Schiff w/ Bohm: The Market Will Rotate to Miners

Earlier this week, Peter joined Gary Bohm on the Metals and Miners podcast to explain why recent wild swings in silver and miners are not random noise, but signals of a much larger monetary reset. He ties together forced selling, dollar weakness, foreign holders of U.S. debt, and the bursting of other speculative bubbles to make a case for why precious metals—and especially miners—are poised to benefit as investors hunt for real value.

He starts by explaining the mechanics behind the violent one-day moves in silver and junior miners, focusing on leverage and forced selling that amplifies price declines for a short period:

Well, look, I think to the extent that there’s liquidity issues, it affects the people who are having those issues and only for a short period of time. I think that’s one of the reasons that we saw the big drop in silver and silver stocks and we’ve had a couple of big drops, but I think there is a lot of leverage out there, some speculators are levered up. If the market moves against them and they don’t have enough cash in their accounts they end up being forced to sell stuff.

From there he calls out political marketing around stock indices, reminding listeners that headline Dow numbers mean little for real wealth and that political spin often ignores context:

In fact, his whole administration is pointing to the fifty thousand Dow as if this is some monumental achievement. Donald Trump the other day said, “Oh, they told me it would be a miracle if I could get the Dow to 50,000 by my fourth year.” When he was sworn in it was 44,000. It wasn’t like we were that far away and it took over a year to go up those six thousand points. I mean meanwhile the Dow hit 40,000 and 30,000 when Biden was president; that was a record high, yet Donald Trump doesn’t think that meant that Biden had a good economy.

He then shifts to the international demand side for U.S. Treasuries and why foreign buyers may be losing appetite, stressing the dollar’s erosion against hard assets:

Well, it’s not even about what the world is capable of doing; it’s what they want to do, what their desire is. I can’t see why they would want to buy these treasuries, you know, the yields are lower I think than the real rate of inflation. They’re certainly lower than the rate of dollar depreciation; the dollar index has been falling. In fact, the dollar itself hit a new all-time record low against the Swiss franc and it doesn’t seem like there’s a bottom anywhere in sight. Gold keeps going up, so the longer you hold dollars the fewer ounces of gold you’re able to buy with those dollars.

Peter points to a concrete risk: major foreign holders of Treasuries, like Japan, may start to unwind their positions as rising rates and domestic strain make dollar assets less attractive. That could put additional pressure on both bond prices and the dollar:

I mean the Japanese I think are finally, you know, going to have to pay the piper here. Their debt to GDP has been out of control for a long time but they were able to handle it because rates were still at rock bottom, but now they’re not. Rates are at 30-year highs and rising inflation is also high and rising and one of the easiest ways that Japan can try to slow this down is by selling their U.S. dollars, their U.S. treasuries—they hold over a trillion.  

His closing remarks tie the metals move to broader sentiment shifts: as bubbles in crypto and tech deflate, investors will look for assets that actually produce earnings and have limited ownership—mining stocks fit that bill. He predicts a rotation into miners as bitcoin and artificial intelligence froth cool off:

I mean the tech stocks, you know, the air is already coming out of the AI bubble. So investors are going to be looking for the next big thing like, “Okay, crypto’s over, AI’s over, what can I buy?” The miners are it. I mean they’re gonna have great earnings, great earnings growth, good valuations, very little ownership, and then the sentiment is just going to go from skepticism to bullish.