Gold Is Running Ahead — Bitcoin Is Next (The Great Rotation Explained)

Jackson Mikalic (00:01.329) We are back Mel Madison. Welcome back to the last trade. It's great to see you, man. How's 2026 been treating you so far? @MelMattison1 (00:08.201) Thank you. Excellent. It's been doing very well. I hope it's doing well for everybody out there. It's been, you know, a year full of surprises, but also some of the main themes that I believe in have been holding true. Kind of a belief in non-USD denominated assets, gold, silver, emerging markets. Unfortunately, Bitcoin, which is one of those non- kind of USD anchored assets, as well as some of the other cryptos have not been doing as well as I had hoped or as I had thought. And so it's been a bit befuddling, a bit disappointing. But it's an example of one of the reasons why I could hold a belief that, you know, probably over the next 10 years, Bitcoin is the best performing asset. but yet I still want to be diversified and not put it all into Bitcoin. because psychologically that's very hard to handle. And to people that can handle that and have like huddled through since, you know, it was a thousand dollars a coin and they're still holding on. Maybe in the long run, they'll be rewarded with that. But for me psychologically and at the point in my life, I appreciate diversification. And this is one of those years so far where that diversification has paid off. Michael (01:37.838) Yeah, Mel, I wanted to ask, are you the guy moving the silver market? Because you did a little foreshadowing on the last call. I think if you remember, you pulled up your 100 ounce silver bar. And so, you know, don't beat yourself up on the Bitcoin price because that diversification is paying off. @MelMattison1 (01:52.042) I use a silver bar. This is just one of like 30 that I bought a long time ago. But it's actually, you know, it's informative because it's, if you look at silver, I mean, this is an asset that when I bought that probably 20 years ago for like 1100 bucks, now it's over 10,000, whatever. Think about what's happened since I bought that in 20 years. It went up to 50 in 2011. As recently as 2020, it was back to $11 an ounce. And now it's gone up 10x in the last five years. And that's a very volatile asset. And that goes exactly to the point that I made in the beginning, which is a value I believe in diversification. because different assets and different asset classes work at different times. And it's very easy to get like short term thinking and be like, well, Bitcoin is dead. Crypto is dead because it's trading where it was a year ago. You know, that, that might be true in the very short term. Like I think Bitcoin and crypto have kind of fallen off the radar a little bit of a lot of asset allocators, but that doesn't mean that that's not going to change. And when it does change, it can change very quickly. And I think that when you look back with hindsight, while I was wrong in my short-term predictions at the end of last year, I think when you look back at hindsight, you can kind of see how we've gotten here. And, I think a big deal was a week or two ago when the Coinbase CEO came out and kind of put the kibosh on the Clarity Act. right ahead of that, had like Bitcoin had broken down. It had been forming what would be called like a bear pennant pattern where it was like setting up for like a deeper dive lower. But then it broke out above it and it was trading well over 90,000 for a few days in a row ahead of the Clarity Act. @MelMattison1 (04:16.638) And other crypto assets were following along with this. At the very beginning of the year, you know, a number of cryptos, I had owned a number of cryptos that I bought at the end of the year because I felt like a lot of people were tax loss harvesting, you know, selling iBit and different things to take some losses. And sure enough, like January 1st, I mean, things took off a little bit. There was a coin virtuals protocol. I think I bought it for like 65 cents on December 31st. It traded up to a dollar 14 within a few days. You had everything in place for like the base being built, the consolidation happening, and now it's time to start another run. You have these fundamental reasons at play, dollar weakness. geopolitical uncertainty, like you had the table was set and, the charts looked like, okay, this is getting ready to go. And then you had kind of the rug pulled with the clarity act, which has been one of the big, kind of bullcase themes going back a year ago. There were three things that. Senator Cynthia Loomis kind of spelled out. Like it was like, we're going to start with the genius act. That's going to get stable coins. Then we're going to do the clarity act. And then we're going to move into a sovereign wealth fund. And these were all parts of kind of the big picture that I think fueled the rally that we saw in the first part of 2024. And we've seen like one by one, these bullcase narratives get torn down. And now the Clarity Act is in jeopardy. Depending on how things work out, it might not even be past this term. which could push it back to 2027. And so you start looking at all of this and then you have gold and silver going crazy, which is like pulling the oxygen out of the Bitcoin and crypto market. Then you still have the hangover from the October 10th due leveraging event. And so it's actually not that surprising to see what's happening. And if you actually factor all that in, @MelMattison1 (06:42.61) You might look at Bitcoin at 87,000 and say, you know what? It's actually hanging in there pretty damn well. And in, in other situations, you, you, you might expect to see this, you know, down in the fifties or sixties, but it's hanging in there very well. So I'm still very bullish longer term, but I have backed away from my shorter term bullish predictions because I think that's only the prudent thing to do. If you get proven wrong. Michael (06:49.008) you @MelMattison1 (07:12.054) once, maybe you try one more time, you get proven wrong again, then I think you step back and you say, you know what, you're missing something in the picture here. And then you listen to price, you listen to, what's actually happening. And then, you know, there'll be time to step in and lever up, at the right time. Michael (07:32.12) So I don't know if we were gonna go here initially, but I think it's a perfect segue to, I appreciate you breaking that down. And I think the thing that, I'm not certain how much of your Bitcoin thesis falls into it, but I know your personal finance thesis falls into it by definition of you a hundred ounces of silver. that the purpose of money is to provide optionality in the future. the reality is, so Bitcoin has, it's a true asymmetry because there is the upside potential, but there's also the downside potential and what other assets are you holding? Because depending on where you're putting those assets, whether it's bonds over priced equities, that's the thing that commonly brought up that it's in a vacuum and it's kind of a paradox because there's a reason why price isn't the only thing if you can hold that asset outside of the system that provides you optionality where something and D levers in your left hole in the bag of shit, which historically has happened across, you know, sovereigns. But then there's the other aspect, which is that you can do that, but then the realization is the majority of the market doesn't know that. They don't price in the optionality. And I don't want to call it sovereignty, but this notion of money outside money, it's the reason why most retail isn't in the gold trade, it's still. And because they don't appreciate having that physical bearer asset when things go south. The person that articulated this the best yesterday laugh late last night Was Nick's a but I'm just gonna read it and then maybe get the you guys thoughts it says because he's basically going down this thread of You know, people are going back and forth about Bitcoin being a hedge against debasement. one, he goes, it's hard to tell that Bitcoin protects against the basement from just its price. Since most of the price rise since the pizza purchase has been due to the learning curve, not to the basement, fiat has fallen, but not by nearly as much as Bitcoin has risen. To understand why Bitcoin has and very likely will protect in the long term against the basement better than gold has and will requires deep understanding of the underlying respective technologies that are gold and Bitcoin, especially in terms of their respective extents and qualities of trust minimization. Michael (09:31.648) And it requires knowing why trust minimization is valuable. These kinds of understandings are still uncommon. And I think from a Western perspective, which we naturally sit in, it's uncommon because everyone's lulled to sleep that their bank will always give their money, their counterparty, their equities, their bonds. Everyone's going to be made whole. And we all, think, understand here that that's just not true. And that's where a fundamental mispricing happens. Independent of the upside, there's the downside that most people are discounting. And the fact that they don't discount it is a part of the bullish case, because once they realize that and things go tits up, that's when the trade also goes on. @MelMattison1 (09:52.98) Hmm. Mm-hmm. @MelMattison1 (09:59.403) you @MelMattison1 (10:06.986) Well, I think those are great points and I think When you you step back, I think even if you look at like precious metals There are different types of holders of precious metals, right? A lot of the people that are driving this recent market move are Momentum hedge fund like they're not people who appreciate the virtues of precious metals They're people who have capital that's fast money that they want to put it somewhere They see a move happening, they pile in, it moves upon each other. And I think there are people, fundamentally, this is actually where a lot of precious metals people and Bitcoin and crypto people have in common is this belief that you just talked about, like what are the virtues of this asset, this trustless asset, right? that does not need a