Frank Giustra: America’s Broke. The Fed Will Print. And Gold Will Win

The dollar is facing more headwinds. It's actually in its worst period since President Nixon was in power. Joining me today is someone who has been warning us about this for quite some time, Frank Giustra. Hi, we're in Boca Raton. It's not on video, but we'll take it. We'll take it. Beautiful weather. By the way, we had an incredible panel yesterday. I encourage everyone to watch it on livestream. We're obviously here at Rick Rule's symposium. Just a powerhouse panel. We'll maybe talk about some of what we discussed yesterday. But first, your thoughts. I mean, you're obviously not surprised that the dollar is in trouble here. Not at all, because it has been overvalued for quite some time. And now you've got the United States on an unsustainable path of debt and deficits that I don't think can ever be turned around. The numbers are far too large in terms of the total debt and the accumulation of additional deficits, which are projected as far as the eye can see, now $2 trillion plus every year. And I think that the world is coming, the global investors are coming to the conclusion that for two reasons. One is that they're on an unsustainable fiscal path. And the other reason, the sanctions that seem to have, the US has sanctioned one third of the world, 60% of which are poorer countries. And obviously, with the Russia sanctions, that really put it into high gear, the idea that de-dollarization, the selling of dollars to invest in other currencies, but more specifically in gold. And now the tariff threats, which have created so much uncertainty, because the Trump administration changes the conditions and threats every single day. So there's so much uncertainty, which is going to slow down trade and I think is going to create problems within the US, in my opinion, if they go through with some of these tariff threats. So you have a combination of perfect storm of factors that are now impacting the value of the dollar. So I'm just saying that that has accelerated the pace of the dollar's downfall. I think it still has a ways to go, quite a bit, maybe another 30%, 40%, who knows. But yeah, and the beneficiary of all this is gold. And we're going to get to that. But first, let me play devil's advocate, because obviously, Jim Rickards was on the panel and I just interviewed him before. And he would say, well, this is all part of the plan. The Trump administration and Scott Besson and co, they want that lower dollar. This is all part of the master plan. The fact that they want a lower dollar is absolutely true. Whether they're playing 3D chess, I'm not so sure. I don't think that the use of the tariff threats was designed to bring the dollar down. I think that it's actually helping to bring the dollar down, which is good, because they want that to improve their export business and the manufacturing industry. So that's all great. But I think a lot of the dollar's downfall is more of about the fiscal situation, which is very bad and not getting any better. The American system is so broken. The fantasy that you can address a debt crisis by issuing more debt and then monetizing that debt with fake money, that game has never worked. And it's been happening since politicians were wearing togas 2,000 years ago. And it fails every time. But that's the path they're on. And I think that that is having more of an impact on the value of the dollar than whatever strategy they're using in the White House. And that makes a lot of sense. I mean, I was a little surprised when I asked Jim Rickards on the panel about the big, beautiful bill adding another $3 trillion. We're just throwing out numbers. Another $3 trillion in 10 years. But he didn't seem to be concerned about the debt. He's not concerned about what Jamie Dimon has been warning about, about what Ray Dalio has been warning about, how the economy is about to have a heart attack at any second. I believe you side more with Dalio on this. I mean, we've spoken about this. It's simple math. It's simple math. The math tells you everything you need to know. There's a huge difference between $36 trillion in debt and $56 trillion in debt. And that's happening at the rate in 10 years, we're going to have probably close to $60 trillion in debt. And you have to finance, you have to service that debt. And right now with interest rates at 4.5% on the 10 year, I mean, that's going to bankrupt the nation. You're in a spiral now of spending more money on servicing debt than you can spend on discretionary items. And so it's an unsustainable path. I call it a road to perdition. And I think we passed the event horizon a long time ago in terms of reversing this, because the system is not set up to address this. It's just the way US politics works. And by the way, both parties are to blame. Like I said yesterday on the panel, my disdain for politicians is evenly distributed. I think both the Democrats and the Republicans are to blame. They each create deficits for different reasons, tax cuts on one side, spending on the other. And what Musk was saying recently that politicians are whistling by the graveyard is true. Politicians know that this is a road to perdition. They know that winter is coming, but they look at it from their own perspective. And I've always said to people, politicians are not there to serve your interests. They're there to stay in power. And so if you look at a politician today in the US, a Congress, Senator, they have a Sophie's Choice. And here's the Sophie's Choice. You can either really address the issue by addressing military spending and non-discretionary spending, because that's really the only places that will make a real difference, but you won't get re-elected. Or you can just do what they're doing right now, which is increasing the deficits, lie about it, and stay in power. And guess what they're going to choose? Every time, with the exception of Thomas Massady, Matt Thomas Massady, Rand Paul. There's only two or three people that are even objecting about that. Everybody else fell into line. I like how you said that winter is coming. I want to ask you about the BRICS summit. It's happening right now in Brazil. We saw President Trump issuing a stern warning saying anyone that sides with the anti-American policies of the BRICS will face tariffs of an additional 10%. Do you think there's a real fear of the growing power of the BRICS, Frank? 