Gold Is Still Going to $30,000 | Simon Marcotte

Good afternoon everyone today. I'm joined with Simon Marcotte Simon is formerly the CEO of Northern Superior who he successfully had acquired by I am gold for 375 million dollars Simon has been outspoken on our channel in the past talking about his $30,000 gold thesis and today he is gonna update us on where that sits some of the Misconceptions people have with the Fed and what levels we should be watching from here. All right, everybody. Enjoy the show Simon thanks for joining us anytime the Simon one of the things that I love about you having you on here is that you've got a pretty successful track record of Getting involved with companies and them getting taken out I'm thinking lithium X back in 2017 arena minerals in 2023 and most recently as we've been having you on the program and we got a first-hand view of it Northern Superior back in December well What better lucky than good-looking they say, right? So the last time we had you on you were talking about $30,000 gold Gold has gone up considerably since but we're still not at $30,000. So where does that thesis sit today? Yeah, no, nothing has changed in my very bullish view of gold And again, you know, I wasn't saying gold was gonna go up to $30,000 in a six months time frame I always referred to gold Reaching that type of levels in roughly the same time frame that it took oil To go from roughly twelve thousand twelve dollars a barrel two hundred and forty dollars a barrel. So You know, there's there's a few years Remaining here, but I want to talk about where we're at What where we're heading and also? Because I think the Fed is likely to turn on a dime here and become very dovish in 2027 and this is really when the gold game would start. So I want to review that I also want to discuss why we saw a pullback in the last few months and Again I want to talk about why is it that the Fed needed to become hawkish and also why? Chinese investors that have been driving a gold price. I'm not talking about the People's Bank of China I'm not talking about the central banks, but the Chinese investors Why is it that they stopped and that that created this pullback in gold and really get to answer the question, you know? Did did gold bottom here, right and I believe I believe that it did so first Steve we need to remember How the economy works now because it changed right before 2008 When credit would expand the economy would expand and Since 2008 this is this is no longer the case So to offset that first we had QE as you recall which QE created a wealth attack with lower yields It increased the price of assets and people had money to spend But then inevitably QE lost its impact and then governments worldwide had to step in and increase deficit spending to sustain the economy globally So I always say, you know, like for those who wish that Governments would reduce deficits be more responsible spend less be careful what you wish for because this would implode asset prices and it would be very very damaging to the economy, especially Considering the debt level that is everywhere right now So it's it's all have been since 2008 after the QE it became about deficit spending This is how the economy is being sustained Then came in President Trump Who decided to hit the gas pedal on this right and I'm not really talking about his first term I mean his first term when he took office the debt was about 20 trillion At the end at the end of his first term the debt was about 28 trillion But granted you had to deal with the beginning of COVID but then comes a second term and You remember the first thing they did the big thing they did was the one big beautiful bill Which increased the deficit materially and in an increased the debt Level the debt ceiling level by by a whopping five trillion dollars, right? And and that five trillion would take the debt of the u.s The 41 trillion more than double where Trump was before before Trump won. So if you include the full impact of the one big beautiful bill and Reaching that new 41 trillion debt ceiling which is coming soon Trump by himself Will have overseen the accumulation Of about thirty three percent of the u.s. Debt, which is, you know unprecedented to say the least So when we say that the stock market is like never before That's why When everyone was surprised that tariffs didn't cause a recession That's why when everyone was surprised that higher interest rates Has yet to have yet to cause a recession That's why it's all about Running large deficits right now But now as I mentioned we're reaching we're gonna be reaching that that's ceiling not tomorrow morning, but soon enough We now we're now about 1.8 trillion from reaching the debt ceiling set by the one big beautiful bill and the big question is Will Congress demand deficit reduction measures to allow for the debt ceiling to be free and even if Republicans retain Both the Senate and the house, which is unlikely I think it's it would be like 20% chances if you look at calcium that sort of thing But even if they do retain the Senate and the house They are likely the Republicans are likely to demand Deficit reduction measures. I mean you'll remember that a one big beautiful bill was not easy to pass J.D Vance had to pass a tie-breaking vote for it to be to be approved. So if Deficit reduction measures are put in place then you have a smaller deficit But you will still have tariffs you will still have higher rates and also remember that the big thing about the one big beautiful bill is that all of the cuts to Medicare Medicaid and other things are only enacted After the midterms, right? So those cuts will be taking money out of the system and are likely to slow the economy on top of everything. So so the Fed may need to turn very dovish and very quickly if If there are deficit reduction measures that are put in place and if the Fed does turn dovish and Very dovish. Well, this is when real rates will finally go down and this is when The gold game will will finally start. So How dovish would the Fed need to be if that is to happen? Well, the Fed would need to be dovish enough to replace the most aggressive deficit stimulus of all time the Fed would need to be dovish enough to support the highest asset valuation of all time and The Fed would need to be dovish enough to get the credit