Did Fed Chair Warsh Just Kill QE? Bubba Horwitz on Gold, Rates & a 40-60% Crash

Welcome back to the Daniela Convoni show. Brand new studio in New York City. We have the best insights and, of course, the greatest guests. Please welcome back to the show Todd Baba Horwitz. Baba, always good to be back with you as the summer is coming close to an end here. What's up, Dani? Great to see you. Great to be with you. Welcome back from Italy. Summer is over, but we can't seem to get the after-summer volume going yet, but I think some big things are coming. I think some big things are coming, too. We saw the Fed head's first speech at a Jackson Hole, basically saying a lot but saying nothing. He was using Hemingway's one of his short stories as inspiration in our time. What was your take on Warsh's statement here? He didn't say much. He talked a lot, but he didn't say much. He talked for like 30 minutes, but I do like him. He is the first guy in the Fed—I go back to Volcker. From Greenspan, Bernanke, Powell, and Yellen, they were all garbage. This guy seems to have a real clue and really wants to give—he's very tight-lipped about what his plans are. He really talked about the dual mandate, which is employment and stability, which is all that the Fed should be worried about. He said that we're not going to be market-dependent on working. I think that's important. If you're a trader, if you're an investor, you don't want to be market-dependent on what the Fed says. You don't want everybody anticipating, because the average investor gets no advantage from the Federal Reserve, and they're either lower or higher interest rates. In this case, they take the brunt of higher interest rates, but when rates were lower and they were taking this down into QE, the average investor couldn't take advantage. That was only for the very, very wealthy who could actually access some of that money. I like his pretty much no-nonsense approach. I think he gets it. I like his no-forward guidance, because I don't want to hear their BS. I don't want the market anticipating and running into enforcing people in and out of situations. First of all, I think the Fed should be eliminated altogether, but if I'm going to be stuck with a guy, this guy seems so far like a guy I'm going to like. I had a great conversation with Jim Rickards on Friday. A, he doesn't think he'll hike in September. He's going to wait, but Jim is still uber bullish gold. He has a $10,000 gold call on the table. Two, the other point he brought up was on page nine of his speech, he basically alluded to the fact that he wouldn't be using the gimmicks. That's not an exact word to use, but he basically alluded to the fact he would not do QE, no QE. Do you interpret it as such? Do you buy it? I interpret it, and I hope that he's telling the truth. This is always an issue. When it comes down to it, if they get nervous, Bernanke is the best example, because he actually panicked if we go back to May of 2010, when they had what they called the taper tantrum. But at the end of the day, if he's legitimately going to do this, it's terrific. We don't need QE, Danny. We need a free market to decide what the market is worth. Every asset class, gold, silver, stocks, whatever you have, houses, they have a value. There is a point in where a buyer and a seller will meet and exchange wealth. If he's going to live by that, which is what he's trying to say, then we're going to be in much better shape as an economy and may be able to work into some of this overwhelming debt that the government has created, regardless of where interest rates go. Interest rates should be higher. They're going to hike rates. Right now, the Fed funds rate is pricing at a 50% chance in September. I think that'll have a lot to do with the jobs number that's coming up Friday. I think that'll have a lot to do with some of the economic data we're going to see. But I think, in my mind, there's a higher chance because inflation is still way too high. And as long as oil, even though oil has dropped significantly from its highs up to the Iran war, it's still extremely high and very high at the pumps. And if you understand that about 80% of your spending has something to do with fossil fuels, this inflation is not coming down. And he admitted that inflation was higher than the 3.7 that they reported. Okay, but you know, I'm going to ask you this, by the way. If you're a gold bug, bull, whatever you want to call it, don't you secretly want QE? No, I think gold, I think, look, we just watched, we've known about this interest rate, right? Now, remember, let's remember markets are always intelligent. They're not always right, but they're always pretty intelligent. And they've already know what the news is going to be or assume what the news is going to be. Gold has had a heck of a rally. You and I last talked, gold was 4,000. I said to be a buyer of gold at 4,000. Okay, I said to be a buyer of silver at 55. And we've seen a pretty dramatic move. Now, again, the markets know that interest rates are going up. The assets themselves are what bring the value. I think we put too much stock into outside ancillary products that happen and things that happen versus gold is valuable. Gold is in a maintained value. Gold is a real hard asset. And we're looking and going into a commodity super cycle, I think, a very bullish commodity cycle. And gold, a hard asset is still a commodity. Okay. And I think that we're going to see commodities running. And I don't care what interest rates are doing. It's going to go where people are going to go and say, hey, things are bad. Let me go to that element of safety and get some hard assets that I can at least defend myself if something goes wrong. And if the dollar fails or whatever could happen and go wrong, because you know that I'm very negative the markets overall in the near term, not long term. I think we continue our cycle, go up 8.5% year over year. But in the short term here over the next year, I think we could see some very ugly stock, which would also be bullish for gold. I think gold is probably going to make it this year. I would not be surprised if we maybe tested the high by the end of the year. I think that'd be a little bit of a stretch. But of course, Rickard's 10,000 call. Yeah, it'll hit there at some point. I don't think it'll be any time soon. But it'll hit there at some point. He's looking at a five year. He's looking at a five year. I have no doubt. In five years, there's probably a 50-50 chance that it sees 10,000 in five years. Okay. So when you see the headlines, like, no, there's actually a big print in play, and there's a secret QE happening, silent QE happening. You don't buy that narrative? I don't buy it. Look, we've always heard. Remember, we've heard about the plunge protection team, right? Always holding up markets, always holding markets. You know what? They always hold them up until they don't. Now, I