counterparty to verify that, that you can hold. And it's not about the, you know, the cash flows that a company is going to generate or the ability of a debtor to pay back its credit. It, it, it's something that's kind of outside of that. It's different. It's in a word, money. and, and that is really what money is as JP Morgan. said in his 1913 testimony to Congress, gold is money, nothing else. And for a long time, people have forgotten this. They've looked at US dollars and US treasuries as money. know, the guy who does the Bitcoin layer, Nick Batia, I'm not sure if that's his name, but you know, I remember I read that book a few years ago. And he talks about what currently sits at the top of the money pyramid in the current financial system isn't a dollar. It's not gold. It's not Bitcoin. It's actually US treasuries that that treasuries are essentially what bring money into existence in the current system. And we're going through a recognition that that was kind of a temporary post Bretton Woods system moment. And we're coming back to money being something else. And @MelMattison1 (12:24.532) People are recognizing that with gold and silver right now. They're recognizing it with Bitcoin, but that different group that I mentioned, the group that's driving the massive gains and precious metals, that's the hot money momentum group. They don't care about Bitcoin right now because that's not the hot momentum name. In the long term, this will hold forth. And I think that's what's happened with precious metals over the years. The first time I bought a gold cougar on it was like $300 an ounce. The first time I bought an ounce of silver, it was like $10 an ounce. Um, and I saw it go up. saw it go down. saw it have parabolic moves. saw it collapse. Um, you know, the, these are, mean, silver, when I was just starting out in this business, I think it was around four or four 50 an ounce. Um, you know, I mean, these are massive things that happened over. massive spans of time. And there is a maturation process going on right now with Bitcoin, where it's I've described it as it's in its puberty stage, where the childhood stage is over. That's where like you're growing steadily every single year as a child. You get into puberty, you might have a year you don't grow much, then you have a growth spurt. And then eventually you'll get into that adult stage, which is a little bit more steady and stable. I think Bitcoin is just going through that right now. And a lot of people are, you know, very quick to dismiss it. I was listening to like Carl Quintanilla and David Faber, who have no real understanding of anything to do with crypto, but yet pontificated sometimes on it. And they are talking about the worries of quantum. I mean, look, quantum is a worry. But if you're worried about quantum, The only asset in the world that probably is quantum non-hackable is precious metals, Every other asset, bonds, treasuries, stocks. So if people are really like freaking out about, you know, encryption getting broken, they would be pulling all their money out of banks. They'd be pulling all their money out of the stock market and their fidelity accounts because it's all going to be cracked. I don't think that's really what's happening. @MelMattison1 (14:50.492) I think you had, again, I mentioned Jordy Visser earlier. I know he wrote a post a few months back about the Bitcoin IPO, about the kind of the, the, the, the, the people that were the original kind of VC backers of it, you know, getting exit liquidity in a sense and the ownership kind of changes. And you see this in stocks sometimes where stocks can be like a value stock, and then they start having growth potential. and their investor base has turned over and different things happen. And a lot of all of these changes are going on with Bitcoin and with crypto in general. And that's very, you know, it's very difficult if last year you started investing in Bitcoin and you heard people tell you, you can count on Bitcoin to return 30 % a year every year, you know, don't worry about it. the greatest thing since sliced bread and you're never going to have to work again if you own point to Bitcoin. If you believe that, then yeah, you're going to be very disappointed and maybe so disappointed that you're like, I give up on it and I sell it. And, I, and so you, you have people doing these things, but at the same time, when you look at these asset classes over time, you see that their fundamental characteristics do eventually show through. And you know, that post you read, Michael, I mean, it spells out, you know, some of those fundamental virtues of Bitcoin and those will shine through. I'm convinced of it in the end. I don't think that this trade is over by a long shot. I'm not selling any of my core holdings. I'm currently not playing like short-term leverage positions like I was at the end of the year. That killed me a little bit. I'm basically saying, look, this is a time. where I need to let the market talk to me and tell me when it's going to be ready for another move and might I miss the first five or 10 percent move? Sure, but as soon as I start to see those signs like, okay, this thing's ready again, you know, then then I'll move back into some of those levered positions. But right now what it's telling me is it's taking a break, it's taking a breather, it's continuing to build a base, it's @MelMattison1 (17:05.93) It's investors, it's holders are getting sorted out. OGs are selling institutions, buying you got the Bitcoin treasury companies. got people at BlackRock putting it into the portfolios. Um, this is all happening. It's a process. It's taking time. And I don't think it's going to be like five years or anything like silver where silver hit 50 in 2011. And then, you know, it took until you know, 2025 to get back to 50. I don't, I don't think we're dealing with a 14 year dry spell like we had with silver, but I do think like we're going through a, a soft patch and the people that stick with it and are smart about how they manage their positions and what they have will ultimately be rewarded. And if you're just a normal investor and you're just like, I don't have a big Bitcoin position, but I want one and you're taking, you know, $200 of every paycheck and just dollar cost averaging into Bitcoin. mean, this is exactly what you want. This is, this is what markets do. They give you the opportunity to get in time and time again, markets give you the opportunity to get in. And right now you're getting the opportunity to get into Bitcoin at a good level. If you maybe regretted not having more when it was 120. Michael (18:22.562) Yeah, I know we have some other topics, just on this one because it relates back to... It's really a prescient description of where we sit in the purity stage or the IPO moment that I was starting to think about it the other day. We're kind of in no man's land with Bitcoin's price because it sits at this $100,000, kind of call it between 80 to 120. And if you think about the historical buyer being an individual retail, even a family office, they don't need a lot of people to convince the liquidity profiles there. Buying 10 Bitcoin moves the needle from a portfolio and it's appreciation versus buying 10 Bitcoin today. fundamentally different who can buy it where they're at. But then on the other side of that, it's still a relatively small asset as compared to a large cap equity or gold or silver. And so it's just this interesting time where it sits. mean, Brian, to throw it to you, just curious, like where you used to sit at BBH, curious, like because in this no man's land, people are doing research and they're trying to understand what it is because now the aperture has grown before people. this new admin, nobody was looking at it or a lot of like institutional allocators weren't looking at it. Now they have to, they're developing their position, but we're still early in where, how do they size it and where does it fit within a portfolio? Brian Cubellis (19:24.676) you Brian Cubellis (19:34.092) Yeah, it's funny you asked that because earlier this week Brown Brothers actually put out, know, one of their publications that they do, I think on a quarterly basis. And I opened it up, it's like 40 pages long and I just control, control F'd gold. And it was mentioned once in the entire report as sort of like an afterthought last sentence of a paragraph, just being like, and you know, golden and precious metals may benefit from some of these tailwinds. It's like, that's all you're going to say about the best performing asset of 2025. I would say, by and large, a lot of those types of institutions are still probably not thinking about this on the precious metals side. And it goes back to Mel, the point you were making. I'm curious what you think, because I think you're right that a lot of this parabolic move in gold and silver is probably some momentum traders. But I also think going back a few years, it's central banks and sovereigns that do see the value of those properties that we were describing. And I'm also curious what you think around the puberty to adulthood stage for Bitcoin. I think there's always been this thinking around diminishing returns for Bitcoin. But then when I look at what and silver have done, that kind of flies out the window. If gold's going to add 20 trillion to its market cap in a year and a half or two years, I don't know what Bitcoin looks like in its adult stage. I think it could still have those types of moves if gold and silver can do that. What do think about that? @MelMattison1 (20:58.442) Yeah, no, I definitely think it can. I mean, you look at something, I was just pulling up like a micron chart, right? I was curious what the market cap of it was, you know, it's 486 billion. This is a stock that was, you know, $115 a share back in the fall of last year. And now it's 431. And like to see an asset go, you know, from like hundred billion to 500 billion, which is more than a quarter of the value of all Bitcoin, that shows you the potential. And that's why you've seen silver. know, Bitcoin was above silver at different points last year. When you're dealing with these smaller