expansion To grow the economy again, which hasn't worked in 18 years So we may have some interesting time ahead and and if the Fed You know doesn't need to turn on a dime from Arcus to dovish it creates a bit of a An issue for them, right and I find it very interesting That the Fed is now shying away from providing guidance and That may be a way for the Fed to preserve credibility in case it does need to turn on a dime From Arcus to dovish very very quickly, which is not usually how they act and I find it You know quite interesting that the new Fed chair Coming in, you know, that could be very well the perfect excuse for this this change of policy So I want to ask you about that because Kevin Warsh He sort of he came in and obviously we saw various markets including precious metals Completely tanked when Kevin Warsh was announced. He was supposed to be this huge hawk It sounds like you're not buying into any of that Well, he didn't vote for a rating prince. Did he he was not part of the dissidents, right? So So we'll see where where it goes But also let me be clear about something, right? I am NOT saying that there's a runway That runs out where the the one big beautiful bill runs out of cash and we hit that that ceiling on it That's not really It because in fact the one big beautiful bill has been very impactful on financial market especially because The measures to increase the deficits were mostly permanent measure So it is possible that Trump is able to get the debt ceiling to be increased Without deficit reduction measures. I mean he's been trying to get a debt ceiling increased even if we're not We're not out of runway if you want he hasn't getting any success on that In fact, it could be also the reason why he's pushing now for this 1.5 trillion To be allocated to the Pentagon Because that way he could ask for the debt ceiling to be increased before he does lose control of Congress, right So, but it doesn't really matter for gold I think I think it's good either way because if the debt ceiling is increased without deficit reduction measures Then well, we're back to the status quo where the debt remains on this exponential path with deficits that are Overly high but without a Fed that will need to be aukish And also the Chinese back at the table buying gold that I'll talk about in a minute So if we're back to the status quo with a without a Fed that's aukish Long-term yields will keep increasing which increases the need for yield curve control, which is catnip for gold I don't think we would see an actual yield curve control policy But we're already seeing it from the back door, right I mean you saw obviously the big news in recent weeks has been the yen intervention, right where US is buying yen so that Japan can turn around and buy treasuries to cap long-term yields and Just for one intervention the Treasury Department Used about a third of its euro reserve. So the yen is not even holding as you see this week So how long before we need to use US dollars and increase the the Fed's balance sheet to do it So 2027 is gonna be very interesting to say the least but I also want to talk about like the I think there's two main reasons why we saw a Gold correction in the first half of 2026. The first one obviously is an aukish Fed So I'm going to talk about that and then Also, we saw weaker demand coming from China, I'm not referring to the Central Bank of China I'm not referring to the People's Bank of China. I'm talking about Chinese investors. So first on The Fed being aukish So obviously every time you have a new Fed chair coming in you always have an aukish narrative at least for a little while But it may have had to do with something different It may have had to do with the refinancing wall that that you're very familiar with right You know, that is a but a third of the total US debt that needs to be refinanced in 2026 And I think that the narrative That the Fed would need to monetize that debt is not correct Right because the money to refinance that debt is already there coming out of the bonds that are maturing But the Fed needs to make sure that this money gets gets reinvested into new bonds being issued So for US holders, that's obvious If they still own that bonds because they want they want to be there and they're getting a higher rate on the rollover Anyway, so to put the money back in it's easy, but for foreign holders They they will look at the yield Yes But they will need to have a bullish view of the US dollar to do the rollover and stay into those bonds And I think an aukish Fed gives them that So I think that could have explained a lot of the aukishness that we are seeing in 2026 And after 2026, there's some big debt refinance for 2027, but a lot less than 2026 But after that, we're going to be in the clear And I don't think the Fed is going to need to be as aukish And then it's also the gold pullback had to do a lot with China Because we have to realize that a big part of the gold rally that we saw since 2024 was fueled by Chinese investors And that's because in China, as you know, real estate prices have been horrible, right? And mainly for that reason, China has been trying to reflate its economy And to do that, they've been increasing money supply But when they increase the money supply in China, people in China take the money and they buy gold They can't buy cryptocurrency, so they turn around and they buy gold And there's actually a great substack to follow by Michael Howell that you can find easily And Michael provides very interesting data on that And he was able to establish that an increase in money supply in China will have an impact on gold price with a three-month lag And so in 2026, you had, I'm assuming, at the end of Q1, the Fed became aukish And at the same time in Q1, China turned off the top They stopped increasing money supply, which probably explains the weakness in gold that we've seen in June and July So again, to that substack done by Michael Howell, he believes that... That's at capital wars Correct. Yes, yes, exactly And he believes that China did that in February-March, or in March, in order to slow down the economy To avoid a shortage of oil that could have been caused by the war in Iran And he may be very well right on that, but I think it may also have been related to the yen Because China and Japan obviously