🔴 Willem Middelkoop | Gold | Real Vision™

okay I'm here with will middle coupe founder of the commodities discovery fund and the author of the book the big reset which you very kindly sent me a copy of a couple years ago and and I want to talk to you about the big reset today because I know you're about to publish an update with I think you told me 30,000 extra words yeah a family of pages revise the edition there's how much happening that's how much things change so why don't we get it let's talk about what the big reset is and what it's all about yeah the big reset is the thesis that we need a a a reset and monetary reset actually it's moving international monetary system towards a new face we've seen resets in the past they won't call three sets but 1944 Bretton Woods was a reset of the international monetary system there were two ideas on the table American idea to use the dollar as a new world standard as a new gold standard and there was a idea by Keynes British idea to start using the bank or the bank or new currency IMF currency and the British lost so became the dollar became the world reserve currency it's funny you talk about that that's that's a reset yeah that happened in our lifetime really but people if you talk of when you talk about stuff like this you're a reset of the global monetary system it's such a big concept for people to get their heads around I am they mostly assume you're crazy yeah it's very hard for people to to have the mental flexibility correct to start to begin to understand that you can change a monetary system because people view in a monetary system as something like climates or something given by nature or God you know financial system is always created and we have seen it I'm students of monetary history and I think the best books on the economy are written by historians not be economic so if you study monetary history in financial history Wow you find out that we have we've had hundreds of monetary resets after each period of hyperinflation why mar 19 2015 world history that we could have a real worldwide monetary reset because in the past the Russians in 94 the world they were also present at the Bretton Woods conference but after the decisions were made they stepped out of the system and so the Communists they had their own economic system but after fourth cause communism they accepted the dollar system as it is so now we live in a world in which the whole world is connected in this monetary system so I think this will be the first time we go towards a worldwide monetary retail to me the thing about this time that feels like you talk about being the first time it's a worldwide one the sheer quantum of the debt that's built up this time it makes me feel like this one will be the biggest reset we've had because it's gonna expose the most frailties it's going to do the most damage to the existing system and I suspect that's why they're fighting so hard to try and push the data that reads it happens as far down the road as they can yeah you can see a monetary reset as a plan B and you can't talk about Plan B when you're still in plan a because we have to keep twisting twisting plan a so if they start to discuss plan B everybody would lose trust and would have Marx collapse so that's why talks about a monetary reset only health after closed doors behind closed doors we know there have been a few conferences jean-claude Trichet he traveled to Beijing in November 2014 to discuss a new financial system where the Chinese there have some have been some some reports about it but very few and but there are two major problems we we need to solve one is a restructuring of depth in advanced economies Japan eu-us and the other big problem is we need to find a new anchor for the monetary system and the anchor has been since 1944 since reset of Bretton Woods has been the dollar and the Chinese have been very clear especially since the fall of Lehman that they do not longer accept the dollar as the anchor for the monetary system for a longer term so for for next few years it's okay but the Chinese are putting tons of pressure on the IMF on the US to change the system and that's why the red maybe had to be added to the SDR because it is the Chinese wish to upgrade the SDR the Special Drawing rights of the IMF towards the new anchor for the financial system but this will take years well it but but it's interesting you know we're talking in the week that that's that's finally happened yeah the SDR now includes the Iranian B or a will do from October that's why it's so significant right so let's talk a little bit about that because the Chinese are clearly moving towards their own little kind of sphere of monetary payments they've started all their new payment systems they're looking at trading oil and gold for you I remember being in the free trade zone and swaps with all the country correct that this stuff's all been going on and it's been going on for a number of years now and like many things that are a little bit that require two steps to understand people kind of just ignore them because well they see them as separate incidents yes they don't see the broader pressure and I think I understand why because everybody in power is trying to send out the message that nothing serious is wrong with the current system even the Chinese and if you study all academic papers you will find the real answers and you'll understand what their objectives are and where they want to travel to but they won't give a press conference stating in five years time the dollar will be finished as the anchor for the financial system because they and this is very important to understand because Russia and Putin he's on a collision course with the West but the Chinese they want cooperation or confrontation you know the Chinese they want to do business with everybody so the Chinese in a way are very open about their wishes and their plans and that's why I could write a book you know study all the academic papers talk to people the Chinese were very happy with the book because they it has been published by the ramen University in Beijing which is directly connected to the Communist Party and so this shows that Chinese are happy that this story is out but they will not