asset classes that are worth less than a Nvidia or a Microsoft, not even half of an Nvidia, you know, they can really move. It doesn't take, it's the same thing with emerging markets. I've been a big emerging markets equity fan for over a year, espousing the, the benefit, the values of countries like Brazil, India, which hasn't done great last year, but you know, you look at the soul, which is still the, the cost be in Korea is technically an emerging market. It's up a hundred percent in the last year. You know, people that want to invest in like Nvidia, you know, I mean, you can do that. But you got to think to yourself, if you want like something that's going to three, four X in the next four or five years, like Nvidia just doesn't really have that potential. Even the biggest bulls out there, like a Brad Gerstner, aren't going to tell you Nvidia is going to four X and go to 16 billion in the next five years. But, um, you know, a, uh, EWZ, a Brazil ETF, you know, that can go up 50 % this year. You know, a lot of these countries market caps are less than, you know, Nvidia's market cap. So, you know, the, you know, you might look at something and be like, and what does Brazil have? You know, you look at their big companies, you look at Petrobras and oil and energy, you look at Vale and iron, you look at, you know, different names that are, that are in, these countries. And what you're seeing with, especially, I think Brazil and India is countries that both @MelMattison1 (23:19.208) the United States, China, and to some extent Russia, they're all courting these countries. And that's why actually you don't have a good trade deal yet with Brazil or with India and the United States, because they're also being courted by other folks. And India just announced this week, a massive trade deal with the EU. Obviously India buys a lot of its energy from Russia. So These are major economies, major land masses, major populations. I mean, multiples of the U S population, right? Especially in the case of India, that are still trading at very relatively benign, P E's that have commodities that have labor that have everything that you need. And like people are starting to wake up and they don't have the dollar risk. Because I think the big overarching thing above all of this is really the sovereign bond fiasco in the developed world, whether it's Japan, whether it's France, know, Germany doesn't have like a huge debt to GDP ratio, but pretty much every other major developed economy has these massive debt to GDP ratios. And what you're seeing is investors saying, huh, I don't want to be in a dollar denominated asset as much as I have been. Even though I know there's a lot of growth in the US, even though I know the US is on the forefront of innovation, there's this fiscal overhang. This is a monetary overhang. This is exactly the type of thing that Bitcoin was built for, which is why it's so frustrating that Bitcoin's not soaring the way gold and emerging markets are right now. And, and, so I think you can only attribute that to, like I said, some of those things that I brought up in the beginning, that a lot of this bull case was getting priced in, the first last three months of 2024, first three months of 2025. And that some of these bull cases just did not materialize, which disappointed people that the clarity act is still on the table. the sovereign wealth fund, is really kind of in the background because @MelMattison1 (25:36.779) Um, that when Trump announced that for people that haven't followed the details on it, um, he pulled in Howard Ludnick and Scott Besson in January, right after being inaugurated. And he did an executive order telling them within, I think it was 30 or 90 days, they needed to produce a report about how to create a sovereign wealth fund. And essentially the report came back, which was not publicly released the full report, but the leaked information on it was. that it would be very difficult to do this without congressional approval, which would be hard to get. And so what Trump has begun doing, and these are the investments they're doing in Rare Earths, in Intel, they're using a couple of different mechanisms. They're using the ESF, which is the Exchange Stabilization Fund, which is a fund within the Treasury that is set up to help manage the dollar, for those that don't know. Traditionally, the Federal Reserve is in charge of interest rates. The Treasury is in charge of the dollar policy of the United States. They have something called the ESF, which has a two or three hundred billion in it that they're able to intervene in currencies, which they might be doing right now to keep the yen in check. And then they're also using a number of investment vehicles tucked into the DOD or now the Department of War. to make these investments. if people will notice, and this is kind of reading the tea leaves, which I haven't heard a lot of commentators talk about, but I believe one of the reasons why Trump is advocating for a $1.5 trillion defense budget is because he wants capital to deploy, to deploy to chipmakers, to rare earths, and also in sovereign wealth fund, you know, certain activities, which could include the purchase of crypto assets. I think that's something that nobody is talking about, that nobody has really said, taking that ABC approach that Trump wants an extra half a trillion for Department of War, Department of War has investment vehicles, those vehicles could fulfill his goal of a sovereign wealth fund because he knows he can't get something like that through Congress. If he does, there are, I mean, that could be like a huge upside surprise. @MelMattison1 (28:00.381) And sometimes in markets you get downside surprises, you get disappointments, but sometimes you also get upside surprises. And, you know, one day in the next 12 months, we could wake up to a true social post. Department of War for Strategic Defense is now initiating a wealth fund and will be buying, you know, Bitcoin or will be transferring the Bitcoin the US government now holds and using different investments, including proceeds from sales of things like, okay, we're exiting our equity in rare earth companies or Intel at a profit, and we're going to store that wealth in the meantime in, uh, you know, Bitcoin. mean, all of this is within the realm of possibility, but it's not priced in at all. So there are upside surprises that are out there that could just, you know, spike this in a ridiculous way. I'm not counting on those. Like I said earlier, I'm waiting for price to tell me. waiting for things to go. But like, if something like that came out, I mean, that's when you just press on the gas and you just say, okay, I missed the first five or 10 % move that happened on the news. I'm still going long because we're back on an upward trajectory. Jackson Mikalic (29:14.435) Mel, you think so? Those are some interesting thoughts that I hadn't considered at all. And I'm curious how that ties into just some of the broader themes that we've discussed on this conversation and last one as well in the sense of we had discussed previously how gold is to the benefit of adversarial nations to gold rising is a benefit to adversarial nations in the United States and our strategic interests. And we talked about how the largest holders and those countries that are accumulating gold, the fastest are at odds with our strategic initiatives as a country. And so I'm curious if you think like with the gold meltup that's happened over the past year, do you think that's putting additional pressure on the Trump administration and those close to the administration to prioritize Bitcoin? Or is that, am I totally misreading the situation? @MelMattison1 (30:04.082) No, I think that Bitcoin offers a more unique US advantage. Obviously, the major gold producers are South Africa. China actually produces a lot of gold. And actually, central bank buying is down over the last 12 months compared to the previous 12 months because of the rise in price. I think this this move really is more momentum driven. Like there is that fundamental narrative out there about central banks, but a lot of them are buying less than they were last year. There are notable exceptions. Poland recently announced a massive increase in their cent and they have one of the highest gold relative to GDP positions in all of Europe and the EU. So there is still that central bank buying going out on out there, but you cannot explain. Jackson Mikalic (30:35.355) Mm-hmm. @MelMattison1 (30:59.602) What gold and and then look at silver? mean no central banks have announced silver purchases. So this move or platinum purchases I I think this move in precious metals it's it's one of those things like bitcoin where it's it's Confounded some of the best analysts where a lot of people would have said This is a point where silver or bitcoin or silver or gold are going to take a breather or you know pull back and then they don't I mean even You know, on, I guess it was, was a Monday where we opened up, you know, and silver went to one 17 and just collapse. Like, like on a chart, that's like the worst type of, you know, candle you could see where you gap up, you rip up like 10 % and then you close below the open. And, yet it's bouncing back because there's just this. kind of unstoppable demand right now for gold and silver, even though it's not even really driven by, like I said, some of these fundamental narratives like, central banks are buying. They've been cutting back. So I think what's happening is there's a lot of liquidity in the system that is chasing returns. And right now that's in micron, that's in Sandis, that's in gold, that's in silver. And buying is begetting buying. These things always do eventually turn. Calling that top in gold or the turn point in Bitcoin has proven elusive for a lot of people, including myself. And so I've backed away from doing that because I've been wrong, you know, point blank. I've thought gold has topped or Bitcoin is going to start, you know, but I did say at the beginning of the year that I think by the end of the year, Bitcoin can outperform gold. And I also thought that Solana could outperform