100%. You've got 11 BRICS members now with 44 applicants, 120 countries that go to these conferences that they throw a couple times a year. And as I said yesterday on the panel, what BRICS has done is given the global south a voice. It would have been impossible, say, 10 years ago, for a country that is at the wrong end of the U.S. dollar system, because the U.S. is exporting its inflation to other countries with a strong dollar. That's exactly what they've been doing forever. But it would have been impossible for a single country or two countries to come together and criticize the dollar system and do something about it. But now you have a very powerful bloc coming together, getting more and more powerful every day, where they're representing half the world's population, almost half the world's GDP, speaking in one voice. And the analogy I used yesterday is, if you're a bully in a schoolyard and you want to bully a kid, it's easy to bully one kid. But if just 45 of his friends lined up behind him, you're going to think twice. And that's why the BRICS have given a voice and courage to speak up against a system that has been not good for them. It's good for the U.S., but it hasn't served them well. I want to get your thoughts on geopolitics now, because I know that you're an insider when it comes to this. You sit on Crisis Group and other foundations and organizations. Will tensions ease or get worse? Middle East? Well, you've got two hot areas at the moment, the Middle East and Ukraine. I'm suggesting different outcomes for each of them. Let's start with the Middle East. I think that the ceasefire between Iran and Israel is fragile, very fragile. I think Israel has been trying to drag the U.S. into a war with Iran for 30 years now, and they are not going to give up. They used the excuse of attacking the nuclear program, but at the end of the day, they upsold it to a regime change, and they're still on that path. And from Trump's perspective, I think Trump would rather not get into a direct war with Iran. I believe Trump, when he says that, that he doesn't want to have a direct, he would like to have a peace agreement of some kind, and some agreement on the nuclear program. Whether Israel allows Trump to do that is another question. And I suspect that this ceasefire will be broken at some point. Iran is not negotiating directly with the U.S. right now because they don't trust the U.S. They felt betrayed. They were in the middle of a negotiation, and the U.S. attacked them. They felt that it was all a ruse. And I think from Iran's perspective, here's the really interesting part. I think given their options right now, having been attacked in such a very aggressive way, Israel and the U.S. did some real damage to their defense. If you were Iran, and you were attacked in this manner, and you've been weakened with your proxies in Hezbollah, and the Houthis, and Hamas, what do you think their options are? My guess is that there's about 400 kilograms of enriched uranium, plus hundreds of centrifuges that were moved outside of the areas that were attacked. They're hidden. And Iran is a very big country. And so I think that most experts agree that they've moved that stuff before the attacks. So what would you do if you're Iran right now, and you're looking at this aggressive country that wants to take down your regime? You might go and actually pursue a nuclear weapon now. Enrich uranium to weapons grade and create a nuclear weapon as a means of deterrence. And if you think about it from the perspective of the Iranians, and again, we do a crisis group. I'm the co-chair of the crisis group. I've been with the organization for 20 years now. When you look at these situations, you have to put yourself in the other person's mindset and not listen to all the propaganda around us. What is really going on? And I think Iran is probably looking at this as, you know, if they give up their nuclear program, what happened to Libya? What happened to Syria? What happened to Iraq? Why hasn't North Korea ever been attacked? Or Pakistan? Because they have a nuclear deterrence. So one of their options, and many options, I hope they continue to negotiate and that we find that there's some ideas being floated about how to come to a peace agreement on a nuclear deal. But I would think that they have to be strongly considering whether this is the moment where they have to enrich the uranium to weapons grade. Just saying. I want to get a question about the Fed, because I asked about QE on the panel yesterday. The Eldon Martino booth was quick to say, no way, never going to happen. You had a good counterpoint saying, look, it's not about this year or next. But the point is that all roads eventually will lead to QE. I mean, at least that's my gut feeling. And I believe you think that's