promote it themselves actively let's talk about the story let's talk about what your your suggestion is for what this big reset looks like because it's really fascinating yeah when people ask me well will and what's what scenario will unfold I have to admit I don't know no and actually as I stated in a book that the worldwide system is not a binary system you know it's not 0 or 1 I think we can have 256 shades of gray so that's a whole different book but you can change the system in almost any way we want and the financial system is always in agreement between the major trading bloc's in the world not everybody has to agree when the major trading bloc's agree on the basis functions of the system and agreements you know you have a new system and a few things are certain we need to find a new anchor for the financial system we can't get rid of the US and we can't get rid rid of the dollar so that's why the SDR is such a perfect solution for China and the US because within the SDR the dollar still has the main yeah sixty or percent yeah and during the the changes which we've seen in this week remain me being added to the to the SDR the weight of the the euro came down the weight of the pound Caribbean not the weight of the dollar yeah so and I know some Chinese economists who don't like the SDR solution because they're more aggressive they would like to see bigger changes but I think the Chinese leader stable ship understands a monetary set can only be accomplished with the help of of the US and with the help of the IMF and and that's why the SDR is that's the only solution because that's that's the only currency we can upgrade as an anchor for the financial system in which still the dollar has this this large component so actually I read in the book that the US wants to stay in the driver seat and they will be in the driver seat when this will be an IMF controlled reset well I mean that there's another big matzo ball hanging out there which is you know the other currency obviously is gold right that's the other solution it's not a total solution or it likely won't be the total solution but it feels to me common sense tells you that after an era of pure fear when it goes wrong you have to go back some way to sound money that's why the Chinese have been pushing to add gold as a six currency to the SDR so first step was bringing Reming me into the SDR making Mme real international reserve currency has been accomplished now there's a Chinese wish to add goals as a sixth currency I think there's strong opposition from the earth a strong operation from IMF but it might be needed at a certain point and there's some very interesting comments made about it in the past Robert Zoellick he was a president of the World Bank and in the 2000s and he wrote a open letter to the Financial Times 2003 proposing using gold and the renminbi in a new monetary system and we've had we have seen some other commands I'm in the advisory board of the on visa over it is a london-based think tank or Monetary Affairs and our Chairman Lord this hi he said in the conference during conference in Dubai last year it might be a very good idea to add go to the SDR and actually said I expect this to happen in the future so it's not a wild idea that the dolt will come back but do you I mean what you've done you have the SDR you you reduced the weighting of the euro primarily plus lambda n plus the pound and a tiny reduction in the dollar and you've added another currency which is pegged to the dollar and then you want to talk about adding gold which is quoted in dollars so this you know this this dollar centric bias gets stronger to a point and and it brings us on to the question of what the Chinese do with their currency there's been a lot of speculation does it appreciate does it depreciate it feels to me like they will need to depreciate it the flow suggests it may appreciate what do you see happening to the yuan notes notes in the SDR oh it's a very difficult question I like to concentrate on the bigger picture so for me as much more important questions why are the Chinese accumulating that much gold because it's it's a known fact that the Chinese are accumulating massive amounts of gold well it's a known supposition right to people that were people that watch the gold markets have a certain idea of what's going on in China and I subscribe to that view completely the facts as we know them or what the Chinese have told us right which is that no no we haven't been buying that we've just bought a little amount of gold and we're adding to it slowly it's it's part of the truth because in June this year the Chinese made public that the official gold reserves by the people Bank of China have increased by six hundred tonnes we all know this was the first revision since 2009 so over six years they have kept silent and have been adding gold secretly since June they changed their reporting system and now they report a new gold holdings every month so we know the accumulating gold and we also know from statements made during speeches that they have this strategy to accumulate the largest gold reserves in the shortest possible time this is a quote a statement by Chinese official we also know because this was published in June this year on the website of the people Bank of China that they have this program which translated from Chinese characters in English is storing gold with the people it's mentioned on the website of the Bank of China so what does this mean that China it's China's policy not only to accumulate gold as reserves for the people Bank of China but also be makes sure that that's as much gold in within the country accumulated by the people by commercial banks by companies and you know the graph if you look at the total the total physical amount of gold accumulated since 2005 when the gold market was opened in China its 13,000 tons now and that's an incredible amount especially given official gold reserves only 1,600 tons but they be seen this whole thing is fascinating to me because you know you and I amongst other things we spent a lot of time looking at the gold market and understanding the flows and understanding the demand and supply situation and ingredients the currency right here but when you