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Craig Hemke: Dollar Confidence is Grinding Lower

Tom welcomes back Craig Hemke, founder of TF Metals Report to the show.

Craig discusses the growing shift in wealth inequality since the untethering of the dollar from the gold standard. The ending of the gold standard required faith and confidence in the US government. Today, that confidence is steadily waning.

The dollar index is a weighted basket of similarly devaluing currencies. This index makes the dollar appear stable, but in reality, they are all declining. The ECB is printing euros just as fast as the US is printing dollars.

A new currency standard with backing will arise to replace the loss of confidence eventually. Few people alive today can remember the gold standard. Therefore we have a normalcy bias that will be overturned and catch most by surprise. In addition, people will come to understand that unallocated paper derivatives don’t represent real wealth.

Markets today are entirely driven by the money pumped into the system, and most trading volume is computer-driven algorithms. So take advantage of the markets and the low prices for metals. Keep averaging into the metals because the current system can’t continue forever.

He gives us his thoughts on the upcoming FOMC meetings and why they keep putting up trial balloons. Craig is expecting a postponement of tapering talk. The system can’t afford rates to move higher, and from here, the dollar will probably decline, which will be positive for metals.

The debt ceiling is now a joke since it rises too fast, and instead of a maximum target, they now use a date. This year the debt ceiling expires at the beginning of October. Any discussion of the debt may create some additional pressure on the dollar.

Keep a careful eye on silver futures. There is a strong correlation between these and the GDX. When silver gets moving, so will the miners.

Time Stamp References:
0:00 – Introduction
0:36 – Nixon – Gold Window
4:47 – The Reserve Currency
9:29 – Scenario – Gold Currency
15:00 – The Market & Bad News
20:30 – Upcoming FOMC Meetings
30:55 – Debt Ceiling & Stimulus
34:13 – International Confidence
40:05 – Instability & Metals
42:20 – Concluding Thoughts
45:01 – Wrap Up

Talking Points From This Episode

  • Growing wealth inequality and fiat printing.
  • Confidence in currencies and governments.
  • Propped up equity markets and dollar-cost averaging into metals.
  • Silver futures and the strong correlation with mining stocks.

Guest Links:

Craig Hemke, aka “Turd Ferguson,” was a licensed securities “professional” for nearly twenty years. Then, disgruntled by the fraud known as “financial services,” he retired to a career as a serial entrepreneur in 2008. Though otherworldly in his ability to forecast price movements, Craig is not a soothsayer, a psychic, or a witch, but, after all these years, he has a decent understanding of the forces at play in the precious metal “markets.”

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