silver. And I still think that's completely possible. And I think if you start looking at some of the action, like you take a look at something like a Solana and you look at like, okay, here's what's happening with it. Like it keeps checking down to this like 120 level, which goes back like years. just taking a quick look at at a week chart so I can give people right numbers. @MelMattison1 (33:20.82) But I mean, you look at Solana first reached these levels in August of 2021. And so when you, when you look at it and you look at the chart and you're like, okay, where did we get down to in the April lows? Well, the monthly low close on Solana was, 105. And last month we closed that, you know, 117. So we're getting very close to like some very, very key. kind of long-term levels, I think you'd see the same thing with EVE. Jackson Mikalic (33:51.794) So you're making a case then that the momentum trade for precious metals is going to at some point this year flip back into Bitcoin. what I heard earlier as well, and then Michael let you chime in on something, whatever you want to say. But what I heard earlier as well, Mel, and we could discuss at some point the conversation is the core allocations haven't changed, right? Like you're not selling your gold, you're not selling your Bitcoin, and you had even published something a couple of weeks back about the Madison allocation. which we could talk about, but Michael, was curious what was top of mind for you before we get there. Michael (34:24.044) Yeah, I mean, it was tying into what Mel was alluding to around like most investors outside of individuals listening to this have no way to bucket or think about Bitcoin. So to the point of momentum traders and the allocation with gold, that doesn't transpire into debasement trade for most people and trying to protect their wealth. They're looking at it if they're getting in via momentum and its number go up. You see a lot of it was even Brian Armstrong yesterday saying you can trade futures of gold and silver, which was interesting commentary saying that that's marking the top. We'll see. But point being is that on the BTC side, it would zooming back out like it's not rocket science what's happening here you have an asset and it goes back to Brian and the Benjamin Graham in the short term markets are voting machines in the long term they're weighing machines just yesterday and today we had more not only Morgan Stanley hire a new head of digital assets who's been at that firm for 20 plus years but they're actually heavily investing in wallet infrastructure they're not just playing like the ETF paper game they're planning for the future and then this morning it came out with Fidelity they've been rumored and been working working on stable coins, which is a $6 trillion firm, know, 100 years roughly age like when you take a step back, it's not hard to understand that a when a narrative slightly shifts. into why somebody want to hold it and people grab onto it. And there's lots of narratives why somebody would want Bitcoin from risk, risk on risk off, know, NASDAQ, beta, beta play. But then once the liquidity and the plumbing is there, because I think we really forget being native to the space. And I was naive early was like the notion of thinking about Mel, when you bought your first Bitcoin and even today, like to the notion of like taking it from your bank account and sending it to a crack in or a buy bit like it might as well be sending it to a gambling casino, which very people @MelMattison1 (36:11.722) Mm-hmm. Michael (36:11.92) But they're on the margins versus people that are trying to just conserve and protect their wealth That would Morgan Stanley and Fidelity and all these firms turn it on they start to add allocations like there's so many tailwinds that it's not Again, it's not rocket science to understand where this goes It's just the fundamentals are being placed right now and I think we just like forget that and it's between Twitter and all the kind of like fast pace of Volatility and perpetuals and futures that everyone gets trapped into these small moves when in reality there's so much happening behind the scenes means. @MelMattison1 (36:43.516) And you know, you didn't even mention the New York Stock Exchange announced creating tokenized trading. So this actually gets into something where I think the fight of Bitcoin is not like over where people think, okay, it's now mainstream and accepted. And I think this is the reason why the clarity act failed is that the banks want to still protect their turf and Like people that might think, well, why did Brian Armstrong say that? what, like what's going on with this? And this goes into a flaw in the genius act. So the flaw in the genius act was it's stating that stable coin holders couldn't get paid interest. And that was put in there because Democrats and Republicans both are bought and paid for by banks. so they did not want to threaten the bank's ability to pay interest on deposits. Now. How can you then make interest on your stable coins? Well, okay. can stake it or whatever and get rewards. So the clarity act, you know, essentially the reason it failed basically was it was going to preserve this kind of unique exclusive right of banks to pay interest on deposits. And this gets into like the whole history of the banking system of central banks. One reason why I'm not a fan of like the federal reserve and nothing personal against Jerome Powell. think he's a bit of a dupe. think he's, he doesn't really have the, uh, you know, moral high ground that a lot of people ascribe to him. I think if you look at what happened in 2020, you know, basically the worst of the pandemic just happened to end at the end of Trump's term. The right thing to do was probably to stop doing stimulus, but Biden needed to do stimulus because Trump had done stimulus. The right thing to do in 2021 was for the Fed to, you know, stop buying bonds and maybe even raise rates. And they didn't because they didn't want to, you know, basically shut off the punch bowl, you know, right as Biden came into office. So they continued to do it for an entire year in 2021 and drive up inflation and liquidity. @MelMattison1 (38:58.534) And create this massive housing bubble. So, you know, I think the fed doesn't take responsibility for that. think they want to act like, we thought it was transitory. We got it wrong. And they don't want to talk about FOMC members, essentially being political and keeping the punch bowl a lot longer than it needed to be because they didn't want to pull it away right when Biden came into office. So there's a lot of stuff that's involved in what I'm talking about, but one of the biggest things is that. Banks have a very unique position in our system. They can create money. Banks create more money than the Federal Reserve. When a bank does a loan, it's essentially creating money. And they're doing that off of fractional reserve banking. They're doing that off of deposits. If people can essentially deposit their cash into a stablecoin and get a direct interest payment from that. The banking system no longer exists as we know it and the banks know that and they understand that. And then they're like, well, Citibank is going to have their own stablecoin or JP Morgan. That's true. But these guys don't want to take the chance that you're going to keep your stable coin money with them. And so obviously if you look at it and you see that the three month T-bills have been paying, you know, 5 % for the last year and a half or two years. and a bank checking account pays like 0.16%, you realize the whole industry is built upon screwing people out of the interest they deserve. And a true stablecoin where you could get interest would take that away. And a stablecoin combined with rewards basically does that. And the Clarity Act was essentially going to put guardrails in place to force people back into the banking system. And there's still this massive battle. that even though Trump is in the White House and they're supposedly the most crypto friendly administration ever, there still is this massive battle that crypto is fighting against the powers that be because it is a fundamental threat to the system. And that's been also a big headwind. And I think one of the reasons why we saw the Clarity Act fail and one of the reasons why we've seen the Bitcoin price stall. Michael (40:54.264) you Michael (41:07.212) Yeah, that's something that I've been keying into the past few weeks. I've been talking about the number of banks and then also to your description, more fintech providers that are. bypassing some of these banks to give access to stable coins via the treasury and then offer the rewards. And my take on this is it's gonna go back to the whole Fed versus treasury battle that we're seeing right now. And it's very similar that like if you go back to, and this doesn't get widely discussed and I brought it up a few times, but pre 22, like 21, 22, institutional allocators, didn't want, they want nothing to do with Coinbase. They refer to it as a Web3 company. It was in the same lights of FTX, BlockFi, All of that was all the same to them and this is what I was hearing from folks at Citadel, BlackRock, etc. And then 23, the rumors of the ETF came about. It was very odd to me because Coinbase was the custodian and everyone at this point is like, you know, doesn't get fired to go into Coinbase if they want to put on a Bitcoin allocation. And that was just odd because that flipped. And then when you tie that into you think about like BitMEX and these offshore derivatives exchanges, they all kind of got like brought into the regulatory apparatus by Bit, or not by Bit. year, was purchased and it was effectively the administration putting their kind of arms around okay we can somewhat control we have visibility we can understand this asset class and then now you have this new administration coming in that I think what's ultimately happening is the large bigger banks are trying to create the structure where maybe they can only issue stable coins but And then there's going to do these like small window accounts into treasuries if you're like a