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David Kranzler: The Metals Bull Market isn’t Dead

Tom welcomes back David Kranzler of Investment Research Dynamics to the show.

Dave argues that the weekly economic data is indicative of the U.S. already in a recession. Eighty percent of all U.S. households have been experiencing the characteristics of a recession. Credit card usage is spiking and this is likely because people are relying on them to make ends meet. Inflation remains rampant at double digits.

It seems unlikely that the Fed will conduct quantitative tightening. Government spending deficit continues to balloon. This year’s tax receipts will likely be down and the deficits will only increase. Who will be buying that debt other than the Fed?

In addition, there appear to be major problems occurring behind the curtains with the credit markets. The quality of corporate credit is deteriorating quickly.

We’ve been seeing a slow steady shift away from the dollar for the past decade. China has been utilizing its own currency in bilateral trade for some time. China has increased the size of its Asian trading markets so they are now less reliant on trade with the United States.

The derivatives markets are the Achilles heel of the system. An example is the paper ‘gold’ derivatives versus the actual physical markets. They rely on investors leaving their ‘metal’ on the exchanges. Their worst nightmare would be for numerous funds and investors to demand delivery.

He discusses what happens when general investors start moving into the miners and the outsized returns one can expect.

Dave discusses the lack of investigation of fraud by the SEC. Every market cycle seems to make these investigations less likely. A lot of fraud continues to be perpetuated and there is a revolving door between government and corporations.

Time Stamp References:
0:00 – Introduction
1:26 – Recession is Here
4:18 – Household Debt
7:14 – Quant Tightening
11:00 – Dollar Status
16:23 – The Achilles Heel
19:30 – Comex Terms
21:06 – Recent Sell-Off
28:58 – Gold Movements
35:56 – Taking Profits
37:00 – Physical Demand
42:27 – Elon, Tesla & Twitter
48:34 – SEC & Corruption
54:10 – Wrap Up

Talking Points From This Episode

  • Declining economic data and why we’re in a recession already.
  • Fed is unlikely to conduct Quantitative Tightening.
  • The U.S. dollar and China’s continued trade diversification.
  • Why derivatives are the Achilles heel for the system.

Guest Links:

David Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for Bankers Trust. Dave earned a master’s degree in business administration from the University of Chicago, concentrating on accounting and finance. He writes a blog to help people understand and analyze what is going on in our financial system and economy.

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