8 000 Gold Incoming Weaker Dollar Only Way America Survives Debt Cancer Tavi Costa

This is Daniela Cambone. Welcome back to the Daniela Cambone Show On The Road. We are covering the Rick Rule Symposium here in Boca Raton and we're trying something new. I have a co-host today, Matthew Tao. He is the director for the International Bullion Division that we just launched at ITM Chating and he's also my husband's husband. So we're trying to do a Mark and Kelly. We're trying to revolutionize the precious metals industry with a new format and Tavi Costa has graciously accepted to be our first guest in this new format. He is the founder and CEO of Azuria Capital and one of the fastest rising stars in our industry in finance. We are thrilled to have him with us. Tavi, congrats on all your success and your new venture here. Thank you so much for having me and looking forward to doing this with you as well. Let's see how let's see. I think it could look easy. No pressure. All right, look, Tavi, the reason we were talking, we were going over all your stats and Matt and I always have conversations and we love what you've been saying, but one of them that really struck to me was you've been doing a lot of essays on America's future and one of your main statements is if you want the dollar to survive, the US dollar to survive, you say we need a weaker dollar. Yeah. Why? Because the system won't survive a strong dollar. The dollar needs to be a lot weaker moving forward for other nations to be able to spend in dollar terms as well. I think that the dollar milkshake theory from Brent, I think it's a really solid argument for the dollar and I've always subscribed to that view pretty much my whole career. What changed was back in 2024 or so, I was looking at just analysis on countries, how much they're paying for debt. Just for context, you can have as much debt personally or through a country as you want, as long as it doesn't start becoming a burden on your spending. And this is exactly what's happening with the US right now. We're spending about 45% of GDP. There's not a single economy outside of Italy, actually. Sorry about that. But there's maybe a few others that are spending close to 45%. You read throughout history, in fact, the UK in the 1800s hit that level. They had a restructure to that. And I'm not saying this will happen next week, next month. I don't know. But what I do know, we're at that danger zone where we need to lower rates regardless of what happens. As you do that, if other countries are not in the same sense of urgency, you're probably going to see the dollar devaluing. So I'm planning five to 10 years ahead that I think the dollar will be not as strong as a lot of people think. And that's going to have an impact in a lot of things, not just precious metals, emerging markets that are very attached to that. I don't know. My lenses of looking at the world is usually through a weaker dollar and suppression of rates eventually. Now you've also been calling for $8,000 gold. Is the weaker dollar the main driver in that thesis or is it much bigger? I think it's an important driver. Is it the main driver? I don't know. I don't think it is. But I think the suppression of rate, the main, I mean, going back to the open letter, which attached to your view here or your question, what holds, I think, the key for the dollar in the US economy in general is the treasury market. The treasury market today is about 3% backed by gold. Back in the 40s or so, it was about 40 to 50%. How do we go back to that? I do think that that's something I wanted to write about because it's a problem. If you're facing that issue, you're probably going to have to see, I think we're probably going to see the US officially reporting that they are buying gold in the next 10 years. I know it sounds like a long time, but they're not going to mention it today. Otherwise, any serious buyer won't mention that and then acquire the metal. You need to acquire first and make the announcement. I think we're in the process of doing that. If you're a Buffett, let's say, and you want to buy, I don't know, any company, Amazon, you're not going to announce to the world you're going to buy Amazon and then buy it. You're going to buy it and announce it. They're just hinting, though, at this golden era. We're talking about a return to a Hamilton-esque era type policy. That is interesting, that point that I think we lose sight of is why would they reveal all their cards? Well, then you have another issue. We were talking about the 4% to 5% of GDP. I think of spending on the fiscal side as a pie. You have a pie, and part of that pie is what you separate to pay your debt. The problem is that section is growing. As it grows, it means that your spending lasts on pro-growth spending. Anything that goes to infrastructure, education, healthcare, it's probably shrinking because of that issue. It's a real cancer in the system. The way to cure it is lowering rates. You lower rate, you lower the burden. The problem is it has a cost on the currency side. Look at Japan. Japan is having a problem ahead of the US. What Japan is having, for instance, is they have 300% of debt to GDP. Like I said, you can grow as much as you want, but then if you start raising interest rates on top of it, then your cost of the debt is going to start increasing, of course. How do you afford it? Then the currency becomes an issue. The currency has collapsed. I have different views on the yen and other things. I think they're controversial, I guess. Not controversial, but unpopular. I think eventually, the dollar is going to be the valve of release of this whole situation. Then what do you make of this hawkish talk about Kevin Warsh and his new Fed? It's interesting because on one side, he's trying to bring back credibility. He's got, in my view, a few options to do that. One of them would be let's hike rates and fix the inflation problem. Let's be serious about the issue. Of course, we all know there's two types of inflation. There's government data and there's actual inflation. Inflation has not changed at all. Government data is doing its own thing. That's what policymakers use to make their own decisions. I highly doubt that he's going to take the approach of hiking rates too much and so forth. That's one thing. The second thing would be, all right, maybe he will go ahead and say maybe 2% target