fintech, but you're ultimately not going to let every bank do it because what's happening right now is the smaller regional banks are thinking about, if I can create better fintech rails where I can let people like distribution channels, like maybe the non ramp offer client services, they can deposit their cash, get yield. You're, starting to not get control of those stable coins versus if you have the big four and all the aggregation that's already happened, they might be the only ones to be able to issue offer the yield. Like that's kind of the, Michael (43:07.312) In fighting I think that's happening that we ultimately get stable coins and we get banks and fintechs playing but it's going to be a limited amount of banks that can offer that. Bridge is a great example. Bridge offers the orchestration. You can deposit dollars into your account but then it goes to lead bank and leads going with the treasury market and I think there's more there's a fear that more and more banks will do that and you don't have the perfect stranglehold of like who's actually issuing these stable coins and I think that's like the missing pieces on getting the clarity act where they feel like they can wrap their arms around in the same way they wrapped their arms around effectively Coinbase and now Coinbase is like an extension in some respects of the state. @MelMattison1 (43:44.843) Now all of that's absolutely true and I think you know philosophically what crypto and Bitcoin represent is a disarming of the government's ability to tax and this goes back to you know the beginning of the country where if you think about you know a democracy you know the first democracy in modern times since ancient Greece, wasn't necessarily a true democracy, but the first post-Middle Age democracy of the United States, very immediately ran into a major issue. And that was the federal government needed revenue. They put on a tax. They thought we're going to tax vice-type activities such as liquor and whiskey. And there was a revolt, the Whiskey Rebellion. I believe George Washington actually invoked or did something similar to, you know, the Insurrection Act to send federal troops into states where people did not want to succumb to federal laws. So, you know, we're seeing some of that now in Minnesota where there's a federal law, but there's a population in place that doesn't support that federal law, doesn't want to do it, and the local elected officials don't want to support it. And then what does the federal government do? Well, what Washington did was he He sent in troops. and so what was kind of came out of this and Hamilton, you know, came out of this with this realization was it's very difficult to tax the population of a democracy. And behind the scenes, I think they very quickly realized the way that you tax people is with inflation. And what you do is you do not issue, debt that's like a mortgage. So in the very beginning of the country, there was some discussion about like issuing treasuries that were more like a mortgage where every payment was also a bit of principle and you'd do a 10 year bond and at the end of that 10 years, you'd actually have paid off the bond and they made the decision, no, Hamilton did this. It was going to be all, you know, interest only payments. @MelMattison1 (46:08.434) So basically interest only mortgages, like the government's like, we're going interest only baby, you know, we're, not paying back principal. And, and this basically just set in like motion, this whole thing where people talk about DGP GDP needs to grow, you know, greater than like the rate of interest on the debt. And then you're not going to get into like a, a, a collapse situation because the government has never had any intention of paying off the debt. It never will pay off the debt. You know, the debt's never getting paid off. technically Andrew Jackson did pay off the debt. also ended the second central bank of the United States, 1836, but you know, those days are long gone. So the government has realized we're going to make our money by inflation. Now tie it into modern day. A fed worker published a paper a few years ago where he essentially was talking about fiscal dominance and how do you. get out of fiscal dominance through inflation, through essentially inflating the debt away. And one thing he talks about in that academic paper is the necessity of what he calls surprise inflation, that the market cannot anticipate the inflation, otherwise it moves its money into different assets and places, and that when you look at inflation, there's only a certain core amount of assets where that inflation can really take hold, and that's basically checking deposits. Because checking deposits are where money sits without an inflationary hedge to it. You know, if you're in gold, if you're in stocks, if you're in real estate and there's inflation, all those assets should go up. If you're in treasury bonds, theoretically, the yield should start to adjust to inflation expectations. But if you're in a checking deposit or savings deposit, there's not. And so the monetary base where you can apply the surprise inflation in order to essentially you know, inflate your way out of a deficit debacle is really only on non-interest bearing checking accounts assets, because all other assets will essentially adjust to the inflation that's out there in the environment. And so there is a very vested interest in the government keeping a substantial stock of money in non-interest bearing assets, because that's their inflation base. And that is in essence the taxation base of the United States, because the actual federal taxes we pay @MelMattison1 (48:34.684) are minuscule compared to the inflation tax that we have paid, for example, over the last five years. So when you start to threaten the fact that there could be a situation where no longer is there money in non-interest or non-inflation adjusted assets, you then threaten the taxation authority of the federal government. And then they would have to actually outright tax us for everything they do, which would be a disaster and never happen. So this is a huge threat. And this is why I think the Clarity Act didn't make it through and why the Stable Act was created the way that it was, is this is a massive threat to the banking cartel and to the federal government. Michael (49:17.998) I'm curious how you reconcile, because this ties into the news of Tether launch in the USAT, how do you reconcile what you describe which makes sense with also the concerted effort or push to kind of dollarize the world and have more treasury demand? Because they seem a little juxtaposed. @MelMattison1 (49:36.939) Well, they want to have the treasuries out there. And if they can have nominal growth ahead of the treasury rate that they pay, then they're okay with that. So if nominal growth is at 5 % and they're paying a 2 % or 3 % on a T-bill, that's fine. The problem that they get into is if the market begins expecting the inflation or the debasement that's actually kind of commiserate, with the inflation or debasement that occurs. A lot of people will talk right now about like inflation breakevens aren't that high. The thing about inflation breakevens is they're based upon like what people pay for tips, which is treasury inflation protected securities. They're kind of an imputed amount. And the way that tips get paid out is it's based on CPI. So that's essentially letting the fox run the hen house. where the government's going to tell you what the inflation level is. And so it makes sense that you're not seeing like a high inflation level because inflation levels of CPI, impact, not only do they impact like COLA payments, cost of living adjustments on social security, they also impact tax bracket adjustments. And so the government has a vested interest in keeping like the CPI much lower than actual observed inflation. And then they want to find a home to answer a question about like the stable coins and where these treasuries are going to go. They're looking for somewhere to put their debt other than foreign holders because foreign holders are no longer interested in buying them. So the place you put that is you put it at the banks. You put it with people in stable coins. And so that's what they want to do. The banks are all down for that. If they can get like a 3 % interest on a treasury bill. and then, you know, collect deposits from the average American and pay them 0.15%. They're fine with them levering that up and getting interest on reserves at the Federal Reserve, which the Federal Reserve used to not pay interest on reserves, excess reserves, until post global financial crisis. So this whole thing is like a, it's a complex web. I don't want to get into too much of the weeds on it, but it's finding a way. Where do we stash all of these, you know, treasuries? @MelMattison1 (52:01.083) that we're going to need to issue. And the bigger problem is actually with a situation like Europe, where they have 3 % fiscal deficit caps and they have a common currency but not a common bond. the ECB, you got the Euros doing pretty good right now at 120. But I think that actually like... The euro zone is really where the biggest problem is even more than Japan, because at least Japan has its own central bank and its own currency. The euro like if there is going to be a big like potential 70 % crash in the stock market, I could see that coming from from a collapse in the euro zone, like where essentially the euro becomes untenable because of civil unrest in Europe, people want their pensions and they want everything but these countries just can't. especially if they have to start paying for defense and stuff that they've been free riding on for decades. So, you know, there are risks out there. I mean, I'm generally a bullish guy, but there's definitely risks out there. Michael (53:08.078) Root. We don't do it deep there, but to your point, you know, the amount of capital leaving the UK alone, you see this with Dubai as an example, in the past six to 12 months, but then also like where there's smoke, there's fire, to your point, it's come up a bunch over the past week with Revolut and