look at it closely all this is actually very clear to see I mean you don't have absolute proof because you can't actually hold it every bar ago that goes anywhere but it's very clear to see what's happening it this enormous shift of physical gold from west to east and yet whenever anything's written about gold is generally written by people that don't pay close attention to these things so that and I've learned a lot and I used this information a lot from James Rickards because I you know James Rickards James Rickards is a Wall Street insider he was present during LT and CM disaster and James Rickards has been a participant of economic war games within the Pentagon he wrote about that that's out in the open and the best explanation for China accumulating all this gold comes from islets from from his last book the debts of money and he has made very clear that there is some kind of agreement between China and the US in with in which the US accepts that China will build gold reserve which are the same compared to the size of their economy like the US the US has eight thousand tons of gold Europe has over 11,000 tons of gold so China is allowed to accumulate let's say six seven eight thousand tons of gold and when China has reached this position the US Europe and China are on the same level on a monetary gold level to work together towards a bigger step in this monetary reset and it's my idea that gold might be revaluated at some points by central bankers to a much higher level and by reevaluate in goals towards four thousand or eight thousand dollars an ounce you solve quite a lot of problems yeah yeah absolutely but you simultaneously create a whole bunch of problems as well which is the problem I mean s but we know plan a the current financial system will ante we can't go on this way so we need some big changes along the way and a revaluation of goals has held central bankers in the past Roosevelt did it in the 1930s but let with that that was a 20 percent that was a 20 percent devaluation of the dollar that Roosevelt came up with right we're talking there with dollar valued at $42 and on the Fed's balance sheet we're talking to taking it to four thousand dollars well that's that that's a whole different but the u.s. gold reserves are still a valued look at the balance sheet of the Treasury and the Federal Reserve there's only 11 billion worth of gold reserves because it's valued at the historical cost price of 42 dollars an ounce if you would revalue go to four thousand two hundred dollars an ounce this 11 billion becomes one point one trillion if you would revalue go towards eight thousand four hundred dollars an ounce the 11 billion on the balance sheet becomes 2.2 trillion so it would solve it would really help to restore the balance sheet of the Federal Reserve and a Treasury in another transaction which you could do in the same weekend you could get rid of the 2 trillion position of US Treasuries on the balance sheet of the Federal Reserve because US Treasury and the Federal Reserve can both agree to just get rid of this position so by these two quite simple steps you can recapitalize the balance sheet of the Federal Reserve and since ECB and the people Bank of China both have this large gold position day a revaluation of gold would also help them although their gold reserve are marked they're priced mark-to-market yeah well okay but let per let's talk about because for anyone watching that doesn't follow the gold market doesn't understand its place in the monetary system talk a little bit about because that sounds like such a simple solution I had there you go well let's do that but talk a little bit about the flip side of that coin because it does create a world of other problems well I think it will solve a lot of problems sure because um of course central bankers are why it's afraid that too many people will start fleeing towards goals so that's why pension funds are not allowed to buy physical gold I'm a fund manager myself within the permits we have we're not allowed to invest in physical goals only in financial problem products connected to goals so which is laughable yeah I think it's laughable as laughable so and by reevaluate in gold to a level of four thousand or eight thousand dollars you make gold that expensive that the general public can't buy gold anymore so then gold becomes too expensive for the general public so you can't flee towards gold anymore so gold will be used only as an anchor for this new financial system and will be only owned by central banks and then the big question is what will happen with the gold mines are they are they do they have to sell to the central banks are they allowed to still sell it on the open market but and reevaluate in goals will solve the problem that too many people will start fleeing towards gold but you create inflationary problems but they want the central bankers want to know that inflation not that kind of inflation I mean that's because that's this this this Nirvana of this 2% this magic unicorn figure of two percent inflation which we all know is impossible to get to and sustain what they're trying to do is is create it and the markets are not cooperating because we were in this massive deleveraging cycle and and the natural path from here is deflationary it's it's a collapsing of some of the excess debts but that's not going to stop them they're going to keep going try be interesting and they will win eventually you know we've never had an extended period of deflation forget Japan it always ends in inflation because they will keep going until they get it and when they get it they normally get it good and hard and they you have to stop this thing right if you then combine that with revaluing gold to four thousand dollars an ounce you compound the problem the new target for central banks is four percent now they've been talking about four possess yeah well it's still being discussed we had a new labor leader here in England he was calling for QE for the people we have seen a former Minister of Finance Ifill in Germany calling for QE for smaller companies we have seen ideas of restarting huy to build more infrastructure in the world's Chinese China is calling for this you know and we we should be