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Simon Mikhailovich: Converging Macro Trends are Changing the World as We Know It

Tom welcomes back Simon Mikhailovich. Simon is a contrarian investor, entrepreneur, and the founder of The Bullion Reserve.

Simon discusses the counterparty risks that are present in the financial system and how they can lead to bank failures. He notes how the financial system is a series of daisy chains that, if broken, can cause a domino effect and throw the entire system into question. He also notes the 2008 crisis was fifteen years ago, and in that time the Fed has been unable to end its extraordinary policies. This is resulting in a massive amount of debt that would be impossible to service at higher interest rates. Simon believes that this is leading to a radical de-globalization, higher costs, and a reshuffling of the global supply chain that is highly inflationary. In this environment, he suggests that gold may be a better investment than Bitcoin due to its perceived reliability.

Time Stamp References:
0:00 – Introduction
0:38 – Counterparty Risks
9:45 – Bank Run Prevention
12:33 – Bail Outs & Confidence
14:09 – Social Polarization
20:50 – System Fragility
29:45 – Cost of Living
36:17 – Human Nature & Time
44:00 – Phase Transitions
48:15 – Gold Price & ETF Flows
53:18 – Gold As Insurance
54:44 – Value of the Dollar
58:42 – Rates, Dollar & Gold
1:04:36 – Bitcoin & Adoption
1:10:37 – Wrap Up

Talking Points From This Episode

  • Counterparty risks in the financial system can lead to bank failures, putting the entire system in question or gridlock.
  • The Fed’s extraordinary policies since 2008 has resulted in a massive buildup of debt, making servicing it impossible at higher rates.
  • In this environment, gold provides a guaranteed level of confidence not available with bitcoin.

Guest Links:

Simon A. Mikhailovich is a co-founder, lead manager of The Bullion Reserve, and a director. Mr. Mikhailovich is an entrepreneur and contrarian investor who predicted and profited from the financial crises of 2000 and 2008. Before co-founding TBR in 2014, Mr. Mikhailovich co-founded Eidesis Capital, a special situations investment firm. Between 1998 and 2014, the Eidesis team deployed over $2.5B of capital through special opportunity funds focused on high yield corporate bonds and loans, credit derivatives, distressed CDOs and MBS, and gold. Previously, Mr. Mikhailovich was a Portfolio Manager at Falcon Asset Management, overseeing alternative investments in hard assets, including oil and gas properties, timberlands, and agribusiness. During the credit cycle of the early 1990s, he headed a workouts’ team responsible for restructuring multiple businesses in North America and Europe. Mr. Mikhailovich received a M.S. in Business (Finance) from the University of Baltimore and a B.S. from Johns Hopkins University.

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