these other fintechs out of Europe completely shutting down accounts or a lot of these issuers on stable coins, because the notion of capital flight and the velocity when it comes to what we're talking about in crypto assets is like, It's so fragile there that, yeah, I definitely think that there's a huge gap that people aren't recognizing where it might be Europe that brings down a lot of things. @MelMattison1 (53:49.887) Yeah, I think that's, that's where the biggest hole in the system is, in my opinion, is really in Europe. And, and not to mention that the underlying, just cultural disharmony, I mean, even a country like Spain has like four countries within it. Right. I mean, it's like these people don't get along. They fought and killed each other like nonstop for like a thousand years. and, and when push comes to shove, you know, and we had this in 2011. with the Euro crisis and the pigs, know, Portugal, Italy, Greece, and Spain. Those countries are actually doing much better now than the France and the Germany's in many respects. And so there is a lot of, there's like an unresolved future. mean, Europe is a basket case. I think Europe is like so much worse than Japan, so much worse than China, so much worse than South America, so much worse than the United States because they're just all screwed up. I mean, from their energy policy to their currency, to their interest rates, to the way they just function, which is completely a bureaucratic mess in Brussels. mean, it's just all screwed up. so like Europe is probably going to be like they were in the 1940s, the powder keg that, you know, ignites issues once again in the 21st century. I don't think it's like happening next year, but I think in the next five to 10 years, like Michael (54:47.118) you @MelMattison1 (55:15.554) Europe is going to have a day of reckoning and that could be a serious threat. And at that point in time, that's when assets like gold, silver and Bitcoin are going to be even more valuable because they're going to be outside of the system. And that goes back to the quote on that tweet. You mentioned Michael that, you know, people don't understand the value until that happens. And then they, they, they go parabolic. Michael (55:38.562) Were you referring to Europe or Minneapolis or Minnesota? wasn't sure. @MelMattison1 (55:40.618) Yeah, I mean there's that too. I mean, you the United States has probably got its own issues. It's got to work through But you know, I don't I actually don't think we're as bad as as Europe is Michael (55:54.658) Definitely, it's more of the propaganda machine pushing it out there. Sorry Jackson, I know you had some that. Jackson Mikalic (55:58.643) I was curious on a lot of these themes, Mel, I just had a conversation earlier this week with a fund manager who decided personally and for his clients years ago to not allocate the bonds anymore for probably obvious reasons to us, Negative real returns, among other issues from a counterparty perspective. He just published a book called The Great Rebalancing. And really the core thesis is the combination of the great wealth transfer that's happening with baby boomers. dying off and their children inheriting and the fact that because of the structural debt issues that exist within the US and globally That more and more people will come to the realization it may not happen tomorrow because many people still don't understand this but it will come to the realization at some point that Their purchasing power is just getting absolutely destroyed over the long term by holding fixed income securities and cash, etc And so I'm curious like how this kind of fits into your worldview because clearly we've talked about money outside of the system, gold and Bitcoin are core parts of your personal portfolio. Do you think that there's going to be some sort of, um, like, do you think there's going to be a lot of financial repression from the governments as it relates to just people's brokerage accounts on the retail side and then institutional, uh, as well as more and more of capital does flee the US treasury market and just sovereign bonds globally. And because what I'm trying to parse out now is like we talked about stable coins, they're coming in to buy up some of the demand. But if there's enough people out there that recognize acutely the pain of just getting their purchasing power destroyed, you'd imagine a lot of them will be smart enough to move out of those asset classes. And like the visceral reaction I'd imagine the natural reaction from governments would be to try to close the doors. So is that kind of part of your base case over the longer term? Is there going to be some sort of fight back from governments in terms of mandating ownership and shutting the doors? And is that part of the reason why you want to hold outside money sooner than later? @MelMattison1 (57:59.412) Well, I think that's going to be part of it, but I also think that the Fed balance sheet is for the United States is significantly going to expand in the coming years that that the QE and we're not doing that. And, and in fact, some of the people have talked about why for a certain period of time, Kevin Warsh was being talked about as the next Fed chair. The reason he's fallen out of favor is he has views about not expanding the Fed balance sheet too much. And I think that the Federal Reserve needs to buy large amounts of treasuries going forward. the buyers of treasuries, you know, so if you were like Saudi Arabia in 1985 and you bought a 10-year treasury, which at that point in time might have yielded like 8%, you know, you did well. you actually made a real return by buying treasuries. You're not making a real return anymore buying treasuries. And so the foreign buyers are gone. You know, I think that the U.S. government recognized that the foreign buyers were pretty much, you know, going to maintain positions or maintain U.S. treasuries for kind of dollar liquidity for their country prior to 2022. And that that was why they confiscated the Russian treasuries was because they knew the game was up. A lot of people say that's what started the, like that was a accelerator. I, I don't really think it was an accelerator. I think that never would have happened if the powers that be in treasury and, and other places didn't already realize that the game was up, that the BRICS countries and everybody else had already realized we're full up with as many treasuries as we want. We're not dumping them onto the system because that's only going to shoot ourselves into the foot, but we're not going to be a big buyer. That's fine. So now what do you do? Who's going to buy it? Well, there's US retirees and 6040 portfolios. That is now going away. That's another big buyer where people are starting to realize, okay, I don't want to own bonds in a personal portfolio. I'd rather have like cash and gold be my 30, 40 % with some Bitcoin and the other @MelMattison1 (01:00:19.326) be equities rather than bonds. So who's going to buy it? And it leaves a few buyers. It leaves pension funds and insurance companies that are institutionally mandated. So they're very price inelastic. They'll buy it no matter what, basically. And then you have the Fed, the buyer of last resort, the largest holder of US Treasuries on the planet by far. And so I think that they're going to absorb more. I've looked at. Fed balance sheet treasury holdings over time relative to treasuries outstanding. And the Federal Reserve actually holds right now a very low amount of US treasuries relative to the total amount of treasury debt. So 38, 39 trillion in debt. The Fed, you know, if you take out their mortgage backed securities and everything else, it's like four or five trillion worth of US treasuries. That amount is actually small and historically is much higher on a percentage basis of outstanding. So I think that the Treasury needs to buy a lot more. the pushback would be, well, then, Mel, that's going to be inflationary. This is what people are counting on, I think, in the administration and elsewhere is a AI productivity miracle, essentially that they're going to supply side. We're going to grow our way into allowing this. And yet we are going to still kind of run it hot, so to speak, and have kind of a running elevated level of inflation that while the CPI prints may be two, three, three and a half percent, the actual inflation will be closer to four or five percent. And so they're trying to thread this needle of how they can get through all of this without a collapse. And I think it's possible to do it. I'm not somebody who sits out here as a doomer and says, we're headed for a day of reckoning and a collapse. think there's this delicate balance that can be weaved through. But at the end of the day, that road leads you to non-US dollar denominated assets outperforming dollar denominated assets. And I think that's why if you look at something like emerging markets, like EEM, I'll just take a quick look at the ETF and say, okay, in the last 12 months, EEM is up @MelMattison1 (01:02:45.226) you know, 43%. You know, what's the S &P 500 up in the last 12 months? And you can go into other countries like Korea up 100%. Brazil's probably up 60 % the last 12 months. So these are non-dollar denominated assets that are outside of this developed world sovereign wealth bubble of Japan, Western Europe, United States. And they're totally crushing it and outperforming. And that's where you're seeing all the assets go commodities, non-USD denominated equities, gold. And that again comes back to like so frustrating because you'd think this would be Bitcoin. what? And so you scratch your head and you say, how did I get it so wrong last quarter? Because I'm looking at these macro picture and I'm saying, this is the, this is it. And, and I think it's one of those things where it's a combination of headwinds from You know, powers that be clarity act not working, you know, some OG selling, some people, Momo money following other assets, different things. But I think that fundamental picture still holds and over time it will reflect that it's just not showing in the price right now, but I don't think that's