well aware that will have more smaller steps before we all get the real big monetary reset in which gold might be revalued so I think we can expect in 2016 2017 more QE to reach an inflation target or 4% 2 to 4% when this eventually won't be enough and inflation targets won't be reached and more unorthodox steps have to be taken with them within the monetary system will enter into the face where a gold revaluation might occur but I think the whole reset process will happen over a time span of 5 10 15 maybe even 20 years so don't expect everything at once we know what's in the toolbox of central bankers the normal toolbox is almost empty so they will start to use more and Orthodox strategies but these unorthodox steps will be taken within Plan B and within plan a and at a certain point plan a is finished and we need a bigger reset towards the plan B and that's where they roll gold revaluation might get a place but the only when you look at QE and and you talk about people's Keeley and QQ in Japan and negative rates of all these things that they're this is purely a function of the fact it's the yell it's the classic mistake nothing bad has happened therefore nothing bad will happen so we can continue doing this you know at some point anybody who's either sane or not in charge understands this I mean this is you're a monetary historian you know I read a lot of monetary history this has never worked I mean will never work because it can never work but it can go on for long trips Rome you know Rome it's my opinion that the collapse of the Roman Empire was very much also the result of a debate ad basement of its currency look at the the silver contains in the coins Roman coins which the Roman soldiers received you know once there was no silver available once they couldn't afford the silver to pay for the Imperial overstretch it was the first sign of him pol overstretched and maybe not the first but one of the early signs so but the collapse of the Roman Empire didn't happen within a few years you know this happened over a period of 100 150 years so it all starts with the debasement of currencies well the the dollar has been debased in 71 is 51 it lost its gold backing and it can take 50 to 100 years before the US might lose all of its power and it's its economic Empire so we in a process which takes a very long time the US was the largest economy in 1870 already but the US dollar became the main world's reserve currency in 1944 over 70 years later so when China will be the largest economy in 2020 or 2025 it might take until 2050 or 60 before the Chinese currency might become the main world reserve currency and what's very interesting for my visits to China I learned that the Chinese you know they're very long-term thinkers and they have this one special date they're working they're working towards and that's 2049 you know why that's one of the anniversary of the revolution so the Chinese always tell me these are all small steps towards our broader plan being in control being in charge of the world or having our own system around 2050 so the Chinese have very long long-term thinkers and planners in this respect so the Chinese don't mind that the US will stay in control over the SDR and the IMF and the world monetary system until 2030 or 40 what do you think why is it that that Western democracies seem largely incapable of this long term strategy thing it is purely a product of the Welfare Society of having to give stuff away to people and continually promised people stuff which isn't in the west we see democracy as the one and only solution and an acceptable form of organization you know that many parts in those in this world especially in these where they the Chinese always say you in the West you're politicians they tell you they will do what you want or what you need we we do what you would what the Chinese need we just do it and I think we've reached a point that maybe in history if we look back in 100 years time will not be around but maybe we have to conclude that democracy isn't the only solution to govern the state our country yeah it feels that way at the moment and if you look at the amount of deception within the political system the amount of corruption and bribery look at the approval rates of the US in Congress you know people understand all these people are bribed in one way or the other but this is but what's also interesting is the awareness of that seems to be peaking now people seem to be a more aware about it be more motivated by it and see more likely to actually do something about you know we're seeing this in the US with guys like Trump and Carson streets ahead of old school politician Europe the same all the new politicians who are very successful and popular anti politicians because people are fed up will be traditional politicians and I have a nice example I wrote my first book in 2007 and 2009 I went to car wash I was helped by a young guy 17 was a Saturday job and I said hi you wrote this book he read it he was a bright student he said well it's worse than you it's worse than you tell me in the book you know the fat is not owned by the government it's privately owned since it was a 17 year old guy and for me he is like the new generation who understands the new generation people younger than 30 they understand their food by politician they understand that the monetary system it is is deception it's a Ponzi scheme they don't understand it but we who are over 40 especially people over 50 they can't they don't have the mental flexibility to accept this but but this younger generation they're going to come up against this overarching sense they have that everything has to be fair and everybody has to have everything they need and we share everything yeah and so I mean those two things cannot coexist well tonight it collides and well this is how a revolutions have been made and I wouldn't be surprised I'm always very interested and quite obsessed by these moments in time when suddenly the whole world starts changing like we've seen 9014 1917 revolution started everywhere you know it was sign of the times it was the end of the feudal system so people revolted against the old money whilst we still in Europe in Holland we have a monarchy it's like