the only path we're on, right? I can't see any other way. Because if you look at it from this just simple concept, the rollover of all of this debt that's coming, like there's $9 trillion of debt that has this coming due in this coming year that has to be rolled over and refinanced. Plus another $2.4 trillion in additional deficits and another $2 trillion the next year after. And who are the buyers for this when China has been selling off their treasury position for years now, they're down to $750 billion. Japan, which was the most reliable buyer of US treasuries, has stopped buying and has actually sold, I think, $50 billion worth because they have their own internal problems with the yen. The rest of the world is de-dollarizing, trying to get away from having too much in US reserves. So where are these buyers going to come from? Financing $10 trillion worth of debt when the total savings in the US is $5 trillion, there's only one buyer left. It's the buyer of last resort, and it's going to be the Fed. That's number one. Number two, Trump is dead set on appointing his own guy at the Fed, which is going to be next May. Who do you think it's going to be? I have no idea. Judy Shelton, Mark? She's polling only 13%. If you ask the experts, it's her chances. Hey, listen, it could be Judy Shelton, but I doubt it. I hope. I like Judy Shelton, so she's listening. We love you. We like you a lot. We love your work. But it's going to be... So if Trump gets his way, think about this, do the math. He wants to drive rates down to 1%. What is that going to do to the mindset of foreign buyers who are looking at then an inflationary environment being created in America that could really spook people? And they're going to probably demand a higher rate on the long end for the 10-year treasuries, which the Fed can't control with their interest rate policy. The only way to control the longer term rates, the 10 years, the 30 years, is with QE. That's the only way you can do it. And so my guess is that if they do manage to get rates down to the level that Trump wants, and he usually gets his way with things. He's a very persuasive guy. Everybody falls into line eventually with him, it seems. So I think that that would trigger another round of QE. And if we get back into QE this time, I think it's the final nail in the I think with already $7 trillion on the Fed balance sheet, they haven't been able to normalize the balance sheet since the Great Recession. They got as high as nine, they brought it down to seven, but I don't think they're going to be able to get it. I've always said we're going back to QE, and the next round is going to be devastating. Yep. Let's end on this note, because after the panel, I know you got stopped by hundreds of people at the roundtable, and people were coming up to me saying like, you know, what's Frank Joost really like? And how much gold does he think I should own? I guess they really just want your thoughts on why for you gold, and I know we've spoken about this, but they love hearing it, of why gold just makes sense given this environment. Well, I think one of the more recent developments is the tier one status for gold. So under Basel III, the Bank of International Settlements, which is the central bank to all banks, basically made gold a zero risk asset. They make gold the same as U.S. Treasuries. So that is now going to force all the LBMA banks to abandon the paper gold Ponzi game that they were playing before. And I think that, you know, the LBMA banks have done a tremendous amount of damage to the gold price through manipulation over the years. And now after exhausting every other option, they're going to have to become, you know, repent and become really good corporate citizens again and play the game. That means that the price of gold will in future be dictated by those that take physical delivery as opposed to who can trade with the most leverage. Okay, so that game is over. So I think that people should really pay attention to what Basel III means and tier one status to gold, because now banks can use it as part of their liquidity and part of their reserves. I'm talking about commercial banks. And that might be one of the reasons we saw this huge influx of physical gold into the U.S. from the London vaults starting December of 2024 and, you know, for the first three, four months of this year. Which was very fishy. Yeah, well, but my guess is that, you know, you can't use gold as a tier one asset unless it's physical. Paper gold does not qualify. It's called allocated gold versus non-allocated gold. And that is that the primary reason why gold is now going to be part of the global financial system is being re-monetized. It's no longer fringe theory to believe that gold is going to play a monetary role. It is going to be a tool for liquidity and the anchor for stability going forward. Well, Jeffrey Gunlock even said that gold's no longer for lunatics. What did you make of that statement? Well, listen, I hate that I've been labeled a lunatic for the last 25 years, but dammit, we were right. You heard it here first, folks. Hey, are you going to have some downtime? You're like, what's that? I was like, can you enjoy some of this incredible resort? Well, no, not here. Not a chance here. I'll get downtime when I head back home. Yeah. Well, it's so great catching up with you, Frank. I love being with you. Great to see you again. And thank you for watching. We'll have more great content, so be sure to stay tuned to the Daniela Comboni show on ITM Trading. And of course, subscribe to our channel to stay on top of it all. Thanks for watching.