant events running parallel in the world for a multipolar economy and for the domination of China.

What really shocks you is France says, “We’re in for China.” Well, naturally, they’ve always been left socialists. I believe Canada’s coming out to do deals with China. They’re all worried about what Trump is basically trying to share with them. You have to hold yourself accountable and protect your own economy. You have to go from 2% to 5%. That is happening, Michael. And we’re seeing military stocks, especially the armament stocks in Europe up 100% over the past year. And we’re continuing to see the big spend is going towards military spending for national security. And I don’t see that ending. So let’s come back to the beginning. $350 trillion of debt is not going away. There is fear to go and build for national security so that debt spending is going to continue and certain commodities are going to become very valuable outside of the 17 for rare earths that are important on the periodic table.

So, I think that when we look at ETFs, that gold investors are as a whole. If I looked at all the ETFs in America, I go back to 2012 when Xi Jinping became dictator for life, we were running about 8% of Americans had exposure to gold. That fell down to almost 1%. That’s a little over 2%. So all the technology and healthcare ETFs and S&P have grown dramatically. Gold and resources are substantially under-loved and under-positioned. And so I think we have much more upside. So, the gold move is really not a bubble. It can correct violently short term, but it’s just a buying situation when you look at the global geopolitics that’s going on.

Mike Maharrey: Yeah. You did such a good job of tying all of those pieces together. That’s probably the best I’ve heard anybody do that. I really appreciate it.

Frank Holmes: No, you’re very kind.

Mike Maharrey: Thank you. So, I want to kind of touch on that because you mentioned of the gold investment in a recent article that you did, you said that you thought that gold is criminally underinvested. Why do you think that is? I mean, particularly in the West, there’ve been kind of this turning your nose up towards gold. It’s always been that way.

Frank Holmes: Well, I’ve always advocated the 10% golden rule, and the biggest hedge fund in the world, Ray Dalio, has also been a 10% parity trading with gold and other currencies, and at times has gone up to 20% gold, long gold. So having 10% is prudent, but there are a lot of RIAs in America, especially the Pac-Men, they’re buying other ones, they liquidate the gold. They don’t believe in gold,

Which is just, that’s what it is, but they will because their investors will demand it. I want to have some exposure to gold. So, I just look at all the ETFs that are out there, what percentage are gold on previous peaks and tops, and where are we today? And it tells me that we have much more on the upside, and we are also in a reflationary economy of rates dropping. So, we have a tailwind behind us that’s really important to recognize. If we were at 10% gold now, then it would all of a sudden be, you would say, is a crowded trade. It’s not a crowded trade. It doesn’t mean it can’t correct, it will correct, but buy it. I did an interview just right after January in Venezuela, the whole drama there, and then there’s a big correction and it’s all over. Silver’s going up $40.

And I said, no, you got to get some courage, like the Bitcoin holders say, buy the dip, stack the coins and hold on for dear life. And I think that that’s what’s really important when we look at owning gold and owning silver. And what’s really ripping, Michael, are gold stocks.

I mean, gold stocks are also deeply undervalued and appreciated. Most of the big gold funds last year had redemptions. As gold went up, the gold stocks went up 100% and people kept just piling out, not believing. And all of a sudden on the correction, you’re having actually net buying coming and people aren’t capitulating. So we are in the sort of unique market and when everyone gets excited about silver, silver is just that unique element that it’s affordable. You can put it in your pocket. You can take a look at the scarcity element because the industrial demand for solar is huge, and now it’s military. So we have big military spending. That means you have a buyer in every dip is basically a buyer in the marketplace. I wrote about this about gold. Interesting about gold. This century, gold has outperformed the S&P 500 two to one.

