In a recent episode of Money Metals' Midweek Memo, host Mike Maharrey engaged in an enlightening conversation with Mark Skousen, an eminent economist with a PhD from George Washington University.
Skousen, who was recently named one of the top 20 living economists, delved into various pressing topics ranging from precious metals to the Federal Reserve's policies, sharing his seasoned perspectives on the current economic landscape.
Mark Skousen, a celebrated academic and author, has a prolific background in economic theory and application. As the founder of FreedomFest, an annual gathering that champions discussions on liberty and economic freedom, Skousen is well-known for his advocacy of free-market principles and limited government intervention.
During the interview, Skousen delved into the resilience and recent performance of gold within financial markets, emphasizing its enduring value, particularly during periods of economic uncertainty.
He highlighted the outperformance of gold itself compared to gold stocks, mentioning his personal holdings, how the Fed harms the purchasing power of USD, and how gold acts as a hedge against inflation:
- Gold's Performance: "Well, I think gold itself has done a lot better than the gold stocks... I have gold, I have GLD, the iShares Gold shares bullion position in my portfolio."
- Central Bank Purchases: He emphasized the significant role of central banks, like the Federal Reserve, in the gold market, stating, "Central banks are buying record numbers of gold... it's definitely at, I think two years ago was a record, and then last year was close to that."
- Gold as a Hedge: Skousen also touched on the strategic value of gold as a hedge against economic instability and inflation, reinforcing its position as a key asset in diversified investment portfolios.
Skousen underscored the significant role of central banks in the gold market, noting their record-breaking purchases in recent years. He discussed gold's strategic importance as a hedge against economic instability and inflation, asserting its crucial role in diversified investment portfolios.
Transitioning to broader economic concerns, Skousen expressed apprehensions regarding inflation and Federal Reserve policies, linking these issues to gold's recent performance as an investment.
Key Discussions in the Interview:
Do people question your choice to live in California given your stance on freedom?
Skousen robustly defended his choice, stating, "Yeah, my response is, don't leave, we're here to take it back." He emphasized the importance of striving for change from within, underscoring his commitment to improving the state's political landscape.
What do you make of the recent economic data and the Federal Reserve's response?
Skousen expressed concern over the modest GDP growth and rising inflation rates, highlighting the challenges faced by the Federal Reserve. He quoted Friedrich Hayek, "Friedrich Hayek made the point that inflation is like a tiger by the tail, and when you loosen it, you really have a hard time controlling it." Skousen criticized the current monetary policies, predicting difficulties in managing inflation and potential stagflation.
What's your perspective on the recent trends in precious metals, particularly gold?
Skousen discussed the vitality of gold as an investment, noting, "Well, I think gold itself has done a lot better than the gold stocks... I have gold, I have GLD, the iShares Gold shares bullion position in my portfolio." He highlighted the significant purchases of gold by central banks as part of a broader de-dollarization trend.
What's your take on the recent bull run that we've seen in precious metals, gold and silver?
"Well, I think gold itself has done a lot better than the gold stocks. We used to think that mining stocks were a leveraged way to really make money in gold and silver, but boy, those mining stocks have struggled for years. So I'm more bullish on gold. But I have gold, I have GLD, the iShares Gold shares bullion position in my portfolio, and I do trade the mining stocks, we just got stocked out of several of them on the recent bull run, which is really good to see."
"What's really interesting is that gold is finally moving, even though the dollar is holding up pretty well, it's not showing much weakness, but I think that it's just everybody's taking their terms. So you had the stock market reach an all-time high, you had tech stocks reaching an all-time high, you had Bitcoin reach an all-time high, and finally gold is catching up with that, I don't know, it's hard for me to figure, other than it's gold's time to finally perform, so I'm glad to see it because it's really been a struggle. You would think with inflation taking off and increasing dramatically in 2020, in 2021, that gold would've just really taken off, but it's only been in the last year that gold has finally started to move. So there's quite a lag there, and I'm not sure how to completely explain it, but I'm in it because it looks good to me."
Is it true that central banks are buying record numbers of gold?
"Yeah, it's definitely at, I think, two years ago was a record, and then last year was close to that, and of course most of it is coming from an emerging market, central banks, and then China, so that's where you see it. And I think it's a little bit of the de-dollarization trend, they're trying to shield themselves from getting under the thumb of the US using the dollar as a foreign policy tool."
What is your story about China and gold?
"I should tell you, about 10 years ago, I was in China and I was honored, I received an award and everything from the mayor, I got the keys to the city to Beijing, can you imagine that? So there was this big banquet that they had in my honor, and they came up and they said, 'Listen, we want to get out of the dollar, what do you recommend?' And they specifically asked about gold, they seemed to think that gold was the place to go, and I agreed with them, I thought, that's your best bet to move out of the dollar, out of the bond market, the treasuries, and buy gold. So I think they just want a confirmation of what they're doing, I don't think it's necessarily that they followed my advice, but it was interesting what they were interested in doing."
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