North Korea you know we'll have to clap for the son of the of the king right and it's a weird system so sometimes I tend to think we reached the end of an era which we've lived in for the last 300 years is an era in which we invented the sovereign bonds with sovereign bonds we could have budget deficits forever the British Royal Navy was was financed by the sell-off of British bonds so I'm working on a new book and it will it will tell the story how empires have been made and collapsed within the last one two thousand years and I can envision a longer-term scenario in which the British Empire which was followed by the American Empire they closely connected and the same families are are holding major strengths of power in this Western financial system in which Wall Street is so dominant and when I see the reactions from readers were all pointed to the road shields and the Rockefellers people start to understand there is a power somewhere they don't understand their who's holding the strings and nobody's really holding the strings but in Holland we had our famous Prince Bernards he was like the key figure of the build-a-bear could the Bilderberg conference you know the the build that conference was started in Holland was based in Holland and Prince Ben has always said there's a list of 5000 families in these walls and if you know most of them you know you're you're connected so there's the real power in the world so when people ask me this row shields of the world or is road shield in control I was I know the five thousand families were in control and and we could reach a point in time where their power becomes at risk I find this faster you could I put a presentation together about this time last year actually about economics from war and and the inextricable links between the two and there no matter where you look in history there are neck seas where they actually absolutely come into interplay and you spoke about 1914 1917 and the parallels between now and 1914 are too close to just dismiss as I you know sorry and if you believe in cyclicality which I do and if you believe in or you prefer it as the arc of a pendulum whichever way you like to go the current system the current extreme of the pendulum the current top in the cycle is the most extreme we've had in terms over you if this extreme is in this prosperity for everybody and can't be limitless credit as it swings back the other way we're gonna go somewhere dark we're gonna go somehow people don't want to go yesterday I saw scary chart we're here at the mines and money in London and one of I think it was a chief economist by Rio Tinto he showed a graph of commodity demands in wolf history so last 200 years and it's it's like this you know it's a parabolic map and this was the total demand for steel copper everything well we all know where commodity investors we know that shortages in metals around the corner so for technical reasons for geological reasons you can't continue with this flight to the moon so what will happen first will will have a collapse because we don't have enough copper left or well we have a collapse because every action will give a reaction and this needs to topple over but once this graph topples over it will begin of Western civilization like we know it and and this is taboo subject nobody dares to go this way and I think it won't happen I'm 53 I'm almost glad I'm 53 because I would think it won't happen in my lifetime but it's him this can't go on for another 100 or 200 years right yeah if this becomes a supply and demand issue but but the kind of things we're talking about these resets they generally have to happen in the middle of a crisis these aren't things that you can just say okay guys hold everything no here's what we're going to do you need I've read a piece yesterday saying that since the attacks in Paris they did a survey a week after their attacks in Paris and 84 percent of French citizens would give up some of their freedom willingly to do this so there's what happens in a crisis never wasted with prices right exactly right so what we see the turkey and Russian tensions we see China in the South China Seas with Japan and other and Vietnam and these tensions are everywhere and and it feels as though if anybody wants a good crisis it's not going to be that difficult to create one when I was in China last time for a presentation of my book I gave presentation within the International Monetary Institute with monetary think tank connected to the Communist Party and we had where the discussion on this topic and actually I was surprised but Chinese asked me what are you afraid of what will the u.s. do and then I said well the US has taken the initiative each and every time it allows 100 years start of the Federal Reserve 1913 Roosevelt the New Deal 1933 Bretton Woods 1944 1971 closing of the gold window so I think the US might surprise everybody with a unilateral reset they could even introduce a new gold back dollar Ricketts has been has been given a scenario for that so it because Ricketts is Games Records is talking about it we know this has been discussed during economic or games because that's where his scenarios but but he also said in his book interestingly enough that the first time they ran these games his team basically played the gold card and they stopped the game and said well yeah no no you can't that's not fair right yeah you can't accumulate go right so - but Russia is playing exactly the game plan of the red site and during the Pentagon wargames so to come back to your question what I do see is that the major powers in this world are positioning themselves for the new face of the insertion monetary system and the new risk which are attached to these broader changes which might happen in the future so it's not the coincident that both Russia and China are accumulating gold the same amount so 250 tons a year for central bank it's no coincidence that China is backing Russia in many respects since the start of the crisis in Ukraine and the revised edition of my book I talk a lot about the new financial economic war fair by the US that there's a book out now by former Treasury official who was head of the group in 2001 who invented the financial economic war you