trade enormously together, right? It's like Canada and the US So the currencies can't be too out of whack, too quickly So it's a lot easier for China to weaken its own currency if the yen is also weak And if you look at that period around February-March, the yen versus the won was very strong in February-March It could have been why, I don't know But regardless, China has now restarted to increase its money supply So it's starting to feel like we have bottom So going into 2027, the Fed will, I think, have the flexibility to be dovish again I think the Fed may need to be dovish again China is also increasing the money supply And if there is no deficit reduction measures that are implemented Then you can expect a return of the whole debasement narrative that we had in 2024-2025 So it'll be very interesting months ahead to say the least Now, a couple more things First, did we see a bottom in gold? I now think we have So if the driving force of the first leg of this bull market was driven by Chinese investors Then we need to look at the gold in the Chinese currency And gold in the Chinese currency did breach the support that we had on our chart in October-November So the next support below that would have been about the equivalent of $3,600 US So I think there was a risk that it could have gone there But the recent rebound that we saw just recently did take place on this upward trend line So it looks like this upward channel is going to remain intact So I'll send you a chart that you can use as well, which comes from Michael Alva as well And then lastly, I think we can't ignore the whole war in Iran And this is likely to have very important long-term implications And as you know, I've been traveling to the Gulf region extensively over the past 20 years And you know, let's go back after how things work I'd never lose sight of that After the US got off the gold standard The US needed to make sure that there would be demand for the US dollar So that's when they reached a deal with Saudi Arabia So that Saudi Arabia would price oil in US dollars In exchange for this, the US protected Saudi Arabia And the US was obviously impossible to defeat And I would also argue that for more than 50 years Hollywood has made countless movies helping to convince the world That the US army could achieve absolutely anything Well, the war in Iran now has kind of proved that there are limits to what the US army can do But now Saudi Arabia, it's already happened now Saudi Arabia already reached an alliance for protection with both Pakistan Which as you know, has nuclear power, has a nuclear bomb And then Turkey as well, which has a big army So this is the beginning of the end Or could be the beginning of the end for the petrol dollar Because if you look at the relationship between Saudi Arabia and Iran Saudi Arabia and Iran were never allies But they're not enemies either And after this war is over, if it ends the way it looks like it's gonna end Then you can expect China and Russia to invest quite a bit in Iran Because now it will be seen as relatively safe So if that is to happen, you can expect Iran to become much more influential In the Gulf region going forward And if the US couldn't protect Saudi Arabia to the extent it was supposed to Well, don't expect Saudi Arabia to go to war to protect the US dollar So Saudi Arabia will move away from the US dollar This is ultimately horrible for the US, but very good for both So one last thing I want to ask you about Your quick thoughts on how AI is going to impact precious metals Because this is something I think about quite a bit Yeah, it's true It's a great question It's going to impact everything Because we hear a lot that AI could be deflationary So does that derail the whole thesis about gold going higher? I really don't think so, right? Because we need to understand the consumer price index, for example So the CPI, I think it's misnamed I think it's mislabeled Because it leads to misunderstanding The CPI is not really a price of goods It's an index of the quality of life So if your quality of life is based on a $100,000 salary a year, for example Are you better off or worse off year on year? That's really what that index is So let's take an example Let's say that you subscribe to cable through TV You decide not to Because you realize you can get most of the content that you want to watch You can get it for free on YouTube So you drop off cable So that's $300 a month you don't need to pay Well, then you can afford to eat just as many Big Macs if you want Even if the price of the Big Mac triples, right? And your quality of life remains the same But because it's called the CPI consumer price index Which wanted the Big Mac that just went up But we don't think about the fact that we're not paying for cable anymore, right? So AI is making an enormous amount of what I would call professional services Things that, you know, lawyers do and anything like that A lot of these professional services are now provided by AI for free So over the, you know, as AI comes in It removes a lot of things from this index basket And it allows the Big Mac to go quite a bit higher And keeping the same level of life And to be clear here, the Big Mac is the gold It is the things that the hard assets So I think AI, if anything, increases the possibility of the economy to accept And deal with higher price for hard assets So very good for both All right, well, Simon, I appreciate you hopping on here Hopefully, I'll be seeing you at a conference soon But if people want some more of your commentary Is there anywhere that they can go to? Your channel is the best, I always say that, Steve Amazing, I appreciate that You can follow me on LinkedIn I do some interesting posts sometimes I appreciate that you're always generous with your time And I look forward to having you back on again soon Thanks for your time, Steve All right, everybody, thank you for watching If you enjoyed this interview, do me a favor Smash that like button, subscribe, and ring that notification bell And guys, if you have any feedback for us Such as guests you want us to have on the channel Or stories that we haven't covered yet But we ought to be covering Let us know in the comment section We read all the comments And I promise you, we consider all of your ideas All right, everybody, thanks for watching