inflation is not feasible. Let's say three to four. That damages the credibility that the Fed stands on right now, which is not a strong ground. The third way that I think he's going to take is to change the inflation calculation. Obviously, I think it's the most obvious play. He's going to claim somehow that we're seeing more productivity and so forth and say, well, inflation is actually not three to four. Maybe it's close to one. For that reason, rates need to be 2%, not three and 75 or whatever. I really think that's going to be the next outcome. I'm on the other side of the market on this. I really don't think we'll see a rate hike in the next six to 12 months. It's priced in already, 100% in six months. It's a big call if you think of it that way. Could we see a cut before the midterms? I wouldn't put a lot of probability on that either, a very high probability of that happening either. Maybe if there's a real shock in the system, but I don't think so. I wanted to get back to your point about GDP and the debt that we're seeing. What would be your response to folks who say, you know what, the debt doesn't matter as long as we're servicing it and we are servicing it? It's true. The other thing is we owe to ourselves as well a lot of the debt still. The external debt is not really, if everything is in US dollars, there's nothing like in other currency terms, number one. Number two, the foreigners own a chunk, but it's close to 25% to 30% of the debt. They're not buying anymore as they used to. They're not selling either. It's been reported, but they're also not net buyers anymore. I agree with that view, actually, that they can grow the debt as much as they want, but rates is out of balance. It's very out of balance. It needs to be maybe 1%, maybe 2% given the direction of the debt. If you look at the compounding effect, it's the easiest way, I think, is to think about a country as a company. A country has two forms of revenues. It collects taxes, or number two, exports more to imports. We are in a deficit on both sides. It's called a twin deficit. To fix one side of it is the fiscal spending. If you reduce spending, you cause a depression, not a recession because we're so addicted to it. The only way to do it is think about that pie and shrink the interest side of it by shrinking rates. That's one aspect. The second aspect is the trade balance. How do you fix that? Right now, guys like Brent Johnson rightly so will point out, look, you have to run a deficit on the trade balance because you're the reserve currency. That's right. The problem is, in order to address that, we're too deep of a deficit on that side. You have to lower the dollar. The dollar is the only mechanism to fix that. I think the combination of those two is I don't know, the factors that will drive markets in the next few years. Interesting. I saw something you posted about U.S. gold reserves as a percentage of debt at current levels. I think it was $75,000 an ounce gold. It puts you back to where you were at 50%. Any possibility of a revaluation just straight up? It is possible. I think the only way to do it logically would be that the U.S. feels very confident that they hold more gold than other countries. There are two ways for the U.S. to improve that. One is the revaluation or two is buying in the market. If you think you own more than China per se or other economies, which it might be the case, I don't know. Nobody knows the answer to that. There are smart guys that think otherwise and they might be right. I think even the government may not know how much the Chinese got. I think they need to buy more personally before a revaluation. Prices are low right now. Why wouldn't they just buy in the market? You say it's a window of opportunity. I do think it is a window. How many times in your career have you seen markets get this oversold? I calculated myself and I saw it only back to 2008. We saw something similar. 2008 was an incredible opportunity for the next one to two years if you just sit on gold for the next few years. I don't know. People put a gun in your head and try to say, when exactly is the price that will bottom? I have no idea, just like anybody else. Bottoms are a process. I only caution people to not be too strict with a certain price in silver and gold. Silver has to hit 50 to bottom. No, it does not. It is the obvious support. If you draw any line, you're going to see the 50 there, but I've seen metals. What if it goes to 45 then invalidates your whole thesis? No, that's not how it works. You have to be flexible. Take a range. If it's 50, you buy it at between 60 and 40, let's say. It sounds like what you say, Matt, all the time to me. Constant accumulation. It works. Not going over your skis. Gradually entering. It's a long-term wealth preserver. It's not a get-rich-quick scheme. We're not buying AI stocks. I think the beauty of it right now is that a lot of the producers are cheap as well. Some of the producers are down 40-50%. I don't remember seeing some of the best royalty businesses in the industry down 30-40%. I don't know. I don't think we're going to see a lot of those windows. Maybe we go down 10% more, but it's not going to really change the game. Let's take advantage. Reach out to ITM Trading. We can help you with the strategy. There's a segue. Of course, Matt Tavna, who's leading our global division for all our international buyers, we can now service the world, which I'm thrilled about. This was a lot of fun. This is what our dinnertime conversations are like. This is a glimpse into our life. Tell you what, my wife and I have a very different conversation. Neither is better or worse. I don't think I could be married to someone who didn't understand. I don't know how to explain this industry. Well, you nailed it. I think we did. Congrats to you. Continued success, Tavi. Like I said, you're one of the rising stars in this space. I appreciate it. Watch Tavi Costa, Azuria Capital. You have a sub-stock. Anything else you want the folks to know? No, this is wonderful. Thanks for having me. Thanks for your service in the industry as well. You've done a lot. Thank you. Look at you. It's wonderful to be here. Stay the course, everyone. Stay the course. We'll have more great content. Who knows, maybe Matt will join us. Let me know if you guys enjoyed this format. We'll have more great content coming your way. Stay tuned.