Since 2008, when Franco-Nevada was spun out of Newmont, it’s more than doubled the performance of Berkshire Hathaway. It’s more than doubled S&P 500, and people don’t believe it. And the gold royalty companies have not done as well as many of the marginal gold producers this past year, but they just continue to be steady, low risk, gold quality ways to play this and pay dividends. And so I look at that gold has outperformed this century, and what has been the buyer on every correction? It’s the love trade. It is Indians. It is Indian women. Indian women owe more than six times the amount of gold in Fort Knox. They have more than the government has. They know that they don’t have legal contracts and trust like we have evolved here. If you are a poor person, you have a gold bangle and you know that if something happens to your sick child, you could take it off and you’ll get healthcare right away.

And the people that got out of Syria early took off their 24-karat gold jewelry. When we look at the people got out of Vietnam, the boat people, that was called a tail, a gold gram of gold. That’s the first people to get out. So gold all of a sudden can become money, but I can wear it. So every time when gold has a correction, you have to go look at the GDP per capita of China, India, Thailand, Vietnam. These countries have an emotional, and the Middle East have an emotional attachment to gold as love. So they buy on the big corrections. And so we have this underlying bid on gold that’s bigger than the new supply coming on mines. And so you have a scarcity element in the marketplace, and now we have this whole money printing element for national security and sovereign security around the world.

I think that gold is all of a sudden becoming the darling. And I think gold stocks like we have and we’re known for are deeply undervalued. And I think that we’re just starting to see some of the production profiles coming out. So the gold mining companies announced the production, basically what they did last quarter before the auditors have audited the financials. So you have to sort of guesstimate what did they do last quarter on the financials? And you could use mathematical probability models, what their expenses are, et cetera. But the production profile for me is first mover advantage. Production, biggest gold producer in Australia, it was only up 57%.

So, you want to look at what was your revenue was up 57% and what was your cashflow? It was up 100%. So they’re already auditing financials. Most of the North Americans haven’t announced their financials. So we are in a sweet spot of being able to look at companies. And when you look at companies that are 100% growth in cashflow, they now meet investor business daily and barren quant models. And the non-agnostic gold investor buys growth. They buy growth. That’s all they look for. Momentum in revenue, momentum and cashflow or EBITDA, and then they look at free cashflow and they don’t care what your company is. If you’ve got it, they want to own it. So when we look at the IBD 50 prettiest stocks for growth, guess what? Gold stocks are 4%. Now all of a sudden they’re 8%, now they’re 12%. So, gold stocks are qualifying in momentum and on financial modeling.

So, that suggests that this quarter is going to be huge for the gold producers.

Mike Maharrey: Yeah. Do you have a price forecast for gold for 2026? What’s reasonable?

Frank Holmes: No, I love seeing some of the analysts coming out and some guys I’ve always looked at that have had very high valuations, but they have a simple model that you can relate to.

And Turk was always, James Turk always had an FX. And then he used to have a simple money supply. Look at the total money supply and look at the total number of ounces of gold. So, I was doing the back of the envelope, and if we looked at the total cash, the money supply, not debt, the money supply is about $140 trillion. Then you look at the total supply of gold in the world that’s known, and it’s like six billion ounces. There’s a math like that. And you merge it together and it says, Gold, $20,000. So, that is a valuation that a president like Trump would love to reset gold at. And he would love to go mark to market for their gold holdings because we’re carrying gold at depression levels.

So, of all of a sudden we went to mark to market, our debt levels balance sheet, everything goes through a massive change. That would be based on that number. If you looked at James Turk’s foreign currency model, a little more complex, I think he suggests it’s worth $11,000. Now, I have forecasted that when gold hit $4,000, because they thought I was in the loony bin four years ago calling it, that it’s $7,000 by the time Trump is retired. So, I can’t give you 12 months out. I can give you the volatility of gold, which you could use that. But if we look at extreme money, as that’s the only way to look at it as some diehard gold bugs like to look at it, it’s $20,000. If you look at sophisticated guys like James Turk, it’s $11,000. If you look at a conservative player like me, it’s $7,000.