like a multi-year scenario. I I'm hopeful that it ends soon. You know, I'm hopeful that it. the malaise end soon. once it does, given it is such a small market cap, as we've talked about, the move can be intense and face ripping when it comes. But I'm not going to try to call exactly when that's going to happen because I've been wrong in the past doing that. So I've learned my lesson. Brian Cubellis (01:04:30.916) Yeah, well, you, of course, you mentioned the Fed chair, Kevin Warsh falling out of favor. I just pulled up Polymarket and now Rick Reader, think, CIO of BlackRock is now in the lead at 44 % likelihood to become the next Fed chair. In your mind, is that just, you know, he's going to be the good henchman for Trump, just cut rates immediately? And then could that be the catalyst to get Bitcoin out of the doldrums is just like an aggressive move? Jackson Mikalic (01:04:31.283) We forgive you, Mel. Brian Cubellis (01:05:00.612) with a new Fed chair. @MelMattison1 (01:05:03.53) Well, I do think like, it seems like they keep floating trial balloons of somebody and seeing what the market comments on. So Hassett, it was like, well, he's very qualified, but he's kind of been compromised because he's so close. Then it was Warsh. Well, he's negative on balance sheet expansion. And now they've kind of, at the end of the day, I do think that Trump wants Bessett. I actually bought like 7,000 Bessett. Brian Cubellis (01:05:08.877) Yeah. Brian Cubellis (01:05:17.315) Mm-hmm. @MelMattison1 (01:05:33.578) on the, on the poly market. Um, I like, it just took a, you know, threw a few hundred dollars out there. Yeah. I I bought it at three cents. So I've doubled my money, I guess. Um, you know, because like, I think that's who Trump wants. So what I'm counting on is like, at some point, like he'll be discussed and it'll shoot up to 25 % best and I'll cash out most of it and keep some in case it actually happens. I don't think that's probably going to happen, but, Brian Cubellis (01:05:38.276) He's at 6 % right now. Alright. Brian Cubellis (01:05:53.059) Right. @MelMattison1 (01:06:01.404) I do think that at the end of the day, he wants Besant. He trusts Besant. He likes Besant. He knows Besant. The market trusts and likes Besant. He thinks Besant is the best person. I think there could be even a, a very unconventional situation where Besant agrees to do it, but perhaps whether he tells the market this or doesn't says like, I I'm prepared to do this, but, I'm only doing it for one. governor's term or one chair's term, which is not as long as a governor's term is 14 years. like Powell has been, I think that the chair's term is, I'm not sure exactly what it is. It's shorter. but he might say, I'll, I'll do it till the end of the Trump administration or for one chair's term. And then I'm resigning. I'm not going to accept it a second, re-upping his chair like Powell did, but Trump nominated him and then Biden re-upped him. So. You know, it could, it could be Besant. I think in any case, as a lot of people have talked about, it still comes down to a vote. And, and so you still are going to have people like Lisa Cook on the board and different people that need to come along with it. And I also think that if it looks like it's too much of like Trump's, minions, then you will get like this rest in the bond market. Like we had during liberation day and stuff. So I think Trump's kind of recognized that and he's like, I want someone the market respects, but that's also going to do what I want. And right now he's thinking that's Rick Reader, that Rick Reader will want a lower rate. So want to expand the balance sheet. He's got market respect, but deep down he wants best and he trusts them more. I think at the end of the day, and this is going to go even beyond Trump's term is that the only way. that this whole system moves forward, given all the things I've talked about, like foreign holders of treasury no longer wanting to accumulate, eventually with the baby boomers are probably the last generation that's going to want to hold bonds in their portfolio in a significant percentage, that the Federal Reserve is ultimately going to have to expand its balance sheet. Now that could either come from somebody proactively doing that, or it could come from a market meltdown that then, you know, @MelMattison1 (01:08:27.144) drops 20 % in a two week period. And then the Fed says, we're coming in to buy treasuries and QE is back on like Donkey Kong and it's just going crazy again. So I think one way or another, that's where we end up. so whoever that Fed person is, Warsh, Reeder, Waller, Hassett, Besant, I think that they don't have much of a choice. I think they need to lower rates because interest expense is too high. And by issuing more treasuries, the Fed funds is the interest rate the government pays. So don't issue duration, issue front end. Fed controls the front end. And eventually they need to add to the balance sheet. And that's going to happen under, I mean, you think a Democratic president in Congress comes in in 2029 and they're going to say, okay, time to raise interest rates. you know, no, anybody who's in power is going to want the Fed to be buying bonds and lowering interest rates. Brian Cubellis (01:09:18.756) you Jackson Mikalic (01:09:26.696) So Mel, we got about 10 more minutes left. I have one more question for you and then I also want to leave some time for like maybe you to just riff on something that you wanted to discuss that we haven't gotten to yet or some crazy shit you've been thinking about, whatever direction you want to go in. But the question first is you kind of hearing this theme a lot online these days about you have, and I think this is more targeted toward let's say Gen Z, millennials, probably people who are still in wealth building accumulation phase. There's this theme that I'm seeing popping up everywhere. It's the idea of you have a few more years, you have kind of a window of opportunity before you're in the permanent underclass because of debasement and artificial intelligence. I'm curious, do you subscribe to this idea because it sounds like between run it hot, inflation is structural, has to go higher because of the debt problem. And then you just are starting to really see the wave of layoffs increase. Certainly last year and into this year, it's gonna just continue to get worse. Curious if you could opine on the underclass. Is this something that you subscribe to and something that people should be thinking about and preparing for? Michael (01:10:31.438) Mel, real quick, just so you know, really this is coming from It's for Jackson, because there's a running theme that really people listen to this pot outside of hearing what your takes is Jackson's stuck and he can't buy a home and he lives in his grandmother's basement. And so he's trying to figure out if he has a chance within the next couple of years to vibe code himself out of poverty. So I just want you to know before you answer, like his life hinges on your directional take. @MelMattison1 (01:10:45.546) You Jackson Mikalic (01:10:56.625) Yeah, exactly. And I don't want you to... @MelMattison1 (01:10:58.004) Well, I got good news for you, Jackson. You do, you do, you do, you do. There's massive deflationary forces at play, which might just save all of our asses. And, and this, this, this is that needle I talked about threading where, where you, you could get into a situation potentially where we're able to have like massive QE, massive fed buying, nine USD assets do incredibly well relative to USD assets. But we don't have this massive inflationary spiral that gets out of control that then leads to Wall Street collapse, everything else. And I think there's two major deflationary aspects going on at the same time. One of them is AI and the productivity that's bringing. The other is the demographics and the retiring of baby boomers and so on. And then you've also kind of shut down the border, at least for now. So that's something in the United States. But that's just US specific and I think monetary policy ultimately is global. I think globally you have these two major deflationary aspects which are demographics. I think in like 10 or 20 years we're expected to reach peak human population and then start declining on a global basis somewhere around 10 billion which would be the first time in a long time that the global population actually begins to decrease. Once you start having that, you're not going to have problems finding houses. Now that's still a ways out, but I do think that with AI, if you think about how much land there is, for example, in the United States, a lot of the reason why it's hard to like just build houses and have houses in different places is because of the governmental infrastructure that's necessary. You need roads, you need garbage disposals, you need electricity lines, you need internet lines, you need police, you need all of these things to be put into place. think with drones and different things, like people are going to be able to build homes in the middle of nowhere where there's not even a road and, they're going to buy like 20 acres of land in the Sierras and you know, fly in, materials and Starlink. and, and so I do think that there's this abundance. @MelMattison1 (01:13:17.642) theme that's out there, I don't think that when you listen to like the moonshots guys or the Elans of the world, that it's going to happen as quickly as they think, which is actually a good thing because if it happened in two years, we'd wind up with like 35 % unemployment and it would be too quick and too much for the system to handle. But I do think that over time, we're going to start to figure out these things because there actually is plenty of resources out there for everybody to have a home. We just need to be able to kind of build them, access them and everything. So I do think that a lot of people are really freaked out about homes. I think there's a number one, there's tons of empty homes in the U S like people don't live in them. They're foreigners own them because they're basically monetary hedges against inflation and their own currencies. Um, there's, you