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Brent Johnson: Updating the Dollar Milkshake Theory and $5000 Gold

Tom welcomes Brent Johnson of Santiago Capital back to the program to discuss his controversial “Dollar Milkshake Theory.” The name for this theory comes from the concept of extracting oil from a neighboring property by “drilling” a longer straw. The United States has this magic straw and regularly uses it to suck up the world’s capital. His theory’s controversial idea is that US equities are going to go to all-time highs along with a stronger US dollar at the expense of most foreign currencies.

Brent believes there will be a pullback in equities around the election or early next year; his theory has yet to play out but will eventually, but he is prepared to be wrong. If the US provides dollars to the rest of the world, then his thesis will be invalid; however, he doesn’t believe that will happen.

He explains why the world’s monetary system does not have a reverse gear if it contracts or slows down, it breaks, and the system begins to collapse. That is why central banks have to re-collateralize the system regularly. They are just trying to keep the system afloat, as debt-based currency is being created, it’s also being destroyed.

If you own gold or have US dollars, you will do well in the coming storm.

Time Stamp References:
0:40 – The Milkshake Theory
3:30 – Recent update, equities higer and timing.
7:50 – Confidence and being open to being wrong.
12:30 – Two different dollar markets – Eurodollars.
15:30 – Betting with Peter Schiff.
17:00 – New dollars vs. more dollars.
20:00 – Why the Fed is printing dollars.
22:30 – Currency swaps how they work.
26:45 – Hedging in this environment.
29:30 – Miners and foreign currencies.
32:30 – Why people need dollars.
35:00 – Alternative investments.

Talking Points From This Episode
• The “Dollar Milkshake Theory.”
• The monetary system has not been fixed.
• You want to have assets in physical gold or dollars.
• How dollar swaps function bi-laterally.

Guest Links:

Brent Johnson brings over twenty years of experience in the financial markets to his position as CEO of Santiago Capital.

Brent enjoyed more than nine years as a Managing Director at BakerAvenue, a $1.7 Billion Asset Manager and Wealth Management firm, with offices in San Francisco, Dallas and New York.  He was the lead advisor for several of the firms largest clients. 

Before joining BakerAvenue, Brent spent nine years at Credit Suisse in their private client group. He got his start as part of the training program at Donaldson, Lufkin & Jenrette (DLJ) in New York prior to moving to San Francisco. He joined Credit Suisse in the fall of 2000 when the bank purchased DLJ.

Earlier in his career, Brent was a financial auditor for Philip Morris Management Company in New York City where he performed audits at the company’s headquarters as well as subsidiaries in Germany, Hong Kong, and Richmond, Virginia.

Brent regularly gives interviews and speaks at conferences regarding precious metals, currency markets & macroeconomic trends.  His views have been quoted in numerous print, online and television outlets. He lives in San Francisco with his wife Mary and son Moses. 

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