look at this market, okay, as a combination of the internet bubble and the housing bubble, because there's trouble in both from the overspending in AI and the trillions of dollars that are off balance sheet that haven't showed up yet. And of course, you're seeing a major housing crisis again, as well. I think when this thing happens, it's going to be ugly, and it's going to be 40 to 60%. All right, let's just talk our neighbors to the north. You know I'm Canadian, Bubba. I live in the States now. Okay, what's your take on now we have Lake America? What's next? Well, I think Carnegie and Trump, you've got two guys that are kind of ridiculous in this whole situation here. I don't want to say what I really think, but- Why not? I want you to say what you really think. Well, no, it would involve a lot of words that you'd have to X out. You'd have to bleep me out. But I think you've got two dumbasses here working at this whole thing, and one's fueling off the other. You know, I am personally a fan of tariffs, not necessarily into Canada, but I think there needs to be more controls and more immigration controls, more everything. And I don't necessarily agree with how this has all played out. And I think that our neighbors to the north, I mean, we do a lot of business back and forth, and I think there should be a little bit more calm and a little bit more cooler heads prevailing between Carnegie and between Trump here. I don't like what's going on with that. But overall, you know, Trump, I mean, he's always, you know, we're going to go from Lake Ontario to Lake America or whatever he's going to call it now. Well, let me just ask you this, because you know you're going to get the question in the comments. Well, Bob, if you like tariffs, that means you like taxes. Tariffs are a tax. I don't agree. I 100% don't disagree. See, that's where the free market comes in, okay? I don't have to buy anything if I don't want to. It's the consumer. Look at how much trouble the consumer is. Somebody said to me today, okay, Gap had big earnings last week. Their stock is flying. And they go, so how can the economy be bad? I said, because look at the credit card debt. You have 18% of the population is 90 days past due on their credit cards. Think about that. They're paying 30% on money, okay? You've got 8% of auto loans in default. You've got 7% of mortgages in default. And that's what they're telling us. I'm saying the banks are in big trouble. The tariffs have nothing to do with any of this. And I think, look, I'm anti-China. China is not the friend of the United States of America. China is an enemy of the United States of America, as far as I'm concerned. As far as I'm concerned, they sent COVID over here as a test balloon in chemical warfare. But at the end of the day, I'd love to tariff China like crazy. I'd rather bring the jobs back to the United States. Yes, we'd have to pay a little bit more, but we'd get better quality and we'd be actually building our own economy versus depending on everybody else. And I think that's what people don't understand about the tariffs is that it forces us and gives other opportunities to Americans to make money and build businesses. Because the way we're operating right now, you can't start a small business, a one-man shop. You could never have another Steve Jobs, another Jeff Bezos, Elon Musk in the current environment in the United States. And I think most Canadians would agree with that statement. But I'm so glad you held yourself. I would, would, would. I mean, I just saw this interview, Christa Friedland, however you pronounce her first name, was on CNBC, you know, stating that, yeah, how China has exactly cut out the man in Canada, just as it has in the U.S. And we need to work together to bring that back, whether it's too little, too late. It's never too late, except when you have idiot politicians. Okay. And it doesn't matter. It's party agnostic, right? It doesn't matter if you're a Democrat or a Republican. The idiot politicians make so much money off the backs of Americans on making a lot of these crappy deals, not to mention that they can do insider trading as well, but they get to make these bad deals that really don't benefit us. So let's cut back on the shady deals. And then the tariffs would be nothing and they wouldn't be a tax. And I'm way against taxes, but tariffs are another thing because tariffs, I have a choice to buy product or not buy product. I don't have to go out and buy and I can shop that product because the truth of the matter is when you go to the grocery store, you can be doing price discovery too. A loaf of bread's a dollar here. It's 80 cents there. You can go for 80 cents if you want to make the trip. But I mean, at the end of the day, the whole economy and capitalism is built on price discovery. And you, the consumer have a choice or the seller have a choice of what price you want to pay and what price you're willing to sell it for. And that's the way it should be. You said the word that can't be said out loud in New York City anymore. Capitalism. Yeah, I know. Another, now that's another problem. And this is a very big problem and I don't know if this is on your topic, but I'm bringing it up anyways, because I'm angry about it. What's going on in New York. You have at least four politicians that are communist or socialist. Yes or no? In New York, at least four. You've got a potential one coming in Michigan. You've got in Chicago, you've got in Minnesota. Now everybody forgets that Adolf Hitler didn't start out where he was when he ended up killing 6 million Jews during the Holocaust. He started out with a little movement. You know, there's a poem by Martin Niemöller that says, first they came for the unionists and I wasn't a unionist, so I didn't get involved. Then they came for the Protestants and they came for the Jews. I wasn't one of those. I didn't get involved. By the time they came for me, there was nobody left to save me. And this is what's happening and everybody's just ignoring it. It's like, it's no big deal. Here we are. We've got a system that is breaking down, funded grocery stores, government grocery stores, yet you need an ID to get in the grocery store, but you don't need an ID to go vote. You tell me what's wrong with that picture. Enough said. Enough said. Todd Babahorowicz, he held back today and he was holding back today. Thank you so much. We'll bring you back soon. We'll have more great content coming your way. And as always, any questions about, like Babah said, you know, gold prices are only going to go higher. So get in on it now. Reach out to my wonderful colleagues at ITM Trading who will build a specific strategy best suited for you. It's a free strategy session. And on top of it, we can now service clients outside of the United States. It's a brand new division and program that we are offering. So give us a call or just scan the QR code. We'll see you all soon.