know, a lot of people talk about the institutional buyers. So there's a bunch of problems in the housing market that I think are fixable. Because homes should not be this unaffordable to the average person. There's no good reason. It just has to do with zoning laws, with, you know, over too much liquidity going into the housing market, part, from corporations. And I know Trump wants to stop that, but I don't think that's really the biggest driver of it. Then you had kind of this Airbnb thing happen. So people could own a home and then they could move somewhere and they have a two and a half percent mortgage on the home. So they're like, I'm not going to sell it. I'm just going to, you know, do a vacation rental with it. So I would not lose hope. I think that there's still this potential for all of this stuff to start to come together. I think the key is like owning assets before you move those assets into a home, owning assets that are going to benefit from all of the themes we've talked about, which are pred primarily non-USD-dominated assets such as emerging market equities, Bitcoin, gold, and silver. Michael (01:15:17.218) I love it. Jackson may have some thoughts, but before we wrap, we have to go here because I don't know if you've been paying attention to the deep dark corners of the web and there's people, I'm not saying where I subscribe, but I'm curious, you guys, is over under, there's eight billion people on this planet. Because you reference population growth. And I don't know if this is coming out of left field where you guys know what I'm talking about, but there's just like... Brian Cubellis (01:15:38.84) This is not on my timeline. Please elaborate. Michael (01:15:42.936) Well, I think it initially started with somebody out of China just referencing that they don't have the 1.2 billion people. the point being is like, there's, there's, so whether it's a 4 billion, 7 billion, I'm just curious, do you think that we have the estimated exact number of people? @MelMattison1 (01:15:52.348) It's a weather. to think that we have the estimated exact. So like world population figures and such. Michael (01:16:02.466) Exactly. @MelMattison1 (01:16:04.521) I have heard some people talk about China numbers not being Michael (01:16:09.942) Mel's my guy, we're in the same deep dark corners of the web. @MelMattison1 (01:16:13.809) Yeah, I've heard some people talk about that. China, there's a lot of people that think every number China gives is wrong. One number I'm almost positive China gives that's wrong is its gold holdings. You know, they claim to hold like 2000 metric tons of gold and yet there's like a they're the largest gold producer in the world, more than South Africa. They have like bans on exports. They I mean, they have a lot more gold than they let on. So could they be lying about their population figures? You know, definitely. They definitely, a lot of people have said, well, they got themselves into a pickle with the one child policy and that, you know, they're not going to have the growth. But then the funny thing that's happening is people are starting to say, well, with AI, actually you don't want an economy with a lot of young people because there's not going to be the jobs. And so you want like an economy with less workers, working age people in it. And I mean, it could be one of those funny accidents of history because I mean, you can go back to, you know, Malthusian economics where Malthus, I mean, he basically calculated out how many people the world could support based on agriculture. And he basically thought, Max, no way could we support more than 2 billion people globally. And that absolutely made sense based on the technology at the time. the big limiting factor in the technology was people had not figured out how to replace nitrogen into the soil farming. you just couldn't, like, you had to do crop rotation, you had to different things. And they figured out guano, bat and bird crap. had had this and and there was a period in time when the United States issued an order that any American citizen who went to an island covered in bird shit could claim that island on behalf of the United States and we almost got into a war with Peru over this. And so there was over a hundred desolate islands that were claimed by American basically privateers and they would come into the ports just full of @MelMattison1 (01:18:34.461) Birdcrap and and they figured out okay this works and then there was a guy a German scientist who Figured out a way to essentially infuse nitrogen into a fertilizer from other basic chemicals like potash and different things and so the the whole bird poop bubble kind of burst and and that that whole thing ended and once that occurred you then begin to be able to re-farm land year after year after year after year because of fertilizers, which has now allowed us to get to 8, 10 billion people. So there could be a technology thing where something that we just can't see on the horizon that's telling us we're limited in this way, and then a technology comes and it just, you know, totally changes the game. And we could be at that point where a lot of people are saying, we're going to be doomed. We don't have population growth or there's not going to be jobs or this and that, and then AI comes into the picture and technology kind of saves our butts once again in the same way that bird poop did, in the same way that nitrogen-infused fertilizers did. And it's really kind of fascinating how throughout history, technology has time and time again managed to figure out a way that we now wind up in a situation we are with over 8 billion people on the planet, which is unthinkable 150 years ago. Michael (01:20:00.034) I love it. On the next episode, we're going to talk about the Georgia Guidestones and Mel's take on. @MelMattison1 (01:20:04.649) I'm into all of that, my friend. Hey, I've been a guest three times on Coast to Coast AM. I'm a big Coast fan. So if you want to get into any of that stuff. Michael (01:20:09.005) Ha Michael (01:20:17.866) That's, if anybody made it this far, that is funny, you bring that up. I didn't even know it's still running. I used to fall asleep because I was listening to Spurs games and 1200 in San Antonio. And then coast to coast would come up and I just be hearing at 2 a.m. about remote viewing from like Sea Crafts. @MelMattison1 (01:20:24.809) I'm @MelMattison1 (01:20:30.601) Yeah, yeah. No, remote viewing, the Nazi bell. I mean, you you can name any conspiracy theory out there. And that's why I own precious metals, because we're all the same guys. Like, we're the guys that, you know, believe in Area 51 and all this stuff that, you know, I actually don't believe in aliens. I think they're out there, but I don't think they're running things behind the scenes. Brian Cubellis (01:20:42.091) You Jackson Mikalic (01:20:43.731) Ha! Michael (01:20:54.286) I love it. Jackson Mikalic (01:20:55.71) Mel, well, it was fun, man. I think we'll have to have another episode in the not too distant future and maybe we'll save, we'll do a little bit less financial talk and maybe we'll just let some crazy shit loose on the podcast. How about that? @MelMattison1 (01:21:11.229) That would be great, man. We can get into all kinds of areas that I'm not qualified to talk on, but happy to do so. Michael (01:21:18.094) And I'll stick my neck out and say, guaranteed next time Matt Amell's on the pod, I'll actually guarantee, money back guaranteed. Next time Amell's on the pod, the Bitcoin price will be higher, much higher. Jackson Mikalic (01:21:30.068) All right. Brian Cubellis (01:21:30.158) Better, better be. @MelMattison1 (01:21:30.301) with you. Jackson Mikalic (01:21:38.504) Mel, what, Mel, where do want people to find you online before we jump? @MelMattison1 (01:21:39.091) Alright. Mel Madison won or melmadison.com and you know I also have my financial thriller Quoz. Quantum Oz is about AI, quantum computing, corrupt central bankers taking over the world and putting in a gold and silver backed currency that causes gold and silver prices to spike. In the novel they spiked to 25,000 an ounce on gold, 1,500 on silver, so we'll see if we get there. Brian Cubellis (01:22:10.756) Thanks, Ian. Jackson Mikalic (01:22:10.898) All right, how about we, yeah, how about for the next episode and then we'll wrap here. For the next episode, we'll figure out, give ourselves enough time to read the book and we'll spend a good amount of time talking about the book and then we can also talk about some other crazy shit that came up at the end of this episode. @MelMattison1 (01:22:24.135) Well, I tell you what, if you read the book and you're through the first five or six chapters, they're like three, four page chapters, short chapter, and you're like, this isn't good. Don't finish it. Only finish it if you really enjoy it, because I actually think it's a good book. It's gotten good Amazon and good reviews. It's actually been more successful than I thought. So if you, if you do it. read it or the audiobook on audible.com or anywhere they have audiobooks. It's distributed by Simon and Schuster. So it's out there wherever books are sold. And I would love to talk about it because it gets into a lot of these themes and there's a central financial sell off where you know, kind of people are a little perplexed because unlike other sell offs, the dollar isn't going up, it's going down and treasury yields are going up instead of down and gold and silver are spiking. and I wrote it in 2022 and it takes place in 2027. So a lot of what's going on in it is pretty topical. Jackson Mikalic (01:23:25.204) Cool. Well, I think what we could commit to then on our side is we can read the book and we'll compare notes. And I bet that would make for a fun conversation if we just all come with some questions and then we can riff on whatever else comes up. Brian Cubellis (01:23:26.062) Love it. @MelMattison1 (01:23:36.595) Yeah, that would be awesome. I love it. Jackson Mikalic (01:23:38.74) All right, Mel, well, thanks for your time. Pleasure catching up with you. Brian Cubellis (01:23:39.556) Thanks Mel. Appreciate it man. @MelMattison1 (01:23:41.716)