Mike Maharrey: Yeah. Yeah. And that sounds very reasonable. And it’s funny again, because you go back two or three years and $5,000 going, oh my gosh, that’s crazy. Yeah. And now $7,000 is like, oh yeah, I can live with that. It makes sense to me.

Frank Holmes: Yeah. And so you want to look at the gold stocks that have a growth profile, that have stable production, and they’re just going to become growth stocks. They’re going to become like Nvidias. And I think that that’s where you’re going to make it. If you’re conservative, make sure you just buy some of that gold and buy some gold coins and buy silver coins. And I’ve been talking about this for a while about buying silver coins because the sort of backwardization that the fact is that the delivery of silver coins trades at a big premium to the future’s price. So you go and look every day at the future’s price, you’re not looking at, I want to have delivery of this silver. What’s the premium? And the premium has stayed high for many years because there is a shortage of physical silver and that shortage is only going to become more pronounced for military on top of solar on top of debt spending.

So, you’ve got three factors as a tailwind moving you along. So if you’re a runner and the wind is nodding your face, it’s behind your back, man, running is much easier.

Mike Maharrey: It is indeed. And I would add to that, just the momentum of investors who are suddenly interested in silver just because the FOMO and just the excitement that you see with an asset appreciating like that. So absolutely agree with you there. Well, I’m going to get you out. I know you’ve got a lot on your plate and you’re a busy man, but I do appreciate you hanging out with me for a few minutes. Before I go, I do want you to let folks know where they can follow you and your work and any other final thoughts you might have for us.

Frank Holmes: Well, it’s Frank talk. So it makes it pretty easy at usfunds.com. I have about 100,000 readers collectively in 80 countries and we write content every Friday. But I have a team, there’s a strategy with the investment team that they have to write about various sectors of the economy and do a SWAT analysis. So every Friday night we look at three strengths and weaknesses of the past week for say gold or it could be airlines. And then we look what economic data’s coming out next week, which could be an opportunity threat. It’s much more like following football, a game film analysis.

So, we try to give this predictive analytics of a view for next week because maybe job claims are coming out or the Fed is meeting and gives people how to manage expectations. That’s what we do. And then I write special things and themes that I write about like Frank Talk, like The Thud about Silver. So I’m writing a special thing on don’t get fooled by the Thud. It’s so well done by AI. And then I’m really busy with Hive building out data centers and the AI boom is real. All this negative news coming up because guys are shorting NVIDIA. It’s very real. There’s a huge shortage of equipment to build these HPC data centers because you can’t build them with Chinese equipment. You have to buy them with good all American or European equipment. Well, the manufacturing sectors in Europe and America are way behind in being able to scale for the volumes of the demand.

And it’s not just open chat, we are finding it for businesses and it’s also national security and military. So the military with robotics coming on stream, humanoids, by Tesla, all that stuff needs data centers. This streaming of you and I talking needs data centers. So I believe in hyvis (a quantum computing visualization tool) position for that secular run and building out data centers.

Mike Maharrey: Yeah, outstanding. Well, appreciate your work. I’ll tell you something that’s kind of fun. When I first started writing about gold and silver, you were one of the first people that I kind of stumbled upon that helped me begin to understand the gold market. And this is probably back 2014, 2013, back in that realm. So, you’ve been important to my development and understanding of this market, so I really appreciate the work that you do. And it’s always fun talking to you.

Frank Holmes: Thank you very much. And you know what? Thank you for spreading the love of educating people. Alternative assets are so important in a diversified portfolio. And when Ray Dalio is advocating 10% in alternative assets like gold, and he’s the biggest hedge fund in the world, I think it’s just wise that any Bridgester investment advisor should also be or retail investor having some exposure.

Mike Maharrey: Yeah, absolutely. Well, thank you again for hanging out with me. And we’ll get you back on again here in the next few months as things continue to unfold and unwind.

Frank Holmes: Hi-Ho silver! Yes, sir!