know kicking Iran out of the Swiss system accusing banks of money laundering so part of financial economic warfare bringing hyperinflation to a country you know families whele it's very interesting is it hasn't been published a lot about this and China is very Freight when the financial economic warfare us warfare against Russia bringing down the price of oil collapse of the ruble when they will succeed China could be at risk and be the next victim so that's why China is backing Russia now China understands there's a financial economic war fought by the u.s. against Russia and now Russia and China are joining forces and also within BRICS we could also end up having a clash between the west and the east but I'm quite sure China would like to choose the past its cooperation not confrontation but I'm quite sure that China is preparing for confrontation if needed and in the South China Sea today they have actually said you want to test us well come and we'll have a war so in the middle of all that and it's all just so fascinating but you touched on commodities and and you're a commodity investor that's what you do you you run a commodities fun so let's just switch text for a little comeback to gold later on I think cuz it's just still plenty more to discuss but talk a little bit about the commodity markets because what we're seeing here is is really feels like end-of-days stuff yeah the reason I do so much research from our books is because I'm an investor so as an investor you need to be ahead of the game and once you know the game plan and when once you know the the change is coming you can adjust your portfolio and your position and we've done a lot of studies on supply and demand for metals and commodities and when we don't have a worldwide depression we'll have shortages and important metals before 2025 actually and if you study current supply and amounts figures there's a production deficit now in platinum palladium silver gold copper is just there's no real deficit but that are coming before 2020 in zinc we'll see serious mining predictions shortages deficits before 2020 because 10 to 15 major zinc mines were closed down in the next few years silver is and byproducts of copper of zinc and a let's so when zinc mines closed down you will lose a lot of silver production and silver is very interesting for investors because Silver's poor man's Gold's so it's a monetary metal same like gold so platinum palladium I'm not monetary metal so are less interesting from that point of view but silver we don't have any a large amount of above the ground silver stocks anymore goal is always available if then if they need to bring the gold price down they always can find a few gold bars in the central bank safe but silver is not owned by central banks anymore so I expects silver shortages to happen before 2020 I've seen a study done by Silver Wheaton in the 1970s we had above the ground silver stocks of 3 billion ounce because of all the old silver coins the three billion ounces of silver stocks above the ground they're all gone now because we needed them because mine production is lower than the amount now for over 30 years and because the golden silk price came down by 40% builds 70% in silver in dollar terms there's hardly any strip available you know scrap availability is down by 40 50 percent so D declines in gold price forty percent to silver 70 percent well demand is up and production is speaking now you know and first as an investor we know if you have a three to five year time frame you know you only can make money from this level of course we lost a lot of money in the last few years but I've been Wester in precious metals since 2002 2003 I sold my real estate I took profits or managed them real estate between 2001 and 2004 started to invest in in precious metals so made money on the the 10 years up lost quite a bit of money now but we're long-term investors I'm 53 now it's for me it's important where's the gold prize where's the Silph rise when I'm 60 65 70 and that's what I always tell my investors and we have 600 high net worth Dutch investors which are very loyal we had a net inflows every year the last fuel for youth and and and well it's you can't lose on this one this is interesting because we get back to this idea of people that watch these markets closely and people that don't yeah and if you don't watch these markets closely and you don't understand the scenario you just laid out all you see is a price that goes down every day your scale that's all you see yeah and and it's really hard because the fundamentals both in silver and in gold are to my mind as constructive as they've been at any point during this bull market perhaps more so particularly in gold what do you think is the cause of this disconnect between circumstance and price action because there's not there's no good reporting on these financial markets on these commodity markets in financial media people only understand that the gold price and self price are coming down every day so they that sends the message there's there's too much gold around there's too much silver around you know just like me that the physical demand by just two countries India and China it's three thousand tonnes a year that's the same amount as worldwide gold mine production so I always tell my audience when I do speeches imagine this the potato market and we have two countries and buying up all potatoes in the world what will happen to the price of french fries you know and then everybody understands the price of french fries only can go up and then I tell them well apply these same rules fundamentals flying around rules on the gold market we need to sell our gold shares but the physical goals you know they're fighting for the physical goals now all the London gold falls we know from the gold analyst by Bloomberg Kenneth Hoffman that the London gold falls are virtually empty he told us a year ago and from the latest research we know over 2000 tons of gold left London golf holes they were all refined in Switzerland or went to the east I always tell listeners that when China wants to have the golden eggs I want to own the chicken who can't produce the golden eggs and who are these chicken as the Gulf companies so selling