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Rafi Farber: The Dollar is being Poisoned

Tom welcomes Rafi Farber back to the show. Rafi is an investor, author, and proponent of the Austrian Business Cycle.

Rafi discusses how to keep sane with short-term price movement in gold. There are times when investments fail to behave how you would expect. This is why it’s important to keep cash on hand since you need to be able to buy the dip. You need emotional stability. Eventually, there will be another liquidity crisis and the Fed will likely intervene once again. There has been some exhaustion seen in miners, particularly Newmont and Barrick.

Most commodities are seeing shortages and higher prices. So far higher prices haven’t corrected these supply issues.

When people understand that their wealth is being taken from them through inflation they will change their behavior. This is when the currency begins dying and shortages begin to occur.

Everyone’s inflation rates are different because they use a different basket of goods. All the experts have different definitions and levels for hyperinflation. Rafi argues that hyperinflation should be defined as when people become reluctant to hold a currency. During these times prices can’t compensate fast enough.

Growth in the money supply has become quite high over the last year. Recently, that rate has come way down although it’s still seasonally high. Some of that supply appears to have entered the equity markets and it’s difficult to track where these flows into equities.

The recent resignation of two Fed presidents demonstrates these people aren’t clean. There almost all involved in equities and he questions why these two individuals were singled out.

Rafi outlines Milton Friedman’s pencil analogy which demonstrates the complexities of free markets. We are seeing a contraction in the industry for various reasons like emission standards.

Lastly, Rafi discusses his ongoing experiment to take delivery of a silver bar via a futures contract.

Time Stamp References:
0:00 – Introduction
0:35 – Gold Price Action
4:12 – Selling Exhaustion
6:10 – Gold to Commodities
10:36 – Dollar Sickness
13:15 – Defining Hyperinflation
17:00 – Backwardation
20:18 – Expectations & Spending
21:13 – Money Supply Growth
24:10 – Fed Resignations
26:48 – Pencil Analogy
30:53 – Taking Silver Delivery
33:43 – Concluding Thoughts
35:12 – Wrap Up

Talking Points From This Episode

  • Keeping sane in an insane economic world.
  • Commodities and supply shortages.
  • Defining hyperinflation as a loss of confidence.
  • Fed resignations and the complexities of markets.

Guest Links

Rafi Farber invests based on the Austrian Business Cycle Theory and covers economic trends for timing the credit cycle. His marketplace service, The Libertarian Investor, helps subscribers manage the risks and profit from the ongoing fiscal and monetary crisis precipitated by the COVID-19 pandemic. His approach uses gold, silver, and associated stocks and investment vehicles as a low-risk, high-return methodology.

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