shares in gold miners now is most stupid thing you can do because they're the only ones who have ounces available when there really is a shortages but people are frustrated they've been there and I understand it and I talk to people about this stuff all around the world wherever I go you know people have looked at exactly this case they've looked at the investment case for owning gold and you said something interesting you know 30 secondly you said it can only go up and yet it only goes down yeah and that yeah it but in dollar terms voltage dieter and that's important that's at one point in and this this we have seen in each and every correction we have seniors in 2008-2009 I was telling all my investors in my first book in 2007 I want foreign pending dollar or credit crisis I was told them you have to see you have to buy gold and silver to hedge that risk and then Lehman collapsed what happened gold price went down 30 percent so they all called me Willem you told us to buy gold because it would be safe haven it goes down I told them relax can take a while and the trend of gold going down after the Lehman collapse and it it continued but gold went up in other currencies but in dollar terms it continues to go down and the last gold price who was going up again and breaking out of the downtrend was the gold price in dollars the same is happening now gold price price in other currencies is going up already for a year but only in dollar terms and that's all journalists all investors they look at go price in dollar terms so they're powerful forces at work in the gold market to be sure called is gone down in dollar terms and the Chinese always tell me and the US designed a smokescreen surrounding the gold price so the Chinese understand there's manipulation and you can manipulate the gold price quite easily by selling loads of futures just on the margin on the Comex and well we we know how well it could be that that brings up another interesting point because and I spoke to John Hathaway about this yesterday about this idea of extreme leverage in the gold market and hugely dwindling physical stocks and incredible the understand he does absolutely yes and he spoke very eloquently about it as he always does excuse me but it's another one of those things that when you look at it at face value it doesn't make any sense you know you've got 280 claims per register doubts on the comics it's climbing Lehman went under at 33 to one but that was a problem this isn't a problem it's not sustainable it's absolute look at the graph it's not sustainable but how does that how does that resolve itself because at the moment there's limitless amounts of paper can be created you you've seen the graph off the paper claims backed by just one ounce of physical gold and you have a parabolic rise now so this has been ongoing for the last few quarters if I look at the graph like this it's my opinion it can't go on for another two years maybe it can go on for another few quarters but I wouldn't be surprised to have a real Comex problem within 12 months because there's only one way that can it that that that chart can only resolve itself one way because you're not going to increase production by 280 times it will right it's pretend in the defaults the Comex default remember the potato defaults 1976 there was a Comex potato default somebody was short potatoes massive not many people know this they know about the hand brothers in which the hunt brothers were killed because the rules of the game were changed overnight by comics but let's go back to 1976 there was a potato default because the short seller couldn't deliver Comex stopped trading potatoes ever since so we could have a silver default or gold default within comics at the end of comics go trading and we've been talking about a monetary set or gold revaluation planned well in advance that we have seen many crisis in our monetary financial past and also in commodities so we sometimes a reset is needed because a crisis developed before you had a plan the why my revolution there was no plan to do water what do we do after after the hyperinflation they had to start thinking about it as it happened and I think we can have a Comex default crisis gold silver crisis any time now and what's interesting is the London gold pool in 1960s western central banks and they all dumped gold on the London fiscal gold market to keep gold at $35 an ounce to support the Bretton Woods system France France decided to to to to stop cooperating and then we had a collapse of the London gold pool in 1969 and the London gold market is just froze it was closed for two weeks and goats trading in other markets who worldwide restarted at a much higher level well that's that's generally the way these things work right I mean but but again we're we're in that we're in that period where because something hasn't happened general consensus is it won't know and and it's very dangerous yeah that's that's quite stupid and I was tell investors this really after this correction in last few years is really once in a lifetime you know why I start to invest in precious metals in 2000 I saw a graph of the gold our ratio now I read somewhere in during the same year it was in 2002 and Amazon the market cap of jehoon and Amazon were was over the total market cap of all listed gold mines then I knew gold mines were too cheap I had to buy gold mines and Amazon's you probably were too expensive currently all listed gold mines are valued around 100 billion market cap of Apple is around 700 billion Apple could buy with his cash position could buy all lists of gold mines worldwide it's a it truly is once-in-a-lifetime Filipa I think the problem that people have certainly people who've been in those investments it's been a once-in-a-lifetime proposition about eight times in the last three years you know and that's the problem yeah you can we can laugh about it it's been painful for a lot of people in myself included but the game's not over when this thing is continued to go it they're getting cheaper it's getting to be more of a once in a lifetime opportunity what how do you what's the best way you can think of for anyone that hasn't suffered the pain of this trade and it hasn't been in and they're kind of well I spoke I did interview Jim Mellon Jamel and is quite a famous investor here and London and I asked him what's what's your position in commodities is only two or three percent you know he's in startups and tech and you see the high there the sexy and the evaluation is sky-high you're a guy like him should should start to invest ten twenty thirty percent of his net worth in commodities now and precious metals you know that but institutional investors are out of commodities from periods periods the reason our fund is still alive because we don't have any institutional money we just have retail money and people listen to the story and still believe in it and are long-term investors but the institutional's are out and I think we can reach a point where the perfect storm we have against now will turn into a perfect storm on the positive side in a few years time because in a few years time people will start to understand their real shortage is coming we might have had a default somewhere in gold and silver and there will be a lack of trust or there will be a correction in broader markets or we can have another tech implosion if I look at the startup world I'm I'm an investing some starters myself it is ridiculous some management teams the startups are paid millions now in advance to come up with a good idea right yes prime all three ideas ending yeah I've seen this yeah it's absurd they know it's a bubble so I think this could develop in in few years time the commodities for the precious metals investment world it could develop in a perfect strong on the upside around 2020 or even before and sorry one more point and I recently found the graph showing the the last eight cycles in commodities and we have had several bear markets so these marks tend to be very violent any commodities up and down but once the downturn is over in all the past six or seven Corrections once the downturn is over you see if you see very rapid very strong move upwards because there's so many commodity traders and they need to restock you know because commodities you can put a warehouse so nobody is buying nobody's restocking as long as the price declines so it can be violent on the upside so are there any I mean do you see anything when you look at what to where the gold mining stocks in particular do you see any out there that you look at a particular company you just go this is crazy well we always focused on discovery place because discoveries tend to bring the most value could be create the most value you know I have yet this 10 million dollar company and you look 12 months later it's a 1 billion dollar company and that's why I like startup investing because with the right startups you have the same amount of positive leverage operational leverage and we one of our largest holdings is next-gen energy and that's the use uranium discovery in Canada and it's still valued less than 100 million it has great upside reservoir minerals wonderful copper discovery in in in former Yugoslavia and Serbia so it's still possible even in a downturn to make money but yeah we have a broad portfolio so you brought broader portfolio goes down but within the portfolio I just looked at all the charts and there are 12 charts now within our 80 and company portfolio who didn't make any new lows in 2015 and these are the strongest companies within the sector and this is the strongest indicator of a real change in the trend so when the best companies are starting to move up already while the broader trend is still down because the Yui goldminer index may new lows but the individual best companies are going up but already that that's the best indicator you reached about you said it's interesting is are you seeing that just in in base commodities are you seeing any gold mining stocks do that because it feels like all the gold mining stocks is just good on ya know I can show you a picture the 13 names and I studied them a half of them are exploration companies working on great discoveries so reservoirs in their next gen is there but the other half are smaller producers who have made a turn around like lakeshore goals lakeshore gold is highly profitable hosts of cash flow are 40 million in a year with recurrent prices so I like about the trash what I like about a downturn everything is sold the good companies have sold as well so if you watch with moving up who's moving up at the first phase of a bottoming pattern it it you know these are the brightest companies Apple and Google went down during the crash of 2008 and you can buy them for cheap and they will recover so vining so fast and you see the same thing happening now with the best companies and commodities and that's what we do in our fund it's very actively managed and that's why we always outperform the index well we're down four years in a row outperform the index and we always outperform the index finally on the move up well we're gonna have to leave it there I've taken away too much you tell me I mean it's fascinating stuff all this and and hopefully you'll come back and do again right now I don't plug books but you'll book I've read the original copy I can't wait to read the expanding one the big reset and you know my recommendation is to people they should read it because it's just a fast they need to buy the revised edition because that's that's when now when's that being published it has been printed last week it will be distributed in the next few weeks but at in Amazon you still can find both but look for the revised edition it has a little red note on top thanks thanks so much thank you

Channel: Real Vision Finance

Views: 272,957

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Keywords: Investing videos, finance videos, finance interviews, investing, trading, economy, real vision, real vision app, real vision tv, real vision videos, real vision finance, gold, willem middelkoop, interview, finance, raoul pal, the video on demand platform for finance, the world's best investors, Willem Middelkoop, founder of the Commodities Discovery Fund, gold being incorporated back, monetary system, outlining the knock-on effects, central banks in this scenario

Id: WmuiAY2WiIU

Length: 61min 41sec (3701 seconds)

Published: Thu Jan 28 2016